User Guide: Why BrickX values transparency

At BrickX, not only are we revolutionising the way in which investors can get exposure to property investments, we also believe we are setting a new benchmark in terms of transparency and information provided to investors. This information doesn’t just relate to individual property investments, but also the way the BrickX Platform and business operates.

BrickX's core values include trust, credibility and transparency. We know that trust and credibility is built over time, and with our continued approach to proactive disclosure, and answering all questions asked by investors, we believe this will set BrickX apart from other investment options.

Our regulated structure segregates assets and gives investors exposure to individual property investments

Working with our external advisers, BrickX has implemented a structure which has each individual property sitting in a separate trust, held separately from the BrickX business by an external custodian - Australian Executor Trustees (AET). They then appoint a BrickX entity to undertake some of the custodial activities on their behalf. This approach provides investment protection. Why, you ask? Because the day-to-day activities of one property, or the BrickX business itself, can’t impact another property. In addition, all client funds deposited with us are held in a segregated and separate bank account.

So why is this structure important to investors?

It is important to note that a Brick is not a direct investment in the property but rather an investment in the Trust which owns an asset - the underlying property. A Brick is the term we use to describe an interest (unit) in a BrickX Trust. Each BrickX Trust holds a single residential property that is split into 10,000 Bricks which are then made available for purchase. BrickX does not own or hold an interest in the properties on the Platform.

By implementing this structure, BrickX provides the opportunity for investors to gain exposure to individual property investments, without being exposed to the performance of the BrickX business or the other properties in which the Investor does not hold an interest. In building trust and credibility, it is important to us that this investment represents exposure to the benefits and risks of the underlying property investment, rather than the financial performance of BrickX.

Then how are the properties funded in the first place? and who owns the Initial Bricks?

It’s true, BrickX does not own or hold an interest in the properties on the Platform.

We do not crowdfund the purchase of properties. Rather, BrickX secures funds to acquire properties before they become available on the Platform. We believe this puts us in a strong negotiating position with property sellers and agents, and also allows us to move quickly on attractive opportunities.

BridgeLane (BrickX's majority shareholder) provides the funds to acquire each property and is the initial owner of the 10,000 Bricks on issue in each Trust. Once a property is acquired (post-exchange) it will be placed on the Platform in a Pre-Order phase, during which investors are able to reserve Bricks at the Initial Brick Price. The Initial Brick Price is the sum of the Property Purchase Price, Acquisition Costs (stamp duty, buyers agents and legal fees etc) and a Cash Reserve. Once all the Initial Bricks are sold, Brick Owners are the only ones who have an interest in the Trust.

Why don’t we hold Bricks and why do we think this is important?

BrickX itself does not hold any Bricks. We believe this is important to providing a trustworthy, credible and transparent environment where investors can gain indirect exposure to property investments. The purpose of the BrickX business is to provide a Platform through which investors can easily and affordably gain access to residential property investments. We believe that by not owning any of the properties, BrickX is better able to act with transparency. BrickX's focus is on managing the Platform, sourcing new properties for investors, managing these properties.

Buying and selling Bricks on the BrickX Platform

Direct property investment is not a liquid asset class and may not be available to all investors. Not only does it take a few months from start to finish to complete a property transaction, there is significant time spent working with agents and lawyers, there's also significant costs and fees.

We designed the BrickX Platform to not only provide easy and affordable access to interests in residential property investments, but also to change the way in which people could sell their investment (of Bricks). BrickX is the first business in Australia to allow investors to buy Bricks when they want and also put them up for sale when they want, through the Platform using the Order Book (see our User Guide on ‘Selling Bricks and realising returns’).

However, the ability and speed at which an Investor can sell their Bricks is an important consideration when choosing to invest in the first place. To provide investors with transparency around the movement of Bricks relating to each property and assist individuals in making decisions, we provide information such as the number of Bricks transacted in the last 30 days on each Property Summary page (see our User Guide on ‘Liquidity and Where to Look’).

Will we always be this transparent?

Comprehensive disclosure about what you are buying helps you to make decisions. We’ll always strive to provide increased information, and respond to all investors questions and feedback.

We’re extremely proud of how we are changing the way in which investors can transact in interests in residential property through the buying and selling of Bricks, and we believe that by being increasingly transparent we can grow the Platform to best serve our investors needs.

If you have any questions relating to this article, please do not hesitate to get in touch with us. For more information on the structure of the scheme, please refer to the articles below or the PDS.

*BrickX Financial Services Limited is the licensed Responsible Entity of the BrickX Platform and trustee of each BrickX Trust. The Brick Exchange Pty Limited is the Manager of the BrickX Platform. Each BrickX Trust has an external Custodian (AET), with BrickX Trusco Pty Limited appointed as AET’s sub-custodian.

BrickX is a corporate authorised representative (number 001000043) of BrickX Financial Services, authorised to market the BrickX Platform and arrange to deal in Interests and Bricks. To the extent BrickX distributes any marketing or promotional materials relating to the BrickX Platform, or arranges for a Member to acquire or dispose of an Interest or a Brick, such activities are undertaken as an authorised representative of BrickX Financial Services.

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