A federal bankruptcy judge has dealt an early blow to New York City Mayor Zohran Mamdani’s tenant-first agenda, rejecting the city’s attempt to block a massive $451 million real estate transaction involving the U.S. arm of Israeli firm Summit Properties.

The deal covers more than 5,000 apartments spread across roughly 90 buildings in Brooklyn, most of them subject to rent regulation. For Mamdani, who swept into office pledging to confront landlords and freeze rents, the ruling represents a major political setback, coming just weeks after he publicly vowed to intervene on behalf of tenants living in one of the deteriorating properties included in the sale.

City officials escalated the fight last week by asking the bankruptcy court to halt the transaction, arguing that Summit lacked both the “will and the resources” to rehabilitate buildings plagued by years of neglect. In court filings, the city pointed to more than 780 open housing violations across Summit-owned properties in New York, including nearly 290 deemed to pose an “immediate danger” to tenants. The figures were drawn in part from disclosures Summit itself filed with the Tel Aviv Stock Exchange in 2025.

The judge was unconvinced. Despite the city’s data and warnings, the court declined to delay the sale and allowed the bidding process to move forward, clearing the way for final approval hearings later this week.

Summit Chairman Zohar Levy told The New York Times that the company is “deeply committed” to New York City and has already begun discussions with government officials about investing in the properties. A company spokesperson acknowledged that the buildings are old but said deficiencies are being addressed on an ongoing basis.

The ruling highlights the tension at the heart of Mamdani’s mayoralty: ambitious promises to defend tenants colliding with the limits of legal authority and the realities of the rent-regulated housing market. While Mamdani has championed policies like a rent freeze, real estate industry figures warn that aggressive regulation without new investment could further degrade aging housing stock.

City Hall signaled the fight is not over. “We are examining our next steps. Our fight to protect tenants is not over,” said Deputy Mayor for Housing Laila Bozorg.

The next hearing, which could grant final approval to the sale, is scheduled for Thursday—setting up another test of how far Mamdani is willing, or able, to go to deliver on the promises that propelled him into office.

(YWN World Headquarters – NYC)