Sam Zell dies at 81; Chicago real estate magnate owned Tribune Co.

Anyone who met Sam Zell – be it one of his executives, a rival in a business deal, a foundation executive or a journalist – knew where they stood with him.

Mr. Zell was raspy and blunt, with little patience for cockeyed ideas or sentimentality. He exulted in his reputation for using salty language even in politically correct times. It made him popular on the speaking circuit, where attendees eagerly listened for his business insights and the entertainment he could provide.

Mr. Zell died Thursday at home of complications from a recent illness, said Equity Group Investments, where he was chairman. He was 81[ads1].

With a career spanning more than 60 years, Mr. Zell amassed one of the leading fortunes in Chicago business circles. It was centered on real estate, but expanded into many other fields, including transportation, energy, manufacturing, and radio stations.

He had a penchant for taking over companies that needed a turnaround, or “dancing on the skeletons of other people’s mistakes,” as he wrote in a 1970s article. It was titled “The Grave Dancer”, and the nickname became his calling card. In 2017, Mr. Zell published a book that played on his nature, called “Am I Being Too Subtle?”

Those close to him knew he had a different mantra – don’t take yourself too seriously. Also, have fun. He used to lead a group of friends called Zell’s Angels on motorcycle trips around the world. He was a keen skier of the toughest slopes.

Around the office, he favored jeans and open-collar shirts long before the tech crowd made them hip.

“Sam lived his life by testing his limits and helping those around him to do the same. He was a self-made entrepreneur, an industry creator and leader, a brilliant deal maker, a generous philanthropist and the head of a family he deeply loved and protected,” said Scott Peppet, president of Chai Trust Co. and Mr. Zell’s son-in-law.

“He had an unapologetic passion for life, a brilliant mind, an infectious wit and a deep sense of community responsibility and personal loyalty. All those who loved and learned from him will miss him terribly.”

In announcing his death, Equity Group said: “Loved by family, friends, staff and colleagues, Sam was an honest, straightforward, inspiring, creative, kind and brilliant man. He valued and embodied humor, loyalty and integrity. Above all, he achieved his own vision for his legacy: he was unfailingly a man of his word, or shem tov, the Hebrew term for a good name or reputation.”

Making history

Forbes has estimated Mr. Zell’s fortune at $5.2 billion. He popularized the concept of real estate investment trusts, or REITs, which allow people to invest in broad real estate holdings via stock ownership. Among the companies he founded was Equity Residential, an apartment building owner that Mr. Zell started while a student at the University of Michigan.

Mr. Zell was also chairman of Equity LifeStyle Properties, which owns mobile home communities and recreational vehicle parks and campgrounds. His portfolio at various times included Schwinn Bicycle Co. and mattress manufacturer Serta.

He previously owned Equity Office Properties Trust, but sold it in 2007 for $39 billion. It was the largest leveraged buyout in the company’s history and considered the crowning achievement of Zell’s career. He personally cleared about $1.1 billion.

Most of Mr. Zell’s deals were hits, but his reputation suffered after a high-profile failure — the same year as his stock-office triumph. Mr. Zell struck a debt-based deal to buy Tribune Co., then the owner of the Chicago Tribune, the Los Angeles Times, other major newspapers and television stations. He followed his playbook by cutting jobs and selling non-core assets, including the company’s Chicago Cubs.

But he took the plunge when the Great Recession and changing technology crushed revenues, and Tribune declared bankruptcy just a year later. Even when the sale was closed, Mr. Zell called it “the deal from hell.” The company’s failure cost him $315 million, and the bankruptcy led to a restructuring that cost about 4,200 jobs.

Over the years, Mr. Zell grew irritated when reporters asked him about the rare defeat. He preferred that they focus on the jobs he created throughout his business career.

In a 2012 interview with the Financial Times, he said his premise for buying the Tribune was sound, but was overwhelmed by a rapid 30% drop in revenue that he said no business could have survived. Urging the interviewer to focus on other things, Mr. Zell said: “And I have a lot of other things in my life that I’m doing. This was a very important investment for us five years ago. It did not work.”

Life on his own terms

Longtime business associates remembered Zell as roaring through life on his own terms, but with a devotion to philanthropy and bringing others into the business world.

“Sam’s insatiable intellectual curiosity and passion for dealmaking created some of the most dynamic companies in the public real estate industry,” said Mark Parrell, Equity Residential’s CEO. “He was a generous philanthropist and an incredible mentor and friend and will be missed by all who were fortunate enough to be a part of his extraordinary world.”

Debra Cafaro, chairman and CEO of Ventas, which owns health care services, said Mr. Zell’s “endorsement at key turning points helped propel my career in real estate at a time when there were almost no women in the industry.”

Among Chicago’s moned A-listers, Mr. Zell’s annual birthday parties were a celebrity-studded affair. He hired the Eagles, Jay Leno, Elton John and others to entertain guests.

For the New Year’s holiday, Mr. Zell used to send hundreds of people a gift, a music box with custom figures and his recorded voice talking about a financial problem, often a warning against excesses. A 2012 gift satirized Ben Bernanke and the Federal Reserve for, in Mr. Zell’s view, keeping interest rates too low and printing too much money. Some of the gifts have become a collector’s item.

Mr. Zell was born Shmuel Zielonka in Chicago on Sept. 28, 1941, about four months after his parents landed in the United States from Poland, having escaped the Nazi persecution of Jews. His parents, Bernard and Rochelle Zielonka, shortened the family name to Zell.

In an interview posted online by Equity Group Investments, Mr. Zell said: “Growing up as the child of an immigrant, things were much different in my house than they were in everyone else’s house. And so the little question in all that wrapped up produced a different person than the average. And whatever else I might claim to be, I definitely claim to be different.”

His father was a jeweler who dealt in real estate. The family settled in Albany Park, but moved to Highland Park, where Mr. Zell graduated from high school.

He showed his propensity for entrepreneurship as a boy, buying Playboy magazines and selling them at a premium to friends. At the University of Michigan, he managed apartments in exchange for free room and board.

He earned a law degree but gravitated to real estate with fraternity brother Robert Lurie, who became a business partner and prominent investor in his own right. Lurie’s death from cancer in 1990 deeply affected Mr. Zell.

The Lurie and Zell names are associated with foundations for entrepreneurship at the University of Michigan and at the University of Pennsylvania’s Wharton School. Mr. Zell also supported programs at Northwestern University’s Kellogg School of Management and Reichman University in Israel.

Mr. Zell was active in business and media engagements until his death. In recent weeks, he criticized the Federal Reserve and the work-from-home culture in his characteristic way. He was quoted as saying the Federal Reserve “screwed up” by raising interest rates and that working from home was “bulls—.”

Mr. Zell is survived by his third wife, Helen. She is the managing director of the family foundation, which is active in art and education. Survivors also include three children, two sisters and nine grandchildren.

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