Sam Zell’s Empire, Underwater In A Big Way

NYTimes ^ | February 8, 2009

[Steelfish]

Sam Zell’s Empire, Underwater in a Big Way

The Worldwide Plaza building in New York, left, was part of Macklowe Properties. Center and right, the Chicago Title and Trust building and the Chicago Mercantile building are part of Tishman Speyer.

In 2007, Sam Zell, the billionaire Chicago investor, sold a portfolio of 573 properties he had assembled over three decades, Equity Office Properties Trust, to the Blackstone Group for $39 billion. It was the largest private equity deal in history, but Blackstone did not stop there: it immediately flipped hundreds of the buildings for $27 billion.

Today, the wreckage of those purchases is strewn across the country, from Southern California to Austin, Tex., to Chicago to New York. Many of the 16 companies that bought Equity Office buildings are now stuck with punishing debt, properties whose values are plummeting and millions of feet of office space they cannot fill.

[Steelfish]

Nice! Zell-Owner of the Chicago Tribune and Los Angeles Times. Where are our conservative (maga-billionaires) buyers or do we have any before Soros gets his hands on these?

[rfp1234]

That serves the a-hole Zell right. The LA Slimes refused to release the Obama / Pro-Hamas Prof. dinner videotape that would have turned the election.

[VeniVidiVici]

Interesting headline. Other than that and the fact Zell SOLD all of these building to dupes, he isn’t underwater at all.

I find it interesting that Zell’s new Tribune holdings, which ARE underwater, didn’t even merit a mention in the New York Times article.

[glorgau]

In 2007, Sam Zell, the billionaire Chicago investor, sold a portfolio of 573 properties he had assembled over three decades,

I know a guy who did a data warehouse for Zell's apartment properties. It must not have been so good because he went out and bought some investment properties in Tuscon for himself in 2006. Also underwater I believe.

[glorgau]

This article is the New York Times sticking up for another Media Dinosaur. It’s called “whistling past the graveyard”.

[Arguendo]

Tribune is bankrupt, but Zell bought his stake in it for a song in the 2007 LBO. He’ll lose that, but he isn’t exactly hurting.

[Attention Surplus Disorder]

“Interesting headline. Other than that and the fact Zell SOLD all of these building to dupes, he isn’t underwater at all.”

I’m with you on this. Zell’s sale of his portfolio of buildings called the the dead nuts top of the real estate market, literally to the hour, as far as I’m concerned. An absolute master stroke.

Now...his reinvestment into newspapers was as ill-timed as it gets. He’s probably WAY underwater on buying Tribune. This is altogether very common: An investor/operator doing well or super-well in area “A” thinks his/her knowledge will translate into area “B”. Happened to me, too, virtually wiped me out. Overconfidence? Arrogance? Perhaps, probably.

I am not clear on how much (what pctage) of his proceeds from the sale of EOP Zell threw into Tribune. But he was massively overpaid on his RE sale and could take a 20%-30% hit without any great pain other than to ego.