As digital assets have risen in popularity over the past decade, various subsets of the sector have arisen, with each bringing new capabilities. Whether this be NFTs, stablecoins, or even meme tokens – each has experienced a massive boom in adoption. Arguably the most potentially laden subset however is that of digital securities or ‘security tokens’. These assets have the potential to transform the way we invest by introducing new levels of efficiency, transparency, and liquidity.
One company called ‘HoneyBricks’, looks to tap into this potential by leveraging security tokens to open new possibilities surrounding commercial real estate investing.
What is HoneyBricks?
HoneyBricks operates primarily as an investment platform for commercial real estate. What sets it apart from more traditional companies of its kind is its use of digital securities or ‘security tokens’ to facilitate the process – and bring along various benefits associated with such assets.
Commercial real estate is made available for investing through the HoneyBricks platform as fractionalized-ownership. This is achieved through the tokenization of shares in a Limited Liability Company (LLC) which holds said property – each of which is based within the United States.
Does real estate even need tokenization and what’s changing to make it happen now?https://t.co/OlVuSSFZGT
— HoneyBricks (@Honey_Bricks) August 3, 2022
HoneyBricks is able to monetize this entire process through two main channels. These include charging property sponsors a listing fee for acting as a bridge to expansive pools of investors, along with modest management fees to asset holders.
Who is Behind HoneyBricks?
While the company itself is based in San Francisco, it boasts a diverse remote team that is constantly growing. It all began however, with a pair of cofounders – each of which currently spearhead operations.
Between this pair alone, decades of experience is shared in both the technology and financial sectors. As a whole though, the team indicates that it operates on a set of core values, which include the following
- Belief in trust-less blockchains
- Strive for growth
- Be the change you seek
- Facilitate ownership
For those interested in learning more about HoneyBricks and the thought process behind its operations, we will soon publish an interview with the company to learn more about the origins of the company, along with a more detailed look at how it plans on disrupting commercial real estate. investing.
What Problems Does HoneyBricks Attempt to Fix?
So we know that HoneyBricks opens up opportunities for investing in commercial real estate located in the United States. What sets it apart from just investing in something similar to a more traditional REIT? The following are a few of the various problems associated with more traditional means of investing that the company hopes to remedy.
The old adage, ‘you need money to make money’ is apt when looking at commercial real estate investing. More often than not, substantial sums of capital are required to invest in such properties, limited who can benefit to those who are already wealthy. By offering fractionalized investing through the use of security tokens, HoneyBricks notes that exposure to commercial real estate found on its platform can be achieved for as little as $1000. In doing so, HoneyBricks opens the door to greater diversification of assets among a much larger group of investors.
Although commercial real estate can often offer amazing returns, the asset class suffers from one major drawback – a lack of liquidity. HoneyBricks notes that its platform offers investors the ability to tap into liquidity even greater than on offer through REITs, combined with the high returns and low-correlation with stock markets of private real estate.
Settlement times, which can normally take multiple business days, are cut down to near instant when using security tokens. This combined with the ability to offer fractionalized investing, and a reduction in required intermediaries means that the entire process is quick and cheap.
With ownership in commercial real estate through HoneyBricks being achieved through the use of security tokens, there is immediately an increase in transparency as asset ownership along with every transaction is recorded on the blockchain. With security tokens allowing for direct ownership, any typical obfuscation is removed.
It should also be noted that as securities, such assets are subject to high levels of regulatory oversight – meaning stringent disclosure and operational requirements of issuers.
Going hand-in-hand with increased efficiency, HoneyBricks is able to reduce operational burdens on both investors and property sponsors alike. This is done by eliminating the need for property management by investors – a task handled by a third party property management company – and through easier KYC verification practices for its sponsors.
How Does HoneyBricks Work?
Put simply, HoneyBricks employs a team that ‘vets’ high-potential commercial real estate prime for tokenization. Property owners can then tokenize shares of the asset, making them available for purchase through the HoneyBricks platform. From there, verified accredited investors can then find an investment opportunity that is right for them, and easily gain access.
HoneyBrick Real Estate Token
Within its platform, investors can gain exposure to an investment opportunity of their liking through the purchase of HoneyBrick tokens structured as security tokens. Each property listed will have its own tranche of unique tokens available for purchase.
As the name implies, security tokens are just that – securities. This means that the creation, sale, and management of such tokens are subject to regulation by bodies such as the Securities and Exchange Commission (SEC). It also means that holders of such assets benefit from not only actual ownership of the underlying asset, but regular dividends as well.
Powered by Polygon
HoneyBrick tokens, which can currently only be purchased through the company’s platform, are built utilizing the Polygon network. Polygon is built on top of the Ethereum network, with the purpose of offering increased scaling, and the ability for developers to create a variety of dApps. By building its tokens atop this layer-2 network, HoneyBricks ensures that any transactions involving its tokens are cheap, fast, and reliable.
To learn more about this popular project, visit our Investing in Polygon guide.
With HoneyBrick tokens being securities, it means that holders are entitled to a proportionate share of dividends associated with any underlying assets. As it stands, these dividends are received by HoneyBricks as USD, and paid out directly to linked crypto-wallets in the form of USD Coin (USDC) – a popular stablecoin which rivals Tether (USDT) for the largest in the world.
In time, the company notes that dividend payouts will be able to be made in a variety of cryptocurrencies, including Bitcoin (BTC), Ethereum (ETH), and more.
How to Invest through HoneyBricks
Investing through HoneyBricks is a simple and seemless process that involves only a few steps. With tokens available on the HoneyBricks platform representing actual securities, the only stipulation is that investors must either reside outside of the United States, or be deemed ‘accredited’.
- Create a KYC verified account.
- Use fiat, crypto, or staked assets to purchase security tokens representing fractionalized ownership of commercial real estate through the HoneyBricks marketplace.
- Choose from a variety of digital assets to receive as dividends. (USD Coin, Bitcoin, Ethereum, etc.)
Once purchased, investors should benefit from a level of asset liquidity not typically associated with commercial real estate. This is made possible by facilitating direct token redemptions through HoneyBricks, or through a secondary marketplace after an SEC imposed 12 month holding period.
Notably, HoneyBricks also facilitates crypto-based loans by allowing token holders to pledge assets as collateral, bringing even more functionality to its platform.
HoneyBricks – Reinventing Commercial Real Estate Investing
Through the use of blockchain, HoneyBricks has built an investment platform which works to open new opportunities for discerning investors. Backed by a well-rounded team, this young company has the potential to act as an exhibit for the potential of security tokens and what they have to offer the real estate sector as a whole.