Indianapolis developer raises $245 million: Four new local projects planned within six months

Indiana Gov. Eric Holcomb, Indianpolis Mayor Joe Hogsett and Milhaus representatives at a press conferencing announcing the funding

Indianapolis-based Milhaus Development LLC says it has raised $245 million from FrontRange Capital Partners, StepStone Group Real Estate LP (SRE) and a group of internal investors.

The money will allow Milhaus to accelerate development of new apartment projects across the U.S. while also maintaining ownership of existing buildings, such as Artistry in Downtown Indianapolis, IndyStar reports.

Milhaus CEO Tadd Miller told the newspaper he expects the company to announce up to four new Indianapolis projects within six months.

Milhaus in recent months faced a somewhat uncertain future. The firm in February put the majority of its portfolio up for sale in an effort to raise money to buy out early, short-term investors. However FrontRange and SRE made long-term investments in the firm, which Miller said will enable Milhaus to keep its management team in place and continue developing new properties, the publication reported.

“Developers basically get a project under contract, put it all together and then they have to go scramble to raise money to actually build it and then hopefully they can raise the money and, if they don’t, they bail on the project,” Miller said. “We don’t have to worry about that anymore. If we get awarded a project, we’ve got cash in the bank.”

Milhaus now has enough capital to operate for two years without raising more money, Miller said. Milhaus, which began six years ago with four partners, has grown to 210 employees across several states.

Collectively these investments will allow Milhaus to retain ownership and control of assets for the long-term, including landmark assets including Lift in Oklahoma City and Highland Row in Memphis, as well as provide capital to fund future development growth in its real estate portfolio, team and geographic reach, a news release reports. Following closing, Milhaus’ portfolio value will reach $689 million with 2,793 units across the nation. Milhaus expects to commence construction on an additional 1548 units by the end of 2018, which will bring its portfolio value to over $1 billion.

“We firmly believe this new capital will empower Milhaus in a number of way,” Miller said in a statement. “From the financial viewpoint, it will help to solidify our goal since inception: to build and own a portfolio of hard-to-assemble, hard-to-replace assets in the top secondary markets throughout the Midwest and Southeast.”

“These investments will reap additional benefits, such as providing job stability, cultivating stronger company culture and improving overall employee satisfaction. We look forward to growing Milhaus into a stronger, better and even more sustainable organization.”

Milhaus currently has projects in Indianapolis, Milwaukee, Cincinnati, Pittsburgh, Oklahoma City, Louisville, Ky., Memphis, Tenn., Kansas City, Mo., St. Petersburg, Fla. and Tampa, Fla., and manages properties in many more.

“Over the last seven years, Tadd and the Milhaus team have delivered impressive growth and investor returns, and we are excited to partner with them on the next phase of the company’s growth,” said FrontRange CEO David Robertson. “We aim to provide the Milhaus team with the financial and human capital support they need to fuel expansion in major markets throughout the Midwest and Southeast.”

Milhaus has developed and built more than 3,805 units and manages more than 7,445 units of multifamily apartments. Milhaus’ owned portfolio is exclusively Class-A, market rate product in the best submarkets of select secondary cities.

“This investment provides us with geographically diversified exposure to high-quality urban in-fill assets within growing U.S. secondary markets with a best-in-class operating partner and developer,” said John Waters, a managing director at SRE. “We believe Milhaus’ integrated platform, management team and track record are top-notch. We are excited to join forces to develop unique, high-quality apartment properties in the Midwest and Southeast.”


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