Larry Silverstein

Larry Silverstein

Larry A. Silverstein (born 1932) is an American billionaire real estate investor and operator and the head of Silverstein Properties, a real estate development group. He is a governor of The Real Estate Board of New York and served as chairman emeritus of the New York University Real Estate Institute. Silverstein contributes his time and resources to organizations dedicated to education and medical research, meeting humanitarian needs and assisting the arts. He supports (and served as chairman of) the United Jewish Appeal/Federation of Jewish Philanthropies of New York. Silverstein is chairman of the Realty Foundation, treasurer of the National Jewish Medical and Research Center in Denver, a trustee of the New York University Medical Center and Health System, and a trustee of the Museum of Jewish Heritage in New York. [ [ Global Conference 2007 - Speakers - Larry Silverstein ] ] Silverstein was the leaseholder of the World Trade Center property at the time of the September 11, 2001 attacks and currently oversees its reconstruction.

Early years

Silverstein was born in Bedford-Stuyvesant, Brooklyn, New York. He graduated from New York University in 1952, and married in 1956. He also attended classes at Brooklyn Law School. He and his wife, Klara, have three children: Lisa, Roger and Sharon.

Silverstein became involved in real estate, together with his late father, Harry G. Silverstein, and then friend and brother-in-law, the late Bernard Mendik, buying buildings in Manhattan. In 1957, they established Silverstein Properties, as Harry G. Silverstein & Sons, and bought their first building. Mendik and Silverstein continued the business after Harry's death in 1966. In 1977, Mendik divorced Annette Mendik Silverstein, with the business partnership also splitting up at that time.cite web |url= |title=Silverstein Properties, Inc. - Company History |] Mendik also cited disagreements over real estate strategies, with Mendik wanting to buy buildings while Silverstein wanted to build. [cite news |title=Putting together city's biggest apartment deal |date=January 28, 1985 |publisher=New York Times |author=Salmans, Sandra]

World Trade Center lease

7 World Trade Center

In 1980, Larry Silverstein won a bid to lease and develop the last undeveloped parcel from the Port Authority of New York and New Jersey to build the 47-story 7 World Trade Center.

On 9/11, WTC 7 collapsed approximately 7 hours after the collapse of WTC 1. In the PBS documentary about the 9/11 attack, America Rebuilds, an interview with Larry Silverstein is featured. In it, Silverstein makes the following statement on the WTC 7 demise:"I remember getting a call from the, er, fire department commander, telling me that they were not sure they were gonna be able to contain the fire, and I said, "We've had such terrible loss of life, maybe the smartest thing to do is pull it." And they made that decision to pull and we watched the building collapse." [America Rebuilds/America Rebuilds II - Return to Ground Zero by Mariska Hargitay, Roger T. Grange III, Justin Schein, and Hayes Greenfield (DVD - Oct 17, 2006)] Although many conspiracy theorists maintain that he meant to intentionally destroy the building, it has been clarified that "they," the FDNY, made the decision to "pull" firefighters from the building and the area around it because the building was unstable and it was apparent to them that it may collapse. [ [ "Chief of Department FDNY (ret.) Daniel Nigro Addresses Conspiracy Theories"] ]

World Trade Center

During the 1990s, New York was suffering from the effects of the 1987 stock market crash, which led to high vacancy rates at the World Trade Center. George Pataki became Governor of New York in 1995 on a campaign of cutting costs, including privatizing the World Trade Center. A sale of the property was considered too complex, so it was decided by the Port Authority to open a 99-year lease to competitive bidding. [cite book| last=Goldberger|first=Paul|title=Up From Ground Zero|publisher=Random House|pages=p.28| year=2004|location=New York| id=ISBN 1-4000-6017-6]

In January 2001, Silverstein, via Silverstein Properties and Westfield America, made a $3.2 billion bid for the lease to the World Trade Center. Silverstein was outbid by $50 million by Vornado Realty, with Boston Properties and Brookfield Properties also competing for the lease. However, Vornado withdrew and Silverstein's bid for the lease to the World Trade Center was accepted on July 24 2001, seven weeks before the buildings were destroyed in the September 11, 2001 attacks. This was the first time in the building's 31-year history that the complex had changed management.

