Investors say Shaya Prager owes them $10 million

First came Shay Prager’s lenders. Now his preferred equity investors are knocking.

An embattled New Jersey investor is the subject of a lawsuit that alleges he stopped paying profits to preferred stock investors and owes them nearly $10 million.

The lawsuit, naming Prager and his wife Shulamit, was filed in Ocean County, New Jersey, on June 25. The plaintiffs claim he defaulted on a bond they say they secured for $26 million on three properties.

The lawsuit comes as Prager, whose company Opal Holdings bought about $2 billion worth of office buildings in 2021 and 2022, faces scrutiny over the ground lease structure he used to grow his portfolio. He also was forced to return the keys to two office buildings in Dallas-Fort Worth and faces foreclosure on an office property in the Minneapolis area.

The three properties at issue in the latest lawsuit are: 194 Wood Avenue in Iselin, New Jersey; 1001 Haxall Point in Richmond, Virginia; and 1100 Virginia Drive in Fort Washington, Pennsylvania.

Prager bought the Wood Avenue property for $140 million in August 2020, NJBIZ reported. The nine-story office building has 470,700 square feet; that’s $297 per square foot. Preferred equity investors put $8 million into the property and were to receive a preferred return of 1.25 percent per month.

They claim Prager owes them $800,000.

In April 2021, it acquired the 263,800-square-foot Richmond office tower for $77 million, or $292 per square foot, Virginia Business reported. Preferred investors put in $7.5 million and were to receive a preferential return of 18 percent per year.

The investors say Prager owes them $8.4 million.

Prager bought 1100 Virginia Drive in August 2021 for $124.5 million, or about $183 per square foot, the Globe Philadelphia Business Journal reported. The office complex spans 680,000 square feet. Preferred investors put $10.5 million into the property and were to receive a preferential return of 1.25% per month.

According to the lawsuit, Prager owes the group $787,000.

The lawsuit alleges that Prager stopped paying preferred investors between November 2023 and January 2024. In February, the plaintiffs sent Pragers a notice of default, giving Prager multiple opportunities to cure the delinquencies and requesting its financial statements (a right granted by the guarantees); they say Prager never responded.

On June 28, the plaintiffs filed a motion for summary judgment, which will be heard on August 16.