Investors heat up cold storage market

Providers like Lineage Logistics and Americold have seen large cash infusions during pandemic

New York /
Oct.October 11, 2020 04:00 PM
Investors turn to the cold storage market (Credit: iStock)

Investors turn to the cold storage market (Credit: iStock)

Investors are increasingly turning to the cold storage sector, which showed surprising resilience through the first few months of the pandemic.

Lineage Logistics, the world’s largest landlord of temperature-controlled storage, pulled in $1.6 billion in a fundraising round that ended last month, according to the Wall Street Journal.

Americold Realty Trust, the only public real estate investment trust specializing in cold storage, saw a 6 percent increase in net operating income in the second quarter.

While the pandemic disrupted the heavily cold storage-dependent restaurant industry, that slowdown was mitigated by a run on supermarket frozen foods. Suppliers repackaged large portions of products meant for restaurants into smaller portions to meet consumer demand.
“The pandemic showed how cold storage is agnostic to the ultimate destination of the food,” said Cohen & Steers analyst Harrison Klein.

Klein’s firm invested $100 million into Lineage Logistics during its recent fundraising round, and has also made a large investment in Americold.

Those that are bullish on the industry contend that demand for space is set to increase because customers like the Kroger supermarkets are investing in their supply chains to reduce home delivery times. The average U.S. cold storage warehouse is 40 years old as well and customers demand newer facilities.

Over the summer, Bridge Development Partners and PGIM Real Estate bought a Hialeah property for what could be South Florida’s first cold storage facility built on spec.

There are downsides to investing in the industry, namely exposure to labor shortages. Covid-19 has spread through some facilities, which require a large number of workers to operate. Revenue growth is also slower than some other property sectors because of the high cost of developing such facilities. [WSJ]Dennis Lynch


Related Articles

arrow_forward_ios
Macy’s CEO Jeff Gennette (Getty)
Macy’s converts 1M sf to fulfillment space
Macy’s converts 1M sf to fulfillment space
Russo Development's Edward Russo (Illustration by The Real Deal with Getty, LinkedIn)
Russo’s complex is latest warehouse project facing blowback
Russo’s complex is latest warehouse project facing blowback
Developer Geoff Palmer with one of his properties (Getty, G.H. Palmer Associates)
Geoff Palmer’s lawsuit over tenant protections tossed by judge
Geoff Palmer’s lawsuit over tenant protections tossed by judge
Reynolds Asset Management's Lou Reynolds and 7-15 W Main St in Bound Brook, NJ (Illustration by Kevin Cifuentes for The Real Deal with Getty Images, Loopnet, Reynolds Assets Management)
Tri-state roundup: These New Jersey and Long Island deals aren’t turkeys
Tri-state roundup: These New Jersey and Long Island deals aren’t turkeys
Tishman Speyer's Andy Burke and 17 William Drive (Tishman Speyer)
Tishman Speyer, Mitsui Fudosan debut $500M industrial JV
Tishman Speyer, Mitsui Fudosan debut $500M industrial JV
 (Illustration by The Real Deal with Getty)
Commercial prices down 13% this year
Commercial prices down 13% this year
(Illustration by The Real Deal with Getty)
Northeast industrial market still breaking records, but may have peaked
Northeast industrial market still breaking records, but may have peaked
Riverhead Town Supervisor Yvette Aguiar (Getty, Town of River Head,  BLD Architecture)
Long Island town eyes warehouse moratorium
Long Island town eyes warehouse moratorium
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...