Summit Properties Wins Auction For 5,200-Unit Rent-Stabilized Portfolio
Summit Properties USA is set to take over a roughly 5,200-unit New York City apartment portfolio after no other bids emerged at a bankruptcy auction Thursday to beat its $451.3M offer.
The sale, which still requires court approval, has become an early flashpoint in the mayoralty of Zohran Mamdani, who opposed the deal as part of his campaign targeting landlords of rent-stabilized housing.
Pinnacle Group put the portfolio into bankruptcy in May after Flagstar Bank filed to foreclose on a $564M loan backing the properties. Summit’s $451M stalking horse bid was revealed in court late last month and became a point of controversy due to the deteriorating state of the portfolio.
Attorneys for the city sought to delay the auction in a filing Monday, claiming that “no information” 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.
Following a hearing Wednesday, the court denied the city’s 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.
Summit is now poised to take control of 93 buildings in Manhattan, Brooklyn, Queens and the Bronx, making it one of the city’s largest apartment landlords.
Through the Chapter 11 process and the corresponding bid, the sale would reduce the properties' mortgage debt by more than $275M, or 45% of the existing debt, while also lowering the interest rate, Summit said in a statement filed in court Friday.
The deal would unlock funds that Summit intends to invest in capital expenditures and preventive maintenance.
“Summit is well-capitalized and has received a sufficient financing commitment from the buildings’ long-term lender,” it said in an unsigned statement.
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.
“Summit has sufficient resources and capital to honor and perform all obligations under the existing resident leases and comply with all regulatory obligations,” the statement reads. “Summit’s objective is to invest in the buildings while preserving affordability and long-term housing for New Yorkers.”
Summit added that it “looks forward” to speaking with city officials and residents about its plans to invest in the portfolio.
“We are assessing all of our options as the case moves forward — both in the bankruptcy proceedings and through other City tools — 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,” Deputy Mayor for Housing and Planning Leila Bozorg said in a statement.
Judge David Jones will decide whether to approve the deal at a hearing scheduled for Jan. 15. Eastdil Secured's Daniel Parker advised Pinnacle in the sale.
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’s 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 “local partner,” which a Bisnow investigation revealed to be a company owned by Pinnacle CEO Joel Wiener’s brother, Jonathan.
In a statement, Jonathan Wiener's firm, Chestnut Holdings, told Bisnow this week that it isn’t professionally connected to Pinnacle and has no “connection whatsoever to any Summit bid for Pinnacle properties.”
Pinnacle, which owns 8,100 units in the city, has racked up more than 5,000 housing violations and 14,000 complaints across 83 buildings, according to the mayor’s office. In letters to the court, tenants recounted tales of neglect and requested a say in the sale.
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.
“The 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,” city attorneys wrote in a filing Monday.
In a Wednesday filing, lawyers in the office of the U.S. Trustee, which oversees bankruptcy proceedings, also objected to the sale. Former Mayor Eric Adams’ administration similarly filed an objection during his final days in office. The deadline to file objections is Sunday.
“Summit’s 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,” it said in the Friday statement.
Pinnacle is also indebted to a handful of other banks as well as Israeli bondholders. In court records, the company blamed interest rate hikes as well as the Housing Stability and Tenant Protection Act of 2019.
The package of rent laws effectively killed Joel Wiener’s 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 “mainstay and successful component of [Pinnacle’s] business plan,” according to a May 27 court filing.
Rent-stabilized property values have declined by 35% to 60% from their 2017-2018 peak, according to Ariel Property Advisors. A December 2024 appraisal valued the 93-building portfolio at $826M, nearly double Summit’s bid.
UPDATE, 9:20 P.M. ET: This story has been updated to include a statement from Deputy Mayor Leila Bozorg.
