Real estate entrepreneur Shaya Prager and his Lakewood-based firm Opal Holdings have faced scrutiny for their complex financing structures. But a closer look shows the real pressure point wasn’t the often-debated leasehold arrangements — it was a series of fee-side bonds created with Chicago-based Mesirow Financial.
According to people familiar with the deals, Mesirow and Opal structured the fee-side bonds at a debt-service coverage ratio (DSCR) of roughly 1.0, a level widely viewed as highly aggressive. “That was where the real over-leverage occurred,” said one person involved in the financing. “The leasehold loans were actually underwritten more conservatively.”
Leasehold loans carried minimum DSCRs of 1.5 or higher, providing a traditional repayment cushion. While sometimes criticized for complexity, those structures were fully disclosed to lenders and documented in closing materials.
Attorneys familiar with the transactions note that the ground leases explicitly permitted common ownership of the leasehold interest and included detailed organizational charts at closing. “All parties had visibility into ownership on both sides of the structure,” said David Feit, a real estate attorney who reviewed several of the deals.
In the end, it was the rapid rise in interest rates — not structural opacity — that pushed some properties into distress. Rates doubled in less than two years, hitting levels not seen in decades and straining even conservative underwriting. Observers say the resulting stress was macroeconomic rather than the product of undisclosed risk.
Ironically, the fee-side bonds, despite their aggressive leverage, locked in 30-year fixed rates, giving them durability in today’s higher-rate environment. Those financings have continued performing even as floating-rate office loans faltered nationwide.
“The idea that these transactions failed because of hidden mechanics is simply wrong,” Feit said. “The banks had full visibility. What changed was the cost of capital — an issue affecting the entire office market, not just Opal.”
Despite the turbulence, Prager oversaw dramatic growth. Opal Holdings built a $5 billion real estate portfolio while he simultaneously launched companies in health care, waste management, and landscaping. His approach has consistently paired financial creativity with extensive disclosure, associates say.
Now, as the office sector continues its post-pandemic reset, Prager is shifting toward more measured growth. “The important thing is that we were always transparent,” he has told colleagues. “Our structures were legal, the banks had disclosure, and we believed in the assets. The lesson is about balancing ambition with sustainability in a volatile market.”
For many in the industry, the narrative around Prager is shifting — from controversy to context. His trajectory underscores a broader truth in commercial real estate: even the best-documented structures can be upended by forces no operator can control.
