Reichmanns May Sell 20% of Developer : Real estate: Olympia & York is the world leader in commercial property. The brothers’ plans to cut their stake fan fears that conditions may worsen.
Plans by the world’s largest commercial developer to sell a 20% stake in the vast U.S. properties it amassed over more than a decade are confirming worries throughout the industry that conditions could get worse.
The Reichmann family of Toronto, which owns Olympia & York Developments Ltd., is seeking a single partner to acquire the stake, valued anywhere from $200 million to $800 million, industry sources said Thursday.
The move “confirms the widespread nature of the problem, the pervasiveness of the (real estate) slowdown and the consensus . . . that things could get quite a bit worse before they get better,” said Daryl Delano, senior economist at Cahners Economics in Newton, Mass. “It’s unsettling to see such a conservative operation sell.”
Real estate insiders say that view generally is shared among those in the industry, which has been battered by an economic slump throughout much of the nation. Commercial real estate in particular is deeply troubled, with soaring vacancy rates in many large cities such as New York and Boston.
The Reichmanns, renowned for their shrewdness in predicting property trends, are “sacrificing a portion of their future gain to have a little comfort in case things get a little tougher,” said one real estate executive who spoke on condition of anonymity.
The Austrian-born Reichmann brothers--Paul, Albert and Ralph--began building offices in Canada in the 1960s. Devout Orthodox Jews who live extraordinarily private lives, they entered the realm of major international developers in 1977 with the decision to buy eight office buildings in Manhattan when the market was at a low point.
Olympia & York executives were not available for comment as the company’s offices were closed Thursday for the Jewish new year.
Olympia & York has interests in about 30 cities in Canada, the United States and Britain.
