SUMMARY

This summary provides an overview of selected information contained elsewhere in this prospectus, but does not contain all of the information that you should consider before making a decision to invest in our common shares. You should carefully read this entire prospectus and the registration statement of which this prospectus is a part in their entirety before making a decision to invest in our common shares, including the information discussed under “ Risk Factors, ” “ Unaudited Pro Forma Condensed Consolidated Financial Statements ” and “ Management’s Discussion and Analysis of Financial Condition and Results of Operations ” and the information presented in our historical consolidated financial statements and related notes contained elsewhere in this prospectus. As used in this prospectus, unless the context otherwise requires, references to “ we, ” “ us, ” “ our ” and “ our company ” refer to Americold Realty Trust, a Maryland real estate investment trust, and its consolidated subsidiaries, including Americold Realty Operating Partnership, L.P., a Delaware limited partnership and the subsidiary through which we conduct our business, which we refer to as “ our operating partnership, ” and references to “ common shares ” refer to our common shares of beneficial interest, $0.01 par value per share.

Our Company

We are the world’s largest owner and operator of temperature-controlled warehouses. We are organized as a self-administered and self-managed REIT with proven operating, development and acquisition expertise. As of September 30, 2017, we operated a global network of 160 high-quality warehouses encompassing 945.3 million cubic feet, with 142 warehouses in the United States, six warehouses in Australia, seven warehouses in New Zealand, two warehouses in Argentina and three warehouses in Canada. Upon the completion of this offering, we will be the first publicly traded REIT focused on the temperature-controlled warehouse industry.

We consider our temperature-controlled warehouses to be “mission critical” real estate in the markets we serve from “farm to fork” and an integral component of the temperature-controlled food infrastructure supply chain, which we refer to as the “cold chain.” The cold chain is vital for maintaining the quality of food producers’, distributors’, retailers’ and e-tailers’ temperature-sensitive products, protecting brand reputation and ensuring consumer safety and satisfaction. Our customers depend upon the location, high-quality, integration and scale of our portfolio to ensure the integrity and efficient distribution of their products. Many of our warehouses are located in key logistics corridors in the countries in which we operate, including strategically critical U.S. and international metropolitan statistical areas, or MSAs, while others are connected or immediately adjacent to customers’ production facilities. We believe our strategic locations and the extensive geographic presence of our integrated warehouse network are fundamental to our customers’ ability to optimize their distribution networks while reducing their capital expenditures, operating costs and supply-chain risks. Many of the warehouses in our real estate portfolio have been modernized to reduce our power costs and increase their competitive position through reliable temperature-control systems and processes.

We consider ownership of our temperature-controlled warehouses to be fundamental to our business, our ability to attract and retain customers and our ability to achieve our targeted return on invested capital. We believe that the ownership of our real estate provides us with cost of capital and balance sheet advantages, stemming from the attractive financing options available to real estate owners and the tax advantages of being a REIT. We also believe that consolidation of the ownership and operation of our portfolio significantly enhances the value of our business by allowing us to provide customers with our complementary suite of value-added services across one integrated and reliable cold chain network. Ownership of our integrated cold chain network enhances our ability to efficiently reposition customers and undertake capital improvements or other modifications on their behalf without the need to obtain third-party approvals. Our decision to own, rather than lease, a significant majority of our warehouses provides us with better control over the specialized nature of our

 

assets and greater influence over our warehouse locations on a long-term basis, which is crucial to meeting our customers’ “mission-critical” cold chain needs.

We view and manage our business through three primary business segments—warehouse, third-party managed and transportation.

Our core business is our warehouse segment, where we provide temperature-controlled warehouse storage and related handling and other warehouse services. In our warehouse segment, we collect rent and storage fees from customers to store their frozen and perishable food and other products within our real estate portfolio. We also provide our customers with handling and other warehouse services related to the products stored in our buildings that are designed to optimize their movement through the cold chain, such as the placement of food products for storage and preservation, the retrieval of products from storage upon customer request, blast freezing, case-picking, kitting and repackaging and other recurring handling services. We refer to these handling and other services as our value-added services.

Under our third-party managed segment, we manage warehouses on behalf of third parties and provide warehouse management services to several leading food retailers and manufacturers in customer-owned facilities, including some of our largest and longest-standing customers. We believe using our third-party management services allows our customers to increase efficiency, reduce costs, reduce supply-chain risks and focus on their core businesses. We also believe that providing third-party management services to many of our key customers underscores our ability to offer a complete and integrated suite of services across the cold chain.

In our transportation segment, we broker and manage transportation of frozen and perishable food and other products for our customers. Our transportation services include consolidation services ( i.e. , consolidating a customer’s products with those of other customers for more efficient shipment), freight under management services ( i.e. , arranging for and overseeing transportation of customer inventory) and dedicated transportation services, each designed to improve efficiency and reduce transportation and logistics costs to our customers. We typically provide these transportation services at cost plus a service fee or, in the case of our consolidation services, we charge a fixed fee.

We believe our transportation services, together with our value-added services, provide our customers with a comprehensive solution for storing and transporting their products through the cold chain. We also believe that this comprehensive solution ultimately enhances the value of our real estate by differentiating us from our competitors, enhancing customer retention and driving warehouse storage and occupancy.

Our global footprint enables us to efficiently serve over 2,600 customers consisting primarily of producers, distributors, retailers and e-tailers of frozen and perishable food products, such as fruits, vegetables, meats, seafood, novelties, dairy and packaged foods. We believe the creditworthiness and geographic diversity of our customer base provide us with stable cash flows and a strong platform for growth. The weighted average length of our relationship with our 15 largest customers in our warehouse segment exceeds 35 years. The total warehouse segment revenues generated by our 15 largest customers in our warehouse segment have been steady over the last three years, representing 50%, 51% and 52% of our total warehouse segment revenues for the years ended December 31, 2016, December 31, 2015 and December 31, 2014, respectively. Each of these 15 largest customers has been in our network for the entirety of these periods.

 

We believe we are entering a new growth period for our company. In 2010, we solidified our position as the largest owner and operator of temperature-controlled warehouses in the world with our acquisition and integration of 74 temperature-controlled warehouses (representing 416 million cubic feet) from Versacold International Corporation, or Versacold. Over the last five years, we have:

 

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assembled a new and talented senior management team based on their real estate, food and logistics industry expertise and ability to bring best practices from outside the temperature-controlled storage industry to our operations;

 

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spent over $635 million to grow and maintain our warehouse business and optimized our real estate portfolio by relocating customers within our network to consolidate occupancy, reduce costs and increase profitability;

 

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utilized a strategic approach to recurring maintenance capital expenditures and repair and maintenance expenses to maintain the high quality and operational efficiency of our warehouses;

 

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implemented new commercial business development and underwriting standards and processes;

 

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transitioned a significant portion of our rent and storage revenues generated on an as-utilized, on-demand basis to a fixed storage commitment basis, as evidenced by the annualized rent and storage revenues generated from our fixed storage commitment contracts and leases as of September 30, 2017 equaling 38.3% of our total warehouse segment rent and storage revenues for the twelve months ended September 30, 2017;

 

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invested over $60 million on our information technology platform and customer interface to create an integrated and scalable information technology system;

 

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enhanced our operating and financial results and realized strong same store contribution ( i.e ., net operating income (NOI)) growth in our warehouse segment of 13.5% for the nine months ended September 30, 2017 and 2.1% and 3.2% for the years ended December 31, 2016 and December 31, 2015 or, on a constant currency basis, 13.1% for the nine months ended September 30, 2017 and 2.9% and 6.1% for the years ended December 31, 2016 and December 31, 2015, in each case, compared to the corresponding prior period;

 

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repositioned our balance sheet to provide flexibility for expansion and growth of our portfolio;

 

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implemented a strategic effort to exit or sell non-strategic warehouses; and

 

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established a substantial expansion and development pipeline built around disciplined and consistent internal underwriting parameters designed to generate strong risk-adjusted returns.

We believe these initiatives, combined with our size, scope, experience and status as the first publicly-traded REIT focused on the temperature-controlled warehouse industry, will position us to grow our warehouse portfolio, expand our customer base, enhance our market share and create value for our shareholders.

Our Warehouse Portfolio

As of September 30, 2017, our 160 warehouses contained approximately 945.3 million cubic feet and approximately 3.2 million pallet positions. We believe that the volume of cubic feet in our warehouses and the number of pallets contained therein provide a more meaningful measure of our storage space than warehouse

 

surface area expressed in square feet as customers generally contract for storage on a pallet-by-pallet basis, not on a square footage basis. Our warehouses feature customized racking systems that allow for the storage of products on pallets in horizontal rows across vertically stacked levels. Our racking systems can accommodate a wide array of different customer storage needs. The following table provides summary information regarding the warehouses in our portfolio that we owned, leased or managed as of September 30, 2017.

