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REALECOIN™ JANUARY 2018 WHITE PAPER The World’s First Tokenized Real Estate Investment Fund

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REALECOIN™ JANUARY 2018 WHITE PAPER

The World’s First Tokenized Real Estate Investment Fund

REALECOIN™ White Paper: The World’s First Tokenized Real Estate Investment Fund. This white paper changes from time to time, and is dated January, 2018. Please ensure that you have the most recent version by checking www.realecoin.com.

© 2018 LEMONADE REALTY, INC. d/b/a REALECOIN • www.realecoin.com 2

TABLE OF CONTENTS

INTRODUCTION .......................................................................................................................................... 3 TEAM ............................................................................................................................................................ 6 ADVISORS ................................................................................................................................................... 9

Advisors ................................................................................................................................................... 9 THE TOKEN ............................................................................................................................................... 11 WHY IS THE FUND USING BLOCKCHAIN AND CRYPTOCURRENCY TECHNOLOGIES? .................. 12 THE REAL ESTATE INVESTMENTS ........................................................................................................ 14 MARKET RESEARCH ................................................................................................................................ 16 SUMMARY ................................................................................................................................................. 26 IMPORTANT LEGAL DISCLAIMER ........................................................................................................... 27

CLOSED SYSTEM UTILITY .................................................................................................................. 27 MARKET AND INDUSTRY INFORMATION AND NO CONSENT OF OTHER PERSONS .................. 27

SUPPLEMENTARY MATERIALS .............................................................................................................. 28 DETAILED DUE DILIGENCE CHECKLIST FOR REAL ESTATE INVESTMENTS ............................... 28 DETAILED REPORT ON 162-164 EAST 82ND ST. ACQUISITION ....................................................... 30 TECHNICAL TERMS USED IN THIS WHITEPAPER ........................................................................... 38

REALECOIN™ White Paper: The World’s First Tokenized Real Estate Investment Fund. This white paper changes from time to time, and is dated January, 2018. Please ensure that you have the most recent version by checking www.realecoin.com.

© 2018 LEMONADE REALTY, INC. d/b/a REALECOIN • www.realecoin.com 3

INTRODUCTION

REALECOIN™ is a tokenized real estate investment fund. The Fund seeks to acquire income-producing,

institutional-quality multi-family housing units that need redevelopment or renovation. The Fund will improve

the properties, refinance the equity, and deploy the cash into additional properties. The Fund plans to buy

properties in the United States. Research from Freddie Mac’s shows that its Apartment Investment Market

Index (AIMI) has increased significantly since 2000:

REALECOIN™ White Paper: The World’s First Tokenized Real Estate Investment Fund. This white paper changes from time to time, and is dated January, 2018. Please ensure that you have the most recent version by checking www.realecoin.com.

© 2018 LEMONADE REALTY, INC. d/b/a REALECOIN • www.realecoin.com 4

The Fund believes that the value of its underlying token, the RC™, will increase in value as the value of its

real estate holdings grows. Further, the Fund believes that people and institutions who hold large blocks

of bitcoin, ether or other cryptocurrencies are looking to diversify their holdings into alternative coins.

These alternative coins, often abbreviated to ‘alt-coins,’ are highly correlated with bitcoin’s and ether’s price

movements. Additionally, REALECOIN™ will allow holders of fiat currency to buy tokens during its Private

Sale and its presale. The token is an ERC20-compliant crypto-token that will exist atop the Ethereum blockchain. The Fund

considers its token to be a security token, meaning it is a financial security. The Fund therefore anticipates

being subject to securities laws in the United States. Additionally, the Fund will only sell the tokens to

accredited investors. During the pre-sale, tokens can be bought with fiat currencies, including USD, Euro,

British Pounds, Yen, or Won. During the public sale, tokens can additionally be acquired with

cryptocurrency, including Ether, Bitcoin, Ripple, or Litecoin.

The Fund is targeting a 12-14% internal rate of return (IRR), and anticipates a dividend yield in the 6%-8%

range. The Fund’s senior management will be compensated with a standard 2 & 20 model: 2% of assets

under management and a 20% performance fee.

The Fund’s Founder, Ruben Azrak, anticipates investing up to 20% of his own capital in each of the

investments the Fund makes, and will additionally sign for any loans or leverage used on a project by project

basis.

The Fund’s first property has already been acquired, and is located on Manhattan’s Upper East Side, in

New York City, at 162-164 East 82nd St. Additional information about this property can be found in the Real Estate Investments section of this white paper. A full analysis of this acquisition can be found in the

Supplementary Materials section of this white paper.

The Fund’s offices are located at 595 Madison Ave., Suite 1101, NY, NY 10022.

A diagram of the Fund’s structure can be seen on the following page.

REALECOIN™ White Paper: The World’s First Tokenized Real Estate Investment Fund. This white paper changes from time to time, and is dated January, 2018. Please ensure that you have the most recent version by checking www.realecoin.com.

© 2018 LEMONADE REALTY, INC. d/b/a REALECOIN • www.realecoin.com 5

This white paper makes use of some technical jargon. Definitions can be found in the Supplementary

Materials section.

REALECOIN™ White Paper: The World’s First Tokenized Real Estate Investment Fund. This white paper changes from time to time, and is dated January, 2018. Please ensure that you have the most recent version by checking www.realecoin.com.

© 2018 LEMONADE REALTY, INC. d/b/a REALECOIN • www.realecoin.com 6

TEAM

Our team has worked at some of the most reputable companies within real

estate, finance and technology

REALECOIN™ White Paper: The World’s First Tokenized Real Estate Investment Fund. This white paper changes from time to time, and is dated January, 2018. Please ensure that you have the most recent version by checking www.realecoin.com.

© 2018 LEMONADE REALTY, INC. d/b/a REALECOIN • www.realecoin.com 7

Ruben Azrak, Chairman and Founder. Mr. Azrak co-founded Phat Farm1 with Russell Simmons in 1992,

and exited in 2004 for $140 million. He is one of the largest landlords in Brooklyn, NY and owns a portfolio

of multi-family properties across the US worth over $200 million.

The following table presents a sample of Mr. Azrak’s current real estate holdings2:

Address Type Bought Price Current Value Income (2016)

785 Flushing Ave Brooklyn, NY

Mixed-Use 1982 $1.2 million >$100 million $4.337 million

162-17 Jamaica Ave., Queens, NY

Mixed-Use 1983 $1 million >$30 million $1.478 million

78 Graham St., Brooklyn, NY

Mixed-Use 1978 $135,000 >$4 million $291,448

162-164 E 82nd St., Manhattan, NY

Multi-Family

2017 $19.4 million

$19.4 million TBD

349 Myrtle Ave., Brooklyn, NY

Mixed Use 2016 $2.4 million $2.4 million TBD

1247 Joseph E. Boone Blvd., Atlanta, GA

Multi-Family

2017 $1.5 million $1.5 million TBD

Additionally, Mr. Azrak is an experienced angel investor, having invested in over 150 companies, including

several unicorn startups like Dropbox and Hotel Tonight

1 https://www.phatfarm.com/ 2 This data has been provided by Mr. Ruben.

