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“Housing market stability will appear sometime this summer. I can’t tell you if it’s June 29 or Aug. 1… But the U.S. will recover and recover first around the world because we have a culture and we have an environment where we face up to reality quickly and effectively as opposed to many other counties in the world which create zombie environments because they are not able to face up to reality.”
- Sam Zell, doing his best “Carnac the Magnificent” at the International Council of Shopping Centers’ annual convention on Monday.
I believe that in a country that continues to grow and where the population continues to grow, we will see the first signs of equilibrium in the housing market in the spring of 2009 and I will expect by spring 2010 the housing market in the U.S. will look a lot better.
- Sam Zell, on Dec. 14, 2008.
I think starts have already pretty much bottomed out…I think the housing market this spring will begin its recovery phase.
- Sam Zell, on Feb. 26, 2008.
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{ 10 comments }
From the guy that has admitted that buying the Tribune Company was a bad idea. I will take his prognosticating with a giant grain of salt.
It pains me to see the views of a guy like Sam Zell treated with such apparent veneration, as if Zell were privy to some perspective unavailable to many others.
Sam Zell should stick to his expertise: over-leveraging newspapers and selling-out editorial-page writers to corrupt politicians (like Blagojevich) in exchange for favorable tax treatment on asset sales.
Zell is a fool. The sooner THAT idea takes hold the better off everyone will be.
I flipped a master lease on a Loop property to Sam Zell about 25 years ago, and he was a backup partner on another deal of mine several years before that. In my brief dealings with him he was a man of impressive intelligence and great integrity.
Zell has an extensive track record as one of America’s all-time great real estate investors.
What’s your track record, harryo, and who do you think appears the fool as a result of your comment?
Zell clearly made a mistake in purchasing the Tribune in this climate.
He is also clearly not a fool. He could lose 99 percent of his wealth and still be filthy rich.
As for the Blago business since no writers were fired at the behest of Blago I would suggest giving Zell the benefit of the doubt until proven otherwise.
I too have worked with Sam Zell, very smart man and intellgent investor. He has made a couple bad investments, no one is perfect.
Harryo should head over to Crib Chatter he will fit right in.
wow. tough crowd.
Unlike Messrs Zekas & Valasko I’ve never dealt with Sam Zell. My off-the-cuff remark was sourced by an impression of him formed over the years from media accounts.
Upon a cursory rereading of his clippings, however, I hold to my original unfavorable view of Sam Zell. I challenge those who view him favorably to submit links on behalf of their view.
Originally I objected to what I thought unwarranted veneration of Zell’s opinion of the housing market. In short the view behind my posting was “Why does anyone care what Zell thinks?”
I found support for my view of Zell’s “Carnac”-like inability to foretell the future in these Sept ‘07 remarks when he said “We’re not really in a ‘credit crunch.’”
http://www.forbes.com/2007/09/21/zell-eop-blackstone-ent-fin-cx_kw_0921whartonzell_print.html
Perhaps you think me unfair for drawing attention to those (inadvertently hilarious) remarks from Zell. But I’d suggest they may be typical of his thinking.
Anyone who thinks Zell “a man of impressive intelligence and great integrity” should consider the means by which he gained control of the $8bb Tribune Co with only $90mm of equity (and a $225mm loan) in exchange for its chairmanship and warrants expirable in 15 (or 10?) years to buy 40% of the company for an additional $590 million.
Am I wrong to think that such deft financial engineering at the expense of other stakeholders was not typical of Zell’s career and of his “great integrity”? Structured as an ESOP to gain his requisite tax-advantages (and asymmetric risk/reward profile), had the deal succeeded Zell would have won very big. As it has now failed his loss is relatively small—especially when compared to that incurred by his current & former employees, his creditors and the city served by his now overleveraged & understaffed newspaper.
http://online.wsj.com/article/SB117625974930665974.html?mod=todays_us_opinion
Mr. Zekas would like to know my “track record”, as if my stewardship of Chicago’s biggest daily were at issue.
I do not fault Zell for buying cheap and selling dear but instead of inquiring into my “track record” I’d prefer attention were paid to considering the longer-term legacy of his. For if Zell’s dealings could be widely emulated our financial system would not likely survive. http://www.nytimes.com/2009/02/07/business/07properties.html?_r=2&em
(Those who think Zell a paragon of civic virtue should read this:
http://www.washingtonpost.com/wp-dyn/content/article/2008/06/10/AR2008061002529_pf.html )
Although everyone, including Zell himself, now regrets his Trib Co. purchase, the motive behind my original peeved posting was the wish that more people were familiar with the devastation wrought by Zell’s track record rather than with his useless Carnac-like prognostications.
