This is an MIP6 Proposal for the addition of Robinland’s tokenized real estate backed loans to Multi-Collateral DAI (MCD). This Proposal seeks a credit line to finance special purpose vehicles (“SPVs”) established by Robinland Holdings LLC or owners or affiliates thereof (the “Issuer”) which are used to finance a series of commercial real estate loans and collaterals of similar nature.
1. Who is the interested party for this collateral application?
The asset originator is Robinland Holdings LLC as is represented by Scarlet Chen (@Scarlet_Chen, [email protected], Chief Executive Officer) and Venus Li (@Venus, [email protected], Chief Operating Officer).
The issuer will tokenize Robinland Portfolio Management LLC, which manages Project SPVs that are backed by commercial real estate loans as the underlying collateral, and issue on-chain crypto security tokens representing such underlying assets via Polymath’s infrastructure using the ERC-1400 (ST-20) protocol. Upon issuance, the tokens will be locked with MakerDAO’s MCD protocol to serve as collateral.
2. Provide a brief high-level overview of the project, with a focus on the applying collateral token
Robinland is a financial technology firm that provides a new financing solution to the real estate industry by channeling liquidity from DeFi lenders via blockchain technology. Robinland acts as a bridge between traditional finance and DeFi: by digitization and tokenization, Robinland turns real world assets, namely real estate project backed debt assets (e.g., Private Notes) into on-chain crypto tokens that can be used as collateral to access liquidity from DeFi-lenders (e.g., MakerDAO).
This innovation benefits both parties: for real estate developers, this is a much faster, cheaper, and hassle-free way of accessing liquidity; for DeFi-lenders, this is a scalable technology allowing them to include high-quality interest-bearing stable real world assets into their collateral pool, enhancing the stability and credibility of their lending facility. Robinland’s ultimate goal is to build a fintech ecosystem for tokenized real estate projects, which will provide the full spectrum of blockchain-based financial services worldwide.
One of the biggest problems with the US housing market is the affordability crisis, which can largely be traced back to restrictions on construction, including not only land use regulations, but also restricted financing for developers. Traditionally, real estate developers can seek financing from three sources: banks, real estate PE firms, or crowdfunding platforms. However, each source has its drawbacks:
- Banks have rigid requirements for extending financing to construction since the 2008 financial crisis, and as a result, many projects that have good fundamentals, i.e. generating a steady flow of rental income, do not get financed or suffer from a very restrictive LTV ratio.
- Real estate PE firms, however, do not always act in the best interest of the developer or the community, but rather its LPs: when a private equity fund invests in a project, it typically holds a super-majority of the equity and therefore the governance rights. Ultimately, the investment fund can take over the property and kick out the developer.
- Crowdfunding platforms are an innovation over the past five to ten years, but they are fundamentally (“legally” speaking) no different from any 506b, 506c real estate PE fund. After all, it’s an innovation more for real estate retail investors than for real estate developers.
Robinland, instead, will introduce a completely new financing alternative for real estate developers: accessing liquidity from DeFi lenders by tokenizing their high-quality interest bearing projects into on-chain crypto tokens and pledging them as collateral. Robinland’s role is two-fold:
- Technology provider: our team’s expertise in real estate fund raising, legal requirements, and the blockchain space allows us to become a one-stop-shop for connecting the real estate space and blockchain DeFi space, from the legal process required to pegging real estate projects to on-chain crypto tokens, to the issuance and distribution of tokens, to the interaction with Maker’s protocol.
- Quality controller: by cooperating with only the best real estate partners in the industry and having a data-based internal evaluation system, Robinland acts as a gatekeeper to ensure that projects that get on the chain are of the highest quality. These projects can then be safely used as collateral by DeFi lenders, strengthening the stability and security of the system.
Maker will be one of the many capital sources used by Robinland, which is to the benefit of both Robinland and Maker: on one hand, Maker will know the details of the loan and have the opportunity to adjust its rates accordingly, which allows Maker to stay competitive. On the other hand, multiple sources help Robinland grow the size of capital available for its lending services, ensuring stability and diversification.
