<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
AMENDMENT NO. 2
TO
SCHEDULE 13E-3
RULE 13E-3 TRANSACTION STATEMENT
(PURSUANT TO SECTION 13(E) OF THE SECURITIES EXCHANGE ACT OF 1934)
------------------------
ROCKEFELLER CENTER PROPERTIES, INC.
(NAME OF THE ISSUER)
THE GOLDMAN SACHS GROUP, L.P., WHITEHALL STREET REAL ESTATE LIMITED PARTNERSHIP
V
AND ROCKEFELLER CENTER PROPERTIES, INC.
(NAME OF PERSON(S) FILING STATEMENT)
COMMON STOCK, PAR VALUE $.01 PER SHARE
(TITLE OF CLASS OF SECURITIES)
773102 10 8
(CUSIP NUMBER OF CLASS OF SECURITIES)
<TABLE>
<S> <C>
RICHARD M. SCARLATA DANIEL M. NEIDICH
ROCKEFELLER CENTER PROPERTIES, INC. GOLDMAN, SACHS & CO.
1270 AVENUE OF THE AMERICAS - 24TH FLOOR 85 BROAD STREET
NEW YORK, NY 10020 NEW YORK, NEW YORK 10004
(212) 698-1440 (212) 902-1000
</TABLE>
(Names, Addresses and Telephone Numbers of Persons Authorized to Receive Notices
and
Communications on Behalf of Persons Filing Statement)
--------------------------
COPIES TO:
<TABLE>
<S> <C> <C>
JOSEPH SHENKER ROBERT B. SCHUMER JONATHAN JEWETT
SULLIVAN & CROMWELL PAUL, WEISS, RIFKIND, WHARTON SHEARMAN & STERLING
250 PARK AVENUE & GARRISON 599 LEXINGTON AVENUE
NEW YORK, NY 10177 1285 AVENUE OF THE AMERICAS NEW YORK, NY 10022
(212) 558-4000 NEW YORK, NY 10019 (212) 848-4000
(212) 373-3000
</TABLE>
--------------------------
This Statement is filed in connection with (check the appropriate box):
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<S> <C> <C>
a. /X/ The filing of solicitation materials or an information statement subject to Regulation 14A
[17CFR 240.14a-1 to 240.14b-1], Regulation 14C [17 CFR 240.14c-1 to 240.14c-101] or Rule
13e-3(c) [Sec. 240.13e-3(c)] under the Securities Exchange Act of 1934.
b. / / The filing of registration statement under the Securities Act of 1933.
c. / / A tender offer.
d. / / None of the above.
</TABLE>
Check the following box if the soliciting materials or information statement
referred to in checking box (a) are preliminary copies: /X/
--------------------------
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<S> <C>
Transaction valuation* Amount of Filing Fee
$306,085,632 $61,218
/X/ Check box if any part of the fee is offset as provided by Rule 0-11 (a)(2) and identify the
filing with which the offsetting fee was previously paid. Identify the previous filing by
registration statement number, or the form or schedule and the date of its filing.
</TABLE>
<TABLE>
<S> <C>
Amount Previously Paid: $61,218
Form or Registration No.: Schedule 14A
Filing Party: Rockefeller Center Properties, Inc.
Date Filed: December 15, 1995
</TABLE>
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* For purposes of calculating fee only. This amount assumes the purchase of
38,260,704 shares of Common Stock at $8.00 per share. The amount of the filing
fee, calculated in accordance with Rule 0-11 promulgated under the Securities
Exchange Act of 1934, as amended, equals 1/50 of one percent of the value of
the Common Stock to be acquired.
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<PAGE>
This joint Transaction Statement (this "Statement") is being filed with the
Securities and Exchange Commission by Rockefeller Center Properties, Inc., a
Delaware corporation ("RCPI"), The Goldman Sachs Group, L.P., a Delaware limited
partnership ("GS Group"), and Whitehall Street Real Estate Limited Partnership
V, a Delaware limited partnership, ("Whitehall"), in connection with the filing
under the Securities Exchange Act of 1934, as amended, of a Proxy Statement.
This Statement relates to the proposed approval and adoption of an Agreement
and Plan of Merger dated as of November 7, 1995 (as amended on February , 1996
and as it may be further amended from time to time, the "Merger Agreement")
entered into by RCPI with Whitehall, Rockprop, L.L.C., David Rockefeller, Exor
Group S.A., Troutlet Investments Corporation (collectively, the "Investors"),
RCPI Holdings Inc. ("Holdings") and RCPI Merger Inc.
To effect the transactions contemplated by the Merger Agreement, the
Investors have organized Holdings and own all of the outstanding capital stock
of Holdings. Upon the terms and subject to the conditions of the Merger
Agreement, Holdings will be merged into RCPI (the "Merger") and will cease to
exist. RCPI will be the surviving corporation in the Merger, thus becoming
wholly owned by the Investors and their designees. If the Merger is consummated,
each share, par value $0.01 per share, of common stock of RCPI (a "Share")
outstanding immediately prior to the Merger, except for the Excluded Shares
referred to below, will be canceled and automatically converted into the right
to receive $8.00 per Share net to the holder in cash, without interest.
"Excluded Shares" means (i) Shares held by RCPI or any of its subsidiaries as
treasury shares, if any, (ii) Shares held by Holdings or any of its
subsidiaries, if any, and (iii) Shares held by stockholders who have not voted
in favor of the Merger or consented thereto in writing and who have properly
demanded in writing appraisal of such Shares in accordance with Section 262 of
the Delaware General Corporation Law.
Pursuant to General Instruction F to Schedule 13E-3, the information
indicated below as contained in the Proxy Statement is hereby incorporated by
reference in answer to the items of this Statement. Where substantially
identical information required by Schedule 13E-3 is included under more than one
caption, reference is made to only one caption of the Proxy Statement.
2
<PAGE>
CROSS REFERENCE SHEET
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<CAPTION>
ITEM OF SCHEDULE 13E-3 LOCATION IN PROXY STATEMENT (INCORPORATED HEREIN BY REFERENCE)
- ------------------------------------ -------------------------------------------------------------------------
<S> <C>
ITEM 1. ISSUER AND CLASS OF SECURITY SUBJECT TO THE TRANSACTION.
(a)................................. "Introduction -- General"; "The Parties -- RCPI".
(b)................................. "Introduction -- General"; "Market Prices and Dividends on RCPI Common
Stock".
(c)................................. "Market Prices and Dividends on RCPI Common Stock".
(d)................................. "Market Prices and Dividends on RCPI Common Stock".
(e)................................. Not applicable.
(f)................................. "Transactions by Certain Persons in Shares"; "Special Factors--Background
of the Merger".
ITEM 2. IDENTITY AND BACKGROUND.
This Schedule 13E-3 is being filed by RCPI, the issuer of the class of equity securities which is the subject
of this Rule 13e-3 transaction, GS Group and Whitehall.
(a) - (d)........................... "The Parties"; "Schedule I"; "Schedule II"; "Schedule III"; "Schedule
IV".
(e) - (f)........................... None of RCPI, GS Group nor any other person listed in Schedule I, II, III
or IV of the Proxy Statement during the past five years (i) has been
convicted in a criminal proceeding (excluding traffic violations or
similar misdemeanors) or (ii) was a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction and as a
result of such proceeding was or is subject to a judgment, decree or
final order enjoining further violation of, or prohibiting activities
subject to, federal or state securities laws or finding any violation of
such laws.
(g)................................. "Schedule I"; "Schedule II"; "Schedule III"; "Schedule IV".
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS.
(a)(1).............................. "Special Factors -- Background of the Merger".
(a)(2).............................. "Special Factors -- Background of the Merger"; "Special Factors --
Interest of Certain Persons in the Merger"; "The Merger -- The Merger
Agreement"; "The Merger -- The Rights Offering Agreement".
(b)................................. "Special Factors -- Background of the Merger"; "Special Factors --
Interest of Certain Persons in the Merger"; "The Merger -- The Merger
Agreement"; "The Merger -- The Rights Offering Agreement".
ITEM 4. TERMS OF THE TRANSACTION.
(a)................................. "The Merger -- The Merger Agreement"; "The Merger -- Source and Amount of
Funds"; "The Merger -- The Rights Offering Agreement"; "Special Factors
-- Borrower's Chapter 11 Case".
(b)................................. Not applicable.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
ITEM OF SCHEDULE 13E-3 LOCATION IN PROXY STATEMENT (INCORPORATED HEREIN BY REFERENCE)
- ------------------------------------ -------------------------------------------------------------------------
<S> <C>
ITEM 5. PLANS OR PROPOSALS OF THE ISSUER OR AFFILIATE.
(a) - (e)........................... "Special Factors -- Plans for RCPI After the Merger"; "Special Factors --
Certain Effects of the Merger"; "Special Factors -- Interest of Certain
Persons in the Merger"; "The Merger -- The Merger Agreement"; "Special
Factors -- Purpose and Structure of the Transaction"; "Special Factors
-- Reasons for the Transaction"; "The Merger -- The Rights Offering
Agreement".
(f) - (g)........................... "Special Factors -- Certain Effects of the Merger".
ITEM 6. SOURCES AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a)................................. "Special Factors -- Background of the Merger"; "The Merger -- Source and
Amount of Funds"; "Introduction -- Solicitation of Proxies".
(b)................................. "Special Factors -- Fees and Expenses".
(c)................................. Not applicable.
(d)................................. Not applicable.
ITEM 7. PURPOSES, ALTERNATIVES, REASONS AND EFFECTS.
(a) - (c)........................... "Special Factors -- Background of the Merger"; "Special Factors --
Purpose and Structure of the Transaction"; "Special Factors -- Reasons
for the Transaction"; "Special Factors -- Recommendation of the Board".
(d)................................. "Special Factors -- Background of the Merger"; "Special Factors -- Plans
for RCPI After the Merger"; Special Factors -- Certain Effects of the
Merger"; "The Merger -- The Merger Agreement"; "The Merger -- The Rights
Offering Agreement"; "Certain United States Federal Income Tax
Consequences of The Merger"; "Special Factors -- Purpose and Structure
of the Transaction"; "Special Factors -- Reasons for the Transaction".
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
ITEM OF SCHEDULE 13E-3 LOCATION IN PROXY STATEMENT (INCORPORATED HEREIN BY REFERENCE)
- ------------------------------------ -------------------------------------------------------------------------
<S> <C>
ITEM 8. FAIRNESS OF THE TRANSACTION.
(a) - (e)........................... "Introduction -- Voting Rights and Proxy Information"; "Special Factors
-- Background of the Merger"; "Special Factors -- Purpose and Structure
of the Transaction"; "Special Factors -- Reasons for the Transaction";
"Special Factors -- Recommendation of the Board"; "Special Factors --
Fairness of the Merger"; "Special Factors -- Opinion of PaineWebber".
(f)................................. "Special Factors -- Background of the Merger".
ITEM 9. REPORTS, OPINIONS, APPRAISALS AND CERTAIN NEGOTIATIONS.
(a) - (c)........................... "Special Factors -- Background of the Merger"; "Special Factors --
Opinion of PaineWebber"; "Special Factors -- The Douglas Elliman 1994
Appraisal; The Weitzman Concurrence Report"; "Annex C"; "Available
Information" .
ITEM 10. INTEREST IN SECURITIES OF THE ISSUER.
(a)................................. "Ownership of Common Stock"; Stephanie Leggett Young, Vice President and
Secretary of RCPI, owns two Shares, and Janet P. King, Vice President
and Treasurer of RCPI, owns no Shares.
(b)................................. "Special Factors -- Interest of Certain Persons in the Merger"; "The
Merger -- The Merger Agreement"; "Ownership of Common Stock";
"Transactions by Certain Persons in Shares".
ITEM 11. CONTRACTS, ARRANGEMENTS OF UNDERSTANDINGS WITH RESPECT TO THE ISSUER'S SECURITIES.
"Special Factors -- Background of the Merger"; "The Merger -- The Merger
Agreement"; "The Merger -- The Rights Offering Agreement"; "Special
Factors -- Plans for RCPI After the Merger".
ITEM 12. PRESENT INTENTION AND RECOMMENDATION OF CERTAIN PERSONS WITH REGARD TO THE TRANSACTION.
(a) - (b)........................... "Introduction -- Voting Rights and Proxy Information"; "Special Factors
-- Recommendation of the Board"; "Special Factors -- Vote of Directors
and Officers of RCPI".
ITEM 13. OTHER PROVISIONS OF THE TRANSACTION.
(a) - (b)........................... "Rights of Dissenting Stockholders"; "Annex D"; "Special Factors --
Fairness of the Merger".
(c)................................. Not applicable.
ITEM 14. FINANCIAL INFORMATION.
(a)................................. "Selected Financial Data of RCPI"; "Selected Financial Data of the
Property."
(b)................................. Not applicable.
ITEM 15. PERSONS AND ASSETS EMPLOYED, RETAINED OR UTILIZED.
(a) - (b)........................... "Introduction -- Solicitation of Proxies".
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
ITEM OF SCHEDULE 13E-3 LOCATION IN PROXY STATEMENT (INCORPORATED HEREIN BY REFERENCE)
- ------------------------------------ -------------------------------------------------------------------------
<S> <C>
ITEMS 16. ADDITIONAL INFORMATION.
The Proxy Statement and Annexes and Schedules attached thereto.
ITEM 17. MATERIAL TO BE FILED AS EXHIBITS.
(a)................................. Not applicable.
(b)................................. (1) Opinion of PaineWebber, Incorporated, incorporated herein by
reference from "Annex C" of the Proxy Statement.
(2) Appraisal of Real Property of Douglas Elliman Appraisal and
Consulting Division.
(3) Concurrence Report of The Weitzman Group, Inc., on the Appraisal of
Real Property of Douglas Elliman Appraisal and Consulting Division.
(4) Presentation to the Board of Directors of RCPI prepared by
PaineWebber, Incorporated dated November 7, 1995, on certain
financial analyses.
(5) Presentation to the Board of Directors of RCPI prepared by
PaineWebber, Incorporated dated December 18, 1994.
(6) Presentation to the Board of Directors of RCPI prepared by
PaineWebber, Incorporated dated September 22, 1995.
(7) Presentation to the Board of Directors of RCPI prepared by
PaineWebber, Incorporated dated October 28, 1995 for the Meeting of
the Board of Directors on October 20, 1995.
(c)................................. (1) Merger Agreement, incorporated herein by reference from "Annex A" of
the Proxy Statement.
(2) Rights Offering Agreement dated as of November 7, 1995 among RCPI,
Goldman, Sachs & Co. and Whitehall, incorporated herein by reference
from "Annex B" of the Proxy Statement.
(d)................................. Letter to Stockholders, Notice of Special Meeting of Stockholders of
RCPI, Proxy Statement of RCPI, Form of Proxy Card.
(e)................................. Section 262 of the Delaware General Corporation Law, incorporated herein
by reference from "Annex D" of the Proxy Statement.
(f)................................. Not applicable.
</TABLE>
6
<PAGE>
SIGNATURES
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, complete and correct.
Dated: February 9, 1996
<TABLE>
<S> <C>
Rockefeller Center Properties, Inc. The Goldman Sachs Group, L.P.
By /s/ RICHARD M. SCARLATA By /s/ BARRY S. VOLPERT
----------------------------------- -----------------------------------
Name: Richard M. Scarlata Name: Barry S. Volpert
Title: President and Chief Title: General Partner
Executive Officer
</TABLE>
Whitehall Street Real Estate Limited Partnership V
By WH Advisors, L.P. V, General Partner
By WH Advisors, Inc. V, General Partner
By /s/ RALPH ROSENBERG
-------------------------------------------------
Name: Ralph Rosenberg
Title: Vice President
7
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER NO.
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<S> <C> <C>
(b)(1) Opinion of PaineWebber Incorporated, incorporated herein by reference from "Annex C" of the Proxy *
Statement.
(b)(2) Appraisal of Real Property of Douglas Elliman Appraisal and Consulting Division. +
(b)(3) Concurrence Report of The Weitzman Group, Inc. on the Appraisal of Real Property of Douglas +
Elliman Appraisal and Consulting Division.
(b)(4) Presentation to the Board of Directors of Rockefeller Center Properties, Inc., prepared by +
PaineWebber, Incorporated, dated November 7, 1995, on certain financial analyses.
(b)(5) Presentation to the Board of Directors of RCPI prepared by PaineWebber, Incorporated, dated [ ]
December 18, 1994.
(b)(6) Presentation to the Board of Directors of RCPI prepared by PaineWebber, Incorporated, dated [ ]
September 22, 1995.
(b)(7) Presentation to the Board of Directors of RCPI prepared by PaineWebber, Incorporated, dated [ ]
October 28, 1995 for the Meeting of the Board of Directors on October 30, 1995.
(c)(1) Agreement and Plan of Merger dated as of November 7, 1995 among Rockefeller Center Properties, *
Inc., Whitehall Street Real Estate Partnership V, Rockprop, L.L.C., David Rockefeller, Exor
Group S.A., Troutlet Investments Corporation, RCPI Holdings Inc. and RCPI Merger Inc.,
incorporated herein by reference from "Annex A" of the Proxy Statement.
(c)(2) Rights Offering Agreement dated as of November 7, 1995 among Rockefeller Center Properties, Inc., *
Goldman, Sachs & Co. and Whitehall Street Real Estate Limited Partnership V, incorporated herein
by reference from "Annex B" of the Proxy Statement.
(d) Letter to Stockholders, Notice of Special Meeting of Stockholders of Rockefeller Center *
Properties, Inc., Proxy Statement of Rockefeller Center Properties, Inc., Form of Proxy Card.
(e) Section 262 of the Delaware General Corporation Law, incorporated herein by reference from "Annex *
D" of the Proxy Statement.
</TABLE>
- ------------------------
*Incorporated by Reference.
+Previously filed.
8
<PAGE>
CONFIDENTIAL
PROJECT PROMETHEUS
PRESENTATION TO THE BOARD OF DIRECTORS
DECEMBER 18, 1994 PAINEWEBBER INCORPORATED
<PAGE>
TABLE OF CONTENTS
Tab
---
- Offer Summary. . . . . . . . . . . . . . . . 1
- RCPI Business Review . . . . . . . . . . . . 2
- RCPI Valuation Review. . . . . . . . . . . . 3
- RCPI Pro Forma Review. . . . . . . . . . . . 4
<PAGE>
OFFER SUMMARY
- - Offer to acquire Rockefeller Center Properties, Inc. ("RCPI" or the
"Company") by Rockefeller Group, Inc. ("RGI") through a cash merger (the
"Offer")
- - Offer proposes each outstanding common share of RCPI be converted into
$6.00 in cash, subject to certain adjustments for the payment of any
dividend by the Company after December 30, 1994 and prior to closing (1)
- - Significant conditions of the Offer include, among other things:
- Formal RGI shareholder approval
- Termination of pending Goldman, Sachs refinancing
- Absence of any material adverse change
- Receipt of required regulatory clearances
- Negotiation of merger agreement
- - Offer equates to the following premiums and multiples:
RGI OFFER (1)
($ IN MILLIONS)
Aggregate Equity Value (2) $223.8
Aggregate Enterprise Value (3) 964.0
IMPLIED PREMIUMS TO RCPI
Premium (1)
-----------
Stock Price (12/16/94) $4.375 33.7%
Stock Price (30 days prior to 12/16/94) 4.375 33.7
52-Week High 8.38 (30.2)%
52-Week Low 3.75 56.0
1-year Average 5.77 1.4%
2-Year Average 6.69 (12.6)
3-Year Average 8.91 (34.3)
IMPLIED MULTIPLES TO RCPI (1)
<TABLE>
<CAPTION>
($ IN MILLIONS)
MEDIAN
---------------------------------
COMPARATIVE COMPARATIVE
IMPLIED COMPANY TRANSACTION
MULTIPLE MULTIPLES (5) MULTIPLES (6)
-------- ------------ -------------
<S> <C> <C> <C> <C>
Latest Twelve Months:
Revenues $109.8 8.78x 5.70x 7.83x
Net Operating Income (after G&A) 105.5 9.1 10.5 15.5
Funds from Operations 25.0 9.0 10.0 11.9
Net Income 24.3 9.2 19.8 24.2
Book Value 522.6 0.43 1.47 1.05
1994E FFO (4) $0.67 8.7x 9.5x N/A
1995E FFO (4) 0.58 10.1 8.9 N/A
</TABLE>
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(1) Based on $6.00 per share purchase price proposed in the Offer and adjusted
(pursuant to the Offer) for $0.15 per share dividend payment to be made on
3/31/95, prior to the estimated closing of the Offer.
(2) Based on 38,260,704 common shares outstanding on September 30, 1994.
(3) Based on aggregate equity value plus total debt and less total cash and
cash equivalents as of September 30, 1994.
(4) Based on First Call estimates as of December 1994.
(5) Based on median multiples of comparative companies (the "REIT Index" as
hereafter defined).
