Zell Seeking to Offer Stock in Mobile Homes

Real estate tycoon Sam Zell is turning to Wall Street for cash to pay off a series of loans about to come due.

Zell, known as “the grave dancer” for his ability to buy failing companies cheap and turn them around quickly, is seeking federal approval to sell a major stake in his mobile-home parks business to the public and to issue mortgage-backed securities.

John Tuccillo, chief economist for the Washington-based National Assn. of Realtors, said Zell is following many other businesses in trying to adjust to changes in bank lending practices.

“A lot of companies are now looking for some sort of capital market financing,” Tuccillo said. “In the current climate, you’re seeing more refinancing.”

Over the last few years, banks and insurance companies have cut back significantly on lending for real estate ventures because of falling real estate prices and the glut of troubled developments on the books of failed savings and loans. Equity offerings have become one of the few options for raising capital.

Under a plan filed with the Securities and Exchange Commission, Zell proposes selling to the public a 64% stake in Manufactured Housing Communities Inc., a Chicago-based operator of mobile-home parks in 16 states. The offer, being underwritten by Merrill Lynch & Co., would raise as much as $115 million.

Zell was unavailable for comment. He told the Wall Street Journal in an interview in Wednesday’s editions that he made the moves to position his business for future expansion--not because he was concerned about refinancing debt.

“As we look out into the 1990s, the historical methods under which a guy like me would own real estate have changed,” he said.

Zell took his Delta Queen Steamboat Co. public earlier this year, raising $45 million. He raised $50 million by going public with Vigoro Corp., a fertilizer company.

His Zell-Chilmark Fund made a $40-million offer for financially troubled Schwinn Bicycle Co. this month, but Chicago-based Schwinn called it low and rejected it.

Newspaper reports said Zell paid $518 million in debt in 1992 and is expected to pay another $539 million when it comes due in 1993 and 1994.