Mitsubishi Quits Famed Property, Zell-GE-Disney Move For Control
NEW YORK (AP) _ The Japanese company that controls Rockefeller Center abandoned its stake today under a deal that would transfer title of the famed office complex to a group including some giants of U.S. industry.
If successful, the deal would end the center’s four-month odyssey in bankruptcy court and mark the most striking retreat by a major Japanese company from an American investment.
It also would spell the end of any ownership role by the Rockefeller family, a dynasty of American capitalism that made the 12-building midtown Manhattan landmark an icon of power and prestige.
Poised to enter the fray is a group led by investor Samuel Zell, who has built a fortune by acquiring distressed real estate; General Electric Co. and its National Broadcasting Co. subsidiary; and the Walt Disney Co.
Rivals, however, were still lurking.
Rockefeller Group Inc., controlled by Mitsubishi Estate Co., announced a plan to surrender the Art Deco property to Rockefeller Center Properties Inc., the trust that holds its $1.3 billion mortgage. The trust would own the property in partnership with the Zell investors.
``It’s a little bit surprising that it’s come to this, that they’re willing to walk away without slogging it a little further through the bankruptcy,″ said Wayne Teetsel, an analyst at B.D.S. Securities Corp. in New York, a brokerage firm.
Rockefeller Center Properties said today it signed a final agreement with the group led by Zell, which would invest $250 million in the property. An initial deal inked last month called for the Zell group to be roughly 50-50 partners with Rockefeller Center Properties.
Further muddying the waters, the investment house Goldman Sachs & Co. filed documents with the Securities and Exchange Commission today outlining a plan to rival the Zell investment.
Goldman and a partnership would buy $100 million of newly issued Rockefeller Center Properties stock in addition to pumping in up to $150 million in cash through future purchases and by underwriting stock sales.
The filing included a letter to Rockefeller Center Properties dated Monday outlining the offer. Goldman is a major holder of securities convertible into the trust’s common shares.
Stephanie Leggett Young, vice president and secretary of Rockefeller Center Properties, said the trust only received the Goldman offer this morning and the board will review it as it does all serious offers.
Regardless, it appeared competing bids for investments in Rockefeller Center Properties, or RCPI, would not easily scuttle the owners’ decision to give up their stake in the center.
``What we’re doing with RCPI is not contingent upon Zell,″ said Albert Togut, an attorney representing the center’s bankrupt partnerships.
GE and NBC, among the most famous tenants of the center, reached an agreement in principle to join the Zell investment group, according to a statement by Rockefeller Center Properties released today.
Disney is included in the Zell group, which has said that the entertainment giant has its eye on managing or leasing Radio City Music Hall, a 5,874-seat theater that is one of the prime tourist destinations in the center.
The center also is known among New Yorkers and visitors from around the world for its annual Christmas tree lighting and a jewel-box of a skating rink.
Meantime, Rockefeller Center Properties said that in light of the uncertainties surrounding the bankruptcy court proceedings, it is suspending dividend payments for the third quarter.
Rockefeller Center Properties shares rose 50 cents to $7.62 1/2 in late afternoon trading on the New York Stock Exchange.
The swirl of announcements surrounded a bankruptcy court hearing on the property’s future.
``The transaction would permit us to restore the financial health of Rockefeller Center by reducing its debt load and strengthening its capital structure,″ said Peter D. Linneman, chairman of Rockefeller Center Properties.
Japanese companies including Mitsubishi invested huge sums in real estate during the 1980s, when prices were high and affluent investors from Japan were pouring money into everything from Hollywood studios to American golf courses.
Some Americans saw the 1989 Rockefeller Center purchase as an affront to the nation’s pride and a symbol of U.S. economic decline.
As real estate prices fell, however, real estate investors had trouble paying their bills. That was true for Rockefeller Center’s owners, who sought bankruptcy court protection on May 11.
In Tokyo, Mitsubishi Estate’s president, Takeshi Fukuzawa, today denied the company is surrendering on U.S. investments.
``This is not a withdrawal″ Fukuzawa said. He noted Mitsubishi is keeping its interests in the nearby Time-Life and McGraw Hill buildings.
Mitsubishi Estate, owns 80 percent of Rockefeller Group, with the Rockefeller family trusts owning the remainder.
``When we made this investment, we considered it carefully. But if we were to let the situation continue as it is, RGI’s position would have become difficult. On reconsideration, unfortunately, we couldn’t find any other way but to sell the 12 buildings,″ Fukuzawa said.
The center is home to the headquarters of The Associated Press, the NBC television unit of GE, Simon & Schuster and other high-profile businesses.