The deal was described in a press release on July 24 2001:

:"Silverstein Properties, Inc., and Westfield America, Inc. will lease the Twin Towers and other portions of the complex in a deal worth approximately $3.2 billion – the city's richest real estate deal ever and one of the largest privatization initiatives in history." [ [ 'Governor Pataki, Acting Governor Difrancesco Laud Historic Port Authority Agreement To Privatize World Trade Center'] Port Authority Press Release, July 24 2001] "

The lease agreement applied to One, Two, Four, and Five World Trade Center, and about convert|425000|sqft|m2|-2 of retail space. Silverstein put up $14 million of his own money to secure the deal. [ [ 'Double Indemnity: Was the WTC disaster one incident or two?'] Alison Frankel, "The American Lawyer", September 3 2002] The terms of the lease gave Silverstein, as leaseholder, the right to rebuild the structures should they be destroyed and should he comply with the onerous financial obligations of the lease. [cite journal|publisher=The New York York|last=Goldberger|first=Paul|date=May 20 2002| url= |title=Groundwork: How the future of Ground Zero is being resolved]

A $3.55 billion insurance policy was obtained for these buildings, and after the damage sustained on September 11, 2001, $4.55 billion was collected from the insurers (see below). [ [ Litigation Settled] , Bloomberg, May 23, 2007] The money is being used to rebuild the World Trade Center, and the Silverstein properties lease has continued without change.

Other projects

While Silverstein is most famous for his involvement at the World Trade Center, his real estate holdings include many other buildings in New York City.

As of 1978, Silverstein owned five buildings on Fifth Avenue, as well as 44 Wall Street, and a shopping center in Stamford, Connecticut. In 1980, he bought the building at 120 Wall Street, which was constructed in 1930. Also in 1980, he renovated the building at 11 West 42nd Street, acquired the lease for the Equitable Building at 120 Broadway.

Other buildings include:
* One River Place (42nd Street west of 11th Avenue)
* Two River Place
* 529 Fifth Avenue
* 570 Seventh Avenue

Silverstein was also involved as a developer of the Ronald Reagan Building in Washington, D.C.

In November 2006, Silverstein agreed to buy the building at 99 Church Street from Moody's for $170 million. [cite news |title=Moody's to sell headquarters to Silverstein |publisher=New York Business |date=November 21, 2006 |author=Hess, Diane |url=] Moody's is slated to move its headquarters into 7 World Trade Center in 2007. 99 Church Street, built in 1951, contains convert|441000|sqft|m2|-2 of space.cite news |title=In Brief |publisher=Newsday |date=November 22, 2006] Depending on market demands, the building may continue to be used as office space or as a mixed-use structure, which would also include apartments.

In 1989 Silverstein proposed to members of the Israeli government that a Free-Trade zone should be created within the Negev region of Israel. The project ultimately failed, however it enjoyed popular support amongst leading Israeli political figures. [ [ Up In Smoke] Haaretz]

eptember 11, 2001 attacks

Dispute with insurers

As a private developer with a 99-year lease on 1WTC, 2WTC, 4WTC, and 5WTC, Silverstein insured the buildings. The insurance policies on these four buildings were underwritten by 24 insurance companies for a combined total of $3.55 billion in property damage coverage.

Following the September 11, 2001 attacks, Silverstein sought to collect double the face amount of that coverage (~$7.1 billion) because, he contended, the two separate airplane strikes constituted two occurrences within the meaning of the policies. The insurance companies took the opposite view. Because some of the policies contained certain limiting language and some did not, the court split the insurers into two groups for jury trials on the question of whether their policies were subject to the “one occurrence” interpretation or the “two occurrence” interpretation.

The first trial resulted in a verdict on April 29, 2004, that 10 of the insurers in this group were subject to the “one occurrence” interpretation, so their liability was limited to the face value of those policies, and 3 insurers were added to the second trial group. [cite news |url= |title=Jurors Deal World Trade Center Leaseholder Major Setback |publisher=New York Law Journal / |author=Hamblett, Mark |date-2004-04-30] [Cite news| title=Jury's Decision Leaves Rebuilding of World Trade Center in Turmoil|publisher=Wall Street Journal|last=Starkman|first=Dean|date=2004-04-30|page=A1] The jury was unable to reach a verdict on one insurer, Swiss Reinsurance, at that time, but did so several days later on May 3, 2004, finding that this company was also subject to the “one occurrence” interpretation. [cite news |url= |title=Appeals court rules for Swiss Re in WTC dispute |publisher=Business Insurance |author=Parekh, Rupal |date=2006-10-18] Silverstein appealed the Swiss Re decision, but lost that appeal on October 19, 2004. [Cite news| title=Circuit Resolves Distribution Of 9/11 Insurance Proceeds|publisher=New York Law Journal|last=Hamblett|first=Mark|date=2006-10-19] The second trial resulted in a verdict on December 6, 2004, that 9 insurers were subject to the “two occurrences” interpretation and, therefore, liable for a maximum of double the face value of those particular policies ($2.2 billion). [Cite news| publisher=Wall Street Journal| title=Jury Rules for Silverstein on Trade Center Insurance|first=Dean|last=Starkman|date=2004-12-07|page=A11] The total potential payout, therefore, was capped at $4.577 billion for buildings 1, 2, 4, and 5. [ WTC Developer to Get Additional $12.5M Payment from Insurer TIG] , Commercial Property News, Barbra Murray, March, 2007]

