Not deviating from Swiss stereotypes regarding any matter politically charged, Piaget SA, the maker of gold and diamond-encrusted watches, has disavowed any connection to the 36-story office tower that bears its name. “Piaget the brand is not affiliated with this,” said spokeswoman Karen Blum in an email—“this” referring to the address 650 Fifth Avenue.
The tower gained its notoriety after federal authorities took steps to seize it in early November as part of what could end up being one of the largest counterterrorism land seizures ever by the U.S. government. The tower is now dealing with a nasty public-relations trial, and it remains to be seen how it will affect tenants and rents alike.
An amended complaint filed by the U.S. attorney’s office in the Southern District of New York on Nov. 12 seeks forfeiture of the 60 percent stake in 650 Fifth that a nonprofit organization called the Alavi Foundation holds, and alleges that Alavi funnels funds to the Iranian government–controlled Bank Melli. Legal procedure requires the landlord to post notice of the complaint in the building.
Bank Melli, which originated the mortgage and loans for construction costs of 650 Fifth, has been the primary recipient of rent generated from it since its construction. (Bank Melli later canceled the mortgage debt in a strange transaction with shell companies and Alavi.) As the Associated Press reports, “Bank Melli has been accused by a U.S. Treasury official of providing support for Iran’s nuclear program, and it is illegal in the United States to do business with the bank.” There is also a complaint against former Alavi president Farshid Jahedi on charges of obstruction of justice, for allegedly destroying documents that linked 650 Fifth to Bank Melli.
THE MODERN TOWER, made entirely from light brown granite, was designed by John Carl Warnecke and Associates, and erected for the Pahlavi Foundation (the Shah’s personal charitable group) in 1978. It replaced the DePinna’s department store, a sort of Brooks Brothers retailer between 51st and 52nd streets, that went out of business in 1969.
The Pahlavi Foundation, set up in 1973, was sued by Iran’s then-new revolutionary government in 1979, because the Shah had allegedly funneled $1 billion in oil revenue to it before being overthrown. The suit sought the Shah’s assets, including the Piaget Building. It went to the Supreme Court, where, in 1985, a ruling by the New York Court of Appeals was upheld, on grounds that the U.S. had no jurisdiction.
The building’s ownership then becomes unclear, although the Iranian government did take control of the Alavi Foundation (through political, not legal, means), according to the U.S. attorney’s complaint.
Though now nearly 25 percent vacant, 650 Fifth did sport classy tenants such as Citigroup, Mistral Equity Partners, Tower Capital Asset Management, Paradigm Global Advisors, Broadmark Capital and Sterling National Bank. Upmarket clothier Juicy Couture rents retail space. North American Watch, exclusive distributors of Piaget watches, rented in 650 Fifth until at least 1982, according to public tax documents. Piaget later became Movado Group and moved up the street in 1996 to 730 Fifth.
The reason Piaget and others sought space in the Plaza district gem is its abiding quality: location. As The New York Observer’s Dana Rubinstein reported, amenities are not what allow the building to command the rents it does. “It’s always been a fair building,” said Mark Weiss, Newmark Knight Frank vice chairman. “Never any better than that, but in a very good location.” Robert Emden of PBS Real Estate says that ownership concerns have cast a shadow over the property, which, though technically Class A, was not always thought to be in great shape.
Then the ownership concerns became very real.
