Banco BTG Pactual is Issuing a Security Token for Real Estate Assets

Banco BTG Pactual, an investment bank based in Sao Paolo, Brazil, is going crypto. More specifically, the bank is issuing a security token based on real estate assets.

BTG Pactual is no small operation. In fact, total assets are pegged at over R$270 billion (USD $70+ billion) and shares trade on both NYSE Euronext and BM&F Bovespa. Bloomberg says that the investment bank is one of the largest in South America.

In regards to real estate, the bank is one of the leading real estate investors in Latin America with more than US$ 2.1 billion under management.

The security token, ReitBZ, is open to investors now with a soft cap of USD $3 million and a hard cap of USD $15 million. It is interesting to note that the STO is available to international purchasers worldwide, excluding persons with residence/nationality from Brazil and the United States of America, as well as any other country where the purchase of cryptocurrencies is legally forbidden.

Purchases will be made in via crypto, according to the white paper. Either ETH or a StableCoin. Their Token will utilize the Ethereum Network and the ERC2011 standard protocol.

The bank explains:

“[the] structure aims to eliminate several bureaucratic procedures and increase cost-efficiency as compared to general costs deriving from financial investments that focus on similar underlying assets, such as the Brazilian Real Estate Investments Funds (“FII”) governed by Normative Ruling No. 472 of the Brazilian Securities Commission. For the sake of comparison, the following costs that would be normally verified on a yearly basis in the FIIs structure would be eliminated with the use of blockchain:

  • Fund administration fees (0.2% on NAV)
  • Bookkeeping fee (0.05% on NAV)
  • Custody fee (0.003% of NAV)
  • Structuring fee (R$ 50k flat)
  • Intermediation fees (stock exchange, related service providers, among others, (up to 0.02% on NAV, depending on amount invested)

The STO is expected to trade on the “main security token exchanges around the world” at some point in the future.

The thesis of the STO is the fact that the value of real estate in South America plunged in 2015 and 2106. Values are starting to rise again but pale in comparison to the boom year of 2010. Buy cheap and sell high, so the story goes. “As economy recovers, the outlook for real estate looks promising since prices have yet to follow suit.”

BTG Pactual has a track record of investing in real estate in Chile/Peru, Brazil and Columbia – so the bank has credibility.

The public sale is ongoing now. The token issuance is scheduled to take place on May 31st. During Q2 of 2019, real estate assets will be purchased.

The white paper is available here.

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