The following infographics explain the proposed structure:
Illustration 1, from left to right: Robinland works with Crowdfunz, a real estate Private Equity firm based in NYC (5-year track record, 0 default rate, 10-20 projects financed every year). Crowdfunz sources real estate debt financing projects, conducts due diligence and project evaluation, and refers the projects to Robinland. If the project meets the criteria set by Robinland’s internal project evaluation system, then Crowdfunz underwrites the loan, and Robinland Asset Management SPV enters into a Service Agreement with Crowdfunz on that specific project. The asset originator, Robinland Asset Management SPV, then transfers the loan to a project SPV, e.g., Robinland (Delaware Series LLC - A) via a Service Agreement.
Illustration 2, from the top: The parent company, Robinland Holdings LLC, manages Robinland Portfolio Management LLC via an operating agreement, and the latter conducts token offering via Polymath’s infrastructure to issue RBL security tokens and locks them in Maker’s vault to access MCD. Robinland Portfolio Management LLC manages Robinland Asset Management SPV (introduced above) which is an umbrella entity that manages (and extends loans to) all the project specific SPVs. The SPV will lend to the commercial real estate loan borrower through Robinland Project Management SPV, who takes the role as project manager.
The proposed structure fulfills several crucial requirements:
- Default independence: since each project SPV is set up as a series LLC, the default (if any) of any single project will not be escalated further than the series LLC itself, thus will not affect the umbrella entity, Robinland Project Management SPV.
- Homogeneity of RBL token: instead of pledging CRE tokens that map to specific project SPVs, Robinland chooses to issue RBL tokens that map to the umbrella entity, Robinland Project Management SPV, which represents a diversified portfolio of real estate debt financing projects. This homogeneity ensures liquidity of the RBL token, as it’s not specific to any project, but rather represents the debt financing solution as a whole.
- Polymath as the blockchain infrastructure: Polymath is one of the biggest and most renowned infrastructure providers in the security token offering space. Polymath provides a full suite of services that allow users to create, issue, and manage digital securities on the blockchain. Its track record and technical expertise add an extra layer of insurance for the legitimacy and liquidity of the RBL security tokens. A detailed overview of Polymath’s technology stack can be found here.
Using the above proposed structure, Robinland would like to utilize MCD as a revolving line of credit to finance new project SPVs that finance commercial real estate loans. The Issuer expects to draw DAI up to its assigned debt ceiling in roughly one to thirty-six months and will seek an increase to its debt ceiling once 75% of the initial line amount is disbursed.
The commercial real estate loans offer several investment benefits including portfolio diversification, low to negative correlation with public equities and positive correlation with inflation. Compared with other debt investment vehicles, commercial real estate loans offer a short investment term (e.g. 6-36 months) with high interest income for getting exposure to high-quality projects and secured by high-quality collaterals.
The commercial real estate loans are used to finance development of high-quality large-scale commercial (apartments) and residential (condominiums) real estate projects in the New York Metropolitan area. The commonalities among these projects are five-fold:
- Prime locations, e.g., one of the most popular areas in New York: Long Island City
- Interest generating projects with stable cash inflow
- Developers with high creditworthiness and loan track records
- No superimposed liens from financial institutions such as banks
- No environmental indemnification issues
The following case is a first lien commercial real estate loan that exemplifies such features:
Loan Amount: Total LTC 55%
Security: The security for the Loan shall be: (i) First mortgage on the Property, and (ii) Assignment of Lease and Rent; and (iii) Guarantor’s full-recourse guaranty; and (iv) UCC-1 Filing; and (v) Environmental Indemnification and Hold Harmless Agreement signed by both Borrower and Guarantor.
Loan Term: Twelve (12) months.
Option to Extend: Three extension (6 Months each) options available with 0.5% extension fee.
Interest Rate: The Loan shall bear interest rate at Eight and A Quarter Percent (8.25%) per annum.
