Update on the Miami We Work Transaction

We have a new closing date (August 7) on the building based on two things; 1) Problems with our intercreditor agreeement, and 2) We heard from many of you that we were moving too fast. So we wanted to give you an update on where we were when we went to close last week (using some bridge money that we would have had to sell off our balance sheet) and what we learned.

Tech = everything went great

Distribution = Incredible, valuable, and we are still working this (we are still in the market accepting subscriptions – we will accept up to $80 million).

Investment/Structure = We had difficulty in completing the deal with documentation (intercreditor agreement) between the senior lender and a bridge mezz piece. We have until June 28th to get this right to close on the building. It is imperative that we partner with quality firms and individuals in order to ensure that the Investments get executed well when bumps in the road come, because they always come.

Here is what we did over the last few months:

1. Distribution

§  100,000 industry participants mapped

·         40,000 crypto-community

·         40,000 traditional investment managers

·         20,000 intermediaries

§  50,000 profiles known & in development 

§  20,000 loaded, verified targets for the Miami WeWork Building transaction

·         15,000+ email addresses delivered to

·         4,000 prospects engaged

§  20,000+ page views, 1000+ clicks

§  1,000 qualified leads actively engaged (QIB and QP)

·         200 top sales prospects on We Work Trade

·         60+ active deal participants

·         $187 million in indications of interest from 14 entities in 2 weeks – obviously not all of this materialized, but these were our initial IOI’s, which is great for first deal out of the chute.

We are now in a better position to process interest in a more orderly fashion as we have the remainder of the month to process the deal, we do need equity investors right now.

2. Technology

§ We have created a methodology, a blueprint of how to proceed with these banking transactions, comprising team, technology and documentation. The tokenization, digital escrow, and the ability to execute in 7 crypto currencies went off without a hitch. 

§ We built our tech, systems, and processes, and we built the digital financial instrument (token) to collect data, making the token a practical tool for use in the secondary market and in the performance of the instrument.

·        Financial Quants have won: 

“Data or it didn’t happen”

·        Data-driven trading is applied—and winning in every asset class. We need to migrate to these markets, but to make illiquid assets liquid, we need the ability not only to settle and clear, but we need bids. Bids are generated when we can socialize data to drive investor behavior

·        Old distinction: 

listed vs unlisted securities

·        New distinction: 

data vs no-data assets

§ Security tokens are problematic (a tech dead end) for Capital Markets use. Their value is for Digital Assets and high volume low variable assets, such as, airline miles, cloud storage space, ETFs, or commodities (essentially blank car loan forms or blank engraved share certificates). Modeling transactions as code is brittle and you need a lot of off chain data and functions for these to trade well, so fo high volume trading and short lived assets, this works. For long lived assets we need to model transactions as data, particularly in the private/illiquid space, more on this later.

·        Tokenization of private securities is the real opportunity because they are an existing, functioning market with real problems that blockchain can solve.

·        Mid-Market Debt and Minority LP Real Estate Interests’ problems are large, painful, and well-known.

USING BLOCKCHAIN TO OVERCOME ADVERSE SELECTION – this is the real time audit of data coming from assets (CRE/Private debt) and is “time-stamped, validated, and indexed by the block chain

·        Provision of trustworthy data

·        Makes real time actionable pricing possible without third party oracles

·        Combining data functionality / validation compatible to that provided by Zillow, Carfax, online dating services.

