Interview with Tor Langoy, SteelWave Digital Advisor, on the strategic goal of investors in the Middle East

SteelWave Digital will headline the World Renowned CryptoVSummit 2024 in Dubai in April (17th and 18th). A subsidiary of the Commercial Real Estate (CRE) firm SteelWave, SteelWave Digital has identified the convergence between commercial real estate and the burgeoning industry of digital securities. SteelWave Digital’s novel blockchain-based initiative provides world-class real estate micro-investments to a new generation of clients – the 2024-era tokenized assets global investment community.

Following the SEC ruling on ETF trading, tokenization of CRE is novel and applicable to myriad investment communities, however, SteelWave is looking first to the versatile Middle East, rather than where the company is domiciled.

Our interview with Tor Langoy, a Senior Advisor to SteelWave Digital, a successful globally minded financier with substantial EMEA experience.

Mr. Langoy and his companies have raised and deployed more than 6 billion USD over the last few years in various businesses.

UAE Business:

Tell us about your background and what brought you to SteelWave Digital?

Tor Langoy:

We ran our own family offices in 2004. We’ve been pretty active in oil and gas and renewable energy, but also real estate and commercial real estate investment for decades.

We had real estate funds 10-plus years ago and focused on commercial real estate in New York and Chicago. But then we sold out in 2012/13 and we’ve been on the sidelines for a while and frankly, I never really saw the value of going deep into US real estate because post-our funds, we didn’t quite understand the marketplace. You had all the NERP and the SERP and cheap money floating around which created inflated asset prices and also distortions in many sectors, including of course the VC world – a lot of companies, a lot of VC-money backed crazy stuff – and the same could be said with wind and solar, which also arguably benefited from cheap money.

Now of course the world’s very different when the price of money, the interest rates have gone up and we see how the world has changed. Now it’s more about value investing.

And as for US real estate, we see you have to be a bit more savvy about what you’re doing. Again, you can’t just throw money at things and then expect valuations to go up and returns to stay steady.

So now we’re seeing this shake out in the marketplace and I saw this trend line emerging a few years ago, and so we teamed up with SteelWave. It was a meeting of the minds when I met Barry, because we both shared the outlook of what’s happening now – that there will be a shakeout in the real estate space.

Everybody knows that towers in New York and San Francisco are under water now essentially because the cap structure is broken, equity is gone, and debt is expensive. The deals done in 2019, and 2020 with relatively cheap debt and very low equity, now these assets are essentially underwater.

We see a huge shakeout happening and this volatility and shakeout in fact, creates a lot of opportunities.

Barry and I were, I guess it’s fair to say, ahead of the curve, and thus we teamed up and set up a fund, a half a billion-dollar real estate fund domiciled in Bermuda to capitalize on what’s happening right now.

UAE Business:

Where you see the opportunity at the intersection of commercial real estate and tokenization?

Tor Langoy:

That’s something we have also been working on for years. It’s been a long journey.

So in 2016, I, like so many others, bought my first Bitcoin and we went down a digital rabbit hole. Those days, things were a bit immature in the space. You had the different ICOs that were out there, whether it was OneCoin or whatever that went belly up. But you had all these ICOs, that was the craze those days.

We also did participate in ICOs, but we always came from an institutional mindset. But those days, institutions were simply not in the space and were more like ‘crypto bros’ out there.

Well, if you go fast-forward to today, you have a whole institutional ecosystem that has now been built. So now you have FCA-regulated custodians like Saudi markets for instance, which is almost Standard Chartered and not in trust. You have FCA-regulated Archax, which is a great custodian, but also a fund marketplace for trading tokens issued by funds.

So then of course you have lawyers and others in the ecosystems who are now astute in the space, and that was simply not the case in 2017-20 when we first started.

What we’re seeing now are large institutions like obviously JP Morgan and BlackRock trading Bitcoin. That was unthinkable a year or two ago.

So you see that all these large institutions are now clearly coming into the digital asset space and we see a great opportunity now to create a tokenized fund.

We don’t call it a token; we call it a digital fund, because what it boils down to is that we offer our LP investors a digital share certificate. That’s really what it boils down to, it is as simple as that. And what we can do with that digital share certificate, the versatility that comes in the form of a token, this makes the fund more attractive for many of these large institutional players.

As far as we know, we are the first institutional-grade large-cap real estate fund with a US focus that is fully embracing digitalization and offers our investors the optionality, and that’s a keyword, optionality of tokenization. We don’t force on any of our LP investors a digital share certificate. You can go for the analog if you want, but there are so many advantages to having a digital share certificate, because when it comes in the form of a token, it’s easier to trade between investor A and B within the fund, but also with time, we expect it to be traded on different platforms. So you have a broader audience to trade your real estate title or your tokens.

UAE Business:

Why is the UAE or Qatar an ideal climate to broker the digital investment vehicle of SteelWave?

Tor Langoy:

I think the Middle East as a whole, particularly the UAE, Bahrain, and Qatar, have been very active in the digital space. They embraced it. They created legal frameworks to attract large players in the space. For instance, Binance set up shop in Bahrain because they got a central bank permit a few years ago. Elsewhere at the time, that is something they couldn’t do. Binance couldn’t establish itself in the US essentially, because they would never get those types of permits required. So they’re now regulated by the Bahraini Central Bank.

So you also have ADGM and the RFC and DMCC and Dubai. They’ve been very proactive in terms of embracing crypto and digital assets. Ahmed Bin Sulayem, the Chairman of the DMCC, and the Dubai government have been very proactive. I mean, even the Dubai police, as far as we recall, issued their own NFT a few years ago.

So I think that the overall marketplace in the UAE and the Middle East has been more open-minded and embraced digital assets to a larger degree than the US and UK and than other jurisdictions have been.

UAE Business:

Are there certain bodies or organizations that you’ll be targeting?

Tor Langoy:

Well, we already had loads of discussions with family offices in the region and larger institutions in the region. So many of them are very traditional. So they like the fact that we have the optionality built in.

Most investors today are still pretty analog. The traditional, particularly in our space, they’re very traditional and conservative. However, many of them are, of course, extremely aware of what’s happening in the financial industry, one that has been shaken up by digital solutions.

Thus, they’re very much appreciative of the fact that we’ve given them the option of providing them a digital share certificate in the form of a token.

UAE Business:

Where do you see SteelWave Digital five years from now?

Tor Langoy:

I think within five years, most of our LP investors will have opted for digital share certificates. I think we’re going to go from zero to maybe 80 to 90% of our investors having tokens or digital share certificates. I think that’s where we’re going in terms of the digital aspect of it.

And also I think within five years we’ll have provided an enormous amount of return for our investors because we are in such a unique position to take advantage of the current market conditions, which is an enormous buy opportunity, probably the best in three decades.

So there’s an enormous amount of incredible deals that we have in our pipeline that we are executing, and within five years, we’ll exit with phenomenal returns.

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