State and corporate officials gathered at a morning press conference at the World Trade Center Plaza to laud the deal, for which final lease papers were signed last night. In an agreement finalized last April, real estate developer Silverstein Properties is now partnered with Westfield America in a 99-year net lease worth $3.2 billion.
Silverstein Properties will gain control of the 10.6 million-square-foot complex, which comprises the 100-story Twin Towers office buildings, and two nine-story office buildings. The complex also includes a shopping concourse called the Mall at the World Trade Center, comprising about 427,000 square feet of retail space.
Carried out under a hot morning sun, the proceedings brought together Westfield CEO Peter Lowy, and Silverstein Properties President Larry Silverstein; Port Authority Chairman Lewis M. Eisenberg, Vice Chairman Charles A. Gargano and Executive Director Neil D. Levin; New York Gov. George E. Pataki; and acting New Jersey Gov. Donald T. DiFrancesco.
"When things happen at the World Trade Center, they happen in a big way," said Levin. The transfer of responsibility means that the Port Authority can leave the business of managing the office complex to businessmen, while it proceeds with ongoing projects to improve the network of bridges, tunnels, rail lines, terminals and roads throughout New York and New Jersey.
"This is a thrill for Westfield," said Lowy. "We’re delighted to participate in the opportunity to invest in this great city." Westfield will be responsible for leasing and managing the concourse mall, plus any additional retail space that may be added. Renamed the Westfield Shoppingtown World Trade Center, the concourse mall features Gap, The Limited, J. Crew and Banana Republic, and its sales per square foot are expected to reach $900 by year-end, according to Port Authority officials.
Westfield will make lease payments only on the retail portion, while Silverstein will be responsible for the office lease payments. The partnership made an up-front payment of $616 million, said Cherrie Nanninga, the Port Authority’s real estate director, and should begin making monthly lease payments in August. While declining to give specifics on the terms of the lease, Nanninga said the lease payments from the partnership would come to about $115 million yearly.
The lighthearted mood – and heat – prompted several officials to remove their suit jackets, and Lowy joked that he saw a passerby washing their face in the plaza fountain. The officials signed a ceremonial proclamation before Port Authority officers handed a giant set of keys to the complex to Silverstein and Lowy.
"This is obviously a humbling experience, and one of high emotions for me," said Silverstein, who has said that his career-long ambition was to own the World Trade Center. "They [the Port Authority] have placed their confidence in us, and we totally intend to validate their decision."
Silverstein was selected to negotiate a lease agreement with the Port Authority after the original top bidder, Vornado Realty Trust, Paramus, N.J., broke off talks with the authority in March.
Omitted from the ceremony was any mention of whether the Port Authority and New York City officials had agreed on a new property tax payment structure for the complex, now that it is in private hands. Currently, the Port Authority makes a yearly $25 million payment in lieu of taxes to New York City, far less than the estimated $100 million that city administrators say should be paid.
Levin said that while final arrangements had not been made, the payments would not be Silverstein’s responsibility. He said the authority was willing to discuss a fair payment plan between itself and New York City officials.