REALECOIN™ White Paper: The World’s First Tokenized Real Estate Investment Fund. This white paper changes from time to time, and is dated January, 2018. Please ensure that you have the most recent version by checking www.realecoin.com.

© 2018 LEMONADE REALTY, INC. d/b/a REALECOIN • www.realecoin.com 8

William Skelley, Consultant. Mr. Skelley is a serial entrepreneur and advisor to startups. He previously

worked at Harvard Business School’s Clayton Christensen’s3 hedge fund Rose Park Advisors, during which

he studied Professor Christensen’s theory of disruptive innovation. Additionally, he was the Founder and

CEO of iFunding, one of the first real estate crowdfunding platforms, which he exited in 2016. He previously

worked as a consultant at Bain Capital, GE, Olympus and Fuji.

During his tenure at iFunding, the platform grew from fewer than 1,000 investors in 2013 to over 11,000 in

2016, and origination volume grew from under $10 million to over $60 million.

Jennifer Powers, Head of Acquisitions. Ms. Powers received her Master’s in Real Estate from the Johns

Hopkins University Carey Business School. She previously worked at KBS Realty Advisors, during which

she personally underwrote nine hundred million dollars’ worth of completed acquisitions for a large

institutional real estate investor. In this role, she was responsible for industrial, office and residential

development. Ms. Powers also served as Vice President of New Boston Fund, Inc., in Arlington, VA, for

which role she served as an Acquisitions Officer for office, multi-family and industrial opportunities, with a

concentration on value-added investments, including the Urban Strategy America Fund. Additional

professional experience includes positions at Lowe Enterprises Real Estate Group, Inc., Kennedy

Associates Real Estate Counsel, Inc., and Barrueta & Associates.

Real Estate Brokerage Firm JLL, CBRE and Cushman and Wakefield

Cushman & Wakefield. Asset Management & Property Management Firm. Cushman & Wakefield is a

global real estate services firm that helps clients transform the way people work, shop and live.

3 http://www.claytonchristensen.com/

REALECOIN™ White Paper: The World’s First Tokenized Real Estate Investment Fund. This white paper changes from time to time, and is dated January, 2018. Please ensure that you have the most recent version by checking www.realecoin.com.

© 2018 LEMONADE REALTY, INC. d/b/a REALECOIN • www.realecoin.com 9

ADVISORS

Advisors

Dave Friedman. Principal at Yang Ventures. Mr. Friedman researches and screens cryptocurrency and

blockchain investment opportunities for Yang Ventures. He previously worked at Bloomberg LP and

Citigroup, and also founded his own boutique startup advisory consultancy.

David Drake. Managing Partner, LDJ Capital. Mr. Drake is an advisor to over 20 ICOs, including Ambrosus

(raised $32.2 million in October, 2017), BlockV (raised $21 million in August 2017), and LAToken (raised

$20 million in October, 2017). Mr. Drake’s firm is a financially integrated ICO family office with a global

footprint and local presence in 18 countries.

Keith Kaplan. Mr. Kaplan is the co-Founder and CEO of Tesla Foundation. The Tesla Foundation is a

Science and Technology Think Tank specializing in “All Things Autonomous” and the transition to the 4th

Stage of the Industrial Revolution.

Vibhuti Jha. Mr. Jha has been at the forefront of India-US relations since coming to the United States in

1991 as a senior executive with American Express. While at American Express, he led the development

of deposit programs for expatriate Indians living in the US, who wanted to invest in India via American

Express.

Based in New York, Mr. Jha has developed a boutique investment advisory, which serves high net worth

Family Offices in the US. He advises clients on asset management, risk management, and investment

management.

Feroz Sanaulla. Mr. Sanaulla is the former CEO of Intel Capital’s Middle East, Turkey and Africa

investment office. While serving in that role, his objectives were to expand, align and accelerate the

frontiers of technology via strategic relationships with companies. He reviewed over 200 deals yearly and

led investments in 11 companies and one acquisition. Mr. Sanaulla holds an electrical engineering degree

from the University of Maryland and an MBA from the Ross School of Business at the University of Michigan.

Anish Mohammed. Mr. Mohammed is a former cybersecurity architect at HSBC, and has been working

in the security and cryptography area for the past 15 years. He has spent half his career researching

cryptographic algorithms and protocols at three different research groups including Microsoft Research and

HSBC. He has also worked as a consultant at Accenture and Capgemini. Most recently he has been

involved with blockchain technology as one of the founding members of UKDCA. He speaks regularly

about blockchain and cybersecurity topics.

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© 2018 LEMONADE REALTY, INC. d/b/a REALECOIN • www.realecoin.com 10

E. David Ellington. Mr. Ellington is Founder and Managing Partner of Emory Capital Group (ECG). ECG

provides advisory and representation services to entrepreneurs, startups, late stage companies, seed

investors, venture capital and private equity firms.

Mr. Ellington is also co-Founder and President of GridSpeak Corporation. Founded in 2009, GridSpeak’s

proprietary technology, the GridSpeak Platform, provides visualization, situational intelligence and

predictive analytics tools for Big Data.

Additionally, Mr. Ellington is a former Trustee and Commissioner on the San Francisco Employees’

Retirement System (SFERS) Board. SFERS is the fifth largest pension fund in the State of California, with

around $16 billion in assets under management.

Blake Coler-Dark. Mr. Coler-Dark is the President of Fusion Networks, a private consulting firm focused

on connection highly sought after alternative investment opportunities with strategic global partners. Mr.

Blake recently served as Chief Investor Relations Officer at FundersClub, the world’s first online venture

capital firm, and a leader in early stage technology startups. He also served as the Managing Director of

FCVC Advisors, the family office and institutional unit of FundersClub, where he focused on capital raising

and investor outreach. Prior to joining FundersClub, he led Investor Relations, Fundraising and Marketing

at Echelon Asset Management and before that, served as Investor Executive for the pre-IPO team at

Lending Club and LC Advisors.

Josh Maher. Mr. Maher formerly lead cybersecurity initiatives at Microsoft Corp. in Redmond, WA. He

has built software products at companies like EMC Corp., Washington Mutual Bank, and other leading

companies. He is a renowned speaker and investor, with a passion for finance and innovation. He is a

supporter of the Seattle startup community, and is President of Seattle Angel, a non-profit focused on

education, startups and angel investing. Additionally, he has written two bestselling books on startup

investing.

