A Beverly Hills developer has agreed to pay $10 million to acquire one of the largest homeless housing portfolios in Los Angeles.
Leo Pustilnikov, 38 years old, Will purchase 17 buildings owned by nonprofit Skid Row Housing Trust,Including Financial bankruptcy last year. The properties, which consist of a single-room hotel and small apartment complex, contain 1,200 units and are designed for formerly homeless tenants, many of whom are elderly, disabled or suffering from mental health issues. The deal, which requires judicial approval, is set to be approved next month in Los Angeles County Superior Court.
Under terms of the deal, first reported by The Times this month and formally announced in court documents filed by bankruptcy experts on Friday, Pustylnikov will pay $19 million for the portfolio and then get back $9 million, for further renovations and repairs.
“In my opinion, the purchaser is a responsible and qualified operator,” Kevin Singer, president of Conservatorship Experts, wrote in court documents. “The high-risk group living in the properties for sale require a permanent owner/operator and without such an owner/operator the alternative for these tenants could be catastrophic.”
The sale to Pustilnikov will ultimately dissolve the trust’s 29-building portfolio, in addition to a separate sale to another owner for additional property. The trust’s failure last year triggered what city officials called an “imminent humanitarian crisis.” Tenants living in poor living conditions and sparked widespread concerns about the loss of an important source of last resort housing.
The trust’s 11 properties, mostly newer and in better condition, have been transferred to not-for-profit landlords. But the remaining buildings, despite federal rent subsidies, are still older and loss-making, making it difficult to find new owners because traditional nonprofits shun them.
Initially, this city Plans to take over the rest of the portfolio, stabilized its finances and divested the complex of buildings to a nonprofit to redevelop them into homeless housing. But as city and state budget pressures increased, the idea disappeared.
and then the AIDS Medical Foundation Become a potential buyer. Negotiations with AIDS charities break down Over the objections of state officials The foundation’s track record in slums and gaps in tenant social services programs. Foundation officials backed out of an agreement to purchase six properties in April, saying their health was worse than they thought.
Pustylnikov has long been interested in acquiring trust buildings and currently owns a portfolio of high-value residential and commercial properties in Los Angeles County. He’s trying to use leverage Radical interpretation of state law It forced local governments to approve the construction of 3,500 new apartments, including a massive project on the Redondo Beach oceanfront and a 19-story tower in Beverly Hills.
Pustilnikov’s first attempt to amass a large downtown portfolio a decade ago with two wealthy investors failed and became mired in litigation. The three SRO hotels owned by the trio were nearly empty, and Pustilnikov had trouble overseeing and financing other low-income properties nearby.
Pustilnikov said his experience downtown has been an asset. He said he has learned how to navigate the difficulties of managing homeless housing on Skid Row and step in to rescue portfolios when established nonprofits have not yet taken action.
“This is something Los Angeles needs,” Pustylnikov told The Times this month.
For the trust building, Pustilnikov formed a partnership with Hope for an Affordable LA, a San Fernando Valley-based nonprofit organization called Hope the Mission, which will oversee social services. Mayor Karen Bass and other city leaders insist that mental health, addiction and other support services continue to be available in the building as a condition of any sale.
Receiver Singh said the situation was one of many challenges in deciding the disposition of the trust’s portfolio.
“Sell any [property] The difficulty is enormous: first, the properties are complex and riddled with issues, second, buyers must obtain approval from the city under regulatory agreements, and third, some of the properties for sale appear to have negative net values and cannot even be given away for free (thus packaging all seventeen into one sale),” Singer wrote in Friday’s court filing.
Judge Stephen Goorvitch has scheduled a hearing on August 7 to approve the sale to Pustilnikov.
