The French fintech firm ID Distribution announced a joint venture with the local real estate firm Groupe JRI, with the aim of tokenizing several properties in Paris.
According to a June 17 announcement, ID Distribution and Groupe JRI plan to jointly issue valuable tokens and a listed bond in Frankfurt to acquire buildings in central Paris. The total amount of funds to be spent, 70 million euros (about USD 78.5 million) will be allocated to acquire five buildings that will then be leased.
Tokenized real estate thrives, while stock tokens struggle
The use of value tokens is intended to strengthen capital more than could be achieved with traditional debt instruments. In addition, ID Distribution and Groupe JRI’s value tokens will have a 6.5% return. The tokens will be issued in a private blockchain through the wezee.io tokenization platform.
ID Distribution’s CFO Christophe Kourdouly told Cointelegraph that the main advantage of tokenized securities is that they do not dilute debt or equity compared to traditional tools. Instead, he said, digital assets like these „strengthen the company’s balance sheet.
Swan Network and Polymath tokenize $2.2 billion in high-end real estate
Kourdouly also pointed out that crypto-currencies cannot be accepted as a means of payment for the company’s value tokens due to compliance issues. He said getting approval for the value token offer was easy for the company, as it already has a bond listed in Frankfurt that complies with regulations.
Use of blockchain in the real estate market
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Several companies are using blockchain technology to make investments in real estate more accessible. A May report suggests that while the overall value token space has some problems, investors in tokenized real estate are experiencing remarkable returns.
In addition, a March report also indicated that the Texas-based commercial real estate market, Red Swan, tokenized $2.2 billion in real estate and plans to tokenize $4 billion more.