Kicking Ass and Taking Names with Sam Zell

by StockJockey

Friday, April 04, 2008 - 11:02 pm

The business headlines have been rather depresssing of late. But you can count on Sam Zell to provide levity as he barnstorms the country snatching up undervalued assets.

Tribune staffers were recently introduced to vintage Gravedancer material:

February 11th
Billionaire Sam Zell is traveling the U.S. using pep talks laced with profanity to exhort Tribune Co.'s 19,000 employees to be more creative or risk seeing their jobs disappear.

n a Jan. 31 meeting at the Orlando Sentinel, a female photographer asked whether Tribune's newspapers risked being dumbed-down. Zell replied and, as the audience was applauding, added ``f--- you.'' Zell later tried to reach the photographer to apologize, said Sentinel spokeswoman Ashley Allen.

On Feb. 7, he told Los Angeles Times employees that Internet pornography could be viewed at work provided it didn't hamper productivity.

``Let me know if you find any good sites,'' he said

Zell brought his traveling circus to New York City this week, and contrary to prevailing sentiment, recommended investors focus on debt, and not equity, in the commercial real estate market:

“I wouldn’t invest in U.S. assets today, but I would buy U.S. paper,” Sam Zell, chairman of several real estate investment trusts, including Equity Residential Properties Trust (EQR), Equity LifeStyle Properties (ELS) and Capital Trust (CT), said at the 13th annual New York University REIT Symposium in New York yesterday. “The opportunity is on the debt side, not the equity side.”

Earlier this bears began to raid REIT’s, proclaiming doom and gloom. But Zell ain’t buying it, and thinks this cycle is a cakewalk compared to earlier ones, thanks, in part, to the locked up credit markets:

The commercial real estate market isn’t facing the oversupply problems that it did in past cycles, Mr. Zell said, noting that the frozen debt markets have limited the amount of new properties being built and dumped onto the market.

“We’ve had nine or 10 months of literally nothing new getting started,” he said.

As a result, the overbuilding and oversupply problems that led to property fire sales in past cycles isn’t occurring, Mr. Zell said.

“I don’t think we’ve seen any significant distressed commercial real estate to date,” he said. “I think it’s going to take some time — if we even see any at all in this cycle.”

Zell thinks the posturing in front of the Presidential race accounts for much of the negative sentiment:

“We have a world where too many people have a vested interest in creating a recession,” Mr. Zell said.

“You have two political candidates who are going out of their way to dual each other with dismal scenarios for the future,” he said. “I think the problem is nowhere near as severe.”

Hopefully we will be hearing more from Zell in the months going into the election, but his comments might be sanitized for public consumption. The newspaper folks might be under assault, but seem to be quick studies. After all they quickly pegged Sam at the LA Times:

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.

Force of nature, indeed. If you are looking for a laugh to help you survive the recession, check out Sam paying a visit to the Orlando Sentinel introducing himself to staffers.