There are opportunities for blockchain in many facets of commercial real estate transactions including property and title searches, financing, leasing, purchasing and selling, due diligence, managing cash flows, and payment management, including cross-border transactions.
In this document we focus on the the use cases and merits as pertinent to raising capital via Digital Initial Public Offering.
4. Areas of real estate being transformed by blockchain technology:
● Property search process
● Due Diligence and Financial Evaluation Process
● Property management
● Title management
● Financing and payment systems
● Real estate investing
Impact of blockchain technology on real estate
5. Impact of blockchain / tokenomics on real estate
There are opportunities for blockchain in many facets of commercial real estate
transactions including property and title searches, financing, leasing, purchasing
and selling, due diligence, managing cash flows, and payment management,
including cross-border transactions.
In this document we focus on the the use cases and merits as pertinent to raising
capital via Digital Initial Public Offering.
6. Blockchain and tokenization of assets has the potential to be used to raise
investments in a new way. (Digital Initial Public Offering - DIPO)
7. Lior Abehassera, co-founder and head of investor relations at Leaseum
Partners, says his firm is the first blockchain-based real estate fund in New
York that pays dividends to its investors. “We provide our investors with
flexible and efficient access to a portfolio of U.S. real estate with
dividends that can be paid in crypto or fiat,” Abehassera says.
New York-based Leaseum Partners Teams Up
with Tokeny to Launch $250M Tokenized Real
Estate Fund
Leaseum partners, a New York-based real estate fund, has chosen the Tokeny
platform to launch a $250 million blockchain-enabled real estate fund.
Use of Digital Initial Public Offerings (DIPO) in real estate is in the process of delivering a major impact on
how individuals and institutions will raise capital, invest in global real estate transactions, and get returns
from investments in real estate going forward.
8. ● More Inclusive: As Digital securities are more flexible than traditional securities investments — minimum
investments can be lower. This means that a wider range of investors can now access opportunities that used
to be reserved to large institutional investors.
○ Voting rights and terms can be granted in a more dynamically inclusive and democratic way,
which would be attractive to initial investors.
● Making investment transaction processes more efficient: Most real estate transactions are still conducted
through wire transfers and require costly verification processes that can take days to complete.
Blockchain-based transactions and identification systems (like Onfido) are enabling a streamlined process
which delivers quickly and reduces costs.
● Limiting the use of intermediaries: Many intermediaries — from brokers to escrow companies — could be
rendered obsolete by blockchain-based approaches, as records could be stored, verified, and transferred
using blockchain technology. Removing the need for intermediaries could dramatically reduce costs and save
time.
● Increased liquidity: Traditionally illiquid assets can be fractionated into smaller pieces that are tradable. Digital
securities can then be traded on regulated platforms globally & operating around the clock. This could allow
for creating even more liquidity.
Merits of raising capital via Digital Initial Public Offering - DIPO
9. ● Building Block Management Inc. and its subsidiary, Building
Block Technology LLC, (“BBT”), are developing a Blockchain
technology solution aimed at disrupting the REIT industry.
● In 2019 Building Block Management anticipates launching
Building Block REIT which will initially be funded through a
private placement or crowdfunding, potentially followed by a
Digital Initial Public Offering.
● The Company expects to issue a securitized digital token, BB
Tokens, to investors in its BB REIT offering(s).
● The BB Tokens are expected to trade on one or more
platforms, providing potential liquidity to investors.
● The Company expects to follow its initial BB REIT offering with
additional private and/or public BB REIT launches based on
market demand.
Building Block REIT
Building Block REIT is a Real Estate Investment
Trust utilizing the full power & benefits of
blockchain technology in its operation.
Chicago, Illinois, United States
Already happening in U.S.
10. Jason Freedman, GM at 42Floors, a commercial property
search engine recently purchased by Knotel, says: “We are
using blockchain technology to access and contribute to a
database of verified building and lease information.”
● Knotel currently spends about 2 percent of the all-in transaction costs
on verifying information about each building and space. With hundreds
of leases representing millions of square feet, these costs are a massive
burden and are only getting larger.
● By using blockchain to incentivize data sharing throughout the industry,
it will change the face of commercial real estate, creating major
efficiencies and cost savings, he notes.
Knotel, Inc.
Knotel designs, builds, and operates custom
spaces for established and growing brands. Since
its founding, Knotel has raised more than $100
million in funding and its clients include Starbucks,
Cheddar, Stash, and King.
Already happening in U.S.
11. Also happening in the Asia
Other organizations around the world are also making
blockchain real estate strides.
● Bank of China Hong Kong (BOCHK), for example, stated in mid-2018
that it processes 85% of real estate appraisals using its own private
blockchain.
● BOCHK’s General Manager of Information Technology Rocky Cheng
Chung-ngam said, “In the past, banks and [real estate] appraisers had to
exchange faxes and emails to produce and deliver physical certificates.
Now the process can be done on blockchain in seconds.”
Bank of China (Hong Kong)
Commercial banking company
Bank of China (Hong Kong) Limited also
known as its short name Bank of China
(Hong Kong) or BOCHK, is a subsidiary of
the Bank of China.