Rosalie Morrisson. Asset Manager at Vanbarton Group. Ms. Morrisson is responsible for the performance

of assets in the Northeast and Midwest regions of the United States. She directs third party consultants

including property management, leasing, property tax consulting, property-level legal, investment sales and

construction management experts. Prior to joining Vanbarton Group, Ms. Morrisson served as facilities

manager at New York University, where she oversaw facilities operations and renovation projects in life

sciences and office properties. Ms. Morrisson received her M.S. in Real Estate Finance and B.Mus in

Classical Voice Performance from New York University. Additionally, Ms. Morrisson is a member of the

NYU Schack Institute of Real Estate Board of Alumni.

Additional investors and advisors will be announced soon.

REALECOIN™ White Paper: The World’s First Tokenized Real Estate Investment Fund. This white paper changes from time to time, and is dated January, 2018. Please ensure that you have the most recent version by checking www.realecoin.com.

© 2018 LEMONADE REALTY, INC. d/b/a REALECOIN • www.realecoin.com 11

THE TOKEN

THE REALECOIN™ TOKEN SYMBOL

RC™ tokens will have an initial value of 1 RC™ to 1 USD. The number of tokens created will equal the

dollar amount raised, rounded down to the nearest whole dollar. If $20 million in capital is raised, then 20

million tokens will be created. Tokens are divisible into 0.1, 0.01, and 0.001 RC™. Tokens are divisible

into subunits solely for investors’ convenience.

The Fund may periodically buy tokens on the open market and burn4 them. “To burn” tokens means to

permanently destroy them, and so reduce the supply of tokens outstanding. This is conceptually equivalent

to a stock buyback in a conventional company5.

The Fund believes that there may be times when the spot price of the token is less than the net asset value

per token (NAVPT) of the Fund. When this is the case, the Fund will have the option to buy tokens on the

open market and burn them. The Fund believes buying tokens on the open market when its spot price is

less than the NAVPT, and subsequently burning them, is prudent capital management. The Fund

additionally believes that buying back tokens on the open market will provide a floor for the spot price of

the token.

The Fund may, at its discretion, buy back tokens on the open market if the spot price of the tokens falls

below 75% of the Fund’s net asset value per token for the most recent quarter. For example, if the Fund’s

NAVPT for the most recent quarter is $1.25 and the spot price of the token is $0.925, the Fund may elect

to buy back some tokens on the open market.

For the purposes of this white paper, the Fund defines Net Asset Value Per Token as [(operating income /

cap rate) – debt] / (number of coins in existence). This calculation is analogous to a net asset value per

share (NAVPS) calculation done for a traditional REIT.

4 https://ethereum.stackexchange.com/questions/16188/best-way-to-burn-ethers-and-other-ethereum-tokens 5 It is important to note, however, that in the case of a stock buyback, the stock which the company buys on the open market becomes Treasury stock, which the company can either retire (‘destroy’) or else set aside for resale or reissuance. For a discussion of stock buyback accounting, see here: https://www.accountingtools.com/articles/2017/5/17/treasury-stock-accounting-cost-method-and-constructive-retirement-method

REALECOIN™ White Paper: The World’s First Tokenized Real Estate Investment Fund. This white paper changes from time to time, and is dated January, 2018. Please ensure that you have the most recent version by checking www.realecoin.com.

© 2018 LEMONADE REALTY, INC. d/b/a REALECOIN • www.realecoin.com 12

WHY IS THE FUND USING BLOCKCHAIN AND CRYPTOCURRENCY TECHNOLOGIES?

REALECOIN™ differentiates itself from other cryptocurrency projects by being a tokenized investment

fund. This means that each token is analogous to a share in an investment fund. A natural question that

arises is why the Fund would use cryptocurrencies at all, given that traditional share-based investment

funds have been around for decades, and are well understood. For example, the law allowing the formation

of Real Estate Investment Trusts (REITs) was passed by Congress back in 19606.

There are a large number of people who own significant amounts of bitcoin or ether or both, who are looking

to diversify their holdings, without converting to fiat assets.

REALECOIN™ provides holders of large amounts of cryptocurrencies the opportunity to buy into a real

estate investment fund, the value of whose cryptocurrency will be derived in large part by the performance

of the real estate. In other words, the RC™ token will derive its value primarily from real assets in the

physical world that generate income and which increase in value over time.

6 https://www.reit.com/investing/reit-basics/reit-industry-timeline#0

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Tokenization of traditional assets7 (including real estate) is coming, and REALECOIN™ is merely one of

the first investment funds to tokenize itself. Real estate tokenization is happening around the world8.

One person wrote on Steemit last year about the tokenization of commercial real estate9:

7 https://hackernoon.com/traditional-asset-tokenization-b8a59585a7e0 8 https://coinidol.com/tokenization-of-real-estate/ 9 https://steemit.com/blockchain/@blockchainblonde/tokenization-of-commercial-real-estate

The blockchain will enable real estate assets to be tokenized and traded similarly to Bitcoin. Property titles

and ownership histories will be recorded on the blockchain, and the value of a property will be represented

on the blockchain by a token. Blockchain will allow commercial buildings to have a digital address that

contains information regarding occupancy, physical characteristics, legal status, historical performance,

and financial position. As commercial property information continues to disseminate across the globe,

brokers will lose their information asymmetry advantage. The data will be available online and relatable

across submarkets and property types. When it becomes easier for investors to gather information on

potential acquisitions, it will be easier to price buildings without investment brokers.

REALECOIN™ White Paper: The World’s First Tokenized Real Estate Investment Fund. This white paper changes from time to time, and is dated January, 2018. Please ensure that you have the most recent version by checking www.realecoin.com.

© 2018 LEMONADE REALTY, INC. d/b/a REALECOIN • www.realecoin.com 14

THE REAL ESTATE INVESTMENTS

REALECOIN™ will invest in multi-family housing across the United States. These assets are income-

producing, institutional-quality real estate that need renovation or redevelopment. The Fund will improve

the real estate, refinance the equity, and reinvest the proceeds into additional properties.

The Fund has already acquired its first property, an apartment building on Manhattan’s Upper East Side, in

New York City, located at 162-164 East 82nd St. The property was acquired for $23 million, with $11 million

of equity and $12 million debt. The full report for this Property can be found in the Supplementary Materials section of this white paper.

Real estate services firm Jones Long LaSalle (JLL) estimates that the size of the US multi-family housing

market was approximately $55.3 billion in 201610. JLL further estimates that the average cap rate for multi-

family housing across the United States is 4.3%. It should be noted, of course, that given the size of the

United States and how varied its real estate markets are, the actual cap rate in any given city may differ,

substantially, from that 4.3% country-wide average.

