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.