Velocity Financial, Inc. (NYSE: VEL) has acquired a majority stake in Century Health & Housing Capital.
Based in California, Velocity Financial, Inc. is a leading provider of small-balance investor loans. It provides innovative financing solutions for 1–4 unit residential rental and small commercial properties.
Notably, shares of Velocity Financial have gained 117% over the past year.
Benefits of the Acquisition
Century provides government-insured Federal Housing Administration (FHA) mortgage financing for the multifamily housing industry, senior living and long-term care facilities, and hospitals. Founded in 1992, Century manages a servicing portfolio of more than $500 million of unpaid principal balance (UPB) loans. For the 11 months ended November 30, 2021, it issued $158 million in UPB loans.
The acquisition of Century will accelerate the growth of Velocity’s commercial mortgage product offerings, with the addition of a new channel as well as new products to Velocity’s broker network.
Furthermore, the asset-light, fee-based business will lead to diversification of revenues and higher return on equity (ROE). The deal is expected to be immediately accretive to earnings and ROE with minimal impact on tangible book value.
CEO of Velocity Financial, Chris Farrar, commented, “We believe the long-term demographic trends will be a strong tailwind for the healthcare lending area in particular.”
He further added, “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.”
Consensus among analysts is a Strong Buy based on 3 unanimous Buys. The average Velocity Financial stock forecast of $15.67 implies 16.5% upside potential to current levels.
Bloggers Weigh In
TipRanks data shows that financial blogger opinions are 100% Bullish on VEL stock, compared to a sector average of 70%.
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