300-Unit US Multifamily Tokenization

Deal context

In Q3 2024, a US-based multifamily operator engaged Asset Haus to structure and provide infrastructure for a $19M tokenized equity raise against a 300-unit value-add multifamily complex in the United States, funding a value-add renovation program. The offering was built as tokenized membership interests in a Wyoming LLC, issued on Ethereum under the ERC-1400 security token standard, and opened simultaneously to US accredited investors under Regulation D 506(c) and non-US investors under Regulation S, with quarterly distributions through a multi-class waterfall.

The raise closed with 80–90 investors at an average ticket of $200,000–$250,000. The full stack — entity formation, offering documents, token architecture, and investor workflow — went from engagement to launch in roughly six weeks.

The structuring problem

Three requirements drove the design.

A three-tier capital stack. The operator wanted three share classes with distinct risk/return profiles: Class A at an 8% preferred return with a 50% profit share, Class B at a 6% preferred return with a 70% profit share, and Class C with no preferred return but a 90% profit share that unlocks only after a 12% IRR hurdle. A familiar syndication pattern — and one that breaks down when administered manually across dozens of investors.

Two regulatory regimes in one raise. US and international investors sit under exemptions with incompatible rules on solicitation, verification, and resale, so the two pools had to stay strictly segregated from subscription through any later transfer.

Distribution workload at scale. Quarterly payments to 80–90 holders across three classes — each with its own preference and split, plus a sponsor catch-up and a moving IRR hurdle — mean hundreds of calculations and payments per year — a cadence at which spreadsheet-and-wire administration breaks.

One scoping note: the tokens represent LLC membership interests — the equity layer only. Property operations and any senior financing stay under conventional documentation; tokenization changes how equity is subscribed, recorded, and serviced.

Jurisdiction and compliance constraints

The issuer was formed as a Wyoming LLC, a common wrapper for tokenized US real estate equity given Wyoming's accommodation of digitally recorded ownership interests alongside standard limited-liability and pass-through treatment. Entity formation, the operating agreement, a Reg D 506(c) private placement memorandum with Reg S addendum, and three class-specific subscription agreements were engagement deliverables. Exemption selection and offering documentation are matters for qualified securities counsel; Asset Haus provides structuring support and the infrastructure that enforces what the documents require.

Pattern-level mechanics for this structure:

• Reg D 506(c) permits general solicitation but limits the offering to accredited investors and requires the issuer to take reasonable steps to verify accreditation — income or net-worth documentation, or third-party professional confirmation — rather than accept self-certification, alongside a Form D filing and state blue-sky notice filings where investors reside.
• Reg S covers offers and sales to non-US persons in offshore transactions, with no directed selling efforts into the US and a distribution compliance period before securities can flow back to US persons.
• Restricted securities. Interests under both exemptions are restricted: resale is subject to holding periods and transfer conditions, embedded here as class-specific whitelist rules at the token level. Nothing in the structure promises a liquid secondary market — transfers occur only within the documented restrictions.

The deal's compliance framework — 506(c) verification, Reg S qualification, and strict pool segregation — was enforced in software rather than by policy alone.

Platform modules deployed

• Token Factory (multi-class) — issued the three ERC-1400 share classes with class-specific rights encoded in token terms.
• Investor Portal — one onboarding and reporting interface for both pools.
• KYC/KYB — identity and entity screening at intake.
• E-Sign — execution of the class-specific subscription agreements.
• Registry (multi-class cap table) — the register of members across all three classes.
• Distribution Engine (waterfall) — automated return-of-capital, preferred-return, catch-up, and profit-split logic, with IRR tracking for the Class C hurdle.
• Transfer Controls (class-specific) — whitelists enforcing verification status, class rules, and Reg D/Reg S segregation.
• Admin & Reporting — quarterly investor reporting from templates, plus the audit trail behind every distribution.

Investor workflow

1. Verification. All investors pass KYC/KYB. US investors complete accreditation verification as 506(c) requires; non-US investors are qualified under Reg S and assigned to the segregated offshore pool.
2. Subscription. The investor selects a class, e-signs the corresponding subscription agreement, and funds the commitment.
3. Issuance. Tokens are issued into the correct class and pool, and the registry updates — issuance and cap-table entry are the same event.
4. Distributions. Each quarter, the engine computes the per-class waterfall and updates Class C hurdle IRR tracking; investors see statements in the portal.

Registry, settlement, and reporting logic

The multi-class registry functions as the LLC's register of members: each token position maps to a class, commitment, and distribution entitlement. The cap table is not reconciled after the fact — it is the operating record.

The distribution engine runs the waterfall in sequence: return of capital to all investors; preferred returns to Class A (8%), then Class B (6%); sponsor catch-up; then per-class profit splits of 50%, 70%, and 90%. Because Class C activates only past the 12% IRR hurdle, real-time IRR tracking was built into the engine rather than computed annually.

On tax: as general practice, a US LLC taxed as a partnership issues each member a Schedule K-1 annually. The registry and distribution records give the issuer's accountants a per-member, per-class allocation trail — K-1 preparation itself sits with the issuer's tax professionals — while quarterly report templates carry interim performance between tax cycles.

Outcome and current status

The engagement is completed. Documented results: launch in roughly six weeks; 80–90 investors onboarded at an average ticket of $200K–$250K; a KYC pass rate above 90%; accreditation verification completed for 100% of US investors; and cost savings assessed as significant versus traditional fund administration (no audited figure is published). Distributions run quarterly under the waterfall policy. These are recorded outcomes for this engagement, not projections for comparable deals.

What operators can reuse

• One entity can carry three risk profiles. A single Wyoming LLC with class rights defined in the operating agreement and mirrored in token terms avoids multiplying entities per investor tier.
• Dual 506(c)/Reg S widens the funnel only if segregation is enforced in software. Pool separation, verification status, and resale restrictions belong in transfer controls, not only in the PPM.
• Waterfall automation is where the economics show up. Multi-class preferences with a catch-up and an IRR hurdle, paid quarterly to 80–90 holders, is precisely the workload that breaks manual administration.
• Verification-first onboarding meets the 506(c) standard. Building accreditation checks into the subscription flow, not post-close cleanup, produced fully verified US participation here.
• Six weeks is achievable when workstreams run in parallel — entity, documents, and platform configuration proceeding together. Treat this timeline as a data point, not a promise.

Related resources

• Real estate tokenization guide — exemptions, documents, launch process
• Tokenized equity vs. debt — choosing the instrument
• Series LLC vs. SPV for tokenization — entity architecture options
• Real estate use cases — property tokenization support
• SPV structuring — formation and structuring support