Capital Challenges For Real Estate Markets
Real estate is the single largest global asset class. Yet, it continues to suffer from significant illiquidity. The complex industry requires interaction between multiple participants for a single transaction.
Buyers, sellers, lease holders, brokers and intermediaries, law firms, lenders, title companies, and ultimately the government, must all interact with their own data sets and information – mostly isolated from the information systems of the other participants. Add the complexity of cross-jurisdiction government issues like taxation, recording, and judicial, the impact of inefficient records and data becomes very clear.
Real estate has traditionally been considered an illiquid asset. It has been lumped somewhat together with similar asset classes like equity in private companies, alternative investment strategies, and art.
In contrast, more liquid assets such as stocks, bonds, and currencies can be more readily bought and sold with fast settlement times. There are a few specific things that create market illiquidity including a lack of transparent market pricing, depth of the market, difficulty executing a trade quickly, and differing investment time horizons.
Illiquidity Discounts Hurt Asset Valuations
While liquidity has historically been less of an issue for public equity markets, in private real estate markets, liquidity has always been a key factor significantly affecting asset valuation — or more specifically, pricing. In fact, illiquidity discounts can often reach up to 30%-50% of the estimated fundamental value! These types of “liquidation” sales may result in a loss and represent the primary downside risk to holding an illiquid investment.
“As Needed” Pricing Markets Hurt Asset Value
Illiquid assets in private markets are generally priced on an “as-needed” basis, creating an inherent lack of transparency. Price discovery can be difficult, especially complicated in an economic climate that further clouds valuation.
Investor Buy Side Limitations Force Lower Prices
Illiquidity also means that a private commercial real estate investment isn’t for everyone. Aside from the size of investments being outside the range of a lot of investors, income and profits from real estate are optimized over a longer term horizon and any effort to quickly convert a property to cash will likely result in having to accept a price below market value.
High Transaction Costs & Lengthy Closings Hurt Capital Efficiency
Even after finding a buyer, the speed of the transaction to sell real estate can be 60 to 90 days, but can be much longer depending on the size and complexity of the property itself. Brokerages like CBRE, Cushman & Wakefield, JLL and Newmark Knight Frank will also pull transaction fees, further reducing the net on a sale in an already compressed market.
How We Help Real Estate Markets
Fractional real estate ownership is changing the landscape of real estate investing.
10XTS helps transform the full lifecycle of the entire retail buying and selling marketplace, the investment process, streamlining payments and property transfers, tokenizing securities and property assets, as well as digitization deeds, titles, liens, leases, purchase agreements, insurance policies, and so on.
Powering Fractional Real Estate Ownership Interests
Real estate suffers from high minimum costs of entry. Single assets are generally out of reach for the average investor.
Fractional real estate asset ownership interests enable a broader investor base, which opens the door to a larger capital pool.
Rather than investing a lot of money into fewer properties, an investor can spread their investment across more properties through fractional ownership interests.
Increasing Real Estate Asset Liquidity
Fractional ownership interests unlock new liquidity models. Rather than entirely disposing of an asset, owners can develop a path towards fractional liquidity by choosing to sell a smaller percentage of ownership.
Fractionalized real estate ownership interests are easily listed and traded on multiple licensed exchanges. This creates an alternative secondary market approach than just agent-based representation for traditional sale.
Improving Real Estate Asset Price Discovery
Because fractionalized real estate asset ownership interests can be listed to buy and sell on multiple secondary marketplaces, buyers and sellers are no longer limited to the opaque methods of pricing.
Multiple liquidity pools enable a more accurate assessment of price as trading is no longer limited to buying and selling the entire asset in a single transaction that’s limited to spot market action through exclusive intermediary activity.
Enabling Global Real Estate Asset Accessibility
It is not easy to buy and sell real estate across international borders. The barriers generally prohibit the average investor from finding and participating in real estate investment opportunities in foreign jurisdictions.
It is also difficult for sponsors to find and secure investment from international investors for their projects.
Controllable electronic records help facilitate investing across international jurisdictions through technology. Buying and selling real estate becomes as simple as clicking a button as the tokenized property interests are immediately transferrable around the world.
Reducing Real Estate Transaction Costs
With controllable electronic records, the complexity of real estate transactions is reduced to that of buying and selling traditional securities in a brokerage account via traditional ecommerce..
Accessing inventory through online marketplaces makes it easy to buy and sell while reducing costs.
Automating Real Estate Transaction and Management Processes & Workflows
Controllable electronic records are natively programmable, which means they can be consumed by any automation through standardized, secure smart contracts.
Traditional management processes can be made easy through seamless integration with accounting systems. This helps with things like distributions and even tax records.
10XTS: Your Partner in Real Estate Asset Fractionalization
At 10XTS, we are revolutionizing the real estate investment landscape by providing cutting-edge solutions for fractionalization of real estate asset ownership interests. Our unmatched expertise in analysis, architecture, and implementation of institutional-grade solutions empowers you to create, issue, distribute, and manage your assets in a controllable electronic record (CER) or token form.
Experience the 10XTS Advantage: Asset Tokenization Lifecycle Process
Our deep expertise in compliance automation, coupled with our rigorous Asset Tokenization Lifecycle Process, ensures that your real estate investments are seamlessly transformed into secure, efficient, and compliant digital assets. With 10XTS, you’ll unlock the true potential of your real estate portfolio.
Benefits You Can Bank On
Primary Offering Automation: Enhance Investor Experience
With 10XTS, you’ll enjoy a streamlined investing process that leverages the power of automation. Our primary offering automation simplifies the investment process, leading to an exceptional investor experience. The result: more interest and engagement from potential investors, driving the success of your real estate projects.
Unparalleled Administrative Control: Simplify Ownership Recordation
Our state-of-the-art technology provides you with unparalleled administrative control over your real estate assets. Effortlessly record ownership, track transactions, and manage your digital assets with ease, accuracy, and security. With 10XTS, you’re always in control.
Access Global Asset Distribution: Increase Liquidity
Tap into a world of opportunity by connecting with global markets. Our solutions enable seamless listing, trading, and settlement on secondary marketplaces, giving you access to a broader pool of investors and greater liquidity. With 10XTS, your real estate investments will reach new heights.
Supercharge Your Real Estate Investments Today
Don’t let outdated processes and complex compliance requirements hold back your real estate investments. Choose 10XTS as your trusted partner and discover the true potential of your real estate portfolio.
Get started now and experience the transformative power of our asset fractionalization and tokenization solutions. Contact our team of experts today, and together we’ll elevate your real estate investments to new heights.