China Firm's Commitment To Freedom Tower Doubted

A Chinese real estate development company with strong ties to China's government has signed a term sheet to occupy five floors of the Freedom Tower upon its scheduled opening in 2012, but some real estate experts say the company has a history of reneging on deals.

The China Center New York — a subsidiary of Vantone, one of China's largest real estate development companies — signed a term sheet with the Port Authority to lease five and half floors in the Freedom Tower, according to the Port Authority, which owns the former World Trade Center site and is leasing the 1,776-foot-tall Freedom Tower.

Several real estate sources with knowledge of Vantone's past lease negotiations aren't putting much stock in the agreement until the Port Authority starts collecting rent.

A developer who is building three towers at the World Trade Center site, Larry Silverstein, abandoned negotiations with Vantone in 2006 — when he was slated to build the Freedom Tower — after he claimed that the company signed a term sheet but then failed to deliver a letter of credit.

A year later, the same thing happened to the president and chief investment officer of L&L Holding Co., Robert Lapidus, for office space at 195 Broadway.

"That might have been the only time that happened in my career," Mr. Lapidus said yesterday.

The executive director of the China Center, Xue Ya, said that in the Silverstein case Vantone had delivered the letter of credit, but it was late, and she said Vantone pulled out of the deal at 195 Broadway because it did not satisfy the company's long-term needs.

According to the Port Authority, Vantone has agreed to lease floors 64 to 69 at $80 a square foot. The terms of the deal call for a 22-year lease with escalations every five years. The China Center New York would be a hub for Chinese firms developing American operations, and for American companies wishing to conduct business in China. It would likely include an executive business club, conference center, and travel center with other corporate catered amenities.

"Serious interest from the China Center is a major milestone in our efforts to secure Freedom Tower tenants from around the world," the Port Authority's chairman, Anthony Coscia, said in a statement. The newly appointed Port Authority executive director, Christopher Ward, said the commitment from Vantone helps "build excitement" for other tenants.

The managing director of the real estate research firm Real Capital Analytics, Daniel Fasulo, said kinks often emerge when deals are struck with companies that have significant links to government, such as Vantone.

"Manhattan is a fast-moving place to do deals, and if you need to go through layers of bureaucracy to make a decision there is a good chance that you are going to lose a deal. That said, they have been around the block a few times now, and I got a feeling this will stick," Mr. Fasulo said.