A major New York City landlord, Joel Wiener’s Pinnacle Group, has filed for bankruptcy due to soaring interest rates and state housing law changes that limit rent increases on rent-stabilized apartments. With nearly $1 billion in debt, including mortgage and bond obligations, the company faces financial strain and foreclosure risks. The bankruptcy filing aims to allow restructuring and negotiations with creditors amid ongoing legal disputes over rental income allocation.
Pinnacle Group, a prominent New York City landlord owned by Joel Wiener, managing a large portfolio of rent-stabilized apartments, has been pushed into Chapter 11 bankruptcy. The move comes amid skyrocketing interest rates and restrictive state housing laws that have curtailed the company’s ability to raise rents, leading to mounting financial pressures, according to court documents filed in the Southern District of New York.
Pinnacle Group’s portfolio includes dozens of properties burdened with approximately $564 million in mortgage debt, alongside outstanding Israeli-issued bonds, pushing the total debt load near $1 billion. The company is currently facing foreclosure actions from Flagstar Bank, its primary lender.
Ephraim Diamond, chief restructuring officer for the properties, highlighted that interest rate hikes in 2022 caused mortgage servicing costs to soar from rates between 3% to 4% to as high as 7.5% to 10.25%. The debt service cost jumped from $26 million in 2023, including $20 million in interest, to $36 million last year, with interest costs alone rising to $25 million. These costs are expected to increase further in 2025.
U.S. Bankruptcy Judge David Jones has postponed ruling on Pinnacle Group’s request to use cash collateral held against the Flagstar debt. Both parties have been urged to reach a compromise regarding the funds. If no agreement is reached, the judge is prepared to rule during the next court session.
Flagstar Bank has accused Pinnacle Group of diverting rent payments to a related holding company, allegedly funneling money to bondholders rather than lenders, an allegation the landlord has yet to respond to publicly.
Compounding Pinnacle Group’s difficulties are legislative changes in New York State that impose rent stabilization and limit rent increases on tenants. Since 2019, the state has also restricted landlords from converting rent-regulated apartments into condominiums, severely impacting the company’s revenue and cash flow, according to Diamond.
The bankruptcy filing is seen as a necessary step for Pinnacle Group to restructure its debts and negotiate with creditors amid these challenges.
The case, Broadway Realty I Co. LLC, is being heard in the U.S. Bankruptcy Court for the Southern District of New York under case number 25-11050.
