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COLD Americold Realty Trust

Filed: 1 Mar 21, 4:04pm
0001455863art:AmarilloTXMemberart:RealEstateNotUnderConstructionMember2020-01-012020-12-31

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year endedDecember 31, 2020
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Transition Period from            to
Commission File Number: 001-34723
AMERICOLD REALTY TRUST
(Exact name of registrant as specified in its charter)
Maryland93-0295215
 (State or other jurisdiction of incorporation or organization) (IRS Employer Identification Number)
10 Glenlake Parkway,Suite 600, South Tower
Atlanta,Georgia30328
 (Address of principal executive offices)(Zip Code)
(678) 441-1400
(Registrants telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbol(s)Name of each exchange on which registered
Common Shares of Beneficial Interest, $0.01 par value per shareCOLDNew York Stock Exchange(NYSE)
Securities registered pursuant to Section 12(g) of the Act: NONE



Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
YesNo
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
YesNo
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
YesNo
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter periods that the registrant was required to submit such files).
YesNo
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:
Large accelerated filer
Non-accelerated filer
Accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Yes¨No¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934)
YesNo
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report
YesNo
As of June 30, 2020, the aggregate market value of the voting common shares owned by non-affiliates of Americold Realty Trust was $6.4 billion, computed by reference to the closing price of the common shares of Americold Realty Trust on the New York Stock Exchange on such date. Such value excludes common shares held by executive officers, directors, and 10% or greater shareholders as of June 30, 2020. The identification of 10% or greater shareholders is based on Schedule 13G and amended 13G reports publicly filed before June 30, 2020. This calculation does not reflect a determination that such parties are affiliates for any other purposes. The number of Americold Realty Trust’s common shares outstanding at February 26, 2021, was approximately 252,366,476.

DOCUMENTS INCORPORATED BY REFERENCE
Part III incorporates by reference portions of Americold Realty Trust’s Proxy Statement for its 2021 Annual Meeting of Shareholders, which the registrants anticipate will be filed no later than 120 days after the end of its fiscal year pursuant to Regulation 14A.




EXPLANATORY NOTE

As used in this report, unless the context otherwise requires, references to “we,” “us,” “our” and “the 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.

In addition, unless otherwise stated herein, when we refer to “cubic feet” in one of our temperature-controlled facilities, we refer to refrigerated cubic feet (as opposed to total cubic feet, refrigerated and otherwise) therein.




















TABLE OF CONTENTS

ItemPage
 PART I 
1.Business
1A.Risk Factors
1B.Unresolved Staff Comments
2.Properties
3.Legal Proceedings
4.Mine Safety Disclosures
 PART II
5.Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
 Market Information and Holders
 Sales of Unregistered Securities
 Securities Authorized for Issuance Under Equity Compensation Plans
Use of Proceeds
 Other Shareholder Matters
7.Management’s Discussion and Analysis of Financial Condition and Results of Operations
 Management’s Overview
 Results of Operations
Non-GAAP Financial Measures
 Liquidity and Capital Resources
 Historical Cash Flows
 Critical Accounting Policies
 New Accounting Pronouncements
7A.Quantitative and Qualitative Disclosures About Market Risk
8.Financial Statements and Supplementary Data
9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
9A.Controls and Procedures
9B.Other Information
 PART III
10.Directors, Executive Officers and Corporate Governance
11.Executive Compensation
12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
13.Certain Relationships and Related Transactions, and Director Independence
14.Principal Accounting Fees and Services
 PART IV
15.Exhibits, Financial Statements and Schedules
16.Form 10-K Summary



CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

    This Annual Report on Form 10-K contains statements about future events and expectations that constitute forward-looking statements. Forward-looking statements are based on our beliefs, assumptions and expectations of our future financial and operating performance and growth plans, taking into account the information currently available to us. These statements are not statements of historical fact. Forward-looking statements involve risks and uncertainties that may cause our actual results to differ materially from the expectations of future results we express or imply in any forward-looking statements, and you should not place undue reliance on such statements. Factors that could contribute to these differences include the following:

