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Inveniam Capital to Host $266 million Digital Security Offering

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Inveniam Capital to Host $266 million Digital Security Offering

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.

This development was made possible, as Inveniam has collaborated with service providers such as Securrency, Vertalo, Bitgo, and Itbit – Each providing their own specialty and service offering.

Dutch Auction

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.

Commentary

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.

Security Tokens are disrupting the Real Estate Market

Realecoin – The First Real Estate Fund built on the ETH Blockchain

Interview Series – Slice RE

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Joshua Stoner is a multi-faceted working professional. He has a great interest in the revolutionary 'blockchain' technology. In addition to this, he is a licenced Paramedic in Nova Scotia, Canada. As such, he can provide emergency care/medicine to any situation necessitating it.

Real Estate

Vertalo to Underpin Tokenization Effort Surrounding RECM Portfolio

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recm

Group Effort

$300 million worth of real estate assets will be, potentially, tokenized in the coming months.  These assets are part of a pair of investment funds managed by Real Estate Capital Management (RECM).

This undertaking is the handywork of, not only RECM, but of an enterprising group of blockchain oriented companies.  Those involved include:

  • Vertalo
  • tZERO
  • Advantage Blockchain
  • Prime Trust

This group of companies, each working together, will provide their own areas of expertise.  Vertalo will facilitate tokenization through use of the Tezos blockchain and act as a digital transfer agent, while tZERO will provide liquidity via secondary markets and act as a broker/dealer.  Advantage Blockchain, meanwhile, will act as a marketing and consulting firm, and Prime Trust will provide custodial and settlement services.

This joint effort is slated to begin by focusing their efforts on an initial $90 million worth of real estate- leaving $210 million in untapped potential for the near future.

Two notable properties to be first up, include hotels located in, both,  the United States and Costa Rica.

Blockchain of Choice

Increasingly, the digital securities sector is moving towards utilizing Tezos for undertaking, such as the one discussed here today.  Reasoning behind this often point to increased versatility provided by the blockchain through highly programmable smart contracts.

This shift has caught our attention in the past.  It was only months ago that Vertalo, themselves, announced their decision to follow suit.

Vertalo Chooses Tezos for Security Tokens

Commentary

Upon announcing this endeavour, RECM President, Gary Grandeis, took the time to elaborate.  He stated,

“Real estate is the perfect industry to take advantage of the newest innovations with those companies transitioning us to digital platforms and flexible ownership structures having the largest impact. Advantage Blockchain is focused on bringing breakthrough financial technology solutions to commercial real estate owners.

He continued,

“As a Pennsylvania-based commercial real estate owner and developer, Real Estate Capital Management is working with Advantage to identify and implement real estate tokenization solutions with the goal of increasing ownership efficiencies and creating real estate liquidity where it hasn’t existed before. Real Estate Capital Management looks forward to being a leader in this space and is excited to work with both the Advantage Blockchain and Vertalo teams.”

Advantage

Founded in 2017, Advantage Blockchain maintains operations in Philadelphia, Pennsylvania.  Above all, the team at Advantage Blockchain works to ‘unlock new value for businesses by providing strategies and solutions centered around cutting edge revenue creation’.

CEO, Dylan Rhodes, currently oversees company operations.

Vertalo

Operating out of Austin, Texas, Vertalo was founded in 2017.  In the time since, this company has managed to establish themselves as a clear leader with the burgeoning digital securities sector.  Beginning as cap-table specialists, Vertalo has expanded their areas of expertise to become a diverse service provider.

CEO, Dave Hendricks, currently oversees company operations.

tZERO

A product of Medici Ventures, tZERO describes their goal as ‘enabling the market to create and trade digital securities using blockchain technologies’.  This has led tZERO to develope a fast growing secondary market, providing liquidity for digital securities.

CEO, Saum Noursalehi, currently oversees company operations.

In Other News

In recent weeks Tezos has generated buzz on various occasions.  This is, not only, in part due to the recent adoption being seen through the digital securities sector, but due to the potential closing of a turbulent chapter in its history.  The following articles take a look at both of these.

