PA hires unit of firm that audited it
- Last Updated: 12:46 AM, October 9, 2012
- Posted: 12:20 AM, October 9, 2012
A unit of the consulting firm that put out a mostly complimentary audit of the Port Authority has been hired by the agency to help it find tenants to replace Condé Nast at 4 Times Square.
The PA tapped Navigant Capital Advisors — the corporate finance arm of Navigant Consulting — to “evaluate strategic alternatives” for the publisher’s 840,000 square feet.
Four Times Square is owned by the Durst Organization.
Under a deal worked out nearly two years ago, the PA is on the hook for the rent on the space when the publisher moves to 1 World Trade Center in 2015.
The rent due between then and the lease’s April 2019 expiration is about $214 million.
The eye-opening arrangement with Navigant doesn’t mean the firm will act as the PA’s broker but rather, an insider said, will “advise the PA in terms of running the process and evaluate proposals” that will come in through brokers — a role similar to that of an investment bank.
Although Navigant won’t get a commission, it will earn a hefty fee “in the high six figures or low seven figures,” a well-positioned source said.
Under the complex deal to let Condé Nast anchor 1 WTC, the PA agreed to pick up the cost of the remaining rent on Condé’s Times Square lease.
The space stretches over 19 floors including the iconic, Frank Gehry-designed cafeteria.
Interest in the space is likely to be high: It’s a Class-A asset in the tower that cemented the “new” Times Square’s role as a commercial center for media, banks and law firms.
But if the PA hasn’t found a tenant to sublease Condé’s floors, the PA must reimburse the publisher for its rent payments to Durst.
Navigant is expected to send a letter today to top commercial brokers apprising them of its role, saying it has been “retained to evaluate strategic alternatives” for the Condé floors.
It says the PA “will consider a variety of transaction structures,” and “the focus will be on proposals that transfer the rights and obligations of the Condé Nast lease through assignment, lease transfer or other economic exchange.”
The letter also says the 4 TS rent into 2019 will be a below-market $58.86 per square foot, rising to $61.60 only in the final year, and 10-year extension rights beyond April 2019 “at discount to market.”
Word of Navigant’s role was a hot potato yesterday. PA Chairman Patrick Foye wouldn’t comment other than to confirm a letter was going out to brokers this week.
Douglas Durst declined to comment. Prominent independent brokers didn’t want their names attached to the story — including one who said Navigant’s involvement “makes no sense.”