NEW YORK—Zyyo, a recently launched real estate platform, is working to connect commercial real estate investors and developers to help simplify the process of getting deals done.
“First and foremost, we are communicating and reviewing projects with a much wider base of investors and developers,” said Nick Campisano, founder/CEO, Zyyo. “Part of it is a numbers game. If you are a kid raising money for your lemonade stand and you hit up mom or dad, they might say yes or no, but if you can hit up a million moms or dads, odds are you will eventually get that money. You should always have different incentives for wanting to invest in any given opportunity. These can be international investors that have EB-5 preferences. These could be ultra-high-net-worth investors who want to know exactly where their cash is parked, even if they are not going to get a return, but they know that it is in physical tangible real estate. These could be distressed hedge funds that want to take advantage of a really good opportunity, or these could be local experts who want to see their local community thrive, so it is more than just a traditional investment; it is almost like a social enterprise.”
The key to finding a good investment is data. “Nowadays, if you have a private investment firm and you don’t have data capabilities, it is like walking around with one leg,” said Campisano. “You really need those comprehensive resources to be effective and that is what we are building. Within our organization, we have an entire data company essentially. That data company is using certain state-of-the-art tools to track population statistics, hotel operating statistics, local airport statistics, employment statistics. That is providing our investors the conviction to actually make an investment in an otherwise intimidating environment.”
He continued, “Without this technology, going back to the lemonade stand, you are just speaking with friends and family or people you have worked with in the past and trying to communicate the same story. If you layer in data, global relationships, and both the debt and the equity side, you can mitigate a lot of fears. What does that do? It lowers your overall cost of capital. It provides financing that is otherwise unavailable. It provides an opportunity to reduce your cash burn through potentially providing some bridge financing facility or something that will alleviate concerns in the near future. All of that is based on technology.”
That technology will help investors view projects in a world where travel is limited. “We are building out our augmented reality capabilities and we are currently working with a number of players,” said Campisano. “In an age when the virus makes it tough to tour certain properties, people are afraid to fly, and they are not going to travel around the world to see a new property. When you invest in something on this platform, we are constantly updating those materials with the latest renderings, the latest drone construction photos. You get that sense of locality, that sense of physical presence without actually being there. That allows for us to communicate that human element on a global scale.”
Campisano started his career as an investment banker focused on private securities, mostly in the hotel space. “Then I started developing and I started noticing that there was an issue,” he said. “We built a better system. We built better relationships. We were just helping out our peers to just do what we could. Then we realized that this was a far bigger opportunity than developing itself. We have been focused on it for about a year and a half. Fast forward to the coronavirus, and it is a lifeline for many different opportunities.”
In addition to bringing investors and developers together, the company is also investing its own capital in the transactions. “Our investors believe in the projects that we promote and that we endorse because they know we have done the research,” he said. “We will turn all of our cards over and show them all of our data, all of our analysis, all of our information. They are under NDA, so they have covered all of the confidentiality concerns. But additionally, they know that we are investing in the deal.”
Zyyo’s core general partnership fund holds at least 15% per deal. “We invest a significant amount directly in the project; we could take down a lot more, but we want our investors to succeed alongside of us,” said Campisano. “If we have done the analysis, if we have found a good deal, we want to share that with our investors; if our internal rate of return proves what we think it is, it would behoove us to keep all the equity, but we want to provide those returns to our investors. We want investor satisfaction and we want success for our developers, and we would like to participate alongside. We will succeed or fail together.”