 

Country / Region		# of warehouses				Cubic feet (in millions)				% of total cubic feet				Pallet positions (in thousands)				Average physical occupancy (1)				Revenues (2) (in millions)				Applicable segment contribution (NOI) (2)(3) (in millions)				Total customers (4)
Owned / Leased (5)
United States
Central			34				241.3				27	%			874.3				74	%		$	231.8			$	78.1				862
East			24				166.0				19	%			540.2				76	%			247.3				65.4				752
Southeast			38				178.2				20	%			575.6				77	%			203.1				56.3				674
West			38				223.8				25	%			972.6				80	%			256.8				98.1				755
United States Total / Average			134				809.4				91	%			2,962.8				77	%		$	939.0			$	297.9				2,365
International
Australia			5				47.6				5	%			142.7				94	%		$	153.3			$	35.5				85
New Zealand			7				22.8				3	%			72.9				84	%			32.9				9.8				98
Argentina			2				9.7				1	%			21.6				83	%			13.8				3.4				30
International Total / Average			14				80.2				9	%			237.2				90	%		$	200.1			$	48.7				204
Owned / Leased Total / Average			148				889.5				100	%			3,200.0				78	%		$	1,139.1			$	346.6				2,612
Third-Party Managed
United States			8				41.5				74	%			—				—			$	216.7			$	10.3				8
Australia			1				—	(6)			—				—				—				8.1				1.7				1
Canada			3				14.3				26	%			—				—				18.2				2.2				3
Third-Party Managed Total / Average			12				55.8				100	%			—				—			$	243.0			$	14.2				12
Portfolio Total / Average			160				945.3								3,200.0				78	%		$	1,382.0			$	360.7				2,633

 

(1)

We define average physical occupancy as the average number of occupied pallets divided by the estimated number of average physical pallet positions in our warehouses for the twelve months ended September 30, 2017. We estimate the number of physical pallet positions by taking into account actual racked space and by estimating unracked space on an as-if racked basis. We base this estimate on the total cubic feet of each room within the warehouse that is unracked divided by the volume of an assumed rack space that is consistent with the characteristics of the relevant warehouse. On a warehouse by warehouse basis, rack space generally ranges from two to three feet depending upon the type of facility and the nature of the customer goods stored therein. The number of our pallet positions is reviewed and updated quarterly, taking into account changes in racking configurations and room utilization.

(2)	Last twelve months ended September 30, 2017.

(3)

We use the term “segment contribution (NOI)” to mean a segment’s revenues less its cost of operations (excluding any depreciation, depletion and amortization, impairment charges and corporate-level selling, general and administrative expenses). The applicable segment contribution (NOI) from our owned and leased warehouses and our third-party managed warehouses is included in our warehouse segment contribution (NOI) and third-party managed segment contribution (NOI), respectively. See “—Summary Selected Historical and Unaudited Pro Forma Condensed Consolidated Financial Data and Operating Data” for more information.

(4)	We serve some of our customers in multiple geographic regions and in multiple facilities within geographic regions. As a result, the total number of customers that we serve is less than the total number of customers reflected in the table above that we serve in each geographic region.

(5)

As of September 30, 2017, we owned 112 of our U.S. warehouses and ten of our international warehouses, and we leased 22 of our U.S. warehouses and four of our international warehouses. As of September 30, 2017, seven of our owned facilities are located on land that we lease pursuant to long-term ground leases.

(6)	Constitutes non-refrigerated, or “ambient,” warehouse space. This facility contains 330,527 square feet of ambient space.

 

We own, develop and manage multiple types of temperature-controlled warehouses, which allows us to service our customers’ needs across our network. Our warehouse portfolio consists of five distinct property types:

 

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Distribution . As of September 30, 2017, we owned or leased 59 distribution centers with approximately 463.1 million cubic feet of temperature-controlled capacity and 1.5 million pallet positions. Distribution centers typically house a wide variety of customers’ finished products until future shipment to end users. Each distribution center is located in a key distribution hub that services a distinct surrounding population center in a major market.

 

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Public . As of September 30, 2017, we owned or leased 46 public warehouses with approximately 205.5 million cubic feet of temperature-controlled capacity and 823.3 thousand pallet positions. Public warehouses generally store multiple types of inventory and cater to small and medium-sized businesses by primarily serving the needs of local and regional customers.

 

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Production Advantaged . As of September 30, 2017, we owned or leased 39 production advantaged warehouses with approximately 203.1 million cubic feet of temperature-controlled capacity and 864.6 thousand pallet positions. Production advantaged warehouses are temperature-controlled warehouses that are typically dedicated to one or a small number of customers. Production advantaged warehouses are generally located adjacent to or otherwise in close proximity to customer processing or production facilities and were often build-to-suit at the time of their construction.

 

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Facility Leased . As of September 30, 2017, we had four facility leased warehouses with approximately 17.9 million cubic feet of temperature-controlled capacity. We charge our customers that are party to these leases rent based on the square footage leased in our warehouses. Our facility leased warehouses are facilities that are leased to third parties, such as retailers, e-tailers, distributors, transportation companies and food producers, that desire to manage their own temperature-controlled warehousing or carry on processing operations generally in warehouses adjacent, or in close proximity, to their retail stores or production facilities. The majority of our facility leased warehouses are leased to third parties under “triple net lease” arrangements.

 

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Third-Party Managed . As of September 30, 2017, we managed 12 warehouses on behalf of third parties. We manage warehouses on behalf of third parties and provide warehouse management services to several leading food retailers and manufacturers in customer-owned facilities, including some of our largest and longest-standing customers. Our third-party managed segment provides a complete outsourcing solution by managing all aspects of the distribution of our customers’ products, including order management, reverse logistics, inventory control and, in some instances, dedicated transportation services for temperature-controlled and ambient ( i.e. , non-refrigerated) customers.

 

The following map shows the locations of our temperature-controlled warehouses in North America by property type as of September 30, 2017.

United States and Canada

 

The following maps show the locations of our temperature-controlled warehouses in Australia, New Zealand and Argentina by property type as of September 30, 2017.

 

Australia		New Zealand		Argentina

 

Investments in Our Warehouses

We employ a strategic investment approach to maintain a high-quality portfolio of temperature-controlled warehouses to ensure that our warehouses meet the “mission critical” role they serve in the cold chain.

 

We have successfully modernized many of our warehouses to reduce our power costs and increase their competitive position through reliable temperature-control systems that can implement distinct temperature zones within the same warehouse. In addition, we use LED lighting, motion-sensor technology, variable frequency drives for our fans and compressors, third-party efficiency reviews and real-time monitoring of energy consumption, rapid close doors and alternative-power generation technologies to improve the energy efficiency of our warehouses. We believe that our warehouses are well-maintained and in good operating condition.

We believe that our comprehensive suite of value-added services and integrated information technology platform provide us with a significant competitive advantage. Over the last five years, we have invested more than $60 million on our integrated and standardized information technology platform across our network, including a proprietary consolidated customer interface system we call “i-3PL.” We believe that the cost of developing and integrating our information technology platform and customer interface in the years following our acquisition of Versacold is now complete. We will continue to invest in our information technology platform and customer interface as warranted to maintain or expand our competitive advantage. Our information technology platform provides us with the ability to streamline our warehouse operations and the data necessary to evaluate opportunities in our portfolio and guide business decisions. Our information technology platform, coupled with our customer interface, provides our customers with what we believe is a “best-in-class” experience in managing the products they store with us. In addition, we designed our operating systems to be scalable, which we believe allows us to integrate acquired or newly-developed properties in an efficient manner while retaining customers.

We actively seek opportunities to expand our warehouse portfolio through targeted expansions and developments in order to serve customer-specific needs and take advantage of favorable market conditions supported by demonstrable customer demand. We seek to expand on land parcels that we own when possible. We currently own more than 600 acres of land adjacent to more than 60 of our temperature-controlled warehouses, which is in addition to land we own adjacent to our warehouses that is either currently under development or in our future development pipeline. This land has the potential to support future expansions of existing temperature-controlled warehouses and the development of new temperature-controlled warehouses aggregating approximately 500 million cubic feet and 1.7 million pallet positions (based on standard warehouse configurations consistent with our existing network). We generally consider land adjacent to our temperature-controlled warehouses to be more readily available for development than outside development opportunities, including acquisitions, as we avoid costs and other impediments associated with land acquisitions, and in certain cases the land adjacent to our facilities is already fully entitled for use as temperature-controlled storage. We refer to growth opportunities that involve the development of land we already own as expansion opportunities and opportunities that involve the acquisition of land for development as development opportunities.

Since 2014, we have completed three expansion and development opportunities totaling approximately $41 million in construction costs and aggregating 9.9 million cubic feet and approximately 23,000 pallet positions. As of September 30, 2017, we have three expansion and development opportunities under construction with an estimated total cost of approximately $132.0 million and with scheduled completion dates ranging from the fourth quarter of 2017 to the fourth quarter of 2018. We expect these expansion and development opportunities to include approximately 26.7 million cubic feet and approximately 108,000 pallet positions. No assurance can be given that the actual cost or completion dates of any expansions and developments will not exceed our estimates.

Based on market conditions, we anticipate commencing an average of two to three expansion or development opportunities annually representing anticipated invested capital of between approximately $75 million and $200 million. As of September 30, 2017, we have identified and are either actively underwriting or otherwise evaluating a range of expansion and development opportunities with an estimated total cost in excess of $1.2 billion, including potential expansion opportunities on more than 85 acres of land adjacent to nine

 

temperature-controlled warehouses in our existing real estate portfolio. We intend to focus the expansion of our warehouse capacity primarily in the production advantaged and distribution property types. We believe these property types are the most critical points in the cold chain and most directly align with supporting the growth of our customers. These future pipeline opportunities are at various stages of discussion and consideration and, based on historical experiences, many of them may not be pursued or completed as contemplated or at all. For additional information regarding the actual and projected returns on our expansion and development opportunities and the calculation methodology and assumptions related thereto, please see “Business and Properties—Investments in Our Warehouses.”

Industry Overview

Under “Industry Overview,” we have included a report furnished by GCCA. Except for information pertaining to our company, the following is a summary of that report and is subject to, and qualified in its entirety by reference to, GCCA’s report.

Revenue Growth Forecasts

GCCA forecasts, beginning in 2018, owners and operators of U.S. temperature-controlled warehouses as a whole will show a five year compounded annual growth rate in revenues of 4%. This forecast is based on GCCA’s view that U.S. demand from food producers, distributors, retailers and e-tailers exceeds currently available temperature-controlled capacity in the United States. Expectations regarding revenue growth are largely tied to demand side considerations that vary across regions, including population trends, consumer preferences and regional food safety concerns. Revenue growth rates in developing countries vary considerably and are highly dependent upon location, rate of expansion of temperature-controlled warehouse space, existence and scope of requisite infrastructure and other local factors.

