Olympia & York Puts Annual Loss at $1.76 Billion : Real estate: The figure does not include ‘major deterioration’ in the value of the bankrupt developer’s giant Canary Wharf project in London.

In its first detailed financial disclosure since seeking refuge in bankruptcy courts two months ago, Olympia & York Developments Ltd. said Friday that it lost $1.76 billion in the fiscal year that ended Jan. 31.

The Toronto-based mega-developer said the loss would have been even greater had the company been able to quantify the “major deterioration” in the value of its uncompleted Canary Wharf project in London’s Docklands.

Olympia & York’s inability to estimate the drop in the value of the project--carried on its books at its $3-billion cost--led its accounting firm, Price Waterhouse, to qualify its auditors’ report for the company.

“In our opinion, the value of the (Canary Wharf) development has been materially impaired,” Price Waterhouse wrote in its auditors’ report. “Generally accepted accounting principles require that the amount of the impairment in value should have been estimated and provided for in these financial statements.”

Some analysts have speculated that the huge project may be worth 40% less than what Olympia & York has invested in it. Still, they stress that Canary Wharf is extremely difficult to evaluate because of current construction and leasing uncertainties.

Despite the huge loss, which was more than five times the size of the company’s $301 million loss a year earlier, and the qualified auditors’ opinion, Olympia & York president Gerald Greenwald tried to accentuate the positive in a three-page message to shareholders.

“Clearly, the O&Y; current financial status is very difficult,” he wrote. “Yet the balance sheet does not reflect what we feel are also the ‘real assets’ of O&Y--its; strong market franchise as reflected by the collective weight of its real estate holdings and its unique human resources.”

As real estate, forest products and petroleum markets improve, he said, “appraised values and the values of other company investments should increase,” Greenwald continued.

The financial report provided graphic evidence of the crumbling market for commercial real estate during Olympia & York’s most recent fiscal year. The company said its loss included write-offs totaling $1.2 billion of plunging real estate and securities values.

Even without the write-offs, Olympia & York said it would have suffered an operating loss of $538 million, compared to operating income of $172 million a year earlier.

The write-off does not include the deterioration in the value of Canary Wharf. And bank analyst Alain Tuchmaier of McLean, McCarthy Inc. in Toronto said Olympia & York may still be overstating the value of its real estate holdings by claiming that they have a special “franchise value.”

“I have a lot of difficulty with that,” Tuchmaier told the Associated Press.

Olympia & York’s Greenwald said the company is attempting to assemble an investor group to “supply the capital necessary to complete Canary Wharf.”

After major successes in Toronto and the World Financial Center in New York, Olympia & York foundered when it attempted to replicate its formula in London with Canary Wharf. A downturn in demand for office space there forced the company to slash rents, turning the project into a cash drain that helped bring the company down.

The company holds direct and indirect ownership in 40 office buildings in North America with 43 million rentable square feet of office space, including 15 buildings in New York City with 23 million feet of rentable space. It employs 1,000 people in the United States, 700 in Canada and 400 in England.