Inside the fallout from Shaya Prager’s “contrarian” 2022 office investments

When Shaya Prager buys a new building, he swipes a magic credit card. 

Regardless of his assets or revenue, there’s no credit limit. The only thing he has to do is pay the bill on time — and, as Prager has proven, even that requirement is a little loose. 

He started swiping during the pandemic. 

The relatively unknown investor from an Orthodox Jewish community in Lakewood, New Jersey, made a splash when he took his card on a shopping spree for something no one else wanted: suburban office buildings. 

It wasn’t a small spree. He fattened the portfolio of his firm Opal Holdings with $2 billion worth of real estate in a matter of two years. 

He stuck to the Garden State in 2020, picking up an office campus built for Merrill Lynch and an office tower in Metropark. The following year, he expanded his portfolio with at least eight buildings around the country, including in Philadelphia, Atlanta, Fort Worth and Orange County, California. 

Prager’s Midwestern purchases drew the industry’s attention. In 2022, he clinched a deal to buy four office parks in Chicago and Minneapolis for more than $1 billion. 

Low interest rates inspired buying frenzies everywhere, and brokers had no problem with the fact that Prager wanted to pour hundreds of millions of dollars into a so-called dying asset class. The brokers who worked with him praised his strategy, calling him a “contrarian investor” as a compliment. 

“They’ve been a go-to because you know they’re going to perform,” Cushman’s Dan Deuter said at the time. He worked with Prager and his partner Katherine Cartagena on three deals. 

Two years later, with interest rates high and office still sinking, Prager is struggling to pay the bills for his spree. 

Worse, when he lost control of one property, the tallest building in Fort Worth, details emerged about the potentially fraudulent mechanics of that magic credit card and the way he got loans to buy his properties in the first place.

The Prager case shows how unconventional deals could stay hidden in the frothy trading environment of 2020-2022, including others where loan totals surpassed the equity a developer put in. Though Prager is hardly the only dealmaker now in distress, foreclosure filings, lenders’ inquiries and federal investigations are illuminating a pattern of allegedly problematic transactions related to his properties.

It’s not just investors and developers in the spotlight. The title insurers that closed the loans on these deals are also drawing attention. Amid investigations into alleged mortgage and title fraud, Fannie Mae, for one, no longer closes loans with Riverside Abstract, a title insurer used by Prager.   

Meanwhile, whole municipal economies are in the crosshairs. In 2022, Prager’s contrarian deals appeared to boost office markets in Chicago and Minneapolis, but he may as well have invested Monopoly money. 

Shaya, Shulamit and Katherine

Five years ago, Prager was a relative nobody, a small-scale developer working on fewer than 10 ground-up projects in New York City and managing some others.

It is difficult to piece together who Prager is. A few clips show a well-regarded man about town in Lakewood, a town of about 100,000 people of whom nearly 70 percent are Orthodox Jews. Prager appears in a 2009 roast of Jay Sanderson of the Jewish Television Network, though he doesn’t say much. In 2015, the yeshiva Mir Yerushalayim honored him in a three-minute video in which one teacher described him as “a person like him who is looking for a real inspiration.” 

“This is Shaya,” he added. “He will do everything for a different person, he will live for a different person.” 

Another teacher in the tribute called him “passionate.”

A handful of filings, mostly from court cases, shed some light on Shaya’s career before he made the $2 billion bet on a struggling office market.

“Lenders are not necessarily opposed to that leverage because of exposure. They’re opposed to that leverage because it removes the alignment of interest where the borrower has no skin in the game.”
David Eyzenberg, ground lease expert

Prager, who appears to have also used the first name Avroham, often worked with his wife, Shulamit Prager. He started Opal in 2014, he said in a 2022 deposition, to buy land and work on ground-up development in the five boroughs, later pivoting to owning and operating offices, residences and warehouses. In 2015, he took out a series of loans from Forefront Income Trust that the latter accused him of not paying back.

They also got into business with two nonprofits in order to help them secure financing. Shulamit agreed to be co-borrower on a $14 million loan from Sterling National Bank, according to a complaint she filed in New York in late 2017. Shulamit’s condition: “that half of the proceeds of the loan from Sterling would simultaneously be loaned to Ms. Prager.”

It’s unclear when the Pragers met Cartagena, but her name began to appear on their deals in 2022, including some in New York City.

