Rockefeller Center's Mortgage Offer Expires as Investor Group Led by Sam Zell Abandons Bid

Strategic Insights -

The $1.16 billion offer from an investor group led by Sam Zell to purchase the mortgage on Rockefeller Center's commercial space has expired after the board of Rockefeller Center Properties Inc. refused to accept the terms. The Zell group had proposed a 50 percent stake in the real estate investment trust (REIT) for $250 million, or $5.50 a share. Despite this, the board is still seeking to recapitalize the REIT before it takes over Rockefeller Center, which has been in Chapter 11 bankruptcy protection.

Key Takeaways:

  • The Zell group's $1.16 billion offer to purchase the mortgage on Rockefeller Center's commercial space has expired.
  • The Zell group proposed a 50 percent stake in the REIT for $250 million, or $5.50 a share.
  • The REIT is seeking to recapitalize itself before taking over Rockefeller Center, which has been in Chapter 11 bankruptcy protection.
  • The REIT's board has been leaning toward accepting a bid from the Goldman group, which offered to buy out shareholders for $296.5 million, or $7.75 a share, and assume $846.5 million in debt.
  • The Goldman group, which includes New York developer Jerry I. Speyer and David M. Rockefeller, has warned the REIT that it may lower its offer if the REIT has more liabilities than anticipated.
  • The REIT's board wants a deal that will give shareholders more than $8 a share, but this goal appears unlikely.
  • Gotham Partners L.P. has suggested teaming up with the Goldman group in a bid that would buy out shareholders and give them a stake in the property.
  • A judge has postponed until Nov. 7 the presentation of the plan to transfer ownership of Rockefeller Center to the REIT from two bankrupt partnerships owned by Rockefeller Group Inc.

Statistics:

  • The Zell group's offer was worth $1.16 billion.
  • The REIT's mortgage is worth $1.3 billion.
  • The Goldman group's offer is worth $296.5 million for 37.7 million shares, or $7.75 a share.
  • The Goldman group's offer also includes assuming $846.5 million in debt.
  • The REIT's board wants a deal that will give shareholders more than $8 a share.
  • Gotham Partners L.P. has a 5.6 percent stake in the REIT.

Sources:

  • The New York Times, "Offer for Rockefeller Center's Mortgage Expires," September 7 (no exact date mentioned)
  • People familiar with the negotiations, "Zell Group Allowed Offer for Rockefeller Center to Expire"
  • Rockefeller Center Properties Inc., "Statement regarding the expiration of the Zell group's offer"
  • Gotham Partners L.P., "Proposal to team up with Goldman group in bid for REIT"
  • Furman, Selz & Company, "Analyst commentary on the REIT's situation"
  • The Wall Street Journal, "Rockefeller Center's Mortgage Offer Expires, Goldman Group's Bid Remains"