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CMS advices investment firm Peakside on blockchain-based real estate fund

19/06/2019

Munich – Peakside Capital Advisors AG launched a real estate fund via the funds-as-a-service blockchain platform ScalingFunds, operated by Brickblock Digital Services GmbH. The Luxembourg domiciled Peakside Income Fund I has an equity target of EUR 200 million and a focus on core and core-plus office properties across first- and second-tier cities in Germany. The fund is targeting institutional investors worldwide with asset sizes ranging between EUR 15 and 75 million, and a maximum leverage of 50%.

A CMS team consisting of investment management and technology lawyers has provided legal advice to Peakside. It focused on legal and tax aspects of the issuance of the fund under German and Luxembourg laws, the relationship with the platform provider Brickblock and the challenges arising from the usage of blockchain technology.

The fund operates within the Alternative Investment Fund Managers Directive (AIFMD) framework governing institutional investor funds across Europe. It uses a classical fund structure under Luxembourg law in which a custodian provides for a statutory level of control for the benefit of investors. The fund units are registered on a blockchain as well as in an offline register with Sanne, a global provider of alternative asset and corporate business services. Investors can opt for different routes of investing into the fund, via classical simple unitholding as well as via enhanced blockchain-secured holding. According to its own statements, the company is looking to utilise the advances in digital technology to increase liquidity and transferability in the real estate fund sector as well as to broaden its investor base. Dr Markus Kaulartz, lawyer at CMS with special blockchain expertise, comments: "We observe a trend towards regulated structures, the tendency is clearly towards blockchain enhanced financial products governed by existing regulatory frameworks. Thereby, involved stakeholders such as regulators, asset managers and investors operate within a known and proven legal environment in which new technology-driven enhancements can be benefitted from also in the fund industry." Additional features shall be added over time, for example the tradability of the digital shares on established exchanges.

Peakside, based in Frankfurt/Main, is a European real estate investment manager which manages assets worth over EUR 1.0bn on behalf of institutional investors. Peakside’s investment spectrum includes not only individual properties but also real estate portfolios and operating companies. The firm employs a team of more than 30 professionals in its offices in Frankfurt, Warsaw, Prague and Luxembourg.

CMS Germany

Dr Markus Häuser, Partner, TMC
Dr Daniel Voigt, Partner, Investment Management
Dr Tillman Kempf, Partner, Tax
Dr Markus Kaulartz, Senior Associate, TMC
Dr Sebastian Sedlak, Senior Associate, Investment Management

Press Contact
presse@cms-hs.com 

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