Robert Campeau, the munificent

By Bruce Firestone | Uncategorized

Jun 17

I just learned
that Robert Campeau has passed away at age 93. He was an amazing person in many
ways and he had a profound impact on the city of Ottawa…

Homes built by Campeau Corporation in
the 1960s and 1970s are still highly sought after today and later he constantly pushed the
city of Ottawa and its mayors to allow buildings to be built that were taller
than the Peace Tower.

He believed that Canada’s Capital city needed to
grow up, a view now widely shared (many decades later) by leadership—mayor,
councilors as well as most town planners.

Bob was a charismatic, angry, ambitious
Franco-Ontarian from Sudbury who moved to Ottawa to become a major

His core team of executives was
unusual in a small town like Ottawa—dynamic
and dedicated, they loved their boss despite his mercurial personality. They
hunted and fished together in Robert’s private northern Quebec camp; they were a tight, impressive

Believe it or not, he had an indirect hand in re-launching the Ottawa Senators by helping Terrace Investments Limited, the first parent company of the team…

In my book, DON’T BACK DOWN,
the real story of the founding of the NHL’s Ottawa Senators and why big leagues
, which I wrote to celebrate the 25th anniversary of the
founding of the Sens, I call him “Robert Campeau, the munificent.”

Here’s why (see below). 

he RIP.

Bruce M Firestone, B Eng (civil), M Eng-Sci, PhD
ROYAL LePAGE Performance Realty broker
Ottawa Senators founder
Real Estate Investment and Business coach


Excerpt from Don’t Back Down:

Fixing Terrace meant first dealing with an imminent bankruptcy.
Admiralty Enterprises, run by irrepressible entrepreneur Lawrence Freedman, was
about to declare bankruptcy.  

Lawrence was the guy who wanted to build a
national chain of roller rinks, but his real strength was in construction of
industrial buildings. He knew how to lock up great sites, secure easy credit
(in the 1970s and 80s), pop up great buildings cheaply, and sign tenants. What
he didn’t know how to do was to control and manage his sprawling real estate
empire, always a challenge to entrepreneurs who have the attention span of

Four of his more than 80 industrial sites, were 50-50 co-ventures with
Terrace Investments Limited. One of those was a roller rink.

Here’s the thing you need to know—in bankruptcy, trustees are gods. They
have incredible power, and courts are not keen on overturning or second
guessing them. So if you put a trustee offside, you are not usually going to fare
very well. That’s just as true for bankrupt companies or individuals as it is
for their creditors.

In this case, Terrace wasn’t strictly a creditor; it was a joint
venture partner on the ownership side.

When I visited the trustee, I told him, “We’d like to buy Lawrence’s half of those
four buildings we own together.”

“I am not in a position to discuss this with you now. We are in the
process of seizing control of all of his assets, his bank accounts, and
notifying tenants that their rents are now to be paid to us. Just finding out
what Mr Freedman actually owns is a challenge. Come back next month.”

I didn’t know it at the time, but the trustee was BS’ing me—he was
already negotiating with Bob Campeau for the sale of the entire portfolio. This
is what trustees do—look for the guy with the deepest pockets and for the
fastest exit.

So we had to face down a lying bankruptcy trustee, deal with an
uncertain court proceeding, and fend off a large predatory real estate
corporation about to devour a huge portfolio of valuable industrial and
commercial properties including a half share of four buildings belonging to

Do you know the old saying, “There are two chairs in heaven waiting
for the first two partners to get there and still like each other?” Perhaps the
best number of partners anyone can have in business is… zero?

Anywho, Bob Campeau was a charismatic, angry, ambitious
Franco-Ontarian from Sudbury who moved to Ottawa to become a major
homebuilder in the 1960s and 70s. His homes were well-built and are still
prized today in inner parts of the city. His core team of executives was
unusual in a small town like Ottawa—dynamic
and dedicated, they loved their boss despite his mercurial personality. They
hunted and fished together in Robert’s private northern Quebec camp; they were a tight, impressive

They branched out in the 1970s and 1980s to commercial real estate in Ottawa and Toronto.
By the late 1980s, Campeau Corporation upon the advice of US-banker Bruce
Wasserstein used junk bonds to do a leveraged buyout of Allied Stores and
Federated Department Stores in the US. They scooped up Bloomingdale’s,
Abraham &
Straus, Jordan
Marsh and other beloved brands.

