Decades before his holding company Leon Capital Group became a nearly $3 billion (estimated value) conglomerate, Fernando De León was a child living in poverty in Mexico and crossing the border daily to go to school in Texas.
The only one in his family born in an American hospital (which guaranteed him citizenship and access to American schools), he finished classes in Brownsville and then returned to his hometown of Matamoros, where he once again went to school for the night with the farmers’ children.
His Mexican teachers sometimes covered the same content, but earlier in the year, which helped him stay ahead of his American classmates.
When he was later accepted to Harvard, the first person he showed his letter to was the American border agent “who had watched me grow up since I was five, every day,” says De León, now 46.
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That daily commute took him beyond the Ivy League, to a brief stint on Wall Street, but eventually led him back to Texas, where he struck out on his own.
“It is the ownership of the company that creates wealth,” says De León. “That is one of the most hidden secrets of American capitalism.” The other, for him, has been to lean on what he knows, starting by developing housing lots and apartment buildings for the working and middle class, and then building other businesses that provide basic consumer services, such as health care.
Today, his Leon Capital has 12 operating companies, more than a third of which are worth nine figures, spanning 11 industries.
“I have always had the mentality of a poor person,” says De León. “I never understood luxury as a consumer. “Even entertainment and sports weren’t something I was naturally drawn to.” You won’t find him developing casinos or luxury mansions. Instead, it makes lower-risk bets on the services people always need, meaning its markets are less cyclical and have more predictable growth.
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About a quarter of his estimated $2.8 billion fortune is currently in residential and industrial real estate, primarily in the sprawling cities of the Sun Belt.
More than a third is dedicated to health care: cardiology, dentistry and ophthalmology centers. The rest is a diverse mix ranging from hair salons to insurance to therapy centers, almost all of which grew out of their original investments in real estate.
De León distinguishes himself from private equity because his investments have broader horizons and he creates companies from scratch or in a handful of locations. It focuses on fast-growing areas such as Dallas and Phoenix, where the Latino population has increased especially rapidly. Its objective is to provide basic services that its new residents require.
“I would venture to say that our investment model understands those consumption patterns more intimately than your ivory tower, hedge fund types,” he says, adding that he tries, as a friend once advised, “to be more focused.” in Matamoros than in Harvard.”
After college, De León went to work as an analyst for Goldman Sachs, but found he couldn’t stand the structure and confines of a job on Wall Street (and wasn’t particularly good at it either), so he returned to Texas with about 80,000. dollars saved to start his own real estate business, the sector he thought he knew best after working with real estate developers in his youth.
De León founded Leon Capital in 2006, a difficult time for real estate: he says he began to notice a preponderance of subprime borrowers among new homeowners, became convinced the market was going in the wrong direction, and sold almost all of them. its assets for around 20 million dollars between 2006 and 2007.
It was a smart moment. When the financial crisis hit in 2007 and 2008, he was able to take over troubled properties and loans and reposition them: “It was like buying shares at $2 that would cost $100 today.”
De León used the new capital to expand, purchasing and renovating even more apartments and then developing properties for fast-food restaurants.
“I built Chick-fil-As, because the big guys thought I was beneath them,” he says.
De León soon expanded to places like Houston, Raleigh and Tampa, a decade before the Covid-era population and investment boom in the Sun Belt.
Today, Leon Capital Group has more than 4,000 employees and generates more than $800 million in annual revenue, with an annual return on its exits of approximately 35% since its inception, according to the firm.
De León says that a handful of family offices (in charge of managing the assets of a family group) have bought specific real estate projects. For its industrial real estate developments in Europe, it partners with billionaire Ross Perot’s Hillwood.
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De León, one of the richest Mexican Americans in the United States, is a far cry from the poverty he experienced as a child in Matamoros, but he says he still suffers from it.
“When you grow up like that, you have a very healthy fear of going back there that dispels arrogance,” he adds. “This idea of ’not losing money’ is deeply rooted in my DNA and that of all our businesses.”
As for his goals for Leon Capital, De León is currently working to establish new foundations for his industrial real estate business in Mexico and also plans to invest more in his lending and insurance companies. In the long term, its goals are even more ambitious.
“I’m a competitive guy. “I would love to beat Warren Buffett in the next 30 or 50 years,” he says.
Read the full article in Forbes United States
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