Summit’s Deal with Pinnacle, By the Numbers

Summit Properties last week won its battle to purchase a portfolio of thousands of New York apartments from Pinnacle Group. Pinnacle put the collection of mostly rent-stabilized units into bankruptcy and held an auction for a buyer, with Mayor Zohran Mamdani and groups of tenants trying unsuccessfully to stop the sale.

Here’s the deal by the numbers, according to court documents and disclosures Summit made on the Tel Aviv Stock Exchange, which it has tapped for financing:

$451.3 million bid

Summit won a bid to purchase the bankrupt portfolio for $451.3 million.

That works out to approximately $87,000 per unit or $1,030 per square meter. In American terms, that’s a little less than $96 per square foot.

5.25 percent interest

Summit arranged financing for the bid from Flagstar Bank, which has historically been a major lender to New York’s rent-stabilized property owners.

But Flagstar has been trying to get rent-stabilized loans off its books due to distress in the market. It was the biggest creditor in the Pinnacle bankruptcy case, and was owed $564 million.

Flagstar agreed to loan Summit $338.5 million for the acquisition, due in three years. That works out to 75 percent of the bid being debt-financed. There is no payment required on the loan principal for two years.

Summit has said it will have extra cash flow because it’s been able to lower the debt on the portfolio as well as lower the interest rate on that debt.

The loan will have a fixed 5.25 percent interest rate, lower than the rates of 7.5 and 10.25 percent that Pinnacle says it paid at times.

23 percent NOI boost

Summit expects the purchase to boost its net operating income, meaning revenue after expenses but not debt service, by 23 percent.

The portfolio itself is expected to make $36 million in net operating income annually. That’s approximately 8 percent of the purchase price.

5,150 units

The portfolio consisted of 5,150 residential units across 98 buildings. But also part of the holdings are 52 commercial units, 326 parking spaces and one parking garage.

The buildings are 95 percent occupied, with about half in Brooklyn, one-quarter in Manhattan and 18 percent in Queens.

The sale is expected to close in February.

$30 million in capital expenditures

Summit chair Zohar Levy has said he expects to spend $10 million on the portfolio in the first year, with $3 million of that for addressing existing violations and the other $7 million for a maintenance backlog.

Levy said he expects to clear half of the existing violations in the first two months, with the rest cleared within six months of the sale.

He expects to spend $5 million on maintenance for the next four years, coming out to a total of $30 million over five years.