“Poles apart, Ghalib, the door to tavern and preacher are.
But I know this: yesterday, while I was leaving, he was coming in.”
- Mirza Ghalib, A Thousand Desires

Quite the geopolitical weekend we’ve had, and likely much more to come in the next few weeks. As always, such topics are beyond the scope of The Promote, and we only touch on them insomuch as they involve our cast of characters/stages. So, for now:

Trump’s diplomatic Batman & Robin, Steve Witkoff & Jared Kushner, were tasked w/ reaching a deal w/ Iran. When they spoke w/ POTUS on Thursday and told him a real breakthrough was unlikely, that was the clincher, per WSJ.

For CRE heads, the assassination of Ayatollah Khamenei and Trump’s stated goal of regime change brings up the Q of Iran’s flagship US CRE asset: 650 Fifth Ave👇

A 🖋️ from Pensford’s JP Conklin: The joint US-Israel strikes will be difficult for markets to price. Flight to safety vs inflation. How long does it drag on? Our best-case scenario is that things settle down by the end of Q1. I expect some interest rate tension in the coming weeks. Military actions of this magnitude usually create a flight to safety and push yields down. But given that oil could surge above $100/ 🛢 , it’s hard to overlook the inflationary effects. Keep in mind that the 10 Year Treasury had already pushed below 4% before the strikes. Read on…

In the mid 2010s on the New York real estate scene, Josh Schuster had the glow. The smooth-talking, Amex Black-toting hotshot developer seemed to be on a stratospheric rise, and promised to take his lenders and investors along w/ him. But it turned out to be an elaborate charade, and Schuster has now plead guilty to a Ponzi scheme. Our snapshot of Schuster, and why his type is a recurring character in ground-up development, is now live on YouTube. We’ll be doing more of these videos on projects & players x the country, so smash that subscribe button and ✏ w/ suggestions.

The tower was built in the late 1970s by the then Shah of Iran, who envisioned it as the seat of his govt.’s charitable interests in the US. After the Iranian revolution in ‘79, the Islamic Republic moved to take over the asset. The ownership entity, the Pahlavi Foundation, was renamed the Alavi Foundation. (“As a former property manager of the building, we never knew exactly who we were working for,” Colliers’ Michael Cohen later said of ownership.) The tenant roster was colorful to say the least, w/ the likes of Marc Rich (Glencore founder, bought oil from Iran during the American embargo, pardoned by WJC) and Ivan Boesky (yup, the Den of Thieves guy). The ownership structure became deliberately labyrinthine: In ‘89, Alavi reportedly transferred a 40% stake to a Jersey Islands-domiciled entity called Assa Corp., and Iranian bank Melli’s original construction loan was forgiven.

The Feds first tried to take control of the 36-story building in ‘08, alleging that nominal owner Alavi Foundation was an instrument of the ayatollah. By late ‘13, a judge ruled in favor of forfeiture, and SL Green & Jeff Sutton 🫡 wasted no time: They swished into the retail, striking a purchase deal w/ the court-appointed monitor; the space is now home to Nike’s flagship. Iran kept fighting for its tower, however, and by ‘19 had won an appeal that staved off forfeiture. The office portion has been in limbo ever since, BUT a couple factors that might change things up

As Anne Hathaway would say, “it came true.” Larry is going to get the damn thing built. We have a finalized deal for Amex to occupy 2 World Trade Center, a milestone for Silverstein Properties, for Lower Manhattan, and really, for 🗽. This thing took its time coming together – chatter of an Amex deal started as far back as ‘24, but given the complexity (Port Authority owns the dirt) and sheer cost (public subsidies play a role in most of the rest of the WTC complex, nothing announced so far here), penciling this one was especially tricky.

Here’s the central problem, per deal insiders who requested anonymity to speak about a sensitive public-private transaction: It costs what it costs to build top-tier ground-up in New York, w/ estimates ranging from the high $1Ks to low $2Ks/ 🦶. You’ll recall BXP projecting $2,100/ 🦶 dev for its upcoming 343 Madison. Now, given the rip-roaring market for single-malt buildings ™ 🥃 in Midtown and Hudson Yards, w/ landlords able to command rents from the high $100s to well into the $200s/ 🦶 , one can justify busting out the shovels. (SLG’s Investor Day presentation has them projecting the stabilized YOC at upcoming ground-up 346 Madison at 7.0% - see p94) But in Downtown, even rosy rent projections don’t get you to the $2K/ 🦶 mark. So, you have to get more creative👇

Promote Insiders: Read on for the full story at the end of this newsletter 👇