(6) Based on median multiples paid in five REIT acquisitions (the "REIT
Transactions"). Excludes not meaningful numbers.
-1-
<PAGE>
RCPI BUSINESS REVIEW
INDUSTRY REVIEW
- - Institutional real estate investors are becoming increasingly confident
that national and regional economies can support stronger real estate
markets (1)
- - RCPI's status as a "single-asset" mortgage REIT makes the Company a unique
entity, with default risk of mortgage payments related directly to both
Rockefeller Center property status and Midtown Manhattan real estate market
conditions
- The property's current occupancy rate is approximately 94%, which
compares favorably to the overall vacancy rate for Midtown office
buildings at the end of June 1994 of about 13.6% (1)
- - New York City's Midtown real estate market experienced a significant
downturn from 1991 through 1993; however, the following signs of improved
conditions have become evident in 1994 (1)
- Vacancy rate for Midtown Manhattan was less than 15% as of June 30,
1994
- Large Class A space for tenants over 100,000 square feet in size has
become scarce
- Transaction activity for desirable product has increased
- Rents are rising and concessions are decreasing
- Several land sales for new construction have been recently announced
- ---------------
(1) Source: June 30, 1994 Appraisal of Real Property for RCPI's collateral,
prepared by Douglas Elliman Appraisal and Consulting Division.
-2-
<PAGE>
RCPI BUSINESS REVIEW
INDUSTRY REVIEW
COMPARATIVE GROWTH ANALYSIS (LTM) (1)
[Bar Chart]
RCPI REIT INDEX(2)
REVENUE GROWTH (4.7)% 18.3%
NOI GROWTH(3) (5.2)% 24.1%
FFO GROWTH (27.6)% 24.5%
PROJECTED FFO GROWTH(4) (16.8)% (6.5)%
COMPARATIVE RATIO ANALYSIS (LTM) (5)
[Bar Chart]
RCPI REIT INDEX(2)
NOI MARGIN(3) 96.1% 54.5%
FFO MARGIN 22.8% 38.5%
GAAP NET INCOME MARGIN 22.1% 18.8%
DEBT/TOTAL MARKET CAP 81.6% 42.9%
DIVIDEND YIELD(6) 13.7% 8.2%
- ---------------
(1) Represents growth rates for the latest interim period available versus the
similar period for 1993 for RCPI and an index of Arbor Property Trust,
Beacon Properties, Carr Realty, MGI Properties, Mellon Mortgage and
Property Capital Trust (the "REIT Index").
(2) Based on median figures for the REIT Index. Excludes not meaningful
numbers.
(3) Represents net operating income after general and administrative expenses.
(4) Based on median projected 2-year annual growth in funds from operations
("FFO") from 1993 to 1995E for RCPI and the REIT Index, as per First Call.
(5) Based on latest twelve months operating results for RCPI and the REIT
Index.
(6) Represents annual indicated dividend divided by current stock price.
-3-
<PAGE>
RCPI BUSINESS REVIEW
INDUSTRY REVIEW
COMPARATIVE GROWTH ANALYSIS (1991 - PRESENT) (1)
[Bar Chart]
RCPI REIT INDEX(2)
REVENUE GROWTH (4.1)% 4.4%
NOI GROWTH(3) (4.5)% 7.3%
FFO GROWTH (15.0)% 11.0%
COMPARATIVE AVERAGE RATIO ANALYSIS (1991 - PRESENT) (4)
[Bar Chart]
RCPI REIT INDEX(2)
NOI MARGIN 96.6% 59.7%
FFO MARGIN 28.2% 30.7%
GAAP NET INCOME MARGIN 27.6% 16.2%
- ---------------
(1) Compound annual growth rates from 1991 to present for RCPI and the REIT
Index.
(2) Based on median figures for the REIT Index. Excludes not meaningful
numbers.
(3) Represents net operating income after general and administrative expenses.
(4) Based on average annual operating results from 1991 to present.
-4-
<PAGE>
RCPI BUSINESS REVIEW
MARKET REVIEW
RCPI HAS UNDERPERFORMED THE COMPARATIVE REIT INDEX AND THE S&P 500 OVER THE PAST
FIVE YEARS
[Line Graph]
Line graph showing RCPI's stock price during the period December 15, 1989 to
December 16, 1994 as compared to a REIT Index comprised of the Comparative
Companies and the S&P 500 Index
<TABLE>
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
12/15/89 - 1/1/92 - 1/1/94 -
12/31/91 12/31/93 PRESENT
-------- -------- -------
RCPI (27.2)% (56.1)% (35.2)%
REIT Index (27.2)% 7.8% (9.1)%
S&P 500 Index 19.1% 11.8% (1.4)%
- -------------------------------------------------------------------------------
</TABLE>
-5-
<PAGE>
RCPI BUSINESS REVIEW
MARKET REVIEW
RCPI HAS PERFORMED UNEVENLY AGAINST THE MARKET DURING THE LAST TWELVE MONTHS
[Line Graph]
Line graph showing RCPI's stock price during the period December 16, 1993 to
December 16, 1994 as compared to a REIT Index comprised of the Comparative
Companies and the S&P 500 Index
<TABLE>
- -------------------------------------------------------------------------------
<S> <C> <C>
12/16/93 - 01/01/94 -
12/31/93 PRESENT
------- -------
RCPI 0.0% (35.2)%
REIT Index 4.1% (9.1)%
S&P 500 Index 0.7% (1.4)%
- -------------------------------------------------------------------------------
</TABLE>
RCPI MARKET MULTIPLE ANALYSIS (1)
[Bar Chart]
RCPI REIT INDEX(2)
REVENUES 8.26x 5.70x
NOI(3) 8.6x 10.5x
TRAILING FFO 6.7x 10.0x
1994 FFO(4) 6.5x 9.5x
1995 FFO(5) 7.5x 8.9x
BOOK VALUE .032x 1.47x
- ---------------
(1) Based on closing stock prices on December 16, 1994 and latest four quarter
operating results.
(2) Based on median multiples for the REIT Index. Excludes negative and not
meaningful numbers.
(3) Represents net operating income after general and administrative expenses.
(4) Based on estimates of FFO as estimated by First Call.
-6-
<PAGE>
RCPI Business Review
M&A Market Review
PREMIUMS PAID IN SELECTED REIT TRANSACTIONS
[Bar Chart]
RCPI REIT TRANSACTIONS(2)
REVENUE 8.78x 7.83x
NOI(3) 9.1x 15.5x
FFO 9.0x 11.9x
NET INCOME 9.2x 24.2x
BOOK VALUE 0.43x 1.05x
PREMIUM OVER STOCK PRICE 33.7% 28.5%
PERFORMANCE OF RCPI VERSUS SELECTED REITS PRIOR TO ACQUISITION
[Bar Chart]
RCPI REIT TRANSACTIONS(2)
NOI MARGIN(3) 96.1% 49.2%
FFO MARGIN 22.8% 32.6%
GAAP NET INCOME MARGIN 22.1% 15.6%
- ---------------
(1) Based on implied premiums for RCPI valuation assuming: (i) RCPI operating
results for the latest twelve months ended September 30, 1994; (ii) per
share consideration paid of $5.85; (iii) 38,260,704 common shares
outstanding as of September 30, 1994; (iv) approximately $740.2 million in
total net debt.
(2) Based on median multiples paid in five REIT acquisitions (the "REIT
Transactions"). Excludes not meaningful numbers.
(3) Represents net operating income after general and administrative expenses.
(4) Based on latest twelve month operating results for RCPI for the period
ending September 30, 1994.
(5) Based on median margins and ratios for the latest twelve months prior to
each respective company being acquired.
-7-
<PAGE>
RCPI BUSINESS REVIEW
OVERVIEW
SUMMARY OF COMPANY AND PROPERTY RELATIONSHIPS
THE PROPERTY
MAJOR ASSETS
RENTABLE AREA OCCUPANCY
BUILDING (SQ. FT.)(1)(2) PERCENTAGE(2)
- -------------------------------- -------------- -------------
GE 1,874,451 98.6%
NBC Studio 384,592 100.0
GE West 151,687 100.0
1270 Avenue of the Americas(3) 388,772 83.1
Associated Press 400,277 98.1
International 1,030,900 93.0
British Empire 102,673 90.7
La Maison Francaise 104,813 99.9
One Rockefeller Plaza 471,538 85.4
Ten Rockefeller Plaza 291,519 93.3
Paramount Publishing & Addition 600,519 93.3
600 Fifth Avenue 353,296 92.9
Additional Property (4) 28,421 100.0
--------- -----
Total 6,185,458 94.6%
--------- -----
--------- -----
MAJOR LIABILITIES
$1.3 billion Participating Mortgage Loan
EQUITY OWNERSHIP
RGI: 80% Mitsubishi, 20% Rockefeller
Source: December 31, 1993 Form 10-K.
/\
| |
| |
MORTGAGE LOAN INTEREST PAYMENTS
| |
| |
\/
71.5% EQUITY OPTION
THE COMPANY
MAJOR ASSETS
$1.3 billion Participating Mortgage Loan
Base interest Rate (pre 12/31/2000): 7.725% - 8.430%
currently 8.115%
Floating interest rate thereafter (if not converted): LIBOR +
(0.25% - 1.0%)
Convertible on 12/31/2000 into 71.5% general partnership interests
MAJOR LIABILITIES
AVERAGE 12/31/93 FACE
YIELD AMOUNT (000'S)
------- --------------
Commercial Paper(5) 4.40% $225,911
Current Coupon Convertible Debenture(6) 9.23 213,170
Zero Coupon Convertible Debenture 10.23 311,334
EQUITY OWNERSHIP
Common Stock: 38,260,704 shares outstanding
- ---------------
(1) Measured in accordance with the standard for measurement promulgated by the
New York Real Estate Board in 1968.
(2) At December 31, 1993.
(3) Radio City Music Hall is included as part of this building but excluded
from the rentable area and occupancy percentage data.
(4) Including the underground concourse and lower plaza and includes the
Lindy's and Hurley's restaurant buildings.
(5) The letter of credit facility supporting the commercial paper will expire
by June 30, 1995.
(6) Coupon steps up to 13.0% from 8.0% on January 1, 1995.
-8-
<PAGE>
RCPI BUSINESS REVIEW
KEY FINANCIAL ISSUES
- - RCPI has been actively addressing both short-term and long-term issues
relating to its financial condition
- - The Company is relatively highly leveraged with a debt to market
capitalization ratio of 81.6% (1)
- - The letters of credit supporting RCPI's commercial paper will expire by
June 30, 1995
- - In order to address its liquidity issues, the Company entered into an
agreement on November 17, 1994 for Goldman, Sachs & Co. and Whitehall
Street Real Estate Limited Partnership to purchase from RCPI $225 million
of long-term debt which will permit the Company to retire its commercial
paper and reduce its interest rate swap exposure
- Refinancing includes warrants and stock appreciation rights covering
19.9% of outstanding shares
- ---------------
(1) Based on September 30, 1994 debt balances and equity market value as of
December 16, 1994.
-9-
<PAGE>
RCPI BUSINESS REVIEW
PROPERTY AND MORTGAGE REVIEW
PROPERTY AND MORTGAGE CASH FLOW SUMMARY
($ IN MILLIONS)
[Line Graph]
Line graph showing RCPI's property and mortgage cash flow summary during the
period 1991 to 2007
Mortgage(1)
OCF(2)
Equity Conversion(3)
- ---------------
(1) Mortgage payment represents mortgage loan payments due until December 31,
2000, and LIBOR of 5.25% plus 1% management fees thereafter.
(2) Operating Cash Flow (or "OCF") represents the net operating income
estimates included in the Property appraisal performed by the Douglas
Elliman Appraisal and Consulting Division dated June 30, 1994, less
interest at LIBOR on an excess capital improvement loan.
(3) Equity Conversion represents 71.5% of Operating Cash Flow.
-10-
<PAGE>
RCPI BUSINESS REVIEW
FINANCIAL FORECAST REVIEW
STAND ALONE FINANCIAL FORECAST SUMMARY (1)
<TABLE>
<CAPTION>
($ IN MILLIONS)
1991 1992 1993 1994 1995 1996 1997 1998
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total Revenue(2) $123.2 $122.4 $113.6 $109.3 $109.3 $109.3 $109.3 $109.3
Funds from Operations(3) $39.1 $39.9 $36.6 $26.7 $20.6 $18.5 $21.3 $24.2
FFO Margin 31.7% 32.6% 32.2% 24.4% 18.8% 16.9% 19.5% 22.1%
<CAPTION>
1999 2000 2001 2002 2003 2004 2005 2006 2007
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Total Revenue(2) $109.3 $110.1 $86.9 $86.9 $86.9 $86.9 $86.9 $86.9 $86.9
Funds from Operations(3) $27.6 $29.5 $29.4 $29.3 $29.2 $29.1 $29.0 $28.9 $28.8
FFO Margin 25.3% 26.8% 33.8% 33.7% 33.6% 33.5% 33.3% 33.2% 33.1%
</TABLE>
(FOR THE YEARS ENDED 12/31) PROJECTED
HISTORICAL ----------------------------
(1991 - 1993) (1994 - 2000) (2001 - 2007)
------------- ------------- -------------
Revenue CAGR (4.0)% 0.1% 0.0%
FFO $ CAGR (3.2)% 1.4% (0.3)%
Average FFO Margin 32.2% 22.0% 33.5%
- ---------------
(1) Based on the 1994 through 2007 financial forecast provided by RCPI
management (the "Stand Alone Financial Forecast"). Assumes that existing
capital structure is maintained in the future but with commercial paper
renegotiated and rolled over at 11.0% starting 6/30/95. Consummation of
the Goldman Sachs refinancing or other refinancing of existing debt is not
assumed. Also assumes no conversion of outstanding convertible debentures.
(2) Total Revenue represents mortgage loan payments from the Borrowers at a
fixed rate of 8.4% until 2000 and a floating rate (assumed at 6.62%)
thereafter.
(3) FFO represents net cash flow after interest expense and debt retirement.
-11-
<PAGE>
RCPI BUSINESS REVIEW
FINANCIAL FORECAST REVIEW
REFINANCING FINANCIAL FORECAST SUMMARY (1)
<TABLE>
<CAPTION>
($ IN MILLIONS)
1991 1992 1993 1994 1995 1996 1997 1998
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total Revenue(2) $123.2 $122.4 $113.6 $109.3 $109.3 $109.3 $109.3 $109.3
Funds from Operations(3) $39.1 $39.9 $36.6 $26.7 $3.7 $18.8 $18.1 $19.3
FFO Margin 31.7% 32.6% 32.2% 24.4% 3.4% 17.2% 16.6% 17.7%
<CAPTION>
1999 2000 2001 2002 2003 2004 2005 2006 2007
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Total Revenue(2) $109.3 $109.3 $86.1 $86.1 $86.1 $86.1 $86.1 $86.1 $86.1
Funds from Operations(3) $20.6 $20.0 $26.0 $25.9 $25.8 $25.7 $25.6 $25.5 $25.5
FFO Margin 18.8% 18.3% 30.2% 30.1% 30.0% 29.9% 29.8% 29.7% 29.6%
</TABLE>
(FOR THE YEARS ENDED 12/31) PROJECTED
HISTORICAL ----------------------------
(1991 - 1993) (1994 - 2000) (2001 - 2007)
------------- ------------- -------------
Revenue CAGR (4.0)% 0.0% 0.0%
FFO $ CAGR (3.2)% (3.6)% (1.9)%
Average FFO Margin 32.2% 16.6% 29.9%
- ---------------
(1) Based on the 1994 through 2007 financial forecast provided by RCPI
management (the "Refinancing Financial Forecast"). Assumes refinancing of
existing capital structure with $225 million in senior and subordinated
debt (including warrants and stock appreciation rights covering 19.9% of
outstanding shares).
(2) Total Revenue represents mortgage loan payments from the Borrowers at a
fixed rate of 8.4% until 2000 and a floating rate (assumed at 6.62%)
thereafter.
(3) FFO represents net cash flow after interest expense and debt retirement.
-12-
<PAGE>
RCPI VALUATION REVIEW
SUMMARY
IMPLIED VALUATION
<TABLE>
<CAPTION>
($ IN MILLIONS)
EQUITY VALUE PER SHARE VALUE (1)
------------ -------------------
<S> <C> <C>
Market Value
Current (12/16/94) $167.4 $4.38
52-Week High 320.4 8.38
52-Week Low 143.5 3.75
Book Value (09/30/94) $522.6 $13.66
Discounted Equity Valuation - Stand Alone (2) $273.9 - $403.6 $7.16 - $10.55
Comparative Transaction Valuation (3)(4) 227.3 - 588.1 5.94 - 15.37
Comparative Company Valuation (3)(5) 197.0 - 480.5 5.15 - 12.56
</TABLE>
- ---------------
(1) Per share figures are based on 38,260,704 common shares outstanding as of
September 30, 1994.
(2) Based on the Stand Alone Financial Forecast. Assumes discount rates
between 9.5% and 12.0% and terminal values of $1.3 billion (in which case
it is not economical for RCPI shareholders to convert to property holders
and the mortgage is repaid in 2007) and $2.1 billion (in which case it is
economical for RCPI shareholders to convert to 71.5% property holders in
2000).
(3) Based on latest twelve month operating results for RCPI for the period
ended September 30, 1994.
(4) Based on median comparative transaction multiples for the REIT
Transactions. Excludes high and low values and negative and not meaningful
numbers.
(5) Based on median comparative company multiples using closing stock prices on
December 16, 1994 and latest twelve-month operating results for the REIT
Index. Assumes no theoretical change of control premium. Excludes high
and low values and negative and not meaningful numbers.
-13-
<PAGE>
RCPI VALUATION REVIEW
SUMMARY
RELATIVE MULTIPLE ANALYSIS (1)
<TABLE>
<CAPTION>
OFFER PRICE COMPARATIVE COMPANIES (2) COMPARATIVE TRANSACTIONS (2)
----------- ------------------------- ----------------------------
$6.00 (3) MEDIAN RANGE MEDIAN RANGE
--------- ------ -------------- ------ ----------------
<S> <C> <C> <C> <C> <C>
Revenues 8.78x 5.70x 5.06x - 10.58x 7.83x 7.01x - 9.12x
Net Operating Income 9.1 10.5 9.6 - 13.1 15.5 8.9 - 18.6
Funds from Operations:
- LTM 9.0 10.0 7.4 - 12.1 11.9 7.0 - 14.2
- 1994E (4) 8.7 9.5 9.1 - 13.0 NA NA - NA
- 1995E (4) 10.1 8.9 8.8 - 16.3 NA NA - NA
Book Value 0.43 1.47 0.57 - 3.04 1.05 0.51 - 3.75
</TABLE>
RELATIVE RATIO AND GROWTH ANALYSIS
<TABLE>
<CAPTION>
COMPARATIVE COMPANIES COMPARATIVE TRANSACTIONS
------------------------- ----------------------------
RCPI MEDIAN RANGE MEDIAN RANGE
--------- ------ ----- ------ ------
<S> <C> <C> <C> <C> <C>
LTM FFO Margin 22.8% 38.5% 24.0% - 54.8% 32.6% 30.6% - 44.0%
Historical FFO Growth (4) (15.0) 11.0 (26.3) - 14.1 NA NA - NA
Projected FFO Growth (5) (16.8) (6.5) (40.7) - 15.9 NA NA - NA
Debt/Total Market Cap 81.6 42.9 0.0 - 61.4 NA NA - NA
Indicated Dividend Yield 13.7 8.2 6.1 - 13.8 NA NA - NA
</TABLE>
- ---------------
(1) Based on latest twelve month operating results.
(2) Based on closing stock prices on December 16, 1994.
(3) Based on $6.00 per share purchase price proposed in the Offer and adjusted
(pursuant to the Offer) for $0.15 per share dividend payment to be made on
3/31/95, prior to the estimated closing of the Transaction.
(4) Historical FFO growth represents compound annual growth from 1991 to
present for RCPI and the REIT Index.
(5) Projected FFO growth represents compound annual growth from 1993 to 1995E
as estimated by First Call.
-14-
<PAGE>
RCPI PRO FORMA REVIEW
REFINANCING ASSUMPTIONS
- - Pro forma review was conducted which assessed the effects of a refinancing
transaction proposed by Goldman Sachs (the "Refinancing")
- - Analysis calculated the financial effects of the Refinancing on RCPI
assuming December 31, 1994 closing
- - Analysis is based on the following projection assumptions
- RCPI Financial Forecasts for years ended 1994 - 2000 on a stand-alone
basis and pro forma for the Refinancing
- Includes Refinancing related fees and expenses
- - Pro forma fully diluted common share ownership
SHARE OWNERSHIP SUMMARY
(SHARES IN THOUSANDS) TOTAL % OWNERSHIP
------ -----------
RCPI Shares Outstanding 38,261 80.1%
Goldman, Sachs Stock Options (1) 9,505 19.9
------ ----
Total 47,766 100 %
- ---------------
(1) Consists of 4,156,927 warrants and 5,348,541 stock appreciation rights.
