Developer Profile - Sam Zell, Equity Group LLC

American businessman Sam Zell is a self-made man. Worth a reported $4.9 billion and ranked number 66 of the Forbes 400, the 70-year-old founder of Equity Group Investments (EGI) has broadened the company’s interests since its conception in the early 1960’s. Such interests now span across industries such as real estate, energy logistics, transportation, media and health care.

According to Equity Residential's website, Zell's career commenced like many other successful property businesses;

In the early 1960s, two guys at the University of Michigan – Sam Zell and Bob Lurie – started managing student apartment buildings. Over the next five decades, the buildings would change but the basic philosophy would remain the same: invest in properties at the right price and hire the best people to manage them well.

The Beginning

Shortly after he graduated Law School, Zell created an investment firm (later known as EGI) alongside his college fraternity brother Bob Lurie.

Zell’s big break came in the late 1960’s to early 1970’s when the commercial property industry crashed and fell into recession, due to skyrocketing interest rates on loans made by developers, who were forced to abandon their projects.

The quaint Zell and Lurie partnership took advantage of the dishevelled state of the property market at the time, and made a portfolio of high-quality apartment buildings in small cities, where there was little competition.

Unlike many other failed developers at the time, whose only concern was to make fast profits, Zell’s strategy was to “invest in properties that would pay for themselves by generating income over time.”

This strategy proved to be the most successful move made by a property investment firm at the time, sparking Zell to broaden his investment interests to the retail and office building markets, of which were industries also struggling at the time.

EGI went on to create three real-estate companies:

• – of which he remains Chairman

• – of which he sold to the Blackstone group in 2007 for $39 billion

• – of which he also remains Chairman

 

Today

Sam Zell is also co-founder and Chairman of several listed American companies including:

• Equity International, an investment firm that focuses on real-estate related companies

• Equity Residential and REIT – the largest apartment owner in the world

• Equity LifeStyle Properties (ELS), a real estate investment trust

• Covanta Holding Corp. (CVA), a company that converts waste to energy

• Tribune Company, a private Media multinational and

• Anixter (AXE), the world’s largest networking and electronic cabling company and largest distributor of communication products.

Zell also owned/co-owned:

• Revco – an American drugstore chain

• Broadway Stores – a department store chain

• Sealy – the renowned mattress manufacturing company

• Santa Fe Energy Resources – an energy company

Though Zell has been blessed with a myriad of investment successes, his major blunder occurred when he became CEO and Chairman of Tribune Company, of which was in $13 billion debt at the time he walked into the role. The company, responsible for media publications such as the Chicago Tribune and the Los Angeles Times, filed for bankruptcy a year later due to a lack of advertisement revenue – and the blame was placed on Zell. Somehow, Zell managed to dodge the investment disaster and lawsuits from employees, who claimed he jeopardised pensions by forcing employees to invest in stocks of the company.

How he managed to avoid this may just be the secret to his international success.

Sam Zell will be a featured guest speaker at the Property Council of Australia's Property Congress to be held in Sydney from the 30th October - 2nd November 2012.