How do corporations make security token offerings available for investors?
What is RealT?
RealT is an entity that designates ownership rights of real estate through Ethereum Blockchain tokens that replace paper deeds.
What are RealTokens?
RealTokens are the asset in which the investor can purchase. Ownership of the tokens represents ownership in the underlying LLC. Each property that is acquired by the LLC is paired with a unique token to accommodate it.
How does RealT conduct Security Token Offerings?
The Delaware based company known as Real Token, Inc creates a separate entity to possess and convey ownership in the properties. That entity is known as Real Token, LLC. This LLC lessens the workload associated with the legal process of providing a security offering in the US. Each property is paired with its own unique token, deducing that each property and token that is being offered is a unique investment offering. The Series LLC which differentiates each investment offering from the next allows the tokens to not be collateralized with or affected by any other Series LLC. The sole ownership and governance lie within the token and the Non-fungible Tokens (NFT) behind it. The Private Placement Memorandum that is required by law for each offering is now considered a master PPM and each property offering only now requires an amendment to the encapsulating PPM.
How does this change Real Estate Investing?
A tokenized real world asset democratizes the opportunity for real estate ownership while simultaneously lowering the barriers of entry of real estate investing. The token conveys verifiable ownership in the underlying asset. These tokens are one of a kind and cannot be duplicated (non-fungible). In fact, providing digital ownership through a zero knowledge proof allows the blockchain consensus to verify and transfer ownership independent of an intermediary. Tokens fractionalized ownership, much as shares in a company do. The binary nature of real estate used to be own or do not own. Fractionalization breaks this notion. It also expedites the process in which real estate ownership can be acquired and enhances the liquidity of real estate investing if an investor wants to sell or realize gains.
What information is available about the STOs?
RealT can sell to US Accredited investors, Reg D and to other non-US persons under Reg S. RealT must be transparent and compliant with regulation standards and bylaws. To be fair and accurate in their disclosures is required and they must give necessary information, so you are able to make an informed investment decision. RealT will provide you with ongoing operation and evaluation reports.
What are the underlying assets?
Properties are acquired through a team of investors and vary from one to the next. Residential Real Estate is the first for RealT to begin with, but in the future the company plans to start acquiring commercial, hospitality and other revenue generating properties to diversify the portfolio. RealT also can invest in non-real assets like loans, MBS, and art.
How does the LLC transfer ownership to investors?
Tokenized interest in the LLC conveys the sole ownership of the underlying asset. Each property has its own LLC. Escrow arrangements allow the LLC to have the deed transferred. With an independent escrow agent to hold the papers for the LLC, RealT can comply with the US governing escrow arrangement.
How are the assets managed?
Property management is outsourced to local professionals. These companies are responsible for renting the property, collecting income, and property maintenance. This is an expense deducted from gross monthly income.
What happens to my tokens if RealT goes out of business?
The LLC is independent and intact if the corporation were to fall. The LLC legally holds the property for taxes, accounting, liability, and ownership purposes. The tokens can be moved to the market and if security transfer laws are followed. You are the owner of the tokens.