Collateralized Real Estate
With investors continually seeking means of financial return, a trend has emerged surrounding U.S based real estate. This is the concept of ‘flipping’ a home/property.
The concept is simple – buy a home in disarray at a discount, strategically renovate, and sell the home for more than the cost of purchase and renovations. This model has proven quite lucrative, and shows no signs of going out of fashion.
OpenLTV has recognized this and developed a platform aimed towards giving investors access to such opportunities. This is made possible through the issuance of digital securities, which represent fractionalized ownership of real estate backed debt. These tokens are ERC-20 based, which means they are issued on the popular Ethereum network. With this being the most commonly used protocol, it is expected that support for secondary trading in future months should be supported.
OpenLTV indicates that through the use of its platform, investors can expect to generate returns in the 8-12% range per year.
Stablecoin of Choice
While investors have the ability to invest through the OpenLTV platform with cryptocurrency, a stablecoin of choice is needed to facilitate interest payments etc. OpenLTV has chosen PAXOS to be this stablecoin.
PAX tokens are ERC-20 based tokens, allowing for widespread support throughout the industry. Paxos issues monthly ‘attestation reports’, along with undergoing regular audits. These steps are taken to ensure transparency, allowing investors to verify that funds are indeed backed 1:1.
Upon announcing the launch of their platform, OpenLTV CEO, Kirill Bensonoff, took the time to issue the following statement.
“The OpenLTV platform will simultaneously allow us to tap into a global pool of investors and unused crypto-asset liquidity…We are thrilled to be partnering with the Paxos team to bring a long-standing and secure investment option in the real estate industry to the financial future.”
In addition to their issued statement, we reached out to OpenLTV for further comment on this development. The following is what CEO, Kirill Bensonoff, had to say.
Q: With the various stablecoin options available, why was PAXOS chosen to partner with?
A: “We have used PAX previously, and were impressed with what they have built. We were looking for a trusted company with regular audits that had verifiable 1:1 USD backing, and a great platform, and they were it.”
Q: How will clients benefit through use of the OpenLTV platform versus more traditional means of investing, such as REITs?
A: “There are a number of differences OpenLTV is issuing on the blockchain, where all transactions and interest payments are open and immutable, bringing a new level of trust and global access. Investors can choose what loans they want to back, unlike with a REIT, which makes all of the divisions and charges more costly. The loans offered on the OpenLTV platform will be short term and at a high-yield. This enables investors to avoid risk, shortens the time before they get their investments back to 12-24 months, and subjects them to less market volatility.”
OpenLTV is a Boston based company, which was founded in 2019. This young company has developed a platform allowing for qualified investors to gain exposure to U.S based real estate through fractionalized ownership.
Company operations are overseen by CEO, Kirill Bensonoff.
Paxos is a New York based company which was launched in 2012. The company states that their mission is ‘creating a global, frictionless economy’. This led to the development of Paxos Standard (PAX). These are digital tokens, which act as stablecoins pegged to the U.S dollar.
Company operations are overseen by CEO, Charles Cascarilla.
In Other News
While OpenLTV appears to be a promising platform through which investors can invest in debt-backed real estate, they are not the only ones to tackle this industry. Real estate has proven to be one of the most possible industries to be tackled by digital securities – and with good cause. The illiquidity, yet potential high-return of real estate makes it a perfect candidate for beneficial blockchain implementation. Here are a few examples of companies tackling real estate through digital securities.
Max Crowdfund STO Promises to Fuel Tokenization Revolution
This week, European investors got their first opportunity to participate in the Max Crowdfund STO. The Max Crowdfund platform seeks to revolutionize the EU real estate sector via an aggressive tokenization strategy. Interestingly, the STO will take place across five phases with the first release already surpassing its soft cap of €500,000.
Max Crowdfund is the tokenization and crowdfunding arm of Max Property Group B.V. (MPG). The platform utilizes blockchain technology to streamline real estate investments in a major way. The platform currently boasts over 75,000 global users. Additionally, Max Crowdfund provides the EU market with much-needed liquidity.
Developers seek to expand upon the platform’ s success. As such, funds raised from the STO will go towards the final development stages of the project. Once the platform is completed, it will become a complete real estate security token ecosystem. This ecosystem will include both native Android and iOS apps.
Also, third-parties will be able to tokenize and crowdfund their own properties via the platform. This means that other real estate firms can enjoy the same benefits without the need to invest directly in blockchain technology. Notably, this strategy has the potential to revolutionize development projects. Basically, any developer can now get pre-funded for their projects if investors feel the ROI is good.
