Port Authority votes to free up $159M for Silverstein’s 3 WTC

Deal will help developer finance construction, convince GroupM to stay put

TRD New York /
Jun.June 25, 2014 03:05 PM

UPDATED, 3:42 p.m., June 25: The Port Authority of New York and New Jersey voted today to release roughly $159 million of insurance money that was paid by insurers following the destruction of the original World Trade Center complex and is currently held in a reserve fund. The move will help Larry Silverstein to finance the construction of 3 World Trade Center.

RXR Realty head and Port Authority vice-chairman Scott Rechler proposed transferring the insurance money and converting it into cash for construction, as Crain’s first reported, after talks on whether or not to grant Silverstein a $1.2 billion subsidy for the tower broke down. The money was won by Silverstein from the insurers of the original World Trade Center after the complex was destroyed in the Sept. 11 attacks. About $50 million of it will be released immediately.

“I appreciate the leadership of Port Authority vice chairman Scott Rechler and other members of the board who have partnered with us to fulfill the vision we all share – a fully rebuilt World Trade Center at the heart of a vibrant new Downtown,” Silverstein said in a statement. “Today’s action permits us to immediately jumpstart vertical construction, employ 3,000 construction workers and stay on target for an early 2018 completion.”

The 2.5 million-square-foot, $2.4 billion tower currently stands eight stories tall, but is slated to be 80 stories tall. Media company GroupM is the building’s anchor tenant, but has the right to cancel its 516,000-square-foot lease after June 30. The insurance funds deal could help persuade GroupM to stay put at the tower, sources said.

As part of the concession to the Port Authority, Silverstein Properties agreed to take back two floors, or about 80,000 square feet, that they leased to the agency at neighboring 4 World Trade Center. The agency’s current commitment at 4 WTC is 600,000 square feet, but it has been looking for a tenant to sublease about 150,000 square feet of that space.

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