Fifth Avenue Office Tower With Links to Iran Finds New Ownership

A newly established nonprofit has taken control of the 36-story office tower at 650 Fifth Avenue from its Iran-linked former owners in a multistage transfer.

The high-profile acquisition, announced in March and recorded on Monday, concludes nearly two decades of legal battles between the former owners and the U.S. government. The acquisition is part of a $318 million settlement for which the building will now serve as collateral in compensation to victims of terrorism linked to Iran.

The Delaware-based nonprofit Amir Kabir Foundation now owns the property through the entity 650 Fifth Avenue Real Estate Holdings, according to city records made public Monday. The nonprofit will be monitored by the U.S. government. The Real Deal first reported the news. 

An initial transaction valued at $174 million took place on Monday afternoon between ownership entity 650 Fifth Avenue Company and the Amir Kabir Foundation. A transfer valued at $435 million immediately followed, this time between the nonprofit and 650 Fifth Avenue Real Estate Holdings.

U.S. authorities have alleged the building’s former owners, Alavi Foundation and Assa Corporation, were secretly backed by Iranian government interests in violation of U.S. sanctions, although some courts have disagreed.  

Jay Clayton, U.S. attorney for the Southern District of New York, announced that it had reached a $318 million settlement with the building’s former ownership in late March. The deal dissolved the owner partnership and arranged for the building’s recent acquisition. 

“For nearly two decades, we pursued hidden Iranian government assets tied to a Manhattan skyscraper to ensure those funds would ultimately compensate victims of Iran-sponsored terrorism rather than terrorists and their enablers,” Clayton said in a statement.

An initial $129 million payment was disbursed to victims groups last month. The remaining $189 million, established as a debt agreement between the newly formed 650 Fifth Avenue Real Estate Holdings and a settlement trust, will be paid over the next three years. 

The complex financial arrangement will allow the building’s commercial operations to continue as the creditors are paid out.

The U.S. first commenced forfeiture action against the building in 2008. It alleged that the highest levels of Iranian leadership used 650 Fifth Avenue’s ownership structure to bypass sweeping U.S. sanctions and facilitate payment of tens of millions of dollars of operating income to a state-controlled bank through Assa.

Alavi Foundation, formerly the Pahlavi Foundation, was controlled by then-Iranian Shah Mohammad Reza Pahlavi when it purchased the 650 Fifth Avenue property in 1974. Construction of the building was completed in 1978 with $42 million in financing from the Iran-controlled Bank Melli, which later held its interest in the building through Assa.

Emily Davis can be reached at edavis@commercialobserver.com.