Only Mortals: The Reichmanns, Pt. III

Summary

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The Promote Podcast: Only Mortals – The Reichmanns, Pt. III

Date: August 12, 2026
Hosts: Hiten Samtani (“Bard of CRE”), Will Krasne
Podcast Theme: Your Commercial Real Estate Insider guide

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Episode Overview:

This final installment in The Promote Podcast’s vivid, no-punches-pulled Reichmann trilogy traces the family’s journey from their audacious ascent to the shattering collapse and lingering legacy of their commercial real estate empire. Hosts Hiten Samtani and Will Krasne peel back the layers of the Reichmans’ most ambitious and ultimately fatal project—London’s Canary Wharf—exploring the unique financial climate, the scale of the bet, consequences of outsized risk, and the indelible imprint left on the industry.

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Key Discussion Points & Insights

Context: The Reichmans Reach Their Zenith

• Early Successes:
  • Olympian rise from the currency bazaars of Tangier and the growth of Toronto to dominating Manhattan CRE, including the legendary Urus portfolio and the World Financial Center.
    • “They have made what is probably the best acquisition of all time in the Urus portfolio.” (01:18, Hiten)
• Trouble Brewing:
  • Cracks appear as income slows from North American assets amid a softening office market; hemorrhaging cash into multiple ventures and opcos, particularly Gulf Canada and Campo.
    • “We’ve started to see cracks in the facade… those are starting to really slow down because the wave has crescendoed.” (02:06, Will)
• Mounting Leverage:
  • By late ‘80s, assets like the Urus portfolio are leveraged to the hilt, foreshadowing the risk to come.

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The Ambition of Canary Wharf: The Isle of Dogs Gamble

Setting the Stage

• Project Genesis:
  • London’s City is high finance, but the Isle of Dogs—a rundown, disconnected, decrepit district—is considered wasteland by local developers.
    • “Before New York took that position, London was the financial capital of the world… but it’s this tiny thing inside London called the City.” (03:20, Hiten)
• Government Incentives:
  • To lure builders, the government offers massive incentives: 10-year rates holiday, capital allowances, tax exemptions, and simple planning approvals.
    • “Rates holiday, 100% capital allowance... you’re almost kind of getting paid to do it.” (05:25, Will)
• Fundamental Challenges:
  • The area is physically and socially disconnected; lacking transit makes it an ultra-tough sell, exacerbated by British class constraints.
    • “It is one thing to be connected… England, unlike America, is a country of class. And class comes with certain constraints.” (07:34, Hiten)

Enter the Reichmans

• Paul Reichman Steps Up:
  • After a failed attempt by G. Ware Travelstead, Paul Reichman, armed with unmatched reputation and capital, steps in—driven and undeterred.
  • “The only thing on the mind of the shark is eat.” (11:36, Will)
• Deal Structure:
  • Secures a 200-year lease at a massive discount (400,000 quid/acre vs. a market rate of 1M).
    • “24 buildings, 12 million square feet… an incredible deal on the land.” (10:35, Will)
  • Anxiety simmers within Olympia & York’s leadership and the Reichman family.

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Canary Wharf Unravels: Grand Vision Meets Brutal Reality

Fatal Flaws and Missed Levers

• Reliant on the Government:
  • For the first time, the Reichmans can’t muscle through with just capital or leverage—a new transit line (Jubilee Extension) is essential but depends on outside actors.
    • “This is the first time they’re really at the mercy of another entity.” (12:13, Will)
• The Culture and Location Gap:
  • Failure to grasp British business culture. A key insight from an advisor:
    • “Paul never understood one thing about Canary Wharf. It’s in the wrong place.” (14:20, Hiten quoting advisor)
• Government Leverage:
  • Thatcher strips crucial transit funding guarantee from the contract—a move that proves “very consequential in the long run.” (14:29, Hiten)

Downward Spiral

• The Doom Cycle:
  • Transit line funded by “first money in” from Reichmans, but the family can’t meet installments; without transit, no tenants; without tenants, no cashflow—endless catch-22.
    • “Choking to death on a crumb.” (16:46, Will)
• Leasing Catastrophe:
  • Losing Midland Bank anchor lease due to price inflexibility—momentum stalls, rents halve amid a wave of new London supply, vacancy soars to 20%.
    • “He blew it. He completely blew it.” (17:23, Hiten)
• Personal Guarantees and Leverage:
  • Downside of corporate structure: guarantees across empire mean one failing asset can take down the whole.
    • “They are signing corporate guarantees for these projects… that’s what gave lenders confidence.” (20:06, Hiten)

The Final Collapse

• Philanthropy as Double-Edged Sword:
  • Hands-on giving, not endowments, keeps cash at risk:
    • “They were just on the hook for it.” (21:48, Will)
    • “This is part and parcel of what made them great.” (22:19, Hiten)
• Death by a Thousand Cuts:
  • Campo debt losses, philanthropic obligations, asset sales, soft leasing, and economic downturn combine into an unstoppable spiral.
    • “A thousand floods, not even just cuts.” (25:54, Hiten)
• Bankruptcy Unfolds:
  • Unable to roll commercial paper, forced asset sales, a $240M court order loss (May 1992), and then full bankruptcy filings in Toronto and New York.
• Unprecedented Debt Workout:
  • “It takes 400 bankers from 91 banks to restructure more than 12 billion in debt.” (31:24, Will)

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Memorable Quotes & Moments

• “The only thing on the mind of the shark is eat.” — Will Krasne (11:36)
• “Paul never understood one thing about Canary Wharf. It’s in the wrong place.” — Advisor, via Hiten Samtani (14:20)
• “Choking to death on a crumb.” — Vivid description of the Reichmans missing a crucial payment (16:46, Will)
• “As Hemingway said, how do you go bankrupt? Slowly, then all at once.” — Will (23:00)
• “These guys weren’t robots… To see someone who did this in one generation, it’s just staggering.” — Will (36:09)
• “Their legacy is dual. We’ve got the real estate side and we’ve got the philanthropy side.” — Hiten (37:07)

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The Legacy, Debts, and Echoes

Aftermath: What Became of the Reichman Empire?

