Tokenization can be defined as the shifting of asset and account management (constructions, premises, and related cash flows) into an electronic format, specifically onto the blockchain. These tokens are indicative of ownership in those real estate assets.
A commercial real estate asset is typically a large scale investment that not all investors have the option of considering. This often rules out a very large set of prospective investors who might’ve liked to own the property, but don’t have the means necessary to do so. This is where tokenization sets in.
In tokenization, fractional ownership of property becomes possible, much like owning the shares of a company. Each individual token is representative of partial ownership in a commercial real estate property. Tokenization imparts a host of benefits to owners and sellers, and a few of these include increased liquidity, the introduction of a new class of investors into the real estate domain, and fractional ownership of real estate property.
Tokens are often given out through asset tokenization offerings (ATOs), or tokenized asset offerings (TAOs). Tokens are categorized as securities under US securities law. Tokenization of commercial real estate assets is set to redefine the way in which we view investing by redefining investing itself.