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Fundament Group to Issue €250 Million in Security Tokens backed by German Real Estate

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Fundament Group to Issue €250 Million in Security Tokens backed by German Real Estate

€250 Million Bond

Fundament Group, a German based company looking to tokenize real-estate within the European nation, was just given the regulatory greenlight by BaFin to host an upcoming STO.

This STO will see Fundament distribute token based bonds, representing fractionalized ownership of a portfolio, backed by German real-estate. It is the intent of Fundament to sell €250 million worth of bonds.

 

A Closer Look

The opportunity will be structured as ‘subordinated token-based bonds with annual variable interest rates’. Fundament indicates that these tokens are to be ERC-20 based, with investors expected to receive returns ranging from 4-8% (IRR) p.a.

Dividends, based upon the performance of the portfolio backed by German real estate, are paid out annually. The investments are to mature in 2033, at which time, investors will see their investments returned.

To learn the full details and inner workings of the offering, Fundament has made their prospectus available HERE.

Facilitated by Ethereum

While various competitors have popped up in recent months, Ethereum is still the ‘big-dog’ in the digital securities sector. The protocol continues to retain a top-ranking within the industry, and benefits from massive developmental efforts.

Between the ‘first-to-market’ boon, and established network, it stands to reason that it will be some time before Ethereum is supplanted as the most commonly used protocol within digital securities.

Commentary

Fundament Group representatives took the time to comment on the regulatory greenlight with multiple entities. Speaking with CoinDesk, Fundament Founder, Florian Glatz, had the following to say.

“The reason we went through this long tedious process with regulators was to get rid of any restriction. Normally these projects are limited either by the minimum investment amount, which would be north of €100,000 or limited heavily in the amount of investors you could have. So it’s the first really like mass-market tokenized real estate for the world.”

Popular Implementations

To date, arguably the most popular implementation of asset backed tokenization, would be in real estate markets. In an industry comprised of high value- low liquidity, assets, which are geographically restricted, digital securities provides an answer to each of these issues.

Through tokenization, and distribution of digital securities backed by real estate, these assets now have the ability to become borderless. Investors will be able to gain exposure to lucrative real estate markets around the globe. By opening these opportunities to a global pool of investors, they are also benefitting from the increased liquidity being seen through secondary market trading.

While there is a plethora of industry that has the potential to be turned upside-down through tokenization, real estate remains the clear, and obvious, choice of industry participants thus far.

Fundament Group

Fundament Group was founded in 2018, and is based out of Berlin Germany. The team at Fundament has developed a suite of services providing clients with a ‘one-stop-shop’ for the tokenization of assets. These services will be on full display, as the company completes their very own STO, as discussed here today.

CEO, Thomas Ermel, currently oversees company operations.

BaFin

This European regulatory body is tasked with imposing rules and guidelines, to ensure fair practice among industry participants in finance. This includes various sectors, such as banking, securities, and insurance.

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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

Byte-Sized Investing with Fraxtor

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Byte-Sized Investing with Fraxtor

Democratic Investing with Fraxtor

Another company is looking to make their mark on the digital securities sector, as they ramp up operations surrounding their real-estate investment platform.

Through use of blockchain, Fraxtor hopes to open new avenues of investment, by making fractionalized ownership of undeveloped real estate accessible.

Naturally, as these types of investments represent ownership in an underlying asset, with an expected positive return over time, the Singaporean government views them as securities. What this means is that participation is restricted to accredited investors only, at this time.

Real Estate

Fraxtor notes a distinction in what separates their projects apart from others. Specifically, the vast majority of real estate based investment opportunities are restricted to developed properties. While these may represent great investments, the ability to gain exposure to such an asset on the ground floor typically proves to be more lucrative in the long run.

The issue with this, however, is that the amount of funds needed to invest in yet-to-be-developed properties is financially prohibitive. The result is that these opportunities are typically restricted to large property developers, not retail investors.

