Silverstein To Refinance $577M in Bonds at 7 WTC

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Last Updated: March 19, 2012 11:26am ET
Silverstein To Refinance $577M in Bonds at 7 WTC
By Jacqueline Hlavenka

CMBS and Liberty Bonds
secured by 7 WTC will be

NEW YORK CITY-After reaching 100% occupancy late last year, Silverstein Properties will be refinancing the liberty bonds and a commercial mortgage-backed security secured by Seven World Trade Center, according to a report from Fitch Ratings.

The total loan includes $577.8 million of liberty bonds and a CMBS loan secured by a mortgage backed by two cross-defaulted loans on 7 WTC. The senior loan is a $452.8 million tax-exempt liberty bond financing designated loan and the junior loan is a $125 million CMBS loan, according to Fitch.

Proceeds of the loans will be used to refinance the prior liberty bonds, pay closing costs and return preferred equity investment to the sponsor, Fitch says.

The refi on the 52-story, 1.7-million-square-foot tower comes just 10 years after the terrorist attacks on September 11. Completed in May 2006, 7 WTC received $452.8 million from the city and state’s Liberty Bond Financing program, which was implemented after 9/11 to spur commercial and utility projects on the World Trade Center site and around Lower Manhattan.

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Since it was built on land Silverstein owned free and clear, the property was built largely without the disagreements that plagued the other WTC buildings. But the wounds of 9/11 "were more raw,” recalls Janno Lieber, the director of redevelopment of the World Trade Center at SPI, in an interview that will appear in the February/March issue of Real Estate Forum. “And it was not clear that Downtown had rebounded, and indeed would rebound, as a world-class business district. There was just a sense that people might not want to go back to an office building with the World Trade Center address because of the negative overlay.”

Despite the initial challenging leasing environment, a wide roster of tenants signed on at the building, including the New York Academy of Sciences, Moody’s, WestLB, Mansueto Ventures and WilmerHale -- all deals that signaled the diversification trend in the neighborhood post-9/11.

Categories: Northeast, Office, Capital Markets, New York