• Unwinding the Holdings:
  • Massively complex, multi-year asset workouts. Olympic & York is carved up; Brookfield emerges from the ashes, taking key assets (World Financial Center, 1 Liberty Plaza, etc.).
    • “Brookfield... now one of the most important financial institutions in the world.” (33:49, Will)
• Canary Wharf Reclaimed (Temporarily):
  • Paul Reichman and partners buy back Canary Wharf in 1995, take it public in 1999, but lose control again in 2003/04.
• Brookfield as Heir:
  • In 2015, Brookfield (backed by Qatar Investment Authority) ends up owning both the London and New York empire:
    • “It’s a full circle moment.” (35:52, Will)
• Personal, Not Just Financial, Legacy:
  • Despite industry collapse, the Reichman name is “still one of the first families of real estate.” (37:56, Hiten)
  • Their philanthropy and “impact’s going to be felt, continue to be felt for a long, long time.” (37:36, Will)
  • Modern “cousins, grandkids, all that, are making their way in the world.” (36:51, Will)

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The Hosts’ Reflections: Lessons and Meaning

• Not a Cautionary Tale:
  • “This is not my takeaway at all... We are here to experience things. The highest highs, the lowest lows, that’s what makes us human.” (36:09, Will)
• What is Legacy?
  • “Is it the biggest balance sheet... or the biggest portfolio? Maybe, for a time. But they innovated, they financialized the business, they took some of the biggest risks, and they stuck the landing for the most part, until they did not.” (37:07, Hiten)

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Notable Timestamps for Important Segments

• 00:17 – 02:45: Table-setting: Reichmans’ rise and state of play in late 1980s
• 03:11 – 05:53: London vs. New York and the Isle of Dogs challenge
• 05:57 – 07:26: The transit conundrum; why Canary Wharf was a hard sell
• 10:07 – 11:52: Commitment to the project; signing the landmark deal on Shabbos
• 12:13 – 15:35: Risks, dependencies, and loss of leverage over government; crucial contract clause removal
• 16:46 – 18:34: Funding failures, leasing collapse, and the consequences of losing momentum
• 20:06 – 22:45: Structural weaknesses—guarantees, philanthropy, and exposure
• 24:17 – 25:54: The Reichmans’ relationship with risky borrower Robert Campo
• 29:00 – 30:02: Collapse: failed funding, broken commercial paper structures, and bankruptcy
• 31:24 – 33:36: Debt workout; Brookfield rises from the ashes
• 36:09 – 37:56: Hosts’ reflections on the meaning of legacy

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Final Thoughts & Impact

The Reichmann saga stands as a colossal tale of ambition and loss, providing a blueprint for both the glory and the peril that comes from acting on the grandest of scales in real estate. Their buildings, their bank accounts, and their philanthropy outlasted the empire itself. The podcast closes with deep respect for what was achieved, what was lost, and what was made possible in CRE because the Reichmanns dared to “dream no small dreams.”

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Recommended Reading & Acknowledgments:

• Much of the podcast is based on Tony Bianco’s seminal biography (39:10, Acknowledgments).
• “Going for Broke,” about Robert Campo, is also highly recommended (24:52).

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For visual assets, show notes, and further insider content, see the episode notes at The Promote Newsletter.

Transcript

[A]

An evil plexus of slums hides human creeping things.

[B]

Where filthy men and women live on pan orths of gin.

[A]

Where collars and clean shirts are decencies unknown.

[B]

And where Paul Reichman sought to build a new financial utopia.

[A]

Dream no small dreams. Welcome back to the Promote podcast, your insider guide to the money and mania of the CRE markets. I'm Haten Samtani.

[B]

And I'm Will Krasny.

[A]

Today we conclude our trilogy on the Reichmans. Arguably the most daring, brilliant and what's the opposite of risk averse captains of the Go team family in commercial real estate history. A big thank you to our sponsors for supporting this endeavor.

[B]

Real Property Captive, the first group captive insurance for mid market owners who the Reichmans weren't and then were they kind

[A]

of were in the end. Loan Boss, your one stop solution for CRE Debt management.

[B]

Bravo Capital, a leading HUD and bridge lender.

[A]

We've been on a whirlwind journey. We started off at a fateful bar mitzvah in Beled, Hungary. We traversed through the currency bazaars of Tangier, Tangiers and the teething grounds of Toronto before ascending the apex mountain of Manhattan. The Reichmans, as you said, they're feeling it more than any other family has felt it in history. They're really at the top of everything right now. They have made what is probably the best acquisition of all time in the Eurus portfolio. They've developed what is probably one of the most complex and successful projects of all time in the World Financial Center. They're also in the middle of their corporate rating adventures all over the place. So they're really up there.

