June 2024
Americold Realty Pays $170 Million for Cold Storage Portfolio
Global Net Lease sold a portfolio of nine cold storage properties for $170 million at a 7.88 percent cash cap rate on 3.3 years of weighted average remaining lease term. The buyer is Americold Realty Trust, the Commercial Observer reported.
“GNL was looking to divest in this portfolio given the relatively short-term remaining leases,” Basile told Commercial Property Executive. “It traditionally prefers longer-term net leased facilities. Americold, like some of its larger competitors, is focused on owning more of its operating facilities to combat rising rents.”
The assets are currently leased to subsidiaries of Americold Realty Trust, which is based in Atlanta. Americold is recognized as the second-largest temperature-controlled warehousing and distribution services provider in the world, after Lineage Logistics.
GNL said the disposition aligns with its 2024 full-year guidance, which projected a disposition cash cap rate range of 7 percent to 8 percent. GNL said it plans to use the net proceeds from this sale to reduce outstanding debt and further lower its leverage.
GNL, a publicly traded real estate investment trust, acquired the portfolio for $153.4 million. The sale is part of the previously announced $567 million of closed and pipeline dispositions at a cash cap rate of 7.2 percent.
The transaction “makes a lot of sense” for both GNL and Americold, according to John Basile, executive vice president, Industrial Services, at NAI Hiffman.
“GNL was looking to divest in this portfolio given the relatively short-term remaining leases,” Basile told Commercial Property Executive. “It traditionally prefers longer-term net leased facilities. Americold, like some of its larger competitors, is focused on owning more of its operating facilities to combat rising rents.”
Americold was able to buy these assets below replacement cost versus developing ground-up or acquiring existing facilities one at a time, Basile noted.
Wells Waller, director, JLL Capital Markets, told CPE the cold storage sector is mirroring the growth trajectory seen in the last-mile space five years ago.
More capital for cold storage
“Over the past five years, transaction volume for cold storage and food logistics has been 1.3 times higher than the average annual volume seen earlier in the cycle,” Waller said. “This has led to an increased share of overall industrial transactions for cold storage, as industrial owners, infrastructure funds, sovereign capital and family offices strategically allocate capital to this sector.”
“The growth projections for cold storage (7.5 percent increase in NOI over the next five years) and the need for modernizing obsolescent facilities are the main drivers behind this trend.”
The cold storage market has attracted new investors such as infrastructure funds, sovereign capital and family offices, Marc Duval, managing director, JLL Capital Markets, told CPE.
“These investors recognize the scarcity of quality existing supply in this sector,” he said.
“What was formally an industry funded by private equity has become a deeper pool. The smart money is structuring deals to capture additional yield and higher margins by focusing on both the operating company and the property company.”
About NAI Hiffman:
NAI Hiffman is one of the largest independent commercial real estate services firms in the US, with a primary focus on metropolitan Chicago, and part of the NAI Global network. We provide institutional and private leasing, property management, tenant representation, capital markets, project services, research, and marketing services for owners and occupiers of commercial real estate. To meet our clients’ growing needs outside of our exclusive NAI Hiffman territory, we launched Hiffman National, our dedicated property solutions division, which provides property management, project services, and property accounting services across the country. NAI Hiffman | Hiffman National is an award winning company headquartered in suburban Chicago, with more than 250 employees strategically located throughout North America.
About Hiffman National:
Hiffman National is one of the US’s largest independent commercial real estate property management and advisory firms, providing institutional and private clients exceptional customized solutions for property management, facility management, advisory services, accounting, lease administration, lender services, project management, marketing, and research. The firm’s comprehensive property management platform and attentive approach to service contribute to successful life-long relationships and client satisfaction. As a nationally recognized Top Workplace, and perennial CRE award winner, Hiffman National is headquartered in suburban Chicago, with more than 275 employees nationally and an additional four hub locations and 15 satellite offices across North America.
