Shaya Prager’s Minneapolis-area office campus was hit with a fourth foreclosure lawsuit.
Iowa-based MidWestOne Bank alleges Prager defaulted on two mortgages totalling $36.8 million, court records show.
The loans are tied to the ground lease at 8300 Norman Center Drive, a 13-story office building also known as 8300 Tower. The building is in the five-building Normandale Lake Office Park, which Prager purchased for $366 million in 2022.
In the latest suit, filed in Hennepin County District Court on June 3, MidWestOne named Prager and the entity that leased the ground from the owner as defendants. It also named the landlord and senior noteholder, UMB Bank, though it’s not seeking a monetary judgment against them.
MidWestOne Bank alleges Prager and an affiliate and stopped making loan payments and didn’t pay property taxes. As of June 1, Prager owes the lender $35.5 million, according to the complaint. The bank is asking the court to appoint a receiver, allow a foreclosure sale and force the loans to be paid back.
Prager is personally on the hook for the loan, according to the suit: “Prager absolutely and unconditionally guaranteed full and prompt payment of the Notes to Lender,” it reads.
On June 11, MidWestOne followed up with an emergency request for a receiver, claiming the property is “at risk of immediately falling into waste” after Prager missed payments to vendors who maintain the property.
Prager didn’t comment on the lawsuit and hasn’t filed a response.
This is the fourth lawsuit Prager has faced in relation to this office park.
Wings Federal Credit Union sued Prager in March 2024, accusing him of defaulting on a $41 million loan for 8000 Norman Center Drive. Columbia Public Advisors alleged that Prager defaulted on a $65 million loan tied to 8500 Normandale Lake Boulevard in an August 2024 lawsuit. HTLF Bank claimed Prager defaulted on a $47.5 million loan tied to 5600 83rd Street in a January lawsuit.
Receivers have been appointed in all three cases.
The Minnesota lawsuits make up a fraction of the legal trouble facing Prager. He, his wife, Shulamit Prager, and his firm have been sued more than a dozen times in six states in the last year.
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. Prager’s lawyers claimed lenders were aware of this common beneficial ownership prior to making the loans. One of those suits has been settled.
Prager’s controversial use of ground leases isn’t his only real estate move that has turned heads.
He also made a fast, profitable flip of a Manhattan townhouse to his go-to deal partner Katherina Cartagena, increasing its value 33 percent in two months.