Security Token Market Industry Interviews — Viktor Viktorov CEO & Co-founder of REINNO
Good morninggggggg viet.. Security Token Family! We're back with yet another interview with a security token trailblazing firm. We were elated to witness all of the amazing feedback from our previous interview with Darius Liu, COO & Co-Founder of iSTOX — the all-in-one security token exchange platform based out of Singapore, we couldn't wait to do another!
This week it is our pleasure to interview REINNO. REINNO is a fintech company based out of Stamford, Connecticut focusing on the tokenization of the commercial real estate industry. Many real estate offerings today utilize the Reg D exemption, which is followed by a 1-year lock-up period. The delayed liquidity can put a strain on the investors’ liquidity. REINNO is fixing this strain by offering instant loans collateralized by the tokenized real estate token. Learn more in the interview, it's very interesting what they’re doing! 👇
Before we go into the interview, we wanted to provide some background on our interviewee. Viktor is a successful entrepreneur from Sofia, Bulgaria. After discovering cryptocurrency and blockchain technology, he became enamored with the potential it harnessed. This sparked an incredible amount of courage, leading him to take a leap of faith and move to the United States of America with only knowing a single soul. A leap of faith usually involves the belief that good things will happen when you choose to change your life even when you have no idea what the outcome will be. Well, it seems that Viktor's risk has paid off thus far. He is an industry leader in the midst of arguably the largest financial transformation ever. Everyone can learn a thing or two from his courageousness and of course, from his interview too!
So, without further ado, let's dive right in!
REINNO is a financial technology company offering a new solution for real estate tokenization, lending, and investing with a focus on providing liquidity. REINNO is providing three services, which are complementary to each other — real estate tokenization, loans against property-backed tokens, and a platform for listing and investing in tokenized real estate. We are covering the technical, corporate, legal, and marketing aspects of these services in order to provide maximum flexibility and efficiency for our users.
As a new firm to the security token industry, what attracted you to the opportunity of real estate tokenization?
A few years ago, I heard about blockchain and cryptocurrencies for the first time from a few successful investors and VCs. Those were the early years of adoption and I did not know anything about the technology. However, it sparked my interest so I did some extensive research. I saw a lot of potential and decided to quit my position as the CEO of MyMall to start a new venture. While I was initially focused on cryptocurrencies, I was asked multiple times whether my new company could tokenize assets, in particular real estate. I thought to myself: “I might not right now… but it will!”. I reached out to Barry Monies, who had experience with bitcoin, commercial real estate, and cybersecurity. As a real estate investor himself, he knew about the pains and challenges of that industry. We spent days talking about how tokenization could revolutionize commercial real estate, make it more liquid and accessible. Then, together with Barry and Kristiyan Lozanov (our third co-founder), we founded REINNO to make our idea a reality.
What type of real estate properties do you tokenize or are you property agnostic?
REINNO’s focus is tokenization of commercial real estate in the U.S. — anything from industrial and office to multifamily and retail. We are concentrating on income-producing properties with long-term tenants; this ensures that investors can get regular income. That being said, we can always consider alternative properties — such as international or development projects. For instance, I am currently closing a deal with a client who wants to tokenize a big construction project. There are no tenants or income yet but I see a lot of potential there so we will be happy to work on that tokenization. The only downfall is that we will not be able to provide loans backed by real estate located outside of the U.S. or still under construction due to additional risks and legalities.
How does blockchain eliminate costs and inefficiencies in the real estate industry?
Blockchain allows us to keep all the records about real estate and who owns it online in an efficient and secure manner. During the tokenization process we create digital tokens that represent fractional ownership of a particular building, fund or portfolio. When someone buys tokens, they are transferred almost instantly. They do not have to go to a notary and sign the deed. There is no additional paperwork needed — the appraisal is completed during the tokenization process. There are no brokerage fees to be paid, saving money for both buyers and sellers. The ability to list properties online allows sellers to reach a wider audience. Fractional ownership also speeds up the selling process since more investors can participate with smaller amounts. Buyers, on the other hand, get a chance to compare properties online and invest from the comfort of their homes. It becomes easier to diversify since you can invest smaller amounts into more deals. Then, they can easily trade on the secondary market — once again without additional paperwork. Investors can also benefit from flexible loans by using tokens as loan collateral and achieving instant liquidity — something that was not previously possible.
Which properties are you currently selling? Can you give us more information on your upcoming listings?
