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Short answer. A commercial property can be tokenized in two ways. A syndication that already has investors would move its investor register on-chain, with no new raise. Or the owner would place the property in a dedicated vehicle and issue interests in it as tokens. Either way, the building itself is often not the obstacle: the existing mortgage usually decides it.
In a new tokenization, investors would not own slices of the building. The property would sit in a vehicle, and the tokens would be interests in that vehicle. Commertize is tokenization infrastructure for the owner of an asset, who becomes the issuer. For each project we would set out the holding structure we would use, typically a dedicated vehicle for the asset, with the token representing an interest in that vehicle, and the alternatives.
The token would be the record of who holds which interest, and the rules on who may hold it and when it may move would be written into the token itself.
A vehicle that already owns a commercial property, such as a syndication with an existing investor base, would keep its investors, their units and every right attached to them. What would change is where the register of who owns what is kept. The move itself would raise no new money.
Consent is a precondition here too. Where a lender already holds a pledge over the vehicle's equity, or restricts transfers, nothing would move without the lender's written consent, and the structure may have to change to get it. Where an operating agreement requires the investors' consent to an amendment, that consent would be needed as well.
The investor would hold a security recorded in their own name on the issuer's register, with transfers restricted by the security's terms and by securities law. The security would be an interest in the vehicle that owns the property, not a deed to part of the building.
The issuer's own securities counsel prepares and signs off the offering documents and chooses the exemption.
Income-producing commercial property often carries a mortgage, and the loan documents usually say what happens on a transfer. Federal law defines a due-on-sale clause as one that lets a lender declare the loan due "if all or any part of the property, or an interest therein, securing the real property loan is sold or transferred without the lender's prior written consent", and it permits a lender to enforce one (12 U.S.C. §1701j-3(a)(1), (b)(1)). The statute's exemptions apply only to residential property with fewer than five dwelling units, so they do not reach a commercial building.
Whether issuing interests in the vehicle that owns the property counts as a transfer is decided by the loan documents. Where the documents treat it as one, the lender's written consent, or a refinancing, would come before anything is issued. Where a lender already holds a pledge over the vehicle's equity, or restricts transfers, nothing would move without the lender's written consent, and the structure may have to change to get it.
That is why the loan agreement is the document to read before the appraisal.
The mortgage question is common to all three. What changes is who else has a say, and what an investor would evaluate.
| Property type | Who else has a say | What an investor would evaluate |
|---|---|---|
| Single-tenant net lease | The lender | One tenant and one lease: the tenant's credit and the lease term |
| Single-tenant industrial | The lender | The tenant's credit; a listed tenant's annual report on Form 10-K is public |
| Multifamily | The lender, including agency lenders with their own transfer and prepayment terms | Many leases, occupancy and operating costs |
| Hospitality | The lender and the brand, whose franchise agreement can require consent | An operating business as well as a building |
A single-tenant property is simple to structure and concentrated in risk: one tenant means all of the income can stop at once. Putting a concentrated risk into tokens does not spread it.
A Delaware statutory trust (DST) is a structure that lets investors roll 1031 exchange proceeds into real property. The IRS ruling that DST exchanges rest on, Rev. Rul. 2004-86, describes a trust whose interests "will be of a single class" and records that "DST interests are not publicly traded" (2004-33 I.R.B. 191). The trust in that ruling could not accept new contributions, renegotiate its loan or its lease, or lease to a new tenant except on the tenant's bankruptcy or insolvency.
Tokens would not change what a DST may do. Whether a particular DST's interests can be recorded as tokens is a question for its own tax counsel. An owner who does not need 1031 capital would usually choose a vehicle with more room, such as an LLC.
For a new tokenization, Commertize charges a flat fee per project, set by the complexity of the structure and not by the asset's value or the size of any raise: $15,000, $25,000 or $50,000. Moving an existing register on-chain is quoted in writing as a flat fee before work starts. All terms are subject to a signed engagement.
Yes, in two ways. A syndication that already has investors could move its register on-chain, or the owner could place the property in a dedicated vehicle and issue interests in it as tokens. What usually decides it is the existing mortgage, because the lender's written consent may be needed before anything moves.
The investor would hold a security recorded in their own name on the issuer's register, with transfers restricted by the security's terms and by securities law. It would be an interest in the vehicle that owns the property, not a deed to part of the building.
A vehicle that already owns a commercial property, such as a syndication with an existing investor base, would keep its investors, their units and every right attached to them. The move itself would raise no new money.
For a new tokenization, Commertize charges a flat fee per project, set by the complexity of the structure and not by the asset's value or the size of any raise: $15,000, $25,000 or $50,000. Moving an existing register on-chain is quoted in writing as a flat fee before work starts. All terms are subject to a signed engagement.
The issuer's own securities counsel prepares and signs off the offering documents and chooses the exemption. Commertize is tokenization infrastructure for the owner of an asset, who becomes the issuer.
Commercial real estate is one of the asset classes Commertize covers, alongside compute, energy infrastructure, and oil and gas royalties. The structure described here, a vehicle that holds the asset and a token that records interests in it, is the same across all of them. What changes is the one question that decides each class.
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