Tokenization: The Private vs. Public Path In Real Estate

Innovation, Investing | January 15, 2019 By:

In 2018, we witnessed the early stages of how tokenization will transform the way we interact with commercial real estate property investments. Such tokenization is disrupting one of the oldest global industries by bringing transparency and increasing access to lucrative deals that traditionally execute in secrecy.

The future of property investment will look different than the solutions we currently see by focusing on public tokenization solutions that appeal to traditional lenders, banks and Main Street investors like those owning Amazon or Apple.

Improving access reduces many of these current issues. My company, Jointer, believes that the future of the real estate industry will be led by a scalable tokenization solution that can provide liquidity and the democratization needed, while minimizing lending risks for all.

Let’s explore the varieties of tokenization options available for investors: owners have their choice between private and public alternatives.

  1. Private tokenization

Currently used by many companies, this method is an improvement from the traditional syndication layout that is generally limited to a hundred accredited investors. We’ll see greater traditional syndications adopting the private tokenization answer, taking advantage of increased liquidity and reduced transaction time.

Private tokenization is limited to accredited investors, carrying a “locked” or untradable period. Further, since the investor pool is limited to 100 investors, there is a high barrier to entry, limiting tradability only to accredited investors.

  1. Public tokenization

A more resource-intensive option that answers the goal to disrupt commercial real estate lending and investing industry by means of providing a path to access by the general public. Public tokenization’s purpose is to update institutional lending and large trading platforms, inclusive of RIETs.

Public Tokenization files under the SEC’s Reg S1, which mirrors a public company, allowing tradability to everyone, at any time, and at a minimum of $1. This advantage can reshape the future of property investing, allowing the entity to function similar to a public stock offering.

The Near Future

In the upcoming year, we’ll begin to see big players like banks, investment funds, and RIETs exploring opportunities with tech companies to preserve pace with the industry evolution. Public tokenization answers the call to disrupting commercial real estate lending and investing. We begin the journey to the important road of mass adoption and public market participation in historically private arenas.

Solutions will focus on updating institutional lenders and large traders inclusive of RIETs to the possibilities through tokenization. At some point of 2019, we’ll begin to see big players which include banks like JP Morgan and RIETs exploring investments with tech companies to preserve pace with the industry evolution.

On Our Galaxy

Currently, solutions are missing the mark needed to truly bring the lucrative commercial real estate investment opportunity to all. As blockchain seeks to democratize access to assets, a solution must provide options in regulatory compliance.

Jointer offers the general public a tokenization solution that allows institutional lenders and REITs an opportunity to stay in the game even as increasing public participation permits them to revel in low dangers and high returns. Jointer offers property owners a public tokenization solution and also acts as a market maker with a buyback program. The buyback program solves liquidity by making all tokens instantly tradable and redeemable within the system.

About Jude Regev, Founder and CEO of Jointer

Serial entrepreneur Jude Regev has successfully grown five companies including Jointer, which creates blockchain solutions to increased liability, improved returns and minimized risk for real estate property owners and investors. For investors, Jointer offers return based on commercial real estate index in a way that an average person- one with zero knowledge or experience- can invest and receive high returns like an owner while minimizing risk like a lender. For property owners, Jointer offers tokenization solution to unlock equity at free cost.