BY Aline Reynolds
The Port Authority Board of Commissioners finalized the equity agreement with the Durst Organization for developing and managing One World Trade Center, the 102-story tower slated for completion in 2013.
The announcement, made at last Thursday’s Board meeting, comes one month after the Port selected Durst for the One W.T.C. development job over several other high-profile candidates.
The deal requires Durst to invest $100 million, and up to a total of $300 million down the line, in the project. Durst will receive a return determined by its final investment – or what real estate experts refer to as “equity interest” – and its performance in developing, managing and leasing the tower. The Port Authority will remain responsible for the bulk of the financing, insurance, and capital expenditures related to the project, in addition to the design and construction of the building’s core and shell.
Durst and the Port Authority will start collaborating immediately on One W.T.C. under an interim agreement, the details of which will be ironed out in the coming months.
“We believe that establishing a joint venture with a recognized world-class real estate firm with experience in developing large-scale commercial office space will reposition One W.T.C. in the market,” said Michael Francois, chief of real estate development at the Port Authority. “Private sector involvement with equity participation will increase [the Port Authority’s] economic competitiveness.”
Durst will begin accruing profits from One W.T.C. once the building is nearly fully occupied with office tenants, which is expected to occur by 2017.
A family-run company, Durst manages 10 million square feet of commercial office space around the city, 97 percent of which is occupied by tenants, according to Jordan Barowitz, director of external affairs for the company. Durst recently developed the 2.1 million-square-foot Bank of America building at One Bryant Park at 42nd Street and the 1.6 million square foot building at Four Times Square, current home to publishing giant Condé Nast.
“They have a proven track record, and large, green office buildings,” Francois said.
Other real estate developers vying for the project included Related Companies, which sources say had a more elaborate plan for the interior of One W.T.C.
“While we are disappointed and thought we offered a great vision for this iconic destination and for Lower Manhattan, we wish the Port Authority and their new partner well,” Related Companies C.E.O. and founder Stephen Ross said in a statement.
Related is known for building the Time Warner Center at Columbus Circle.
The Port Authority wouldn’t comment directly on their selection of Durst over Related, but Francois said, “Principals, Douglas and Jody Durst, have a high degree of involvement in all aspects of the Durst’s business. The organization maintains an excellence track record with New York-based large block tenants.”
Construction of One W.T.C. is now at the 34th floor, around 340 feet above street level, according to the Steve Coleman, spokesperson for the Port Authority. The future 1,776-foot-high tower, valued at around $2 billion, will have 2.6 million square feet of office space, around 40 percent of which already has commitments from two government agencies, the New York State Office of General Services and the United States General Services Administration.
Only days before the agreement with Durst, Condé Nast announced tentative plans to move to the future One W.T.C. in 2014. If the deal goes through, the publishing company would become the second private tenant of the tower, following Vantone Real Estate, a Chinese real estate company that has signed a lease for 190,000 square feet of space. Durst is not involved in the lease negotiation with Condé Nast, according to Barowitz.
