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The developer of a huge 13,000-apartment residential development in south east London is attempting to raise up to £140M by selling tokens secured against a rented residential block at the scheme.
Hong Kong-based Knight Dragon said in a press release it was undertaking a tokenisation that would give investors the right to the profits from Building Four at its Greenwich Peninsula residential scheme. It said it was the first tokenisation of a building to be undertaken in central London.
Building Four is a 191-unit block that is fully leased, a spokesperson for Knight Dragon told Bisnow in an email. Knight Dragon said the building is valued at £140M. It will put on sale 100,000 tokens, called KDB4, initially valued at £1,400 each.
The owners of the tokens will be entitled to 80% of the profits from the building. By profit, Knight Dragon means the net rental income generated from the scheme.
If the rental income from the building goes up, the value of the tokens is likely to go up, Knight Dragon said. The reverse happens if income goes down.
The tokens will be created using blockchain technology. They will be regulated securities and owners will be able to trade them on the HKbitEX, an exchange platform for digital assets such as cryptocurrencies based in Hong Kong. Only sophisticated investors will be able to buy the tokens, the company said.
In a statement, Knight Dragon said that the token issuance was akin to investors being able to buy shares in a single building, and was a way of providing liquidity in what is typically an illiquid asset class.
“At a corporate level, Knight Dragon has just revolutionised the entire European property market and will now move to do so internationally,” Knight Dragon founder and Vice Chairman Sammy Lee said.
“At an individual level, for a relatively modest investment, individuals can own a piece of Central London real estate profit. In the same way an asset can be securitised by dividing it into shares, tokenisation allows an asset to be divided into individual tokens. The tokens represent a specific share of an underlying asset.”
Knight Dragon is backed by Henry Cheng, chairman of Chow Tai Fook Enterprises Ltd, the jewellery and property conglomerate. Forbes pegs his net worth at $1.2B. Greenwich Peninsula is a mix of residential for sale and rent.
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