$280 Million Real Estate-backed Tokenized Bonds to Be Issued to Investors Worldwide

Fundament, a blockchain firm focused on developing products for the real estate industry, has reportedly obtained approval for issuing a crypto token-backed bond to individual traders and investors. 

The Berlin-headquartered company announced on July 23, 2019 that it was granted permission by Germany’s financial regulator, BaFin, to conduct a €250 million (appr. $280 million) token sale. 

Tokens Offered to Individual Retail Investors Throughout the World

According to details shared by Fundament’s management, the regulated real estate-backed bond will be offered to retail investors located throughout the world. Notably, there’s no minimum investment required to participate in Fundament’s token sale.

For example, investors based in Asian countries such as Singapore or Malaysia may purchase €1,000 worth of Fundament’s tokenized bonds which would represent an actual investment in Germany-based real estate properties.

First Time Approving Blockchain-based Real Estate Bonds

In statements shared with Coindesk, a BaFin spokesperson stated:

“We can confirm that we granted approval for a Fundament Group prospectus. It has indeed been the first time we have approved a prospectus regarding blockchain-based real estate bonds, but not the first time in respect to blockchain technology as such.”

As noted by the Fundament team, the firm will begin marketing its ERC-20 compliant crypto token in August 2019. Commenting on the development of the tokenized bond, Florian Glatz, Co-Founder of Fundament Group, clarified that real estate-backed tokens have been created by several other companies. 

However, tokenized bonds issued previously were introduced through private placements which did not need a prospectus or regulatory clearance.

“The First Mass-Market Tokenized Real Estate for the World”

Elaborating on why his firm decided to obtain regulatory approval, Glatz said: “The reason we went through this long tedious process with regulators was to get rid of any restrictions.” 

In most cases, these types of projects are required to have a minimum investment amount of at least €100,000, Glatz noted. Other restrictions on tokenized offerings may include limiting the number of investors that can participate in the initiative. 

Since Fundament’s tokens do not have to follow these guidelines, Glatz referred to his project as “the first … mass-market tokenized real estate for the world.”

Security Tokens Increasingly Being Launched on Blockchain Platforms

In March 2019, Inveniam Capital Partners released $260 million worth of property-backed tokens via four separate private transactions involving various real estate projects. 

Last year, Templum Markets offered security tokens that represented shares in a Colorado-based ski resort. The tokens were sold in exchange for Bitcoin (BTC), Ether (ETH), and USD.

Apart from the real estate sector, firms like UK-headquartered Nivaura have considered several regulated, tokenized debt and equity shares, which may be sold through secondary markets. 

Backed By Five Different Real Estate Projects

Notably, Fundament’s real estate token will be backed by five different construction projects, three of which are located in Hamburg. One of the projects is based in Frankfurt and one in the University town of Jena. 

After completion, the properties are expected to cover an area of 680,000 square feet, and will consist of various commercial, residential, and hotel properties. 

Explaining how shareholders may earn profits on their investments, Glatz stated:

“[Token investors have] a legal claim of the holder against the issuer of the bond to pay them an annual dividend of around 4-8 percent.” 

“Once the run time of the fund is over and there is an exit, then the token holders get the complete value that was within this fund,” Glatz added.

Fundament’s tokens may be purchased from the firm itself (instead of a bank) for bitcoin, ether, USD, or Euros.