Latest news with #PinnacleGroup
Mint
28-05-2025
- Business
- Mint
Major NYC Landlord Blames Bankruptcy On High Interest Rates
(Bloomberg) -- A portfolio of rent-stabilized New York City apartments owned by Joel Wiener was pushed into bankruptcy by 'sky-rocketed' interest rates and changes to state housing law that restricted the property owners' ability to increase rent on tenants, according to court papers. Dozens of properties managed by Wiener's Pinnacle Group were put into Chapter 11 last week, saddled with roughly $564 million in mortgage debt and facing foreclosure actions from its primary lender, Flagstar Bank. The apartments also have outstanding amounts on Israeli-issued bonds, pushing the total debt on the properties to roughly $1 billion, according to bankruptcy papers filed Tuesday. Interest rate hikes in 2022 significantly increased the cost of the mortgage debt, to the point that rental income was no longer enough to cover debt service and operating expenses, Ephraim Diamond, the properties' chief restructuring officer said in a court filing. Rates on a large portion of the Pinnacle properties' mortgage debt has 'sky rocketed' since 2022, from between 3% to 4% to as high as 7.5% and 10.25%, in certain circumstances, Diamond said. The cost to service the debt was about $26 million in 2023, including $20 million interest. Last year, that amount jumped to $36 million, including $25 million in interest, and is projected to increase again in 2025, he said. US Bankruptcy Judge David Jones, during the first hearing in the case since the filing, delayed ruling on a request by the apartment business to spend cash being held as collateral for the Flagstar debt. Jones asked both sides to try to come to a compromise about how the money would be used during the next few weeks. If they can't agree, Jones said he was prepared to rule on the request as soon as tomorrow, when both sides are scheduled to return to court. Flagstar claims that rent money that should have gone to pay the mortgage instead may have been funneled to a related holding company where it went to bondholders. 'No one knows where the rental income went, but it did not go to pay the lenders and appears to have been consolidated to pay bondholders,' Flagstar said in court papers filed Wednesday. A lawyer for the apartment company did not immediately return a request for comment. Most of its tenets get some form of rent stabilization and changes to state law in recent years intended to protect renters created further financial stress on the buildings, Diamond said. In 2019, state lawmakers placed restrictions on building owners' ability to raise rents when a tenement leaves a rent-regulated apartment and limited landlords' ability to turn apartments into condos, according to court documents. 'These legislative changes put further strain on the Company's and the Debtors' cash flow, and significantly slowed their condominium conversion initiatives,' Diamond said. Diamond said bankruptcy will give advisers time to devise a restructuring strategy and discuss options with creditors. The case is Broadway Realty I Co. LLC, number 25-11050, in the U.S. Bankruptcy Court for the Southern District of New York. More stories like this are available on
Bloomberg
28-05-2025
- Business
- Bloomberg
Major NYC Landlord Blames Bankruptcy On High Interest Rates
A portfolio of rent-stabilized New York City apartments owned by Joel Wiener was pushed into bankruptcy by 'sky-rocketed' interest rates and changes to state housing law that restricted the property owners' ability to increase rent on tenants, according to court papers. Dozens of properties managed by Wiener's Pinnacle Group were put into Chapter 11 last week, saddled with roughly $564 million in mortgage debt and facing foreclosure actions from its primary lender, Flagstar Bank. The apartments also have outstanding amounts on Israeli-issued bonds, pushing the total debt on the properties to roughly $1 billion, according to bankruptcy papers filed Tuesday.
