A blockchain entrepreneur, with the help of a former real estate i-banker, will mint the world’s first virtual property REIT in October. It could be listed on a public exchange as soon as next year.
Tokens.com, a publicly traded company based in Toronto that facilitates investment in digital assets, signed a letter of intent to buy a 50% stake in a portfolio of digital real estate owned by Metaverse Group, which plans to subsequently spin off the portfolio as Metaverse REIT — the first REIT for digital real estate NFTs, or non-fungible tokens.
Tokens.com will pay about $2 million in stock, which makes the transaction among the largest virtual land deals so far, according to Michael Gord, cofounder of Metaverse Group. The transaction is expected to close next week.
Tokens.com is led by co-founder and CEO Andrew Kiguel, a former real estate investment banker who spent more than 18 years at GMP Securities, now Stifel Canada, advising, taking public and raising capital for traditional REITs. Kiguel will lead the efforts to take Metaverse REIT public.
“We see Metaverse Group as being a significant land owner and developer in the
digital world with the ability to pay out distributions in a REIT structure,” Kiguel said in a release.
A public listing could come as early as next year, but is more likely 2023, according to Gord. He cited strong demand for the Metaverse REIT from “larger real estate investors.”
“Our intention is to have a public equity for the traditional capital markets as well as a crypto token for the crypto market,” Gord said. Backers expect to target multiple exchanges for the listing, he said.
Metaverse enthusiasts and speculators have driven up the value of digital property in recent months, anticipating an explosion of new participants and commercial uses, including retail showrooms, casinos and virtual office space.
Metaverse Group’s digital land is spread across several virtual worlds, where people interact, play games and trade digital collectibles. The bulk of its portfolio is in the two most popular ones, Decentraland and The Sandbox, Gord said in an interview. The land is to be developed for a variety of commercial uses.
Eventually, Metaverse Group could create digital REITs for each of the individual metaverses, or for specific property types within those virtual worlds, tailored to investors’ risk-reward appetites, Gord said.
The IRS in recent years has cracked down on companies outside traditional property sectors seeking REIT status, which carries significant tax advantages.