uncertainties and risks related to public health crises, including the ongoing COVID-19 pandemic;
adverse economic or real estate developments in our geographic markets or the temperature-controlled warehouse industry;
general economic conditions;
risks associated with the ownership of real estate and temperature-controlled warehouses in particular;
acquisition risks, including the failure to identify or complete attractive acquisitions or the failure of acquisitions to perform in accordance with projections and to realize anticipated cost savings and revenue improvements;
our failure to realize the intended benefits from our recent acquisitions, including the Agro acquisition, and including synergies, or disruptions to our plans and operations or unknown or contingent liabilities related to our recent acquisitions;
risks related to expansions of existing properties and developments of new properties, including failure to meet budgeted or stabilized returns within expected time frames, or at all, in respect thereof;
a failure of our information technology systems, cybersecurity attacks or a breach of our information security systems, networks or processes could cause business disruptions or loss of confidential information;
risks related to privacy and data security concerns, and data collection and transfer restrictions and related foreign regulations;
defaults or non-renewals of significant customer contracts, including as a result of the ongoing COVID-19 pandemic;
uncertainty of revenues, given the nature of our customer contracts;
increased interest rates and operating costs, including as a result of the ongoing COVID-19 pandemic;
our failure to obtain necessary outside financing;
risks related to, or restrictions contained in, our debt financings;
decreased storage rates or increased vacancy rates;
risks related to current and potential international operations and properties;
difficulties in expanding our operations into new markets, including international markets;
risks related to the partial ownership of properties, including as a result of our lack of control over such investments and the failure of such entities to perform in accordance with projections;
our failure to maintain our status as a REIT;
possible environmental liabilities, including costs, fines or penalties that may be incurred due to necessary remediation of contamination of properties presently or previously owned by us;
financial market fluctuations;
actions by our competitors and their increasing ability to compete with us;
labor and power costs;
changes in applicable governmental regulations and tax legislation, including in the international markets;
additional risks with respect to the addition of European operations and properties;
changes in real estate and zoning laws and increases in real property tax rates;
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the competitive environment in which we operate;
our relationship with our associates, the occurrence of any work stoppages or any disputes under our collective bargaining agreements and employment related litigation;
liabilities as a result of our participation in multi-employer pension plans;
losses in excess of our insurance coverage;
the potential liabilities, costs and regulatory impacts associated with our in-house trucking services and the potential disruptions associated with our use of third-party trucking service providers to provide transportation services to our customers;
the cost and time requirements as a result of our operation as a publicly traded REIT;
changes in foreign currency exchange rates;
the impact of anti-takeover provisions in our constituent documents and under Maryland law, which could make an acquisition of us more difficult, limit attempts by our shareholders to replace our trustees and affect the price of our common shares of beneficial interest, $0.01 par value per share, of our common shares;
the potential dilutive effect of our common share offerings; and
risks related to any forward sale agreement, including the 2018 forward sale agreement, the 2020 ATM forward sale agreements and the 2020 forward sale agreements, or, collectively, our forward sale agreements, including substantial dilution to our earnings per share or substantial cash payment obligations.
    
    The risks included here are not exhaustive, and additional factors could adversely affect our business and financial performance, including factors and risks included in other sections of this Annual Report on Form 10-K, including under Part I, Item 1A, Risk Factors. Words such as “anticipates,” “believes,” “continues,” “estimates,” “expects,” “goal,” “objectives,” “intends,” “may,” “opportunity,” “plans,” “potential,” “near-term,” “long-term,” “projections,” “assumptions,” “projects,” “guidance,” “forecasts,” “outlook,” “target,” “trends,” “should,” “could,” “would,” “will” and similar expressions are intended to identify such forward-looking statements. Examples of forward-looking statements included in this Annual Report on Form 10-K include, among others, statements about our expected expansion and development pipeline and our targeted return on invested capital on expansion and development opportunities. We qualify any forward-looking statements entirely by these cautionary factors. Other risks, uncertainties and factors, including those discussed under “Risk Factors,” could cause our actual results to differ materially from those projected in any forward-looking statements we make. We assume no obligation to update or revise these forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.
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PART I

