Lehman Brothers Holdings has scheduled a foreclosure auction for Friday in an effort to seize control of the block-long 550-unit Dunbar apartment complex in Harlem between 149th and 150th Streets off 7th and 8th Avenues, along with a set of smaller properties, according to article today by Eliot Brown in The Wall Street Journal.
The Pinnacle Group, which bought thousand of apartments in low-income neighborhoods during the real estate boom, as a result now faces losing one of its more prominent properties, the article said.
With investment funds controlled by Praedium Group, the article continued, Pinnacle "paid aggressive prices to become among the city's most active buyers of walk-up apartment buildings throughout 2005 and 2006," adding that "Pinnacle has been criticized by elected officials who allege improper eviction practices. The company has denied wrongdoing."
"Amid a tough lending market and lower market prices for the properties," the article said, "Pinnacle failed to repay Lehman about $51 million in junior debt that came due in September. The firm is still in talks with Lehman in an attempt to maintain control of some of its portfolio, a person familiar with the matter said. However, that doesn't include holding on to the Dunbar complex, this person said."
"There are a lot of opportunities and a lot of challenges in this financial environment, but we're very comfortable that we're navigating both successfully," said Kenneth Fisher, an attorney for Pinnacle," the article said.
In 2007, it continued, "a group of tenants sued the company in federal court alleging that the company had improperly forced out tenants. That lawsuit hasn't yet been resolved. Pinnacle has fought the charges, saying it has acted properly. 'Pinnacle is proud of its record of providing safe and affordable housing,' Mr. Fisher said. 'The controversy over its operations is greatly overblown.'"
A spokeswoman for Lehman Brothers Holdings, which still holds real-estate assets while in bankruptcy, didn't respond to requests for comment.
Built in the 1920s, the red-brick Dunbar apartment complex was bought by Pinnacle in 2005 for $94 million from Baruch Singer.
The Pinnacle Group, which bought thousand of apartments in low-income neighborhoods during the real estate boom, as a result now faces losing one of its more prominent properties, the article said.
With investment funds controlled by Praedium Group, the article continued, Pinnacle "paid aggressive prices to become among the city's most active buyers of walk-up apartment buildings throughout 2005 and 2006," adding that "Pinnacle has been criticized by elected officials who allege improper eviction practices. The company has denied wrongdoing."
"Amid a tough lending market and lower market prices for the properties," the article said, "Pinnacle failed to repay Lehman about $51 million in junior debt that came due in September. The firm is still in talks with Lehman in an attempt to maintain control of some of its portfolio, a person familiar with the matter said. However, that doesn't include holding on to the Dunbar complex, this person said."
"There are a lot of opportunities and a lot of challenges in this financial environment, but we're very comfortable that we're navigating both successfully," said Kenneth Fisher, an attorney for Pinnacle," the article said.
In 2007, it continued, "a group of tenants sued the company in federal court alleging that the company had improperly forced out tenants. That lawsuit hasn't yet been resolved. Pinnacle has fought the charges, saying it has acted properly. 'Pinnacle is proud of its record of providing safe and affordable housing,' Mr. Fisher said. 'The controversy over its operations is greatly overblown.'"
A spokeswoman for Lehman Brothers Holdings, which still holds real-estate assets while in bankruptcy, didn't respond to requests for comment.
Built in the 1920s, the red-brick Dunbar apartment complex was bought by Pinnacle in 2005 for $94 million from Baruch Singer.
Architecture Critic
Carter Horsley
Since 1997, Carter B. Horsley has been the editorial director of CityRealty. He began his journalistic career at The New York Times in 1961 where he spent 26 years as a reporter specializing in real estate & architectural news. In 1987, he became the architecture critic and real estate editor of The New York Post.
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