Real Estate tokenization feels and smells a lot like Old-fashioned Securitization

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What is securitization or rather What was securitization? The practice of pooling different types of assets, repackaging their cash flows and rights and creating new securities out of the mashed and hashed[1] results.

Asset-backed securities in the conventional financial world are still a huge asset class. What is asset-backed tokenization or rather What will asset-backed tokenization look like? What more natural than to experiment with the tokenization of Real Estate, a huge asset class that remains fairly illiquid, local, and with tons of intermediaries and information asymmetries.

Indiegogo, the international crowdfunding giant, launched the Aspen token on their platform. Investors on the Indiegogo platform globally will be able to own tokenized fractional shares of the common stock in the St. Regis Aspen Resort. The luxury hotel raised $18mil in Oct. 2018. The tokens are offered and traded on Templum Markets, broker-dealer and alternative trading system (“ATS”) registered with the SEC and FINRA.

In early 2019, it was announced that the AspenCoin will be managed by Securitize, the early pioneer or securitizing assets. The Aspencoin, a Security token offering, is being transitioned from Ethereum to the Tezos blockchain. The team behind Elevated Returns has partnered with Securitize in order to handle a pipeline of real estate tokenization projects.

Realecoin is another US real estate project focused on “taking over” Manhattan through tokenizing a Real Estate fund (a portfolio of prime real estate in NY). OpenFinance, an early-stage venture building regulated securities token exchange out of the US, has agreed to list all Securitize equity tokens and they have also announced a focus on the tokenization of REITs.

Early stage blockchain ventures focused on tokenizing real estate are preparing for launch and dealing with all the regulatory complexities.

Q1 of 2019, has seen several announcements of plans to tokenize real estate projects, especially in the US.

Inveniam Capital Partners will start tokenizing a property in downtown Miami, a WeWork-occupied building, and has three others in the pipeline.

Harbor, the security token protocol, is selling shares in a South Carolina high-rise building with each share worth only $21,000.

The SwissReal Coin, tokenizing Swiss commercial real estate, aims to overcome regulatory hurdles that have pushed back their ICO offering. Their platform aims to provide an efficient way to manage a real estate portfolio.

Alt.Estate, is a British Virgin Islands venture, with a working prototype of a protocol to tokenize real estate and trade fractional ownership. They have already tokenized 3 apartment properties in 3 continents (Beach apart. In Europe, Brooklyn apartments in the USA, and apartments in Tokyo, Japan). They raised $4.5mil in their ICO in summer 2018.

All of these designs are no different than a digitized structuring process. I am not undermining the improved efficiencies — more access, fractional ownership, more security, and transparency — at all. However, the financial engineering behind all this is less innovative than what it appears. It is creating asset-backed with very traditional underlying assets.

Even though admittedly, we are in the very early stages of tokenizing real estate, we need at the same time to keep experimenting and creating new value that is not a simple linear step from the current reality — as is the classic tokenization of real estate.

An example in this direction is building a new economy that is all-inclusive for the stakeholders in a real estate smart ecosystem. A unique such venture is being built through the recently announced partnership between MIRIS and Redsand Partners. MIRIS is a Norwegian Smart real estate company that develops, finances and executes real estate projects all over Norway, with a focus on: Edge Data Centers, Positive energy buildings and Smart Homes. Redsand Partners, is a UK-based boutique advisory company with labs, focused on designing and building new tokenized models and economies. Together, they are building the MIRIS Token Economy platform using the power of blockchain technology to design a holistic token economy model to serve the way in which MIRIS serve all Stakeholders

  • Investors
  • Residents
  • Property Owners
  • And all the supply chain (that will be optimized)

This is a case where blockchain is enabling to build a new business model that transforms the way real estate, energy and technology “work” together. In the end, it is using tokenization for a smarter and cleaner planet. Now that goes beyond securitization. This past February the MIRIS X platform went live.

[1] Securitize, is behind the SPiCE, the first tokenized venture capital (VC) fund.

[1] Mashed and Hashed, is my own way of thinking of the financial engineering of cash flows and rights. It is obviously borrowed from cooking terms. Hash means chop and dice.

I have no positions or commercial relationships with the companies or people mentioned. I am not receiving compensation for this post.

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№1 Finance Global Woman Influencer by Refinitiv 2020 & 2019. Fintech & Blockchain Advisor: 30yrs FINANCE; #fintech #blockchain

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