Similarly, Zell doesn't think that the 2007 sale of Equity Office Properties to the Blackstone Group for $39 billion called the top of the market. He said that as a REIT chairman, his responsibility was to shareholders and to considering—and, perhaps, acting on—any offer that could boost shareholder value.

Zell famously predicted REIT-sector consolidation a number of years ago, and he reaffirmed that forecast Wednesday. For one thing, as far as Zell is concerned there are too many smaller REITs. “What do you do with a $1.5-billion REIT?” he asked. “How do you create liquidity?” The real growth in the REIT sector, he said, is with “the big ones.”

A partner with law firm Wachtell, Lipton, Rosen & Katz, Panovka reminded Zell that at a previous NYU REIT symposium, he had predicted a domestic recession and asked him whether his outlook was more optimistic this year. “I didn't think I was that pessimistic,” Zell replied, to audience chuckles. “I thought I was realistic. I think the US at the moment is doing pretty well; I don't think it's doing as well as the pundits would hope or expect. But you have to look at the United States as part of a connected, globalized world—and the rest of the world ain't doing so terrific. We can look around the world, and the first question you ask is, 'where's the demand?' ”

Two days earlier, Zell said, Nigeria revised its GDP growth projection downward from 6% to 3.2%. “For an emerging economy, that's a disaster. And that's happening all over the world.”

Zell agreed with Panovka that when a recession does occur in the US, it's likely to be milder than the 2008 financial crisis. But that doesn't mean we'll see a garden-variety downturn. “We're looking at stuff that frankly we've never seen before,” he said. “And we're trying to reach conclusions based on no previous experience. Tell me what QE2 is really going to do. And I'm sitting around trying to figure out what negative interest rates are. What's the implication? Do they think that a bank is going to pay me to borrow money from them for nothing? I don't think so.”

Zell said that from a macroeconomic standpoint, the greatest concern is that “this is the first recession since World War II where there's more debt in existence since before the recession. So instead of marking to market, as the world has always done to recover from difficult periods, we're not marking to market at all. We're just rolling up more debt.” While the private sector is in better shape debt-wise than sovereign states, the latter “are all broke,” he said. “I'm not so sure I can remain optimistic about the private sector.”

He took a dim view of the current presidential race, using the word “idiots” to characterize the contenders on both sides of the political divide and calling the incumbent President “the biggest idiot.” Donald Trump, the real estate magnate who may or may not garner the Republican nomination this summer, is “a wild card,” in Zell's view.

NEW YORK CITY—“Over the past 18 months, we looked at each asset and ask, 'Do we want to own this?' Or, more to the point, Sam Zell might have added, “Do we want to continue owning this?” Among the godfathers of the modern REIT era, Zell has been a firm believer in portfolio rationalization for most of that era.

Zell asked that question in the context of describing his organization's takeover of what was formerly CommonWealth REIT, but it could also apply more generally. “About 18 months ago we took over Equity Commonwealth, and we started with a very simple premise: any day you're not selling, you're buying,” Zell told the audience at the NYU Schack Institute of Real Estate's 21st Annual REIT Symposium, held Wednesday at the Pierre Hotel. “We looked at Equity Commonwealth's portfolio and concluded that a significant portion of its assets were assets we just didn't want to own.” About half that portfolio has since been sold, he added, and he later noted that potential acquisitions similarly are evaluated on an asset-by-asset basis.

However, Zell disputed moderator Robin Panovka's characterization of Equity Residential's recent $5.4-billion sale to Barry Sternlicht's Starwood Capital Group as a bell-ringing signal to the market. He pointed out that while EQR's portfolio consisted primarily of suburban garden-style apartments—an asset class that comprised the bulk of its sale to Starwood Capital—the company had begun moving toward a concentration in urban CBD properties as long ago as 1999.

“The Sternlicht deal just created an opportunity to end the process in one fell swoop, at a time when the pricing was very attractive,” Zell said. “So I don't think that sale was ringing any kind of bell.” On the other hand, he added, to audience laughter, “If somebody needs to hear a bell ringing in order to figure out that the market is pretty frothy, I'm in the business of selling hearing aids.”

Similarly, Zell doesn't think that the 2007 sale of Equity Office Properties to the Blackstone Group for $39 billion called the top of the market. He said that as a REIT chairman, his responsibility was to shareholders and to considering—and, perhaps, acting on—any offer that could boost shareholder value.

Zell famously predicted REIT-sector consolidation a number of years ago, and he reaffirmed that forecast Wednesday. For one thing, as far as Zell is concerned there are too many smaller REITs. “What do you do with a $1.5-billion REIT?” he asked. “How do you create liquidity?” The real growth in the REIT sector, he said, is with “the big ones.”

A partner with law firm Wachtell, Lipton, Rosen & Katz, Panovka reminded Zell that at a previous NYU REIT symposium, he had predicted a domestic recession and asked him whether his outlook was more optimistic this year. “I didn't think I was that pessimistic,” Zell replied, to audience chuckles. “I thought I was realistic. I think the US at the moment is doing pretty well; I don't think it's doing as well as the pundits would hope or expect. But you have to look at the United States as part of a connected, globalized world—and the rest of the world ain't doing so terrific. We can look around the world, and the first question you ask is, 'where's the demand?' ”

Two days earlier, Zell said, Nigeria revised its GDP growth projection downward from 6% to 3.2%. “For an emerging economy, that's a disaster. And that's happening all over the world.”

Zell agreed with Panovka that when a recession does occur in the US, it's likely to be milder than the 2008 financial crisis. But that doesn't mean we'll see a garden-variety downturn. “We're looking at stuff that frankly we've never seen before,” he said. “And we're trying to reach conclusions based on no previous experience. Tell me what QE2 is really going to do. And I'm sitting around trying to figure out what negative interest rates are. What's the implication? Do they think that a bank is going to pay me to borrow money from them for nothing? I don't think so.”

Zell said that from a macroeconomic standpoint, the greatest concern is that “this is the first recession since World War II where there's more debt in existence since before the recession. So instead of marking to market, as the world has always done to recover from difficult periods, we're not marking to market at all. We're just rolling up more debt.” While the private sector is in better shape debt-wise than sovereign states, the latter “are all broke,” he said. “I'm not so sure I can remain optimistic about the private sector.”

He took a dim view of the current presidential race, using the word “idiots” to characterize the contenders on both sides of the political divide and calling the incumbent President “the biggest idiot.” Donald Trump, the real estate magnate who may or may not garner the Republican nomination this summer, is “a wild card,” in Zell's view.