On February 25, our company, Jointer.io, submitted a substantial offer to purchase the Chrysler Building. The building, an iconic piece of the New York skyline, was put up for sale in January and its estimated value is $800-900 million. We offered $1.5 billion dollars using our new model of tokenization, which means that unlike traditional commercial real estate transactions, the transaction would utilize Jointer debt tokens issued on the Ethereum blockchain from which the ownership and brokers would receive cash for their equity.
Our offer was rejected. We can only assume it was due to the fact that tokenization is still a relatively new concept of value transaction. It’s often confused with cryptocurrency, which it is not. Couple this confusion over what tokenization is with the tried and true commercial real estate transaction processes, which relies on When an offer to purchase a building via tokenization crosses the broker’s desk, is it rejected because the process – and the value – is not understood?
Experts across the field are calling 2019 the year of tokenized securities, according to the Kepler Finance database. 32 Digital Securities Offerings have been announced across the various issuance platforms. The Securities and Exchange Commission has recognized and is regulating STOs. The market cap for STOs has been placed at $10 trillion by 2020.
Yet, the commercial real estate industry hesitates.
Early adopters of tokenization understand the immense value of this method of unlocking the equity of commercial real estate properties. In fact, the idea of submitting this offer for the Chrysler Building was prompted by a group of investors at a New York City meeting who urged our company to approach the iconic landmark building’s broker. Yet, our offer was not considered by the broker.
While the concept of tokenization may seem foreign to some, this isn’t the first time a new way of financing a New York landmark has been proposed. In 2013, the owners of the Empire State Building approved a plan to take the tower public through a real estate investment trust. This puts us in good company, as the decision to offer the iconic business to the public faced major pushback at the time. The tower’s ownership remains consistent and the property viable, as we would anticipate as well for the Chrysler Building under our tokenization model which allows the principal a share of the profits.
So who wins in a tokenization offer? The public, the investors, New York City, and sellers.
Our tokenization model is designed to help property owners unlock up to 100% of their equity. If the owner chooses to stay as a Principal to manage the property, they are also eligible for asset management fees plus 50% fromJointer’s future profits from the property – which can boost ROI significantly.From a risk and profits point of view, our new tokenization solution can generate the property owner and investors better ROI than any purchasing, refinancing or investment vehicle out there.
“Jointer’s new tokenization approach presents a better solution that has the potential to disrupt the entire real estate industry,” said David Weild, former Vice Chairman of NASDAQ and a Jointer Advisor.
Our plan included massive renovations of the building to utilize the vacant space for decentralized companies looking to utilize blockchain technology to benefit the world. We respect history and the old yet strive for the greatness in a better shared future for New York City and the world at large.
Yet, despite all of these efforts to not only purchase the building but make it viable, our offer went unanswered. And maybe, too, is the question of how will commercial real estate brokers, who must protect their market cap and commissions, will respond to this coming disruption in the industry. Will they embrace tokenization and find a way to leverage it for their clients? Or will they favor traditional offers which that protect their high fees and reduce their risk?
The best place to start is in understanding. Tokenization is not just around the corner, it’s here. Properties such as the Chrysler Building will benefit from this new method of transaction when all parties involved understand and embrace the change.