Judge Rejects City’s Bid for Pause in Pinnacle Auction

A bankruptcy judge has rejected the city’s bid to pause the auction of more than 5,000 mostly rent-stabilized New York apartments, clearing the way for a possible takeover by Summit Properties.

The apartments were put up for sale as part of a bankruptcy suit connected to Joel Wiener’s Pinnacle Group. The judge’s decision represents not only a likely change in ownership in New York’s multifamily market but a reminder of the limits to city power when it comes to the dealings of private companies.

The Mamdani administration earlier this week had asked for a 30-day pause on the sale to evaluate the transfer to Summit and explore potential alternatives. That followed similar requests from a coalition that included tenants, elected officials and the housing department under Mayor Eric Adams to delay the sale, originally with the hope that a nonprofit or other entity might be able to draw up a workable bid. Mayor Zohran Mamdani had taken things further, publicly championing the cause and vowing to intervene for tenants.

Summit has a national portfolio of regional malls, office buildings and New York City apartments. Last summer, the company partnered with Savanna to acquire the leasehold at 444 Madison Avenue for $50 million. It offered $451 million for the Pinnacle portfolio as the minimum, or stalking horse, bidder in the auction.

But the Mamdani administration expressed concern that Summit wouldn’t be able to make the acquisition work while repairing the properties with the proposed $451 million sale price. The legal rents on the units are low enough that the company likely couldn’t maintain an income stream to profitably support renovations and debt service, the city said in a court filing.

“This is not the end of our fight to protect Pinnacle tenants and working New Yorkers across the city,” said Deputy Mayor for Housing and Planning Leila Bozorg, in a statement. “We are assessing our options as these proceedings move forward, and we will continue to fight to ensure any owner of this portfolio makes necessary repairs to bring the buildings up to code and respects the rent stabilization regulations.”

Pinnacle’s collection of bankrupt LLCs owes the city more than $12.7 million in unpaid fees and violations, according to court documents. They owe Flagstar Bank more than $564 million, according to court documents.

The sale is scheduled for Thursday.

Kathryn Brenzel contributed reporting to this story.