Tokenisation, Blockchain & Marbella Real Estate with Alex Rapatz of Black Manta Capital Partners

Tokenisation, Blockchain  & Marbella Real Estate with Alex Rapatz of Black Manta Capital Partners

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Welcome to another episode of Me & Mrs  Jones. Here we are in Marbella outside   the Marbella Arena. Now newly christened, it was  formerly the Plaza de Toros de Nueva Andalucia,   And today we´re going to go inside and  meet a very interesting gentleman. Come on.  A very good morning from Jones In Marbella. This  morning we're sitting in the beautiful Arena  

here in Puerto Banus. This incredible  architectural structure was built in 1965   and inaugurated in 1968 as the Plaza de Toros,  the Bull Ring, for many people very controversial   but i'm delighted to say that now it's  being transformed into a fabulous place   of entertainment ,enjoyment, culture, all sorts  of conventions conferences and in fact just   this last weekend was the International  Padel Tournament, held in this venue. So we're sitting here today and sitting next to  me is a very interesting gentleman called Alex   Rapatz. Good morning Alex. Lovely to see you  here today. Thank you for joining me all the   way from Austria. May i say so you're very very  welcome here in Marbella. And I´ve asked you to   speak with me today to bring a little  bit of information to us about the,   if you like the technology of tokenization  of real estate. In my humble opinion,   there's no question that tokenization of  assets and actually blockchain as a whole   is undoubtedly the future. There is no future  without being able to understand this concept  

and of course being in the business of real estate  myself i'm particularly interested to know how it   applies to real estate. You have a company in  Vienna called Black Manta Capital Partners.   So give us a little bit of a background  about that company please Alex. First of all, thanks for inviting me.  Pleasure to be here. Yeah as you said  

i'm Black Manta Capital Partners. I´m based in  Vienna. We're a group of companies in Europe.   We're in Luxembourg. We're in Cork, Ireland. We  have a financial service institute in Germany   in Munich for the whole European Union,  and out of Vienna we do our advisory work.   We focus on tokenization security  tokenization and all kind of digital assets.   With tokenization what does it mean? We  convert rights to an asset into the token.  So Alex could you start by explaining to us  actually what a token is. So we take an asset,  

it can be a real estate, it can be like a square  meter in an apartment building, it can be a whole   apartment or whatever, and we put the rights  ....we transfer the rights and obligations onto   the token. The token gets or becomes the medium  of transport of rights and obligations attached to   the real estate. We can also tokenize a security,  an existing security like a stock or whatsoever.  So can any asset be tokenized? Yes. So almost on every conference   i've been the last years and with Covid it ´s  not too many conferences, but there was always a   panel with the topic "tokenization of everything"  and you can tokenize everything if you want to .  Why is tokenization so applicable  in the context of real estate?  So it's an investment vehicle, also tokenization  we use it for investment purposes. As of today  

if you wanted to invest into real estate it was  either like you had a high threshold in terms of   prices you had borders. So probably me,  as an Austrian, I wouldn't invest into   the Marbella real estate because I´m not living  here. I have no idea about the market etc.   And and you have a lot of costs involved taxes  whatsoever. With tokenization we can fractionalize   real estate we can like sell certain  square meters only and we can we can   provide real estate retail investors the  opportunity to invest in bigger real estate.  This is what we call the democratization.  Correct. Somebody like me, I could never  

afford to buy for example this whole  building. But I could buy a small part of it.  Yes that's the democratization. Yes ...and so there were other use   cases or similar use cases like real estate  crowd-funding, but in the crowdfunding mechanism   you only provided the loan, subordinated loan in  most cases, but you couldn't get real equity. So   I could buy like a square meter of this arena and  then participate in the value increase in an exit   participation if it gets old or whatsoever  or in in revenue income streams. 

So you become an owner. Yes  But it's an owner of the investment  rather than of its use is that correct?  Both is possible. And from probably now this  was the perspective of the investor, retail as   well as professional. From a real estate owner  I can refinance my real estate. I can take out   my equity risk and and get in like um investors in  particular when it comes to development projects.   Like as of today let's say 80% is financed by  a bank and 20% needs to be financed by the real   estate developer. In equity. You can take this  20%, tokenize it, get in retail investors they can  

take a seat on the table in in a deal where they  wouldn't have access normally. The developer took   out his equity risk and make probably a bigger  project because he has now more funds available.  So when we're talking about the benefit  of liquidity being one of the main   factors of tokenization this is  exactly what you're referring   to. Yes.  So why are we hearing so  much now about tokenization?  Yeah. I mean tokenization is now, security  tokenization in the current use of how we use   it with the blockchain technology, is I would say  it's quite new. It's like around four years now.   The concept of tokenization was already  with crowdfunding . It's a similar concept.  

