A Beverly Hills developer has agreed to pay $10 million to acquire one of the largest portfolios of homeless housing in Los Angeles.
Leo Pustilnikov, 38 years old, will buy 17 buildings owned by the nonprofit Skid Row Housing Trustthat it got collapsed financially last year and declared bankruptcyThe properties, comprised of one-room hotels and small apartment complexes, contain 1,200 units intended for formerly homeless tenants, many of whom are elderly, disabled or suffer from mental health issues. The deal requires court approval, which is expected in Los Angeles County Superior Court next month.
Under the terms of the settlement, first reported by The Times this month and formally announced in court papers filed by Receivership Specialists on Friday, Pustilnikov will pay $19 million for the portfolio and then receive $9 million to cover additional renovations and repairs.
“The buyer appears to me to be a responsible and qualified operator,” Kevin Singer, president of Receivership Specialists, wrote in the court filing. “The at-risk population living in the properties for sale needs a permanent owner/operator, and without such an owner/operator the alternatives for these tenants could be catastrophic.”
The sale to Pustilnikov, plus a separate sale to another owner of an additional property, would finalize the dissolution of the trust's 29-building portfolio. The trust's failure last year triggered what city officials called a “looming humanitarian crisis” with Tenants living in miserable conditions and sparked widespread fears of losing a critical source of last-resort housing.
Eleven of the trust’s properties, mostly the newest and best-maintained ones, have already been transferred to nonprofit owners. But the remaining buildings, which are older and losing money despite federal rent subsidies, have struggled to find new owners as traditional nonprofits have turned them away.
Initially, the city It was planned to take over the rest of the portfolio.stabilize it financially and transfer groups of buildings to nonprofits that would rehabilitate them into housing for homeless people. But that idea fell through as city and state budget pressures mounted.
Then the AIDS Health Care Foundation emerged. emerged as a potential buyer. Negotiations with AIDS charity failed Amid opposition from state officials, The Foundation's Journey on Skid Row and gaps in plans for social services for tenants. In April, foundation officials backed out of a deal to buy a half-dozen properties, saying their physical condition was worse than they had believed.
Pustilnikov, who has long been interested in acquiring the trust's buildings, currently owns a collection of high-value residential and commercial properties throughout Los Angeles County. He is seeking to leverage an aggressive interpretation of state law to force local governments to approve 3,500 new apartments, including a massive project on the coast of Redondo Beach and a 19-story tower in Beverly Hills.
Pustilnikov’s first attempt with two wealthy investors to amass a large downtown portfolio a decade ago failed and ended in litigation. Three SRO hotels owned by the trio sat mostly empty, and Pustilnikov struggled with oversight and financing of other low-income properties in the neighborhood.
Pustilnikov has said his downtown experience is an asset. He said he learned to navigate the difficulties of managing homeless housing on Skid Row and stepped in to rescue the portfolio when established nonprofits wouldn't.
“It's something Los Angeles needs,” Pustilnikov said in an interview with The Times this month.
For the trust buildings, Pustilnikov formed a partnership, Hope for an Affordable LA, with the San Fernando Valley-based nonprofit Hope the Mission, which will oversee social services. Mayor Karen Bass and other city leaders have insisted that mental health, addiction and other support services continue to be offered in the buildings as a condition of any sale.
The singer, the recipient, said that condition has been one of many challenges that have dictated the disposition of the trust's portfolio.
“Sell any [property] “It is incredibly difficult: first because the properties are complex and problematic, second because the buyer must comply with city approval under regulatory agreements, and third because some of the properties for sale appear to have negative equity and could not even be given away (hence the packaging of all seventeen into one sale),” Singer wrote in Friday's court filing.
A hearing before Judge Stephen Goorvitch to approve the sale to Pustilnikov is scheduled for August 7.
