The Real Deal New York

Port Authority approves subsidies for Silverstein’s 2 WTC

Deal expected to generate $500M to $600M for revenue for infrastructure projects
December 10, 2015 04:10PM

Silverstein Properties’ 2 World Trade Center received a major boost Thursday from the Port Authority of New York and New Jersey, which approved subsidies to help expedite the 2.8 million-square-foot office tower’s construction. 

Silverstein, which leases the sites for 2 World Trade Center and two other towers at the complex from the Port Authority, is set to receive rent breaks from the agency meant to attract the office tower’s Rupert Murdoch-controlled potential anchor tenants, 21st Century Fox and News Corp.

The subsidies will help the Port Authority generate $500 million to $600 million of revenue supporting future transportation projects, said Patrick Foye, director of the authority.

In a statement, Janno Lieber, who is overseeing the World Trade Center project for Silverstein, characterized the deal as one that “always made sense for the Port Authority.” He classified the rent breaks as “a modest adjustment to 21st Century Fox and News Corp’s long-term ground rent,” and said they would cost the authority $9 million dollars over the 30-year lease term.

In addition, the tenants will also receive $19 million in support from Silverstein and $15 million in tax credits from Empire State Development — with the proposed public support for 21st Century Fox and News Corp. totaling around $16 per square foot over the 30-year initial lease.

That would be “well below the per square foot level of support provided for tenants” at 1 World Trade Center and the planned 3 World Trade Center, the Port Authority said.

Completion of the Bjarke Ingels-designed tower, meanwhile, would raise the value of the entire World Trade Center complex – enabling the Port Authority to eventually exit that investment, according to Bloomberg.

Silverstein has a non-binding letter of intent from 21st Century Fox and News Corp. to take about 1.5 million square feet at 2 World Trade Center in a 30-year lease, strengthening the Financial District’s position as a hub for major media companies.

Publishing giant Conde Nast is already anchoring 1 World Trade Center, while Time Inc. agreed to take 700,000 square feet at Brookfield Place last year.

Silverstein is reportedly aiming to raise about $500 million in financing through the EB-5 visa program to fund construction of 2 World Trade Center[Bloomberg]Rey Mashayekhi