Mönchengladbach: Welcome Home Security Token
Key Takeaways
- FiveRocks is constructing a new building with its development company (SPV) Welcome Home MG GmbH
- The building with 8 residential units & 4 commercial units will be in Mönchengladbach, North Rhine-Westphalia, Germany
- Investors will receive a fixed interest rate of 4% p.y. + 20% profit share if the property gets sold during the duration
- The real estate security token will mature on 31.07.2023 (with the option to extend for 6 months until 31.12.2023)
Why Did FiveRocks Choose Mönchengladbach As Location for the real estate security token?
Tobias Hänschke and Michael Schröder are the managing directors of FiveRocks Development SE (holding company of Welcome Home MG GmbH). They will explain here why exactly they chose Mönchengladbach as the location.
TOBIAS: The Rhine-Ruhr metropolitan region is the largest in Germany (by population & GDP) and the fourth largest in Europe. That is why Mönchengladbach is a very interesting location for us with its proximity to the most affordable A-city in Germany (Düsseldorf). In particular, the industrial and business demand there is enormous. Also, the connections between all the cities in the Rhein-Ruhr metropolitan region give us more flexibility to address potential tenants from both the commercial and residential side. This was basically one of the main points for us to decide to develop this property in Mönchengladbach.
MICHAEL: There is also an initiative from Mönchengladbach to create more green and sustainable areas in the city center, including green living and commercial space. In terms of the micro-location, “Welcome Home” is a very exciting plot because we are right next to the newly built city hall. So we are very close to the heart of Mönchengladbach and still a little bit away from the traffic. That is an important reason why we chose to build this property.
Why Did FiveRocks Choose A Mixture Of Residential & Commercial Usage for the real estate security token?
This property is in a very good B-location right next to many A-locations (Düsseldorf & Cologne) which is why the return can be very good. Especially with a mix of commercial and residential use. What is the advantage for investors exactly?
TOBIAS: First of all, we have to develop according to the plan of the city of Mönchengladbach. The zoning plan says that we need commercial and residential space in this area. So we want to optimize that mix of commercial and residential usage. Also, commercial buildings yield a higher return than residential real estate. Yet, there is a lot of demand for residential space in the heart of Mönchengladbach. We think the mix is perfect and the potential returns are attractive for investors (especially in times of high inflation).
MICHAEL: There are many retail stores very close to our property already (including the large shopping center Minto). That is why this property is ideal because we already have all the stores of daily life and the very quiet location is ideal for living. What is missing in the city center of Mönchengladbach so far is high-quality office space, which we are targeting with “Welcome Home.” That is the reason why we decided on this particular split between high-quality office space and high-quality residential space. Commercial space offers a higher return, that is why “Welcome Home” is very attractive for investors.
What Is The Current Status Of "Welcome Home" in Mönchengladbach?
Being a real estate investor, especially developing real estate yourself, is a lot of work. What is the current status of the property development?
MICHAEL: We acquired the plot about a year ago and have been in discussions with the city since then. We have received the first positive feedback from the city for our development plans, the design of the property, etc. We have now submitted our building permit application with the goal of receiving it by the end of 2022 or early 2023. Until then we are willing to negotiate possible changes or improvements together with the city council of Mönchengladbach.
TOBIAS: Planning and developing the perfect property with the perfect mix of commercial and residential space takes time. Once we have the building permit, we will start developing the property and find the right tenants after that. After finishing the construction in 2024 we could sell the property (with a 20% profit share for security token investors). Preferably, we would like to keep the property together with investors for passive rental income (tax-efficiently with security tokens). The flexibility we have here is the major advantage of tokenizing a property development like “Welcome Home” with the blockchain technology.
What Are The Next Steps For The Property?
As of writing this article, FiveRocks is far from done with the work. When is the planned completion date for the construction and what is your plan with "Welcome Home" afterwards? Usually, property developers sell the properties after they are completed, but you have something very special in mind.
MICHAEL: We plan to finish the project in the first half of 2024. I think we are well on the way to accomplishing this. But if necessary, we always have a plan B if things get delayed.
TOBIAS: This project is absolutely awesome! It would be great to find as many real estate security token investors as possible to keep “Welcome Home” as an asset and get cash flow from passive rental income in the future. That would be the best scenario! FiveRocks would manage the property and everyone would benefit from a modern & sustainable building in a very attractive area in Germany.
Investment Details Of the real estate security token "Welcome Home" - Mönchengladbach
AXEL: FiveRocks is offering investors 450.000€ divided into 1€ security tokens to participate in this project development. Therefore creating together with us an exciting investment opportunity that didn’t exist before. In order to reach the goal and hold the property after construction, the funding goal of 1 million € is required. If that goal cannot be met, FiveRocks will sell “Welcome Home” after completion.
Investors will receive in both scenarios a fixed interest rate of 4% until the duration of this blockchain-based Welcome Home security token on 31.07.2023 (with the option for the issuer to extend for another 6 months until 31.12.2023). If FiveRocks has to sell the property, investors will receive an additional 20% profit share of the sale value (an additional 8,8% return equaling a 12,8% return for one year according to FiveRocks calculations).
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