Ben Johnson

(July 16, 2010) Sam Zell’s Chicago-based international investment firm, Equity International, has sold a significant stake in Brazil’s largest mall developer, BR Malls, to the tune of $245 million.

Here’s the full announcement:

CHICAGO–Equity International (EI), the privately held company focused on investing and building world-class companies outside of the United States, announced today the sale of approximately 18.2 million shares of BR Malls (Bovespa:BRML3), the leading publicly traded retail property company in Brazil, for approximately US$245 million. Following this transaction, EI’s ownership interest in the Company is approximately 6 percent. EI remains a significant and active shareholder in BR Malls.

Headquartered in Rio de Janeiro, BR Malls is the largest retail property company in Brazil and is the most diversified both in terms of geography and coverage of income sectors. The Company is distinguished by its high quality portfolio, significant service business, professional management and efficient operating systems. Since EI’s original investment, BR Malls has grown its portfolio from 7 to 35 shopping malls, representing more than 1 million square meters of gross leasable area with 6,000 stores attracting 430 million visitors annually.

“We continue to have the highest level of enthusiasm for BR Malls and the retail property sector in Brazil, and we remain an avid investor in the Company, the sector and the country,” commented Gary Garrabrant, EI’s chief executive officer. “Today’s sale is simply a reflection of EI’s disciplined and proven monetization philosophy.”

EI made its original investment in BR Malls in 2006 and a follow-on investment three years ago. “The Brazilian retail sector continues to offer significant growth opportunities and we look forward to working with BR Malls to capitalize on these,” added Mr. Garrabrant.

EI provides ongoing strategic direction and counsel to BR Malls, and Thomas McDonald, EI’s chief strategic officer, continues to serve as a member of the Company’s Board of Directors.

(June 10, 2010) Chicago billionaire investor Sam Zell is getting hungry for another acquisition candidate.

Shares in publicly traded Rewards Network Inc. (NASDAQ:DINE) jumped 38% on June 9 after receiving an overture from investor Sam Zell to take over the firm.

Rewards Network stock closed at $13.67 and recorded the biggest gain in the Russell 2000 Index. Zell’s Equity Group Investments LLC, which owns 26.4% of the Chicago-based operator of discount dining programs, said in a filing it is prepared to offer $13.50 a share for the company.

Rewards Network issued a plain vanilla response to the offer:

CHICAGO, IL, Jun 09, 2010 (MARKETWIRE via COMTEX) –Rewards Network Inc. (NASDAQ: DINE) announced that it has received non-binding indications of interest from parties potentially interested in pursuing a strategic transaction with the Company. A special committee of independent directors of the Board of Directors of the Company is evaluating these indications of interest and other strategic alternatives. The Company has engaged Harris Williams & Co. to assist in evaluating the indications of interest received to date and to pursue a broader exploration of strategic alternatives in an effort to enhance shareholder value.

(May 21, 2010) Sam Zell is going bonkers over Brazil, again.

According to Equity International CEO Gary Garrabrant, the firm hopes to raise $500 million to plow into Brazilian real estate and companies that develop residential and commercial properties there. Zell is chairman of Equity International.

“Our enthusiasm for Brazil could not be higher,” said Garrabrant in a recent interview with Bloomberg News in Sao Paulo. “You’ve got this local demand that’s unparalleled.”

Earlier this year, Zell sold part of his stake in Brazilian homebuilder Gafisa SA, raising some fears that his fervor for the country had cooled. Such is obviously not the case.

To read the entire Bloomberg story, click here.

(January 30, 2010) Barron’s has reviewed the new biography on Sam Zell, Money Talks, Bullsh*t Walks, in its latest issue out this weekend. Here’s the review:

Paper Chase

Reviewed by Susan Witty

EVEN IF YOU’RE REAL-ESTATE MAGNATE Sam Zell, you can’t win ‘em all.

That was evident in December of 2008 when Zell’s misadventure in the newspaper business — buying and running the Tribune Co. — landed the media empire in bankruptcy court. It was a spectacular comeuppance for the overconfident Zell, but in the year or so since then, the challenges he faced have become commonplace in the newspaper industry.

By providing in-depth and revealing details of Zell’s botched effort to make the ailing Tribune into a moneymaker, Money Talks, Bullsh*t Walks not only provides a compelling blow-by-blow account, it brings fresh insight into the troubles at many of America’s biggest newspapers.

Author Johnson is fawning at times, especially when recounting Zell’s earlier victories. Two highlights: creating Equity Residential Properties, which made him “the nation’s largest apartment landlord,” with 554 properties, and masterminding “the largest office REIT in the world.” While the book celebrates the deals, it keeps Zell’s private life safely under wraps.

