AMA: Ask Me Anything Session SwissRealCoin (07.05.2018)

SwissRealCoin is doing a Token Sale in some days time. SwissRealCoin will be Switzerland’s first real estate crypto token. On Monday the 7th of May the Co-Founder and CEO of the project of the project Brigitte Luginbühl has been in our Telegram channel to answer all questions from the community regarding this interesting project (Names of community members are anonymous):

Mr. A, [07.05.18 20:59]

Good Evening Ladies and Gentlemen! Now our AMA (Ask-me-Anything session) with SwissRealCoin. Switzerland's first Real Estate Token. Today with CEO & Co-Founder Brigitte Luginbühl! More information about this project here: https://www.swissrealcoin.io/

Mr. A, [07.05.18 20:59]

So please start now with your questions 👍

Mr. A, [07.05.18 21:01]

So \@Brigitte , will explain this project in 3-4 sentences to our community?

Brigitte Luginbuehl, [07.05.18 21:01]

Good evening everyone!

Brigitte Luginbuehl, [07.05.18 21:01]

Thank you \@Mr. A - very happy to!

Brigitte Luginbuehl, [07.05.18 21:02]

SwissRealCoin is the first crypto token backed by Swiss commercial real estate

Mr. B, [07.05.18 21:02]

HI!

Brigitte Luginbuehl, [07.05.18 21:03]

And we will bring transparency and liquidity into the portfolio by our Management and Investment Assistant MIA

Brigitte Luginbuehl, [07.05.18 21:03]

Literally, we are creating a new asset class - Crypto Real Estate

Brigitte Luginbuehl, [07.05.18 21:03]

[In reply to Mr. B]

Hello Mr. B!

Mr. A, [07.05.18 21:04]

Will this be all in Switzerland? What kind of Real Estate ?

Brigitte Luginbuehl, [07.05.18 21:05]

Switzerland is one of the most stable and strongest real estate markets in the world and of course one of the most secure and stable economic and political systems - perfect for a stable underlying!

Brigitte Luginbuehl, [07.05.18 21:06]

And it is where I spent my last 10 years of professional life - Swiss commercial real estate 😊

Mr. B, [07.05.18 21:07]

if I buy tokens, is it possible to change to others Cryptocurrencies? How much is the minimum investment?

Brigitte Luginbuehl, [07.05.18 21:07]

We invest into commercial real estate with a focus on e commerce logistics because it is a growing market

Brigitte Luginbuehl, [07.05.18 21:08]

[In reply to Mr. B]

Yes, it is - right after the beginning you can change them on the decentralized platforms and then after also on exchanges as tZERO

Mr. A, [07.05.18 21:09]

Have you already raised funds? What is the target to get in the ICO?

Brigitte Luginbuehl, [07.05.18 21:09]

The minimum investment in the ongoing private sale is CHF 1000, during the ICO it is CHF 500

Mr. B, [07.05.18 21:10]

is it necessary to live in Switzerland to invest, or have a residential status?

Brigitte Luginbuehl, [07.05.18 21:10]

[In reply to Mr. A]

Yes we did :) Now we are still in the private sale but are already in the double digit MM

Brigitte Luginbuehl, [07.05.18 21:10]

Our goal is CHF 80-100 MM, our hard cap is CHF 150 MM

Brigitte Luginbuehl, [07.05.18 21:11]

This sounds like a lot for an ICO but it isn't for a real estate portfolio - there it is only the starting point

Brigitte Luginbuehl, [07.05.18 21:12]

[In reply to Mr. B]

No you also can live abroad (only US citizens are excluded) - since we only invest into commercial real estate SRC is open for everyone 😊

Mr. A, [07.05.18 21:13]

have you received a FINMA Non Action letter for this ICO?

Brigitte Luginbuehl, [07.05.18 21:14]

[In reply to Mr. A]

As we are a security token, we publish a Public Prospectus, i.e. we are already fully compliant with the Securities Law

Mr. A, [07.05.18 21:14]

Ah, great to hear!

Brigitte Luginbuehl, [07.05.18 21:15]

But indeed we are awaiting this week the Letter of No Action for the Collective Investment Scheme (in German Kapitalanlagegesetz) that we are not a collective investment fund

Mr. A, [07.05.18 21:17]

Do you seek any problems because of the Lex-Koller-Law in Switzerland?

