New 24-story San Jose tower propelled by landmark $60 million fractional ownership offerSUMMARY
Alterra Worldwide will launch one of the world's leading real estate tokenization projects for a new multi-family high-rise tower in downtown San Jose dubbed Tower 27. The token name, T27 Silicoin (T27S) was inspired by the location of the project in the heart of Silicon Valley. 60 million T27S security tokens, each equal to $1, will be available globally via the website www.t27silicoin.com in November.
Tower 27 is a 24-story, 374-unit, Class A multi-family residential project that includes 35,597 sq ft of leasable commercial space. The property is fully entitled. The construction of Tower 27 with a total development cost of $260 million is scheduled to start in the fourth quarter of 2022 and expected to be completed within 32 months. On October 19, 2021, the San Jose City Council unanimously approved a waiver providing a 50% reduction in commercial fees for qualifying developments. The waiver provides an estimated total of $6.3 million discount in construction taxes and Affordable Housing Impact fees for the development.
Alterra Worldwide has been involved with commercial real estate development projects worldwide for more than 20 years. The company emphasized the start of construction and ongoing development are not dependent on the course of the offering. The funds necessary to develop Tower 27 are being sourced simultaneously through traditional financing methods. Alterra Worldwide CEO Mike Sarimsakci clearly stated his stance on this issue by saying, "No matter the success of the T27 Silicoin offering the building of Tower 27 will move forward".
Sarimsakci also stated Alterra Worldwide has collected funds through traditional methods many times before on previous development projects and said, “We have tracked blockchain technology and its financial extensions closely since its infancy. Due to our vision and belief in the power of crowdfunding in DeFi, we strive to become one of the pioneer companies in the digital future of real estate.”
The investment strategy is to share the profit with investors
Tower 27 is located in one of the most valuable real estate locations in the US. Directly in the center of Silicon Valley in downtown San Jose. Due in part to the region’s rapid growth, Alterra Worldwide’s investment strategy is to exit at the end of the stabilization period in 2026. As a result of this strategy, in addition to annual preferred dividend payments, a special profit-sharing system has been developed for token holders thereby increasing the estimated IRR up to 29.7% at the end of the 4-year investment period.
The property sits in the most socially active area of the city adjacent to the office campuses of large Silicon Valley companies. Tower 27 sits within blocks of Adobe Headquarters (which has begun construction on a new 4th office tower) and current construction of Google’s 80-acre mega campus deemed ‘Downtown West’. It is expected these two projects alone will bring approximately 30,000 new employees to downtown San Jose in the coming years.
Reorientation of San Jose, the Capital of Silicon Valley
Competing tech firms make San Jose one of the most attractive real estate markets in the US. San Jose, is Northern California's largest city, home to nearly one million people, and is known as the Capital of Silicon Valley. It is in constant need of quality living spaces for thousands of high-paid employees joining a variety of industries every year. San Jose, and the city's real estate is considered one of the best long-term investments in the country over the past decade.
Downtown San Jose is rapidly reorienting itself to become an economic anchor for Silicon Valley and the Bay Area as a whole. Improvement of the region directly affects the valuation of Tower 27 beyond expectations. According to market indications, demand is driving the need for more multi-family housing and this demand is expected to increase further in the near future with the rapid development of downtown San Jose in part due to big tech companies.
Tokenization, the future of real estate investment
The global real estate market reached a market cap of 32.6 trillion U.S. dollars in 2020 and offers attractive opportunities to investors looking for a safe harbor with relatively high returns. No matter how attractive it may seem, traditional real estate investments have barriers in reaching large audiences due to their high illiquidity, difficulty marketing globally, high brokerage fees and large investment capital requirements. Visionary approaches, like T27 Silicoin Offering, aim to solve these barriers by tokenizing within blockchain technology, a method to accelerate real estate investments considerably.
Real estate is on its way to becoming the driving force of tokenization with an increasing number of successful projects. Security tokens allow real estate investments to become globally accessible and individually affordable. Pioneering this trend, Tower 27 is rising in the most advantageous location of downtown San Jose and pushing the boundaries of security tokenization with the $60 million security token offering.
“We believe digitalization is the future of real estate with the convenience, speed, and global participation it provides,” said Ali Tüzmen, a board member of Alterra Worldwide and project manager for T27 Silicoin STO.
The most secure side of blockchain technology, security tokens
While cryptocurrencies are perhaps the best-known applications of blockchain technology at the moment, from a financial perspective, security tokens are much more attractive as they enable ownership (including fractional ownership) in real estate, private businesses and other alternative assets to be recorded in a digital form under the existing regulatory framework.
The asset-backed tokens of Tower 27, issued on the Ethereum blockchain, are official representations of bearer stocks of Tower 27 Partners, LP, making this offering, one of the most secure investments based on blockchain technology.
In general terms, tokenization is the creation of identical pieces of cryptographic data on the blockchain called tokens. Each token represents a value determined before issuance, it is immutable after being recorded on the blockchain, and its movement can be tracked with the records kept. Security tokens are differentiated from generic tokens for their asset-backed structure. The value they represent is a portion of a tradable financial asset such as equity, debt, or real asset. The security tokens include a smart contract with terms and conditions defined, similar to a traditional contract. The big difference is their ability to automate the execution of terms at the time the conditions are met.
Tokenization of Tower 27, the establishment of the digital infrastructure, and the digital execution of the process flow were carried out by the latest technology and the most reliable systems.
“Security tokens are an innovative way of both financing real estate projects and enabling more investors to participate. With investors able to purchase fractional ownership through a website and have their interest permanently and transparently recorded on a blockchain, even individual investors can now participate in large development projects,” said Jamie Finn, President of Securitize, Inc.