Broadway Realty: NYC's Largest Rent-Stabilized Portfolio Heads to Auction

Broadway Realty I Co., LLC's chapter 11 case involves a large sale of rent-stabilized properties in New York City. Eighty-two affiliated debtors, all single-purpose real estate entities within Joel Wiener's Pinnacle Group portfolio, filed for bankruptcy on May 21, 2025, seeking to auction 93 apartment buildings containing approximately 5,100 units across Manhattan, Brooklyn, Queens, and the Bronx. The portfolio carries approximately $574 million to $615 million in non-cross-collateralized mortgage debt held by Flagstar Bank.

The case reflects rent-stabilized property distress following New York's 2019 Housing Stability and Tenant Protection Act, which eliminated the vacancy decontrol and high-income deregulation mechanisms that landlords had relied upon for decades to raise rents and exit stabilization. With average per-unit sales prices for 100% rent-stabilized buildings down 37.6% (inflation-adjusted) in 2024, the Pinnacle portfolio sits within a market where 25% of securitized loans on pre-1974 buildings are now in distress. The case also includes a ruling on adequate protection in multi-debtor real estate bankruptcies, after Judge David S. Jones denied the initial cash collateral motion for failing to demonstrate adequate protection on an entity-by-entity basis.

Debtor(s)	Broadway Realty I Co., LLC (82 single-purpose real estate holding companies)
Court	U.S. Bankruptcy Court, Southern District of New York
Judge	Hon. David S. Jones
Case Number	25-11050 (lead case)
Principal	Joel Wiener / Pinnacle Group
Properties	93 apartment buildings
Units	~5,100 residential units
Boroughs	Manhattan, Brooklyn, Queens, Bronx
Unit Type	Majority rent-stabilized
Petition Date	May 21, 2025
Plan Status	Pending (Confirmation scheduled January 2026)
Primary Lender	Flagstar Bank
Total Debt	~$574-615 million
Bid Deadline	December 12, 2025
Auction Date	January 8, 2026

Joel Wiener and Pinnacle Group

The Broadway Realty bankruptcy is tied to Joel Wiener's strategy of acquiring rent-regulated properties and the business model that changed following regulatory change.

Building a rent-stabilized portfolio. Joel Saul Wiener, born 1948/1949, began acquiring rent-regulated apartments in New York City in the late 1980s. He established Pinnacle Group in 1997 and pursued an expansion strategy over the following two decades, building a portfolio of approximately $2 billion worth of New York City property containing more than 10,000 apartments in every borough except Staten Island. The vast majority of these units are rent-regulated. Wiener's personal wealth grew from $124 million in 2001 to $1 billion by the time of the bankruptcy filing.

The Pinnacle model relied on the assumption that landlords could eventually exit rent stabilization through various regulatory mechanisms, allowing rents to rise to market levels. Many landlords acquired properties and took out loans under the assumption they could eventually deregulate units through these legal mechanisms. The 2019 Housing Stability and Tenant Protection Act eliminated these mechanisms.

Regulatory scrutiny and litigation history. Wiener and Pinnacle have faced extensive regulatory scrutiny and litigation throughout their operations. As of 2006, Wiener had been personally sued 84 times, and his company had been the subject of criminal investigations by both the Manhattan District Attorney and the New York State Attorney General's office.

Rent Stabilization Business Model After HSTPA

The Broadway Realty bankruptcy followed regulatory change that eliminated the exit strategies landlords had relied upon for decades. This section reviews the pre-2019 regulatory framework and the shift that occurred when New York enacted the Housing Stability and Tenant Protection Act.

The Pre-2019 Deregulation Path

Prior to 2019, landlords acquiring rent-stabilized buildings operated under a business model that assumed eventual rent increases through several regulatory mechanisms. This assumption informed property valuations and lending decisions across the rent-regulated market.

Vacancy decontrol allowed apartments to exit rent stabilization when vacated if the legal rent reached a specified threshold. Landlords could make capital improvements, claim statutory vacancy bonuses, and gradually push rents toward the decontrol ceiling. Once an apartment exited stabilization, the landlord could charge market rent.

High-income deregulation provided another exit path. Units could be removed from rent stabilization when occupants earned above a specified income threshold while paying above a rent threshold. This mechanism particularly affected apartments in desirable neighborhoods where higher-income tenants might occupy below-market stabilized units.

Vacancy bonuses entitled landlords to increase the legal rent by 20% upon each vacancy, accelerating the path toward decontrol thresholds even without capital improvements.

Major capital improvement (MCI) pass-throughs allowed landlords to permanently increase rents across a building to recoup the costs of building-wide capital investments. These increases compounded over time and contributed to the decontrol trajectory.

