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with the Great Value Storage name, boosting sales with an
online reservation system and installing revenue management
that would adjust prices based on demand. Eventually, Paul
held 35,000 storage units at 69 sites across the nation. “It’s a
lot like multifamily housing,” he explains. “Yet because a lot of
people don’t have the expertise in running it there is a disparity
in value. We know how to run them better.”WHEN YOU ARE a twentysomething Indian-American man
buying everything in sight in the capital of Texas, people start
talking. The rumors in Austin would trickle back to Paul—that
he was backed by Chinese money, an Indian conglomerate or
a billionaire in Dubai. In a town that is home to Michael Dell
and his company, billionaire John Paul DeJoria, Whole Foods
and the South by Southwest festival, “Nate Paul” was by far the
most-searched phrase on the Austin Business Journal’s website
in 2014. “Is this guy for real?” the publication asked the next
year in a headline.
Paul’s growing pains generated more gossip. In 2013, there
was a New York Post item about Paul buying expensive bottles of
champagne at Leonardo DiCaprio’s 39th
birthday party. Then former employees of
the Austin rooftop bar and pool lounge
that Paul owns sued him, claiming the bar
cheated them out of tips. Paul says he did
nothing wrong, and the case was privately
settled in 2014. One of Paul’s investors,
Texas oilman Michael Macs, sued World
Class after crude crashed in an effort to
quickly retrieve some $15 million he had
invested with the firm. A judge tossed the
lawsuit to arbitration, and the duo settled.
There has also been some noisy employee turnover at World
Class. In his highest-profile hiring, Paul lured five former Cred-
it Suisse bankers to build a debt platform, but two left within
months. “World Class is not for everyone,” Paul says. “I reward
those who do well. And the people who don’t live up to what I
expect, there is no place for them at my company.”
And of course he has plenty of admirers. “The only reason
I moved to Austin is to be closer to Nate,” says Avery Bradley,
a guard for the Boston Celtics who got to know Paul while at
the University of Texas. “When I get ready for a game, I think
of how hard Nate works—he works all the time—and it pushes
me. I want to be around that.”
What Paul is working on will keep shocking people in Austin.
In June, he struck deals to buy 3M’s 158-acre Austin campus,
which has been appraised by the county at $80 million, and
another 6 acres of land just south of downtown Austin. Last
year, for $85 million he scooped up 13 office buildings in north
Austin that house outposts of Allergan and Integra LifeSciences.
In all these deals, Paul asserts, long-standing relationships and
his ability to move fast secured him excellent prices. He says his
negotiations are short and he doesn’t bargain over price. Those
6 acres in downtown Austin come with a land lease that doesn’t
expire for more than two years, and Paul was willing to pay nowa trustee of the police pension since 2000. “He had excellent
presentation skills. We got comfortable. It was a plus that he
was a local investor.”
The pension fund agreed to go in with Paul on a deal-by-
deal basis starting with a $2 million equity check he used to
buy a distribution center in north Austin for $4.5 million. In
a move that showed he was thinking bigger than Austin, Paul
used some of the pension money to invest outside the state,
starting with the distressed debt of an office property in Orlan-
do, Florida, which he bought for $2.7 million and sold in 2012
for $6.4 million. Those kind of returns meant the pension plan
kept investing more capital. Paul also raised money from the
Texas Medical Liability Trust and a group led by Harvey Book-
stein, a prominent Los Angeles accountant who suggests real
estate investments to his high-net-worth clients. Bookstein says
his group has invested $100 million in six deals with World
Class that were structured in a way that let Paul keep 50% of
the profits on development deals and 25% on existing buildings
after Bookstein’s group made an 8% to 10% return.
Paul specifically searched for distressed opportunities and
rolled more of his own accumulated capital as the deals kept
coming. In 2011, he bought a $19 million defaulted mortgage
on a 180,000-square-foot shopping center outside of Minne-
apolis for $3 million. He foreclosed on it, took over operations
and proceeded to lease the vacant retail space. “I ended up with
the property since I was the only bidder willing to go tour a
shopping center in Minneapolis in freezing temperatures in
November and could close in ten days,” he says.
Around the same time, Paul started putting a lot of the
money he raised into self-storage. A deeply fragmented indus-
try, storage has become popular with institutional investors
that see it as recession-resistant and a cash-flow machine.
As in all his other deals, Paul became an owner-operator.
He started in Austin, but one of his first storage deals was a
$2.9 million investment in a defaulted mortgage on a facility in
a Chicago suburb that Paul grabbed, leased up and later sold to
publicly traded Sovran Self Storage for $7.2 million. He would
buy from mom-and-pop owners in Colorado or Ohio who
didn’t even have a website, or build new storage sites in areas of
Los Angeles where it was hard to get permits, making it tough
for competitors to emerge.
Paul’s storage playbook included slapping a fresh coat of
green paint on a building and clearly branding each facility
THE RUMORS IN AUSTIN WOULD
TRICKLE BACK TO PAUL—THAT HE
WAS BACKED BY CHINESE MONEY, AN
INDIAN CONGLOMERATE OR
A BILLIONAIRE IN DUBAI.FORBES ASIA
NATE PAUL