[B]

It's important to note as well that we've started to see cracks in the facade. So while they are simultaneously the most respected name in global real estate in frankly investing period, but at this time they're also hemorrhaging cash into Gulf Canada, campo, the other OPCOs, and most importantly the office market in North America has really started to soften. And so we're seeing the cash machines that they had at the Urus portfolio, First Canadian Place, all of these other deals that they've done, those are starting to really slow down because the wave has crescendoed, right?

[A]

They bought Urus in the late 70s. By the late 80s, that price portfolio

[B]

has 10x barred against it to the hilt. And the cash flow that went to service, it has started to collapse. And again as we've seen recently with office, it's really expensive to retenant multifamily. You can drop your own 200 bucks and get apps the next day. That's not how this works. So while this is happening, they are about to take on the single largest commercial development in the history of the world.

[A]

Fair. Way to put it.

[B]

Outside of, like, Tenoctitlan with the Aztecs.

[A]

So what are we talking about? The Isle of Dogs.

[B]

Dags, dags.

[C]

Yeah.

[B]

Dags, dags.

[A]

Oh, dogs. Before New York took that position, London was the financial capital of the world. And at this time, they were still one of the most dominant forces in high finance. But it's not really London. It's this tiny little nebulous thing inside London called the City. The City of London?

[B]

Yeah. This is where all of the major investment banks are. The Magic Circle is the law firms. It's really concentrated in one area. In New York, when you say you work on Wall street, you work in midtown, but in London, if you work in the City, you're in the City.

[A]

And it has this very unique culture because of the density, and we love these esoteric associations. There's one called the City Corporation, and they're the shot callers in that space

[B]

to bring it back here. Though Isle of Dogs is far away. It is not in the city.

[A]

See in the movie Green street hooligans, of course, West Ham United, they have this serious rivalry with Millwall, where This is Millwall fucking.

[B]

Yeah, yeah, yeah.

[A]

Who only wants the upper crust would not be caught dead in this neighborhood, is the point. Paul Reichman had some exposure to the English property market through Olympia New York's interest in Trizik, which also controlled a company called English Property. And he wasn't very impressed of England. He said the work habits were poor, the level of interest low. And this is important for our listeners. Will is like a hardcore wife guy, and so am I now. But I've had previous relationships where there's something that was not quite right from the get go. And I still stuck around for a while, maybe to my detriment. And that's what this feels like a little bit to me.

[B]

It does. There are these deals and it happens to everybody where you just know it. Something's off and you can't get out of it. There's sort of always a reason to keep going. And frankly, one of the reasons here is the fact that this was so far away and that it was such a decrepit area because the government gave away the farm to try to get people to build here. They created a land development company. They gave it urban enterprise status.

[A]

What does that mean for our stateside

[B]

Listeners, it's a big deal. It's basically a 10 year rates holiday, 100% capital allowance on buildings, exemption from development, land tax and very, very simple planning which I think is almost most important. The land is not just free, almost kind of getting paid to do it. And that's just the carrot, right? That's what gets people interested. The problem though, as we said, it's three miles away, but it might as well be a lifetime. And that's because London, which has phenomenal public transit, of course all the cabbies have the knowledge.

[A]

One of my favorite pieces of all time is piece about the knowledge. I'll send it to you.

[B]

There's no easy way to get there. So you have this area that's not connected, but it's got free land.

[A]

All this to say that people who are very familiar with this market, namely English property developers, want nothing to do with it. So as always, it takes an American to really bring the fire here. And in this we have our discount Bill Zeckendorf almost.

[B]

We're about to go through a series of names which are phenomenal and we

[A]

will put these in the show notes, I promise you. So if you get lost, never fear, we have your back.

[B]

So Credit Suisse for Sposton at a London office and Michael Von Klem, who is the chair, wanted to convert the Isle of Dogs into back office, shades of Dumbo, where you can go across the river, get much cheaper space, but you're still connected. This was not connected. So Michael von Klem though, he's the chair of csfb, he's got a lot of things to do. He's gotta find a property guy who knows what's up here and he goes to Gware. Travelstead can give you one guess what state he's from.

[A]

It's gotta be Kentucky, man. He has a dream. He said, let's make a real run at this. So he goes to First Boston and Morgan Stanley and he puts together a consortium structured is as follows. They will sign a mass release agreement, but they need him to go and pre lease some space to do a little bit of a proof of concept and he's unable to do that. Very tough sell. Even at this rate.

[B]

All comes down to the transit because you can't get the tenants without the transit. And transit is unbelievably expensive to spec.

[A]

I don't think it's just transit. It is one thing to be connected. That's a very core part of this. England, unlike America, is a country of class. And class comes with certain constraints. You've got to be in the right place. It's much more important to the English to commute into the city than it is for Americans to go to a specific place. There is this whole ethos of having to go to the city because it is the proper thing to do. Higher class of clientele. It becomes a serious problem, actually.

[B]

So after our good friend G. Ware. Man, what a legend. Can't pull it off. Who else is out there? Who has the stones, the balance sheet, and the expertise to do this?

