Warehouse space is growing increasingly limited in the United States as e-commerce continues to rise. However, there has been indications that the demand for space may be dropping as Americold reported its Q2 results dropped 83.3 percent in net income to $4.9 million.
The company has shrugged off the number, however, suggesting it is not a primary metric for real estate investment trusts. Americold continued to say that funds from operations are a more relevant measurement - especially as the company made several sizeable acquisitions.
Americold announced in April that it agreed to buy Cloverleaf Cold Storage for $1.24 billion, further consolidating the refrigerated warehousing sector. The deal will boost the company's market share in the United States as it receives an additional 132 million cubic feet of storage space in 22 facilities in the Southeast and central regions of the United States.
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The second quarter does like brighter for Americold, though. Loadstar reports that FFO increased from $43.1 million last year to $56 million, and core ebitda reached $93.6 million. In addition revenue grew 11.1 percent.
There are still signs that the warehousing market will slow down in the coming months. Deloitte predicts that demand was slow to 0.9 percent over the next five years.
Though, temperature-controlled warehousing may differ from the general warehouse scene. Currently, the sector is less crowded as there are more significant entry barriers, making the outlook more upbeat.
“As we look ahead, the supply and demand dynamics within our industry remain consistent and favorable to Americold,” said Fred Boehler, president and CEO of Americold Realty Trust. “We expect demand to rise steadily with population and corresponding consumption growth. In addition, the ongoing shift in consumer preferences towards healthy perishable food increases the demand for temperature-controlled infrastructure. We believe these fundamentals are sustainable over the long term.”
CBRE reports that the United States market will need 10 million square feet of additional cold storage over the next five years as the grocery sector moves into the delivery space.
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Americold recently broke ground on an expansion project in Atlanta and a new facility in Savannah. Meanwhile, three expansion projects in the Cloverleaf portfolio have already moved forward as well.
Americold recently broke ground on an expansion project in Atlanta and a new facility in Savannah, while three expansion projects in the Cloverleaf portfolio are moving forward.