The Diamond District site consists of 67 acres bordered by Arthur Ashe Boulevard, Hermitage Road, the interstate and the railroad tracks. (BizSense file images)
As Richmond-based Thalhimer Realty Partners and Chicago-based Loop Capital fend off a $40 million lawsuit from one of their former teammates in the Diamond District development, it turns out that Loop is also no longer involved in the high-profile project.
An attorney for Loop confirmed to BizSense last week that the firm is not participating in the project, leaving Thalhimer the sole principal of Diamond District Partners LLC – the development group responsible for the mixed-use portion of an overall project that includes a new ballpark to replace The Diamond.
The anchor ballpark, currently underway, is being developed separately by the Richmond Flying Squirrels.
While Loop did see through the city’s bond sale to secure financing for the ballpark, a process that wrapped up in July, it otherwise has not been involved in the project since May, when City Council approved a development agreement with Diamond District Partners.
The LLC was to consist of Thalhimer and Loop, but Loop never signed on to be a member of the group, Loop said in a statement to BizSense.
The statement was provided by Dan Herbst, a Reed Smith attorney representing Loop in the lawsuit brought in July by Republic Properties, a D.C.-based firm that once led a previous iteration of the development group with Thalhimer and Loop.
“Although Loop had discussions with the City, Thalhimer, and Republic about participating in the Diamond District development project, Loop never signed onto the project and currently is not involved in any capacity,” the statement said.
“Loop never signed onto any partnership agreement that is the subject of Republic’s lawsuit. Loop holds no interest, nor has any involvement in Diamond District Partners, LLC and Loop is not a party to the City’s development agreement,” the statement said.
While Loop is listed as a defendant in the suit along with Thalhimer and others, the statement concludes, “Loop maintains that it is incorrectly named in Republic’s lawsuit and has requested that Republic voluntarily dismiss Loop to avoid the need for further litigation. Republic has not agreed to dismiss Loop to date and, if necessary, Loop intends to file a demurrer to the complaint.”
Thalhimer, which is fighting Republic’s lawsuit and seeking a dismissal, provided its own statement acknowledging that Loop is not affiliated with Diamond District Partners.
“While Loop chose not to proceed, we continue to maintain a great relationship with them,” Thalhimer said, going on to note the other players that remain on the team.
“Diamond District Partners, LLC is supported by (Thalhimer), component developers and a deep bench of design and construction experts, all of whom are committed to the success of this project,” Thalhimer said. “The development program is in line with projects we have completed over the last several years and we’re excited to build a new, successful Diamond District community.”
A conceptual rendering of the Diamond District along Arthur Ashe Boulevard.
Loop’s withdrawal leaves Thalhimer to lead the team that still includes hotel developer Capstone Development, residential developers Pennrose and NixDev, design firms Baskervill and KEI Architects, J&G Workforce Development, and contractors Prestige Construction, M Companies and Whiting-Turner.
It also makes Thalhimer solely responsible for raising the capital needed to fund initial costs for the first phase of the mixed-use development, tax revenues from which are to be used to help pay off the debt on the $130 million stadium bond.
Where Loop would have been an investor in the project as an equal partner with Thalhimer in the LLC, Thalhimer is now responsible for providing the funds needed for those costs, including an initial land purchase of $11.4 million for one of three sections that make up the 30-acre first phase that Diamond District Partners is signed on to develop.
The rest of the city-owned 67-acre Diamond District site, minus the stadium, would be developed in subsequent phases, either by Diamond District Partners or other developers.
Thalhimer and Loop had raised some of the funds needed for the initial costs from Richmond investors earlier this year. But without Loop’s investment, Thalhimer has needed to make up the difference with more local investment, which Lincoln Saunders, Richmond’s chief administrative officer, described as a positive in an interview last week.
“The fact that (Loop is) not investing has meant that the Thalhimer team has been able to raise more and have more local partnerships and investors, which is from our perspective an equally good thing,” Saunders said.
“I’m sorry to lose them as a partner,” Saunders said of Loop, “but they’ve fulfilled the most important role, which was supporting us on the bond sales.”
