Chapter 11 Bankruptcy Leading to Auction of 5K-Plus Rent Stabilized Units

A 93-building residential portfolio spread across Brooklyn, Queens, Manhattan, and the Bronx that generated $84.4 million in 2024 may be heading to auction after a Chapter 11 bankruptcy filing several months ago by an entity connected to the Pinnacle Group according to reported details within a September 19 court filing. Pending approvals of a proposed marketing process by a New York State bankruptcy judge, lawyers overseeing the buildings will be marketing the properties for a “proposed bankruptcy auction and also solicit offers for a potential refinancing,” as part of an “agreement with lender Flagstar, which holds more than $564 million in debt on the buildings and initiated foreclosure lawsuits earlier this year.” According to reported city data, between 2019 and 2024, Housing violations that the city deems “immediately hazardous” have “increased fourfold.” In response, advisors to Pinnacle’s building reportedly stated that the “bankruptcy filings are mostly the result of a sharp rise in interest rates, inflation-driven increases in operating expenses and lower rent collection,” also pointing out that “the COVID pandemic 2020-2023, made building maintenance more difficult” for various reasons. The portfolio managed by the Pinnacle Group houses more than 5,100 rent-stabilized apartments; and “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.” Nonbinding indications of interest by bidders are urged to be submitted by November 21, 2025, with a bid deadline of December 21, 2025, was proposed by the lawyers involved; and if “the process wins court approval, an auction would be held in January” per further details within the court filing that were noted in the recent Bloomberg article posted by Crain’s New York.

Source:    https://www.crainsnewyork.com/real-estate/over-5000-nyc-rent-stabilized-apartments-headed-auction