The lawsuit between Pinnacle Bank and Shulamit Prager and Liberty Centerpoint, managed by Opal Holdings, sheds light on the complexities and challenges facing the office real estate market, particularly post-COVID-19.
Pinnacle is seeking to recover millions of dollars in allegedly unpaid debt tied to the Centerpoint office park in Arlington, Texas.
The legal action follows a separate lawsuit against Shulamit’s husband, Shaya Prager, for fraudulently obtaining a loan for Burnett Plaza in Fort Worth.
The current lawsuit claims that Pinnacle is owed $7.28 million in unpaid principal from a $40 million loan extended to Liberty Centerpoint in 2021, which Pinnacle acquired through a foreclosure auction.
The Centerpoint office park spans 450,000 square feet and is approximately 90 percent occupied. Pinnacle alleges that Liberty Centerpoint missed payments, failed to meet debt coverage ratios, and did not maintain all operating accounts with Pinnacle.
However, the Pragers’ attorney disputes these claims, arguing that there was no loan default and questioning the legitimacy of the foreclosure.
While Pinnacle foreclosed on the leasehold interest, the office park itself remains under the ownership of Arlington Port LLC, connected to Opal Holdings.
These disputes reflect broader challenges in the office real estate market, with similar foreclosure issues emerging in other regions like Washington, D.C. Carr Properties, for example, is facing foreclosure on multiple office buildings amid high vacancy rates.
These cases highlight financial strain on landlords and increasing foreclosure auctions to resolve debt issues.
The legal battles and market dynamics underscore the need for robust financial strategies and transparent dealings between lenders and borrowers in the office real estate sector.
High loan-to-value ratios and reliance on credit tenant financing can become problematic in challenging market conditions.
The trend of increasing foreclosures and high vacancy rates calls for careful risk management and proactive measures to steer uncertainties in the market.