But now blockchain for the first time  enables people to create digital identities   on blockchain so I can really create equity and  identities, my own identity on blockchain, and not   only digital copies. For example, if you send out  an email today you send out the copy. Everyone can   make as many copies as they want to or if you  send it in pdf or whatsoever. On blockchain,   you send it once. It´s probably easiest to  understand as bitcoin. You send out the bitcoin  

you don't have it anymore. The recipient has it.  And the same as with tokens. I cannot copy tokens.   So that's why I can create real  equity and real identities we call it.  There is a lot of skepticism expressed  about blockchain, crypto, tokenization,   relayed mainly by people who don't understand the  science behind it. What would you say to them?  I mean if you trust in technology or not  that's the main question. What is indeed  

true that um when it comes to blockchain it's also  always associated with cryptocurrencies and there   was a lot of scam in the past a lot of projects  which like in the ICO hype a lot of projects   failed. A lot of people lost their money. So  that's why our way was....Okay, we get regulated   by BaFin (German Financial Market Authority).  We are financial service institute. We take   care of all the regulatory uh and compliant  topics, we KYC i(know your client) nvestors   we AML (anti money laundering) and also  check the product with the tokens itself.  

We do due diligence etc so that people can trust  and know what they're buying. On the other side   uh the goal would be in my opinion that if for  example people buy real estate tokens through   us or for any other provider, they do not need  to know that it's a blockchain. If I´m buying   again an Apple stock, I have no idea how the  underlying technology works. That's true yes  So yeah and actually i don't care I mean that's interesting   there comes the philosophy of the financial  institutions that we know today which have   been in existence for so many years have really  done such a great marketing job on us, because   we don't question it. We don't question the banks.  We don't question that our money is is being used   in the correct way. The fact is actually the  money that's in my wallet is just paper it's  

not even backed up by by the the value that it's  supposed to be. But we don't question it anymore   and I suppose the curiosity of of blockchain and  crypto and everything that I think is going to   be very significant in our future has to  be has to be backed up by investigation.   Once one starts to look at how it works or where  crypto came from or what its applications are for   the future and for me the democratization of  of the world in that respect is is very very   significant, then you start to understand that  it's real that it's safe and that it's certainly   not something that people should go into to make  money now this is we're talking about the future   we're talking about you know years to come. I mean that's why we need to have the discussion   and all this educational work what  is blockchain how does it work it's   that way we need to have this now but in  five to ten years no one will question it.  Exactly right probably the trader said  why do I need the internet ?I have my   fax machine. It's perfectly working.  You know the transition takes time.  Yes, and it's almost like you're like a pioneer.  You're at the forefront of the pioneer movement  

into the future. I mean it's no question  that that um it's significant and it's also   interesting that most of the people involved  in this industry are very much younger than   my generation certainly. The best way that i can  describe it is that somebody of my generation,   I was brought up being educated in an analogue  way, and as years have rolled on we're now living   on the forefront of a digital age. Somebody  like me I have to translate in my head from   analogue to digital whereas someone like my  son, who's never known anything different,   just automatically understands the digital  technology. And it´s probably the same for   you as well. It's just something where  you don't have to do that translation. 

Yes, what i saw the last  two years was a high profile   professionalisation of the market, in terms of  institutional investors, banks, pension funds,   and our our clients and also our investors they  range from like i would say very young people from   18 and also people who are already um retired.  So there is I mean the majority are probably the   younger generation. Our assumption was a few years  ago that everyone who invests in cryptocurrencies   wants sometime, on some day, to put his earnings  into a solid asset class like real estate and   therefore buy security tokens. But 99.9 percent  of our investors are traditional investors who   would invest in real estate anyway. But now with  security tokens there's a new way to invest. 

