BaFin, Germany’s financial regulatory authority, has approved the first Security Information Sheet (SIS) which will allow retail investors to participate in a real estate security token offering.
Press Release – updated: Oct 30, 2019 14:13 CET
BERLIN, October 30, 2019 (Newswire.com) – BaFin, Germany’s financial regulatory authority, has approved the first Security Information Sheet (SIS; in German: “Wertpapierinformationsblatt”) for a public security token offering in Germany.
The security token offering represents profit participation notes for a real estate property in Wiesbaden, Germany. The real estate is valued at €2.2 million. The notes’ returns correlate with the rental income of the property’s special purpose vehicle (SPV), Property Schönbergstraße 31 GmbH.
An SIS is required for public securities offerings in Germany with a total aggregate subscription volume of up to €8 million. Offerings worth €8 million or more require a full prospectus.
The security tokens are registered on the blockchain in a process commonly referred to as ‘tokenisation’. ‘Tokenisation’ allows for small- and medium-sized enterprises (SMEs) to access the capital market with less financial and bureaucratic overhead.
“Security token offerings present a financing option where bank loans are not available,” said Axel von Goldbeck, Partner at the global legal business DWF. “This is a great benefit for SMEs who have problems securing bank loans to access capital markets, and for property owners in particular.”
“New technologies such as blockchain and smart contracts eliminate unnecessary intermediaries, reduce costs, and accelerate transactions,” said Peter Schott, Manager, Property Schönbergstraße 31 GmbH. “Less management effort and increased transparency is a win for both manager and investors.”
The technology and portal unlocking this potential are provided by the Berlin-based company Brickblock. Brickblock also runs ScalingFunds, a platform that provides fund managers with digital tools to more efficiently raise and manage investments. The company remains solely focused on servicing institutional clients and accredited investors and lends its whitelabel product for the public security token offering to showcase the potential of blockchain technology in the retail sector.
Until recently, it was unclear when this potential could be realised. That changed on September 18, 2019, when the German federal government published a comprehensive blockchain strategy, including a framework for public security token offerings. BaFin’s approval of the Property Schönbergstraße SIS came less than a week after the strategy was published.
“I am very happy that the German government has decided to introduce blockchain regulations that allow for de-materialized notes,” said Jakob Drzazga, CEO and Managing Director, Brickblock. “It is time for the industry to benefit from a more efficient and transparent way to invest in securities.”
Brickblock’s technology is currently being used by Peakside Capital to manage a real estate investment vehicle with an equity target of €200 million, and by Uavend Property and Leisure to manage a vehicle carrying a €35 million property in the United Kingdom.
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Source: Brickblock Digital Services GmbH