KKR buys real estate lender Merchants Mortgage

KKR buys real estate lender Merchants Mortgage

KKR has acquired real estate lending platform Merchants Mortgage Trust & Corporation (MMTC). Financial terms of the transaction were not disclosed.

KKR said it is investing in Merchants Mortgage 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.

MMTC’s Chief Executive Officer, Justin Land, and the existing management team will continue to lead the company.

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 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.”