CRC029 Blockchain Will Revolutionize Real Estate
Connecting Sound Economics With Experience in Real Estate
On Thursday, April 30, 2020 the Chicago Blockchain Real Estate Collective hosted an informative introductory meeting on the rapidly changing state of technology crashing into the staid world of real estate finance and investment. The Zoom conference helped us chart the course for additional meetings. Contact us here for suggestions on topics or speakers:
Just like your grocery list, the hotel’s guest ledger you sign, or any bank account or accounting book, blockchain is a ledger. Except a blockchain is a distributed digital ledger. That’s it!
“But wait… then what is all the excitement about? And why the tens of billions of dollars invested into this new technology?” – you may ask. We have had access to digital ledgers in the form of databases and spreadsheets for a couple of decades.
Humanity has been using ledgers to keep track of goods and transactions for millennia. In fact, the first discovered written word etched into stone was in fact, a ledger, depicting units of goods. This means that money, representing the equivalent value of a property, goods, services or one’s work, is in fact older than writing.
Blockchain technology has many advantages, both in being immutable and temper-proof, transparent, censorship resistant and virtually hack proof due to being decentralized. It is “trustless” in its functionality, while also offers complete reduction of the bureaucracy, and “friction” that currently encumbers transactions and transfers of assets.
Even today, giant financial institutions, investment and brokerage companies, judicial institutions and governments have started to recognize the disruptive potential of blockchain technology. Sooner than expected all digital assets, contracts and even physical properties will be registered, transacted and moved exclusively on a blockchain.
How Do You Get Physical Real Estate Onto The Digital Blockchain?
In 2009 Bitcoin was introduced as a revolutionary alternative to fiat currencies. In 2020, the bigger story may be “Blockchain Technology” the architecture that Bitcoin is based upon. Utilizing Blockchain technology, assets can be digitized into Security Tokens/Digital Securities so that investors can own all or a fraction of the asset along with a bundle of rights associated with their ownership.
Security Tokens Will Revolutionize Real Estate Finance
A new form of blockchain based investing has emerged in the form of the Security Token. A Security Token Offering (STO) is a way to convert hard assets, such as real estate, into an asset backed security by fractionalizing ownership of the asset into rights for cash flow, appreciation and potential tax advantages depending on the location of the real estate.
As of December 2019, global stock markets were valued at close to $90 trillion. Debt markets (bonds, corporate paper and government obligations) were around $125 trillion and gold holdings around $8 trillion. Real estate is a very large asset class, estimated to be about valued at more than $280.6 trillion as of 2017 according to Savills World Research.
By any measure, real estate is by far the most significant store of wealth, representing more than 3.5 times the total global GDP.
The Future Of Real Estate Finance Is Here
Tokenization of single assets has already been happening. For example, the St. Regis Aspen Resort in Aspen, Colorado is an outstanding 179 room luxury hotel with majestic mountain views of beautiful Aspen Colorado. The owners of the St. Regis Aspen issued the Aspen Digital Token, a blockchain based Reg D 506 (c) security coin. This is an early example of a “tokenized asset offering” or more specifically a security token offering. Accredited Investors from all over the globe can now own a piece of the St. Regis Aspen Resort.
What Problems Does The Technology Solve?
• Democratization of Investing – Small Investors can Acquire Fractions of Real Estate Assets or Portfolios
• More Transparency – Smart Contract Technology Allows Participants to see and Monitor in Real Time
• Process Automation – Reduces Paperwork, Lowers Fees and Impediments for Investments
• Access To Global Pools of Capital – Opens Local Real Estate Markets To Foreign Investment
• Geographic Diversification – Investors can Better Allocate Among a Greater Array of Choices
• Liquidity Through Secondary Market and P2P Trading – Tokens are Optimized for Trading
• Real Estate Has Intrinsic Value – Token Value Is Tied To Tangible Asset
* Portions of this article were excerpted from an article written by Steve Kovacs for the website libertyfund.io
About the Author: Michael Flight, Principal with Concordia Equity Partners LLC
Michael Flight is a founding principal of Concordia Realty Corporation, Concordia Equity Partners LLC and more recently Liberty Token Real Estate Fund, a net leased property fund curated to create a conservative, safe haven portfolio of long term, Single-Tenant Net-Leased properties designed for geographic diversification, tenant credit diversification and industry diversification.
Michael is a real estate entrepreneur who is an expert in Retail Real Estate (Shopping Centers and Single-Tenant Net-Leased) investment, leasing, operations, and redevelopment. Michael has been active in commercial real estate over the past 34 years and has handled more than $500 million worth of real estate transactions. Michael has extensive experience in development, leasing, sales, property management, and innovative financing techniques.
Michael has been featured on The Real Estate Guys Radio Show, Cash Flow Connections podcast, the Real Estate Espresso podcast, the Kingdom Capitalist podcast, and Buck Joffrey’s Wealth Formula podcasts to name a few. Michael is also a well-known speaker at FreedomFest, Investor Summit at Sea, the Intelligent Investors Real Estate Conference, the Multifamily Investor Network Conference, and the Liberland 5th Anniversary Conference. He is a published author having been recently, and was featured in the #1 Amazon bestselling book: DESIRE, DISCIPLINE & DETERMINATION (2019). He is currently finishing a book on the benefits of Single-Tenant Net-Lease (STNL) real estate investments.
Michael has been elected to public office and is currently serving in his third term as treasurer of the Riverside Public Library. He also serves on the real estate investment advisory boards of two non-profits: Chicago Hope Homes and Sunshine Gospel Ministries and is a founding board member for Freedom of Life, a Romanian NGO helping women achieve liberty and build new lives while recovering from human trafficking.
Steve Kovacs is the CEO at Crestpoint in Timisoara, Timis County, Romania. Steve is an experienced technology leader, programmer and public speaker with over 10 years of experience in software development, sales operations, marketing and entrepreneurship, both in fields of business and non-profits (NGOs) including a term as the CEO at Asociatia Blockchain Romania. Steve specializes in Blockchain technology development and adoption, investments and startups (ICOs).
Concordia Realty Corporation has been successfully connecting sound economics with experience in real estate for more than 30 years. More recently, Concordia Equity Partners LLC was created to provide the same investment opportunities and expertise that our institutional partners have enjoyed over the years. We are a premier private real estate investment and management firm that specializes in Retail Real Estate, including Shopping Centers and Single-Tenant Net-Lease Detail/Medical (“Medtail”) properties. Our wide range of experience has uniquely positioned us to redevelop and repurpose properties that are experiencing disruptions related to technology and merchandising. This experience has built a skill-set that helps to add value to all of our real estate ventures.
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