The Closing: Sam Zell
The real estate billionaire on the supply-and-demand lessons he got from Playboy, cursing and the last time he flew coach
Editor’s note, May 18, 2023: Sam Zell died Thursday at 81, Equity Residential announced. The Real Deal is republishing this 2017 interview in his memory.
Sam Zell is the brash and outspoken chairman of Equity Group Investments, a private equity and venture capital firm he founded more than 45 years ago. He made his fortune — which has been pegged at $5 billion — by investing in an array of industries, including commercial real estate, manufacturing, transportation and health care. As of December, Equity Residential, the REIT he chairs, owned (or had a stake in) 300-plus properties with more than 77,000 apartments nationwide. More than 10,000 of those units are in New York — including 269 luxury rentals at the Christian de Portzamparc-designed Prism on Park Avenue South, where Toll Brothers, Equity Residential’s partner on the project, is selling part of the building as condos. Zell also founded and chaired Equity Office Properties Trust, which was the biggest office REIT in the country until it was sold in 2007 for $36 billion to the Blackstone Group. That same year, Zell bought the cash-strapped Tribune Company for $8.2 billion. His tenure there was, however, controversial, and his slash-and-burn cost-cutting did not go over well. In 2008 the venerable newspaper company sank into bankruptcy, and in 2012 its ownership was turned over to creditors and lenders. But Zell — nicknamed the “Grave Dancer” for snapping up distressed real estate and generally known as a contrarian — didn’t express regrets about buying the media giant. And the tycoon, who turns 76 this month, isn’t mellowing with age. In May, he published a memoir entitled “Am I Being Too Subtle?” and he’s been actively making the rounds on cable news shows, talking about the Trump administration’s proposed tax plan, which he believes will boost the economy. He’s also an avid motorcycle rider.
DOB: September 28, 1941
Lives in: Chicago
Family: Married to third wife; three children
What were you like as a kid? I was always different. Like all children, I wanted to be part of the popular, relevant group. But I figured out relatively early that I would never survive in a conformist environment. I always had enormous confidence in my own views and was not willing to compromise.
Did you get good grades? I was the world’s most adequate academic — good enough to go to the University of Michigan, but academia was never one of my great desires.
Didn’t you have your own business selling Playboy magazines as a kid? I was commuting from the suburbs into Chicago every day as part of my Hebrew education. I was 12 when I discovered there were stores under the L tracks that sold different magazines than the ones they had in the suburbs. I figured out supply and demand and started importing the magazines to the suburbs. I got away with it.
How’d you spend your profits? I played poker. I always had a lot of money.
Your parents were Polish Jews who escaped before World War II. What did they do for a living? When my dad was in Europe, he’d buy farmers’ grain and sell it to the processors, basically creating liquidity in that market. He was very good. When they moved to the U.S. [in 1939], someone from Quaker Oats said he wanted someone like my dad working for the company, but they wouldn’t hire him because he didn’t have a college education.
What was your dad like generally? He was very conservative. I was never very conservative, but I’d probably have been even more flamboyant if it wasn’t for him. He was always in the background encouraging me to slow down and take less risk.
Weren’t you a frat guy in college? I joined a fraternity, but was never really a serious joiner. I was involved for the sports. I only lived in the house for six weeks. It was horrible — too communal a living style for my tastes. I was never an “Animal House” guy.
Didn’t you start your real estate career while you were in college? A college friend told me that his landlord had bought the house next door and was going to knock both down and build an apartment building. I said, “Gee, why don’t we pitch him on managing it?” They bought our act. We furnished the apartments, rented them and maintained them — from unclogging disposals to vacuuming the hallways and cutting the grass. We got another building and another and another. Eventually, we started buying some, too.
Didn’t you also try your hand at law for a week [after graduating from law school at the University of Michigan]? The first day of my job at a small law firm in Chicago, I was negotiating a contract between a linen supply company and a dormitory. I spent the week doing it and then told the partner that it wasn’t a good use of my time — he couldn’t believe it. In my view, working is all about having a comparative advantage against other people. I didn’t see my comparative advantage in grunt work.
You always dress casually. When was the last time you wore a suit? I can’t remember. I used to wear a suit when I was raising money. But then I even stopped doing that. Once I called on my largest pension fund client and I showed up in jeans and a jean jacket. The guy at the front desk said, “You can put the package over there.” If you’re really good at what you do and you dress funny, you’re eccentric. If you’re not so good at what you do and you dress funny, you’re a schmuck.
How did you meet your third and current wife, Helen? She was married to a guy I played bridge with. My ex-wife and I used to play with them as a foursome. I didn’t see Helen for 20 years and then I ran into her after my divorce. … I had an opportunity to watch her in action and see if it was worth the effort.
