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DENVER–Chicago-based real estate mogul Sam Zell made a whirlwind and somewhat stealth visit to Denver last week. He was one of the keynote speakers at the Association for Investment Management Research meeting, which drew about 1,000 from all around the world.

As soon as his lively and wide-ranging talk was over, he caught a plane to New York City.

Zell’s Equity Office Properties Trust is the largest office owner in the metro area, as well as the US. And his Equity Residential REIT has more than 7,000 multifamily rental units in Colorado. The local EOP office learned about Zell’s visit when contacted by GlobeSt.com.

Why did he agree to speak to a group of financial planners? “I’m an evangelist,” Zell tells GlobeSt.com.

During his hour-long talk in the Adam’s Mark Hotel, Zell said he thinks the Denver office market is soft, but is slowly getting better. He said it reminds him of a 1984 motorcycle trip to Telluride, where he saw the rising sun stream through empty office buildings.

In 40 years in the business, he said he has seen many metrics used to measure the health of real estate, and only one has withstood the test of time: replacement value.

Zell was asked why investors shouldn’t short REITs. It’s simple, Zell said. Most REITs aren’t developing at this time, so they don’t need to be overly concerned that the price of lumber, steel, concrete, insulation and everything else is going through the roof.

Indeed, that gets back to his earlier comment that the only metric worth its salt is replacement value. As it becomes more expensive to build, the replacement cost rises, thus making the underlying value of the real estate owned by REITs more valuable. And if interest rates rise because of a better economy, more jobs will be created to fill offices.

The same is true about the multifamily sector, he said. An unprecedented 80,000 apartment renters left his company’s properties last year, many of them to buy homes. They’re leaving at a time that landlords are dropping apartment rates by 15% to 20%, while in many parts of the country single-family home prices have risen by 15% to 20%.

Zell advised against private REITs and family-type real estate investments. He notes that often those partnerships take 15% or 20% off the top. “I’m not smart enough to be able to do that,” and still provide a return to shareholders, he said. “They’re toxic. Avoid them.”

When GlobeSt.com asked him what he thinks about Donald Trump’s plan to develop a luxury hotel and condominiums in his backyard on the Chicago Sun-Times site, Zell shrugged his shoulders and said: “To each his own.”

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