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[00:07]
A
There are very few families that become synonymous with an entire approach to an industry, a playbook combining canny assemblage and skyscraper building mastery with the arcana of extreme financialization and a riverboat gambler's instinct to put it all on the line again and again and again.
[00:23]
B
There are very few families whose histories start in the shadow of the Holocaust, expand to the Anything Goes Free zone of Tangier, before rising to the top of the apex proving grounds of Manhattan and London, and who do so while maintaining their faith with such rigor and giving at such scale that they become symbols of it.
[00:43]
A
Those are two short lists.
[00:46]
B
Only one name appears on both.
[01:00]
A
Welcome back to the Promote podcast, your insider guide to the money and mania of the CRE markets. I'm Hitan Samtani.
[01:06]
B
And I'm Will Krasny.
[01:08]
A
A shout out to our sponsors helping bring this very special episode to life. Loanboss, the best in class CRE Debt Management Software.
[01:15]
B
Real Property Captive, the first group Captive Insurance for mid market owners who the Reichmans were not.
[01:20]
A
They certainly were not. And Bravo Capital, a leading HUD and bridge lender. Check out their handy HUD Express lane assessment. I'll drop it in the show notes. It's episode 70 as promised. Every 10th episode, we're gonna break programming and give you something special. It's time to dive into the improbable on so many levels. Tale of the Reichman Family There has never been a story like this and
[01:43]
B
there probably never will be again.
[01:45]
A
We should maybe start with a little lesson for my co host here. So since we're gonna say his name a hundred times in this episode. Reichman. Reichman.
[01:54]
B
I had my tonsils and adenoids out when I was very young. So like the is really difficult.
[02:04]
A
Where do we get into this? It just hits on all our stuff
[02:06]
B
before even just talking specifics. Let's just talk about scale. We did this with our previous special episode with jmb talking about how big they were compared to Blackstone today. Before accounting for inflation, these guys were about order of magnitude as wealthy as Donald Bren in 1982. $6. The richest guy in U.S. real estate today. They were as wealthy as back then 40 years ago.
[02:31]
A
Yes. So think about that with JMB Realty. It's your standard real estate mega corporation with a bunch of different LPs. This is wholly owned by the Reichmans. No outside partners, no equity for anyone else. It's just the guys.
[02:45]
B
Exactly. There's no other equity. There's a lot of debt.
[02:52]
A
When people talk about, oh, we want to be conservative like the grand old families, you always scoff because these are the complete opposite.
[02:59]
B
The single most aggressive commercial real estate borrower maybe in the history of real estate was a grand old family from Toronto. You don't compound your wealth at the rates that these guys do without one, being in the right market and having the underlying value of the land compound. And two, levering to the hilt.
[03:19]
A
Not only levering to the absolute hilt of what was available at the time, but in fact creating new structures to then lever up some more.
[03:25]
B
Skill is hitting the target. Genius is hitting the target that no one can see. And that's what these guys did. They not only borrowed as much as humanly possible under the existing loan structures available, they created new ones. As we watch the financialization of asset backed loans in the data center space
[03:48]
A
or the life co insurance pipeline or
[03:51]
B
what Apollo is doing now, this is what these guys were doing 40 years ago. That's one of the reasons that we're attracted to this. It's very akin to the reckoning that's happening in the syndicator space over the past few years, just at a much grander scale and unraveling that impact of the global financial markets. And I think the biggest one is that some of the biggest players today, in fact one of the two or three biggest, is a phoenix rising from the ashes of their former portfolio, which is Brookfield. You also wanted to talk about their philanthropy.
[04:19]
A
I generally take a pretty dim view of philanthropy. I see it as a reputation burnishing slash tax shield exercise for the most part. These guys though, it seems hardwired into their DNA. Unlike a lot of other super wealthy people who give, these guys have been given from the very beginning through some unimaginable adversity. And they're giving often outweighed what they had. So they were giving at a scale that was bigger than their pockets at a certain time. Eventually those pockets caught up. And the other thing is the sheer concentration of their giving really makes them stand out. So your typical billionaires will do a lot of spray and pray, art education, the Met, et cetera. These guys gave almost exclusively to ultra orthodox haredi Jude causes. And so their legacies in those worlds are magnified. A lot of the source material for this episode is this extraordinary book called the Reichmans. And we'll surely put it in the show notes Tony Bianco. Props to you, man. A great family story, a great CR story, a great sociological tale. Well done.
[05:21]
B
It's a fantastic book. The title really says everything because it's not Just the Reichmans. There's subheading, which is family, faith, fortune, the empire of Olympia and York. You can't really untangle the whole Reichmann mystique without looking at how the family, the faith, the business and the fortune are all intertwined.
[05:44]
A
There's a sense that I got from the book that the Reichman saw themselves as men of destiny. So it's not enough to just be very successful at business. You have to parlay that into something that can shape the fortunes of your people. That is a through line. From their pretty tough moments around the World War all the way to their incredible ascent to the top of the real estate pyramid.
[06:08]
B
Totally. To whom much is given, much is expected. With great power comes great responsibility. Yeah, these guys were as talented and smart and driven as anyone who's ever laced up a spreadsheet in real estate. If you go through the family history, they faced horrible, unimaginable tragedies, lost several fortunes through no fault of their own, but always made it back. There's a study that shows that folks with inherited wealth are the cheapest because if you don't make the money, you don't have any confidence that you can make it back. These guys, it was about creating a legacy beyond just First Canada Place or World Financial Center. And they certainly did that. Enough teasing. Let's get into it.
[06:53]
A
When we come back, we start our journey at a bar mitzvah in Beled, Hungary. So, will you violate any debt covenants recently?
[07:08]
B
So funny you should ask. I have been in technical default recently. I mean, who among us, right? But not since Q4.
[07:16]
A
Ooh.
[07:17]
B
And that's not because I paid off the loan. It's because that's when I started using Loan Boss.
[07:21]
A
I can't believe how old school some of our listeners are. They're still crunching DSCRs in Excel and all that.
[07:26]
C
Ugh.
[07:26]
B
Total waste of time. Risky business to boot. Lone Boss runs the entire process for me. One click covenant testing. Incredible instant cash flow forecasting. Impeccable. And my favorite nerdy delight, the live forward curve. So I hate having to go download the forward curve. And then it's always vertical. And you got to alt HVT to have it go horizontal. Make sure the index match works, like ridiculous.
[07:50]
A
They've just got it sorted here for you.
[07:52]
B
Much better. So thank you, Loan Boss listeners.
[07:55]
A
Check them out@loanboss.com that's loneboss.com and tell them the promote sent you. If you know me well, you know that I really like my eggs. And if I Were back in Hungary back in the day, I'd be buying my eggs from Samuel Reichman for sure.
[08:25]
B
Absolutely. When I think of bled, Hungary and eggs, there's really only. There's two names, but Sam Rman is definitely the one that comes up first.
[08:34]
A
Samuel Rechman, like so many people from this community, he was a merchant. He bought, he sold very smartly, and he parlayed that into a very prosperous life for him and his large family. This life was often centered around faith. There's so much history that we're probably not going to be able to get into. But let's just start at the bar mitzvah of his eldest son Edward.
[08:55]
B
There's numerous near misses like this. His son Edward had been scheduled to have his bar mitzvah in Vienna at
[09:02]
A
the Grand Synagogue and everything. Right. Full pomp and circumstance.
[09:05]
B
Pomp, circumstance, all of the music.
[09:08]
A
Samuel's father was not in great shape, so they moved the whole ceremony to Bellet.
[09:14]
B
And that was the day that Vienna and Austria were annexed into Nazi Germany.
[09:26]
A
The history of CRE has so many of these incredible near misses. I remember reading Sam Zell's book. It starts with something similar where his parents take the last train out of Poland right before the invasion. Any change to that plan and we would have never maybe heard of Sam Zell.
[09:42]
B
Frankly, I think this is part of why they viewed themselves as men of destiny, because they were. They really were. If they had been in Vienna on that day in March in 1938, they're not getting out. Their faith saved them in a way. You really can see that through line throughout.
[09:56]
A
We've been saying men of destiny, but I think that the matriarch here is such an extraordinary character that Rene Reichman, Samuel's wife, is one of those colossuses of history. And she was a woman in an ultra orthodox family. So decidedly life in the backseat. If she had been a man, I think we wouldn't be talking about Paul Reichman or any of the others. It would be all Rene, just an amazing force of nature.
[10:22]
B
It'd be like Alfred Vanderbilt versus Cornelius or something like that. Force of nature is right. If you read between the lines and how her children thought about her, saying that they were in awe of her is sort of shortchanging it. She was the emotional bedrock, Sam. Very successful, but behind every great man, there's a great woman. I'm sure she had a big impact on him and his ability to make money. And she inculcated this same instinct in her five kids.
[10:48]
A
Right. And during this whole thing World War II is taking place. Some unspeakable horrors are happening all throughout Europe. She sees herself as someone who needs to do things for her community.
[10:58]
B
Well, first Hungary. They just never went back and ended up going London to Paris and then ended up settling in Tangier when France fell in 1940.
[11:09]
A
They're thrust into a whole new world. They have to figure everything out from scratch. And they do this multiple times. So the kids are growing up through this. We've got to figure it out each time. Nothing is promised to us. We've just got to get better and do bigger things as the world changes so rapidly around us.
[11:25]
B
Absolutely. The through line is they had incredible mom. Let's get into some of the things that she did during the war. Some of these are just astounding. So she pressured Franco's officials into issuing visas.
[11:36]
A
This is Generalissimo Franco, Generalissimo for Jews
[11:40]
B
in Nazi controlled Budapest. And organized food parcels through the Spanish Red Cross. A very famous US diplomat, J. Reeves Childs, was her channel. And he apparently carried a letter from Rene in his pocket for years and credited her, not himself, for getting all of this done.
[11:57]
A
There's this extraordinary sentence in the book that I want to read for the tape. At a time when much of Spain itself was desperately hungry, Rene and Eva Reichman employed an artful mix of indomitability, feminine charm, homespun diplomacy and bribery to maneuver the fascist government of Francisco Franco into sponsoring the shipment of tens of thousands of food parcels to inmates of Nazi concentration camps.
[12:20]
B
I don't really know what to say.
[12:22]
A
There's one from later on that I think we should also have for the tape. This is Canary Wharf, which we'll jump into later. But at one point, Prince Charles himself visits Canary Wharf and he's chatting with Paul Reichman. Samuel, by this time has passed and Rene is the chairman of the company. Old Prince Charles says to Paul, I understand that your mother is the chairman of the company. How does that work for you? And Paul replies, you could say that we both have the same problem. Just amazing. Let's get into the Sons.
[12:51]
B
So there's five of them, kind of
[12:53]
A
middle of the pack for that time in this kind of family.
[12:55]
B
So Edward, Louis, Ralph, Albert and Paul. And so these kids, they've settled in Tangier.
[13:02]
A
Don't you wish you'd have done a couple years in Tangier? It feels incredible.
[13:05]
B
Tangiers.
