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The real estate empire built by Austin businessman Nate Paul continues to shrink.
Paul lost large portions of his holdings during Tuesday’s foreclosures – including the 150-acre former 3M campus in northwest Austin and its headquarters on Lavaca and West Ninth Streets in downtown Austin.
The foreclosure sales were his biggest loss to date in a protracted battle against lenders who claimed he owed more than $ 250 million in arrears debt.
A total of nine properties belonging to Paul’s company World Class Property were sealed off. They have a total value of $ 138.1 million on Travis County’s tax records, with the 3M campus making up the majority of that number at $ 100.9 million.
Mutual funds controlled by Karlin Real Estate LLC, which held the debt securities for many of the properties, acquired the majority of them during Tuesday’s auctions. Karlin is based in Los Angeles and already owns real estate in Austin.
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The vacant 3M campus at 6801 River Place Blvd. was sold to Karlin with a $ 53 million loan offer, meaning no money changed hands as one of his mutual funds held the promissory notes and owed more.
In an email to the American Statesman, Paul described Tuesday’s sales as “unlawful” and indicated that he would contest them. Paul said he was falling victim to unethical opponents.
The “alleged sales that were made yesterday were inappropriate,” said Paul. “The groups that have violated the law in their attempts to trade themselves and steal property will be held fully accountable.”
Karlin representatives were not immediately available for comment.
Paul Rana, operations manager of Roddy’s Foreclosure Listing Service, said the sales were made in accordance with state law. Roddy’s compiles data on foreclosures in Texas and has a regular foreclosure agent.
Subsidiaries of Paul’s firm “have defaulted on their loans, and according to their trusts and the Texas Property Code, all properties were properly and legally booked 21 or more days prior to the sale date,” said Rana, who participated in the Travis County foreclosures on Tuesday attended courthouse. “My job is to research foreclosure notice data for investors to find out what was done right.”
Such auctions are usually relatively quiet, but several dozen protesters appeared on Tuesday and nearly halted sales, a development Rana described as “shocking”. It remains unclear why the crowd was there, but the police were able to maintain order.
In addition to the 3M campus, the properties sold include:
• The Phillips building at 103 E. Fifth St. It was sold to a Karlin mutual fund with a $ 5 million loan offer. The property was valued at $ 6.56 million by the Travis Central Appraisal District.
• The two-story Koppel building at 320 Congress Ave. The building was sold to a Karlin fund with a $ 13.5 million loan offer. The property was valued at $ 5.8 million by the appraisal group.
• Two buildings downtown, Shiner’s Saloon at 422 Congress Avenue and a nearby building at 101 W. Fifth St. A Karlin Fund purchased both buildings for approximately $ 5 million with a $ 10 million loan -Dollar.
• Two properties east of Interstate 35, 805 E. Sixth St. and 809 E. Sixth St., were sold to a Karlin fund with a $ 1 million loan offer. The appraisal district valued the properties at around $ 2.45 million.
• Three lots on the 900 block of East Cesar Chavez. They were sold to a Karlin fund with a $ 1.5 million loan offer. The properties are valued by the appraisal district at $ 4.24 million.
• A warehouse at 1216 E. Sixth Street sold for $ 5.9 million, although it is unclear who bought it. The valuation group estimated the property to be worth around US $ 3.8 million.
• An office building on 9005 Mountain Ridge Drive was sold to a Karlin Fund with a $ 1.5 million loan offer. The building was valued at nearly $ 6 million.
• The Hirshfeld-Moore complex on West Ninth Street, which serves as World Class headquarters, sold for $ 5.7 million, although it is unclear who bought it. The complex was valued at approximately $ 4.25 million.
Despite what Paul called “illegal sales,” he said in his Wednesday email to the Statesman that his company “still has a multi-billion dollar real estate portfolio and is not deterred in our pursuit of long-term value creation will let “.
“To those who have shown contempt for me, sorry, I’m not going anywhere,” he said.
Tuesday’s foreclosures aren’t the first time Paul Immobilien has lost in the auction block.
In December, a handful of its downtown Austin holdings were acquired by a company called ATX Lender 5, a subsidiary of real estate firm Stonelake Capital Partners and the debtor of the real estate. ATX Lender 5, owed around $ 23 million, was the sole bidder and won the properties for $ 17.8 million, though Paul is still denying the sale.
Paul is also a central figure in an ongoing controversy over allegations of corruption against Texas Attorney General Ken Paxton.
The statesman first reported last October that seven senior Paxton employees filed a criminal complaint against their boss alleging abuse of office, bribery and other misconduct related to his dealings with Paul, who is an acquaintance of Paxton and was one of his campaign donors.
In March, a state judge turned down an offer to dismiss a whistleblower lawsuit by four of these Paxton employees who said they were fired in retaliation after accusing Paxton of wrongdoing. Paxton attorneys filed an appeal Tuesday against the judge’s decision.
Separately, a number of Paul’s properties, including his home and office, were searched by the FBI and the Treasury Department in August 2019, although no charges were brought as a result of those searches. Federal officials have not commented on the reasons for the searches, even though their investigations are ongoing.
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