[Regulated] Smart Property Trust (SPT)

[BadBitcoin (James Sutton)]

Smart Property Trust
In this document, “SPT”, “SPT Inc.”, “Smart Property Trust”, “the company”, “us”, “we”, and “our” relate to Smart Property Trust Inc. of New York,USA.

Unless explicitly otherwise stated, posts by the forum user “Badbitcoin (James Sutton)” outside this
thread express personal views and opinions not the views of the company.

The terms “GPG signature”, “GPG signed” relates to the GNU privacy guard technology
http://www.gnupg.org/

This document is not yet in its final form, and is not legally binding. When it is, this section will be edited and digitally signed using GPG authentication.


EDIT JULY 9th, 2013: We have recieved the green light for maintaining the anonymity of bitcoin investors, while allowing us to be a regulated Real Estate Investment Trust (REIT) in the USA.
EDIT JULY 10th, 2013: Due to issues involving the requirement of a significant portion of our fund being constituted of canadian investors, we won't be filing as an REIT in canada, however the current plan is to file one in New York, USA as a foreign company.
EDIT July 11th, 2013: We're currently in talks with Nesenoff & Miltenburg LLP (Marco Santori's firm) over REIT incorporation, we're meeting with a local commercial investment advisor tomorrow afternoon. Once the legal hurdles are out of the way, the remainder of this securities prospectus will be released.
EDIT July 18th, 2013: Most of our legal questions have been answered and we have solutions to all of our problems, we're currently securing angel investment to pay the legal/accounting fees required to organize this corporation, the business model of our investment will be updated below this evening.
What we are
The Canadian Real Estate Market is one of the strongest investment markets in the world, (for further information http://www.deloitte.com/assets/Dcom-Canada/Local%20Assets/Documents/REITGuide2%281%29.pdf)
Initially we will be investing in Canadian based multi-unit residential properties, however as we further develop we will diversify into multiple property developments.
Now this may not be the most aggressive bitcoin investment, we are however legally regulated by the Nova Scotia Securities Commission and Canadian Securities Admistrators.
Our model is to maintain investment security and high sustainable returns instead of generating unsustainable growth. This means that over the long term, your risk is minimized and your growth maximised.
click here if you'd like to see what the types of buildings we will be investing in.


Special thanks to Marco Santori (MSantori) for his assistance in dealing with our legal hurdles in forming this security.

[BadBitcoin (James Sutton)]

Q&A (if you asked a question and I answered it, I'll probably put it here)
Q: How can I trust you?
A: Trust is a funny thing on the internet, it’s extremely challenging to prove that you are who you say you
are, and prove that you will do exactly what you say you will do.
Using our permanent block chain/p2p shareholder contract protocol we remove the potential that we
may have to commit fraud, while allowing our shareholders to trade shares without counterparty risk.

We also will be a regulated investment in canada, which means that if we screw up, you can sue us, no funny business.

Q: Who are you?

A: The management team consists of two individuals, myself and my partner Devin.
I'm a long time Bitcoin investor (March 2011 is when I first started using Bitcoin and getting interested in the technology), with experience in new technology development.

Devin has over 5 years’ experience as a property manager of several local rental
properties, founder of several business ventures and is experienced in portfolio management.

Q:What kind of funding do you have or are you capable of raising or have access to?

A:We're currently in communication with a number of angel investors to secure funding for all the necessary legal/accounting fees required to set up this corporation.

Q:Where will you be purchasing?
Will you be only purchasing in canada? Will you only be purchasing in locations that you are physically near?
What will you be purchasing?

A:Initially investsments will be in multi-unit residential properties (apartments) local to us, and in Canada. These types of properties best utilize our experience and contacts. In the long term we don't see expansion into other locales and types of income properties to be an obstacle, however initially we will obviously try and manage properties close enough so we don't have to move.
Exiting the Canadian and investing globally is one direction we are thinking about persuing, more on this will come at a later date.

Q:Will you be renting, leasing or selling these properties or a combination of all 3?

A: We will be primarily purchasing, renting, rennovating, and selling, the unitholder of each investment has the right to vote on what happens to their investments, you decide when to sell, we provide monthly reports on exactly how the current real estate environment is doing and what it means for your investment.

Q:Will the REIT be publicly traded and listed on an exchange? BitFunder, BTCT.CO, TSE(Candian Stock Exchange), CNSX etc, etc.

