Dive Brief:

• On Jan. 19, U.S. Bankruptcy Judge David Jones approved Summit Properties USA’s  purchase of more than 5,000 rent-stabilized units in an auction after the former owner, Pinnacle Group, had placed the apartments into bankruptcy in May, according to court documents. The deal is valued at $451 million, per Bloomberg.
• Newly appointed New York City Mayor Zohran Mamdani, in one of his first acts, attempted to delay the auction, according to The New York Times. However, a judge rejected the city’s request on Jan. 15. 
• Flagstar Bank held more than $564 million in debt on the buildings in Brooklyn, Manhattan, Queens and the Bronx. Summit provided $113 million in equity and received $338.5 million in financing from Flagstar, according to Jones’ decision in the U.S. Bankruptcy Court for the Southern District of New York.

Dive Insight:

The rent-stabilized properties were indirectly and directly owned by 82 debtor companies, controlled by a company called Zarasai, and managed by Pinnacle, with Joel Weiner serving as CEO, according to a June 29, 2025, Chapter 11 filing in the U.S. Bankruptcy Court for the Southern District of New York. 

Housing violations deemed by New York City as “immediately hazardous” at Pinnacle’s bankrupt buildings increased fourfold from 2019 to 2024, which is twice the rate of similar rent-stabilized properties, according to a Bloomberg analysis of municipal data. 

While city officials had voiced concerns about Summit’s ability to repair the apartments, CEO Zohar Levy said the firm set aside $30 million to repair the properties, according to the Jan 19 decision. 

Summitt said $10 million of that amount will be used to address building code violations and existing issues. In addition, Flagstar is providing “a revolving credit line of $3 million for costs associated with curing violations at any individual building,” according to the Jan. 19 decision.

“This process has been difficult for the residents, and we understand their frustration and concerns about their homes,” Levy said in a statement emailed to Multifamily Dive. “This 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.”

The Pinnacle portfolio properties aren’t the only rent-stabilized workforce apartments in New York City that have faced issues in recent years. 

In 2024, the special servicer for eight commercial mortgage-backed securities loans in New York City instructed its legal counsel to foreclose on the 28 workforce properties that back the loans, according to DBRS Morningstar. New York City-based Emerald Equity Group owned the properties. 

“The Housing Stability & Tenant Protection Act of 2019, high inflation rates, increasing operating expenses — which continue to outpace permitted rental increases for rent-stabilized apartments — and an inability to collect rents have critically impaired the value of rent-stabilized assets in NYC over the past five years,” DBRS Morningstar said in the report.

Click here to sign up to receive multifamily and apartment news like this article in your inbox every weekday.