NEW YORK CITY-The Port Authority of New York and New Jersey is getting out of the real estate business.
Looking to focus more on core competencies, the organization has sold its remaining 50% joint venture in the World Trade Center retail project to the Westfield Group for an astounding $800 million. The sale values the 365,000 square feet of space at over $4,000 per square foot among the most ever paid for retail space in lower Manhattan, according to Crain's New York Business.
The sale represents approximately 365,000 square feet of retail space at the World Trade Center Transportation Hub, including future bi-level retail offerings in the newly opened WTC West Concourse pedestrian corridor. Westfield also will have a major street level presence along Church street, Cortland Way, Dey street and above-grade in tower three four. An additional 90,000 square feet of retail space will be added for additional consideration when tower two is developed in the future. Several high profile tenants, like Apple and Victoria's Secret, Theory and Michael Kors, are reported to have made commitments for space in the WTC complex. The grand opening of the retail complex is expected to include a mix of 150 world-class brands and dining options when it opens in 2015.
The boost of Westfield's role in the project may add appeal for prospective tenants, a shift that could put pressure on another major retail complex slated to come to the area, Brookfield Place (the revamped World Financial Center). Brookfield Office Properties, which oversees the complex, did not respond to a request for comment by presstime.
“Today's $800 million sale of the Port Authority's remaining interest in the World Trade Center Retail joint venture is a significant step in the Port Authority's continuing efforts to refocus agency resources on our core transportation mission,” says Port Authority chairman David Samson. “Westfield's $1.4 billion overall investment in the World Trade Center retail project, which represents the largest private sector investment at the site, underscores Westfield's commitment to provide an exceptional shopping experience to all who visit.”
“Westfield's $1.4 billion commitment to the retail project generates upfront capital, allowing us to further reduce our redevelopment risk, and additionally deliver critical jobs to the region,” adds vice chairman Scott Rechler, who is also the chairman and CEO of RXR Realty.
“The retail experience will provide unparalleled service for the millions of tourists who visit New York, as well as the thousands of New York and New Jersey residents who work, visit, or live in Lower Manhattan.”
The sale comes a year and a half after the agency entered into a 50/50 joint venture with Westfield in May 2012, generating $612.5 million in private sector investment. This latest $800 million transaction for the agency's remaining interest represents a 30% premium in value and brings Westfield Group's investment to more than $1.4 billion.
In addition, the Port Authority will have the potential to receive an additional onetime payment from Westfield within the first five years after the retail grand opening, should Westfield exceed certain agreed upon return thresholds. The Port Authority will retain ownership of the World Trade Center Transportation Hub, and will remain the contractor on behalf of Westfield to construct and deliver the retail space to its tenants.
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Rayna Katz
Rayna Katz is a seasoned business journalist whose extensive experience includes coverage of the lodging sector, travel and the culinary space. She was most recently content director for a business-to-business publisher, overseeing four publications. While at Meeting News, a travel trade publication, she received a Best Reporting award for a story on meeting cancellations in New Orleans during Hurricane Katrina.