REINNO has eight projects ready to go on the marketplace. We are going to share the details on the launch date but there is definitely something for everyone. There are office and multifamily buildings, retail properties, luxurious rentals and even opportunity zone assets. The locations are all over the United States — from Connecticut and Nevada to Hawaii. Of course, you have already heard about REI Capital Growth — a commercial real estate fund we tokenized for one of our clients. They offer both equity and debt investment with the option to either get regular dividend payments or capital gains. The rest of the real estate we are going to list on the platform will be 100% equity with regular passive income distributed to investors. There are deals with fixed and variable returns.
Currently, the tokenized offerings on your platform are restricted to accredited investors only. Do you envision opening up these offerings to retail investors with either Reg A+ or Reg CF exemptions?
REINNO provides support with filing for exemptions but it is really up to our clients to decide what type of offering they want to launch. Most of them choose Reg D and Reg S exemptions. Reg A+ and Reg CF have additional requirements (such as the maximum amount that can be raised) that might be unsuitable for certain offerings. We are open to listing Reg A+ or Reg CF offerings if a client decides to file for such exemptions.
Lock-up periods can put a strain on investors’ liquidity, but you have created a solution to eradicate this problem by providing instant loans collateralized by the real estate tokens. Can you go more in-depth on what this will look like and why this would be beneficial to an investor?
Sure! REINNO lending is a way to bring additional liquidity to investors. The SEC exemptions I mentioned earlier require investors to hold their tokens for a certain period of time — up to one year for equity investors. However, we acknowledge that someone’s financial needs and even the state of the economy can change during this time. So many things can happen in a year — both positive and negative — and being rich in real estate might not be helpful when you need some quick cash. Using tokenized real estate as loan collateral can bridge that gap.
The process is very simple. Investors decide on the amount they want to borrow by adjusting the number of tokens to pledge as collateral. They do not have to do any additional paperwork or wait for the approval as we as a lender already know the value and risks associated with each tokenized property. This allows us to approve the loans and send the money almost instantly. Then, as the borrower pays it back, they regain equity equivalent to the principal they paid against the loan. This is one of the biggest differences from a traditional mortgage — we do not block an entire property, just the tokens still used as collateral at a particular point in time.
These loans turn real estate into a flexible investment instrument, helping investors gain control and leverage over their assets.
Once the lock-up period ends, will these tokens be exclusively tradable on your own proprietary marketplace or will these be traded on another trading platform?
Both. We are working on a secondary market solution at the moment and our plan is to have it ready by the end of the one-year lockup period. However, we are also partnering with existing secondary markets. We already have an established relationship with ADAX. Moreover, our tokenization clients and even investors can initiate a listing on a trading platform of their choice to increase their reach and visibility of the asset.
As the industry develops, the real estate sector might become saturated. What do you see as your competitive advantage(s) that will allow you to retain your market share for years to come?
REINNO cares about what happens with an asset after it is tokenized. We do not just issue tokens and leave our clients wondering what to do next. We provide a comprehensive solution that helps throughout the lifecycle of a token — from issuance and initial sale to lending and secondary market. We are building an ecosystem that can offer something to everyone. Our team members always take into account the needs of our current and future clients. We try to stay flexible and adjust our offerings where needed. For example, we saw a lot of interest to invest in tokenized real estate with cryptocurrency. Adding it as a payment method quickly became a priority on our to-do list.
If you had the power to change one thing about the US private securities exemptions and regulations pertaining to digital assets, what would you change and why?
I would like to allow more people to participate in private placements. Usually they offer the highest returns but are reserved for the wealthiest. I understand that the limitations are there to protect less experienced investors from potential risks and prevent them from losing money. However, I also believe that real estate it is a relatively stable, secure and easy to understand asset. Investing in real estate does not have the same risk as, for example, investing in a startup. So maybe there is another problem. Not all assets that are securitised should be considered the same. Perhaps, the regulations should be based more on the underlying asset rather than on the pure fact that it has gone digital.
Are you live now? What is the minimum investment for US investors? How can they access your investment platform?
Our platform is live — users can register at https://app.reinno.io. The marketplace functionality is launching soon. We are super excited about making it available to the public but we also want to make sure that we deliver the best possible version of our investment product. It is important for us to test it thoroughly and finalize documentation to protect our investors and property owners. As for the minimum investment, it really depends on the offering. It can range anywhere between $1,000 for smaller deals and $25,000 for the bigger ones.
Although the marketplace is not launched yet, users can register and pass the KYC to be among the first people to access our exclusive offerings.
Thank you to REINNO and Viktor for participating in our interview series. We hope you learned a lot, we certainly did!
Be sure to check them out at https://reinno.io/ and follow them on Twitter and Medium!
See you next time! 👋
