- Cold-storage giant Lineage Logistics revealed to Business Insider that it has scooped up 24 warehouses across the US for more than $500 million, solidifying the company as the industry’s largest player.
- The private-equity backed company acquired most of the space in 2020.
- Once an obscure corner of real estate, cold storage has seen an uptick in demand from a growing e-grocery industry, shifting consumer preferences for fresh foods, and the antiquation of decades-old cold spaces.
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Cold-storage giant Lineage Logistics is further consolidating its position as the largest player in a suddenly hot industry.
The company told Business Insider it has purchased 24 cold-storage properties across the country over the past year for over $500 million. The spaces, two-thirds of which were acquired in 2020, together total about 5.5 million square feet.
The buildings are the latest disclosure of growth for the private-equity backed firm as interest in the cold-storage sector has picked up among investors.
The increase in investment in what was until recently an obscure corner of the real-estate market has been prompted by demand from e-grocery tenants and shifting consumer habits that favor fresh foods, and comes as millions of square feet of decades-old cold storage spaces reach the end of their useful life.
“All those factors are tailwinds to this industry,” said Greg Lehmkuhl, the CEO of Lineage Logistics, a private cold-storage company owned by the investment firms Bay Grove Capital, D1 Capital Partners, and Stonepeak Partners. “These properties will help us satisfy the growing demand and will both supplement markets we’re in and complement our portfolio with locations where we don’t have a presence currently.”
Matt Walaszek, an industrial and logistics research analyst at CBRE, previously told Business Insider that the cold-storage market is set to grow by nearly 50% in the next 5 years to more than 300 million square feet nationally.
The anticipated demand is so robust, some real-estate investors have begun building speculative facilities. That’s a development that was virtually unheard of in the past because of the high costs associated with erecting cold spaces, which require industrial cooling systems, heavy insulation and, in some cases, advanced robotic equipment to weather the unforgiving conditions. Tenant requirements in the sector can also often be highly specific.
Lehmkuhl said that Lineage has focused on the acquisition of existing properties that already are tenanted and improving them.
“We buy these properties and we optimize them by increasing the occupancy and density,” Lehmkuhl said. “We go in and attack every aspect of revenue and cost to get more out of them.”
Lineage has dramatically grown in recent years, consolidating its place as the largest cold-storage landlord in the world. Last year it purchased Preferred Freezer Services for over $1 billion. In June, the Novi, Michigan-based company closed on a $900 million deal to buy the large cold-storage owner, Emergent Cold, which added nearly 200 million cubic feet to Lineage’s portfolio. In May, it purchased another 14 locations by scooping up the cold-storage company Henningsen Cold Storage Co.
A spokeswoman for Lineage said the company’s portfolio now spans 57 million square feet, with nearly 2 billion cubic feet of storage.
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