One of the things that differentiates REALECOIN™ from every other cryptocurrency opportunity is that fully

one hundred percent (100%) of the funds raised will go into income-producing real estate assets. It is

important to remember that REALECOIN™ is not a speculative software startup, but rather a real estate

investment fund, which invests in hard assets in the real world that throw off cash in the form of rent rolls.

The Fund believes that its managers’ investing acumen and property management skills will create real

value in the underlying RC™ token. The Fund additionally believes that this investment opportunity provides

cryptocurrency holders with real diversification.

Every acquisition goes through a detailed due diligence checklist, which includes information on the

following topics:

§ Tenant Information, including leases and related information.

§ Third Party Reports, including structural and engineering reports.

§ Title/Survey, including title insurance and easements.

§ Reports/Plans, including Certificates of Occupancy and Building Plans.

§ Service Agreements, including Elevator, Water Treatment, and other agreements.

§ Warranties, including for the roof.

10 http://www.us.jll.com/united-states/en-us/Research/US-Multifamily-Investment-Outlook-Q2-2017-JLL.pdf

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§ Financial and Operational documents, including operating budgets, and income and expense

statements.

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MARKET RESEARCH

Market research firm Colliers released the following findings in its 2017 Midyear Capital Flows Market

Report:

§ Overall transaction volumes for the first half of 2017 are down 19% from the second half of 2016,

and down 7% from a year ago.

§ Investment capital flows remain robust by historical standards.

§ Portfolio and entity purchases continue to account for a disproportionate share of the recent sales

declines, while individual property transactions have been stable.

§ Investment momentum continues to shift from primary into secondary markets, and from CBDs into

inner suburban markets, particularly for offices and apartments, as both foreign and domestic

investors eschew premium pricing in the top markets.

§ The relative strength and stability of the US economy and ultra-low interest rates will continue to

make real estate a compelling option for investors, which is likely to keep property capital markets

strong, attracting offshore capital to our markets.

§ Apartments surged from 18% of properties sold in 2007 to 32% last year, and falling back to 30%

this year.

§ Institutional buyers of real estate comprised 21.8% of transaction volume.

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REALECOIN™ White Paper: The World’s First Tokenized Real Estate Investment Fund. This white paper changes from time to time, and is dated January, 2018. Please ensure that you have the most recent version by checking www.realecoin.com.

© 2018 LEMONADE REALTY, INC. d/b/a REALECOIN • www.realecoin.com 18

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Research from real estate services firm Jones Long LaSalle11 (JLL) suggests that investors in multi-family

properties are focusing on secondary and tertiary markets:

11 http://www.jll.com/research

The significant decline of transactions in primary markets has sustained strong liquidity in secondary and

even tertiary markets. As a result, secondary markets comprised 44.6 percent of total multifamily

transaction volumes at midyear, a record for this indicator if analyzing the past nearly two decades. Denver

and Phoenix led secondary market activity this quarter, with each market seeing over $1.1 billion worth of

transactions. Despite the overall decline in activity, several secondary markets are seeing growth, ranging

from Baltimore (+5.1 percent), to Salt Lake City (+99.2 percent). Jacksonville, Orlando, Philadelphia and

San Antonio additionally saw year-to-date gains in volumes.

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JLL Research provides the following table, sourced from Real Capital Analytics, summarizing the most

active multifamily investment markets in 2016 and 2017:

H1 2017 Rank H1 2016 Rank Market Transaction volume 2017 YTD (millions $US)

YoY Change

1 3 Dallas-Ft. Worth $3,061 -12.2%

2 4 Atlanta $2,506 -20.6%

3 2 Denver $2,314 -36.9%

4 5 Phoenix $1,859 -30.4%

5 13 Orlando $1,626 +21.2%

6 1 New York $1,456 -74.4%

7 11 Seattle-Bellevue $1,348 +22.8%

8 9 Austin $1,343 -31.6%

9 12 Los Angeles $1,302 -20.0%

10 6 Washington, DC $1,298 -45.9%

JLL defines the primary multi-family markets as New York, San Francisco, Washington, DC, Los Angeles,

Chicago and Boston.

Of particular interest is JLL’s map of cap rates12 for Class A multi-family properties across the United States:

12 In real estate finance, the ‘cap rate’ is the rate of return on a real estate investment, based on the income that the asset is expected to generate. The cap rate is roughly analogous to the yield on a bond. The cap rate is calculated as Net Operating Income / Current Market Value.

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As one would expect, the cities with the lowest cap rates are the most expensive ones, such as San

Francisco and New York. The Fund believes that attractive investment opportunities exist in non-primary

markets, such as the southeastern and southwestern United States.

JLL further notes that multi-family investment capital is primarily sourced from institutional investors: “mid-

to-long term optimism in the sector remains high across varied sources of capital, notable private equity

and institutional investors, which continue to pursue opportunities of scale in the multifamily space.” JLL

notes:

Additionally, JLL notes that multifamily portfolio acquisitions by private equity and institutional buyers are

up 42.6% during this expansion period:

This has been evident in portfolio activity in recent years….These portfolios often comprised assets in the

Sub Belt and Southwest regions of the country:

§ In the largest portfolio of the quarter, Starwood closed on its approximately $2.85 billion

acquisition of Milestone Apartments REIT. The portfolio contains 23,789 units throughout

Southeast and Southwest markets.

§ Blackstone remains active in the multifamily sector, acquiring more than 7,000 units this quarter

across three portfolios with exposure to Texas, Florida, Las Vegas, Southern California and the

Midwest. In its two largest deals, Blackstone closed on 3,618 units throughout the Sun Belt from

IMT Residential for $658.5 million, as well as 2,513 units from TA Realty for $429.5 million.

§ Student housing accounted for 5.4 percent of institutional acquisitions in the quarter, spurred in

part by Singapore-based Mapletree. The Singaporean investor acquired its second student

housing portfolio from Kayne Anderson, closing 3,751 beds and 1,388 multifamily units for $1.6

billion.

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In spite of improvements in fundamentals, garden-style assets are trading at a wide pricing discount relative

to historic cycles:

Mr. Willet provided the following graphs in support of his claims. These graphs show both high occupancy

levels of multifamily housing across the United States, as well as steady growth in rent rolls.

In July of 2016, The Urban Institute hosted a talk by Greg Willett, Chief Economist of RealPage, Inc. in

which Mr. Willet made the following points:

§ “The housing demand generated by job additions is disproportionately going to rental units,

including apartments, for both lifestyle and financial reasons.”

§ “Demographics say the cycle of strong demand has long legs, assuming overall economic growth

is sustained.”

