Quick hits: blockchain + real estate

Instead of a single topic, this week we’ll be commenting more briefly on a few notable recent developments in the world of blockchain and real estate.

First, Goldman Sachs is launching a tokenized real estate vehicle. This is great news on multiple levels. It’s important validation of the thesis that onchain real estate is a valuable product–an idea that has been clear to us at Groma for a while, but that gains additional weight from having a major player like Goldman endorse it. This will bring significantly more interest and demand to the space from both institutional and retail investors, creating positive spillover effects for existing assets like GromaCoin. Especially for institutions (both allocators and exchanges), tokenized securities thus far have been an awkward fit, as they sit at the intersection of novel technology, complex regulation, and risk-averse, inertia-bound players; having Goldman on board will do a lot to overcome this. It will, of course, be competition for GromaCoin, but we’re confident in our differentiated real estate thesis, our flexibility, and our ability to innovate.

Second, Morpho, the lending protocol we’re using to launch our lending and investment vaults with Birch Hill, is launching a fixed-rate, fixed-maturity lending protocol called Morpho Midnight. This is a huge step forward for those of us who prefer reliable long-term lending terms. Running a program like rentvesting can work when rates are variable, but it’s much simpler to administer and eliminates uncertainty for both borrowers and lenders when rates are set over a long period of time. This isn’t to say that the utilization-based, variable-rate approach that has been the default on Morpho so far is bad–there’s a lot to recommend it, especially in a decentralized context–but we’re enthusiastic about the potential to deploy future vaults based on Midnight.

Switching to Massachusetts politics, the campaign behind the rent control ballot initiative has released a “compromise” proposal in the hopes of the state legislature passing this proposal and eliminating the need for an extended and costly ballot campaign. While the compromise proposal is less strict than the ballot initiative in some ways, it doesn’t avoid the biggest flaw of the ballot question’s proposed policy, which is deterrence of new construction. This makes it a non-starter for both the real estate industry and for people who are serious about addressing MA’s housing shortage. The rent control advocates have gotten a few real estate groups to sign on, but these are primarily nonprofit developers who aren’t subject to the same market forces as normal real estate operators or developers, who remain broadly opposed to the compromise. The compromise also introduces rent control boards, which are nightmarishly bureaucratic and were a hated element of the pre-1994 rent control system. Fortunately, legislative leaders like Speaker of the House Ronald Mariano and House Ways & Means chair Aaron Michlewitz seem unimpressed by the compromise, and it arguably reflects a lack of confidence on the part of the campaign, which is a good signal for rent control’s opponents.

Last, in the midst of a lawsuit against Boston’s assessing department for its alleged retaliation against commercial properties that appealed their valuations, long-serving assessing department commissioner Nick Ariniello has just stepped down from his role. To put it mildly, this is not something that I would do if I were confident that my department’s practices were legally defensible, and while there’s still a while to go in the lawsuit, I’d say this is a good sign for the plaintiffs’ prospects, and correspondingly for the future health of Boston’s property tax system.