The acquisition of Veros Credit LLC’s Santa Ana headquarters is the latest piece of notable business this year for the family-owned auto finance company, which is taking steps to ramp up lending operations.
The firm, formed in 1998, operated as Credit One Corp. until 2010. It’s long been the primary tenant at 2333 N. Broadway, a five-story office building alongside the Santa Ana (5) Freeway.
The 58,500-square-foot building is one of the most prominent offices in Santa Ana visible to travelers on the freeway as they pass the 5 and Broadway interchange. It’s on the opposite site of the freeway as the Discovery Science Center.
An affiliate of Veros listed in property records as Broadway Investment Group LLC bought it in mid-November for a little more than $8.6 million, or about $148 per square foot, according to CoStar Group Inc. records.
The 46-year-old building, also known as Colton Financial Plaza, was sold by an affiliate of Irvine-based real estate investor Colton Cos., which has been shedding area properties during the past few years.
The new owners took out a $7.2 million loan with Opus Bank to finance the purchase.
Veros, which also has business lines related to real estate property valuation and risk-assessment technology products, is no stranger to loan deals.
The company, which primarily originates auto loan contracts to subprime borrowers, had a loan portfolio with an aggregate outstanding balance of $268.1 million as of July, according to a recent report by Kroll Bond Rating Agency. It’s originated nearly $50 million in loans per quarter this year, up from $30 million to $40 million in the prior few years.
The company worked with more than 1,100 dealers in 21 states as of this past summer, according to the Kroll report. Most of the dealers are independently run.
The average FICO score of a Veros customer is 553, which credit data firm Experian PLC describes as “very poor,” and which typically requires borrowers to pay a fee or deposit on top of the loan they apply for.
A typical loan ranges from $7,500 to $25,000, and annual interest rates between 18% and 25%, according to Kroll’s report.
In October, Veros completed its first-ever auto asset-backed securitization, or ABS, in a $165.2 million offering. The ABS consisted of subprime automobile loan contracts secured 99% by used vehicles. About 71% of the loans were for vehicles in California, according to Kroll’s report. Loans in the ABS pool average about $10,000.
Veros plans to issue additional securitizations approximately once a year, according to the report, which says the company is profitable and had shareholders’ equity of $24 million as of this past summer.
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The company’s one of several auto financiers with prominent Orange County operations.
Hyundai Capital America, which services buyers of Hyundai, Genesis and Kia vehicles, employs several hundred people in its Irvine and Newport Beach offices.
Consumer Portfolio Services Inc. is reported to be the area’s largest subprime auto lender, having issued several more than 25 securitizations since 2010, according to Standard & Poor’s. It was based in Irvine until 2015, when it moved its headquarters to Las Vegas, though it maintains its operational base in Irvine.
Veros is privately owned by the Bozorgi family, and Broadway Investment Group’s chief executive is Cyrus Bozorgi, Veros’ co-founder, president and chief executive, state filings show.
The family’s investment in the company includes total equity of $24.2 million and total capital, including long-term debt held by the owners, of $55.4 million, according to Kroll.
It hasn’t been all growth for the company this year, when it consolidated operations to focus more on California deals.
It announced in March that it would close its Nevada and Arizona dealer center locations.
“Our focus is on reducing costs, utilizing technology to increase efficiencies, maximizing productivity, and leveraging the advantages of a more centralized and growth oriented business model,” Bozorgi said in a statement at the time of the closings.
