Cold Storage REITs Under Scrutiny: Why W.P. Carey Outshines Lineage Logistics in 2025

The cold storage real estate investment trust (REIT) sector has long been a niche but critical component of the industrial real estate market. However, 2025 has brought renewed scrutiny to the segment, particularly for Lineage Logistics (LINE), as macroeconomic headwinds and structural oversupply challenge its growth narrative. Meanwhile, W.P. Carey (WPC), a diversified REIT with a focus on industrial and single-tenant properties, has emerged as a more compelling investment due to its balanced portfolio, disciplined capital allocation, and stronger dividend sustainability. This analysis compares the two REITs across valuation, dividend health, and operational flexibility to argue why WPC is the superior choice in today's market environment.

Sector Headwinds: Cold Storage's Growing Pains

The cold storage sector, dominated by LINE, faces significant challenges. Excess capacity has driven down utilization rates, with LINE reporting a 3.6% year-over-year decline in same-warehouse net operating income (NOI) and physical occupancy dropping to 75.2% in Q3 2025. Tariff uncertainties and reduced import/export activity have further dampened demand, forcing LINE to lower its full-year 2025 guidance. These risks are compounded by LINE's high leverage: a net debt/EBITDA ratio of 5.8x, coupled with a negative operating margin and weak return on invested capital (ROIC) according to financial analysis.

In contrast, WPC's diversified portfolio

-spanning 1,600 properties across industrial, retail, and self-storage sectors-provides a buffer against sector-specific volatility. Its 97% portfolio occupancy as of Q3 2025 underscores the stability of long-term net leases with built-in rent escalations. By exiting the office sector and doubling down on industrial assets, WPC has positioned itself to benefit from the logistics boom while mitigating exposure to cold storage's cyclical risks according to industry analysis.

Valuation Metrics: LINE's Optimism vs. WPC's Prudence

LINE's valuation appears anchored to future growth rather than current profitability. Despite a 47% stock price decline in the past year, its forward price-to-earnings (P/E) ratio of 769.23 and price-to-sales (P/S) ratio of 1.47 suggest investor optimism about long-term demand for frozen food storage according to market analysis. However, this optimism clashes with LINE's financial reality: a GAAP net loss of $112 million in Q3 2025 and an adjusted funds from operations (AFFO) per share of $0.85.

WPC, meanwhile, trades at a more conservative P/E of 39.64 and a P/EBITDA of 19.47x according to financial data, reflecting confidence in its stable cash flows. Its AFFO per share of $1.25 in Q3 2025, coupled with a 4.5% year-over-year dividend increase, highlights its ability to generate consistent returns according to financial reports. While LINE's valuation may appeal to growth-oriented investors, WPC's metrics align with a value-oriented strategy, offering a clearer path to capital preservation.

Dividend Sustainability: A Stark Divide

Dividend sustainability is where the two REITs diverge most sharply. LINE's 5.8% yield is enticing, but its payout ratio of 247%-calculated using its $2.11 annualized dividend and $0.85 AFFO per share-reveals a precarious balance sheet according to financial analysis. This level of payout is unsustainable without significant operational improvements or external financing.

WPC, by contrast, maintains a far healthier 73% payout ratio, with a $0.91 quarterly dividend supported by $1.25 AFFO per share according to financial data. Its disciplined approach has enabled a 4.5% dividend growth over the past year, reinforcing its reputation as a reliable income generator according to market analysis. For investors prioritizing dividend security, WPC's conservative payout ratio and history of increases make it the clear winner.

Operational Flexibility: Diversification as a Strategic Advantage

LINE's operational flexibility is constrained by its focus on cold storage. While its global network of 485 warehouses offers long-term contracts, the sector's sensitivity to inflation, tariffs, and supply chain disruptions limits its agility according to financial analysis. Recent expansion into Canada and integration of acquisitions add further complexity, with mixed results evident in its Q3 guidance revisions according to market reports.

WPC's diversified model, however, provides greater adaptability. Its 97% occupancy rate and strategic shift toward industrial and warehouse assets-sectors with robust demand-position it to capitalize on e-commerce and logistics trends according to industry analysis. Additionally, WPC's stake in LINE offers a hedge against cold storage volatility while diversifying its revenue streams according to investment research. This operational flexibility ensures WPC can navigate macroeconomic shifts without sacrificing growth.

Conclusion: WPC Emerges as the Safer Bet

While LINE's long-term vision for cold storage growth is compelling, its current financial and operational challenges-high leverage, unsustainably high dividend payouts, and sector-specific risks-make it a speculative bet. WPC, with its diversified portfolio, conservative valuation, and robust dividend sustainability, offers a more balanced approach. In a market environment marked by inflationary pressures and supply chain uncertainties, WPC's strategic positioning and operational discipline make it the superior REIT play for 2025 and beyond.