A:As this is a mutual fund style investment, there won't be any need for a conventional exchange, however we're completely fine with Passthrough (as long as their ok'd by me, I don't want our company getting a bad rep for a scam PT)

[BadBitcoin (James Sutton)]

Investment Details

When you purchase a unit of our fund, you will be giving us equity we can use to finance additional property purchases, which will then produce income via rent and property sales.
There will be a 3% fund management fee on the purchase of each unit of S P Trust, as well as a 2% annual fee charged on the netAsset Value (NAV)  of the fund which will be incorporated into monthly gross income, or 0.166% of the fund's net assets per month.
When you would like to sell your unit(s), you will contact us, we will then match your sale with that of a buyer, and then facilitate a consignment transaction. This is to preserve the private status of our REIT, as conventional exchange type systems (aka bitfunder) would require us to form as a publicly traded company, which is cost prohibitive for us.

The maintenance/environmental costs will be factored into the down-payment of a property and pooled into a maintenance pool, this is a common structure for conventional REITs and we see no reason to alter that arrangement.

[BadBitcoin (James Sutton)]

First Property and Preferred Units
For the investment into the first property, all mutual fund units will be given the "preferred" status.
As the first property bares the largest risk, there are a number of privileges that preferred unit-holders will receive.

• The ability to vote unhindered in every property purchase, rennovations, property sale and other major uses of fund's assets.
• A reduced fee structure (40% off of purchase fees and trading fees indefinitely)
• The ability to vote for a preferred unit-holder representative to sit on our board of directors

Investment for the first property will be done manually, pm me if you're interested, however if you think of further questions please post in this thread, as I will answer it and add it to the FAQ for all to see.

[BadBitcoin (James Sutton)]

reserved for shareholder security and trading

[BadBitcoin (James Sutton)]

reserved for legal

[BadBitcoin (James Sutton)]

“the company”, “us”, “we”, and “our” relate to Smart Property Investments Inc. of Halifax, Nova Scotia, Canada.

Would you by chance have your registration number?
 - https://rjsc.gov.ns.ca/rjsc/

We will as soon as we file incorporation papers, which should be no later than next week, the main post has been changed to reflect this, thanks for pointing that out.

[BadBitcoin (James Sutton)]

main post has been updated to reflect our current progress.

[btceic]

Can you share more details about the REIT?
Can you share your business proposal?

What kind of funding do you have or are you capable of raising or have access to?
Will you be relying solely on the capital raised here to fund your operations?

Where will you be purchasing?
Will you be only purchasing in canada? Will you only be purchasing in locations that you are physically near?

What will you be purchasing?
houses, condos, commercial, land, etc., etc.

Will you be renting, leasing or selling these properties or a combination of all 3?

Will the REIT be publicly traded and listed on an exchange? BitFunder, BTCT.CO, TSE(Candian Stock Exchange), CNSX etc, etc.

[BadBitcoin (James Sutton)]

Can you share more details about the REIT?
Can you share your business proposal?

What kind of funding do you have or are you capable of raising or have access to?

Where will you be purchasing?
Will you be only purchasing in canada? Will you only be purchasing in locations that you are physically near?

What will you be purchasing?
houses, condos, commercial, land, etc., etc.

Will you be renting, leasing or selling these properties or a combination of all 3?

Will the REIT be publicly traded and listed on an exchange? BitFunder, BTCT.CO, TSE(Candian Stock Exchange), CNSX etc, etc.

1) We are capable of funding the deposit, the incorporation fees, legal fees and the hiring of an accountant, however paying the down payment and the like would require us to delve into purchasing credit.

2) 2) Initially investsments will be in multi-unit residential properties (apartments) local to us. That best utilizes our experience and contacts. In the long term we dont see expansion into other locales and types of income properties to be an obstacle

3) We will be primarily purchasing, renting, rennovating, and selling, the unitholder of each investment has the right to vote on what happens to their investments, you decide when to sell, we provide monthly reports on exactly how the current real estate environment is doing and what it means for your investment.

4) Interestingly, we don't need an exchange to start with, we are developing multi-sig support for trading bitcoins for investment "units", this allows for completely p2p trading of shares without directly needing our involvement, all information regarding who owns what will be automatically uploaded in ledger format to the bitcoin blockchain for all to see.

[Deprived]

Can you share more details about the REIT?
Can you share your business proposal?

What kind of funding do you have or are you capable of raising or have access to?

Where will you be purchasing?
Will you be only purchasing in canada? Will you only be purchasing in locations that you are physically near?

What will you be purchasing?
houses, condos, commercial, land, etc., etc.

Will you be renting, leasing or selling these properties or a combination of all 3?