ITEM 1. Business
The Company
    We are the world’s largest publicly traded REIT focused on the ownership, operation, acquisition and development of temperature-controlled warehouses. We are organized as a self-administered and self-managed REIT with proven operating, development and acquisition expertise. As of December 31, 2020, we operated a global network of 238 temperature-controlled warehouses encompassing over 1.4 billion cubic feet, with 194 warehouses in North America, 26 in Europe, 15 warehouses in Asia-Pacific, and three warehouses in South America. In addition, we hold two minority interests in Brazilian-based joint ventures, one with SuperFrio, which owns or operates 22 temperature-controlled warehouses and one with Comfrio, which owns or operates 13 temperature-controlled warehouses. We view and manage our business through three primary business segments: warehouse, third-party managed and transportation.
    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 strategic 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.
    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.
Recent Acquisitions and Investments in Joint Ventures
On January 2, 2020, the Company completed the purchase of all outstanding shares of Nova Cold for C$338.7 million, or $260.6 million USD. Also on January 2, 2020, the Company completed the purchase of all outstanding membership interests of Newport Cold for cash consideration of $57.7 million.
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On March 6, 2020, the Company acquired a 14.99% ownership interest in Superfrio Armazéns Gerais S.A. (SuperFrio) for Brazil Reals of $117.8 million, or approximately USD $25.7 million, inclusive of certain legal fees.
On August 31, 2020, the Company acquired Caspers Cold Storage (Caspers) for $25.6 million. Also on August 31, 2020, the Company acquired AM-C Warehouses (AM-C) for approximately $82.7 million.
On November 2, 2020, the Company acquired Hall’s Warehouse Corporation (Hall’s) for $489.2 million.
On December 30, 2020, we acquired privately held Agro Merchants Group (“Agro”) from an investor group led by funds managed by Oaktree Capital Management, L.P. (“Oaktree”) for consideration of $1.59 billion, which includes cash received of $47.5 million. This was comprised of cash consideration totaling $1.08 billion, of which $49.7 million was deferred, and the issuance of 14,166,667 common shares of beneficial interest to Oaktree, with a fair value of $512.1 million based on the share price on December 29, 2020 of $36.15. Financing and sale-leaseback obligations associated with the acquisition totaled $119.9 million, and when added to the total consideration transferred brings the total transaction cost to approximately $1.7 billion. Refer to Note 3 of the Consolidated Financial Statements for details of these amounts.

Refer to Item 7 - Management’s Discussion and Analysis and Notes 2 and 3 of the Consolidated Financial Statements in this Annual Report on Form 10-K for further details of each of the 2020 acquisition.
Initial Public Offering and Follow-on Offerings
    On January 23, 2018, we completed an initial public offering of our common shares, in which we issued and sold 33,350,000 of our common shares, including 4,350,000 common shares pursuant to the exercise in full of the underwriters’ option to purchase additional common shares (the “IPO”). The offering generated net proceeds of approximately $493.6 million to us, after deducting underwriting fees and other offering costs of approximately $40.0 million. Subsequent to our IPO, we have completed multiple follow-on offerings, which are described in further detail in Item 5 of this Annual Report on Form 10-K.
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 Annual Report on Form 10-K or any other report or document we file with or furnish to the Securities and Exchange Commission (the “SEC”). Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, Proxy Statement and all amendments to those reports are available free of charge on our website as soon as reasonably practicable after such material is electronically filed with, or furnished to, the SEC. In addition, all reports we file with the SEC are available via EDGAR through the SEC website at www.sec.gov. Copies of our annual report will be made available, free of charge, on written request. Our Code of Business Conduct and Ethics is also made available through our website under “Investors - Governance Documents”.
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BUSINESS STRATEGY AND OPERATING SEGMENTS
    We were formed as a Maryland REIT on December 27, 2002. Our Operating Partnership was formed as a Delaware limited partnership on April 5, 2010. Our operations are conducted through our Operating Partnership and its subsidiaries.
    Our primary business objective is to increase shareholder value by serving our customers, growing our market share, enhancing our operating and financial results 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 the following:
Enhancing Our Operating and Financial Results Through Proactive Asset Management
    We seek to enhance our operating and financial results by supporting our customers’ growth initiatives in the cold chain, optimizing both physical and economic occupancy, underwriting and deploying yield management initiatives and executing operational optimization and cost containment strategies. 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 several 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. 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. 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 and economies of scale provide us with a significant advantage over our competitors with respect to expansion, development and acquisition opportunities. Being the first publicly-traded REIT focused on the temperature-controlled warehouse industry provides us greater access to the capital markets than our competitors, which we believe better positions us to strategically enter new locations, fill gaps in existing distribution networks and effectively compete for expansion, development and acquisition opportunities.
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. 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 one of 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.
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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. We believe our ability to design, build and operate warehouses across the cold chain makes us an attractive storage solution for existing retailers and 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.

