ICO Analysis: Global REIT
Putting real estate and other real assets on the Blockchain has become a trend recently, and there are certainly cases where this makes a lot of sense both for the issuer and the investors. A Real Estate Investment Trust (REIT) is one type of fund that in theory could work well as a tokenized fund.
Some of the benefits of tokenizing a REIT are that essentially anyone can invest, no matter how small their budget is. It also represents a much lower barrier to overcome for real estate investment companies wishing to attract investors by bypassing all of the regulatory issues associated with the world of traditional finance, considering the high costs of developing a prospectus, having legal reviews and audits performed, etc.
Based out of Dubai, Global REIT claims to be the first Blockchain-based and Sharia-compliant REIT on the market.
The company’s idea of putting a REIT on the Blockchain is definitely good, and Dubai is well-suited as a starting point for their investment activities, given the large number of real estate investment opportunities there as well as many other REITs.
Although the concept is sound, we question the team’s readiness for an ICO, for several reasons.
Firstly, the white paper appears unclear and confusing in several key areas, lowering the credibility of the Global REIT ICO. This is especially true when it comes to the relationship between the two tokens that the company is issuing: GREM and GRET.
When investing in a security token, which is intended to produce income on a regular basis for the investors, it is extremely important that the team issuing the token is as transparent as possible. White papers for these types of ICOs should be very well-written, with a level of detail comparable to traditional REIT’s prospectus. Unfortunately, this is missing in the case of Global REIT.
A good example of the level of detail we expect from a tokenized fund is the Hyperion fund we recently reviewed. Feel free to compare these two white papers and judge for yourself.
According to Global REIT’s white paper, each subscriber will be offered two tokens:
- GREM: Global REIT Fund Manager token
- GRET: Global REIT Asset token
GRET is in other words the token that is backed up by the real estate assets the company plans to invest in. This token will, according to the white paper, pay out a monthly dividend in US dollars and Tether (USDT).
It is unclear exactly how much the monthly dividend to holders of the GRET token will be, but the white paper states that GRET holders will earn a “stable ROI of 8% p.a. on its first acquired asset.” The next sentence states that “this income is before any expenses related to operations are incurred.”
The above paragraph is all the information that the white paper contains regarding return on investment for the GRET token, and in plain English it means that we do not know how much the final return on investment will be.
The listed ICO price of the GRET token is $1.00, with bonuses available during the pre-ICO sale.
The token distribution will be as follows:
The white paper is also short on details when it comes to team members’ backgrounds or future growth plans of the REIT. An example is the bio of the founder, copy-pasted from his LinkedIn profile, simply stating that he is a “great leader and business owner” without offering anything to back this claim up.
The second most senior person listed on the website is Chief Operating Officer Paul Christodoulou. He is currently working as Managing Director for Sotheby’s International Realty in the Gulf Area. According to Mr. Christodoulou’s LinkedIn profile, he took up the position in Sotheby’s in April 2018, and there is no mention of Global REIT on his profile, putting into question his level of commitment to the position as COO of Global REIT.
To make things even more confusing, Global REIT’s blog on Medium lists Mr. Christodoulou as CEO of the company, contrary to the information given on their website and in the white paper.
Indian national Vijay D Vyas is listed as Director Acquisitions – India. To our delight, this also matched the information on his personal LinkedIn profile. Mr. Vyas has over two decades’ worth of experience from various companies in the IT sector in India, China, and the UAE.
Finally, it should be mentioned that the website does list all team members’ personal LinkedIn profiles, which is a step in the right direction.
A tokenized Real Estate Investment Trust is something that could absolutely work, as long as the team behind it does solid work in preparing, marketing, and structuring the project. Transparency, credibility, and trust in all areas are also key issues for anyone launching a tokenized investment fund in today’s challenging ICO landscape.
We are not sure if Global REIT has achieved the level of transparency and trust that we would want before putting money into a tokenized investment fund.
Most team members seem to only have a half-hearted commitment to the project, and even the management of their Telegram has been outsourced to a group of ICO consultants.
Further, both the generic-looking white paper and website is sketchy when it comes to details of the company’s plans, dividend pay-out, and plans for future growth.
- Putting real assets on the Blockchain is a trend that is currently gaining traction in many areas. There is no reason why this wouldn’t work for a Real Estate Investment Trust as well, and Dubai is a good starting point as a base of operations. +3
- A tokenized REIT would open up this type of investment opportunity to a lot of people who in the past could not qualify to invest in a traditional REIT because of high minimum investment requirements, geographical restrictions, or banking issues. +3
- Other REIT’s may find the opportunity to expand their reach into Blockchain interesting, and therefore choose to invest in Global REIT rather than setting up their own infrastructure from scratch. +2
- The team member’s commitment to the Global REIT is put into question with very few of them mentioning anything about Global REIT on their personal LinkedIn profiles. This includes senior members of the management team such as the COO and CFO. -3
- The white paper is very generic-looking and offers few details on this investment opportunity, with little information provided about future plans and dividend payments. -3
Although the idea of a tokenized Real Estate Investment Trust is appealing, we have doubts regarding the level of preparedness, transparency, and information provided about the Global REIT ICO.
We arrive at a score of 2 out of 10 for the Global REIT ICO.
- Token Type: Utility (Security)
- Platform: Ethereum ERC20
- Symbol: GRET
- Pre-ICO: May 1 to May 31, 2018
- Public ICO: June 1 to June 30, 2018
- Token Supply: 75 million (GRET)
- Tokens Available for Sale: 16,650,000
- Price: 1 GRET = $1 (1 GREM = $0.07)
- Minimum investment: 0.1 ETH / 0.01 BTC
- Payments Accepted: ETH, BTC, USD
- Jurisdictions Barred from Participating: None mentioned
Featured image from Pixabay.
Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term trading. The author has no investment in Global REIT at the time of writing.