AIDS Healthcare Kills $27M Deal to Buy Skid Row Buildings

The AIDS Healthcare Foundation has scotched a deal to buy six single-room occupancy hotels and apartment complexes on L.A.’s Skid Row for $27 million.

The Hollywood-based nonprofit, the world’s largest charity for those with AIDS, withdrew its offer to buy the buildings containing 415 units in a receivership sale from the Skid Row Housing Trust, the Los Angeles Times reported.

The reason: AHF found the properties in need of millions of dollars in further repairs and would continue to run large operating losses, according to foundation spokesman Ged Kenslea.

The buildings scuttled in the deal include the Boyd, Hart and St. George single-room occupancy hotels, and the Lincoln, New Carver and Rainbow efficiency apartments. The deal this month had included $5 million for ongoing repairs.

“Any buyer of these properties will find themselves in the same situation that led to the failure of Skid Row Housing Trust in short order unless a new model can be developed,” Kenslea said in a statement.

The foundation pullout came hours before the City of Los Angeles filed documents in court opposing the deal.

The foundation and the city hadn’t agreed on a plan to maintain comprehensive social services for tenants and to resolve hanging health and safety code violations, according to the filing, which said the city would have withdrawn its objection if such terms had been reached.

“The city is committed, as evidenced by its $36.5 million investment in the receivership, to preserve permanent supportive housing for the city’s most vulnerable residents,” Deputy City Attorney Alia Haddad wrote in the filing.

The unraveling of the sale could put the city on the hook to increase the funding authorized over the past year to rehabilitate and operate the buildings. It also puts the receiver back to square one in its aim to salvage the properties owned by the trust.

Jackson Wyche, a senior project manager with Receivership Specialists, the Sawtelle-based firm managing the Skid Row Housing Trust portfolio, had said the foundation’s offer was “the only viable path forward.”

The receiver said if the AHF deal to buy the half-dozen buildings wasn’t approved by May 10, its bank account would run dry by the end of the month

“We are engaging with prospective purchasers and hope to have a new deal in place in the next two weeks (possibly sooner),” Wyche said.

Skid Row Housing Trust financially collapsed in February last year, largely forsaking its 29 buildings and 1,500 formerly homeless tenants. The city then pushed its portfolio into receivership.

Since then, the receiver has sold 11 of the troubled properties to nonprofit affordable housing providers such as LA Family Housing and People Assisting the Homeless, or PATH.

Receivership Specialists, led by Kevin Singer, has put the remaining 18 trust buildings up for sale on the condition that they remain homeless housing.

Singer said in court filings last week that three undisclosed bidders made substantive offers for the trust portfolio that were lower than the foundation’s, or involved complicated financing that the receiver believed wasn’t viable.

— Dana Bartholomew