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, thermal energy storage, motion-sensor technology, variable frequency drives for our fans and compressors, third-party efficiency reviews and real-time monitoring of energy consumption, high speed doors and alternative-power generation technologies, including solar, to improve the energy efficiency of our warehouses. We also utilize rain-water recapture to reduce our reliance on municipal water supplies and reduce run-off. We believe that our warehouses are well-maintained and in good operating condition.
Our Business Segments
    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, case-picking, blast freezing, 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 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, lower costs, reduce supply-chain risks and focus on their
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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 provide these transportation services at cost plus a service fee or, in the case of our consolidation services, we charge a fixed fee. We supplemented our regional, national and truckload consolidation services with the Halls acquisition, which services the Northeast corridor of the U.S. with an owned and maintained fleet. Our acquisition of Agro Merchants further expands our Transportation service offering. Agro Merchants operates its own fleet of temperature-controlled vehicles in the U.S., Ireland and UK and also offers a variety of non-asset based transportation management services. These include multi-modal global freight forwarding services to support our customers’ needs.
    We also operated a limestone quarry, which was sold on July 1, 2020.
Customers
    Our global footprint enables us to efficiently serve approximately 2,500 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 25 largest customers in our warehouse segment exceeds 35 years. The total warehouse segment revenues generated by our 25 largest customers in our warehouse segment represent 55%, 60% and 63% of our total warehouse segment revenues for the years ended December 31, 2020, 2019 and 2018, respectively. As we have acquired multiple businesses over the past two years, this percentage has declined as our portfolio has expanded. For the year ended December 31, 2020, this disclosure is calculated on a proforma basis as if the Company had completed all 2020 acquisitions as of the beginning of the year, except for the Agro acquisition. This metric will incorporate Agro in 2021 as a result of it closing at the end of 2020. There has been no material change to the composition of our top 25 customers. Each of these 25 largest customers has been in our network for the entirety of these periods.
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    The following table presents summary information concerning our 25 largest customers in our warehouse segment, based on warehouse segment revenues for the year ended December 31, 2020:
Network Utilization
% of Warehouse Revenue (1)
# of Sites
Credit Rating (Moody’s/S&P)(2)
Multi LocationDedicated SitesValue Added ServicesTransportation ConsolidationTechnology Integration
Committed Contract or Lease (3)
Retailer7.8%12Baa2 / BBBüüüüüü
Producer5.4%40Baa3 / BBB-üüüüüü
Producer3.8%29Baa2üüüüü
Producer3.7%50Baa2 / BBB+üüüüü
Producer3.6%30BB+ / Baa3üüüüü
Producer3.6%20NAüüüüüü
Retailer2.7%20Ba1 / BB+üüüüüü
Producer2.6%4NAüüüüü
Producer1.9%3Baa1 / BBB+üüüüü
Retailer1.8%5Aa2 / AAüüüüü
Producer1.8%16B1 / B+üüüüü
Producer1.8%24Ba3 / BB+üüüüü
Producer1.7%6NAüüü
Retailer1.7%12Baa1 / BBB+üüüüü
Producer1.4%5A1 / A+üüüüü
Producer1.4%10Baa2 / BBBüüüüü
Producer1.2%21A1 / Aüüüü
Retailer1.1%29NAüüüü
Producer1.1%25NAüüüüü
Retailer1.1%17NAüüüüü
Producer0.9%21Ba2 / BB+üüüüü
Producer0.8%10BBB-üüüüü
Retailer0.7%3NAüüüü
Producer0.7%14NAüüüü
Retailer0.7%16NAüüüü
Total55.0%
(1)Based on warehouse revenues for the twelve months ended December 31, 2020. Presented on a pro forma basis as if the Company had completed all 2020 acquisitions as of the beginning of the year, with the exception of the Agro acquisition, which was completed on December 30, 2020.
(2)Represents long-term issuer ratings as published in January 2021.
(3)A check mark indicates that the customer had at least one fixed commitment contract or lease with us as of December 31, 2020.
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Seasonality
    We are involved in providing services to food producers, distributors, retailers and e-tailers whose businesses, in some cases, are seasonal or cyclical. In order to mitigate the volatility in our revenue and earnings caused by seasonal business, we have implemented fixed commitment contracts with certain of our customers. Our customers with fixed commitment contracts pay for guaranteed warehouse space in order to maintain their required inventory levels, which is especially helpful to them during periods of peak physical occupancy. On a portfolio-wide basis, physical occupancy rates are generally the lowest during May and June. Physical occupancy rates typically exhibit a gradual increase after May and June as a result of annual harvests and our customers building inventories in connection with end-of-year holidays and generally peak between mid-September and early December as a result thereof. Typically, we have higher than average physical occupancy levels in October or November, which also tends to result in higher revenues. In light of the ongoing COVID-19 pandemic, we have seen variability in physical occupancy levels as compared to the typical seasonality trends.
