Land proceeds looking for a home in a sponsor that's 41% industrial

Closing a land parcel sale next month, roughly 240k net after costs, and I'm not replacing it with more dirt this cycle because the entitlement timelines in my county have gotten silly.

One place that money might go is a public non-traded REIT where the schedule of investments runs 41% industrial by NOI, 22% residential, the rest split across data centers and net lease retail, with about 6% office they've been selling down for three years. Leverage sits near 40% of gross asset value, weighted average debt maturity a bit over four years.

The reason it interests me is that industrial and land are close cousins in how they price. Both track absorption and both punish you for building into a soft window. The reason I'm hesitating is that I'd be handing over the one decision I'm actually good at, which is when to sell.

Minimum is 2,500 so sizing isn't the constraint. The constraint is that 240k is most of what I have working outside the land, and the repurchase plan runs on a quarterly cap I'd be sharing with everybody else who wants out at the same time.

Also unresolved: whether selling the land outright and buying securities closes the door on any exchange treatment I might have wanted. I know that's a question for my CPA and I've got a call booked, I just want to know what other people asked their CPA before the call.

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1kevin_lombardPG1BPRO5

I'm two months into reading about all of this so take the question at face value. When you say 41% industrial by NOI, is that different from 41% by value? I've seen both used and I assumed they'd be close, then I looked at a fact sheet where they weren't close at all because one property type was carried at a much lower cap rate.

On the exchange thing, from what I've read the like-kind rules apply to real property and REIT shares are securities, which is why people bring up DSTs and 721 contributions instead. How any of that applies to your sale is genuinely a tax attorney question, and it sounds like you already have the call. I'd ask them what has to be true before the closing rather than after, because the reading I keep running into says the sequencing matters a lot.

Land proceeds looking for a home in a sponsor that's 41% industrial

1 reply