First came Shaya Prager’s lenders. Now his preferred equity investors have come knocking.
The embattled New Jersey-based investor is the subject of a lawsuit claiming he stopped paying returns to preferred equity investors and owes them nearly $10 million.
The lawsuit, which names Prager and his wife, Shulamit, was filed in Ocean County, New Jersey, on June 25. The plaintiffs allege he defaulted on guarantees to repay them; they say they provided $26 million for three properties.
The lawsuit comes as Prager, whose firm Opal Holdings purchased some $2 billion worth of office buildings in 2021 and 2022, faces scrutiny over the ground lease structure he used to fatten his portfolio. He also was forced to return the keys to two office buildings in Dallas-Fort Worth, and he’s facing foreclosure on a Minneapolis-area office asset.
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The three properties subject to the latest lawsuit are: 194 Wood Avenue in Iselin, New Jersey; and 1001 Haxall Point in Richmond, Virginia; and 1100 Virginia Drive in Fort Washington, Pennsylvania.
Prager purchased the Wood Avenue property for $140 million in August 2020, NJBIZ reported. The nine-story office building spans 470,700 square feet; that’s $297 per square foot. The preferred equity investors contributed $8 million for this property and were supposed to receive a preferred return of 1.25 percent per month.
They allege Prager owes them $800,000.
In April 2021, he acquired the 263,800-square-foot Richmond office tower for $77 million, or $292 per square foot, Virginia Business reported. Preferred investors contributed $7.5 million and were supposed to receive a preferred return of 18 percent per year.
These investors say Prager owes them $8.4 million.
Prager purchased 1100 Virginia Drive in August 2021 for $124.5 million, about $183 per square foot, Globe Philadelphia Business Journal reported. The office complex spans 680,000 square feet. Preferred investors contributed $10.5 million for this property and were supposed to receive a preferred return of 1.25 percent per month.
Prager owes the group $787,000, the lawsuit states.
The lawsuit says Prager stopped paying the preferred investors between November 2023 and January 2024. In February, the plaintiffs sent the Pragers a default notice. They provided multiple opportunities for Prager to cure the default and requested his financial statements (a right provided by the guarantees); they claim Prager never responded.
The plaintiffs on June 28 filed a motion for summary judgment, which will be decided on August 16.