Inside Iran’s Fifth Avenue Skyscraper
Dana Rubinstein Nov. 13, 2009, 1:07 p.m.
Citigroup, Joseph Abboud, Kurt Salmon Associates, Pali Capital, and the Liz Claiborne Art Ortenberg Foundation are just a few of the bold-faced names who may have been paying rent to the Iranian government for their offices in a Fifth Avenue skyscraper, according to real estate sources, the tenants’ own Web sites, and a complaint filed Thursday by the U.S. Attorney for the Southern District of New York.
The U.S. Attorney’s office alleges that the Alavi Foundation and 650 Fifth Avenue Company, owners of the rust-colored granite skyscraper, at 52nd Street, have been transferring its revenues into the coffers of Bank Melli, an institution that the complaint alleges is controlled entirely by the Iranian government. That also means that Jones Lang LaSalle, the brokerage that, according to real estate database CoStar, handles leasing for the building, may have been in the employ of Tehran.
Jones Lang LaSalle did not immediately have a comment.
From top to bottom, the 35-story building is also home to: Integrated Media Solutions; Mistral Equity Partners; TGM Associates; Delta National Bank; L.E.K. Consulting; the Doris Duke Foundation; Tower Capital Asset Management; Paradigm Global Advisors; Hana Bank; Starwood Hotels; Toppan Printing; Ore Hill Capital; MBIA; Sterling National Bank; De Brauw Blackstone Westbroek; and Broadmark Capital.
Only Hana Bank, a Korean firm, and Kurt Salmon would comment for this story.
“We saw the news yesterday,” said Young Jeong, a bank spokesman. “We are reviewing the contract with the building owner… We have some years left until the maturity of the contract, so we are scanning our documents with our broker.”
Peter Brown, a vice chairman at Kurt Salmon, told The Observer that though the staff of the building and its maintenance were to his liking, “As a veteran, as an American, I’m appalled at the idea that the money we pay to the landlord might be funding this regime.”
COSTAR DESCRIBES THE BUILDING as Class A, meaning a top-tier office tower, but brokers who have some familiarity with the building said its main allure was always its location in the city’s most expensive office submarket: the Plaza District.
“The ownership position has always cast a cloud,” said Robert Emden, a principal at PBS Real Estate, who has done some work with tenants in the building. “You know, it was positioned when it was put up in the ’80s to be a [Class] A building, but it never in my opinion attained that status for one reason; that was because of the reported ownership.”
Moreover, Mr. Emden said, “It’s not a building that can sell easily,” in part because the lobby was not up to snuff, though he said ownership has embarked on a renovation project for the lobby and elevators.
Mark Weiss, vice chairman of Newmark Knight Frank, described the building thusly: “It’s always been a fair building. Never any better than that, but in a very good location.”
An attorney for the Alavi Foundation, based at 500 Fifth Avenue, did not immediately respond to a request for comment.
THE BUILDING’S HISTORY, AS outlined in great detail in the criminal complaint seeking to seize the Foundation’s assets, reads like something New York Times building chronicler Christopher Gray might write.
The Pahlavi Foundation, a non-profit operated by the Shah, built the tower in the 1970s, with financing from Bank Melli. Following the 1979 revolution, the Islamic Republic established an entity called “the Bonyad Mostazafan,” whose purpose was to expropriate property, including that of the Shah and the Pahlavi Foundation, and then to manage it. In 1980, the Pahlavi Foundation was renamed “The Mostazafan Foundation of New York.” And then, in 1989, the Alavi Foundation.
Some of the building’s earliest tenants included disgraced financiers Marc Rich–indicted, interestingly, for doing business with Iran during the hostage crisis–and Ivan Boesky, indicted for insider trading, according to two sources in the real estate industry. Also, in 1989, the Alavi Foundation and Bank Melli allegedly formed a partnership called 650 Fifth Avenue Company, in order to avoid federal taxes on the tower’s rental income, hiding the move with the creation of two shell companies, Assa Corp and Assa Co. Ltd.
In December 2008, the U.S. Attorney’s office filed a complaint seeking forfeiture of Assa Corporation’s 40 percent interest in 650 Fifth Avenue Company. In the amended complaint filed Thursday, the U.S. Attorney also seeks the 60 percent interest held by the Alavi Foundation.