Brigitte Luginbuehl, [07.05.18 21:18]

Good question! To allow also foreign investors to buy SRC, we only invest into commercial real estate where Lex Koller is not applicable

Brigitte Luginbuehl, [07.05.18 21:20]

Did you understand the pricing mechanism?

Mr. A, [07.05.18 21:20]

Ah I see!

Mr. A, [07.05.18 21:20]

Can you explain the pricing mechanism for us?

Brigitte Luginbuehl, [07.05.18 21:21]

Sure - excited to!

Brigitte Luginbuehl, [07.05.18 21:22]

SRC will be a sustainable growing token, that means when the price of the token goes up, the real estate portfolio grows as well.

Brigitte Luginbuehl, [07.05.18 21:22]

How do we do that?

Brigitte Luginbuehl, [07.05.18 21:23]

Whenever the market price goes up to the double of the real estate value, new tokens are sold at market price and with the new funds we can buy additional properties and add to the portfolio

Brigitte Luginbuehl, [07.05.18 21:24]

This mechanism ensures that SRC profits from the fully crypto upside but with a down side protection

Mr. C, [07.05.18 21:25]

Can you tell us something about your discounts? How does that work? If you need the full amount to buy real estate how can you give discounts?

Mr. A, [07.05.18 21:25]

Interesting mechanism I must say. Is there a kind of Committee behind taking this decisions?

Mr. D, [07.05.18 21:26]

[In reply to Brigitte Luginbuehl]

How does the reverse work?

Brigitte Luginbuehl, [07.05.18 21:27]

[In reply to Mr. C]

We have a staggered bonus program - on the first CHF 25 MM the investor benefits of a bonus of 25%, on the next CHF 25 MM he benefits of 15%, and on the subsequent CHF 25 MM a bonus of 7.5% applies

Brigitte Luginbuehl, [07.05.18 21:27]

For example if you buy with CHF 1 you receive SRC 1.25

Brigitte Luginbuehl, [07.05.18 21:28]

Important is that this bonus is referring on the issuing price of the token, not on the real estate price nor net asset value

Brigitte Luginbuehl, [07.05.18 21:30]

[In reply to Mr. A]

Thank you! It is a software monitoring permanently the average market price of SRC and compares it with the last audited NAV. This software will interact as soon as the price reaches the doble

MR. C, [07.05.18 21:31]

So lets say you just raise 25m Coins. You will just have 18.75 M in FIAT. You need money for travelling, staff etc. It could be possible that you are just able to buy real estate for 12M?

Mr. A, [07.05.18 21:31]

Will you use implied Leverage if you buy Real Estate. For example, most of the Real Estate Funds work with a Leverage of 1:1 for Equity (so around 50% Leverage Ratio)

Mr. E, [07.05.18 21:32]

[In reply to Mr. A]

Oh didnt even know it

Brigitte Luginbuehl, [07.05.18 21:33]

[In reply to Mr. D]

In the short run, the market price can drop below the NAV due to demand&suppyl. But our strong assumption is that in the long run the price adjusts at least to the NAV as rational investors will buy additional tokens when they see price \< NAV

Brigitte Luginbuehl, [07.05.18 21:34]

And of course we have always the possibility to buy back tokens on the 2ndry market to push it from below

Brigitte Luginbuehl, [07.05.18 21:34]

[In reply to Mr. C]

We allocate 92% of the proceeds from the ICO to real estate. This is legally binding according our prospectus

Mr. C, [07.05.18 21:34]

[In reply to Brigitte Luginbuehl]

Where do you get the money for that?

Mr. E, [07.05.18 21:35]

What is the liquidity outlook for the token? Will it be traded on exchanges?

Brigitte Luginbuehl, [07.05.18 21:35]

[In reply to Mr. A]

Yes we will, as it is a subordinated loan structure it is bankable. We will apply ca. 30-40% LTV, means rather conservative

Mr. C, [07.05.18 21:35]

[In reply to Mr. E]

Its a security. It won’t ask

Mr. C, [07.05.18 21:36]

It’s the lykke problem

Mr. A, [07.05.18 21:36]

The Token itself, will you send out Dividends you get from rent or accumulate it to buy more Real Estate later?