-15-
<PAGE>
RCPI PRO FORMA REVIEW
CASH AVAILABLE FOR DISTRIBUTION ACCRETION/(DILUTION) (1)(2)
<TABLE>
<CAPTION>
YEARS ENDING DECEMBER 31,
---------------------------------------------------------
1995 1996 1997 1998 1999 2000
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Stand Alone - no Goldman Sachs Refinancing 0.52 0.46 0.54 0.62 0.70 14.49
Pro Forma - with Goldman Sachs Refinancing (3) 0.60 0.60 0.60 0.60 0.60 12.12
Accretion/Dilution % 15.4% 30.4% 11.1% (3.2)% (14.3)% (19.6)%
</TABLE>
PRO FORMA CAPITALIZATION
<TABLE>
<CAPTION>
($ IN MILLIONS) PRO FORMA FOR YEARS ENDING DECEMBER 31,
STAND-ALONE ----------------------------------------------------------
1994 1995 1996 1997 1998 1999 2000
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Zero Coupon Convertible Debentures $ 326.9 $ 360.3 $ 397.1 $ 437.7 $ 482.5 $ 531.8 $ 586.2
Current Coupon Convertible Debentures 213.2 213.2 213.2 213.2 213.2 213.2 213.2
Commercial Paper 200.0 - - - - - -
Senior Debt - 129.1 101.3 70.9 35.7 0.0 0.0
Subordinate Debt - 75.0 75.0 75.0 75.0 70.1 25.5
-------- -------- -------- -------- -------- -------- --------
Total Debt 740.0 777.6 786.6 796.8 806.4 815.1 824.9
Common Stockholders' Equity 526.3 504.0 497.0 489.1 482.4 477.1 471.2
-------- -------- -------- -------- -------- -------- --------
Total Capitalization $1,305.3 $1,315.9 $1,312.7 $1,309.4 $1,306.1 $1,302.8 $1,299.2
-------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- --------
Capitalization (% of Total)
Total Debt 56.7% 59.1% 59.9% 60.9% 61.7% 62.6%63.5%
Common Stockholders' Equity 43.3 40.9 40.1 39.1 38.3 37.4 36.5
-------- -------- -------- -------- -------- -------- --------
Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
-------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- --------
</TABLE>
- ---------------
(1) Includes property value of $2.1 billion on December 31, 2000 and RCPI
equity holders convert into 71.5% of the property. Further assumes
property sale (excluding transaction costs) and liquidation of the REIT on
December 31, 2000.
(2) Cash Available for Distribution equals net income plus non-cash interest
expense less debt principal repayment. All available cash not used to pay
dividends is assumed to be used to amortize outstanding debt balances.
(3) Cash Available for Distribution for Refinancing Financial Forecast of $0.60
is equal to net income plus non-cash interest expense less debt
amortization.
-16-
<PAGE>
CONFIDENTIAL
BOARD OF DIRECTORS
CONFIDENTIAL INFORMATION PACKAGE
September 22, 1995
PaineWebber Incorporated
<PAGE>
ROCKEFELLER CENTER PROPERTIES, INC.
TABLE OF CONTENTS
I. Introduction
RCPI CURRENT SITUATION
II. Summary of Alternatives
III. Zell Transaction
IV. Goldman Proposal
V. Independent Alternative
APPENDIX
A. GOLDMAN, SACHS TERM SHEET DATED SEPTEMBER 11, 1995
GOLDMAN, SACHS 13D/A FILING DATED SEPTEMBER 18, 1995
B. LETTER OF INTENT BETWEEN RCPI, NBC AND EQUITY OFFICE HOLDINGS
DATED SEPTEMBER 11, 1995
C. ASSUMPTIONS USED IN CASH FLOW MODELS
PaineWebber Incorporated
<PAGE>
ROCKEFELLER CENTER PROPERTIES, INC.
I. INTRODUCTION -- RCPI CURRENT SITUATION
- On September 12, 1995, Rockefeller Center Properties, Inc. ("RCPI" or
the "Company") and Equity Office Holdings, L.L.C. ("Zell") executed an
Agreement and Plan of Combination (the "Zell Transaction") dated as of
September 11, 1995.
- The Zell Transaction contemplates a $250 million equity investment in
a recapitalization and deleveraging of RCPI by Zell and other
institutional investors (the "Zell Investors"). The Zell Investors
include The Walt Disney Company and General Electric and the National
Broadcasting Company. The equity investment will be increased to
$265 million in the event of a specified "consensual" transaction with
Rockefeller Center Properties and RCP Associates (collectively, the
"Borrower"). The Zell Transaction is discussed further in Tab III.
- After RCPI reached an agreement with Zell on September 12, 1995, RCPI
received by facsimile transmission a proposal from Goldman Sachs
Mortgage Company and Whitehall Street Real Estate Limited Partnership
V ("Goldman" or "Goldman, Sachs" and the "Goldman Proposal") dated as
of September 11, 1995.
- The Goldman Proposal contemplates (i) a $100 million equity investment
by Goldman, (ii) a $100 million rights offering to existing RCPI
equity holders (including Goldman) underwritten by Goldman and (iii) a
$50 million commitment by Goldman to underwrite an additional rights
offering in the next three years if desired by RCPI's Board of
Directors. The Goldman Proposal is discussed further in Tab IV.
PaineWebber Incorporated 1
<PAGE>
ROCKEFELLER CENTER PROPERTIES, INC.
INTRODUCTION -- RCPI CURRENT SITUATION
- Also on September 12, 1995, the Borrower announced its intent to
transfer ownership to RCPI (the "Transfer"), pursuant to a
reorganization plan, of the 12 landmarked buildings at Rockefeller
Center ("Rockefeller Center" or the "Property") that serve as
collateral for RCPI's $1.3 billion loan to the Borrower. The Borrower
announced its intent to enter a Transfer in both a press release and
in a verbal statement that day in Federal Bankruptcy Court.
- The Federal Bankruptcy Court established on September 12, 1995 the
following tentative dates to proceed with the proposed Transfer
between RCPI and the Borrower. These dates assume successful
negotiations with the Borrower with respect to the Transfer.
-- October 3, 1995: Filing of joint plan of
reorganization and disclosure statement by RCPI and the
Borrower
-- October 30, 1995: Hearing to consider the disclosure
statement
-- November 28, 1995: Hearing to confirm the joint plan of
reorganization. The Court warned that a bankruptcy case of
this size will probably require more than one confirmation
hearing to receive final approval of the bankruptcy plan by
the Court
- Based on the schedule outlined by the Bankruptcy Court, it is expected
that confirmation of a joint plan of reorganization would occur in
December 1995 or January 1996, although neither the timing nor the
outcome is certain.
- The purpose of this presentation is to review RCPI's current strategic
alternatives with respect to the Zell Transaction and the Goldman
Proposal. The presentation also briefly considers an "Independent
Alternative." A summary of the alternatives is provided in Tab II.
PaineWebber Incorporated 2
<PAGE>
ROCKEFELLER CENTER PROPERTIES, INC.
II. SUMMARY OF ALTERNATIVES
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
NET PRESENT VALUE PER SHARE AT VARIOUS
STRATEGIC PRIMARY PRIMARY SCENARIO DISCOUNT RATES (4)
ALTERNATIVE TAB ADVANTAGES DISADVANTAGES (3) -------------------------------------------
10% 11% 12% 13% 14% 15%
- ----------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 ZELL III - More Conservative - RCPI Share Reduced to BASE
TRANSACTION Capital Structure either 39% (Base) or 2007 $8.40 $7.66 $7.00 $6.40 $5.87 $5.39
(1) - Less Expensive Debt 30% (Alternative) 2000 $8.25 $7.90 $7.57 $7.25 $6.95 $6.67
- Strength in Borrower - 62.5% Shareholder
Negotiations Vote Required ALTERNATIVE
- Zell Interest - Practical Difficulties 2007 $7.44 $6.80 $6.22 $5.71 $5.24 $4.82
Alignment in Prepaying 2000 $7.41 $7.09 $6.80 $6.51 $6.25 $5.99
- Long Term Property Goldman Debt
Value Focus - Zell Investors Control
- Operating Expertise Over Nureit,
- Balance Sheet Subject to Independent
Flexibility Board
- Agreement Executed - RCPI Bears Goldman
- Updated Corporate Risk
Charter - Certain Bankruptcy
Court Approval Required
to Close
- Transaction Uncertainty
and Complexity
- ----------------------------------------------------------------------------------------------------------------------------------
2 GOLDMAN IV - Goldman Cooperation - Higher and Increasing BASE
PROPOSAL (2) - 50% Shareholder Vote Leverage 2007 $8.24 $7.52 $6.87 $6.29 $5.76 $5.29
Required - More Expensive Debt 2000 $8.01 $7.67 $7.35 $7.04 $6.75 $6.47
- Updated Corporate - Less Balance Sheet
Charter Flexibility ALTERNATIVE
- 18% Share Price - Goldman Debt Interest 2007 $8.03 $7.34 $6.72 $6.17 $5.66 $5.21
Premium to Zell and Equity Interest 2000 $7.85 $7.51 $7.20 $6.90 $6.62 $6.35
Transaction - Goldman Control Over
- RCPI Shareholder Nureit, Subject to
Participation/ Independent Board
Mandate
- ----------------------------------------------------------------------------------------------------------------------------------
3 INDEPENDENT V - Reduced Shareholder - Inflexible Corporate N/A N/A N/A N/A N/A N/A N/A
ALTERNATIVE Ownership Dilution Charter
- RCPI Rights Offering - Potential Inability
can be Achieved to Meet Short Term
Without Shareholder Cash Obligations
or Goldman Approval - No Operating Partner
- Triggers Goldman
Anti-Dilution
</TABLE>
(1) The Zell scenarios assume a GE/NBC credit lease financing based on current
market quotes. The ability to achieve such a financing is dependent upon
completion of a definitive agreement on terms substantially similar to the
Letter of Intent signed by RCPI, NBC and Equity Office Holdings on
September 11, 1995 which is included in Appendix B.
Zell Base Scenario assumes that Goldman receives anti-dilution protection
only on the $23 million private placement of RCPI shares to the Zell
Investors.
Zell Alternative Scenario assumes that Goldman receives anti-dilution
protection on both the RCPI and Nureit shares purchased by the Zell
Investors.
(2) Goldman Base Scenario contemplates a $200 million equity investment through
(i) a $100 million private placement to Goldman and (ii) a $100 million
rights offering to Goldman and RCPI shareholders.
Goldman Alternative Scenario contemplates a $250 million equity investment
through (i) a $100 million private placement to Goldman and (ii) a
$150 million rights offering to Goldman and RCPI shareholders.
(3) Analyses assume a sale of the property in either December 2000 or
December 2007, as detailed in Appendix C.
(4) Net present value calculated as of January 1, 1996. Discussion of discount
rate theory in footnotes to Financial Summary in Tabs III and IV. Other
assumptions set forth in Appendix C.
PaineWebber Incorporated 3
<PAGE>
ROCKEFELLER CENTER PROPERTIES, INC.
SUMMARY OF ALTERNATIVES -- DEBT STRUCTURE
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
($ IN MILLIONS)
NUREIT ASSUMED
STRATEGIC INDEBTEDNESS ON ASSUMED INTEREST 1996 DEBT REQUIRED
ALTERNATIVE TAB JANUARY 1, 1996 AMOUNT RATE SERVICE (8) AMORTIZATION
- ----------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C> <C> <C> <C>
1 ZELL TRANSACTION BASE III GE/NBC Credit Lease Financing (3) $355.0 7.25% (6) $25.6 27 Years (9)
SCENARIO (1) Commercial Bank Loan (Chemical) 344.0 8.25% 28.4 None
------ ---- ----
TOTAL/WEIGHTED AVERAGE $699.0 7.74% $54.0
- ----------------------------------------------------------------------------------------------------------------------------------
2 GOLDMAN PROPOSAL BASE IV Whitehall Debentures $ 75.0 (4) 14.00% $10.5 None
SCENARIO (2) Third Party Debt 300.0 9.50% (7) 28.5 None
Zero Coupon Convertible Debentures 360.3 (5) 10.22% 36.8 Accretes
------ ---- ----
TOTAL/WEIGHTED AVERAGE $735.3 10.31% $75.8
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
CONSIDERATIONS
- - On December 31, 2000, total debt is projected to be $887 million under the
Goldman Proposal Base Scenario and $673 million under the Zell Transaction
Base Scenario, a $214 million differential.
- - The Zell Transaction debt structure provides for $148 million of cumulative
interest savings (including accrued interest) over the next five years.
- - In 2001, the Zell Transaction Base Scenario debt structure is projected to
allow for 2.3x debt service coverage as opposed to 1.6x under the Goldman
Proposal Base Scenario.
- ---------------
(1) Zell Base Scenario assumes that Goldman receives anti-dilution protection
only on the $23 million private placement of RCPI shares to the Zell
Investors.
(2) Goldman Base Scenario contemplates a $200 million equity investment through
(i) a $100 million private placement to Goldman and (ii) a $100 million
rights offering to Goldman and RCPI shareholders.
(3) Assumes GE / NBC credit lease financing based on current market quotes.
The ability to achieve such a financing is dependent upon completion of a
definitive agreement on terms substantially similar to the Letter of Intent
signed by RCPI, NBC and Equity Office Holdings on September 11, 1995 which
is included in Appendix B.
(4) Payable in cash or, if Net Cash Flow is insufficient, in kind.
(5) Debt principal accretes at 10.225% through December 31, 2000. If
bondholders do not elect to convert on December 31, 2000, the Zero Coupon
Convertible Debentures will automatically be exchanged for non-convertible
floating rate notes which will bear interest at a rate equal to 90-day
LIBOR plus a spread of between 25 to 100 basis points (assumed to be LIBOR
+ 50 basis points (7.50% assumed) for purposes of this analysis).
(6) Effective monthly payment rate of 8.45%, including principal amortization.
(7) Represents estimated LIBOR spread in Goldman Proposal of LIBOR + 300 basis
points plus an estimated 50 basis points for term interest rate swaps, for
a fixed rate of 9.50%.
(8) Interest only, includes non-cash payment of interest on Zero Coupon
Convertible Debentures for comparative purposes.
(9) Based on 27 year amortization with monthly payments.
PaineWebber Incorporated 4
<PAGE>
ROCKEFELLER CENTER PROPERTIES, INC.
III. ZELL TRANSACTION
FINANCIAL SUMMARY
<TABLE>
<CAPTION>
FULLY NET PRESENT VALUE PER SHARE AT VARIOUS
DILUTED SHARES DISCOUNT RATES AS OF JANUARY 1, 1996 (4)
SCENARIO (1) OUTSTANDING --------------------------------------------------------
10% 11% 12% 13% 14% 15%
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BASE GOLDMAN RECEIVES ANTI-DILUTION
PROTECTION ONLY IN RCPI
Sell Property in 2007 97,576,748 $8.40 $7.66 $7.00 $6.40 $5.87 $5.39
Sell Property in 2000 97,576,748 $8.25 $7.90 $7.57 $7.25 $6.95 $6.67
ALTERNATIVE GOLDMAN RECEIVES ANTI-DILUTION
PROTECTION IN RCPI AND NUREIT
Sell Property in 2007 127,111,973 $7.44 $6.80 $6.22 $5.71 $5.24 $4.82
Sell Property in 2000 127,111,973 $7.41 $7.09 $6.80 $6.51 $6.25 $5.99
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
INDEBTEDNESS ON JANUARY 1, 1996
- ----------------------------------------------------------------------------------------------------------------------------------
(IN MILLIONS) ASSUMED ASSUMED REQUIRED
DEBT OUTSTANDING AMOUNT INTEREST RATE AMORTIZATION
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
GE/NBC Credit Lease Financing (2) $355.0 7.25% (3) 27 Years (5)
Commercial Bank Loan (Chemical) 344.0 8.25% None
------ ----
Total/Weighted Average $699.0 7.74%
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------
(1) Zell Base Scenario assumes that Goldman receives anti-dilution protection
only on the $23 million private placement of RCPI shares to the Zell
Investors. Goldman Base Scenario contemplates a $200 million equity
investment through (i) a $100 million private placement to Goldman and
(ii) a $100 million rights offering to Goldman and RCPI shareholders. Debt
structures are identical for Base and Alternative Scenarios.
(2) Assumes GE / NBC credit lease financing based on current market quotes.
The ability to achieve such a financing is dependent upon completion of a
definitive agreement on terms substantially similar to the Letter of Intent
signed by RCPI, NBC and Equity Office Holdings on September 11, 1995 which
is included in Appendix B. If the GE / NBC financing does not occur, the
debt would consist solely of the commercial bank loan resulting in an NPV
range (2007 Property sale; 10% to 15% discount rates) of $8.09 to $5.15,
respectively, in the Base Scenario and $7.16 to $4.60, respectively, in the
Alternative Scenario.
(3) Effective payment rate of 8.45%, including principal amortization.
(4) The selection of an appropriate discount rate to use in calculating net
present value requires consideration of a broad range of qualitative and
quantitative variables. These variables include but are not limited to (i)
the entity's cost of debt and equity capital on both an overall and
marginal basis, (ii) the entity's leverage level with respect to its
ability to service debt and its debt ratio relative to comparable companies
in its industry, (iii) the entity's capital structure flexibility with
respect to restrictive covenants and (iv) other important factors.
(5) Based on monthly 27 year amortization with monthly payments.
PaineWebber Incorporated 5
<PAGE>
ROCKEFELLER CENTER PROPERTIES, INC.
ZELL TRANSACTION DEBT STRUCTURE
DEBT PRINCIPAL BALANCE (1)
<TABLE>
<CAPTION>
(IN MILLIONS) AS OF YEAR ENDING DECEMBER 31,
--------------------------------------------------------------------------------------
1996 1997 1998 1999 2000 2001
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
GE/NBC Credit Lease Financing $350.6 $345.9 $340.8 $335.3 $329.4 $323.1
Commercial Bank Loan (Chemical) 344.0 344.0 344.0 344.0 344.0 344.0
------ ------ ------ ------ ------ ------
Total Debt $694.6 $689.9 $684.8 $679.3 $673.4 $667.1
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
DEBT SERVICE COVERAGE (1)
(IN MILLIONS, EXCEPT COVERAGE RATIOS) 1996 1997 1998 1999 2000 2001
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
EBITDA (2) $ 66.4 $ 94.9 $118.5 $122.6 $121.4 $117.8
Interest Expense -- Cash $ 54.0 $ 53.6 $ 53.3 $ 52.9 $ 52.5 $ 52.1
Debt Service Coverage -- Cash 1.23x 1.77x 2.22x 2.32x 2.31x 2.26x
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Debt structures are identical for Zell Transaction Base and Alternative
Scenarios.
(2) Property net operating income, plus interest income received, less general
and administrative expenses.
PaineWebber Incorporated 6
<PAGE>
ROCKEFELLER CENTER PROPERTIES, INC.
ZELL TRANSACTION OWNERSHIP
ZELL BASE SCENARIO: GOLDMAN RECEIVES ANTI-DILUTION PROTECTION ONLY IN RCPI
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
SHARES % PRIMARY WARRANTS & TOTAL FULLY % FULLY
OWNED SHARES SARS DILUTED DILUTED
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
RCPI Shareholders 38,260,704 45.7% -- 38,260,704 39.2%
Zell Investors 45,454,545 54.3% 3,333,829 48,788,374 50.0%
Goldman, Sachs -- 0.0% 10,527,670 10,527,670 10.8%
---------- ----- ---------- ----------- -----
83,715,249 100.0% 13,861,499 97,576,748 100.0%
- --------------------------------------------------------------------------------------------------------------------------------
ZELL ALTERNATIVE SCENARIO: GOLDMAN RECEIVES ANTI-DILUTION PROTECTION IN BOTH RCPI AND NUREIT
- --------------------------------------------------------------------------------------------------------------------------------
SHARES % PRIMARY WARRANTS & TOTAL FULLY % FULLY
OWNED SHARES SARS DILUTED DILUTED
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
RCPI Shareholders 38,260,704 45.7% -- 38,260,704 30.1%
Zell Investors 45,454,545 54.3% 18,101,442 63,555,987 50.0%
Goldman, Sachs -- 0.0% 25,295,283 25,295,283 19.9%
---------- ----- ---------- ----------- -----
83,715,249 100.0% 43,396,724 127,111,973 100.0%
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
PaineWebber Incorporated 7
<PAGE>
ROCKEFELLER CENTER PROPERTIES, INC.
ZELL TRANSACTION STRUCTURE
TRANSACTION STRUCTURE
- - Sale of assets of RCPI to Nureit, which will ultimately own and operate
Rockefeller Center.
- - Equity investment by Zell Investors in Nureit of $250 million in a non-
consensual transaction. The $265 million investment by the Zell Investors
in a specified consensual transaction with the Borrower is not assumed in
these analyses.
- - Approximately $699 million placement of intermediate and long term, fixed
rate debt.
