Toronto, Canada – A Bittersweet End to Reichmann’s Canary Wharf Saga

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    Paul ReichmannToronto, Canada – Seventeen years ago, a Canadian banker angrily jabbed his finger at Paul Reichmann in a gleaming new Canary Wharf office tower and warned: “This turkey won’t fly.”

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    What followed was arguably the worst humiliation in Canadian business history. Mr. Reichmann’s bankers walked away from a global bailout of what was then the world’s largest real estate company. Olympia & York Developments was carved up by creditors. Much of his fortune was vaporized. Worst of all, his vision of a vibrant new money centre in London’s Docklands was ridiculed as a grand testament to real estate folly.

    Last week, Mr. Reichmann saw Canary Wharf slip from his grasp again when a German bank repossessed his 8.45-per-cent stake in the sprawling development, according to sources who confirmed British media reports. Mr. Reichmann could not be reached for comment and a spokesman for Canary Wharf declined to comment.

    No one likes to lose something twice, but this time around, the humiliation is not nearly as painful. According to people familiar with the reclusive 78-year-old, Mr. Reichmann still has control of most of the small fortune he slowly rebuilt after Olympia & York was pushed into bankruptcy.

    Unlike his first plunge into Canary Wharf, Mr. Reichmann did not mortgage most of his business to reclaim a slice of the development when he purchased a stake in 1995 with the help of a few billionaire friends, including George Soros and Prince al-Waleed bin Talal.

    He owns interests in office developments in Mexico and non-real-estate investments in Canada and elsewhere. Most of all, he still has bragging rights to the contrarian vision that correctly foresaw, years ahead of its time, that Canary Wharf would one day house Europe’s largest collection of global banks and financial institutions. “You can never take that vindication away from him. He was right about Canary Wharf. That will always be his,” said one person close to Mr. Reichmann.

    Added veteran Bay Street money manager Ira Gluskin: “I still rate him somewhere near the top of the list of the smartest people that I have encountered over the decades.”

    So what went wrong this time?

    “Well, real estate does have its booms and busts,” the source said.

    The globe-trotting financial players that filled up Canary Wharf during the past decade have been fleeing like scared rabbits ever since the global financial crisis toppled some and pushed others into shotgun marriages. Lehman Brothers, which had 20 floors of office space, is bankrupt. Bank of America and Morgan Stanley are downsizing their Canary Wharf operations.

    The development’s operating company, Canary Wharf Group, was forced to publicly admit earlier this year that it was at risk of breaching its financial covenants.

    Covenants are those tricky legal clauses that give lenders the power to seize assets or demand loan repayments if certain stress thresholds, such as shrinking cash flow or rising vacancy rates, are tripped. It was a covenant breach that appears to have triggered the loss of Mr. Reichmann’s shareholding at Canary Wharf.

    According to a report in London’s Daily Telegraph newspaper, which was confirmed by a source, Mr. Reichmann had pledged his Canary Wharf holdings as collateral for a bank loan and last week Germany’s Commerzbank sold the shares for £112.5-million ($196.8-million).

    It is understood that Mr. Reichmann was not surprised by the bank’s move and that it followed several weeks of discussions about declining values at Canary Wharf.

    Fortune will likely shine again on the office towers that rise above London’s Thames River. But it’s unlikely that Mr. Reichmann will make that bet for a third time.

    People close to the businessman said he has slowed his pace considerably since he broke his hip over two years ago after a fall in Toronto. He uses a cane to walk, travelling is scaled back and real estate plays a much smaller role in his life.

    “Things are much quieter for him now,” the source said.


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    68 Comments
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    Lebediger
    Lebediger
    14 years ago

    galgal hachoizer

    Anonymous
    Anonymous
    14 years ago

    Reichmann was a really ehrleche yid and a big baal tzadakah. His absence from the business world will be missed.

    chochom
    chochom
    14 years ago

    He is friends with George Soros!?! Why does he not talk some sense into him? Reichman is a very inteligent and refined person. Could he not share a bit of those qualities with Soros?

    Anonymous
    Anonymous
    14 years ago

    May the zechus of his vast Tzdukos help him in these trying times

    abe
    abe
    14 years ago

    he is probably the biggest bal tzedka in the last century he has given out billions of dollars a real tzadik

    YH
    YH
    14 years ago

    Everyone loves him, his integrity, he is a man of his word, he is passionate about kiruv, chinuch, helping sefardim, Torah.. He has earned and created a new tiche in shaim tov mishemen tov.. He had both but the good name endures through all.. May they only have nachas and may they once again be zoche to be leshaim ulesiferes and be mekadaish shaim shamayim barabim.. Hashem yemaleh chisroncha

    knowitall
    knowitall
    14 years ago

    I fail to see what there is to feel bad about. He has clothing. He has food. He has shelter. He still has a lot more money than I would make in a hundred lifetimes. Vus iz azoi shlecht? So he lost some office towers? I never had one.