[13:06]
A
I was saying this to myself all afternoon when I was preparing the docket. But Tangier is a city, but it's not quite a city at this time. What is Tangier. It explains so much of the entrepreneurial ambition and DNA of these guys in the next generation.
[13:21]
B
It's like the Mos Eisley Cantina. Samuel became a major currency trader and made the real first family fortune. He was well off in Hungary, but this was really a different level. And the sons, of course, you know, what is it? We study war so our sons may study business so that our grandchildren may study art. Yeah. And they wanted Paul to become a rabbi.
[13:46]
A
He showed an affinity for the Torah study.
[13:48]
B
He did, indeed.
[13:49]
A
In this community, the study of the Torah is considered the highest calling as opposed to success in business. And Paul brings this up later. I don't know if he does it because he has to, but he almost downplays his business success and says, I should have gone and done this.
[14:03]
B
Everyone thought that he was going to basically do this for his entire life because he clearly had a gift. Obviously, fate had other plans, but just down the line, he became so famous and the Reichmans were so successful that they had New York real estate families and other, like, finance professionals who are trying to read the Talmud and be like, how did this guy do this? We got to figure this out. It was such a part of their whole mystique. We keep harping on this because that's really what allowed them to borrow. We have this phrase in the podcast that we use, men with deep pockets. These are the guys like that. And every lender just assumes they have unlimited money. Every counterparty knows that they're smarter, have more borrowing capacity, have a bigger balance sheet, but no one knows what's there.
[14:47]
A
They played that very well.
[14:48]
B
Yeah. And everything is just off the reputation, off a handshake. They were so pious, so smart, so humble, especially relative to their success. Paul lived in a modest house in Toronto. Despite being one of the 10 wealthiest
[15:02]
A
people in the world, his only billionaire extravagance was collecting rare Talmud manuscripts.
[15:07]
B
I think we'll let him slide on that. That's fine.
[15:13]
A
One line about Tangier. So this was an free zone that was set up by the colonial powers. And the idea was that anything goes. You can find a million different ways to make money, and there's not too many laws around. There's traders from all over the world who really pitted against the very best with very light regulation, to put it mildly. And this is the environment in which Samuel Reichman thrived. He figured out a way to make gobs of money and set the family up for its eventual path to North America.
[15:43]
B
So the fortune that built what is now Brookfield Place, Canary Wharf, First Canadian Place started as a wartime FX arbitrage in a lawless port city. That's not a normal CRE origin story.
[16:01]
A
So when you take family, that's shown that it can thrive amid lawlessness and in the absence of the institutional capital markets, and you let them loose on more genteel terrain, what happens? We'll find out right after this. Okay, I'm here with Aaron Krewitz from Bravo Capital. What are the elements you look for in a great originator, a great lender?
[16:25]
C
We talk a lot about urgency, quality, and enthusiasm. My language is a language of urgency. Of course, we have a high standard for quality, and we want that person to. To be someone you could work with late at night who has enthusiasm and a good personality. We've taken a really contrarian approach towards talent acquisition. Some bridge lender peers have kind of laughed at us, saying, why do you have such a big summer program? Why don't you just hire laterals? And having come from Skadden and Gibson, that feels to me the best way to build a firm. You are able to ingrain your culture in your new hires from an early time point. You're able to get the best people, and it's worth it. It's worth training somebody for two years or so until maybe they make a big impact.
[17:16]
A
Thank you, Aaron. And where can people find you?
[17:19]
C
People could find us at bravocapital.
[17:28]
A
Com we leave Tangier and we go to Canada, which becomes really the root of the Reichman business model. The development game plan, the capital markets expertise. It all starts in two cities in Canada, Toronto and Montreal.
[17:45]
B
With a wife from Ottawa. There's a lot of Montreal. It's like, oh, the separatists.
[17:51]
A
My father in law, which plays a role here, by the way.
[17:53]
B
Oh, for sure. So Edward immigrates free. First it's Montreal, and then Lewis founds Olympia Flooring and Tile, which is a tile importer of all things.
[18:03]
A
It continues that DNA of buying and selling, which was the core DNA of the family at this point.
[18:08]
B
Great investors, great traders. They're going to be good at basically any asset class they're trading. And it's the same thing here. So Lewis founds the tile company, and then Albert founds York Factory Developments, which
[18:20]
A
is their construction business. Did you see how the name Olympia in York came about? It's pretty good.
[18:25]
B
Illuminate us.
[18:26]
A
Edward is on the phone with his lawyers trying to come up with a name for the company. All his pics are taken. He's in a hotel, I believe he looks At a couple pairs of socks he has lying there. One has the name Panther. I'm grateful he didn't choose that. And the other one says Olympia. He says to his lawyer, is Olympia available? He says, yeah, that's how you get Olympia in Yorkie, frankly, the.
[18:48]
B
And makes it so classy.
[18:51]
A
That adds the gravitas that you need.
[18:53]
B
Imagine if it was black and stone or star and wood. It's just better. No, I agree with you. So you've got the operating brothers. Right. Albert, Paul, and then Ralph is still alive, but Paul was among the youngest and was this wunderkind. In the Talmud, Albert was seen as the administrator, builder.
[19:12]
A
But eventually Paul sort of became the mastermind, the driver.
[19:16]
B
He was the John Lennon.
[19:17]
A
Something we should say about Paul. He's almost holding back at this point, especially in orthodox circles. It's like he's masking his brilliance, staying a little bit low profile, but as his career goes on, he just expresses himself more and more in his work. It's this combination of intensity, energy, ambition, and financial understanding at a very, very high level that just makes him the absolute G at what he does.
[19:42]
B
You think about Pat Riley? I think keep the main thing. The main thing. And when you're a titan of industry like this, it becomes really easy to get distracted. The returns go away. You've got the boat, the plant, whatever. And Paul was just sitting there crushing cigarettes.
[19:57]
A
Yeah, Just smoking right through it.
[19:59]
B
Yeah. And just dreaming up financial schemes to build the next massive campus.
[20:04]
A
Imagine getting this endorsement from Lou Frickin Renieri, the founder of Mortgage Backed securities, of all people. He said, paul Reichman plays the game in three dimensions while everyone else plays it in one.
[20:16]
B
Pretty good endorsement there.
[20:18]
A
And let's start with the smaller deals that really created this model for them.
[20:22]
B
It's really funny if you read the book about Trammell Crow. The origin story of the great real estate empire is almost exactly the same,
[20:28]
A
which everyone's been pushing us to do, but this one's way more interesting to us.
[20:31]
B
We'll do it at some point. But Paul falls into real estate because they needed a warehouse. I think the cost someone else quoted him was. He's like, that's. That's crazy. I'll do it myself. And spent 70,000 bucks building it and made a $35,000 profit in a year. 1.5x in a year. That IRR is pretty good. He does it once, gets a taste for it and starts doing it for third parties. Very similar to Chairman Corot building these very simple warehouses throughout Toronto and Montreal. There's a million of these guys in every major city in North America who've stuck up some industrial parks and made
[21:04]
A
some money, and you'll never hear of them. They've done well. You'll never hear of them.
[21:07]
B
What's so fascinating to me, too, is that in all of these stories about whether it's Blackstones or anyone, they're the inflection points, and you go vertical in a way, the ones who end up being the absolute top. It's like you flop a nut straight four times in a row.
[21:24]
A
Yeah. Yeah, you're right. Teddy the ace didn't help me.
[21:27]
B
I flopped the nut straight. That's really what happened here. And so the first one is called Flemington Park.
[21:33]
A
I love the backstory of this project, mostly because it has my main guy, the mascot of the promote, Big Bill Zeckendorf, shows up here.
[21:39]
B
Another one where the. And makes it so much better. Web and nap.
[21:43]
A
Yeah, Webnap sounds like a wet diaper.
[21:47]
B
One of the most legendary developers say, eyes are too big for your stomach. His eyes were too big for an entire city's stomach, but built some of the most iconic projects in New York, North America.
[21:58]
A
This is the guy who had the immortal quote, I'd rather be alive at 18% than dead at the prime rate. Big Bill Zeckendorf, at this point, his empire is starting to cave in a little bit. He has this big assemblage that he's put together in not quite Toronto. That's the important part here. It's just kind of in the suburbs of what is now known as North York. But back then, it was basically the boonies.
[22:22]
B
Bill's empire was built on extreme leverage, creative financing, really very similar things that the Reichmans would exhibit. So it's really a passing of the baton in a way that they take over this project, which had issues.
[22:37]
A
One of the things that a developer needs to be able to do at any level, but definitely at the highest level is reach consensus with the politicians. You cannot do anything big in development unless you really have a sense of how the political power structures work in a given city that you're operating in. In this one, there was a squabble between the province of Ontario, the city of Toronto, and the city of North York over this $300,000 underpass. No one wanted to pay for it. If this did not get made, it would be a huge blow to the value of this project. So the Reichmans go in and say, look, we will cover 75,000 of this. That's on us. We'll take that hit. Can you guys split the rest? They agree. They create an underpass. And this unlocks millions of dollars in value for this project.
[23:23]
B
There's this line in the Bianco book. It's essentially Paul Reichman trying to convince his family to do the deal. Said, there's money on the ground over there, we need to go over and pick it up.
[23:31]
A
I drink your milkshake. There's no bad deals, there's just bad capital stacks. And that's how Zach found himself. And these guys came in, took it over, and once it was completed, what it was the most populated census tract in Canada at some point, yeah.
[23:46]
B
It had housing for over 20,000 people. Knocked it absolutely out of the park.
[23:50]
A
This line really hit for me. I really felt it in my bones. It was typical of Paul Reichman that he would lose interest in Flemington park once its success was assured. I really felt that one. I'm no Paul Reichman, but the romance is in the challenge. And then once you know you've made it, the sparkle goes away.
[24:09]
B
As Freddy Miles said, oh, God, don't
[24:11]
A
you want to fuck every woman you see just once? The other thing that I think makes them quite remarkable is the lack of sentimentality to their company, their employees, the way they did the business. They were always iterating, they were always looking to level up their talent because they go from building pretty simple warehouses to more complicated structures, to eventually they become the preeminent skyscraper developers in Toronto. To do that, they've got to basically create a new company every four or five years. Completely different level of engineering talent you need financing talent you need. And they did this.
[24:43]
B
They did indeed. Speaks to their grand designs. I think Paul at the beginning knew where this was going.
[24:49]
A
A man of destiny.
[24:50]
B
But he didn't short run any steps. They did the simple developments, they did a more complicated master plan and just sort of moved on from there. This quote really, I think, exemplifies the feeling around them. The Reichman boys never had that feeling inside, that inner fear holding them back. Says an Auschwitz survivor who achieved more modest, if more enduring success in Toronto real estate. I kept telling them to slow down, take their time, but their outlook was different. They see only opportunity.
[25:18]
A
