Blackstone Buys Majority Control of Cloverleaf; Americold Launches IPO After Rejecting Earlier Blackstone Buyout Offer
The Blackstone Group (NYSE:BX), which reportedly attempted to buy one cold storage warehouse operator earlier this year, has found a willing partner in another.
Sioux City, IA-based Cloverleaf Cold Storage has agreed to a recapitalization that will see private equity funds affiliated with Blackstone make a majority investment in Cloverleaf alongside the firm’s existing Feiges and Kaplan family shareholders, who will continue to operate the business post-closing. Terms of the transaction were not disclosed.
Meanwhile, Atlanta-based Americold Corp., the world’s largest owner and operator of temperature-controlled warehouses, filed an initial public offering this week to form a new REIT called Americold Realty Trust. It was previously reported that Americold turned down a $3 billion buyout bid from Blackstone this past September, according to Frozen & Refrigerated Buyer magazine and other news reports.
Goldman Sachs is funding Blackstone’s Cloverleaf investment. The Wall St. financial firm is well versed in the cold-storage real estate sector having partnered with JPMorgan earlier this yeat to sell a $1.3 billion CMBS offering backed by loans on 54 cold storage facilities operated by Lineage Logistics Holdings LLC.
The Global Cold Chain Alliance, an industry trade group, recently forecast that, beginning next year, owners and operators of U.S. temperature-controlled warehouses as a whole will see a five-year compounded annual growth rate in revenues of 4% based on the group’s view that U.S. demand from food producers, distributors, retailers and e-tailers exceeds currently available temperature-controlled capacity in the U.S.
The alliance further posits that an owner with a large-scale network of high-quality temperature-controlled warehouses will be well-positioned to take advantage of these trends.
Market capitalization rates in the temperature-controlled warehouse sector for triple net leased temperature-controlled facilities have ranged from 6.25% to 7.25% and for owner operated temperature-controlled facilities ranged from 7.5% to 8.25%, according to a recent report on temperature-controlled warehouses by Cushman & Wakefield.
The Cushman report attributed the higher capitalization rates of owner-operated facilities to the net operating income derived from the handling and other services provided by the owner to customers at the facility. The report further said that temperature-controlled facilities have benefited from the same capitalization rate compression that has helped drive values in the warehouse sector since the global financial crisis.
Cloverleaf Cold Storage
Cloverleaf is the eighth-largest public refrigerated warehouse company in North America, as reported by the International Association of Refrigerated Warehouses. It operates a network of 19 warehouses across eight states in several Midwest and Mid-Atlantic markets, providing a variety of food grade storage, handling, and freezing services to food producers.
“Our partnership with a world-class firm such as Blackstone provides us with significant capital and operating resources to invest for growth and continue to expand our platform,” said Daniel Kaplan, co-president of Cloverleaf, in a statement announcing the recapitalization with Blackstone.
Wells Fargo Securities served as financial advisor and Katten Muchin Rosenman LLP served as legal advisor to Cloverleaf during the transaction. Barclays and Goldman Sachs served as financial advisors to Blackstone and Kirkland & Ellis LLP and Simpson Thacher & Bartlett LLP served as legal advisors. Committed debt financing for the recapitalization was provided by Goldman Sachs.
Americold Files IPO for REIT
Meanwhile, Americold Realty Trust filed for an IPO of an undisclosed number of common shares. The company has a global portfolio of 160 warehouses spanning about 945.3 million cubic feet. Of this number, it owns or leases 134 warehouses in the U.S. and manages another eight. Its other warehouses are located in Australia, New Zealand, Canada and Argentina.
It listed the value of its assets at $2.39 billion as of Sept. 30 and reported $1.14 billion in revenue first nine months of 2017.
“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,’ ” Americold said in its filing.
The company plans to use capital from the common stock offering to take advantage of the market opportunity from the combination of tight warehouse capacity and increased demand for a range of handling and other warehouse services.