From Exclusive To Inclusive: CRE Investing, One Token At A Time

Twenty-five million. That is the approximate number of investors who might leap at a chance to invest in commercial real estate if only the process were made easier for them, according to AKRU founder and CEO Mohsin Masud.

Masud, whose company operates an online CRE investment platform, based his estimate on the number of accredited investor households in the United States. These are people who possess the financial characteristics needed to purchase securities not registered with regulatory authorities. However, he noted, they might be deterred by the cost or complexity of conventional CRE investing.

“They want access to real estate deals without having the hassle of managing them and dealing with the paperwork, the tenants, the maintenance and everything else because, frankly, they don't have the time or knowledge to deal with it on their own,” Masud said.

AKRU’s platform tokenizes real estate assets using blockchain. Masud said this system creates an ideal entry point for people new to CRE, since they can invest for as little as $1K per token, contributing to what AKRU calls the “democratization” of CRE investing. 

“It gives them the ability to invest in CRE and reap the benefits of pass-through taxation, inflation hedging and long-term growth, and to have the ability to invest in things other than the capital market,” he said. 

Bisnow spoke more with Masud about property tokenization and how it impacts CRE.

Bisnow: How does CRE tokenization work?

Masud: It is essentially just fractionalized commercial real estate. Imagine you're doing an IPO for a commercial building — that's all that you're doing, you're breaking it into smaller pieces.

And that's where AKRU comes in. AKRU provides a platform where fractionalized real estate can be bought, sold and traded. We allow you to do all that and give you the ability to receive your distributions and tax documents through a single portal.

Bisnow: What inspired you to create this platform?

Masud: A lot of tokenization companies out there don't work that way, which is unfortunate, and is what led me to start up AKRU. My background is in real estate, not technology, and when I wanted to tokenize real estate back around 2018, I realized no one was really offering true real estate tokenization services. 

Instead, they were saying, “Here's some technology and you can do whatever you want to do with it, but we don't have this or that functionality and we don't have the ability to do compliance or reporting.” That was a big red flag for me.

Bisnow: What is AKRU’s approach to real estate tokenization?

Masud: Once an investor has gone through our six-step sign-up and verification process, they could buy 10 assets in under a minute if they wanted to. They could say: “I want to buy one share in property asset No. 1, five shares in No. 3 and four shares in No. 7.”

They have access to all the key information into an asset’s possible performance, risks, location, its sponsor or asset manager and what their history has been like. Based on that, they can make a decision. We also have a calculator on our site so people can estimate their return on the investment.

Bisnow: Is this a cryptocurrency-based platform?

Masud: No. Blockchain is not equal to crypto and we are not a crypto company. All transactions are in U.S. dollars and we truly use blockchain as the general-purpose utility that it's meant to be, with an immutable ledger and instantaneous transactions.

Bisnow: What should the broader CRE community understand about tokenization?

Masud: Tokenization is a solution for them, not a competitor. AKRU doesn't own or manage real estate. We’re in the business of making asset owners’ lives a lot easier by giving them all the right tools for compliance, reporting and asset management. 

We're making the exclusive inclusive and giving everyone access to these investment opportunities. This gives them access to the same kind of liquidity that capital markets would offer.

Bisnow: What sort of commercial properties do you focus on?

Masud: AKRU is focused on stabilized income-producing assets. A lot of our investors are looking for stable and steady growth. They’re not looking for the more opportunistic deals right now as this is still a relatively nascent market. 

We've got distribution to both accredited investors and wealth managers and the average investment on our platform last year was a little over $9K. We are focused on the sweet spot of properties between $5M and $50M, where you have more retail investors versus large institutional investors. However, as we grow, we expect we will grow the asset sizes as well.

We are also working very diligently with regulators to open the platform up to nonaccredited investors. But, having said that, there are many people within the accredited investor space who didn't have access to any of these opportunities or the knowledge of how to do these things until now.

This article was produced in collaboration between Studio B and AKRU. Bisnow news staff was not involved in the production of this content.

Studio B is Bisnow’s in-house content and design studio. To learn more about how Studio B can help your team, reach out to studio@bisnow.com.