Sam Zell

Samuel Zell
Born	Shmuel Zielonka (1941-09-28) 28 September 1941 Chicago, Illinois, U.S.
Died	18 May 2023(2023-05-18) (aged 81)
Occupation(s)	Entrepreneur, philanthropist
Known for	Real estate investments; founder of Equity Residential, Equity International, EQ Office, Covanta, Tribune Media, Anixter

Samuel Zell (originally named Shmuel Zielonka; born September 28, 1941 – passed away May 18, 2023) was a prominent American billionaire entrepreneur and philanthropist, chiefly recognized for his extensive involvement in real estate investments. Among the enterprises he established or controlled are Equity Residential, Equity International, EQ Office, Covanta, Tribune Media, and Anixter.

Early life and education

Born in Chicago on September 28, 1941, Zell was the son of Ruchla (later Rochelle) and Berek (later Bernard) Zielonka, Polish Jewish immigrants who arrived in the United States just four months prior to his birth to escape Nazi persecution. His father, formerly a grain trader in Poland, transitioned to roles as a wholesale jeweler and real estate investor after settling in Chicago. The family initially lived in Seattle before relocating to Albany Park, Chicago, where Zell began entrepreneurial ventures such as selling prom photographs and reselling Playboy magazines at significant markups.

At twelve years old, Zell's family moved to Highland Park, Illinois, where he completed his secondary education at Highland Park High School. He graduated from the University of Michigan in 1963 with a bachelor's degree and was affiliated with the Alpha Epsilon Pi fraternity. During his college years, Zell managed a 15-unit apartment building in exchange for room and board and subsequently expanded his property management operations to include multiple buildings, generating approximately $150,000 by the time he graduated.

Collaborating with fraternity colleague Robert H. Lurie, Zell secured contracts to manage large apartment complexes in Ann Arbor. He earned his J.D. degree from the University of Michigan Law School in 1966. By that point, Zell and Lurie were managing over 4,000 apartment units and owned between 100 and 200 units outright. After completing law school, Zell sold his interest in their management firm to Lurie and relocated to Chicago to pursue additional real estate opportunities.

Real estate investments

Following graduation, Zell briefly practiced law before dedicating himself fully to real estate. He purchased a 99-unit apartment building in Toledo with financial backing from a senior partner. In 1967, he acquired a profitable apartment complex in Reno, Nevada, which he later described as a "hidden gem" within the real estate market. Two years later, in 1969, with investment from Jay Pritzker, Zell bought Arlington Towers, Reno’s tallest building at the time, for $9 million. To facilitate this acquisition, Zell’s brother-in-law orchestrated offshore transactions designed to protect sellers from tax obligations; Zell avoided legal consequences by cooperating with authorities during the investigation while his brother-in-law faced imprisonment.

In 1968, Zell established what would become Equity Residential, joined by Robert H. Lurie in 1969 until Lurie’s death in 1990. During the economic downturn of 1973–1975, Zell capitalized on distressed assets by acquiring numerous bankrupt properties at low prices through offering lenders financial restructuring plans that prevented foreclosure. In the recession of the early 1990s, having personally guaranteed loans amounting to $600 million, he broadened investor involvement to mitigate risk exposure. In August 1993, after purchasing an extensive portfolio from Barry Sternlicht for a 20% equity share, the company launched an initial public offering that resulted in ownership of approximately 22,000 apartments.

Zell created the predecessor to EQ Office in 1976 with the goal of investing in office properties. In 1988, he co-founded the first of four Zell/Merrill Lynch Real Estate Opportunity Partners Funds; these were consolidated into EQ Office by 1997. In a landmark transaction in 2007, The Blackstone Group acquired EQ Office for $36 billion—the largest recorded leveraged buyout at that time—and subsequently divested assets ahead of the 2008 financial crisis, illustrating astute timing.

In addition, in 1984 Zell founded Equity Lifestyle Properties, which currently owns more than 400 mobile home parks.

Investments in Distressed Assets

In 1985, Zell took ownership of Itel Corporation, a transportation and logistics firm that had recently emerged from bankruptcy. The following year, he acquired Anixter and led the company until its sale in 2020. In 2004, Zell purchased Covanta through a bankruptcy sale conducted under Section 363.

Zell/Chilmark Fund

Co-founded by Zell in 1991, Zell/Chilmark was a $1 billion fund specializing in distressed securities. That same year, it acquired $550 million worth of junk bonds and vendor claims related to Carter Hawley Stores, the parent company of Broadway Stores, eventually gaining control before selling it to Federated Stores (now Macy's, Inc.) in 1995. In 1992, the fund invested $250 million in the bankrupt drugstore chain Revco, later earning $363.8 million when Rite Aid purchased the company in 1995. Also in 1992, Zell/Chilmark secured a stake in Jacor, a radio broadcasting group with television assets, which was sold to Clear Channel Communications in 1999. The fund acquired the Schwinn Bicycle Company out of bankruptcy for $60 million in 1993 and later sold it for $86 million in 1997. Additional acquisitions included energy firm Santa Fe Energy Resources and mattress manufacturer Sealy Corporation. In 1994, the fund invested $25 million to obtain a 90% ownership interest in Midway Airlines.

