Despite efforts by Mayor Zohran Mamdani’s administration, Summit Properties is slated to take over more than 5,000 mostly rent-stabilized New York apartments from Joel Wiener’s Pinnacle Group. The final auction price was not immediately clear after the firm issued an initial bid of $451 million.
It’s the result of Pinnacle’s bankruptcy auction, in which Summit represented the minimum, or stalking horse, bidder. A confirmation hearing is scheduled for January 15.
The auction commenced despite efforts by tenants and elected officials, most recently Mamdani’s office, to delay the sale. The coalition had asked the judge in the case for more time, originally hoping that the city or a nonprofit might be able to draft a workable bid. After Summit came forward as a stalking horse bidder, the city asked for a 30-day pause to evaluate the sale to Summit and explore potential alternatives.
However, the judge rejected that effort in a Wednesday hearing, clearing the way for Summit’s acquisition.
As distress grows in the city’s rent-stabilized housing stock, the auction result shows a potential future for thousands of units across the city. Surging expenses and elevated interest rates have eaten away at revenue, at the same time that a 2019 statewide law has limited owners’ abilities to raise rents. Pinnacle placed its LLCs into Chapter 11 bankruptcy owing $564 million to Flagstar Bank, according to court records.
“We are deeply committed to New York and understand how critical the preservation of affordable housing is to the success of our City,” Zohar Levy, chairman of Summit, said in a statement. “We have reached out to the City and look forward to talking with the new administration and residents about our plans to invest in the portfolio and help make New York affordable for everyone.”
Summit has a national portfolio of regional malls, office buildings and New York City apartments. But the Mamdani administration expressed concern that Summit wouldn’t be able to make the acquisition work while repairing the properties and maintaining rent stabilization. The bankrupt LLCs owe the city more than $12.7 million in unpaid fees and violations, which number more than 5,000.
The legal rents on the units are low enough that Summit likely couldn’t maintain an income stream to profitably support renovations and debt service, the city said in a court filing.
Eastdil Secured advised on the auction.