Port Reaches Deal on 3 WTC Funding

NEW YORK CITY—In a unanimous vote Wednesday, the Port Authority of New York and New Jersey‘s board of commissioners voted up a plan to allow construction to proceed on Silverstein Properties Inc.’s 3 World Trade Center. The agreement, which taps into $159 million of previously escrowed insurance proceeds, $50 million of which will be released immediately, appears to resolve longstanding uncertainty over financing of the 80-story office tower at the World Trade Center redevelopment site.

The agreement minimizes the amount of senior debt SPI will need to incur on the 2.5-million-square-foot 3 WTC, while also limiting the Port Authority’s exposure to the same level that was set in its 2010 agreement with SPI. The developer expects to raise $300 million in mezzanine debt and/or private equity, as well as $1.2 billion to $1.3 billion of senior fixed-rate bonds. The remainder of the capital contribution includes $463 million in insurance proceeds, as well as $210 million in state and city funding.