Cartagena graduated with a master’s degree in real estate development, finance and investments from New York University in 2017. Within five years, she was signing multimillion-dollar deals as the founder of Prana Equities. Prager and Cartagena became “a go-to” for sellers’ brokers in 2020 and 2021, Cushman’s Deuter said; even when interest rates surged, the pair was still able to close.  

The credit card likely had something to do with it. 

The magic trick

Prager’s magic credit card isn’t a slim piece of plastic; it’s an operation that relies on an antiquated type of lease agreement. 

Here’s how it works: After Prager buys an office building, he bifurcates the property and creates a ground lease. 

That kind of separation is common in New York City but rarer elsewhere in the nation, except in the case of government entities or educational institutions.

It makes sense for a situation where property owners “don’t want to sell the land, but they want it to be productive,” said David Eyzenberg, a ground lease expert who’s on the faculty at NYU and the University of Miami. Cartagena was a student of Eyzenberg and later worked for his ground lease and capital advisory firm, Eyzenberg & Company. Her LinkedIn profile indicates she left the job near the end of 2018. 

In Prager’s play, he holds onto the land, while another entity leases the land for the building. In many of these cases, that second entity is also controlled by Prager.

The twofer structure allows for double the financial transactions. Prager is able to take out a mortgage based on his interest in the land, while the lessor — in this case, also Prager — takes out a mortgage based on the ground lease. Together, the loans can add up to more than the purchase price of the property.

This is not in itself illegal, but ground lease experts don’t encourage it.

About a decade ago, investors started using the ground lease structure as an investment vehicle, a way to turn a building into an abstract financial instrument, the real estate equivalent of a security in finance. Eyzenberg was an early adopter of the innovative use. He compares investing in a ground lease to “buying a long-dated bond” whose low returns make it a better match for an investor like an insurance company or pension fund than an individual investor in small deals.  

But Prager adapted the theory, allegedly bifurcating the property to become both the landlord and the ground lease tenant.  

Eyzenberg called the common ownership structure “greatly frowned upon by lenders.” 

Lenders who knew that Prager controlled both the ground lease and the building probably wouldn’t have made those loans.  

“Lenders are not necessarily opposed to that leverage because of exposure,” he said. “They’re opposed to that leverage because it removes the alignment of interest where the borrower has no skin in the game.”

The Texas unraveling 

Some call Prager’s ground lease strategy a risky yet shrewd way to buy property. 

One of Prager’s lenders, Pinnacle Bank, calls it fraud. 

Prager started having issues with his magic credit card when he stopped paying the bill. Then a web of liens, lawsuits and foreclosure filings surrounding a Fort Worth tower fixed the spotlight on his dealings.

One of his pandemic shopping spree purchases was downtown Fort Worth’s tallest building, Burnett Plaza. Prager purchased the property for $137.5 million through an entity called Burnett Plaza Holdings. Around the same time, that entity signed a ground lease with another LLC, Burnett Cherry Street, public records show. 

The two companies ostensibly operated as separate enterprises. Burnett Plaza Holdings collected rent on the ground lease from Burnett Cherry Street, which operated the building as a typical landlord, amassing rents and providing maintenance, security and other services. 

However, sale documents show that the two companies have the same address: 950 Airport Road in Lakewood. 

In  filings with the Texas secretary of state, Avrohom Prager is listed as the manager of Burnett Cherry Street, and Shimon Katz is listed as the manager of Burnett Plaza Holding, but both managers list the same Airport Road address.  

Burnett Plaza Holdings borrowed $86 million against the property. Burnett Cherry Street, the ground lease tenant, borrowed $83 million from Pinnacle Bank against the lease. 

In total, then, the two entities took out $169 million in loans on the building, which it purchased for $137.5 million. 

Typically, the loan-to-value ratio for a building is between 60 and 70 percent. In this case, one $80 million loan would be standard, not two. 

It didn’t take long for the liens and lawsuits to pile up. 

Quality Floors Contract filed the first lien in May 2023 and claimed the owner owed more than $12,000. Two more liens came in June. In 2024, more than a dozen were filed against Burnett Plaza Holdings and Burnett Cherry Street, claiming more than $2 million in unpaid services. 

But it was a lawsuit filed in March that shed light on Prager’s purchasing strategy. 

