Summit’s deal with Pinnacle, in numbers

Summit Properties last week won the battle to buy a portfolio of thousands of New York apartments from Pinnacle Group. Pinnacle put its collection of mostly rent-stabilized units into bankruptcy and held an auction for a buyer, with Mayor Zohran Mamdani and tenant groups trying unsuccessfully to stop the sale.

Here’s the deal in numbers, according to court documents and disclosures Summit made on the Tel Aviv Stock Exchange, which it tapped for financing:

A bid of $451.3 million

Summit won a bid to buy the bankrupt portfolio $451.3 million.

That amounts to approx $87,000 per unit or $1,030 per square foot. In American terms that is slightly less than $96 per square meter.

5.25 percent interest

Summit arranged financing for the bid from Flagstar Bank, which has historically been a major lender to New York’s rent-stabilized property owners.

But Flagstar is trying to get rent-stabilized loans off its books because of the market turmoil. It was the largest creditor in Pinnacle’s bankruptcy case, owing $564 million.

Flagstar agreed to loan Summit $338.5 million for the acquisition, which is to occur over three years. That works out 75 percent that the offer is financed with debt. No payment is required on the loan principal for two years.

Summit has said it will have additional cash flow because it has been able to reduce debt on its portfolio and lower the interest on that debt.

The loan has a fixed value 5.25 percent interestlower than the rates of 7.5 and 10.25 percent that Pinnacle says it sometimes paid.

23 percent NEW boost

Summit expects the purchase to increase net operating income, which is revenue after expenses but not debt service 23 percent.

The wallet itself is expected to make $36 million in net operating income annual. That’s approximately 8 percent of the purchase price.

5,150 units

The portfolio consisted of 5,150 residential units spread over 98 buildings. But so are some of the assets 52 commercial units, 326 parking spaces And one parking garage.

The buildings are 95 percent occupied, with approx half in Brooklyn, a quarter in Manhattan And 18 percent in Queens.

The sale is expected to be completed February.

$30 million in capital expenditures

Top chairman Zohar Levy has said he expects to spend money $10 million on the portfolio in the first year, with $3 million thereof for addressing existing violations and the others $7 million for a maintenance backlog.

The levy said it expects to vacate half of the existing violations in the law first two months, with the rest cleared away inside six months after the sale.

He expects to spend $5 million of maintenance for the next four years, which amounts to a total of $30 million over five years.

Read more

Summit confirmed as buyer of Pinnacle, ending battle with Mamdani

Judge rejects Mamdani’s bid to pause Pinnacle auction, paving the way for a takeover by Summit

There is talk of a settlement at Summit and Pinnacle’s hearing, but no resolution yet