A complaint filed in Hennepin County District Court late this week highlights the financials woes facing the owner of the largest multi-tenant office complex in the Twin Cities.
Normandale Lakes owner owes $65M in second tower foreclosure at marquee office park
It’s the second office tower in the Twin Cities complex that has faced foreclosure this year.
The Minnesota Star Tribune
August 9, 2024 at 10:54PM
The complaint says the owner of what’s known as the 8500 Tower, one of five major office buildings in the sprawling Normandale Lake Office Park in Bloomington, has defaulted on its $65 million loan. The 467,016 square-foot office tower is in foreclosure and headed toward a sheriff’s sale scheduled Oct. 10. The suit asks for the appointment of a receiver who will manage rents and operation of the property.
The list of defendants in the suit includes Liberty 8500 Normandale, the entity that originally borrowed $65 million on the property, which is secured by a ground lease on the same property, and Avrohom Prager, founder of New York-based Opal Holdings, which bought the five-tower Normandale Lake complex for $366 million in 2022, a time when office values were falling.
Prager, also known as Shaya Prager, has purchased several other trophy office buildings across the country. He financed those properties, including Normandale Lake, using an unconventional and complicated structure that includes mortgages on both the land and ground leases that are tied to different entities.
The 8500 Tower, which is located at 5800 84th St. W. in Bloomington, also includes a parking garage. The complaint seeks more than $70 million including taxes and penalties.
The action is similar to one taken earlier this year on Normandale’s 8200 Tower, which per a May 6 order, appointed New Brighton-based Lighthouse Management Group to take control of the property. The appointment came after Apple Valley-based Wings Credit Union sued to foreclose on the building in April.
According to its website, Lighthouse Management is “a Twin Cities-based corporate renewal advisor, helping clients and their stakeholders navigate and resolve difficult business issues.” A representative from Lighthouse could not be immediately reached for comment.
The 8500 complaint says the plaintiff, an entity tied to Seattle-based Columbia Pacific Advisors, is the sole lender and administrative agent of the $65 million loan.
Attorneys at Winthrop & Weinstine, who are representing Columbia, were not available to comment Friday.
Despite the financial woes of its owner, Normandale Lake is still considered one of the premier office properties in the metro area, which has seen record office vacancies.
As of late last year, the occupancy rate of the five-building park according to various sources was around 80%, which was higher than many other offices in the area. Still, as of last year, Opal hadn’t fully paid nearly $10 million in property taxes to Hennepin County, including nearly $850,000 in penalties.
The latest complaint said that based on the rent rolls and budgets submitted to the lender, the leasing operations at the property generate sufficient excess cash to pay real estate taxes, especially given the fact the owner hadn’t been making regular payments to its lender.
Calls to Opal Holdings were not returned Friday, and the public-facing side of the company’s website no longer listed Normandale Lakes as one of its assets.
Staff writer Burl Gilyard contributed to this report.
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