After months of wrangling, the Port Authority of New York and New Jersey have approved a revised financing agreement with Silverstein Properties that will allow construction of the 2.5 million-square-foot tower to continue.
Only eight of the planned 80 stories in the $2.4 billion tower have been built. The deal allows construction to move forward by giving developer Larry Silverstein access to $159 million in insurance proceeds from the Sept. 11, 2001 terrorist attacks that had previously been held in escrow until the tower is completed.
Silverstein, who previously sought $1.2 billion in loan guarantees from the Port, expects to raise $300 million in mezzanine debt, private equity or a combination of the two -- as well as $1.2 billion to $1.3 billion of senior fixed-rate bonds -- to complete the project.
The revised agreement "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.
It also helps ensure that anchor tenant advertising firm GroupM will fulfill its commitment to occupy 515,000 square feet at the tower. GroupM's lease agreement signed late last year contains a June 30 opt-out clause.
"We remain confident that we will nail down a construction financing package that will allow us to complete the project and create an ideal environment for GroupM employees and other dynamic, creative companies who are making their home at the new World Trade Center," Silverstein said in a statement e-mailed to CoStar News.
The agreement "permits us to immediately jumpstart vertical construction, employ 3,000 construction workers and stay on target for an early 2018 completion," Silverstein said. Construction is expected to start during the upcoming third quarter.