Chris Cutler Perspective: Parcels Network

1. Real Estate Digital Security Protocol
Revolutionizing Investments In Real Estate
By Christopher Cutler
P A R C E L S
Rethinking Real Estate Securities Beyond the Blockchain.
www.parcels.network

2. PARCELS MISSION IN REAL ESTATE
• Parcels is developing disruptive technologies that will allow investors to bypass
banks and stock exchanges altogether for their investing, by making tangible
real estate investing readily accessible to them. Parcels’s Real Estate Digital
Security Protocol (REDS Protocol) will revolutionize direct investing in real
estate. This blockchain approach technology will facilitate transparency in
performance for properties, their managers, and their investors. It will also
facilitate the ready exchange of ownership interests in shares of properties in
fractional units, on the Parcels Exchange, thus bypassing real estate brokers
altogether for secondary sales.

3. PARCELS PROPOSED SERVICES
• Our business model is to bring the best blockchain technologies to the real
estate market.
• We will originate real estate investment opportunities, all real estate markets, and list
them as Parcels on the Parcels Exchange.
• We will provide ongoing technology and governance services to investors in Parcels,
to help ensure the proper performance and reporting for the underlying investments.
• We will facilitate transaction services for buyers and sellers of Parcels on the Parcels
Exchange for a modest fee.

4. PARCELS IS READY TO LIST PROPERTIES AS
SOON AS THE REDS PROTOCOL IS
LAUNCHED
• The parcels team has already identified $75 million in real estate properties from
willing sellers interested in the launch of the Parcels Platform.
• We expect to list about 12 properties initially. We will list properties using the
REDS Protocol, which standardizes the presentation and information for each
property. Investors in real estate can pick which properties are of most interest
for investing, and buy the associated Parcels units.
• There will be a separate series of Parcels for every property, and each Parcel will
be listed on the Parcels exchange.
• This system will allow investors to buy and sell their Parcels at sizes of their own choosing,
rather than having to make discrete, large purchases and sales.
• This system also allows investors to assemble their own customized portfolios of buildings.

5. WHAT THE PARCELS TOKENS ARE
• Parcel Tokens for each property are fractional interests in a building. Each
Parcel token represents approximately one square foot, and thus the token
price is approximately what a square foot is worth in any given property. The
token holders are entitled to all net cash flows, which are net of management,
legal, and operating expenses, any debt service and taxes, and any reserves to
improve/maintain properties, which is similar to existing real estate partnership
interests, except not digitalized.
• Net cash flows will be paid at the option of parcels in cash or in primary-
equity units at book value or market value, whichever is greater. Token holders
can either retain the primary-equity units and earn future returns, or sell them
on an eligible cryptocurrency exchange for fiat or cryptocurrencies.

6. PARCELS WILL ASSURE QUALITY CONTROL
BOTH FOR LISTINGS AND FOR PROPERTY
MANAGEMENT
• We will create a list of approved property managers, and select among this list
to manage each property. The offering documents will specify the management
fee for each property, and if the fee is lower than specified, that difference will
be passed back to the investors.
• We will have the ability to replace property managers with our own
managers on an interim basis, if we determine that a management
problem is outstanding and must be immediately corrected
• We will provide ongoing services by overseeing the performance of the
property managers, and offering data management and reporting services to
investors.

7. THE POTENTIAL MARKET FOR PARCELS
IS ENORMOUS
• The global value of real estate was about $200 trillion in 2015, and even a 0.1%
market share would create an enormous entriprise for Parcels.
• Millennial investors have demonstrated a willingness for investing in
blockchain-related assets.
• We have been finding that real estate owners, fund managers, and developers
are very receptive toward new vehicles for raising capital, provided that it is
done in a professional manner.
• The 1031 exchange market for real estate investments provides a
deep pool of ready capital to fund new investments.

8. PARCELS MEDIUM OF EXCHANGE
• All payments within the Parcels ecosystem can be made using the Parcels Common
Unit Exchange Token (PCX), at parcels’s election.
• The PCX serves several purposes. It is both a token for exchange of value within
the Parcels REDS Protocol and a unit of investment in the Parcels ecosystem.
• The PCX units will receive all fees net of expenses that are received in the Parcels
platform, less a 20% profit participation share paid to parcels. In effect, parcels
functions as a general partner for the PCX limited partners.
• parcels can use all cash flows from the underlying real estate investments to
support the liquidity of the PCX, by delivering PCX instead of cash to investors in
properties listed on the Parcels Exchange. This liquidity attribute distinguishes
Parcels from the vast majority of SecurityToken Offering - related offerings.

9. THE BUSINESS MODEL: REVENUES
• Parcels will charge reasonable fees for the services it provides
• Underwriting fee: negotiated individually but assumed to be 4%; does not
include brokerage, legal, and other fees. The underwriting fee is the cost
charged for all aspects of including the property on the platform.
• Technology and monitoring services: 5% of gross rent rolls
• Transaction and clearing services: 1%, compared to 2 to 4% for CRE brokerage
fees.
• Other expenses are just passed directly to Parcel token holders over time,
including property management fees, taxes, utilities, and legal.

11. WHAT PARCELS MUST ACCOMPLISH
• parcels is seeking to raise $100 million to finance the development of Parcels.
• Most of the technology is readily available, and the main unique developments
will be in the protocols for the blockchain for each property.
• Legal review of standard contracts will be developed, and other steps as
necessary.
• There will be substantial onboarding costs for each property, and this is built
into the fee structures for each property purchased for a Parcels offering.
• Any capital raised that is not deployed in developing the Parcels REDS Platform
and ancillary matters will be used to purchase/inventory real estate investment
properties.

12. PARCELS’S GOALS FOR INVESTORS
• The Parcels REDS Platform is a revolutionary development that could
fundamentally change real estate investing.
• We believe the Parcels network can expand rapidly, once launched, and obtain
significant market share in the market for smaller properties. Potentially, the
market for large office buildings could also become attractive, if digitalized
assets continue to trade at a premium.
• Our goal for investors is for them to earn 30x on their investment by 2026.
There are obviously many assumptions underlying this projection, including
rapid adoption of Parcels to a $30 billion platform, a 50% margin on revenues,
and a 30x multiple on net earnings.

13. Parcels Financial Objectives, amounts in $ millions
2020 2021 2022 2023 2024 2025 2026
Market Value of Properties ($ million) 100 500 3000 7000 15000 25000 35000
Platform Onboarding net revenue 4 16 100 160 320 400 400
Parcels Transaction and Clearing Services 0.1 0.5 3 7 15 25 35
Technology and Governance Fees 0.2 1 6 14 30 50 70
less expenses -2.15 -8.75 -54.5 -90.5 -182.5 -237.5 -252.5
less participation rate -0.86 -3.5 -21.8 -36.2 -73 -95 -101
Net PCX return 1.29 5.25 32.7 54.3 109.5 142.5 151.5
Cap Rate 4%
Gross Margin on Operations 50%
Participation Rate 20%
Annual Parcels Turnover 10%