QuantmRE launches security token tied to U.S. real estate assets

The QuantmRE ‘EQRE’ security token is available only to qualified investors and will enable investment into a diversified pool of fractional equity interests in single family homes in the US.

The funds from the sale of EQRE securities tokens will be used to invest in financial instruments designed to assist property owners to unlock the equity they have built up in their homes, without creating additional debt, incurring any interest or other monthly payments. According to QuantmRE CEO Matthew Sullivan, these instruments are a consumer contract with the homeowner that "acts as an option agreement to share in the potential future appreciation of the property at the time the home is sold or the contract is refinanced."

Sullivan summarizes the EQRE offers as "a securities token tied to a unique class of real estate assets that can be attractive to institutions as well as small investors who want to dip a toe into crypto and real-estate assets at the same time. There is a low initial investment threshold and the tokens will have intrinsic value as they will represent ownership in a diversified pool of US-based real estate assets."

Under the terms of the equity agreements, when a homeowner decides to sell their home, QuantmRE receives its original investment amount back plus as a share of the potential increase in the value of the property. Unlike taking on more debt, the arrangement with QuantmRE is a partnership where both parties share in the upside and potential downside, and the homeowner is free to spend the money on whatever they wish.

To guarantee the investment Sullivan says that homeowners will remain listed as owners on the title but QuantmRE will record with the county recorder’s office a Performance Deed of Trust on the property. "This is a lien on the property that protects our interests," he says, "but is not a loan, security or swap instrument." The QuantmRE lien will be junior to other liens on the property that are based on debt products, such as a first or second position mortgage.

Legal compliance profile

Given a recent ramping up of enforcement actions from the SEC, investors have been understandably reluctant to invest in ventures with any question marks as to their legal status. In the case of the EQRE token, the security will operate under an exemption from registration pursuant to Rule 506(c) of Regulation D of the Securities Act.

QuantrmRE is also ‘testing the waters’ under Regulation A of the Securities Act. QuantmRE’s Reg A offering statement can be viewed here. This process allows companies to determine whether there may be interest in an eventual offering of its securities. If QuantmRE does go ahead with an offering under Regulation A, it will only be able to make sales after the SEC has qualified its offering statement.

Sullivan says although there is currently no public market for the EQRE tokens and QuantmRE cannot guarantee that a public market will develop. Nonetheless, he says longer term the company does plan to list the EQRE token "on an approved and regulated alternative trading system or other regulated trading exchange and are currently in discussions with two US based ATS platforms and one international exchange."