What do you think about the power of blockchain  and its ability to completely disrupt the way   that we have learned to do things? I think it just opens a   new asset class to new investors. It does, but it also it negates the the need for   for me, for you as a lawyer, for me as a  real estate broker, for the notary sitting   up here behind us actually in the plan in  the Centro Plaza. He's not needed anymore.  That's true yeah that you can you can avoid a lot  of intermediaries. Yes. But listen it's progress   it's evolution. It's not necessarily a bad thing  and surely with tokenization comes another form of   auxiliary services which are needed to  support the tokenization of their product.  But this is something we see in  all in all industries not only   with blockchain ....is really disruptive. So give me an example of a project that  

Black Manta have facilitated in tokenization. So the first deal we made two and a half years   ago was a Berlin residential real estate. It was  in construction phase like 42 or 43 apartments   and it was a use case. I said before like the  developer, the majority was financed by the bank  

and the equity portion of the developer was  financed by real tokenization. And everyone   starting from 500 year investment could gain an  interest in the profit out of this project. And   if someone invested for example 25 000 he  got the preemption right on the apartment.   So this was a an equity deal We currently  are having a tokenized bond; a big Austrian   real estate developer tokenized one of its  shopping centres and is refinancing internally. 

That's happening now? Yes it's a it's a bond um so from the   structure, very traditional, but it's tokenized. So to understand, the commercial building has been   tokenized providing the liquidity for the  developer to upgrade his existing project?  Fascinating. When we're thinking about tokenization   of real estate specifically is it imperative  that we have to engage with cryptocurrency?  If we tokenize an asset and we store it and we  trade it essentially on a blockchain do we have to   connect it with crypto? Can we use fiat currency? Yes yes we can. So we don't have  

to...we are only using the same technology.  But if the issuer or the real estate owner   does not want to accept cryptos that's totally  fine. We can also close the transaction with   FIAT only ( government issued currency). Is there a reason that crypto makes it   facilitates it more easily more swiftly? Yes. So if everything is then on blockchain   infrastructure and all payments are also handled  in cryptocurrencies then we can really...  

the whole transaction can benefit from the  technology itself and everything can be automated.   If we include fiat then we also we need a  bank account we need the interaction the API   integration with the banks again. So if  everything is on blockchain it makes it easier   but it's not it's not a necessity. So Alex, you're a lawyer by   profession so this must be a very  interesting perspective from which to   approach the the integration of these  technologies into the new way of doing things.  So interestingly, we don't need new legislation  for what we do. We can apply existing capital   market laws. Tokenization just provides  a new mechanism of closing transactions. 

I see. And so bearing in mind the wariness,  the resistance that so many people still   have to these technologies actually  where do you source your clients from?  Interestingly again, we don't need to find them.  They're finding us. So everything when it comes   to sales is inbound and we are getting almost  on a daily base request from potential issues.  And when you speak to those those people who  approach you those investors, these institutions,   these developers, what is it that they say to you  that's made them want to embark upon this process?  I mean most of them are are interested in how  it works and testing it out. We have a few like   major real development companies we're working  with. A lot of them kind of in the background.   Like it's not public. It's private projects.  They want to test it out. Some of them still  

have fear of reputational damage because they  don't know how it works. But they're curious.  Do you find that the people who are coming  to you are already knowledgeable about   how it works or are they really very very  green and they're coming out of curiosity?  Both. So the majority already  looked into the topic before.  Yes so what is it that actually makes this this  idea of tokenization so applicable to real estate?  Liquidity is main topic because you can  provide liquidity in a market which is by   definition un-liquid. And also like when it comes  to secondary. I take the example of crowdfunding.  

When it comes to democratization of real estate  investment , if I invest into a crowdfunding   project today I give a loan, and i'm stuck to  that loan for four five six years whatever the   term is. But, when I invest into a token in  a tokenized transaction I have a secondary   market .I can sell my tokens. I can trade them  on platforms. So this is completely new yeah.  And that that's perhaps what  differentiates this from   something like fractional ownership if you like Yes and also with tokenization it's not like uh   one legal structure you need to fit  in. We can be completely creative  

in structuring the products for the clients. Where do you see the future of tokenization going?  Six months ago you were at a major convention  in the United States about tokenization of   real estate. Tell us a bit about that  what was the the feeling the vibe the   the atmosphere there around this? It was like last September;   it was in Austin Texas by one of our clients. A  US real estate fund and they tokenized the fund.  

