Michael Kelly

As the Ivy climbs into the San Diego hotel market, it is just another in a long line of green-thumb successes for Michael Kelly.

Kelly Capital, founded in 1993 with his brother Richard, has amassed 2.5 million square feet of property generating over $500 million in annual revenues in 17 states. With assets all over the country and in a variety of categories, Kelly Capital isn’t limited by genre.

“The one consistent theme across the board is that we’re first and foremost value investors regardless of asset class,” he says. And he means it: the company has acquired such diverse distressed properties as a Hawaiian resort, a uniform service, an office supplier and a family entertainment complex.

Perhaps Kelly Capital’s most unusual project was its 1997 Car Barn venture near Los Angeles International airport. “We bought the land for $6 million and then invested another $17 million to build the largest private parking campus serving LAX,” Kelly says. “We then sold it three years later at a significant profit and what we considered to be top of the market.”

Making money isn’t all cocktails and handshakes for Kelly. He says a recent deal, which monetized a 2003 investment in an Atlanta public company, was probably his most difficult, but also the one of which he has been most proud to date.

“We completed the transaction in a record-breaking six months and I never worked so hard in my entire life,” he says. “The financial reward was exceeded only by the personal satisfaction of completing such a complex transaction.”

Kelly acknowledges his success has as much to do with his employees as it does with him. “The skill I believe I possess is finding and working with great people,” he says. “The key in improving any business is putting the right team in place and then giving the team freedom and resources to do their job effectively.”

The Kelly brothers didn’t have to look far when they wanted to add another star to their team. Sister Louise, who ran the Gaslamp Quarter Association for six years when the district was just gaining rehab momentum, is Kelly’s senior vice president. She urged her brothers to develop The Bitter End, an upscale Downtown bar that just celebrated its 10th anniversary.

“Louise can see development potential and her local knowledge has had significant impact on our decision to invest in San Diego,” says Kelly. “(She) has been responsible for making sure the Ivy becomes a reality.”

In addition to the company’s ambitious Ivy project and the flourishing Bitter End, its San Diego holdings include a research facility that is leased to GenProbe.

Kelly says he hopes to continue compounding capital through acquisitions and development and might take the hospitality division public at some stage.

But at 41, he’s comfortable knowing he’s accomplished his professional goals and can relax more — which was perhaps one catalyst for his recent move to Miami, although he still keeps a home in San Diego.

“The key is making sure every single one of us at Kelly Capital continues to enjoy what we’re doing every day,” he says.

— Christy Scannell