Some emerging markets will check all the boxes — strong population growth, growing middle class, verge of investment grade, great leadership, and hun… - Sam Zell

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.

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.

From the very first deals we did at EGI, I have spread the opportunity — both the risks and the rewards. We co-invest, side by side, and I often provide a “promote” to my people, allowing them to share in profits on a portion of my invested capital. That means I put my money behind theirs (say $150,000 of my money to $30,000 of their money), and if our investments or funds achieve their minimum target metrics, my people get returns based on the aggregate ($180,000). In effect, we’re all invested in each other’s success. It’s not only about motivation; it’s a mandate to collaborate. Deal opportunities and challenges are discussed, questioned, and probed by the team at large because everybody has a piece of everybody else’s deal.

Zeckendorf’s autobiography was packed with colorful stories, but what fascinated me most was his strategy. Zeckendorf viewed assets as a sum of parts, so he could increase the value of the whole. Various parts were more valuable to different buyers, so Zeckendorf could maximize the value of his holding overall, in effect making 1 + 1 = 3. For example, One Park Avenue in Manhattan, which the marketplace had valued at $10 million, was ultimately worth $15 million in Zeckendorf’s hands. He calculated everything separately — the building’s title, the land, the leases, the individual mortgages. I thought this was brilliant. I adopted the approach both inside and, later, outside of the real estate industry.