Iranian Government-Linked Fifth Avenue Office Transfers In $435M Deal: This Week's N.Y. Deal Sheet
A Fifth Avenue office tower at the heart of a settlement involving the Iranian government has officially changed hands to facilitate a nine-figure payment to victims of terrorism.
The 336K SF building at 650 Fifth Ave. is now owned by nonprofit the Amir Kabir Foundation following a transfer valued at $435M, PincusCo reported.
The building was 60% owned by nonprofit Alavi Foundation and 40% owned by Assa Corp., which the U.S. Treasury said in 2008 was owned by a front for the Iranian government, Bank Melli.
A jury ruled that the U.S. government could seize the asset in 2017, The New York Times previously reported, although that verdict was overturned by an appeals court.
The transfer was approved by the New York State Attorney General in January after the litigation in the Southern District of New York led to the settlement, PincusCo reported last month.
Alavi, which promotes Persian culture in the U.S., said in a statement it “categorically rejects any allegation” that it acted on behalf of the Iranian government and asserts it did not know that Assa Corp. was indirectly owned by Bank Melli.
Alavi was a successor to the Pahlavi Foundation, controlled by the former Shah of Iran. Pahlavi developed the building in 1978, a year before the Iranian Revolution. Prosecutors allege that the building's ownership concealed its ties to the current regime following sanctions in 1995.
The transfer is part of a settlement that includes payments to private judgment creditors who hold legal claims against the Iranian government as a state sponsor of terrorism.
The Amir Kabir Foundation borrowed $189M to finance the acquisition, provided by Alavi as a structured mortgage obligation as part of the settlement. The financing arrangement is part of a larger $318M settlement that will draw on millions of accumulated rental income from the office tower that was frozen during the asset forfeiture process.
The foundation now also owns the building’s retail portion, which is occupied by Nike's House of Innovation and controlled by SL Green Realty via a long-term net lease.
The debt allows the Amir Kabir Foundation to retain property ownership while guaranteeing a way for creditors to collect the unsatisfied judgments. The mortgage has a 7% annual interest rate, but the Amir Kabir Foundation can defer 3% and is only required to pay 4% over a three-year term unless it refinances the property earlier.
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