Perhaps if Zell gave more interviews like this to his own newspaper more Chicago-area blog commentators would be persuaded of my view that Zell is less a sage than an Emperor with no clothes:
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aDtueFHRe35E
Finally, Zell’s wikipedia page brought this quote to my attention:
“This country needs a cleansing,” billionaire real estate investor Sam Zell said yesterday at the Milken Institute Global Conference in Los Angeles. “We need to clean out all those people who never should have bought in the first place, and not give them sympathy.”
http://www.bloomberg.com/apps/news?pid=20601087&sid=acare3gwtAdI&refer=home
One wonders in the aftermath of the Trib’s bankruptcy if Zell remains firm in his belief that “We need to clean out all those people who never should have bought in the first place.” One can only hope.
(Such thinking is reminiscent of Travis Bickel: “Someday a real rain will come and wash all this scum off the streets.”)
I’ll admit to knowing little about Zell’s intelligence or integrity in comparison with his partners. I’ve always thought of him from afar as largely a creature of Mike Milken’s fundraising ability, more lucky than smart, a product of a once-in-a-lifetime era of unprecedented leveraging-up (not likely to be repeated soon).
But after a cursory perusal of his clippings I will agree with those who hold that Zell is NOT stupid or a fool. I have now come to the provisional belief, however, that Zell practiced a kind of pariah capitalism that may be to blame for my beloved country’s current economic crisis.
Those who think Sam Zell a beneficent, “one of America’s all-time great real estate investors,” that his ethical practices warrant “the benefit of the doubt,” that he is a “very smart man” ought to make the case for those beliefs by submitting links to articles in support of them.
My question to my responders is simply this: For what reason(s) should one esteem Sam Zell’s business acumen?
Even if Zell cannot be counted a fool (for that title is more fittingly reserved for his counterparties & taxpayers) why, after reading the above linked articles, should anyone think Zell’s career is worth venerating rather than disdaining?
I look forward to reading considered responses.
Harryo,
You pose this question: “Why does anyone care what Sam Zell thinks?”
Warren Buffet’s annual letter to shareholders is eagerly awaited and widely publicized. A great many people care about what Buffet thinks.
Sam Zell is the Warren Buffet of the real estate industry. Throughout his career he created an enormous amount of value for a large number of people who backed his enterprises with many billions of dollars. That track record, most of which came long after the demise of Michael Milken, makes whatever he has to say worth listening to.
Zell sold out of the real estate market just before it began collapsing, before the current conditions were widely foreseen.
You mock his statements about the state of the credit markets. If he was so wrong, how did those markets back his Trib deal with $8 billion in debt?
I could source out many positive media articles about Zell over the years, but what would be the point? Zell has never courted the media as they’d like and media jackals howl at those who don’t. The Wikipedia entry you cite makes it crystal clear why his opinions merit attention. Look at what he accomplished.
Another reason for not responding in further detail to your detailed comment is that there’s an undercurrent of hostility toward capitalism running through it. American capitalism, even what you call “pariah capitalism,” has produced by orders of magnitude the greatest good for the greatest number in the history of the world. My experience has been that it’s a waste of time to dispute that issue with people who don’t have a deep understanding of that fact.
Mr. Zekos, your reply missed the gist of Haryo’s comments.
1.) is the issue of Zell’s benevolence (unfavorable opinion of the person)
2.) is the issue of what Zell thinks (frankly, we will never know)
3.) is the issue of Zell’s predictive capabilities (factually they suck)
and 4.) is the issue of the US economy, which both of you seem to be preoccupied with… to the exclusion of the global realities.
To one of Haryo’s strongest points: Zell appears to have, no scratch that, actually has screwed the Trib, the City, and the employees. Now whether he intended to or not is besides the point. As Haryo points out, his negotiations led to his gigantic upside with miniscule downside.
Is that wrong? you decide.
If the US wants to clean up our finances, it’s effective regulations that will be needed. As a good American capitalist, I believe in greed. Greed will not be elminated, it’s a farce to say finacial professionals are greedy- that’s their job.
Finally as for opinions on Zell, or Haryo’s track record that is meaningless. Zell’s facts say he can’t predict shit, so I’ve lost interest in his pronouncements. The question is which myth do you want to believe in?
joe,
Short answer: I don’t want to believe in any of your myths.
to Joe Zekas:
1.) sorry you feel the need to defend Zell
2.) your intellectual skills are limited & transparent
3.) Zell is wrong, yet again, on his pronouncement that housing will bottom this summer (discounting for inflation). Perhaps he is as smart as you think and he’s just trying to pump the market, but he does not have enough wieght.
cheers
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