From Los Angeles Business Journal · Hannah Welk · · 2m
Real Estate Quarterly: Fixing Skid Row
LA developer Leo Pustilnikov battles HACLA over Rosslyn Lofts after nonprofit landlord collapse.
In brief
LA developer Leo Pustilnikov battles HACLA over Rosslyn Lofts after nonprofit landlord collapse. LA developer Leo Pustilnikov faces legal battle with city housing authority over Rosslyn Lofts after nonprofit landlord collapse. Originally reported by Los Angeles Business Journal.
Leo Pustilnikov's Plan
Leo Pustilnikov wants to expand in LA’s Skid Row after taking over 17 supportive housing buildings from the collapsed Skid Row Housing Trust in 2024.
Rosslyn Lofts Dispute
Pustilnikov claims HACLA bought Rosslyn Lofts for $10 million and one penny, but he argues the city didn’t actually purchase the building.
Rosslyn Lofts Details
Rosslyn Lofts is a 297-unit mixed-income building at 451 S. Main St. that was converted from a hotel in 2000s.
HACLA's Bid
HACLA bid $10 million for Rosslyn Lofts, which Pustilnikov claims was a penny less than his bond deal with Citi.
Financial Distress
Rosslyn Lofts entered receivership in 2023 due to pandemic cash flow issues and debt service struggles.
Pustilnikov's Firm
Pustilnikov’s Hope for an Affordable LA has spent $26 million rehabilitating eight of 17 Trust properties.
HACLA's Role
HACLA manages over 9,000 affordable units and administers about 58,000 federal Section 8 rental assistance vouchers.
Legal Battle
Pustilnikov filed two lawsuits claiming breach of contract and misrepresentation after HACLA won the auction.
HACLA Takes Over
HACLA took control of Rosslyn Lofts on July 1, planning to refinance and rehabilitate it.
Pustilnikov's Stance
Pustilnikov says affordable housing runs on different economics and he won’t profit for a very long time.
Skid Row Housing Trust
Skid Row Housing Trust collapsed in 2023, leading to 1,204 units being sold to Hope for an Affordable LA for $19 million.
Affordable Housing Challenges
Skid Row Housing Trust’s buildings couldn’t cover depreciation and had 55-year affordability covenants.
Pustilnikov's Strategy
Pustilnikov plans to build a housing continuum with shelters, permanent supportive housing and deed-restricted buildings.
Rosslyn Lofts Auction
Rosslyn Lofts was auctioned on May 21 for $10 million and one penny, with HACLA as the only bidder.
Pustilnikov's Bond Deal
Pustilnikov had a bond deal with Citi for $20.7 million in principal and interest, but it didn’t close.
HACLA's Expansion
HACLA aims to add 30,000 affordable units in 10 years through an acquisition fund backed by a $215 million revolving credit line.
What to remember
LA developer Leo Pustilnikov faces legal battle with city housing authority over Rosslyn Lofts after nonprofit landlord collapse.