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Further, the cities with the strongest growth in housing inventory also have strong rent growth rates:

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City Units Under Construction

Inventory Growth Rate

3-Year Class A Rent Growth Avg

Current Class A Rent Growth

Nashville, TN 12,113 9.4% 4.6% 5.4%

Dallas, TX 43,859 8.3% 4.5% 5.4%

Austin, TX 16,977 7.7% 3.4% 2.8%

Charlotte, NC 11,976 7.6% 4.8% 4.6%

Denver-Boulder, CO 19,001 6.4% 6.3% 3.9%

Houston, TX 38,630 6.1% 3.1% -0.8%

Salt Lake City, UT 6,820 5.7% 4.8% 6.5%

San Jose, CA 8,576 5.3% 9.4% 4.7%

Raleigh-Durham, NC 7,649 5.2% 2.7% 3.4%

West Palm Beach, FL 5,738 5.1% 5.8% 6.9%

Research from Freddie Mac indicates that most prospective homebuyers believe that homes are becoming

more expensive, which suggests that many people will continue renting for the foreseeable future:

Further, Freddie Mac found that 63% of millennials, ages 21-27, and 47% of older millennials, ages 28-37,

think that renting is a good option. Intriguingly, older generations, those of Generation X and the Baby

Boomers also thought renting was preferable to buying:

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Clearly this research suggests that there is a strong need for multifamily housing across the United States.

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SUMMARY

REALECOIN™ is the world’s first tokenized real estate investment fund. The Fund seeks undervalued,

income-producing multifamily housing units across the United States, and plans to rehabilitate the

properties, refinance the equity, and invest proceeds in additional properties. The Fund expects the value

of its crypto-token, the RC™, to increase in value as the value of the underlying property increases in price

and generates steady cash flow. The Fund anticipates that many holders of bitcoin and ether will see in

the Fund an attractive opportunity to diversify some of their holdings into a cryptocurrency backed by

physical, income-producing assets in the real world.

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IMPORTANT LEGAL DISCLAIMER

CLOSED SYSTEM UTILITY

As of the date of publication of this paper, the Tokens have no known potential uses outside of the

REALECOIN™ ecosystem, and are not permitted to be sold or otherwise traded on third-party exchanges.

This paper does not constitute advice nor a recommendation by REALECOIN™, its officers, directors,

managers, employees, agents, advisors or consultants, or any other person to any recipient of this paper

on the merits of the participation in the Token Sale. REALECOIN™ Tokens should not be acquired for

speculative or investment purposes with the expectation of making a profit or immediate re-sale. No

promises of future performance or value are or will be made with respect to REALECOIN™ Tokens.

Accordingly, no promise of inherent value, no promise of continuing payments, and no guarantee that

REALECOIN™ Tokens will hold any particular value is made. Unless prospective participants fully

understand and accept the nature of REALECOIN™ and the potential risks inherent in REALECOIN™

Tokens, they should not participate in the Token Sale.

REALECOIN™ Tokens are sold as a functional good and all proceeds received by REALECOIN™ may be

spent freely by REALECOIN™ absent any conditions, save as set out herein.

MARKET AND INDUSTRY INFORMATION AND NO CONSENT OF OTHER PERSONS

This Whitepaper includes market and industry information and forecasts that have been obtained from

internal surveys, reports and studies, where appropriate, as well as market research, publicly available

information and industry publications. Such surveys, reports, studies, market research, publicly available

information and publications generally state that the information that they contain has been obtained from

sources believed to be reliable, but there can be no assurance as to the accuracy or completeness of such

included information.

Save for REALECOIN™ and its directors, executive officers and employees, no person has provided his

or her consent to the inclusion of his or her name and/or other information attributed or perceived to be

attributed to such person in connection therewith in this Whitepaper and no representation, warranty or

undertaking is or purported to be provided as to the accuracy or completeness of such information by such

person and such persons shall not be obliged to provide any updated on the same.

While REALECOIN™ has taken reasonable actions to ensure that the information is extracted accurately

and in its proper context, REALECOIN™ has not conducted any independent review of the information

extracted from third party sources, verified the accuracy or completeness of such information or ascertained

the underlying economic assumptions relied upon therein. Consequently, neither REALECOIN™ nor its

respective directors, executive officers and employees acting on their behalf make any representation or

warranty as to the accuracy or completeness of such information and shall not be obligated to provide any

updates on the same.

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SUPPLEMENTARY MATERIALS

DETAILED DUE DILIGENCE CHECKLIST FOR REAL ESTATE INVESTMENTS

1. Tenant Information

§ Leases

§ Copy of Current Rent Roll

§ List of Security Deposits

§ Copied of Common Area Agreements

2. Third Party Agreements

§ Structural Reports

§ Environmental Reports

§ New Phase I Report

§ HVAC Study (if available)

§ Roof Repairs (if available)

3. Title/Survey

§ Commitment of Title Policy with Exceptions

§ Survey

§ Title Insurance

§ Copy of Declaration of Easements

4. Reports/Plans

§ Certificates of Occupancy

o Building Certificate

o All Tenant Certificate of Occupancy

§ Complete Set of Building Plans

§ Complete Set of CAD Files for Property

§ As-Built Plans

§ Site Development Plans and Approvals

§ Schedule of Outstanding TI’s and LC’s.

§ Sewage Discharge Permits

§ Soil Tech & Geo-Technical Reports

§ Sprinkler Tests

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5. Service Agreements

§ Elevator

§ Water Treatment

§ Security

§ Alarm Monitoring Service Agreement

§ Life Safety

§ Trash Removal

§ Janitorial

§ Exterior Landscaping

§ Exterminating

§ Interior Plants

§ Snow Removal

§ HVAC

§ Maintenance & Repair

§ Water Sub-Metering

§ Parking

§ Other

§ Copies of All Equipment Leases

6. Warranties

§ Roof

§ Other

7. Financial/Operational Documents

§ Operating Budget (Past Three Years, YTD)

§ Operating Budget Forecast

§ YE Monthly Income/Expense Statements

o Past Three Years, YTD

§ YE Monthly Detailed General Ledger

o Past Three Years, YTD

§ Detailed CAM Reconciliation Worksheets/BY

o Past Three Years, YTD

§ Year-End Bank Reconciliation

o Past Three Years, YTD

§ Copies of Tax Bills: Semi-Annual

o Past Three Years, YTD

§ Itemized Capital Improvements

Complete/Planned

§ Copies of Monthly Utility Bills

o Past Three Years, YTD

§ YE PM Reports (including delinquencies)

o Past Three Years, YTD

§ Staffing Schedule, Including Hire

Dates/Salaries/Bonuses

§ Inventory of Personal Property

§ Crime/Accident Reports and Insurance

Claims

§ Five-Year Historical Occupancy

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DETAILED REPORT ON 162-164 EAST 82ND ST. ACQUISITION