Will the REIT be publicly traded and listed on an exchange? BitFunder, BTCT.CO, TSE(Candian Stock Exchange), CNSX etc, etc.

1) We are capable of funding the deposit, the incorporation fees, legal fees and the hiring of an accountant, however paying the down payment and the like would require us to delve into purchasing credit.

2) Initally we will be purchasing commercial rental properties as they are what we know and will be purchasing locally to us (Nova Scotia, Canada).

3) We will be primarily purchasing, renting, rennovating, and selling, the unitholder of each investment has the right to vote on what happens to their investments, you decide when to sell, we provide monthly reports on exactly how the current real estate environment is doing and what it means for your investment.

4) Interestingly, we don't need an exchange to start with, we are developing multi-sig support for trading bitcoins for investment "units", this allows for completely p2p trading of shares without directly needing our involvement, all information regarding who owns what will be automatically uploaded in ledger format to the bitcoin blockchain for all to see.

I'm interested to see how number 4, works out.  With the degree of control you propose giving to investors, listing on an exchange wouldn't be feasible anyway - as the individual investments are not likely to have a common fungible unit.

[BadBitcoin (James Sutton)]

Can you share more details about the REIT?
Can you share your business proposal?

What kind of funding do you have or are you capable of raising or have access to?

Where will you be purchasing?
Will you be only purchasing in canada? Will you only be purchasing in locations that you are physically near?

What will you be purchasing?
houses, condos, commercial, land, etc., etc.

Will you be renting, leasing or selling these properties or a combination of all 3?

Will the REIT be publicly traded and listed on an exchange? BitFunder, BTCT.CO, TSE(Candian Stock Exchange), CNSX etc, etc.

1) We are capable of funding the deposit, the incorporation fees, legal fees and the hiring of an accountant, however paying the down payment and the like would require us to delve into purchasing credit.

2) Initally we will be purchasing commercial rental properties as they are what we know and will be purchasing locally to us (Nova Scotia, Canada).

3) We will be primarily purchasing, renting, rennovating, and selling, the unitholder of each investment has the right to vote on what happens to their investments, you decide when to sell, we provide monthly reports on exactly how the current real estate environment is doing and what it means for your investment.

4) Interestingly, we don't need an exchange to start with, we are developing multi-sig support for trading bitcoins for investment "units", this allows for completely p2p trading of shares without directly needing our involvement, all information regarding who owns what will be automatically uploaded in ledger format to the bitcoin blockchain for all to see.

I'm interested to see how number 4, works out.  With the degree of control you propose giving to investors, listing on an exchange wouldn't be feasible anyway - as the individual investments are not likely to have a common fungible unit.

exactly, off the record we are currently planning on turning each property into ~1000 individual ownership "units", these units represent a portion of the mortgage, and can independently control their own capital appreciation vs. dividend payment rates.

[_mr_e]

4) Interestingly, we don't need an exchange to start with, we are developing multi-sig support for trading bitcoins for investment "units", this allows for completely p2p trading of shares without directly needing our involvement, all information regarding who owns what will be automatically uploaded in ledger format to the bitcoin blockchain for all to see.

How will this work? Are you somehow using Open Transactions to pull this off? Definitely want to hear more about this.

[btceic]

Thanks for the replies, I appreciate it.

Are there any legal issues with non-Canadians owning "units"?

What is your definition of a "unit", something akin to a share? as in a share of stock?

Do you have a minimum or maximum investment

Do you have a minimum or maximum investment holding period? i.e. can we day trade the shares? (not that I would but the question came to me, so I thought I would ask for others that may have had the same thought)

How will you handle legal issues in regards to landlord issues that will come up?

Will you allow sub-leases?

If we own "units" can we get a discount on lodging if we want to visit Canada for vacation?

If we own "units" and that land is huntable (can be hunted on)? can we get a discount on hunting or fishing trips? I hear northern Canada has some great hunting and fishing, Salmon, Elk, Deer, etc.

Do "unit" holders get votes on what and where and when will be purchased next?

[BadBitcoin (James Sutton)]

Thanks for the replies, I appreciate it.

Are there any legal issues with non-Canadians owning "units"?

What is your definition of a "unit", something akin to a share? as in a share of stock?

Do you have a minimum or maximum investment

Do you have a minimum or maximum investment holding period? i.e. can we day trade the shares? (not that I would but the question came to me, so I thought I would ask for others that may have had the same thought)

How will you handle legal issues in regards to landlord issues that will come up?

Will you allow sub-leases?

If we own "units" can we get a discount on lodging if we want to visit Canada for vacation?

