Over 5,000 New York City rent-stabilised apartments headed for auction
Any transaction for all or a portion of the buildings “will not impact the existing tenant leases at any of the debtors’ properties”, according to the court filings
[NEW YORK] Dozens of New York City apartment buildings managed by Joel Wiener’s Pinnacle Group that house thousands of rent-stabilised units are being put up for sale months after falling into Chapter 11.
Lawyers overseeing the buildings spread across Brooklyn, Queens, Manhattan and the Bronx said in a Sep 19 court filing that they will market the properties for a potential bankruptcy auction and also solicit offers for a potential refinancing. The deal is part of an agreement with lender Flagstar Bank, which holds more than US$564 million in debt on the buildings and initiated foreclosure lawsuits earlier this year.
Any transaction for all or a portion of the buildings “will not impact the existing tenant leases at any of the debtors’ properties”, according to the court filings. Any bidder offering to purchase or refinance the buildings “will be required to do so subject to the existing tenant leases”, the filing said. The buildings house more than 5,100 rent-stabilised apartments.
Terms of the proposed marketing process must be approved by a New York bankruptcy judge. Bidders are being urged to submit non-binding indications of interest by Nov 21 and lawyers overseeing the properties have proposed a Dec 21 bid deadline.
If the process wins court approval, an auction would be held in January, according to court documents. Advisers to Pinnacle’s buildings retained real estate advisory firm Eastdil Secured, which “commenced the marketing process by identifying and contacting numerous potential third-party bidders”, according to court documents.
A sale or refinancing of the properties could provide a resolution to Pinnacle’s dispute with Flagstar as well as residents in the buildings. Tenants at multiple Pinnacle properties told Bloomberg News that the company has for years either been slow or failed to respond to leaks, bug infestations and other problems in their buildings.
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Housing violations the city deems “immediately hazardous” at Pinnacle’s bankrupt buildings increased fourfold from 2019 to 2024, according to city data, twice the rate of similar rent-stabilised buildings. The timing coincides with rising interest expenses and operating costs at the company.
Advisers to Pinnacle’s buildings have said that the bankruptcy filings are mostly the result of a sharp rise in interest rates, inflation-driven increases in operating expenses and lower rent collections. They have also cited a 2019 state law that restricted rent increases. The buildings generated about US$84.4 million in 2024, according to financial statements filed in bankruptcy court. BLOOMBERG
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