2+ Year Saga Involving Tezos ICO Approaches Denouement

Tezos to be Used for Tokenization of 22 Projects

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Real Estate

Black Manta Capital Partners Tokenizes $12M Of German High-End Real Estate

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Black Manta Capital Partners Tokenizes 12M in Berlin Real Estate

The EU tokenization market just got a jolt of energy after Black Manta Capital Partners announced a strategic partnership with the German real estate firm, Tigris Immobilien. The partnership will help facilitate the tokenization of $12 million in high-end properties located in Berlin. The news showcases accelerated adoption within the EU sector, as well as, how tokenization brings professional opportunities to the regular investment community.

Tokenization Expansion

According to company documentation, Black Manta Capital Partners intends to purchase high-end real estate projects located in and around the Berlin area. In total, the firms seek to acquire around 2000 square meters of real estate. These properties include a variety of individual apartments from 40 to 60 square meters in size. Once the properties are in the firm’s portfolio, the group seeks to have the units updated and then sold to investors and owner-occupiers.

Notably, the total value of the project is expected to be €10,943,398. Additionally, the firms will finance an additional EUR €1,999,500 via the real estate token offering (RETO). Importantly, the group estimates a 2022 completion date for the project.

Discussing the decision, Black Manta’s co-founder, Christian Platzer spoke on the advantages tokenization brings to the market. He explained how blockchain technology enables lower transaction costs, increased transferability, and streamlined tradability. Platzer also touched on how tokenization eliminates the need for third-party verification systems such as notaries.

The Black Manta Capital Partners RETO

The Black Manta Capital Partners RETO started on April 14th, 2020. Importantly, the firm chose to keep the minimum investment amount reasonable to encourage participation from regular investors.  As such, the minimum investment is only €500. In contrast, major investors have a maximum amount of nearly €2 million.

Black Manta Capital Partners via Homepage

Black Manta Capital Partners via Homepage

The RETO is only available to residents of Germany and Austria at this time. Despite this fact, Black Manta Capital Partners stated that more STOs will be carried out on its platform this year. Specifically, the group has plans to host a series of other EU-wide offerings. Importantly, these offerings will cover a wide range of tokenized assets including startup securities, small-medium enterprises, and funds.

RETO Investors

Investors in the Black Manta RETO gain a host of benefits for their participation. For one, investors are privy to dividends from the sale of the residential apartments and their subsequent purchases. Additionally, investors gain preference during the sale of the apartments. Lastly, token holders receive a share of twenty percent (20%) of the total profit following the sale of the entire project.

Full regulation

Crucially, Black Manta Capital Partners’ RETO has the blessing of regulators. Specifically, the event is regulated by the German regulator BaFin, the Federal Financial Supervisory Authority. Describing the approval process, Platzer called it “straightforward.” However, he did point a need for more regulated custodial firms in the space. He explained that these firms will bring the liquidity of bigger players to the market.

Germany Gets A Leg Up on The Competition

As the tokenization race continues to heat up across the globe, this latest development catapults Germany to the forefront of the EU RETO sector. This positioning could strengthen in the coming weeks as the Black Manta Capital Partners RETO gains momentum. For now, this crowdfunding campaign represents a huge milestone for the entire EU market.

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Crowdfunding

Nick Bhargava, Co-Founder of GROUNDFLOOR – Interview Series

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Nick Bhargava, Co-Founder of GROUNDFLOOR - Interview Series

GROUNDFLOOR is an American real estate lending marketplace. It was the first real estate crowdfunding company to achieve SEC qualification utilizing Regulation A+ since the regulation became operable through the JOBS Act. GROUNDFLOOR was purposely built to serve self-directed investors instead of institutional ones

You’re both a director and one of the co-founders of GROUNDFLOOR. What was the inspiration behind launching this crowdfunding platform?

My co-founder, Brian Dally, had years of experience to make telecom services more accessible to everyday individuals. Meanwhile I had a lot of experience in the securities and regulatory industries. We wanted to combine our respective strengths in a way that opened up high yield investment opportunities for everyone, not just the 1 percent. We eventually started with single-family residential housing because most people are familiar with this kind of asset from being homeowners themselves.

