Commercial real estate startup Red Swan has tokenised $2.2 billion in real estate through security token platform Polymath.
The New York City-based commercial real estate investment platform, Red Swan , hopes to make commercial real estate more affordable. By tokenising a large asset’s value into smaller investment allocations, the company plans to help investors participate in real estate who were traditionally unable to do so in the past because they didn’t have enough equity.
According to Red Swan CEO Ed Nwokedi, $780 million of that is available to investors in pre-sale, while the company has another $4 billion in real estate in its pipeline. The $2.2 billion represents 16 different Class A commercial properties based in Austin and Houston, Texas, Brooklyn, N.Y., Oakland, California and Ontario (Canada).
Red Swan says its platform provides affordability, liquidity and efficient transparent ownership of SEC-approved security tokens. While banks will usually allow about 50 percent leverage on a given asset, Red Swan allows property owners to tokenise 90 percent of the net equity underlying a property.
Red Swan’s ST-20 tokens runs on Ethereum and investors’ funds will be held in escrow with plans for shares distribution in April. Currently Red Swan is in the process of becoming a registered investment adviser with the U.S. Securities and Exchange Commission, which will allow it to manage assets for accredited investors.
Nwokedi plans to create a new investment category of commercial real state investments with more than $500 billion in security token opportunities. Red Swan monetises by taking a percentage of the equity that’s issued, and tokens sit in a digital wallet custody by Prime Trust that is insured up to $1 billion.
Nwokedi, an 18-year veteran in the real estate space, turned to tokenisation because he was looking for a way to open up high-quality real estate investment, typically available only to institutions and high-net-worth individuals. Red Swan claims it has 30,000 accredited investors on its platform.
“You have a very large segment of investors who are between half a million and $10 million that were not participating because they just don’t have enough equity to buy a quality piece of real estate”
– Ed Nwokedi Red Swan CEO.