A pioneering project to tokenize a luxury Manhattan apartment building was announced at the end of 2018. It concerned a newly built 12-unit condominium building in the East Village (address: 436 and 442 East 13th Street), known as the “Thirteen East + West” project. The total value of this building (the so-called sellout, i.e. the total projected selling price of all units) was estimated at around USD 36 million (Crypto Real Estate | Fluidity | Thirteen East West). The purpose of tokenization was to enable investors to purchase shares in this project in the form of digital tokens secured by real estate, which was to open up the real estate market to a wider group of investors through fractional shares available even for small amounts (New York's $30 Million Housing Development Up for Grabs on Ethereum). The initiative was carried out by the Amirian Group development company in cooperation with the technology companies Fluidity/AirSwap and the broker-dealer Propellr (later integrated under the Factora brand (Introducing the next level of tokenization of private placement securities – The Tokenizer) (Propellr)). This project was hailed as the first real estate tokenization of its kind on the New York market and attracted a lot of media attention (Propellr and Fluidity's NYC Real Estate Tokenization Deal Falls Through), heralding a more democratized and decentralized model of real estate investment.
The tokenization used an innovative financing structure called the “Two Token Waterfall” (two-token waterfall structure) developed by Factora (formed from the merger of Propellr and Fluidity). Instead of one type of share, the issue was divided into two types of tokens corresponding to different capital layers in the project (Introducing the next level of tokenization of private placement securities – The Tokenizer): • Senior (debt) token – senior in the order of satisfaction, reflecting the debt component (loan secured by real estate). • Junior (equity) token – subordinated, corresponding to equity in the project and entitling to a share in the profits from the sale of apartments after repayment of the debt. This division reflects the full capital structure of the project (the so-called capital stack) in the form of tokens (Introducing the next level of tokenization of private placement securities – The Tokenizer). According to the available information, the intention was to issue tokens corresponding to a total of approximately USD 25 million of project capital, of which approximately USD 17 million was to be in the form of debt tokens and approximately USD 8 million in the form of equity tokens (). These amounts corresponded to the planned refinancing - ~$17 million is roughly the amount of the existing construction loan, while ~$8 million covered the developer's equity/preferred equity, which investors were to take over through tokens (Crypto Real Estate | Fluidity | Thirteen East West) (). However, the exact number of token units (pieces) has not been made public. Industry sources only reported that “the entire property is represented by an unspecified (unconfirmed) number of tokens on the public blockchain,” with each token representing a fraction of the value of the apartment building ( $30 Million New York Condo Tokenized on Ethereum Blockchain | Bitcoinist.com). In other words, the division could have been very granular (e.g. theoretically 1 token = $1 in value, which would result in ~25 million tokens), but the specific nominal value of the token was not disclosed. This was partly due to regulations – the offering was a private placement for accredited investors (exempt from full registration thanks to Reg D 506(c)), hence the organizers could not publicly advertise details of the issue such as the price of a single token or the total number (Crypto Real Estate | Fluidity | Thirteen East West). It is worth noting that the minimum investment was set at $25,000 (Crypto Real Estate | Fluidity | Thirteen East West), which indicates an indicative entry threshold for investors and indirectly suggests that a single investor would cover a significant number of tokens corresponding to this amount (or multiples thereof). In total, the tokens represented approximately $25 million in project equity, divided into two tranches (debt and equity). The exact number of tokens issued is not publicly available; it is only known that the issuance was planned to cover a significant portion of the property value (approximately 70%) in the form of digital equity.
Unlike some high-profile cases (such as the “Aspen Coin” for the tokenization of the St. Regis Aspen hotel), the tokens for the Manhattan apartment building did not receive a common marketing name. In documents and statements, they were usually described simply as “tokenized securities” related to the Thirteen East + West project or as the aforementioned tokens of senior and junior class within the Two Token Waterfall model (Introducing the next level of tokenization of private placement securities - The Tokenizer). It can therefore be said that the functional name of the tokens was simply debt and equity interests in the project, recorded on the blockchain. Each token corresponded to a membership interest in an LLC holding the project's assets. The debt token gave investors a fixed preferential return (equivalent to interest) - there was mention of a “preferred return” for investors (Crypto Real Estate | Fluidity | Thirteen East West), which means that token holders had priority in receiving a predetermined profit (e.g. interest rate) from the project's revenues. The equity token, on the other hand, ensured participation in the profits from the sale of apartments after repayment of the debt tokens (i.e. a potentially higher return depending on the sales success of the project). This distribution was intended to reflect the traditional financial instruments - debt and equity - in the form of tokens, so that different investors could choose the risk and return profile (more stable and secure vs. more volatile, but with growth potential) (Introducing the next level of tokenization of private placement securities - The Tokenizer). In practice, the tokens were not listed on a public cryptocurrency exchange, but were made available to eligible investors via a private placement platform (AirSwap/Propellr). The lack of public trading and the restriction to accredited investors meant that the tokens did not appear under any ticker or symbol on the open market. From the investor's point of view, they were more like digital shares in the Thirteen East + West project, recorded in the Ethereum distributed ledger, than typical cryptocurrencies with their own name. In short, the tokens did not have a separate trade name – their “name” was de facto their belonging to the project (e.g. 436/442 E 13th Street project token) and category (debt vs. equity). The term Two Token Waterfall mentioned in the materials refers to the structure of these tokens, not the proper name of each of them (Introducing the next level of tokenization of private placement securities - The Tokenizer). It can therefore be concluded that the naming of the tokens was limited to a descriptive indication of their financial role in the project (debt token and equity token).
Finyear – “Swarm launches world-first tradable stocks and bonds on chain” (announcement about the launch of tokenization of stocks and bonds by the Swarm platform, February 2023) (Swarm launches world-first tradable stocks and bonds on chain) (Swarm launches world-first tradable stocks and bonds on chain). It contains information about the use of the Polygon network, compliance with German regulations and enabling 24/7 investment in tokens secured by real assets for both institutional and retail investors.
101blockchains - “How Tokenization of Physical Assets Enables the Economy of Everything?” (analysis of the tokenization concept, 2022) (How Tokenization of Physical Assets Enables the Economy of Everything?). Among other things, he mentions the tokenization of a hotel in Paris (€26 million) as the largest in Europe before 2023, which underlines the scale of the 25hours transaction (€45 million). He also discusses the advantages of tokenization in general (e.g. wider investor access, lower entry threshold).
Transak (blog) – “How RWA Tokenization Unlocks Decentralized Loans?” (article about tokenization of real assets in the context of DeFi, 2023) (How RWA Tokenization Unlocks Decentralized Loans? | Transak | Transak). He explains that the tokenization of real estate opens a new chapter for loan collateral in DeFi because it allows tokens representing buildings, for example, to be used as collateral. This confirms the concept of using hotel tokens as collateral for loans.
CityAM – “Crypto AM Spotlight on Swarm Markets: Paving the way for tokenization of real-world assets” (interview with the founders of Swarm, June 2023) (Crypto AM SPOTLIGHT on Swarm Markets: Paving the way for tokenization of real-world assets – City AM). It describes Swarm's mission as combining traditional finance with DeFi through the tokenization of real-world assets. It emphasizes Swarm's regulated approach (BaFin license) and the goals of introducing real-world securities on the blockchain.
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