Fractional property, explained

How a vehicle is meant to work

A sponsor puts one asset into a special purpose vehicle and sells shares in that vehicle. Investors own a proportion of the SPV, not a registered interest in the property. Net rent is distributed, usually quarterly, and the return is realised when the asset is sold or the sponsor buys the shares back.

The structure is ordinary. What varies enormously, and what determines whether it is a good idea, is everything around it.

What to examine before subscribing to any of them

• Who holds the title. If the SPV does not hold registered title to the asset, you own a claim on a company, not on a building.
• Where subscription money sits before a raise closes, and who can move it. "Escrow" means nothing without a named escrow agent and a written mandate.
• How the asset is valued, by whom, and how often. A sponsor valuing its own asset is not a valuation.
• The exit. A vehicle with no defined exit and no secondary market is an indefinite holding, whatever the marketing says.
• Total fees, including the sponsor’s acquisition fee, which is often taken before any rent is distributed.
• Whether the sponsor is authorised to promote the vehicle to you in your jurisdiction. Many are not, and the promotion itself may be unlawful.

Where Propstock stands

We do not operate, sponsor, promote or take subscriptions for any fractional vehicle. Doing so is a regulated activity and we do not hold the permissions for it in any of our markets.

What we intend to publish is coverage: which sponsors are operating in each market, how their vehicles are structured, and how the ones that have run their course actually performed against what was advertised. That is journalism about the sector, which is a different thing from selling into it, and it is the part nobody currently does well.