Japanese multinationals had already bought control of Columbia Pictures, Universal Studios, CBS Music, the Seattle Mariners baseball team and the AT&T and Citicorp buildings in New York. Now Mitsubishi was buying 80 per cent of the Manhattan office complex that was virtually synonymous with American capitalism, the Rockefeller Center.
Four years later, Mitsubishi's dollars 1.37bn (pounds 940m) 'coup' looks like one of the worst real estate deals on record, rivalling such disastrous projects as Olympia & York's Canary Wharf building in London.
Mitsubishi's share of the centre's operating losses since 1989 is estimated at almost dollars 200m. And early next year, with the New York property market almost certain still to be mired in recession, leases on half the centre's 6.2 million square feet of office space will come up for renewal.
Not that the 50-year-old complex, which boasts the headquarters of such corporate giants as Time Warner, Exxon and McGraw-Hill, will have trouble filling the space. 'Despite its age, Rockefeller Center has a prestige which defines it as a first-class location,' one veteran New York agent said.
But 1994 was to have been the watershed for the centre's cash flow, when income from 12 of the centre's towers was finally to have exceeded mortgage payments to Rockefeller Center Properties, the real estate investment trust created eight years ago to allow the Rockefeller family to distribute cash among its many members.
The going rate for office space, however, is now roughly half the dollars 74 a square foot that was expected when the buildings were mortgaged to the trust in 1985. The jump in rents was to have increased revenues to dollars 312m by 1995; instead the centre, which was expected to have almost broken even last year, lost dollars 50m, with only the prospect of deepening losses as new lower-rate leases come into force.
'The fact that cash flow from the buildings would not meet mortgage payments for several years was expected by Mitsubishi,' said Catherine Cresswell, a property trust specialist with Alex Brown & Company in New York. 'What is out of line is that the new rents will be dramatically lower, rather than higher, as everyone predicted at the time.'
That so much of the floor space should roll over at once dates back to the original deal John D Rockefeller struck in 1929 with Columbia University, then the owner of the midtown tract.
The oil baron had leased the property, planning to build an opera house. But the stock market crash left him with a suddenly onerous rent and tax bill, and he decided instead he needed revenue-generating buildings, which he cleverly marketed as 'an example of urban planning for the future'.
The Rockefellers spent dollars 135m building the 12 modern buildings between 1931 and 1940, but Columbia University continued to own the underlying land, limiting their ability to offer long-term leases to the centre's tenants.
They finally bought the land the year before they mortgaged the centre to the investment trust, but the expiry of many tenants' leases had been negotiated to coincide with 21-year extension signed with Columbia in 1973, in the midst of the last New York property recession.
The 1985 mortgage and, four years later, the sale of most of the centre to Mitsubishi subject to that mortgage, looked like ill-considered and even unpatriotic acts by a weakened dynasty at the time. But the Rockefellers were able to pull more than dollars 2bn out of the property on the eve of the collapse of the Manhattan market.
'Everybody agrees the family went out at the top of the market,' said Mary Ann Tighe, a managing director of Edward S Gordon, a New York property firm.
Mitsubishi's bad timing means that it is saddled with a property worth less than its underlying mortgage, after a recent reappraisal of the 12 older buildings that valued them at dollars 1.2bn, dollars 400m below last year's assessment.
This situation has caused concern among 60,000 investors in the property trust, who have seen their dividends cut in half and now worry that Mitsubishi will try to renegotiate the mortgage, or even walk away from it.
In principle, the owners of the centre - Mitsubishi and the Rockefeller family - are to make gradually rising interest payments on the mortgage to the investment trust. But fears of a default have forced the trust to eliminate its own debts, reducing the income available for distribution as dividends to the trust investors.
The trust has had to sell its other assets to pay down its borrowings, losing another source of dividend income. The trust's managers, after reporting lower operating income for the second quarter last week, predict that the dividend - which stood at dollars 1.92 last year - will now have to be cut further next year, perhaps to less than 75 cents.
But Edward Fontaine, the chief executive of the trust and a former employee of the centre's owners, says a default by Mitsubishi would be expensive and therefore highly unlikely. The owners would forfeit a dollars 200m letter of credit and lose dollars 175m in tax breaks, and of course lose any long- term interest in what is probably America's best-known business address.
'We have a long-term view,' Horiharu Yamada, the vice-president of Mitsubishi Real Estate, told one reporter last month. 'The market is not so good, but everybody has to be patient.'
But even the Japanese can lose their patience when it comes to the American commercial real estate market, analysts point out. And the Rockefeller Center deal, unlike many of the long-term investments they made in the US during the 1980s, could even rob them of the chance to benefit from an eventual recovery in office rents.
In the year 2000, the property trust has the option of converting its loan into a 71 per cent ownership position in the centre.
'After suffering years of losses, just when the market will finally be in a position to reward the patience of the centre's owners, Mitsubishi may instead be evicted,' one property analyst said.
'The timing, once again, couldn't be worse for the Japanese. Two years ago, everyone was lamenting the sale of a piece of America's patrimony. Now everybody is sorry the Japanese didn't buy more.'
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