[NYguy]

http://www.wsj.com/articles/port-aut...ate-1419819665

Port Authority to Explore Selling Its Real Estate
Sales at Center of Plan to Overhaul Agency


By ELIOT BROWN and ANDREW TANGEL
Dec. 28, 2014

Govs. Andrew Cuomo and Chris Christie have turned to a familiar idea in their pledge to reform the Port Authority of New York and New Jersey: selling its real estate.

A report released over the weekend highlights a plan to sell off many of the agency’s sprawling property holdings, by far the most notable of which is the World Trade Center site in lower Manhattan.

That concept has long been pushed within the agency, and it has been implemented gradually over the past decade and a half.

Now, real estate sales are at the center of a plan to overhaul the Port Authority in the wake of the George Washington Bridge scandal by reorienting the agency to its core mission of transportation projects.

John Degnan, Port Authority chairman, said it wasn’t clear how the authority would carry out the plan. The agency could pursue outright sales, lease the properties or partner with private companies. The chairman noted that bond covenants could complicate any sales of its assets.

He said it could take years to figure out how to sell the authority’s roughly 90% stake in One World Trade Center. The Durst Organization owns the remainder.

“We’ve spent billions of dollars to build the World Trade Center—I’m not getting rid of it on a fire sale,” Mr. Degnan said. “I believe in the end it is going to be a profitable venture and will result in the Port Authority financially benefiting from its sale.”

While the Port Authority long debated privatizing the Twin Towers after they were built in the early 1970s, the agency ultimately signed a 99-year lease to transfer the site to developer Larry Silverstein in mid-2001, just six weeks before the terrorist attacks destroyed the buildings on the site.

After, the agency reinserted itself by putting billions of dollars into site infrastructure and taking over development and ownership of One World Trade Center. Mr. Silverstein kept a 99-year lease on the sites for three other towers; the Port Authority continues to own the land under the towers.

Just how much One World Trade Center is worth will depend on how well the tower attracts new tenants in the coming years. It has leases for 61% of its space. The agency and Durst have projected it would have an operating income of $144 million by 2019, when it is projected to be 95% full. Depending on the strength of the sales market, that means the building would likely be worth at least $3 billion and perhaps substantially more.

In addition, the Port Authority could theoretically sell the land under Mr. Silverstein’s towers, trading a lump cash sum from an investor for the tens of millions of dollars in annual rent the towers pay to the Port Authority.

The agency also owns a site for a fifth tower across the street from 4 World Trade Center that it has long planned to sell. It sold the complex’s retail in two deals to Westfield valued at $1.4 billion.