Kelly Doran, one of the Twin Cities' biggest multifamily housing developer-owners of the last decade, has sold majority interest in Doran Cos. to two younger executives.
Founder of Doran Cos. sells majority ownership to younger executives
COO Anne Behrendt has acquired a 51% stake and has succeeded Kelly Dornan as CEO. CFO Ryan Johnson has acquired a 24.5% stake.
May 12, 2019 at 6:57PM
Chief Operating Officer Anne Behrendt, 40, who began with Doran in 2011 as general counsel, has acquired a 51% stake from Doran and has succeeded him as CEO.
Chief Financial Officer Ryan Johnson, 37, has acquired a 24.5% stake. Doran retains a 24.5% stake.
Doran, 61, who has overseen $1 billion-plus in projects since 2009, started thinking about succession planning after a 2017 bout with early-stage lung cancer.
That "morphed into a desire to ensure Doran Cos. can grow beyond me and into the next generation," Doran said. "Anne and Ryan have been my partners during our record growth and we simply wouldn't be where we are without their leadership and involvement."
In an interview last week, Doran said elevating Behrendt to CEO means he no longer has responsibility for overseeing 200 employees at Doran Cos. who work in development, architecture, construction and property-management businesses. Doran contracts for construction labor.
Doran will focus on developing projects in which he also will be an investor. Doran and his wife, who live in Doran's Mill and Main apartment complex on the east bank of the Mississippi River near Downtown, also plan to travel more and step up their philanthropy.
"I'm not going to worry anymore about bidding health insurance or completing a 'punch list' with 99 million items on it," he said.
Behrendt said the arrangement allows younger members of the senior-management team to own and lead. She said the company also likely will expand to regional markets beyond the Twin Cities and Denver.
"We do about $500 million in annual transaction volume across all our businesses in Minnesota and Colorado," Behrendt said. "We have built about 6,000 residential units, completed or under construction. We have 2,000 units in stages of planning. We have a solid leadership team.
"We've gone from 20 to 200 employees since 2011. We're tenacious in our work and proud of what we do … and our success."
Doran Cos. itself is valued at something less than $50 million. The larger wealth, in aggregate, for Kelly Doran, other key executives and some outside partner-investors, is the equity positions they take in Doran projects that have bloomed during the 10-year economic expansion.
For example, two years ago, one of the largest apartment managers in the nation, TH Real Estate, paid $93 million for a pair of high-end apartment buildings near the University of Minnesota that were built and owned by Doran.
The amount invested by Kelly Doran and other investors in the project is unknown. With a combined 310-plus units, the Bridges and the Knoll, built in 2013-2014, were among the newer and largest buildings near campus. They were fully occupied at premium rents.
Doran Cos. was a prolific developer near the U. It drove a higher-end, pricier standard for private student housing.
Ironically, Doran, a Minneapolis schools graduate, was raised modestly by his divorced working mother. He lived at home while studying business at the U.
He still subsidizes housing for an unspecified number of low-income Minneapolis schools graduates studying at the U.
Doran learned development as junior partner to the late Robert Muir on commercial projects in the Twin Cities and elsewhere in the 1980s and '90s.
Doran left Muir amicably in 2007 to get into multifamily housing, after seeking the DFL nomination for governor in 2006.
Doran is a hands-on boss, often in jeans, who compulsively picks up trash or grabs a broom to tidy a job site. He irritated strict preservationists with a multistory project in Dinkytown several years ago that passed the City Council.
Last year, he opposed the city's new 10% affordable-housing requirement attached to new multifamily developments. Doran, who typically includes some lower-priced units in his developments, other developers and the Downtown Council argued that it would be better for them to work with nonprofit developers and the city to set aside related funds than to force an affordable component into each project.
Doran Cos. also has developed in the suburbs in recent years.
Doran developed the Moline in downtown Hopkins, a $50 million-plus, 241-unit luxury apartment project. It replaced 1960s warehouses near the former Minneapolis Moline tractor plant. A $48 million Southdale project at 66th Street and York Avenue in Edina is a joint venture between Bloomington-based Doran and KM2 Development.
Doran Cos. came back to the St. Anthony Falls district in 2018 to launch its biggest project. Doran and CSM Corp., which redeveloped the Milwaukee Railroad Depot and a Marriott hotel into an event center, are building the Expo, $100 million-plus luxury apartments on the east side of the Mississippi. It's a couple of blocks from Doran's two-building Mill and Main project.
In 2017, Doran and CSM paid $15.8 million for the 2.6-acre, General Mills facility between Second and Third avenues along University Avenue that was once a research facility and parking lot. Doran and CSM founder Gary Holmes have confidence in the so-far continuing demand for river-area luxury rentals among affluent empty-nesters and professionals.
Neal St. Anthony has been a Star Tribune business columnist and reporter since 1984. He can be contacted at nstanthony@startribune.com.
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