Prepayment: No prepayment of the Loan Amount shall be permitted without the Lender, or its assigns, having received Twelve (12) full months of payment.
Interest Reserve: Six (6) months of Interest Payments to be paid in advance at Closing.
Default Rate: The lesser of (i) Twenty Four Percent (24%) per annum, and (ii) the Maximum Legal Rate.
Late Fee: If any amount payable under any Loan Document is not received by Lender within 7 business days from its due date, Borrower shall pay to Lender a late charge equal to Five Percent (5%) of such due amount.
Insurance: Borrower shall provide Lender with certificates of insurance evidencing that all insurance required under the Mortgage (“Insurance Policies”) is in full force and effect and in form acceptable to Lender in its sole discretion. Borrower shall covenant that the Insurance Policies shall remain in full force and effect throughout the Loan Term. Borrower shall maintain at all times, at the Borrower’s sole cost and expense, policies of liability and property (including business income and terrorism coverage) insurance, builder’s risk, law and ordinance insurance and other insurance coverage required by the Lender according to the Loan Documents. The Insurance Policies must be paid for the term of the Loan at closing. Lender, its successors and/or assigns must be listed as mortgagee, loss payee, and additional insured. All Insurance Policies shall be issued by insurance companies satisfactory to Lender having an A.M. Best Key Rating of at least A.
There are several desirable features protecting Maker’s rights:
- Full recourse right: Recourse is the lender’s legal right to collect the borrower’s pledged collateral if the borrower does not pay their debt obligation. Full recourse means that in addition to the collateral, the lender can also seize other assets from the borrower to repay the debt. This means even in the event of default Maker will be able to fully recover the value of its lending.
- Short loan term: Unlike in other types of financing where the loan terms tend to be 3-30 years, our commercial real estate loan terms range from 3-36 months, which means there is much less contraction or extension risks.
- Credit Policy: Loan-to-value and debt-to-service-coverage-ratio are among the two most important metrics representing the health of a loan project. As seen above, the 50-60% LTV and > 1 DSCR are extremely healthy by industry standards.
3. Provide a brief history of the project
Robinland Holdings LLC (a Delaware company) was founded in 2021 with the mission to solve the liquidity and financing problem in the traditional real estate industry. Robinland serves as the bridge between Frad-fi and DeFi for real estate developers by transforming large real estate projects into on-chain crypto tokens which can then be used as collateral to access liquidity and financing from DeFi lenders.
The CEO holds a PhD in Economics from Stanford University, with a focus on the housing market, especially how financial innovations can reduce inefficiencies and improve welfare, and has previously served as CEO of another blockchain real estate start-up. The COO is a veteran in the real estate space, having served as regional head of marketing for two major real estate conglomerates and having worked on Reg A real estate public offering in the US. The CTO is a full stack engineer with 6 years of experience at Google building Gmail-scale enterprise products, has issued his own SocialFi token “ShibaCoin” (which came before SHIB), and runs an active crypto community. The General Legal Counsel holds a JD from University of Arizona and has 7 years of experience in corporate and financial laws; his experience includes supervising and managing token issuance and smart contracts alongside handling Reg D and Tier 1 Reg A offerings.
Robinland Holdings LLC has a strategic partner Crowdfunz, a real estate private equity firm in NYC with 5 years of track record, 0 default rate, and 10-20 projects financed every year. Crowdfunz sources and screens real estate projects, and refers them to Robinland. Thus, Robinland can focus on providing liquidity while Crowdfunz takes care of operational tasks such as loan servicing and due diligence. With Crowdfunz’ extensive experience and network, the deals sourced from it are of top level. Combined with Robinland’s in-house data-driven proprietary evaluation system, Robinland can focus on its comparative advantage: channeling funds from the DeFi space to finance real estate projects in the real world.
CrowdFunz is a real estate private equity firm based in New York that integrates financing and investment. Since initiating its first real estate project in 2016, they have successfully issued 29 private equity funds for retail investment clients in the United States, totaling assets under management over $90 million.