-- Nureit will raise approximately $355 million through a 27
year term, AAA-rated credit lease financing on the NBC space
at a rate of approximately 75 basis points over the yield on
the interpolated 27 year Treasury bond.
-- Nureit will also raise approximately $344 million for 5
years at a rate of approximately LIBOR + 175 basis points
plus an estimated 50 basis points for full term interest
rate swaps, which will result in a fixed rate of
approximately 8.25%. Chemical Bank has been identified as a
potential lender at these terms.
- - RCPI equity holders (including Goldman) will receive 50% of Nureit on a
fully diluted basis and approximately $835 million cash to repay all
existing indebtedness, retire the swaps and fund estimated transaction
costs.
- - If Goldman's anti-dilution protection is not enforceable against Nureit's
capitalization (Zell Base Scenario), upon completion of the transactions
the Zell Investors will own 45.5 million shares and 3.3 million SARs,
representing 50.0% of the REIT's economics. Goldman, Sachs will own a
total of 10.5 million warrants and SARs, representing 10.8% of the REIT's
economics. The RCPI shareholders will be diluted to 39.2% of the REIT's
economics.
- - If Goldman's anti-dilution protection is enforceable against Nureit's
capitalization (Zell Alternative Scenario), upon completion of the
transactions the Zell Investors will own 45.5 million shares and 18.1
million SARs, representing 50.0% of the REIT's economics. Goldman, Sachs
will own a total of 25.3 million warrants and SARs, representing 19.9% of
the REIT's economics. The RCPI shareholders will be diluted to 30.1% of
the REIT's economics.
- - Total indebtedness is projected to decline annually through credit lease
financing amortization from approximately $699 million on January 1, 1996.
Assuming a $7.50 stock price, this would represent an initial Debt to Total
Market Capitalization Ratio of 51%.
- - Nureit will have approximately $114 million of working capital upon
closing.
- - Nureit's Board will consist of nine Directors with five independent
Directors.
PaineWebber Incorporated 8
<PAGE>
ROCKEFELLER CENTER PROPERTIES, INC.
ZELL TRANSACTION CONSIDERATIONS
CONSIDERATIONS
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
ADVANTAGES DISADVANTAGES
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
- More conservative capital structure -- 51% Debt to Total - If Goldman anti-dilution extended to Nureit, current RCPI
Market Capitalization after transaction is completed shareholders economic interest reduced to 30% (Alternative
(based on $7.50 stock price) Scenario) versus 39% if anti-dilution extends only to RCPI
(Base Scenario)
- Significantly less expensive debt; weighted average rate
of approximately 7.74% - Shareholder approval may be difficult to achieve - will
require a 62.5% affirmative shareholder vote with Goldman
- Ability to negotiate the Transfer with Borrower from a dissent
position of strength
- Practical difficulty in prepayment of Whitehall Debentures
- Zell interests aligned with common shareholders' due to timing of cash flow sweep payments. If unsuccessful,
interests RCPI may need to file for bankruptcy to achieve its
reorganization
- Management strategy to maximize long term real estate
value of Rockefeller Center - Zell Investors will have de facto control over RCPI, subject
to an independent board
- Zell office management expertise
- Risk of Goldman anti-dilution borne solely by RCPI, not Zell
- Disney entertainment / retail expertise Investors
- Balance sheet flexibility - Certain Bankruptcy Court approval required to close
- Zell Transaction Agreement has been documented and - Does not have perception of "fairness" of a rights offering
executed
- Transaction uncertainty and complexity
- Updated corporate charter
- Short term funding offered allows RCPI to fund current
- Shareholder vote is a mandate for a new company strategy operations only up to March 1, 1996
and capitalization policy
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
PaineWebber Incorporated 9
<PAGE>
ROCKEFELLER CENTER PROPERTIES, INC.
IV. GOLDMAN PROPOSAL
FINANCIAL SUMMARY
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
FULLY NET PRESENT VALUE PER SHARE AT VARIOUS
DILUTED SHARES DISCOUNT RATES AS OF JANUARY 1, 1996 (5)
SCENARIO OUTSTANDING -------------------------------------------------------
10% 11% 12% 13% 14% 15%
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
BASE $200 MILLION EQUITY INVESTMENT
Sell Property in 2007 84,182,847 $8.24 $7.52 $6.87 $6.29 $5.76 $5.29
Sell Property in 2000 84,182,847 $8.01 $7.67 $7.35 $7.04 $6.75 $6.47
- ----------------------------------------------------------------------------------------------------------------------------------
ALTERNATIVE $250 MILLION EQUITY INVESTMENT
Sell Property in 2007 93,563,710 $8.03 $7.34 $6.72 $6.17 $5.66 $5.21
Sell Property in 2000 93,563,710 $7.85 $7.51 $7.20 $6.90 $6.62 $6.35
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
BASE SCENARIO INDEBTEDNESS ON JANUARY 1, 1996 (1)
- ----------------------------------------------------------------------------------------------------------------------------------
(IN MILLIONS)
ASSUMED REQUIRED
DEBT OUTSTANDING (1) ASSUMED AMOUNT INTEREST RATE AMORTIZATION
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Whitehall Debentures $ 75.0 (2) 14.00% None
Third Party Debt 300.0 (1) 9.50% (4) None
Zero Coupon Convertible Debentures 360.3 (3) 10.22% Accretes
------ ------
Total/Weighted Average $735.3 10.31%
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ---------------
(1) Goldman Alternative Scenario assumes third party debt of $250 million
versus $300 million in Goldman Base Scenario. This $50 million debt
paydown is achieved through the second rights offering proceeds.
(2) Payable in cash or, if Net Cash Flow is insufficient, in kind.
(3) Debt principal accretes at 10.225% through December 31, 2000. If
bondholders do not elect to convert on December 31, 2000, the Zero Coupon
Convertible Debentures will automatically be exchanged for non-convertible
floating rate notes which will bear interest at a rate equal to 90-day
LIBOR plus a spread of between 25 to 100 basis points (assumed to be LIBOR
+ 50 basis points for purposes of this analysis).
(4) Represents estimated LIBOR spread in Goldman Proposal of LIBOR + 300 basis
points plus an estimated 50 basis points for term interest rate swaps, for
a fixed rate of 9.50%.
(5) The selection of an appropriate discount rate to use in calculating net
present value requires consideration of a broad range of qualitative and
quantitative variables. These variables include but are not limited to (i)
the entity's cost of debt and equity capital on both an overall and
marginal basis, (ii) the entity's leverage level with respect to its
ability to service debt and its debt ratio relative to comparable companies
in its industry, (iii) the entity's capital structure flexibility with
respect to restrictive covenants and (iv) other important factors.
PaineWebber Incorporated 10
<PAGE>
ROCKEFELLER CENTER PROPERTIES, INC.
GOLDMAN PROPOSAL DEBT STRUCTURE
DEBT PRINCIPAL BALANCE -- BASE SCENARIO (1)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
(IN MILLIONS) AS OF YEAR ENDING DECEMBER 31,
------------------------------------------------------------------------------
1996 1997 1998 1999 2000 2001
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Whitehall Debentures $ 75.0 $ 75.0 $ 75.0 $ 75.0 $ 75.0 $ 75.0
Third Party Debt 300.0 300.0 276.2 254.7 225.4 225.4
Zero Coupon Convertible Debentures 397.1 437.7 482.5 531.8 586.2 586.2
------ ------ ------ ------ ------ ------
Total Debt $772.1 $812.7 $833.7 $861.5 $886.6 $886.6
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
DEBT SERVICE COVERAGE -- BASE SCENARIO
- --------------------------------------------------------------------------------------------------------------------------------
(IN MILLIONS, EXCEPT COVERAGE RATIOS) 1996 1997 1998 1999 2000 2001
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
EBITDA (2) $ 46.9 $80.4 $122.6 $126.7 $125.5 $121.9
Interest Expense -- Cash $ 39.0 $39.0 $ 39.0 $ 36.7 $ 34.7 $ 75.9
Interest Expense -- Cash & Accrual (3) $ 75.8 $79.6 $ 83.8 $ 86.1 $ 89.1 $ 75.9
Debt Service Coverage -- Cash 1.20x 2.06x 3.14x 3.45x 3.62x 1.61x
Debt Service Coverage -- Cash & Accrual (3) 0.62x 1.01x 1.46x 1.47x 1.41x 1.61x
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ------------------
(1) Goldman Alternative Scenario assumes third party debt of $250 million
versus $300 million in Goldman Base Scenario. This $50 million debt
paydown is achieved through the second rights offering proceeds.
(2) Property net operating income, plus interest income received, less general
and administrative expense.
(3) Includes accrual of interest on the Zero Coupon Convertible Debentures.
PaineWebber Incorporated 11
<PAGE>
ROCKEFELLER CENTER PROPERTIES, INC.
GOLDMAN PROPOSAL OWNERSHIP SUMMARY
GOLDMAN BASE SCENARIO: 100% RCPI SUBSCRIPTION TO RIGHTS OFFERING (1)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
SHARES % PRIMARY TOTAL FULLY % FULLY
OWNED SHARES WARRANTS DILUTED DILUTED
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
RCPI Shareholders 50,583,781 73.3% -- 50,583,781 60.1%
Goldman, Sachs 18,446,154 26.7% 15,152,913 33,599,066 39.9%
---------- ----- ---------- --------- ------
69,029,935 100.0% 15,152,913 84,182,847 100.0%
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
GOLDMAN BASE SCENARIO: 0% RCPI SUBSCRIPTION TO RIGHTS OFFERING (1)
- --------------------------------------------------------------------------------------------------------------------------------
SHARES % PRIMARY TOTAL FULLY % FULLY
OWNED SHARES WARRANTS DILUTED DILUTED
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
RCPI Shareholders 38,260,704 55.4% -- 38,260,704 45.4%
Goldman, Sachs 30,769,231 44.6% 15,152,913 45,922,143 54.6%
---------- ----- ---------- --------- ------
69,029,935 100.0% 15,152,913 84,182,847 100.0%
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ------------------
(1) Goldman Alternative Scenario assumes an additional $50 million is raised
through a second rights offering at $6.50 per share for 93,563,710 total
fully diluted shares. The diminished economics under this alternative are
shown on page 10.
PaineWebber Incorporated 12
<PAGE>
ROCKEFELLER CENTER PROPERTIES, INC.
GOLDMAN PROPOSAL TRANSACTION STRUCTURE
TRANSACTION STRUCTURE
- - To pay the Zell Transaction break-up fees and repay the working capital
line, RCPI completes a private placement of $27.0 million of RCPI common
shares to Goldman at $6.50 per share on the date a transaction with Goldman
is announced. In addition, RCPI will borrow $10.0 million from Goldman in
additional Floating Rate Notes.
- - RCPI repays the Floating Rate Notes balance of $127 million after December
27, 1995 with a 1.5% penalty ($1.9 million), repays the Current Coupon
Convertible Debentures balance of $213 million and retires its swap
obligations.
- - RCPI completes its private placement to Goldman for the remaining
$73.0 million of Common Shares.
- - Goldman completes a $100 million rights offering (for a total equity
investment of $200 million) for RCPI common shares to RCPI Shareholders and
Goldman in the Goldman Base Scenario.
- - Goldman, at the Board's request, will commit to stand by to underwrite an
equity rights offering of up to $50 million at $6.50 per share within the
next three years. The Goldman Alternative Scenario assumes the execution
of this rights offering at closing with proceeds used to reduce the third
party debt to $250 million.
- - RCPI common shareholders and Goldman exchange their shares for Nureit
common shares on a one-for-one basis.
- - Goldman exchanges its RCPI warrants and SARs for Nureit warrants and is
given additional Nureit warrants to bring its total economic interest to
18.0%. Goldman will own between 39.9% and 54.6% of Nureit on a fully
diluted basis, depending on the RCPI shareholder subscription level.
- - Nureit borrows $300 million (in Goldman Base Scenario) in fixed rate debt
($250 million in Goldman Alternative Scenario) from Goldman or another
source at an assumed rate of 9.5%, interest only.
- - Nureit assumes RCPI's 14% Debentures (which will be subordinate to the $300
million or $250 million in new third party debt) and Zero Coupon
Convertible Debentures and uses a portion of the proceeds from the debt and
equity offerings to retire the remainder of RCPI's indebtedness and
obligations (approximately $372.5 million on December 31, 1995).
- - Goldman will receive fees equal to (i) an up-front commitment fee equal to
3% of the aggregate dollar value of the rights offering and (ii) a 3%
"Take-up" fee on the aggregate value of the shares it purchases from rights
that were not exercised.
- - Nureit will have approximately $101 million of working capital upon
closing.
- - Nureit Board will consist of nine Directors with five independent Directors
and four Goldman Directors.
- - Offer terminates on September 22, 1995 unless definitive agreement signed
(Goldman offered to extend the termination date in its September 18, 1995
13-D/A filing with the S.E.C.).
PaineWebber Incorporated 13
<PAGE>
ROCKEFELLER CENTER PROPERTIES, INC.
GOLDMAN PROPOSAL CONSIDERATIONS
CONSIDERATIONS
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
ADVANTAGES DISADVANTAGES
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
- Certainty of Goldman approval and cooperation - Higher initial leverage which increases annually, reaching $887
million (Goldman Base Scenario) in 2000 versus $673 million in
- Goldman cooperation allows shareholder vote threshold Zell Transaction (Zell Base Scenario)
of 50% as opposed to 62.5% with Goldman dissent
- More expensive debt; weighted average rate of approximately
- Updated corporate charter 10.3% versus approximately 7.7% in Zell Transaction
- Goldman share purchase price of $6.50 per share is an - Less balance sheet flexibility
18% premium to the $5.50 per share purchase price
contemplated in the Zell Transaction - More burdensome covenants on more expensive, shorter term debt
- RCPI shareholder participation / mandate via rights - Goldman's position as a debt holder may not represent the same
offering interests as RCPI's shareholders' interests
- No Bankruptcy Court approval required to close - Goldman may have de facto control over RCPI, subject to an
independent board
- Short term funding offered allows RCPI to fund current
operations past March 1, 1996 - Unclear management strategy with respect to real estate value
of Rockefeller Center
- No office, retail or entertainment expertise
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
PaineWebber Incorporated 14
<PAGE>
ROCKEFELLER CENTER PROPERTIES, INC.
V. INDEPENDENT ALTERNATIVE
- - Assuming the Borrower follows through on its September 12, 1995
announcement of its intent to transfer ownership of Rockefeller Center to
RCPI, RCPI's Board now has the theoretical option of foregoing both the
Zell Transaction and the Goldman Proposal (the "Independent Alternative").
- - The Independent Alternative provides the advantage of minimizing the
dilution of ownership of the current shareholders compared to the Zell or
Goldman opportunities.
- - However, RCPI must still raise capital to have the ability to fund the
obligations of ownership of Rockefeller Center. These obligations include
the cash requirements of funding the costs of bankruptcy resolution and of
leasing the approximate 1 million square feet of vacant space.
- - The Independent Alternative raises a series of considerations for the
Board, a few of which follow:
-- Will the loss of a viable financial partner for RCPI impact the
status of the Borrower's current cooperative approach with respect to
the Transfer of ownership of Rockefeller Center?
-- If the Board foregoes the Zell Transaction it will immediately be
required to repay the $10 million working capital loan with accrued
interest. How will RCPI quickly raise equity capital in order to
(i) repay the working capital loan and (ii) continue to meet
operating and debt service obligations prior to a large
recapitalization?
-- How will RCPI raise the equity capital required to fund the costs of
bankruptcy resolution and the current 1 million square foot leasing
requirement?
-- Is the Board willing to continue operating RCPI under the outdated
Company charter, which was structured for a special purpose vehicle?
The merger formats contemplated by the Zell Transaction and Goldman
Proposal offer RCPI the opportunity to adopt a charter that has the
flexibility required to own and operate Rockefeller Center.
PaineWebber Incorporated 15
<PAGE>
ROCKEFELLER CENTER PROPERTIES, INC.
INDEPENDENT ALTERNATIVE
-- How will RCPI obtain the necessary operational skills and depth
required to operate and enhance the value of Rockefeller Center and
Radio City Music Hall?
-- From a tactical perspective, could RCPI be ready to raise the
required equity capital and staffing to take control of Rockefeller
Center in the first quarter of 1996?
-- Does the Board want a shareholder vote to approve of the Independent
Alternative?
-- How will the Independent Alternative impact the status of the current
positive agreements with respect to GE, which will allow for the
raising of approximately $355 million of debt at an attractive rate,
and The Walt Disney Company, which is prepared to propose
opportunities for Radio City Music Hall and potentially certain of
Rockefeller Center's retail space?
-- Without a merger structure, is the Board prepared to continue
operating under the status quo with respect to Goldman, Sachs?
PaineWebber Incorporated 16
<PAGE>
ROCKEFELLER CENTER PROPERTIES, INC.
INDEPENDENT ALTERNATIVE CONSIDERATIONS
CONSIDERATIONS
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
ADVANTAGES DISADVANTAGES
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
- -- Reduced ownership dilution of current shareholders -- Current inflexible Company charter is virtually impossible
to change (80% shareholder vote required) without a
- -- RCPI rights offering at fair market value can be achieved merger structure
without a shareholder vote or Goldman, Sachs approval
-- Potential inability to meet short term cash obligations
-- No real estate operating partner
-- Triggers Goldman, Sachs anti-dilution and retains certain
burdensome debt covenants
-- GE and Disney participation uncertain
-- Uncertainty of response by the Borrower and impact on
current negotiations
-- Uncertainty of response by Bankruptcy Court with respect
to RCPI's financial viability
-- Tactical requirements with respect to need for quick equity
capital raise and staffing to operate Rockefeller Center
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
PaineWebber Incorporated 17
<PAGE>
ROCKEFELLER CENTER PROPERTIES, INC.
ASSUMPTIONS USED IN CASH FLOW MODELS
- - December 31, 1995 closing.
- - Terminal Value of $1.71 billion in December 2000 and $2.26 billion in
December 2007. Terminal value is calculated using Douglas Elliman's
December 1994 appraisal methodology (an average of the discounted cash
value from five different holding periods).
- - Rockefeller Center property cash flow projections have been prepared by The
Realtech Group and assume a lease-up to an approximate 96% economic
occupancy by January 1, 1998. The projections are the Case 2 cash flow
projections presented to the Board on August 3, 1995, as updated by The
Realtech Group.
- - Nureit obtains a new working capital line of credit to meet potential cash
shortfalls.
- - Annual dividend distributions, if any, are set at a maximum of $0.60 per
share and are made only when Net Cash Flow is positive and no balance on
the assumed line of credit exists.
- - Distributions to warrant and SAR holders are paid as per the December 1994
warrant and SAR agreements.
- - Remaining cash flow after dividend distributions is used to prepay existing
indebtedness.
- - RCPI receives the property on or prior to closing and uses $55 million cash
to pay property-related obligations ($68 million of expenses, reduced by
the $13 million cash assumed to be available on the Property's balance
sheet).
- - Transaction costs estimated to be $20 million.
PaineWebber Incorporated 18
<PAGE>
ROCKEFELLER CENTER PROPERTIES, INC.
ASSUMPTIONS USED IN ZELL TRANSACTION MODEL
IN ADDITION TO THE ASSUMPTIONS OUTLINED ABOVE, THE FOLLOWING ASSUMPTIONS HAVE
BEEN MADE WITH RESPECT TO THE ZELL TRANSACTION:
- - None of the $15 million placed in escrow by the Zell Investors and RCPI
will be paid to settle unknown liabilities of the Company which may or may
not arise.
- - NBC lease payments are modified as per the Term Sheet between RCPI, NBC and
Equity Office Holdings dated September 11, 1995 (see Appendix B).
- - GE / NBC credit lease financing payments are based on 7.25% interest and 27
year monthly amortization.
- - Commercial bank loan payments are based on an interest rate of LIBOR + 175
basis points plus an estimated 50 basis points for term interest rate swaps
to fix the interest payments.
- - Remaining cash flow after dividend distributions is used to prepay the
commercial bank loan.
PaineWebber Incorporated 19
<PAGE>
ROCKEFELLER CENTER PROPERTIES, INC.
GOLDMAN PROPOSAL ASSUMPTIONS
IN ADDITION TO THE ASSUMPTIONS OUTLINED ABOVE, THE FOLLOWING ASSUMPTIONS HAVE
BEEN MADE WITH RESPECT TO THE GOLDMAN PROPOSAL:
- - Zero Coupon Convertible Debentures are kept in place and, on December 31,
2000, convert into floating rate notes which bear interest at a rate of
LIBOR + 50 basis points, which is assumed to be 7.50%.
- - Third party debt payments are based on an interest rate of LIBOR + 300
basis points plus an estimated 50 basis points for term interest rate swaps
to fix the interest payments.
- - Remaining cash flow after divided distributions is used to prepay third
party debt.
PaineWebber Incorporated 20
<PAGE>
September 11, 1995
Rockefeller Center Properties, Inc.
