Tokenized Real Estate
An announcement made today by Inveniam Capital Partners, has revealed that the group intends to tokenize $260 million worth of real-estate. The first chunk of which is a $66 million USD property located in Miami.
The idea of tokenized real-estate is one of the most prevalent, and popular, in the growing world of digital securities. Real estate has long represented an asset class that is high on potential, but low on accessibility and liquidity. Through the use of blockchain technology, Inveniam Capital Partners looks to change this.
By offering investors access to this event, Inveniam is giving investors the means to gain exposure to stable assets. All the while maintaining their footing within the cryptocurrency industry.
Bringing further intrigue to the opportunity, is the manner in which these digital securities will be sold. To date, most STOs provide investors with the opportunity to by tokens at a fixed rate – often with limitations on the amount of shares that can be purchased. Inveniam Capital Properties have decided to utilize a Dutch auction instead.
A Dutch Auction allows for investors to essentially bid for their desired holdings. With a fixed number of tokens available, investors take part in a timed event which allows for them to submit bids. Each of these bids will state the quantity of desired shares, and what they are willing to pay for them. Upon closure of the auction, the investors which submitted the best offers will be rewarded with digital securities representative of ownership in the properties.
In an excerpt from their information packet, Inveniam has high praise for cryptocurrency, and its place within finance.
It is stated,
“This trade is the first of its kind: a large, multi-offering placement of real financial instruments in tokenized form to be held in crypto wallets and sold via Dutch auction. In undertaking this transaction, we will send a clear signal to markets that cryptocurrency can indeed be a store of value which can be used in institutional transactions.”
With this message being sent, it is clear that Inveniam is confident in the future of cryptocurrencies. They are also confident in their ability to be a trailblazer in this young industry. This is made clear when they state,
“We are the first to tokenize multiple complex debt instruments and has produced tokenized instruments for seven different transactions to date, including the full provenance of diligence materials, deal documents, and distribution of tokens to holders of the debt instruments. Inveniam is the first to market and is the only company with the full business and technology stack in place to create, distribute, list, and sell highly functional security tokens for complex financial instruments.”
Inveniam Capital Partners
ICP is a blockchain focused investment firm, which was founded in 2016. The company maintains headquarters in New York, where operations are overseen by CEO, Patrick O’Meara.
In Other News
As stated above, real estate has shown itself to be one of the most intriguing applications of digital securities. With this in mind, here are a few articles detailing events pertaining to the use of STOs within real estate.
Connecticut Real Estate Tokenized by REINNO
Connecticut has recently become home to one of the first commercial properties to undergo tokenization in the United States.
REINNO, real estate tokenization specialists, have just announced the successful creation and issuance, of security tokens, representative of this property; A process which demonstrated clearly what REINNO is able to offer its clients.
While the digital securities sector is still young, we have seen various properties tokenized, both residential and commercial. This has provided accredited investors around the globe with access to potentially lucrative opportunities that they would not have otherwise.
In this particular instance however, the owners of the $2.5M property having undergone tokenization, have no intention of selling their property. Rather, they were looking for a loan.
Similar to companies like BlockFi and Celsius, REINNO is able to provide capital loans to borrowers by taking some form of collateral in return. With regards to this Connecticut based property, a multi-step process was used to facilitate such a loan.
- REINNO tokenized the entirety of the commercial property.
- The property owners may now choose as many tokens needed to be used as a pledge/collateral for their desired capital loan.
- REINNO facilitates the loan, structured on their unique risk assessment
Naturally, each of these companies offering loans utilize unique risk models, when assessing a potential loan, as the assets being put forth as collateral differ greatly.
By structuring the tokenization in such a manner, the borrowers/property owners stand to benefit on multiple fronts.
While they are obviously still on the hook for repaying the loan, plus interest, borrowers can expect to benefit from:
- Increased rate of approval
- Structuring flexibility
Speaking with REINNO CEO, Viktor Viktorov, he states that much of this flexibility is owed to the fact that borrowers can choose how much of their, now tokenized, property they would like to put forth as collateral.
With the tokenization taking place to facilitate a loan, this also means that there was no STO required, as financing was handled in-house. This greatly expedites the process of attaining capital, and saves money for deals such as this.
When it is all said and done, with the loan being repaid – collateral is returned, and the borrower has retained their asset.
Upon announcing the tokenization of the aforementioned property, the co-founders of REINNO each took the time to share their thoughts.
Viktor Viktorov, CEO & Cofounder of REINNO stated,
“That is where REINNO stands out. Unlike its competitors, REINNO provides not only tokenization but also additional services, from regulatory compliance and legal structure to lending against real estate tokens to create liquidity”
Barry Monies, Cofounder of REINNO, stated,
“Thanks to tokenization and our proprietary lending platform, leveraging an equity investment and pledging tokens to take a loan is possible in just a few minutes…Moreover, fractional ownership makes it possible to use a portion of tokens as collateral rather than putting a lien on the entire property.”
The development discussed here today comes right on the heels of REINNO’s first $105M fund, announced in late January 2020 in conjunction with REI Capital Growth.
This was a fund that was structured in a manner providing investors access to equity or debt in a fund populated by various pieces of U.S. based real estate.
Investors will be happy to hear that REINNO has managed to establish a partnership with security token exchange ‘ADAX’. In doing so, they will benefit from the much sought after liquidity which is often associated/promised with security tokens.
Viktor Viktorov, CEO of REINNO, states,
“…we are excited to have partnered with a fully-regulated security token exchange to create greater liquidity for investors.”
