(Bloomberg)-a portfolio of Rent-stabilized new york City Apartments Owned by joeel wise was pushed into bankruptcy by “Sky-robbed” interes and changes to constructs to constlate Property Ownes’ Ability to Increase Rent on tenants, according to court papers.
Dozens of Properties Managed by Wisener’s Pinnacle Group WeE Put Into Chapter 11 Last Week, Saddled With Roughly $ 564 Million in Mortgage Debt and Foreclosure Actions from Primary Lendy Lenders, Flagstar Bank. The Apartments also have outstanding Amounts on Israeli -SUed 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 expeces, Epharaim Diamond, the Properties Diamonds’ Chief restructuring officer said in a court.
Rates on a large portion of the Pinnacle Properties’ Mortgage Debt has “Sky Rocked” SINCE 2022, from Between 3% to 4% to 4% to as High as high as high as 7.5% and 10.25%, DIDIND SAIDD SAIDD 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 projection to increase against in 2025, He Said.
Us bankruptcy judge david jones, during the first hearing in the case the case the filing, delayed ruling on a request by the Apartment Business to Spend Cash Being Held as Calateral 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 the next few weeks. If they can’t agree, jones said he was prepared to rule on the request as soon as as tomorrow, when bot sides are scheduled to return to court.
Flagstar Claims that Rent Money that should be given to pay the mortgage instead may have been funneled to a related Holding Company where it is given to bondhlders. “No one knows where the Rental Income Went, but it did not go to pay the lenders and appears to have ben consolidated to pay bondhlets,” Flagstar said in Court Papers Fled Papers Fled Wednsday. ”
A Lawyer for the Apartment Company Did Not Immedited Return a request for comment.
Most of its tenings 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 Ownes ‘Ability to Raise Rents when a Tenement Leaves A Rent-Regulated Apartment and Limited Landlords’ Ability to Turns APANDONS, CONDOS, CONDOS, 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 discus options with credits.
The case is broadway realty I Co. LLC, Number 25-11050, in the US Bankruptcy Court for the southern district of new york.
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