Saunders said Loop had reconfirmed its commitment to the deal when the development agreement was brought to City Council in May. He said the city became aware that Loop was having reservations soon after council approved the agreement.
Despite the change in the development group’s leadership, Saunders said the city remains confident in Thalhimer’s ability to see its part of the Diamond District through, noting that the scope of the project has likewise changed with the Squirrels taking on the ballpark’s development and the city taking the risk to assume the debt on the bonds, through its financing pivot earlier this year.
Lincoln Saunders
“When Loop was brought onto the team, it was under the expectation that the development team was going to have to sell bonds,” Saunders said, referring to the previous plan of having bonds issued through a community development authority, an approach later deemed to be more expensive long-term than the city issuing its own bonds based on its established and favorable credit rating.
“The project has changed significantly in divided-up responsibilities than when it was originally considered, where everything was going to fall on the development team,” he said. “Now, the development team is responsible for the private development, the Squirrels are responsible for constructing the stadium, and the city has sold the bonds.”
While the development team over two iterations has gone from three principals leading it to now one, Saunders said Thalhimer is capable of pulling off the initial mixed-use development and has proven it can with other projects such as its apartment buildings in Manchester and its Regency redevelopment with local developer Rebkee.
“If you look at the scale of what is now on the development team, it’s very much in line with the type of development that Thalhimer does every day,” Saunders said. “We have every reason to believe that Thalhimer has the capacity, particularly with their support in local investors, to execute the parts of the development deal that they’re responsible for.”
Saunders acknowledged that the development group’s initial iteration, the Republic-led RVA Diamond Partners, was first selected by the city for the project in part because of Loop’s involvement as a minority-owned company. Minority business involvement was encouraged in the city’s solicitation for the project, but Saunders said Loop’s loss would not affect Diamond District Partners’ ability to meet the project’s minority business participation goals.
Those goals deal more with contract awards and employment over the course of the project. The team’s roster still includes other minority-owned businesses such as Capstone, M Companies, NixDev.
Diamond District Partners is aiming to start development in fall 2025. The first phase is to include a 180-room hotel, apartment buildings and retail. City officials have said the initial land purchase, originally scheduled for August, could close in coming weeks.
Meanwhile, filings continue in Republic’s lawsuit, which is scheduled for an initial hearing in December. Republic argues in the suit that its former partners struck out on their own without first dissolving their partnership with Republic. Thalhimer alleges that the parties never came to terms on or signed an operating agreement for the partnership and that Republic notified Thalhimer in writing that it was bowing out of the project.
I think this was always the plan! This project has been a house of cards from the beginning. I was and continue to be a supporter of the project and other development projects in the city, but we have to do better! I believe the stadium will get built but nothing will be built around it until the city can get out of its own way and attract a serious development company to take control of the entire project! This can be successful and profitable for all but we have to get out of the way and stop the closed… Read more »
Thalhimer is “a serious development company”. The entire redevelopment of Manchester was at a near standstill until they stepped in during the recession and bought the Reynolds plant. The’ve been building in nearly every quadrant in the City and in Henrico. They seem serious to me. Granted, this is the whopper, but they can pull it off, now that the albatross of the ballpark financing has been handed off to City taxpayers.
Point missed.. not saying they are not a serious developer, but do you believe this was not the desired outcome? The citizens of richmond were never suppose to foot the bill for the stadium, but if the project fails to meet revenue expectations the citizens will pay for this. My message was to highlight that if this deal in its current format was submitted for approval it would not have received approval! We have to be better.
Don’t you wonder what Republic, and now Loop, have seen in this supposedly-lucrative project to make them jump ship? And do the bond purchasers have any reason to be concerned about the viability of their investment?
Why would the bond holders be concerned it is backed with general revenue tax dollars with the full fail and credit (funds not in the politicians or staff) of the taxpayer.
You have to hand it to Thalhimer. While being the least experienced group in the room for dealing with a project of this magnitude, it appears they managed to team up with experienced national developers and lenders in order to win the project, then seemingly ran those experienced developers and lenders off, and are now rewarded with the only portion of the project that they are remotely capable of handling on their own.
They never wanted to deal with the baseball stadium. They just wanted the apartments. That’s what they’re good at, and that’s where they make their money.