[A]

One name. Paul Reichman. Olympia in York comes and takes a look at this. Maggie Thatcher, the aforementioned Iron lady has won a third term and she is anxious to get this built. That really cements the legacy. Maggie's like, you have until July 17th of 1987. If you can't get me a deal, then you're out. So he gets desperate. First Boston on July 1, which is Canada Day, incidentally, tells Paul Reichman, let's meet up. And so Paul calls his team and says, we gotta fly to London tonight. And more on that right after this. So will you violate any debt covenants recently?

[B]

So funny you should ask. I have been in technical default recently. I mean, who among us, right? But not since Q4.

[A]

Ooh.

[B]

And that's not because I paid off the loan. It's because that's when I started using Loan Boss.

[A]

I can't believe how old school some of our listeners are. They're still crunching DSCRs in Excel and all that.

[C]

Ugh.

[B]

Total waste of time. Risky business to boot. Loan 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 gotta alt HVT to have it go horizontal. Make sure the index match works like ridiculous.

[A]

They've just got it sorted here for you.

[B]

Much better. So thank you, Lone Boss listeners.

[A]

Check them out@lone boss.com, that's lone boss.com and tell them the promote sent you.

[B]

The Iron lady sends her guy, Young, Lord Young, to feel Paul out. And like most people who interact with Paul, Reichman comes back with rave reviews. Just like somebody opening on the West End.

[A]

Lord Young says, I was staggered that he had both the confidence and the resources to do it. So they've convinced Maggie Thatcher. And this plan is. This makes World Financial center look like a Mickey Mouse project.

[B]

It's more than twice as big. It's 24 buildings, 12 million square feet. And they got an incredible deal on the land.

[A]

200 year lease at 400,000 quid an acre. And this is at a time when the going rate was one million quid an acre. So that's a giant, giant discount.

[B]

In addition to all of the tax incentives, planning incentives, all that.

[A]

Even with all that within Olympia, New York, there's some anxiety about this deal.

[B]

Yeah. So you've got Albert, who's the guy who's got to go build it. He's got some reservations. Keith Roberts doesn't love it.

[A]

One of their most senior executives.

[B]

Importantly, they're also going through a shift in which Renee, the backbone of the entire family, is fading and heading towards the end of her life.

[A]

The matriarch in episode one of this trilogy, we really talk about the kind of respect that she commanded from her sons. So if she had put the kibosh on this, it wouldn't have happened. So there's only Paul then. And you know what Paul wants to do here?

[B]

The only thing on the mind of the shark is eat.

[A]

So just like the Urus acquisition which made him, this deal was also signed on Shabbos, the Jewish day of rust.

[B]

That means I don't work, I don't handle money, I don't turn on the oven, and I sure as shit don't fucking roll.

[A]

Paul is dark, he's unreachable, and one of his lieutenants does the deal. The contrast here though is the Juris deal put the Reichmans on the map globally. In this case though, the Reichmans have reached such a stature that their association with this project is hailed as the revival energy for it. It was a complete shift in those 15 years.

[B]

One thing to note too though is that with URIS and with the World Financial center, they both were able to find the lever that made the deal work. Particularly at World Financial center showing up with the BO repayment schedule. Hey, we know what your pressure point is. We can hit it and really make the deal here. This is the first time that they're really at the mercy of another entity. Rich as they are. They can't build a new line out there. The government has to help. And so for the first time, that dynamic has shifted where someone has a pressure point on them and buying into distress, looking through that, looking through a cycle, all those things. That is not the case here. Yeah, they're delivering into a massive supply glut. So it's not a Urus situation where they are buying at the nadir. This is on the way down because as this site was sort of Coming through the ether. The city doesn't take this sitting down.

[A]

Yeah, they're going to rise up against the rebels.

[B]

There's a huge wave of deregulation, both on sort of the financial side, which unleashed demand for office, and then also on the planning side. And there was new towers built basically every day for six years, something like 40/million square feet of new office.

[A]

And so much of this is a defense mechanism against what the Canary Wharf project is going to be.

[B]

Companies with the 80s deregulation globally are expanding. They want new, they want state of the art. It's harder to do that in such a space constrained area like the city. And Canary Wharf was sort of a blank sheet of paper. And so a way to front run that is say you don't have to go out there, you don't have to wait for this train line to get built. You can just do it right here. As good a project as World Financial center is, as good a project as First Canadian Place is, at the end of the day, the true non commodity product in office or any other asset class is really, really small. And I'll tell you, Canary Wharf in it, as smart as Paul Reichman is, as good a builder as Albert Reichman is, they are not immune to the laws of supply and demand. And there is a ton of supply.

[A]

Did this not remind you so much of Hudson Yards and how much of a role the MTA played in the eventual success of that project? Because without the seven line, there ain't no Hudson Yards, there ain't no tripling in values or anything that we've seen in the last five years. The 7 trains extension and then the city's willingness to give them another 2 billion in tax breaks and whatnot is really the thing that this all rests on. That's the wild card here. The other thing, we should read this line for the tape just because of how devastating it is. In the URIS acquisition you had talked about, you can't change a building's location. It sounds like a very simple throwaway line, but it really is the core of this here. Paul never understood one thing about Canary Wharf. It's in the wrong place. That's what one of his advisors later said to Tony Bianco. And I think being from the outside, he just did not get the culture. You're not building in prime Manhattan, so to speak. You're really in the boonies here. The initial contract had this clause that the Reichmans would be entitled to damages if the government didn't make good on their transit funding commitments. Maggie Thatcher reportedly was scanning this document. That's how invested she was. And she took that out. And that proved very consequential in the long run.