Mr. E, [07.05.18 21:37]

[In reply to Mr. C]

DEXes will not wait... Or is there a lockup and centralized storage?

Brigitte Luginbuehl, [07.05.18 21:37]

[In reply to Mr. C]

Liquidity margin in the company: 20% of the net rental income stays in the company (but therefore we don't take any management fees)

Brigitte Luginbuehl, [07.05.18 21:38]

[In reply to Mr. E]

Yes, we are talking to tZERO for example

Brigitte Luginbuehl, [07.05.18 21:39]

[In reply to Mr. C]

There are several licensed exchanges on the way, Lykke is only one of them

Brigitte Luginbuehl, [07.05.18 21:40]

[In reply to Mr. A]

We will reinvest the net rental income which has also a tax advantage for the investor

Brigitte Luginbuehl, [07.05.18 21:40]

And yes, with this the inner value of the token always increases

Brigitte Luginbuehl, [07.05.18 21:41]

There are 3 mechanisms how the inner value and therefore the price of the token increases:

Brigitte Luginbuehl, [07.05.18 21:41]

  1. Reinvestment of the net rental income

Brigitte Luginbuehl, [07.05.18 21:42]

  1. Price increase of the token: New tokens are sold, with the new proceeds additional houses are bought

Brigitte Luginbuehl, [07.05.18 21:43]

  1. The investor participates as well on software licensing. 50% of the net profits of software licensing fees are reinvested into the portfolio as well

Mr. A, [07.05.18 21:43]

What is the minimum you need to buy one object? Or will you also buy parts of projects together with other firms?

Brigitte Luginbuehl, [07.05.18 21:44]

[In reply to Mr. E]

There is a lockup only for very large investments

Brigitte Luginbuehl, [07.05.18 21:45]

[In reply to Mr. A]

Our soft cap is CHF 30 MM, which means we start then with 2 houses. Below that amount no profitable portfolio is possible

Mr. A, [07.05.18 21:45]

I see

Mr. A, [07.05.18 21:46]

When will the ICO start. How long will it last?

Brigitte Luginbuehl, [07.05.18 21:47]

The ICO starts on the 23 May and will be open until July

Mr. A, [07.05.18 21:48]

What I like, more money is not a dilution for the investor. You just buy more houses with it.

Brigitte Luginbuehl, [07.05.18 21:50]

Right! When the token price increases, the token value gets also bigger.

Mr. E, [07.05.18 21:50]

But bonuses seem quite high to me for a fund like yours. You will be in catch-up mode until you filled the bonuses, no?

Brigitte Luginbuehl, [07.05.18 21:54]

[In reply to Mr. E]

No, as explained above this initial "gap" is filled fast as the inner value / real estate portfolio is not only growing with annual rental yield but also with the price mechanism and software licensing

Mr. F, [07.05.18 21:54]

[In reply to Brigitte Luginbuehl]

why do you think this is a new asset class?

...just because it comes in form of a token or do you see benefit s.a. in terms of volatility/correlation in a portfolio?

Brigitte Luginbuehl, [07.05.18 21:54]

[In reply to Mr. F]

Loving this question- thank you!

Mr. E, [07.05.18 21:55]

[In reply to Brigitte Luginbuehl]

Hmm this implies you are close to certain that your underlying asset will grow in value...

Brigitte Luginbuehl, [07.05.18 21:55]

It is a new asset class as it is a much more efficient and liquid way to invest into real estate. As well we open the management up to the investor and give him full transparency 24/7 as well as voting right (for acquisition and liquidation)

Brigitte Luginbuehl, [07.05.18 21:56]

[In reply to Mr. E]

Correct. This is our ultimate goal of SRC!

Mr. E, [07.05.18 21:57]

[In reply to Brigitte Luginbuehl]

I agree. In my view it is not so much the asset class as the asset medium that is new. You could do the same on legacy/existing systems as well but not auditable in the same way.

Mr. E, [07.05.18 21:57]

[In reply to Brigitte Luginbuehl]

No offense - I am very skeptic about such claims.

Brigitte Luginbuehl, [07.05.18 21:58]

This is the goal of every fund and asset vehicle - to grow the value!

Brigitte Luginbuehl, [07.05.18 21:59]

Not even only in real estate.