But Johnson is blunt when writing about the Tribune fiasco, the heart of the book. Instead of triumphing as “the grave-dancer,” with a reputation for turning failing properties around, Zell simply dug his own grave. While the company owned such iconic newspapers as the Los Angeles Times, Zell knew zilch about the news business and even less about news people.

The following is how he addressed recalcitrant L.A. Times and other Tribune journalists. “You think I needed to do this?” he barks at them at a town meeting. “You think I needed to take on the Tribune because this is my way to maybe get a plane, or maybe I can live in a penthouse or maybe have a house in California if this works. I got all that sh-t, OK?”

Now, he has all that and something else: a large blemish on his once-enviable record.

If you have a subscription, you can see it on the Barron’s website here.

(January 29, 2010) Rumor has it that Sam Zell is sizing up a major purchase in the heart of the Big Apple.

According to the New York Post, Equity Residential, of which Zell is chairman, is considering purchasing a 38-story apartment building known as Rivertower now owned by New York real estate mogul Harry Macklowe.

The estimated price tag on the East 54th Street property is about $160 million, or around $500,000 per unit. The Post reports that Macklowe could net $100 million large in deal.

(January 26, 2010) Equity Lifestyle Properties Inc., chaired by Sam Zell and one of the largest owners of manufactured housing communities in the United States, beat analysts’ estimates for the fourth quarter and full year of 2009.

The company, a real estate investment trust traded on the New York Stock Exchange under the ticker symbol ELS,  reported that funds from operations (FFO) jumped 35% in the fourth quarter and 21% for the year. FFO totaled $27.7 million ($0.79 a share) in the last quarter and $118.1 million ($3.58 a share) for the year. That easily beat analyst estimates of $0.67 a share for the quarter and $3.20 a share for the year.

In a healthy sign, operating revenues for the year totaled $479.3 million compared to $419.3 million in 2008.

ELS offered guidance for 2010, when it expects to report $3.39 to $3.59 per share. The company owns or has an interest in 304 properties in 27 states and British Columbia, including 110,364 home sites.

(Jan. 12, 2010) According to a new study by Barclays Plc and Bloomberg LP, the nation’s life insurance companies are somewhat insulated from continued steep drops in commercial real estate values.

The reason: they purchased the least risky bonds in pools of commercial mortgage-backed securities, or CMBS.

“Our study validated what the life insurers have been saying for months but haven’t provided the evidence for — namely, that the companies won’t take meaningful hits because of their position in the capital structure of CMBS,” said Eric Berg, an analyst with Barclays.

Check out the full story here.

(Dec. 28, 2009) Well, it was inevitable, one supposes. Chicago investor Sam Zell has topped one of the plethora of “decade’s best” lists now circulating. And this one is right up Zell’s alley, the apartment business. That’s apropos since Zell got his start waaaaay back in 1963 managing apartment properties while attending the University of Michigan in Ann Arbor.

According to Multifamily Executive magazine, Zell was the most influential figure in the apartment industry for the past decade. Here’s the ranking:

1. Sam Zell, chairman, Equity Residential
2. Ron Terwilliger, former chairman, Trammell Crow Residential
3. Ric Campo, CEO, Camden Property Trust
4. Tom Bozzuto, CEO, The Bozzuto Group
5. Scot Sellers, CEO, Archstone
6. Mike May, sr. vice president multifamily, Freddic Mac
7. Doug Bibby, president, National Multihousing Council
8. Tom Toomey, CEO, UDR
9. Phil Weber, former sr. v.p. multifamily, Fannie Mae
10. Shaun Donovan, secretary, HUD

For the complete listing, click here.

(Dec. 10, 2009) Sam Zell is often criticized for buying media powerhouse Tribune Co. at the top of the market. Or rather (and even worse), just as the newspaper business was already plunging straight down the economic toilet. Very un-Zell-like indeed.

When it comes to his real estate dealings, however, there is ample recent evidence to suggest that his prescient timing to sell Equity Office Properties Trust for $39 billion to The Blackstone Group at the height of the real estate market keeps paying dividends.

Turns out Morgan Stanley is formally turning over the keys to five San Francisco office buildings it purchased from Blackstone in May 2007, right after the EOP sale. Morgan’s deal was the largest commercial real estate transaction in San Francisco history.

The properties are part of Morgan’s MSREF V US opportunity fund. They encompass 1.2 million sq. ft. and include One Post St., 201 California St., Foundry Square 1, 60 Spear St. and 188 Embarcadero

AREA Property Partners, an arm of Apollo Global Management, a New York private equity firm, is in the process of taking control of the buildings.