ROCKEFELLER CENTER PROPERTIES AND RCP ASSOCIATES SEEK FINANCIAL
NEW YORK, May 11, 1995 -- Rockefeller Center
Properties and RCP Associates, two partnerships that own the twelve original
buildings at Rockefeller Center, announced today that because of the impact of the
deep and prolonged recession in the New York real estate market, they have requested
protection under the provisions of Chapter 11 of the United States Bankruptcy
Code in a petition filed today in the U.S. Bankruptcy Court in New York.
The partnerships said that this action will enable them to develop a
reorganization plan that will be in the best interests of the creditors,
tenants and employees of the properties and will ensure that the properties
will remain a vital element in New York City's economy for many years to come.
The partnerships are owned by Rockefeller Group, Inc.
The filing involves only these two partnerships. No other part of Rockefeller Group,
Inc. is affected.
In 1985 the two partnerships borrowed $1.3 billion from Rockefeller Center
Properties, Inc. (RCPI), a publicly held real estate investment trust. Rental
income from Rockefeller Center declined because of the severely deteriorating
market for office space in the real estate market of the 1990s. Consequently,
the cumulative cash shortfall substantially exceeded original projections,
reaching $623 million.
Rental income is, and will continue to be, insufficient to cover interest on
the mortgage. Between 1995 and 2007, when the mortgage loan matures, the cash
shortfall is expected to increase by an additional $400 million.
Because this situation is not sustainable, extensive negotiations have been
conducted with the lender, RCPI. These negotiations included proposals to
acquire RCPI's outstanding public shares as well as to renegotiate the terms
of the mortgage loan. Because no agreement could be reached, the only
available decision was to seek protection under the bankruptcy code in order
to restructure the partnerships' debt.
The partnerships stated that, "In the past 10 years, the owners have
invested in excess of $300 million in capital improvements to keep Rockefeller
Center as the premier commercial real estate property in New York and the
pre-eminent international business address."
"The result of this significant financial support is evident in the state of
the art technology and quality of services and amenities throughout the
60-year old architectural masterpiece."
"The orderly resolution of the financial burdens now facing the property
will allow us to ensure the Center's long term future. In the interim, it is
anticipated that the quality of services provided to current and prospective
tenants will be unaffected," the partnership stated.
ADDITIONAL BACKGROUND INFORMATION
Who are the parties filing?
Rockefeller Center Properties and RCP Associates are the two partnerships
that are filing. These partnerships are the legal owners of the property.
The buildings affected are: the GE Building, the NBC Studio Building, the GE
Building West, 1270 Avenue of the Americas, the Associated Press Building, the
International Building, the British Building, La Maison Francaise, One
Rockefeller Plaza, Ten Rockefeller Plaza, the Simon & Schuster Building, and
600 Fifth Avenue (the Lower Plaza and other parcels).
Why is Chapter 11 the only solution available?
Rental income from Rockefeller Center declined because of the severely
deteriorating market for office space in midtown Manhattan in the real estate
market of the 1990s. The cumulative cash shortfall substantially exceeded
original projections, reaching $623 million in March of 1995. The New York
City real estate market is not expected to sufficiently recover to offset the
What is Chapter 11?
The provisions of Chapter 11 provide two important benefits: first, Chapter
11 stops creditors from seeking repayments until a restructuring plan is
adopted; second, chapter 11 protects the company and its employees by
requiring "business as usual." The partnerships, RCP and RCP Associates, will
prepare a reorganization plan with due consideration given to all involved
How long will it take to develop a plan?
The partnerships intend to proceed expeditiously and look forward to working
constructively with all constituencies to develop a plan of reorganization.
We cannot at this time provide a time frame.
How will the reorganization affect the tenants?
How will the reorganization affect the employees?
Everyone will be paid with court approval.
To date, how much have the partnerships lost on the property?
In March of 1995, the cumulative shortfall was $623 million.
Will rental income continue to be insufficient to cover the partnerships
The New York City real estate market is not expected to sufficiently recover
to offset the partnerships' interest payments.
What is the expected shortfall?
Between 1995 and 2007, when the mortgage loan matures the shortfall is
expected to increase an additional $400 million.
When did negotiations begin with RCPI?
The parties have been involved with negotiations since the beginning of the
summer of 1994.
What other options did the partnerships propose to RCPI before
filing for bankruptcy?
