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\n Mayor Zohran Mamdani tours a Pinnacle-owned apartment in Brooklyn on his first day in office.\n <\/p>\n
Pinnacle Group<\/a>\u00a0put the portfolio into bankruptcy in May after\u00a0Flagstar Bank<\/a>\u00a0filed to foreclose on a $564M loan backing the properties. Summit\u2019s $451M stalking horse bid was\u00a0revealed in court<\/a>\u00a0late last month and became a point of controversy due to the deteriorating state of the portfolio.\u00a0<\/p>\n Attorneys for the city\u00a0sought to delay the auction in a filing Monday, claiming that \u201cno information\u201d had been provided on Summit, including its principals, history as a landlord, or financial resources and capability. In requesting a 30-day extension, the city hoped to better examine the bid and look for alternative buyers.<\/p>\n Following a hearing Wednesday, the court denied the city\u2019s extension application, allowing the auction to move forward. It was held in the Midtown office of law firm Weil, Gotshal & Manges, which is representing Pinnacle in the bankruptcy, and was closed to the public.\u00a0<\/p>\n Summit is now poised to take control of 93 buildings\u00a0in Manhattan, Brooklyn, Queens and the Bronx, making it one of the city\u2019s largest apartment landlords.<\/p>\n Through the\u00a0Chapter 11 process and the corresponding bid, the sale would reduce\u00a0the properties’ mortgage debt by\u00a0more than $275M, or 45% of the existing debt, while also lowering the interest rate, Summit said in a statement filed in court Friday.\u00a0<\/p>\n The deal would unlock funds that Summit intends to invest in capital expenditures and preventive maintenance.\u00a0<\/p>\n \u201cSummit is well-capitalized and has received a sufficient financing commitment from the buildings\u2019 long-term lender,\u201d it said in\u00a0an unsigned statement.<\/p>\n Summit also plans to hire a new management firm to operate the properties, according to the statement, which was peppered with bold and italicized phrases.<\/p>\n \u201cSummit has sufficient resources and capital to honor and perform all obligations under the existing resident leases and comply with all regulatory obligations<\/strong>,\u201d the statement reads. \u201cSummit\u2019s objective is to invest in the buildings while preserving affordability<\/strong> and long-term housing for New Yorkers.\u201d<\/p>\n Summit added that it \u201clooks forward\u201d to speaking with city officials and residents about its plans to invest in the portfolio.\u00a0<\/p>\n \u201cWe are assessing all of our options as the case moves forward \u2014 both in the bankruptcy proceedings and through other City tools \u2014 but our goals have not changed: ensuring that the necessary repairs are made to bring the buildings up to code, and respecting the rent stabilization regulations for these buildings,\u201d Deputy Mayor for Housing and Planning Leila Bozorg said in a statement.<\/p>\n Judge David Jones\u00a0will decide whether to approve the deal at a hearing scheduled for Jan. 15.\u00a0Eastdil Secured<\/a>‘s Daniel Parker\u00a0advised Pinnacle in the\u00a0sale.<\/p>\n Summit Properties USA is a Midtown-based subsidiary of Israel-based Summit Group. Led by Zohar Levy, it is a relatively unknown player in New York City\u2019s real estate landscape, though it already owns approximately 3,000 units across 90 buildings in all five boroughs. Those acquisitions were made through and operated by a partnership with a \u201clocal partner,\u201d which\u00a0a\u00a0Bisnow\u00a0investigation revealed<\/a>\u00a0to be a company owned by Pinnacle CEO\u00a0Joel Wiener<\/a>\u2019s brother, Jonathan.<\/p>\n In a statement, Jonathan Wiener’s firm, Chestnut Holdings, told Bisnow this week that it isn\u2019t professionally connected to Pinnacle and has no \u201cconnection whatsoever to any Summit bid for Pinnacle properties.\u201d<\/p>\n \n The apartment building at 932 Carroll St. in Brooklyn was one of dozens of Pinnacle Group’s buildings put into bankruptcy.\n <\/p>\n Pinnacle, which owns\u00a08,100 units in the city, has racked up more than 5,000 housing violations and 14,000 complaints across 83 buildings, according to\u00a0the mayor\u2019s office<\/a>. In letters to the court, tenants recounted tales of neglect and requested a say in the sale.<\/p>\n Due to the condition of the bankrupt buildings, the city warned that the deal may be overleveraged. The lack of information on Summit provided in court resulted in fears that the new owner may not be well capitalized enough to resolve the violations.<\/p>\n \u201cThe City has substantial concern that even if Summit is able to consummate the proposed sale, it may not have sufficient resources or willingness to rehabilitate the Properties, or be able to maintain a profitable business based on the income stream from the rent stabilized or rent controlled apartments in the Properties,\u201d city attorneys wrote in a filing Monday.\u00a0<\/p>\n In a Wednesday filing, lawyers in the office of the U.S. Trustee, which oversees bankruptcy proceedings, also objected to the sale. Former\u00a0Mayor\u00a0Eric Adams<\/a>\u2019 administration similarly filed an objection during his final days in office. The deadline to file objections is Sunday.\u00a0<\/p>\n \u201cSummit\u2019s investment has undergone a rigorous underwriting process that aligns the purchase price, ongoing maintenance costs, and debt structure to support sustainable operations over the long term,\u201d it said in the Friday statement.<\/p>\n Pinnacle\u00a0is also indebted to a handful of other banks as well as Israeli bondholders. In court records, the company\u00a0blamed interest rate hikes<\/a>\u00a0as well as the\u00a0Housing Stability and Tenant Protection Act of 2019<\/a>.<\/p>\n The package of rent laws effectively killed Joel Wiener\u2019s business model by implementing a far lower cap on how much property owners can raise rents after improving buildings or individual units. It also prevented landlords from converting rent-stabilized units into condos, a \u201cmainstay and successful component of [Pinnacle\u2019s] business plan,\u201d according to a May 27 court filing.<\/p>\n Rent-stabilized property values have\u00a0declined by 35% to 60%<\/a>\u00a0from their 2017-2018 peak, according to\u00a0Ariel Property Advisors<\/a>. A December 2024 appraisal valued the 93-building portfolio at $826M, nearly double Summit\u2019s bid.\u00a0<\/p>\n UPDATE, 9:20 P.M. ET:\u00a0<\/strong>This story has been updated to include a statement from Deputy Mayor Leila Bozorg.<\/p>\n","protected":false},"excerpt":{"rendered":"Summit Properties USA is set to take over a roughly 5,200-unit New York City apartment portfolio after no…\n","protected":false},"author":3,"featured_media":506121,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5122],"tags":[5229,152239,226673,188156,121181,226674,405,403,5226,5225,5228,5227,226672,226675,226676,67,586,132,5230,68,2969],"class_list":{"0":"post-506120","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-new-york","8":"tag-america","9":"tag-ariel-property-advisors","10":"tag-daniel-parker","11":"tag-eastdil-secured","12":"tag-housing-stability-and-tenant-protection-act-of-2019","13":"tag-joel-wiener","14":"tag-new-york","15":"tag-new-york-city","16":"tag-newyork","17":"tag-newyorkcity","18":"tag-ny","19":"tag-nyc","20":"tag-pinnacle-group","21":"tag-summit-properties","22":"tag-summit-properties-usa","23":"tag-united-states","24":"tag-united-states-of-america","25":"tag-unitedstates","26":"tag-unitedstatesofamerica","27":"tag-us","28":"tag-usa"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@us\/115870807087162376","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/506120","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/comments?post=506120"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/506120\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media\/506121"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media?parent=506120"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/categories?post=506120"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/tags?post=506120"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}<\/p>\n