Construction of 72-story WTC tower to proceed with $1.25B

By Eliot Brown

After repeatedly running into roadblocks, developer Larry Silverstein has secured $1.25 billion in bond financing to fund the remaining construction of his 4 World Trade Center office tower.

The financing, announced Tuesday by the developer, is a big relief for Silverstein Properties Inc. as the firm otherwise could have been forced to halt work on the tower, currently about 55-stories up and rising about a floor per week.

Initially thought to be something of a formality, the financing hit a number of unexpected snags. First there was the turbulent market for municipal bonds last December; the tower’s financing is in the form of tax-free bonds, the payments for which are backed by the Port Authority of New York and New Jersey. The developer was thwarted again in the spring, when investors in the Port Authority’s debt criticized the structure, blocking a deal.

But on Tuesday, Silverstein went out to the market with a revised structure — one that investors didn’t oppose — and found buyers for the bonds, effectively guaranteeing that the money necessary to finish the tower will be there so long as costs stay in line.

“The investment community’s intense demand for these bonds is more proof of the tremendous momentum of the World Trade Center rebuilding effort and the continued strength of our partnership with government,” Silverstein said in a statement.

Now the biggest challenge is finding tenants willing to take space in his buildings. While 4 World Trade Center has some public-sector tenants — New York City and the Port Authority — about one-third of the 72-story building isn’t spoken for.

Silverstein is also trying to find companies to move to the neighboring 3 World Trade Center, which doesn’t yet have any tenants. Construction on that tower has now passed above street level, but the developer will have to halt construction after the first few stories of retail unless he secures a large tenant — part of an agreement he made to receive public aid on the project.

Across the site, the developer also faces some competition with One World Trade Center, which is being built by the Port Authority and has secured a lease with publisher Condé Nast for about one-third of the building.

http://blogs.wsj.com/metropolis/2011/11/01/after-trouble-wtc-tower-gets-construction-funds/

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