USING BLOCKCHAIN & INTERNET OF THINGS (IoT)

“Blockchain is promising for IoT security for the same reasons it works for cryptocurrency:

It provides assurances that data is legitimate, and the process that introduces new data is well-defined”

–Prof. Ahmed Ban (quoted in Forbes)

 3. Investment - the limited partnership that is being tokenized is focused on the primary property, located in downtown Miami a few blocks away from Biscayne Boulevard, 1.5 blocks from the new high speed rail station. Beginning over six months ago we negotiated a deal with the seller to purchase the building and we needed to fund the LP with $65 million dollars. Our price analysis was based on diligence on the market, the area, the building, 100% occupancy by WeWork, (an outstanding tenant, generating amazing data), credit support from the parent in the form of a letter of credit issued by Deutsche Bank, and we combed these attributes with expert opinion from property assessments as well as several prominent real estate executives on the value of the upside of the building in this location and the advent of highspeed rail into Miami.  We executed the deal and began the process of completing documentation and preparing to go to market, which we did in early May. 

·        We will use permanent senior finance after acquisition of the building – for now we have the Seller providing a bridge senior loan until after we take possession and can refi with commercial paper.  

·        We have a bridge in place for the mezz, but this will likely be taken over by additional subscriptions over the next 2.5 weeks.

·        The Equity is currently taken by a limited number of family offices who are interested in not only the Real Estate investment but also in the CRE tech and Inveniam as a company.

We look forward to your continued engagement on this deal and we invite you to:

Get a Deal Sheet:

https://info.inveniam.capital/2019q2deals

Get an NDA if you would like access to the deal room:

https://info.inveniam.capital/nda

Start AML KYC if you are interested in being an investor:

https://info.inveniam.capital/amlkyc

In addition, today we begin with our work on our the next slate of deals. These deals include:

1. Student Housing -- Roers Development LLC (Seller) is marketing a portfolio of 3 student housing development (Project) in Fargo, North Dakota. The Project consists of 488 units and 917 beds and is expected to reach stabilized revenue of $7.3 million in 2020 with $4.5 million in net income. The property primarily serves students at North Dakota State University (NDSU) for which Moody's has assigned Aa3 ratings to NDSU's Series2017A and 2017B bonds. Inveniam is raising approximately $80 million to complete the acquisition of the Project, which Seller will continue to manage.
2. RWS-- Regional Water service (RWS)is a midstream service company that is a major player in the sourcing, transporting, and storing of water prior to the use of hydraulic fracturing processes in the Bakken oil and gas region of North Dakota. The Bakken Formation is one of the largest contiguous deposits of oil and natural gas that underlies North Dakota, Northeastern Montana, Southern Saskatchewan, and Southwestern Manitoba. The company is seeking capital to complete the expansion of their pipeline to take advantage of existing client demands and to enhance their competitiveness. The financing being sought will not only allow the company to achieve its growth potential but will enable it to simplify its capital structure and create greater efficiency in capital management.
3. Inveniam Impact Africa Micro-finance Fund – Inveniam has partnered with JumpStart Africa Ltd as they provides financial services to the active poor women in the peri-urban slum areas of Kampala and Wakiso Districts in Uganda with a focus on both profitability and social impact. Inveniam Impact Africa Fund will invest in microfinance providers to provide funds, technology and training for those most in need to fuel Africa’s development. We partner with local, established, in-country institutions and companies to achieve these goals. Inveniam Impact Africa helps provide better tracking and accounting tools. In addition, through Inveniam’s proprietary tokenization tools Microloans can be tokenized which will allow to expand the sale/socialization of microloans in bundles to third party investors. JumpStart Africa (JSA) currently provides - financial services to community trust groups with a group guarantee for loans repayable in 20 to 30 weeks for business and schooling investment. Inveniam will fund raise capital for fund incubator groups funding between $82 to $545 USA Dollars with an average loan size is US $ 245. Targeted raise is $10 million, This investment will be open to accredited investors.

Thank you everyone for following, reviewing our deals, providing feedback, and supporting Inveniam as we continue to grow and develop our own firm, as well as the utilization of blockchain in the capital markets. In particular Inveniam seeks to stand at the nexus of capital markets, blockchain, and crypto currencies in order to drive innovation and the more efficient movement of capital to underserved markets and market participants. 

We are highly interested in feedback. Please tell us your thoughts on the process to date.

God Bless,

Pat