Centered in the New York Metropolitan area, Crowdfunz continues to cooperate with commercial real estate projects across the US that see both potential for appreciation and a steady stream of income. In the past five years, Crowdfunz has successfully integrated various development, transformation, and value-added business opportunities for project owners and investors in the small-to-medium-sized real estate sector in New York.
Polymath is a blockchain technology provider founded in 2017, especially one of the biggest and most renowned infrastructure providers in the security token offering space, used for security token creation, issuance and offering, KYC, AML, etc. Polymath makes it easy to create, issue, and manage security tokens on the blockchain. More than 220 tokens have been deployed using Polymath’s Ethereum-based solution, and Polymath has also developed the open-source code for Polymesh, an institutional-grade blockchain built specifically for regulated assets. Polymath streamlines antiquated processes and opens the door to new financial instruments by solving the inherent challenges with public infrastructure around identity, compliance, confidentiality, governance, and settlement.
This is Polymath’s roadmap.
4. Link the whitepaper, documentation portals, and source code for the system(s) that interact with the proposed collateral, and all relevant Ethereum addresses. If the system is complex, schematic(s) are especially appreciated.
Here is Robinland’s pitchdeck.
Robinland Holdings LLC’s mainnet deployment will be accessible via Polymath.
Robinland’s security token RBL is currently awaiting issuance. Once we gain initial approval from the Maker governance forum, Robinland will kick off the legal process, the last step of which is RBL tokens being issued.
5. Link any available audits of the project. Both procedural and smart contract focused audits.
Polymath has conducted several audits of its technology stack.
6. Link to any active communities relating to your project.
7. How is the applying collateral type currently used?
Robinland plans to tokenize portfolios of commercial real estate loans and issue crypto tokens which represent fractional ownership of the portfolio, giving the holder claim over the underlying cash flows.
As part of the integration with Maker, Robinland will issue RBL tokens to bundle all underlying tokenized real estate loan projects. Subsequently, these tokens will be used as collateral in order to produce DAI.
The Project SPV will be financed by issuing RBL tokens for 90% (or subject to Maker’s discretion) of the net asset value of the commercial real estate loans plus cash on hand from Robinland Holdings LLC. The Issuer expects to launch with 12 million DAI increasing to 15 million Dai when 75% of the initial line amount is disbursed. It will initially seek 10.8 million DAI from MakerDAO, increasing to 13.5 million.
The Issuer expects to invest in commercial real estate loans that have an average value of $500,000 to $1,500,000, and the projects are expected to last 6-30 months and can be extended for another 6 months. Upon completion of the loan term, the Issuer will repay the outstanding balance drawn against the commercial real estate loans and accrued interest thereon. All of the loans in the pool will have similar risk characteristics including high quality underlying projects, short investment periods, full recourse right, etc.
The Issuer will provide MakerDAO with a put option, which it can utilize if it ever needs to liquidate. After the first 6 months, MakerDAO will have the right, but not the obligation to sell its ownership of RBL tokens to the Issuer, in whole or in part, upon 90 days notice. The Issuer will work in good faith on a best efforts basis to find one or more buyers to purchase RBL tokens from MakerDAO if it successfully sells the RBL tokens to a new buyer. If the RBL tokens are not sold within 90 days, then the Issuer will have another 90 days to sell the tokens. This process will continue until the Issuer has fulfilled the MakerDAO’s sell request.
The Issuer will seek a lower Stability Fee from MakerDAO because 1) the Stability Fee is variable versus the bank rates, which are fixed; 2) MakerDAO has a put option; and 3) the Issuer will be taking early stage risk versus taking a loan from the bank.
8. Does one organization bear legal responsibility for the collateral? What jurisdiction does that organization reside in?
Robinland Holdings LLC will bear legal responsibility for the collateral. The jurisdiction is the state of Delaware.
