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Estridge again seeking investors to avoid closing

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The Estridge Group, one of the area's most recognizable names in homebuilding for more than 40 years, is seeking investors or a line of credit to stay afloat, the Carmel-based company said Tuesday.

Estridge’s latest pursuit of outside investments marks the second time in less than a year the company has sought a cash infusion to keep operating.

Last June, owner Paul Estridge Jr. told IBJ that about 25 investors had agreed to chip in from $25,000 to $500,000 in exchange for ownership stakes. Collectively, the subcontractors own 35 percent of the company.

At the time, Estridge maintained the company was in no danger of becoming the latest casualty of the housing meltdown, but acknowledged the difficulties of securing traditional bank financing at a time many have restricted lending. The homebuilding industry is mired in its worst slump in a quarter-century.

“How are you going to raise capital?” he asked then. “We’re not a public company; the banks are shut down. What do you do? You go to the people you’ve done business with.”

Estridge said in the Tuesday statement released to the media that “it’s the banks that are killing us by killing the lines of credit.”

The company said it has buyers for 25 homes but can not build them without a line of credit to pay for building materials.  

In September, Bank of Indiana sued Estridge for allegedly failing to repay a $1 million investment the Indianapolis-based bank provided to the builder.

The pending lawsuit in Marion Superior Court charges that Estridge, along with Indianapolis-based Indiana Securities LLC, committed securities fraud in connection with an offering the bank says was due to be paid off June 30.

Estridge sold 161 homes in 2009, according to IBJ statistics, at an average price of $350,000, ranking it as the sixth-largest home builder in the Indianapolis area. The company ranked No. 1 in the area as a custom home builder in 2009 with $21.9 million in revenue on 25 home sales.

The company is building in 16 developments in the Indianapolis area, according to its website. Among them is the high-profile Symphony development in Westfield. In October, Estridge announced it was scaling back the planned 1,400-acre project by about two-thirds. Estridge attributed the decision to the anemic residential housing market.

The home builder’s decision to scale back Symphony followed its announcement the previous month that it would withdraw a proposal to build a massive youth sports complex within the master-planned project.

Estridge had asked Westfield to invest $70 million in the project to fund roads and sewers, as well as the stadium, which has a preliminary price tag of $15 million. Establishing a tax-increment financing district could help the city pay for the infrastructure improvements and stadium project.

The homebuilding slump has claimed several prominent builders in recent years. Local builders C.P. Morgan Communities LP and Davis Homes went out of business in 2009, and Indianapolis-based Hansen & Horn Group Inc. followed in 2010. National player KB Home left the local market in 2007.
 

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  • Things always happen for a reason
    Signed a contract with Estridge back in September of 2009 to build a home with completion scheduled for early January 2010. April 1st house was about half done with Estridge not able to give us a completion date. Lucky me in that I was able to back out of the deal and move on... pray for others to be so lucky. If you ask me, they should have stuck to what they know best and not follow their greed. This has been a long time comming.

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  1. How much you wanna bet, that 70% of the jobs created there (after construction) are minimum wage? And Harvey is correct, the vast majority of residents in this project will drive to their jobs, and to think otherwise, is like Harvey says, a pipe dream. Someone working at a restaurant or retail store will not be able to afford living there. What ever happened to people who wanted to build buildings, paying for it themselves? Not a fan of these tax deals.

  2. Uh, no GeorgeP. The project is supposed to bring on 1,000 jobs and those people along with the people that will be living in the new residential will be driving to their jobs. The walkable stuff is a pipe dream. Besides, walkable is defined as having all daily necessities within 1/2 mile. That's not the case here. Never will be.

  3. Brad is on to something there. The merger of the Formula E and IndyCar Series would give IndyCar access to International markets and Formula E access the Indianapolis 500, not to mention some other events in the USA. Maybe after 2016 but before the new Dallara is rolled out for 2018. This give IndyCar two more seasons to run the DW12 and Formula E to get charged up, pun intended. Then shock the racing world, pun intended, but making the 101st Indianapolis 500 a stellar, groundbreaking event: The first all-electric Indy 500, and use that platform to promote the future of the sport.

  4. No, HarveyF, the exact opposite. Greater density and closeness to retail and everyday necessities reduces traffic. When one has to drive miles for necessities, all those cars are on the roads for many miles. When reasonable density is built, low rise in this case, in the middle of a thriving retail area, one has to drive far less, actually reducing the number of cars on the road.

  5. The Indy Star announced today the appointment of a new Beverage Reporter! So instead of insightful reports on Indy pro sports and Indiana college teams, you now get to read stories about the 432nd new brewery open or some obscure Hoosier winery winning a county fair blue ribbon. Yep, that's the coverage we Star readers crave. Not.

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