Market Opportunities

In the United States, the combination of tight warehouse capacity, increased demand for a range of handling and other warehouse services and the stable and relatively inelastic demand for frozen and perishable food products should fuel steady demand for temperature-controlled warehouse space and drive growth in related revenues. In other developed countries, demand for temperature-controlled warehouse space should remain relatively steady in the coming years based on the stable and relatively inelastic demand for frozen and perishable food products. GCCA believes that an owner with a large-scale network of high-quality temperature-controlled warehouses will be well-positioned to take advantage of these trends by capturing customer demand for warehouse space and enhancing the value of the cold chain to its customers by allowing consolidation of storage needs onto a single integrated platform or network. An owner with the ability to provide value-added services to supplement its network would further support its ability to capitalize on this market opportunity.

GCCA also believes that the underdeveloped nature of the temperature-controlled warehouse industry in many developing countries—particularly those with an expanding middle class and increasing appetite for frozen and perishable foods like meat, dairy and produce—should benefit owners and operators of temperature-controlled warehouses with the financial wherewithal to take advantage of the market opportunity.

Temperature-Controlled Warehouses Cushman & Wakefield Report

Under “Temperature-Controlled Warehouses Cushman & Wakefield Report,” we have included a report furnished by Cushman. The following is a summary of that report and is subject to, and qualified in its entirety by reference to, Cushman’s report. Because of the highly specialized and custom-designed nature of many temperature-controlled warehouses, there are relatively few sale

 

transactions in the cold storage sector relative to the ambient warehouse sector. The thin market activity associated with temperature-controlled warehouses limits Cushman’s ability to definitively establish a general temperature-controlled warehouse capitalization rate or detail sector-wide changes based solely on empirical temperature-controlled warehouse transaction data. Cushman believes, however, that capitalization rates in the ambient warehouse sector represent a basis for analyzing the capitalization rates applicable to temperature-controlled facilities because of the baseline similarities between these assets and the mission critical role each type of asset plays in commerce. Using ambient warehouse capitalization rates and taking into account the temperature-controlled sale transactions of which Cushman is aware, Cushman’s general market experience and industry knowledge, and Cushman’s discussions with its regional brokers across the United States that cover relevant sectors, Cushman’s observation is that, as of the date of its report, market capitalization rates in the temperature-controlled warehouse sector for triple net leased temperature-controlled facilities ranged from 6.25% to 7.25% and for owner operated temperature-controlled facilities ranged from 7.50% to 8.25%, in each case, as of the date of the Cushman report. The higher capitalization rates attributable to the owner operated facilities are attributable to the net operating income derived from the handling and other services provided by the owner to customers at the facility. Cushman believes that temperature-controlled facilities have benefited from the same capitalization rate compression that has helped drive values in the ambient warehouse sector since the global financial crisis, which is also supported by the limited empirical data available on temperature-controlled sale transactions.

Please see “Temperature-Controlled Warehouses Cushman & Wakefield Report” for additional detail regarding capitalization rates applicable to temperature-controlled warehouses.

Occupancy of our Warehouses

Physical occupancy of an individual warehouse is impacted by a number of factors, including the type of warehouse ( i.e. , distribution, public, production advantaged, or facility leased), specific customer needs in the markets served by the warehouse, timing of harvests or protein production for customers of the warehouse, the existence of leased but unoccupied pallets and the adverse effect of weather or market conditions on the customers of the warehouse. On a portfolio-wide basis, physical occupancy rates and warehouse revenues generally peak between mid-September and early-December in connection with the holiday season and the peak harvest season in the United States. Physical occupancy rates and warehouse revenues on a portfolio-wide basis are generally the lowest during May and June.

Our target occupancy across our warehouse portfolio varies by warehouse and warehouse type because our warehouses are configured to accommodate the individual needs of our customers. In contrast to standard ambient warehouses that typically target an occupancy rate of 95%, we generally regard approximately 85% average physical occupancy across our temperature-controlled warehouse portfolio as optimal, subject to relevant local market conditions and individual customer needs. We do not believe that a 100% occupancy rate is an ideal target for utilization of our warehouses because optimizing pallet throughput and efficient delivery of relevant value-added services require a certain amount of free pallet position capacity at all times in order to be able to efficiently place, store and retrieve products from pallet positions, particularly during periods of greatest occupancy or highest volume.

Throughput at our Warehouses

The level of throughput at our warehouses is an important factor impacting our warehouse services revenues in our warehouse segment. Throughput refers to the volume of pallets that enter and exit our warehouses. Higher levels of throughput drive warehouse services revenues in our warehouse segment as customers are typically billed on a basis that takes into account the level of throughput of the goods they store in our warehouses.

 

Our Competitive Strengths

We believe that we distinguish ourselves as the global market leader in the temperature-controlled warehouse industry through the following competitive strengths:

Global Market Leader in Temperature-Controlled Warehousing

We are the largest global and U.S. owner and operator of “mission critical” temperature-controlled warehouses. As of September 30, 2017, our global network consisted of 160 high-quality warehouses, 122 of which we owned, and encompassed 945.3 million cubic feet of temperature-controlled storage space. Based on information from IARW and our management, as of October 2017, our network represented approximately 20.7% of the total estimated cubic footage of temperature-controlled warehouse storage in the United States and approximately 4.5% globally. As of October 2017, we owned, leased or managed significantly more temperature-controlled warehouse storage space than any of our competitors, as reflected in the following graphs:

Estimate of U.S. Temperature-Controlled Market Share (as of October 2017)

Source: IARW Top Companies in USA and North America, October 2017 and USDA National Agricultural Statistics Service, “Refrigerated Space: By Type of Warehouse” chart. Company figures provided by our company.

Estimate of Global Temperature-Controlled Market Share (as of October 2017)

Source: GCCA and IARW Top Companies in USA and North America, October 2017. Company figures provided by our company.

We believe that our position as the global and U.S. market leader in the ownership and operation of temperature-controlled warehouses helps us realize economies of scale that reduce our operating costs and lower our overall cost of capital, which positions us well to compete for customers and external growth opportunities. The scope and breadth of our real estate portfolio and the flexibility of our information technology platform allows us to efficiently onboard customers into additional facilities across the full footprint of our network, which results in reduced onboarding and operating costs and increased revenues as compared to competitors with less extensive platforms. In addition, the size of our real estate portfolio allows us to efficiently reposition customer products and goods across our warehouses to meet changing customer needs.

 

Extensive Integrated Network of Strategically-Located, “Mission Critical” Warehouses

We consider our temperature-controlled warehouses to be “mission critical” real estate in the markets we serve from “farm to fork” and an integral component of the cold chain. The cold chain is vital for maintaining the quality of food producers’, distributors’, retailers’ and e-tailers’ temperature-sensitive products, protecting brand reputation and ensuring consumer safety and satisfaction. Our customers depend upon the location, high-quality, integration and scale of our temperature-controlled warehouse network to ensure the integrity and efficient distribution of their products. Many of the warehouses in our portfolio have been modernized to reduce our power costs and increase their competitive position through reliable temperature-control systems and processes, and we believe that our warehouses are well-maintained and in good operating condition. Many of our warehouses are located in key logistics corridors in the countries in which we operate, including strategically critical U.S. and international MSAs, while others are connected or immediately adjacent to customers’ production facilities.

We believe our strategic locations and the extensive geographic presence of our integrated warehouse network are fundamental to our customers’ ability to optimize their distribution networks while reducing their capital expenditures, operating costs and supply-chain risks. For example, customers at our production advantaged facilities are able to minimize their logistics costs by leveraging our network of distribution warehouses servicing MSAs such as New York, Los Angeles, San Francisco, Seattle, Washington D.C., Boston, Chicago, Dallas and Atlanta when moving their products through the cold chain. As the largest owner and operator of temperature-controlled warehouses in the world, we believe our extensive integrated network of strategically located warehouses is unrivaled and, together with our substantial expertise and comprehensive suite of value-added services, make us an attractive provider of temperature-controlled storage solutions to leading food producers and retailers.

Long-Standing Relationships with Our Largest Customers and Strong Credit-Quality Customer Base

We believe our long-standing relationships with our largest customers and the strong credit quality of our customer base represent two important competitive strengths. Many of our customers entrust us with the management of their cold chain from production to end user. The weighted average length of our relationship with our 15 largest customers in our warehouse segment exceeds 35 years. The total warehouse segment revenues generated by our 15 largest customers in our warehouse segment have been steady over the last three years, representing 50%, 51% and 52% of our total warehouse segment revenues for the years ended December 31, 2016, December 31, 2015 and December 31, 2014, respectively. Each of these 15 largest customers has been in our network for the entirety of these periods. The scope and scale of our warehouse portfolio coupled with our global brand and our long-standing relationships with top frozen food companies positions us well to grow market share as our customers continue to grow organically and through acquisitions.

Many of our customers are leading participants in the food industry, including nine of the ten largest frozen food companies based on 2015 global sales according to information from Refrigerated Frozen Foods (the latest date as of which information is available). Of our 15 largest customers in our warehouse segment, seven are rated investment grade, two are rated Ba2/BB and the remainder consist of established private companies that we believe are creditworthy. Our bad debt expense in our warehouse segment constituted only 0.09% and 0.001% of our total warehouse segment revenues for the year ended December 31, 2016 and the nine months ended September 30, 2017, respectively. The integral role our warehouses play for our customers’ cold chain has allowed us to qualify as a “critical vendor” in certain bankruptcies involving our customers in the past and we believe it should allow us to qualify in the future, which, in turn, would enhance our ability to fully collect on our accounts receivable during the pendency of the bankruptcy proceeding.

