Business

Campeau is back

A fallen tycoon resurfaces to build homes in Berlin

NOMI MORRIS June 23 1997
Business

Campeau is back

A fallen tycoon resurfaces to build homes in Berlin

NOMI MORRIS June 23 1997

Campeau is back

Business

A fallen tycoon resurfaces to build homes in Berlin

NOMI MORRIS

The east German town of Teltow looks almost as grimy now as it did seven years ago, when the Cold War ended and authorities bulldozed the concrete wall separating it from the wealthy West Berlin suburb of Zehlendorf. At about that same time, Canadian real estate magnate Robert Campeau fled North America, leaving creditors to pick over the wreckage of his debt-laden property and retail empire. Now, at 72,

Campeau has resurfaced in cobblestoned Teltow, new bulldozers poised to work on a $650-million subdivision that dwarfs every other housing project in the region. June 25 marks the long-awaited groundbreaking for Mühlendorf—literally Mill Village—a 700-acre community that will hold 1,800 upscale homes, including villas, duplexes and four luxury apartment towers. Also planned are shops, a kindergarten and a park with an artificial lake for swimming.

It is an astonishing resurrection for a hero„ turned-pariah of Canadian business. Born in

Sudbury, Ont., and a millionaire at age 30, %

Campeau came to personify the fast-buck, debt1 intoxicated 1980s. American business writer §

John Rothchild summed up the entrepreneur's s fall in the title of his book, Going for Broke: How §

Robert Campeau Bankrupted the Retail Industry,

Jolted the Junk Bond Market and Brought the Booming Eighties to a Crashing Halt. Campeau’s foray into retail— culminating in the $8.2-billion takeover of Federated Department Stores, owner of Bloomingdale’s and other U.S. chains—sparked a downward debt spiral that almost destroyed his Toronto-based real estate company, Campeau Corp. In August, 1990, the board of directors of the firm he had founded stripped him of the chairmanship. “Campeau was in such deep water here, his ship got swamped,” remembers New York City retail consultant Alan Millstein. “Now, he is reinventing himself.”

After four years of wrangling with authorities near Berlin, Campeau got final approval for Mühlendorf in April. His new firm, BerlBau GmbH, quickly set up a trailer on a grassy field bisected by an unpaved bike path. Across the road from the site is a derelict Communist-era apartment house, its windows shattered. It is a dramatic counterpoint to the huge billboard nearby that proclaims, with trademark Campeau confidence: “Mühlendorf—you want to live here.” The developer is selling the project to locals as the lifestyle of the future. “Campeau—the key to better living,” reads another slogan. Inside the trailer, a friend of Campeau’s 39-year-old son, Daniel, reads a magazine as he waits for the curious to drop by. Peter van Roon gestures across the building site, boasting of Campeau’s plan to run a shuttle bus to the nearest commuter rail station until a new one links the suburb to Berlin. Danny, as van Roon calls him, is vice-

president of operations for BerlBau, the company that, together with a prominent Düsseldorf-based bank, owns the Mühlendorf project.

The elder Campeau, who declined to be interviewed by Maclean’s, still lives with his 55-year-old wife, Ilse, in a $10-million Austrian chateau he built in 1991. (The property is officially owned by a Lichtenstein trust.) In keeping with European formality, the businessman now calls himself Doktor Campeau, for the honorary PhD given him by Laurentian University in 1985. In 1993, he began working from the Berlin offices of Toronto architect Eberhard Zeidler, one of a small but accomplished circle of Canadians who have joined such U.S. executives as Ronald Lauder, former head of the Estée Lauder cosmetics empire, in investing in the Berlin area. Zeidler, architect of the Toronto Eaton Centre, designed the entire Mühlendorf project. The Campeau subdivision is within a 10-minute drive from Genshagen, where Canadian Peter Munk’s TrizecHahn Corp. is building a $ 1-billion business park.

Campeau’s detractors in North America shake their heads at the mention of his new venture. “I was amused Campeau was living high on the hog in Europe,” said Millstein, who closely followed the U.S. department store collapse. “His record here is deplorable. He escaped with his life.” Millstein calls Campeau a “first-class buccaneer” who is using his prowess as a salesman to stage a comeback. “If you get far enough away from your debacle, people forgive and forget.”