The parties' negotiations included proposals to acquire RCPI's outstanding
public shares as well as to re-negotiate the terms of the mortgage loan.
Because no agreement could be reached, the only remaining option was to seek
protection under the bankruptcy code in order to restructure the partnerships'
How many millions have the partnerships invested in capital
improvements to Rockefeller Center over the past ten years?
The partnerships have invested in excess of $300 million. This significant
capital investment is evident in the state of the art technology and the
quality of services and amenities throughout this 60-year-old complex.
How will the bankruptcy affect the quality of service provided to
It is anticipated the quality of services will not be affected.
Rockefeller Center Properties and RCP Associates Backgrounder
In 1985, Rockefeller Center Properties and RCP Associates borrowed $1.3
billion from Rockefeller Center Properties, Inc. (RCPI), a real estate
investment trust (REIT). Funds for the REIT were raised from the public by
the issuance of common stock and convertible debentures. The stock is listed
on the New York Stock Exchange. As collateral for this loan, RCPI holds a
mortgage on the 12 landmarked buildings comprising the original Rockefeller
Center. The partnerships are owned by Rockefeller Group, Inc. (RGI).
RGI, a privately held corporation with interests in real estate, real estate
services, entertainment and telecommunications, has five subsidiaries. They
include: Rockefeller Center Management Corporation, Rockefeller Center
Development Corporation, Rockefeller Group Telecommunications Services, Inc.,
Cushman & Wakefield, Inc. and Radio City Music Hall Productions, Inc. RGI
also holds 100 percent ownership interest in the Time & Life Building and a 55
percent interest in the McGraw-Hill Building. None of these subsidiaries or
properties are subject to the RCPI mortgage loan.
Ownership of The Rockefeller Group is held by Rockefeller family trusts
established in 1934 by John D. Rockefeller, Jr. and by the Mitsubishi Estate
Co. (MEC), a major developer and property owner in Japan.
On October 30, 1989, MEC agreed to pay $846 million to acquire a 51 percent
stake in RGI. Over the next two years, MEC made an additional investment of
$527 million to increase its total interest to 80 percent. The remaining 20
percent is held by the Rockefeller family trusts.
Beginning in the early 1990s and continuing today, global real estate values
have experienced one of the longest and most severe declines in history.
Among the hardest hit regions has been the New York City commercial office
market, where Rockefeller Center is a major player.
For the Center this downturn occurred at a time when 40 percent of the
leases in the REIT properties subject to the mortgage, nearly 3 million square
feet of space, were due to expire on September 30, 1994. Even though
Rockefeller Center management successfully secured approximately 2.2 million
square feet of that space by the end of 1994, it was forced to do so at market
rents which fell far below the figures needed to continue to meet the Center's
mortgage obligations. Consequently, the cumulative cash shortfall
substantially exceeded original projections, reaching $623 million. As a
result, rental income is, and will continue to be insufficient to cover
interest on the mortgage. Between 1995 and 2007, when the mortgage loan
matures, the cash shortfall is expected to increase by an additional 400
The total rental income from the property will not significantly increase in
the years ahead because most of the space in the Center is subject to leases
that won't expire for 10 to 15 years. Given these factors, it is expected
that between the years 1995 and 2007, when the REIT loan matures, the cash
shortfall will increase by another $400 million.
Facing these realties, the shareholders of RGI -- Mitsubishi Estate and the
Rockefeller family trusts -- began in early 1994 exploring various ways to
maintain the financial viability of the investment.
Having exhausted the options available, the partnerships -- Rockefeller
Center Properties and RCP Associates -- filed for relief from creditors under
the provisions of Chapter 11 of the U.S. Bankruptcy Code.
It is the intention of the partnerships to restructure their debt and
emerge with a vital business.
NBC Studio Building
GE Building West
1270 Ave. of Americas
Associated Press Building
La Maison Francaise
One Rockefeller Plaza
Ten Rockefeller Plaza
Simon & Schuster Building
600 Fifth Avenue
Lower Plaza and other parcels.
Background on Chapter 11
GIVING BUSINESSES A FRESH START
Through many changes over many years, the bankruptcy code of the United
States has become a way for companies facing financial difficulties to find a
way to get a fresh start.
Relief under the code means that a business entity has the time to
restructure its finances and reorganize its obligations in a way that allows
it to emerge a strong and viable business.
