Tokenized Real Estate
With the popularity of digital securities/security tokens on the rise, one of the most benefitted applications is in real estate. Real estate represents an asset often larger than even very successful investors can afford. By utilizing blockchain, fractionalized ownership can bring access, and liquidity, to this asset class that has not been seen before.
To date, most of the products that have launched, with a focus on tokenized real estate, are within the state of New York. This has now changed, with an announced offering within South Carolina.
This project is brought to investors through a working partnership between Harbor, and Convexity. Made possible through the framework and platform provided by Harbor, Convexity is offering the sale of digital tokens. These tokens represent a fractionalized ownership of a luxury student housing complex, owned by Convexity, within South Carolina.
The planned token offering will see the distribution of 955 tokens. Each representing a single share within the housing complex. Each share will be sold for $21,000, representing a goal of $20 million investment total.
The appeal of this offering is multifold. Through the use of secondary markets, these shares will be tradable within a short period of time. This brings levels of liquidity not seen before, as investors can enter/exit their positions with ease.
Furthermore, as these tokens are securities, they are subject to regulatory oversight. This means that holders will be privy to regular financial statements, and transparency in the process.
With these being subject to regulations, the sale is restricted to accredited investors only. These investors are required to pass all KYC and AML checks along the way.
Harbor is a United States based company that provides the step-by-step framework for companies looking to tokenize their shares.
Harbor slots in as a competitor to companies such as Securitize and Neufund.
Convexity is a real estate investment firm. They are one of various branches of the mother company, DRW. Based out of Chicago, Illinois, they were founded in 2009, and have expanded into a global brand since.
The Hub at Columbia
The Hub at Columbia represents one of various real estate investments owned by Convexity. This asset is a luxury student housing complex located in the vicinity of the University of South Carolina. It is this property that is the subject of the upcoming token sale.
With a Twist
While Convexity may be the first to offer fractionalized ownership of student housing, various companies have delved into the real estate market in other manners. Below are a couple companies that have done just that.
- Invests in multi-family housing in need of renovation.
- Property Coin
- Invests in fix & flip real estate assets
UPRETS to Tokenize New York RE through DigiShares
Today, two companies with a focus on asset tokenization have announced an upcoming joint STO. These companies are DigiShares and UPRETS.
This pairing appears to be a complimentary one, as each company brings different areas of expertise to the table. While DigiShares will leverage their presence and experience tokenizing assets within Europe, UPRETS will provide, not only the asset itself, but manage on-going investor relations.
U.S. Real Estate in Europe
This partnership was undertaken with the main goal of hosting a successful STO around New York based real estate.
Known as the Oosten property, this STO will see the asset tokenized, with access to the event open to European based investors. This property was chosen, as the mother company of UPRETS, Xinuan Real Estate, owns a variety of condos in the complex.
While full details of the STO have not been released, it is believed that the event will look to generate between $1-4M in funding.
Upon announcing this event, representatives from each, DigiShares and UPRETS, took the time to comment. The following is what each had to say on the matter.
Claus Skaaning, CEO of DigiShares, stated.
“We see real estate as one of the most promising markets for blockchain tokenization technology to be implemented. As the global infrastructure for banking, tech and capital markets rebuilds itself on blockchain over the next decade, the real estate industry will also be impacted. Real estate industry investors and developers are actively seeking ways to reduce delays, costs, and obscurity in transferring ownership of real estate-related securities. We hope that together with UPRETS we can help resolve some of those issues.”
Dan Chase, CEO of UPRETS, stated,
“Real estate remains to be the most valuable asset in class in the world. The barriers to entry such as liquidity and many intermediaries in this market can be solved through the blockchain. This partnership with DigiShares will bring sanity to the real estate market and make the digital security market more liquid. We intend to work as a team and become global leaders in real estate tokenization.”
Speaking with Claus
We recently had the pleasure of sitting down with DigiShares CEO, Claus Skaaning, for an exclusive interview. In this discussion, Claus Skaaning touches on, not only his own journey, but that of DigiShares.
DigiShares is a European company which was founded in 2018. Above all, the team behind DigiShares has focused on developing a suite of services aimed towards the tokenization of assets. These services include investor accreditation, payment gateways, and more.
CEO, Claus Skaaning, currently oversees company operations.
UPRETS is a New York based company, which was founded in 2018. This young company identifies as a ‘security tokenization platform for global real estate’.
CEO, Dan Chase, currently oversees company operations.
In Other News
Over the past year, DigiShares has shared various developments and strategic partnerships. The following articles discuss a couple of these events.
Fundament Group Receives Strategic Investment from Bauwens Group
Investing in the Future
Bauwens Group, a German based real estate developer, has announced that they have invested in Fundament Group.
