Silverstein Properties’ $2.3 billion development of Richard Rogers’ 3 World Trade Center has taken a major step forward after the Port Authority of New York and New Jersey gave the go-ahead for an amendment to the financial agreement between the two parties.
The Port Authority was looking for more private sector money, which would decrease its exposure and the new arrangement accomplishes this goal.
Silverstein will need to raise approximately $1.3 billion of senior fixed-rate bonds, without its requested $1.2 billion loan guarantee.
The modified agreement will also guarantee about $300 million in World Trade Center site revenues for the Port Authority.
The agency will achieve $14 million in savings by giving up two floors measuring approximately 76,400 sq ft on its existing lease at Tower 4 to Silverstein.
Silverstein gets the benefit of being able to use $159 million of Tower 2 insurance proceeds to finance Tower 3 construction. Except for previous commitments, the Port Authority’s financial commitment will end at this point.
Up to $50 million of the funds will be made available immediately, which means vertical construction of 3 World Trade Center will continue.
The balance of the financing structure listed in the new agreement has not changed. Silverstein will raise $300 million in funding through private equity and/or mezzanine debt.
The company will also receive $463 million in insurance proceeds and $210 million in state and city funding.
Construction work on the 2.5 million sq ft project will resume in Q3. If everything goes as planned, the Tower will open in 2018.
Meanwhile an update from the Port Authority, and partners the Durst Organization, claims that over half of the space in the 102 storey 1 World Trade Center (pictured) has now been taken, after three new leases were signed over the past few weeks.
The latest tenants to agree terms are ad agency KiDS Creative, Legends Hospitality and an unnamed London based wealth management company.
Jordan Barowitz, a spokesman for Durst, said; “It’s 56 per cent leased. The building opens at the end of the year, so it’s progressing well.”