These mechanisms resulted in the loss of 160,000 rent-stabilized units since 1994. Properties were acquired and financed based on projections that assumed gradual deregulation of the portfolio.

HSTPA: The 2019 Reset

The Housing Stability and Tenant Protection Act, passed by the New York State Legislature on June 14, 2019, and signed by Governor Andrew Cuomo the same day, changed the rent-stabilized business model.

The legislation eliminated vacancy decontrol entirely—apartments can no longer exit stabilization based on rent levels. High-income deregulation was abolished. Vacancy bonuses were restricted. MCI pass-throughs were capped and made temporary rather than permanent. The exit strategies that justified years of rent-stabilized acquisitions and the debt incurred to finance them were eliminated.

The law's impact on the housing stock is reflected in the number of units that remained stabilized. HSTPA saved 15,670 apartments from deregulation between 2020 and 2021 alone, indicating the volume of units that would have otherwise exited stabilization under the prior framework.

Valuation Impact

The elimination of the deregulation path was followed by a decline in rent-stabilized property values. Properties that had been valued based on projected future rent increases after deregulation were instead valued on stabilized cash flows.

Landlords who had acquired properties at prices reflecting expected deregulation faced loan balances above current values. The debt service on loans underwritten under the old assumptions could not be supported by the constrained cash flows of permanently stabilized buildings.

CMBS Market Distress

The Broadway Realty case reflects a broader wave of distress in the securitized loan market for rent-stabilized properties.

The distress data are concentrated in pre-1974 buildings, the vintage subject to rent stabilization. The Pinnacle portfolio's $574-615 million in mortgage debt is a large exposure in this market.

Pre-Filing Distress and Foreclosure Actions

The chapter 11 filing was a response to lender action. Flagstar Bank initiated foreclosure actions against the Pinnacle properties in state court prior to the bankruptcy filing. The filings placed the properties at risk of piecemeal foreclosure sales instead of an organized disposition.

The chapter 11 petitions were filed to stay these foreclosure proceedings and provide time to market the properties through a structured sale process. By consolidating the 82 entities into jointly administered cases, the Debtors sought to preserve the option of selling properties as a portfolio or in organized tranches rather than through scattered foreclosure auctions.

Cash flow pressure. Beyond the foreclosure threat, the properties faced ongoing operating challenges. Annual rent increases approved by the NYC Rent Guidelines Board failed to keep pace with operating cost inflation, including property taxes, insurance, utilities, and maintenance. The mismatch between constrained revenues and rising expenses reduced the cash flows available for debt service.

Capital Structure at Filing

The Debtors' capital structure reflects the complexity of operating 82 separate single-asset real estate entities within a coordinated portfolio.

A structural feature is that each property's mortgage is non-cross-collateralized. Flagstar Bank holds 82 separate loan positions, each secured only by the specific property that borrowed the funds. There is no pooling of collateral across the portfolio; a property with substantial equity cannot support a loan on a property that is underwater.

This structure created complexity in the bankruptcy proceedings, particularly regarding cash collateral and adequate protection. A lender with a cross-collateralized portfolio can accept adequate protection calculated on an aggregate basis because shortfalls on individual properties can be offset by equity in others. Flagstar, with its non-cross-collateralized structure, required protection on each of its 82 separate loan positions.

No debtor-in-possession financing was obtained. The cases were funded through the use of cash collateral—the rental income generated by the properties—subject to negotiated adequate protection for Flagstar's secured position.

Cash Collateral and the Adequate Protection Ruling

Judge Jones' June 29, 2025 ruling on cash collateral addressed adequate protection in multi-debtor real estate bankruptcies.

Initial Cash Collateral Motion

The Debtors filed a Cash Collateral Motion on May 27, 2025, seeking authorization to use rental income to fund operations during the bankruptcy. The motion proposed a global approach to adequate protection, treating the 82 entities as a coordinated portfolio.

The Debtors obtained an interim order on May 29, 2025, allowing continued operations while the motion for final authorization proceeded.

June 29, 2025 Denial

On June 29, 2025, Judge David S. Jones denied the motion for final authorization to use cash collateral. The ruling directly addressed the tension between the Debtors' portfolio approach and the non-cross-collateralized structure of Flagstar's loans.

The court's analysis, as reported by Nelson Mullins, identified several issues in the Debtors' motion:

Entity-specific analysis required. The Debtors failed to provide adequate protection analysis on an entity-by-entity basis. Because each debtor was a separate, single-asset entity with a separate, non-cross-collateralized mortgage, Flagstar could not be forced to accept aggregate portfolio treatment. Each of the 82 debtors needed to independently demonstrate that its equity cushion provided adequate protection to Flagstar's secured claim in that specific property.