This SPV structure creates a bankruptcy-remote entity whereby owners, debt holders or interested parties of this newly created SPV are left unaffected by the parent’s financial, operational and/or legal health.
9. Where does exchange for the asset occur?
The RBL security tokens issued by Robinland Portfolio Management SPV are used purely to gain financing from Defi lenders such as Maker and will not be traded on exchanges, thus, there will not be “exchange for the asset.”
Robinland might consider issuing security tokens from each underlying project SPV for sale towards retail investors in the future, but the legal structure of that is still in progress and will be shared with the Maker forum for approval when ready.
10. (Determined by Legal Domain Team) Has your project obtained any legal opinions or memoranda regarding the regulatory standing of the token or an explanation of the same from the perspective of any jurisdiction? If so, those materials should be provided for community review.
Please see legal opinions from Robinland’s general counsel here.
11. (Determined by Legal Domain Team) Describe whether there are any regulatory registrations for the token and provide related documentation (including an explanation of any past or existing interactions with any regulatory authorities, regardless of jurisdiction), if applicable.
Please see legal opinions from Robinland’s general counsel here.
12. (Optional) List any possible oracle data sources for the proposed Collateral type.
Upon project referral from Crowdfunz, we have three types of oracle data sources. First, as a mature real estate private equity firm, Crowdfunz will perform due diligence on the project and the underlying assets. If the project meets their qualifications, they will pass the detailed information to us.
Second, Robinland performs an independent assessment of each real estate debt financing project which is subject to tokenization and subsequent loan disbursement. Robinland calculates the value of the real estate debt financing project behind the tokens in the loan application. It provides an estimate of the value based on its characteristics, e.g. underlying asset type (commercial vs residential), location, size, loan term, LTV, DSCR, existence of full-recourse rights, etc. This number is used to calculate the lending parameters. If the real asset debt financing project has to be sold, the assessed value can be used to determine the minimum amount to be made on a sale.
Third, a third party appraisal company is hired to determine the underlying value of each loan project. Members of our team have experience working with world-class global real estate consultancies such as CBRE, BakerTilly, JLL, and Cushman & Wakefield. We will use them as our certified data resources.
The value of the security tokens issued by Robinland Portfolio Management SPV is the sum of the value of all such project specific SPVs, which each equal to the value of the underlying loan asset based on the third party appraisal report. Furthermore, these projects will be reassessed on a regular basis. All the documents produced in the process will be made available to the appointed auditor.
13. (Optional) List any parties interested in taking part in liquidations for the proposed Collateral type.
We have three layers of protections for Maker in the liquidation process for the proposed collateral type.
First, as mentioned above, the Issuer will provide MakerDAO with a put option, which it can utilize if it ever needs to liquidate. After the first 6 months, MakerDAO will have the right, but not the obligation to sell its ownership of RBL tokens to the Issuer, in whole or in part, upon 90 days notice. The Issuer will work in good faith on a best efforts basis to find one or more buyers to purchase RBL tokens from MakerDAO if it successfully sells the RBL tokens to a new buyer. If the RBL tokens are not sold within 90 days, then the Issuer will have another 90 days to sell the tokens. This process will continue until the Issuer has fulfilled the MakerDAO’s sell request.
Second, Maker is one of Robinland’s capital resources. Robinland will also obtain a credit line from the bank and set aside a reserve fund. Having several capital sources will allow Robinland to liquidate or refinance loans. Moreover, the loan can be sold to third parties specializing in loan purchasing. Robinland loans are collateralized by high quality assets and enable buyers to diversify their portfolios and expand their risk strategy.
Third, when liquidation is triggered, Robinland Series LLC will act as the project manager and force the underlying project to execute the foreclosure process. The full recourse rights include but are not limited to going against the borrower for the amount by which the sale of a repossessed collateral property falls short of the principal outstanding on the loan. The project manager then goes back to the borrower personally in an attempt to collect any excess of the loan amount above the net proceeds from foreclosing on and selling the property.