Tuesday, October 27, 2015

Sam Zell sells $5.4 billion worth of Apartments to Starwood Capital

A recent Wall Street Journal article has reported on a transaction that everyone should pay attention.

"Sam Zell has agreed to sell more than 23,000 apartments controlled by his real-estate company, Equity Residential, for $5.4 billion to Starwood Capital Group, the companies said."

 This is a especially note worthy transaction because of Sam Zell.  In 2007, Mr. Zell predicted the top of the real estate market.  At that time he sold a company to Blackstone for $23 billion.  “There’s an awful lot of apartments under construction,” Mr. Zell said, “and the majority of them are garden apartments in suburban areas.”

 This translates to Equity Residential selling off 25% of their Apartment holdings.

No, the transaction does not mean the sky is falling, but we should make sure our eyes are open.  Anytime a large investor makes a move, especially when that investor has a history of making "right" decisions, it is noteworthy.

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