The percentage of a REIT’s portfolio allocated to raw or entitled industrial land varies significantly based on the REIT’s investment strategy, stage of growth, and market positioning. However, across the industry, this percentage typically falls within a low to moderate range, due to the nature of REIT structures and income requirements. Here’s a breakdown of general allocation trends:
1. Traditional Industrial REITs
- Most publicly traded industrial REITs (e.g., those focused on logistics or light manufacturing) allocate less than 5% of their portfolio to raw or undeveloped land.
- These REITs prioritize income-generating assets (e.g., leased warehouses and distribution centers) to meet their legal obligation to distribute at least 90% of taxable income as dividends.
- Land holdings are often limited to strategic parcels intended for near-term development or tenant-specific build-to-suit projects.
2. Development-Focused or Hybrid REITs
- Some REITs that combine income properties with a development pipeline may allocate 5% to 15% of their portfolio to raw or entitled industrial land.
- These REITs typically operate with a development arm, using land as a long-term value creation tool.
- The land portion may rise temporarily during land banking phases, before development or joint ventures begin
3. Land-Dominant Private or Niche REITs
- Private or non-traditional REITs with a focus on land appreciation, entitlement, or ground leasing may allocate 20% to 50% or more to raw or entitled land.
- These entities may specialize in rezoning, parceling, or infrastructure-ready land sales, particularly near transportation corridors, ports, or economic development zones.
- Because these assets generate limited short-term income, they are less common among dividend-focused REITs.
4. REIT Filings and Disclosures
- Exact percentages can be found in a REIT’s annual report (10-K), investor presentation, or supplemental financial filings.
- Look for disclosures under categories like “Land Held for Development,” “Investment in Land,” or “Development Pipeline.”
- Some REITs report land value as a percentage of gross book value, while others list acreage or fair market value without income attribution.