If you today invest into a real estate fund which  is not listed on an exchange then you're kind of   stuck to the investment for a certain amount of  time. If you tokenize these limited partnership   shares you can also create liquidity. You  can create a secondary market for that.   He put together this blockchain real estate  summit in Austin Texas and we were the only   Europeans there because it was still a time  of travel restrictions back then But from   the whole of the US and then also Canada , real  estate professionals and investors came there,   trying to understand how they can benefit from  blockchain technology in the real estate sector. 

So the interest is huge! Is the interest  sort of inspired or enhanced by FOMO,   what we call FOMO, the fear of missing out?  So tokenization is not a hype. It's not like we  had this ICO hype and now like NFTs, whatsoever.   Tokenization of for example real estate um we  are targeting the biggest available market and   this is something which takes time and everyone  is looking into that but like the transition   within these organizations if you take like  big investment banks or institutional investors   it's just like it's not something they can easily  um just switch a button and then they can accept   crypto. So the two biggest challenges what we see  are education like yeah what is the wallet? What   is the token? Why do I need it? What's the benefit  of it? And the second is technical integration.   For example, when we talk to asset managers or  wealth managers for our products and the projects   they say "yeah I like the product, project. I  would invest into that but my asset management   system is currently not capable of investing  into tokens. So this technical transition this   also needs time and this is like the example  I gave before. Like the trader on the stock  

exchange in the 90s, having its fax machine and  it just took time that everything was digitalized.  Yes, I mean it's fascinating isn't it because  we when i think about what we've known of the   internet, you know, initially the internet, Web 1,  I think they would call it, would have been just   something where you would would read online. And  then comes along Web 2 where you can interact so   far as you can send and receive and Google. But  Web 3 , which is really for most people , we're   still on the brink of it. The Metaverse  is an interactive phenomenon within which   our lives can be played out in  so many different ways and that's   really exciting and certainly  very applicable to real estate.  I mean, I wrote an article a few  days ago and it stated that like   the Metaverse, or Web 3 solutions, are developing  solutions without having a problem at the moment.  

So I think it's highly interesting that it's  possible there but the need is not there. In my   opinion yeah. So I can buy real estate in the  Metaverse yes yes i can yeah but if you there   was the second life game or it still is on like  15 years ago already. They could do the same.  But there is no need for it, but there will be and  actually those people who are involved in it now   are going to be very pleased with themselves in  10 20 years time when they look back and realize   or everybody else looks back and realizes that  your crazy cousin who was talking about blockchain   and crypto and the Metaverse actually was at  the forefront of something very very exciting.  So finally, if I decide to tokenize my  apartment and i want to sell it to you   it's really possible for me to directly send  you my blockchain address representing the token   of my apartment, and not use any intermediaries. In theory yes. The challenge we face in particular  

in highly- developed countries like  all countries in the European Union,   is that most countries have a very good  land registry. So we need to make this um   we need .....so once blockchain also and  technology applies to those authorities,   or like land registers are on blockchain, then  it's an easy easy move. As of today we need we  

developed some workarounds some some structures  to to avoid registering with the land registry.  In a legal way? In a legal capacity so   at the moment we work um with for example  participation rights where the buyer the   investor has the same commercial interest like  the physical owner, like a profit or revenue  but he's not registered yet. So if I sell you my apartment, it   would it be like me sending you a bit of bitcoin  from my wallet. I could literally send you   the ledger, the code, and I don't have to go and  see the notary upstairs? I can do it like that   and it's it's a legal deal. Fabulous. Okay, so one day I may well be redundant.   I might not have a job anymore so I think  I'd better learn more about the Metaverse.  So Alex, thank you so much for coming today.  It's been really interesting to talk with you and  

there's no question that we're going to be  hearing more about tokenization, about blockchain,   and of course about cryptocurrency  in the years to come undoubtedly.  And it's something that perhaps you feel  at the moment isn't for you. But I can   guarantee that you will learn more about  it because inevitably we will have to.  If you're interested in finding  out about tokenization in any form,   perhaps you have a real estate project,  a development, that you would like to   think about using this form of technology  to enhance then please do contact me,   Mrs Jones from Jones In Marbella, or of course  better still get in touch with Alex direct   that's Black Manta Capital Partners and  the link to his website will be in the bio   of this video it's been a pleasure speaking with  Alex today and until the next time. Thank you.

2022-06-22 23:35

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