Harbor — the blockchain-based security token platform — recently launched along with its first investment option, a private real-estate investment token from Convexity Properties for The Hub at Columbia building, located in Columbia, SC.
Speculation of the security token market has been rampant since the extended demise of the ICO. Harbor’s platform launch represents the beginning of these platforms, with the first offering targeting fractionalized ownership of REIT commercial real estate.
Tokenizing The Hub at Columbia REIT
The inaugural offering from Harbor is The Hub at Columbia REIT, a commercial student housing property located near the University of South Carolina. Owned by Convexity Properties, The Hub is allowing registered investors with Harbor to purchase token shares in the building, totaling 955 in all.
Each share costs $21,000, and it is one of the first examples of fractionalized ownership for private, commercial real estate utilizing a blockchain. The shares are ERC-20 tokens on Ethereum that represent ownership in the building. After passing the harbor KYC compliance process, investors are free to purchase shares in the building at a much smaller cost than traditional methods for investing in the property.
For instance, enabling more investors to purchase tokens in the property reduces the minimum cost per share and opens up investment to a wider audience. Further, private sales of this sort typically have more extended periods of share selling locks. With Harbor, the lock-up period for The Hub is 90 days, granting investors much more flexibility than with typical REIT investments.
Payment for shares can be completed in Bitcoin, Ether, or USD and Convexity is working with BitGo for custody of cryptocurrency assets. Additionally, external auditing will be completed by major accounting firms to monitor the flow of payments and returns. The sale begins today, 11/27/2018.
Tokenizing Financial Assets
The concept of security tokens has gained significant momentum throughout the last few months following the decline in ICO popularity, increasing regulatory scrutiny, and a broader recognition of blockchain’s potential to enhancing the flexibility of conventional financial assets. One of the primary practical cases that are cited as deriving direct benefits from tokenization is the commercial real estate industry.
Platform’s like harbor decentralize the investing structure so that costs for participating are reduced. Moreover, the barrier to entry for more retail-oriented investors is minimized by Harbor’s KYC compliance process. Such a dynamic enables better market depth by opening the asset to a larger audience of potential investors and allowing the token — representing a share in the property — to be traded on secondary markets. Regulatory restrictions and requirements can be hardcoded into the token directly, and its existence as an ERC-20 token makes trading — particularly settlement — much more efficient.
Harbor’s platform launch is the beginning of what is sure to be a continually evolving trend at the intersection of legacy finance and cryptocurrency platforms.