You have three grown-up children. Are they in real estate? None of them are in the business. I don’t make widgets — I’m in the risk-taking business. That’s not something you pass on. One is a housewife and raises horses, one is a doctor and one is a teacher.
In 2007, the Blackstone Group purchased Equity Office Properties Trust for $36 billion, which was the largest leveraged buyout in history at the time. What was that deal like behind the scenes? At the time, the company wasn’t for sale. But from the day we went public [in 1997], we made a deal with the devil that we’d serve the shareholders as our primary interest. We constantly valued the company ourselves and got some offers below those amounts in the beginning. Then we got an offer [from Blackstone] that was significantly above our own valuation, and that forced us to respond.
What’s your negotiating secret? You start every negotiation by trying to figure out what the deal breakers are for the other side. What does the other guy really need? If you can’t overcome that, you’re wasting everyone’s time.
What’s the worst deal you’ve ever done? I lost the most amount of money on the Tribune. But let me put it this way — my goal is to be right seven out of 10 times. … I’m not going to get all hits, but what I’ve gotta do, and what a lot of other people in my field have not done well, is assess the scale of the risk. I start by saying, “Can I afford to lose it all?”
The Tribune deal played very badly for you in the media. Do you regret it? Someone told me before the Tribune deal that the media loves to cover nothing more than the media itself. I don’t think I understood what that meant at the time. The level of coverage was, in my judgment, unnecessary. We were caught up in a vortex of the end of print as a profitable business. I knew what I was doing, and the risk-reward ratio was there. Had it worked, it would have been well worth the effort.
Would you do it again? Probably.
You owned the Chicago Cubs for a while as part of that deal. Did you love going to the games? No, I didn’t go. I’m not a baseball fan. As far as I was concerned, owning the Cubs was just part of the deal.
You called President Donald Trump a wild card during the campaign. Have your views changed? I don’t think they have. If you look at what he’s done, he’s done a very good job so far. If you look at his tweets, it raises a question of whether that’s the most effective way to get the message out. (The interview with Zell was conducted before Trump’s controversial response to incidents in Charlottesville last month, and he’s since declined further comment.)
Steven Roth has called you a “bald-headed chicken fucker.” How do you feel about that? He’s been doing that for years — probably because I have a little more hair than he does. He’s very envious. I’ve known Steve since the ’70s and consider him a friend, so he can call me whatever the fuck he wants.
Do you ever try to clean up your language? I’ve never tried. I don’t think I’m foul-mouthed, but there are times when the use of a swear word at the appropriate moment does the job better than anything else.
How come you and Roth get away with saying whatever you want, while other CEOs of public companies often stay buttoned up? We both made our fortunes in the private real estate market. By the time we’d entered the public market, we already had unlimited resources and a lot of confidence.
What’s your attitude toward money? Do you care about your Forbes estimate? Unfortunately, Forbes has never included a certified check with its estimate, so it’s always of a questionable nature.
Do you know the real number? I don’t care — it’s a lot. I can’t possibly spend what I’ve accumulated.
Are you extravagant with your money? Anyone who has their own plane fits the word extravagant. And I have my own plane. But I don’t think anyone would accuse me of being jet-set.
When was the last time you flew commercial? January 1995. There was a sleet storm, and Teterboro was frozen up. I had to fly coach for a meeting in Boston the next morning.
Where do you live? Atop a high-rise in Chicago, and I have homes in Sun Valley and Malibu.
You’re big into motorcycles and ride with your crew, Zell’s Angels. How did that get started? As a freshman at Michigan, you weren’t allowed to have a car, so a few of us had motor scooters. Over time, it turned into motorcycles. I became kind of enthralled with it as a means of seeing the world. We were foolish, and we used to take these ambitious trips, starting once in Copenhagen and going all the way up to the Arctic Circle. It was a couple of thousand miles, so we had to pump it. Now I take two one-week trips a year.
How many motorcycles do you have? I have 13.
Billy Macklowe recently showed me a music box you made him. It had a singing Ben Bernanke on top. What inspired that? In 1976, my business had grown to the point where I was receiving chocolates and pens and pencils at Christmastime. I thought I had to respond, but the idea of me sending a calendar with my name on it just didn’t fit my self-image. So each year I think of a theme, and then I compose a song to reflect the message.
Do you think about retirement? Retirement from what? I don’t understand that, because I’ve never worked in my life. I’ve just done stuff that turns me on. Let’s put it like this — I don’t play golf.
Anything else you want to talk about? I’ve stopped beating my wife, so it’s okay [laughs].