Sam Zell Quotes

chairman of everything and the CEO of nothing.

I have always believed that every day you choose to hold an asset, you are also choosing to buy it. Would I buy our buildings at the price Blackstone was quoting? Nope.

work out every morning at 4:45, I’m at the office by 6:30 a.m., and I don’t get home from work until 7:00 at night.

Around the same time, Congress passed the Economic Recovery Tax Act. Among other things, it extended the life of net operating loss carry-forwards (NOLs) from seven to fifteen years. NOLs allow companies to offset their current year’s taxable income with past losses, thereby reducing current tax liability. The goal of the act was to help struggling companies recover and to enable their shareholders to benefit from the prior losses. We took a look at all of the public companies with large NOLs and found something surprising. These companies had virtually no change in share price as a result of the new legislation. The market was overlooking the significant value added through the extended life of NOLs. That presented us with an enormous opportunity to gain control of those NOLs and create holding companies for businesses whose profits would be shielded. If a company was trading at $3 a share for a total enterprise value of $45 million and it had $350 million in NOLs, we knew we could create profits that were sheltered and convert those NOLs (which were valued at $0) to roughly $100 million of cash, or 25 cents on the dollar over time. And that’s just what we did.

The opportunity was in the fact that maritime law, in the form of the Jones Act, prevents foreign-built or foreign-flagged ships from conducting coastal trade in the U.S. In the case of tourism, foreign vessels have to either drop off or pick up passengers from a non-U.S. port, certainly not convenient for interisland vacationing in Hawaii.

The Jacor story was all about seeing micro opportunities in macro events. In this case, the macro event was legislation similar to the impact of the Economic Recovery Tax Act of 1981 on NOLs. But I find implications for opportunity everywhere — in world events, economic news, and conversations. I’ve always been on the lookout for big-picture influencers and anomalies that will direct the course of industries and companies.

Opportunity is very often embedded in the imbalance between supply and demand. It could be rising demand against flat or diminishing supply, or flat demand against shrinking supply. When there’s an imbalance, I look at where the two lines will intersect and then determine whether it is cheaper to buy or to build. Usually the answer is in acquisition, which eliminates a lot of the risk inherent in development. I like to invest below replacement cost, thereby creating a competitive advantage.

didn’t know it then, but this phase in my career was the genesis of a mantra I would repeat regularly for decades to come: Liquidity equals value.

we had always looked at the tax benefits of real estate as what you got for the lack of liquidity.

In the beginning, we took nearly all of our returns in residuals, and we charged very little in fees. Eventually, the residual equity turned to cash, and then we’d reinvest it in the business. Consequently, we never had any money. Never. We were asset rich and cash poor. We operated the company on a shoestring. One year, we sold the last piece of an asset, got a windfall of $30,000, and promptly bought a stereo system for the office.

Jay taught me to use simplicity as a strategy. He had an uncanny ability to grasp an extremely complex situation and immediately locate the weakness. He always said that if there were twelve steps in a deal, the whole thing depended on just one of them. The others would either work themselves out or were less important.

Some emerging markets will check all the boxes — strong population growth, growing middle class, verge of investment grade, great leadership, and hunger for capital — and then be missing the one ingredient that enables you to monetize your investment: scale. Without scale, you don’t have liquidity. You have no optionality. In essence, you’re stuck.

Boards that don’t exercise an ownership approach are complicit in poor-performing companies.

A Jewish refugee delegation, including my father, went to the Vilnius Japanese vice consul, Chiune Sugihara, for these transit visas. Sugihara wired Tokyo three times for permission to help the refugees, but was denied each time. The vice consul was a Japanese career diplomat, but he had also been raised in a middle-class samurai family. And part of the code of the samurai is benevolence and mercy, and appreciation and respect for life. Despite the risk to his career and his family, Sugihara ignored his direct orders and decided to do as much as he could. For the next month, he and his wife barely stopped to eat or sleep as they wrote out thousands of transit visas. My family was among the six thousand Jews Sugihara saved — the Sugihara Survivors.

I started negotiating the deal, which was complex beyond belief. I was creating structures and terms that had never been done before. I went to Jay and took him step-by-step through this incredibly complicated transaction. And damn it if he didn’t just look at me and say, “But, Sam, isn’t the real key to this whole thing just to rent the office space?” And sure enough, that’s what the whole transaction was predicated on. Jay’s level of intellectual rigor really appealed to me. And I immediately latched on to the understanding that I could cut right to the heart of something complex if I broke the problem into pieces. It was a matter of organizing my thinking. A discipline.