Under the law, debts owed at the time of filing are stayed by the court
until a plan or reorganization can be developed and approved by all interested
parties. Until then, the business entity does not have the pressure of those
creditors seeking payment or by having some creditors gain advantage over
others by acting first.
Expenses that arise after the date of filing that are necessary to keep the
business going are paid under court supervision and approval. Because the law
recognizes that wages, salaries and other operating expenses are necessary to
keep the business going, and because the intent of the law is to preserve the
business while financial problems are being addressed, the courts generally
support the proper and current payment of post-filing obligations.
In other words, the employees and suppliers can be assured they will be paid
while the business restructures its finances.
With the court's permission, the existing management becomes the "debtor in
possession" to maintain the continuity of the business, through
debtor-in-possession financing arrangements with banks and financial
institutions as well as the revenues from the business.
In most cases, the business entity's management is given an exclusive period
of time to propose a plan for reorganization. This plan amounts to a contract
between the business and its creditors that establishes the timing, method and
amount of payment to satisfy creditor claims.
The business must assure the court and the creditors through a disclosure
statement that it can meet that commitment through future earnings and cash
The reorganization plan is presented to creditors and the court for
When the bankruptcy process works as the law intends, a fundamentally
healthy business that has significant financial problems can work through
those problems and emerge as a healthy, viable business.
PROPERTY OWNED BY ROCKEFELLER GROUP, INC.
ROCKEFELLER CENTER Year Number Rentable area (sq. ft.)
GE 1933 69 1,875,779
NBC Studio 1933 10 384,592
1250 Avenue of
the Americas 1933 16 151,687
1270 Avenue of
the Americas 1932 32 389,091
Associated Press 1938 16 389,091
International 1935 40 1,034,139
British Empire 1933 9 102,669
La Maison Francaise 1933 9 104,794
One Rockefeller Plaza 1937 35 470,729
Ten Rockefeller Plaza 1939 17 291,495
Simon & Schuster
(and Addition) 1940 21 600,374
600 Fifth Avenue 1952 29 355,312
Additional property 28,421
PRESS STATEMENT ON BEHALF OF MINORITY SHAREHOLDERS OF RGI
NEW YORK, New York--May 11, 1995--The Minority Shareholders of RGI, comprised
primarily of the Rockefeller Family Trusts,
disassociate themselves and the Rockefeller family from the decision to have the
partnerships that own Rockefeller Center file bankruptcy papers. The bankruptcy
decision was made solely by the Mitsubishi Estate
Company (MEC), which owns 80% of RGI. Although as Minority Shareholders the
Rockefeller Family Trusts have had no control over this decision, they have
repeatedly voiced strong opposition to this course of action.
Since February of 1994, the Committee responsible for oversight of the
Trusts, and the Committee's advisors, have developed and discussed with MEC a
host of options short of default for dealing with the cash flow problems at
Rockefeller Center. These have included: (1) maintenance of the status quo;
(2) a buyout of the REIT in concert with MEC; and (3) a third-party investor
approach that would have relieved MEC of its stake in the partnerships and of
all future responsibility for the property. The Trust Committee continues to
view all of these alternatives as clearly superior to default, both on
economic and noneconomic grounds.
From the beginning, the Trust Committee has been willing to contribute to a
buyout of the REIT on a fully pro-rata basis, and then to go beyond that.
In commenting on MEC's action, Dr. William G. Bowen, who is chairman of the
Rockefeller Trust Committee, expressed his "intense disappointment that all of
our efforts to resolve this problem have been rejected." Speaking on behalf
of the Trust Committee, Bowen commented: "We disassociate ourselves and the
Rockefeller Family from this extremely short-sighted and unwise decision. The
Trust Committee has full confidence in the future of Rockefeller Center, which
is without question one of the greatest real estate properties in the world.
The current financial difficulties faced by Rockefeller Center are short-term
"We believe that this unique set of buildings and spaces will long remain a
most attractive investment as well as an extraordinary cultural asset for the
people of New York, including the millions of visitors from all over the world
who come to Rockefeller Center every year. Knowledgeable investors are agreed
that the recent strengthening of Manhattan's Midtown office market augurs well
for the prospects of Rockefeller Center. Because of our great confidence in
its future, we have asked our advisors to explore other ways in which the
Trusts might continue to retain an ownership interest in the Center."
/CONTACT: Kurt P. Ross or Guy B. Lawrence, both of K.P. Ross, Inc.,
212-308-3333, or fax, 212-207-8096/