 

Differentiated Operating Systems and Information Technology Deployed Across Warehouse Network

The reliability and efficiency of our temperature-controlled warehouses have material implications for our customers’ respective businesses. Over the last five years, we have invested more than $60 million to create what we consider to be an industry-leading integrated and standardized information technology platform and a consolidated customer interface across our warehouse portfolio. Our information technology platform provides us with the ability to streamline our warehouse operations and the data necessary to evaluate customer performance and contract compliance by comparing contract terms to actual contract performance and by identifying business trends and guiding business decisions. Our information technology platform, coupled with our customer interface, provides our customers with what we believe is a “best-in-class” experience in managing the products they store with us. We believe this level of service is critical not only in assisting our customers to optimize their logistics operations, but also in meeting their regulatory obligations under various food safety laws and regulations. In addition, we provide our customers with many key services through our “i-3PL” customer interface system, such as inventory visibility and rotation, documentation of chain of temperature custody, order management, and access to key performance indicators, all on a real-time basis, across our integrated network of high-quality warehouses. Our operating systems are designed to be scalable, which we believe allows us to integrate acquired or newly-developed properties in an efficient manner while retaining customers. We believe that our comprehensive suite of value-added services and integrated information technology platform are superior to our competition and provide us with a significant competitive advantage.

Ownership of Our Real Estate Increases Our Financial Flexibility and Enhances the Value of Our Business

Historically, we have owned a significant majority of the temperature-controlled warehouses in our portfolio as opposed to leasing those warehouses or entering into warehouse management arrangements with third-party owners. We believe that the ownership of our real estate provides us with cost of capital and balance sheet advantages, stemming from the attractive financing options available to real estate owners and the tax advantages of being a REIT. In addition, in an acquisition, we would have the ability to utilize our “UPREIT” operating partnership structure to provide attractive tax-advantaged consideration ( i.e. , interests in our operating partnership) to potential sellers. We also believe that consolidation of the ownership and operation of our portfolio significantly enhances the value of our business by allowing us to provide customers with our complementary suite of value-added services across one integrated and reliable cold chain network. Ownership of our integrated cold chain network enhances our ability to efficiently reposition customers and undertake capital improvements or other modifications on their behalf without the need to obtain third-party approvals. Our decision to own, rather than lease, a significant majority of our warehouses provides us with better control over the specialized nature of our assets and greater influence over our warehouse locations on a long-term basis, which is crucial to meeting our customers’ “mission critical” cold chain needs and allows us to enhance our suite of value-added services. For instance, each of our 15 largest customers stores goods in multiple sites across our real estate portfolio, ranging from three sites for one of these customers to more than 20 sites for seven of these customers. By storing goods in multiple sites across our real estate portfolio, our customers can track network-wide inventory levels and efficiently move goods from rural production-advantaged sites to metropolitan distribution centers without leaving our network.

Strong Cash Flows from Stable Demand for Frozen Food and Diverse Revenue Sources

We believe stable demand in the food industry creates consistent cold chain demand, with low volatility, for our warehouses, which provides our business with strong cash flows even during periods of general economic stress. Population growth, global food shortages, urbanization and fresh, chilled and frozen food consumption help drive demand for temperature-controlled warehouse space and services. As shown in the figure below, the U.S. temperature-controlled warehouse industry has experienced relatively stable revenue growth since 2006, a period marked by significant dislocation in the global financial markets, commodity shocks, profound disruption to the retail markets and secular shifts in consumer habits and preferences.

 

U.S. Temperature-Controlled Warehouse Industry Revenues (2006-2017E)

 

Source: IBIS Report as of February 2017.

We believe our ability to provide an integrated global network of high-quality temperature-controlled warehouses paired with our comprehensive suite of value-added services makes us an attractive storage solution for food producers, distributors, retailers and e-tailers of varying sizes who move products through the cold chain to meet the demands of consumers and positions us to capture a greater share of the demand for temperature-controlled storage solutions as compared to our competitors.

Our warehouse segment revenues are also diversified by geography, product and warehouse type, which enhance the stability of our cash flows. Our portfolio had the following geographic, product and warehouse type diversification statistics, based on warehouse segment revenues and, in the case of warehouse type diversification, warehouse segment revenues and contribution (NOI), for the twelve months ended September 30, 2017. Amounts in these charts may not sum due to rounding.

 

Warehouse Segment Revenues by Country (Last Twelve Months Ended September 30, 2017)		Warehouse Segment Revenues by Product Type (Last Twelve Months Ended September 30, 2017)
(1)    Retail reflects a broad variety of product types from retail customers. (2)    Packaged food reflects a broad variety of temperature-controlled meals and foodstuffs. (3)    Distributors reflects a broad variety of product types from distribution customers.

 

 

Warehouse Segment Revenues by Warehouse Type (Last Twelve Months Ended September 30, 2017)		Warehouse Segment Contribution (NOI) by Warehouse Type (Last Twelve Months Ended September 30, 2017)

Talented and Experienced Senior Management Team and Alignment of Interest

Our senior management team was assembled based on their real estate, food and logistics industry expertise and their ability to bring best practices from outside the temperature-controlled storage industry to our operations. Our senior management team includes talented and experienced executives from leading companies with extensive experience in managing temperature-controlled warehouses and food distribution centers and deep relationships with customers, suppliers and vendors. We believe this experience is critical to our ability to meet the demands of our customers and grow our business. Our five-person senior management team has an average of nearly 22 years of experience in the real estate, temperature-controlled warehouse, logistics, manufacturing and food industries.

Upon the completion of this offering, the members of our senior management team will beneficially own, on a fully-diluted basis, approximately     % (or approximately     % if the underwriters exercise in full their option to purchase additional common shares) of our outstanding common shares. We believe our senior management team’s meaningful ownership of our common shares aligns their economic interests with those of our shareholders.

Strong, Flexible Balance Sheet Positioned for Growth

Upon the completion of this offering, we believe we will have a strong, flexible balance sheet that positions us for growth. On November    , 2017, we closed into escrow on new senior secured credit facilities, or our New Senior Secured Credit Facilities, consisting of a five-year, $500.0 million senior secured term loan A facility, or our New Senior Secured Term Loan A Facility, and a three-year, $350.0 million senior secured revolving credit facility, or our New Senior Secured Revolving Credit Facility. Our New Senior Secured Revolving Credit Facility has a one-year extension option subject to certain conditions. The effectiveness of our New Senior Secured Credit Facilities is contingent upon the completion of this offering, after which our Existing Senior Secured Credit Facilities (as defined below) will be replaced. We intend to use the net proceeds from this offering, together with borrowings under our New Senior Secured Term Loan A Facility, to repay the entire $809.0 million aggregate principal amount of indebtedness outstanding under our Existing Senior Secured Term Loan B Facility (as defined below).

As of September 30, 2017, we had no debt maturities (other than principal amortization) prior to December 2018, and the weighted average stated maturity of our indebtedness on a pro forma basis after giving

 

effect to this offering was             years. We have strong relationships with numerous lenders, investors and other capital providers, which have provided us access to the private secured and unsecured credit markets. Since 2010, we have raised approximately $2.1 billion of debt financing. In addition, unlike many of our largest competitors, we believe our ownership of a significant percentage of our warehouses enhances the strength and flexibility of our balance sheet. As the first publicly traded REIT focused on the temperature-controlled warehouse industry, we believe our ability to access both the public and private capital markets to fund our business and growth strategies provides us with a significant competitive advantage and distinguishes us from our competitors.

We had a net debt to Core EBITDA (as defined below) ratio of 5.26 for the twelve months ended September 30, 2017, and a net debt to total enterprise value (as defined below) ratio of                  as of September 30, 2017, in each case on a pro forma basis after giving effect to this offering and the pro forma adjustments described in “Unaudited Pro Forma Condensed Consolidated Financial Statements.” Our net debt to Core EBITDA ratio and our net debt to total enterprise value ratio involve financial measures that are not calculated in accordance with U.S. generally accepted accounting principles, or U.S. GAAP. See “—Summary Selected Historical and Unaudited Pro Forma Condensed Consolidated Financial Data and Operating Data” for a reconciliation of each of Core EBITDA and net debt to the most comparable financial measures calculated in accordance with U.S. GAAP.

Ability to Offer Comprehensive Cold Chain Solutions Drives the Value of Our Real Estate Portfolio

We believe our strategically located temperature-controlled real estate portfolio is unmatched in terms of its scale, geographic presence and integration, which is fundamental to providing our customers with the specialized real estate infrastructure necessary to move their products through the cold chain. Our extensive portfolio enables us to partner with our customers as they grow by optimizing the location of their products and streamlining their storage, handling and transportation costs through, among other things, the comprehensive suite of value-added services we offer across our integrated real estate portfolio and the logistics solutions we provide. We believe our information technology platform further increases the efficiency, integration and reliability of our customers’ cold chain by providing us with the ability to rationalize our warehouse operations and the data necessary to evaluate opportunities in our network and guide business decisions. Our technology platform is scalable, which we believe allows us to efficiently integrate acquired or newly developed temperature-controlled warehouses. We believe that the size, scope and integration of our network, the comprehensive suite of value-added services provided therein and the utilization of our “best-in-class” information technology platform significantly enhance the value of our real estate portfolio and provide us with a competitive advantage when competing for development and acquisition opportunities.

Our Business and Growth Strategies

Our primary business objective is to enhance shareholder value by serving our customers, growing our market share and increasing cash flows from operations. We also believe that our ability to execute on our business and growth strategies will enhance the overall value of our real estate. The strategies we intend to execute to achieve these objectives include:

Enhancing Our Operating and Financial Results Through Proactive Asset Management

We seek to enhance our operating and financial results by (i) supporting our customers’ growth initiatives in the cold chain, (ii) optimizing occupancy, (iii) underwriting and deploying yield management initiatives and (iv) executing operational optimization and cost containment strategies.

