Startup founder Peter Rex purchases historic Hotel Ella
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Peter Rex, founder and CEO of startup Rex. Photo courtesy of Rex
The new owner of the Hotel Ella is aiming to sell the property off in digital chunks.
Driving the news: The Hotel Ella, the boutique hotel housed in a historic mansion near the University of Texas campus, changed hands in an unlikely deal that closed on Wednesday when Peter Rex, CEO of Austin-based tech startup Rex, took over.
The big picture: The purchase by the tech founder — who moved his company from Seattle to Austin last year — is part of his plan to make real estate investing more accessible.
He claims he will sell fractions of the hotel to accredited investors on the blockchain, and he says he intends to eventually receive approval from federal regulators to sell those pieces to anyone.
Yes, but: Using blockchain technology to allow any user to buy and sell property via non-fungible token (NFT) will be an uphill battle.
- Regulators have yet to release more guidance or new rules about digital assets — making it tricky to sell likely securities to everyday consumers.
But Rex says his plan will work on the OwnProp app, a subsidiary of his startup, and turn it into the New York Stock Exchange of real estate. He expects to launch the app in the coming weeks to accredited investors and will list Hotel Ella and a handful of other Rex-owned properties.
- "We are democratizing real estate," the CEO added. "Real estate has been the luxury of the rich … especially prime assets."
Of note: It can take years to receive SEC approval. Plus, the financial world is still asking regulators and lawmakers for more legal clarity regarding digital assets.
- Alison Staloch, CFO of real estate investing platform Fundrise, said the Securities and Exchange Commission will be focused on investor protection, adding that it took Fundrise years to be able to produce an SEC-qualified fund that was truly accessible to all individual investors.
- "We're extremely bullish on the underlying technology as a force for decentralization," Staloch, who previously worked as the chief accountant in the Division of Investment Management at the SEC, told Axios.
- "However, it's not clear to me how this application of the blockchain makes investing more accessible, efficient or effective," she continued.
- "Proving ownership is considerably easier in real estate than, say, in the digital art world. Fundrise, for instance, uses an SEC-registered Transfer Agent — the same ledger of ownership used when you buy a public stock or bond."
What's next: Hotel Ella and its restaurant, Goodall's Kitchen, will continue normal operations with the same staff, but Rex has plans to expand the boutique hotel's offerings.
- The company declined to share the purchase price. Hotel Ella's property valuation, for tax purposes, is $10.27 million, according to Travis Central Appraisal District records.