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Sam Zell Best of the Best
Old 09-05-2007, 05:03 PM   #1
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Sam Zell Best of the Best

Remember last February when he sold Equity Office to Blacksone? Pretty well timed, wasn't it?

"The Bloomberg Office Property Index of real estate investment trusts has dropped 26 percent since reaching a record high on Feb. 8, just as Zell sold his company to Blackstone in the largest real estate takeover. The index had dropped 27 percent through Aug. 30 before stocks rallied the next day after President George W. Bush and Federal Reserve Chairman Ben Bernanke pledged to prevent credit losses from snuffing out the country's economic expansion." (from Bloomberg.com today)

One guy among the very few that should always be piggybacked.

Ha
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Old 09-05-2007, 05:13 PM   #2
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So, we should be buying newspaper stocks now? At a 20% premium? I guess I just can't see what he sees.
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Old 09-05-2007, 06:06 PM   #3
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So, we should be buying newspaper stocks now? At a 20% premium? I guess I just can't see what he sees.
I am always happy to discuss Mr. Zell. He did unload one asset at the top of its historical price, and he picked up another severely depressed one. This much is typical Zell behavior.

Now the question is - is the newspaper industry in general and Tribune Co. in particular justifiably depressed? Just a week or so ago the industry reported horrible advertising sales, as print ads were off as I recall about 8%. Internet ad revenue was up, but not enough to close the deficit.

I have been interested in papers, but I haven't acted- partly because they just keep going down, and partly because I can't really form an opinion on the question above. And, with respect to Zell, one has to consider is he perhaps buying this old line Chicago paper to stick it to Chicago Society, which has never really welcomed him into their fold? Notice in the quote I found that he disavows non-economic motivations, but why does he bother to do this?


Billionaire Zell buys Chicago's venerable and troubled 'Tribune' for Independent, The (London) - Find Articles
Mr Zell insisted he was "not quite as bearish as most people about the print side of the business" and that his interest in Tribune was "solely economic". And yesterday he added: "I am delighted to be associated with Tribune Company ... As a long-term investor, I look forward to partnering with the management and employees as we build on a great heritage."

However, he will put in barely $315m of his own money to take control of the Tribune, in a complex deal which will share ownership with the company's employees and load the business with debt. His offer beat off a challenge from the Los Angeles billionaires Ron Burkle and Eli Broad, who had offered an equivalent $34 per share but with a deal structure that did not satisfy the Tribune board.


Anyway, because of the possibility that this might have reasons other than just another way for him to make money, I would not buy a newspaper just because Zell did it.

Ha
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Old 09-05-2007, 06:22 PM   #4
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Other than acquiring real estate during a real estate recession and selling during the REIT craze, what other smart moves has he made?
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Old 09-05-2007, 06:29 PM   #5
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Other than acquiring real estate during a real estate recession and selling during the REIT craze, what other smart moves has he made?
I am not a librarian; may I refer you to the World Wide Web?

I piggybacked on 3 Zell ventures, all very successful although in one case there were temporay setbacks- like BK of the major operating subsidiary. Fortunately he structured it with non-recourse debt and the setback has been made up many times over.

Anyway, don't follow him- for you this might not be a good idea.

Ha
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Old 09-05-2007, 06:37 PM   #6
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I googled him and that's all I got. He obviously knows real estate -- he's been doing it since he was a kid. But "best of the best" and "always piggyback" are pretty strong recommendations, so I was wondering if his insights went deeper than his HUGE bet on real estate.

BTW, I do love his new year cards.

Year End Gift
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Old 09-05-2007, 06:54 PM   #7
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But "best of the best" and "always piggyback" are pretty strong recommendations,
Of course you are right; I intended this as hyperbole.

Ha
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Old 09-05-2007, 06:54 PM   #8
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Remember last February when he sold Equity Office to Blacksone? Pretty well timed, wasn't it?

"The Bloomberg Office Property Index of real estate investment trusts has dropped 26 percent since reaching a record high on Feb. 8, just as Zell sold his company to Blackstone in the largest real estate takeover. The index had dropped 27 percent through Aug. 30 before stocks rallied the next day after President George W. Bush and Federal Reserve Chairman Ben Bernanke pledged to prevent credit losses from snuffing out the country's economic expansion." (from Bloomberg.com today)

One guy among the very few that should always be piggybacked.

Ha
While his sale of EOP looks very well timed, and his reputation as the "grave dancer" for picking up
assets at fire sale prices is well deserved, his purchase of SPK right at the height of the Silicon Valley
/ dot com craze was particularly ill-timed. EOP heavily under-performed the other large office REITs
(VNO, BXP) since, largely as a result of this purchase.
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Old 09-05-2007, 07:03 PM   #9
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Good point. I had EOP and VNO at the time, and sold EOP and went heavier into VNO.

Then I nullified my good judgment by selling that way too early!

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