Mr. F, [07.05.18 21:59]

...do not (yet ?) fully agree real estate funds are also traded on exchanges and the liquidity will not auMr. Jatically rise because of a token solution, as pricing and valuation problematic remains mainly the same

Brigitte Luginbuehl, [07.05.18 22:00]

[In reply to Mr. E]

Isn't it the goal of any asset vehicle, company or fund to grow its inner value?

Mr. E, [07.05.18 22:01]

[In reply to Brigitte Luginbuehl]

Ofc, but the claim that you will fill the gap with the raising prices in a short time is close to a "success guarantee". That's what I am talking about.

Mr. E, [07.05.18 22:01]

[In reply to Brigitte Luginbuehl]

Yes of course.

Mr. E, [07.05.18 22:02]

Not being a dick here. Just an advocatus diaboli.

Mr. D, [07.05.18 22:02]

The goal, yes. But I think it would be prudent to have a process in place in case that does not happen. From where do you get the cash for the buybacks you mentioned above?

Mr. E, [07.05.18 22:03]

Do you have models in place for a sell-off scenario?

Brigitte Luginbuehl, [07.05.18 22:03]

[In reply to Mr. F]

Tokens are tradable globally, fund shares are often underlying restrictions (for example of the exchange itself). Also, the settlement of a fund share can take up to 4 days.

Mr. E, [07.05.18 22:03]

How do you ensure KYC/AML on the tokens once they are traded on secondary markets? Will claims be centralized?

Brigitte Luginbuehl, [07.05.18 22:07]

[In reply to Mr. D]

Even if the gap would not be filled up in due time, the investor still benefits from a very high ratio underlying compared to other crypto assets, also other asset backed crypto assets, for example Gold backed tokens where the market price and underlying doesn't correspond

Mr. F, [07.05.18 22:07]

[In reply to Brigitte Luginbuehl]

...sorry but this argument rarely led to higher volume ... but to higher costs. At least not in for regular equities, funds, structured products etc.

Argument is more valid for "global assets" s.a. Gold, USD .... but not even Nestle or IBM shs

Brigitte Luginbuehl, [07.05.18 22:08]

[In reply to Mr. E]

With any other cryptocurrency/crypto assets, the secondary market is not regulated in terms of KYC/AML

Mr. E, [07.05.18 22:09]

[In reply to Brigitte Luginbuehl]

Sorry I am not sure: Will there be dividend payments on your token or any kind of profit sharing?

Mr. F, [07.05.18 22:09]

oh oh oh ... attention.. definitely dangerous view!

Smells like an asset token ... :-)

.."imagine" regulatory would judge these kind of tokens - in the future - under the "KAG" (kollektives Anlagegesetz)

Brigitte Luginbuehl, [07.05.18 22:09]

Even when technically feasible to control it (for example when SRC would be used for some illegal activities)

Mr. E, [07.05.18 22:10]

Will your token be issued as an ERC-20 compliant token?

Brigitte Luginbuehl, [07.05.18 22:11]

[In reply to Mr. E]

Yes there is profit sharing (80% of the rental income and 50% of the licensing fees) but we reinvest these profits (more tax efficient for the investor)

Brigitte Luginbuehl, [07.05.18 22:11]

[In reply to Mr. F]

We anticipate exactly this - this is why we applied for a letter of no action fot the KAG

Mr. E, [07.05.18 22:12]

So it will be a cumulating fund?

Brigitte Luginbuehl, [07.05.18 22:12]

[In reply to Mr. E]

Yes.

Mr. E, [07.05.18 22:13]

[In reply to Brigitte Luginbuehl]

Will your contract be audited by an independant third party?

Mr. E, [07.05.18 22:14]

[In reply to Brigitte Luginbuehl]

To my knowlege the FINMA has not issued any no-action letter yet. Are you in the process of working this out before you start the ICO?

Mr. F, [07.05.18 22:14]

[In reply to Brigitte Luginbuehl]

...supported by some good knowledgeable legal advisor? ... did you already receive an answer? ... suppose not

Brigitte Luginbuehl, [07.05.18 22:14]

[In reply to Mr. E]

No, it is not a fund structure, we are a PropTech company (my co-founder Mr. G is programming really cool stuff => real estate asset & investment mangement tool => which we license to other real estate owners

Brigitte Luginbuehl, [07.05.18 22:14]

[In reply to Mr. E]

Audit by one or two - the contract is currently published on github

Brigitte Luginbuehl, [07.05.18 22:15]

The FINMA did already no action letters, even in the FinTech Desk

Mr. E, [07.05.18 22:15]

[In reply to Brigitte Luginbuehl]

Not for security tokens as far as I know - but I might be wrong on that.

