Meet the grave dancer Sam Zell the American billionaire businessman. He is the creator of the contemporary REIT and is the founder and shareholder of Equity Group Investments, who have been prominent in creating some of the largest publicly traded REITS in the world. Zell has described his investment strategy as ‘dancing on the skeletons of other people’s mistakes’. The famous nickname originated from an article he wrote for The New York University Review in the 70s saying ‘I am really a grave dancer’. His signature graveyard deal was his $39 billion sale of Equity Office Properties to the Blackstone Group just before the subprime crisis that caused the last recession.
What is a REIT and why should I be interested?
REIT’s or Real Estate Investment Trusts are companies that own or finance income-producing real estate across a range of property sectors. A REIT allows investors to own valuable real estate with the added bonus of earning dividend based income and total returns. They provide investors a liquid way to access the real estate sector without going through the rigmarole of buying, managing or financing a property.
Why we like Equity Group Investments
Sam Zell’s private investment firm founded 50 years ago specializes in opportunistic, often complex and contrarian investments throughout the debt and equity markets. As they say themselves ‘Every one of our senior investment professionals commits his/her own capital to every deal we do. WE HAVE SKIN IN THE GAME. So, we are highly engaged owners. We get involved, working alongside portfolio company management often two to three levels deep within a company to maximize opportunity, potential and performance’.
We also like their macro view strategy. ‘Our investment portfolio ranges across sectors and geographies. We look for patterns, anomalies, and disruptions in areas like demographics, supply and demand, and changing legislation to identify opportunities.’
Which REITs and how have they performed?
On 14 January 2019, we opened three REIT positions, all part of Sam Zell’s empire. Equity Residential (EQR) is an apartment REIT which pays a 2.93% dividend, as well as Equity Commonwealth (EQC), an office REIT with 86 properties in the U.S. and finally Equity Lifestyle Properties Inc. (ELS), a residential REIT that pays investors a 1.99% dividend.
Equity Lifestyle properties (ELS) +26.31%
Equity Residential (EQR) +15.84%
Equity Commonwealth (EQC) +7.89%
See Portfolio: https://theimpartiallens.com/2019/07/portfolio-update