Velocity Financial, Inc., a leading provider of small balance investor loans, announced it has acquired a majority stake in Century Health & Housing Capital.
“Velocity’s national footprint and operational capabilities will significantly expand our ability to grow customer relationships and origination volume.”
Founded in 1992, Century is a licensed “Ginnie Mae” issuer/servicer that provides government-insured Federal Housing Administration (FHA) mortgage financing for multifamily housing, senior housing and long-term care/assisted living facilities. Century originates loans through its borrower-direct origination channel and services the loans through its in-house servicing platform, which enables the formation of long-term relationships with its clients and drives strong portfolio retention. Century issued $158 million in unpaid principal balance (UPB) of loans for the 11 months ended November 30, 2021, and manages a servicing portfolio in excess of $500 million in UPB.
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Transaction Highlights:
- Expands growth opportunities via new products for Velocity’s broker network
- Capital light, fee-based business diversifies revenue and enhances return on equity
- Immediately accretive to EPS and ROE with minimal book value impact
- Stable and durable MSR income due to long term loan characteristics
- Substantial organic growth opportunity by leveraging Velocity’s national origination footprint
- Century’s government-insured product focus acts as a natural hedge through market cycles
- Longer-term opportunity to further expand the product suite
The Century acquisition expands Velocity’s commercial mortgage product offerings through growth in a new channel and the ability to offer new products to Velocity’s broker network. The addition of Century is expected to be immediately accretive to Velocity’s earnings with minimal impact to tangible book value. The transaction also diversifies Velocity’s revenue with fee-based origination and servicing income which generates strong returns on capital and is durable through market cycles, in addition to providing the opportunity for Century to leverage Velocity’s technology-driven platform to broaden their Northeast-focused origination footprint.
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“The entire Century team is pleased to be joining Velocity’s family and we look forward to realizing the opportunities this transaction offers to both companies,” said Kyle Perry, Century’s Chief Executive Officer. “Velocity’s national footprint and operational capabilities will significantly expand our ability to grow customer relationships and origination volume.”
“We are very excited to partner with a proven leader in Kyle and accelerate the growth of the Century platform in this important lending segment. We believe the long-term demographic trends will be a strong tailwind for the healthcare lending area in particular,” said Chris Farrar, President and Chief Executive Officer. “The ability to offer government-insured products to our brokers will drive incremental origination growth and enables further expansion of our product menu in the future.”
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