Image: Tim Pannell for Forbes
Unlike other successful millennial entrepreneurs, Nate Paul is not a T-shirt or hoodie kind of guy—his uniform is a suit. He has worn one to work, usually with a vest, every day since he dropped out of college nearly 10 years ago. “I always wanted people to take me seriously,” the Texas real estate prodigy says. “Part of it is you have to look older.”
At 5’11”, with a stocky build and a two o’clock shadow, Paul certainly looks as though his odometer has long since passed 30 years old. But that’s not why the real estate brokers who clamour to meet him take him seriously. They try to get in the elevator that rises to the top floor of Austin’s tallest commercial skyscraper, up past the offices of billionaire-run private equity firms, because Paul is the biggest buyer and owner of land for development in the city. And Texas isn’t big enough for his ambition.
Paul’s World Class Holding, which he started building in 2007, has $1.2 billion in assets, according to a document obtained by Forbes. That portfolio includes 120 properties in 17 states from California to New York, but most are in economically vibrant Texas. World Class Holding owns 10 million square feet of commercial real estate that ranges from office space to retail to self-storage. And although he once bid $800 million for Manhattan’s Plaza and Dream hotels, Paul is no Texas Trump—he doesn’t own a single trophy building and his name is not on any of his properties. “My assets are not sexy,” the 30-year-old says proudly. “I mean, I own lots of storage. But I love my assets.”
For good reason. Paul, who retains 100 percent of the company, is not overleveraged according to financial documents, and none of his debt is at the holding-company level. Based on his holdings inside and outside the company, Forbes estimates that Paul’s net worth is $800 million. If commercial real estate prices stay strong, he could be a billionaire soon.
It’s a particularly impressive trajectory when you consider that real estate is famously a dynastic business and Paul is the son of an obstetrician-gynecologist. Complicating things further, he is the son of Indian immigrants in overwhelmingly white Austin.
From the beginning, Paul set out to build his portfolio as an operator and an investor. In order to buy, he hit up his obstetrician father’s buddies, charmed high-net-worth individuals, and then landed pension and insurance money. He raised funds in dozens of partnerships to do deals and kept upwards of 50 percent of the profits. With the $25 million he started raising from the Austin Police Retirement System in 2009, he produced an annual (and now fully realised) internal rate of return of 24.8 percent, net of fees.
Now Paul is getting ready to double down on his early success. He has spent much of the past year recapitalising his business, cashing out limited partners (such as the Austin Police Retirement System) and taking full ownership of many of World Class’s partnerships, often using debt and his own accumulated capital. He then rolled up all the properties he could into his new holding company, which is attempting to raise $1 billion of preferred equity in the coming year. Paul thought about trying to raise a private equity fund, but what he really wants is permanent capital, which would allow him to get off the treadmill that requires him to sell assets to achieve exits for his investors every few years. “I am thinking with a 30-year time horizon,” Paul says. “I actually have a 30-year amortisation and will be around.”
he rumours would trickle back to Paul—that he was backed by Chinese money, an Indian conglomerate or a billionaire in Dubai
(This story appears in the 18 August, 2017 issue of Forbes India. To visit our Archives, click here.)