Shaya Prager Sinks Deeper into Midwest Real Estate Trouble

Shaya Prager is nearing the end of the shot clock while handling Midwest real estate disputes.

The mysterious investor from Lakewood, New Jersey, who spent billions buying up suburban office properties drilled by the pandemic, is losing his grip on a big Chicago-area corporate campus that has been tied up in foreclosure proceedings for nearly two years.

He has also drawn the ire of investors in Wisconsin nursing homes who claim he shorted them on payments and owes the state $3 million.

These advancing court battles are among many involving commercial real estate tied to Prager, whose firm Opal Holdings was a go-to buyer during the height of the pandemic until its controversial ground-lease strategy started to crack at some high-profile properties, such as the tallest tower in Fort Worth, Texas, that was seized from the landlord by a lender.

Now, Prager is set to lose to control of another office property, this one in suburban Chicago.

Iowa-based lender GreenState Credit Union is moving to confirm a court-ordered sheriff’s sale totaling $66 million held last month for the four-building, 698,000-square-foot Corporate 500 complex in Deerfield, just north of Chicago at 500-540 Lake Cook Road. Prager has yet to file a motion objecting to the sale, with a deadline of Oct. 24.

Neither Prager, GreenState nor attorneys for the investors in Wisconsin nursing homes who are suing Opal returned requests for comment.

GreenState entered the picture after buying the loan note tied to the Corporate 500 property’s leasehold interest, which is separately owned from the ground beneath it — such bifurcations were implemented frequently by Prager and his investment partner Katherine Cartagena during their buying spree.

In the case of the Deerfield property, Prager’s Opal took out a $104 million loan from Unify Financial Credit Union to buy the building portion of the property, while also entering a 99-year ground lease with a Cartagena-led entity serving as landlord of the dirt. Prager’s building ownership was set to pay annual rents to Cartagena’s entity starting at $4.8 million per year in 2022, with 2 percent annual hikes as part of the deal.

But Prager allegedly defaulted on the leasehold loan from Unify in 2023, leading to a $106 million foreclosure lawsuit against the property’s ownership.

Although Prager initially tried to fight the foreclosure and the appointment of a receiver, a judge found Opal to be in default on the debt, and issued a $130 million judgment against the landlord that accounted for interest and fees. It’s unclear how much GreenState paid Unify to take over the troubled loan note, but it was likely at a substantial discount to its face value.

GreenState was able to use the judgment to make a credit bid for $66 million for the property at last month’s sheriff’s sale, meaning $64 million is still owed by the leasehold owner, a Prager affiliate, court records show.

Meanwhile, Opal lost an initial ruling while trying to beat back the Wisconsin nursing homes investors’ claims that they were shorted on payments by Prager’s firm for years on deals involving four properties in small towns.

A lawsuit the investors filed in a New Jersey court earlier this year alleged Opal transferred $860,000 out of the nursing homes to other parties, despite claiming the properties generated negative income of nearly $5 million between 2022 and 2024. The investors who sued say they were owed base rent payments by Opal as part of the operating agreements for the nursing homes, but that they were ignored. Simultaneously, unpaid property tax bills and assessments owed to the state of Wisconsin Department of Health Services stacked up, and the investors claim Opal owes more than $3 million to the state.

While the New Jersey lawsuit was settled without prejudice earlier this year, meaning the claims could be revived later on, the investors have similar allegations against Opal moving forward through a suit in Wisconsin court. The investors are the funders of entities called GPH Fort Atkinson LLC; GPH Greenfield LLC; GPH Muscoda LLC; and Silver Spring Acquisition LLC.

At the nursing home Opal was operating in Fort Atkinson, deferred maintenance and a lack of repairs led to the property being named a “Special Focus Facility” under a Centers for Medicare and Medicaid Services program meant to get problematic assets back on track.

“The Special Focus Facility program designates nursing facilities that have had a history of serious quality problems for increased visitations by state surveyors and more stringent enforcement actions for deficiencies identified by those state surveyors,” the investors said in their suit. “In Wisconsin, only two of the approximately 330 nursing facilities in the state are designated as Special Focus Facilities.”

Two more of the Opal-run facilities became candidates for the Special Focus program, the investors said. As of late last year, each of the facilities was under either an active designation or a candidate for the “Denial of Payment for New Admissions” designation by Centers for Medicare and Medicaid Services, meaning the properties were suspended or close to being suspended from the right to receive reimbursement for admitting new Medicare patients.

As of Thursday, the Fort Atkinson property remains under the Special Focus designation, while another, the Silver Springs Health Care Center in Glendale, is still a candidate, according to a list published by the Centers for Medicare and Medicaid.

A Wisconsin federal judge denied Opal’s motion to dismiss the allegations earlier this summer. The landlord has since answered the investors’ complaint and raised affirmative defenses, including that they didn’t take reasonable steps to reduce their own losses; that Opal may have had reasons for not paying the investors; and that Opal already paid at least some of what the investors say they are owed.

The parties have been tasked with working toward a settlement and, if unable to reach one, completing written discovery in the case by May.

Back in suburban Chicago, however, the Corporate 500 property’s financial health seems to be improving. During the foreclosure proceedings against Opal, the property lured a tenant to lease the entire campus, with the help of Illinois tax incentives. Vantive, a kidney care spinoff of medical device giant Baxter International, is set to invest $23 million into the property and make it a headquarters.

The lease was agreed to while the property was in control of a court-appointed receiver, and details of the deal have been obscured by the receiver’s heavily redacted reports to the judge. It’s unclear whether Prager, his partner Cartagena’s ground landlord entity, GreenState or none of them will reap the benefits of the massive lease.