Miami Herald
23-05-2025
- Business
- Miami Herald
Thousands of NYC rentals just hit bankruptcy court
Renting an apartment in New York City was never easy. Everyone wants to live and build a career in a city that never sleeps, the place "dreams are made of." That's what makes the competition in the city so intense and allows landlords to impose strict requirements. We all know what some of these are by now - a strong credit score (600-680), proof of income 40-50 times the monthly rent, and sometimes a guarantor or co-signer. Related: Scott Galloway sends strong message on home buying, housing crisis Then, there are upfront costs with broker fees, security deposit, and of course, the first month's rent. Despite the obstacles, rental demand is still strong, most likely due to high homeownership costs. In the first quarter of the year, the median asking rent for 0-2 bedrooms in the Big Apple was around $3,365, up by 7.2% year over year. Rent for 3+-bedroom units grew 1.2% compared to the first quarter of 2024, reaching $4,773. All boroughs saw year-over-year rent growth, with Manhattan leading at 5.5%, followed by Brooklyn at 5%, Queens at 4.3%, and the Bronx at 0.7%, according to Realtor. Yet even in a strong rental market, not all landlords are staying afloat. One of New York City's largest landlords has put dozens of apartment-holding companies into bankruptcy. A famous name in the New York City real estate market, Pinnacle Group CEO Joel Wiener, has placed dozens of apartment-holding companies into Chapter 11 bankruptcy. The filings directly impact thousands of rental units across Manhattan, Brooklyn, Queens, and the Bronx. The bankruptcy filings list between $500 million and $1 billion in assets and liabilities, and affect around 82 holding companies tied to more than 5,000 rental units. Weiner is trying to consolidate the case under the entity Broadway Realty I Co. LLC, which owns a 73-unit building at 4530 Broadway, according to Law 360. Under Chapter 11, businesses and individuals can reorganize their financial affairs in a process where a debtor can continue to operate their business while developing a plan to repay creditors. More on Chapter 11 bankruptcy: Another major trucking company files Chapter 11 bankruptcyAnother popular pizza dining chain files Chapter 11 bankruptcyBeloved taco brand making post-Chapter 11 bankruptcy return Several months ago, Flagstar Bank initiated foreclosure proceedings in state court against most of the 5,000 units that are part of the bankruptcy filing. Now, Chapter 11 pauses legal actions against the companies. Per the report, Pinnacle itself and its core affiliates are not part of the bankruptcy cases. The 20 largest unsecured creditors in the bankruptcy name a collection of construction-related firms including Liftco Elevator Group, Sentry Elevator Corp., and Eastern Elevator of New York, with each claiming a debt of more than $300,000. Utilities like the New York City Water Board, National Grid, and Con Edison are also among the creditors, each owed over $100,000. Wiener was also involved in a separate legal dispute over $1.75 million in unpaid legal fees to the firm Gibson Dunn that previously represented Pinnacle in a labor class-action case. Pinnacle Group has a long history of legal challenges, including past allegations of rent overcharges and tenant mistreatment. While the company has previously settled with state officials and tenant groups, this latest bankruptcy could be more challenging to resolve. So does this mean tenants are at risk? Currently, tenants shouldn't be at risk, because buildings are still operating, rent should be collected, leases are still valid, and maintenance should be ongoing. Also, New York is known for strong tenant protections. Related: Shark Tank's Kevin O'Leary sends strong message on Social Security However, there could be long-term consequences such as delayed repairs, potential property sales if the bankruptcy leads to liquidation, or uncertainty if new owners take over. The bankruptcy court will manage the restructuring as the holding companies work to reorganize debt and regain financial stability. The results will impact whether Flagstar Bank and other creditors are able to recoup their losses. The Arena Media Brands, LLC THESTREET is a registered trademark of TheStreet, Inc.
Mint
23-05-2025
- Business
- Mint
Major NYC Landlord Puts Thousands of Units in Bankruptcy
(Bloomberg) -- Joel Wiener, a major owner of New York City apartments, has put properties with thousands of residential units into bankruptcy months after a bank sought to foreclose on them. Numerous property holding companies tied to Wiener's Pinnacle Group sought court protection Wednesday in New York. The properties listed assets and liabilities of between $500 million and $1 billion on Chapter 11 petitions, each of which was signed by Wiener, who is Pinnacle's chief executive officer. The bankruptcies were filed months after Flagstar Bank initiated foreclosure actions in state court against the properties. Filing Chapter 11 immediately pauses legal actions brought against the companies. The companies put into bankruptcy cover apartment buildings in Manhattan, Brooklyn, Queens and the Bronx, according to court documents. Lawyers representing the companies in the foreclosure actions notified the state court of the bankruptcy filings on Thursday. A Pinnacle spokesperson declined to comment. Pinnacle and its related corporate affiliates aren't part of the Chapter 11 filings. The holding companies are represented by the law firm Weil, Gotshal & Manges LLP and financial adviser FTI Consulting Inc., according to court documents. Wiener accumulated a fortune through ownership of rent-regulated apartments in New York City. He has previously sold shekel-denominated debt backed by a portfolio of properties owned by Pinnacle Group and trade in Tel Aviv under the name Zarasai Group Ltd. Joel, along with family members and trusts, own the ordinary shares of Zarasai Ltd., which is a privately-held company incorporated in the British Virgin Islands, according to bankruptcy court papers. Zarasai Group has around $216 million-equivalent of outstanding bonds and its 5.45% bonds due in 2025 that trade near 87 cents on the dollar, down from near par at the start of the year, according to data compiled by Bloomberg. The case is Broadway Realty I Co. LLC, number 25-11050, in the U.S. Bankruptcy Court for the Southern District of New York. --With assistance from Georgia Hall. (Updates with context and related debt in paragraphs seven and eight.) More stories like this are available on
Bloomberg
22-05-2025
- Business
- Bloomberg
Major NYC Landlord Puts Thousands of Units In Bankruptcy
Joel Wiener, a major owner of New York City apartments, has put properties with thousands of residential units into bankruptcy months after a bank sought to foreclose on them. Numerous property holding companies tied to Wiener's Pinnacle Group sought court protection Wednesday in New York. The properties listed assets and liabilities of between $500 million and $1 billion on Chapter 11 petitions, each of which was signed by Wiener, who is Pinnacle's chief executive officer.