Tribune Media

In December 2007, Zell completed a leveraged buyout to gain control of Tribune Media, which owned newspapers such as the Chicago Tribune, The Baltimore Sun, Newsday, and The Hartford Courant, along with the Chicago Cubs baseball team and Wrigley Field. The $8.2 billion purchase involved Zell contributing only $315 million of his own capital, all financed through debt.

Zell appointed former radio executive Randy Michaels, who lacked newspaper experience, as Tribune's CEO. Michaels’ leadership was characterized by a toxic workplace environment and the dismissal of 4,200 employees, while top executives received substantial bonuses and hosted extravagant office events. Michaels stepped down in October 2010.

Amid significant debt and during the Great Recession, Tribune filed for bankruptcy in December 2008—the largest media bankruptcy in U.S. history—with $7.6 billion in assets against liabilities totaling $13 billion.

During the bankruptcy restructuring, Zell sold the Chicago Cubs, Wrigley Field, and a 25% share of Comcast SportsNet Chicago to Joe Ricketts and his family for $900 million in January 2009. Zell relinquished control when Tribune exited bankruptcy proceedings in December 2012.

In 2019, Zell along with former Tribune executives agreed to pay $200 million to resolve accusations of fraud involving illegal dividends and fraudulent transfers during the acquisition period; executives had received $107 million from these transactions.

Support for Education

In 1983, Zell endowed the Zell/Lurie Real Estate Center at the Wharton School of the University of Pennsylvania. He later founded the Zell Lurie Institute for Entrepreneurial Studies at the University of Michigan in 1999. Additionally, he contributed funding to establish the Helen Zell Writers’ Program and the Master of Fine Arts Creative Writing Program at Michigan. Furthermore, Zell supported Northwestern University's Kellogg School of Management by helping create both the Zell Center for Risk Research and the Zell Scholar Program.

Arts

In 2012, Zell made a $10 million donation to the Museum of Contemporary Art, Chicago, followed by a $17 million gift to the Chicago Symphony Orchestra in 2014.

Poverty

Zell contributed $10 million in 2014 to Start Early (previously known as The Ounce of Prevention Fund), an organization dedicated to early childhood development initiatives in disadvantaged Illinois neighborhoods.

Jewish causes

He provided $3.1 million to the Herzliya Interdisciplinary Center in Israel and supported the Israel Center for Social and Economic Progress, a free-market think tank founded by Daniel Doron. His philanthropic efforts also extended to the American Jewish Committee and the Bernard Zell Anshe Emet Day School, a Jewish elementary school in Chicago named after his father. In 2015, Zell donated more than $10 million to Chicagoland Jewish High School, which was subsequently renamed Rochelle Zell Jewish High School in honor of his mother.

Personal life

Zell was married three times and divorced twice, fathering three children: Matthew and Joann Zell Gillis from his first marriage to Janet (née Skolnick) Zell Kessler, and an adopted daughter, Kellie Zell Peppet, from his second marriage. His second marriage spanned from 1979 until 1994. His third spouse was Helen (née Herzog) Fadim Zell. He was also a grandfather to nine grandchildren.

A passionate motorcyclist, Zell frequently commuted on his Ducati at high velocities and once reached speeds of 145 mph while riding across the pampas. He established Zell’s Angels, a collective of business leaders who toured globally on motorcycles. His recreational interests included skiing, racquetball, paintball, and various sports.

Zell owned homes in Chicago, Sun Valley, Idaho, and Malibu, California. In 1998, he acquired a 12,000-square-foot residence in Malibu designed by John Lautner for $13 million.

As of April 2023, Forbes estimated Zell’s net worth at $5.2 billion. In May 2017, he authored Am I Being Too Subtle?: Straight Talk From a Business Rebel, detailing his philosophy on spotting investment prospects.

Zell passed away on May 18, 2023, at age 81 following a brief illness.

Political involvement

Zell contributed $100,000 to Restore Our Future, the Super PAC backing the Mitt Romney 2012 presidential campaign. In 2015, he donated $50,000 to the John Bolton Super-PAC. Both he and his wife gave $75,000 each in 2019 to support the campaign of Mayor of Chicago Lori Lightfoot. Additionally, he made smaller donations to politicians from both major parties.

Use of foul language

Zell was recognized for his candid use of "salty," "obscenity-laced," and coarse language in both public forums and professional environments.

Awards and honors

• 1987: Golden Plate Award from the Academy of Achievement
• 1999: Induction into the Hall of Fame of the Chicago Association of Realtors
• 2007: Kellogg Award for Distinguished Leadership

Bibliography

• Am I Being Too Subtle?: Straight Talk From a Business Rebel (2017)
• "The Grave Dancer: A Guide to The Risky Art of Resurrecting Dead Properties," Real Estate Review (1982)
• "Pension Fund Perils in Real Estate," Real Estate Review 61 (Spring 1975)