Mitsubishi misfortune signals end of great Japanese spree

Nobody in New York welcomes the news that the Rockefeller Center, one of the city's proudest landmarks, has descended into bankruptcy. But there has been a tinge of schadenfreude to the reaction here - the Japanese, who once seemed unstoppable in their investment binge in America, have been humbled.

The move was confirmed on Thursday by the Mitsubishi Estate Company, which holds 80 per cent of the partnerships that own the complex along with the Rockefeller family itself, which has the remaining 20 percent. Citing a "deep and prolonged recession" in the New York property market, the Japanese blamed falling rents and the precipitate drop of the dollar against the yen.

Mitsubishi has indicated that it is not planning to sell its interest in the Center, built in the aftermath of the Great Depression. Rather, it seems, the company is hoping for breathing space in which to negotiate new terms with creditors.

The difficulties of Mitsubishi in New York represent another turn in a remarkable reversal of fortunes over recent months for high-profile Japanese investments in the US.

It was not long ago when it seemed that no symbol of national prestige in America was not vulnerable to the Japanese shopping spree. A famous building here, a Hollywood studio there. They even took control of a major league baseball side.

Now, with the balance sheets of the big Japanese corporations suddenly looking altogether less healthy, thanks again in part to currency strains, the picture in the US is a bit different. In their enthusiasm for acquisition, it seems the Japanese bit off more than they could chew.

The first sign of Japanese indigestion came in November with a confession by the mighty Sony Corporation that it was being forced to make a huge write-off on the value of Sony Pictures Entertainment, the progeny of its famous buy-out of Columbia Pictures in 1989, at a cost of $3.4bn (£2.1bn).

Sony is still a leading force in Hollywood. Matsushita, however, is not. Just last month, Japan's consumer electronics behemoth agreed to sell 80 per cent of its prize studio and recording enterprise, MCA, to Seagram, the Canadian beverage company, for $5.7bn.

In Hollywood, the hot currency of industry gossip these days is not Japanese but American - what will Seagram do with MCA and whither the daring new Dreamworks SKG studio, forged last year by Steven Spielberg, Jeffrey Katzenberg and David Geffen? In New York, the property world is absorbing news also unveiled last week that the all-American Disney Company has agreed to develop a retail and entertainment hub on Times Square.

At the Rockefeller Center, Mitsubishi has suffered a cash shortfall from rental revenues of $623m as of March. Moreover, the value of the complex itself is far below the $1.4bn paid by the company in 1989.

Nobody, though, is gloating in public about Mitsubishi's misfortunes. "I don't think it's fair to laugh - this is so complicated," Warren Wechsler, vice president of the Real Estate Board of New York, said.

The collapse of the dollar coupled with rock-bottom Japanese interest rates could, theoretically, encourage some Japanese investors to try again in the US. Analysts believe that for now, however, the Japanese will keep their wallets closed.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Sales Executive / Foreign Exchange Dealer - OTE £40,000+

£16000 - £40000 per annum: Recruitment Genius: A Foreign Exchange Dealer is re...

SThree: Experienced Recruitment Consultant

£20000 - £40000 per annum + OTE + Incentives + Benefits: SThree: Established f...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40/45k + INCENTIVES + BENEFITS: SThree: The su...

Recruitment Genius: Collections Agent

£14000 - £16000 per annum: Recruitment Genius: This company was established in...

Day In a Page

Refugee crisis: David Cameron lowered the flag for the dead king of Saudi Arabia - will he do the same honour for little Aylan Kurdi?

Cameron lowered the flag for the dead king of Saudi Arabia...

But will he do the same honour for little Aylan Kurdi, asks Robert Fisk
Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Humanity must be at the heart of politics, says Jeremy Corbyn
Joe Biden's 'tease tour': Could the US Vice-President be testing the water for a presidential run?

Joe Biden's 'tease tour'

Could the US Vice-President be testing the water for a presidential run?
Britain's 24-hour culture: With the 'leisured society' a distant dream we're working longer and less regular hours than ever

Britain's 24-hour culture

With the 'leisured society' a distant dream we're working longer and less regular hours than ever
Diplomacy board game: Treachery is the way to win - which makes it just like the real thing

The addictive nature of Diplomacy

Bullying, betrayal, aggression – it may be just a board game, but the family that plays Diplomacy may never look at each other in the same way again
Lady Chatterley's Lover: Racy underwear for fans of DH Lawrence's equally racy tome

Fashion: Ooh, Lady Chatterley!

Take inspiration from DH Lawrence's racy tome with equally racy underwear
8 best children's clocks

Tick-tock: 8 best children's clocks

Whether you’re teaching them to tell the time or putting the finishing touches to a nursery, there’s a ticker for that
Charlie Austin: Queens Park Rangers striker says ‘If the move is not right, I’m not going’

Charlie Austin: ‘If the move is not right, I’m not going’

After hitting 18 goals in the Premier League last season, the QPR striker was the great non-deal of transfer deadline day. But he says he'd preferred another shot at promotion
Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

How Isis profits from destruction of antiquities

Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

'If we lose touch we’ll end up with two decades of the Tories'

In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea
Tunisia fears its Arab Spring could be reversed as the new regime becomes as intolerant of dissent as its predecessor

The Arab Spring reversed

Tunisian protesters fear that a new law will whitewash corrupt businessmen and officials, but they are finding that the new regime is becoming as intolerant of dissent as its predecessor
King Arthur: Legendary figure was real and lived most of his life in Strathclyde, academic claims

Academic claims King Arthur was real - and reveals where he lived

Dr Andrew Breeze says the legendary figure did exist – but was a general, not a king
Who is Oliver Bonas and how has he captured middle-class hearts?

Who is Oliver Bonas?

It's the first high-street store to pay its staff the living wage, and it saw out the recession in style
Earth has 'lost more than half its trees' since humans first started cutting them down

Axe-wielding Man fells half the world’s trees – leaving us just 422 each

However, the number of trees may be eight times higher than previously thought
60 years of Scalextric: Model cars are now stuffed with as much tech as real ones

60 years of Scalextric

Model cars are now stuffed with as much tech as real ones