Taking control of the Rockefeller Group — and quitting the Rockefeller Center investment five years later (1990)

The weight of an acquisition never justified by its returns

What President Takagi Jotaro put at the centre of his case for the acquisition was not dividends or rents but redevelopment know-how: how the concourses beneath Rockefeller Center were joined up, how the local area network across the district was laid. He said himself that holding 51% of the shares was not a business that came out ahead on dividend income alone, so it was clear from the start that this was an investment not justified by its returns. Even so the outlay reached about ¥220 billion, and the book value of the ownership released five years later ran to roughly $900 million. It stands as an acquisition that asks at what scale “learning” remains an acceptable reason.

What went wrong, though, was not the explanation but the numbers. Rents that were expected to double to $60–70 per square foot at the 1994 renewals stopped at $30–40, and a market with 20% vacancy persisted. Mitsubishi Estate said it had had an entirely unrelated institution investigate, that it had tapped the stone bridge before crossing — but what it tapped was the counterparty’s character, perhaps, and not the rent forecast. The Rockefeller Group itself remained in hand after the withdrawal, and the Marunouchi rebuilding that had been the object of the lesson broke ground in 1999.