On his third day in office, New York City Mayor Zohran Mamdani faced a sharp courtroom setback, as a federal bankruptcy judge denied his plea to pause the sale of 5,100 rent-stabilized apartments owned by Joel Wiener’s Pinnacle Group. The ruling underscored the clash between local housing ambitions and federal bankruptcy authority amid a deepening affordability crisis.
A New Mayor’s Urgent Move
Hours after his January 1 swearing-in, Mamdani visited a decaying Pinnacle building in Brooklyn, vowing swift action in the company’s bankruptcy case. By January 6, his team filed an emergency motion for a 30-day auction delay, aiming to scrutinize the buyer and explore alternatives like nonprofit bids. The city claimed $12.7 million in unpaid fines and violations, but tight bankruptcy timelines left little room for maneuver.
Pinnacle’s Rise and Fall
Billionaire Joel Wiener amassed a $2 billion portfolio by acquiring distressed rent-regulated properties, renovating them, and hiking rents legally. By the early 2000s, Pinnacle managed 20,000 apartments, though it faced settlements in 2006 for overcharging and in 2022 for concealing repair costs during condo conversions, costing Wiener $330,000 in penalties.
The 2019 Housing Stability and Tenant Protection Act upended this model. It eliminated vacancy decontrol, limited Major Capital Improvement rent hikes to 2% annually from 6%, and restricted condo conversions. High inflation, rising costs outpacing rent increases, and collection issues eroded asset values, as noted in a 2024 DBRS Morningstar report. Pinnacle reported a $12 million loss in fiscal 2024, with debt expenses soaring.
Tenant Struggles and Debt Spiral
The fallout hit 5,100 families across 93 buildings in all four boroughs. Pinnacle accumulated over 5,000 housing violations and 14,000 tenant complaints, with “immediately hazardous” Class C violations quadrupling from 2019 to 2024. Tenants documented crumbling conditions, from leaks to structural hazards.
Flagstar Bank, holding $564 million in loans, initiated pre-foreclosure on nearly 100 entities in March 2025 after payments halted. Pinnacle disclosed a $549 million working capital deficit and $1.1 billion total debt. In May, Wiener filed 82 entities into Chapter 11 bankruptcy, consolidating to market the portfolio intact despite having no cash on hand.
The Auction and Hidden Ties
In late December 2025, Summit Properties USA, led by Israeli investor Zohar Levy, offered a $451 million “stalking-horse” bid—nearly half a December 2024 appraisal of $826 million for Flagstar’s collateral. Summit already held 3,000 units in 90 city buildings. City filings noted scant details on its finances, history, or rehab capacity; a Housing Preservation and Development review warned the sale might not sustain rent-stabilized operations.
Complicating matters, Summit’s property manager, Denali Management, linked to Jonathan Wiener, Joel’s brother and head of the 2021 Landlord Watchlist firm Chestnut Holdings. Chestnut denied any Pinnacle or Summit ties.
Courtroom Defeat
On January 8, Judge David S. Jones rejected Mamdani’s motion after a hearing, allowing the private auction at Weil, Gotshal & Manges to proceed without overbids. Summit secured the properties by default, inheriting $564 million in Flagstar debt, average legal rents of $1,200-$1,700 per unit, and the backlog of violations. Summit pledged investments in repairs and maintenance, though doubts persist.
The Pinnacle case mirrors wider distress: 10% of rent-stabilized buildings now operate at a loss, up from 5% in 2017, with Trepp CMBS data showing 16.43% loan delinquency for regulated properties versus under 1% for unregulated ones. Among 960,000 stabilized units citywide, such sales test ownership viability.
Mamdani’s team assesses next steps, eyeing the Third Party Transfer Program for nonprofits and Community Opportunity to Purchase Act bids starting 2027, alongside a proposed rent freeze from October 2026. Tenants await Summit’s actions, while the ruling highlights federal limits on city intervention, fueling ongoing debates over stabilization’s future and repair accountability.
Sources:
Housing Stability & Tenant Protection Act of 2019. New York State, October 2, 2019
Judge rejects Mayor Mamdani’s bid to slow bankruptcy sale of 5100 NYC apartments. Gothamist, January 9, 2026
Summit Properties Wins Auction to Acquire 5,100-Unit Pinnacle Portfolio. Commercial Observer, January 9, 2026
Bidder For Pinnacle’s 5,000-Unit Portfolio Has Ties To CEO Joel Wiener’s Brother. Bisnow, January 8, 2026
Mayor Mamdani Signs EO to Revitalize Mayor’s Office to Protect Tenants. NYC Mayor’s Office, January 1, 2026