1270 Avenue of the Americas
Suite 2410
New York, New York 10020
Gentlemen:
This will confirm the mutual intent of Rockefeller Center Properties,
Inc. (together with its successors, the "Company" or "RCPI"), Whitehall Street
Real Estate Limited Partnership V ("Whitehall") and Goldman, Sachs & Co. ("GS")
or designated affiliates of Whitehall or GS (together with Goldman Sachs
Mortgage Company ("GSMC"), the "Whitehall Group") to engage in a
recapitalization transaction (the "Transaction") pursuant to which, on the terms
and subject to the conditions set forth herein, Whitehall or its designated
affiliate(s) (the "Whitehall Entity") will (i) acquire for $100 million
15,384,615 newly issued shares of Common Stock, par value $0.01 per share, of
the Company ("Common Stock") at a price of $6.50 per share (the "Stock
Purchase"), and (ii) commit to being a stand-by purchaser of a $100 million
publicly registered rights offering by the Company of 15,384,615 newly issued
shares of Common Stock at a price of $6.50 per share (the "Rights Offering").
In addition, if the Board of Directors of RCPI so determines within the three
years following the Transaction to raise up to $50 million of additional equity,
the Whitehall Group will commit to stand by to underwrite an equity rights
offering of up to $50 million on customary terms (including underwriting
discount).
A. EQUITY INVESTMENT
1. Except as otherwise agreed by the parties hereto, the
consummation of the Transaction will be subject only to the receipt by the
Company of all required consents and approvals, which the Company will use its
best efforts to obtain. The Transaction is not subject to any financing
condition nor is it in any way dependent on the Company obtaining control over
the Rockefeller Center property; of course, Whitehall and GSMC will provide the
Company with any necessary consents in connection with the Transaction. It is
expected that, except as otherwise determined by the Company (as provided in
paragraph 2 hereof), the closing of the Stock Purchase and the Rights Offering
will occur simultaneously.
2. At the option of the Company, the Stock Purchase may be
bifurcated so that Whitehall or a designated affiliate will purchase immediately
upon execution of definitive agreements relating to the Transaction
<PAGE>
("Definitive Agreements") up to 4,155,927 shares of Common Stock at $6.50 per
share (the "Initial Shares"), or $27,013,526 in the aggregate, and will acquire
the remaining shares of Common Stock in the Stock Purchase at $6.50 per share
($72,986,474 in the aggregate) at the closing of the Transaction. Any shares
issued in the Stock Purchase and the Rights Offering are referred to in this
letter as the "New Shares". In order to effect the purchase of the Initial
Shares, the Company may cancel up to that number of warrants (the "Warrants")
issued to Whitehall under the Warrant Agreement, dated as of December 18, 1994,
between the Company and Chemical Bank, as Warrant Agent, as is necessary to
effect the issuance to the Whitehall Entity of the Initial Shares under RCPI's
Certificate of Incorporation, and issue to the Whitehall Entity in exchange
therefor an equivalent number of Stock Appreciation Rights ("SARs") containing
terms identical to the SARs issued to Whitehall under the SAR Agreement, dated
as of December 18, 1994, between the Company and Chemical Bank, as SAR Agent.
3. The Warrants will remain outstanding, and all SARs will be
converted into Warrants in connection with the Transaction. In addition,
Whitehall will receive a portion of the additional Warrants it is entitled to
under Section 6 of the Warrant Agreement so that it thereby holds, as a holder
of the Warrants (including former SARs), an 18% interest, plus its percentage
interest obtained with respect to the New Shares, in the Company on a fully
diluted basis taking into account the New Shares. The Warrants will be amended
to provide that in the future they will receive anti-dilution protection, except
with respect to issuances of equity securities for cash or property at a price
equal to the then fair market value of the securities issued.
4. Under the Rights Offering (a) Whitehall will be entitled to
participate with respect to its Warrants and SARs as if no Stock Purchase had
occurred, and the Whitehall Entity will not be entitled to participate with
respect to the shares purchased in the Stock Purchase, (b) each holder of Common
Stock will be entitled to purchase such percentage of the offered shares of
Common Stock as is equal to such holder's percentage ownership of the Common
Stock on a fully diluted basis (excluding any shares purchased in the Stock
Purchase) immediately prior to consummation of the Rights Offering, (c) the
rights will be freely tradeable until termination of the Rights Offering, (d)
the Whitehall Entity will purchase for its own account offered shares for which
rights are not exercised (the "Take-up Shares"), and (e) the Whitehall Entity
will be entitled to a fee, upon consummation of the Rights Offering, equal to 3%
of the aggregate value of the Take-up Shares. The Rights Offering will remain
open for at least 30 days.
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5. The New Shares and the Warrants issued in respect of Whitehall's
existing Warrants and SARs will be the only equity issued in connection with the
Transaction, and will be issued in a merger of RCPI and an entity formed by the
Whitehall Entity.
6. The Whitehall Entity will be entitled to demand and piggy-back
registration of their New Shares.
7. Upon execution of the Definitive Agreements, the Company will pay
Whitehall a commitment fee equal to 3% of the aggregate dollar value of the
Rights Offering. There is no commitment fee on the Stock Purchase.
B. DEBT RESTRUCTURING
1. The up to $150 million outstanding principal amount under the
loan (the "GSMC Loan") provided for in the Loan Agreement, dated as of
December 18, 1994, between RCPI and GSMC, will be repaid at the redemption price
in effect at the time of repayment as specified in the Loan Agreement plus all
accrued interest.
2. The Debentures issued under the Debenture Purchase Agreement,
dated as of December 18, 1994, between RCPI and Whitehall (the "Whitehall
Debentures") will remain outstanding (on a non-callable basis until December 30,
2000); the Debenture Purchase Agreement will be amended to include market
covenants for comparable securities that are no less favorable to the holder
than those contained in any new financing obtained by the Company.
3. The $213 million of RCPI's Current Coupon Convertible Debentures
due 2000 will be repaid at par plus all accrued interest. RCPI will partially
finance such repayment and the repayment of the GSMC Loan through the issuance
of new financing as to which GS will have the opportunity to participate as
financial advisor.
4. The Company will use its best efforts to leave RCPI's Zero Coupon
Convertible Debentures due 2000 (the "Zero Coupons") outstanding. In the event
that the Zero Coupons remain outstanding, (a) the Company may arrange up to $350
million of new financing, (b) the Whitehall Debentures will be subordinated to
the new financing, and (c) the total outstanding indebtedness of the Company
will be comprised of the Zero Coupons, the Whitehall Debentures and the new
financing. In the event that either (a) notwithstanding the best efforts of the
Company, the Zero Coupons are required to be repaid or (b) new financing cannot
be arranged at LIBOR plus 350 or less from a new
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<PAGE>
lender or GSMC, then the Company may refinance the Zero Coupons. In the event
that the Zero Coupons are refinanced, (a) the Company may arrange up to $625
million of new financing, (b) the Whitehall Debentures will be pari passu to the
new financing, (c) the interest rate on the Whitehall Debentures will be reduced
to 13%, and (d) the total outstanding indebtedness of the Company will be
comprised of the Whitehall Debentures and the new financing.
5. Upon execution of this letter agreement, the Company will prepay
any borrowing it has made under the Investment Agreement, dated as of August 18,
1995, between the Company and Zell/Merrill Lynch Real Estate Opportunity
Partners Limited Partnership III (the "Investment Agreement") and thereby
terminate the Investment Agreement, and, in conjunction therewith, GSMC will
lend the Company up to an additional $33 million under the Loan Agreement, dated
as of December 18, 1994, between the Company and GSMC.
C. GOVERNANCE
1. The Board of Directors of the Company will be comprised of nine
directors, four of whom will be Whitehall nominees, and five of whom will be
independent directors. Whitehall will lose its right to a nominee to the Board
of Directors if they reduce their equity security holdings (determined as of the
closing of the Transaction) by half, and will lose their right to any nominee to
the Board of Directors at such time as they no longer hold equity securities in
the Company. Upon the closing of the Transaction, the independent directors
will consist of four existing directors and one director chosen by the existing
directors (the "New Director"). The New Director will be selected by Whitehall
from among a list of at least four potential directors nominated by the Board of
Directors in good faith. Following the expiration of the terms of the existing
directors, the independent directors will be nominated by a nominating committee
of the Board of Directors, comprised of three independent directors and two
directors chosen by Whitehall.
2. RCPI will use its best efforts to cause the Company to elect and
maintain a Board of Directors constituted as set forth in 1. above
3. The Company's Certificate of Incorporation (the "Certificate")
will provide, among other things, that the Board of Directors will waive any
"excess shares" provisions with respect to any persons or transactions so long
as such waiver does not adversely affect the REIT status of the entity.
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<PAGE>
4. The Whitehall Entity designees to the Board of Directors of the
Company will (i) vote to place any determination with respect to a business
combination involving the Whitehall Group and the Company before an independent
committee of the Board of Directors and (ii) endorse the conclusions reached by
such committee so long as they are supported by a fairness opinion from a
nationally recognized investment banking firm.
5. In connection with the closing of the Transaction, the Whitehall
Group will relinquish its rights under the letter, dated December 18, 1994, by
and among Whitehall, GS and RCPI, to designate a member to the Board of
Directors thereunder, and to require a 62.5% vote of the shareholders under
certain circumstances, as set forth therein.
D. MISCELLANEOUS
1. Upon execution of this letter agreement, the Company shall
terminate all discussions or negotiations with any other party regarding the
refinancing of the indebtedness of the Company or the restructuring of its
capitalization or its assets. From the date hereof until consummation of the
Transaction, the Company shall not directly or indirectly solicit or entertain
inquiries or proposals from, or in any way engage in discussions or negotiations
with, or provide any information to, any other parties (including
intermediaries) regarding the refinancing of the indebtedness of the Company or
the restructuring of its capitalization or its assets and shall not take any
other action (or fail to take any required action) or permit any person on its
behalf to take any other action (or fail to take any required action) that could
be inconsistent with, delay or adversely affect the consummation of the
Transaction. Nothing contained in the preceding sentence, however, shall
prevent the Company's Board of Directors, if advised by counsel that their
fiduciary duty so requires, from (a) entertaining proposals from any entity with
which the Company is currently holding discussions respecting a recapitalization
or major business transaction or which had not been directly or indirectly
solicited by the Company or its advisors or (b) engaging in discussions or
negotiations with, or providing any information to, such entities if the Board
of Directors has determined in good faith that such proposal is materially
superior to the Transaction from a financial point of view. The Company shall
promptly notify Whitehall if any such inquiries or proposals are received by,
any such information is requested from or provided by, or any such discussions
or negotiations are sought to be
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<PAGE>
initiated or continued with, the Company, shall promptly inform Whitehall of the
terms and conditions thereof and shall promptly furnish Whitehall with copies of
any such written inquiries or proposals.
2. The Company agrees that beginning immediately upon the execution
of this letter agreement, it will not file any material pleadings and other
documents ("RCP Pleadings") relating to the bankruptcy proceedings involving
Rockefeller Center Properties (the "Proceedings") or take any other action that
is material (as determined by the Whitehall Group in its reasonable discretion)
in any way relating to the Proceedings without the prior consent of the
Whitehall Group. In addition, the Definitive Agreement will provide that the
Company will pursue a foreclosure on the Rockefeller Center property through a
reorganization plan, or otherwise, in consultation with the Whitehall Group.
3. The parties hereto will use their best efforts to enter into
Definitive Agreements embodying the terms set forth herein and such other terms
as would be customary in agreements embodying transactions of the nature of the
Transaction by no later than September 22, 1995; if Definitive Agreements are
not executed by such date, this letter agreement will expire, any obligations
under this letter agreement will terminate and no party shall have any liability
whatsoever to any other party; PROVIDED, HOWEVER, that notwithstanding any such
termination, paragraphs B5, D3, D4, D5 and D7 of this letter agreement shall
remain in full force and effect, and no party shall be relieved of liability for
any breach of any binding provision of this letter agreement.
4. The parties hereto agree that if the Company does not close the
Transaction for any reason whatsoever other than the failure or refusal of the
Whitehall Group to close notwithstanding the satisfaction of all closing
conditions by the Company, the Company shall immediately pay to Whitehall upon
demand a fee of $8 million. In addition, the Company will reimburse each of the
members of the Whitehall Group for all expenses incurred by them and
reimbursable under the existing agreements between the Company and any member of
the Whitehall Group. Whitehall will promptly notify the Company of all
reimbursable expenses existing as of the date hereof. In addition, all expenses
incurred by any member of the Whitehall Group in connection with negotiating and
documenting the proposed Transaction (including attorneys' fees and expenses)
shall be reimbursed by the Company promptly upon request (except that such
Transaction expenses shall not be reimbursed if the Transaction does not close
solely as a result of the failure or refusal of the Whitehall Group to close
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<PAGE>
notwithstanding the satisfaction of all closing conditions by the Company). The
Company will also indemnify and hold harmless each member of the Whitehall Group
and their affiliates and the partners, officers, directors and employees of each
of the foregoing from and against any and all liabilities, losses, claims or
damages arising out of this letter agreement or the Transaction.
5. Except as required by applicable law and except for a press
release and disclosure in the Company's Form 8-K announcing the signing of this
letter of intent, the Company shall not disclose or permit its officers,
directors, agents, bankers, representatives, accountants, "D and O" insurers or
attorneys to disclose the existence or terms of this letter of intent to any
third party without the prior written consent of Whitehall, which consent will
not be unreasonably withheld, provided that the Company may disclose the terms
hereof to its agents, bankers, representatives, accountants, "D and O" insurers
and attorneys, who shall maintain such information confidential and who shall
use it for no purpose other than the Transaction. The Company will not issue
any press release or make any other public disclosure regarding the Transaction
without the prior agreement of the Whitehall Group as to the form, timing and
content of such release or disclosure.
6. Each of the parties hereto acknowledges and agrees that no
failure or delay in exercising any right, power or privilege hereunder will
operate as a waiver thereof, nor will any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any right,
power or privilege hereunder.
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<PAGE>
7. This letter agreement shall be governed by and construed in
accordance with the laws of the State of New York without regard to the
principles of conflict of laws.
Please confirm that the foregoing correctly sets forth your
understanding by signing and returning the attached copy of this letter.
Very truly yours,
GOLDMAN, SACHS & CO.
By: _____________________
WHITEHALL STREET REAL ESTATE
LIMITED PARTNERSHIP V
By: W.H. Advisors, L.P. V
By: W.H. Advisors, Inc. V
By: _______________________
The foregoing is hereby
confirmed:
ROCKEFELLER CENTER PROPERTIES, INC.
By: _______________________________
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<PAGE>
SCHEDULE 13D/A
Under the Securities Exchange Act of 1934
(Amendment No. 2)
Rockefeller Center Properties, Inc.
-----------------------------------
(Name of Issuer)
Common Stock, Par Value $.01 Per Share
--------------------------------------
(Title of Class of Securities)
773102 10 8
(CUSIP Number)
David J. Greenwald, Esq.
Goldman, Sachs & Co.
85 Broad Street
New York, N.Y. 10004
(212)902-1000
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
September 18, 1995
- --------------------------------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If a filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
Check the following box if a fee is being paid with this statement [ ].
<PAGE>
Whitehall Street Real Estate Limited Partnership V, WH Advisors, L.P. V, WH
Advisors, Inc. V, The Goldman Sachs Group, L.P., and Goldman, Sachs & Co.
(collectively, the "Reporting Persons") hereby amend the report on Schedule 13D,
dated January 3, 1995, as amended by Amendment Number 1 thereto dated September
12, 1995 (the "Schedule 13D"), filed by the Reporting Persons in respect of
events occurring on December 29, 1994 with respect to the Common Stock of
Rockefeller Center Properties, Inc., a Delaware corporation ("RCPI"), as set
forth in this amendment. Capitalized terms used but not defined herein shall
have the meanings given such terms in the Schedule 13D.
ITEM 4. PURPOSE OF TRANSACTION.
Item 4 of the Schedule 13D is hereby amended by inserting the following
paragraph as a new numbered paragraph 7 immediately after numbered paragraph 6
appearing therein:
7. On September 18, 1995, Goldman, Sachs & Co., Goldman Sachs
Mortgage Company and Whitehall Street Real Estate Limited Partnership
V (collectively the "Whitehall Group") submitted a letter to the Board
of Directors of RCPI responding to questions posed by RCPI's financial
advisor concerning the recapitalization and restructuring transaction
involving RCPI proposed by the Whitehall Group on September 11, 1995.
A copy of the letter (including Exhibits but excluding Attachments) is
attached hereto as Exhibit 9, and is incorporated herein by reference.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Item 7 of the Schedule 13D is hereby amended by adding the following
immediately at the end thereof:
Exhibit No. Exhibit Page
9 Letter, dated September 18, 1995, from Goldman, 4
Sachs & Co., Goldman Sachs Mortgage Company and
Whitehall Street Real Estate Limited Partnership
V, to the Board of Directors of Rockefeller Center
Properties, Inc. (including Exhibits but excluding
Attachments).
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<PAGE>
SIGNATURE
After reasonable inquiry and to our best knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Dated: September 19, 1995
WHITEHALL STREET REAL ESTATE LIMITED PARTNERSHIP V
By: WH Advisors, L.P. V, General Partner
By: WH Advisors, Inc. V,
General Partner
By: _______________________
Name: Ralph Rosenberg
Title: Vice President
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<PAGE>
EXHIBIT 9
WHITEHALL STREET REAL ESTATE
LIMITED PARTNERSHIP V
WHITEHALL STREET REAL ESTATE
LIMITED PARTNERSHIP VI
PERSONAL AND CONFIDENTIAL
September 19, 1995
Board of Directors
Rockefeller Center Properties, Inc.
1270 Avenue of the Americas, Suite 2410
New York, NY 10020
Attention: Dr. Peter Linneman
Chairman
Gentlemen:
Enclosed is our response to the questions posed by your financial adviser
concerning specific details of our proposal. We believe that it is obvious that
our transaction offers the greatest value for RCPI and its shareholders compared
to other proposals. Moreover, we are prepared to work with the Board to develop
the optimal technical structure for this transaction within the framework of the
economic terms we have proposed.
Our proposal offers numerous important advantages for the shareholders of RCPI,
including:
/ / Higher Price
/ / Less Dilution
/ / Shareholder Participation
/ / Honors Existing Agreements
/ / Few Conditions
/ / Quicker Funding
We respectfully request an opportunity to meet with the Board of Directors and
its advisors to discuss our proposal in person with you to review its advantages
and to meet any concerns or objections which you may have. We are confident
that after a
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careful review of RCPI's alternatives, you will select our proposal as the one
most beneficial to shareholders.
Sincerely,
Daniel Neidich
(on behalf of Goldman, Sachs & Co.
Goldman Sachs Mortgage Company
and Whitehall Real Estate Limited Partnership V)
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<PAGE>
REQUESTED CLARIFICATION TO OFFER TO RCPI
DATED SEPTEMBER 11, 1995 BY
WHITEHALL STREET REAL ESTATE LIMITED PARTNERSHIP V
1. Describe and provide a schematic of the structure of RCPI or Newco at each
point during and after the merger.
THE RECAPITALIZATION PROPOSAL OUTLINED IN OUR LETTER TO THE BOARD OF
DIRECTORS OF RCPI, DATED SEPTEMBER 11, 1995 (THE "PROPOSAL"), CONTEMPLATES
THE MERGER STRUCTURE SET FORTH BELOW. HOWEVER, WE REMAIN AMENABLE TO
EFFECTING THE PROPOSAL WITHOUT A MERGER, SHOULD THE BOARD SO DESIRE, OR
THROUGH OTHER MEANS THAT THE BOARD MAY CONTEMPLATE. IN ADDITION, IF THE
BOARD WOULD SO PREFER, WE WOULD BE WILLING TO CONDUCT THE RIGHTS OFFERING
(AS DEFINED BELOW) SIMULTANEOUSLY WITH THE SOLICITATION OF SHAREHOLDER
APPROVAL OF THE TRANSACTION.
STEP 1: WHITEHALL ESTABLISHES A WHOLLY OWNED DELAWARE SUBSIDIARY, NEWCO.
STEP 2: WHITEHALL AND ITS AFFILIATES AND RCPI EXECUTE DEFINITIVE
AGREEMENTS.
STEP 3: RCPI CIRCULATES A PROXY STATEMENT SEEKING SHAREHOLDER APPROVAL OF
THE MERGER OF NEWCO WITH RCPI (THE "MERGER").
STEP 4: ASSUMING SHAREHOLDER APPROVAL OF THE MERGER, RCPI COMMENCES
IMMEDIATELY (ONE BUSINESS DAY FOLLOWING THE SHAREHOLDER APPROVAL)
THE $100 MILLION RIGHTS OFFERING (THE "RIGHTS OFFERING") AT $6.50
A SHARE. THE RIGHTS OFFERING REMAINS OPEN FOR 30 DAYS.
