Reitbz is its name, and is I believe the first security token (STO) backed by a traditional investment bank. $10 for one ReitBz token. No US or Brazilian citizens. You can pay with ETH or USD pegged coined Gemini Dollar.
I am excited because this comes from Brazil and not Manhattan or Canary Wharf real estate. Second, because ReitBZ is backed by distressed real estate that BTG Pactual has access to, as they have been a leading investor in Latam real estate for many years. They manage over $2billion and earned the Euromoney award for Best Real Estate investors in 2017 and 2018. Of course, in this phase they will tokenize only $15million worth from their holdings.
The real estate portfolio to be tokenized by BTG, has is a niche focus in three ways:
- Real estate foreclosures by developers who were denied financing post-construction.
- Real estate returned by buyers that couldn’t afford a bank loan after construction.
- Real estate owned by companies that filed for bankruptcy or judicial recovery
ReitBZ is a transparent structure to invest in deal flow that is not accessible easily.
The funds raised will not be held by the BTG but by a smart contract on the Ethereum protocol. The management of the investment process (purchase, management of the assets, sale) will be done through Enforce, and entity that is 10yrs old. Blockchain technology reduces the costs of a traditional real estate investment fund substantially (custody, bookkeeping, fund admin, structuring etc). The exact savings, I guess will be reported once the structure is live. What is unclear to me, is whether these savings are higher than the tax benefits that investors enjoy through traditional REIT structures (which undoubtedly have much higher costs in structuring).
As the devil is always in the details, keep in mind that on the one hand the funds are kept in the smart contract but on the other hand all decisions are made by BTG/Enforce. They are looking to buy assets at a 30% to 40% discount and over an 18month period, they aim to restructure them and sell them. They estimate that the restructuring process involves 10% to 20% costs. Once the property is sold at a profit, the managers will decide to distribute on a prorated basis the profits via dividends, which will take the form of Airdrops.