Reichmann restakes his goldmine claim

Canary Wharf: Canadian developer bids to buy back Docklands office comple

JOHN WILLCOCK

Financial Correspondent

If Paul Reichmann succeeds in buying back the Canary Wharf scheme in London's Docklands which he lost control of three years ago when the development went bust, then the Canadian entrepreneur will have pulled off one of the greatest comebacks in property history.

This would not surprise those who know this secretive figure, however. Throughout Canary Wharf's construction between 1989 to 1992, Mr Reichmann took a personal interest in even the smallest details of the office development. He was convinced it would be a goldmine.

Canary Wharf collapsed when the UK property market went into freefall, suffering from vast oversupply and plummetting demand. One banker to the development called it "a financial toxic waste dump".

Reichmann's other businesses in Canada and the US, under the Olympia & York umbrella, also crashed as world property markets slumped. O&Y teetered on bankruptcy with debts of $11bn, and its bankers took effective control.

Now the London property market has improved at the top end and Canary Wharf is three-quarters let. The vital Jubilee Line underground extension is due to open in 1988. And Mr Reichmann has offered to buy Canary Wharf back from the 11 banks which rescued it, for a price of around pounds 800m. He has assembled a weighty group of investors to fund the deal, and according to sources is close to clinching a final agreement.

Since Canary Wharf crashed Mr Reichmann and his two brothers have carried on doing what they started after they moved from Tangier to Toronto in the late 1950s - wheeling and dealing. All now approaching their 70s, the Reichmanns have shown a tenacity in the face of business failure which has won respect from even their sternest critics.

When Paul, Albert and Ralph arrived in Canada they had already amassed substantial wealth in Tangier. One of the first new businesses they founded was Olympia Tile, which supplies floor coverings. It is still going, run by the youngest and least influential of the brothers, Ralph.

Their first big break came in 1981 with a development which catapulted them into the world league: The World Financial Centre in Manhattan.

This $1.5bn project involved taking a run down part of land called Battery Park - within walking distance of Wall Street - and building a series of vast, high quality offices on it. These buildings were immediately sold or leased to leading institutions such as Merrill Lynch and American Express.

In 1987 the opportunity to repeat this feat was presented in London's Docklands. But it was too far away from the centre of town and the world downturn blew it away. The collapse of O&Y did not stop the relentless Paul Reichmann, however, from forming a group to buy it back immediately - which the banks rebuffed.

Mr Reichmann's investor group then included US media mogul, Larry Tisch, a participant again. Meanwhile a struggle continues in New York and Toronto between O&Y's various creditors over the remaining parts of the empire. Many bits of it have been in and out of administration, with the only winners being the lawyers.

There is also good news for the Reichmanns. The second generation is emerging to manage what is left. Philip Reichmann, Paul's nephew, and Frank Hauer, his son-in-law, have both been installed in O&Y Property as managers.

But there is also bad news. Paul Reichmann teamed up with speculator George Soros two years ago to build an $800m tower in Mexico City but the plans crashed with the Mexican peso last autumn.

It may be too early to say that the latest attempt by Paul Reichmann to buy back Canary Wharf is his last roll of the dice. The sheer resilience of the man may see more ventures yet.