Backed by blockchain technology and smart contracts , this Argentine firm promotes investments in real estate in the US using tokens that allow each property to be divided into smaller units, seeking to make investments more accessible and democratic.
Although the fervor for non-fungible tokens (NFTs) peaked in 2021, the trend continues to quietly advance in other fungible areas, other than the modern art for which they became famous. So much so, that the consulting firm Boston Consulting Group (BCG) projects that in less than 10 years the so-called 'asset tokenization' will exceed US$16 billion and will represent 10% of global GDP by 2030.
A prediction shared by the World Economic Forum (WEF), which advances this milestone to 2027. All this, given that significant savings in time and costs are attributed to it thanks to the advantages offered by blockchain technology.
It is under this premise that a year ago Rext burst onto the market as a tokenized real estate investment platform.
The process, as described by the firm, operates through tokens that function like shares, representing both physical, financial and intangible assets and, in its words, “promises to radically transform access to the real estate market, challenging the traditional perception of the sector as conservative and not very innovative.”
The company was launched as a real estate investment company in 2022, founded by three Argentines: Bruno Drobeta, Emiliano Fernández Balague and Álvaro Castro Burgueño with the concept of allowing Latin Americans to invest in properties in the United States starting at US$ 1,000. .
“I come from the technological world. I worked for the last 12 years at Samsung, managing the Southern Cone operation (Argentina, Uruguay and Paraguay), previously I was at Apple, and my partners come from the world of real estate . We brought both worlds together and created this venture,” details Bruno Drobeta, CEO and co-founder of Rext to AméricaEconomía .
As Drobeta describes, Rext is using tokenization technology for the investor to buy these shares of a property.
“Here we are using tokenization technology, but at the end of the day what an investor is buying are shares of a company that owns an asset, which is why I am a shareholder of a property and I am the owner of that property,” highlights the CEO.
In your business, blockchain technology and smart contracts play a crucial role in the process. According to the CEO of Rext, these allow the creation and management of digital tokens that represent the shares of the owner company, thus facilitating the participation of microinvestors by dividing each property they manage into smaller units - the tokens - so that they can be purchased and sold on specific platforms.
Their format also allows you to invest in them, using different currencies, from dollars to crypto assets, such as Bitcoin or Ethereum.
Rext's star project today is the renovation and expansion of the Sorrento Villas hotel, located in Miami Beach, specifically on Harding Street and parallel to the coastal Collins Street. “An area that has received a lot of investment for its remodeling, due to its good location,” highlights Bruno Drobeta.
The property is a 20-room boutique hotel that they purchased with their own capital for US$4 million. Today they are expanding it to 50 rooms, with the goal of operating it for a couple of years and then selling it for US$16 million.
Their investment is strategic and the core of a business that they will seek to grow both in that city and in the State. This is because Miami continues to be one of the most attractive destinations for real estate investments by Latinos such as Mexicans, Brazilians and Chileans, according to Rext.
In fact, the coastal city remains bustling due to its strong tourist interest and notable state economic growth: in 2022, Florida's GDP experienced an increase of 4%, while internal immigration increased almost 30% in the last two years.
And, unlike traditional financial products, where interest rates can be affected by Fed decisions, the profitability of these real estate investments is based on direct returns generated by the asset and the appreciation of its value. the long of the time.
In addition, it exhibits outstanding real estate dynamism, with a cumulative property appreciation of 22.6% in the last decade. It also offers prices per square meter “competitive compared to other large cities” and has a robust infrastructure that includes airports and a high-speed train system, factors that increase the value of investments in the region, highlighted in Rext.
“Once the expansion is completed, investors could achieve an estimated total return of 7.5%, benefiting especially from higher rates during events such as the Soccer World Cup in 2026,” says Drobeta.
Likewise, he projects that investors in his project can expect a total return of 43% in a period of 30 months. This is broken down into 6% annually as a direct return on the investment and an additional gain derived from the appreciation of the asset at the time of sale.
Likewise, investors have the possibility of liquidating their position by selling their tokens in a secondary market managed by the same platform. This flexibility allows them to exit their investments at any time, thereby mitigating the illiquidity risks often associated with traditional real estate investments.
“Rext acts as an initial buyer on the secondary market, offering to buy back the tokens at a price close to face value, minus a small percentage,” says Drobeta. In this way, it ensures that investors can exit their positions efficiently and without the additional costs and complexity that come with managing a traditional real estate portfolio.
Today, Rext has secured 80% of the capital necessary to finance its real estate operations or projects. In addition, they have concrete plans to launch up to three new investment opportunities in the coming months, since the firm sees the United States as a stable and large-scale market, ideal for diversifying and mitigating risks.
According to Drobeta, its operating structure with a Canadian company also plays a crucial role. This partnership allows Rext to implement investment funds that can accommodate multiple investors under one ownership, a practice commonly known as 'investment atomization'.
This atomization is beneficial because it simplifies the process for investors, eliminating bureaucracy and making it easier to participate in real estate projects from Latin America or other places outside the United States, where 37% is withheld from non-resident investors.
In the short term, Rext is exploring opportunities in other locations, such as apartments in the Cocoa Beach, Florida, area and properties in Spain.
MARKET FOR TOKENS
Unlike the failure of non-fungible tokens , which had no backing in the physical world, asset tokenization is experiencing notable growth globally.
“Industries are increasingly adopting this technology to offer fractions of tangible and intangible assets through digital tokens , making them easier to buy, sell and transfer. This growth is driven by technological innovation, which allows the creation of safe and transparent digital representations of real assets, and by increasing regulation, which provides clarity and security to investors,” Javier Pastor, director of Institutional Relations of the Bit2Me cryptocurrency platform .
On the other hand, since tokenized assets are subject to taxes, just like any other type of financial asset, Pastor explains that specific tax obligations vary depending on the jurisdiction of each country and the type of asset, so it is essential to consult with a tax advisor from the place where tax is paid, in addition to managing tokenized assets with the same diligence as other financial assets: including them as part of a diversification strategy to mitigate risks and regularly monitoring their performance and any changes in the market or regulation that may affect its value.
“To address the offers and avoid scams, users should conduct a thorough investigation of the project, including the equipment, technology, business model, and security audits. As well as using recognized and regulated platforms,” adds Pastor.
With this in mind and despite initial institutional resistance, many hope that the adoption of these innovations will gradually transform the way private capital is accessed and operated.
So much so that some are already talking about a momentum in the massification of what is known as RWA, for the acronym in English of tokenization of real-world assets, with Larry Fink, the CEO of BlackRock, defending this process as the next generation of traditional financial markets.
And more news is coming regarding new fields in which it will be possible to invest 'tokenized' because, according to Erik Hirsch, co-executive director of the private markets investment company Hamilton Lane, the future of private capital is leaning towards this tokenization.
Hirsch said in June on Axios that startups like Securitize and ADDX are leading this change by converting interest funds and other real-world assets into digital tokens on the blockchain .
This approach not only seeks to expand the participation of retail investors, but also simplify fundamental processes in the industry, which goes hand in hand with new technologies.