Founded in 2019, REINNO maintains operations in Connecticut. The team behind REINNO has developed a platform, and series of services, which merge real estate with tokenization.
CEO, Viktor Viktorov, currently oversees company operations.
In Other News
Connecticut is not the only region to begin seeing the benefits of real estate tokenization. For instance, we have seen the practice ramping up in Europe, and most recently in Africa. Peruse the following article to learn more about how Africa stands to benefit from the tokenization of real estate.
$105M STO from REI Tokenized by REINNO
While REINNO is responsible for the tokenization of the fund discussed here today, it was developed and managed by a company named REI.
Coming in at, roughly, $105 million, this fund is backed by U.S. based real estate. Through the tokenization process, access to this asset class is now attainable on a much more global scale.
In a somewhat unique approach, the pairing of companies have decided to structure/offer the REI Capital Growth Fund in what they call a ‘two-tiered’ approach.
- $40 million in equity
- $65 million in debt
By raising capital in this manner, REI hopes to attract a greater amount of investors. Many investors are simply not interested in equity, or maybe debt – by offering both, investors can choose what suits their particular needs.
Upon announcing the tokenization of their fund, and releasing details of their STO, representatives from each, REINNO and REI, took the time to comment. The following is what each had to say on the matter.
Alan Blair, Managing Principal of REI, stated,
“I have been in the real estate business for over 36 years. It is exciting to see the industry evolve and use innovative technologies, such as blockchain, to create new opportunities…Tokenization allows us to reach international investors and offer them exceptional investment opportunities in American commercial real estate. We are now able to deliver flexible, paperless assets and the highest standards of excellence to investors worldwide.”
Viktor Viktorov, CEO of REINNO, stated,
“Tokenizing REI Capital Growth brings us one step closer to creating an ecosystem where commercial properties are liquid while real estate transactions are paperless, instant and efficient…We already provide real estate tokenization and lending services; soon we are launching a new functionality which makes investing in tokenized real estate easily accessible.”
Maintaining headquarters in Connecticut, REINNO is a young company, which was founded in 2019. The team behind REINNO has identified real estate markets as being ripe for an infusion of technology such as blockchain. As such, the company has developed a comprehensive suite of services allowing for the tokenization of such assets.
CEO, Viktor Viktorov, currently oversees company operations.
REI Capital Growth
Like REINNO, REI Capital Growth calls Connecticut home. They are a private equity company looking to provide ‘global access to US real estate investing’ through an upcoming STO.
Managing Partner, Alan Blair, oversees company operations.
In Other News
To date, Europe has widely been seen as a leader with regards to tokenized real estate. Not content with being left behind, we are seeing an increasing amount of U.S. based companies jump aboard. The following are examples of this.
Real Estate Fund First of Its Kind to be Regulated by the FMA
The development of said fund was possible through the collaboration of two companies – Token Factory and Bank Frick.
Bringing to the Table
In this particular instance, each of the participating companies bring different specialities to the table, making the fund possible.
- Tokenization capabilities
- Sale, generation, and distribution of security tokens to investors, representative of ownership within the fund
- Investor on-boarding
What makes this particular fund interesting is its recognition by the Financial Market Authority of Liechtenstein (FMA).
The regulatory body designated the aforementioned fund as an ‘Alternative Investment Fund (AIF)’. In doing so, the fund becomes the first of its kind to be regulated in such a manner within the continent of Europe.
With the announcement of this new regulated fund, also came the commentary of those responsible. The following is what representatives from each, Token Factory and Bank Frick, had to say on the matter.
Bastiaan Don, Managing Director of Token Factory, stated,
“Our tokenization solution is based on standard protocols like ERC20 and an open Blockchain (Ethereum). This allows our customers to maximize the potential of Blockchain technology without having to commit to a central technology partner or proprietary (closed) solution.”
Raphael Haldner, Head Fund and Capital Markets of Bank Frick, stated,
“As the preferred point of contact for Blockchain Banking, we were again able to demonstrate the possibilities of Blockchain technology with the tokenization of a regulated investment fund. The issuance of digital, Blockchain-based fund shares leads to greater efficiency and a higher degree of automation in the transmission process.
While evaluating possible technology partners, we were impressed by Token Factory’s team, their track record and their far-sighted and understandable tokenization solution.
We are pleased to take this step to further strengthen our service offering in the issuing business and are confident that we have set an important milestone for future developments.”
While digital securities hold the potential to transform many industries, to date, the world of real-estate has been the greatest benefactor. Furthermore, although there are examples world-wide, Europe is most definitely leading the way. The following articles are just a few examples of European real estate being tokenized.
Speaking with Bastiaan
We were fortunate to have recently interviewed Bastiaan Don through our on-going interview series, hosted here at securities.io. In this exclusive conversation, Bastiaan Don discussed, not only his own entrance into blockchain, but how Token Factory hopes to develop the sector.
Founded in 2018, Token Factory maintains headquarters in Zug ‘Crypto Valley’ Switzerland. This forward thinking company is currently comprised of multiple branches, which address different market needs. These include Blockimmo (RE Tokenization), and STX.Swiss (secondary market trading).
Managing Director, Bastiaan Don, currently oversees company operations.
Founded in 1998, Bank Frick maintains headquarters in Balzers, Liechtenstein. Above all, the company works to provide bridging services between traditional, and blockchain based, banking.
CEO, Edi Wogerer, currently oversees company operations.