Real estate fractionalization
Real estate tokenization through ATK democratizes access to institutional-quality properties while calculating rental income entitlements and maintaining compliance controls. The platform handles fractionalized ownership, expense tracking, and property governance.
Who should read this: Real estate sponsors, property managers, and asset managers exploring fractional ownership models.
Business value: Lower minimum investment thresholds, calculate monthly rental entitlements for on-demand claiming, enable secondary liquidity, and provide real-time performance visibility to investors.
Business challenge
Highland Properties owns a $25 million office building in a major market. They want to fractionalize ownership to enable smaller investors to participate while maintaining professional property management and compliance controls.
Traditional approach
How ATK solves it
Property tokenization as equity
Highland creates 250,000 equity tokens, each representing $100 of building ownership. Token holders receive proportional rental income distributions and can participate in governance decisions on major property matters.
Investor eligibility and documentation
The platform enforces that only verified investors with appropriate accreditation levels can purchase tokens. Property documents—purchase agreements, operating agreements, building inspections, insurance policies—are hashed and linked to the token metadata for permanent transparency.
Fractional ownership
Investors can purchase as few as 10 tokens ($1,000 investment) or as many as they want up to regulatory limits. The platform enforces maximum ownership percentages via compliance modules to maintain distributed ownership.
Rental income distributions
Monthly rental income from tenants flows into Highland's treasury. After deducting property management fees and reserves, the platform distributes net income proportionally to all token holders. Distributions execute automatically on a preset schedule via configured payment adapters.
Property expenses and reserves
Major repairs or capital improvements require approval from token holders. Highland creates a governance proposal using the governance addon module. Token holders vote with their holdings weighted proportionally.
Note: The current platform supports proposal creation and voting infrastructure. Property-specific UI workflows (proposal templates for repairs, capital improvements, special assessments) require custom dapp development or use of third-party governance tools integrated with the token contract.
Valuation updates
Annual appraisals update the property's value through the admin portal, adjusting the implied token value. Holders see current valuations without requesting reports.
Compliance with securities and real estate law
The platform enforces both securities regulations (accredited investor requirements) and applicable real estate regulations (ownership transfer restrictions, FIRPTA withholding for foreign investors via compliance modules).
Exit mechanisms
When Highland eventually sells the building, sale proceeds distribute automatically to all holders proportionally. Tokens are redeemed and the holding concludes with complete documentation of every income distribution, every expense, and every ownership change.
Key capabilities
| Capability | Traditional | With ATK |
|---|---|---|
| Minimum investment | $25M (full ownership) | $1,000 (10 tokens) |
| Distribution processing | Days of manual wire work | Automated monthly schedule |
| Ownership visibility | Quarterly reports | Real-time dashboard |
| Governance voting | Email/phone campaigns | Token-weighted on-chain proposals |
| Secondary transfers | Must sell entire property | Trade tokens with compliance checks |
| Expense tracking | Spreadsheets | On-chain transaction records |
Measurable outcomes
Democratized access – Real estate institutional-quality investment becomes available to smaller investors who cannot deploy $25 million for full ownership.
Operational streamlining – Distribution entitlement calculations that used to take days of manual spreadsheet work now happen automatically each month, and token holders claim their rental income on-demand via the smart contract.
Transparency – Investors see property performance, expenses, and income in real time rather than waiting for quarterly reports.
Secondary market – Token holders can sell positions to other qualified investors, creating liquidity in a traditionally illiquid asset class.
The diagram above shows the ATK real estate lifecycle, from tokenization through automated servicing to secondary liquidity.
Compliance considerations
Real estate operate under both securities and property regulations:
- Accredited investor verification – Enforced via OnchainID claims
- Maximum ownership limits – Configured via compliance modules to maintain distributed ownership
- Transfer restrictions – Lock-up periods, holding requirements
- FIRPTA withholding – For foreign investor transactions (requires custom tax module integration)
- State securities laws – Multi-state registration compliance
For detailed compliance architecture, see Compliance & Security.
Implementation checklist
- Structure property ownership vehicle (LLC, Delaware Statutory Trust, etc.)
- Define token economics (total supply, price per token, minimum/maximum holdings)
- Capture property location metadata (City, District Code, Area ID) so dashboards,
registries, and investors can search consistently—the asset designer now
surfaces placeholders such as “New York”, “001”, and “NYC-001” to guide the
expected format, and the reference Hardhat script issues the
TOPIC_ASSET_LOCATIONclaim with those defaults for the Prime Commercial Property identity. - Select compliance template (Reg D, Reg A+, or custom ruleset)
- Integrate KYC/AML provider for investor verification
- Configure rental distribution schedule and payment adapters
- Set up governance addon for proposal creation and voting
- Upload property documents (appraisals, insurance, operating agreements) and link to metadata
- Deploy smart contract and conduct primary token sale
- Configure expense tracking and reserve management workflows
Supply model in the reference deployment
The reference Hardhat script (kit/contracts/scripts/hardhat/assets/real-estate.ts) mints the full
Prime Commercial Property supply upfront, pairing the US ISIN with Countries.US so the jurisdictional
metadata stays consistent. ATKRealEstateImplementation stores the premint recipient and amount during
initialize, locks the SMART cap to that amount, and requires the factory to call completePremint
exactly once to transfer tokens before pausing again. Additional mint/batchMint calls revert until
governance raises the cap via setCap, ensuring the circulating supply remains fixed after deployment unless
operations intentionally expand it.
Limitations and considerations
- Governance UI – Platform provides proposal registry and voting infrastructure; property-specific workflows (repair proposals, capital improvement templates) may require custom dapp development
- Rental data source – Income and expense data entered manually via admin portal; integration with property management systems requires custom API development
- Regulatory complexity – Multi-state securities registration and property-specific regulations require legal counsel review
Next steps
- Review SMART Protocol architecture to understand embedded compliance
- Explore Developer Documentation for governance addon customization
- Contact your SettleMint representative to discuss a real estate tokenization pilot
Private equity
Private equity fund tokenization through ATK automates LP servicing, NAV tracking, and distribution processing. The platform reduces fund administration costs while enabling secondary liquidity for limited partners.
Stablecoins
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