Profile: Silverstein Properties
Silverstein Properties was a participant or observer in the following events:
A property risk assessment report is prepared for Silverstein Properties before it acquires the lease for the World Trade Center (see July 24, 2001). It identifies the scenario of an aircraft hitting one of the WTC towers as one of the “maximum foreseeable losses.” The report says, “This scenario is within the realm of the possible, but highly unlikely.” Further details of the assessment, such as who prepared it, are unreported. [National Institute of Standards and Technology, 5/2003, pp. 16 ; Barrett and Collins, 2006, pp. 189; American Prospect, 9/1/2006]
[Source: Silverstein Properties publicity photo]Real estate development and investment firm Silverstein Properties and real estate investment trust Westfield America Inc. finalize a deal worth $3.2 billion to purchase a 99-year lease on the World Trade Center. The agreement covers the Twin Towers, World Trade Center Buildings 4 and 5 (two nine-story office buildings), and about 425,000 square feet of retail space. [New York Times, 4/27/2001; Port Authority of New York and New Jersey, 7/24/2001; IREIzine, 7/26/2001] Westfield America Inc. will be responsible for the retail space, known as the Mall. Silverstein Properties’ lease will cover the roughly 10 million square feet of office space of the Twin Towers and Buildings 4 and 5. Silverstein Properties already owns Building 7 of the WTC, which it built in 1987. This is the only time the WTC has ever changed hands since it was opened in 1973. [International Council of Shopping Centers, 4/27/2001; Westfield Group, 7/24/2001; Daily Telegraph, 9/11/2001; New York Times, 11/29/2001; CNN, 8/31/2002] It was previously controlled by the New York Port Authority, a bi-state government agency. [Wall Street Journal, 5/12/2007] Silverstein and Westfield are given the right to rebuild the structures if they are destroyed. [New Yorker, 5/20/2002]
Silverstein Properties Not the Highest Bidder - Silverstein Properties’ bid for the WTC, at $3.22 billion, was the second highest after Vornado Realty Trust’s, at $3.25 billion. Silverstein Properties won the contract only after protracted negotiations between the Port Authority and Vornado Realty Trust failed. The privatization of the WTC has been overseen by Lewis M. Eisenberg, the chairman of the Port Authority. Eisenberg, a financier, is involved in Republican politics. [New York Times, 3/17/2001; Forward, 8/20/2004]
Banks Provide Most Money for Deal - Larry Silverstein, the president of Silverstein Properties, only uses $14 million of his own money for the deal. His partners, who include real estate investors Lloyd Goldman and Joseph Cayre, put up a further $111 million, and banks provide $563 million in loans. [Brill, 2003, pp. 156; New York Times, 11/22/2003; South Florida CEO, 2/2005; Wall Street Journal, 9/11/2008]
Silverstein's Lenders Want More Insurance - The Port Authority had carried only $1.5 billion in insurance coverage on all its buildings, including the WTC, but Silverstein’s lenders insist on more, eventually demanding $3.55 billion in cover. [American Lawyer, 9/3/2002] After 9/11, Larry Silverstein will claim the attacks on the World Trade Center constituted two separate events, thereby entitling him to a double payout totaling over $7 billion. [Daily Telegraph, 10/9/2001; Guardian, 8/18/2002] Eventually, after several years of legal wrangling, a total of $4.55 billion of insurance money will be paid out for the destruction of the WTC (see May 23, 2007). Most of this appears to go to Silverstein Properties. How much goes to Westfield America Inc. is unclear. [New York Post, 5/24/2007]
Alan Reiss. [Source: Eric Weeks]In the first week of September 2001, the real estate development and investment firm Silverstein Properties assumes control of the World Trade Center. The company had acquired the lease to operate the Twin Towers from the New York Port Authority in late July (see July 24, 2001). It has already begun managing the facility with its own executives. Selected Port Authority employees, including Alan Reiss, the director of the World Trade Center, have been assisting the firm during a three-month transition period. But in the weeks prior to 9/11, according to the New York Times, “Silverstein Properties asked Mr. Reiss to let it more fully operate everything from safety systems to tenant relations.” [New York Times, 9/13/2001; New York Times, 10/14/2001; Weiss, 2003, pp. 338; 9/11 Commission, 11/3/2003; 9/11 Commission, 5/18/2004 ]