I absolutely love that. And it reminds me of another Esther Perel thing that I heard recently, which has been on my mind ever since. She talks about growing up in a Belgian family of Holocaust survivors. And she says that in our community there were two types. There were people who did not die and there were people who came back to Life. And the second group just saw life as something to be had and enjoyed and were able to tackle things like that for the boys here because they were not quote Holocaust survivors. It was part of the big family history. But they did not go through that. Life for them was all upside. And we'll talk about that in just a second right after this. Well, what if I told you insurance could become an asset instead of just an expense?
[26:06]
B
I'd say you're trying to sell me something, but also I'm interested.
[26:10]
A
Fair. Here's the Math. You spend 2 million on insurance annually. Loss ratios well under 30% over five years. That's about 10 million out the door. Zero return.
[26:19]
B
Painful but accurate.
[26:22]
A
What if 7 million of that built up in reserves that you actually owned?
[26:25]
B
That's pretty interesting. Tell me more.
[26:27]
A
Real property captive built specifically for scattered site gps. Top carriers issue policies for lender compliance. Reserves stay in your account and after a few clean years you're converting spend into equity.
[26:38]
B
I like this because that's what the big boys do.
[26:40]
A
Exactly. And now it's accessible for mid markets drivers like yourselves too. Check out the platform@rpcaptive.com that's rpcaptive.com and tell them the promote sent you. I love this one. It's the original data center deal. So good. Let's talk Shell.
[27:07]
B
Gosh, can't believe it's still around. So they want to build their own data center and I'm trying to imagine what this looks like in the late 60s, early 70s. There's like a phone line coming in and it's one guy sort of writing everything down, but he's in a center. So it's data center.
[27:23]
A
Rothman's, the cigarette company. I don't know if you guys remember those great ads that they used to have. Rothman's world leader. They were planning to build over here. But at this time the cigarettes cause cancer revelations were coming out so they backed out, leaving the Reichmans with this big assemblage. That's the property that Paul Reichman then pitched to Shell. They're looking to purchase the site. They're not looking for a developer partner. They want to go and build this Paul Reichman. Very cannily. I will give you an option to buy this, but in exchange you have to at least hear out my proposal. The way that they impress Shell was just giving them an incredibly detailed, persuasive project plan. This is exactly how we're going to build this. And this is exactly what it's going to look like. And I'm going to take you from A to B. The virtue of the plan, sold the thing. And having Shell on board was incredible for two reasons. One, from a reputation standpoint that's big and two, it unlocks an extraordinary new financing mechanism for them.
[28:23]
B
Yeah, this is almost like a CTL is today. We're which a credit tenant lease where you can get financing for zero cash flow if you have a long enough lease with a credit tenant. And it's really a tax arbitrage generally construction loan for something like this, you know, 60, 70% LTV spread plus 2, something like that. And these guys got 100% LTV or perhaps a little bit more the corporate borrowing rate. And their argument was that a net net lease with a top tier credit tenant was akin to the tenant borrowing. They basically invented ctls. I mean not really this happened before, but like this was very, very sophisticated for someone who's doing their second big project.
[29:01]
A
What's good for General Motors is good for the Reichmans in a sense.
[29:04]
B
Indeed.
[29:05]
A
That complex became the locations for Shell and Texaco and Bell Canada. And instead of being able to raise $8 million in financing, they were able to raise $22 million using this mechanism at cheaper rates as well.
[29:19]
B
And that lets you keep all the equity. The value creation just accrues 100% to them. There's no slippage. And so that is what allows you to really compound your net worth at staggering rates, which is what these guys were doing.
[29:31]
A
It's quite mimetic, right. If Bell sees that Shell's done it, they're on board. Totally. Texaco's on board because Bell did it. They did a big project for Toronto Star, one of the largest and oldest newspapers there. The publisher off the Star was so impressed, he gave Paul Reichman extraordinarily generous payment terms. To your point, about like no one knew what was under the hood, he said. One thing I always had to smile at was their free cash flow at this time was only something like $50,000. But the banks thought highly of them and so did Bell Canada and that's why he did it.
[30:05]
B
You can always depend on the kindness of strangers.
[30:07]
A
It's just amazing. And just like our boy Gary Barnett later on, what they started with whatever site they had was not what they ended up building. They were cons looking to add to the assemblages that they had. So if they had X by the time they broke ground, they had 1.3x.
[30:23]
B
And they did it in ways where it was just really accretive. It wasn't just more for the sake of more. It was figuring out how to unlock this hidden value. There's also this sort of thought in real estate that you have to steal a property. If there's a marketed property, it's no good, it's got to be off market. Widows and orphans have to own it for 75 years and never raise the rents. And that's not true. Good stuff is expensive and it's always going to look expensive. And I think they recognized that.
[30:47]
A
They didn't haggle very much at all. In fact, they were one of the few big players out there who would often just be price takers. They would say, all right, we'll do it.
[30:55]
B
But they do it in ways where they knew they could add additional value above and beyond what they were paying. They weren't just buying beta. I love this story too about the Toronto Star site. There's this one additional parcel which is very accretive and. And all the bidders did the same math really. They took an acceptable price per square foot for the pro forma, multiplied it by its buildable square footage and then rounded down to the nearest hundred k. Reichman's did the same but didn't round down. Yeah, and Paul thought it'd be good to add on the extra. I think it was $37,000. And that's how they won the site.
[31:28]
A
It's inches. As your boy says, in any given
[31:31]
B
Sunday, the inches we need are everywhere around us.
[31:35]
A
Okay, the next one is the big boy. This is the one that elevates them from being scrappy successful developers to top tier guys.
[31:44]
B
Yes. And it's First Canadian Place and it's
[31:47]
A
built for bank of Montreal. It's important here to take a step back and talk about the dick measuring that happened amongst the banks because that is really what created this project and what anointed the Reichman. So all these banks, cibc, Toronto, Dominion bank of Montreal and what's the fucking Scotiabank, I think is the last one. I used to live in Toronto. It's been a while, but BMO always considered themselves the whitest of white shoe banks. It's been around the longest. It's done some of the most significant transactions in Canadian financial history. And they had this old site in downtown Toronto that they needed to vivify.
[32:23]
B
Oh, great word.
[32:25]
A
Thank you.
[32:25]
B
Yeah, this was one of the only. I think it was the last undeveloped corner. King and Bay. I've been to Toronto twice, so I don't really know, but this is.
[32:32]
A
Yeah, because you said King and Bay is Bay and King.
[32:34]
B
You okay, Hoser? Bay and King. Sorry. Yeah, it's very super prime. This site had been, you know, looked at forever. Nearly died. There was a mayor who was very anti development. David Crombie. These are all Canadian historical figures that I've never heard of. Development was basically halted for three years.
[32:51]
A
Luckily they had the approval for the first phase, which was with bmo. That was the important thing here. They survived that. They just sat through it.
[32:58]
B
Yeah. And so they finally got it built in 1976. It was the tallest office building in Canada and they crushed it. They beat budget, they beat the timeline. And there's some really interesting nuggets on how they did that.
[33:11]
A
In this site we first see the spirit that then comes out to disastrous effect a couple decades later where they have to get financing to get this thing together. They get a consortium of banks, bmo, which is their partner on this project and the anchor tenant is not going to be part of the lending syndicate here. However, BMO offers to guarantee their payments on it. In exchange they have to put up for collateral everything that they own. And they do it.
[33:42]
B
Goddamn right they do it.
[33:44]
A
It's all their holdings. This is the pattern that repeats throughout history. There's a saying, right? Never go full Reichman.
[33:49]
B
Never go full Reichman. Yeah. At this time, they're rich. Yeah. They're successful. This is not, you know, betting everything because you got nothing to lose. They're very, very successful and are on a path to be even more so. So they don't do this project. It's not the end of the world. But if you do it right, you just need one.
[34:06]
A
Yeah.
[34:07]
B
And this was the one.
[34:09]
A
You're a successful developer, you know what you're doing. You deliver on time, deliver on budget. You've built a reputation, but now you're trying to build a fricking skyscraper. Completely different game, honestly.
[34:20]
B
It's sort of like how Elon Musk works where they do from first principles and they go back and restructure how even just like the site is laid out with all of their workers to do it more efficiently.
[34:31]
A
They design a new high speed system for transporting concrete. This giant, I guess like a dock structure that they use to move things up and down and move workers up and down. So even though they're off on Shabbat, remember they estimate that they saved 1.3 million man hours on this project, which equates to about $26 million in savings, which is huge. 10% more.
[34:52]
B
Something I think about a lot, which is that we haven't really iterated on construction. Part of it is we have much more regulation. But these guys, they iterated on how to build a skyscraper. And you talked about how they had to shed their skin every four or five years as they grew the company and this is really the next phase of that.
[35:09]
A
There are moments of humanity in this giant construction job. Did you catch the anecdote about Michelangelo?
[35:14]
B
Go for it.
[35:18]
A
They're halfway through construction and they realize that their marble which is arriving from Quebec is beginning to get a lot lighter. The skyscraper is going to be a two tone skyscraper which is a no, no. So they dispatch one of their guys, Otto Blau, he sent to Italy to go figure this out and he goes and buys a piece of the frickin mountain that supplied the stone for Michelangelo. He saves the day. The cladding comes in just a month behind schedule. Even though they've completely changed their supply chain here. And the Reichmans put a plaque up to commemorate this event and it says the these stones were brought over by Otto, Patricia's father, with sweat and tears. Anno 1975.
[36:00]
B
Unbelievable.
[36:01]
A
I love that.
[36:02]
B
So you've got a brand new tower, you are feeling it and most importantly, you've unlocked a ton of equity in something.
[36:11]
A
Yeah.
[36:13]
B
So what do you do next?
[36:15]
A
Look, I lived in Toronto. It's Canada. There's an end line there. If you really want to go big, you got to go to Manhattan.
[36:23]
B
All you need is, as Shelley Levine would call it, an opportunity.
[36:27]
A
An opportunity. So we'll just leave you with this quote about what's to come. It's from the president of the Battery Park City Authority, Meyer Frucher. There have been two great real estate deals in the history of New York. The first was when the Dutch bought the island of Manhattan. The second was when the Canadians bought the island again. Amazing.
[36:54]
B
Unbelievable.
[36:55]
A
I'm getting goosebumps. That's it for the promote podcast. We will wrap up our tale of the Reichmans which could honestly be a 10 parter next time. We're sorry to leave you hanging in escrow.
[37:05]
B
At the very least we put your interest in an interest bearing account in escrow.
[37:10]
A
Thanks again to our sponsors who helped make this happen. Loan boss, the best in Class CRE debt management software. Find them at loanboss.com Real Property Captive,
[37:19]
B
the first group captive for mid market owners. Find them at rpcaptive.com and Bravo Capital.
[37:24]
A
They have a new HUD Express Lane Assessment tool. You can check it out@bravocapital.com this is one of my favorite stories. Thanks for doing it with me, man.
[37:33]
B
Of course. It's a pleasure. I'm really excited for part two.
[37:36]
A
Ciao.

