Prudence was his mantra; he was always deeply respectful of risk. - Sam Zell

I knew what the Equity Office portfolio was worth. And I knew we were undervalued by Wall Street. Every quarter, the management team would do an in-depth analysis of every asset in the portfolio to develop a real-time valuation. The most reliable measure of our buildings’ value remained — and had always been, in my opinion — replacement cost. Replacement cost mattered more to me than rents or comparable prices or vacancies or economic growth or stock price. This was because replacement cost determined the price of future competition.

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.

At some point the guy I was sitting next to turned to me and asked, “So what do you do?” I replied, “I’m a professional opportunist.” And that has been my response to that question ever since.