STEP 5: WHITEHALL CONTRIBUTES $100 MILLION TO NEWCO.
STEP 6: THE MERGER OCCURS. SIMULTANEOUS WITH THE MERGER, (A) THE RIGHTS
OFFERING WILL CLOSE AND THE SURVIVING COMPANY IN THE MERGER WILL
ISSUE THE SHARES PURSUANT TO THE RIGHTS OFFERING EITHER TO
EXISTING SHAREHOLDERS OF RCPI, A COMBINATION OF EXISTING
SHAREHOLDERS OF RCPI AND WHITEHALL, OR IF NO EXISTING
SHAREHOLDERS OF RCPI PARTICIPATE IN THE RIGHTS OFFERING, TO
WHITEHALL, AND (B) WHITEHALL WILL CONTRIBUTE TO THE SURVIVING
COMPANY IN THE MERGER THE FUNDS NECESSARY TO FULFILL ITS
OBLIGATIONS AS A STAND-BY PURCHASER UNDER THE RIGHTS OFFERING.
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STEP 7: AT THE TIME OF THE MERGER, THE UP TO APPROXIMATELY $116 MILLION
OUTSTANDING PRINCIPAL AMOUNT UNDER THE GSMC LOAN AND THE $213
MILLION OF RCPI'S CURRENT COUPON CONVERTIBLE DEBENTURES DUE 2000
COULD BE REPAID, AND ANY NEW FINANCING, AS DESCRIBED IN THE
PROPOSAL, COULD BE CONSUMMATED. ALTERNATIVELY, RCPI COULD
COMPLETE THE REFINANCING SUBSEQUENT TO THE MERGER, IF MARKET
CONDITIONS SUGGEST THIS WOULD BE PREFERABLE.
EXHIBIT A HERETO IS A CHART THAT SETS FORTH THE EQUITY OWNERSHIP OF
STOCKHOLDERS OF RCPI (OTHER THAN WHITEHALL) AND OF WHITEHALL UNDER
THREE DIFFERENT SCENARIOS.
PLEASE SEE ATTACHMENT I FOR A DIAGRAM OF THE MERGER.
2. What are the "market covenants" Whitehall proposes for the 14% Debentures?
THE COVENANTS IN THE 14% DEBENTURE DOCUMENT ARE MARKET COVENANTS, AND WERE
NEGOTIATED AT A TIME WHEN RCPI 1) OWNED, AS ITS SOLE ASSET, A SUB-
PERFORMING MORTGAGE SECURITY, AND 2) FACED TREMENDOUS UNCERTAINTY WITH
RESPECT TO ITS FINANCIAL VIABILITY. THE PROPOSED TRANSACTION WILL RESULT
IN STRONG EQUITY SPONSORSHIP OF RCPI. THE EQUITY SPONSORSHIP, COUPLED WITH
RCPI'S ANTICIPATED OWNERSHIP OF THE PROPERTY, ALLOWS FOR GREATER
FLEXIBILITY IN MODIFYING THESE COVENANTS IF WE REACH AN AGREEMENT WITH YOU.
PLEASE SEE ATTACHMENT II FOR OUR PROPOSED MARK-UP OF THE EXISTING LOAN
COVENANTS CONTAINED IN THE EXISTING DEBENTURE PURCHASE AGREEMENT TO
ACCOMMODATE OUR PROPOSED TRANSACTION. AS FOR THE MORTGAGE "PROPERTY LEVEL"
COVENANTS, WHITEHALL IS PREPARED TO ACCEPT WHAT IS NEGOTIATED IN THE
MORTGAGE DOCUMENTS WITH THE NEW MORTGAGE LENDER.
3. Please provide subordination language with respect to the 14% Debentures.
PLEASE SEE ATTACHMENT III, WHICH IS THE FORM OF INTERCREDITOR AGREEMENT
PURSUANT TO WHICH WHITEHALL SUBORDINATES ITS 14% DEBENTURES TO GOLDMAN
SACHS MORTGAGE COMPANY'S SENIOR NOTES. WE WOULD PROPOSE THIS AS THE BASIS
FOR THE SUBORDINATION OF THE 14% DEBENTURES TO THE NEW FINANCING.
4. Does Whitehall plan to sell any or all of the twelve buildings in the next
few years?
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NO, WHITEHALL DOES NOT HAVE ANY SUCH PLAN.
5. If Whitehall plans to sell any or all of the buildings, what is the
proposed timing and proceeds recognition schedule?
NOT APPLICABLE.
6. What is Whitehall's strategy with respect to negotiations with RGI for a
consensual foreclosure?
WHITEHALL EXPECTS THAT THE BOARD OF DIRECTORS OF RCPI WILL DEVELOP A
STRATEGY IN CONSULTATION WITH WHITEHALL FOR A QUICK, CONSENSUAL
FORECLOSURE.
7. Do you plan to include parties in addition to Whitehall in your investment
group?
OUR PROPOSAL CONTEMPLATES THAT ALL EXISTING SHAREHOLDERS OF RCPI WILL HAVE
THE OPPORTUNITY TO PARTICIPATE WITH WHITEHALL IN THIS INVESTMENT THROUGH
THE RIGHTS OFFERING. WE DO NOT REQUIRE ADDITIONAL INVESTORS, ALTHOUGH WE
WOULD CONSIDER ADDING INVESTORS WHO BRING STRATEGIC BENEFITS TO RCPI.
8. Will you immediately suspend or modify your cash flow sweep requirements
under the two existing loan facilities?
UPON CONSUMMATION OF THE PROPOSAL, THE CASH FLOW SWEEP WOULD BE ELIMINATED
FROM THE DEBENTURE PURCHASE AGREEMENT, DATED AS OF DECEMBER 18, 1994,
BETWEEN RCPI AND WHITEHALL, AND WOULD NOT EXIST WITH RESPECT TO THE GSMC
LOAN IF THE GSMC LOAN IS REPAID. UNTIL THAT TIME, OUR PROPOSAL DOES NOT
CONTEMPLATE ANY MODIFICATIONS TO THE CASH FLOW SWEEP REQUIREMENTS IN OUR
TWO EXISTING LOAN FACILITIES. HOWEVER, AS YOU KNOW, IN OUR LETTER TO RCPI,
DATED AUGUST 28, 1995 (A COPY OF WHICH IS ATTACHED AS EXHIBIT B), GSMC
OFFERED TO WAIVE THE $33 MILLION CASH FLOW SWEEP PREPAYMENT WHICH WAS DUE
ON SEPTEMBER 1, 1995, IN ORDER TO GIVE RCPI ADDITIONAL TIME TO CONSIDER ITS
ALTERNATIVES AND TO AVOID FEES AND OTHER COSTS AND RESTRICTIONS IN
CONNECTION WITH THE INTERIM FINANCING ARRANGEMENTS NEGOTIATED WITH THE ZELL
GROUP. GSMC IS PREPARED TO LEND THE COMPANY AN ADDITIONAL $33 MILLION
UNDER THE GSMC LOAN AGREEMENT TO REPLACE THE FUNDS PAID TO GSMC IN THAT
SWEEP.
9. Explain your fee and expense estimates with respect to both the equity and
debt financings.
STOCK PURCHASE: NO FEE
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RIGHTS OFFERING: 3% OF COMMITMENT ($3,000,000). WE EXPECT THAT ALL OF
THE RIGHTS WILL BE EXERCISED, IN WHICH CASE NO
ADDITIONAL FEES WOULD BE PAYABLE. IF, HOWEVER, ANY
RIGHTS ARE NOT EXERCISED, WHITEHALL WOULD PURCHASE THE
SHARES FOR WHICH RIGHTS ARE NOT EXERCISED, AND
WHITEHALL WILL BE ENTITLED TO A TAKE-UP FEE EQUAL TO 3%
OF THE AGGREGATE PURCHASE PRICE OF THOSE SHARES.
DEBT FINANCING: FOR ACTING AS FINANCIAL ADVISOR IN CONNECTION WITH THE
ISSUANCE OF THE NEW DEBT CONTEMPLATED BY OUR PROPOSAL,
GS WOULD RECEIVE AN ADVISORY FEE EQUAL TO 1% OF THE
AGGREGATE PRINCIPAL AMOUNT OF SUCH NEW DEBT. WE DO NOT
PLAN TO PURCHASE THE NEW DEBT FOR OUR OWN ACCOUNT. SEE
QUESTION 16.
EXPENSE ESTIMATE: $1,000,000
10. What fees will Goldman charge to serve as financial advisor to RCPI for the
new financing?
THE ONLY FEES THAT WE CONTEMPLATE IN CONNECTION WITH OUR PROPOSAL ARE SET
FORTH IN THE ANSWER TO QUESTION 9.
11. Will current or future warrants receive dividends?
THERE WOULD BE NO CHANGE IN THE EXISTING WARRANT AGREEMENT WITH RESPECT TO
DIVIDENDS.
12. What dividend policy and payments do you project?
WE EXPECT THAT THE BOARD OF DIRECTORS WILL DETERMINE DIVIDEND POLICY AND
PAYMENTS IN LIGHT OF ALL THE CIRCUMSTANCES. ACCORDINGLY, WE HAVE NOT
PROJECTED ANY PARTICULAR DIVIDEND POLICY, ALTHOUGH OF COURSE WE EXPECT THE
COMPANY TO RETAIN REIT STATUS.
13. How do you plan to position the Whitehall proposal for the required
shareholder vote?
SEE QUESTION 1.
-9-
<PAGE>
14. At what interest rates do you expect to finance the $350 million or $625
million debt pieces?
WE EXPECT THAT THE NEW DEBT FINANCING WOULD BE RAISED AT THE INTEREST RATE
AND ON THE TERMS THEN PREVAILING IN THE MARKET. BASED ON CURRENT MARKET
CONDITIONS, WE WOULD EXPECT THE INTEREST RATE ON SUCH NEW DEBT, IF ISSUED
TODAY, WOULD BE LIBOR + 250 BASIS POINTS OR LESS.
15. Will Whitehall principal the new debt?
NO. HOWEVER, SEE QUESTION 16.
16. If GSMC will principal the new financing, what interest rate and fees does
it expect to charge?
GSMC HAS NO PLANS TO PRINCIPAL THE NEW DEBT FINANCING. GSMC WOULD CONSIDER
OFFERING TO PRINCIPAL THE NEW DEBT ON MARKET TERMS, FOR CUSTOMARY FEES, AT
THE REQUEST OF THE COMPANY. WE EXPECT THE COMPANY TO OBTAIN THE BEST
FINANCING AVAILABLE TO IT IN THE MARKET AT THE TIME ANY FINANCING IS
COMPLETED.
MOREOVER, OUR PROPOSAL IS NOT CONDITIONED ON ANY FINANCING OR REFINANCING,
ALL OF WHICH COULD BE COMPLETED AFTER CLOSING AT THE DISCRETION OF THE
COMPANY IN LIGHT OF THEN EXISTING MARKET CONDITIONS.
17. Please explain the "without regard to the principles of conflict of laws"
statement in Section 7.
THE PURPOSE OF THE CLAUSE IS TO ENSURE THAT THE SUBSTANTIVE LAWS OF THE
STATE OF NEW YORK WILL ALWAYS GOVERN THE LETTER. THE CLAUSE MEANS THAT IN
THE EVENT THE CONFLICTS OF LAW PRINCIPLES OF THE STATE OF NEW YORK WERE TO
REQUIRE THE APPLICATION OF THE SUBSTANTIVE LAWS OF ANOTHER JURISDICTION,
THE CONFLICTS OF LAW PRINCIPLES WOULD BE DISREGARDED AND THE SUBSTANTIVE
LAWS OF THE STATE OF NEW YORK WOULD GOVERN THE LETTER.
18. Are warrants defined as "equity securities"?
WARRANTS ARE INCLUDED IN THE TERM "EQUITY SECURITIES" AS IT IS USED IN THE
PROPOSAL.
-10-
<PAGE>
19. With respect to Whitehall Board seats, will Whitehall relinquish all Board
representation rights if it sells all of its stock but retains warrants?
NO. AS YOU KNOW, WHITEHALL CURRENTLY HAS THE RIGHT TO BOARD REPRESENTATION
BASED ON ITS OWNERSHIP OF WARRANTS. UNDER OUR PROPOSAL, WE WOULD EXPECT TO
CONTINUE TO HAVE BOARD REPRESENTATION APPROXIMATELY EQUAL TO OUR PERCENTAGE
OWNERSHIP IN THE COMPANY ON A FULLY DILUTED BASIS.
20. Will the new debt amortize in proportion to the accretion of the zero
coupon bonds?
WE EXPECT THAT THE NEW DEBT WILL AMORTIZE IN PROPORTION TO THE ACCRETION OF
THE ZERO COUPON BONDS, SINCE THAT WILL REDUCE THE COMPANY'S FINANCING COST
AND AVOID ANY INCREASE IN THE OVERALL LEVERAGE OF THE COMPANY. HOWEVER,
THE AMORTIZATION SCHEDULE OF THE NEW DEBT WILL BE DETERMINED BASED ON
MARKET CONDITIONS AND NEGOTIATIONS WITH THE NEW LENDER.
21. When do you expect to close the Stock Purchase and Rights Offering?
AS SOON AS PRACTICABLE. WE WOULD ANTICIPATE THAT THE CLOSING WOULD
PROBABLY OCCUR APPROXIMATELY 80 DAYS FOLLOWING THE EXECUTION OF DEFINITIVE
DOCUMENTS (30 DAYS TO PREPARE THE DOCUMENTS, FILE THEM WITH THE SEC AND
HAVE THEM CLEARED, 20 DAYS TO SOLICIT SHAREHOLDER APPROVAL AND 30 DAYS TO
CONDUCT THE RIGHTS OFFERING).
22. Will Whitehall receive anti-dilution protection in the future only to the
extent that new equity securities are issued at a price below the then fair
market value of the securities issued?
UPON CONSUMMATION OF THE PROPOSAL, OUR ANTI-DILUTION PROTECTION WOULD BE
AMENDED SO THAT THE SALE OF SECURITIES AT MARKET VALUE WOULD NOT TRIGGER
THE APPLICATION OF THE ANTI-DILUTION PROTECTION. THE ANTI-DILUTION
PROVISIONS WOULD CONTINUE TO PROTECT US AGAINST BELOW MARKET ISSUANCES,
STOCK DIVIDENDS, STOCK SPLITS AND THE OTHER CIRCUMSTANCES NOW COVERED BY
THOSE PROVISIONS.
23. Will Whitehall receive a 6% fee on the Take-up Shares (3% on New Shares
plus 3% on Take-up Shares)?
-11-
<PAGE>
YES. TO THE EXTENT THE EXISTING SHAREHOLDERS OF RCPI NEITHER EXERCISE THEIR
RIGHTS NOR SELL THEM TO OTHERS WHO WOULD EXERCISE, WHITEHALL WOULD PURCHASE
THE SHARES FOR WHICH RIGHTS ARE NOT EXERCISED AND WOULD BE ENTITLED TO A 3%
TAKE-UP FEE. PLEASE NOTE THAT OUR PROPOSAL CONTEMPLATES FREE
TRANSFERABILITY AND TRADING OF THE RIGHTS. SEE QUESTION 9.
24. Why does Whitehall request that RCPI waive its "excess shares" provisions?
OUR PROPOSAL CONTEMPLATES THAT THE "EXCESS SHARE" PROVISION WILL NOT APPLY
IN THE CONTEXT OF THE MERGER, AND THAT IN THE FUTURE, THE COMPANY WILL HAVE
A STANDARD "EXCESS SHARE" PROVISION -- ONE THAT PERMITS THE BOARD OF
DIRECTORS TO WAIVE THE "EXCESS SHARE" PROVISION WITH RESPECT TO ANY PERSONS
OR TRANSACTIONS SO LONG AS SUCH WAIVER DOES NOT ADVERSELY AFFECT THE REIT
STATUS OF THE ENTITY.
25. Would Whitehall defer the September 22, 1995 expiration of the letter
agreement?
WE WOULD BE PLEASED TO CONSIDER EXTENDING THE EXPIRATION DATE AT THE
REQUEST OF THE COMPANY.
26. Other Comments.
WE NOTE THAT THE ADDITIONAL WARRANTS CONTEMPLATED BY OUR PROPOSAL UNDER THE
ANTI-DILUTION PROVISIONS OF OUR WARRANT AGREEMENT WOULD HAVE AN EXERCISE
PRICE OF $6.50, AND THEREFORE WOULD BE LESS DILUTIVE TO THE SHAREHOLDERS
AND MUCH LESS VALUABLE THAN NEW WARRANTS ISSUED AT A LOWER PRICE.
FURTHER, WE NOTE THAT THE 14% DEBENTURES PROVIDE SEVERAL ADVANTAGES TO THE
COMPANY COMPARED TO SHORT-TERM FLOATING RATE DEBT. THE DEBENTURES HAVE A
12-YEAR TERM, A FIXED INTEREST RATE, A PAY-IN-KIND FEATURE, ARE
SUBORDINATED TO CERTAIN OTHER DEBT, AND REQUIRE NO FEES. ALL OF THESE
CONSIDERATIONS BENEFIT THE SHAREHOLDERS COMPARED TO SHORT-TERM FLOATING
RATE DEBT.
-12-
<PAGE>
EXHIBIT A
Summary Fully-Diluted Ownership Table
Public
Exercises/ Public and
Current Whitehall Whitehall both Public does
Ownership Does Not Exercise not Exercise
- -----------------------------------------------------------------------------
Public 80.0% 63.7% 63.7% 45.5%
Whitehall
Common 0.0% 18.3% 18.3% 36.5%
Warrants 19.9% 18.0% 18.0% 18.0%
----- ----- ----- -----
Total Whitehall 19.9% 36.3% 36.3% 54.5%
Total 100.0% 100.0% 100.0% 100.0%
-13-
<PAGE>
CASE #1: PUBLIC EXERCISES/WHITEHALL DOES NOT EXERCISE
(all numbers in $000's)
<TABLE>
<CAPTION>
Existing Ownership Proposed Transaction
-------------------------------------------------------- ------------------------------------------
Fully Diluted
# Warrants -------------------------- # Warrants Fully
Shares @$5.00 # % Shares @$6.50* Diluted
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Public 38,261 0 38,261 80.10% 15,385 0 15,385
Whitehall 0 9,505 9,505 19.90% 15,385 5,647 21,032
----- ------ ------ ------ ----- ------
Total 38,261 9,505 47,766 100.00% 30,769 5,647 36,417
</TABLE>
Total-After Implementation of Transaction
-------------------------------------------------------------
Shares Warrants Fully Diluted
-------------------- ---------------------
# % # %
-------------------------------------------------------------
Public 53,645 77.71% 0 53,645 63.72%
Whitehall 15,385 22.29% 15,153 30,538 36.28%
------ ------ ------ ------ -------
Total 69,030 100.00% 15,153 84,183 100.00%
* Issued pursuant to antidilution provisions of Warrant Agreement from
December 19, 1994 between Whitehall and RCPI under which RCPI is obligated
to maintain Whitehall's warrant position at 19.9% on a fully-diluted basis.
In our proposal, Whitehall would accept a voluntary reduction in the
percentage of its warrant position to 18.0%. Whitehall would receive no
additional warrants as a result of it being a purchaser of additional
shares of common stock.
-14-
<PAGE>
CASE #2: PUBLIC EXERCISES/WHITEHALL EXERCISES
(all numbers in $000's)
<TABLE>
<CAPTION>
Existing Ownership Proposed Transaction
-------------------------------------------------------- ------------------------------------------
Fully Diluted
# Warrants -------------------------- # Warrants Fully
Shares @$5.00 # % Shares @$6.50* Diluted
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Public 38,261 0 38,261 80.10% 12,323 0 12,323
Whitehall 0 9,505 9,505 19.90% 18,446 5,647 24,094
----- ------ ------ ------ ----- ------
Total 38,261 9,505 47,766 100.00% 30,769 5,647 36,417
</TABLE>
Total-After Implementation of Transaction
-------------------------------------------------------------
Shares Warrants Fully Diluted
-------------------- ---------------------
# % # %
-------------------------------------------------------------
Public 50,584 73.28% 0 50,584 60.09%
Whitehall 18,446 26.72% 15,153 33,599 39.91%
------ ------ ------ ------ -------
Total 69,030 100.00% 15,153 84,183 100.00%
* Issued pursuant to antidilution provisions of Warrant Agreement from
December 19, 1994 between Whitehall and RCPI under which RCPI is obligated
to maintain Whitehall's warrant position at 19.9% on a fully-diluted basis.
In our proposal, Whitehall would accept a voluntary reduction in the
percentage of its warrant position to 18.0%. Whitehall would receive no
additional warrants as a result of it being a purchaser of additional
shares of common stock.