INVESTMENT HIGHLIGHTS

Total Per Unit Per SF Purchase Price: $23,000,000 $605,263 $1,169 Closing Costs: 22,000 579 1 Acquisition Fee: - - - Total Costs: $23,022,000 $605,263 $1,170 Less: Existing Debt 12,000,000 318,789 610 Total Initial Equity: $11,022,000 $290,053 $560 Capital Improvements: 300,000 7,895 15 Total Equity Investment: $11,322,000 $295,947 $576

PROJECTED RETURNS*

In-Place Capitalization Rate: 3.8% Holding Period: 5 Years Stabilized Unleveraged Return on Equity (Yr 4): 4.6% Stabilized Leveraged Return on Equity (Yr 4): 3.6% Average Leveraged Return on Equity: 3.0% Exit Capitalization Rate: 4.0% Unleveraged IRR: 7.9% Leveraged IRR: 11.6%

EXECUTIVE SUMMARY

162-164 East 82nd Street

New York, NY 10028

CORE/VALUE-ADD INVESTMENT OPPORTUNITY

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162-164 East 82nd Street in New York, NY (“Property”) presents an excellent opportunity to acquire a well-occupied apartment building in the Upper East Side neighborhood of Manhattan, one of the most prestigious residential locations in the world. The address is in the heart of the Upper East Side, approximately three blocks from the middle of Central Park and the Metropolitan Museum of Art. Also in the nearby vicinity is the Guggenheim Museum, the prestigious Lenox Hill Hospital and unparalleled shopping, dining and entertainment options. The Property consists of two, five-story walk-up buildings built in 1920 containing 38-units. Thirty-seven units are subject to New York City Rent Stabilization Regulations and one unit is subject to New York City Rent Control Regulations.

The Property was purchased for $19.4M ($510,526/unit) by Ruben and Victor Azrak in June 2017 from Harbor Group Management who purchased the Property in September 2013 for $16.15M ($425,000/unit). The Azrak’s have invested approximately $2M in base building and unit renovations at the Property for a current basis of approximately $21.2M. Ruben Azrak is the founder of Realecoin and will contribute the Property to the Fund at a Purchase Price of $23M Approximately 34% of buildings in Manhattan built before 1946 are subject to NYC Rent Stabilization Regulations. After a two-year rental rate increase freeze, allowable rent increases beginning Sept 2017 are 1.25% for a one-year renewal and 2.0% for a two-year renewal. These rental rate cap increases are only applicable to the “legal” rent of the Property and not the in-place “preferential” rent. Every rent stabilized apartment has a maximum legal rent based on its unique history. Landlords are required to register the “legal regulated rent” of rent-stabilized apartments with a state agency (New York State Homes & Community Renewal) every year, but may offer the apartment for a lower amount (market) called a “preferential rent”. Fourteen of the units at the Property have “legal” rents that are significantly higher than the “preferential” in-place rent. Under Rent Stabilization Guidelines, rental rates can also be increased If the owner makes approved building-wide capital improvements or renovations to a vacant apartment (or occupied with tenant permission). The owner is entitled to collect a rent increase equal to either 1/40th or 1/60th of the cost of the improvement. Approximately ½ of the units have been renovated. Units will continue to be renovated as they come available at a cost of $15,000/per unit. There is also the possibility of creating additional value by adding a rooftop deck amenity and creating a Penthouse unit from the 762 sf of available Air Rights. The Property was 90% leased at purchase and is currently 76% leased as available apartments have been removed from the market for renovations. There were nine units vacant at 162 East 84th Street as of October 2017. Five have recently completed renovations and have been listed for rent with Open Houses for all units scheduled for January 14, 2018. Of the four remaining vacant units, one has been rented and the other three are currently undergoing renovations. There were three vacant units at 164 East 82nd Street as of October 2017, two have been leased and one is currently undergoing renovations.

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The Property is subject to two loans with Dime Savings Bank. The primary loan has an original balance of $10.5M at an interest rate of 3.75%, 30-year amortization. The secondary loan is also with Dime Savings Bank and has an original principal of $1.5M at an interest-rate of 4.75%, interest-only. PROPERTY DESCRIPTION

Property Address: 162-164 East 82nd Street Upper East Side New York, NY 10028

Cross Streets: Lexington & Third Avenues Property Type: Apartment (Non-Elevator) Number of Buildings: Two Floors: Five Units: 38 SF: 19,670 sf Average Unit Size: 518 Land Area: 5,108 sf (0.117-acres) Year Built: 1920 Class: B Occupancy of (as 10/17): 76% Block/Lot: 1510/46, 45 Zoning: R8B Zoning FAR: 4 Lot Dimensions: 50’ X 102’ Available Air Rights: 762 sf Parking Spaces: None Parking Ratio: N/A

MARKET ANALYSIS 162-164 East 82nd Street is located in New York, NY within the borough of Manhattan, one of the most desirable real estate markets in the world.

Manhattan is the most densely populated borough of New York City, its economic and administrative center, and its historical birthplace and commonly referred to as just “The City”. The borough is coextensive with New York County, one of the original counties of the U.S. State of New York. The borough consists mostly of Manhattan Island, bounded by the Hudson, East, and Harlem rivers; several small adjacent islands; and Marble Hill, a small neighborhood now on the U.S. mainland, physically connected to the Bronx and separated from the rest of Manhattan by the Harlem River.

Manhattan is often described as the cultural, financial, media, and entertainment capital of the world, and the borough hosts the United Nations Headquarters. Anchored by Wall Street in the Financial District of Lower Manhattan, New York City has been called both the most economically powerful city and the leading financial center of the world, and Manhattan is home to the world's two largest stock exchanges by total market capitalization: the New York Stock Exchange and NASDAQ. Many multinational media conglomerates are based in Manhattan, and the borough has been the setting for numerous books, films, and television shows. Manhattan real estate is among the most expensive in the world, with the value of Manhattan Island, including real estate, estimated to exceed $3 trillion in 2013. Median residential property sale prices in Manhattan exceeded $1,500 per square foot as of 2018, and Fifth Avenue in Midtown Manhattan commands the highest retail rents in the world, at $3,000 per square foot in 2017.