Brigitte Luginbuehl, [07.05.18 22:16]

And as we are not applying in the FinTech Desk, but KAG Desk, we were a bit faster. Expecting the letter this week

Mr. E, [07.05.18 22:16]

[In reply to Brigitte Luginbuehl]

Will you make it public?

Brigitte Luginbuehl, [07.05.18 22:17]

[In reply to Mr. F]

Yes we are very well supported 😊 Baer & Karrer became kind of friends in the last couple of months

Brigitte Luginbuehl, [07.05.18 22:17]

[In reply to Mr. E]

No, you are right - for security tokens not yet.

Brigitte Luginbuehl, [07.05.18 22:18]

[In reply to Mr. E]

Sure.

Mr. E, [07.05.18 22:18]

Btw the Moon and Mars remarks are fun (in the roadmap) - but I think they don't belong there.

Brigitte Luginbuehl, [07.05.18 22:19]

[In reply to Mr. E]

You don't like it?

Mr. E, [07.05.18 22:19]

[In reply to Brigitte Luginbuehl]

In a fun environment yes - not in an official roadmap though...

Mr. E, [07.05.18 22:19]

But this is a question of taste more than anything.

Brigitte Luginbuehl, [07.05.18 22:19]

[In reply to Mr. E]

Fair point.

Brigitte Luginbuehl, [07.05.18 22:20]

[In reply to Mr. E]

Did you invest into ICOs before?

Mr. E, [07.05.18 22:21]

[In reply to Brigitte Luginbuehl]

Far too many \^\^

Mr. G, [07.05.18 22:21]

:)

Mr. H, [07.05.18 22:21]

[In reply to Brigitte Luginbuehl]

Erm, Mr. E is one of the most reputed folks here Brigitte...

Mr. E, [07.05.18 22:21]

[In reply to Mr. H]

Thanks mate I am flattered 😘

Mr. H, [07.05.18 22:22]

[In reply to Mr. E]

Giving credit when credit is due.

Mr. F, [07.05.18 22:22]

[In reply to Brigitte Luginbuehl]

Good support! Will be interesting to see/read if they really provide you this letter ... would definitely be some how a game changer and interesting to understand why they do not see it as "KAG" relevant ...

I definitely will follow it

Mr. A, [07.05.18 22:22]

Well Tezos have had Venus and Mars also in their Roadmap/Whitepaper. No issues with this

Mr. A, [07.05.18 22:23]

Time is finished, any further question?

Mr. E, [07.05.18 22:23]

[In reply to Mr. A]

Haha thanks

Mr. E, [07.05.18 22:23]

[In reply to Mr. A]

Yep

Mr. H, [07.05.18 22:23]

[In reply to Mr. A]

But you know the Breitman's are not marketing savvy...

Mr. E, [07.05.18 22:24]

\@Brigitte How are you going to justify/prive/make auditable the returns on your investments/underlying assets? This will not be fully transparent as transactions are going to be mostrly (if not all) off chain. Or will you impose crypto payments on the rental payments?

Mr. G, [07.05.18 22:24]

[In reply to Mr. E]

.. there is still a fair chance that Elon will invest. Not sure about the moon though with its 1.2% mass

Mr. E, [07.05.18 22:24]

[In reply to Mr. H]

Haha made my day

Mr. F, [07.05.18 22:26]

[In reply to Mr. E]

...might only work with Daniel Gasteiger´s Trust Square ;-)

Brigitte Luginbuehl, [07.05.18 22:27]

[In reply to Mr. E]

At the very beginning you are right, there is a transformation from off- to on-chain. After initial launch, rental payments and opex are made with crypto / ETH as well, full information comes on the blockchain

Mr. I, [07.05.18 22:27]

This is not a “software TOKEN style of ICO” right ? It’s more like a private equity investment whereas returns are in that range , but also less risk , correct ?

Brigitte Luginbuehl, [07.05.18 22:28]

[In reply to Mr. I]

Absolutely.

Mr. I, [07.05.18 22:28]

So it’s a security token ?

