The real estate market is in distress. What will Sam Zell do?

The head of Equity Group Investments and self-described “professional opportunist” is well-positioned to make big plays as the coronavirus pandemic has sent the economy into a tailspin

TRD NATIONAL /
Mar.March 23, 2020 03:15 PM
Sam Zell (Credit: Steven Ferdman/Getty Images, iStock)

Sam Zell (Credit: Steven Ferdman/Getty Images, iStock)

Sam Zell has billions in dry powder and an economy in turmoil. Is the developer and investor, known to zag when everyone else zigs, planning his next strike?

The brash, often controversial, sometimes vulgar chairman of Equity Group Investments has made his fortune buying up distressed real estate in times of economic uncertainty and upheaval, and the coronavirus pandemic has prompted both. The stage is set for Zell to pounce, according to Crain’s Chicago.
“It’s definitely what the company has been waiting for,” says Jerry Ehlinger of Chicago-based investment firm Heitman. “This is the time to perform.”

With the exception of mobile home parks, Zell has significantly reduced his companies’ exposures to real estate. But prices have been bottoming out in the last few weeks as states have imposed stay at home and shelter in place orders.

Equity Commonwealth, a real estate investment trust that Zell purchased in 2014, has raised about $3.4 billion from sales of about 150 office properties over the last several years. The company now owns just five properties. But that could change, and in the past Zell has referred to himself as a “professional opportunist.”

Its parent company, Equity Group Investments, has also reduced its exposure to real estate in recent years, selling off several billion dollars of properties.

Cash has insulated Equity Commonwealth from the downturn. Its shares are down just 6 percent compared to 25 percent for Zell’s multifamily entity Equity Residential and the same 25 percent for his mobile home entity.

And cash may be exactly what Zell needs if he wants to capitalize on a down market, according to Crain’s. Many real estate pros worry about commercial and residential landlords defaulting on loans if their tenants miss rent payments.

But some lenders may hold off from foreclosing on properties, creating fewer opportunities for investors like Zell who look for properties on the cheap. If borrowers do start to default, the conditions may be right for a buying spree, according to the report. [Crain’s Chicago] — Dennis Lynch 


Related Articles

arrow_forward_ios
(iStock)

Landlords lost about $9B in rental payments last quarter: report

Landlords lost about $9B in rental payments last quarter: report
Jamie Dimon and 383 Madison Avenue (Getty, Google Maps)

JPMorgan suffers setback in return to office

JPMorgan suffers setback in return to office
Lennar's Stuart Miller, Rick Beckwitt and Jon Jaffe (Lennar; iStock)

Lennar reports untempered demand for new homes in Q3

Lennar reports untempered demand for new homes in Q3
A lawsuit seeks to dismantle Gov, Andrew Cuomo’s midnight food curfew by arguing coronavirus is not a vampire (Getty; iStock)

Nail in the coffin: Eatery says Cuomo’s biz-killing curfew treats virus like vampire

Nail in the coffin: Eatery says Cuomo’s biz-killing curfew treats virus like vampire
U.S. foreclosure filings in August jumped 11% as some states ended relief measures, though continued government intervention has prevented sharper increase (iStock)

US foreclosure filings jump as some states end relief measures

US foreclosure filings jump as some states end relief measures
Singapore (iStock)

Singapore’s housing market storms back

Singapore’s housing market storms back
Century  21 will wind down operations at its 13 stores (Getty)

Century 21 Stores files for bankruptcy, blames insurers

Century 21 Stores files for bankruptcy, blames insurers
Miami-Dade mayor: Bars and nightclubs won’t reopen until there’s a vaccine

Miami-Dade mayor: Bars and nightclubs won’t reopen until there’s a vaccine

Miami-Dade mayor: Bars and nightclubs won’t reopen until there’s a vaccine
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...