Sam Zell Is A Smart Guy, And He Tells It Straight

Sam Zell is a smart guy and he tells it like it is. He is not part of the Nouveau riche created by easy credit and loose money. He is an old-school real estate mogul. Zell is an iconic figure in American real estate. In 1968, he started Equity Group Investments, which today invests in industries like energy, logistics, and healthcare. Many real estate investors consider him the forefather of modern real estate investment. If you want to know what is happening in the real estate market and the economy in general, listen to Zell.

I have admired Sam Zell for many years. He is unlikely to remember me but decades ago he backed me when I was in the middle of purchasing a large apartment complex that had fallen into bankruptcy. I was just about to turn 30 at the time and he sent one of his people, a fella by the name of Cody Engle, into town to look over the situation. He rapidly backed partnering with me with half a million dollars from Illinois Continental Bank. Back then, that was a lot of money. 

Considering my young age, completing that deal would have been a watershed life-changing event, however, it was not to be. After selling the property to me, the owner (in bankruptcy) also sold it to someone else leaving the bankruptcy court to sort things out. The mortgage holder siding with the other party swung things away from me even though I was in possession of the property and actively managing it. The complex was sold for 1.9 million dollars and resold for 3.7 million just six months later.

Back then, when all this went down, almost everyone considered a million dollars a lot of money. This requires a special "historic" note in wake of the recent bank failures;

Continental Illinois National Bank and Trust Company was at one time the seventh-largest commercial bank in the United States as measured by deposits, with approximately $40 billion in assets. In 1984, Continental Illinois became the largest-ever bank failure in U.S. history, when a run on the bank led to its seizure by the Federal Deposit Insurance Corporation (FDIC). Continental Illinois retained this dubious distinction until the failure of Washington Mutual in 2008 during the financial crisis of 2008, which ended up being over seven times larger than the failure of Continental Illinois.

Circling back to Zell, in an interview that lasted just short of ten minutes,  https://www.youtube.com/watch?v=BEDI5cKLbBY Zell opined about America's tough path forward. His appraisal of the current economy is that we are about to run into some very serious problems. A big issue that Zell is quick to point out is that Americans face a huge reduction in living standards if eventually. the dollar loses its reserve currency status.

When Zell talks about the end of free money he notes that it appears to be just talk. The act of doing so continues to be kicked down the road. He was also asked what he would do if placed in charge of financial policy. Most of his answer is rooted in facing the economic problems we face rather than continuing to sidestep that reality. When all is said and done, Zell is a man worth listening to.

 

(Republishing of this article welcomed with reference to Bruce Wilds/AdvancingTime Blog)