The rise of Rockefeller Center's skyscrapers was a symbol of hope during the Great Depression. Now a brutal real estate market has forced one of the world's premier properties to seek bankruptcy protection.
Over the objection of their American partners, the Japanese-backed owners of the art deco skyscraper complex filed for Chapter 11 bankruptcy protection Thurs-day.Mitsubishi Estate Co. said it had been unable to renegotiate the properties' $1.3 billion mortgage. Mitsubishi paid $1.4 billion for its 80 percent share six years ago, when New York's real estate market was at a peak, but the value of the purchase has dropped by as much as half.
Rockefeller Center includes the GE Building, which houses the NBC headquarters; the plaza that holds the sunken skating rink and annual towering Christmas tree; The Associated Press Building, home to the news service's world headquarters; and the Simon & Schu-ster Building.
Tenants, employees and services won't be affected by the action.
David Rockefeller, whose family owns 20 percent of the landmark in the heart of midtown Manhattan, was among the unhappy American partners.
"While we don't feel bankruptcy was the best way - in fact we think it was the least good way of dealing with the problem - we hope Mit-su-bi-shi will recognize the importance of keeping it a premier property," said Rockefeller, chairman of Rockefeller Group Inc.
At a news conference today in Tokyo, Mitsubishi Estate Co. president Takeshi Fukuzawa said the developer did not plan to sell its stake.
But Richard Scarlata, head of the company that holds the mortgage, said Mitsubishi Estate has "ample financial resources" and didn't have to seek bankruptcy protection. He said his company would seek to take ownership of the properties.
"We think it is unconscionable to attempt to take advantage of U.S. bankruptcy laws in light of Mitsubishi Estate's significant assets," said Scarlata, president and chief executive officer of Rockefeller Center Properties Inc., or RCPI.
A Chapter 11 filing allows businesses to hold off their creditors while they work out a plan to pay their debts and stay in business.
In court papers filed in U.S. Bankruptcy Court in Manhattan, the owners said the prolonged housing slump after the recession of the early 1990s left them no choice after they couldn't renegotiate the mortgage.
They said they had "experienced extended and severe cash shortfalls" totaling $623 million since 1985, including more than $50 million so far this year. The recession forced them to lower rents to keep tenants even as losses mounted, they said.
Rockefeller Center's 12 buildings are admired by many as the aesthetic heart of commercial New York.
The NBC headquarters include studios for "Today" and "Saturday Night Live," and the GE Building also is home to the famous Rainbow Room restaurant. When David Letterman's show was on NBC, he regularly turned his cameras on the skating rink, Christmas tree and throngs of tourists. The complex won landmark status in 1985.