Additionally, the involvement of our customers in a cross-section of the food industry mitigates, in part, the impact of seasonality as peak demand for various products occurs at different times of the year (for example, demand for ice cream is typically highest in the summer while demand for frozen turkeys usually peaks in the late fall). Our southern hemisphere operations in Australia, New Zealand and South America also help balance the impact of seasonality in our global operations, as their growing and harvesting cycles are complementary to North America and Europe. Each of our warehouses sets its own operating hours based on demand, which is heavily driven by growing seasons and seasonal consumer demand for certain products.
Competition
    In our industry, the principal competitive factors are warehouse location, warehouse size, breadth and interconnectivity of warehouse networks, quality, type of service and price. For refrigerated food customers, transportation costs are typically significantly greater than warehousing costs and, accordingly, location and transportation capabilities are major competitive factors. The size of a warehouse is important in part because large customers generally prefer to have all of their products needed to serve a given market in a single location and to have the flexibility to increase storage at that single location during seasonal peaks. In areas with direct local competition, customers generally will select a temperature-controlled warehouse based upon service level, price and the quality of the warehouse. In addition, some food producers and distributors attend to their own warehousing and distribution needs by either building or leasing warehouses, creating a private warehousing market which may compete with the public warehouse industry. Many customers, including those for whom private warehousing is a viable option, will select distribution services based upon service level and price, provided that an appropriate network of related storage facilities is available. The ability to provide a wide breadth of high-quality integrated logistics management services is an increasingly important competitive advantage in the marketplace. In addition, we compete for the business of customers and potential customers who may choose to provide temperature-controlled warehousing in-house.
United States
    Outside the five largest owners of temperature-controlled warehouses, the United States temperature-controlled warehouse industry is highly fragmented among numerous owners and operators. We believe our main competitors include Lineage Logistics, LLC, United States Cold Storage, Inc. (an affiliate of John Swire & Sons), Interstate Warehousing, Burris Logistics, NewCold Advanced Cold Logistics, Hanson Logistics and Seafrigo Logistics, in addition to numerous other local, regional and national temperature-controlled warehouse owners and operators.
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Europe
Our main competitors in Europe include Lineage Logistics, LLC, Kloosterboer and NewCold Advanced Logistics. Generally, the European temperature-controlled warehouse industry is highly fragmented among numerous owners and operators.
Asia-Pacific
    Our main competitors in Australia include Emergent Cold Storage (acquired by Lineage Logistics in June 2020) and NewCold Advanced Cold Logistics, which operate warehouses and service many of the Australian markets. Generally, our other competitors operate in only one region and do not compete in the retail market that comprises the majority of our revenues.
    Our main competitors in New Zealand are Emergent Cold Storage (acquired by Lineage Logistics in June 2020) and Halls Transport. Emergent Cold operates an estimated seven warehouses and is the largest public warehouse operator in New Zealand. Emergent Cold specializes in bulk storage and focuses on the commodity market with warehouses located near New Zealand’s ports. Halls Transport is primarily a transporter that also operates a network of 3 warehouses. Generally, our other competitors also service the commodity market and operate in only one region.
South America
    We have several competitors in the Buenos Aires and Santiago markets, which in the past tended to be smaller single-site operations or fragmented networks. The greatest sources of competition in Argentina and Chile are the disproportionate number of producers (compared to the United States) that continue to in-source their temperature-controlled storage needs. Through our joint ventures with Superfrio and Comfrio, we now have a relationship with the top two owners and operators of cold storage facilities in Brazil. The largest competitor in Brazil is Friozem Armazens Frigorificos Ltda.
ASSOCIATES
    As of December 31, 2020, worldwide we employed approximately 16,300 people, approximately 37% of which were represented by various local labor unions and associations, and 84 of our 238 warehouses have unionized associates that are governed by 73 different collective bargaining agreements. Since January 1, 2016, we have successfully negotiated 95 collective bargaining agreements without any work stoppages. During 2020, we successfully negotiated and renewed 19 agreements.
    During 2021, we expect to engage in negotiations for an additional 11 agreements, which make up approximately 3.3% of our employee population, covering all or parts of 13 operating locations worldwide. We do not anticipate any workplace disruptions during this renewal process. We consider our labor relations to be positive and productive.
We believe that how we attract, develop and retain our talent is critical to how we deliver on our strategy and create sustained growth and value for our shareholders, customers and associates. Our human capital measures and objectives focus on:
Caring for our Associates During the COVID-19 Pandemic

