Summit wins New York property auction despite mayor’s intervention

Summit Properties USA, a unit of Summit Real Estate Holdings (TASE: SMT), which is controlled by Zohar Levy (48%), announced yesterday that it had won an auction for the purchase of a portfolio of properties in New York from The Zarasai, a unit of US real estate company Pinnacle Group, for $451 million. This was despite the attempts of New York mayor Zohran Mamdani to hold back completion of the auction.

The portfolio bought by Summit Properties USA consists of 5,100 housing units in 93 buildings in various parts of New York, mostly Manhattan, Queens, and Brooklyn. The properties were put up for sale after the owner, The Zarasai, which has bonds listed on the Tel Aviv Stock Exchange, failed last year to meet the terms of loans from US bank Flagstar, which demanded immediate repayment.

Last September, the parties agreed to a settlement under which whereby the properties would be sold, and last month the company decided that the bid by Summit to buy the property portfolio would be a “leading bid” in the public auction process. At the same time, Summit reached understandings with Flagstar, which undertook to provide it with the finance to complete the deal.

At that stage, Mamdani, who had just become mayor, entered the picture. He had run on a platform of greater availability of affordable, rent-controlled housing in New York. He attempted to intervene in the auction, on the grounds that the municipality needed more time to examine it. In its filing in the bankruptcy court, the municipality claimed that Summit did not have the wherewithal to complete the deal and improve conditions in the buildings.

Mamdani even made a well-publicized tour of one of The Zarasai’s buildings in Brooklyn, during which tenants showed him the problems from which they suffered, which the mayor described as conditions that no New Yorker should have to live under. At the end of last week, however, the court dismissed the motion, paving the way for Summit’s win in the auction.

The Zarasai is one of a group of veteran companies in rent-stabilized properties in New York. Its portfolio is valued at $1.7 billion. It first made a bond offering in Tel Aviv in 2013, at the beginning of a wave of US real estate companies that raised relatively cheap finance on the Tel Aviv Stok Exchange. The Zarasai’s debt on the bonds issued in Tel Aviv is currently about NIS 1.2 billion, mostly unsecured.

Last year, the company announced that it was ceasing to pay interest to its senior lender, US bank Flagstar, which initiated proceedings to foreclose on the properties.

As a result, the prices of The Zarasai’s bonds plummeted, and they are traded at junk yields to maturity of 195% and 560%, reflecting fears that the company will not be able to repay them, a situation that has not changed since the report of Summit’s win in the auction, as the properties concerned have no direct connection to the bondholders.

Published by Globes, Israel business news – en.globes.co.il – on January 13, 2026.

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