Pinnacle sues another Prager over Arlington office campus debts

Bank sued real estate investor Shulamit Prager and Liberty Centerpoint, an LLC managed by Opal Holdings

Pinnacle Bank New Lawsuit Against Prager in Arlington
The Centerpoint office park in Arlington, TX (TXRE Properties)

There’s another lawsuit in North Texas between Pinnacle and a Prager.

Pinnacle Bank sued Opal Holdings principal Shulamit Prager and Liberty Centerpoint, an LLC managed by Opal. The bank is seeking millions of dollars in allegedly unpaid debt tied to Centerpoint office park in Arlington. 

The case comes on the heels of separate litigation in which Pinnacle accused Shulamit Prager’s husband, Opal principal Shaya Prager, of lying to the bank to obtain a loan on Burnett Plaza, the tallest tower in Fort Worth. In that suit, Pinnacle claims Shaya Prager secretly controlled the landlord and ground lessee at the building while representing to the bank that they were unrelated entities. 

In the suit naming Shulamit Prager, Pinnacle claims it is still owed money from the $40 million loan it extended against Liberty Centerpoint’s ground lease on Centerpoint office complex in 2021. In May, Pinnacle bought the leasehold interest at the four-building, 450,000-square-foot office park at a foreclosure auction. It won with a $30 million credit bid.

Pinnacle claims it is still owed $7.28 million in unpaid principal, not counting interest and fees, on the buildings at 2401 East Randol Mill Road, and 600, 616 and 624 Six Flags Drive in Arlington. The office campus is about 90 percent occupied.

Israel Dahan, an attorney for Shaya Prager, Shulamit Prager, and several of their corporate entities, denied the charges in both cases. 

“We don’t believe this was a proper foreclosure,” he said of the Arlington case. 

While he has yet to file a response to that lawsuit, Dahan said Prager denies there was ever a default on the loan and disputes the nature of the foreclosure. Pinnacle claims Liberty missed a monthly payment, failed to meet a required debt coverage ratio and did not maintain all of its operating accounts with Pinnacle. 

Dahan also said previous reports that Pinnacle now controls the building are mistaken, as it foreclosed on the leasehold interest, not the building itself. Public records show that the office park itself still belongs to Arlington Port LLC, the landlord entity. 

Indeed, any confusion, and the separation of the building from the leasehold, is possible because Centerpoint office park has a ground-lease agreement that established a landlord and a tenant. 

As was the case at Burnett Plaza, both entities have tenuous, if not explicit, connections to Opal Holdings. The landlord, Arlington Port LLC, traces to Katherine and Stephanie Cartagena. Katherine Cartagena is a frequent business partner of Shaya Prager’s in his Chicago deals. Meanwhile, Shulamit Prager and Avrohom Prager — another name for Shaya Prager — have signed documents on behalf of the tenant entity, Liberty Centerpoint LLC. 

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Shulamit Prager does not appear on Opal’s website as an employee, but in an unrelated New York lawsuit, Shaya Prager said she is a principal and co-owner of the company. 

In several records, Liberty Centerpoint lists as its address Opal Holdings’ New York City office. On the Texas Secretary of State’s corporate entity database, both Liberty Centerpoint and Arlington Port list addresses at 212 2nd Street in Lakewood, New Jersey. Meanwhile, loan documents list Liberty Centerpoint LLC as care of Opal Holdings, and provide Opal’s New York City office as the address for all correspondence

An attorney for Pinnacle declined to comment on the suit. 

The financing on Centerpoint also mirrors Burnett Plaza’s, in that the landlord and tenant entities have, together, taken out loans worth more than 100 percent of the value of the building. The landlord entity, Arlington Port, bought the park for $68.9 million, according to deed records. Yet, the landlord and tenant entities have taken loans against the property and the ground lease of at least $74.5 million. 

At present valuations, the four buildings are worth just over $45 million, according to the Tarrant Appraisal District.

The loans are part of a credit tenant financing, which borrowers can usually only obtain with ultra-high-quality tenants in place, like government agencies or Fortune 500 companies. Due to the high creditworthiness of these tenants, loan-to-value ratios on CTF deals can go up to 100 percent. 

In the same fashion as the Burnett Plaza loans, Opal’s entities broke the financing into three series of loans, with UMB Bank as trustee. At both developments, the tenant entities took mezzanine debt from Pinnacle Bank. 

Pinnacle has claimed Shaya Prager committed fraud by representing to it that the landlord and tenant entities at Burnett Plaza were not affiliates, when in fact they were.

In response, Dahan pointed to the loan agreement, which defines affiliation to mean that an entity has control over the decisions of another. He said that is not the case with the Burnett Plaza landlord and tenant entities, even though some investors own pieces of both, and both appear to trace to Opal Holdings or its members, which would constitute affiliation in a colloquial sense.

“In the ground lease, specifically, the bank acknowledged that they knew there was potentially some common ownership,” Dahan said. “But ownership and control are two different things.”

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