Austin businessman Nate Paul and his company, World Class Property, have generated headlines for years, first for a meteoric rise in the real estate industry but more recently for a spate of bankruptcies, legal skirmishes and a search of Paul’s downtown headquarters by federal agents in August 2019.
Paul, who is still in his early 30s, has amassed a portfolio of high-profile holdings in the Austin area and elsewhere since founding World Class in 2007, growing the company into one of the nation’s largest privately owned real estate firms.
Now, Paul’s alleged relationship with Texas Attorney General Ken Paxton has sparked a major legal and political whirlwind in the top echelons of Texas government. Seven senior Paxton aides have filed a criminal complaint against the attorney general that they say stems from his dealings with Paul. They asked federal agents to investigate their boss for potential crimes that include bribery and abuse of office.
World Class has offices in Austin, Dallas, New York and Los Angeles.
Its holdings include the 156-acre former 3M campus in far Northwest Austin and numerous properties downtown.
Paul’s fast success, sprawling portfolio and various legal entanglements have been topics of keen interest — and much speculation — in the real estate community for years.
In 2017, he was the subject of a laudatory profile in Forbes magazine, which described him as a “30-year-old Texas tycoon” on his way to building “a real estate empire.”
According to the Forbes article, Paul’s company had $1.2 billion in assets and 10 million square feet of commercial space at the time, ranging from offices to retail outlets to self-storage facilities. Its portfolio consisted of 120 properties in 17 states from California to New York, the article said, noting that Paul had once bid $800 million for Manhattan’s Plaza and Dream hotels.
More recently, however, the path for Paul and World Class has been rocky.
In August 2019, agents from the FBI and U.S. Department of Treasury conducted searches of some Paul-controlled properties in Austin, including a search of his downtown Austin headquarters in the Hirshfeld-Moore building at Ninth and Lavaca streets, seizing folders and related materials.
The U.S. Attorney’s Office and other authorities have declined to comment on the searches, and no charges have been filed.
But multiple World Class real estate entities have filed bankruptcy in the wake of the searches, amid numerous loan defaults and efforts by creditors to foreclose on them.
According to court filings, 16 bankruptcies by Paul-controlled entities have been filed since November 2019 and are pending, including the entity that owns the former 3M campus and the entity that owns Paul’s Hirshfeld-Moore headquarters.
In addition, Paul has frequently been embroiled in lawsuits over the years. Some cases have been settled out of court, but one continues to play out — involving the Roy F. and Joann Cole Mitte Foundation.
The foundation, an Austin-based nonprofit that provides grants to charitable organizations and academic scholarships for students with financial needs, is a limited partner in a pair of Austin real estate entities formed by World Class, one of which owns prime waterfront property at East Cesar Chavez and Trinity streets.
The long-running legal battle over the partnerships — named WC 1st and Trinity LP and WC 3rd and Congress LP, based on the locations of their properties — began in December 2018, when the Mitte Foundation sued to gain access to more financial information about its investments in them. But it since has evolved into a fight over disposition of the assets.
According to court filings, the Mitte Foundation has a minority interest in both partnerships, with an estimated 6% stake in WC 1st and Trinity and 16% stake in WC 3rd and Congress.
Other legal battles that Paul has been involved in include a 2014 lawsuit against him by former employees of a rooftop club he owns in downtown Austin, who said they were cheated out of their tips.
It was settled out of court, as was a 2016 lawsuit by Texas investor Michael Macs, who accused Paul of fraud, breach of contract and misrepresentation in connection with Macs’ investments of nearly $15 million in real estate ventures in Texas, Indiana and California.
In Austin, World Class owns several shopping centers, including Arboretum Crossing, which the company bought last year.
In addition, it has purchased downtown sites that once housed the Spaghetti Warehouse, Katz’s Deli, La Zona Rosa and Carmelo’s Italian Restaurant, as well as the IHOP property near Rainey Street.
Paul has said in various news releases that his company also owns shopping centers in Houston, San Antonio, Dallas, Chicago, Kansas City, Oklahoma City, Des Moines, St. Louis, New Orleans and Denver.
Combined, World Class development sites have approvals to build more than 75 million square feet in high-growth markets nationwide, a World Class release said last year.