If we own "units" and that land is huntable (can be hunted on)? can we get a discount on hunting or fishing trips? I hear northern Canada has some great hunting and fishing, Salmon, Elk, Deer, etc.

Do "unit" holders get votes on what and where and when will be purchased next?

1) Foreign investment in Canadian securities has never historically required any special actions on the part of the funds or the investors, so there are no foreseeable issues. We will confirm that with to our legal team.

2) A unit is similar to a share except units dont suffer dilution when new units are sold at the net asset value per unit (NAV)

3) Yes and No. We dont have a holding time on trades between investors (except for local tax reasons), however the unit isnt readily retractable from us as it is tied into real estate assets. Canadian AML laws require deposits larger than $10,000 CAD or totalling that in 24hrs to be declared. We don't impose a holding time.. however you may want to for tax reasons.

4) We will manage the assets internally to reduce operating expenses and we are legally equivalent to a landlord. Tenant disputes do happen, but are generally avoidable with good management practices.

5) Allowing sublets are up to the unitholders. In my experience as a property manager, some owners have an issue with it, some don't;  I personally have never seen any problems with sublets on year leases.

6) As the properties are owned by more than one investor, that is something that can be voted on. If unitholders decide a to diversify the portfolio into hotels that is most likely do-able.

7) Well there are many great opportunities in Canada to hunt, duck hunting on Great Slave Lake, Muskie fishing in northern Manitoba, salmon fishing on the Pacific cost; hunting inside city limits is generally illegal, and viable income properties in rural regions are hard to find.

Unitholder's definitelyget to vote on the what, where and when of purchase decisions. We will provide our picks, and anaylsis on potential purchases but are open to suggestions from unitholders.

I'll be putting your questions in the FAQ if you don't mind, they are good!

4) Interestingly, we don't need an exchange to start with, we are developing multi-sig support for trading bitcoins for investment "units", this allows for completely p2p trading of shares without directly needing our involvement, all information regarding who owns what will be automatically uploaded in ledger format to the bitcoin blockchain for all to see.

How will this work? Are you somehow using Open Transactions to pull this off? Definitely want to hear more about this.

We are developing a multi-sig transaction system, this system involves a digital form of ownership called a "certificate". This certificate is script code that is machine readable (.json format), and is ECDSA signed using both the seller and buyers bitcoin address. This file is then traded using a bitcoin/certificate multi-sig transaction program that will be built ontop of the bitcoin client, the certificate is then automatically uploaded to the blockchain as the transaction is completed.

This technology is still "in the works" as we are actively looking for a developer to assist us with producing this technology, however if complications arise we may pivot into a trading structure that can be more easily stored and accounted for.

[btceic]

possibly relevant,
http://mobile.bloomberg.com/news/2013-07-09/sec-set-to-lift-80-year-old-ban-on-advertising-by-hedge-funds.html

[BadBitcoin (James Sutton)]

possibly relevant,
http://mobile.bloomberg.com/news/2013-07-09/sec-set-to-lift-80-year-old-ban-on-advertising-by-hedge-funds.html

interesting, we've recently discovered that we won't be able to form a canadian REIT, however were currently looking into other forms of corporation and US options, I wish there were more lawyers in my city!

[nomailing]

really interesting stuff. keep us updated.

[BadBitcoin (James Sutton)]

really interesting stuff. keep us updated.

will do, I plan to update this daily and say whats happening, transparency is our #2 priority, after profit for our investors of course 

we're currently in talks with Marco Santori about our REIT options in the USA, the reason we want to form as an REIT is we receive major tax breaks, an REIT that returns 90% of all net income to its shareholders through dividend payments or asset appreciation pays 0% tax, unlike a conventional corporation who would be subject to large corporation tax which could be up to 45% or more. We theoretically could do this as a normal corporation, however the profit margins would be considerably less as all investors will be subjected to double tax, we don't want that

[forensick]

really interesting stuff. keep us updated.

will do, I plan to update this daily and say whats happening, transparency is our #2 priority, after profit for our investors of course 

we're currently in talks with Marco Santori about our REIT options in the USA, the reason we want to form as an REIT is we receive major tax breaks, an REIT that returns 90% of all net income to its shareholders through dividend payments or asset appreciation pays 0% tax, unlike a conventional corporation who would be subject to large corporation tax which could be up to 45% or more. We theoretically could do this as a normal corporation, however the profit margins would be considerably less as all investors will be subjected to double tax, we don't want that

Why do you incorporate offshore company instead all those complicated and too regulated entities? Transparency is fine, but all those REITs and other options look like it is more a barrier to enter the market than anything else