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ARTICLE · 25 JUNE 2019

CRE Equity Tokenization: A Path For Enhanced Liquidity

A&O Shearman
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Moving real estate assets into a blockchain enhances the efficiency and transparency of trading, according to Shearman & Sterling attorneys Kris Ferranti and Cristiana Modesti.

United StatesReal Estate and Construction
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Moving real estate assets into a blockchain enhances the efficiency and transparency of trading, according to Shearman & Sterling attorneys Kris Ferranti and Cristiana Modesti.

Real estate is a relatively illiquid asset. In general, investors cannot quickly and easily sell their commercial real estate positions in the open market. As a result, commercial real estate is typically traded at an illiquidity discount reported to be as high as 25-30 percent. Compared to traditional investments, this is a staggering loss in value. And for investors that typically invest alongside sponsors through fund or joint venture structures, exiting early is even more difficult. But with equity tokenization, investors could potentially unlock liquidity in this otherwise illiquid alternative asset class.

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