The hearing marks the end of a weeks-long battle, with Pinnacle and Summit on one side and Mamdani’s government and the tenants on the other. The latter group tried unsuccessfully to stop, pause, and delay the sale, hoping for a tenant-aligned bidder or concessions from Summit.
Bankruptcy Judge David Jones took into account their argument that Summit had not provided sufficient guarantees that it could act as buyer and refurbish the portfolio. But he ultimately decided to confirm the purchase after Flagstar Bank agreed to provide Summit with a $3 million revolving line of credit hours after the hearing.
The result underlines the challenges ahead for the Mamdani government as it tries to balance its weight between private transactions. But it also shows that landlords live in a new New York: a city where the mayor can turn his portfolios into political problems and possibly even make small concessions.
“Summit’s statements make it clear that the company is committed to doing whatever is necessary,” Judge Jones said. “The city’s approach to this matter gives me confidence that the city will monitor and audit Sumit’s performance.”
Summit purchased the largely rent-stabilized portfolio for $451.3 million, or about $88,000 per unit. Flagstar Bank, the largest creditor in the bankruptcy proceedings, agreed to finance about 75 percent of the acquisition and reduce interest rates.
The city first raised concerns about the auction during the Adams administration, when the housing department requested time for a “conservation-oriented” buyer to submit a bid.
But Mamdani raised the profile of the sale and turned the auction into a political rallying point. His government initially asked for a postponement of the auction, but the judge rejected that attempt. During the hearing, attorneys for the city and the tenants asked questions about Summit’s financial ability to resolve violations, its history as a property owner and its limited experience running real estate in New York.
But Judge Jones sided with Summit, saying the company had developed a “serious and reasonable-sounding plan” to improve property conditions.
CEO Zohar Levy said the company plans to spend $10 million in the first year to resolve violations and address maintenance needs, with $3 million specifically going to existing violations. It plans to address half of violations within the first two months of the sale and the other half within six months of the sale. The company plans to spend $30 million on capital expenditures within five years, or about $5,824 per unit.
Although the city expressed concern that Summit’s current properties in New York have thousands of violations, Levy said at the hearing that the company is only a limited partner in those properties and would have greater oversight of the new portfolio. REM Management has been brought in to manage part of the portfolio.
Judge Jones said Flagstar’s promise of a $3 million revolving line of credit was a “valuable and useful” commitment.
It’s a mixed result for the Mamdani camp’s first major battle with private landlords. The administration failed to achieve its original goal of halting the sale and attracting a nonprofit or tenant-oriented buyer. But it was also able to slightly change the terms of the transaction when making a large purchase of a multifamily portfolio.
“Our board said from day one that we would make tenants a priority, and that is exactly what we have done in this procedure,” said Leila Bozorg, deputy mayor for housing and spatial planning. “Thanks to our intervention and dedicated tenant organizing, the new owner of these buildings has committed to investing $30 million and remediating all violations within six months. We will continue to monitor this portfolio closely as part of our ongoing fight for tenants.”
In a statement, Levy said he understood the process was difficult for tenants and that they were concerned about their homes.
“Today’s ruling marks 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,” Levy said in the statement. “We are putting together a strong team and have the capacity, commitment and resources to succeed for everyone’s benefit.”
A spokesperson for Pinnacle Group noted that the judge’s decision is the end result of an eight-month public process. “The company, its independent lead restructuring officers and advisors appreciate the court’s recognition that this outcome, reached under challenging circumstances, is the best available to all constituencies, and hopes the city will do the same,” the spokesperson said in a statement.
The Union of Pinnacle Tenants, which represents some of the tenants in the buildings, labeled the outcome as a decision in favor of slum landlords. But the group said they would continue organizing for Summit’s repairs and an end to the harassment. The group has partially credited the Mamdani government for its swift intervention in the case.
“We will fight this next battle knowing that the city and Mayor Mamdani have our backs – not just in this auction, but in the long term,” the UPT said in a statement. “Because we organized, tenants across the city heard us.”
The city did not immediately respond to a request for comment.
Despite rumors of a possible insider connection in the deal involving Jonathan Wiener, brother of Pinnacle’s Joel Wiener, Jones said he was not convinced of any insider involvement.
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