tZERO, Overstock’s blockchain subsidiary, said it will help tokenize at least USD 25 million of the value of Alliance Investments’ River Plaza, a 180-unit luxury residential development that is located in Manchester, UK.
In a partnership announcement, tZERO said that River Plaza is "the UK’s first real estate-backed security token offering (STO)" and the first project of Alliance Investments’ real estate tokenization plan. The UK-based direct-to-developer real estate investment company aims to tokenize approximately USD 640 million of real estate projects across the UK over the next several years.
The River Plaza STO, slated for Q1 of 2020, will be digitized using tZERO’s tokenization technology and Megalodon’s advisory services and issued on the Tezos (XTZ) Blockchain. At pixel time (16:09 UTC), XTZ trades at c. USD 0.91 and is up by 5% in the past hour and by 4.3% in the past 24 hours, while majority of other coins from the top 20 by market capitalization are in red.
"We strive to stay ahead of the innovation curve and believe that security token offerings are the future. They are more efficient, cost-effective, autonomous and democratic in comparison to traditional financing," Alliance Investments CIO Rani Zahr was quoted as saying.
According to the announcement, while the real estate market is greater than the value of all stocks, shares and stocks combined, it is one of the most difficult asset classes to invest in:
"Only one third (USD 81 trillion) of the global real estate asset are readily investible at scale, with the rest not being accessible to public investors in a meaningful way."
How a real estate-based STO works:
A real estate-based STO is the process of issuing digital equity securities in a holding company that owns the real estate asset. More generally, security tokens can be structured to represent a variety of ownership and economic interests in an underlying asset, such as equity in a company that owns the asset, an interest in debt secured by the real estate, a stream of income based on cash flows from the asset or an interest in the capital growth of an off-plan project, to name a few.
Meanwhile, as reported, a Cayman Islands-based holding company, La Estancia Holdings Ltd., is also offering real estate investment through STOs, given that real estate STOs are “future-proof investments which provide more liquidity than a traditional real estate investments.” Moreover, the company is advertising a chance to gain citizenship in the Dominican Republic (not to be confused with Dominica) among other benefits to their STOs investors.