$18M Aspen Hotel Sale Lands as First Big Commercial Real Estate Blockchain Deal
By Matt Grossman October 9, 2018 10:00 am
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Elevated Returns, an asset-management company controlled by investor Stephane De Baets, has sold $18 million in securitized tokens that represent ownership stakes in the firm’s St. Regis resort in Aspen, Colo., the first major commercial real estate transaction facilitated by blockchain technology, the company announced.
A group of accredited investors bought the tokens through a portal administered by digital asset platform Templum Markets, which will also allow secondary trading of ownership in the luxury hotel. A spokesman for Elevated Returns declined to identify the investors who participated.
The tokens function, in effect, as shares, backed by blockchain infrastructure, in a new entity called Aspen Digital, which provides investors equity exposure to the Aspen, Colo. resort. Blockchain, the technology that also underlies cryptocurrencies like Bitcoin and Etherium, allows computers to independently verify ledgers and other transaction records. Boosters say it could reduce financial reliance on authoritative institutions like banks, courts or governments to referee transactions and property ownership.
“The Aspen Digital closing not only represents a new coin on the market that is asset-backed, it also establishes a blueprint for future real estate tokenization,” Jason Kirschenbaum, director at Elevated Returns, said in a statement. “The future of real estate investing is one that provides global exposure, transparency, public access and liquidity, all of which are elements that can be delivered through blockchain technology.”
Elevated Returns has trumpeted big plans for the St. Regis for months, first proclaiming in February that it would form the hotel into a pioneering single-asset REIT. Those plans petered out early this year, before De Baets emerged again in late August with his tokenization strategy, saying at first that the initial offering would conclude last month.
“As a firm, we’ve always been searching for ways to inject liquidity into the real estate [asset] class,” De Baets told Commercial Observer in August. “A lot of money is being deployed towards real estate tokenization platforms. We wanted to be the first one to tokenize [a flagship property].”
Each of the 18 million tokens sold for $1, and together represented an 18.9 percent ownership stake in the St. Regis, valuing the property at $224 million. Elevated Returns will keep control of the other 81.9 percent. Every investor had to plunk down for a minimum of 10,000 tokens.
The crowdfunding website Indiegogo also played a role in the deal by listing the transaction to its network of accredited investors.
Elsewhere, Elevated Returns also said it was bidding for nearly 25 percent of a Thai financial company, Seamico Securities, with a specialty in digital assets. De Baets noted in a statement that Thailand has a pioneering framework for administering blockchain-ish projects and that the acquisition would help his company expand its presence in Southeast Asia.
