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Global REIT: The First Sharia-Compliant REIT Launched in the Cryptocurrency Market

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Real estate investing is an increasingly favorable method of wealth-building, and there are many ways for individuals to invest in it. However, traditional real estate investment models have immense barriers to entry. They create an onerous burden in terms of both regulatory and financial aspects that makes investing unfeasible for most of the potential investors.

Mitigate These Risk and Overcome Investing Challenges

So, if you are looking to invest in real estate perhaps in a foreign country, in addition to the significant capital required for purchasing the asset itself, you would generally need to incorporate a local entity as an investing partner since investment by foreign investors is restricted in most jurisdictions. You will also need to fulfill other statutory requirements including and not limited to taxation, accounting, and many other registration obligations as well as restrictions on the type of property funds.

Furthermore, foreign direct investment also has vulnerability attached to it in terms of micro and macroeconomic conditions in each country. To mitigate these risks and overcome investing challenges, the market offers Real Estate Investment Trusts (REITs) as an alternative investment vehicle. A REIT is a trust, corporation or an association that owns, or finances income-producing real estate and can be publicly listed or privately owned.

Asset Value of USD 10 billion

Global REIT is the first ever Blockchain based Sharia-compliant REIT to be launched in the cryptocurrency space today. It is offering investors exposure to the real estate market on a global scale without the necessity of acquiring an entire property and shift the management and compliance obligations to the fund manager. At first, Global REIT will acquire assets from the UAE and rapidly acquire more assets from other jurisdictions worldwide. The first AUM (Asset under Management) will have a Net Asset Value of USD 75 million. Gradually by the end of 5 years, Global REIT is projecting an Asset Value of USD 10 billion.

The firm has decided to leverage the power of blockchain technology to build a world-class, robust platform on the Ethereum blockchain, powered by the strength and reliability of smart contracts to create custom asset tokens (GRET). The GRET token is based on the ERC20 standard which means the token will be tradable on all token exchange platforms, unlocking rapid, simpler, cheaper, and more secure trading than traditional REITs.

Global REIT has its pre-ICO scheduled to start from 1st May and ends 31st May 2018, during which it will offer Dual Utility tokens to its subscribers; Global REIT Fund Manager Token (GREM) and Global REIT Asset Token (GRET). This means that each ICO subscriber is entitled to a share in the Fund Management Company (GREM) and returns from the Asset Owning Company (GRET), besides the utility attached to each token. Publicly listed REITs will be liquid investment vehicles. Token holders of Asset Owning Company will be paid monthly dividends from their participation in the Fund Management Income, which is quite unlike traditional REITs.

Loyalty Program Which Will Be Attached to Its AUM

In the Pre-ICO stage, bonus tokens will be offered to subscribers in 4 tranches, with maximum bonus given to those subscribing in the 1st tranche. ETH, BTC and Fiat currency will be accepted for the subscription to these tokens. Subscribers will, in turn, receive dividends on their investments in USD and USDT (Tether). REIT will offer additional benefits including future access to any of its AUMs with free stays every year in its 1st Hospitality Asset, and reward points through its loyalty program which will be attached to its AUM, among others.

Additional utility of the token allows the holder of GREM with a minimum balance of 100,000 tokens to have options to sell their real estate assets to Global REIT and thereby enter into the liquid market of the Global REIT domain. These tokens can either be bought from the Fund Manager -GREM- or from the open market. The settlement of such acquisition will be done in any cryptocurrency and the capital base will be open-ended.

First of the assets will be secured on an 8% yield locked in for 5 years. The return will be distributed in two ways following ICO subscription. One, the income generated for GREM token holders will initially start at 2% of AUM and will reduce by 0.25% annually over the first three years, stabilizing at 1.25% thereon. Secondly, the income to GRET token holders will be a stable Return on Investment of 8% p.a. on its first acquired asset. In both instances, income is before any expenses related to the operation are incurred.

Corporate Governance

Given that Global REIT is one of the first blockchain based real estate platforms, the firm has ensured that any concerns regarding the transparency and independence of the decision-making process is addressed strictly. In the interest of all stakeholders, the firm will implement an elaborate multi-level decision-making structure that is designed to exhibit utmost efficiency in the corporate and technological governance of the firm by the company’s board and various committees. They are a team of highly-energized experienced individuals with decades of experience in the real estate market.


