Harbor partners with Rhodium for another go at bringing tokens to real estate

Quick Take

  • Harbor is partnering with Rhodium Capital Advisor, lending its technology to a tokenized real estate investment fund
  • Primary Capital is acting as broker/dealer in the transaction
Token sales platform Harbor is taking another swing at introducing tokens to the real estate market, after its first deal collapsed last month.
 
The firm is now partnering with Rhodium Capital Advisor to create a security token that represents ownership of a number of properties, hoping to provide affordable housing, according to a press release. They will focus on urban and suburban housing projects in the U.S., with the first step involving raising capital for a development fund in both fiat and crypto; specifically bitcoin, Ether, and Gemini dollar.
 
A tokenized model of housing ownership is about widening access for investors, according to John Leo, Chairman of Primary Capital LLC, the broker dealer for the transaction. He explained to The Block via email that using Harbor’s technology with the fund enables crypto investors to get liquidity sooner than in a traditional investment fund, where investors are locked in for the length of the fund. Harbor can ensure compliance with securities laws and also enable the investor to transfer ownership of tokens, according to the company.
 
“We don’t think it adds challenges,” Leo added.
 
But rapid liquidity seekers is not the only target audience. Aside from providing efficiency and liquidity, Leo also believes by tokenizing real estate, Rhodium will help private capital market players pivot to digital securities.
 
“Rhodium has a proven track record...[It] has acquired and manages over $1 billion in real estate and is currently holding nearly 100 portfolio properties and approximately 10,000 residential units in the U.S," Leo said.  
 
Meanwhile, Kevin Young, head of Marketing and Communications for Harbor, said he believes the tokenized fund is the beginning of a movement to modernize private capital markets.
 
“We hope private real estate investments become more accessible to a broader range of investors and more liquid than they are today,” Young said. “We want to remove a lot of the inefficiencies from the fundraising and investor management process and help issuers lower their cost of capital by attracting new investors through broader global reach and lower minimums.”
THE SCOOP

Keep up with the latest news, trends, charts and views on crypto and DeFi with a new biweekly newsletter from The Block's Frank Chaparro

By signing-up you agree to our Terms of Service and Privacy Policy
By signing-up you agree to our Terms of Service and Privacy Policy
 
Second time lucky
 
Harbor made a previous attempt at a tokenized model with a $20 million mega-dorm for students at the University of South Carolina. The Block reported the fallout of the deal last month, when a Harbor spokesperson cited an impasse between the issuer and mortgage lender as reason for the project's failure.
 
Young said the company revamped its approach in light of the deal's collapse. “Earlier this year, we shifted our model a bit and introduced Harbor Platform 2.0; designed as a white-label digital securities platform for enabling issuers and broker dealers,” he said.
 
He said he sees these shifts as part of the natural progression towards the next incarnation of private capital.
 
"As private securities become digital, it can unlock liquidity opportunities as well as options to unbundle and bundle assets in ways not possible before. This is the very beginning of a broader movement to modernize private capital markets, including real estate."
 
The Block's Isabel Woodford contributed to this article.

© 2023 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

About Author

Aislinn Keely is a reporter on The Block's policy team holding down the legal beat. She covers court decisions, bankruptcies, regulatory actions and other key moments in the legal sphere, putting them in context for the wider crypto industry. Before The Block, she lent her voice to the NPR affiliate WFUV and helmed Fordham University's student newspaper. Send tips or thoughts on all things policy and legal to [email protected] or follow her on Twitter for updates @AislinnKeely.