But it has not all been roses for Campeau in Germany. Like Munk,

Campeau was often frustrated by the mind-set in the formerly Communist region and by rigid German building codes. At one point, says Canada’s trade attaché in Berlin, Campeau lashed out in the local press against the “Commies” he was forced to deal with. To make matters worse, German journalists dredged up his North American experiences, sowing doubts about his credibility. He was twice refused permission to build. The German tabloid Bild Zeitung called the Canadian entrepreneur “Mr. Bankrupt.” André Ouellet, then Canadian foreign minister, helped out by writing a letter supporting Campeau, confirming he has never been declared bankrupt in Canada.

True, Campeau has never been personally bankrupt. But it was left to his successor as chief executive of Campeau Corp., Stanley Hartt, to clean up the financial mess. Hartt, a Montreal lawyer and former adviser to then-prime minister Brian Mulroney, presented a restructuring plan in early 1992. That changed the company’s name to Camdev Corp. and traded all of its U.S. department store operations for forgiveness of $20 billion in debts. Camdev also recovered $100 million by selling all its other U.S. holdings. “We now have no assets, no debts and no claims in the U.S.,” Hartt said last week.

Canada is another story. Camdev is still pursuing a $17-million suit against Campeau for unpaid loans. The National Bank of Canada, meanwhile, has sued him over a $50-million personal loan guarantee. Campeau turned around and sued Camdev for unfair dismissal. He then sued National Bank and another Camdev stakeholder, the Reichmann family’s Olympia & York Developments Ltd., for $1 billion, claiming they deprived him of financing to rebuild the company. “His tactic is always to file a 10 times bigger lawsuit to try and force a settlement,” says Hartt. “He has been very clever at fending off his creditors.”

The strategy is working. A Lichtenstein appeals court has refused to hear Camdev’s $4.6-million claim against the Austrian property. An Ontario trial date will be set later this month. The asking price for Campeau’s mansion in Toronto’s exclusive Bridle Path area has dropped from $15 million in 1994 to $7.3 million. But the home is in Use Campeau’s name, helping keep her husband’s assets, as Hartt puts it, “judgment-proof.” Adds Hartt: “I’m sure the Berlin _ company is locally incorporated, and that the shares S are in his wife’s or his son’s name.” g While Campeau left a lot of angry people in North I America, there is a grudging respect for him in Telc tow. The town could gain up to 8,000 jobs from the project. “He’s quite a miracle,” says Mayor Sigfried Kluge. “For his age he has so much energy. We have fought sometimes for hours—to midnight—and he holds his ground.” Campeau, adds Kluge, has done all the negotiating through a German interpreter. Many fights with the town council centred on infrastructure. But there was also a faction who flatly opposed the project because, unsettled by press reports, they did not trust Campeau. Others did not want to see their former farming village turn into a residential suburb. Then the respected Westdeutsche Immobilienbank became a joint owner. Now, BerlBau has a staff of 25. And 32 buyers have reserved in the first of Miihlendorf’s three phases. Two fivefloor apartment buildings are sold out, and ads appear in newspapers as far away as Bonn and Munich.

In Canada, a scaled-down Camdev is back on its feet. Run by Albert Reichmann’s son Phillip, it plans to change its name to O&Y Properties Corp. next month. (“That,” says Hartt in jest, “should make Robert Campeau happy.”) Campeau visits Florida and Toronto, but he divides most of his time between the Austrian chateau and his office in Teltow. He still swims, jogs or skis daily. “I wish him no harm,” says Hartt. “He may be around until 90, fighting these lawsuits. I get the feeling he enjoys it.” Campeau will no doubt enjoy his groundbreaking ceremony next week, fêting locals with a project that marks a return to the business that made his name 40 years ago: building quality homes for the upwardly mobile. □

ROBERT CAMPEAU'S RISE AND FALL...AND RISE

1950 A Grade 8 dropout, Campeau founds his own construction firm and earns kudos as a quality builder with his first subdivision in Ottawa.

1969 Campeau Corp. goes public with assets of $70 million and revenues of $25 million.

1985 Campeau’s expansion from housing to office development culminates with the building of Toronto’s Scotiabank Plaza.

1986 Campeau uses loans and junk bonds to finance a $4.9-billion takeover of Allied Stores Corp. Two years later, he wins a bidding war with retail giant R. H. Macy and Co. to buy Federated Department Stores Inc., owner of Bloomingdale’s, paying $8.2 billion.

1990 Allied and Federated department store chains both file for U.S. bankruptcy protection.

Campeau is fired as chairman and CEO of the firm he founded and disappears for several months.

June, 1997 Campeau’s German development company, BerlBau GmbH in partnership with the Westdeutsche Immobilienbank, begins work on a $650-miIIion housing project in the Berlin suburb of Teltow.