Port Authority Wants Prenup at One World Trade
Eliot Brown July 7, 2010, 3:45 p.m.
As the Port Authority’s board meets today to ponder who gets a chunk of One World Trade Center, one landlord not involved in the bidding—Larry Silverstein—looms in the background.
For months, the board has been weighing (though it may not select today) bids by developers to buy a stake in the 2.6 million-square-foot tower. In recent weeks, as the agency has narrowed it down to two—the Related Companies and the Durst Organization—both bidders, according to a person familiar with discussions, were asked to submit to something of an unusual request: Should it start to have regrets about the decision, the Port Authority wants the ability to boot the developer out of the deal, giving them their investment back, plus an agreed-upon return.
This request, according to multiple people familiar with the talks, in part grew out of the Port Authority board’s frustration with Mr. Silverstein, who has been the agency’s on-again, off-again foe, as the two parties have now undergone two very hard-fought renegotiations over other planned towers at the World Trade Center site. Multiple board members feel strongly that he should have been removed years ago, according to numerous people familiar with the board, and have long voiced that opinion.
(The practicality of such a move is a point of dispute: It’s quite unclear that the Port Authority could have won close to the large $4.5 billion chunk of insurance money that Mr. Silverstein received to finance the rebuilding, for instance.)
Thus far in talks, Durst has resisted agreeing to the Port Authority’s request in full, demanding multiple stipulations, according to a person familiar with the bidding. Compared with Related, Durst would have a more traditional equity investment, with upside and downside.
Related, with a bid that, more closely than Durst’s, resembles a loan/development fee agreement, has generally agreed to the provision.