NEW YORK CITY—Silverstein Properties—and its legendary founder and chairman, Larry Silverstein—have gotten a reprieve. The Port Authority of New York and New Jersey has held meetings about whether to continue funding the company's development of 3 World Trade Center and, according to Bloomberg.com, it will decide next month whether to continue supporting the project.
Behind closed doors, the agency discussed a plan advocated by vice chairman Scott Rechler—who also is chief executive and chairman at RXR Realty—to guarantee $1.2 billion of financing to Silverstein for the planned 2.5 million-square-foot tower. Rechler tells Bloomberg he spent the session “educating” his fellow commissioners about the proposal and that they intend to vote on it in April. He appears to be leading the contingent that supports continued financial backing of the building.
“The board had a whole bunch of information supplied to them,” Rechler reports. “It's appropriate to have them have a chance to reflect on it and digest it.”
Silverstein wants to alter a 2010 agreement that set the terms under which he could build 3 World Trade Center, the third of four skyscrapers planned for the lower Manhattan site. The outcome of the discussions could determine whether Silverstein can proceed with construction on the 80-story tower, in which the advertising firm GroupM agreed to take 516,000 square feet of office space. A Silverstein spokesman declined to comment.
Under the current plan, Silverstein would be entitled to a total of $600 million in cash assistance, from the city and state as well as the Port Authority. The Rechler proposal would require the developer to raise his equity and mezzanine-debt stake to $450 million from $300 million. Under the plan, the $1.2 billion guarantee would apply only in case of default.
Detractors say Rechler's proposal to guarantee up to $1.2 billion in construction loans for Silverstein could hurt the authority's credit rating and even its budget, which is partly reliant on bridge and tunnel tolls.
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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.