[B]

Sharp old lady, you know, when the state does everything for you, it'll soon take everything from you. We keep talking about the transit. Here's the situation. Olympiadorc wanted to build its own dedicated line out there. And of course the city goes, no, it's got to be for everybody. It was expected to cost something like $2 billion. Ends up being, you know, almost 100% higher.

[A]

Transit in a nutshell.

[B]

That's showbiz, baby. Yeah. And the deal that the Reichman strike is that they're going to be on the hook for 400 million. And it's the first 400 million. The government line, very smart by the government, is this is going to make your property value explode. So you've got to pay for it first. The key is they have to be first money in. And if they don't fund the project, doesn't work.

[A]

Can we just step back and realize how crazy that is? When you walk around midtown you'll see these public plazas and say paid for by Vornado Realty Trust or whatever. But it's just this little awning and whatnot. In this case they're actually funding the frickin transit line.

[B]

You can't really borrow against that. It's got to be like Randy Moss

[A]

says, straight cash, homie. We should say the bravado at this point is at its very peak. Paul Reichman says that we're going to fund this thing through our cash flow. As in no construction loan.

[B]

Of course, as everyone knows, the Reichmans couldn't fund the first payment of the Julie line extension. And someone described it as like choking to death on a crumb.

[A]

That's so vivid.

[B]

They don't fund, this line doesn't get built and it's really a doom cycle. Tenants aren't going to sign without the link on the tube. The city is terrified of losing tenants. So they're building like crazy. And the tubelet can't proceed without the Reichman money. But the Reichman money is tied up in billions of dollars in opcos hemorrhaging cash on Robert Campo of all people.

[A]

Let's talk leasing for a second. If you remember, the Amex deal at World Financial center is the thing that really made them there, right? In this case they needed one of those tenants, they needed the English equivalent. They're in talks with Midland bank, which is a major UK bank. Midland bank is Willing to anchor an entire tower and then half of another. Very close to the finish line. Paul Reichman refuses to budge on price. Midland pulls out. And that makes all the difference in the world because again, as you've said in the previous episodes, the few dollars here and there didn't really matter. It's all about the momentum, showing that you're able to create something here. And he blew it. He completely blew it. And he acknowledged later that he blew it on that deal.

[B]

To put some stats on it, we talked about this wave of supply. Rents in the city were about £70. I still don't understand like a pound versus a quid. Is it the same thing?

[A]

It's the same thing.

[B]

All right, so 70 quid per foot.

[A]

You could say pound quid or sterling.

[B]

Okay, great.

[A]

Sterling is just for fun.

[B]

Yeah, 70 pounds a foot to under 35 a foot. By 1992, half a decade, rents were down 50%. Office vacancy went from 3%, 4% ish to 20. So you lose Midland and then you ain't getting anybody else.

[A]

So when one project goes south, worst case scenario, you can typically walk away from it and say, ah, that was the brakes. But in this case, the Reichmans had set themselves up not to be able to do that. And more on that right after this. Okay, I'm here with Aaron Kurowitz from Bravo Capital. Aaron, you've done two and a half billion dollars or so of deals so far. How are you thinking about scale going forward?

[C]

There's a divergence between optimizing for scale and optimizing for quality. And when you're running a debt fund, you have to pick. You have to say, am I really fee driven and do I want to maximize how much I could put out? And the other business model is what we've ch is slow and steady. We want the reputation to proceed ourselves. Investor returns, that's more important for us than volume. If you look at some of the REITs, they were forced to deploy in the realm of 2 to 8 billion a month. First the AUM gobbled right, as your sweatshirt says. But then they were forced to like regurgitate that AUM more rapidly than they really could. And it forced them to pick terrible deals. Their returns are negative. To just go for scale for scale's sake. That's a short lived business model.

[A]

Thank you, Aaron. And where can people find you?

[C]

People could find [e-mail].

[A]

Okay, so it's important now to talk about how the Reichman empire was set up. They are signing corporate guarantees for these Projects. They're backing up these projects with the entire weight of the Reichman empire. That's what gave the lenders confidence for them to write pretty lax KYC stipulations into these things.

[B]

Yeah, the whole point is that no one lender knew the full extent of the loans or how much leverage was in the empire. And it's just they're the men with deep podcasts, pockets.

[A]

They're the men with deep pockets. They are banking quite literally on their reputations here. Yeah, Paul Reichman, the Reichmans, they're good for the money. They have X project, Y project, Z project. But the lenders on each of those projects is thinking the same thing. Right. So eventually there's putting like immense pressure on the whole operation.

[B]

It's like how we've seen recently with multifamily syndicators where, you know, that same net worth can guarantee a whole lot

[A]

of loans at the same time. We've mentioned their philanthropy so many times through this trilogy. Importantly, unlike some of the grand old families, they weren't creating endowments. So they weren't creating these self perpetuating vehicles which would invest proceeds into causes smartly. Take that money, do it again, again. They were essentially opening those very deep pockets and just handing money out.

[B]

Hubba, hubba, hubba. Money, money, money. Who do you trust? If you're this wealthy, generally you have some sort of foundation where you seed it with a certain amount of assets. Generally appreciated assets for tax purposes. Exactly. And that pool of money generates a return which then is invested. So if you have a foundation, it's invested in bonds, stocks, real estate, what have you.

