Welcome to Digital Security Frontier Vision: The Voice of the Core Builders from Global Digital Security Industry # 16.
Resolute.Fund offers investors the opportunity to invest in a diversified U.S. real estate fund, managed by professionals, with a liquid share class that investors can buy, sell or hold. Anytime.In this interview, Andy Strott ,the founder of Resolute.Fund will talk about that.
Mr. Strott has worked as an executive with some of the largest fund managers in the United States — BlackRock, Alliance Bernstein and MFS Investment Management. He has worked in two different European countries, having been selected to lead new initiatives abroad.
Mr. Strott has structured real estate funds and joint venture opportunities as well as performed underwriting for more than $5 billion in new development, multi-family redevelopment, non-performing loans, bridge, and mezzanine financing.
1. Why did the Resolute.Fund choose STO?
Resolute.Fund chose to launch an STO so that investors in our fund can have a liquidity option for their investment, an option to buy, sell or hold their shares in our fund, giving them flexibility and control. This is something very new for real estate funds. Also, with no minimum investment, we offer our fund to many more investors around the world.
2. What is the strategy for the Resolute.Fund? What are the requirements for your investment targets？
Distressed mortgage investments historically produce above average returns, with the security of owning the most senior loan on the property. We target 18–20% return per year.
The distressed mortgage loans will be senior loans on residential or commercial real estate where the borrower has failed to make payments or are selling at distressed prices for other reasons. Our competitive advantage is our singular focus on loans in the $5–15 million range, where we have limited competition.
The Fund will seek to acquire the loans at discounted prices to principal balance, then manage and monetize these mortgage assets employing various methods, including these singularly or in combination: loan modification, foreclosures with sales to third parties, refinancing and deficiency judgments. Our aim is to first work with borrowers to help them to begin making regular payments again.
If we are successful, the value of the loan should increase, reflecting a ‘performing’ loan status, and we will have the option to sell the loan at a higher value than acquired. Alternatively, we have the right to foreclose on a property, which we would then sell at or close to market value. Our primary geographical focus is in secondary and tertiary markets primarily in the Southeast, Southwest, Mid, and Northwest. The senior members of our mortgage debt team have been acquiring and servicing mortgages since days of the Resolution Trust Corporation in the late 1980’s.
3.What legal compliance requirements about distressed mortgage loans ‘STO products in The U.S.？
To invest in our STO, every investor must pass through a KYC (Know Your Client) and AML (Anti-Money Laundering) process, and U.S. investors must also be Accredited Investors.
4. Investing in a diversified portfolio of distressed mortgage debt across the U.S, are there any risks?
The risks are low because we buy the most senior mortgage loan on a property, therefore, we have legal rights if the borrower does not make payments. A possible risk is if the foreclosure process runs too long and costs too much, but, we only invest in regions of the U.S. where foreclosure is short and low cost.
5. There are many STO issuance platforms. Why did you choose SWARM?
SWARM’s no-fee structure has allowed us to prepare our digital securities offering without prohibitive upfront costs, to the benefit of our investors.
SWARM’s open infrastructure offered us the customizable options and flexibility we were looking for to structure our offering as we desired.
The SWARM Community of 40,000+ strong.
6.Which STO trading platforms does Resolute.Fund currently work with?
Our tokens cannot be traded for 12 months, but, we are speaking with Archax, OpenFinance, LAToken, AirSwap, and others.
7. What is the current funding situation for the Resolute.Fund through STO? Is the financing situation of us real estate digital securities optimistic?
The Resolute.Fund STO began May 28, 2019 and runs for 4 months. We had a strong first week with a good number of investors applying for the STO. The financing opportunity for real estate digital securities is very optimistic. Real Estate is one of the biggest asset classes in the U.S. and we are the 1st real estate fund to do an STO. Our fund has an above-average return target and proven track record and, now, with a digital security, liquidity option for investors.
8. According to your observation, where are the main investment institutions and investors of digital securities coming from? Will “old money” be attracted to the real estate industry in U.S.?
Mostly Family Offices and High Net Worth investors to start. Some funds will participate as well, but, for any new technology, there are generally a small loyal group of investors, then institutional and others come in once the digital securities STO is proven.
9. How do you see the future of American real estate fund tokenization?
As one of the biggest asset classes in the U.S., there is very big opportunity for tokenizing real estate, funds and individual assets. Tokenizing offers a liquidity option to an asset class that has always been a long-term investment with little option to access invested capital, so we are revolutionizing the industry with STOs.
10. Do you think an STO based on asset collateral will be the next boom in this market?
An STO based on real estate, a real asset, should give investors confidence that their investment and digital securities are backed by actual property and real estate investments. Different from a startup company, real estate generally has cash flow and real financial value right from the beginning.
11. What is the next plan for Resolute.Fund ?
This 1st STO launch is small, at USD5MM, and so, we plan to launch more STOs like it very quickly, raising the funding amount to larger amounts each time. We have a deep and active pipeline of real estate investments to invest in and a lot of demand for our STOs.
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