The problem was that while they knew how to run a real estate empire,
they knew nothing about merchandising. It turns out that it greatly helps if
you actually know something about the business you are in.

Department store sales along with the national economy stalled, costs
were slashed but not fast enough, and cashflow declined. As a result, they were
unable to pay punishing interest rates on their junk bonds and Campeau Corp
teetered into bankruptcy themselves.

Campeau Corporation was in turn acquired by Olympia
and York (owned by the Reichmann brothers) which
later went bankrupt too—after London’s Canary Wharf
development proved to be their Waterloo.

By now you should be starting, I hope, to see a pattern.

Admiralty (successful real estate developer) –> roller rinks




Campeau (successful real estate developer) purchase of Admiralty


LBO Allied Stores and Federated
Department Stores




O+Y (successful real estate developer)


purchase of Campeau à Canary



Somewhere in there I could add:

Terrace (successful real estate developer) –> NHL expansion franchise –> bankruptcy

If there is a lesson in there, it’s this:

to what you know

is a powerful tool

can work for you

can work against you

is good debt (secured debt)

is bad debt (unsecured).

Secured debt is debt that is secured against an asset, against which
you are hopefully not upside down on
equity (ie, you don’t have LTV (loan-to-value) ratios over 100% like so many of
them did in those days (and would do so again if their lenders, investors, and
shareholders would let them get away with it). Secured debt is supposed to go
away when you sell the underlying asset.

Unsecured debt is like personal credit card debt—it is supported
solely by your personal or corporate guarantee. If things go bad, this debt
sticks to you as an individual or to your company.

The Reichmann brothers had a clever scheme—they would tell lenders
that they had no secured debt on a vast office tower in Toronto
or New York;
ie, no mortgage. They could raise unsecured debt (eg, a line of credit) based
on the fact that their assets were not
pledged to anyone, and with a promise made not
to pledge it to anyone.

In this way, they could, in effect, “leverage” the same building over
and over again, raising billions. It’s perfectly legal, and ultimately deadly
to your business if cashflow falters even for a quarter or two.

Former LA Kings owner, the beguiling Bruce McNall, did the same
thing—he apparently pledged the same rare coin collections over and over again,
only in his case, he didn’t use negative pledging. He gave each of his lenders
a collateral mortgage. It’d be like you having five or six first mortgages on
your home. He was sentenced to 70 months in prison for fraud.

You might think that the Reichmann’s London
project was a logical extension of their multi-billion dollar commercial real
estate portfolio in New York and Toronto, but you’d be
wrong. Real estate is a hyper local business. What works in the mainly English
side of Ottawa (its west end) may not work in a
more French Vanier or Orleans (in its east end) and vice versa.

London’s commercial property market is
very different from anything the Reichmann’s had seen before. It’s very
City-focused; it’s ultra conservative; it’s snobby and hidebound; it’s in a
straight jacket of its own making—companies at the time signed 25-year leases.

No North American CEO would ever sign a 25-year deal, never. Things change
far too fast in the local, national and international economy to tie your
company to a physical plant for that long. But it also meant lease-up took far
too long at Canary
Wharf—the Reichmanns
could not shake enough financial companies loose from their longterm
commitments to the City. The whole situation was made much worse by the fact
that the tube did not (at that time) serve Canary Wharf.

So figure out what you are good at, and then stick with that. It

Later on with the Sens, we believed that core competencies were these—

and amateur scouting



with key stakeholders

That’s the list. Everything else—like parking, food and beverage,
security, cleaning—could be and should be done by someone else.

Anyway, here’s what a New York Times editorial had to say about Bob
Campeau at that time[1]:
“It took the special genius of Robert Campeau, chairman of the Campeau
Corporation, to figure out how to bankrupt more than 250 profitable department
stores. The dramatic jolt to Bloomingdale’s, Abraham & Straus, Jordan
Marsh and the other proud stores reflects his overreaching grasp and oversized

But before he cratered his career, there was still the matter (seven
years earlier) of acquiring the Admiralty portfolio at 20₵ on the dollar.

