Despite receiving hype as a potential killer-app for blockchain, tokenized real estate has in many ways failed to live up to its early promise.
However, fintech startup Reinno has just launched an investment platform for tokenized United States commercial real estate, covering $237 million worth of property at launch.
Accredited investors globally can now participate in several different offerings, including both individual assets and diversified property portfolios.
All of the properties are income-producing, and including medical facilities, residential blocks and industrial buildings.
The new platform will allow investors to enter the commercial real estate market with a minimum investment of $5,000, with no fees for creating or maintaining an account, or buying tokens.
At present all potential investors must be accredited or qualified individuals that comply with the U.S. Securities and Exchange Commission regulations.
However, this could change in future, as it ultimately comes down to the choice of the tokenization client, as Reinno CEO Viktor Viktorov explains:
“Most [clients] prefer having [...] offerings that do not allow selling securities to unaccredited investors but provide other benefits, such as no limit on the amount to be raised.”
But other categories of SEC regulation do allow investment by non-accredited investors, and these can also be accommodated within the platform.
Due to regulations, any real estate investment tokens cannot be traded on secondary markets for up to 12 months after the offering is closed. This means that investors’ funds are essentially locked-in and illiquid for this period.
However, Reinno has developed a model which allows it to instantly approve loans backed by the tokens. Loan to value (LTV) ratio is dependent on the property but is generally between 60 and 85%.
This aims to provide a higher level of liquidity, compared to other methods of investing in real estate.
Reinno is certainly hoping that its new platform helps to realize at least some of the hype around tokenized real estate.