Mohsin Masud, is the founder & CEO at AKRU, a platform to invest in premium fractionalized real estate assets.
I first learnt and invested a little in bitcoin back in late 2013 when it was at its ATH of around 1000 and then forgot about it for the longest time . I do wish I had made a substantial investment then. Fast forward to January of 2018, I was back in Toronto for a few business meetings when my buddy from University, Haider, broke blockchain technology down for me and explained the many possible use cases and applications other than crypto.
When did you initially discover security tokens?
It was that exact trip to Toronto, when I had the “aha” moment of how blockchain could really transform the industry I was in and solve for the biggest problem of them all – Liquidity. I had no idea what I was referring to at that time was actually the security token but shortly thereafter I started to read more and more into blockchain and realized Security tokens is what we were going to create. I eventually ended up taking a Blockchain Strategy Program at the Saïd Business School at University of Oxford which was a big help in understanding the technology in its true essence and coming up with and utilizing our proprietary multi token architecture at AKRU.
Could you tell us the genesis story behind AKRU?
I think I’m being very repetitive, but AKRU really started off at that dinner table in Toronto where my instant need for using blockchain to resolve for liquidity and equal access for all in the commercial real estate space started to come to life. The words: “this could change what I do completely in a very short period” is what I recall as ending the conversation with that night. By April that year (2018) I had come up with a name for the company and within the following month had brought on board some of the brightest minds in the securities space in Cincinnati to work out the legalities of offering these “digital” securities to retail investors. Despite everyone in the tech world discouraging us to set up as a US company and how it would lead to all kinds of regulatory concerns, I knew one thing: we were going to be a fully compliant US based platform that would truly democratize the commercial real estate world. Up until recently the company had retained its original name, Tokenism as in a distinctive practice or a movement for the love of tokens (blockchain reference) and me being an immigrant I didn’t ever realize the implications and negative connotations associated with the word until it was pointed out to me. Upon realizing this we very quickly hired a Brooklyn based agency to help us with the renaming of the company. Countless internal meetings and an infinite number of focus group discussions followed by a major product overhaul led to the birth of “AKRU”.
Why is real estate a perfect candidate for being tokenized?
Not only has real estate been primed for disruption; but there are some real-world problems that exist in this segment. Everyone wants to own land and most people believe it to be the safest investment for building generational wealth. However, there is a very small percentage of individuals who can currently afford to invest in some form of commercial real estate investment vehicle and an even smaller group who can even purchase large commercial assets themselves. As someone who has lead a RE investment company and syndicated hundreds of millions of dollars for commercial real estate deals I have experienced first-hand the frustration that investors have for their inability to participate due to being short on the minimum investments (usually around $250k) or for investors to have to pay large redemption fees to free up their capital. On the flip side, as a GP I have had to liquidate or refinance assets when I didn’t want to. That’s what AKRU is here for, to resolve all of these issues for everyone involved in the real estate investment world.
Another big problem with real estate is valuations and the untappable equity within the assets. This equity forever remains inaccessible for asset owners as it’s written off as the discount on marketability during the appraisal process. By tokenizing real-estate and having the ability to achieve capital market style liquidity, it reduces that discount tremendously. In other words, there is a sizable premium that is unlocked by fractionalizing (tokenizing) Real Estate assets.
Now all of this happening on the blockchain truly provides trust in a trustless environment. It’s where an individual’s ownership is recorded on a public blockchain and will forever remain, the use for intermediaries becomes redundant with the use of smart contracts and transactions complete near instantaneously.
How does AKRU choose what properties are listed on the platform?
AKRU lists all commercial real estate on our platform be it office, retail, mixed use, single tenant NNN, industrial, warehouses or Hospitality and in today’s day and age we look at hospitality with a twist: We have decided to include short term or fully serviced executive rentals as true hospitality assets as well. With our focus on commercial assets, we wanted to start off with some of the smallest assets to prove the use case but are looking to ensure that even the smallest assets are raising at least $1,000,000 in equity and preferably over $10M.
The idea behind the smaller assets in the beginning is to ensure full subscriptions and quick returns being received by investors. We hope this will trigger a more liquid secondary market.
What type of due diligence is performed to ensure that listed properties have no liens or other legal issues with the property title?
Every property being listed on the AKRU platform goes through a rigorous valuation and due diligence process. We want to make sure every investor’s money is safe and in the right hands. Our platform’s reputation depends on it. Therefore, the due diligence is not just limited to the asset financials but extends to the project sponsor, historic performance and in-depth physical asset inspections.
Investing in Tokenized assets is the same as investing in a syndicated deal or a partnership with a few friends to a certain extent. When buying security tokens each investor’sname is not on the title of the property but rather the property is owned by a legal entity and the tokens represent the shares or interest within that entity. In order to avoid anything that may not have been captured during our initial due diligence when listing an asset on AKRU there is also extensive legal, and title based due diligence that is performed to avoid any title or legal risks. We are truly building something that would completely revolutionize the way real estate investing has been perceived up until now.
What’s the process for an investor who wishes to cashout?
It’s as simple as a few clicks. Almost synonymous to depositing money in your online wallet. Whether you have excess funds in your online wallet or have received your quarterly distribution; instead of reinvesting it you want to cashout, just go to the dashboard and under your wallet tab just click on withdraw to confirm the amount you want transferred back in your bank account. The funds are usually available in the customers bank account the next business day, and can also be made available instantaneously for a small fee charged by the payment processor.
If you own an asset backed security token and want to cash out, you’re in luck (that’s where the liquidity aspect comes in). You can list your tokens for the price you want straight from your dashboard with just 3 clicks and it’s not a matter of the platform matching you up with a buyer who is willing to pay your price, other investors can actually make offers (lower or higher) than what your list price is and a free market lets you achieve true liquidity. As soon as you have an offer that’s acceptable to you, you accept the offer and the funds are transferred in your online wallet and you can withdraw these (or cashout as you put it) by simply withdrawing into your connected bank account.
AKRU does intend to come up with other financial products to enable easier access to these funds and additional liquidity in the future as we work with our trusted partners and financial institutions to offer an option for leverage at the security token level.
Where do you see digital securities 5 or 10 years from now?
I truly believe there will be mass adoption of digital securities in the near future be it blockchain or something else that’s a whole different topic.
Is there anything else that you would like to share about Akru?
AKRU’s mission is to democratize commercial real estate investing. Because we believe real estate investing should be simple and accessible, we created a platform that lowers the barriers to entry and offers a seamless experience for both investors and owners. AKRU’s commercial real estate investment platform uses blockchain technology to create a secure and easy-to-use marketplace. AKRU offers investors the opportunity for fractionalized ownership (for as low as $1,000 in the form of security tokens. The platform’s technology enables instantaneous transactions to be recorded on an immutable ledger, building investor trust. Tokenization shortens the transaction cycle and is able to compress the closing and settlement period of assets to mere seconds – making the world’s largest investment class more accessible and liquid for investors. Since launching the paid beta in October 2020, AKRU has secured 14 assets and over 50 investors for the marketplace. AKRU relaunched its platform in March of 2021 as the Title Sponsor for the Security Token Summit.