Digital Assets: Vertalo To Launch STOs For REI Capital, A New Commercial Real Estate Fund
Vertalo and REI Capital Growth to introduce security token offerings (STOs) of equity and debt each of $50 million.
Vertalo is a digital transfer agent that specializes in the tokenization of assets. Its real estate division, Vertalo Real Estate (VRE) launched in June 2020. VRE focuses on the digitization and tokenization of real estate assets. REI Capital Growth, an innovative commercial real estate (CRE) fund, has licensed Vertalo’s platform for the launch of two security token offerings (STOs) utilizing a Reg S exemption from registration. (CROWDFUND INSIDER)
STOs will democratize U.S. commercial real estate
Alan Blair, CEO & founder of REICG had this to say of the prospects of tokenized CRE:
“The blockchain visionaries have been saying from the very beginning that this technology will enable the ‘democratization of U.S. commercial real estate’ and it will. But in order for this to become a reality, there need to be some real estate visionaries with a holistic understanding of the entire ecosystem, who can navigate the complex web of regulations and technology and bring a properly structured investment product offering to new global investors, who will actually benefit from the added liquidity value an STO has to offer. Much in the same way that the introduction of the REIT structure in 1960, for the first time allowed small investors access to commercial real estate investments”.
REICG – REAL ESTATE INVESTMENT FUND
REI describes its fund as a new way to invest in US Commercial Real Estate utilizing a long-term growth strategy. It is launching two real estate security token offerings secured by commercial real estate.
The first offering (from REI Capital Growth) is an equity-based, international STO. Designed as a “perpetual growth machine,” it is open to both global and U.S. investors.
The second launch (through REI Capital Lending) is a debt model that “corporatizes” and replaces traditional mortgage debt. REICL seeks to deliver of 5.5% coupon rate with the pay rate of 4.00% interest providing income paid quarterly.
$50 million Equity STO for Growth – by REI Capital Growth
This new model is the combination of an “Interval Fund” structure wrapped in a “Permanent Capital Vehicle (PCV)” with beneficial ownership recorded as a “Security Token Offering (STO).”
The fund will purchase stabilized commercial properties with regular cash flow. It will accumulate and reinvest 90% of the free cash flow in yet more stabilized properties with leverage. The fund, therefore, hopes to grow the real estate portfolio exponentially. It will reserve 10% of the free cash flow for redemption to liquidity seeking investors.
$50 million Debt STO for Income – by REI Capital Lending (an REICG affiliate)
This innovative offering is based on the combination of a “Corporate Bond” and a structured “Real Estate Credit Facility”, made possible by the “Portfolio Debt Exception” recorded on the blockchain as a “Security Token Offering (STO).”
Issued as the REICL Bond STO, the funds raised will be invested in portfolio acquisitions subject to the following:
- loan to value ratio of 65%
- debt service coverage ratio of 1.75X
- all acquisitions will be based on an appraisal from a nationally recognized appraisal firm
Related Story: Vertalo to Tokenize Real Estate in Mexico and Canada
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