Equity cushion standards. The court noted that while a 15% equity cushion is sometimes accepted, most courts require a 20% equity cushion for adequate protection purposes. The Debtors' global approach obscured which individual entities met this threshold and which did not.

No cross-collateralization benefit. Flagstar emphasized that it had structured its loans on a non-cross-collateralized basis. Properties with substantial equity could not be used to provide protection for properties where Flagstar's loan exceeded current value. The Debtors could not aggregate the portfolio to create protection that did not exist on an individual basis.

The motion was denied without prejudice, allowing the Debtors to re-file with targeted, entity-specific adequate protection proposals. The court acknowledged that some subset of debtors likely had significant equity cushions and could satisfy adequate protection requirements individually.

Adequate Protection Ruling

The Broadway Realty ruling stated that when loans are non-cross-collateralized, each debtor must demonstrate adequate protection on a standalone basis. Debtors cannot aggregate their portfolios to create adequate protection that does not exist at the individual entity level.

Non-cross-collateralization preserves the ability to demand entity-specific treatment in bankruptcy. It prevents borrowers from using equity in some properties to justify cash collateral use that impairs the lender's position in others.

Subsequent Cash Collateral Orders

Following the denial, the Debtors worked with Flagstar to develop property-by-property adequate protection proposals satisfying the court's requirements.

Multiple extension notices were filed as the parties negotiated adequate protection for each of the 82 separate debtor entities. The process required individual analysis of equity cushions, property values, and protection mechanisms for each property, reflecting the non-cross-collateralized structure of the loans.

363 Sale Process

With cash collateral secured, the Debtors moved forward with marketing the portfolio for sale under section 363 of the Bankruptcy Code.

Marketing Campaign

Eastdil Secured L.L.C. was retained as exclusive real estate advisor to market the properties.

The marketing included more than 50 parties executing confidentiality agreements to access due diligence materials.

Bidding Procedures

The court approved bidding procedures on October 1, 2025, establishing the framework for the auction process.

The stalking horse bid notice filed on December 23, 2025 establishes a baseline bid for the auction.

Market Dynamics

The 37.6% decline in per-unit values reduces entry prices compared with the pre-2019 period when deregulation assumptions influenced pricing.

Without the expectation of deregulation, buyers must underwrite the properties based on stabilized cash flows. The underwriting assumption differs from the pre-2019 period when deregulation expectations influenced pricing.

Chapter 11 Plan

The Joint Chapter 11 Plan contemplates a sale of substantially all assets through the section 363 auction process, with proceeds distributed to creditors according to absolute priority.

Plan Structure

The plan structure reflects the non-cross-collateralized nature of the Flagstar loans. Class 3 contains the Secured Mortgage Claims, with Flagstar voting through individualized ballots for each of the 82 separate debtor entities. A property-by-property approach to plan treatment mirrors the entity-specific adequate protection requirements established by Judge Jones' June 29 ruling.

Key Scheduled Dates

The schedule places the auction in early January 2026, with plan confirmation proceedings scheduled later in January.

Key Timeline

Professional Retentions

The Debtors retained restructuring and real estate professionals for the multi-debtor case.

First interim fee applications for both Weil and FTI were approved in December 2025. The retention of Golenbock Eiseman as conflicts counsel provides conflicts counsel for the debtor group.

Tenant and Regulatory Context

The Broadway Realty case has drawn attention from tenant advocates, who have raised concerns about building conditions and the bankruptcy's impact on residents.

Tenant advocacy. Tenant rallies have accompanied the bankruptcy proceedings, with residents expressing concerns about building conditions under Pinnacle's management. Public letters have been filed with the bankruptcy court expressing tenant perspectives on the case.

Tenant advocates have referenced Pinnacle's history of regulatory violations and settlements. The 2006 settlement requiring a forensic rent audit and the 2022 settlement over undisclosed condo conversion costs are part of that history.

Rent stabilization protections. Rent-stabilized tenants retain their statutory protections regardless of building ownership. The rent stabilization law attaches to the apartment, not the landlord. New owners would be bound by existing leases, legal rents, and stabilization regulations. The sale transfers ownership of stabilized buildings to new parties who must operate within the same regulatory framework.

Rent Guidelines Board. The NYC Rent Guidelines Board sets permissible rent increases for stabilized apartments, and recent increases have failed to keep pace with operating cost inflation. This dynamic affected cash flow pressures that preceded the bankruptcy filing and affects the properties under new ownership.

