Tax lien assets will provide collateral for $101.4 million in securitization bonds coming to market from the Hageman Capital 2025 Issuer Trust, in Hageman Investments' first rule 144A securitization.
The transaction will sell just one tranche, class A notes with a AAA rating from Morningstar DBRS and a yet-to-be finalize coupon, according to the rating agency. Sponsors of tax lien asset bonds (TLABs) purchase the assets directly from the municipality, according to DBRS.
The deal's current collateral pool consists of 16 TLABs totaling about $106.7 million. Since 2013, Hageman Capital has invested in multifamily apartments. DBRS notes that Hageman has purchased TLABs connected to new development projects. In these cases, the company can apply its real estate development and construction expertise to make project selection decisions and push for better bond structure and terms to reduce risk.
They are not municipal bonds, but they follow municipal bond repayment practices. The trust will repay investors semiannually, on the fourth business day after each fifth day of February and August.
They pay fixed-rate, semiannual coupons and fully amortize over a 20- to 25-year period, DBRS said.
Overcollateralization representing 5.00% of the notes provide some credit enhancement. If available funds will come up short in making full interest payments on the class A notes, especially if it is because the assets haven't generated enough interest revenue, the collateral administrator must make interest advances.
Hageman Capital provides financing on agriculture properties and real estate in the form of tax increment finance bonds to developers and communities; they have been in business since the 1940s.