A Global Audience
Max Crowdfund will remove many of the typical barriers surrounding real estate investment. For example, investors can participate in property sales for as little as $100. Aside from making real estate investing a reality for anyone, the platform seeks to provide these opportunities to a global audience.
Currently, Max Crowdfund awaits pending regulatory approval from the Dutch financial authorities (AFM). The company filed for approval back in October 2019 but the AFM has yet to make a decision. Typically, an AFM license approval takes around thirteen weeks to complete.
Max Crowdfund is already a major player in the tokenization sector. The platform is best known for its unique combination of features. Features such as automated KYC/AML reduce the amount of time it takes an investor to enter the market. Also, the platform offers multi-currency investment options. This feature is set for major expansion as the platform prepares for its global launch in the coming months.
Max Property Group B.V.
The Max Property Group B.V. entered the EU real estate sector in 2016. The company quickly gained notoriety for its advantageous market strategy. Currently, Max Property Group B.V. controls over €7,000,000 of property assets. The firm specializes in property funds, management services, and sales. Importantly, Max Property Group B.V. started development on the Max Crowdfund platform in 2017.
It’s no surprise to see Max Crowdfund’s expansion. The EU leads the globe in terms of security token regulatory framework. Many analysts see security tokens as the natural evolution of the crypto sector. A solid regulatory framework does more than just protect investors. It allows firms to invest in R&D without concern about the legal ramifications. In turn, you get more investment capital flowing into innovation.
Max Crowdfund STO
The Max Crowdfund STO is underway currently. Given the reputation and success of the platform to date, you can expect to see further investment into its capabilities as the EU tokenization sector continues to heat up.
GreyP Scores with NeuFund STO – Black One Entertainment On Deck
While never intended to be a financially large scale STO, the event was important, as it demonstrated the effectiveness and potential for digital securities to change the way smaller, private companies raise capital.
Just prior to the launch of the STO, we detailed the events which made it possible. In the following article you can learn more about the clearance given to NeuFund by the FMA, and what it means for the platform, moving forward.
Due, in large part, to their successes, NeuFund continues to see strong growth in their client base. The company indicates that their platform investor pool now totals great than 11 thousand individuals. This growth should result in a snowball effect, as issuers are attracted to the platform due to the scope of investors. More STOs will then draw in more investors – and the cycle continues.
Details of the Raise
With regards to the GreyP STO, there were various positive figures that came out of the events. The following are a few of the details surrounding participation:
- 1017 participating investors
- Hailing from 34 different countries
- €4million raised
- Represents 179% of the target cap
This early in the developmental stage of the digital securities sector, any successful STO is an important feat. With every positive and negative experience, industry participants can adapt and grow. Recognizing the importance of the GreyP STO, Zoe Adamovicz took the time to comment by stating,
“It’s an exciting day for Neufund and huge step forward for the security tokens industry at large. We have proven that private companies can effectively utilize blockchain IPOs, whilst lowering the barrier to entry for retail investors. Neufund is the future of stock exchanges.”
Speaking with Zoe
Earlier this year, we were able to complete an exclusive interview with the CEO of Neufund – Zoe Adamovicz. In this discussion, we learn more about NeuFund, themselves, as well as the views of Adamovicz herself.
“Blockchain is one of the greatest opportunities we’ve been presented with in modern history. Decentralization is ultimately about equalizing opportunities, so a young entrepreneur from the third world receives the same access as a wealthy investor. Building solutions that perpetuate the mistakes of existing markets solely for the purpose of increasing revenues is not enough. We, as a Blockchain community, can and should do better.”
Operating out of Croatia, GreyP is a tech company, which was founded in 2013. Above all, the team behind GreyP is working to redefine ‘smart mobility’. This technology has led the company to utilize e-bikes as a development platform.
CEO, Mate Rimac, currently oversees company operations.
Maintaining headquarters in Berlin, Germany, NeuFund is a popular digital securities issuance platform, which was founded in 2016.
CEO, Zoe Adamovicz, currently oversees company operations.
In Other News
NeuFund has also announced their follow-up to the successful GreyP event. This will see Black One Entertainment look to repeat this success in early 2020. While a firm date has not been announced for this STO, more information can be found in the company’s pitch deck, HERE.
Tokenizing London Penthouses and Greek Island Villas
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.”
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.
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.
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.
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.
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