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Lineage Raises $1.6 Billion Amid Demand Surge for Cold Storage

The cold storage REIT plans to use the equity for new acquisitions.

(Bloomberg)—Cold-storage specialist Lineage Logistics raised $1.6 billion from investors including Oxford Properties Group, private equity firm BentallGreenOak and Dan Sundheim’s D1 Capital Partners as the pandemic pressures the food-supply chain.

The closely held real estate investment trust plans to use the equity to expand, in part by pursuing acquisitions, Co-Chairman Adam Forste said.

“In addition to expanding or building new sites, we’ve closed 16 acquisitions in the year to date and our future pipeline is deep,” Forste said in an interview.

Lineage, which uses software made by companies including WorkDay Inc., Mulesoft Inc. and Turvo, is also planning to spend some of its fresh capital on technology. “We’re focused on being the most innovative player in our industry whether that’s in automation, customer visibility” or key performance indicator management, Forste said.

The latest fundraising values Lineage at $15.5 billion including debt, according to people with knowledge of the matter. If it were public, it would be the third-largest U.S. industrial REIT by enterprise value, behind warehouse owners Prologis Inc. and Duke Realty Corp.

Novi, Michigan-based Lineage has 320 facilities with 1.9 billion cubic feet (54 million cubic meters) of storage capacity across 56 million square feet of real estate. That compares with rival Americold Realty Trust’s 183 facilities and roughly 1.1 billion in cubic feet of storage across 45.2 million square feet as of June 30, according to filings.

Board Expansion

“Since founding the company in 2008, we’ve enjoyed growing Lineage outside the bright spotlight of the public market with a long-term focus,” said Forste, who is also a managing partner at Bay Grove, the firm that founded and manages Lineage. He said the company continues to evaluate an initial public offering, without providing a specific timeline.

Other investors in its latest fundraising include Cohen & Steers Inc., OPTrust, CenterSquare Investment Management and funds managed by Morgan Stanley Tactical Value.

Oxford Properties President Michael Turner will join Lineage’s board while BentallGreenOak senior managing partner John Carrafiell and SOHO China Chief Executive Officer Zhang Xin will be board observers.

“Oxford has substantially increased our exposure to logistics real estate by selectively investing in a series of best-in-class operators across the globe, and Lineage represents the premier operator in the cold-storage sector,” Turner said in an emailed statement. Oxford is the real estate investment arm of the Ontario Municipal Employees Retirement System.

Customers

Lineage, led by CEO Greg Lehmkuhl, has more than 5,000 customers, including Walmart Inc., Tyson Foods Inc., McDonald’s Corp., Amazon.com Inc., PepsiCo Inc. and General Mills Inc.

In an earnings call last month, Fred Boehler, CEO of Lineage’s publicly traded rival Americold, referred to the resiliency of the cold-storage sector as the “mission-critical heart of the food-supply chain.”

Americold’s shares had risen 5.5% this year through Tuesday, outperforming the U.S. Bloomberg REITs index, which has declined 11%, and the S&P 500’s 5.3% advance.

© 2020 Bloomberg L.P.

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