Alterra is offering shares at $1 per token in a 24-story housing project in the heart of Silicon Valley.
Dallas-based developer Alterra Worldwide is about to break ground in San Jose, CA on one of the most ambitious tokenized CRE developments to date, a 24-story, 374-unit Class A multifamily residential high-rise known as Tower 27.
The $237-million tower, to be completed in 2024, will serve as housing for an influx of 20,000 new tech workers from nearby expansions of Google and Adobe in the heart of Silicon Valley. Google is building an 80-acre tech campus a few blocks from the Tower 27 site in San Jose.
Alterra is selling 100 million tokenized shares in Tower 27, under the brand T27 Silicoin (T27S). Each T27S token is valued at $1.
These asset-backed security tokens, issued on Ethereum blockchain’s ERC-20 token standard, are official representations of bearer stocks of Tower 27 Partners LP. Alterra is heavily promoting the T27S tokens as part of what it says is a five-year investment strategy for Tower 27.
In addition to annual dividends, token holders are part of a profit-sharing system that Alterra says will increase their estimated IRR by more than 18 percent over five years.
However, Alterra also is going to great lengths to assure institutional investors that Tower 27 will be completed on schedule regardless of how many T27S tokens are sold.
The company says all of the funds needed to construct the apartment tower are being sourced through “traditional financing methods” simultaneous to the T27 Silicoin offering.
Alterra CEO Mike Sarimsakci says construction on Tower 27 will move forward “no matter the success” of the digital asset offering.
Security tokens have been hailed as the key to democratizing CRE investments by enabling investors to purchase fractional ownership in properties for as low as $1 per share from online digital asset trading platforms, with each transaction securely and transparently recorded on a blockchain.
Tokenized real estate on blockchain is part of a trend toward “crowdfunded ownership” that is expected to open access to the largest asset classes, including residential and REITs, to anyone who wants to invest in real estate without having the funds for an entire property transaction.
Emerging digital asset trading platforms, including those that specialize in tokenized CRE, got a huge shot in the arm from President Biden’s recent executive order calling for a top-priority federal review of US crypto policy.
The three-month review is widely expected to result in a regulatory framework that gives the green light to a rapid expansion of cryptocurrency exchanges and digital asset trading platforms in the US, while paving the way for the introduction of a digital dollar.
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