Summary8 min read

The Promote Podcast - Episode 70

"Men of Destiny: The Reichmanns, Pt. I"

Date: July 29, 2026
Hosts: Hiten Samtani & Will Krasne

Main Theme Overview

This special 70th episode of The Promote Podcast dives deep into the fascinating rise of the Reichmann family, one of commercial real estate’s boldest and most mysterious dynasties. Hosts Hiten Samtani and Will Krasne trace the Reichmanns' journey from the shadows of the Holocaust in Hungary, through their Tangier origins, to their dramatic impact on the North American and global CRE landscape. The episode foregrounds the family’s unmatched risk appetite, financial ingenuity, and profound sense of faith and destiny – culminating in the creation of landmark developments and the building of an empire whose reverberations continue to shape today’s market.

Key Discussion Points & Insights

1. Setting the Stage: Who Were the Reichmanns?

The Reichmanns are described as a family that changed the commercial real estate (CRE) game through aggressive borrowing, extreme financialization, and constant reinvention.
Quote:
- “There are very few families that become synonymous with an entire approach to an industry, a playbook combining canny assemblage and skyscraper building mastery with the arcana of extreme financialization and a riverboat gambler's instinct...” (A, 00:07)
Their story begins with survival during the Holocaust, relocation from Hungary to Tangier, and finally the building of a property empire in Toronto, London, and New York.

2. Scale & Wealth – The Reichmann Playbook

The Reichmanns amassed personal wealth on a level comparable to contemporary titans like Donald Bren—but decades earlier and without outside partners.
Quote:
- “Before accounting for inflation, these guys were about order of magnitude as wealthy as Donald Bren in 1982. The richest guy in U.S. real estate today.” (B, 02:06)
Unlike firms with institutional LPs, the Reichmann empire was entirely family-owned, backed by massive leverage.

3. Aggression, Leverage, and Financial Innovation

The Reichmanns are positioned as the most aggressive commercial real estate borrowers ever—willing to create novel capital structures to further leverage already risky positions.
Notable insight:
- Their willingness to "create new structures to then lever up some more" (A, 03:18) foreshadows later financial market innovations.
Parallels are drawn to current CRE financialization trends in sectors like data centers and asset-backed lending (B, 03:50).

4. Philanthropy as Destiny & Identity

Unlike most billionaire philanthropists, the Reichmanns' charitable giving was both sacrificial and highly targeted towards ultra-orthodox Jewish causes, often outpacing their own wealth.
Quote:
- “Their giving often outweighed what they had. So they were giving at a scale that was bigger than their pockets at a certain time. Eventually those pockets caught up.” (A, 04:19)

5. The Role of Family, Faith, and Destiny

Family cohesion, faith, and a belief in divine purpose are recurring themes. The Bianco book is cited as a key source encapsulating these dimensions. Quote:
- “The Reichman saw themselves as men of destiny. So it's not enough to just be very successful at business. You have to parlay that into something that can shape the fortunes of your people. That is a through line.” (A, 05:43)
Discussion of resilience: the Reichmanns repeatedly lost and rebuilt fortunes.

6. Origins: Hungary, Vienna, and Near Misses

The Reichmanns narrowly escape Nazi annexation by moving Edward’s bar mitzvah from Vienna to Beled, Hungary, a seemingly minor but life-saving decision.
Quote:
- “If they had been in Vienna on that day in March in 1938, they're not getting out. Their faith saved them in a way.” (B, 09:41)

7. The Matriarch: Rene Reichmann’s Crucial Role

Rene Reichmann emerges as a towering influence, negotiating with Franco’s officials to save Jews in Budapest and orchestrating relief with diplomacy, force of will, and charm.
Quote (from source book):
- “Rene and Eva Reichman employed an artful mix of indomitability, feminine charm, homespun diplomacy and bribery to maneuver the fascist government of Francisco Franco into sponsoring the shipment of tens of thousands of food parcels to inmates of Nazi concentration camps." (A, 11:57)
Her leadership continues into peacetime, even chairing the family company at one point.

8. Tangier: The Fertile, Lawless Free Zone

The family’s leap into currency trading in Tangier is painted as a formative period, where trading acumen, adaptability, and dealmaking DNA crystalize. Quote:
- “The fortune that built what is now Brookfield Place, Canary Wharf, First Canadian Place started as a wartime FX arbitrage in a lawless port city. That's not a normal CRE origin story.” (B, 15:43)

9. Migration to Canada – Launching an Empire

The brothers—Edward, Louis, Ralph, Albert, Paul—each establish footholds in various sectors (tile import, construction), forming the Olympia & York (O&Y) conglomerate.
The O&Y name? Inspired by a random pair of socks—an anecdote that illustrates family practicality and quick thinking. (A, 18:26)

10. Paul Reichmann: The Reluctant Genius

Paul emerges as the quiet prodigy—deeply studious, almost rabbinical, masking ambition beneath humility, eventually becoming the "mastermind." Lou Ranieri (founder of MBS market):
- “Paul Reichman plays the game in three dimensions while everyone else plays it in one.” (A, 20:16)

11. Building the Model – Early Projects and Signature Approach

The brothers start with small warehouse developments, quickly flipping and scaling up via leverage and operational efficiency.
Will draws comparison to Trammell Crow’s origin, emphasizing how Reichmann-style growth requires hitting extraordinary "inflection points" multiple times.