Tarrant Construction Services sued Prager, claiming he owed the company more than $1 million in construction costs. In his response, Prager blames lender Pinnacle Bank. 

Pinnacle shot back at Prager with accusations of fraud. 

The lender claims Prager represented that Burnett Plaza Holdings, the ground lessor, “is not an affiliate of the Borrower.”

“As a result of Prager’s string-along fraud, Pinnacle continued to service the loan and has caused Pinnacle to suffer injury,” the lender wrote in a response to the lawsuit. 

An attorney for Prager calls the accusation “baseless,” denying that the two entities are “affiliates” according to the definition in the loan agreement. 

Rather, he claims Pinnacle could have known the entities had an owner in common. He said the lease document included an organizational chart and “explicitly represented that there may be ‘common beneficial ownership’ in the landlord and tenant.”

He also denies that Burnett Cherry Street violated the loan agreement, turning the blame on Pinnacle for “manufacturing Events of Default.”

The property landed in a May 7 foreclosure auction on the steps of the Tarrant County Courthouse. Pinnacle acquired the building with a $12.3 million credit bid against the $13 million loan. In taking over the building, Pinnacle also absorbed the building’s $70 million senior loan. 

The trial is set for February 2025. 

Opal allies 

Prager has likely evaded scrutiny thanks to his various associates, who have been signatories on his various property documents. 

For example, in another suit by Pinnacle Bank against Opal, the defendant isn’t Prager; it’s his wife, a principal at Opal whose name appears on documents and in lawsuits related to her husband’s business.

In a 2022 deposition, Prager said his wife wasn’t involved in day-to-day operations of the business. 

In addition, different people signed for Opal-controlled Burnett Plaza Holdings in the Burnett Plaza sale documents, including Avrohom Prager, Shimon Katz and Lawrence Heller.

Cartagena also appears as the signatory for Prager’s Midwest office deals.

When Opal purchased Normandale Lake Office Park outside of Minneapolis, he executed the same strategy. An entity called 8200 Normandale LLC purchased the property and signed a ground lease with Liberty 8200 Normandale LLC. 

Cartagena signed for 8200. Prager signed for Liberty. But Minnesota state filings show that Prager is the manager of both entities. 

Prager can’t close deals without the approval of a title insurer, a crucial piece of the business model. That’s where Riverside Abstract comes in. 

The Lakewood-based title insurance company is linked to multiple Prager deals, including the Burnett Plaza purchase. 

Riverside is already on the feds’ radar. 

This year, Fannie Mae stopped closing loans involving Riverside after the company was involved in a deal that the Department of Justice deemed fraudulent. The DOJ claims that Riverside provided closings tied to illegal flips orchestrated by Brooklyn real estate investor Boruch Drillman and his alleged co-conspirator Aron Puretz. 

Fannie and Freddie have responded with broader investigations into suspected mortgage fraud.

More foreclosures 

Prager’s failure to pay the bills is threatening to further slim down his portfolio.

In April, Pinnacle Bank foreclosed on a 450,000-square-foot office park Opal owned in Arlington, Texas. Opal defaulted on a $40 million loan at that property, located at 600, 616 and 624 Six Flags Drive and 2401 East Randol Mill Road. The complex was most recently appraised at $45 million. 

Pinnacle took over the office park with a $30 million credit bid at a May 7 foreclosure auction, the Dallas Business Journal reported.

Prager is also facing foreclosure on part of the Normandale Lake Office Park.

The lender, Wings Credit Union, sued to foreclose on the property in April. A judge approved Wings’ request for a receiver in May. 

The property at 1100 American Boulevard in Pennington, New Jersey was also threatened with foreclosure when lender Bethpage Federal Credit Union accused the ground lease tenant of not paying real estate taxes. The case was dismissed without prejudice, likely indicating that the parties reached a settlement. 

And two other properties — 1100 Virginia Drive in Fort Washington, Pennsylvania, a Philly suburb, and 333 City Boulevard West in Orange, California — are riddled with liens.

The fallout isn’t just bad for Prager’s portfolio. It might indicate that struggling office markets have been — at least slightly — buoyed by phantom purchases.

For example, when Prager bought $253 million worth of office parks in the suburban Chicago, the vacancy rate was 27 percent.

If Prager appeared to invest hundreds of millions into these office markets, how much worse off are they when the transactions from Prager’s magic credit card disappear?