More rebuilding BS and Lucky Larry Buys a New Yacht

http://cityroom.blogs.nytimes.com/2009/05/08/silver-backs-three-ground-z...

May 8, 2009, 11:05 am
Silver Backs Three Ground Zero Towers
By Charles V. Bagli
Assembly Speaker Sheldon Silver called for a summit meeting on rebuilding ground zero on Friday morning to resolve the impasse between the developer Larry A. Silverstein and the Port Authority over the construction of office towers on the 16-acre site in Lower Manhattan.

Mr. Silver, who is emerging as perhaps the most powerful politician in the state, called for the construction of at least three massive office towers at the World Trade Center site by 2014, despite rising vacancies and falling rents in the city’s financial district. But he also said that Mr. Silverstein, the Port Authority, the city and the state should all contribute toward making that happen.

“Seven years and eight months after the attacks, I am fed up with the stalling and exasperated with the current state of the World Trade Center project,” Mr. Silver said at a breakfast forum sponsored by the Alliance for Downtown New York.

He reiterated that the city, the state and the federal government had a “moral obligation to rebuild this American community.”

Unable to finance the towers, Mr. Silverstein, who leases the trade center site from the Port Authority, recently asked the authority to finance the two new towers along Church Street, a move that could cost about $3 billion.

The authority, which is already building 1 World Trade Center, a 2.6 million-square-foot tower at West and Vesey Streets, has little appetite to finance even more office space downtown at a time when vacancy rates are expected to rise for the next several years and rents continue to fall. At the same time, the authority’s bridge and tunnel revenues are down sharply, putting a severe strain on its capital programs.

In talks last month, Christopher O. Ward, the authority’s executive director, offered to provide about $800 million in financing for what is known as Tower 4, a 64-story building on Church Street, between Cortlandt and Liberty Streets. Under that proposal, two additional towers would be built over the next two decades as companies expand and demand grows. Mr. Silverstein would be free to build the towers sooner if he obtained tenants and private financing.

Mr. Silverstein, however, rebuffed that offer. Knowing of Mr. Silver’s coming speech today, both the developer and Mr. Ward lobbied Mr. Silver heavily.

But even as Mr. Silver seemed to endorse Mr. Silverstein’s view, he also called the developer to put his own money into the project and he argued against the use of an arbitrator to resolve the matter, because it would slow any progress.

Mr. Silverstein leased the trade center in 2001, only six weeks before it was destroyed in the terrorist attack. Ultimately he received a total of $4.5 billion in insurance proceeds. In 2003, Mr. Silverstein used some of that money to repay a $563 million loan he had on the project. In turn, he and his investors received most of the money that they invested in the deal.

Since the attack, Mr. Silverstein has paid the Port Authority about $800 million in rent, while he took $150 million in development fees. Today, there is only $964 million left to pay for the three office towers he is required to build under a 2006 development agreement.

Downtown, the vacancy rate for office buildings is at about 12 percent today, and many real estate brokers and developers expect that number to rise to 16 percent or higher in the coming years. A lot of new but vacant office buildings will only make things worse, they say.

“You don’t want all that inventory built on a speculative basis right now,” said Robert L. Freedman, executive chairman of FirstService Williams Real Estate, a broker.

http://online.wsj.com/article/SB123975480920319013.html

World Trade Center developer Larry Silverstein is busy trying to get his office skyscrapers built on the site of the Sept. 11, 2001, attacks. He is in negotiations with the trade center's owner, the Port Authority of New York and New Jersey, to provide public financing for at least one of Mr. Silverstein's three planned towers. Mr. Silverstein wants the Port Authority to back two of the towers. The Port Authority provided a formal financing proposal in the past few days.

In the meantime, Mr. Silverstein has another project to watch after: his new yacht.

The 174-foot twin-diesel-engine-powered boat is under development by Delta Marine in Washington state, according to SuperYachtTimes.com. The ship, set to deliver in 2010, will replace Mr. Silverstein's yacht, the 131-foot, 1987-vintage Silver Shalis.

It isn't clear what he is paying, but industry observers point to similar-size vessels that cost in the $30 million to $40 million range. Mr. Silverstein declined to comment.

—Alex Frangos