Sam Zell’s Empire, Underwater in a Big Way
The New York Times reports: It was, for a brief shining moment, the real estate deal of the century.
In 2007, Sam Zell, the billionaire Chicago investor, sold a portfolio of 573 properties he had assembled over three decades, Equity Office Properties Trust, to the Blackstone Group for $39 billion. It was the largest private equity deal in history, but Blackstone did not stop there: it immediately flipped hundreds of the buildings for $27 billion.
But elsewhere, problems with Equity Office properties have spread like a virus, weakening and even paralyzing major real estate developers.
In Stamford, the crisis on Wall Street and the consolidation of financial services has weakened the market, undermining the RFR Properties’ effort to raise rents at its seven Equity Office buildings by 15 percent. The purchase price of $850 million, roughly $515 a square foot, was close to a record for Stamford.
RFR’s Equity Office buildings are now worth less than its mortgages, said Dan Fasulo, a managing director at the commercial real estate research firm Real Capital Analytics. But the company has not defaulted on its loans.
“Some of the rents they projected won’t come to fruition for many years,” Mr. Fasulo said.
View the full article on The New York Times: Sam Zell’s Empire, Underwater in a Big Way
Posted by: Nina Turner