The New York metro is the nation’s largest apartment market, with 2.2 million rental units, of which 47% are rent stabilized and 1.2% rent controlled. As anticipated, a glut of new class A supply coupled with a slowdown in overall job growth and a sky-high cost-of-living, have produced elevated concessions and vacancies in the luxury end of the market. The metro’s overall economic drivers are multi-faceted but are primarily two-pronged: FIRE (Finance, Insurance, and Real Estate) and TAMI (Technology, Advertising, Media, and Information). Education and Health Services is actually the largest segment of the Metro’s economy at nearly 20%, but its average

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salary is just $57,000 compared to $119,000 for Financial Services and $154,000 for Information Services. In fact, firms such as Bloomberg, Google, DraftKings, and BuzzFeed have been some of the leading job creators in the metro. Job growth has remained above the national average over the past few years but is expected to slow down over the forecast horizon. It slowed to 1.9% in 2016 and is expected to be just 1.0% annually over the next three years, which is below the expected national average of about 1.4%. Business costs are among the highest in the nation at 161% above the national average. Add in expensive housing, living costs and elevated taxes, and the metro is poised to see a greater rift in income inequality. The improvement in the equity markets have improved the financial wherewithal of the metro’s money center banks. As Dodd-Frank gets scaled back, the big banks should see a direct positive impact on their bottom line. If Brexit succeeds in sending its capital and jobs from London to New York, the banking sector should benefit. Although the metro does suffer from negative domestic net migration, international immigration remains (for now) robust and thereby creates a cosmopolitan atmosphere attracting a diverse workforce. As a result, demographics are favorable for apartment rentals, with the overall metro’s key renting age 20-34 cohort above the national average at 21.5%, compared to 20.8% nationally. Despite rent control and stabilization requirements, the metro has some of the most expensive housing costs in the nation and yet remains a fairly tight rental market. Below are vacancy and rent composite estimates compiled by Fannie Mae:

Manhattan is typified by numerous high-wage industries generating stable base of renter households. Powered by a diverse employment spectrum and containing more than 8.5 million residents, New York

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City benefits from a consistent supply of new households. Due to the extreme price of single-family housing, the vast majority of the households seek rental accommodations, particularly in the core boroughs of Manhattan and Brooklyn where prices are highest. According to Marcus & Millichap, as a result, vacancy rates in these boroughs (and broadly metrowide), have posted significant deterioration, falling to an overall 2% average at the end of the third quarter of 2017. While completion rates have edged higher during the past year, the sheer volume of demand will keep vacancy near the lowest levels of the current cycle. Below is a breakdown of Manhattan rental rate growth in 2017 by Borough and Submarket (Marcus & Millichap):

A slower construction schedule, coupled with net absorption of more than 7,600 rentals, trimmed the vacancy rate to 2.3% as of 3Q 2017. All submarkets recorded vacancy declines, reversing the previous trend toward marginally higher vacancy rates. The Downtown Manhattan submarket performed best, with vacancy declining 130 basis points to 2.4%. The average effective rent ticked up 1.6% to $3,569 per month, driven by broad performance throughout the borough. The most affordable rents are in Uptown Manhattan at $3,111 per month. The Downtown Manhattan submarket recorded the fastest appreciation over the last year, rents rising 2% to $4,195 per month, the highest level in the Borough. New York City is one of the most active investment sales market in the world. In 2016, there was $13.57 billion of multifamily transaction volume, up 2% from the $13.24 billion of activity in 2015. In the elevator category, there was $8.75 billion of sales activity last year, a 5% increase over the $8.37 billion of activity in 2015. In the walk-up sector, there was $4.82 billion of sales value in 2016, just $48 million below the 2015 total. Even in the Manhattan submarket, where sales volumes were off much more significantly than the citywide averages, the multifamily sector saw the dollar volume of sales increase by 3% in 2016 from 2015. The number of properties sold in the multifamily sector in 2016 totaled 1,508, a 9% drop from the 1,652 properties that traded in 2015. Elevator properties showed a 19% decrease with 275 buildings sold in 2016 versus the 340 properties sold in 2015. Last year, 1,233 walk-up buildings were sold citywide, a 6% drop from the 2015 total.

With regard to property values in the multifamily sector, 2016 saw price appreciation across the board. This was the case for elevator buildings and walk-up buildings in every submarket throughout the city with the exception of elevator properties in northern Manhattan, where property values dropped by 5%.

Citywide, multifamily properties had an average sale price of $417 per square foot in 2016, an 11% increase over the 2015 average of $374 a foot. Elevated properties rose by 6% to a $514 average while walk-up properties increased by 12% to $397 per square foot.

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Capitalization rates continued to compress citywide as well. Total cap rate compression citywide was 26 basis points down to an average of 4.31%. In the elevator sector, the compression was 17 basis points to 3.95% and in the walk-up sector, compression was 29 basis points to 4.47%. In Manhattan, capitalization rates continued to be extremely low with an average of 3.55% in the multifamily sector. Elevator buildings had an average of 3.3% and in the walk-up sector the average was 3.71%.

Manhattan is among the most desirable investment markets in the world, with multi-family a preferred asset type. Average prices per unit are in the mid-to-high $600,00 range, driven by sales in Tribeca, East Village and the Upper East Side with cap-rates in the mid 3% range. Below is a graph charting Manhattan multi-family sales since 2013.

Below is a breakdown of Manhattan 3Q 2017 multi-family sales by type and submarket (Ariel Property Advisors):

FINANCIAL ANALYSIS

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The key underwriting assumptions include the following: • Holding period of five years. • Current renovated market rents of $3,390/unit (individual units vary according to NYC Rent

Regulation Rules). • In-place rents increasing 5% in Year 1, 6% in Year 2 and 7% in Year 3, 3% thereafter. • Stabilized Vacancy Rate of 2.0% annually. • Expense growth of 2.0% annually. • Real Estate Taxes based on current assessment and increased 3.0% annually. • Replacement Reserve of $250/unit. • Capital Expenditures of $60,000/yr (includes renovation costs of $15,000/unit of 19 units). • Exit capitalization rate of 4.0% with Closing Costs of 2.5%.

Since the Seller will be contributing this Property to the Realecoin Fund, closing costs are estimated to be minimal at $22,000. Based on these assumptions, the Gross Sales Price at the end of the Holding Period is $29,096,226 ($765,690/unit). The purchase price of $23,000,000 ($605,263/unit) and capitalization rate of 3.8% is in-line with current comparable sales detailed in Market section. The Property is currently encumbered by two loans from Dimes Savings Bank. The terms are detailed below: PRIMARY LOAN

• Origination Date: June 15, 2016 • Original Loan Amount: $10,600,000 • Interest Rate: 3.75% • Amortization: 30 years • Loan Expiration: TBD

SECONDARY LOAN • Origination Date: June 15, 2016 • Original Loan Amount: $1,510,000 • Interest Rate: 4.75% • Amortization: Interest-only • Loan Expiration: TBD

The pro forma assumes the current loan remain in-place until the Property is sold at end of Year 5. ASSET MANAGEMENT STRATEGY The Property is currently being managed by Choice New York Management. Our strategy is to continue with the current in-place Property Management team. Founded in 2010, Choice New York now manages over one hundred buildings, provides a wide array of staffing and leasing services, and is the fastest growing full-service property management company in New York City.

