Part of Mapletree's first European office fund offered in digital tokens

iSTOX enables that access by tokenising these assets using blockchain and smart-contract technology.
iSTOX enables that access by tokenising these assets using blockchain and smart-contract technology.PHOTO: ISTOX/FACEBOOK

SINGAPORE (THE BUSINESS TIMES) - Digital securities platform iSTOX has, for the first time, tokenised a private real estate investment trust (Reit) from property giant Mapletree Investments, reducing the investment ticket into the fund for 50 accredited investors.

The latest tokenisation is for Mapletree's latest European office fund, the Mapletree Europe Income Trust (Merit).

iSTOX declined to disclose the size of its minimum investment ticket and how large a part of the fund it has tokenised, but said in a statement on Wednesday (April 7) that "a part of the fund has been made available in tokenised form and in smaller units".

Tokenisation refers to the use of blockchain technology to create fractional digital shares of "mainstream" assets, such as real estate and art. These tokens can then be traded on a secondary market.

Merit consists of seven Grade-A offices in regional cities such as Manchester, Bristol, Dublin and Warsaw, with a total net lettable area of about 270,000 sq m at a total asset value of €1.2 billion (S$1.9 million).

The trust has a target internal rate of return of 12 per cent, which Mapletree hopes to achieve through yield and growth. Mapletree announced last week that it had raised €507 million at the closing of the fund, with participation from new and repeat investors comprising pension funds, insurance companies, investment companies, asset managers and private banking clients.

Primary subscription of iSTOX's tokens closed last month, with 50 individual investors having taken up the deal. Subscribed units are now listed on the iSTOX exchange for secondary trading.

Smaller accredited investors often find it very difficult to gain access to private real estate funds because of the minimum investment amount, iSTOX chief commercial officer Choo Oi Yee told The Business Times.

iSTOX enables that access by tokenising these assets using blockchain and smart-contract technology to overcome manual processes in the life cycle of a security.

Ms Choo said: "At iSTOX, we expect digital securities to eventually become a regular part of the conversation for any company planning an issuance. As they are fundamentally more efficient, we expect digital securities to grow rapidly as a share of total securities issued - benefiting both issuers and investors."

Asked about the risk that investors in office real estate might be exposed to as remote working is increasingly normalised around the world, Ms Choo noted that the Merit portfolio has a high occupancy rate.

"In addition, the weighted average lease expiry of the portfolio is 6.8 years, which is longer than the fund's life of five years. These factors reduce risk for the fund's investors," she said.

In March, iSTOX announced its tokenisation of Astrea VI, a series of private equity-backed bonds. Through iSTOX, accredited platforms can invest in the US-denominated tranches of Astrea VI - Class A-2 and Class B bonds - for a minimum of US$20,000.

The minimum investment tickets in a traditional placement exercise earlier last month were US$50,000 for Class A-2 bonds and US$200,000 for Class B bonds.