Chicago billionaire Sam Zell’s Equity LifeStyle Properties has just been hit with a US$111 million jury verdict against it in a case against it in California, where it owns a mobile-home park in San Jose.
One of its partnerships has been hit with a double whammy of US$15.3 million in compensatory damages and a whopping US$95.8 million in punitive damages in the trial.
The jury awarded the money of residents of the mobile home park who had filed a lawsuit which claimed that Equity LifeStyle failed to maintain their property properly, including proper provision of utilities leading to outages at the mobile home park called California Hawaiian.
Sam Zell obviously disagrees and EquityLifestyl CEO Marguerite Nader said after the verdict last week “We will vigorously seek to overturn them in the trial court or on appeal, including but not limited to asking the trial judge to grant a new trial and to reduce the grossly excessive damages.” While Zell serves as a director and sits on the board, the senior shareholder constituencies today are mostly made up of institutions and mutual funds.
The lawsuit was filed by residents at 42 of the 418 home site occupants at California Hawaiian had joined the suit, at the mobile home park which was set up originally in the nineteent sixties. Today the park is 100 percent occupied.
Equity LifeStyle is actually the nation’s largest mobile-home park owner, even though this would not be the first thing that comes to mind when one thinks of Sam Zell, with more than 140, 000 home sites in 379 properties spread across more than 30 US States, as well as in British Columbia. The company has a current market capitalization on the New York Stock Exchange of US$3.4 billion, and the shares have more than doubled since 2009.
The attraction for a real estate investor can be a steady yield on the original land costs with, in some cases where urban development later advances towards them, possibilities for very substantial upside later once more intensive development should take place.