 

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Supporting Our Customers’ Growth Initiatives in the Cold Chain . We partner with our customers to become an integral part of their cold chain operations. As part of this strategy, we seek to provide

 

value-added services to customers in our warehouse segment to help them identify opportunities for improvements in their cold chain operations and, once identified, to design customized solutions to meet those opportunities. These solutions may include modifying pallet configuration to optimize racking utilization, enhancing a customer’s storage and handling to minimize unproductive storage time and relocating inventory to more strategic positions in our warehouse portfolio. We also believe we can continue to increase our share of customer spending on temperature-controlled storage by selectively increasing our existing warehouse capacity and supplementing our temperature-controlled warehouse network with expansions, developments and acquisitions in response to identified customer needs.

We intend to focus the expansion of our warehouse capacity primarily in the production advantaged and distribution property types. We believe these property types are the most critical points in the cold chain and most directly align with supporting the growth of our customers. Our production advantaged warehouses are often build-to-suit facilities customized to support a single customer under a long-term contract (typically with an initial term of ten to 20 years). Our distribution warehouses are often higher-volume facilities located in or near strategically desirable MSAs which are configured to efficiently serve multiple customers under varying contract terms (typically three to ten years depending upon the needs of a customer). We believe production advantaged and distribution warehouses provide an attractive opportunity for achieving strong risk-adjusted returns as these property types afford us a higher visibility into customer demand.

 

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Optimizing Occupancy . We believe our high-quality, integrated warehouse network and value-added services offer significant cost-savings and comprehensive solutions to our customers and, when combined with our proactive approach to enhancing the cold chain for our customers, drive occupancy. We continuously monitor the business profile of our customers to seek to ensure our temperature-controlled warehouse network, equipment and information technology platform align with the needs of our customers and drive additional occupancy. We seek to accomplish this through, among other things, implementing optimized pricing structures and fixed storage commitments under our contracts. Through data collected by our information technology platform, we identify trends in the cold chain that allow us to provide solutions often before our customers identify an opportunity for enhancement. We also seek to utilize customer profiles built with our in-house information technology and historical customer data to increase occupancy by identifying additional customers with different seasonal storage needs than existing customers.

We seek to utilize data from our information technology platform to proactively position our warehouse portfolio to meet the changing needs of our customers. In instances where there is excess capacity, we actively manage our portfolio to optimize occupancy. We continuously review the geographic scope of our portfolio and capacity in individual markets. Since January 1, 2014, we have sold or exited 11 facilities that were non-strategic. In addition, we are expanding our warehouse portfolio in two strategic MSAs that are characterized by limited supply to serve growing demand from our customers.

 

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Underwriting and Deploying Yield Management Initiatives . Our management team engages in a rigorous underwriting process in connection with new business development and deploying capital to enhance our warehouse portfolio. We seek to ensure that any project serves its intended business purpose and meets our return objectives. Our extensive information technology platform provides us with the data and business intelligence to actively monitor customer profiles and manage customer profitability at sites in our warehouse portfolio. If actual performance deviates from our underwritten customer profile, we may seek to implement equitable rate adjustments where justified by shifts in a customer’s profile or market dynamics in order to maintain or enhance our expected segment contribution (NOI).

 

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Executing Operational Optimization and Cost Containment Strategies . We regularly pursue operational optimization and cost containment strategies for our warehouse portfolio through active asset management and will continue to actively monitor and pursue additional cost-saving automation and other measures where we believe they can help support customer efficiencies and reduce costs. We have successfully modernized many of our warehouses to reduce our power costs and increase their competitive position through reliable temperature-control systems that can implement distinct temperature zones within the same warehouse. In addition, we use LED lighting, motion-sensor technology, variable frequency drives for our fans and compressors, third-party efficiency reviews and real-time monitoring of energy consumption, rapid close doors and alternative-power generation technologies at many of our warehouses. As a result, while we increased average physical occupancy and throughput across our warehouse portfolio during the three-year period ended December 31, 2016, we utilized the aforementioned technologies to reduce our overall consumption of electricity in our U.S. temperature-controlled warehouse network by approximately 1.1% on a per throughput pallet basis. Power costs accounted for 6.7% and 6.6%, respectively, of our total warehouse segment revenues for the year ended December 31, 2016 and the nine months ended September 30, 2017.

We have also implemented several initiatives designed to reduce labor costs associated with our operations. One of these initiatives includes extensive safety and training programs designed to increase the efficiency of our employees, enhance the consistency of service across our temperature-controlled warehouse network and generally promote workplace safety. In addition, we recently implemented initiatives aimed at reducing warehouse employee turnover and managing our warehouse labor force more effectively with respect to overtime and contract work, particularly at our larger and higher throughput warehouses. Where economically advantageous, we seek to add advanced automation systems, which include automatic retrieval, case-picking and kitting and re-packing features, to our newly constructed warehouses, which reduces costs and drives operational optimization.

As a result of these and other initiatives implemented by our senior management team, we have enhanced our operating and financial results over the last three years, improved our warehouse segment contribution (NOI) margin from 29.0% for the year ended December 31, 2014 to 30.4% for the twelve months ended September 30, 2017 and increased our storage revenue per occupied pallet position for the same period from $185.32 to $199.35, representing a compounded annual growth rate of 2.7%. In addition, we increased our average physical occupancy from 74% for the year ended December 31, 2014 to 78% for the twelve months ended September 30, 2017. This has allowed us to realize strong same store contribution (NOI) growth of 13.5% for the nine months ended September 30, 2017 and 2.1% and 3.2% for the years ended December 31, 2016 and December 31, 2015 or, on a constant currency basis, 13.1% for the nine months ended September 30, 2017 and 2.9% and 6.1% for the years ended December 31, 2016 and December 31, 2015, in each case, compared to the corresponding prior period. Our warehouse segment contribution (NOI) presented on a same store or same store constant currency basis are not financial measures calculated in accordance with U.S. GAAP. Please see “—Summary Selected Historical and Unaudited Pro Forma Condensed Consolidated Financial Data and Operating Data” for a description of our warehouse segment contribution (NOI) calculated on a same store and a same store constant currency basis, as well as a reconciliation to the most directly comparable financial measure calculated in accordance with U.S. GAAP. Our same store contribution (NOI) growth for the nine months ended September 30, 2017 was driven by certain of our below-market contracts resetting to new rates; as this marks a new base for same store contribution (NOI) growth, we expect future same store contribution (NOI) growth to normalize consistent with same store contribution (NOI) growth as reflected in our full year 2016 and 2015 financial results.

We believe that the combination of our ability to execute these and other initiatives and the significant investments we have made in our business over the last five years will continue to drive our financial results and

 

position us to expand our warehouse portfolio, grow our customer base, enhance our market share and create value for our shareholders.

Continue to Increase Committed Revenue in Our Warehouse Segment

Historically, providers of temperature-controlled warehouse space have offered storage services to customers on an as-utilized, on-demand basis. We actively seek to enter into contracts that implement our commercial business rules which contemplate, among other things, fixed storage commitments in connection with establishing new customer relationships or renewing agreements with existing customers, particularly with our largest customers, and variable rates for the value-added services we provide. Pricing for our storage and value-added services under our commercial business rules is based on the anticipated profile of our customer, including the anticipated pallet occupancy of the customer, anticipated throughput of pallets delivered and retrieved annually, expectations regarding the value-added services to be used by the customer, and anticipated labor hours necessary to provide the value-added services. Our significant investments in information technology and our utilization of collected customer data have facilitated the building of these customer profiles, which we believe provides us with a significant competitive advantage. We believe these terms allow our customers access to temperature-controlled warehousing space for their products on a reliable and consistent basis while at the same time help us manage and project occupancy across our real estate portfolio and generate predictable cash flows. Our fixed storage commitment contracts also typically include price increase mechanisms that are fixed or tied to the Producer Price Index, or PPI, an index published by the Bureau of Labor Statistics, or related indices, giving us the ability to recover cost increases which are incorporated in the indices, such as wage increases and increases in power, property taxes and other costs.

Over the last several years, we have transitioned a significant portion of our rent and storage revenues generated on an as-utilized, on-demand basis to a fixed storage commitment basis, as evidenced by the annualized rent and storage revenues from our fixed storage commitment contracts and leases as of September 30, 2017 equaling 38.3% of our total warehouse segment rent and storage revenues for the twelve months ended September 30, 2017. As of September 30, 2017, we had entered into contracts featuring fixed storage commitments or leases with 83 customers in our warehouse segment, which generated approximately $190.8 million of annualized committed rent and storage revenues as of September 30, 2017 and $455.0 million of total warehouse segment revenues for the twelve months ended September 30, 2017. Our contracts featuring fixed storage commitments typically have stated maturities ranging from three to seven years. As of September 30, 2017, our contracts featuring fixed storage commitments had a weighted average stated term of approximately five years and a weighted average remaining term of three years. We believe the scope and breadth of our network position us favorably to continue to increase our fixed storage commitments as we believe this structure offers commercial advantages to both our customers and us.

Focused and Disciplined Strategy to Expand Our Portfolio of Temperature-Controlled Warehouses

We believe our operating systems, scalable information technology platform and economies of scale provide us with a significant advantage over our competitors with respect to expansion, development and acquisition opportunities. We anticipate that as the first publicly traded REIT focused on the temperature-controlled warehouse industry we will have greater access to the capital markets than our competitors, which we believe will allow us to strategically enter new locations, fill gaps in existing distribution networks and effectively compete for expansion, development and acquisition opportunities.

