Zell, Disney Seeking Rockefeller Center
With the Broadway Stores Inc. and Capital Cities/ABC Inc. deals barely out of the headlines, real estate tycoon Sam Zell and Walt Disney Co. said Wednesday that they have joined forces in a bid to eventually take over New York’s famed Rockefeller Center.
An investment group headed by Zell and including Disney has tentatively agreed to invest $250 million in an effort to gain control of the landmark, whose owners have filed for bankruptcy protection.
The Zell group plans to invest the money in Rockefeller Center Properties Inc., which holds the $1.3-billion mortgage on Rockefeller Center. Rockefeller Center Properties will transform itself into a new company owned equally by the Zell group and its current investors.
Zell, who also controls Los Angeles-based Broadway Stores, earlier this week agreed to sell the department store chain to Federated Department Stores Inc. He will receive about $200 million in Federated stock if the acquisition is completed.
The Zell investment is a major boost for Rockefeller Center Properties and its fight to take control of the 12-building complex in mid-town Manhattan. The owners of the landmark property--Mitsubishi Estate Co. and Rockefeller family trusts--filed for Chapter 11 bankruptcy protection from creditors in May after being unable to meet their mortgage payments to Rockefeller Center Properties.
“You have seen some fairly sophisticated real estate people [Zell’s group] today essentially agree that RCP is likely to receive something close to full payment on this mortgage or take over this property,” said Les Nelkin, a securities analyst at Furman Selz, a New York-based brokerage house.
RCP shares rose 37.5 cents to $6.875 on the New York Stock Exchange on Wednesday. The stock traded as high as $22.50 in the late 1980s.
While Disney is playing a prominent role in revitalizing New York’s Times Square, the Burbank-based entertainment giant said it has no plans to take an active role in the operation of Rockefeller Center if a takeover is completed. “It’s simply a place to put in cash . . . nothing else,” said Disney spokesman John Dreyer.
Disney’s contribution would account for only about 10% of the Zell group’s investment in Rockefeller Center Properties, according to those familiar with the deal. Ironically, Disney, which has agreed to buy ABC, would end up owning a piece of rival NBC’s headquarters at Rockefeller Center.
The deal was announced two days after Rockefeller Center Properties said it was also in danger of falling into bankruptcy. The company’s income is derived from mortgage payments on Rockefeller Center, which have been halted in the wake of the bankruptcy filing by Mitsubishi and the Rockefeller family trusts.
The company will eventually submit a plan on how it would resolve Rockefeller Center’s financial problems to a bankruptcy judge in New York, according to Rockefeller Center Properties spokeswoman Stephanie Leggett Young.
“The ultimate goal here is to . . . take title to the property,” she said.
However, the owners of Rockefeller Center are expected to present their own financial reorganization plan next month.
