Paul Reichmann, the contrarian Toronto developer who made and lost a family fortune building office towers on unwanted spaces, has died at the age of 83.
A spokeswoman for the family said Mr. Reichmann died Friday morning – the cause of his death was not disclosed.
Mr. Reichmann was one of five close-knit brothers who emigrated to Canada in the 1950s from Tangier, Morocco after the Orthodox Jewish family fled persecution in Vienna. Three brothers, Edward, Louis and Ralph, ran Olympia Floor & Wall Tile Co., while Paul and Albert diversified into real estate with Olympia & York Developments Ltd.
At its peak in the 1980s, Olympia & York Developments was the largest and most respected commercial real estate company in the world. Its properties included Toronto’s First Canadian Place, New York’s World Financial Center and London’s Canary Wharf.
Mr. Reichmann made his name as a gutsy investor who acquired undervalued real estate properties and hired leading architects to build landmark towers. His attention to detail was so great that he once poured water over marble tiles to show prospective tenants how First Canadian Place would shine in the rain.
By the late 1980s, the Reichmanns had become such a sensation for their successful daring bets that bankers and investors were unusually liberal with the terms of loans to Olympia & York to secure their business. Most bankers were only allowed partial access to the private company’s financial statements and some were reduced to speed reading documents before the books were closed.
It was only when the real estate crash drained Olympia & York’s cash levels in the early 1990s that bankers comprehended the full extent of the company’s debts. The shock irreparably damaged Olympia & York’s relations with its banker and in 1992 it was forced into bankruptcy proceedings, triggering the largest business failure in Canadian history at the time.
Ira Gluskin, founder of wealth management firm Gluskin Sheff + Associates Inc., called Mr. Reichmann a “genuine real estate genius,” who represented an era when many large real estate developers were strong-willed individuals. “Today, the whole business is dominated by institutions,” he said.
RioCan Real Estate Investment Trust chief executive officer Edward Sonshine, who worked with Mr. Reichmann on projects in the 1980s, credited the property mogul with showing Canadian developers how to think globally. “He showed that Canadians don’t have to be afraid to be players on the world stage, certainly in the real estate industry,” Mr. Sonshine said.
Olympia & York started modestly in Toronto with nondescript buildings and a cement-clad office tower at the foot of Yonge Street. The company leapt onto the international stage when Mr. Reichmann acquired the Uris portfolio of buildings in lower Manhattan in 1977. The city was nearly bankrupt, but the developer rightly calculated that the Wall Street buildings would soar in value.
In 1980, he won a contract to build office towers on landfill in Manhattan’s Battery Park district. He hired famed architect Cesar Pelli, to build the World Financial Center, a complex of office towers, high-end stores and giant atriums decorated with storeys-high palm trees.
John Zuccotti, the former head of O &Y’s U.S. operations, said Mr. Reichmann overcame enormous skepticism when he built the World Financial Centre.
“He was the one that had the strength and the risk-taking and the imagination to undertake that project,” Mr. Zuccotti said. “He had vision. He could see things that other people couldn’t see.”
As Olympia & York’s business grew and Mr. Reichmann spent more of his time selling government leaders, business leaders and bankers on his grand real estate plans, he never veered from his strict observance of Jewish traditions. The company’s offices were shut down every Friday at sunset and remained closed until Sunday, in observance of the Sabbath. Mr. Sonshine said Mr. Reichmann once refused to ride in a vehicle from the Toronto airport after a flight from London was delayed past the start of the Sabbath. “He walked from the airport to his home,” he said.
Mr. Reichmann’s most ambitious real estate bet was London’s desolate docklands. Instead of urban decay he saw a sprawling complex of modern skyscrapers. Mr. Reichmann never realized his grand vision of Canary Wharf. A real estate slump combined with heavy debts and fractious banking relationships forced Olympia & York into bankruptcy protection in 1992.
Olympia & York was eventually sold off by its bankers and Canary Wharf was ultimately built by other developers. Despite the defeat, Mr. Reichmann insisted on keeping rights to the company name, and his nephew Philip Reichmann and son-in-law Frank Hauer relaunched O&Y in 1997 to reclaim the family’s reputation and some of its lost holdings, including First Canadian Place.
Paul Reichmann took another run at the London development in in the mid-1990s, when he acquired a small stake in Canary Wharf. Debt issues and the 2008 financial crisis defeated him again, when in 2009 a German bank repossessed his stake in the London development.
After that, associates said, Mr. Reichmann’s health declined and he became increasingly frail.
Key dates in the Reichmann family history
Edward Reichmann, the eldest of five brothers, including Louis, Paul, Albert and Ralph, moves from Tangier, Morocco, to Montreal, where he opens a small tile company called Olympia Trading.
Louis Reichmann moves to Toronto and opens the maker Olympia Floor and Wall Tile, where he is later joined by his youngest brother, Ralph.
Paul and Albert Reichmann make their first big splash in Toronto real estate when their Olympia & York Developments wins a contract to build a 26-storey office tower for the Toronto Star at One Yonge St.
O&Y wins approval to build two office towers on King Street that will be known as First Canadian Place.
O&Y buys a package of eight Wall Street-area skyscrapers known as the Uris portfolio at a time when New York is nearly bankrupt.
O&Y wins contract to build office towers on desolate lower Manhattan sand spit known as Battery Park.
O&Y buys Gulf Canada from Chevron.
British government selects O&Y to build massive office complex known as Canary Wharf on London’s desolate Docklands.
Crushed by debts borrowed to build Battery Park and Canary Wharf, O&Y files for bankruptcy protection in Canada, the U.S. and Britain. Its assets are eventually broken up and sold.
Albert’s son Philip Reichmann and Paul’s son-in-law Frank Hauer reclaim family real estate name with creation of O&Y Properties Inc.
O&Y Properties buys First Canadian Place, which the family had lost to its creditors during bankruptcy proceedings in 1992.
O&Y Real Estate Investment Trust is formed to invest in commercial real estate properties. Its major stakeholder is O&Y Properties.
Philip Reichmann puts both O&Y Real Estate Investment Trust and its parent company, O&Y Properties Corp., up for sale.