Industry Implications

The Broadway Realty case includes data points for the rent-stabilized lending market and an adequate protection ruling in a multi-debtor real estate case.

Rent-stabilized lending. The 990% increase in non-performing loans at some institutions with rent-stabilized exposure indicates stress among lenders with rent-stabilized portfolios. Cash flow and valuation pressures described in the market data align with the conditions facing the Pinnacle portfolio.

Recourse triggers. Commercial real estate mortgages are typically structured as non-recourse, meaning borrowers are not personally liable for deficiencies if property values decline below loan balances. However, bankruptcy filings typically trigger recourse provisions that require borrowers to cover deficiencies.

Borrowers can pursue negotiated workouts or deed-in-lieu transactions that avoid triggering recourse, while lenders can pursue bankruptcy to seek borrower assets beyond the mortgaged property. The Broadway Realty case, with its 82 separate entities, shows the structural complexity these considerations create.

Adequate protection precedent. Judge Jones' June 29 ruling states that adequate protection must be demonstrated on an entity-by-entity basis when loans are non-cross-collateralized. Debtors cannot aggregate their portfolios to create protection that does not exist at the individual property level.

Frequently Asked Questions

What is rent stabilization and why did it contribute to this bankruptcy?

Rent stabilization is a New York regulatory system limiting annual rent increases on approximately one million apartments, primarily in buildings constructed before 1974. The 2019 Housing Stability and Tenant Protection Act eliminated landlords' ability to exit stabilization through vacancy decontrol and high-income deregulation. Landlords who had acquired properties expecting to eventually raise rents to market levels had cash flows insufficient to service debt, contributing to distress in the rent-regulated market.

How many properties and units are involved in the Broadway Realty bankruptcy?

The case involves 93 apartment buildings containing approximately 5,100 residential units across Manhattan, Brooklyn, Queens, and the Bronx, managed through 82 separate debtor entities. Each debtor is a single-purpose real estate entity holding one or a small number of buildings.

Why was the cash collateral motion initially denied?

Judge Jones found that the Debtors failed to demonstrate adequate protection on an entity-by-entity basis. Because each property's mortgage was non-cross-collateralized, Flagstar Bank could not be forced to accept aggregate portfolio treatment. Each of the 82 debtors had to separately prove its equity cushion provided adequate protection to Flagstar's secured claim in that specific property.

Who is Joel Wiener and what is his relationship to the bankruptcy?

Joel Wiener is the CEO of Pinnacle Group and one of New York's largest landlords of rent-stabilized apartments, managing approximately $2 billion worth of property containing more than 10,000 units. The 82 debtor entities are part of the broader Pinnacle portfolio. Wiener has faced extensive regulatory scrutiny and litigation over decades of landlord operations, including a 2006 settlement for overcharging tenants and a 2022 settlement with the New York Attorney General.

How much debt is involved in the case?

The 82 debtors collectively carry approximately $574 million to $615 million in secured debt held by Flagstar Bank. Each property has its own non-cross-collateralized mortgage—the debts are not pooled across the portfolio.

What happens to tenants if the properties are sold?

Rent-stabilized tenants retain their statutory protections regardless of building ownership. The rent stabilization law attaches to the apartment, not the landlord. New owners would be bound by existing leases, legal rents, and stabilization regulations. However, tenant advocates have expressed concerns about building conditions and maintenance practices under any new ownership.

Is this the largest rent-stabilized sale in NYC history?

Market observers describe the 93-building, 5,100-unit auction as one of the largest sales of rent-stabilized properties in New York City history.

What is the current status of the case?

As of late December 2025, the disclosure statement has been approved and bids have been submitted ahead of the December 12 deadline. A stalking horse bid has been noticed, and the auction is scheduled for January 8, 2026, with confirmation proceedings scheduled to follow.

How does this case relate to broader rent-stabilized distress?

The case reflects a broader trend of rent-stabilized property distress following HSTPA. The distress rate for securitized NYC multifamily loans has more than doubled to 14.4%, with 25% of pre-1974 buildings in distress. Per-unit values for 100% rent-stabilized buildings declined 37.6% (inflation-adjusted) in 2024.

What was the precedent from the adequate protection ruling?

Judge Jones' June 29, 2025 ruling established that in multi-debtor real estate cases, each entity must demonstrate adequate protection on a standalone basis when loans are non-cross-collateralized. Debtors cannot aggregate portfolios to satisfy a lender whose individual loan positions may lack equity cushion.

Who is the claims agent for Broadway Realty?

Stretto, Inc. serves as the claims and noticing agent. The firm maintains the official claims register and distributes case notifications to creditors and parties in interest.

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