 

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Capitalize on Expansion and Development Opportunities . We actively seek opportunities to expand our warehouse portfolio in order to serve customer-specific needs and take advantage of favorable market conditions supported by demonstrable customer demand. We seek to expand on land parcels that we own when possible. We currently own more than 600 acres of land adjacent to more than 60

 

of our temperature-controlled warehouses, which is in addition to land we own adjacent to our warehouses that is either currently under development or in our future development pipeline. This land has the potential to support future expansions of existing temperature-controlled warehouses and the development of new temperature-controlled warehouses aggregating approximately 500 million cubic feet and 1.7 million pallet positions (based on standard warehouse configurations consistent with our existing network).

In evaluating customer-specific expansion and development opportunities, which we refer to as our customer-specific opportunities, we work with our customers to locate projects in the most logistically efficient locations to serve our customer’s needs for additional space. We also pursue expansion and development opportunities as driven by market dynamics and as necessary to support demonstrable customer needs or when strategically desirable, particularly near significant MSAs with respect to which we have existing facilities and particularized market knowledge. We refer to these opportunities as market-demand opportunities. We believe our demand-driven approach to expansion and development opportunities reduces the risks associated with these projects. Since 2014, we have completed three customer-specific expansion and development opportunities totaling approximately $41 million in construction costs, aggregating 9.9 million cubic feet and approximately 23,000 pallet positions. As of September 30, 2017, the average return on invested capital for the two projects that have reached stabilization ranged from approximately 18% to 20% and the budgeted stabilized return on invested capital for the third project is between 9% and 11%. For additional information regarding the calculation methodology and assumptions relating to our budgeted and actual returns on invested capital for expansion and development opportunities, please see “Business and Properties—Investments in Our Warehouses.” Our returns on completed expansions and developments may not be indicative of future results, and we may not achieve our targeted returns. A summary of our recently completed expansion and development opportunities as of September 30, 2017 is set forth below.

 

Recently Completed
		Opportunity Type		Facility Type		Cubic Feet (in millions)				Pallet Positions (in millions)				Cost of Expansion / Development						Completion Date
Facility														Total Cost  (in millions)				Return on Invested Capital
Phoenix, AZ		Development		Distribution			3.5				12.1			$	17.3			18%			Q1 2014
Leesport, PA		Expansion		Distribution			2.2				1.6				12.5			20.4%			Q3 2014
East Point, GA (1)		Redevelopment		Distribution			4.2				9.2				10.8			9.0-11.0% (2)			Q4 2016
Total							9.9				22.9			$	40.6
(1)    We acquired and redeveloped the East Point facility in 2016. (2)    Figures represent budgeted stabilized return on invested capital with respect to the East Point facility.

 

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Current Pipeline of Expansion and Development Opportunities . Based upon current market conditions, we anticipate executing an average of two to three expansion or development opportunities annually representing anticipated invested capital of between approximately $75 million and $200 million. Our current pipeline includes:

Under Construction. As of September 30, 2017, we have three expansion and development opportunities under construction with an estimated total cost of approximately $132.0 million and with scheduled completion dates ranging from the fourth quarter of 2017 to the fourth quarter of 2018. We expect these expansion and development opportunities to include approximately 26.7 million cubic feet and approximately 108,000 pallet positions, and they have budgeted stabilized returns on invested capital ranging from 8% to 15%. Two of the projects are market-demand

 

expansion opportunities and one is a customer-specific development opportunity. No assurance can be given that the actual cost or completion dates of any expansions or developments will not exceed our estimate, or that our budgeted stabilized returns will be achieved. A summary of our under construction expansion and development opportunities as of September 30, 2017 is set forth below:

 

								Under Construction								Costs of expansion / development (in millions)												Budgeted Stabilized Return on Invested Capital				Target Completion Date
Facility		Opportunity Type				Facility Type		Cubic Feet (in millions)				Pallet positions (in thousands)				Cost to date				Estimate to completion (1)				Estimated cost (1)
Clearfield, UT			Expansion			Distribution			5.8				22			$	23.3			$	5.7			$	29.0				12-15%				Q4 2017
Middleboro, MA			Development			Production Advantaged			5.2				28				2.7				21.3				24.0				8-12%				Q3 2018
Rochelle, IL			Expansion			Distribution			15.7				58				10.8				68.2				79.0				12-15%				Q4 2018
Total									26.7				108			$	36.8			$	95.2			$	132.0

 

(1)

Reflects management’s estimate of cost of completion as of September 30, 2017.

Future Pipeline . As of September 30, 2017, we have also identified and are either actively underwriting or otherwise evaluating a range of expansion and development opportunities with an estimated total cost in excess of $1.2 billion, including potential expansion opportunities on more than 85 acres of land adjacent to nine temperature-controlled warehouses in our existing real estate portfolio. Our future pipeline includes both customer-specific and market-demand expansion and development opportunities. We note that these investments have not yet been approved by our board of trustees. Under current market conditions, we generally budget an unleveraged stabilized return on invested capital of between 10% and 15% on expansion opportunities and between 8% and 13% on development opportunities depending upon the site, construction and customer profile, although we may vary our budgeted stabilized returns for strategic purposes in certain customer or market-driven circumstances. These future pipeline opportunities are at various stages of discussion and consideration and, based on historical experiences, many of them may not be pursued or completed as contemplated or at all, and there is no assurance that our budgeted stabilized returns will be achieved. A summary of our future pipeline of customer-specific expansion and development opportunities as of September 30, 2017 is set forth below:

 

Customer-Specific Opportunities
Customer		Region		Opportunity Type				Facility Type
Retailer		International			Development			Distribution
Retailer		West			Development			Distribution
Retailer		International			Development			Distribution
Food Producer		East			Development			Production Advantaged
Food Producer		Central			Development			Production Advantaged
Food Producer		West			Expansion			Production Advantaged
Food Producer		Central			Expansion			Production Advantaged
Food Producer		West			Expansion			Production Advantaged
Retailer		West			Expansion			Distribution
Food Producer		Central			Expansion			Production Advantaged

 

A summary of our future pipeline of market-demand expansion and development opportunities as of September 30, 2017 is set forth below:

 

Market-Demand Opportunities
Market		Opportunity Type				Facility Type
New England			Development			Distribution
Southern California			Development			Distribution
Southeast			Expansion			Distribution
Central			Expansion			Distribution
Texas			Expansion			Distribution
Pacific Northwest			Expansion			Distribution

 

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External Growth Through Acquisitions . We also have experience in identifying strategic acquisitions and successfully integrating them into our warehouse portfolio. In 2010, we completed the acquisition of Versacold’s warehouses and operations in the United States, Australia, New Zealand, Argentina and select managed assets in Canada to solidify our position as the largest owner and operator of temperature-controlled warehouses in the world. This strategic acquisition combined two of the leading temperature-controlled warehouse companies in the temperature-controlled storage industry and added 74 temperature-controlled warehouses (representing 416 million cubic feet) to our portfolio. Our information technology and customer interface facilitate our efforts to integrate acquisitions, drive synergies and generate superior risk-adjusted returns.

The temperature-controlled warehouse storage business in the United States is fragmented in terms of ownership and comprised primarily of closely held or family enterprises that own facilities concentrated in local markets. In addition, as of October 2015 (the latest period for which information is available), food producers, distributors, retailers and e-tailers in the United States owned 1.3 billion cubic feet of temperature-controlled warehouse space, according to the U.S. Department of Agriculture, or the USDA. These participants have increasingly made certain warehouses available for sale and outsourced their temperature-controlled warehousing needs in the related geographic areas to increase efficiency, reduce costs and redeploy capital into their core businesses. The ample supply of independent warehouses owned by smaller industry participants, together with the outsourcing opportunities from food producers, distributors, retailers and e-tailers, provide us the opportunity to strategically expand our warehouse portfolio in the United States and fill in gaps in existing distribution networks. We also intend to strategically grow our portfolio globally through acquisitions of temperature-controlled warehouses in attractive international markets to service demonstrable customer demand where we believe the anticipated risk-adjusted returns are consistent with our investment objectives. Specifically, we are targeting attractive growth opportunities for temperature-controlled warehouses in international markets in Asia and Europe. In Asia, we believe that the large and growing population, increasing affluence among citizens, evolving food consumption habits and limited number of temperature-controlled warehouses relative to population afford us an opportunity to utilize our strong reputation, operational expertise, strong relationships with existing customers already active in the region and balance sheet strength as a platform for temperature-controlled warehouse development and acquisition. In Europe, we believe there may be attractive opportunities to leverage our global brand, customer relationships and depth of experience to acquire an existing business and expand our integrated real estate portfolio.

Due to the size and scope of our integrated warehouse network, and the scalability of our operating systems and information technology platform, we believe we are well-positioned to continue to be a consolidator in the temperature-controlled warehouse storage industry.

 

Capitalize on Increased Outsourcing by Leading Global Food Producers, Distributors, Retailers and E-Tailers

Over the last 35 years, frozen food producers, distributors, retailers and e-tailers have increasingly outsourced their temperature-controlled warehousing needs to increase efficiency, reduce costs and redeploy capital into core businesses. Since 1979, the total amount of U.S. temperature-controlled warehouse capacity, as measured by cubic feet, outsourced by food producers, distributors, retailers, e-tailers and other comparable participants in the cold chain has grown at a compounded annual growth rate of 3.5%, according to USDA statistics. We anticipate that cold chain participants will continue to make certain of their “in-house” temperature-controlled warehouses available for sale in the future and, accordingly, will continue to look to third-party providers to meet their temperature-controlled warehouse storage and service needs in related geographic markets. We believe that our ability to offer the most extensive and integrated network of high-quality temperature-controlled warehouses globally with value-added services and our long-standing relationships with leading cold chain participants will enable us to capitalize on this trend.

