Martin Sumichrast

Japan’s most prestigious real estate company, Mitsubishi Estate Co., is expected to press ahead with its over­seas investment strategy of putting its money into “prime cities (and) prime loca­tions” in 1990, a spokesman says.

The spokesman, who speaks for the compa­ny but is not directly employed by Mitsubishi Estate, said he was not aware that the company currently was seeking new major investments in the United States, but, he said, “I think, clearly, their whole invest­ment strategy overseas will be prime cities, prime locations.”

In an interview with Real Estate Perspectives, the spokesman said Mitsubishi, with its acquisition of 51 percent of the Rockefeller Group for $846 million, was more interested in gaining experience in urban renewal, managing 14 office buildings in New York, and developing the Rockefeller’s vacant lot on 7th Avenue, than just in the Rockefeller Center.

The spokesman noted that there was a pub­lic offering involving the New York City Rockefeller Center in 1985.

“Investors have the right in the year 2000 to convert their securities to 71. 5 percent in Rockefeller Center. Certainly Mitsubishi Estate was well aware of those conditions .. . so if things proceed as they theoretically should, they (Mitsubishi) will end up with 51 percent of 28.5 percent.”

“So obviously in setting the price, they were looking at what other properties are there,” the spokesman said. “I think foremost in their mind, they saw these undeveloped properties, as well as some other interesting pieces of Rockefeller property.”

“They see themselves as developers of busi­ness centers,” the spokesman said. “They have stated their intention earlier to do that in the world’s major financial centers -Tokyo, New York and London” and usually with foreign partners. Developments in California and Oregon were done with Prudential and Morgan Stanley, he said.

So far, Mitsubishi only has some small hold­ings in London, perhaps indicating the British capital as a future target. The spokesman said he had no information about that.

In particular, the vacant lot on New York’s 7th Avenue and 49th Street drew Mitsubishi’s interest, the spokesman said. The property is adjacent to Rockefeller Center, and some development plans for a 57-story building already have been made. The building will be called Rockefeller Plaza West and cover 1.6 million square feet.

Final approval is expected from the city of New York in February 1990, with construction to begin in January 1991 and a completion target of 1993. Current plans call for the new skyscraper to be connected to an underground concourse that would allow walkers to reach the 19 other Rockefeller Center buildings.

The spokesman said Mitsubishi was approached this year when the Rockefeller Group was looking for a partner to help develop the 7th Avenue property. About the same time, the Rockefeller family trust people also were in the market for someone to buy into the Rockefeller Group. In the course of negotiations, both schemes came together.

“The timing (of the Rockefeller-Mitsubishi purchase announcement) was determined by the seller,” the spokesman said, and it came shortly after some adverse reaction to the Sony Corp.’s purchase of Columbia Pictures. Newsweek suggested that Sony “had bought a piece of America’s soul.”

Martin Sumichrast

Mitsubishi would have been happier to delay the announcement, but reporters got wind of it. “We had hoped to withhold the whole thing until early next year,” Mitsubishi Estate President Jyotaro Takagi said in an interview that appeared in the Sunday Mainichi news­paper in Japan. Earlier reports in the Wall Street Journal of the impending deal circulated in Tokyo, and reporters started paying nightly visits to the homes of Mitsubishi officials, triggering the early announcement.

Mitshubishi is one of Japan’s largest busi­nesses with interests in shipping, banking, real estate, mining, car manufacturing, heavy industrial equipment, office machinery, insur­ance, chemicals, oil, and other areas.

One hundred years ago, the Japanese gov­ernment, in some financial difficulty, per­suaded Mitsubishi to buy about 108 acres of marshy, undeveloped land near the Imperial Palace in Tokyo. The price was five times the going rate elsewhere in the capital, and people suggested that Mitsubishi President Yanosuke Iswasaki was a little odd.

That property today forms Tokyo’s downtown Marunouchi business district and is worth bil­lions. Mitsubishi still owns most of it except for the part it sold back to the government for the construction of Tokyo Station, a major rail, subway and shopping center.