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UAE real estate developer MAG has partnered with Mantra (OM) to tokenize a $500 million real estate portfolio. MAG, a leading real estate developer in the UAE with a portfolio valued at over $5 billion, has collaborated with Mantra to innovate real estate investment using blockchain technology.
Revolutionizing Real Estate Investment
The partnership aims to introduce a real estate financing vault to Mantra’s compliance-ready Layer 1 blockchain, starting with Keturah Reserve, a luxury residential development in Meydan, Dubai. This vault offers investors a promising yield from an alternative asset class backed by the security of blockchain technology.
“The real estate financing vault provides real estate developers with a new source of capital that is outside the more common real estate financing channels on which they typically rely,” said Stephen Peepels, General Counsel & Chief Legal Officer at Mantra.
Peepels emphasized that this financing model opens up opportunities for investors who are not accessible through traditional real estate finance markets, potentially lowering the cost of capital for developers over time.
Annual Yields
Investors in the vault are looking at an approximate expected return of 8% APY from stablecoins, further enhanced with $OM tokens. Peepels explained that this yield is based on the market rate of interest that a major real estate developer would expect from traditional debt financing.
The yield in $OM tokens is additional, with the exact amount to be determined after consultations with potential investors. A widely accepted stablecoin is expected to be used to pay the approximate 8% yield, with final details to be determined.
Property Tokenization
MAG and Mantra have ambitious plans to tokenize significant real estate assets, starting with properties that have a known market value. The initial vault will be backed by a major residential real estate asset, whose value is determined by the developer based on market factors known to real estate investors and professionals.
If a property’s value drops, MAG and Mantra have mechanisms in place to protect investors by tokenizing only a fraction of the property’s market value. The first vault is expected to tokenize $20 million of an asset with a market value exceeding $70 million, resulting in over 300% collateralization, further secured by MAG’s corporate credit.
The aggregate transaction value of projects to be tokenized will be $500 million, firmly positioning Mantra and MAG as leaders in the Middle East’s tokenized real estate market.
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