The Flemington Park Deal

The Reichmanns take over a struggling Zeckendorf project in Toronto’s outskirts, resolving political squabbles and unlocking value via strategic negotiations with the city and province.
Memorable Quotes:
- “Any developer at any level has to reach consensus with politicians. You can’t do anything big unless you know the political power structures.” (A, 22:36)
- "Paul Reichman trying to convince his family to do the deal: There's money on the ground over there, we need to go over and pick it up.” (B, 23:22)
Massive success, with the project housing over 20,000 people at its peak.

12. Evolution: From Warehousing to Skyscraper King

The Reichmanns consistently “shed their skin” every few years, upgrading talent and expertise to match the next development challenge.
- “They were always looking to level up their talent… basically create a new company every four or five years.” (A, 24:08)
Notably unsentimental with assets and team—no sacred cows.

13. Financial Innovation: The Shell & Bell Canada Deals

Pioneering use of credit tenant lease (CTL) structures, allowing 100%+ LTV financing at corporate borrowing rates for development—decades ahead of CRE finance trends.
- “They basically invented credit tenant leases. Very, very sophisticated for someone doing their second big project.” (B, 28:23)

14. Winning Bids and Playing Reputation

Known for often accepting sellers’ price (price takers), confident in their ability to create value post-purchase.
- “They did not haggle very much at all… they knew they could add additional value above and beyond what they were paying.” (A, 30:46)
Won Toronto Star site by outbidding rivals by “not rounding down” on their math—a paradigm of marginal value creation.

15. First Canadian Place: The Leap to Skyscraper Royalty

The project that makes the Reichmanns CRE household names.
They risk their entire portfolio as collateral to guarantee financing, even though they’re already rich—establishing the “never go full Reichmann” meme.
Quote:
- “At this time, they're rich… this is not, you know, betting everything because you got nothing to lose. They're very, very successful…” (B, 33:49)
Mastery in efficiency: tenacious innovation in the construction process, including new high-speed concrete transport and saving 1.3 million man-hours. Anecdote:
- When facing an issue with marble two-toning, they simply bought a portion of Michelangelo's old quarry in Italy, commemorating the event with a special plaque. (A, 35:17)

16. Ambition Without Borders: Setting Sights on Manhattan

The success of First Canadian Place prompts the leap to New York and the legendary Battery Park City deal—a Canadian takeover of Manhattan real estate, second only (in jest) to the Dutch purchase.
Quote:
- “There have been two great real estate deals in the history of New York. The first was when the Dutch bought the island of Manhattan. The second was when the Canadians bought the island again.” (A, 36:27)

Notable Quotes & Memorable Moments

“Skill is hitting the target. Genius is hitting the target that no one can see.” – B, 03:25
“Never go full Reichmann.” – B, 33:49
“I drink your milkshake. There's no bad deals, there's just bad capital stacks.” – A, 23:31
“Paul Reichman plays the game in three dimensions while everyone else plays it in one.” – Lou Ranieri, cited by A, 20:16
“Paul Reichman: You could say that we both have the same problem.” (In reply to Prince Charles asking about his mother as company chair) – A, 12:22

Important Timestamps

Intro and Reichmanns' place in CRE history: 00:07 - 03:25
Family, faith, philanthropy and sense of destiny: 04:19 - 06:52
WWII survival and the move from Hungary to Tangier: 08:24 - 11:08
Rene Reichmann’s WWII heroics: 11:24 - 12:22
Move to Tangier, rise as traders: 13:06 - 15:43
Early ventures in Canada, creation of Olympia & York: 17:28 - 18:51
Paul Reichmann’s talents and trajectory: 19:15 - 20:16
Flemington Park takeover and the Zeckendorf connection: 21:32 - 23:31
Pioneering credit tenant lease financing with Shell, Bell Canada: 27:07 - 29:18
Winning the Toronto Star project by marginal bid increments: 30:54 - 31:28
First Canadian Place skyscraper deal and going ‘full Reichmann’: 33:10 - 34:51
Marble supply crisis and the Michelangelo quarry solution: 35:08 - 35:59
Propelling from Toronto to Manhattan (teaser for Pt. II): 36:08 - 36:53

Tone & Style

Language: Sharp, insider, irreverent; a blend of dry wit and deep industry expertise (“the Bard of CRE” persona, frequent use of in-jokes and memorable references).
Dynamic: Lively interplay between Hiten and Will—mixing heart, high finance, and “war stories” for industry pros.

Final Thoughts

Part one of the Reichmanns' saga in The Promote Podcast paints a vivid portrait: visionary, ruthless, and deeply faithful, the family’s unique blend of character, culture, and financial recklessness redefined the scale and ambition possible in commercial real estate. Stay tuned for part two, where the story migrates to New York and some of CRE's biggest deals.

For sources, family lore, and detailed credits, check the episode show notes.

