ROCKEFELLER CENTER PROPERTIES AND RCP ASSOCIATES SEEK FINANCIAL RESTRUCTURINGNEW YORK New York, state, United States
New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of , May 11 /PRNewswire/ -- Rockefeller Center Properties and RCP (networking, tool) rcp - (Remote copy) The Unix utility for copying files over Ethernet. Rcp is similar to FTP but uses the hosts.equiv user authentication method.
Unix manual page: rcp(1). 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 bankruptcy court n. the specialized Federal court in which bankruptcy matters under the Federal Bankruptcy Act are conducted. There are several bankruptcy courts in each state, and each one's territory covers several counties. in New York.
The partnerships said that this action will enable them to develop a reorganization plan A scheme authorized by federal law and promulgated by the president whereby he or she alters the structure of federal agencies to promote government efficiency and economy through a transfer, consolidation, coordination, authorization, or abolition of functions. 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 RCPI Royal College of Physicians of Ireland
RCPI Regional Community Policing Institute
RCPI Radio Communications of the Philippines, Inc.
RCPI Research for Communication & Public Involvement ), 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 NBC
in full National Broadcasting Co.
Major U.S. commercial broadcasting company. It was formed in 1926 by RCA Corp., General Electric Co. (GE), and Westinghouse and was the first U.S. company to operate a broadcast network. 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 Simon & Schuster
U.S. publishing company. It was founded in 1924 by Richard L. Simon (1899–1960) and M. Lincoln Schuster (1897–1970), whose initial project, the original crossword-puzzle book, was a best-seller. 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 New York City: see New York, city.
New York City
City (pop., 2000: 8,008,278), southeastern New York, at the mouth of the Hudson River. The largest city in the U.S. real estate market is not expected to sufficiently recover to offset the shortfall.
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 parties.
How long will it take to develop a plan?
The partnerships intend to proceed expeditiously ex·pe·di·tious
Acting or done with speed and efficiency. See Synonyms at fast1.
ex 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 interest payments?
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' debt.
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 REIT
See: Real Estate Investment Trust
See 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 New York Stock Exchange (NYSE)
World's largest marketplace for securities. The exchange began as an informal meeting of 24 men in 1792 on what is now Wall Street in New York City. . 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 Ragnar Granit Institute
RGI Resource Group International
RGI Regional Geographical Initiative
RGI Reactant Gas Inlet ).
RGI, a privately held corporation Noun 1. privately held corporation - a corporation owned by a few people; shares have no public market
close corporation, closed corporation, private 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 Radio City Music Hall
New York City’s famous cinema; home of the Rockettes. [Am. Hist.: NCE, 2338]
See : Theater 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 MEC Ministério da Educação (Ministry of Education)
MEC Ministerio de Educación y Ciencia (Spain: Ministry for Education and Science)
MEC Mountain Equipment Co-Op ), 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 million.
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 Adv. 1. in other words - otherwise stated; "in other words, we are broke"
put differently , 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 debtor in possession n. in bankruptcy proceedings when a debtor has filed for the right to submit a plan for reorganization or refinancing under Chapter 11, and the debtor is allowed to continue to manage his/her/its business without an appointed trustee, that debtor " 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 Plan for reorganization
A plan for reorganizing a firm during the Chapter 11 bankruptcy process. . 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 flow.
The reorganization plan is presented to creditors and the court for approval.
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.) Opened of Stories 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 (1955) 600 Fifth Avenue 1952 29 355,312 Additional property 28,421 TOTAL 6,189,499 -0- 5/11/95 R
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