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.
Mamdani touring an apartment at a Brooklyn building previously owned by the Pinnacle Group earlier this month. (Michael Appleton/Mayoral Photography Office)
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.
“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 chief executive officer 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,” said 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.
The Mamdani administration took office while the bankruptcy case was already progressing, leaving scarce time for their objection.
The mayor’s office and Summit did not immediately respond with comment.
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.
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