A Pension Real Estate Association PREA Quarterly article examines the tokenization of real estate interests on the blockchain. The article analyzes potential benefits of tokenization and addresses some of the legal and regulatory considerations implicated when employing blockchain technology in the real estate industry.
The authors explain that the ability to own fractions of specific properties as tokens may offer a new means of gaining exposure to and trading in real estate assets. Tokenization aims to provide enhanced liquidity opportunities for real estate assets, along with greater efficiency, cost savings and democratization.
Once established, blockchain digital ledgers allow for low cost issuance, transfer, settlement and trading processes via smart contracts. Real estate tokens can be programmed to automate governance and compliance requirements such as transfer restrictions, lock-up periods, voting rights and dividend payments. These cost-saving efficiencies provide fund managers with a method of raising capital from a global pool of potential investors with lower minimum investment requirements.
The article was co-authored by litigation & enforcement counsel Mark Cianci and real estate associate Justin Kaufman.
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