Leaseum Partners: How to tokenize a Real Estate Fund?
Interview with Steve Sillam — CEO of Leaseum Partners
1. 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 dividends to token holders either in fiat or crypto. 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.
2. What is your biggest challenge tokenizing Real Estate?
Being the first to tokenize Real Estate presents many challenges that Leaseum Partners have managed to turn into opportunities: such as the lack of regulations specific to security tokens presenting an opportunity for the Leaseum token to be classified as a security. This presents an opportunity to the Leaseum token as a securitized real estate token with enhanced liquidity in comparison to other market participants.
3. Why should anybody buy Real Estate via an STO and not in the traditional way?
Increased liquidity: Security Tokens are tradable on electronic secondary markets operating around the clock. This means they can be purchased and sold at any time on exchanges around the world. Trades are no longer tied to traditional 9:30am — 4:30pm trading hours — trading is 24/7.
Greater Flexibility: Security Tokens 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 access to gain access to new markets.
More Inclusive: As Security Tokens 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
4. What are my rights as a Token Owner? Are they any different from traditional Ownership Rights of Real Estate?
Distribution — Rental income will be distributed to token holders in either traditional currencies (USD/EUR) or cryptocurrencies (ETH or Leaseum tokens).
Voting: In the event of the token trading at a severe discount to the portfolio’s net asset value, an early liquidation vote will be triggered by the investment committee. The token holders will be asked to vote for or against the fund’s liquidation
Redemption: At any time during the life of the Fund, Token holders will be able to trade Leaseum Tokens on exchanges. However years after the Security Token Offering, each investor can choose individually to redeem their tokens. In which Leaseum Partners will liquidate its Real Estate holdings via selling the buildings to generate potential capital gains.
5. What are my risks as a Real Estate Token Owner?
Real Estate token holders face the same risks as normal real estate owners. In the case of Leaseum token holders, token holders will benefit from a diversified portfolio managed by vastly experienced portfolio manager. Token holders will also be have the option to benefit from the volatility of the crypto market.
6. What happens with my Tokens (Ownership Rights) if Leaseum Partners goes out of business?
Leaseum Partners is the fund advisor, therefore in event that they go out of business, tokens will still represent a fractional ownership of the fund and token holders will be entitled as such.
7. Who is eligible to purchase your Real Estate Tokens?
Accredited investors who have successfully whitelisted their wallets are eligible to purchase Leaseum tokens, subject to KYC/AML compliance. In the US, we are filing under Regulation D. 506c.
8. Will Token Owners be able to sell / trade their Tokens after your STO?
Leaseum tokens will be tradable on decentralized exchanges as well as centralized security and security token exchanges.
9. On which exchanges are you planning to be listed? When do you think this will be?
We are planning to be listed on major security token exchanges such as OpenFinance (which has already launched) and tZero (due to launch soon).
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Note: This interview was conducted on 17.09.2018