[A]

And you, the children's investment fund, for example.

[B]

But I think in the US there's a certain level you have to distribute every year. So basically, like, that's your bogey. Try to make more than that, whatever. And they weren't doing that. They were just cutting checks. And so what that meant is that their available cash was always subject to their philanthropy. And it wasn't as if we gave this once in a very flush period. We got a big tax break and then the money comes out of there. We're not on the hook for it. The foundation's on the hook for it. They were just on the hook for it. This is part and parcel of what made them great. The philanthropy and the faith and the

[A]

religion is just inextricable from the Reichman story.

[B]

It absolutely is. They were men of destiny. We are destined for great things and we're destined not only to have financial success for us, but to bring along all our people. Even in this time, you know, when you might say, maybe we should be conserving a little bit of cash, they weren't. They were continuing to support their people, not just in the U.S. but in the carcass of the Soviet Union.

[A]

It was the guys sitting in a room signing checks, handing out cash. It was very high touch, as they say nowadays. And so the reputation at this point has compounded to a level that they cannot pull back. How can you pull back? You're the guy sitting in the room.

[B]

I can't even fathom it. At this point, too. What you're seeing is there's a lot of warning lights going off. As Hemingway said, how do you go bankrupt slowly then all at once? And that's really the case here at the beginning, their reputation is able to save them. So even in the late 80s, as the cash crunch is coming and they're putting money in the Canary Wharf, they get a $500 million loan in 1990, but it's at a higher rate, it's more expensive, they start selling off assets.

[A]

But if you zoomed out a little bit, you could start seeing this. This weaken a little bit, the layoffs. But lest you start feeling sorry for the Reichmans, at this point, they're still doing their thing. Dude, they made a run at the sears tower in 1989.

[B]

The only thing on the mind of the shark is eat. But this is one of these things where he talks about this really well. Francis Greenberger talks about this when he's doing co op conversions in New York.

[C]

He.

[B]

And he starts to sense that the market has shifted. He goes to his lenders and says, we're having problems. And they're like, what are you talking about? You're current on everything. He's, no, no, no, no. This is coming. I'm trying to get ahead of this. Let's figure out a way to like, restructure prior to there being issues. I'm not in public equities. I'm not a currency trader. I'm not any of those things. But you read the books and you listen to Paul Tudor Jones and all these guys, and it's your first loss, your best loss. They're doing this stuff on the margins. Okay, we'll figure this out. It'll come back around.

[A]

You ever dated a crazy woman, Will?

[B]

I was a professional baseball player. What do you think?

[A]

There are some relationships you just can't quit, right? No matter. It's like the red flags are right there on the forehead, but you just can't quit them. Bobby Campo is that relationship. For the Reichmans, it's mad. Bobby Kempo was the original longevity guy. He used to apparently get injections of sheep brain to keep them going. And one of his bankers, one of his core guys, described him as, quote, a living water torture. So, that being said, take us through what happened with Kenpo.

[B]

By the way, everyone go read Going for Broke about Robert Kempo.

[A]

It's in the show notes, one of

[B]

the most crazy books I've ever read. But he, with essentially no money, buys Allied and then Federated Department Stores. Two years apart, wildly overpays, goes bankrupt. An Ottawa home builder, real estate developer, not in the Reichman's league, but he does own some nice stuff. And so they were big shareholders in his public company, and then they loan him a bunch of money as part of these retail buyouts, but it's secured by, I think, seven office buildings he's got in Canada. And they're like, that's money. Good. Like, we're. We're all right. And of course, he defaults on those. And they just pour good money into bad after bad because that'll help it get fixed. Initially, they backed him like 200 million or 250 million, something like that.

[A]

And ballooned to, what, half a billion?

[B]

At some point, I think it was close to 700. So that's $500 million just gone. This is right as all of the stuff at Canary Wharf is happening too. And that could have funded the first part of the Jubilee Line extension, and instead it was sort of torched at the altar of Robert Campo.

[A]

We mentioned Campo. We mentioned the philanthropic obligations they have. We mentioned the slowing leasing across all their markets. This is death by a thousand floods, essentially. Not even just cuts. It's bad. If he had leasing momentum in Canary Wharf, he would have been fine. If they had the transit funding come through, they would have been fine. If the government had still been on their side, they would have been fine. But in 1990, Paul Reichman goes hat in hand, or should I say fedora in hand, for a government bailout. But there's no Maggie Thatcher anymore at 10 Downing, it's John Major, and he has no attachment to this project or to Paul. So he says, no dice.

[B]

And we'll get into the lengths they went to to try to salvage Canary Wharf right after this.

[A]

Well, what if I told you insurance could become an asset instead of just an expense?

[B]

I'd say you're trying to sell me something, but also, I'm interested.

[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.

[B]

Painful but accurate.

[A]

What if 7 million of that built up in reserves that you actually owned?

[B]

That's pretty interesting. Tell me more.

[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.

[B]

I like this. Because that's what the big boys do.

[A]

Exactly. And now it's accessible for mid markets drivers like yourselves too. Check out the [e-mail] that's rpcaptive.com and tell them the promote sent you.

[B]

So hey Dan, how do you finance real estate? You think it's mostly bank loans with term? It's asset backed securities.

[A]

What are you talking about? I've got a little bit of game. I'll probably go with taste. I'll get some EB5, maybe sign some PGs here and there.

