Segal recalls Olympia and York and Block Bros.

It’s not a well known fact, but Joe Segal briefly owned a real estate brokerage business in the late 1980s.
During NAIOP Vancouver’s monthly breakfast meeting on Thursday, the legendary entrepreneur, philanthropist and real estate investor became interested in a group of properties owned by Olympia & York, then one of Canada’s dominant developers. Figuring that O&Y had lost interest in them, he put in a call to Alberta Reichmann, one of three brothers who founded the company.
The 18 income properties weren’t on the market at the time, but Reichmann was willing to listen to what Segal might offer, so Segal went to Toronto to see him. The potential acquisition included Block Bros., then a booming residential real estate brokerage.
Reichmann told his company’s vice-president to tell Segal “anything and everything” he wanted to know about Block Bros. Segal said he would come back in two weeks to talk with Reichmann again.
But Segal, knowing he could not get through all of the properties in two weeks, did not look at any of them.
“But I really didn’t care,” said Segal. “All was interested in, all the valuation, was in the income stream.”
He did some number crunching and eventually offered Reichmann $140 million.
“I said, ‘I’ll give you $140 million . . . or I’ll give you $145 million if you keep the brokerage business,’ ” said Segal.
Reichmann rejected that pitch and asked for $145 million – brokerage business included. Segal agreed.
Segal’s next step was to get financing. He called the president of his long-time bank and requested $100 million.
His plan was to pay the bank back through the sale of the properties. But the bank boss said Segal would have to wait six weeks until he and the board assessed the proposal.
So Segal went to Canada Trust, made the same offer to its president, who said approval would take six days or so. Segal set the second bank boss in motion, got his money, and then sold Block Bros. back to its president and brokers for $5 million.
It took Segal a year to pay back his $100 million loan. A few years later, Block Bros. and O&Y both went bust while Segal continued to build a commercial real estate portfolio now worth hundreds of millions.
The year was 1988, but with the credit markets still tight, investors developing deals today can probably relate to what Segal went through.
I wonder where that bank president who told Segal to wait six weeks is now . . .