JAPANESE TO BUY 51% OF ROCKEFELLER CENTER (2024)

TOKYO, OCT. 31 (TUESDAY) -- Japan's largest real estate company today announced that it will acquire a controlling interest in Rockefeller Group Inc., which owns Rockefeller Center and other buildings in midtown Manhattan, for $846 million. Mitsubishi Estate Co. said it will buy from various Rockefeller family trusts a 51 percent stake in Rockefeller Group, a privately held real estate firm that also owns telecommunications and entertainment properties, including Radio City Music Hall Productions. The Rockefeller Group's showcase property is Rockefeller Center, the heart of Manhattan's midtown office district. An ice skating rink and holiday retail displays draw thousands of tourists every Christmas. The group controls 19 buildings in and around the center, including Radio City Music Hall, the GE Building (formerly the RCA Building), the Exxon Building, the McGraw-Hill Building and the Warner Communications Building. It owns 15 of the buildings outright and has a majority interest in another. In 1985, the Rockefeller Group mortgaged Rockefeller Center. Under the terms of the mortgage, the group expects public shareholders will own 71.5 percent of the center starting in the year 2000. At that point, Mitsubishi Estate's stake in the Rockefeller Group will give it only a minority interest in the center. The group is planning the development of an office building on a site on Seventh Avenue and 49th Street. It is also engaged in the development of a 670-acre international trade center in Mount Olive, N.J. Rockefeller Group owns 70 percent of that development, which is expected to cost about $500 million when completed. The investment in Rockefeller Group by Mitsubishi Estate, announced simultaneously here and in Manhattan, represents one of the largest and most visible Japanese investments in U.S. real estate. It also demonstrates that Japanese firms are not backing away from investing in the United States despite the recent controversy over Sony Corp.'s $3.4 billion purchase of a major motion picture studio in particular and mushrooming Japanese investment in general. "There is no business address in the world that has the same cachet as Rockefeller Center," said Jotaro Takagi, president of Mitsubishi Estate. "It is synonymous with excellence." Takagi promised that Mitsubishi shares "with the Rockefeller family the vision of the center as a very special place and of the city itself as a world capital of business and culture." David Rockefeller, former head of Chase Manhattan Bank and captain of one of the largest family fortunes in America, and others representing the family interests also stressed that Mitsubishi will maintain amicable ties with the family and New York. "Our agreement with Mitsubishi Estate preserves the abiding commitment to Rockefeller Center and New York City, which my father made more than 50 years ago and which present generations of the family continue to feel," Rockefeller, grandson of the legendary oil man John D. Rockefeller, said in a statement. Takagi said that he hopes David Rockefeller and Richard A. Voell will remain as chairman and president, respectively, of Rockefeller Group Inc., although he expects eventually to dispatch Japanese executives to assume other posts at the company. The motivating factor for the sale was concern about the balance of the portfolios of the 14 Rockefeller family trusts, according to William Bowen, chairman of the trust committee. These trusts, established in 1934 by John D. Rockefeller, are directed by a five-member committee that includes former Federal Reserve chairman Paul A. Volcker, former Princeton University President Bowen, University of Chicago President Hannah Gray, former Harvard University treasurer George Putnam, and Robert Engel, an officer of J.P. Morgan Bank. In most endowments or trusts, real estate investments make up roughly 10 percent of overall holdings. In the Rockefeller trusts, real estate made up about half the assets prior to the agreement with Mitsubishi Estate. The portion concentrated in real estate has climbed because the value of the Rockefeller Group has nearly tripled in the past four or five years, according to Bowen. "No fiduciary who worries about the interests of other people would want half of the assets of a trust in a single investment. It's just not the prudent thing to do," Bowen said. For its part, Mitsubishi regards the purchase as a long-term investment as well as an opportunity to learn from Rockefeller and use that expertise in a major redevelopment project now planned for Tokyo, Takagi said. Raymond Pettit, senior vice president of the Rockefeller Group, said in Tokyo that the sale represents "a very fine example of international partnership." He said the Rockefeller Group had considered about 10 real estate companies, including some in Europe and the Middle East, before beginning serious talks with Mitsubishi Estate in May. Mitsubishi Estate Co. is one of Japan's oldest and biggest real estate firms, responsible for developing the Marunouchi district that has become part of Tokyo's financial center. It is loosely affiliated with the electronics, trading, heavy industry, shipbuilding and other companies that bear the same name. According to a company spokesman, Mitsubishi Estate Co. is Japan's largest real estate company, with more than $2 billion in revenue and $269 million in profits for the year ended March 1989. The Mitsubishi purchase continues a trend of increasing Japanese interest in U.S. real estate. The interest has been spurred by the purchasing power of the yen compared with the dollar, by huge cash reserves built up through Japan's trade surplus with the United States and by phenomenally high land prices in Japan. According to U.S. Commerce Department statistics, Japan's stake in U.S. real estate increased from $744 million in 1984 to more than $10 billion by the end of 1988. Overall direct investment, including in manufacturing companies, increased from $16 billion to a total of $53 billion during the same period, ranking Japan second behind Britain. Staff writer Steve Mufson in New York and special correspondent Shigehiko Togo in Tokyo contributed to this report.