July 5, 2022
Digitization for Closed End, Interval, and Private #CRE Funds will be one of the largest drivers of Tokenization. Apex Group Ltd led by Georges Archibald who leads their digital initiatives will be a groundbreaker in this space in partnership with Tokeny. When the tokenized fund is connected to real time surveillance of the underlying asset and a third party mark is being set on the asset (Cushman & Wakefield, Houlihan Lokey, ValuStrat, Deloitte, JLL, CBRE and others) the listing of these assets on Digital ATS and global Exchanges will transform Real Estate Funds.
Last year Brookfield Asset Management wrote an excellent piece on Real Estate Secondaries. “Opportunities Abound for Real Estate Secondaries” based on a world view where there is no marketplace other than an OTC/direct/underwritten placement or GP led recapitalization. We believe price discovery utilizing fully observable inputs into valuation models, sophisticated models, and in period comps will not only open the door for better accounting treatment (ASC 820, FASB 157, IFRS 13) but also drive the tokenization and listing of these assets on exchanges where they are/were distributed in a bulletin board manner (no market maker). This data enhanced, monthly pricing will drive much greater volume and liquidity for these funds.
The US public markets are sub $40 Trillion with daily volumes at near 0.25 trillion in the US. This compares with $8-ish billion of annual turnover on over $1 Trillion of these type of Real Estate Funds. This listing of Tokenized assets on ATS’ like Oasis Pro Markets will never hit the turn over of public markets but will grow dramatically (minimally 10-50x in our opinion) as price discovery and listing on ATS and exchanges grow. We believe that we will see these on Nasdaq, NYSE, Euronext, Rialto Markets, ADDX, Texture Capital, tZERO Group, Inc., and others.
This is good for the LP, this is good for the GP, it is good for the market, and the transparency has massive regulatory tailwinds. Price discovery is the killer app for blockchain where the ability to commute trust in source documentation and real time observability of inputs will transform data rich, low frequency trading assets. When the Altus Group fully integrates this with Argus Enterprises Inc, the transformation in the industry will be rapid. The market places that are ready will capture huge market share. We see #CRE leading this, but private credit, private equity, and infrastructure are moving fast as well. Inveniam.io is the data architecture that is the foundation for all of this, where there is not a centralized data base, but a decentralized data architecture, that will power this trading of private market assets globally. #tokenization