Local builder’s bankruptcy plan includes shedding apartment buildings across South Sound
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A local homebuilder that switched course in the past few years to focus on multifamily development is set to sell off four area properties along with assets in three other states as part of its bankruptcy process.
Harbor Custom Development, which relocated its headquarters from Gig Harbor to Tacoma in 2022, announced late Friday, Feb. 16, that it plans to “continue to wind down its operations and voluntarily liquidate all of its assets through an approved Chapter 11 Plan.”
The company filed for Chapter 11 bankruptcy protection in December in U.S. Bankruptcy Court’s Western District in Tacoma.
In its release, the company stated, “The company explored the possibilities of restructuring its business to continue as a going concern, but unfortunately, has found no viable plan to do so.”
It added, “Subject to approval of the Bankruptcy Court, the company now intends to complete an orderly wind-down of its business, including sales of its remaining assets in Washington, California, Florida and Texas, to maximize any potential recovery for the company’s creditors.”
HCDI retained Keen-Summit Capital Partners LLC in New York to manage the sale of its apartment real estate portfolio, which includes Pacific Ridge Apartments in Tacoma.
The other sites include Belfair View Apartments in Belfair, Bridgeview Trail Apartments in Port Orchard and Meadowscape Apartments in Olympia.
According to the development company, “An auction has yet to be scheduled. Stalking horse offers are being considered.”
HCDI plans to submit its liquidation plan to the court for approval later this month, and any sale is subject to court approval.
In a website created to promote the apartment properties for sale, it offered details about the four developments:
▪ Belfair View is planned for 228 units, with only the first phase completed, consisting of 126 units and 82 occupied. Phase 2 calls for 102 units and is listed as “ready to go vertical.”
▪ Bridgeview Trail Apartments in Port Orchard has “horizontal construction complete,” according to the listing, and is planned for 138 units.
▪ Meadowscape Apartments in Olympia was completed at the end of 2023 with 177 units and is “20.9 percent occupied,” the website states.
▪ Pacific Ridge, 8445 Pacific Ave. in Tacoma, was completed in November 2022. Originally planned for condominiums, HCDI switched its plans to apartments and the 80-unit site is now between 74 to 78 percent occupied.
In a final blow, the company said in its release that it “believes it is unlikely that the liquidation process will result in any material return to its equity shareholders.”
HCDI also plans to sell off its holdings in Blaine near Semiahmoo, Washington, set to be “put on the market shortly,” it added. Its Horizon development there was planned for both single-family homes and condos.
After rapidly growing its operations and moving to Tacoma from its original 2014 founding in Gig Harbor, the company struggled to sell off developed apartment sites.
In 2022, the Tacoma, Belfair and Port Orchard apartments made up half of a six-property bundle it marketed to sell.
By summer of 2023, the company abandoned plans for an approximately 200-unit luxury apartment development in Tacoma at what appeared to be next to Sky Terrace Condo.
The company’s stock tumbled precipitously last year. Its shares were down more than 90 percent year to date by the time it entered bankruptcy protection in December 2023.
In a court filing dated Feb. 20, the company stated that its 157 properties (a mix of home lot sites and multifamily properties) had a “total value in excess of $160 million in four different states ...”.
Commercial banker BankUnited, based in Florida, stated in a Jan. 24 filing in a separate case involving itself and HCDI that “...this Debtor’s projections currently reflect that it will run out of cash at some point in March 2024 ... .”
HCDI’s bankruptcy filing listed the company’s total assets of nearly $224 million and total debts of more than $172.5 million as of Sept. 30, 2023.
In Pierce County, the company is delinquent on its 2023 property tax for Pacific Ridge, with nearly $51,000 past due on a total of more than $245,000 owed on the property, according to county records on file.
If approved, Tacoma’s Pacific Ridge would be the latest high-profile development in the city to head to the auction block in recent months.
The unfinished Tacoma Trax near the Tacoma Dome Station was bought back by its project lender in November at just under $40 million. Various parcels at Point Ruston are also in receivership.
This story was originally published February 21, 2024 at 5:30 AM.