[B]

How about 90 day commercial paper that you have to roll every quarter?

[A]

That's just. How do you do that on a long term development asset?

[B]

Who agrees to that? That's insane.

[A]

I don't even understand structurally how that works.

[B]

Some of these are nuts. So I don't even know what this means. These are just words by the way

[A]

for our more sophisticated financial listeners. Please write in. Will's going to break something down that we fucking have no idea what it means.

[B]

Just pretend I'm Mark Wahlberg in the Gambler when he's giving a lecture and you can tell that he doesn' know what the actual lecture is and he's just like memorize the script phonetically. So there's a 1989, 800 million 7.75% euro bond on World Financial Center Tower B via Nomura with yen equivalent principal formula.

[A]

What sounds like it didn't work out

[B]

and that's really the end of it. Because commercial paper basically depends on confidence, right? People are confident, have to be confident that you are good for the money to roll your paper because you have to do it so often.

[A]

So 1989 they've got this fancy yen denominated principal formula, whatever it is. In 1990amomentous event. Rene Reichman passes, Paul goes to Toronto, he sets Shiva for her and then he comes back to London. And the most urgent problem at hand is that he needs to pre lease 800,000 square feet for Morgan and Credit Suisse to lock in their commitment for that 1 million square feet that we talked about a very, very precarious situation.

[B]

At the same time, at the end of 1991, as they're trying to pre lease this space, they're forced to admit they can't roll the paper, they don't have the money. And by Q1, that market's done that source of funding that's completely shut off to them. And that basically is it, kind of. Paul was forced to resign in March of 92. In May of 92, a UK court ordered Olympia New York to pay $240 million to Morgan Stanley in a collateral hedging dispute. And that's just a massive gut punch. That's really all she wrote. Olympia New York files in Toronto and New York.

[A]

When you say files, you mean chapter 11.

[B]

I forget what chapter, but they filed. They filed bankruptcy.

[A]

Yeah.

[B]

And Canary Wharf goes into administration, so phase one actually delivers. But it's only 50% leased, which means it's cash flow negative. It's important to note to your spiel rant earlier about how the British market is very parochial and different than the us. Almost none of the tenants are British.

[A]

And that's very important because if any future concessions are to be had from the government, you can't really make the pitch that this is saving British industry and innovation. These are all out of towners. Who cares about them?

[B]

So what do we have left here? We've got the company just completely taken apart.

[A]

I mean, this is sad. Dude, what a wild ride in such a short time frame. It is 1977 when they buy the US portfolio, their first deal in New York. It is what, early 1990s. Right now we're talking, it's 1992.

[B]

We're watching Dan O' Brien Barcelona Olympics commercials. Who is the world's greatest athlete?

[A]

Dan or Dave? As we said, this wasn't a normal setup. This wasn't a project you could walk away from. Take a black eye, go do something else. Go do something in another market. The entire empire starts imploding.

[B]

Just to give you the scale of the borrowing. It takes 400 bankers from 91 banks to restructure more than 12 billion in debt.

[A]

Where's PJT Partners when you need them? This is the kind of thing they were born for.

[B]

I think back to what happened with Rupert Murdoch where he had to restructure everything and he came within a whisper of losing it all. And I think it was restructuring like 2 billion in debt. The scale of, again, this is like $1992 is just staggering. It speaks to sort of the power of their mystique to get commercial funding for real estate, which is insane. And this again, this is not a massive institutional company. This is just a family. There's no investors, there's no LPs, there's no fee revenue coming in.

[A]

When the bankers and the creditors start unwinding this empire, they realize, what were we lending to? Exactly.

[B]

Yeah. Because what we were lending to was something somebody else was lending to as well. So who really had the priority here? By the early mid-90s, this thing is over. That's not the end though.

[A]

It isn't. It never is. We're just never gonna have a family like this again. And it makes me sad.

[B]

It's a different time, a different world.

[A]

But they didn't leave behind nothing. The ashes of Olympia, New York created other great things.

[B]

I'm sure a lot of people listening to this podcast work in an Olympia York building and don't even know it. And the biggest one here is essentially

[A]

Brookfield, aforementioned Edper Corporation. So Edper Karina had what, about a third of Olympia, New York through various confabulations.

[B]

I think it was tied to the World Financial center project.

[A]

Yeah.

[B]

So as all this is getting worked out and it takes years like this, takes several years to work out 400

[A]

frigging bankers, as you said.

[B]

Yeah. So Brookfield, which is a new thing along with, I think there's a pretty big syndicate here at cibc, Citibank, Dragon, they take basically the rest of the portfolio. So you have the U.S. assets in a World Financial Center. You've got 1 Liberty Plaza, 245 Park. So the Euros portfolio is still there. If you look at Brookfield's own corporate history, it basically calls 1996 the start of their US expansion.

[A]

Jack Cockwell, who was the Bronfman's go to deal maker, who Paul was simpatico with. Yes, he steps in here, Jack and another young accountant called Bruce Flatt.

[B]

Indeed they come together, they build this into Brookfield Asset Management, which is a

[A]

$1 trillion AUM gobbler, one of the

[B]

four Blackstone, Apollo, Brookfield, KKR. Basically those four. So one of the most important financial institutions in the world. And essentially they got a several billion dollar head start by stepping into these assets which they already knew. It's funny, this is how a lot of these companies were made. Apollo was made by Leon stepping into the executive life portfolio which he had originated when he was working for Michael Milken. So you find these assets, good assets, bad balance sheet, step in, restructure, and you get in at the right basis and you are off to the races. So while all this is going on, though, Paul is still around. He's fighting really hard to maintain the family stake here. He ends up buying Canary Wharf specifically. So the US Stuff is gone, but buys Canary Wharf back.