To address the dynamic nature of COVID-19 in 2020, we implemented social distancing and other health and safety protocols as recommended and required by global, national, state and local government agencies and
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organizations, including the U.S. Centers for Disease Control and Prevention and the World Health Organization. In addition to the number of actions taken to promote the health and well-being of our associates, we also wanted to recognize our associates for their contributions to our success. This included paying discretionary bonuses to our associates during the COVID-19 pandemic and providing additional personal protective equipment.

Equal Opportunity and Development
We are an equal opportunity employer, with all qualified applicants receiving consideration for employment without regard to race, color, national origin, ancestry, religion, genetic information, physical or mental disability, marital status, age, sexual orientation or identification, gender, veteran status, political affiliation, physical appearance, or any other characteristic protected by federal, state or local law. We seek to foster a diverse and inclusive workplace with employees who possess a broad range of experiences, backgrounds and skills. We continually assess and strive to enhance associate satisfaction and engagement. Our associates, many of whom have a relatively long tenure with our company, are offered regular opportunities to participate in formal and informal personal growth and professional development programs. Our formal offerings include tuition reimbursement, leadership development experiences, and a diverse curriculum of online learning programs. One of our unique leadership development programs is the Americold Leadership Academy, which builds the leadership capabilities of our global operations supervisors and managers, who have direct oversight of the frontline workforce managing our customers’ products through the supply chain.

Safety and Health
The safety, health and welfare of our associates is our number one priority. Our associates receive ongoing safety training to ensure that safety policies and procedures are effectively communicated and implemented. Personal protective equipment is provided to ensure our associates can safely perform their job function. We use safety scorecards, standardized signage, and visual management throughout our facilities to reinforce safety principles and metrics.

Total Rewards
We provide programs and benefits designed to attract, retain and reward a high-performing culture. In addition to salaries, our compensation programs, which vary by country/region, can include annual bonuses, share-based compensation awards, paid time off, a 401(k) plan with employee matching opportunities, healthcare and insurance benefits, health savings accounts and flexible work schedules, employee assistance programs, and tuition assistance. In addition, to drive further engagement and individual ownership of the company, we recently added a new Employee Stock Purchase Program (ESPP) which provides an opportunity to purchase Americold stock at a discounted price. The ESPP will be available to our associates during 2021.

Business Conduct and Ethics
We are dedicated to conducting our business consistent with the highest standards of business ethics. Our Business Code of Conduct and Ethics sets forth our standards and policies and associates receive regular training and reminders about our standards. We also maintain an anti-discrimination and anti-harassment policy that includes mandatory harassment training for all managers. We do not tolerate any form of racism, sexism or injustice within our facilities or across our organization. We also maintain a policy against modern slavery and we are committed to ensuring transparency within our business.

