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Deal of the Year: World Trade Center, New York, NY

Weighing in at $3.2 billion, the acquisition of the 99-year leasehold of the World Trade Center was the largest of the year. "Notwithstanding the emotional difficulty of celebrating anything related to the World Trade Center is the fact that upon completion of its acquisition by Larry Silverstein, it was clearly the deal of the year for the industry, and now more than ever, a deal of [a] lifetime for Silverstein" said Ken Zakin, managing director at Insignia/ESG. [iiRealEstate]

Silverstein Makes a Huge
Profit off of the 9/11 Attacks

Six months before the 9/11 attacks the World Trade Center was "privatized" by being leased to a private sector developer. The lease was purchased by the Silverstein Group for $3.2 billion. "This is a dream come true," Larry Silverstein said. "We will be in control of a prized asset, and we will seek to develop its potential, raising it to new heights."

But the World Trade Towers were not the real estate plum we are led to believe.

From an economic standpoint, the trade center -- subsidized since its inception -- has never functioned, nor was it intended to function, unprotected in the rough-and-tumble real estate marketplace. [BusinessWeek]

How could Silverstein Group have been ignorant of this?

Also, the towers required some $200 million in renovations and improvements, most of which related to removal and replacement of building materials declared to be health hazards in the years since the towers were built.

It was well-known by the city of New York that the WTC was an asbestos bombshell. For years, the Port Authority treated the building like an aging dinosaur, attempting on several occasions to get permits to demolish the building for liability reasons, but being turned down due the known asbestos problem. Further, it was well-known the only reason the building was still standing until 9/11 was because it was too costly to disassemble the twin towers floor by floor since the Port Authority was prohibited legally from demolishing the buildings. [Arctic Beacon]

Other New York developers had been driven into bankruptcy by the costly mandated renovations, and $200 million represented an entire year's worth of revenues from the World Trade Towers.

The perfect collapse of the twin towers changed the picture.

Under a pending agreement, a developer and his investors will get back most of the down payment that they made to lease the World Trade Center just six weeks before a terrorist attack destroyed the twin towers. Developer Larry Silverstein and investors Lloyd Goldman and Joseph Cayre are nearing a deal that would give them about $98 million of their original investment of $124 million, The New York Times reported Saturday. [MontereyHerald 11/22/2003]

Instead of renovation, Silverstein is rebuilding, funded by the insurance coverage on the property which 'fortuitously' covered acts of terrorism. Even better, Silverstein filed TWO insurance claims for the maximum amount of the policy, based on the two, in Silverstein's view, separate attacks. The total potential payout is $7.1 billion, more than enough to build a fabulous new complex and leave a hefty profit for the Silverstein Group, including Larry Silverstein himself.

As reported in The Washington Post, the insurance company, Swiss Re, has gone to court to argue that the 9/11 disaster was only one attack, not two and that therefore the insurance payout should be limited to $3.55 billion, still enough to rebuild the complex.

Update: WTC Leaseholder May Collect Up To $4.6B

A federal jury on Monday ruled that the assault on the Twin Towers of the World Trade Center was in fact two occurrences for insurance purposes. The finding in U.S. District Court in Manhattan means leaseholder Larry Silverstein may collect up to $4.6 billion, according to reports. [Forbes.com 12/06/04]

The result of court ruling: Silverstein makes a huge profit off of the 9/11 attacks.


See also:

Westfield, Silverstein and the WTC Golden Goose
Ground Zero Worker and 9/11 Hero Dying of Cancer From Toxins at WTC


What Really Happened

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