Shaya Prager Faces Third Foreclosure at Minnesota Complex

A third property in Shaya Prager’s Minneapolis-area office campus has been hit with a foreclosure lawsuit.

Denver-based lender HTLF Bank alleges he defaulted on a $47.5 million loan tied to the ground lease at 5600 84th Street, an 18-story office building also known as 8400 Tower, court records show. The lawsuit was filed in Hennepin County District Court in January. The bank named Prager and the entity that leased the ground from the owner as defendants.

The property, in Bloomington, Minnesota, is part of the five-building Normandale Lake Office Park, which Prager purchased for $366 million in 2022.

The lender alleges Prager failed to maintain the agreed-upon debt service coverage ratio; maintain liquid assets; lease vacant spaces in the building before the deadline set out in the loan documents; and reimburse the bank for real estate taxes on the property.

The bank also alleges it advanced Prager $166,000 in December to ensure there was enough money in a lockbox account to avoid utility interruptions.

The lender asked the court to appoint a receiver to manage the property. Prager didn’t comment on the lawsuit and hasn’t filed a response.

A receiver has already been appointed as part of foreclosure proceedings for two other Prager-owned properties in the complex.

Wings Federal Credit Union sued Prager in March, accusing him of defaulting on a $41 million loan for 5600 West 83rd Street. Columbia Public Advisors alleged Prager defaulted on a $65 million loan tied to 8500 Normandale Lake Boulevard in an August lawsuit.

Prager admitted to not paying property taxes and other payments, in response to the Wings suit, but alleged the lender had agreed to reduce payments to interest-only and reneged on the promise, causing the default. Prager denied the allegations in the second case.

He maintains control of two other buildings in the complex.

The Minnesota lawsuits make up a fraction of the legal trouble facing Prager. He, his wife, Shulamit Prager, and his firm are the subject of at least 13 other open lawsuits across six states.

At many of these properties, Prager used an ownership structure involving ground leases to take out loans worth more the value of his real estate purchases. Prager and his partners borrowed about $3 billion, an analysis by The Real Deal found. Two lenders have sued him over the ground lease structure, alleging that Prager has not been forthcoming.

Prager’s lawyers claimed lenders were aware of this common beneficial ownership prior to making the loans. One of those suits has been settled.

His controversial use of ground leases isn’t the only financing technique in Prager’s playbook that’s turned heads. He also flipped a Manhattan townhouse to his go-to deal partner Katherina Cartagena for a 33 percent increase.