When the idea was conceived, we had no idea if there would be a market for it. We needed to first find an accessible regulatory framework that would allow them to test the business concept. We discovered the Invest Georgia Exemption (IGE), created in 2011 to help small businesses access capital. Being an intrastate offering rule, it was only available for Georgia companies, so both of us picked up and moved to Atlanta to launch GROUNDFLOOR. Because of IGE, we were able to fund $2 million in loans in Georgia, clearly demonstrating the demand for GROUNDFLOOR’s platform.

Over time, GROUNDFLOOR has grown considerably and is now open to investors in all 50 states.

 

Can you explain how GROUNDFLOOR connects investors with real estate developers?

We are focused on providing retail investors with high yield investment opportunities. A real estate borrower, someone who develops real estate for a living, secures a loan through GROUNDFLOOR rather than a traditional bank or a hard money lender to finance a residential real estate project. That borrower submits a loan application, and we vet the individual and the project to determine if we should originate a loan. Our underwriting is based on past experiences, amount of skin in the game and many other factors. If approved, the loan is assigned a loan Grade of A through G and a corresponding rate where Grade A loans are the least risky, with the lowest rate of return and Grade G loans are most risky, with the highest rate of return.

We have filed an offering with the Securities Exchange Commission (SEC) through which we sell securities. The proceeds of these securities are used to fund the loans we originate. The performance of these securities and corresponding rate of return is tied to the underlying loan. Investors can choose which securities, and therefore, which underlying loans, they wish to invest in.

Investors can choose to invest up to $10 increments to fund the loan. Once a loan is fully funded, the borrower draws money according to a draw schedule, and completes the new construction, renovation or rehab project. The property is then typically listed for sale. When the project sells or is refinanced, which is usually 6-12 months from the time the investor invested, the loan is repaid. The investor’s principal investment, plus all accrued interest, is deposited into the investor’s GROUNDFLOOR Investor Account. The cash balance in an individual’s GROUNDFLOOR Investor Account can be withdrawn or reinvested in other projects.

 

Are there any types of restrictions or quality controls in place to ensure that real estate developers can repay the loans?

When the borrower submits the loan application, our underwriting team works closely to vet the projects and the borrower. We also factor in the local real estate market. We don’t lend in markets we don’t like. When a loan is originated, we stay in regular contact with the borrower to ensure that the project is meeting deadlines, and we share regular updates with investors. Draws are not given out if the borrower is not making sufficient progress or has deviated from plan. If we think there could be delays or the borrower violates terms of the agreement, we can decide to step in and proactively put the loan in default, which can result in a stronger outcome for the investor because we pass through penalty interest. Most GROUNDFLOOR loans are first lien position, so the loan is backed by a physical asset, which is the land and structure.

 

What are some of the types of returns that can be expected by investors?

For the past six years, participants in GROUNDFLOOR real estate loans have earned annualized returns averaging 10 to 12 percent in a 6 to 12 month timeframe.

 

Are all investments currently in the United States? Is there a preference for certain cities or states? If yes, could you describe these.

While anyone in the country can invest in GROUNDFLOOR with only $10, the company focuses its lending in 30 states.

 

You were an early advocate for the JOBS Act, were you happy with how the JOBS Act was written? Was there anything that should have been left out?

I am generally happy with how the act turned out. The different provisions are designed to help companies of different sizes, and each provides value for companies in different situations. I don’t think any particular provision should have been left out.

 

What would you like to see changed in a future version of the JOBS Act?

We have seen Reg. A be used heavily by real estate issuances. I think there is value beyond this use case, particularly for mid-sized privately held companies that want to access public market capital. The cap for Regulation A will soon change to $75M, which will be more appealing to companies of that size. I think we could see some novel offerings in that space.

 

Is there anything else that you would like to share about GROUNDFLOOR?

There is no other company that offers what GROUNDFLOOR does for individual investors and borrowers. We’ve created a new category and offer completely new products.

Why hasn’t anyone copied us? One reason is because regulatory innovation. Providing investments directly tied to this type of high quality, high yield real estate credit is not something that has been done for the retail investor. GROUNDFLOOR was the very first company qualified by the Securities & Exchange Commission to offer this type of investment via Reg A for non-accredited and accredited investors alike, and because of the enormous amount of infrastructure we put into place, we can continue to iterate on our product where others cannot.

I really enjoyed learning about your company, readers and/or investors who wishes to learn more may visit GROUNDFLOOR.

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