Well Positioned to Benefit from E-Commerce Growth

Our warehouse portfolio serves as a fundamental bridge between food producers and fulfillment centers – whether for online e-tailers or traditional brick and mortar retailers. While the growing popularity of e-commerce has re-organized the retail landscape in the United States, it has not adversely impacted the overall volume of temperature-sensitive goods moving through the cold chain, the stability of our cash flows or the integrity of our warehouse portfolio. Moreover, we believe our global footprint and the comprehensive temperature-controlled storage solutions that we offer across our integrated real estate portfolio make us well-positioned to capture substantial growth in temperature-controlled storage demand generated by the rise of e-tailers, who typically require significantly more logistics space than traditional retailers. We believe our ability to design, build and operate warehouses across the cold chain makes us an attractive storage solution for the growing e-tailer segment and positions us well to generate new relationships, drive growth and capture market share by increasing our presence in the e-commerce channel.

Expand Our Presence by Increasing Market Share for Other Temperature-Sensitive Product Types

Although we focus on providing temperature-controlled warehouse space to the food industry, we also store other forms of temperature-sensitive products, including pharmaceutical, floral and chemical products. As the rapid growth in e-commerce continues to increase the flow of products through the global distribution network, we believe our ability to provide comprehensive and consistent quality warehousing and value-added services at all points in the cold chain put us in a strong position to develop new relationships, drive growth and enhance market share with producers, distributors, retailers and e-tailers in other temperature-sensitive products. Additionally, we have the flexibility to store non-temperature-sensitive “dry” goods in our warehouses to the extent desirable.

Recurring Maintenance Capital Expenditures and Repair and Maintenance Expenses

We utilize a strategic approach to recurring maintenance capital expenditures and repair and maintenance expenses to maintain the high quality and operational efficiency of our warehouses and ensure that our warehouses meet the “mission critical” role they serve in the cold chain.

Recurring Maintenance Capital Expenditures

Recurring maintenance capital expenditures are capitalized investments made to extend the life of, and provide future economic benefit from, our existing temperature-controlled warehouse network and its existing supporting personal property and information technology systems. Examples of recurring maintenance capital

 

expenditures related to our existing temperature-controlled warehouse network include replacing roofs, replacing refrigeration equipment, re-racking our warehouses, and implementing energy efficiency projects, such as LED lighting, motion-sensor technology, variable frequency drives for our fans and compressors, third-party tune-ups and real-time monitoring of energy consumption, rapid-close doors and alternative-power generation technologies. Examples of recurring maintenance capital expenditures related to personal property include expenditures on material handling equipment ( e.g. , fork lifts and pallet jacks) and related batteries. Examples of recurring maintenance capital expenditures related to information technology include expenditures on existing servers, networking equipment and current software. The following table sets forth our recurring maintenance capital expenditures for the nine months ended September 30, 2017 and each of the last five years.

 

(dollars in thousands, except per cubic foot amounts)		Nine months ended September 30, 2017				Year ended December 31,
						2016				2015				2014				2013				2012
Real estate		$	25,269			$	36,153			$	34,011			$	24,733			$	19,488			$	36,387
Personal property			1,359				3,213				3,678				5,836				4,545				8,452
Information technology			3,363				5,079				3,996				2,239				4,258				10,233
Total recurring maintenance capital expenditures		$	29,991			$	44,445			$	41,685			$	32,808			$	28,291			$	55,072
Total recurring maintenance capital expenditures per cubic foot		$	0.031			$	0.047			$	0.043			$	0.034			$	0.029			$	0.062

Repair and Maintenance Expenses

We also incur repair and maintenance expenses that include costs of normal maintenance and repairs and minor replacements that do not materially extend the life of the property or provide future economic benefits. Repair and maintenance expenses consist of expenses related to our existing temperature-controlled warehouse network and its existing supporting personal property and are reflected as operating expenses on our income statement. Examples of repair and maintenance expenses related to our warehouse portfolio include ordinary repair and maintenance on roofs, racking, walls, doors, parking lots and refrigeration equipment. Examples of repair and maintenance expenses related to personal property include ordinary repair and maintenance expenses on material handling equipment ( e.g. , fork lifts and pallet jacks) and related batteries. The following table sets forth our repair and maintenance expenses for the nine months ended September 30, 2017 and each of the last five years.

 

(dollars in thousands, except per cubic foot amounts)		Nine months ended September 30, 2017				Year ended December 31,
						2016				2015				2014				2013				2012
Real estate		$	16,298			$	20,956			$	18,843			$	18,440			$	17,728			$	16,961
Personal property			22,918				30,888				31,257				29,488				33,793				38,469
Total repair and maintenance expenses		$	39,216			$	51,844			$	50,100			$	47,928			$	51,521			$	55,430
Repair and maintenance expenses per cubic foot		$	0.041			$	0.055			$	0.052			$	0.049			$	0.053			$	0.062

Growth and Expansion Capital Expenditures

Growth and expansion capital expenditures are capitalized investments made to support our customers and warehouse expansion and development initiatives and enhance our information technology platform. Examples of growth and expansion capital expenditures associated with expansion and development initiatives

 

include funding of construction costs, increases to warehouse capacity and pallet positions and acquisitions of reusable incremental material handling equipment. Examples of growth and expansion capital expenditures to enhance our information technology platform include expenditures related to the delivery of new systems and software and customer interface functionality. The following table sets forth our growth and expansion capital expenditures for the nine months ended September 30, 2017 and each of the last five years.

 

(dollars in thousands)		Nine months ended September 30, 2017				Year ended December 31,
						2016				2015				2014				2013				2012
Expansion and development initiatives		$	70,851			$	27,529			$	8,532			$	21,757			$	44,728			$	11,559
Information technology			4,715				4,649				4,031				4,831				1,423				3,565
Total growth and expansion capital expenditures		$	75,566			$	32,178			$	12,563			$	26,588			$	46,151			$	15,124

Our Organizational Structure

Through our predecessor entities, we have operated in the temperature-controlled warehouse industry since 1910, and from 1997 to 2004 all of our common shares were indirectly wholly owned by Vornado Realty Trust, or Vornado, and Crescent Real Estate Equities Company, or Crescent, two REITs. In 2004, three investment funds affiliated with The Yucaipa Companies, LLC, or Yucaipa, acquired 20.7% of our common shares from Vornado and Crescent, and Yucaipa began to oversee our day-to-day management through its participation in an operating committee formed in 2004. On March 31, 2008, four investment funds affiliated with Yucaipa (including two of the original Yucaipa fund purchasers) acquired from Vornado and Crescent the remaining 79.3% of our common shares. These common shares are held indirectly through YF ART Holdings, L.P., or YF ART Holdings, a Delaware limited partnership controlled by Yucaipa. In 2015, CF Cold LP, or the Fortress Entity, an investment vehicle affiliated with Fortress Investment Group LLC, or Fortress, made an investment in YF ART Holdings.

In 2010, we completed the acquisition of Versacold’s warehouses and operations in the United States, Australia, New Zealand, Argentina and select managed assets in Canada to solidify our position as the largest owner and operator of temperature-controlled warehouses in the world. We financed the acquisition of the Versacold portfolio in part through the sale of Series B cumulative convertible voting preferred shares of beneficial interest, or Series B preferred shares, to affiliates of The Goldman Sachs Group, Inc., or the GS Entities, and Charm Progress Investment Limited, or Charm Progress. For further information regarding our Series B preferred shares, see “Description of Shares of Beneficial Interest—Preferred Shares—Series B Preferred Shares.”

We anticipate that affiliates of Yucaipa, the GS Entities and the Fortress Entity will enter into a new shareholders agreement and related registration rights agreements in connection with this offering, pursuant to which they will remain entitled to registration rights in respect of our common shares and board of trustees representation rights based on their fully diluted ownership interest in us. For further information regarding our new and existing shareholders agreements, please see “Certain Relationships and Related Party Transactions—Shareholders Agreement.”

The following diagram depicts our ownership structure after giving effect to this offering, excluding common shares, if any, to be issued upon exercise of the underwriters’ option to purchase additional common shares. Our operating partnership indirectly owns substantially all of our properties through its subsidiaries,

 

including its taxable REIT subsidiaries, or TRSs, and certain special purpose entities that were created in connection with various financings.

 

 

(1)

On a fully-diluted basis, upon the completion of this offering, our public shareholders, our trustees, executive officers and employees, YF ART Holdings, the GS Entities and Charm Progress will own approximately     %,     %,     %,     % and     %, respectively, of our outstanding common shares (based on the assumed initial public offering price of $         per share, which is the midpoint of the price range set forth on the cover page of this prospectus), subject to adjustment between YF ART Holdings, the GS Entities and Charm Progress as described in “Principal Shareholders.” If the underwriters exercise their option to purchase up to                  additional common shares in full, on a fully-diluted basis, our public shareholders, our trustees, executive officers and employees, YF ART Holdings, the GS Entities and Charm Progress will own approximately     %,     %,     %,     % and     %, respectively, of our outstanding common shares, subject to adjustment between YF ART Holdings, the GS Entities and Charm Progress as described in “Principal Shareholders.”

 

(2)

YF ART Holdings directly holds 69,342,769 common shares and warrants (currently exercisable) to purchase 18,574,619 common shares. The diagram assumes the cashless exercise of these warrants into an aggregate of              common shares upon the completion of this offering (based on the assumed initial public offering price of $         per share, which is the midpoint of the price range set forth on the cover page of this prospectus). For further information regarding these warrants, see “Description of Shares of Beneficial Interest—Warrants.”

 

The Fortress Entity is a limited partner of YF ART Holdings. As of                 , 2017, the number of common shares held by YF ART Holdings and attributable to the Fortress Entity was                 . This

 

number of common shares held by YF ART Holdings that are attributable to the Fortress Entity increases from time to time, subject to an aggregate cap of             common shares. This ongoing increase ends upon the earlier of (i) repayment in full of the obligations of YF ART Holdings to the Fortress Entity and (ii) March 1, 2019. Under the terms of the YF ART Holdings limited partnership agreement, prepayments of the obligations of YF ART Holdings to the Fortress Entity result in a partial reduction in this ongoing increase. See “Principal Shareholders” and “Certain Relationships and Related Party Transactions—The Fortress Entity Contribution Agreement.”

