KKR announced its purchase of Merchants Mortgage Trust & Corporation (MMTC), a real estate lending platform that offers short-term mortgage products for experienced individual residential real estate investors.
MMTC has expanded its lending activity as of late and last year originated more than $500 million in loans to roughly 500 different borrowers. KKR’s investment is through its private credit funds and accounts that are part of the firm’s asset-based finance investment strategy.
“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’s credit business dates back to 2004. KKR’s private credit strategies are vast, encompassing both alternative credit and leveraged credit. Within alternative credit, the strategies include direct lending, private opportunistic credit and special situations. Then within leveraged credit there are a variety of funds including bank loans, revolving credit, and opportunistic credit.
Through this deal, KKR gains exposure to a pool of directly originated, primarily short-term residential real estate loans made to a group of high-quality borrowers. Financial terms of the transaction were not disclosed.
As a part of this transaction, MMTC will also acquire the outstanding interests in its affiliate, Orchard Funding.
“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 MMTC’s Land.
For its part, KKR has more than $30 billion in asset-based finance and 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.