In real estate investing, real money is made at the top of the
market by those who bought at the bottom. There's probably no
better example of that than Sam Zell.
Known as the 'Grave Dancer' one gets the impression that's
something others feel he should be embarrassed about. From an
investing point of view, it's just smart. When property is on sale
at artificially depressed prices, that's the time to buy all you
can in markets that will appreciate well when they recover.
In February 2007 Zell sold his flagship business, Equity Office
Products (EOP), and its portfolio of 540 prime office buildings to
the Blackstone Group for $39 billion, as reported in a Forbes
article at the time.
This is the portfolio of property that Zell has meticulously built
up over the last 20 years and now sold at premium price to a
private equity group at the very peak of the market.
"According to Zell, private equity firms awash with capital
benefitted from "preposterous" leverage and offered premium prices
to publicly held real estate firms. Zell said he considered that
type of deal a "Godfather offer"-because no publicly held company
could responsibly refuse it."
The point to pay particular attention to is, when everybody else in
the market was losing their heads buying, afraid they may "miss
out", Zell sold his entire commercial property portfolio (about 125
office buildings in 15 metropolitan areas he had identified as
And likewise, when everbody is desperately trying to sell, unable
to continue with ownership of their property, Zell is buying.
"Following a market crash in 1973, Zell spent three years acquiring
$3 billion in real estate assets, much of it for $1 down. He built
his portfolio by approaching lenders and offering to take future
operating losses off their hands in return for equity.