According to Business Insider, Chairman Sam Zell of Equity Group Investments knows real estate timing better than anyone else.
The publication says that he sold his firm, Equity Office, to Blackstone Group for $39 billion back in 2007. And the timing was right. The deal was done only months ahead before credit markets in the property market became haywire.
He could be making the same business decision once again. Sam Zell's real estate fund, Equity Residential, is said to have arranged to let go of 23,000 apartment units. The said units, which represent more than 20 percent of the firm's portfolio, will be handed over to Starwood Capital for $5.4 billion. And in the near future the fund is planning to sell 4,700 more units. As for the proceeds, they will be returned to the firm's investors in the form of dividends in 2016.
Equity Commonwealth, which is also being overseen by Zell, has sold 82 office assets amounting to $1.7 billion since February 2015. But it doesn't not stop there. Zell's firm wants to raise another $1.3 billion which it intends to achieve by selling off more of their assets.
But why is Zell selling off properties. As mentioned earlier, timing is crucial in the real estate industry. Therefore, according to Business Insider, Zell is simply implying that "it is time to sell." And he could be right especially after the recent overwhelming rise in the value of real estate. And while prices are high, selling may be a good idea as investors might be very happy that they are receiving a bigger return on their investment.
And Steven Roth, CEO of Vornado Realty Trust has reacted by saying, "The easy money has been made in this cycle... this is a time when the smart guys are starting to build cash."
But the choice is still up to the properties owners to either cash in or wait longer.