Loading summary

Transcript184 lines

[00:07]
A
There are very few families that become synonymous with an entire approach to an industry, a playbook combining canny assemblage and skyscraper building mastery with the arcana of extreme financialization and a riverboat gambler's instinct to put it all on the line again and again and again.
[00:23]
B
There are very few families whose histories start in the shadow of the Holocaust, expand to the Anything Goes Free zone of Tangier, before rising to the top of the apex proving grounds of Manhattan and London, and who do so while maintaining their faith with such rigor and giving at such scale that they become symbols of it.
[00:43]
A
Those are two short lists.
[00:46]
B
Only one name appears on both.
[01:00]
A
Welcome back to the Promote podcast, your insider guide to the money and mania of the CRE markets. I'm Hitan Samtani.
[01:06]
B
And I'm Will Krasny.
[01:08]
A
A shout out to our sponsors helping bring this very special episode to life. Loanboss, the best in class CRE Debt Management Software.
[01:15]
B
Real Property Captive, the first group Captive Insurance for mid market owners who the Reichmans were not.
[01:20]
A
They certainly were not. And Bravo Capital, a leading HUD and bridge lender. Check out their handy HUD Express lane assessment. I'll drop it in the show notes. It's episode 70 as promised. Every 10th episode, we're gonna break programming and give you something special. It's time to dive into the improbable on so many levels. Tale of the Reichman Family There has never been a story like this and
[01:43]
B
there probably never will be again.
[01:45]
A
We should maybe start with a little lesson for my co host here. So since we're gonna say his name a hundred times in this episode. Reichman. Reichman.
[01:54]
B
I had my tonsils and adenoids out when I was very young. So like the is really difficult.
[02:04]
A
Where do we get into this? It just hits on all our stuff
[02:06]
B
before even just talking specifics. Let's just talk about scale. We did this with our previous special episode with jmb talking about how big they were compared to Blackstone today. Before accounting for inflation, these guys were about order of magnitude as wealthy as Donald Bren in 1982. $6. The richest guy in U.S. real estate today. They were as wealthy as back then 40 years ago.
[02:31]
A
Yes. So think about that with JMB Realty. It's your standard real estate mega corporation with a bunch of different LPs. This is wholly owned by the Reichmans. No outside partners, no equity for anyone else. It's just the guys.
[02:45]
B
Exactly. There's no other equity. There's a lot of debt.
[02:52]
A
When people talk about, oh, we want to be conservative like the grand old families, you always scoff because these are the complete opposite.
[02:59]
B
The single most aggressive commercial real estate borrower maybe in the history of real estate was a grand old family from Toronto. You don't compound your wealth at the rates that these guys do without one, being in the right market and having the underlying value of the land compound. And two, levering to the hilt.
[03:19]
A
Not only levering to the absolute hilt of what was available at the time, but in fact creating new structures to then lever up some more.
[03:25]
B
Skill is hitting the target. Genius is hitting the target that no one can see. And that's what these guys did. They not only borrowed as much as humanly possible under the existing loan structures available, they created new ones. As we watch the financialization of asset backed loans in the data center space
[03:48]
A
or the life co insurance pipeline or
[03:51]
B
what Apollo is doing now, this is what these guys were doing 40 years ago. That's one of the reasons that we're attracted to this. It's very akin to the reckoning that's happening in the syndicator space over the past few years, just at a much grander scale and unraveling that impact of the global financial markets. And I think the biggest one is that some of the biggest players today, in fact one of the two or three biggest, is a phoenix rising from the ashes of their former portfolio, which is Brookfield. You also wanted to talk about their philanthropy.
[04:19]
A
I generally take a pretty dim view of philanthropy. I see it as a reputation burnishing slash tax shield exercise for the most part. These guys though, it seems hardwired into their DNA. Unlike a lot of other super wealthy people who give, these guys have been given from the very beginning through some unimaginable adversity. And they're giving often outweighed what they had. So they were giving at a scale that was bigger than their pockets at a certain time. Eventually those pockets caught up. And the other thing is the sheer concentration of their giving really makes them stand out. So your typical billionaires will do a lot of spray and pray, art education, the Met, et cetera. These guys gave almost exclusively to ultra orthodox haredi Jude causes. And so their legacies in those worlds are magnified. A lot of the source material for this episode is this extraordinary book called the Reichmans. And we'll surely put it in the show notes Tony Bianco. Props to you, man. A great family story, a great CR story, a great sociological tale. Well done.
[05:21]
B
It's a fantastic book. The title really says everything because it's not Just the Reichmans. There's subheading, which is family, faith, fortune, the empire of Olympia and York. You can't really untangle the whole Reichmann mystique without looking at how the family, the faith, the business and the fortune are all intertwined.
[05:44]
A
There's a sense that I got from the book that the Reichman saw themselves as men of destiny. So it's not enough to just be very successful at business. You have to parlay that into something that can shape the fortunes of your people. That is a through line. From their pretty tough moments around the World War all the way to their incredible ascent to the top of the real estate pyramid.
[06:08]
B
Totally. To whom much is given, much is expected. With great power comes great responsibility. Yeah, these guys were as talented and smart and driven as anyone who's ever laced up a spreadsheet in real estate. If you go through the family history, they faced horrible, unimaginable tragedies, lost several fortunes through no fault of their own, but always made it back. There's a study that shows that folks with inherited wealth are the cheapest because if you don't make the money, you don't have any confidence that you can make it back. These guys, it was about creating a legacy beyond just First Canada Place or World Financial Center. And they certainly did that. Enough teasing. Let's get into it.
[06:53]
A
When we come back, we start our journey at a bar mitzvah in Beled, Hungary. So, will you violate any debt covenants recently?
[07:08]
B
So funny you should ask. I have been in technical default recently. I mean, who among us, right? But not since Q4.
[07:16]
A
Ooh.
[07:17]
B
And that's not because I paid off the loan. It's because that's when I started using Loan Boss.
[07:21]
A
I can't believe how old school some of our listeners are. They're still crunching DSCRs in Excel and all that.
[07:26]
C
Ugh.
[07:26]
B
Total waste of time. Risky business to boot. Lone Boss runs the entire process for me. One click covenant testing. Incredible instant cash flow forecasting. Impeccable. And my favorite nerdy delight, the live forward curve. So I hate having to go download the forward curve. And then it's always vertical. And you got to alt HVT to have it go horizontal. Make sure the index match works, like ridiculous.
[07:50]
A
They've just got it sorted here for you.
[07:52]
B
Much better. So thank you, Loan Boss listeners.
[07:55]
A
Check them out@loanboss.com that's loneboss.com and tell them the promote sent you. If you know me well, you know that I really like my eggs. And if I Were back in Hungary back in the day, I'd be buying my eggs from Samuel Reichman for sure.
[08:25]
B
Absolutely. When I think of bled, Hungary and eggs, there's really only. There's two names, but Sam Rman is definitely the one that comes up first.
[08:34]
A
Samuel Rechman, like so many people from this community, he was a merchant. He bought, he sold very smartly, and he parlayed that into a very prosperous life for him and his large family. This life was often centered around faith. There's so much history that we're probably not going to be able to get into. But let's just start at the bar mitzvah of his eldest son Edward.
[08:55]
B
There's numerous near misses like this. His son Edward had been scheduled to have his bar mitzvah in Vienna at
[09:02]
A
the Grand Synagogue and everything. Right. Full pomp and circumstance.
[09:05]
B
Pomp, circumstance, all of the music.
[09:08]
A
Samuel's father was not in great shape, so they moved the whole ceremony to Bellet.
[09:14]
B
And that was the day that Vienna and Austria were annexed into Nazi Germany.
[09:26]
A
The history of CRE has so many of these incredible near misses. I remember reading Sam Zell's book. It starts with something similar where his parents take the last train out of Poland right before the invasion. Any change to that plan and we would have never maybe heard of Sam Zell.
[09:42]
B
Frankly, I think this is part of why they viewed themselves as men of destiny, because they were. They really were. If they had been in Vienna on that day in March in 1938, they're not getting out. Their faith saved them in a way. You really can see that through line throughout.
[09:56]
A
We've been saying men of destiny, but I think that the matriarch here is such an extraordinary character that Rene Reichman, Samuel's wife, is one of those colossuses of history. And she was a woman in an ultra orthodox family. So decidedly life in the backseat. If she had been a man, I think we wouldn't be talking about Paul Reichman or any of the others. It would be all Rene, just an amazing force of nature.
[10:22]
B
It'd be like Alfred Vanderbilt versus Cornelius or something like that. Force of nature is right. If you read between the lines and how her children thought about her, saying that they were in awe of her is sort of shortchanging it. She was the emotional bedrock, Sam. Very successful, but behind every great man, there's a great woman. I'm sure she had a big impact on him and his ability to make money. And she inculcated this same instinct in her five kids.
[10:48]
A
Right. And during this whole thing World War II is taking place. Some unspeakable horrors are happening all throughout Europe. She sees herself as someone who needs to do things for her community.
[10:58]
B
Well, first Hungary. They just never went back and ended up going London to Paris and then ended up settling in Tangier when France fell in 1940.
[11:09]
A
They're thrust into a whole new world. They have to figure everything out from scratch. And they do this multiple times. So the kids are growing up through this. We've got to figure it out each time. Nothing is promised to us. We've just got to get better and do bigger things as the world changes so rapidly around us.
[11:25]
B
Absolutely. The through line is they had incredible mom. Let's get into some of the things that she did during the war. Some of these are just astounding. So she pressured Franco's officials into issuing visas.
[11:36]
A
This is Generalissimo Franco, Generalissimo for Jews
[11:40]
B
in Nazi controlled Budapest. And organized food parcels through the Spanish Red Cross. A very famous US diplomat, J. Reeves Childs, was her channel. And he apparently carried a letter from Rene in his pocket for years and credited her, not himself, for getting all of this done.
[11:57]
A
There's this extraordinary sentence in the book that I want to read for the tape. At a time when much of Spain itself was desperately hungry, Rene and Eva Reichman employed an artful mix of indomitability, feminine charm, homespun diplomacy and bribery to maneuver the fascist government of Francisco Franco into sponsoring the shipment of tens of thousands of food parcels to inmates of Nazi concentration camps.
[12:20]
B
I don't really know what to say.
[12:22]
A
There's one from later on that I think we should also have for the tape. This is Canary Wharf, which we'll jump into later. But at one point, Prince Charles himself visits Canary Wharf and he's chatting with Paul Reichman. Samuel, by this time has passed and Rene is the chairman of the company. Old Prince Charles says to Paul, I understand that your mother is the chairman of the company. How does that work for you? And Paul replies, you could say that we both have the same problem. Just amazing. Let's get into the Sons.
[12:51]
B
So there's five of them, kind of
[12:53]
A
middle of the pack for that time in this kind of family.
[12:55]
B
So Edward, Louis, Ralph, Albert and Paul. And so these kids, they've settled in Tangier.
[13:02]
A
Don't you wish you'd have done a couple years in Tangier? It feels incredible.
[13:05]
B
Tangiers.
[13:06]
A