Choice New York aims to blend superior customer service, operational excellence and technology with traditional real estate principles to meet and exceed resident and client’s expectations. Their core values are summarized into Eight “P’'s” of Property Management. Choice New York blends superior customer service, operational excellence and technology with traditional real estate principles to meet and exceed our resident and client’s expectations. We have summarized our core values into Eight “P’'s” of Property Management that we strive to exemplify each and every day.

Professional. Observance of the highest ethical and operational standards. Personal. Communication and responsiveness. Representatives are available 24/7. Precise. Responsive, accountable with the highest level of accuracy.

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Proactive. Hands-on approach to property management. Preventative. Perform regular building checkups and maintenance routines to ensure that all systems are working properly and attempt to address problems before they develop. Problem Solvers. Commitment to expedient, cost-effective and long-lasting solutions. Persistent. Tenacity is a valuable commodity that they carry into every endeavor. Progressive. Ongoing investment into technology, operations and staff to maximize the performance of client’s assets. Current ownership has invested approximately $2M ($52,632/unit) in base building upgrades and unit renovations into the Property since purchase. Our strategy is to continue unit renovations at a cost of $15,000/unit. This includes total kitchen, bathroom and other fixtures and finishes upgrades. The combination of allowable rental rate increases through capital improvements and relatively high in-place “legal” rents will allow us to increase rents above Rent Stabilization guidelines. Operating expenses at the Property are consistent with properties of similar size and type, with a current expense ratio of 28%. Our strategy is to continue to run the Property as efficiently as possible and the Base Case pro forma doesn’t include a reduction from current Operating Expenses. RISK ANALYSIS The primary risks of the investment are potential cash flow volatility, capital expenditures significantly higher than projected, market instability and the Property achieving an exit price less than projected. A further discussion of these risks and mitigating factors is detailed below. Cash Flow Risk Cash flow risk assumes that the Property doesn’t perform in accordance with pro forma projections. We believe this risk is mitigated by several factors. Manhattan is one of the most desirable residential markets in the world. The City is landlocked and highly developed, providing limited new development opportunities, particularly in the Upper East Side submarket. The Property is also in an exceptional Manhattan location. It’s immediate access to Central Park, two subway stations and premium shopping, dining and entertainment options will always place units in high demand. Capital Expense Risk This risk is that actual Capital Expenditures at the Property are higher than projected. Total capital at the Property is estimated at approximately $70,00/year (deferred capital and replacement reserve). Including renovations and other structural items. In addition, the Azrak’s have put considerable capital into the Property since Purchase. The below market purchase price of $19.2M ($505K/unit) has allowed for significant additional capital investment. Market Risk Market risk is that economic volatility impacts Property performance. This risk is inherent in all investments, but we believe this is moderated by several circumstances. 162-164 East 82nd Street is located in Manhattan, one of the leading cities in the world. Although susceptible to an economic downturn, particularly in the FIRE sector, Manhattan continues to be one of the most vibrant locations world-wide with one of the strongest rental markets due the high price of ownership. Economic stagnation would also impact the luxury segment of the market more heavily, while demand for well-located economically priced apartments should remain strong. Exit Risk Exit risk is that the realized Sales Price on the Property is below pro forma projections. The exit capitalization rate is assumed to be 4.0%, while typical capitalization rates are currently in the mid-3% range. Multi-family is the most desirable real estate asset class in the nation with typically the lowest capitalization rates. Capitalization rates are heavily influenced by interest rates, which began to incrementally increase in 2015 after being at historically low levels since late 2008. However, inflation has been consistently low since the early 1990’s, the main risk to interest rate increases. According to REIS, as of 2Q 2017 the average capitalization rate for multi-family properties nationwide is 5.7%, a decrease from 6.0% over the last three quarters. This is despite a corresponding 25 basis point increase in the Federal Funds Rate during the same time period.

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TECHNICAL TERMS USED IN THIS WHITEPAPER

Following is a list of terms and jargon that should help non-technical people understand this white paper

and the Fund’s investment thesis. A note to the technically inclined: these definitions are necessarily

simplified, and elide some important details.

§ Blockchain: “A blockchain is a digitized, decentralized, public ledger of all cryptocurrency

transactions….[which] allows market participants to keep track of digital currency transactions

without central recordkeeping.”13 It is important to understand that there are different blockchains.

Bitcoin exists on its own blockchain. Ethereum is a separate blockchain. Ethereum allows for third-

party tokens, such as REALECOIN™’s RC™ token, to exist atop it.

§ Ether: This is the value token of the Ethereum blockchain. It is used to pay for transaction fees

and computational services on the Ethereum network14.

§ Ethereum: “Ethereum is an open-source, public, blockchain-based distributed computing platform

featuring smart contract (scripting) functionality”15.

§ ERC20-compliant: ERC2016 is a technical standard for Ethereum-based tokens. Tokens that

adhere to this technical standard are called ‘ERC20-compliant.’

§ Initial Coin Offering (ICO): This is a generic term, not used by the Fund, to describe the general

practice of creating and selling to investors or speculators digital tokens that allow participation in

a particular opportunity. The Fund does not use this term because it believes ‘tokens’ (defined

below) distinguishes the investment from fiat-based coins issued by a sovereign government.

§ REALECOIN™ and RC™: REALECOIN™ is the real estate investment fund for which RC™ is the

token.

§ Smart contract: A smart contract is a piece of software used to enforce the terms of a contract or

negotiation between two parties.

§ Token: Tokens, also called coins by some people, are cryptographically secured digital

representations of ownership in a company. Some people argue that there is another form of token

called ‘utility tokens’ which are not securities; the Fund views its tokens as ‘security tokens’,

meaning that they are financial securities subject to securities laws and regulations.

13 http://www.investopedia.com/terms/b/blockchain.asp 14 A good introductory article about Ether and Ethereum is available here: https://www.nytimes.com/2016/03/28/business/dealbook/ethereum-a-virtual-currency-enables-transactions-that-rival-bitcoins.html 15 https://en.wikipedia.org/wiki/Ethereum 16 https://theethereum.wiki/w/index.php/ERC20_Token_Standard

REALECOIN™ White Paper: The World’s First Tokenized Real Estate Investment Fund. This white paper changes from time to time, and is dated January, 2018. Please ensure that you have the most recent version by checking www.realecoin.com.

© 2018 LEMONADE REALTY, INC. d/b/a REALECOIN • www.realecoin.com 39

§ Tokenization: Tokenization is the process of converting rights to an asset into a digital token on a

blockchain. In the context of a real estate development fund, one can think of tokens as roughly

analogous to equity. If you own 5% of the tokens that have been created, this is roughly analogous

to owning 5% of the equity of a traditional investment fund. One can think of an individual token as

being akin to a digital stock certificate representing one share.