Fraxtor saw this, not as a problem, but as an opportunity to leverage the capabilities of digital securities, bringing the masses access to such investments; essentially democratizing real estate investing.

Commentary

Representatives from each, Proptech and Fraxtor, took the time to elaborate on the need for their solutions, and how they will work.

Oliver Siah, CEO of Fraxtor, states,

“Investing in premium real estate is often out of reach for the average investor as it requires high capital outlay and is very illiquid. This makes property investment riskier for investors as they are not able to effectively diversify their portfolio. REITs, on the other hand, do not provide the returns that Private Equity Real Estate Funds can achieve. With Fraxtor, I hope to be able to democratize real estate investment…We have placed a digital wrapper around a physical asset which allows us to issued digital securities to our global investors so that they are able to participate in that particular investment.”

Jordan Kostelac, Director of Proptech, states,

“Now everyday investors like you and me can actually own a piece of grade A office tower in the biggest cities in the world. From an asset holder standpoint, it creates new sources of liquidity and allows them to improve that asset or creating yields from that asset by dividing up the ownership. In the same way as companies do in public offering of their equity.”

Singaporean Participation

To date, Singapore has established themselves as one of the leading countries, with regards to acceptance of digital securities. Not only does the Monetary Authority of Singapore (MAS) host a FinTech Sandbox, they have been quite forward thinking with their endorsements towards companies such as iSTOX. Check out the following articles to learn a bit more about a few Singaporean based endeavours.

iSTOX Exchange Completes Series A Funding

Propine Accepted into MAS FinTech Sandbox

1X Launches as First Licenced Private Securities Exchange in Singapore

Fraxtor

Operating out of Singapore, Fraxtor was founded in 2017. This young company specializes in bringing real estate based investments to the masses, through the use of blockchain based technologies.

CEO, Oliver Siah, currently oversees company operations.

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Real Estate

Tokenizing London Penthouses and Greek Island Villas

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Sotheby's

Luxury Real Estate

With multiple STOs already on the docket from a variety of asset classes, Smartlands has just announced a new collaboration, which will, hopefully, see the addition of multiple more. This move sees the UK based company partner with Sotheby’s International Realty.

This collaboration will see the pair explore the feasibility of tokenizing multiple pieces of luxury real estate. The company notes two specific properties as holding the potential for tokenization.

  • Greek Islands Villa
  • London Penthouse Apartment

While details on the STOs are scarce, for the time being, it is indicated that the Greek Islands Villa is under management by a world renowned hotel network.

This collaboration spurred Smartlands’ Executive Director, Katharine Manderfield, into commenting. She stated that, “Deals of this level of exclusivity will open a new page in asset tokenisation.”

Past Successes

While many are still figuring out their first steps within the world of digital securities, Smartlands remain one of the few companies to have successfully completed an STO. Not only that, but they are now moving on to subsequent opportunities.

Like any experiences, they have the ability to shape our future actions. Expect Smartlands to learn from their past capital generation events, and apply that knowledge to the development discussed here today. The following articles take a brief look at just what these previous successes were.

Smartlands to Tokenize Nottingham Real Estate through STO

Smartlands Team up with ECN CrowdCamp

Popular Implementation

Due to the nature of real estate, it has caught the attention of various tokenization platforms from more than just the United Kingdom. While there have been hiccups along the way – such as the failure of Fluidity and Propellr – real estate continues to be one of the more lucrative industries, which stands to be transformed by digital securities.

Despite beginning to branch into different sectors, such as commodities and disruptive start-ups, expect for real estate to remain a popular outlet on Smartlands’ path to reaching the goal of tokenizing $1 billion in assets.

Speaking with Arnoldas

Roughly 6 months ago, we were fortunate enough to have completed an exclusive interview with the then CEO of Smartlands, Arnoldas Nauseda. While he has since transitioned into the role of Chairman, our discussion with Arnoldas Nauseda remains relevant today, offering a glimpse into Smartlands operations.