    Toronto fan
    Toronto fan
    14 years ago

    Him and his son Berry are Tzaddikim

    moish
    moish
    14 years ago

    the reichmans are truly people with a keser shem toiv the kindest nicest most generious people ever

    Yankee
    Yankee
    14 years ago

    The Lubavitcher Rebbe warned him not to build in England, but to build in Israel…Reichman didn’t listen. This is the result.

    "Oy and Why?
    "Oy and Why?
    14 years ago

    Zol er zein gezint in shtark. He is an example of Torah Ugdilla bemokom echod.

    joe
    joe
    14 years ago

    i still remmber driving in manhattan on a sunday before sucos many years ago’
    seeing workers building a new office building
    o&y was building on sunday because they did not build on shabbos and yom tov
    this was a wonderful lesson for my children

    Shmerel
    Shmerel
    14 years ago

    When Reichman came to the Lubavitcher Rebbe Zatzal and asked his advice about the project in London, the Lubavitcher told him that he should rather invest it in Eretz Yisroel and build there. Chaval that he did not listen he was such a big Baal Tzedakah and ish hachesed.
    May hashem bless him to regain his wealth.

    Admirability
    Admirability
    14 years ago

    we should have a rededications for this. he is one of our admirable ones who we should support. i, for one, am there.

    Anonymous
    Anonymous
    14 years ago

    “This account between the Rebbe, z’tl, and Mr. Reichmann is very well known. May Hashem bless him again with wealth.”
    He is still a very very wealthy man.

    Pinny
    Pinny
    14 years ago

    If only his refined middos and ehrlechness would rub off on the unfortunately many frum yidden who do not have ehrlech business practices.

    Video
    Video
    14 years ago

    Binyomin, your foolish chutzpa is amazing. You are quoting the “esteemed” Ed Koch (not known for his refined character, etc. etc) to *try* to minimize the Rebbe?

    Boo Hoo
    Boo Hoo
    14 years ago

    So instead of Mr. Reichman having hundreds of millions he only has tens of millions?

    Nebach, I’m shedding tears.

    SwissYankee
    SwissYankee
    14 years ago

    Ad meah v’esrim to the Gadol HaDor in chesed and tzedakah.
    I’ll trade my Olam HaBaah for 1% of his.

    mo kapoier
    mo kapoier
    14 years ago

    Uh-huh, so the Rebbe, who gave out hundreds of thousands of dollars to hundreds of thousands of people, allegedly gave Reichmann some unsolicited advice about where to build…and since Reichmann didn’t listen to him, that’s why, twenty years later, he lost that particular investment.
    Of course, all the years when he had the towers, which reached $300 million dollars in value and allowed Reichmann to borrow against them and make millions more dollars, we never heard about the Rebbe’s “prophetic” words and how Reichmann prospered despite “going against them”.
    Wait long enough and everything will turn, then we can give the Rebbe credit.
    Please, have another shot of vodka, it might scare an intelligent thought out of you.
    Anyway, I was once in the Mikveh, and I told the guy next to me that I thought Reichmann should pull out of Canary Wharf. Reichmann didn’t listen, and BOOM!, ten years later, he loses his holdings.
    You know why?
    Cuz he didn’t listen to me!

    Canadian
    Canadian
    14 years ago

    I know this Ehrliche Yid personally, he’s of the greatest people I ever met.
    May he find comfort in these trying times.

    the letzer dor
    the letzer dor
    14 years ago

    31 & 48 quote….you pair of misnagdisher birdbrains. reichman started losing most of his fortune within a few years of that yechidus with the rebbe, not 20 years..he didnt listen and that was the result. whats so hard to grasp…tzadik gozer umakayaim. he thought he was smarter than the rebbe….. as for shach…. what do you need it for is a far cry from dont build you as you will lose your investment….which he did despite the warning. reichman attributes his vast losses to the fact he didnt listen to the rebbe. whoa to those losers who lost the opportunity of yechidus with the rebbe. as for koch 31 that is pure TRIPE. Koch was shaking before he went in and shaking when he came out.

    Chaim
    Chaim
    14 years ago

    To all those questioning the veracity The Lubavitcher Rebbe’s influence on global leaders, see the post today at 10:14 AM on VIN: Netanyahu: My UN Speech Heeding The Advice From The Lubavitcher Rebbe Zt’l [video]