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.