Mitsubishi Estate Co., one of Japan's leading real estate concerns, announced here today that it has invested $846 million for a 51% stake in the Rockefeller Group, making the firm a major partner in such American icons as New York City's Rockefeller Center and Radio City Music Hall.
A spokeswoman for the Rockefeller Group said that, although the purchase gives Mitsubishi Estate controlling interest in the group, the tie-up is expected to be treated as a "partnership" without any significant changes in management objectives or personnel.
Still, the deal is steeped with symbolic significance. It marks the transfer to a foreign buyer of control over high-profile vestiges of the historic Rockefeller family's economic might, built by the legendary John D. Rockefeller in the late 19th Century through his powerful Standard Oil trust.
Mitsubishi Estate's purchase follows a string of acquisitions of landmark U.S. properties by Japanese investors. In downtown Los Angeles, Mitsubishi Estate is one of the developers of the Citicorp Plaza high-rise complex at 8th and Figueroa streets, and Japanese investors have acquired other big chunks of prime real estate elsewhere in Los Angeles, New York and other major U.S. cities.
The Mitsubishi-Rockefeller deal also was announced amid controversy over other conspicuous Japanese investments in the United States, including Sony Corp.'s re cent agreement to buy Columbia Pictures for $3.4 billion. It is not clear whether the Rockefeller deal will engender the same kind of negative backlash, however, because the mechanics of the transaction appear to differ from many of the recent Japanese acquisitions.
Rather than directly purchasing property, Mitsubishi Estate obtained 627,000 shares of common stock in the Rockefeller Group, which was privately held by various Rockefeller family trusts controlled by an independent trust committee. The group owns and manages 14 office buildings in New York, including Rockefeller Center.
Alan Woodhull, a real estate analyst for Merrill Lynch Japan Inc. in Tokyo, said the fact that Mitsubishi Estate purchased shares in the buildings, rather than the properties themselves, might serve to shield the company from criticism that it is "buying the heart of America," one of the charges leveled at Sony during the highly emotional reaction to its planned Columbia takeover.
Daniel Burstein, the New York author of "Yen: Japan's New Financial Empire and Its Threat to America," raised similar points, adding that the form of the purchase "is a response and reflection on the Japanese side that Americans don't want the perception that their companies and businesses are being sold lock, stock and barrel to Japanese investors."
"I think that's a very intelligent and sane approach. The money is going to come to this side of the Pacific. That's sort of inevitable. The question is: What is the way to (invest) that doesn't get American backs up?"
Amy Trotta, spokeswoman for the Rockefeller Group, said that a 51% stake in the group was sold to Mitsubishi Estate because that was the amount of the shares that needed to be sold off to meet the "fiduciary duties" of the Rockefeller family trust, which had too much capital concentrated in one part of its holdings.
With the purchase, however, Mitsubishi Estate apparently indirectly acquired only a 14.5% share in Rockefeller Center. The Rockefeller Group divested itself of 71.5% of the center in 1985 in a public offering of shares, and it retained only a 28.5% interest at the time of the Mitsubishi deal, according to Trotta.
"There is no business address in the world that has the same cachet as Rockefeller Center," Jotaro Takagi, president of Mitsubishi Estate, said in a statement.
The 56-year-old Rockefeller Center is a 19-building, 22-acre Art Deco complex that includes such landmarks as the Radio City Music Hall and the old RCA building, now known as 30 Rockefeller Plaza. The center, opened during the Depression, has been immortalized in songs, such as George and Ira Gershwin's 1937 ditty, "They All Laughed," which goes: "They all laughed at Rockefeller Center, now they're begging to get in."
Rockefeller Group's holdings include Rockefeller Center Management Corp., which runs Rockefeller Center; Rockefeller Center Development Corp., which owns developments in New York and New Jersey, and Rockefeller Group Telecommunications Services, which provides telecommunications services for tenants of Rockefeller Center and other customers.
In addition, Rockefeller Group owns Radio City Music Hall Productions, an entertainment production company that not only stages the annual Christmas spectacular at Radio City Music Hall but also planned such extravaganzas as the anniversaries of the Eiffel Tower and the U.S. Constitution.
Another holding is an 80% interest in New York-based Cushman & Wakefield Inc., one of the nation's largest real estate brokerage firms.
The Rockefeller family empire dates to John D. Rockefeller, America's first billionaire, who was born in 1839 in modest circumstances. He rose from a job as a bookkeeper to build what became known as the Standard Oil trust, which eventually was broken up in 1911 by the U.S. Supreme Court.
John D. Rockefeller's son, John Jr., went on to build Rockefeller Center. The Rockefeller Group that has held the center has been controlled by the trusts that John Jr. established in 1934 to provide for his six children and their descendants, now numbering about 85.
Forbes magazine recently estimated the family's fortune at more than $5 billion.
Mitsubishi Estate is a member of the Mitsubishi Group, one of Japan's leading conglomerates, and is the custodian of much of the vast landholdings assembled by the former zaibatsu , as pre-World War II family-owned industrial monopolies are known.
Mitsubishi typifies the business practices--interlocking directorates, cross-shareholdings and tight group loyalties--that are currently being criticized by U.S. officials as posing structural impediments to free trade with Japan. Mitsubishi and five other major financial-industrial combines together control 25% of the Japanese economy, according to a report issued earlier this year by the Japan Fair Trade Commission.
Sales for the real estate company in the fiscal year ended March 31 were about $2 billion, while after-tax profits totaled $250 million.
Staff writers Teresa Watanabe and Stuart Silverstein in Los Angeles and John J. Goldman in New York contributed to this story.