Date: Jun 25, 2014
Press Release Number: 135-2014
The Port Authority Board of Commissioners today approved a modification to the 2010 financial agreement with Silverstein Properties (SPI) that meets the Port Authority's goal of increased private investment, advances construction of 3 World Trade Center and ensures that GroupM, a 515,000 square foot anchor tenant moves to the World Trade Center site. The revised deal takes advantage of growing momentum in Lower Manhattan, as well as improved financial market conditions and does not require the Port Authority to provide additional public sector support.
The modified agreement limits the Port Authority's exposure to the same level as the 2010 agreement. By moving forward now, the modified agreement ensures the Port Authority more than $300 million in WTC site revenue, and $14 million in cost savings from SPI taking back two floors from the Port Authority from the agency's existing lease at 4 WTC.
The agreement includes use of $159 million of previously escrowed insurance proceeds, which will minimize SPI's amount of senior debt to levels that allow it to move forward with construction under current market conditions. To construct the tower, SPI expects to raise $300 million in mezzanine debt and/or private equity, as well as $1.2 to $1.3 billion of senior fixed-rate bonds. The remainder of the capital contribution includes $463 million in insurance proceeds, $210 million in state and city funding.
Overall, the modified agreement allows immediate construction of 3 World Trade Center and provides hundreds of millions of dollars in accelerated and incremental revenue.
"After months of public debate and constructive discourse of the Port Authority's Board of Commissioners, we have reached an agreement that strikes the right balance of public sector support with private sector commitment," said Vice-Chairman Scott Rechler. "With today's action, the Port Authority will receive hundreds of millions of revenue, 3 World Trade Center will move forward and GroupM will join Conde Naste in calling the World Trade Center home."
"Today's agreement approved by the Board of Commissioners minimizes the Port Authority's financial risk and increases private sector participation in the World Trade Center site," said Port Authority Executive Director Pat Foye. "The modified financial agreement is consistent with the objective we have had over the last two years to ensure financial discipline and improve the Port Authority's financial standing."
"Our focus throughout these negotiations has been to ensure that there is increased private sector participation and that the Port Authority enhances its position when compared to the 2010 agreement," said Port Authority Deputy Executive Director Deb Gramiccioni. "Today's modified agreement approved by the Board achieves both of those goals and allows SPI to move forward and complete the construction of 3WTC."
The agreement will not have any financial impact on the Port Authority's ten-year capital plan. Construction is expected to start in the 3rd quarter of 2014, with the building complete in 2018.
Port Authority of New York and New Jersey
Founded in 1921, the Port Authority of New York and New Jersey builds, operates, and maintains many of the most important transportation and trade infrastructure assets in the country. The agency's network of aviation, ground, rail, and seaport facilities is among the busiest in the country, supports more than 550,000 regional jobs, and generates more than $23 billion in annual wages and $80 billion in annual economic activity. The Port Authority also owns and manages the 16-acre World Trade Center site, where construction crews are building the iconic One World Trade Center, which is now the tallest skyscraper in the Western Hemisphere. The Port Authority receives no tax revenue from either the State of New York or New Jersey or from the City of New York. The agency raises the necessary funds for the improvement, construction or acquisition of its facilities primarily on its own credit. For more information, please visit http://www.panynj.gov.