-15-
<PAGE>
CASE #3: PUBLIC DOES NOT EXERCISE
(all numbers in $000's)
<TABLE>
<CAPTION>
Existing Ownership Proposed Transaction
-------------------------------------------------------- ------------------------------------------
Fully Diluted
# Warrants -------------------------- # Warrants Fully
Shares @$5.00 # % Shares @$6.50* Diluted
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Public 38,261 0 38,261 80.10% 0 0 0
Whitehall 0 9,505 9,505 19.90% 30,769 5,647 36,417
----- ------ ------ ------ ----- ------
Total 38,261 9,505 47,766 100.00% 30,769 5,647 36,417
</TABLE>
Total-After Implementation of Transaction
-------------------------------------------------------------
Shares Warrants Fully Diluted
-------------------- ---------------------
# % # %
-------------------------------------------------------------
Public 38,261 55.43% 0 38,261 45.45%
Whitehall 30,769 44.57% 15,153 45,922 54.55%
------ ------ ------ ------ -------
Total 69,030 100.00% 15,153 84,183 100.00%
* Issued pursuant to antidilution provisions of Warrant Agreement from
December 19, 1994 between Whitehall and RCPI under which RCPI is obligated
to maintain Whitehall's warrant position at 19.9% on a fully-diluted basis.
In our proposal, Whitehall would accept a voluntary reduction in the
percentage of its warrant position to 18.0%. Whitehall would receive no
additional warrants as a result of it being a purchaser of additional
shares of common stock.
-16-
<PAGE>
EXHIBIT B
PERSONAL AND CONFIDENTIAL
August 28, 1995
Board of Directors
Rockefeller Center Properties, Inc.
1270 Avenue of the Americas
New York, New York 10020.
Attention: Dr. Peter Linneman
Chairman
Gentlemen:
We are prepared to waive the mandatory principal prepayment due September 1 in
order to give you additional time to consider your alternatives and to avoid
fees and other costs and restrictions in connection with the $33 million interim
financing you have negotiated with the Zell Group.
We believe that the equityholders of RCPI would be better off if RCPI obtained a
waiver of the Prepayment from GSMC and thereby avoided the conditions and fees
required in the Zell Loan Transaction. Therefore, subject to your satisfying
the conditions set forth in the attached form, GSMC is prepared to waive the
Prepayment in exchange for a $500,000 waiver fee, which fee will be added to the
balance of the GSMC loan.
As always, we remain eager to work with the Board constructively to help RCPI
solve its liquidity problems while honoring its obligations.
As we indicated to you in our letter of August 11, 1995, we believe that the
entire Zell recapitalization plan that formed the basis of the Zell Letter of
Intent and is summarized in the Form 8-K is not in the best interests of the
equityholders of RCPI. Please note that the GSMC waiver is not conditioned in
any way on any action by RCPI respecting the Zell recapitalization plan.
However, we hope that by relieving the time pressure created by the Prepayment,
the waiver will help the Board to develop a financing plan that is in the best
interests of the equityholders of RCPI and complies with all of RCPI's
obligations.
Sincerely,
GOLDMAN, SACHS & CO.
on behalf of itself,
GOLDMAN SACHS MORTGAGE COMPANY and
WHITEHALL REAL ESTATE LIMITED
PARTNERSHIP V
-17-
<PAGE>
WAIVER
Goldman Sachs Mortgage Company ("GSMC") hereby agrees to waive the obligation of
Rockefeller Center Properties, Inc. ("RCPI") to make the $33.7 million mandatory
principal prepayment (the "Prepayment") due to GSMC on September 1 under Section
2.05(b) of the Loan Agreement, dated as of December 18, 1994, between RCPI and
GSMC (the "GSMC Loan Agreement") on the following conditions: (a) RCPI does not
consummate the loan and share issuance transactions contemplated by the
Investment Agreement, dated August 18, 1995, between Zell/Merrill Lynch Real
Estate Opportunity Partners Limited Partnership III and RCPI (the "Investment
Agreement") or any similar transaction (and thereby terminates the Investment
Agreement), (b) RCPI waives its right under the various agreements entered into
between RCPI and Goldman, Sachs & Co. GSMC and Whitehall Street Real Estate
Limited Partnership V (together, the "Whitehall Group") to borrow up to $10
million for working capital needs, and (c) RCPI agrees to pay to GSMC $500,000
as a waiver fee, which fee shall be added to the balance of the GSMC loan.
The waiver granted hereby does not constitute a waiver of any other provision
of, or the obligation of RCPI to make any other payments under, the GSMC Loan
Agreement or any agreement entered into between RCPI and any member of the
Whitehall Group.
Please indicate your agreement to have GSMC waive the Prepayment on the terms
set forth in this waiver by signing below in the space indicated and returning a
copy of the executed waiver.
Sincerely,
GOLDMAN, SACHS & CO. on Agreed and Accepted:
behalf of itself, GOLDMAN
SACHS MORTGAGE COMPANY and ROCKEFELLER CENTER
WHITEHALL REAL ESTATE PROPERTIES, INC.
LIMITED PARTNERSHIP V
____________________________ ____________________
-18-
<PAGE>
NBC/EOH TERM SHEET
Date: September 11, 1995
1. LEASE MODIFICATIONS. Except as otherwise provided herein and as may be
required to conform to the bondable lease transaction, all existing rights and
privileges of NBC in the existing Lease (the "Lease") to be retained, but
modifications will be made to the Lease to accomplish the following in manner
consistent with continued IDA benefit coverage:
BONDABLE LEASE. The lease will be modified to include the following:
<TABLE>
<S> <C> <C>
- - Term: 27 years from the later of 1/1/96 or consummation of a plan of
reorganization, but in no event later than 3/31/96
- - Rent: $2,519,718.90 per month, payable in arrears
- - Expenses: Triple net (bondable)
- - Casualty: Triple net (bondable)
- - Condemnation: Triple net (bondable)
- - Enhancement: GE guaranty of NBC obligations
- - Bond Rating: AAA/Aaa (Standard & Poor's/Moody's)
</TABLE>
SYSTEMS. NBC's right to assume electrical and chilled water systems to the
extent they are solely for NBC, which expired in August 1989, will be reinstated
and NBC's right to assume condenser water systems will be extended beyond the
current December 15, 1995 termination date so long as such systems assumptions
are based on sound engineering practices and do not adversely impact the
delivery of such services to other tenants. Both assumption rights will continue
until the Lease terminates. The capital cost of altering these mechanical
systems would be paid by NBC and NBC will indemnify Landlord pursuant to a
mutually acceptable indemnification arrangement for any damage caused by this
work or the operations of the systems.
ALTERATIONS. NBC will be permitted to make interior alterations without
Landlord approval costing up to $1 million per project, so long as such
alterations do not impact the structure of the building or conflict with its
landmark status. NBC will indemnify Landlord pursuant to a mutually acceptable
indemnity agreement for any damage resulting from such alterations made without
Landlord's approval. Landlord and tenant will in good faith act to expedite
review and approvals of alterations. All alterations will continue to require
any necessary City inspections and approvals.
SUBLEASING APPROVALS. Landlord and tenant will in good faith act to
expedite review and approvals of proposed subleases.
OPERATING COSTS. Landlord will meet periodically with NBC to review and
explore possible reductions in operating costs of the Center, including common
areas. Landlord will consider NBC's suggestions in good faith, but in the event
of disagreement between the
1
<PAGE>
parties, Landlord will control the outcome. Landlord will use reasonable and
customary accounting procedures for common charge allocations.
MUSIC HALL. NBC will be granted a right of first offer with respect to any
management/operating lease for Radio City Music Hall, subject only to the rights
to be granted to Disney.
NO COMPETING USES. No public area within the Center (including, without
limitation, the skating rink) may be made available (except as may otherwise be
required pursuant to the rights of current tenants) on a regular or continuous
basis for commercial, sales, promotional, advertising, filming, or broadcasting
or other marketing purposes competitive with NBC entertainment, sports, news or
information businesses without specific advance NBC written consent; occasional
one-time (time limited and previously scheduled in consultation with NBC) public
activities would continue to be permitted.
RESTRICTIONS ON OFFICE LEASING. In addition to existing limitations and
restrictions in the Lease, no "Competitor" of NBC (i.e., any entity owning or
controlling a network or a significant interest in one or more significant
stations or in the video broadcasting business and any of its affiliates) shall
be granted a lease or permitted by Landlord (where its sole discretion for
approval is required) as the subtenant or occupant of any space in the Center
without NBC's consent, unless the terms of such occupancy specify that such
Competitor will not (i) utilize the common or public areas within the Center for
promotional, advertising or other marketing purposes, (ii) conduct broadcasting
from visible ground floor space, (iii) publicly (by broadcast, advertising,
media announcements, or otherwise) make use of the name "Rockefeller Center" or
its image or the image of any of its prominent parts for promotional or
marketing purposes, or (iv) conduct ongoing retail sales from or at such space.
RESTRICTIONS ON RETAIL SPACE USE. At 30 Rockefeller Center and in the
designated "red zone" of public area routinely used by NBC in broadcast
activities (see attached map), NBC will have right to unobstructed views, free
from visible occupancy, signs, or symbols of Competitors. This restriction shall
lapse if and when NBC no longer broadcasts from Studio 1A and does not otherwise
utilize the "red zone" in production or for other promotional purposes.
AGREED NBC ACTIVITY. NBC agrees that during the Lease, it shall continue
substantial broadcast and production activities in the Center.
INSURANCE. Landlord shall pay or reimburse the full incremental amount of
any increase in NBC's current insurance cost resulting from the bondable lease
transaction.
PURCHASE OPTION. Either the Lease or a separate instrument will provide to
NBC a purchase option for the condominium units it occupies (subject to the
continued fee ownership of those units by IDA for IDA benefit purposes) in 2022
at a net price equal to 94% of the then fair market value of such units on a
basis to be agreed.
2
<PAGE>
2. EQUITY INVESTMENT. NBC will, subject to completion of due diligence,
invest $62,500,000 in the equity on a parity basis with the other members of the
Zell investor group and will be entitled to a 25% interest in a portion of the
Group's $250,000,000 aggregate investment. A representative of NBC or GE will
receive one of the nine seats on the REIT Board of Directors.
3. FEES AND EXPENSES. Landlord shall reimburse NBC for all expenses related
to the bondable lease transaction including, but not limited to, attorneys'
fees, [investment banking fees and expenses, lease-backed bond underwriting
fees] and expenses, SEC fees, printing costs, rating agencies, trustee and
servicer fees, and engineering reports, it being understood that NBC shall bear
no expense in connection with the bondable lease transaction except for the
payment of its rent obligations under the Lease. Payment of other NBC expenses
in connection with the transactions described herein (other than the bondable
lease transaction) shall be agreed upon.
4. STUDIO 1A (TODAY STUDIO). Lease for this space shall be modified to
provide for rent beginning 1/1/96 to be $665,000 per annum payable monthly in
arrears. Additionally, NBC shall have three five-year options at the same rent
to extend this lease from 1/1/04 through 12/31/18. If NBC ceases operation of
broadcasting operations from Studio 1A for a continuous period to be determined,
it shall surrender the lease to Landlord at Landlord's request. In event of
sublease by NBC, Landlord shall be entitled to 100% of sublease profit for this
space. Landlord reserves the right to approve of sublessee but shall not
unreasonably withhold such approval.
5. PUBLICITY. Neither party shall make any public announcement or
disclosure of the terms of this letter or of its existence without the consent
of the other.
6. NON-BINDING EFFECT. Except for the provisions of paragraph 5 concerning
limitations on publicity, this letter shall not constitute a binding agreement
and neither party shall have any legal obligations to the other unless and until
definitive agreements have been negotiated and executed by the parties hereto.
The transaction shall be subject to NBC, GE, and REIT Board approvals and any
necessary regulatory approvals.
Acknowledged for the purposes stated:
- ------------------------------------------------------------------
- ------------------------------------------------------------------
L. Rutkowski
R. Kincaid
NBC
EOH
- --------------------------
R. Scarlata
RCPI
3
<PAGE>
CONFIDENTIAL
BOARD OF DIRECTORS
CONFIDENTIAL INFORMATION PACKAGE SUPPLEMENT
September 22, 1995
PaineWebber Incorporated
<PAGE>
CONFIDENTIAL
TABLE OF CONTENTS
NOTE: THIS INFORMATION SUPPLEMENTS THE CONFIDENTIAL INFORMATION PACKAGE
DATED SEPTEMBER 22, 1995 WHICH WAS DELIVERED TO THE BOARD OF DIRECTORS
ON SEPTEMBER 20, 1995.
I. Updated Case 2 Cash Flow Projections
-- STATUS QUO
-- WITH NBC LEASE MODIFICATIONS
II. Projected Dividend Distributions
-- ZELL TRANSACTION BASE SCENARIO
-- ZELL TRANSACTION ALTERNATIVE SCENARIO
-- GOLDMAN PROPOSAL BASE SCENARIO
-- GOLDMAN PROPOSAL ALTERNATIVE SCENARIO
PaineWebber Incorporated
<PAGE>
CONFIDENTIAL
I. UPDATED CASE 2 CASH FLOW PROJECTIONS
OVERVIEW
- - Rockefeller Center property cash flow projections have been prepared by The
Realtech Group and assume a lease-up to an approximate 96% economic
occupancy by January 1, 1998. The projections are the Case 2 cash flow
projections presented to the Board of Directors on August 3, 1995, as
updated by The Realtech Group to reflect recent leasing.
- - Cash flow projections have been prepared under two separate scenarios:
(i) the "Status Quo" scenario reflects the projected cash flow assumptions
as described above and (ii) the "With NBC Lease Modification" scenario
reflects the Status Quo scenario with a modified cash flow stream due to
the change in NBC's lease payment schedule.
-- As stated in the Letter of Intent signed by RCPI, Equity
Office Holdings and NBC, NBC will modify its current lease
payment schedule to a triple-net rent lease under which it
will pay a monthly rent of approximately $2.5 million
through December 31, 2022 on its 1.28 million feet of space
(1).
- - These updated Case 2 cash flow projections provide the Rockefeller Center
cash flows which serve as the basis for the net present value analyses
performed on the Zell Transaction and Goldman Proposal which are outlined
in the Confidential Information Package.
- ---------------
(1) Does not include the approximately 19,000 square-foot "Studio 1A" lease or
any additional space leased by General Electric or NBC subsequent to the
1988 lease agreement.
PaineWebber Incorporated 1
<PAGE>
CONFIDENTIAL
UPDATED CASE 2 CASH FLOW PROJECTIONS
-- STATUS QUO
<TABLE>
<CAPTION>
PROJECTED CASE 2 CASH FLOWS BASED ON APPRAISAL ASSUMPTIONS WITH LEASE-UP BY JANUARY 1, 1998
- -----------------------------------------------------------------------------------------------------------------------------
(THOUSANDS) 1996 1997 1998 1999 2000 2001
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Effective Gross Income $198,113 $237,061 $287,093 $299,181 $306,292 $313,931
Total Operating Expense (1) 148,179 153,893 161,320 169,119 177,307 188,455
-------- -------- -------- -------- -------- --------
Net Operating Income $ 49,934 $ 83,168 $125,773 $130,063 $128,984 $125,476
Tenant Work $ 21,513 $ 21,096 $ 2,764 $ 4,118 $ 4,968 $ 11,530
Leasing Commissions 10,048 8,791 1,411 2,126 3,417 7,097
Capitalized Expense (2) 14,644 12,485 14,167 20,825 11,775 7,350
-------- -------- -------- -------- -------- --------
Total Property Investment $ 46,205 $ 42,372 $ 18,342 $ 27,069 $ 20,160 $ 25,977
-------- -------- -------- -------- -------- --------
Net Cash Flow Before Debt Service $ 3,729 $ 40,797 $107,431 $102,993 $108,824 $ 99,499
- -----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
(THOUSANDS) 2002 2003 2004 2005 2006 2007
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Effective Gross Income $333,304 $354,587 $363,907 $368,227 $380,469 $406,894
Total Operating Expense 197,483 206,963 216,916 227,367 238,340 249,863
-------- -------- -------- -------- -------- --------
Net Operating Income $135,820 $147,624 $146,991 $140,860 $142,128 $157,031
Tenant Work $ 9,471 $ 4,543 $ 13,572 $ 12,272 $ 22,804 $ 18,976
Leasing Commissions 6,182 2,250 9,993 9,403 12,037 10,486
Capitalized Expense (2) 7,000 7,000 7,000 7,280 7,571 7,874
-------- -------- -------- -------- -------- --------
Total Property Investment $ 22,653 $ 13,793 $ 30,565 $ 28,955 $ 42,412 $ 37,336
-------- -------- -------- -------- -------- --------
Net Cash Flow Before Debt Service $113,167 $133,831 $116,426 $111,906 $ 99,717 $119,695
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ---------------
(1) Does not include potential New York City tax rebate in 1996 due to the
uncertainty of the net impact to the property after reimbursements to
tenants.
(2) Capital expenditures represent the Borrower's budget through 2004 and
increase by the assumed growth rate thereafter.
PaineWebber Incorporated 2
<PAGE>
CONFIDENTIAL
UPDATED CASE 2 CASH FLOW PROJECTIONS
-- WITH NBC LEASE MODIFICATIONS
<TABLE>
<CAPTION>
PROJECTED CASE 2 CASH FLOWS BASED ON APPRAISAL ASSUMPTIONS WITH LEASE-UP BY JANUARY 1, 1998
- -----------------------------------------------------------------------------------------------------------------------------
(THOUSANDS) 1996 1997 1998 1999 2000 2001
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Effective Gross Income $217,577 $250,632 $282,984 $295,072 $302,183 $309,822
Total Operating Expense (1) 148,179 153,893 161,320 169,119 177,307 188,455
-------- -------- -------- -------- -------- --------
Net Operating Income $ 69,398 $ 96,739 $121,664 $125,954 $124,875 $121,367
Tenant Work $ 21,513 $ 21,096 $ 2,764 $ 4,118 $ 4,968 $ 11,530
Leasing Commissions 10,048 8,791 1,411 2,126 3,417 7,097
Capitalized Expense (2) 14,644 12,485 14,167 20,825 11,775 7,350
-------- -------- -------- -------- -------- --------
Total Property Investment $ 46,205 $ 42,372 $ 18,342 $ 27,069 $ 20,160 $ 25,977
-------- -------- -------- -------- -------- --------
Net Cash Flow Before Debt Service $ 23,193 $ 54,368 $103,322 $ 98,884 $104,715 $ 95,390
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
(THOUSANDS) 2002 2003 2004 2005 2006 2007
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Effective Gross Income $329,195 $350,478 $359,798 $364,118 $376,360 $401,497
Total Operating Expense 197,483 206,963 216,916 227,367 238,340 249,863
-------- -------- -------- -------- -------- --------
Net Operating Income $131,711 $143,515 $142,882 $136,751 $138,019 $151,634
Tenant Work $ 9,471 $ 4,543 $ 13,572 $ 12,272 $ 22,804 $ 18,976
Leasing Commissions 6,182 2,250 9,993 9,403 12,037 10,486
Capitalized Expense (2) 7,000 7,000 7,000 7,280 7,571 7,874
-------- -------- -------- -------- -------- --------
Total Property Investment $ 22,653 $ 13,793 $ 30,565 $ 28,955 $ 42,412 $ 37,336
-------- -------- -------- -------- -------- --------
Net Cash Flow Before Debt Service $109,058 $129,722 $112,317 $107,797 $ 95,608 $114,298
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ---------------
(1) Does not include potential New York City tax rebate in 1996 due to the
uncertainty of the net impact to the property after reimbursements to
tenants.
(2) Capital expenditures represent the Borrower's budget through 2004 and
increase by the assumed growth rate thereafter.
PaineWebber Incorporated 3
<PAGE>
CONFIDENTIAL
II. ZELL TRANSACTION
-- BASE SCENARIO DIVIDEND DISTRIBUTIONS
<TABLE>
<CAPTION>
DISTRIBUTIONS PER SHARE -- 2007 SALE
- -----------------------------------------------------------------------------------------------------------------------------
1996 1997 1998 1999 2000 2001
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Distributions to Common Shareholders $ -- $0.22 $0.50 $0.44 $0.51 $ 0.40
Distributions to Warrant & SAR Holders (1) $ -- $ -- $ -- $ -- $ -- $ --
- -----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
2002 2003 2004 2005 2006 2007
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Distributions to Common Shareholders $0.54 $0.60 $0.58 $0.53 $0.41 $ 0.60
Distributions to Warrant & SAR Holders (1) $0.13 $0.19 $0.17 $0.12 $ -- $ 0.18
Residual Value in Terminal Year (2) $17.74
- -----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
DISTRIBUTIONS PER SHARE -- 2000 SALE
- ------------------------------------------------------------------------------------------------------------------
1996 1997 1998 1999 2000
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Distributions to Common Shareholders $ -- $0.22 $0.50 $0.44 $ 0.51
Distributions to Warrant & SAR Holders (1) $ -- $ -- $ -- $ -- $ --
Residual Value in Terminal Year (2) $11.39
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
- ---------------
(1) It is assumed that distributions will continue to be made to warrant and
SAR holders as per the warrant and SAR agreements dated December 18, 1994.
