DEAL TOY: A PIECE OF THE ROCK
In 1989, a Japanese conglomerate overpaid for Rockefeller Center. Are Chinese investors making similar mistakes?
WHEN THE CONGLOMERATE
Mitsubishi Estate struck a deal to take control of Manhattan’s Rockefeller Center in late 1989, it capped a decade of gogo acquisition of U.S. trophy assets—firestone Tire & Rubber, Columbia Pictures and plum real estate—by Japanese corporations. This deal, struck just weeks before Japan’s stock market cratered, would prove hubristic, landing the iconic building complex in bankruptcy.
2. cashing out, cashing in
owned by the rockefeller family for decades, the buildings became a liquidity spigot in 1985, when dozens of heirs extracted $1.3 billion from them via a mortgage held in a publicly traded real estate investment trust. in 1989, the family opted to cede control, selling an 80% share of holding company rockefeller Group to Mitsubishi for $1.4 billion.
3. Buyer’s Remorse
bullish on america, Mitsubishi envisioned eventual rock Center rents of $100 per square foot (they were about $33 when the deal closed), but a sharp early-’90s U.s. real estate recession dictated otherwise. in 1995, Mitsubishi defaulted on the complex’s mortgage, sparking a bidding war for control among billionaires david rockefeller (John Jr.’s son), Jerry speyer and sam Zell (as well as 28-yearold agitator bill ackman).
a year later, the victor was a consortium led by rockefeller, commercial-property giant Tishman speyer and Goldman sachs. in 2000, Tishman speyer and Chicago’s Crown family bought rockefeller Center outright for $1.85 billion.
1. child of the depression
built on derelict Midtown Manhattan land leased in late 1929 from Columbia University, rockefeller Center was planned as the home of the Metropolitan opera. as the depression began to bite, though, John d. rockefeller Jr. (son of the original oil titan) boldly shifted focus.
selling standard oil shares at heavy losses, rockefeller personally covered three-quarters of the $125 million construction cost ($2.1 billion today) to erect a 12-building art deco masterpiece that employed 40,000 construction workers through the tumult of the early 1930s.
4. Second time AS farce?
Today foreign buyers are once again looking to park their cash in prestige Manhattan properties. Three years ago, the unheralded Chinese conglomerate anbang insurance Group inked a startling $1.95 billion deal for the Waldorf-astoria hotel. The deal is part of a new wave of asian money. since 2014, according to dealogic, companies from China have plowed $100 billion into U.s. assets.