Brookfield tells investors One Liberty Plaza is safe
But building has sustained 'significant' cosmetic damage to glass, granite facings
By OLIVER BERTIN, The Globe and Mail
REAL ESTATE REPORTER
Friday, September 14, 2001
Brookfield Properties Corp. rushed yesterday to reassure investors that its prized One Liberty Plaza building was safe, though it has sustained "significant" damage to the glass and granite facings.
"We have confirmed there is no structural damage to our building," said Bruce Flatt, president and chief executive officer of the Toronto-based real estate company.
That assessment came amid repeated media reports that the building was collapsing.
"The press has been wrong," Mr. Flatt said.
He assured investors that Brookfield would suffer no financial loss following the destruction of the World Trade Center in New York on Tuesday. "We have adequate [insurance] coverage . . . Acts of terrorism are covered."
He said that, with the destruction of the twin towers, 15 million square feet of premium New York office space "is missing . . .
"The city had only a 6-per-cent vacancy rate" before the terrorist attack on the city, he said.
That vacancy rate will now be close to zero, a financial analyst said, and tenants will be scrambling for whatever space they can find.
The World Trade Center accounted for about one-third of all the premium office space in New York, according to one financial analyst, and the remaining space will now be very valuable indeed.
Brookfield was already the largest single office developer in New York, with 9.8 million square feet of premium office space, including One Liberty Plaza, three buildings and one shopping plaza in the World Financial Center complex and 245 Park Avenue. The company has another 3.7 million square feet of space in development at Penn Station and 300 Madison Avenue.
One Liberty Plaza houses some elite clients, including the Nasdaq Stock Market and Goldman Sachs & Co., as well as Bank of Nova Scotia and Royal Bank of Canada.
Despite the soothing words of Mr. Flatt and his staff, Brookfield stock plummeted from Monday's close of $29.65 to $25 on the Toronto Stock Exchange soon after markets reopened Thursday morning. The stock later recovered to $27.60 by the close, up 60 cents from its last close of $27 in Tuesday's abbreviated session. Volume was 3.5 million, the highest level in more than a year.
Mr. Flatt and other senior executives said the confusion arose when local media in New York saw skyscrapers collapsing adjacent to the World Trade Center. Amid the smoke and dust, the broadcast and electronic media apparently confused other buildings with Brookfield's.
"None of our offices have structural issues," Mr. Flatt repeated several times. "We have significant glass loss, but we have no structural damage."
At one point Wednesday evening, Mr. Flatt was inside One Liberty Plaza, talking on his cellphone in an effort to quash reports that the building was collapsing above his head.
Brookfield wants to reopen the building as soon as possible, but company officials said it was impossible to give a date until construction crews are allowed onto the site to properly assess the damage.
"I believe we can be operational in short order," Mr. Flatt said yesterday afternoon. Treasurer Steven Douglas said earlier in the day that the building would open "very quickly," but refused to be more specific. "It's impossible to say until we get on the site," he said. "We don't even have electricity or telephones."
Mr. Flatt said he was allowed into One Liberty Place and Brookfield's three buildings in the World Financial Center complex on Wednesday with two teams of independent structural engineers.
"What you see on TV looks bad," he said. "To a layperson like me on the ground, it looks much worse."
But he said the damage to One Liberty Plaza was limited to "significant" cosmetic damage to the glass curtain wall and granite facings in the lobby and lower floors of the building. The building has no water, electricity or telephone lines, but he said most of the tenants' property appears undamaged.
The building was evacuated soon after the initial explosion at the World Trade Center Tuesday morning. There were no deaths, and most tenants have been accounted for.
Mr. Flatt said he intends to repair the building as soon as city officials allow construction crews into the area. As a stop-gap measure, he is arranging emergency electricity hookups, and he has ordered several truckloads of plywood to replace broken windows. Those trucks were slated to arrive in New York this morning.
Company spokeswoman Katherine Vyse said it was impossible to say how long it will take to repair the windows at One Liberty Place. In the meantime, the company intends to erect barriers of plywood and tarpaulins so tenants can return to work as soon as possible.
Several engineering and financial experts agreed it would be impossible to estimate the cost of repairing the building for some time.
"There's no way of knowing," said Frank Mayer of HSBC Securities in Toronto.