Glossary

Appreciation refers to an increase in the market value of a real estate asset over time.

While Fractual investors hold debt instruments rather than direct equity, appreciation of the property may strengthen the issuer’s financial position, improve refinancing or exit outcomes, and support the repayment of principal.

Asset allocation is the strategy of distributing investments across different asset classes to manage risk and optimize returns.

Average Daily Rate (ADR) is a performance metric used in the hospitality industry to measure the average revenue earned for an occupied unit on a given day.

A decentralized digital ledger technology that records transactions across multiple nodes, providing transparency and security for tokenized real estate investments.

A private or public offer of debentures (securities).

Capital appreciation refers to an increase in the value of a real estate asset, while capital depreciation refers to a decrease in value.

In Fractual, investors do not directly benefit from capital appreciation or bear depreciation risk as owners would. However, changes in asset value may indirectly affect bond performance by influencing refinancing options, exit proceeds, and overall credit risk.

A distribution is a payment made to investors, typically derived from net operating income or exit proceeds.

Diversification is a risk-management strategy that involves spreading capital across multiple, different asset types to reduce concentration risk.

A dividend is a profit distribution made to a company's shareholders.

Since Fractual investors hold bonds rather than equity, they do not receive dividends. Returns are paid in the form of interest and principal repayments, not profit distributions.

Equity represents ownership in an asset or company and entitles the holder to residual profits and voting rights.

Fractual investors do not acquire equity in real estate assets. Instead, they hold tokenized bonds, which provide contractual rights to cash flows, not ownership rights.

An exit refers to the sale or refinancing of the underlying real estate asset at the end of the investment lifecycle.

Exit proceeds are used to repay outstanding bond principal and distribute net proceeds to token holders, in accordance with the bond’s terms.

An investment model allowing multiple investors to subscribe to smaller units (fractions) of a (Bond) offer, which is linked to a specific real estate asset.

(see also: Yield)

Gross yield measures the total income generated by a property before deducting operating expenses, financing costs, or taxes.

The holding period is the duration between the initial investment and the exit of a real estate asset.

An investment strategy defines the objectives, risk profile, asset selection criteria, and expected return characteristics of an investment.

Within Fractual, investment strategies may vary by property type, geography, duration, and income profile.

KYC refers to regulatory procedures used to verify the identity of investors and assess compliance with anti-money laundering laws.

All investors must successfully complete KYC checks before investing through the Fractual platform.

(see also: Yield)

Net yield represents income remaining after deducting operating expenses, financing costs, and fees. Net yield is the primary source used to service interest payments to Fractual investors.

Occupancy measures the percentage of time a rental property is occupied over a given period. Higher occupancy levels generally support stronger revenue generation and improved debt-servicing capacity.

Passive income refers to earnings generated with limited ongoing involvement from the investor.

A portfolio is a collection of investments held by an investor.

Principal is the original amount invested in a bond, excluding interest.

Principal is typically repaid to investors at exit, subject to the performance of the underlying asset.

A private offer is an investment offering made to a limited group of investors and not available to the general public.

Property appreciation refers to an increase in the market value of a real estate asset over time.

For consistency, this term is treated as equivalent to capital appreciation and does not imply investor ownership participation.

Rental demand reflects the level of market interest for rental accommodation in a given location.

Rental yield measures income generated from rental operations relative to property value. Rental yield contributes to the cash flows used for servicing bond obligations.

RevPAR measures revenue generated per available unit, combining occupancy and ADR. It is a key performance indicator for short-term rental assets.

ROI measures the total return relative to the initial capital invested. In Fractual, ROI consists of interest payments and principal repayment.

Tokens are digital representations of financial instruments recorded on a blockchain.

In Fractual, tokens represent fractions of bonds, not ownership of real estate assets.

Tokenization is the process of converting financial rights into blockchain-based digital tokens.

Fractual uses tokenization to issue, manage, and transfer bond interests efficiently.

(see also: Distributions)

Unrealized distributions refer to accrued but not yet paid investor returns.

Yearly return represents the total return generated by an investment over a one-year period.

Yield refers to the income generated by an investment relative to the amount invested, typically expressed as a percentage.

In Fractual, yield reflects the interest income generated by tokenized bonds, funded by the net cash flows of the underlying real estate asset. Yield may be expressed as gross yield or net yield, depending on whether expenses and fees are included.