Judge approves sale of 5,100 contested rent-stabilized NYC apartments

A federal bankruptcy judge ruled to authorize the sale of 5,100 mostly rent-stabilized units in New York City in a deal that Zohran Mamdani tried to stall on the day he swore in as the new New York City mayor.​

With the decision, international real estate firm Summit Properties USA will acquire 93 buildings from Pinnacle Group, which filed for Chapter 11 bankruptcy last year, in a deal brokered by Eastdil Secured.​

The disposition and the ruling that preceded it opened many observers’ eyes to the challenges Mayor Zamdani faces as he tries to fulfill his campaign promises to expand rent stabilization and control as a housing affordability solution for New York City.

Judge David Jones allowed the auction to proceed last week, despite Mamdani’s efforts, tenant complaints and New York Attorney General Letitia James’s questions about Summit’s purchase.​

In a court filing, James’s office noted problems with Summit’s existing portfolio and family ties between the firm and Pinnacle’s owner, billionaire Joel Weiner (brother of Jonathan Weiner, founder and owner of New York City property owner Chestnut Holdings, in which Summit Properties is reported to be a limited partner).​

Jones, however, wrote in his ruling that Summit has good intentions it will operate the properties properly.​

“They have shown more than adequate financial wherewithal to do this,” the judge wrote.​

Mamdani had sought to delay the sale for 30 days to find a buyer other than Summit. Instead, he faced his first setback in his avowed crusade to remake the city’s rent-stabilized housing.​

New York City’s fight over the Pinnacle portfolio stems from years of complaints about how the buildings were bought and run under rent stabilization.​

Pinnacle was part of a mid-2000s wave of investor-property owners who loaded up on regulated buildings, raised rents aggressively, and drew scrutiny from prosecutors, ultimately settling tenant-harassment claims in 2011.​

After New York overhauled its rent laws in 2019, banning many of the tactics used to push out tenants and deregulate units, Pinnacle’s highly leveraged model unraveled, and the company defaulted last year on more than $560 million in debt.