Harbor Custom Development Chapter 11 — Pacific Ridge Apartments Credit Bid (Sound Capital NW)
As part of Harbor Custom Development's Chapter 11 reorganization, lender Sound Capital NW Holdings LLC took title to Pacific Ridge Apartments, an 80-unit Tacoma complex completed in 2022, via a $5 million credit bid against a construction loan with an outstanding balance of roughly $20.3 million — well above the property's $17.5 million-plus assessed value.
Why it matters
A concrete data point on construction-loan recovery economics in a distressed multifamily workout: even a completed, occupied 80-unit asset returned only about 25 cents on the dollar of the outstanding loan balance via credit bid, with the shortfall left to the Chapter 11 estate's other creditors. Construction lenders and mezzanine participants underwriting Pacific Northwest multifamily should treat assessed value as a soft floor, not a reliable recovery estimate, once a borrower is in reorganization.
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