In 2007, Silverstein and the Port Authority of New York and New Jersey filed a lawsuit against some of its insurers for failure to pay out insurance proceeds following the 2004 verdicts, and that litigation was settled in late May, 2007. [ [ Litigation Settled] , Bloomberg, May 23, 2007] [ [ $2B settlement ends trade center litigation - ] ] [ [ The New York Law Journal - Circuit Resolves Distribution Of 9/11 Insurance Proceeds ] ] [Cite news| title=The Importance of Being Larry|publisher=Wall Street Journal|last=Jenkins, Jr.|first=Holman|page=A17|date=2002-03-06] [ [ Gothamist: WTC Insurance Payout Totals $4.55 Billion ] ] Silverstein's lease with the Port Authority for the World Trade Center requires him to continue paying $102 million annually in base rent.cite web |url= |title=2001 Annual Report |publisher=PANY |date=2002, April 23|format=PDF] He is applying insurance payments toward the redevelopment of the World Trade Center site.

Negotiations to rebuild at the World Trade Center site

As leaseholder of buildings One, Two, Four and Five, Silverstein had the legal right to rebuild the buildings, including the Freedom Tower at the World Trade Center site which would later be designated as building One, and while the site remains unoccupied, he continues to pay $10 million per month in rent to the Port Authority of New York and New Jersey.

After the September 11, 2001 terrorist attacks, the United States Congress approved $8 billion in tax-exempt Liberty Bonds to fund development in the private sector at lower-than-market interest rates. $3.4 billion remained unallocated in March 2006 designated for Lower Manhattan, with about half of the funds under the control of Mayor Michael Bloomberg and the other half under the control of former Governor George Pataki.

In April 2006, after several months of negotiation aimed toward permitting reconstruction to commence, Silverstein yielded some of his rights back to the Port Authority, in order to facilitate rebuilding at the site. Those negotiations resulted in Silverstein ceding his rights to building One (and its pro-rata share of the above-noted Liberty Bond funds) to the Port Authority, and allocating a portion of the insurance proceeds to the rebuilding of building One in favor of the Port Authority. In return, the remaining pro-rata shares of the Liberty Bond funds were allocated to Silverstein Properties for purposes of rebuilding the remaining buildings, and government agencies are expected to be among the tenants in those buildings.

Ground was broken on the construction of the Freedom Tower on April 27 2006. [ [ "Construction Begins at Ground Zero", Washington Post, April 28, 2006] ] Lack of financing had prevented construction from commencing earlier. The proceeds of the insurance policies arising from the destruction of the previous buildings were insufficient to cover the cost of rebuilding all the insured buildings.

In March 2007 Silverstein appeared at a rally of construction workers and public officials outside of an insurance industry conference to highlight what he describes as the failures of insurers Allianz & Royal and Sun Alliance to pay $800 million in claims related to the attacks. Insurers cite an agreement to split payments between Mr. Silverstein and the Port Authority as a cause for concern. [ [ Silverstein Lashes Out Against WTC Insurers, Special to the New York Sun, March 13, 2007] ]

In summary, Silverstein retains rights for Towers Two, Three, and Four. The Freedom Tower (designated as Tower One) will be owned by the Port Authority as well as Tower Five which may be leased out to another private developer and redesigned as a residential building. [ ["Freeing us from Freedom Tower" Nicole Gelinas, City Journal, Autumn 2006 ] ]


External links

* [ Silverstein Properties]
* [ World Trade Center]
* [ Yahoo! - Silverstein Properties, Inc. Company Profile]
* [ WTC Design Unveiling] (video)
* [ New York Magazine Profile]
* [ Video of speech at cornerstone laying ceremony for the Freedom Tower on July 4, 2004]

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