Sam Zell Biography

Samuel "Sam" Zell (born September 27, 1941) is an American entrepreneur. He is chairman of Equity Group Investments (EGI), a private investment firm he founded in the 1960s. The firm's equity interests are often in asset-intensive industries such as real estate, energy, logistics, transportation, media, and health care. EGI's holdings also include fixed-income investments in public and private companies. The firm's specialty has always been opportunistic, often contrarian, long-term investing and active ownership.

Zell is also co-founder of Equity International, a private investment firm focused on building real estate-related businesses in international emerging markets. In addition, Zell maintains substantial interests in, and is the Chairman of, a number of public companies listed on the New York Stock Exchange, including: Equity Residential (EQR), the largest apartment REIT in the U.S.; Equity LifeStyle Properties (ELS), a real estate investment trust that owns and operates manufactured home and resort communities; Covanta Holding Corp. (CVA), an international owner/operator of energy-from-waste and power generation facilities; and Anixter (AXE), a leading global provider of communications, security, and wire and cable products.

Biography

Early life

Zell was born in Chicago in 1941 to Rochelle and Berek Zielonka, Jewish immigrant parents from Poland who fled the country just before the German invasion in 1939. Shortly after moving from Seattle to Chicago, Berek Zielonka (later known as Bernard) changed the family name to Zell. Zell graduated from Highland Park High School in Highland Park, Illinois and later received his BA (1963) from the University of Michigan, where he was a member of the Alpha Epsilon Pi fraternity. He also received his JD (1966) from the University of Michigan Law School.

Real estate business

Zell founded Equity Group Investments in 1968 and with Robert H. Lurie went on to grow the small firm into a vast enterprise. EGI Equity Group Investments was the genesis for three of the largest public real estate companies in history, including: Equity Residential, the largest apartment owner in the United States; Equity Office Properties Trust, the largest office owner in the country; and Equity Lifestyle, an owner/operator of manufactured home and resort communities. With their entry onto the public markets in the 1990s, Zell became recognized as a founding father of the modern real estate industry. In addition, Zell has created a number of public and private companies in various other industries.

In 2007 the Blackstone Group completed its purchase of Zell's Equity Office Properties Trust for $39 billion, which was the largest LBO in history at the time. Blackstone sold off many of the portfolio's properties for record amounts. By early 2009 most of the properties sold were "under water" (worth less than the mortgage).

Investments

Either by himself or with partners, Zell owned the Schwinn Bicycle Company, the drugstore Revco, department store chain Broadway Stores, energy company Santa Fe Energy Resources and mattress company Sealy.

Railroad Boxcars:

In 1985 Sam Zell took over Itel Corporation (see interview: Graham & Doddsville An investment newsletter from the students of Columbia Business School, pp. 27"28. ).

Media investments

Between 1992 and 1999, Zell's Chillmark fund owned Jacor Communications, Inc., a successful radio broadcast group that included a television station. The company was sold to Clear Channel Communications in 1999.

On April 2, 2007, the Tribune Company announced its acceptance of Zell's offer to buy the Chicago Tribune, the Los Angeles Times, and other media assets. On December 20, 2007, Zell took the company private, and the following day he became the Chairman and CEO. He sold the Chicago Cubs and the company's 25 percent interest in Comcast SportsNet Chicago. Under the burden of the debt incurred as part of Zell's leveraged buyout and in context of the unexpected severity of the Great Recession, the Tribune Co. filed for chapter 11 bankruptcy reorganization in December 2008.

Los Angeles Times

In a sharply critical June 2008 opinion piece for The Washington Post entitled, "The L.A. Times' Human Wrecking Ball", veteran Los Angeles-based editor and columnist Harold Meyerson took Zell to task for "taking bean counting to a whole new level", asserting that "he's well on his way to... destroying the L.A. Times." Comparing Zell to James McNamara, who was sentenced to life in prison for the notorious 1910 Los Angeles Times bombing (which killed 21 employees), Meyerson concluded his article by opining that "Life in San Quentin sounds about right" for Zell.

Zell is known for using "salty" language in the newsroom. In February 2008, the website LA Observed reprinted an internal memo that said:

"Last week you may have encountered some colorful uses of the lexicon from Sam Zell that we are not used to hearing at the Times... But of course we still have the same expectations at the Times of what is correct in the workplace. It's not good judgment to use profane or hostile language and we can't tolerate that... In short, nothing changes; the fundamental rules of decorum and decency apply... Sam is a force of a nature; the rest of us are bound by the normal conventions of society."

Philanthropy

A long-time supporter of the Wharton School of the University of Pennsylvania, he helped fund the Real Estate Department at Wharton, as well as the Zell-Lurie Institute at the Ross School of Business at University of Michigan. Zell also endowed the Zell Center for Risk Research at the Kellogg School of Management at Northwestern University, and the Samuel Zell and Robert Lurie Real Estate Center at the Wharton School. Zell has also donated significantly to his alma mater, the University of Michigan.

Zell, according to The Forward, is also "a major donor to causes in Israel. His donations include a $3.1 million donation to the Herzliya Interdisciplinary Center in Israel and separate donations to the Israel Center for Social and Economic Progress, a free market oriented Israeli think tank founded by Daniel Doron. In the United States, he has given major gifts to such Jewish causes as the American Jewish Committee and the Bernard Zell Anshe Emet Day School, a Chicago Jewish primary school named after his father."

Controversies

Zell was questioned as a potential witness in the corruption charges against former Illinois Governor Rod Blagojevich. The charges against Blagojevich claimed that he had pressured Zell to fire particular Tribune editorial staffers, known to be harshly critical of the governor, in exchange for tax breaks on the sale of Wrigley Field, home of the Chicago Cubs. An aide to Blagojevich reported back to the governor that Zell "got the message and is very sensitive to the issue." The District Attorney's office later concluded that the aide had not in fact approached Zell and was lying to the governor.

In 2008, Zell announced a plan to place the Chicago Cubs and Wrigley Field up for sale separately in order to maximize profits. He also announced he would consider selling naming rights to Wrigley Field. These announcements were widely unpopular in Chicago and a poll taken by the Chicago Sun-Times showed that 53% of 2,000 people who voted said they would no longer attend Cubs games if the field was renamed.

Zell's company Equity LifeStyle Properties, a leading owner/operator of manufactured home and resort communities, has been criticized for working to eliminate rent-control laws in local municipalities so that they can bring rents on their properties up to market-level rates. The company characterizes rent controls as "private subsidies for mobile-home dwellers", saying in 2007 that its annual subsidy to California tenants was $15 million.

In April 2008, Zell made a controversial comment about the subprime mortgage crisis at a conference in Los Angeles, where he stated, "This country [real estate market] needs a cleansing. We need to clean out all those people who never should have bought homes in the first place." He was referencing the many consumers who purchased homes at prices well above their means, as well as the mortgage lenders who encouraged those loans.

Wealth

With an estimated net worth of US$4 billion, he is ranked as the 106th richest American and the 329th richest person in the world by Forbes.