Brigitte Luginbuehl, [07.05.18 22:29]

Correct, it is a security token.

Mr. J, [07.05.18 22:30]

[In reply to Mr. E]

100% sign

Mr. I, [07.05.18 22:30]

I’m curious why did you guys choose the ICO route for collecting money vs traditional PE kind of fundraising through family offices , PE funds , HNI, etc?

Brigitte Luginbuehl, [07.05.18 22:31]

[In reply to Mr. I]

PE is often very illiquid on the secondary market

Brigitte Luginbuehl, [07.05.18 22:32]

We create a more efficient and transparent real estate asset class which benefits from a higher tradebility

Mr. E, [07.05.18 22:32]

[In reply to Brigitte Luginbuehl]

You could sell a token still...

Brigitte Luginbuehl, [07.05.18 22:33]

A traditional fundraising would have been even simplier => the set up for a fully compliant security is a lot of ground work

Brigitte Luginbuehl, [07.05.18 22:33]

[In reply to Mr. E]

Correct but how to you want to sell it to some crypto guys in South Korea? Pretty complicated... or a lot of work with international law firms 😉

Mr. E, [07.05.18 22:34]

[In reply to Brigitte Luginbuehl]

Ofc this would include creating vehicles.

Mr. E, [07.05.18 22:34]

But still you could raise some MM and then do a small part crowd.

Mr. E, [07.05.18 22:35]

I am baffled no Swiss project ever chose that route so far.

Brigitte Luginbuehl, [07.05.18 22:35]

The value proposition of SRC is that you can trade it directly from any other cryptos and freely around the globe on the secondary market which isn't the case with a traditional PE investment

Brigitte Luginbuehl, [07.05.18 22:35]

[In reply to Mr. E]

Correct somehow we are the first

Mr. E, [07.05.18 22:36]

[In reply to Brigitte Luginbuehl]

In creating vehicles for other juristictions investors?

Brigitte Luginbuehl, [07.05.18 22:36]

Our project is not about just simple fundraising (BTW one of our founding shareholders built up an infrastructure fund with EUR 1 bn AUM)

Mr. E, [07.05.18 22:36]

\@Mr. A sorry, you call it quits when you feel like boss.

Mr. A, [07.05.18 22:37]

I'm flexible, no worries!

Brigitte Luginbuehl, [07.05.18 22:37]

It is much more about creating a new way of investing into real estate

Brigitte Luginbuehl, [07.05.18 22:38]

And as well a disruptive way of asset management

Mr. E, [07.05.18 22:38]

[In reply to Brigitte Luginbuehl]

I was talking about vehicles (offshore) for these investors.

Brigitte Luginbuehl, [07.05.18 22:39]

[In reply to Mr. E]

Much more complexitiy than setting up one token, at least to my opinion

Brigitte Luginbuehl, [07.05.18 22:39]

[In reply to Mr. A]

Merci 😊

Mr. F, [07.05.18 22:40]

The "Grundbuch-Owner" will be SRC? And the real estate will be bought in their/your name? ...or a Trust in between? ... sorry did not read the whitepaper ...shame on me..

Mr. E, [07.05.18 22:40]

I am done with questions from my part. Thank you very much for answering Brigitte. Good luck with your ICO!

Brigitte Luginbuehl, [07.05.18 22:42]

[In reply to Mr. F]

:D happy to provide you with our short summary 😊

Brigitte Luginbuehl, [07.05.18 22:42]

Yes the token itself is structured as a subordinated perpetual bond with a legal claimable right for the liquidation proceeds of the portfolio

Mr. F, [07.05.18 22:43]

okay , just drop me a private message.

Also from my side thks a lot to Brigitte ... much appreciated!

Brigitte Luginbuehl, [07.05.18 22:44]

which means every token holder has the right to vote for liquidation once a year. when more than 80% decide to liquidate, all investors receive their money back plus the additional surplus

Brigitte Luginbuehl, [07.05.18 22:44]

Thank you all for joining and your brilliant questions! It was a pleasure!

Brigitte Luginbuehl, [07.05.18 22:44]

If you have more questions please join our community on telegram: \@SwissRealCoinChat.

Mr. A, [07.05.18 22:44]

So many thanks for the participation and thanks for the anwers Brigitte! Awesome and good luck with the ICO!