AND THE WTC GOLDEN GOOSE
4th October 2001
The World Trade Center is a gold mine.
And Larry Silverstein knows it.
Silverstein already owned number Seven WTC, but he led a
consortium that just months ago signed a new $3.2 billion
US, 99-year lease on the WTC complex. That was the first
time the WTC had changed hands in its thirty year
The Port Authority of New York and New Jersey signed the
deal with the Silverstein-led Westfield America on the
26th April, 2001. Westfield America leased the concourse
mall, and Silverstein the office portion.
The deal was finalized and celebrated on the 23rd July
-just seven weeks before almost the entire complex was
destroyed. Port Authority officers gave a giant set of
keys to the complex to Silverstein and to Westfield CEO
Silverstein was ecstatic at that time. "This is a
dream come true," he had said. "We will be in
control of a prized asset, and we will seek to develop
its potential, raising it to new heights." An ironic
choice of words, in retrospect.
The leased buildings included Numbers One and Two (the
Twin Towers), Four, Five and 400,000 square feet of
retail space. The Marriott Hotel (3WTC), U.S. Customs
building (6WTC) and Silverstein's own 47-story office
building were already under lease.
Despite the transfer to private hands, the tax payments
would still come from the Port Authority -who had been
making yearly $25 million payments in lieu of taxes to
New York City. The proper figure should be more like $100
million according to city administrators.
Silverstein is undeterred by the demolition of the
complex. He already has somewhat insensitive plans to
rebuild. Four towers this time. Although the complex was
not insured against an act of war, new policies insured
against terrorist damage.
Which leaves everybody financially consoled, even if not
emotionally so. The vendors still have the $3.2 billion
they made on the sale. The purchasers lease deal had
spanking new insurance --with new beneficiaries-- for
capital value and loss of income.
Silverstein has insurance money to rebuild and get the
$110 million of annual rental income flowing again. Or
double that with his planned four towers. Nice money if
you can get it. Can he?
Not if the insurers could help it. They are
the big losers. And they detest having to pay a claim on
a policy taken out only weeks before. Indeed, they often
delay payment to investigate cases where immediate claims
are made against brand new policies.