The Real Deal New York

Port Authority wants $5B for 1 WTC, but selling the tower will be very complicated

Durst Organization has first dibs on the office building
September 06, 2016 09:00AM

From left: Port Authority’s Pat Foye and 1 World Trade Center

From left: Port Authority’s Pat Foye and 1 World Trade Center

The Port Authority of New York and New Jersey plans to sell One World Trade Center for as much as $5 billion, the highest price ever paid for an office building in the U.S. But finding a buyer may be tricky.

Roughly one-third of the $3.8 billion tower remains empty, and the tower has brought in modest revenue — only taking in $13 million last year, Crain’s reported. As part of the agency’s efforts to shed its real estate assets, the Port Authority plans to sell One World Trade Center to the highest bidder.

“Ownership of One World Trade is not a part of the Port Authority’s mission to advance transportation infrastructure in the region,” Port Authority chairman John Degnan told Crain’s. “The only question is how and when to proceed in a manner that ensures that the maximum return is yielded for reinvestment in facilities that do serve the agency’s core mission.”

But the Durst Organization TRData LogoTINY, the tower’s landlord, invested $100 million into the tower in 2010, which turns into an ownership stake when the tower is fully leased (projected to be 2019). The developer has the right to match any bid on the tower and can block any sale before its stake vests. Any potential buyer would likely have to buy out Durst before the sale would go through.

The next owner would also have to deal with security at the property. It’s not clear how much Port Authority spends on security, but the agency shelled out $121 million to operate the property last year. [Crain’s] — Kathryn Brenzel