Commercial real estate marketplace Red Swan has tokenized $2.2 billion in real estate through security token platform Polymath.
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 tokenization pipeline. The $2.2 billion represents 16 different Class A commercial properties based in Austin and Houston, Texas, Brooklyn, N.Y., Oakland, Calif., and Ontario, Canada.
Tokenization has struggled to transform the multitrillion-dollar real estate market as institutions hesitate to re-engineer back offices until they see liquidity. Graeme Moore, head of tokenization at Polymath, believes this project will work where others failed.
“I think what kind of happened in the past was there were platforms like Harbor, Propellr and Fluidity, which were really tech companies,” Moore said. “They didn’t really have the real estate background or the expertise to understand how the private real estate market works.”
New York City-based Red Swan is holding investors’ funds in escrow and plans to distribute shares in April. Meanwhile, Nwokedi said Red Swan is in the middle of becoming a registered investment adviser with the U.S. Securities and Exchange Commission, which will allow it to manage assets for accredited investors.
The tokens are ST-20 tokens running on Ethereum, but Red Swan plans to switch over to an Enterprise blockchain platform in the future for increased speed and security, Nwokedi said. Polymath only provides the tokenization technology while Red Swan appraises, markets and sells the deals.
Nwokedi, an 18-year veteran in the real estate space, turned to tokenization because he was looking for a way to open up high-quality real estate investment, usually only available for institutions and high-net-worth individuals, to accredited investors. Red Swan claims it has 30,000 accredited investors on its platform.
“You have a very large segment of…