US property investor Sam Zell dies aged 81


Sam Zell, a legendary investor in distressed property who later took a tumultuous turn in the media industry, has died.

Zell, 81, became known as the “Grave Dancer” for his habit of feasting on other developers’ ills, particularly during the early 1990s property market crash.

He built his flagship company, Equity Office Properties Trust, into the nation’s largest office landlord — with trophy buildings from coast to coast. Then, with peerless timing, he sold it to private equity group Blackstone for $39bn in 2007. It was at the time the biggest-ever leveraged buyout and came just ahead of the global financial crisis.

Zell later tried his hand at media, outbidding two other billionaires in 2007 for the Tribune Company in his native Chicago, publisher of newspapers including the Chicago Tribune and owner of broadcast television networks and the Chicago Cubs baseball team.

At first, Zell was welcomed as a potential saviour for a company swept up in the newspaper industry’s accelerating decline. But Tribune ended up filing for bankruptcy the next year, loaded down with $13bn in debt. Zell faced recriminations from journalists and lawsuits from investors. He later called it “the deal from hell”.

The child of Jewish immigrants from Poland who fled the Holocaust, Zell was born in Chicago in 1941. His father was a jewellery salesman. The young Zell showed an entrepreneurial streak at an early age, buying Playboy magazines downtown and then selling them at a mark-up to his school friends in the suburbs.

Zell entered real estate while still a law student at the University of Michigan by managing rental properties alongside his studies. He became so successful at it that he ditched a legal career to become a full-time developer.

Retired attorney Jack Guthman, who represented Zell and his company on zoning transactions, was introduced to the young developer in the 1970s by Newton Minow, the renowned former head of the Federal Communications Commission. Minow noted Zell was “an up-and-comer in the real estate world”, Guthman recalled.

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

He gained fame as one of America’s great contrarian investors, making a habit of scooping up properties in distress — 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 rode the property market boom of the 1980s but then predicted doom — and was proved right.

Today, as investors confront another commercial property market crash after a prolonged boom, they routinely hearken back to Zell and his insights from 30 years ago.

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

He showed characteristic bravado upon buying Tribune, telling employees and investors: “Everything I do is motivated by doing it best, doing it different, answering the questions no one else could.”

But he ended up bedevilled by the same forces afflicting other newspaper owners, including the collapse of print advertising. The irreverence and aggressive business culture brought by Zell and his managers wore thin as the company weakened and prized assets, such as the Cubs and the Los Angeles Times, were sold off. Zell later blamed the 2008 financial crisis and the seizing up of the credit markets for the deal’s woes.

Still, he and his wife, Helen Zell, were mainstays among Chicago philanthropists. They supported the Museum of Contemporary Art Chicago and Invest for Kids, which assists non-profit organisations serving disadvantaged children.

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

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