Americold Realty Trust’s $308M Expansion
- Nov 25, 2019
As December approaches, Americold Realty Trust is creating its own international cold front. Even as it signed an agreement to purchase Canadian temperature-controlled warehouse operator Nova Cold Logistics, the REIT closed on the acquisition of two cold-storage facilities from MHW Group Inc. The two deals are jointly valued at about $308 million.
Based in Atlanta, Americold is the world’s largest publicly traded REIT specializing in the ownership, operation and development of temperature-controlled warehouses.
Nova Cold is currently owned by Brookfield Business Partners L.P., together with its institutional partners. The portfolio comprises three locations in Toronto, Calgary and Halifax, totaling 23.5 million cubic feet, with approximately 81,000 pallet positions and additional acreage for future expansions. Americold noted that its current customer base has significant overlap with Nova Cold’s.
Americold intends to fund this CAD $337 million (US $254 million) transaction with a combination of cash on the balance sheet, its corporate revolver, and proceeds from its second-quarter 2019 equity forward. The REIT also intends to implement cross-currency swaps to reduce exposure to exchange-rate fluctuations. Subject to customary closing conditions, the acquisition is expected to occur in the first quarter of 2020.
Separately, Americold has completed the $54 million acquisition of two cold-storage facilities owned by MHW Group Inc., one in Maryland and one in Pennsylvania, including the underlying land, which reportedly will allow for future expansion. The MHW portfolio consists of two rail-served facilities, totaling 19 million cubic feet and approximately 86,000 pallet positions, in Chambersburg, Pa., and Perryville, Md. Americold is funding this acquisition with cash on the balance sheet.
Neither Americold nor Nova Cold replied to Commercial Property Executive’s requests for additional information.
Cold storage warms up
MHW CEO Herman Haksteen told Commercial Property Executive that the sale takes his company completely out of the cold-storage warehouse business. He explained that MHW will now focus on its core business, Cryo-Trans, which has a fleet of more than 2,500 insulated or refrigerated railcars and is North America’s largest lessor of such cars.
Americold owns and operates 176 temperature-controlled warehouses, totaling more than 1 billion cubic feet of refrigerated storage, in the U.S., Australia, New Zealand, Canada and Argentina, as of the third quarter.
As Commercial Property Executive reported in early October, a recent CBRE report noted that demand for refrigerated storage is growing, driven by online food sales, particularly direct-to-consumer delivery services.
But given the high development costs and longer construction times for cold storage, and its inflexibility, among other factors, spec development in particular often lags demand. Still, the higher rents and typically longer-term leases could help to spur more development in this niche asset class.