Friday, October 5, 2007
"I would tell you whatever business I've been in real estate, barges, rail cars it's all about supply and demand."
Sam Zell is ranked by Forbes this year as the 52nd wealthiest American. He sold his flagship company Office Equity Holdings for $39 billion to the Blackstone Group last February, which was a record breaking private equity transaction. He continues to be invested in residential housing, media and technology eqipment companies. We can all learn a few things from his success as he comments about his career and investment strategies in our latest podcast from Knowledge@Wharton.
Sam Zell, the master real estate investor, has built a fortune on the cycles that shape his industry. These days, he believes the current turmoil in financial markets is more an emotional reaction to yet another period of excess rather than a true credit collapse.
In a wide-ranging lecture at Wharton moderated by real estate professor Peter Linneman, the Chicago-based investor said markets currently are spooked by problems with U.S. subprime lending. However, they still have capital to deploy, unlike during other real estate busts when financing could not be arranged at any price.
"We're not really in a quote 'credit crunch.' I think what we are in is a 'confidence crunch,'" said Zell, funder of the Samuel Zell and Robert Lurie Real Estate Center at Wharton. "I would argue the excess liquidity that existed eight weeks ago still exists today. It has a different risk premium on it, but the actual amount of liquidity has not changed."