Sam Zell earned the nickname “grave dancer” for his uncanny ability to unlock value from distressed real estate opportunities. But he may be doing a jig for a completely different reason today as Equity Office Properties Trust formally considers a sweetened offer from a Vornado Realty Trust-led investor group.

Yesterday, the Chicago-based office REIT announced plans to open its books to the group, Dove Parent LLC. Equity Office has given Dove Parent until next Wednesday to deliver a definitive proposal to Equity Office’s Board of Trustees.

This saga began last Wednesday when Dove Parent made an unsolicited $21.6 billion offer for the Chicago-based office landlord. It was unclear over the weekend if Equity Office would even consider the rival bid. Back in November, private equity juggernaut Blackstone Group offered to pay $20 billion (sans debt) for the office landlord.

But this latest development, which pits several industry titans against Blackstone Group, has jeopardized the original deal. There are clearly some colorful personalities on both sides of this deal. For example, the buyout vehicle that Blackstone created to take Equity Office private is called Blackhawk. Not to be outdone, the Vornado-led group came up with Dove Parent as the name of their rival bidding party.

The dove and the hawk may soon have company as much could happen over the next few days. One Manhattan-based real estate investor who asked not to be named says it’s possible that a third bidding party could take a shot at Equity Office. Carl Icahn took an unsuccessful stab at buying office REIT Reckson Associates last year. The source wonders if someone like Icahn, perhaps even a team of bidders, might be eying this deal.

One obstacle to such a bid is Blackstone Group’s deep-roots with many lending institutions, plus the fact that half a dozen finance firms already agreed to help Blackstone buy Equity Office. That could give Blackstone a strong defensive position, says the source. Another defensive advantage: Blackstone manages billions of dollars in third party equity capital.

“Many pension funds and institutional sources of capital that are advised by Blackstone are also clients of other opportunity funds and pension fund advisors,” says the source. “These pension funds and institutional investors may not be as keen to support competing offers from other groups or advisors where they have money invested as they would be competing with themselves.”

Which deal will ultimately sway Equity Office’s board and shareholders? Much depends on whether or not Blackhawk ups the ante by meeting or exceeding the Dove bid. Most observers in Manhattan, where both Blackstone and Vornado are based, believe that the former will match the latter’s $21.6 billion offer. Once you’ve agreed to pay $20 billion, what’s another $1.6 billion really?

What’s also fascinating about this showdown is that it pits a deal-obsessed private equity firm (one of the largest buyout funds in the world) against several commercial real estate giants. Both sides have access to boatloads of capital, not to mention strong relationships within the capital markets. Steve Roth of Vornado is one of the scrappiest tycoons out there. Vornado’s market capitalization is roughly $34 billion, making it the fourth largest listed REIT in the nation, and it’s delivered 23.1% average annual returns over the past 10 years.

Roth’s partners on the deal — Barry Sternlicht of Starwood Capital and Neil Bluhm of Walton Street Capital — aren’t exactly slouches, either. Sternlicht manages a $12 billion real estate portfolio and recently closed a $3.2 billion high-end hotel portfolio deal in Europe. He was also the founder of Starwood Resorts & Hotels. Bluhm of Walton Street has bought nearly $10 billion in real estate since 1995. Unlike Vornado, which many regard as a public opportunity fund, Starwood and Walton Street are both privately held.

At stake is a roughly 100 million sq. ft. collection of office properties that ironically weren’t much loved by the public markets until the recent buyout binge began to take shape in the office market. Equity Office was not only a laggard among its peers in the listed REIT market. It was also lambasted by analysts for years over its misbegotten “bigger is better” philosophy that founder Sam Zell aggressively pushed.

Only when Equity Office began paring down its portfolio in recent years did some analysts change their negative view of the firm. Some speculated that the asset sales — which were expected to rid the firm of more than $3 billion in assets — were strategically designed to lighten the portfolio in advance of a sale.

*We’d like to hear from you. In your view, which group will win Equity Office Properties Trust? And why? Email Parke Chapman at parke.chapman@penton.com