“Tokenize” in the international context is often understood as a way to standardize and digitize the economic benefits associated with an asset.
This article shares a perspective on an effective tokenization model that could bring many benefits if applied in the future: reorganizing rental cash flows for commercial real estate with clear contracts and operational data. This approach focuses on the process of recording - reconciliation - distribution and standardization.
Why should you approach rental cash flow?
Instead of emphasizing the issue of “fragmentation” of ownership, businesses can focus on the mechanism of recording – reconciling – distributing cash flows from existing lease contracts. This thinking helps:
- Clarify the allocation order (operation, maintenance, financial obligations, reserves, remainder) according to the agreed principles;
- Increase reporting transparency and auditability, reduce dependence on manual operations;
- Standardize documents and processes, creating a foundation for phased expansion.
The above results can only be achieved when the governance - technology - legal system is established synchronously from the beginning.
Reference model
1. Original assets & contracts: Review the legal basis of the assets/lease blocks, standardize price terms and adjustment mechanisms, terms, guarantee obligations, termination/renewal conditions. Update records and operational data according to the prescribed cycle.
2. Cash flow & allocation order: Rental income transferred back controlled deposit account; allocation system according to agreed principles (operating – maintenance – management costs; financial obligations; reserve fund; remaining). All transactions are tracked and reconciled periodically.
3. Administration & Technology: Establish internal record book with role-based access control, immutable transaction logs, multi-layered approvals, document storage, and legitimate payment gateway connectivity. Prioritize auditability, traceability, and compliance. HVA can provide a set of operating principles, testing criteria, and risk-based system architecture recommendations.
“If you can't standardize, don't automate; if you can't measure, don't put it into business.” — Eric Vuong
Controlled operation
Lease recording → cash flow into controlled accounts → automated system allocation based on rules → multi-layer approval for expenses/payments → periodic reporting (revenue, allocation, balance, liabilities) → independent testing and review.
In terms of technology, prioritize role-based authorization, plan deviation alerts, separation of test and production environments, and backup/restore mechanisms. Build authorization matrices, approval flows, and early warning indicators.
Risk management
- Rental revenue fluctuations: Operational contingencies, performance-based adjustment mechanisms, warning thresholds and response scenarios.
- Media risks: Content approval process, compliance training, ensuring consistency between contracts and published documents.
- Systemic risk: Independent testing, regular backups, change management, incident response plans, and post-incident documentation for improvement.
Use a risk-based checklist to help businesses assess before, during, and after operations.
Conclusion
It is advisable to start with a small, controlled trial on a single asset or lease block for a limited period; measure the legal, operational and technological impact; and adjust contract documentation, processes and reporting accordingly. Once operational data shows acceptable stability, consider scaling up in stages, based on continued testing and independent review.
Eric Vuong
Chairman of BOD
HVA Investment Joint Stock Company
