A bankruptcy court judge approved the sale of a troubled portfolio of rent stabilized units to Summit Properties after their bank made additional funds available for repairs. Tenants and Mayor Mamdani had pushed to delay the sale or find a buyer who would preserve the affordable housing.
A troubled portfolio of over 5,000 rent stabilized apartments will be sold to a new private landlord, a bankruptcy court judge ruled Friday afternoon after lawyers for the Mamdani administration, the New York Attorney General, and organized tenants had intervened to try and stop it.
Residents of the 90-plus building portfolio owned by Pinnacle Group had been pushing a judge to delay Pinnacle’s bankruptcy sale and give the city a chance to vet the buyer and put together a competing offer.
Judge David Jones approved the sale to Summit Properties early Friday afternoon over the city’s objections about the buyer’s ability to resolve thousands of outstanding housing code violations in the buildings.
(function(d,u,ac){var s=d.createElement(‘script’);s.type=’text/javascript’;s.src=’https://a.omappapi.com/app/js/api.min.js’;s.async=true;s.dataset.user=u;s.dataset.campaign=ac;d.getElementsByTagName(‘head’)[0].appendChild(s);})(document,54625,’u4kmqsczew4vunxutxmd’);
“I am going to approve the proposed sale,” said Judge David Jones.“I am satisfied that the purchaser… has described a serious and reasonable sounding plan to rectify violations and poor conditions at the properties at issue.”
Zohar Levy, the chair of Summit, had testified that Summit intends to remedy half of the outstanding violations in the first 60 days of ownership and promised $10 million for repairs in the first year as part of an “immediate action plan.”
The approval was a blow to Mayor Zohran Mamdani and tenants who had hoped to further delay or stop the sale. But if a goal was to bring their future landlord to the negotiating table, they might find a silver lining.
In a packed federal bankruptcy court in lower Manhattan Thursday, lawyers for the city and the prospective new landlord sparred for nine hours over whether the new regime could protect tenants.
Summit is a limited partner in a portfolio of rent stabilized properties in New York City owned by Chestnut Holidings—a 3,000 unit portfolio with over 4,000 open code violations—that also happens to be owned by Jonathan Weiner, brother of Pinnacle owner Joel Weiner.
Eric Snyder, of counsel to the Legal Aid Society, called it “meet the new boss, same as the old boss.” To fund repairs, he called on Summit to commit “money that’s going to be there and not just promises.”
In a somewhat unusual move, Summit’s lender, Flagstar Bank, offered to make a $3 million dollar line of credit available to Summit should they need additional capital to fund repairs in any of their buildings.
Matt Talubas, a Pinnacle tenant from Northern Manhattan, said he came to court Thursday with little hope that tenants could stop the sale.
“We were hoping for even more conditions, if perhaps not a guarantee—some explicit instructions that they would be beholden to,” said Talubas.
The fight may be a sign of what’s to come for a new administration that has promised to flex its power to hold bad landlords accountable.
“The city’s action makes very clear it’s committed to these tenants,” added Judge Jones in court Thursday.
Levy estimated the buildings needed $30 million in investment over the next five years.
He said that was an estimate, not a cap. “If it doesn’t cover it… we will be there,” Levy testified, saying that they could put in more equity, seek a loan, or get bridge financing from Summit if repair needs exceeded expectations.
Summit also said that it would find two new property managers for the portfolio.
“This process has been difficult for the residents, and we understand their frustration and concerns about their homes. Today’s ruling is a new chapter, and we look forward to working with the City, our elected officials, stakeholders and residents to improve the buildings and move forward. We are assembling a strong team and have the capacity, commitment and resources to succeed for everyone’s benefit,” said Levy in a statement to City Limits.
The Mamdani administration took office while the bankruptcy case was already progressing, leaving scarce time for their objection.
When delaying the sale further proved unfeasible Thursday, lawyers for the city pivoted to securing assurances for tenants in an approval.
“The hope is that there’s more eyes on it, right? And sometimes more eyes means hopefully more accountability,” added Talubas.
Deputy Mayor for Housing and Planning Leila Bozorg claimed a partial victory in a statement: “Our administration said from day one that we would make tenants a priority, and that is exactly what we have done in these proceedings. Thanks to our intervention and dedicated organizing by tenants, the new owner of these buildings has committed to invest $30 million and to cure all violations within six months. We will continue to closely monitor this portfolio as part of our ongoing fight for tenants.”
To reach the reporter behind this story, contact Patrick@citylimits.org. To reach the editor, contact Jeanmarie@citylimits.org
Want to republish this story? Find City Limits’ reprint policy here.
The post Judge Approves Sale of More Than 5,000 Rent Stabilized Apartments in Pinnacle Portfolio appeared first on City Limits.
Want more insights? Join Working Title - our career elevating newsletter and get the future of work delivered weekly.
