As digital assets have grown in popularity over the past decade, different sub-sectors of the sector have emerged, each bringing new capabilities. Whether it’s NFTs, stablecoins, or even meme tokens, all have seen massive adoption booms. Arguably the most heavily 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.
A company called HoneyBricks is trying to unlock this potential by using security tokens to open new opportunities around commercial real estate investing.
What is HoneyBricks?
HoneyBricks primarily functions 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 to bring various benefits associated with such assets.
Commercial real estate is made available through the HoneyBricks platform as fractional ownership for investment. This is accomplished by tokenizing shares in a limited liability company (LLC) holding said property – each resident in the United States.
Does real estate even need tokenization and what is changing to make it possible 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 a listing fee from real estate sponsors that act as a bridge to large pools of investors, as well as modest management fees for asset owners.
Who is behind HoneyBricks?
Although the company itself is based in San Francisco, it has a diverse remote team that is constantly growing. However, it all started with two co-founders, each of whom currently runs the business.
Decades of experience in both the technology and financial sectors are shared between this couple alone. Overall, however, the team states that they operate according to a number of core values, including the following
- Believe in trustless blockchains
- strive for growth
- Be the change you are looking for
- facilitate property
For those interested in learning more about HoneyBricks and the thought process behind its operations, we’ll be posting an interview with the company shortly to learn more about the company’s origins, along with a more detailed look at how it’s made plans to disrupt commercial real estate investing.
What issues is HoneyBricks trying to fix?
So we know that HoneyBricks opens up opportunities to invest in commercial real estate in the United States. What makes it different from just investing in something that resembles a more traditional REIT? Below are some of the various issues related to more traditional investing methods that the company hopes to fix.
More inclusion
The old adage “It takes money to make money” applies when it comes to investing in commercial real estate. In most cases, substantial sums of capital are required to invest in such properties and there are limits to who can benefit and those who are already wealthy. By offering fractional investments through the use of security tokens, HoneyBricks finds that exposure to commercial real estate found on its platform can be achieved for as little as $1000. As a result, HoneyBricks opens the door to greater asset diversification among a much larger group of investors.
liquidity
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 opportunity to tap into liquidity even better than REITs, combined with the high yields and low correlation with private property stock markets.
efficiency
Settlement times, which can normally take several business days, are reduced to almost an instant when using security tokens. This combined with the ability to offer fractional investments and a reduction in the number of intermediaries required means the whole process is quick and cost-effective.
transparency
Since commercial property ownership through HoneyBricks is achieved through the use of security tokens, there is an immediate increase in transparency as asset ownership is recorded on the blockchain along with each transaction. With security tokens that allow direct ownership, any typical obfuscation is eliminated.
It should also be noted that, as securities, such assets are subject to a high level of regulatory oversight – which means strict disclosure and operational requirements on the issuers.
Reduced stress
Along with increased efficiencies, HoneyBricks is able to reduce operational burdens for both investors and real estate sponsors. This is achieved by eliminating the need for investors to manage property – a task that is handled by an external property management company – and by simplifying KYC verification practices for their sponsors.
How does HoneyBricks work?
Simply put, HoneyBricks employs a team that “reviews” commercial properties with high potential for tokenization. Property owners can then tokenize shares of the asset and make them available for purchase through the HoneyBricks platform. From there, verified accredited investors can then find an investment opportunity that suits them and gain access easily.
HoneyBrick real estate token
Within the platform, investors can gain access to an investment opportunity of their choice by purchasing HoneyBrick tokens structured as security tokens. Each property listed will have its own tranche of unique tokens available for purchase.
As the name suggests, 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). This also means that the holders of such assets not only benefit from actual ownership of the underlying asset, but also from regular dividends.
Powered by Polygon
HoneyBrick tokens, which can currently only be purchased through the company’s platform, are created using the Polygon network. Polygon is built on top of the Ethereum network with the goal of providing increased scaling and the ability for developers to create a variety of dApps. By building its tokens on this Layer 2 network, HoneyBricks ensures that all transactions using its tokens are cheap, fast, and reliable.
To learn more about this popular project, visit our Investing in Polygon guide.
Stablecoin Dividends
Since HoneyBrick tokens are securities, this means that holders are entitled to a proportional share of any dividends associated with any underlying assets. Currently, HoneyBricks receives these dividends in USD and pays them directly to connected crypto wallets in the form of USD Coin (USDC) – a popular stablecoin that competes with Tether (USDT) for the largest in the world.
Over time, the company realizes that dividend payouts can 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 seamless process that involves just a few steps. For tokens available on the HoneyBricks platform that represent actual securities, the only requirement 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 fractional 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.)
Post-purchase, investors should benefit from asset liquidity not typically associated with commercial real estate. This is made possible by facilitating direct token redemptions via HoneyBricks or via a secondary marketplace after a 12-month hold period imposed by the SEC.
Notably, HoneyBricks also facilitates crypto-based lending by allowing token holders to pledge assets as collateral, adding even more functionality to its platform.
HoneyBricks – Reinventing commercial real estate investing
Through the use of blockchain, HoneyBricks has built an investment platform aimed at opening up new opportunities for sophisticated investors. Supported by a well-rehearsed team, this young company has the potential to act as an exhibit for the potential of security tokens and what they have to offer to the real estate industry as a whole.
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