City blocked from halting sale of neglectful landlord’s rent-stabilized apartments
Mayor Zohran Mamdani touring a unit in a Pinnacle Flatbush building last week. Credit: Michael Appleton/Mayoral Photography Office on Flickr
A federal bankruptcy judge has denied Mayor Zohran Mamdani’s bid to halt the sale of thousands of rent-stabilized apartments owned by a notorious landlord, a move aimed at preventing the buildings from falling into the hands of another negligent owner. On Monday, Mamdani asked the court to delay a bankruptcy auction scheduled for Thursday, arguing the city needed more time to evaluate a deal that would give ownership to Summit Properties USA. Despite the mayor’s claim that the city is a major creditor in the case—Pinnacle owes the city millions in unpaid fines—the judge rejected the request, likely ensuring Summit’s potential purchase of nearly 90 buildings, pending court approval at a January 15 hearing.
Just hours after taking office last week, Mamdani signed executive orders strengthening housing and tenant protections, choosing a Pinnacle-owned building in Flatbush as the site for the announcement. At the event, he also said the city would intervene in the company’s bankruptcy sale. Pinnacle has been responsible for more than 5,000 housing violations and 14,000 tenant complaints across more than 80 buildings citywide.
Tenants have long accused Pinnacle, which owned roughly 5,100 rent-stabilized apartments across dozens of properties, of neglect, saying the company allowed many buildings to fall into disrepair.
Pinnacle was one of several real estate firms that raised rents and deregulated units to satisfy lenders and boost revenue. City and state prosecutors scrutinized this business model in 2006, leading to a tenant harassment case that Pinnacle settled for over $2 million in 2011, according to Gothamist.
After a 2019 legislative package banned this business model, Pinnacle’s success began to fall apart. The firm filed for bankruptcy in May after defaulting on more than $560 million in loans owed to lender Flagstar.
In an effort to prevent the buildings from falling into the hands of another negligent owner, a citywide network of Pinnacle tenants organized to slow the sale and buy time to identify a more responsible buyer. Mamdani sought a 30-day delay of the sale, a request that federal bankruptcy Judge David Jones denied, as reported by Crain’s.
Last month, Summit made a $451 million bid on the properties a few days before Mamdani took office. In Monday’s court filing, city attorneys questioned Summit’s bid and questioned if the company would be able to handle repairs while also having enough money to pay off its loans and earn a profit.
“We are assessing our options as these proceedings move forward, and we will continue to fight to ensure any owner of this portfolio makes necessary repairs to bring the buildings up to code and respects the rent stabilization regulations,” Leila Bozorg, the city’s deputy mayor for housing and planning, said in a statement to the Wall Street Journal.
The Union of Pinnacle Tenants, a tenant advocacy group that has been working to delay the sale, said it will continue to challenge the transaction and develop an alternative plan. The group also highlighted familial ties between Pinnacle and Summit: Joel Wiener owns Pinnacle, and his brother, Jonathan Wiener, has signed deeds for properties owned by Summit, according to real estate news outlet Bisnow.
The group further pointed to Summit’s own record of neglect, claiming the company has numerous violations of city housing codes.
“Both our current landlord and the prospective buyer, Summit Properties, have more than 5,000 open violations of city housing code,” the group said in an Instagram post. “This morning, Judge David S. Jones rejected that extension, though it was supported by both the City of New York and a US Trustee. Worse, our slumlord is trying to sell our homes to his own brother. Judge David S. Jones, who do you stand for—10,000 tenants of two slumlords?”
Tenants and attorneys say it’s still too early to determine what will happen next. The parties have until Sunday to file objections and until next Thursday to confirm the sale, Gothamist reported. Additional bidders could also still emerge.
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