Summit Real Estate Holdings has been declared the successful bidder for a portfolio of more than 5,200 rent-stabilized apartments across the New York City area.
The winning bid of $450 million is based on the terms originally set forth in Summit's stalking horse agreement established in Pinnacle Group's Chapter 11 bankruptcy reorganization case in the U.S. Bankruptcy Court for the Southern District of New York filed last May.
No higher bid emerged in the auction process that newly sworn-in Mayor Zohran Mamdani had asked the bankruptcy court to postpone. The court denied the city's request, and the winning bid is now set for a confirmation hearing on Jan. 15.
"We are deeply committed to New York and understand how critical the preservation of affordable housing is to the success of our city," Zohar Levy, chairman of Summit, said in a statement emailed to CoStar News. "We have reached out to the city and look forward to talking with the new administration and residents about our plans to invest in the portfolio and help make New York affordable for everyone."
Israel-based Summit, which operates Summit Properties USA, is a real estate investment, development and management firm that already owns dozens of properties in New York, according to bankruptcy court filings.
Through the Chapter 11 process, the apartment portfolio is expected to reduce its mortgage debt by more than $275 million — 45% of the existing debt — while lowering its interest rate and monthly payments. This would unlock additional cash flow for capital expenditures and preventative maintenance, according to filings.
Summit said it is committed to long-term housing investment and maintaining the quality and affordability of the Pinnacle portfolio apartments.
Pinnacle valued the properties at $826 million in its May bankruptcy filing. The 46% value gap underscores mounting financial pressure on rent-stabilized properties. New York restricted landlords' ability to raise rents on vacant units starting in 2019 through the Housing Stability & Tenant Protection Act. Operating expenses have surged without corresponding revenue increases, driving Pinnacle into Chapter 11 protection.
Pinnacle's portfolio consists of 82 properties encumbered by $564 million in Flagstar Bank mortgage debt. Flagstar has committed to finance Summit's acquisition bid.