With Fundament Group looking to change the way real estate projects are financed, through the implementation of blockchain technologies, they caught the eye of Bauwens Group. The latter has recognized the potential cost savings, and ease of access to capital, that blockchain can offer.
Real estate continues to be a popular implementation for the tokenization of assets, and the entrance of a giant developer such as Bauwens Group continues to support this.
The investment in Fundament by Bauwens is just the latest in a recent string of positive news surrounding the company.
We recently covered Fundament Group, and their approval by BaFin, for an upcoming STO involving German real estate. The following article discusses this in greater detail.
Upon making their announcement, Alexander Jacobi, Managing Director at Bauwens, took the time to comment on the investment. The following is what he had to say on the matter.
“We are delighted to announce this partnership with Fundament Group which recently achieved a decisive breakthrough in Germany by securing the first regulated tokenized real estate bond. The Fundament Real Estate Token is an extremely interesting option for selling our real estate and we are proud to support them with our real estate and digitization expertise. By partnering with Fundament Group, Bauwens is positioning itself sustainably in the emerging real estate tokenization market.”
One of the reasons that Germany has started to become popular for developments, such as the one discussed here today, is clarity afforded to industry participants by their regulators. The following article takes a look at some of the steps necessary for getting regulatory approval for a German based STO.
This Berlin, Germany, based company was founded in 2018. Since launch, the team at Fundament Group have worked to create a comprehensive platform tailored towards the tokenisation of assets, such as real estate.
CEO, Thomas Ermel, currently oversees company operations.
With almost 400 employees, and billions worth of real estate under their management, Bauwens Group represents one of the largest real estate developers in Germany. The company has grown to such stature since their founding almost 150 years ago in 1873.
In Other News
To date, Germany has continued to be one of the more forward thinking countries with regards to digital securities. This has been made apparent through parties from various sectors showing interest in blockchain. This includes, not only real estate, but big banks as well, with the following articles demonstrating this.
AssetBlock Tokenizes $60 Million Real Estate Fund
This week has seen some dramatic events take place in the blockchain real estate sector. Notably, AssetBlock announced the tokenization of $60 million in real estate funds. The news demonstrates the further expansion of blockchain technology into the traditional real estate market, and AssetBlock’s desire to become a major player in the sector.
News first broke of the tokenization on September 17 via a BusinessWire press release. In the post, AssetBlock sheds some light on the strategies in place and how the company plans to disrupt the traditional markets.
AssetBlock Utilizes Algorand Blockchain
Uniquely, AssetBlock chose to tokenize the properties on the Proof-of-Stake blockchain – Algorand. The Algorand blockchain brings some interesting benefits to the table including compliance, global reach, and a strong team of experienced experts.
As such, the Algorand blockchain is built to be sustainable and governed by open operating standards. Another important point worth mentioning is that Algorand blocks finalize in seconds. In essence, this strategy makes it possible for investor participation globally and instantly.
As a Proof-of-Stake blockchain, the energy consumption is far less than a Proof-of-Work (PoW) blockchain such as Bitcoin. Algorand uses a proprietary version of PoS dubbed Pure Proof of Stake (PPoS). This protocol provides full participation while leaving users protected at all times. The system is able to achieve consensus without the need for a central authority making truly decentralized.
Lodging Capital Partners LCP
To make this advantageous maneuver, AssetBlock enlisted Lodging Capital Partners (LCP). LCP currently holds over $1.5 billion in international real estate. For their part, LCP provided the properties to be tokenized.
In this particular instance, AssetBlock chose to tokenize $60 million in luxury hotel properties. According to company executives, these properties are only available to blockchain investors.
AssetBlock – More Opportunities
Speaking on the decision, AssetBlock CEO, Mike Lidell touched on the importance of merging traditional and non-traditional investors in an efficient manner. He explained that this is the best way to create more opportunities for everyone in the market.
Additionally, Steve Kisielica, the Principal CIO of LCP described how the maneuver creates a new investment pool in the market. He also spoke on the responsibility companies have in terms of embracing new technology that simplifies the market.
AssetBlock officials are serious about getting these tokens out to investors. The company officially earmarked the token launch for mid-October.
Real Estate is Growing Digital
The company’s decision mirrors that of some of the biggest players in the game in some aspects. Just this week, Securities reported on Harbor tokenizing $100 million in real estate funds for much of the same reason.
You have to give it to AssetBlock for it’s out of the box thinking. Utilizing a Proof-of-Stake blockchain is a great way to avoid future issues related to energy consumption. You can expect this deal to boost the notoriety of all the firms involved, as well as the possibilities of using PoS blockchains for tokenized real estate.