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The Thesis
Zell, the 'Grave Dancer' of real estate, sold his massive office REIT at the peak of the commercial real estate bubble in February 2007 — months before the crash.
The Story
Sam Zell had earned his nickname "The Grave Dancer" for buying distressed real estate assets on the cheap. But his greatest trade may have been a sale. In February 2007, Zell sold Equity Office Properties — the largest office REIT in America — to Blackstone for $39 billion. It was the largest leveraged buyout of a REIT in history and it came at almost exactly the top of the commercial real estate market.
Within months, the real estate market began its historic collapse. Office values plummeted, credit markets froze, and many of the properties Zell had sold declined 30-50% in value. Blackstone, to their credit, quickly flipped many of the assets to other buyers before the worst hit. But Zell's timing was extraordinary. He had spent decades buying at the bottom and this time demonstrated equal skill selling at the top. The trade netted billions for Equity Office shareholders and cemented Zell's reputation as one of the greatest real estate investors in history.
Key Insight
Knowing when to sell is just as important as knowing when to buy — the best investors don't fall in love with their positions.
“If everyone is going left, look right.”
Sam Zell
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See how Glen Bradford applies these principles to his own investing. Long Fannie Mae & Freddie Mac junior preferred — conviction meets patience.