During the heart of COVID-19, Tegethoff Development, an Indianapolis-based real estate and luxury lifestyle developer, and Hageman Group were partnered on three properties that were in operation. Despite the global pandemic, the two partners successfully navigated through the challenging times to forge successful outcomes. All three multi-family living complexes – one in Cincinnati and two in St. Louis – have since been completed and sold.
Prior to these three projects being sold, Tegethoff partnered with Hageman Capital, a subsidiary of Hageman Group, for the first time to use tax increment financing (TIF) bonds for a project called The Signature Carmel. The Signature Carmel is a 295-unit, urban-designed, market-rate apartment community in Carmel, Indiana, an affluent suburb of Indianapolis.
“That’s the first time we’ve ever looked at a different strategy with our incentives, and we worked with Hageman to be able to pull it together,” said Matt Cremer, chief operating officer at Tegethoff Development. “We decided to switch to a leveraged buyout of our future TIF cash flows after learning about the investment vehicle Hageman Capital had created. This reduced our over capital raise on the front end of the deal and simplified the future cash flows that will be looked at for valuation purposes ongoing as we own this asset.”
Keep reading to learn more about the relationship between Tegethoff Development and Hageman Capital and how TIF bonds have proven to be one of the most impactful tools for economic development across the country.
How Do TIF Bonds Work?
Historically, developers such as Tegethoff Development have elected to finance their TIF through their construction lender instead of selling them. The primary market for these bonds has also lacked the liquidity that traditional bond markets have had in the past. This means that developers had difficulty selling developer-backed bonds on single-site projects, and many have elected to keep their bonds until after project stabilization.
Hageman Capital provides upfront capital to real estate development projects through the purchase of single-site, developer-backed TIF bonds. By purchasing TIF Bonds, Hageman Capital provides real value for real estate developers and communities. Hageman partners with developers to purchase TIF bonds and maximize cash proceeds available for investment into the projects.
How Did Tegethoff Benefit from Partnering with Hageman Capital
Cremer said it was refreshing to work with Hageman Capital because they care about the projects and the communities they work in, adding: “The Hageman Capital team is there to provide capital, but just as important, they assist in strategic decision-making that creates wins on the investment side and helps further our mission to build communities that are more desirable for people to live in.”
“One thing I enjoyed the most about working with Hageman is they wear different hats,” Cremer added. “We were able to have a conversation with them about a specific challenge or an opportunity. They have been there on other investments, so their team has experience in various things we’re working on, so I feel it’s a value for them as a partner, however you’re partnering with them.”
Why Work With Hageman Capital?
Cremer hopes to partner with Hageman Capital again on future projects and recommends their services to other developers or municipalities that may be struggling to finance development projects that can help to spark economic growth in cities across Indiana.
“They’re good people who are driven by the right reasons in a partnership,” Cremer said. “Being able to trust that is something I would 100% vouch for in my feelings for them, and I think that is something hard to find. We had a successful round trip from start to finish with Hageman.”
“The partnership and the communication back and forth between both organizations were phenomenal, and they were able to help us rise through challenges that led to success,” he added.
If you would like to learn more about Hageman Capital’s TIF purchase process, please contact us today to set up an appointment.
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