Three Roots Provides $25.5M for Real Estate Development Projects at the University of Tennessee Research Park

Close up of UT Research Park development

Collaboration between developers, banks, research institutions and innovative financing companies like Three Roots Capital on forward-thinking projects is critical for creating more economic development opportunities and access to capital in the greater East Tennessee region.

Over the past few years, Three Roots Capital has worked with the University of Tennessee Research Park (UTRP) on numerous real estate projects and efforts to support the region’s entrepreneurs. Three Roots has provided more than $25.5 million in financing for real estate development projects at UTRP, including the construction of the Innovation South building and the renovation of the Innovation North building.

“Three Roots has collaborated with UTRP since our founding in 2016. In 2020, we formalized the relationship by partnering to apply for a $645,600 grant from the U.S. Economic Development Administration to fund our joint effort to encourage and support development at the site,” said Grady Vanderhoofven, president, founder and CEO. “Through our work at UTRP, we want to attract additional private developers and capital to the location to continue making Knoxville a great place to start and grow a business.”

Successful projects at UTRP require participation by experienced real estate developers like Partners Development and community-focused banks like SouthEast Bank and CBBC Bank, as well as the full backing of UT Knoxville.

“The science and collaboration happening at Cherokee Farm is shaping the future of Tennessee’s economy,” said UTK Chancellor Donde Plowman. “We are at a time of incredible momentum and productivity at the UT Research Park, and none of it would be possible without partners like Three Roots, who share our mission to make life and lives better for all Tennesseans.”

Due to the complex nature of real estate projects at UTRP, Randy Jenkins, Chief Financial Officer and Financial Strategist at Partners Development, invited Three Roots to collaborate in creatively structuring the projects’ unique financing.

“Developing projects at UTRP benefits the university, collaborations between public and private institutions and the entire community,” said Jenkins. “We love having a partner like Three Roots to dive into complicated projects for creative financing strategies. They are always willing to jump into a conversation to build project financing solutions which support the vibrancy of our community.”

Aerial view of development at the University of Tennessee Research Park.

Innovation South, a project developed and owned by Partners Development, will enable UT and industry partners to educate a next-generation workforce, conduct cutting-edge use-inspired research, and scale up technology development for many critical sectors including automotive, biotechnology, forestry and manufacturing.

On the Innovation South project, Three Roots collaborated with multiple banks, including SouthEast Bank. As a local bank, SouthEast is committed to working with Three Roots and other regional partners to positively impact the community. Three Roots has worked closely with Jimmy Dalton, Chief Credit Officer at SouthEast Bank, on multiple projects over the course of the last seven years.

“We’re proud to work on a project that helps the university and UTRP offer tremendous opportunities for researchers, professors, students and private partners to do work that drives impact in their industries,” said Dalton. “Between rising interest rates and other challenges, without Three Roots, this project wouldn’t have been economically feasible. Grady is somewhat of an innovator in this space. We’re proud to work with Three Roots on this project.”

Three Roots recently teamed with CBBC Bank to finance the buildout of space in the Innovation North building to house the new Nursing Scholars Program at UT, established through a partnership between University Health Systems and the UT College of Nursing. The space will accommodate specialized training for hundreds of nursing students beginning in the Fall of 2023. Because of the critical need for registered nurses in the community, the project had an ambitious and aggressive schedule, so it was essential to have the support of financial partners that could be creative and move quickly.

“We’ve teamed with Three Roots Capital to finance multiple projects at UTRP,” said CBBC Executive Vice President and Chief Lending Officer John Harris. “We share their commitment to supporting projects that benefit our community, and we value our relationship with them.”

In addition to real estate projects, Three Roots has financed four innovation-based companies affiliated with the university and UTRP, including a $150,000 participation in a $1 million seed funding round for Shift Thermal (formally Active Energy Systems) and a $300,000 loan to Eonix in the fourth quarter of 2022.

For Tom Rogers, president and CEO of the Research Park and a valued Three Roots partner, Three Roots has been critical in helping further the mission of UTRP, which is to serve as a gateway for collaboration between the University and public and private partners.

“Three Roots has provided value in two primary ways: Helping finance building projects and providing important seed capital for some of our most promising Spark Innovation Center clients,” said Rogers. “We’ve established some significant momentum, and Three Roots has been a great strategic partner in making this happen.”

Three Roots raised $33.7 million from six bank partners in 2022

In 2022, Three Roots Capital raised $33.7 million from six bank partners, making it one of the organization’s most successful fundraising years to date. With these funds, Three Roots is better positioned to support companies and projects in low-and-moderate income and rural communities throughout the greater East Tennessee region.

“Sometimes you get so busy working that you forget to look up and reflect on the progress you have made. 2022 was a really big year for us,” said Grady Vanderhoofven, president, founder and CEO. “This additional $33.7 million is especially significant in light of broad economic uncertainty and the rising interest rates we all experienced last year.”

Three Roots forged new relationships with Regions, Truist Bank, Coffee County Bank, and First Bank & Trust and raised additional funds from existing bank partners, Pinnacle Bank and CBBC Bank. One of the first new community partnerships formalized in 2022 was with Regions.

“Regions is proud to work with Three Roots Capital in strategically deploying resources to communities that need them the most,” said Rob Stivers, market executive, Regions. “This directly complements our long-term focus on creating more inclusive prosperity in East Tennessee. Grady and the rest of the staff have done a fantastic job educating banks and the broader financial community about the importance of having a viable CDFI in today’s market.”

For Truist, partnering with CDFIs helps their community development managers and regional leadership meet the unique needs of the communities in which they operate. More than just connecting capital with people and projects, Three Roots also offers essential business coaching and wraparound services that help businesses grow and thrive.

“Truist’s partnership with Three Roots Capital is an example of our purpose to inspire and build better lives and communities,” said Lauren Butler, Community Development Financing Initiative Relationship Manager at Truist.  “Our investment with Three Roots provides much needed resources to support the needs of businesses and projects in the greater East Tennessee region. It’s a great partnership focused on growth in the community.”

Looking ahead, Three Roots will focus the additional funds on projects and companies in low-and-moderate income areas. With the funds from Truist, Three Roots seeks to emphasize the deployment of capital to minority-owned and controlled businesses and affordable/workforce housing projects.  With the funds from CBBC, Three Roots will support specific projects and opportunities at the University of Tennessee Research Park.