Walking away from an investment of nearly $2 billion, Mitsubishi Estate Co. is expected to announce today a plan to relinquish its 80% ownership of New York's Rockefeller Center, a source said Monday.
The proposal would not only end Mitsubishi's majority ownership in the storied office complex, which has been mired in bankruptcy court since early May, but it would eliminate the Rockefeller family's stake in the 12-building center.
Rockefeller Group Inc., the parent of two partnerships that own the center, is expected to disclose at a court hearing a plan to turn over the center to the trust that holds its $1.3-billion mortgage, an adviser familiar with the transaction told the Associated Press.
The center's owners believe the publicly traded real estate investment trust, Rockefeller Center Properties Inc., will support the plan, said the adviser, who spoke on condition of anonymity.
Mitsubishi purchased a controlling interest in Rockefeller Center in 1989 in a sale that triggered widespread resentment against the foreign ownership of American landmark properties in the wake of a Japanese buying binge of prime U.S. real estate.
But the Japanese investors, whose property holdings include several downtown Los Angeles skyscrapers, have suffered major losses after the U.S. commercial real estate market fell into a deep slump in the early 1990s.
After waiting for a turnaround that has been slow in coming, Japanese investors have been selling off their U.S. real estate holdings or have been forced into foreclosure. The Japanese selloff of U.S. properties could reach as high as $10 billion this year, according to a survey by E&Y Kenneth Leventhal Real Estate Group.
Rockefeller Center was placed in Chapter 11 bankruptcy protection in May by Mitsubishi after the complex, which includes Radio City Music Hall, lost more than $600 million in New York's depressed real estate market.
Mitsubishi also stopped making mortgage payments to Rockefeller Center Properties, which is trying to foreclose on the center. The owner has said the 6.2-million-square-foot property is estimated to be worth "under $900 million."
Mitsubishi's reported plan to walk away from the property came after the company had also been contemplating an auction and other reorganization plans to avoid an estimated $200-million tax liability if it loses the property.
Meanwhile, Rockefeller Center Properties has tentatively agreed to team up with Chicago real estate investor Sam Zell. A Zell-led investment group that includes Walt Disney Co. would end up owning half of the property in exchange for an investment of $250 million in Rockefeller Center Properties.