Residential Bridge Mortgage Company Joins KKR’s Portfolio of Asset-Based Finance Investments
NEW YORK–(BUSINESS WIRE)–
KKR, a leading global investment firm, today announced that KKR has acquired Merchants Mortgage Trust & Corporation, LLC (“MMTC” or the “Company”), a real estate lending platform specializing in short-term mortgage products for experienced individual residential real estate investors. KKR is making its investment in MMTC through its private credit funds and accounts as part of the firm’s Asset-Based Finance (ABF) investment strategy, which pursues privately originated investments backed by diversified pools of hard and financial assets.
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MMTC’s Chief Executive Officer, Justin Land, and the existing management team will continue to lead the Company. KKR’s investment provides MMTC with access to long-term capital to grow its origination activity and support the expansion of its product offerings, geographic footprint and financing capabilities. As a part of this transaction, MMTC will also acquire the outstanding interests in its affiliate, Orchard Funding.
Founded in 1961 and headquartered in Denver, Colorado, MMTC primarily originates residential bridge loans for private investors that are predominantly used for property rehabilitation with a focus on one-to-four unit residential properties. MMTC operates in growing markets across the western United States with a strong presence in Colorado, Arizona and California. The Company’s financing solutions enable community-based entrepreneurs to improve the quality of U.S. residential housing stock by investing in renovations and new construction.
“The support and long-term capital provided by KKR will accelerate our growth and broaden and enhance our ability to meet the financing needs of our customers. We look forward to working with KKR and realizing the benefits this strategic partnership will bring to MMTC and to the entrepreneurs we are proud to finance,” said Land.
MMTC has significantly expanded its lending activity in recent years and in 2021 originated more than $500 million in loans to approximately 500 different borrowers. Through its investment, KKR’s credit strategies will gain exposure to a pool of directly originated, primarily short-term residential real estate loans made to a group of high-quality borrowers.
“By enabling entrepreneurs to invest in residential real estate, MMTC is contributing to the long-term resilience of the U.S. housing market, which we are excited to support through our ABF strategy,” said Daniel Pietrzak, Partner and Co-head of Private Credit at KKR. “We look forward to working with the Company’s talented management team as they continue to grow MMTC’s already strong market presence in the U.S.”
KKR has deployed more than $5 billion in 49 ABF investments globally since 2016. KKR’s ABF portfolio includes several independently operating proprietary loan origination platforms focused on themes in consumer/mortgage finance, hard assets, SME and contractual cash flows. KKR has established these lending businesses in partnership with experienced industry management teams to pursue specific lending markets that the firm finds attractive.
Financial terms of the transaction were not disclosed.
Hovde Group and Wells Fargo served as financial advisors to MMTC and Otteson Shapiro LLP and Hunton Andrews Kurth acted as legal advisors. Sidley Austin LLP served as legal counsel to KKR.
About Merchants Mortgage Trust & Corporation
Merchants Mortgage & Trust Company, LLC is a real estate finance company that originates and finances residential mortgages primarily to private investors purchasing 1 to 4 family homes. Founded in 1961 and headquartered in Denver, Colorado, Merchants primarily operates in growing markets in the western United States. Merchants provides a range of products to its customer base including bridge, rental and ground-up construction loans. The company is focused on providing a superior product to its customers with high levels of customer service, rapid funding and competitive pricing.
KKR is a leading global investment firm that offers alternative asset management and capital markets and insurance solutions. KKR aims to generate attractive investment returns by following a patient and disciplined investment approach, employing world-class people, and supporting growth in its portfolio companies and communities. KKR sponsors investment funds that invest in private equity, credit and real assets and has strategic partners that manage hedge funds. KKR’s insurance subsidiaries offer retirement, life and reinsurance products under the management of The Global Atlantic Financial Group. References to KKR’s investments may include the activities of its sponsored funds and insurance subsidiaries. For additional information about KKR & Co. Inc. (NYSE: KKR), please visit KKR’s website at www.kkr.com and on Twitter @KKR_Co.
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Julia Kosygina and Miles Radcliffe-Trenner