Silverstein Properties, Larry Silverstein’s company which took over the lease of the WTC weeks earlier (see July 24, 2001), has a meeting planned for the morning of 9/11 in it’s temporary offices on the 88th floor of the WTC North Tower, along with Port Authority officials. It is to discuss what to do in the event of a terrorist attack. However, this evening the meeting is canceled because one participant cannot attend. [New York Times, 9/12/2001; Ha'aretz, 11/21/2001] Of Silverstein Properties’ 160 staff, 54 are in the North Tower when it is hit, and four of them die. [Globe and Mail, 9/7/2002]
Industrial Risk Insurers agrees to make a full payment under its $861 million policy for the loss of World Trade Center Building 7, a 47-story office building which completely collapsed late in the afternoon of 9/11. [Insurance Journal, 6/7/2002; Wall Street Journal, 7/10/2002; Newsday, 10/21/2003] WTC 7 was owned by Silverstein Properties, which also acquired the lease on the Twin Towers six weeks before 9/11. [International Council of Shopping Centers, 4/27/2001; Port Authority of New York and New Jersey, 7/24/2001] Larry Silverstein, the president of Silverstein Properties, intends to use $489 million of the insurance payment to cover an existing mortgage on WTC 7, and $65 million of it for other debts and costs. The remaining $307 million will go toward the construction costs of the new WTC 7. [Bloomberg, 1/14/2003; New York Daily News, 1/14/2003] He is currently in a dispute with the carriers of his insurance on the Twin Towers, over whether the 9/11 attack constituted one or two separate events, and this will not be settled until mid-2007 (see May 23, 2007). [Wall Street Journal, 9/11/2002; New York Times, 5/23/2007]
An engineering report is released concluding that the destruction of one of the World Trade Center’s Twin Towers would have rendered the other unusable. Swiss Re and other insurance companies involved in the WTC coverage commissioned the study, which was written by California-based Exponent Failure Analysis Associates. It is released the same day as a report on the collapses by WTC leaseholder Silverstein Properties Inc. (see October 23, 2002). Contradicting the Silverstein report, it concludes: “[T]he collapse of one tower in the World Trade Center complex would have severely compromised the future viability of the entire complex.” This supports the insurance companies’ contention that the WTC attacks constituted one loss event, not two, as claimed by Silverstein Properties, thereby entitling Silverstein to a policy limit of $3.5 billion instead of $7 billion. The report, along with the underlying data, computer models, and engineering analyses, have been passed on to the National Institute of Standards and Technology (NIST), which is conducting an investigation into the collapses (see August 21, 2002). [Business Insurance, 10/23/2002; Insurance Journal, 10/23/2002; Engineering News-Record, 11/4/2002] In late 2004, a jury will rule that the WTC attacks were two events, and Silverstein Properties will be tentatively awarded $2.2 billion in insurance for the destruction of the Twin Towers. [BBC, 12/7/2004; Insurance Journal, 12/7/2004]
Matthys Levy. [Source: PBS]A report is made publicly available, which the Engineering News-Record calls the “most comprehensive study yet on the destruction of the World Trade Center.” The study was commissioned by WTC leaseholder Silverstein Properties Inc. to support a $7 billion insurance claim, and conducted by a team of engineers from several leading firms, including Weidlinger Associates, LZA Technology/Thornton-Tomasetti, and ARUPFire. It is intended to build on a previous study sponsored by FEMA (see May 1, 2002). The report’s findings are based on an analysis of original structural drawings, thousands of photos, and dozens of videos. Investigators used fire evaluation techniques and powerful computer software to simulate the condition of each tower at critical times between the planes’ impacts and the towers’ collapses. The earlier FEMA investigators had no access to such computer modeling. Matthys Levy, the chairman of Weidlinger Associates and one of the engineers on the study team, says, “The buildings had tremendous reserve capacity and that was reflected in all of the elements we analyzed. In fact, because there were so much excess capacity, the columns even in the impact floors did not buckle immediately, but failed as the result of the fire.” The report states that failure of the WTC’s steel floor supports (“trusses”) did not contribute to the collapses. Instead, the collapses