Leaseum Partners: How to tokenize a Real Estate Fund?
Interview with Steve Sillam — CEO of Leaseum Partners
Which problem is Leaseum Partners trying to solve?
Leaseum Partners is a tokenized private equity fund, investing in commercial real estate in NYC. Paying out quarterly dividends to Leaseum holders. Leaseum Partners aims to bring liquidity to an illiquid asset, real estate, as well as provide accessibility to the world’s most sought after commercial real estate, without the need for a high principal investment.
What is your biggest challenge tokenizing Real Estate?
Being one of the firsts to tokenize Real Estate presents many challenges that Leaseum Partners have managed to turn into opportunities. A significant challenge is the digital security industry is very new and as far as we know, no company has yet to accomplish what we are doing, so there is no example to follow.
Why should anybody buy Real Estate via an DSO and not in the traditional way?
Greater Flexibility: Digital securities enable holders to own fractional portions of assets with a high unit value — such as Real Estate. In addition, as more assets are tokenized and fractional ownership develops, it will become easier to gain access to new markets.
Increased liquidity: Traditionally illiquid assets can be fractionated into smaller pieces that are tradable. Digital securities will be tradable on regulated platforms operating around the clock. Trades will most likely no longer be tied to traditional trading hours — trading will be 24/7.
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.
What are my rights as a Digital security Owner? Are they any different from traditional Ownership Rights of Real Estate?
Distribution: Rental income will be distributed to Leaseum holders quarterly.
Voting: Leaseum holders will be able to vote on some decisions.
Capital Gains: At any time during the life of the Fund, Leaseum holders will be able to trade on exchanges (depending on regulation and liquidity). We expect the price of the token on the market to reflect the value of the underlying real estate portfolio. In any case when buildings will be sold, Leaseum holders will collect their slice of the potential capital gains.
What are my risks as a Real Estate Digital Security Owner?
Real Estate digital security holders face the same risks as traditional real estate investors. In the case of Leaseum holders, digital security holders will benefit from a diversified portfolio managed by a vastly experienced team. All the risks are described in more details in the offering documents, which should be read carefully before investing.
What happens with my Digital securities (Ownership Rights) if Leaseum Partners goes out of business?
Investors are purchasing Fund shares or Fund interests indirectly through their tokens. In the unlikely event Leaseum Partners the manager goes out of business, investors still own the underlying real estate assets and have their dividend and capital gains rights.
Who is eligible to purchase your Real Estate Digital securities?
Accredited investors are eligible to purchase Leaseum digital securities, subject to KYC/AML compliance.
Will Digital security Owners be able to sell / trade their digital securities after your DSO?
Yes, as soon as Leaseum securities get listed and depending on liquidity, and subject to regulatory lock-ups.
On which exchanges are you planning to be listed? When do you think this will be?
We are planning to be listed on major digital security exchanges such as OpenFinance and tZero (both have already been launched) to start, and then on traditional exchanges as soon as they would launch their digital securities listings.
Thank you for the Interview.
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Note: This interview was conducted on 17.09.2018 and updated on 04.03.2019
