Developer Is Adept at Adapting
James A. Thomas is a prominent veteran of Los Angeles real estate who, along with former partner Robert F. Maguire, has helped shape the city’s skyline.
But in recent years, Thomas has been better known for basketball than building. Indeed, Thomas, co-owner of the Sacramento Kings--spent much of last week following the team’s progress through the NBA playoffs.
But don’t get him wrong, Thomas says. Real estate--not basketball--remains his main business.
In fact, nearly three years after Thomas and Maguire split up their well-known firm, Thomas is poised to shift into high gear by teaming up with a major public pension fund and raising $250 million from institutional investors. In addition, he has reorganized his Los Angeles-based firm--newly named Thomas Properties Group--to take advantage of changes in the real estate business.
“I’ve never really gone away from real estate--it’s my primary focus,” said Thomas, who recently agreed to sell a majority stake in the basketball franchise.
His firm--formerly Thomas Development Partners--owns and is developing major commercial projects in Philadelphia and Sacramento. In Sacramento, the firm is in charge of building a 900,000-square-foot headquarters for the state’s Environmental Protection Agency.
But Thomas wants to move beyond the role of a traditional developer and create a more diversified real estate company that can quickly adapt to industry changes. For example, the firm will focus on building office and headquarters complexes for specific clients instead of pursuing the speculative projects favored by entrepreneurial developers. The firm will also devote more time to managing properties as major corporations dispose of assets and reinvest the proceeds in their operations.
Thomas is well-suited for keeping a highly diversified company on track, says Maguire, his former partner. “There is nobody smarter and more tenacious in terms of pursuing goals,” he said.
Thomas and his current partners--several of whom followed him from the defunct Maguire Thomas Partners--also want to take advantage of pension funds and other private sources of capital. The giant California State Teachers Retirement System, for example, is expected to select the firm to develop office projects and act as one of its investment advisors by making “moderate-risk” acquisitions, according to Thomas.
In addition, Thomas said the firm plans to raise $250 million for a major institutional fund--the TPG Opportunity Fund--that will be geared to funding slightly more risky commercial real estate development and acquisitions.
“It’s an alignment with these money sources,” said John R. Sischo, chief financial officer.
Thomas said he could not have pursued such diversification at Maguire Thomas Partners, prompting the split with longtime partner Maguire after more than two decades in business. Together, they built what at one point in the late 1980s was the nation’s largest developer of office space.
But faced with a deep and prolonged real estate slump in the early 1990s, Maguire Thomas Partners was forced to dismantle its vaunted development team that had built the tallest skyscraper on the West Coast--the 73-story Library Tower in downtown Los Angeles. Thomas and Maguire parted company soon afterward.
“We had a terrific firm,” said Thomas. But, “Rob liked holding on to the properties we had developed. My view was that the you had to be more diversified. The limitation of the Maguire Thomas Partners model was [the lack of] diversification.”
Despite their differences, Thomas and Maguire remain close. In fact, their offices are less than 20 floors apart in the same downtown Los Angeles skyscraper they developed in the early 1980s.
“We’re good friends,” Thomas says. “We work well with one another to this day. It’s been a good relationship.”
Maguire Thomas Partners is gone, but Thomas and his top managers say they still reap the rewards of their former firm’s stellar reputation. The connection is an important tool when the members of the Thomas Properties Group go out in search of new deals, said Senior Vice President Thomas S. Ricci.
“You have a track record and you lean on that,” Ricci said.
Whether that reputation and new corporate model will pay off remains to be seen. Thomas’ company has yet to land any major new projects, but company executives say they are moving ahead on some deals.
Thomas, for his part, is confident that his new company--one of several that he has helped found in his career--has been tailored to avoid the limitations of his previous ventures.
“Each time I do it, I get better at it,” Thomas says. “This time, I feel I will get it right.”