were caused by the failure of steel structural columns that were either destroyed when the planes hit or lost fireproofing, leaving them vulnerable to the weakening effects of the ensuing fires. It says that debris and dust distributed by the plane crashes inhibited the fires, such that the average air temperatures on the impact floors were between 400 and 700°C (750-1,300°F): significantly lower than those associated with typical “fully developed” office fires. However, says Matthys Levy, “By the time the temperature inside the buildings reached 400 degrees, the steel would have lost approximately 50% of its strength. Eventually, gravity took over and the towers began to fall.” Then, according to the analysis led by researchers from LZA Technology/Thornton-Tomasetti, “Once collapse initiated in each tower, essentially all of the interior structure of the tower fell straight down with floors pancaking on top of one another. The network of perimeter steel columns and spandrels acted like a chute to funnel the interior contents into the tower footprint.” According to the computer simulations, the damage to the South Tower’s steel core columns was so severe that the tower should have collapsed immediately after the plane hit. Civil engineer John Osteraas says this incorrect result casts doubt upon some of the study’s predictions. The report concludes that the collapse of the South Tower did not cause or contribute to the subsequent collapse of the North Tower, thus supporting Silverstein Properties’ claim that the terrorist attack represented two occurrences, entitling it to two $3.5 billion insurance policy limits. A separate study commissioned by the insurers contradicts this (see October 23, 2002). The Silverstein report apparently does not examine the collapse of WTC Building 7, a 47-story skyscraper that also collapsed on 9/11 (see (5:20 p.m.) September 11, 2001). It has been passed on to the National Institute of Standards and Technology (NIST), which is undertaking its own investigation of the WTC collapses (see August 21, 2002). [New York Times, 9/30/2002; Business Insurance, 10/23/2002; Silverstein Properties, Inc., 10/23/2002 ; Engineering News-Record, 10/25/2002; New York Times, 10/29/2002; Engineering News-Record, 11/4/2002; Real Estate Weekly, 4/30/2003]
Insurance companies reach a $2 billion settlement with real estate development and investment firm Silverstein Properties for the destruction of the World Trade Center on 9/11. The agreement, which involves seven of the two-dozen insurers for the WTC, ends more than five years of legal wrangling. The other insurance companies involved have already paid out about $2.55 billion, meaning the total payout will be $4.55 billion. In September 2006, Silverstein Properties and the New York Port Authority had agreed to split the reconstruction of the WTC site between them, and to divide up the remaining insurance proceeds accordingly. Consequently, the Port Authority is to receive about $870 million from the latest settlement, while the remaining $1.13 billion will go to Silverstein Properties. [New York State, 5/23/2007; New York Times, 5/23/2007; Newsday, 5/23/2007; Reuters, 5/23/2007] Silverstein Properties acquired the lease on several of the World Trade Center buildings, including the Twin Towers, in July 2001 (see July 24, 2001). [Port Authority of New York and New Jersey, 7/24/2001] As the New York Times summarizes, “At that time, two dozen insurers had signed binders pledging to provide $3.5 billion in insurance coverage, but had not finished the documentation.” Therefore, after 9/11, an “ugly dispute developed over which insurance policy was in effect at the time of the attack. Mr. [Larry] Silverstein [the president of Silverstein Properties] argued that since two jetliners slammed into the two towers, he was entitled to a double payment on the $3.5 billion policy. But many of the insurers countered that they had agreed to a different policy that did not permit double claims.” [New York Times, 5/23/2007] In 2004, federal juries had decided that Silverstein Properties could collect a maximum of $4.68 billion for the loss of the WTC. The current settlement therefore means the insurers are obliged to pay 97.2 percent of that maximum. [Bloomberg, 5/23/2007; New York State, 5/23/2007; Newsday, 5/23/2007; Reuters, 5/23/2007] Silverstein Properties had separately been awarded $861 million of insurance money in 2002 for the loss of World Trade Center Building 7, which also collapsed on 9/11 (see May 2002).
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