Global REIT dividend

The above paragraph is all the information that the white paper contains regarding return on investment for the GRET token, and in plain English it means that we do not know how much the final return on investment will be.

The listed ICO price of the GRET token is $1.00, with bonuses available during the pre-ICO sale.

The token distribution will be as follows:
GRET token distributionTeam

The white paper is also short on details when it comes to team members’ backgrounds or future growth plans of the REIT. An example is the bio of the founder, copy-pasted from his LinkedIn profile, simply stating that he is a “great leader and business owner” without offering anything to back this claim up.

Ali Tumbi bio

The second most senior person listed on the website is Chief Operating Officer Paul Christodoulou. He is currently working as Managing Director for Sotheby’s International Realty in the Gulf Area. According to Mr. Christodoulou’s LinkedIn profile, he took up the position in Sotheby’s in April 2018, and there is no mention of Global REIT on his profile, putting into question his level of commitment to the position as COO of Global REIT.

To make things even more confusing, Global REIT’s blog on Medium lists Mr. Christodoulou as CEO of the company, contrary to the information given on their website and in the white paper.

Indian national Vijay D Vyas is listed as Director Acquisitions — India. To our delight, this also matched the information on his personal LinkedIn profile. Mr. Vyas has over two decades’ worth of experience from various companies in the IT sector in India, China, and the UAE.

Finally, it should be mentioned that the website does list all team members’ personal LinkedIn profiles, which is a step in the right direction.
Verdict

A tokenized Real Estate Investment Trust is something that could absolutely work, as long as the team behind it does solid work in preparing, marketing, and structuring the project. Transparency, credibility, and trust in all areas are also key issues for anyone launching a tokenized investment fund in today’s challenging ICO landscape.

We are not sure if Global REIT has achieved the level of transparency and trust that we would want before putting money into a tokenized investment fund.

Most team members seem to only have a half-hearted commitment to the project, and even the management of their Telegram has been outsourced to a group of ICO consultants.

Further, both the generic-looking white paper and website is sketchy when it comes to details of the company’s plans, dividend pay-out, and plans for future growth.
Growth potential

Putting real assets on the Blockchain is a trend that is currently gaining traction in many areas. There is no reason why this wouldn’t work for a Real Estate Investment Trust as well, and Dubai is a good starting point as a base of operations. +3
 A tokenized REIT would open up this type of investment opportunity to a lot of people who in the past could not qualify to invest in a traditional REIT because of high minimum investment requirements, geographical restrictions, or banking issues. +3
 Other REIT’s may find the opportunity to expand their reach into Blockchain interesting, and therefore choose to invest in Global REIT rather than setting up their own infrastructure from scratch. +2

Risks

The team member’s commitment to the Global REIT is put into question with very few of them mentioning anything about Global REIT on their personal LinkedIn profiles. This includes senior members of the management team such as the COO and CFO. -3
 The white paper is very generic-looking and offers few details on this investment opportunity, with little information provided about future plans and dividend payments. -3

Disposition

Although the idea of a tokenized Real Estate Investment Trust is appealing, we have doubts regarding the level of preparedness, transparency, and information provided about the Global REIT ICO.

We arrive at a score of 2 out of 10 for the Global REIT ICO.
Investment details

Token Type: Utility (Security)
 Platform: Ethereum ERC20
 Symbol: GRET
 Pre-ICO: May 1 to May 31, 2018
 Public ICO: June 1 to June 30, 2018
 Token Supply: 75 million (GRET)
 Tokens Available for Sale: 16,650,000
 Price: 1 GRET = $1 (1 GREM = $0.07)
 Minimum investment: 0.1 ETH / 0.01 BTC
 Payments Accepted: ETH, BTC, USD
 Jurisdictions Barred from Participating: None mentioned

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term trading. The author has no investment in Global REIT at the time of writing.

Website: https://www.globalreit.io
ANN Thread: https://bitcointalk.org/index.php?topic=3341986.msg34966361#msg34966361
Bounty Thread: https://bitcointalk.org/index.php?topic=3352552.0
Telegram: https://t.me/GlobalReit

Link Profile: https://bitcointalk.org/index.php?action=profile;u=881009
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