Fundament, a blockchain startup has received the green light to issue the first tokenized real-estate backed bond that can be widely offered to individual investors. The Berlin-based firm has obtained approval from Germany’s financial regulator, BaFIN, for the 250 million euro ($280 million) offering.
As a regulated token, it will be open to any retail investor anywhere with no minimum investment restriction. The token, which Fundament will start marketing next month, will run on the public ethereum blockchain using the ERC-20 standard
Florian Glatz, Co-Founder of Fundament Group, stated, “Blockchain real estate is a busy space. Typically what has been seen in the past are private placements that have not required a prospectus or a financial market authority’s approval.
In an interview with Coindesk Glatz stated, “The reason we went through this long tedious process with regulators was to get rid of any restrictions. Normally these projects are limited either by the minimum investment amount, which would be north of €100,000 or limited heavily in the amount of investors you could have. So it’s the first really like mass-market tokenized real estate for the world.”
Fundament’s token will be backed by five separate construction projects, three in Hamburg, one in Frankfurt and one in the university town of Jena. The portfolio, including residential, commercial and hotel properties, would total more than 680,000 square feet upon completion. The company projects a return on the projects in the mid-to high single digits.
“Holding a token enshrines a legal claim of the holder against the issuer of the bond to pay them an annual dividend of around 4-8 percent, and obviously 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 said.
To comply with know-your-customer (KYC) and anti-money-laundering (AML) regulations, IDnow will verify prospective token buyers’ identities. The vendor’s process takes three minutes on average before a user can purchase tokens, Glatz said.
Buyers can pay for their tokens with bitcoin, ether, U.S. dollars or euros. For those who pay fiat, Fundament says it will deliver the tokens on a hardware device.