Valued at $100.9 million, former 3M site is foreclosed upon

Once home to a large 3M campus, this World Class Holdings property at River Place Boulevard and RM 2222 was foreclosed upon this week. Photo courtesy Austin Business Journal

Staff Reports

The Austin American-Statesman reported on June 2 that nine properties of Nate Paul‘s World Class Property were foreclosed upon including the former 3M campus in Four Points. Valued at $100.9 million, the 156-acre site at River Place Boulevard and RM 2222 accounted for the largest portion of the World Class Holdings foreclosures, the Statesman reports.

According to the Austin Business Journal, “dozens of rowdy protestors descended upon the Travis County Courthouse on the morning of June 1 in an apparent effort to disrupt the day’s slate of scheduled foreclosure sales.”

Law enforcement had to intervene, before Los Angeles-based Karlin Real Estate LLC acquired the bulk of the World Class properties during Tuesday’s auctions, according to local reports.

The Statesman shares that collectively, the properties total losses of $138.1 million for Paul and World Class and “the largest portion of that was $100.9 million from the 3M campus.” 

In an email on Tuesday, Paul told the Statesman he is “being victimized by unethical adversaries” and that the sales were “unlawful” and indicated he will contest them.  

Site history

Paul renamed the 1.3-million-square-foot site to Silicon Hills Campus LLC not long after acquiring it in 2018.

The campus was occupied by the multinational conglomerate before 3M moved into a new facility in Austin in 2019.

Silicon Hills, a subsidiary of Paul’s World Class, defaulted on its $64 million note for the campus in August 2019, shortly after 3M’s leaseback ended. There has been some exterior painting and lighting added since but otherwise the property has been vacant since 3M left. 

The troubles for World Class were coming to a head around that time. Federal authorities raided the World Class headquarters in August of 2019. 

World Class kept foreclosures from happening multiple times over the past 18 months or so.

Then in November 2020, a bankruptcy judge lifted a stay that had prevented Tuebor REIT Sub LLC (the lender that originally foreclosed on the campus) from selling the property, according to ABJ. Additionally then, Travis County COVID-19 safety guidelines kept a foreclosure sale from proceeding in January. 

The Four Points site was part of more than 20 World Class bankruptcy cases that were filed in federal court in Austin, ABJ reported earlier this year. In December 2020, World Class “lost a cluster of properties to a subsidiary of Stonelake Capital Partners after a tumultuous foreclosure sale,” ABJ reported.

During that time, a number of properties owned by Paul and World Class were acquired during a foreclosure sale in Travis County by a lender owed about $22 million in delinquent debt. 

ABJ reported that Tuebor REIT sold the $64 million Silicon Hills Campus note in early 2021 to a “mysterious Delaware-based entity called ATX Debt Fund 1 LLC,” according to a transfer recorded Jan. 27 in Travis County. ATX Debt Fund 1 LLC was also listed as the lender in the March 11 foreclosure notice filed in Travis County, ABJ stated earlier.

Fast forward to this week and the property was foreclosured upon. 

3M history at site

In 1988, 3M employees started to fill the Four Points campus. Its current 11 buildings were offices, laboratories, an innovation center, and an on-site co-generation utility plant that powered the 3M campus. 

The 115-year-old 3M ​based in Minnesota has many products including Post It notes and Scotch Guard to cell phone parts, fiber optics and touch screen hardware.

In early 2018 —  some 30 years after 3M arrived on the campus — World Class completed the purchase of 3M’s 156-acre site. 3M continued to occupy the site until April 2019. 

Some 800 3M employees including engineers, and research and development, marketing, and supply chain positions moved from the Four Points campus to a new, 272,000-square-foot building off Parmer Lane in the Tech Ridge area of Northeast Austin.

The main building complex is the largest contiguous office building in Austin, according to Paul in an earlier report by Four Points News. The site also has nature trails and walking paths.