Units, Ownership Percentage and Dilution in Capital Calls Explained
Fractional property ownership rests on one simple idea: you own units, and your percentage is just units divided by total units. Once that is clear, capital calls and dilution are easy to follow.
Units and percentages
Take a plaza with 115,000 units of PKR 1,000 each, valued at PKR 11.5 crore. Invest PKR 230,000 and you receive 230 units. Your share is 230 / 115,000 = 0.2000%. If 500 investors each put in PKR 230,000, together they hold 115,000 units and every one of them holds 0.2000%.
Percentages are stored to four decimals, and the whole set always adds up to exactly 100.0000%.
No rounding up
When your payment is not an exact multiple of the unit price, you receive whole units and the remainder is refunded to your wallet. Paying PKR 230,500 for PKR 1,000 units gives 230 units and PKR 500 back. Units are never rounded up in anyone's favour.
What is a capital call?
Sometimes a property needs more money after the first raise: a renovation, a completion payment, a repair. The manager opens a capital call, inviting investors to buy additional units on the same terms. Participation is optional.
What is dilution?
If you do not take part and others do, the total number of units rises, so your percentage falls even though your units stay the same.
Example: you hold 230 of 115,000 units (0.2000%). A call raises 11,500 new units, all taken by other investors. Total units are now 126,500. You still hold 230, but your share is 230 / 126,500 = 0.1818%.
Two things you should know:
- You are never in debt for not taking part. No receivable is created against you.
- You may take your pro-rata units to keep your percentage. In the example, 10% of your holding is 23 new units.
Why dilution is not a loss in itself
New money buys new units at the call price and goes into the property. Whether dilution helps or hurts depends on the price of the call relative to the property's value, which is why the terms of a call are shown before you decide.
Quick checklist for any capital call
- What is the purpose and the amount?
- What is the price per unit?
- What is the deadline?
- What happens to my percentage if I do not take part?
For the basics, start with fractional ownership explained.
Frequently asked questions
What is a capital call in property investment?
A request to investors for additional money after the first raise, for example a renovation or completion payment. Taking part is optional.
What happens if I do not join a capital call?
You keep your units, but your percentage falls if others buy new units. You do not owe anything for not taking part.
Are units rounded up when my payment is not exact?
No. You receive whole units and any remainder is refunded to your wallet.
