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CF History

The CF Story

The first chapter of the Cadillac Fairview story was written over 50 years ago in Toronto, when three friends, Eph Diamond, Joseph Berman and Jack Kamin, started their

own construction company.

 

One evening, while meeting over dinner, a minor disagreement occurred among the three over what to name their new venture. The name was decided when Jack Kamin went outside that same evening and got into his car, a Cadillac. They all agreed that would be the perfect name, although it got them into an argument with General Motors (GM), producer of the Cadillac automobile. The illustrious trio believed the name was in the public domain because it belonged to the French explorer who founded the city of Detroit. Subsequently, the partners came to an agreement with GM who registered the trade name, prohibiting the use by anybody else of the Cadillac name.

Cadillac Development Corporation Limited: A New Company

In 1953 the partners opened the doors to the Cadillac Development Corporation Limited. It was perfect timing, as they found themselves right in the middle of the post-war baby boom. The demand for new housing was tremendous and the company quickly set to work developing high rise apartment buildings in Guelph, Ontario.

 

Innovation became their trademark, as the company revolutionized the design of apartment buildings. Features that are taken for granted now, such as health club facilities, individually controlled heating and air conditioning, underground parking, and grounds landscaped with trees and fountains, were pioneered by Cadillac Development.

 

The Fairview Corporation Shares the Real Estate Limelight

In the early 1960’s, another company was busy building a reputation in the Canadian real estate industry. The Fairview Corporation was established as a division of Cemp Investments Ltd., the holding company for the Bronfman family, one of Canada’s most successful business dynasties.

 

Fairview and the Toronto-Dominion Bank joined forces with the goal of building the largest office complex in the country. Mies van der Rohe, an internationally renowned architect, was chosen to design the landmark project, the Toronto-Dominion Centre. The original concept called for a 1 million square foot office tower, which eventually expanded to include multiple towers totaling over 4 million square feet.

 

The trend setting complex set new standards in the design of skyscrapers, with innovative features including an underground shopping concourse, tinted glass and high speed elevators.

 

Over the years, the principals from Cadillac and Fairview occasionally crossed paths when Cadillac built shopping centres for Fairview. In 1968 they joined forces to purchase Canadian Equity and Development Co., a firm which owned 80,000 acres outside of Toronto in an area known as Erin Mills. Cadillac was interested in Erin Mills because it offered a huge area to build houses. Fairview was interested because the community would need shopping centres. Although the land was initially purchased in 1954, the Erin Mills development was at a standstill because no municipal services had been installed. Conflicts arose over the development of Erin Mills as both Cadillac and Fairview began to expand their areas of operation, so the two companies sought a solution.

 

Cadillac & Fairview Merge

In the spring of 1974, two of the most dynamic forces in the Canadian real estate industry agreed to merge. A quick flip of a coin positioned the Cadillac name before Fairview, and a new real estate powerhouse was born. Cadillac Fairview continued its successful association with the Toronto-Dominion Bank, and along with a new partner, the T. Eaton Company, launched two other landmark projects: Vancouver’s Pacific Centre (opened in phases starting in 1971) and the Toronto Eaton Centre (opened in phases starting in 1977).

 

Expansion to the United States

In 1975, Cadillac Fairview entered the U.S. real estate market (at one time Cadillac had also scouted opportunities in Brazil, Hong Kong and Europe, but decided against going ahead because of the difficulties inherent in running such a far-flung operation.)

 

Turbulent Times in Real Estate

During the recession of the early 1980s interest rates skyrocketed. Revenue from income-producing properties across the industry was negatively impacted. At Cadillac Fairview, a strategic decision was made to sell the Land and Housing division over the period from March 1982 to March 1985.

 

By the end of 1986, the Bronfman family agreed to sell their interest in Cadillac Fairview. At the same time, a former Cadillac Fairview executive organized an investor group to purchase the U.S. office portfolio.

 

On November 2, 1987, a consortium of 39 mostly U.S. institutional investors, which had been put together by the Chicago-based real estate developer, JMB Realty Corp., purchased all of the outstanding shares of Cadillac Fairview for about $2.6 billion.

 

A streamlined Cadillac Fairview refocused on the business of owning, managing and developing commercial real estate. However, as a result of the economic recession in North America in the early 1990s and its impact on the real estate market (particularly the increased rate of retail tenant bankruptcies and resulting shopping centre vacancies combined with an oversupply of office space), Cadillac Fairview experienced a decline in cash flow and asset values. This, coupled with the debt added to the leveraged buyout in taking Cadillac Fairview private, necessitated a financial restructuring.

 

Strategy for Success

In July 1995, under a restructuring plan, a total of $832 million in additional capital was injected from a new group of investors into the Company. The investor group recruited a new CEO, Bruce Duncan, in December 1995, who put together a fresh management team during 1996. On November 6, 1997 an initial public offering raised an additional $304 million (CAD), completing one of Canada’s most successful corporate turnarounds.

 

The Cadillac Fairview executive team decided the best way to turn the weakened company around was to become the real estate investment vehicle of choice for investors and the dominant retail franchise in Canada. As a result, from 1996 forward, management efforts were focused on growing the corporation, through selected developments and acquisitions, to either complement or strengthen existing dominance in current markets or to enter and dominate new markets. The strategy proved successful, and in late September 1999 (only four years after emerging from a major financial restructuring) it was announced that a newly robust Cadillac Fairview — owner of landmark properties like the Toronto-Dominion Centre, Vancouver’s Pacific Centre and The Toronto Eaton Centre — was going up for sale.

 

Teachers’ Buy Cadillac Fairview

By December 1999 the new Cadillac Fairview was on its way to becoming a wholly-owned subsidiary of the Ontario Teachers’ Pension Plan whose relationship with Cadillac Fairview began in 1995 (when Cadillac Fairview was publicly traded, Teachers’ was the largest shareholder holding approximately 21.8% of the outstanding common shares.) Teachers’, with over $68 billion in assets, saw the acquisition of Cadillac Fairview as an excellent opportunity to attain a desired level of allocation in the real estate sector while providing a good level of return for the active and retired Ontario teachers for whom it invests. The acquisition was finalized in mid-March 2000. For more information, please visit Ontario Teachers’ Pension Plan.

 

Today Cadillac Fairview possesses one of North America’s finest portfolios of retail and office properties. Buoyed by an expanding economy and strong consumer and business confidence, the company is ideally positioned for continued growth. Tremendous opportunities for external growth through strategic acquisitions and development, as well as internal growth through innovative leasing and property management will continue to build Cadillac Fairview’s reputation as one of North America’s largest and most dynamic real estate organizations.