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everly Hills developer Leo Pustilnikov is working with his lender to resolve a loan maturity default tied to his retail storefronts on Santa Monica's 3rd Street Promenade. UBS Real Estate filed a notice of default in Los Angeles County this month for a $18.9 million loan that was past due as of September 6. Pustilnikov has been struggling to refinance in the current interest rate environment, citing difficulties in securing new financing.

    Pustilnikov is known for his builder's remedy projects, which allow developers to bypass zoning requirements for affordable housing in cities without up-to-date plans. He has multiple such projects in Beverly Hills and Redondo Beach, as well as a recent purchase of 17 buildings on LA's Skid Row for $10 million.

    The default notice highlights the ongoing challenges facing retail properties due to the pandemic. Several tenants have left the Promenade, including Banana Republic and Old Navy. Nearby, Macerich, owner of Santa Monica Place, defaulted on its $300 million loan in April and is now exploring a sale as it retools its portfolio. The mall's value has fallen by 35% since the loan went to special servicing.

    In contrast, average asking retail rent in the greater Los Angeles market increased by six cents to $3.09 per square foot in the third quarter, according to CBRE. However, sales of retail property declined by 68% to $192.4 million in the same period.