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Paul Reichmann and Brian Mulroney look at a model of the proposed Canary Wharf in London. Reichmann has died at the age of 83. (Ron Poling/CANADIAN PRESS)
Paul Reichmann and Brian Mulroney look at a model of the proposed Canary Wharf in London. Reichmann has died at the age of 83. (Ron Poling/CANADIAN PRESS)

Obituary

Developer Paul Reichmann was driven by a sense of destiny Add to ...

By the time Paul Reichmann left Europe in his early 20s, he and his Orthodox Jewish family had been so successful in eluding Nazi inquisitors that they arrived in Canada in the 1950s with a sense of infallibility.

One such stroke of luck had the Reichmanns leaving Vienna to visit family in Hungary hours before the Germans annexed Austria in 1938.

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The Reichmans believed they were a chosen clan. And it was Paul, the fifth of six children born to Renée and Samuel Reichmann, a wealthy egg merchant, who personified the family’s sense of destiny. A gangly, soft-spoken Talmud scholar, Paul Reichmann was an unlikely yet determined businessman-negotiator who invested a safe portion of his father’s fortune in unwanted properties.

In the space of 30 years, Mr. Reichmann, who died Oct. 25 of undisclosed causes, parlayed the family’s nest egg into one of the world’s most profitable and admired real estate dynasties, Olympia & York Developments. That success allowed the Reichmanns, who lived modestly in North Toronto, to funnel a large share of their fortune into struggling ultra-Orthodox schools, or yeshivas, and charities around the world.

“They transcended some of the worst atrocities of the century, so as a result the family had the sense that the Reichmanns transcended circumstances in an epic way. They had a powerful sense of destiny and power,” said Anthony Bianco, who authored the 1997 book The Reichmanns.

As Mr. Reichmann’s development ambitions grew, he became convinced his negotiating skills and grand visions would prevail. This faith saw him overcome daunting zoning and construction obstacles to build Toronto’s First Canadian Place in 1975, still the tallest building in the country. He correctly bet on undervalued properties in New York, building one of Manhattan’s most admired developments, the World Financial Center, on top of landfill.

Mr. Reichmann’s sense of destiny, however, blinded him to risks that threatened his grandest project: a complex of modern office towers rising from London’s decrepit docklands. The Canadian developer correctly predicted that his plans for a massive office development at Canary Wharf would solve a severe real estate shortage in the city’s small financial district. What Mr. Reichmann failed to anticipate was that economic and political forces would conspire against him.

When a global recession in the late 1980s torpedoed real estate values and prompted the government of British prime minister Margaret Thatcher to yank support for a crucial subway line to Canary Wharf, Mr. Reichmann continued to finance the project with family money.

“He was secure in the knowledge that this was a project that needed to be built and would be built,” said David Brown, a lawyer with Davies Ward Phillips & Vineberg LLP who advised Olympia & York during the early days of the Canary Wharf project.

As costs rose and tenants hesitated to commit to leasing office space without a subway line, Mr. Brown said Mr. Reichmann, a legendarily cautious borrower, filled the funding gap with bank loans and family money. “They were pouring more of their money into the development to keep it afloat. They leveraged everything they could to keep it going,” he said.

By the early 1990s, Mr. Reichmann finally ran out of time. Corporate tenants would not commit to the project and Olympia & York’s opaque financial practices eventually eroded bankers’ confidence. The company was pushed into bankruptcy proceedings in 1992, marking the humbling of the world’s most admired real estate empire.

The collapse sent shock waves around the world. Bank stocks swooned. Even the Canadian dollar wavered. When the full extent of bank loans and collateral pledges against various properties was revealed in court proceedings, relations between the Reichmanns and dozens of global banks were so strained that efforts to restructure the company foundered. The company’s global properties were carved up by the banks, which were forced to absorb billions of dollars in loan writedowns.

“Paul Reichmann had incredible credibility and trust,” said Bob Brooks, a retired senior executive with Bank of Nova Scotia, a minor Canary Wharf lender. “He prevailed on bankers to keep lending to the project and foolishly we did. No one lender knew the full extent of the loans. They didn’t understand how much leverage there was in the empire.”

One of the few things Mr. Reichmann was able to preserve was the family’s right to the Olympia & York name. The title had enormous meaning to Paul and his four brothers, Edward, Louis, Albert and Ralph, whose initial Canadian venture was a decorative tile importing business named Olympia Trading, which opened in 1956 and still operates today across Canada and in the United States as Olympia Tile.

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