Consulting firm Advantage Blockchain is teaming up with Vertalo, the digital transfer agent, and alternative trading system tZERO in the first deal completed on its new tokenization platform tokenize the portfolio of Class A real-estate amounts to $300 million and owned by a boutique company.
The portfolio belongs to Real Estate Capital Management based in Pennsylvania and Advantage plans to tokenize the portfolio in phases, starting with $90 million of office and hospitality real estate over the next three months, the consulting firm’s president, Alec Beckman, said. Pennsylvania and Costa Rica hotels will be the first in the deal to be tokenised.
The multi-firm partnership lays the groundwork for a steady stream of property tokenization projects for property and real estate investment trusts in Philadelphia and other parts of the northeastern United States, Vertalo CEO Dave Hendricks said.
Digital Representations of Real-Estate Shares will Trade Alongside Private Equity Token, TZROP
According to tZERO CEO Saum Noursalehi, the digital representations of real-estate shares will trade alongside the private equity token, TZROP, and Overstock’s preferred stock digital voting series A-1.
“Rather than doing one-off deals … we’re partnering and are able to scale that way,” Noursalehi said. “We’re the most liquid platform out there for security tokens. We should have our own retail broker-dealer live in Q2 and have signed up another four to five broker-dealers to integrate and trade security tokens on our platform.”
There are already 55 additional funds in the pipeline, waiting to start tokenized, Hendricks said of Vertalo. Vertalo is working with four other Advantage-like firms that will give access to more funds.
Advantage will use the Tezos blockchain through Vertalo tokenize the immovable property. Investors on tZERO can sign up to trade tokens through Dinosaur Financial Group, a consumer-facing broker-dealer. The tokens are to be custodied by Prime Trust, based in Nevada.
Tokenizing real estate has been seen in the past as a way to facilitate the trade in real estate investments. Trading immovable property normally requires a buyer to be found and paper certificates transferred to a central office.
“If you own a building and your plan is to own it for five years and improve the value, the cost to buy and sell is expensive,” said Gary Brandeis, president of Real Estate Capital Management. “The amount of value you have to create is significant. … You have to make it up to get in and out of real estate.”