Shortly after our first and only meeting, the trustee unceremoniously
announced that Campeau Corp was the successful bidder for all Admiralty properties. As far as I could tell, they were the
only bidder. I never got a call back from the receiver, who also refused to
take any calls from me.

So I did something I don’t usually do, I called a lawyer—Brian Hebert,
a tough talking, funny, profane guy.

“Brian, I have this document signed by Admiralty and Terrace. It’s
called a joint venture agreement. It seems to suggest that if either party
decides to sell its interest, it may do so provided that the other party is
given a right to match said offer. Is that right?”

“Bruce can you fax me a copy of that agreement?” Brian proudly

Proudly I say because Brian and I were among early adopters of
facsimile machines, which were a wonder in those days. Imagine being able to
send someone something without having to call a car or bike courier, in just

So after Brian confirmed that Terrace did indeed have a first refusal
right, I called the great man himself in Toronto.
It was a civil conversation. But Bob was adamant. He would buy the whole
Admiralty portfolio or nothing.

When I mentioned having consulted a lawyer about Terrace’s right of
first refusal, the conversation derailed in a hurry. I found out it’s never a
good idea to mention lawyers, even casually, if you are trying to reach a

“Why don’t you want to be partners with the great and powerful Campeau
Corporation?” he asked me in a scene taken from Dorothy’s first visit to see
the wizard of Oz.

I didn’t want to tell him the truth. The fact is that when you are a
small company, and you get into bed with a gorilla, you’ll be crushed. You see
if the larger company has, say, a 100,000 square foot warehouse that they own
100% of down the street from another 100,000 square foot warehouse they own 50%
of and you own the other half, it’s profitable for them to take all the tenants
from your building (since, guaranteed, they’ll insist on operating control) to
fill their vacant space.

Then after a couple of years of humongous losses, the larger company
will call you up, and ask you, “Gee, we lost $2 million operating your
building. When can we expect you to send us your share of those losses?”

Finally, a few months after you fail to pay $1 million (your half of
those losses), you’ll get another call that’ll go something like this, “We
value your half of the building at around a ½ million. But here’s the thing.
We’re friends, right? We’ll take your 50% ownership off your hands for nothing
and call it even. OK?”

Instead, I told Bob, “I think those buildings need local ownership, Mr
Campeau. I’d like to try running them myself. Maybe see what I can—”

He hung up on me.

The trustee was prepared to argue a concept in law apparently called
the “greater good”. Somehow, society would be better served by granting all
these properties to Campeau Corporation, ignoring any legal rights purportedly
held by small firms like Terrace.  

It was in the best interest of the court, they argued, to support
Campeau Corporation’s all-or-nothing ultimatum.


“So how much do you really want, Bruce?” Campeau Corp VP Andrew Jacob
asked me ten minutes before the court hearing was set to begin. Bob Campeau was
watching us from about 15 feet away, not deigning to make an approach himself.

“$2.1 million for our half, Mr Jacob. Same as I’ve said for the last
60 days.”

“No, really? Come on, be reasonable.”

“I am. Look those four buildings are worth $4.2 million. You know it.
I know it. So our half is worth 2.1. You got Admiralty’s half for $400,000, 20
cents on the dollar, Mr Jacob. If you pay us 2.1 and Lawrence 400, that means
you get these four buildings for $2.5 million, that’s 60 cents on the dollar.
It’s either that or I’m exercising our first right of refusal in ten minutes,
and I’ll own these buildings 100% for $400k.”

“You can’t win, Bruce,” Andrew said to a 28-year old rookie developer.

“We’ll see you in court, Mr Jacob.”

At 2 minutes before the hour, after conferring with Mr Campeau, Andrew
made an offer for our half at $2 million cash. Right then and there, Brian
Hebert made out a bill of sale by hand (in blue ink), which he had me and Mr
Campeau sign (separately). Then he walked into court and announced a settlement
had been reached.

Terrace was on its way to a successful re-launch, thanks to Robert
Campeau, the munificent.

[1] Robert Campeau’s Special Genius,
January 17th 1990,

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About the Author

Bruce is an entrepreneur/real estate broker/developer/coach/urban guru/keynote speaker/Sens founder/novelist/columnist/peerless husband/dad.