[A]

Amazing.

[B]

In 1995, with the world's foremost enthusiast

[A]

of Diet Coke, after Will and myself, Prince Al Waleed bin Talal Al Saud, the Saudi investor in Royal, Large shareholder,

[B]

went in Citibank, Apple at one point.

[A]

Everything temporary. Involuntary guest of the Ritz.

[B]

Indeed. So they end up taking Canary Wharf public again in 1999. In 2003, 2004, lose it again. Morgan Stanley buys it out. Paul ends up, you know, getting shivved a little bit by one of his investors and friends. Who's one of your favorites?

[A]

Shimmy Glick, the diamond mogul and real estate titan. Yeah, they remained friends for a long time after that. They figured it out.

[B]

It's just business.

[A]

It's just business.

[B]

Paul ends up selling his stake back to the Bronfmans, and in 2009, the last of his stake is sold. And that's the end of 22 years of Canary Wharf.

[A]

In 2015, Brookfield, now with the backing of the Qatar Investment Authority, one of the giant sovereign funds, comes in and buys this outright. Brookfield ends up owning both ends of the empire, New York and London.

[B]

It's a full circle moment.

[A]

Some people would look at this story and feel regret and feel like this is a cautionary tale of real estate. Icarus flying too close to the sun, whatnot. That's not my takeaway at all.

[B]

No, it's not. We're human beings. We are here to experience things. And. And having the full range of emotions, the highest highs, the lowest lows, that's what makes us human. These guys weren't robots going to the office the same day making widgets. To see someone who did this in one generation, it's just staggering. I think it was Jimmy Cayne when Bear Stearns went bankrupt and someone asked him, how's it feel like to go from whatever $3 billion net worth or 2, 1, whatever, to a couple hundred million? And he goes, you know what? My quality of life is exactly the same. He's like, the only people who care are my heirs.

[A]

Well, we could bring it back to the present day to A.B. rosen recently saying, yeah, am I worth a lot less than I was a few years ago? Absolutely. But I'm still worth more than most.

[B]

And they still have a sizable portfolio. They are active today. Cousins, grandkids, all that are Making their way in the world. And people are going to remember the Reichmans.

[A]

What we're getting at is what is legacy really? Is it having the biggest balance sheet or the biggest portfolio? Maybe for a time. But they innovated, they financialized the business to an extent that had never been seen. They took some of the biggest risks, and they stuck the landing for the most part, until they did not. They're a real developer. They built some of the most iconic structures throughout North America and London. Their legacy is dual. We've got the real estate side and we've got the philanthropy side.

[B]

All that money that they gave away and all the good causes they supported that didn't get clawed back in the restructure. So that stuff stays forever. And that impact's going to be felt, continue to be felt for a long, long time. I'm literally moving to Battery Park City next week. Had they not showed up with one sheet of paper, I would be looking for another apartment.

[A]

It all comes back to the title of our first episode. These were men of destiny. They believed in something much bigger than themselves. They created something much bigger than themselves. And they're leaving behind something much bigger than themselves, too. If you're not a student of cre, you might past Brookfield Place and not really think of the the people behind it. For those in the know, the Reichman are still one of the first families of real estate. And I think they'll always remain that way.

[B]

Well said.

[A]

This concludes our trilogy on the Reichmans. We don't typically spend multiple episodes on one family, but this is not a typical family. A couple of acknowledgments here. First, our sponsors, Bravo Capital. You can find them at bravocapital.com Loan

[B]

Boss, you can find [e-mail] and Real Property Captive.

[A]

You can find them at rpcaptive.com thank you so much for indulging us on this ride. Producer Jay, what a phenomenal job on this series. Just really brings it to life. So appreciate you, man.

[B]

Thank you. Also, I want to thank Tony Bianco.

[A]

What a guy. Tony, thank you.

[B]

Wrote the book that a lot of our research was based on. Tremendous job. Come on the pod, Tony.

[A]

You have an open invite. It's an epic and it's so well written. It's not just a dense tome of real estate nonsense. It's a human story. I hope we did it. A sliver of justice. Shragi who turned me onto this book and got the Reichmans on my radar. Thank you so much. Thank you to Nugget for not barking during this episode. And to John for being such a good boy.

[B]

Yeah. Also to Nico Krasny for being asleep right now. Good job.

[A]

And we should say, numerous members of the Reichman clan reached out to us when we said we were doing this, and their comments, their stories were really helpful in informing this episode as well.

[B]

You can just tell in speaking with them the impact that this generation of Reichmanns still has, not just on their own family, but throughout the broader communities in Toronto, England, and the United States. And it's a very special thing. So thank you guys so much for sharing that with us.

[A]

When they talk about the family history, it's primarily pride. It's not pathos.

[B]

How could it be anything but?

[A]

Well, this was a blast. We can't do this too often because it breaks us, but it was a great time.

[B]

Are we going to do it again in seven episodes or are we putting the. Who knows? We'll do some girl math and figure it out.

[A]

All right, thanks, man.

[B]

Thank you.

[A]

Ciao.