Wall Street Journal - May 22, 2000
Rockefeller Center Is Put Up for Sale In the Booming New York City Market
By PETER GRANT Staff Reporter of THE WALL STREET JOURNAL
NEW YORK -- The group that owns Rockefeller Center is putting the landmark on the block to cash in on its turnaround of the property and the sharp increase in real-estate values during the past five years, say people with knowledge of the complex.
Rockefeller Center Properties Inc. Trust, whose largest shareholder is Goldman Sachs Group Inc., hopes to get $2 billion to $2.5 billion from selling the Art Deco property, which includes 12 buildings and such New York icons as Radio City Music Hall and the Rainbow Room, say these people.
The group, which will market the property through Goldman Sachs, may decide to refinance rather than sell it -- but these people say chances are the complex will be sold.
The decision to sell comes at a time when many investors are rushing to market with properties they bought during the mid-1990s when real estate was still in the doldrums. This is especially true of high-risk investment vehicles that projected returns to investors exceeding 20%. One such vehicle is Goldman's Whitehall real-estate fund, which made the Rockefeller Center investment.
Sellers also are capitalizing on the high prices in markets such as New York, where rents are rising and development isn't keeping up with demand. "The people who are looking for high returns are using the favorable picture to their advantage," says Scott Latham, managing director of real-estate services company CB Richard Ellis Inc. "Why sit around and wait for the market to change?"
Others in the Rockefeller Center group include David Rockefeller, Chicago's Crown family, Italy's Agnelli family, Greece's Niarchos family and TishmanSpeyer Properties, which also has been operating the complex. A Rockefeller Center spokesman declined comment.
The group in early 1996 paid $1.2 billion for the property, which had been put under bankruptcy protection by its former owner, a company controlled by Mitsubishi Estate Co. Shortly after buying the complex, the Goldman group sold General Electric Co.'s NBC unit 1.6 million square feet in the center for $440 million.
Tishman Speyer has increased the value of the center through some glitzy deals with companies such as Christie's International PLC and Cablevision Systems Corp., which took over Radio City in a long-term lease. The complex's occupancy has risen to 94% at the end of 1999 from about 75% in 1996, while office rents have increased by more than $20, to close to $60 a square foot. The complex's income was $45.3 million in 1999, according to a Securities and Exchange Commission filing.
"It was always clear from day one that once they executed their plan, this was going to be sold," said one person with knowledge of the property.
Real-estate experts say likely buyers include German investment funds, which have acquired a number of trophy properties lately. Domestic real-estate investment trusts also may vie for Rockefeller Center, though REIT stocks are out of favor on Wall Street.
"People will look at this as a gem asset and stretch to be in the deal," said Kevin Haggarty, executive managing director of Insignia/ESG, a real-estate services firm.