Real estate market legend left a plan for EGI, maintaining focus on long-term investments and avoiding leverage. His legacy continues with Mark Sotir
Billionaire Sam Zell ensured that his company’s legacy would be preserved before his passing. The current president of Equity Group Investments (EGI), Mark Sotir, revealed that the founder had drawn up a succession plan for the company. Zell, who passed away in May 2023, became known as a real estate legend after selling his portfolio of office buildings to Blackstone for US$39 billion, one of the largest transactions in history.
According to the president, Zell adopted a similar approach to the succession plan as mega-investor Warren Buffett, focusing on long-term investments. EGI prefers to keep the management of the companies it acquires intact, maintaining the companies for long periods, sometimes decades. “I hate leverage, just like Zell,” says Sotir.
Furthermore, the company never resorted to forming investment funds. The capital invested comes from its founder’s fortune, estimated at $5.2 billion by Forbes at the time of his death. While Sotir did not disclose specific details, he did mention that EGI typically issues checks ranging from $50 million to $150 million, sometimes up to $500 million. This capital is used to acquire companies that meet the investment criteria.
With a portfolio made up of 19 companies, Equity Group Investments, a private equity firm founded in 1968, covers a variety of sectors. In addition to real estate, the portfolio includes a chain of hospitals, a group of John Deere dealers, transportation and logistics companies, as well as a hydraulic fracturing company. Since Sotir and Zell began working together in 2006, they decided to diversify their investments and explore new segments beyond real estate.
“I feel satisfied that I don’t have to constantly chase money,” shares Sotir, 60 years old. “I’m trying to achieve the best of both worlds.”
However, the plan also includes the possibility for EGI to challenge its own history by seeking like-minded investors such as family offices and sovereign wealth funds. “Sam was encouraging me to explore raising capital,” reveals Sotir.
Legendary dealer
Zell’s death at age 81 deprived the world of a great negotiator and Sotir of a mentor. Zell was known as “the grave dancer” for his ability to profit from distressed assets. He popularized real estate investment funds in 1993. His legendary status was cemented in 2007 when he sold a portfolio of office buildings to Blackstone for $39 billion, marking one of the biggest real estate deals ever.
While Zell’s strength was in doing business, Sotir’s expertise is in operations. Born in Boston, he worked for Coca-Cola and ran a software company and a car rental company. Afterwards, Zell brought him over. Sotir says he already imagined himself being CEO of one of EGI’s portfolio companies. That was 18 years ago. He found the work too fascinating to leave.
Investment criteria
In 2019, Equity Group Investments (EGI) acquired a 65% stake in Lanter Delivery Systems, an overnight car parts delivery company. Since then, CEO Steve Lanter, 65, who founded the company in 1981, has seen earnings before interest, taxes, depreciation and amortization (EBITDA) quadruple. Now, the American company is ready to expand into Canada.
“We were on a pretty decent growth trajectory from 2015 to 2018,” says Lanter. He says he met with several private equity firms before closing the deal with EGI.
What made Lanter’s company an attractive target for EGI was its business model. What she did was “basic for the economy,” says Sotir, and “it wouldn’t be stopped tomorrow morning. I literally place the order at 5pm and it arrives at 6am.”
Another important criteria for EGI was “literally” Steve Lanter.
“Steve is a good person. It is well aligned with who we work with and what we do. He has relationships with customers. This is a crucial point about why it is so important to work with landlords. If Steve had come to us and said, ‘We’re selling the company, auction it to the highest bidder and I’m leaving,’ we wouldn’t have done this deal.”
The feeling was mutual. In their first meetings, Lanter was impressed that Sotir respected the company culture and valued the work Lanter had done over the years. Sotir wasn’t going to come in and tarnish this.
