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Paul Reichmann: a billionaire businessman who never veered from religious observation

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Paul Reichmann

In honour of Canada’s 150th birthday, The CJN presents 40 profiles of some of the most prominent Jewish Canadians throughout our history.

Paul Reichmann was a real estate developer who the Toronto Star once called a “high-stakes gambler with a Cray supercomputer for a brain.” He made and then lost billions of dollars while transforming three of the world’s major urban centres, and is widely credited with helping Toronto become a world-class city.

Reichmann was one of five brothers who immigrated to Canada in the 1950s from a then hostile Morocco, where they had in turn fled persecution in Vienna. His Hungarian father, Samuel, after leaving Vienna, became a currency trader. His mother Renee took in piecework to raise money to get food to Nazi death camp inmates through the Red Cross. She helped secure visas for 1,200 Jews. The couple had 19 brothers and sisters; only four survived.

Reichmann was engaged to Lea Feldman from the age of 15, and they married in 1955. He ran a Jewish educational institute in Casablanca and his parents hoped that he would become a teacher. Instead, after negotiating a dramatically better price for a family real estate deal, Reichmann, now conscious of a major talent, went into property.

Paul and his brother Albert opened Olympia & York Developments Ltd., which would erect close to 100 buildings in the Toronto area over the next 15 years. The most impressive of these projects was First Canadian Place, a 72-storey office tower in downtown Toronto that was then the country’s tallest building.

Reichmann became known as a brilliant risk-taker who acquired undervalued real estate properties and hired leading architects to build landmark creations. The success of First Canadian Place encouraged Reichmann to venture into U.S. real estate, where he built the acclaimed World Financial Center building in New York. He bought eight Manhattan office buildings in 1977 for $325 million at a time when office vacancies were soaring. A decade later the same properties were valued at around $3 billion.

Reichmann combined big picture thinking with legendary attention to detail: he once poured water over marble tiles to show prospective tenants how First Canadian Place would shine in the rain. When the design for the World Financial Center was unveiled in 1981, Paul Godlberger, the New York Times architecture critic, called it “the finest group of skyscrapers since Rockefeller Center.”

READ: THE CJN’S SPECIAL COVERAGE OF CANADA’S SESQUICENTENNIAL

Forbes magazine ranked the Reichmanns as the fourth richest family in the world in 1991, worth $12.8 billion, but they still lived relatively modestly in the same upper-middle-class homes they had built for themselves in Toronto a generation before. Reichmann was described as austere, soft spoken, and reserved, but he took enormous business risks. The writer Anthony Bianco, who produced a book on the family’s history, described Reichmann as “a capitalist daredevil in the guise of an undertaker”.

In 1988, Reichmann took his greatest risk by committing Olympia & York to build Canary Wharf in London. The completed project, which overturned hundreds of years of history by shifting the centre of gravity of London’s financial centre, had an estimated construction cost of $8 billion.

By 1991 Canary Wharf was paralyzed by a lack of financing, and early the next year Olympia & York announced that it had run out of money. Real estate prices were plunging around the world, and other major Reichmann properties were also in debt they couldn’t pay. Owing more than $20 billion, Olympia & York went bankrupt.  Reichmann blamed his own overconfidence. “The fact that I had never been wrong created character flaws that caused me to make mistakes,” he said in 1997.

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.

Olympia & York was eventually sold off by its bankers and Canary Wharf was ultimately built by other developers. Reichmann and his family partly rebuilt their fortune. In a personal triumph, he recovered control of Canary Wharf in 1995, as a minority partner and chairman of an investment group that included George Soros and Laurence Tisch, and then pushed ahead with the completion of the project. He retired in 2005 after an alliance of developers led by Morgan Stanley acquired Canary Wharf.

By 2000, the Reichmann family’s net worth had again reached $1 billion. In an interview with Institutional Investor in 2000 Reichmann indicated that his internal compass had moved elsewhere.  Reichmann said his business accomplishments had never given him the sense of fulfilment he experienced as a young religious teacher. However, he sighed, “You are what you are.”

Reichmann never veered from Orthodox Jewish observance. The company’s offices shut down weekly for Shabbat, and Reichmann once refused to ride in a vehicle from the Toronto airport after a flight from London was delayed past the start of Shabbat, choosing to walk home instead. He and his family were generous philanthropists, mostly to Orthodox Jewish causes, donating up to $50 million a year to yeshivas, synagogues and hospitals around the world.