Well Silverstein is spending $3.5 billion of insurance proceeds on redevelopment of the site, and has $1.75 billion in rent to pay as well. And that's not even getting started on WTC7. Already he's well and truly over his insurance funds. Doh.
So much wrong there. He doesn't pay $1.75B rent, he pays an
additional $1.75B rent in 99 years to his already pre-set lease of $4.95B rent in 99 years - which is the 50 million a year. That means the new lease is some 67 million a year.
But here's the thing: He spends 50 million, +15 million on the insurance, and the next thing that happens is that he can get 4.6 billion from the insurers. Alright, they appeal and it gets toned down to 3.5. It was worth a try, to get 1.1 billion extra cash, not?
65 million immediate expenses. 3.5 billion income.
He gets awarded 250million from the state, which means effectively he didn't have to pay for the last 5 years of the lease.
The (new) lease means a yearly cost of 67 million - plus a probably much higher than before insurance fee - and those will be paid by the future tenants of the new WTC. And a large part of this will again be paid by the government by guaranteeing tenancy.
And how much of the new WTC is paid by him? You guys need to understand how capital works. If you can pay the interest (~3-3.5% a year for long term investments of that scale) you don't need to invest much of your own hard cash to get billions of dollars of investment capital available to build a new WTC. But getting hard cash for yourself (like you do when you get awarded from an insurance) that's an entirely different thing. Liquidity is power.
For Silverstein, who would have had to renovate the building due to the asbestos (which would have cost ridiculous amounts of money and time) the blowing up of the WTC was probably the best deal of his life.
