Billionaire Sam Zell, real estate mogul, dies aged 81 – 05/18/2023 – Market

Sam Zell, a legendary real estate investor who later made a tumultuous turn in the media industry, died Thursday at the age of 81.

Zell became known as the “Dancer on the Graves” for his habit of taking advantage of the difficulties of other developers, particularly during the housing market crash of the early 1990s.

He turned his flagship company, Equity Office Properties Trust, into the largest office owner in the United States — with high-rise buildings from coast to coast. Then, with unparalleled timing, he sold it to private equity firm Blackstone for $39 billion in 2007. It was the largest leveraged buyout of all time at the time and came just before the global financial crisis.

Later, Zell tried his hand at media, besting two other billionaires in 2007 for the Tribune Company in his hometown of Chicago. The company edited newspapers such as the Chicago Tribune and owned broadcast television networks and the Chicago Cubs baseball team.

At first, Zell was hailed as a potential savior for a company dragged down by the newspaper industry’s steep decline. But Tribune ended up filing for bankruptcy the following year, saddled with $13 billion in debt. Zell faced recriminations from journalists and lawsuits from investors. He later called it “the deal from hell”.

The son of Jewish immigrants from Poland who fled the Holocaust, Zell was born in Chicago in 1941. His father was a jewelry salesman. Young Zell showed an entrepreneurial streak early on, buying Playboy magazines downtown and then selling them at a profit to his school friends in the suburbs.

Zell got into real estate while still a law student at the University of Michigan, managing rental properties during his studies. He was so successful at this that he abandoned his legal career to become a full-time developer.

Retired attorney Jack Guthman, who represented Zell and his firm in zoning transactions, was introduced to the young entrepreneur in the 1970s by Newton Minow, the renowned former head of the Federal Communications Commission. Minow noted that Zell was “an audacious newcomer to the real estate world”, recalled Guthman.

“Turns out he became a giant,” Guthman said. “I think of him as a person with a great imagination. He did deals that other people couldn’t conceive of.”

Zell gained fame as one of America’s great backwater investors, making a habit of rounding up distressed properties — from mobile homes to office buildings and industrial assets — and breathing new life into them.

Along with his friend and business partner, the late Robert Lurie, Zell took advantage of the housing boom of the 1980s, but then he predicted disaster — and was proved right.

Today, when investors face yet another commercial real estate market meltdown after a prolonged boom, they routinely recall Zell and his insights from 30 years ago.

Zell enjoyed a reputation as an iconoclast. He dressed modestly and preferred an annual motorcycle trip with friends to membership in Chicago’s traditional clubs.

He showed characteristic bravado when he bought Tribune, telling employees and investors alike, “Everything I do is motivated by doing better, doing different, answering the questions no one else has.”

But he was plagued by the same forces that afflict other newspaper owners, including the collapse of print advertising. The irreverence and aggressive corporate culture brought by Zell and his directors petered out as the company weakened and valuable assets like the Cubs and Los Angeles Times were sold. Later, Zell blamed the company’s problems on the 2008 financial crisis and the shutdown of credit markets.

Still, he and his wife, Helen Zell, were important pillars among Chicago philanthropists. They supported the Chicago Museum of Contemporary Art and Invest for Kids, which helps charitable organizations that serve underprivileged children.

“Being committed to Chicago is a valued trait, and he was highly valued,” said Guthman.