Related defends 1 WTC bid

TRD New York /
Jun.June 15, 2010 09:20 AM

Fox News charges Related-Middle East connection, but developer not alone in financial ties

From left: Douglas Durst of the Durst Organization, Stephen Ross of the Related Companies

The Port Authority of New York & New Jersey has narrowed a star-studded roster of bidders for One World Trade Center down to two, and now there’s just one week left to go before the agency is expected to make its final pick. But as the Related Companies and the Durst Organization duke it out for the coveted partnership with the Port Authority, the foreign capital that has been touted as Related’s strength is turning into a public relations headache.

Yesterday morning, Fox News ran a segment in which legal analyst Peter Johnson Jr. slammed Related for being “substantially bankrolled by the most powerful Arab corporate interests in the world” in light of the developer’s bid to operate the site where terrorists killed thousands of Americans on Sept. 11, 2001. Related’s ties to United Arab Emirates-backed Mubadala Development and Saudi Arabia’s Olayan Group, Johnson said, “may yet become the cruelest irony yet of one of the most infamous days in our national history.”

According to a spokesperson for Related, Mubadala and Olayan are merely owners of the company’s subordinated debt — and that relationship has been public for more than two years.

Bill Shine, executive vice president of programming for Fox News, told The Real Deal that the network stands by the story.

“Related has two corporate equity partners, Goldman Sachs and MSD Capital. Like every other real estate developer, we also have many relationships all over the world with financial institutions that purchase debt,” the company said in a statement. “They have no management control, no board representation and no active role in our developments, including [One World Trade Center].”

Indeed, ties between sovereign wealth funds and most major developers in the city have been widely reported.

Boston Properties, which dropped out of the bidding for One World Trade Center last month, paid $3.95 billion for the General Motors Building, Two Grand Central Tower and two other Midtown office buildings in 2008 with the help of Goldman Sachs, Qatar and Kuwait. The same year, Hines Interests, another former bidder on the tower, announced plans for a $1 billion fund to buy up distressed properties in the United Arab Emirates.

“It’s not an uncommon relationship,” said Gary Barnett, president of Extell Development, who sold a majority stake in his hotel and condominium project at 157 West 57th Street to Abu Dhabi-controlled Aabar Investment last year.

And if Related were to win a partnership in the 1,776-foot-tall project formerly known as the Freedom Tower, it wouldn’t be the first New York City trophy property with ties to the Middle East. Israel’s Elad Properties co-owns the Plaza Hotel with Saudi Arabia’s Kingdom Holdings. Dubai World controls the Jumeirah Essex House and, until its recent debt troubles, owned both the W New York Union Square and the Knickerbocker Hotel. In 2008, Tishman Speyer and a group of German real estate investors sold a 90 percent stake in the Chrysler Building to the Abu Dhabi Investment Council.

“I don’t think that in any way, shape, or form Mubadala controls what Related does,” Barnett said. “I don’t see any issue at all in [the company’s bid] on the World Trade Center.”

The Port Authority, which is slated to choose a winner by June 22, did not respond to a request for comment. The Durst Organization declined to comment.


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