Under these agreements, warrant and SAR holders are entitled to receive
annual cash distributions equal to the positive difference, if any, between
the aggregate dividend paid per share of common stock during the prior
calendar year (placed in the current calendar year for modeling purposes)
and (i) with respect to years ending on or before December 31, 2000, $0.60
or (ii) thereafter, the product of the warrant or SAR exercise price
multiplied by LIBOR plus 1%.
(2) Residual value per share is calculated as property sale proceeds, plus cash
on Nureit's balance sheet, plus cash received from the conversion of
warrants and SARs, less debt outstanding, divided by the number of fully
diluted shares outstanding.
PaineWebber Incorporated 4
<PAGE>
CONFIDENTIAL
ZELL TRANSACTION
-- ALTERNATIVE SCENARIO DIVIDEND DISTRIBUTIONS
<TABLE>
<CAPTION>
DISTRIBUTIONS PER SHARE -- 2007 SALE
- -----------------------------------------------------------------------------------------------------------------------------
1996 1997 1998 1999 2000 2001
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Distributions to Common Shareholders $ -- $0.22 $0.50 $0.44 $0.51 $ 0.40
Distributions to Warrant & SAR Holders (1) $ -- $ -- $ -- $ -- $ -- $ --
- -----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
2002 2003 2004 2005 2006 2007
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Distributions to Common Shareholders $0.52 $0.68 $0.54 $0.50 $0.39 $ 0.55
Distributions to Warrant & SAR Holders (1) $0.08 $0.24 $0.11 $0.07 $ -- $ 0.12
Residual Value in Terminal Year (2) $14.79
- -----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
DISTRIBUTIONS PER SHARE -- 2000 SALE
- ------------------------------------------------------------------------------------------------------------------
1996 1997 1998 1999 2000
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Distributions to Common Shareholders $ -- $0.22 $0.50 $0.44 $ 0.51
Distributions to Warrant & SAR Holders (1) $ -- $ -- $ -- $ -- $ --
Residual Value in Terminal Year (2) $10.03
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
- ---------------
(1) It is assumed that distributions will continue to be made to warrant and
SAR holders as per the warrant and SAR agreements dated December 18, 1994.
Under these agreements, warrant and SAR holders are entitled to receive
annual cash distributions equal to the positive difference, if any, between
the aggregate dividend paid per share of common stock during the prior
calendar year (placed in the current calendar year for modeling purposes)
and (i) with respect to years ending on or before December 31, 2000, $0.60
or (ii) thereafter, the product of the warrant or SAR exercise price
multiplied by LIBOR plus 1%.
(2) Residual value per share is calculated as property sale proceeds, plus cash
on Nureit's balance sheet, plus cash received from the conversion of
warrants and SARs, less debt outstanding, divided by the number of fully
diluted shares outstanding.
PaineWebber Incorporated 5
<PAGE>
CONFIDENTIAL
GOLDMAN PROPOSAL
-- BASE SCENARIO DIVIDEND DISTRIBUTIONS
<TABLE>
<CAPTION>
DISTRIBUTIONS PER SHARE -- 2007 SALE
- -----------------------------------------------------------------------------------------------------------------------------
1996 1997 1998 1999 2000 2001
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Distributions to Common Shareholders $ -- $0.08 $0.60 $0.60 $0.60 $ 0.29
Distributions to Warrant Holders (1) $ -- $ -- $ -- $ -- $ -- $ --
- -----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
2002 2003 2004 2005 2006 2007
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Distributions to Common Shareholders $0.48 $0.60 $0.53 $0.47 $0.30 $ 0.57
Distributions to Warrant Holders (1) $0.03 $0.16 $0.08 $0.02 $ -- $ 0.12
Residual Value in Terminal Year (2) $17.46
- -----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
DISTRIBUTIONS PER SHARE -- 2000 SALE
- ------------------------------------------------------------------------------------------------------------------
1996 1997 1998 1999 2000
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Distributions to Common Shareholders $ -- $0.08 $0.60 $0.60 $ 0.60
Distributions to Warrant Holders (1) $ -- $ -- $ -- $ -- $ --
Residual Value in Terminal Year (2) $10.82
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------
(1) It is assumed that distributions will continue to be made to warrant
holders as per the warrant agreements dated December 18, 1994. Under these
agreements, warrant holders are entitled to receive annual cash
distributions equal to the positive difference, if any, between the
aggregate dividend paid per share of common stock during the prior calendar
year (placed in the current calendar year for modeling purposes) and
(i) with respect to years ending on or before December 31, 2000, $0.60 or
(ii) thereafter, the product of the warrant exercise price multiplied by
LIBOR plus 1%.
(2) Residual value per share is calculated as property sale proceeds, plus cash
on Nureit's balance sheet, plus cash received from the conversion of
warrants, less debt outstanding, divided by the number of fully diluted
shares outstanding.
PaineWebber Incorporated 6
<PAGE>
CONFIDENTIAL
GOLDMAN PROPOSAL
-- ALTERNATIVE SCENARIO DIVIDEND DISTRIBUTIONS
<TABLE>
<CAPTION>
DISTRIBUTIONS PER SHARE -- 2007 SALE
- -----------------------------------------------------------------------------------------------------------------------------
1996 1997 1998 1999 2000 2001
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Distributions to Common Shareholders $ -- $0.19 $0.60 $0.60 $0.60 $ 0.32
Distributions to Warrant & SAR Holders (1) $ -- $ -- $ -- $ -- $ -- $ --
- -----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
2002 2003 2004 2005 2006 2007
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Distributions to Common Shareholders $0.49 $0.60 $0.53 $0.48 $0.33 $ 0.57
Distributions to Warrant & SAR Holders (1) $0.04 $0.15 $0.08 $0.03 $ -- $ 0.12
Residual Value in Terminal Year (2) $16.37
- -----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
DISTRIBUTIONS PER SHARE -- 2000 SALE
- ------------------------------------------------------------------------------------------------------------------
1996 1997 1998 1999 2000
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Distributions to Common Shareholders $ -- $0.19 $0.60 $0.60 $ 0.60
Distributions to Warrant & SAR Holders (1) $ -- $ -- $ -- $ -- $ --
Residual Value in Terminal Year (2) $10.39
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
- ---------------
(1) It is assumed that distributions will continue to be made to warrant
holders as per the warrant agreements dated December 18, 1994. Under these
agreements, warrant holders are entitled to receive annual cash
distributions equal to the positive difference, if any, between the
aggregate dividend paid per share of common stock during the prior calendar
year (placed in the current calendar year for modeling purposes) and
(i) with respect to years ending on or before December 31, 2000, $0.60 or
(ii) thereafter, the product of the warrant exercise price multiplied by
LIBOR plus 1%.
(2) Residual value per share, calculated as property sale proceeds, plus cash
on REIT's balance sheet, plus cash received from the conversion of
warrants, less debt outstanding, divided by the number of fully diluted
shares outstanding.
PaineWebber Incorporated 7
<PAGE>
ROCKEFELLER CENTER PROPERTIES, INC.
BOARD OF DIRECTORS
OCTOBER 30, 1995 MEETING
PaineWebber Incorporated October 28, 1995
<PAGE>
ROCKEFELLER CENTER PROPERTIES, INC.
ANALYSIS OF ZELL INVESTOR GROUP PROPOSAL
ASSUMES A CLOSING DATE OF DECEMBER 31, 1995
RCPI SOURCE OF PROCEEDS
- -------------------------------------------------------------------------------
Cash Proceeds From Zell Investor Group $ 1,025,900,000
Cash Proceeds From Warrant Conversion (1) 53,241,449
Cash Available at Closing 3,624,768
--------------
TOTAL SOURCE OF CASH PROCEEDS $ 1,082,766,217
- -------------------------------------------------------------------------------
RCPI USE OF PROCEEDS
- -------------------------------------------------------------------------------
Repayment of Current Coupon Convertible Debentures $ 213,170,000
Repayment of Zero Coupon Convertible Debentures 360,283,410
Repayment of Floating Rate Notes (2) 119,012,134
Repayment of 14% Debentures (2) 81,239,990
Repayment of Unsecured Working Capital Loan 10,351,769
Repurchase of Common Stock 23,000,000
Swaps (Estimated) 10,000,000
Estimated Transaction Costs 8,000,000
Liquidation Expenses and Other Company Liabilities 5,588,196
Litigation Reserve (3) -
-------------
TOTAL $ 830,645,499
- -------------------------------------------------------------------------------
CASH DISTRIBUTION TO RCPI SHAREHOLDERS
- -------------------------------------------------------------------------------
Cash Available for Distribution to RCPI Shareholders $ 252,120,718
Divide By: Fully Diluted Shares Outstanding 48,545,595
-------------
DISTRIBUTION PER SHARE $ 5.19
- -------------------------------------------------------------------------------
RCPI EQUITY OWNERSHIP AT CLOSING
- -------------------------------------------------------------------------------
SHARES OUTSTANDING CONVERSION PROCEEDS
------------------ -------------------
Common Shares (4) 38,260,704 $ -
Warrants (1) 4,497,785 23,283,531
Stock Appreciation
Rights (1) 5,787,106 29,957,918
-------------------- -------------------
FULLY DILUTED SHARES
OUTSTANDING 48,545,595 53,241,449
- -------------------------------------------------------------------------------
- --------------
Note: Assumes the Zell Investor Group will purchase $23 million of RCPI shares
as outlined in the Investment Agreement dated August 18, 1995 at Fair
Market Value on November 2 and December 5, 1995. This analysis further
assumes that the Zell Investor Group will agree to purchase an
additional $5 million of RCPI shares on January 2, 1996 if the
transaction has not closed. Fair market value is assumed to be $6.85 on
November 2, 1995 and $7.75 for all purchase dates thereafter.
(1) Reflects additional Warrants and SARs issued to Whitehall in connection
with the sale of shares to the Zell Investor Group.
(2) Assumes a 1.5% prepayment penalty on the Floating Rate Notes and
repayment of the 14% Debentures without penalty.
(3) Does not include a reserve for potential litigation, including litigation
by Goldman.
(4) After the repurchase of shares sold to the Zell Investor Group.
PaineWebber Incorporated
<PAGE>
ROCKEFELLER CENTER PROPERTIES, INC.
ANALYSIS OF ZELL INVESTOR GROUP PROPOSAL
ASSUMES A CLOSING DATE OF DECEMBER 31, 1995
NOTES PROVIDED TO RCPI SHAREHOLDERS
- -------------------------------------------------------------------------------
Second Mortgage Note $ 135,000,000
Face Value of Notes Per Fully
Diluted RCPI Share $ 2.78
Net Present Value of Principal (Using
a 6.5% Discount Rate) $ 1.31
Net Present value of Interest (Using
a 12.0% Discount Rate) 1.15
------------
NET PRESENT VALUE OF PRINCIPAL AND INTEREST $ 2.45
- -------------------------------------------------------------------------------
ESTIMATED VALUE OF PROPOSAL AT DECEMBER 31, 1995
- -------------------------------------------------------------------------------
FACE VALUE BASIS
Cash Proceeds Per Share $ 5.19
Second Mortgage Note Valued at Par (Per Share) 2.78
------------
ESTIMATED VALUE PER SHARE $ 7.97
NET PRESENT VALUE BASIS
Cash Proceeds Per Share $ 5.19
Net Present Value of Second Mortgage
Note Per Share (1) 2.45
------------
ESTIMATED VALUE PER SHARE $ 7.65
- -------------------------------------------------------------------------------
SENSITIVITY MATRIX - ESTIMATED VALUE OF PROPOSAL AT DECEMBER 31, 1995
- -------------------------------------------------------------------------------
DISCOUNT RATE USED TO DETERMINE NPV OF INTEREST (2)
10.0% 11.0% 12.0%
----- ----- -----
ESTIMATED VALUE
PER SHARE $7.76 $7.70 $7.65
- -------------------------------------------------------------------------------
- --------------
(1) Using a 12.0% discount rate to determine the Net Present Value of the
interest payments from the Second Mortgage Note.
(2) The discount rates in the above matrix are used only in the calculation
of the Net Present Value of interest payments from the Second Mortgage
Note. In all instances a 6.5% discount rate has been used to calculate
the Net Present Value of the principal payment on the Second Mortgage
Note.
PaineWebber Incorporated
<PAGE>
ROCKEFELLER CENTER PROPERTIES, INC.
ANALYSIS OF ZELL INVESTOR GROUP PROPOSAL
ASSUMES A CLOSING DATE OF MARCH 31, 1996
RCPI SOURCE OF PROCEEDS
- -------------------------------------------------------------------------------
Cash Proceeds From Zell Investor Group $ 1,025,900,000
Cash Proceeds From Warrant Conversion (1) 54,483,646
Cash Available at Closing 862,404
--------------
TOTAL SOURCE OF CASH PROCEEDS $ 1,081,246,050
- -------------------------------------------------------------------------------
RCPI USE OF PROCEEDS
- -------------------------------------------------------------------------------
Repayment of Current Coupon Convertible Debentures $ 220,175,003
Repayment of Zero Coupon Convertible Debentures 369,268,608
Repayment of Floating Rate Notes (2) 119,012,134
Repayment of 14% Debentures (2) 84,085,109
Repayment of Unsecured Working Capital Loan 10,612,726
Repurchase of Common Stock 28,000,000
Swaps (Estimated) 10,000,000
Estimated Transaction Costs 8,000,000
Liquidation Expenses and Other Company Liabilities 4,688,492
Litigation Reserve (3) -
-------------
TOTAL $ 853,842,072
- -------------------------------------------------------------------------------
CASH DISTRIBUTION TO RCPI SHAREHOLDERS
- -------------------------------------------------------------------------------
Cash Available for Distribution to RCPI Shareholders $ 227,403,978
Divide By: Fully Diluted Shares Outstanding 48,705,878
-------------
DISTRIBUTION PER SHARE $ 4.67
- -------------------------------------------------------------------------------
RCPI EQUITY OWNERSHIP AT CLOSING
- -------------------------------------------------------------------------------
SHARES OUTSTANDING CONVERSION PROCEEDS
------------------ -------------------
Common Shares (4) 38,260,704 $ -
Warrants (1) 4,567,880 23,826,768
Stock Appreciation
Rights (1) 5,877,294 30,656,878
-------------------- -------------------
FULLY DILUTED SHARES
OUTSTANDING 48,705,878 $ 54,483,646
- -------------------------------------------------------------------------------
- --------------
Note: Assumes the Zell Investor Group will purchase $23 million of RCPI shares
as outlined in the Investment Agreement dated August 18, 1995 at Fair
Market Value on November 2 and December 5, 1995. This analysis further
assumes that the Zell Investor Group will agree to purchase an
additional $5 million of RCPI shares on January 2, 1996 if the
transaction has not closed. Fair market value is assumed to be $6.85 on
November 2, 1995 and $7.75 for all purchase dates thereafter.
(1) Reflects additional Warrants and SARs issued to Whitehall in connection
with the sale of shares to the Zell Investor Group.
(2) Assumes a 1.5% prepayment penalty on the Floating Rate Notes and
repayment of the 14% Debentures without penalty.
(3) Does not include a reserve for potential litigation, including litigation
by Goldman.
(4) After the repurchase of shares sold to the Zell Investor Group.
PaineWebber Incorporated
<PAGE>
ROCKEFELLER CENTER PROPERTIES, INC.
ANALYSIS OF ZELL INVESTOR GROUP PROPOSAL
ASSUMES A CLOSING DATE OF MARCH 31, 1996
NOTES PROVIDED TO RCPI SHAREHOLDERS
- -------------------------------------------------------------------------------
Second Mortgage Note $ 135,000,000
Face Value of Notes Per Fully
Diluted RCPI Share $ 2.77
Net Present Value of Principal (Using
a 6.5% Discount Rate) $ 1.30
Net Present value of Interest (Using
a 12.0% Discount Rate) 1.14
------------
NET PRESENT VALUE OF PRINCIPAL AND INTEREST $ 2.44
- -------------------------------------------------------------------------------
ESTIMATED VALUE OF PROPOSAL AT MARCH 31, 1996
- -------------------------------------------------------------------------------
FACE VALUE BASIS
Cash Proceeds Per Share $ 4.67
Second Mortgage Note Valued at Par (Per Share) 2.77
------------
ESTIMATED VALUE PER SHARE $ 7.44
NET PRESENT VALUE BASIS
Cash Proceeds Per Share $ 4.67
Net Present Value of Second Mortgage
Note Per Share (1) 2.44
------------
ESTIMATED VALUE PER SHARE $ 7.11
- -------------------------------------------------------------------------------
SENSITIVITY MATRIX - ESTIMATED VALUE OF PROPOSAL AT MARCH 31, 1996
- -------------------------------------------------------------------------------
DISCOUNT RATE USED TO DETERMINE NPV OF INTEREST (2)
10.0% 11.0% 12.0%
----- ----- -----
ESTIMATED VALUE
PER SHARE $7.23 $7.17 $7.11
- -------------------------------------------------------------------------------
- --------------
(1) Using a 12.0% discount rate to determine the Net Present Value of the
interest payments from the Second Mortgage Note.
(2) The discount rates in the above matrix are used only in the calculation
of the Net Present Value of interest payments from the Second Mortgage
Note. In all instances a 6.5% discount rate has been used to calculate
the Net Present Value of the principal payment on the Second Mortgage
Note.
PaineWebber Incorporated
<PAGE>
[EQUITY OFFICE HOLDINGS, L.L.C. LETTERHEAD]
October 27, 1995
Dr. Peter Linneman
Chairman
Rockefeller Center Properties, Inc.
1720 Avenue of the Americas
New York, New York 10020
Dear Peter:
While we stand ready, willing and able to honor the existing definitive
agreement, we have always been willing to explore alternatives. We have
previously suggested the possibility of an outright purchase of the $1.3 billion
mortgage loan at a mutually agreeable price. As an alternative that is clearly
superior to your other offers as we understand them, and which the Board must
thus consider as being in the best interests of its shareholders, we are
prepared to offer the following:
1. The Zell Investor Group would purchase the existing mortgage loan for
$1,160,900,000, to be paid $1,025,900,000 in cash and a $135 million note
secured by a second mortgage on Rockefeller Center and guaranteed as to
principal by General Electric. The GE guaranteed note would bear interest
at 6 1/2% per annum, payable monthly, and mature in 12 years, but would
be prepayable at any time without premium.
The $135 million note represents a face value to RCPI shareholders of
$3.52 per share and, assuming not more than $815.5 million of RCPI
liabilities, the net cash component equals $5.50 per share, for a total
value of approximately $9.00 per share without accounting for either the
Goldman Sachs/Whitehall warrants and sars, on the one hand, and amounts
owed to the Zell Investor Group under existing agreements with RCPI, on
the other.
2. RCPI would be obligated to transfer the mortgage loan free and clear of
any and all liens and encumbrances: the Zell Investor Group would not
assume any RCPI liabilities.
<PAGE>
Dr. Peter Linneman
October 27, 1995
Page 2
3. In purchasing the loan, the Zell Investor Group would inherit the
responsibility for working out a reorganization plan with RGI/Mitsubishi.
4. There is to be no "fiduciary out". If this transaction were to fail to
close for any reason other than a failure to obtain RCPI shareholder
approval or a Zell Investor Group default, RCPI would be obligated to pay
the Zell Investor Group a break-up fee of $25 million (which amount would
include the $9,575,000 topping fee from the existing definitive
agreement).
5. If there is no closing, other than due to a Zell Investor Group default
(but whether or not RCPI shareholders approve the deal), breakage costs
on any interest rate protection secured by the Zell Investor Group would
have to be paid by RCPI.
6. If the sale of the loan closes in accordance with this proposal, the Zell
Investor Group would waive its right to receive the topping fee and
expense reimbursement provided for the definitive agreement.
If you advise us of your acceptance of this proposal not later than 5:00 p.m.
(New York time) on Monday, October 30, 1995, we are prepared to pursue such a
transaction subject to: (a) RCPI honoring its obligations under the Investment
Agreement by closing on the sale and purchase of the "Initial Shares" on
November 2, 1995; (b) final GE approval; (c) the termination by RCPI of
discussions with Goldman Sachs/Whitehall and Gotham; (d) RCPI terminating the
definitive agreement pursuant to the "fiduciary out" and acknowledging that the
topping fee and expense reimbursement requirements thereunder have vested; and
(e) the execution and delivery of a new definitive agreement (which we believe
must be very short and to the point) by November 10, 1995.
<PAGE>
Dr. Peter Linneman
October 27, 1995
Page 3
Peter, the Board must act, as we have, consistent with its agreements. We
have worked with the Board in good faith to meet its stated objectives. As the
Board's objectives have changed, we have modified our proposals accordingly. The
proposal outlined above clearly provides the best cash value to RCPI
shareholders, while relieving the Company from any further liability or costs
due to the RGI/ Mitsubishi bankruptcy. I look forward to your response.
Very truly yours,
Samuel Zell,
Chairman
