The St. Regis Aspen, Colorado, luxury hotel launched unique real estate security tokens on the Ethereum blockchain in partnership with Indiegogo, a crowdfunding website. The security token offering started late August and is set to end on September 28. It was open to accredited investors with a minimum investment of $10,000.
While invited to speak at Fortune’s Balancing the Ledger, Slava Rubin, co-founder of Indiegogo, an online crowdfunding platform, explained by saying:
“From the beginning ten years ago, we always looked at democratizing access to capital and allowing people to get more involved in these opportunities and today we are talking about our expansion into security token offerings. It’s the Aspen St. Regis, which is a blueship luxury resort in Aspen [Aspen, Colorado, USA, Ed.Note] […] It’s an Asset, and now people will be able to invest in it through a security token, and we are working with them [The owners of the Resort, Ed. Note] as our marketing partner.”
Rubin went on to explain that the Aspen Digital team, which is a real estate investment trust (REIT) created by St. Regis Aspen Resort to conduct the offering, was tokenizing a portion of the hotel and selling it in the form of security tokens, using Templum Markets as a broker-dealer.
Digital Ownership Through the Purchase of Tokens
The offering featured 18 million tokens with an initial token price of 1$. Besides, the minimum investment was set at $10,000, and the security offering was only open to US accredited investors for regulatory reasons.
Speaking about the concept, Stephane De Baets, owner of the St. Regis Aspen Resort, conveyed to Fortune his interest in pursuing tokenization of properties as it may bring liquidity to the historically illiquid asset class that is real estate. In fact, the $18 million valuation offered to investors represents 18.9% equity stake in the St. Regis Aspen Resort (present market valuation of the hotel is $224 million, according to Fortune). The 81.1% remain owned by Elevated Returns, an asset management company founded by De Baets.
“We’ve lined up a substantial pipeline of global properties to bring to market subsequent to the first offering. A lot of people don’t want to sit on depreciating fiat cash in a bank account,” De Baets said to Fortune while reportedly hinting hotels owned by Elevated Returns in Washington, D.C., area; Hong Kong; and Thailand to be the next ones on the list up for tokenization.
“We think future lies in everyone starting to keep more wealth in appreciating asset-backed tokens rather than cash.”
Security Token Offerings
Security token offerings have drawn growing attention from investors and regulators alike in the crypto space since the beginning of the year, with many experts claiming it to be the next big thing in crypto.
In fact, as opposed to utility tokens offered during ICOs, where investors put their money in promises of future software or products to be used within a closed ecosystem, security tokens are backed by real and existing assets.
They also come in the form of equities, shares of a limited partnership company or even commodities. The emergence of security tokens also came as a response to the increased scrutiny imposed by regulators on token offerings as many of them were found to be or ruled as unregulated securities.
Furthermore, STOs are subject to federal securities regulations and are often time limited to accredited investors, where the offering should be registered and cleared with regulators prior to the offering.
The concept is believed by many to help several sectors such as fine art or real estate, where investors will be able to own chunks of an asset, bring in extra streams of liquidity and bring the operational offering cost down when offered on blockchain.