A onetime corporate finance executive wants to take her high net worth clients to the next level of investment -- Commercial real estate -- and at the same time help create a niche firm that can take a developer's idea from financing through the launch of major marketing efforts. Kelly McCarthy, vice president of Zynergy's new investment banking division, said there is a new breed of investors who is shy of the stock market and looking for new opportunities. Those investors also were once heavily involved in corporate bridge financings or inital public offerings. "My goal is to take these investors and transform them into real estate investors," she said. Her investors are high net worth individuals, many of whom made their money by running and selling family businesses. One hundred or so are comfortable with investments under $1 million, she said. Fifty to 75 of them can handle a $3 million to $5 million commitment, while 10 to 15 can operate in the $20 million to $30 million range.

Prior to 2001, they had invested only in equities, McCarthy said. She met them while serving as head of corporate finance for Cohig & Associates, a boutique investment banking firm in Denver, where her job was to develop relationships with venture funds and high net worth individuals. She also was involved in more than 200 IPSs, private placements and bridges valued at more than $200 million.

By 1999, her investors began feeling nervous about the markets, and most pulled out by July. "Luckily, we had really good timing," she said. "After gaining that experience, I really did feel, "Well, now what?"

McCarthy started looking for new opportunities and soon came across Zynergy. the Celebration based firm which provides marketing, web-based technology integration, business consulting, and investment banking services.

"At the time, real estate was the furthest thing from my mind," she said. "As I started my dialog with Zynergy and talking about what they were doing, I said, "You guys are missing a big component."

That component was the financing, and incorporating it has led to the company's latest venture -- a business model that provides commercial project financing and from its share of the proceeds, creates the complete marketing package.

"It's a new way of doing business," said McCarthy, who joined Zynergy in December.

The company has yet to do its first financing but is working closely with Nick Pavonetti, director of capital solutions for The Beck Group, to evaluate opportunities, McCarthy said. The duo is looking for the perfect project where:

• Beck locates the property and creates the development plan
• Zynergy finds investors
• Beck serves as builder/developer
• Zynergy handles the launch through marketing, advertising and technology

Pavonetti said working with Zynergy offers several advantanges.

"It's the contacts that they have, and the youthful energy that they bring to a project really attracts me. They're just a dynamic company," he said. "It's a very interesting combination. You don't see many companies that are both in the marketing and the investment banking business. In fact, they're the only one I know of."

McCarthy said her investors, in most cases, would be interested in short-term construction loans maxing out at two years -- although equity structures also could be created. She anticipates substantial returns -- from 20% up to 60% per year on high end condominium projects like Beck's 82-unit Victory Lofts in Tampa.

"I can say these investors are going to see 20 to 25 percent per year for the length of the investment. It seems like the economy and the real estate market will continue to support that," she said. "My investors are not looking for 60 percent returns. They're pleased with anything north of 12 percent. Right now, where can they go with there money and get anymore than 4 percent that isn't high risk? To me, it seems very logical."

McCarthy said her investors are likely to favor condominiums, loft apartments and other short-term projects. "The buildout time of a Reunion (The Ginn Co.'s Orlando resort community) or a Celebration is so long and takes such large amounts of money," she said.

While her long-term goals include creating for Zynergy a real estate investmeent fund of its own, McCarthy also would like to see the commercial real estate industry become more comfortable with syndication as a financing option.

"I always like having a group of investors rather than one," she said.

McCarthy said she expects Zynergy to conduct its first financing in the second quarter of this year.

Strategy applies to corporate finance
Zynergy also is tapping its investors to provide capital for other company needs. After Zynergy raises the capital, 30% of the net proceeds become Zynergy's budgeted money, said Kelly MCarthy, vice president of Zynergy's investment banking division.

With the money, Zynergy creates the company's entire media campaign -- advertising, marketing, branding, and web presence, McCarthy said. Zynergy also provides consulting services in the area of business development, board governance, and sales and marketing.

By Robert Pitts
April 16-30, 2003 Florida Real Estate Journal

About Zynergy
Zynergy was founded in 1997 to bring revolutionary and visionary business ideas to fruition. Zynergy partners with venture capitalists to incubate visionary entrepreneurial ideas by using the Internet as the platform to develop new companies, products, services, systems, and marketing tools needed to bring tomorrow into today.

For more information contact info@zynergy.com or call 407.566.2323

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