Westlake Village, CA – August 27, 2026 – Velocity Financial, Inc. (NYSE: VEL) today announced a definitive agreement to acquire the operating platform of longtime AAPL member Toorak Capital LLC, a business-purpose lending and asset management firm which is majority owned by funds advised by affiliates of KKR, a leading global investment firm. Toorak has also entered into separate agreements with a third-party investment firm for the purchase of Toorak’s existing portfolio of business-purpose loans (“BPL”) totaling approximately $3 billion in unpaid principal balance across whole loans and loans held in Toorak Mortgage Trust and TRK Trust securitizations.

In connection with the closing of the transactions, Velocity will also enter into an agreement with the third-party investment firm to manage the Toorak portfolio, as well as agreements to sell future Toorak loan production to the third-party investment firm and other parties.

The total value of the platform and portfolio transactions is estimated at $3.2 billion based on Toorak’s consolidated balance sheet as of June 30.

Toorak provides real estate investors with the capital required to buy, renovate and/or rent residential properties. Since its inception in 2016, Toorak has funded over $20 billion in cumulative volume across almost 43,000 loans. Toorak’s BPL products include short-term single-family and multifamily residential transition loans (“RTL”), ground-up construction loans, and long-term rental property loans (debt service coverage ratio or “DSCR” loans) secured by residential properties. Toorak has established a strong position through its AI-powered omnichannel asset sourcing and asset management platform, comprehensive product suite, and securitization program, including the first-ever rated RTL securitization. The company also has an established presence across the U.S. and U.K. markets.

Velocity expects the transactions to be accretive to GAAP earnings in 2027, including projected increases of 76% to its current origination volume and 39% to servicing platform sales. Increased earnings from fee-based revenue streams through forward loan sale agreements will support Toorak’s transition to a primarily capital-light operating model.

“This acquisition reflects our commitment to scaling responsibly and deepening our presence in segments where we see durable, long-term demand,” said Chris Farrar, Co-Founder and Chief Executive Officer of Velocity. “Toorak’s exceptional team and platform are highly complementary to what we’ve built, and together we’re positioned to serve a broader set of borrowers and capital partners with greater speed and efficiency. We are thrilled to partner with the highly skilled team of professionals at Toorak.”

Taken alongside Figure’s proposed acquisition of Kiavi earlier this year, the Velocity/Toorak transaction offers another indication that institutional investors are placing value on the infrastructure surrounding private lending as much as on loan production itself. Both deals connect established BPL origination platforms with broader capital and distribution networks, supporting a model in which lenders can scale production, servicing and asset management while relying more heavily on institutional partners for capacity. For the private lending market, that could raise the premium on scalable technology, diversified funding relationships, and access to secondary-market liquidity.

“When we founded Toorak in 2016, our thesis was that residential real estate investors were underserved by institutional capital. Over $20 billion in loans later, that thesis has been proven. Partnering with Velocity lets us pursue the opportunity at even greater scale,” said John Beacham, Founder and Chief Executive Officer of Toorak. “Our team will continue doing what it does best—serving our borrowers and lending partners with a consistent standard of excellence. I want to thank KKR for a decade of partnership and thank our employees, whose work made this outcome possible.”

The ongoing acquisition trend also points to a widening divide in how private lending businesses may scale. Smaller lenders and balance-sheet practitioners continue to see opportunity in relationship-driven lending and transactions that fall outside the portfolio parameters of larger institutional investors. For larger platforms pursuing substantial growth, however, acquisitions such as Toorak and Kiavi suggest a different path, one closely tied to the efficient movement of capital.

“These transactions underscore the growing diversity of business models within private lending,” said Linda Hyde, President of the American Association of Private Lenders. “As institutional participation expands, some lenders are building toward greater scale, while others continue to serve opportunities that require flexibility beyond institutional investment criteria. Both models have a place in the market.”

Transaction Details

The acquisition by Velocity is structured as a 100% cash purchase of Toorak’s operating platform, including Merchants Mortgage & Trust Corporation, which is Toorak’s direct origination business in the United States, and Toorak’s lending operations in the United States and the United Kingdom.

Globally, Toorak has approximately 280 employees, including approximately 120 employees of Merchants. Velocity expects the acquisition to close in the fourth quarter of 2026, subject to the satisfaction of customary closing conditions.

Toorak will maintain its existing brands across its respective lending segments, including the Merchants brand, will continue to be led by Founder and Chief Executive Officer John Beacham and the current management team, and retain its corporate headquarters in Tampa, Florida. Upon closing, Beacham will become an Executive Vice President of Velocity Commercial Capital, LLC  and Toorak will become a subsidiary of VCC, with its operations reflected in the Company’s consolidated financial statements.

Conference Call

Velocity’s executive management team will host a live conference call and webcast on August 27, 2026, at 5:30 a.m. Pacific Time / 8:30 a.m. Eastern Time to discuss the acquisition.

About Velocity

Based in Westlake Village, California, Velocity is a vertically integrated real estate finance company that primarily originates and manages business-purpose loans secured by 1-4 unit residential rental and small commercial properties. Velocity originates loans nationwide across an extensive network of independent mortgage brokers built and refined over 22 years.

About Toorak

Founded in 2016 with backing from KKR, Toorak Capital LLC is a business-purpose lending and asset management platform focused on residential real estate investors across the United States and United Kingdom markets. The platform offers a range of lending solutions including RTL, ground-up construction and DSCR loan products and has funded over $20 billion of cumulative volume across almost 43,000 loans since inception.