I was saying this to myself all afternoon when I was preparing the docket. But Tangier is a city, but it's not quite a city at this time. What is Tangier. It explains so much of the entrepreneurial ambition and DNA of these guys in the next generation.
[13:21]
B
It's like the Mos Eisley Cantina. Samuel became a major currency trader and made the real first family fortune. He was well off in Hungary, but this was really a different level. And the sons, of course, you know, what is it? We study war so our sons may study business so that our grandchildren may study art. Yeah. And they wanted Paul to become a rabbi.
[13:46]
A
He showed an affinity for the Torah study.
[13:48]
B
He did, indeed.
[13:49]
A
In this community, the study of the Torah is considered the highest calling as opposed to success in business. And Paul brings this up later. I don't know if he does it because he has to, but he almost downplays his business success and says, I should have gone and done this.
[14:03]
B
Everyone thought that he was going to basically do this for his entire life because he clearly had a gift. Obviously, fate had other plans, but just down the line, he became so famous and the Reichmans were so successful that they had New York real estate families and other, like, finance professionals who are trying to read the Talmud and be like, how did this guy do this? We got to figure this out. It was such a part of their whole mystique. We keep harping on this because that's really what allowed them to borrow. We have this phrase in the podcast that we use, men with deep pockets. These are the guys like that. And every lender just assumes they have unlimited money. Every counterparty knows that they're smarter, have more borrowing capacity, have a bigger balance sheet, but no one knows what's there.
[14:47]
A
They played that very well.
[14:48]
B
Yeah. And everything is just off the reputation, off a handshake. They were so pious, so smart, so humble, especially relative to their success. Paul lived in a modest house in Toronto. Despite being one of the 10 wealthiest
[15:02]
A
people in the world, his only billionaire extravagance was collecting rare Talmud manuscripts.
[15:07]
B
I think we'll let him slide on that. That's fine.
[15:13]
A
One line about Tangier. So this was an free zone that was set up by the colonial powers. And the idea was that anything goes. You can find a million different ways to make money, and there's not too many laws around. There's traders from all over the world who really pitted against the very best with very light regulation, to put it mildly. And this is the environment in which Samuel Reichman thrived. He figured out a way to make gobs of money and set the family up for its eventual path to North America.
[15:43]
B
So the fortune that built what is now Brookfield Place, Canary Wharf, First Canadian Place started as a wartime FX arbitrage in a lawless port city. That's not a normal CRE origin story.
[16:01]
A
So when you take family, that's shown that it can thrive amid lawlessness and in the absence of the institutional capital markets, and you let them loose on more genteel terrain, what happens? We'll find out right after this. Okay, I'm here with Aaron Krewitz from Bravo Capital. What are the elements you look for in a great originator, a great lender?
[16:25]
C
We talk a lot about urgency, quality, and enthusiasm. My language is a language of urgency. Of course, we have a high standard for quality, and we want that person to. To be someone you could work with late at night who has enthusiasm and a good personality. We've taken a really contrarian approach towards talent acquisition. Some bridge lender peers have kind of laughed at us, saying, why do you have such a big summer program? Why don't you just hire laterals? And having come from Skadden and Gibson, that feels to me the best way to build a firm. You are able to ingrain your culture in your new hires from an early time point. You're able to get the best people, and it's worth it. It's worth training somebody for two years or so until maybe they make a big impact.
[17:16]
A
Thank you, Aaron. And where can people find you?
[17:19]
C
People could find us at bravocapital.
[17:28]
A
Com we leave Tangier and we go to Canada, which becomes really the root of the Reichman business model. The development game plan, the capital markets expertise. It all starts in two cities in Canada, Toronto and Montreal.
[17:45]
B
With a wife from Ottawa. There's a lot of Montreal. It's like, oh, the separatists.
[17:51]
A
My father in law, which plays a role here, by the way.
[17:53]
B
Oh, for sure. So Edward immigrates free. First it's Montreal, and then Lewis founds Olympia Flooring and Tile, which is a tile importer of all things.
[18:03]
A
It continues that DNA of buying and selling, which was the core DNA of the family at this point.
[18:08]
B
Great investors, great traders. They're going to be good at basically any asset class they're trading. And it's the same thing here. So Lewis founds the tile company, and then Albert founds York Factory Developments, which
[18:20]
A
is their construction business. Did you see how the name Olympia in York came about? It's pretty good.
[18:25]
B
Illuminate us.
[18:26]
A
Edward is on the phone with his lawyers trying to come up with a name for the company. All his pics are taken. He's in a hotel, I believe he looks At a couple pairs of socks he has lying there. One has the name Panther. I'm grateful he didn't choose that. And the other one says Olympia. He says to his lawyer, is Olympia available? He says, yeah, that's how you get Olympia in Yorkie, frankly, the.
[18:48]
B
And makes it so classy.
[18:51]
A
That adds the gravitas that you need.
[18:53]
B
Imagine if it was black and stone or star and wood. It's just better. No, I agree with you. So you've got the operating brothers. Right. Albert, Paul, and then Ralph is still alive, but Paul was among the youngest and was this wunderkind. In the Talmud, Albert was seen as the administrator, builder.
[19:12]
A
But eventually Paul sort of became the mastermind, the driver.
[19:16]
B
He was the John Lennon.
[19:17]
A
Something we should say about Paul. He's almost holding back at this point, especially in orthodox circles. It's like he's masking his brilliance, staying a little bit low profile, but as his career goes on, he just expresses himself more and more in his work. It's this combination of intensity, energy, ambition, and financial understanding at a very, very high level that just makes him the absolute G at what he does.
[19:42]
B
You think about Pat Riley? I think keep the main thing. The main thing. And when you're a titan of industry like this, it becomes really easy to get distracted. The returns go away. You've got the boat, the plant, whatever. And Paul was just sitting there crushing cigarettes.
[19:57]
A
Yeah, Just smoking right through it.
[19:59]
B
Yeah. And just dreaming up financial schemes to build the next massive campus.
[20:04]
A
Imagine getting this endorsement from Lou Frickin Renieri, the founder of Mortgage Backed securities, of all people. He said, paul Reichman plays the game in three dimensions while everyone else plays it in one.
[20:16]
B
Pretty good endorsement there.
[20:18]
A
And let's start with the smaller deals that really created this model for them.
[20:22]
B
It's really funny if you read the book about Trammell Crow. The origin story of the great real estate empire is almost exactly the same,
[20:28]
A
which everyone's been pushing us to do, but this one's way more interesting to us.
[20:31]
B
We'll do it at some point. But Paul falls into real estate because they needed a warehouse. I think the cost someone else quoted him was. He's like, that's. That's crazy. I'll do it myself. And spent 70,000 bucks building it and made a $35,000 profit in a year. 1.5x in a year. That IRR is pretty good. He does it once, gets a taste for it and starts doing it for third parties. Very similar to Chairman Corot building these very simple warehouses throughout Toronto and Montreal. There's a million of these guys in every major city in North America who've stuck up some industrial parks and made
[21:04]
A
some money, and you'll never hear of them. They've done well. You'll never hear of them.
[21:07]
B
What's so fascinating to me, too, is that in all of these stories about whether it's Blackstones or anyone, they're the inflection points, and you go vertical in a way, the ones who end up being the absolute top. It's like you flop a nut straight four times in a row.
[21:24]
A
Yeah. Yeah, you're right. Teddy the ace didn't help me.
[21:27]
B
I flopped the nut straight. That's really what happened here. And so the first one is called Flemington Park.
[21:33]
A
I love the backstory of this project, mostly because it has my main guy, the mascot of the promote, Big Bill Zeckendorf, shows up here.
[21:39]
B
Another one where the. And makes it so much better. Web and nap.
[21:43]
A
Yeah, Webnap sounds like a wet diaper.
[21:47]
B
One of the most legendary developers say, eyes are too big for your stomach. His eyes were too big for an entire city's stomach, but built some of the most iconic projects in New York, North America.
[21:58]
A
This is the guy who had the immortal quote, I'd rather be alive at 18% than dead at the prime rate. Big Bill Zeckendorf, at this point, his empire is starting to cave in a little bit. He has this big assemblage that he's put together in not quite Toronto. That's the important part here. It's just kind of in the suburbs of what is now known as North York. But back then, it was basically the boonies.
[22:22]
B
Bill's empire was built on extreme leverage, creative financing, really very similar things that the Reichmans would exhibit. So it's really a passing of the baton in a way that they take over this project, which had issues.
[22:37]
A
One of the things that a developer needs to be able to do at any level, but definitely at the highest level is reach consensus with the politicians. You cannot do anything big in development unless you really have a sense of how the political power structures work in a given city that you're operating in. In this one, there was a squabble between the province of Ontario, the city of Toronto, and the city of North York over this $300,000 underpass. No one wanted to pay for it. If this did not get made, it would be a huge blow to the value of this project. So the Reichmans go in and say, look, we will cover 75,000 of this. That's on us. We'll take that hit. Can you guys split the rest? They agree. They create an underpass. And this unlocks millions of dollars in value for this project.
[23:23]
B
There's this line in the Bianco book. It's essentially Paul Reichman trying to convince his family to do the deal. Said, there's money on the ground over there, we need to go over and pick it up.
[23:31]
A
I drink your milkshake. There's no bad deals, there's just bad capital stacks. And that's how Zach found himself. And these guys came in, took it over, and once it was completed, what it was the most populated census tract in Canada at some point, yeah.
[23:46]
B
It had housing for over 20,000 people. Knocked it absolutely out of the park.
[23:50]
A
This line really hit for me. I really felt it in my bones. It was typical of Paul Reichman that he would lose interest in Flemington park once its success was assured. I really felt that one. I'm no Paul Reichman, but the romance is in the challenge. And then once you know you've made it, the sparkle goes away.
[24:09]
B
As Freddy Miles said, oh, God, don't
[24:11]
A
you want to fuck every woman you see just once? The other thing that I think makes them quite remarkable is the lack of sentimentality to their company, their employees, the way they did the business. They were always iterating, they were always looking to level up their talent because they go from building pretty simple warehouses to more complicated structures, to eventually they become the preeminent skyscraper developers in Toronto. To do that, they've got to basically create a new company every four or five years. Completely different level of engineering talent you need financing talent you need. And they did this.
[24:43]
B
They did indeed. Speaks to their grand designs. I think Paul at the beginning knew where this was going.
[24:49]
A
A man of destiny.
[24:50]
B
But he didn't short run any steps. They did the simple developments, they did a more complicated master plan and just sort of moved on from there. This quote really, I think, exemplifies the feeling around them. The Reichman boys never had that feeling inside, that inner fear holding them back. Says an Auschwitz survivor who achieved more modest, if more enduring success in Toronto real estate. I kept telling them to slow down, take their time, but their outlook was different. They see only opportunity.
[25:18]
A
