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Last Thursday, Nasdaq welcomed the world’s largest cold storage warehouse REIT, trading under the ticker symbol “LINE.” Following last September’s IPO launch of British semiconductor designer Arm Holdings (Nasdaq: ARM), Lineage will be the biggest IPO in 2024, starting at $78 per share. 

The dominant temperature-controlled real estate investment trust (REIT) generated $4.4 billion in sales of 57 million shares, materializing the high-end of the estimated $70 – $82 price target. Over the week, LINE stock rose 8.4% to $87.12 per share at press time. 

Under the previous brand, Lineage Logistics, co-founders Adam Forste and Kevin Marchetti started their venture in late 2008. As former Morgan Stanley bankers, they have employed an aggressive 116-acquisition spree since. From Seafreeze, Citylce and Terminal Freezers to Stanford Refrigerated Warehouses, Emergent Cold, Pago and Henningsen Cold Storage, the company effectively became the world’s “food infrastructure.”

“We touch over 400 billion pounds of food a year…we are that food infrastructure. If you open your fridge or freezer, all that product had to go somewhere and it has come to our warehouse, a lot of that food.”

Lineage co-founder and co-executive chairman Kevin Marchetti on CNBC

Lineage runs an integrated solutions business model across 19 countries, spanning nearly 500 warehouses, making it a critical cog in the global food supply chain. Skyquest research report in April forecasted that the US cold storage market will have a compound annual growth rate (CAGR) of 13.5%, from $43.2 billion in 2023 to $118.8 billion by 2031.

Considering the importance of such companies, tied to growing e-commerce and delivery robotics, which other cold storage REITs are worth considering?

Americold Realty Trust (Nasdaq: COLD)

As the second largest cold-storage REIT, Americold has an interesting tie with Lineage co-founder Marchetti. Having previously worked for The Yucaipa Companies, Marchetti oversaw Yucaipa Funds that invested in Americold.

The company operates 241 cold storage warehouses and has 120 years of experience in the logistics real estate business. In December 2020, Americold completed the €750 million acquisition of Agro Merchants Group, adding 46 refrigerating facilities to its portfolio.

As of Q1 2024 earnings, Americold reported $665 million in revenue, an uptick of 1.7% from the year-ago quarter. Americold beat earnings per share (EPS) estimates for the last four consecutive quarters.

The last Q1 quarter was exceptionally performant. It surpassed the forecasted $0.27 EPS at $0.37, a 37% surprise. Americold’s net income drastically increased from Q1 2023, at $2.6 million vs. $9.8 million, respectively.

As a REIT, Americold gives 2.99% dividend yield with an annual payout of $0.88 per share. Priced at $29.47, COLD stock is above the 52-week average of $27.64. At present, Nasdaq’s forecasting puts the average COLD price target in line with the current price, at $29.6 per share.

Prologis (Nasdaq: PLD)

Focused on high-barrier, high-growth markets, Prologis generates revenue from 5,576 real estate, typically leased to logistics facilities. As they are strategically positioned near major urban centers, making them gateway facilities, the company is indispensable for e-commerce and logistics companies. 

In Q2 earnings ending June 30th, Prologis reported an average occupancy rate of 96.3%. The company spent $279 million on acquisitions and beat the EPS estimate of $1.33 at $.34. Prologis’ total gross assets under management (AuM) is $199 billion, with only 25% outside the US.

Against its debt of $35.6 billion, Prologis has $57.9 billion worth of equity, with a debt-to-EBITDA ratio under 5.0, considered financially strong. At $123.95 per share, PLD stock is just above its 52-week average of $118.79. Nasdaq’s average PLD price target is $131 per share. 

While not a dividend aristocrat, Prologis has had 10-year consecutive dividend growth. Presently, the company offers a 3.1% dividend yield at a $3.84 annual payout per share. 

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