 

(3)

The GS Entities directly hold 325,000 Series B preferred shares and Charm Progress directly holds 50,000 Series B preferred shares. The Series B preferred shares have an aggregate liquidation preference of $375 million. The diagram gives effect to the anticipated arrangements of the GS Entities and Charm Progress to convert all 375,000 outstanding Series B preferred shares in connection with this offering into an aggregate of              common shares (based upon the Series B preferred share conversion price of $             as of             , 2017). We expect that YF ART Holdings will enter into an agreement to transfer common shares held by YF ART Holdings to the GS Entities and Charm Progress with a value of up to the total value of the common shares that the GS Entities and Charm Progress would have received in the event the initial public offering price in this offering were equal to the price of a qualified initial public offering under the terms of our Series B preferred shares, less the value of the common shares received by the GS Entities and Charm Progress in this offering based on the initial public offering price, subject to a maximum. Based upon the assumed initial public offering price of $         per share, which is the midpoint of the price range set forth on the cover page of this prospectus, we expect that YF ART Holdings would transfer          common shares to the GS Entities and          common shares to Charm Progress based on the anticipated terms of the agreement. The diagram gives effect to these anticipated transfers. The transfers contemplated by these arrangements would not result in an increase in the aggregate number of outstanding common shares or any changes in the beneficial ownership of the purchasers of common shares in this offering or other entities and persons presented in the diagram. The terms of the arrangements are subject to further negotiation by the parties. For further information regarding our Series B preferred shares and the anticipated arrangements described above among YF Art Holdings, the GS Entities and Charm Progress, see “Description of Shares of Beneficial Interest — Preferred Shares — Series B Preferred Shares” and “Principal Shareholders,” respectively.

 

(4)

We have previously issued 125 Series A cumulative non-voting preferred shares of beneficial interest, $0.01 par value per share, or the Series A preferred shares, in connection with maintaining our status as a REIT. The Series A preferred shares may be redeemed at our option for consideration equal to $1,000 per share plus all accrued and unpaid dividends thereon to and including the date fixed for redemption with no redemption premium or penalty. We intend to redeem all 125 outstanding Series A preferred shares upon the completion of this offering.

Risks Relating to Our Company

Investing in our common shares involves risks. Any of the risks set forth in this prospectus under the heading “Risk Factors” may have a material adverse effect on our business, financial condition, liquidity, results of operations and prospects, and on our ability to service our debt and make distributions to our shareholders. As a result, the market price of our common shares could decline significantly and you could lose a part or all of your investment in our common shares. You should carefully consider all the information set forth in this prospectus and, in particular, should evaluate the risks set forth in this prospectus under the heading “Risk Factors” before deciding to invest in our common shares. The following is a summary of some of the principal risks we face:

 

•

Our investments are concentrated in the temperature-controlled warehouse industry, and our business would be materially and adversely affected by an economic downturn in that industry.

 

•

Our temperature-controlled warehouses are concentrated in certain geographic areas, some of which are particularly susceptible to adverse local conditions.

 

•

Unfavorable market, economic and demographic conditions could have a material adverse effect on us.

 

•

We are exposed to risks associated with expansion and development, which could result in disappointing returns and unforeseen costs and liabilities.

 

•

We may be unable to identify and complete acquisitions of suitable properties, which may impede our growth, and our future acquisitions may not yield the returns we expect.

 

•

We may be unable to successfully expand our operations into new markets.

 

•

We depend on certain customers for a substantial amount of our warehouse segment revenues.

 

•

Our customers could experience bankruptcy, insolvency or financial deterioration.

 

•

The short-term nature and lack of fixed storage commitments of many of our customer contracts exposes us to certain risks that could have a material adverse effect on us.

 

•

We have no experience operating as a publicly traded REIT.

 

•

Competition in our markets may increase over time if our competitors open new warehouses.

 

•

Our warehouse business outside the United States exposes us to losses resulting from currency fluctuations.

 

•

We may be subject to work stoppages, which could increase our operating costs and disrupt our operations.

 

•

We could experience power outages or breakdowns of our refrigeration equipment.

 

•

We may incur liabilities or harm our reputation as a result of quality-control issues associated with our warehouse storage and other services.

 

•

We could incur significant costs related to environmental conditions and liabilities.

 

•

We have a substantial amount of indebtedness that may limit our financial and operating activities.

 

•

Failure to qualify as a REIT for U.S. federal income tax purposes would have a material adverse effect on us.

Our REIT Status

We elected to be taxed as a REIT for U.S. federal income tax purposes commencing with our taxable year ended December 31, 1999. As a REIT, we generally are not subject to U.S. federal income tax on REIT taxable income that we distribute to our shareholders. Under the Code, REITs are subject to numerous organizational and operational requirements, including a requirement that they annually distribute at least 90% of their REIT taxable income. If we fail to qualify for taxation as a REIT in any year, our REIT taxable income will be taxed at regular corporate rates, we will not be allowed a deduction for distributions to our shareholders in computing our REIT taxable income and, unless certain relief provisions apply, we will be ineligible to elect to be treated as a REIT for the four taxable years following the year of our failure to qualify as a REIT. Even if we

 

qualify as a REIT for U.S. federal income tax purposes, we may still be subject to state, local and foreign taxes on our income and property as well as to U.S. federal income and excise taxes on our undistributed income and certain other items. See “Material U.S. Federal Income Tax Considerations—Taxation of Our Company—General.”

Distribution Policy

We intend to make regular quarterly distributions to holders of our common shares. We intend to make a pro rata initial distribution with respect to the period commencing on the completion of this offering and ending             , based on $         per share for a full quarter. On an annualized basis, this would be $         per share, or an annual distribution rate of approximately     % based on the assumed initial public offering price of $         per share, which is the midpoint of the price range set forth on the cover page of this prospectus. We estimate that this initial annual distribution rate will represent approximately     % of estimated cash available for distribution for the twelve months ending September 30, 2018. Our intended initial annual distribution rate has been established based on our estimate of cash available for distribution for the twelve months ending September 30, 2018, which we have calculated based on adjustments to our pro forma net income for the year ended December 31, 2016.

We intend to maintain our initial annual distribution rate for the twelve-month period following completion of this offering unless actual results of operations, economic or market conditions or other factors differ materially from the assumptions used in our estimate. Any distributions made to our shareholders by us will be authorized and determined by our board of trustees in its sole discretion out of funds legally available therefor and will be dependent upon a number of factors, including our actual or anticipated financial condition, results of operations, cash flows and capital requirements, debt service requirements, financing covenants, restrictions under applicable law and other factors described under “Distribution Policy.”

We cannot assure you that our intended distributions will be made or sustained or that our board of trustees will not change our distribution policy in the future. Our New Senior Secured Credit Facilities that will be effective upon the completion of this offering will, subject to certain exceptions, prohibit us from making distributions to our shareholders if we fail to maintain compliance with certain covenants or if an event of default has occurred and is continuing.

We believe that our estimate of cash available for distribution constitutes a reasonable basis for setting the initial annual distribution rate; however, we cannot assure you that the estimate will prove accurate, and actual distributions may therefore be significantly different from our intended distributions. If we have overestimated our cash available for distribution, we may need to increase our borrowings or otherwise raise capital in order to fund our intended distributions. We do not intend to reduce the intended distribution if the underwriters exercise their option to purchase additional common shares from us in this offering.

Restrictions on Ownership of Our Shares

Subject to certain exceptions and to assist us in complying with the limitations on the concentration of ownership of our common shares and preferred shares of beneficial interest, which we refer to collectively as shares, imposed by the Code, our declaration of trust will provide that no individual (including certain entities treated as individuals) may own, or be deemed to own by virtue of the attribution provisions of the Code, more than 9.8% (in value) of our outstanding shares without the approval of our board of trustees. Our declaration of trust will also impose certain other restrictions on ownership and transfer of our shares, including prohibitions on:

 

•

owning shares that would result in our being “closely held” under Section 856(h) of the Code or otherwise cause us to fail to qualify as a REIT;

 

•

transferring shares if the transfer would result in our shares being beneficially owned by fewer than 100 persons; and

 

•

owning shares to the extent such ownership would result in our failing to qualify as a “domestically controlled qualified investment entity” within the meaning of Section 897(h) of the Code (after taking into account for such purpose the statutory presumptions set forth in Section 897(h)(4)(E) of the Code).

Any attempted transfer of our shares which, if effective, would result in a violation of any of the above ownership or transfer limitations (except for a transfer which results in our shares being owned by fewer than 100 persons, in which case such transfer will be null and void and the intended transferee shall acquire no rights in such shares) will cause the number of our shares that are the subject of the violation, rounded up to the nearest whole share, to be automatically transferred to a trust for the exclusive benefit of one or more charitable beneficiaries designated by us, and the intended transferee will not acquire any rights in the shares.

To reduce the ability of our board of trustees to use these ownership limitations to delay, defer or prevent a transaction or a change in control of our company, our declaration of trust requires our board of trustees to grant a waiver of these ownership limitations if the person seeking a waiver demonstrates that such ownership would not jeopardize our status as a REIT or violate the above provisions.

These restrictions are designed primarily to enable us to comply with share ownership and other restrictions imposed on REITs by the Code. See “Description of Shares of Beneficial Interest—Restrictions on Transfer.”

Our Information

Our principal executive office is located at 10 Glenlake Parkway, South Tower, Suite 600, Atlanta, Georgia 30328, and our telephone number is (678) 441-1400. Our website address is www.americold.com. The information found on, or otherwise accessible through, our website is not incorporated into, and does not form a part of, this prospectus or any other report or document we file with or furnish to the Securities and Exchange Commission, or the SEC.