I absolutely love that. And it reminds me of another Esther Perel thing that I heard recently, which has been on my mind ever since. She talks about growing up in a Belgian family of Holocaust survivors. And she says that in our community there were two types. There were people who did not die and there were people who came back to Life. And the second group just saw life as something to be had and enjoyed and were able to tackle things like that for the boys here because they were not quote Holocaust survivors. It was part of the big family history. But they did not go through that. Life for them was all upside. And we'll talk about that in just a second right after this. Well, what if I told you insurance could become an asset instead of just an expense?
[26:06]
B
I'd say you're trying to sell me something, but also I'm interested.
[26:10]
A
Fair. Here's the Math. You spend 2 million on insurance annually. Loss ratios well under 30% over five years. That's about 10 million out the door. Zero return.
[26:19]
B
Painful but accurate.
[26:22]
A
What if 7 million of that built up in reserves that you actually owned?
[26:25]
B
That's pretty interesting. Tell me more.
[26:27]
A
Real property captive built specifically for scattered site gps. Top carriers issue policies for lender compliance. Reserves stay in your account and after a few clean years you're converting spend into equity.
[26:38]
B
I like this because that's what the big boys do.
[26:40]
A
Exactly. And now it's accessible for mid markets drivers like yourselves too. Check out the platform@rpcaptive.com that's rpcaptive.com and tell them the promote sent you. I love this one. It's the original data center deal. So good. Let's talk Shell.
[27:07]
B
Gosh, can't believe it's still around. So they want to build their own data center and I'm trying to imagine what this looks like in the late 60s, early 70s. There's like a phone line coming in and it's one guy sort of writing everything down, but he's in a center. So it's data center.
[27:23]
A
Rothman's, the cigarette company. I don't know if you guys remember those great ads that they used to have. Rothman's world leader. They were planning to build over here. But at this time the cigarettes cause cancer revelations were coming out so they backed out, leaving the Reichmans with this big assemblage. That's the property that Paul Reichman then pitched to Shell. They're looking to purchase the site. They're not looking for a developer partner. They want to go and build this Paul Reichman. Very cannily. I will give you an option to buy this, but in exchange you have to at least hear out my proposal. The way that they impress Shell was just giving them an incredibly detailed, persuasive project plan. This is exactly how we're going to build this. And this is exactly what it's going to look like. And I'm going to take you from A to B. The virtue of the plan, sold the thing. And having Shell on board was incredible for two reasons. One, from a reputation standpoint that's big and two, it unlocks an extraordinary new financing mechanism for them.
[28:23]
B
Yeah, this is almost like a CTL is today. We're which a credit tenant lease where you can get financing for zero cash flow if you have a long enough lease with a credit tenant. And it's really a tax arbitrage generally construction loan for something like this, you know, 60, 70% LTV spread plus 2, something like that. And these guys got 100% LTV or perhaps a little bit more the corporate borrowing rate. And their argument was that a net net lease with a top tier credit tenant was akin to the tenant borrowing. They basically invented ctls. I mean not really this happened before, but like this was very, very sophisticated for someone who's doing their second big project.
[29:01]
A
What's good for General Motors is good for the Reichmans in a sense.
[29:04]
B
Indeed.
[29:05]
A
That complex became the locations for Shell and Texaco and Bell Canada. And instead of being able to raise $8 million in financing, they were able to raise $22 million using this mechanism at cheaper rates as well.
[29:19]
B
And that lets you keep all the equity. The value creation just accrues 100% to them. There's no slippage. And so that is what allows you to really compound your net worth at staggering rates, which is what these guys were doing.
[29:31]
A
It's quite mimetic, right. If Bell sees that Shell's done it, they're on board. Totally. Texaco's on board because Bell did it. They did a big project for Toronto Star, one of the largest and oldest newspapers there. The publisher off the Star was so impressed, he gave Paul Reichman extraordinarily generous payment terms. To your point, about like no one knew what was under the hood, he said. One thing I always had to smile at was their free cash flow at this time was only something like $50,000. But the banks thought highly of them and so did Bell Canada and that's why he did it.
[30:05]
B
You can always depend on the kindness of strangers.
[30:07]
A
It's just amazing. And just like our boy Gary Barnett later on, what they started with whatever site they had was not what they ended up building. They were cons looking to add to the assemblages that they had. So if they had X by the time they broke ground, they had 1.3x.
[30:23]
B
And they did it in ways where it was just really accretive. It wasn't just more for the sake of more. It was figuring out how to unlock this hidden value. There's also this sort of thought in real estate that you have to steal a property. If there's a marketed property, it's no good, it's got to be off market. Widows and orphans have to own it for 75 years and never raise the rents. And that's not true. Good stuff is expensive and it's always going to look expensive. And I think they recognized that.
[30:47]
A
They didn't haggle very much at all. In fact, they were one of the few big players out there who would often just be price takers. They would say, all right, we'll do it.
[30:55]
B
But they do it in ways where they knew they could add additional value above and beyond what they were paying. They weren't just buying beta. I love this story too about the Toronto Star site. There's this one additional parcel which is very accretive and. And all the bidders did the same math really. They took an acceptable price per square foot for the pro forma, multiplied it by its buildable square footage and then rounded down to the nearest hundred k. Reichman's did the same but didn't round down. Yeah, and Paul thought it'd be good to add on the extra. I think it was $37,000. And that's how they won the site.
[31:28]
A
It's inches. As your boy says, in any given
[31:31]
B
Sunday, the inches we need are everywhere around us.
[31:35]
A
Okay, the next one is the big boy. This is the one that elevates them from being scrappy successful developers to top tier guys.
[31:44]
B
Yes. And it's First Canadian Place and it's
[31:47]
A
built for bank of Montreal. It's important here to take a step back and talk about the dick measuring that happened amongst the banks because that is really what created this project and what anointed the Reichman. So all these banks, cibc, Toronto, Dominion bank of Montreal and what's the fucking Scotiabank, I think is the last one. I used to live in Toronto. It's been a while, but BMO always considered themselves the whitest of white shoe banks. It's been around the longest. It's done some of the most significant transactions in Canadian financial history. And they had this old site in downtown Toronto that they needed to vivify.
[32:23]
B
Oh, great word.
[32:25]
A
Thank you.
[32:25]
B
Yeah, this was one of the only. I think it was the last undeveloped corner. King and Bay. I've been to Toronto twice, so I don't really know, but this is.
[32:32]
A
Yeah, because you said King and Bay is Bay and King.
[32:34]
B
You okay, Hoser? Bay and King. Sorry. Yeah, it's very super prime. This site had been, you know, looked at forever. Nearly died. There was a mayor who was very anti development. David Crombie. These are all Canadian historical figures that I've never heard of. Development was basically halted for three years.
[32:51]
A
Luckily they had the approval for the first phase, which was with bmo. That was the important thing here. They survived that. They just sat through it.
[32:58]
B
Yeah. And so they finally got it built in 1976. It was the tallest office building in Canada and they crushed it. They beat budget, they beat the timeline. And there's some really interesting nuggets on how they did that.
[33:11]
A
In this site we first see the spirit that then comes out to disastrous effect a couple decades later where they have to get financing to get this thing together. They get a consortium of banks, bmo, which is their partner on this project and the anchor tenant is not going to be part of the lending syndicate here. However, BMO offers to guarantee their payments on it. In exchange they have to put up for collateral everything that they own. And they do it.
[33:42]
B
Goddamn right they do it.
[33:44]
A
It's all their holdings. This is the pattern that repeats throughout history. There's a saying, right? Never go full Reichman.
[33:49]
B
Never go full Reichman. Yeah. At this time, they're rich. Yeah. They're successful. This is not, you know, betting everything because you got nothing to lose. They're very, very successful and are on a path to be even more so. So they don't do this project. It's not the end of the world. But if you do it right, you just need one.
[34:06]
A
Yeah.
[34:07]
B
And this was the one.
[34:09]
A
You're a successful developer, you know what you're doing. You deliver on time, deliver on budget. You've built a reputation, but now you're trying to build a fricking skyscraper. Completely different game, honestly.
[34:20]
B
It's sort of like how Elon Musk works where they do from first principles and they go back and restructure how even just like the site is laid out with all of their workers to do it more efficiently.
[34:31]
A
They design a new high speed system for transporting concrete. This giant, I guess like a dock structure that they use to move things up and down and move workers up and down. So even though they're off on Shabbat, remember they estimate that they saved 1.3 million man hours on this project, which equates to about $26 million in savings, which is huge. 10% more.
[34:52]
B
Something I think about a lot, which is that we haven't really iterated on construction. Part of it is we have much more regulation. But these guys, they iterated on how to build a skyscraper. And you talked about how they had to shed their skin every four or five years as they grew the company and this is really the next phase of that.
[35:09]
A
There are moments of humanity in this giant construction job. Did you catch the anecdote about Michelangelo?
[35:14]
B
Go for it.
[35:18]
A
They're halfway through construction and they realize that their marble which is arriving from Quebec is beginning to get a lot lighter. The skyscraper is going to be a two tone skyscraper which is a no, no. So they dispatch one of their guys, Otto Blau, he sent to Italy to go figure this out and he goes and buys a piece of the frickin mountain that supplied the stone for Michelangelo. He saves the day. The cladding comes in just a month behind schedule. Even though they've completely changed their supply chain here. And the Reichmans put a plaque up to commemorate this event and it says the these stones were brought over by Otto, Patricia's father, with sweat and tears. Anno 1975.
[36:00]
B
Unbelievable.
[36:01]
A
I love that.
[36:02]
B
So you've got a brand new tower, you are feeling it and most importantly, you've unlocked a ton of equity in something.
[36:11]
A
Yeah.
[36:13]
B
So what do you do next?
[36:15]
A
Look, I lived in Toronto. It's Canada. There's an end line there. If you really want to go big, you got to go to Manhattan.
[36:23]
B
All you need is, as Shelley Levine would call it, an opportunity.
[36:27]
A
An opportunity. So we'll just leave you with this quote about what's to come. It's from the president of the Battery Park City Authority, Meyer Frucher. There have been two great real estate deals in the history of New York. The first was when the Dutch bought the island of Manhattan. The second was when the Canadians bought the island again. Amazing.
[36:54]
B
Unbelievable.
[36:55]
A
I'm getting goosebumps. That's it for the promote podcast. We will wrap up our tale of the Reichmans which could honestly be a 10 parter next time. We're sorry to leave you hanging in escrow.
[37:05]
B
At the very least we put your interest in an interest bearing account in escrow.
[37:10]
A
Thanks again to our sponsors who helped make this happen. Loan boss, the best in Class CRE debt management software. Find them at loanboss.com Real Property Captive,
[37:19]
B
the first group captive for mid market owners. Find them at rpcaptive.com and Bravo Capital.
[37:24]
A
They have a new HUD Express Lane Assessment tool. You can check it out@bravocapital.com this is one of my favorite stories. Thanks for doing it with me, man.
[37:33]
B
Of course. It's a pleasure. I'm really excited for part two.
[37:36]
A
Ciao.