Up until then, our investment decisions had been based on buying broken companies on the cheap, below replacement cost, and building them from there. - 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.

Blackstone’s ace in the hole was that it was offering an all-cash deal, as opposed to Vornado’s 40 percent stock. Blackstone was also aggressive about a quick deal closing, promising to close the transaction within two weeks of a scheduled Equity Office shareholders meeting on February 5, while Vornado had to wait a few months for its own shareholders’ vote and for the SEC’s ruling because of the proposed issuance of Vornado stock. A lot can happen in a few months, and I liked the certainty Blackstone was offering.

My takeaway was a whole new respect for simplicity. Development required multiple steps, and every step meant one more chance for something to go wrong.