Harbor Custom Development Inc said it has listed six Western Washington apartment projects totaling 734 units for a combined value of $278 million with Kidder Mathews, the largest independent brokerage firm on the West Coast.
"Rental rates continue to escalate at unprecedented levels driving up project apartment values as demand for multi-family housing exceeds the limited supply in the Puget Sound Region of Western Washington. We are capitalizing on this market dynamic by listing for sale our current owned inventory of six apartment projects totaling 734 units in various stages of construction," said Sterling Griffin, president and CEO of Harbor Custom Development in a statement.
Kidder Mathews is the largest independent commercial real estate firm on the West Coast, with 900 real estate professionals and staff in 21 offices in Washington, Oregon, California, Nevada, and Arizona. Kidder Mathews offers a complete range of brokerage, appraisal, asset services, consulting, project and construction management, and debt & equity finance services for all property types. The firm performs $10.9 billion in transactions, manages 62 million square feet of space, and conducts over 2,600 appraisals annually.
"We are excited to represent Harbor Custom Development, Inc. in selling their multi-family properties. Apartment projects in Washington State are trading at historically low CAP rates driving significant value to the underlying asset. The Puget Sound Region apartment market and specifically the Seattle, Tacoma MSA continue to outperform the majority of the country," added Austin Kelley, senior vice president at Kidder Mathews.
READ: Harbor Custom Development enters Texas market with 208 single-family lot developments
Harbor's portfolio of listed apartment communities in Western Washington includes the following:
- Mills Crossing (Townhomes), Bremerton - (36 units) - Listed
- Belfair View, Belfair - (228 units) - Listed
- Wyndstone, Yelm - (75 units) - Listed
- Tanglewilde, Lacey - (177 units) - Listed
- Pacific Ridge, Tacoma - (80 units) - Listed
- Bridgeview Trails, Port Orchard - (138 units) Listed
It is anticipated the listed projects will sell upon completion over the next 24 months. There is no assurance that real estate market conditions will remain constant and that the final sales price of each multi-family project will meet management's expectations.
Diluted EPS restatement
In a separate statement, Harbor Custom Development announced that it will restate its previously issued annual financial statements for the year ended December 31, 2021, and quarterly financial statements for the fourth quarter ended December 31, 2021, and third quarter ended September 30, 2021 to reflect revised diluted earnings per share (EPS) results.
The company identified that the Diluted EPS for the periods referenced above were inaccurate due to an error with the weighting calculation of diluted shares outstanding. These restatements result in non-cash, non-operating financial statement corrections and have no impact on the company's current or previously reported income, expenses, assets or liabilities, except for the aforementioned diluted weighted average shares outstanding and Diluted EPS.
The company said it expects that the restatements will result in the following estimated adjustments: an increase in the previously reported Diluted EPS for the year ended December 31, 2021, from $0.24 to $0.41; an increase in the previously reported Diluted EPS for the fourth quarter ended December 31, 2021, from $0.15 to $0.16; and a decrease in the previously reported Diluted EPS for the third quarter September 30, 2021, from $0.20 to $0.17.
While the third quarter 2021 restatement resulted in a decrease of $0.03 Diluted EPS and the fourth quarter 2021 restatement resulted in an increase of $0.01 Diluted EPS, the net difference in the full year 2021 restated Diluted EPS increased $0.17 because the company overestimated the weighted average shares outstanding for the full year.
"In order to strengthen our internal financial controls, we have significantly enhanced our accounting team through the recent hirings of a Chief Financial Officer, Director of Accounting, Senior Manager of SEC Reporting, and Tax Manager. We are also providing additional training to our personnel, and have engaged a nationally recognized third-party accounting specialist with whom we can consult regarding the application of complex accounting transactions, including Diluted EPS," said Sterling Griffin, Harbor Development's chief executive officer.
Harbor Custom Development is a real estate development company involved in all aspects of the land development cycle, including land acquisition, entitlements, construction of project infrastructure, home building, marketing, sales, and management of various residential projects in Western Washington's Puget Sound region; Sacramento, California; Austin, Texas; and Punta Gorda, Florida.
As a land developer and builder of apartments, condominiums, single-family homes, and luxury homes, Harbor Custom Development's business strategy is to acquire and develop land strategically based on an understanding of population growth patterns, entitlement restrictions, infrastructure development, and geo-economic forces.
Harbor focuses on acquiring land with scenic views to develop and sell residential lots, new home communities, and multi-story condominium and apartment properties within a 20- to 60-minute commute of the nation's fastest-growing metro employment corridors. Harbor is leading the real estate industry as the first national land developer and home builder accepting payment in the form of cryptocurrency for its listed properties.
Contact the author at jon.hopkins@proactiveinvestors.com