Interview Series – Arnoldas Nauseda, Chairman of Smartlands

Sotheby’s International Realty

Founded in 1976, Sotheby’s International Realty is a United Kingdom based company. While many associate the name Sotheby exclusively with fine art, there are company branches, such as Sotheby’s International Realty. This branch specializes in facilitating the buying/selling of real estate, with a presence in over 60 countries.

CEO, Philip A. White, currently oversees company operations.

Smartlands

Founded in 2017, Smartlands is a tokenization platform, which operates within the United Kingdom. Through use of the Stellar blockchain, this forward thinking company has developed a variety of solutions built to make fractionalized ownership of real world assets accessible to the masses.

CEO, Ilia Obraztsov, currently oversees company operations.

In Other News

Not content with opportunities based solely in the United Kingdom, Smartlands recently took their first steps towards operating within the United States. These steps were taken by forming an alliance with a U.S. based broker/dealer, bringing support for state-side investors on their platform.

Smartlands Set for Expansion into U.S. with New Agreement

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XIN Group Tokenizes NY Properties – UPRETS

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UPRETS and XIN Group Tokenize Brooklyn Condos

This week, the Chinese-based tokenization platform, UPRETS announced plans to begin tokenization of several condominiums in New York owned by the XIN Group. The news showcases how blockchain technology continues to upend the real estate markets globally. Additionally, it represents a more international approach to real estate liquidity concerns.

In order to accomplish this monumental task, UPRETS formed a strategic partnership with the Xinyuan Real Estate blockchain platform. Together the firms intend to offer investors a stake in the XIN Group’s Oosten Property holdings.

XIN Group – New York Properties

These luxury condominiums are located in Williamsburg, Brooklyn. The units feature a modern floor plan with 2-3 bedrooms per unit. As you would imagine, NY property values are through the roof. Recognizing the growing demand for these properties, XIN Group intends to fractionalize the ownership of these highly sought after units.

Fractional Ownership – UPRETS

Tokenization removes most of the boundaries preventing people from investing in real estate. For one, there is far less paperwork to get approved. Additionally, investors can make micro-investments in order to diversify their holding accordingly.

UPRETS via Homepage

UPRETS via Homepage

In this instance, each token will represent a $1 share in the ownership of the properties. In this manner, anyone can begin their real estate investment career. Additionally, these low investment entry levels provide much-needed liquidity to the local real estate markets.

UPRETS

The properties tokenization will take place on the UPRETS permissioned blockchain. This unique and highly functional blockchain is based on X-BOLT consortium chain. Consequently, it provides users with added functionality when compared to other options.

Flexible Blockchain – UPRETS

For example, the UPRETS blockchain design is meant to be flexible. The blockchain can communicate with other blockchains to facilitate a more streamlined payment system. Currently, payment can be made via the Bitcoin blockchain. Notably, developers hope to expand these capabilities to include Ethereum investors in the coming weeks.

This added interoperability allows URT tokens to trade on a wide variety of secondary markets. Consequently, more liquidity is added to the entire investment process with this strategy.

Property Tokenization is on the Rise

The XIN Groups’ advantageous strategy is now the new normal. Every day new property tokenization firms emerge. The benefits provided by these companies are too much to ignore. Tokenization opens local real estate to international investors and streamlines the entire sale process in a way previously unimaginable.

Additionally, Tokenization allows the average person to invest in real estate without putting forth a huge amount of funding. Traditionally, real estate investment takes a considerable amount of cash. Plus there are tons of regulatory and financial hoops one must jump through in order to complete a traditional property sale. Tokenization eliminates a large portion of these requirements.

XIN Group – Moving Forward

The XIN Group is at the forefront of the tokenization revolution. When you consider how desirable a spacious condominium located in New York currently is, it’s easy to see the logic behind choosing these properties. As such, you can expect to see this trend continue until the majority of all real estate sales occur via the blockchain.

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