Canary Wharf Saga May Be Coming Full Circle

Article excerpt

Banks may finally be on the verge of extricating themselves from one of the biggest bad loans of the international real estate bust.

Arabian Prince Waleed bin Talal and Canadian developer Paul Reichmann have teamed up on a bid for the Canary Wharf project outside London, raising hope that a long and difficult saga for 11 banks that seized the property in 1992 is about to draw to a close.

If the banks accept Mr. Reichmann's bid, it would bring the saga full circle, since he was the original developer as head of Olympia & York Developments Ltd. The formerly mighty real estate firm is still working its way out from under a mountain of bad debt.

A spokesman for Mr. Reichmann, who left O&Y in 1992, declined to say how much the new group had bid. The prince and a group led by Mr. Reichmann bid separately, he said, but now are teaming up in their effort to win back the property.

They are competing with two other bidders.

Prince Alwaleed is well known to U.S. bankers for opportunistic investments, including a huge stake in Citicorp when the bank's stock was trading at about $10 and the recent purchase of New York's Plaza Hotel from the bank group that controlled it.

Mr. Reichmann's group includes CNA Financial Corp. and the Mutual Series Fund, managed by value investor Michael Price, whose noteworthy investments include a 6.1% stake in Chase Manhattan Corp.

Alluding to Mr. Reichmann's background with Canary Wharf, Prince Alwaleed said in a press release that his team now has "a solid approach towards the project."

He added: "Our joint effort should benefit all parties, including the selling banks."

Mr. Reichmann, starting with some successful contrarian investments in the depressed New York office market of the 1960s, had built a huge international real estate empire and was widely thought to be too smart and well capitalized to get sucked into the property crisis that arose at the end of the '80s. …