How One Group Of Owners Tokenized An Office For Greater Liquidity
Tokens created on Flote are backed by physical real estate and adhere to relevant financial regulations and qualified investor checks.
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SAN FRANCISCO–It is all well and good to hear the theory behind blockchain and how it can help commercial real estate, but to see it in action is another thing all together. Case in point: A group of owners of an office building in Oakland, CA’s uptown district just tokenized the building to provide greater liquidity and make it easier for the owners to sell and exchange their shares.
Essentially this was a securities transaction, according to Razmig Boladian, co-founder and managing partner of Real Estate Private Equity firm Rubicon Point Partners. Boladian spoke to GlobeSt.com on behalf of the building owners. “It was a faster, cheaper and more liquid route instead of trading paper,” he says.
The transaction complete, the shares have already been distributed among the owners, he adds. The owners used Flote, a fintech startup based in San Francisco, to tokenize the shares of the office building, which is valued at $10 million. Flote provides software and services to fractionalize large commercial real estate assets into tradeable tokens on blockchain.
Because it is a new method of finance, some users can be leery of it, Roland Pan, CEO of Flote, tells GlobeSt.com. “We have made this process as painless and frictionless as possible,” Pan, who recently led corporate strategy at Skype, says.
Then there are the advantages of the process and product.
“For asset owners and operators it means that a whole new universe of capital can move seamlessly in and out of their funds and buildings,” Pan says. “For investors it means gaining access to large-scale commercial real estate without long hold periods or high investment minimums.”
Flote is not a cryptocurrency. Tokens created on its platform are backed by physical real estate and adhere to such regulations as Know Your Customer and Anti-Money Laundering requirements. It also is subject to qualified investor checks.
“Using Flote owners don’t have to deal with the technical, regulatory or structuring issues associated with tokenization, Boladian says. “It also gives investors a lot more options for liquidity than they currently have.”