Velocity Financial, Inc. has announced the issuance of $75 million in senior secured notes, a move that the company expects will support its continued growth and financial performance. The notes, issued by Velocity Commercial Capital, LLC, a wholly-owned subsidiary of Velocity Financial, will bear interest at 9.875% per annum and are set to mature on February 15, 2029. Interest on the notes will be payable semi-annually, starting on May 15, 2024. The net proceeds from the issuance are intended to be used for originating new investments and for general corporate and working capital purposes.
Mark R. Szczepaniak, the Chief Financial Officer of Velocity Financial, expressed confidence in the transaction, stating, "This transaction marks another successful corporate debt offering, made possible by the company's continued strong financial performance and growth in our investment portfolio. We expect this capital to be accretive to earnings as we work to attain our '5x25' goal ($5 billion portfolio by 2025)."
The notes, which have not been registered under the United States Securities Act of 1933, are secured on a pari passu basis with Velocity's $215,000,000 outstanding principal amount of 7.125% senior secured notes due 2027. Piper Sandler & Co. acted as the placement agent for the offering.
Commenting on the flexibility of the notes' structure, Szczepaniak added, "The notes are structured with flexibility to continue issuing additional series of similar notes, allowing us to continue building a laddered corporate debt maturity schedule."
In the market, the company's shares have experienced a slight movement, down by -0.4%, and are currently trading at a price of $15.83.
The full 8-K submission from Velocity Financial, Inc. is available here.
