Ex-Peebles “partner” claims he was cut out of JV

Developer argues Dan Hoeg was a consultant

New York /
Sep.September 03, 2015 11:50 AM

A political operative who claims he convinced Don Peebles to be the “face” of their minority-owned development partnership is accusing the businessman of backsliding on their handshake deal.

Peebles, on the other hand, argues the operative signed a contract to work as a consultant, not as an equity partner.

Dan Hoeg, whose background includes work as a land-use advisor to then-Queens City Councilman James Sanders, is suing the Peebles Corporation, claiming that the company breached the contract they formed to bid on city-owned redevelopment projects.

According to the lawsuit filed in Brooklyn Supreme Court, Hoeg, then 27, and Peebles entered into a handshake agreement in 2012 to form a joint venture to make a play for city projects they thought the Bloomberg Administration would be eager to award to minority business owners.

Under the terms of the agreement, Hoeg would leverage his political connections behind the scenes to respond to requests for proposals for city-owned sites, while Peebles would be promoted “as the face of the team, in order to create the perception of a larger, more capable organization,” court papers claim.

Per the alleged agreement, Hoeg would own 25 percent of the partnership and Peebles would claim the remaining 75 percent.

The joint venture initially bid on 370 Jay Street in Downtown Brooklyn, and after losing out to New York University it turned its sights to a trio of Civic Center properties the city was looking to sell to developers.

Hoeg claims he was the “driving force” behind the venture’s proposal to the New York City Economic Development Corp. in submitting the winning bid for 346 Broadway, 22 Reade Street and 49-51 Chambers Street, but when it came time to seal the deal Peebles cut him out and instead brought in the Elad Group as a partner.

According to Hoeg, Peebles passed on the other two properties and instead cut a check for $160 million to buy 346 Broadway, a landmarked building his company and Elad are converting to condos.

Peebles’ lawyers have filed a motion to dismiss the case, claiming that instead of an oral agreement to form a JV, the two entered into a written agreement that hired Hoeg in a paid consultant role.

“We believe the claim is frivolous,” attorney Barry Friedberg told The Real Deal. “We look forward to the court’s disposition of the matter in due course.”

The project has been a sticky one for Peebles, who was sued earlier this year by former employee Daniel Newhouse, who said he was cut out of a 5-percent ownership stake in 346 Broadway. Newhouse recently dropped his appeal in the case and received no compensation.

Newhouse’s suit alleged that Peebles gained inside information on the 346 Broadway property from EDC employee Tawan Davis, whom he later hired as his chief information officer.

As for Hoeg’s suit, the political operative says Elad and Peebles entered into a deal to flip 346 Broadway’s air rights, valuing the property at $60 million more than Peebles had paid for it.

The deal repaid Peebels’ initial capital investment and credited him $60 million, about half of which he reinvested for a 35-percent ownership stake in early 2014, according to Hoeg, who claims his former partner stands to make between $130 million and $170 million off the transaction.

Full disclosure: Barry Friedberg’s firm, Trachtenberg, Rodes & Friedberg, is general counsel to TRD.


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