One blockchain-enabled real estate fund is going to Puerto Rico amid growing interest in vehicles run on the technology, PERE has learned.
The founders of a Palo Alto, California-based private equity blockchain platform called Swarm Fund, which launched a US-focused real estate fund earlier this month, are bringing another vehicle to market next week. For the latest fund, Viejo San Juan Comunidad RE Holdings Fund, the firm is seeking to raise at least $25 million and up to $100 million. The vehicle is understood to be the first blockchain-enabled real estate fund.
With capital from the accredited investor-backed vehicle, the firm plans to invest in property redevelopment in Old San Juan, Puerto Rico, focusing on office and short-term residential properties that target both the local community and Puerto Rico’s emerging group of crypto entrepreneurs, many of whom are relocating to the island for tax benefits and other reasons.
Led by Stephen Inglis and Mercy Zayas, the firm is targeting an 8 percent net internal rate of return for the fund. Inglis last managed a Puerto Rico-based agriculture-focused vehicle for EB-5 investors and previously ran a financial technology company, according to his LinkedIn profile. Zayas is a commercial real estate broker in San Juan, per her LinkedIn profile.
The Puerto Rico fund comes as more blockchain-enabled vehicles come online globally.
One lawyer who works in the space told PERE the industry is still in its infancy, with many legal hurdles still to overcome. He likened it to the legalization of marijuana in the state of Colorado in 2012, which led to a “burst of opportunity” where entrepreneurs rushed to set up cannabis-related funds without understanding federal law.
While it’s early days, a few firms are jumping in to launch real estate funds through initial coin offerings, in addition to others crowdfunding capital for real estate projects through cryptocurrency.
Funds currently raising capital include:
- SwissRealCoin: seeking to raise a minimum of SFr 30 million ($31 million; €25.5 million) and up to SFr5 million through fiat money, bitcoin and ethereum. The group is investing in core-plus and value-added Swiss commercial real estate with plans to launch additional country-specific vehicles, starting with Germany, next year. The fund is currently raising capital from friends and family in its initial round and opens to all investors in late May. SwissRealCoin is led by Brigitte Luginbul, a former vice president at JLL Switzerland.
- Evareium: launched last month, raising capital through bitcoin and ethereum through the end of April. The Dubai-based fund, run by a company called Evarei Management, is investing primarily in Dubai and Abu Dhabi, as well as elsewhere in the United Arab Emirates and in the wider Gulf region. The firm is seeking to raise up to $150 million in its first round of funding to invest in serviced apartments, hospitality, industrial and retail real estate and has inked its first deal, a 700-apartment portfolio in Dubai. EVM was founded by Stefan Hickmott, who previously was the chief investment officer for CiRQ Investment Management, a regionally-focused alternative asset manager, according to his LinkedIn profile.
- One: currently raising a $50 million friends-and-family round through May, with a public round to raise up to $100 million starting in May, accepting fiat currency, bitcoin and ethereum. The firm is investing in Europe and plans to ink its first deal in April. The fund is founded by Will Andrich, who previously ran Moscow-based alternative asset manager Astor Capital Group.
Funds set to launch this spring:
- Empyre: the Beverly Hills-based firm is launching a public ICO at the end of May. The fund will invest in opportunistic and value-added US real estate, with deal sizes ranging from $50 million to $500 million. The fund’s target size has not been disclosed.
- REALECOIN: run by New York-based real estate investor Ruben Azrak, the fund is seeking to raise at least $1 million and up to $50 million, solely through fiat currency, to invest in US multifamily. The fund has one seed property, a multifamily building in New York’s Upper East Side neighborhood, and will open a public token sale this spring. The fund is targeting a 12-14 percent IRR.
- Monaco Estate Token: seeking to raise at least 2,000 etherum ($830,000; €674,000) and up to 50,000 ethereum, the fund will invest in luxury apartments in Monaco. Run by Daniel Golding, a web developer turned real estate entrepreneur, the fund’s presale starts next month.