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Community Outreach
We are passionate about giving back to the communities in which we live and work. We partner with and support organizations around the globe that contribute to fighting hunger and supporting the growth and development of children and teens. Our most significant partnership is with Feed the Children in the United States, through which we provide donations, complimentary temperature-controlled transportation of food products, and volunteer opportunities for our associates.
REGULATORY MATTERS
Many laws and governmental regulations are applicable to our properties and changes in these laws and regulations, or interpretation of such laws and regulations by agencies and the courts, occur frequently.
Environmental Matters
Our properties are subject to a wide range of environmental laws and regulations in each of the locations in which we operate, and compliance with these requirements involves significant capital and operating costs. Failure to comply with these environmental requirements can result in civil or criminal fines or sanctions, claims for environmental damages, remediation obligations, revocation of environmental permits or restrictions on our operations. Future changes in environmental laws or in the interpretation of those laws, including stricter requirements affecting our operations, could result in increased capital and operating costs, which could materially and adversely affect our business, financial condition, liquidity, results of operations and, consequently, amounts available for distribution to our shareholders.
Food Safety Regulations
    Most of our properties in the United States are subject to compliance with federal regulations regarding food safety. Under the Public Health Security and Bioterrorism Preparedness and Response Act of 2002, the United States Food and Drug Administration, or the FDA, requires us to register all warehouses in which food is stored and further requires us to maintain records of sources and recipients of food for purposes of food recalls.
    The Food Safety Modernization Act, or FSMA significantly expanded the FDA’s authority over food safety, providing the FDA with new tools to proactively ensure the safety of the entire food system, including new hazard analysis and preventive controls requirements, food safety planning, requirements for sanitary transportation of food, and increased inspections and mandatory food recalls under certain circumstances. The most significant rule under the FSMA which impacts our business is the Current Good Manufacturing Practice and Hazard Analysis and Risk-Based Preventive Controls for Human Food rule. This rule requires a food facility to establish a food safety system that includes an analysis of hazards and the implementation of risk-based preventive controls, among other steps. This is in addition to requirements that we satisfy existing Good Manufacturing Practices with respect to the holding of foods, as set forth in FDA regulations. The USDA also grants to some of our warehouses “ID status,” which entitles us to handle products of the USDA. Any products destined for export must also satisfy the applicable export requirements. As a result of the regulatory framework from the FDA, the USDA and other local regulatory requirements, we subject our warehouses to periodic food safety audits which are for the most part carried out by a recognized global, third-party provider of such audits. In addition to meeting any applicable food safety, food facility registration and record-keeping requirements, our customers often require us to perform food safety audits.
    To the extent we fail to comply with existing food safety regulations or contractual obligations, or are required to comply with new regulations or obligations in the future, it could adversely affect our business,
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financial condition, liquidity, results of operations and prospects, as well as the amount of funds available for distribution to our shareholders.
Occupational Safety and Health Act, or OSHA
    Our properties in the United States are subject to regulation under OSHA, which requires employers to provide associates with a safe work environment free from hazards, such as exposure to toxic chemicals, excessive noise levels, mechanical dangers, heat or cold stress and unsanitary conditions. In addition, due to the amount of ammonia stored at some of our facilities, we are also subject to compliance with OSHA’s Process Safety Management of Highly Hazardous Chemicals standard and OSHA’s ongoing National Emphasis Program related to potential releases of highly hazardous chemicals. The cost of complying with OSHA and similar laws enacted by states and other jurisdictions in which we operate can be substantial, and any failure to comply with these regulations could expose us to substantial penalties and potentially to liabilities to associates who may be injured at our warehouses.
International Regulations
    Our international facilities are subject to many local laws and regulations which govern a wide range of matters, including food safety, building, environmental, health and safety, hazardous substances, waste minimization, as well as specific requirements for the storage of meat, dairy products, fish, poultry, agricultural and other products. Any products destined for export must also satisfy the applicable export requirements. A failure to comply with, or the cost of complying with, these laws and regulations could materially adversely affect our business, financial condition, liquidity, results of operations and prospects and, consequently the amounts available for distribution to our shareholders.
INSURANCE COVERAGE
    We carry comprehensive general liability, fire, extended coverage, business interruption and umbrella liability coverage on all of our properties with limits of liability which we deem adequate. Similarly, we are insured against the risk of direct physical damage in amounts we believe to be adequate to reimburse us on a replacement basis for costs incurred to repair or rebuild each property, including loss of business profits during the reconstruction period. We also carry coverage for customers’ products in our warehouses that are damaged due to our negligence. The cost of all such insurance is passed through to customers as part of their regular rates for storage and handling.
    We are self-insured for workers’ compensation and health insurance under a large-deductible program, meaning that we have accrued liabilities in amounts that we consider appropriate to cover losses in these areas. In addition, we maintain excess loss coverage to insure against losses in excess of the reserves that we have established for these claims in amounts that we consider appropriate.
    We will not carry insurance for generally uninsured losses such as loss from riots or war; however, we do include coverage for risks across all programs for acts of terrorism. We carry earthquake insurance on our properties in areas known to be seismically active and flood insurance on our properties in areas known to be flood zones, in an amount and with deductibles which we believe are commercially reasonable. We also carry insurance coverage relating to cybersecurity incidents commensurate with the size and nature of our operations.


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ITEM 1A. Risk Factors

Investing in our common stock involves risks and uncertainties. Below is a summary of the principal risks involving an investment in our common stock. This summary does not address all of the risks that we face. Additional discussion of the risks summarized in this risk factor summary, and other risks that we face, can be found below under the heading “Risk Factors” and should be carefully considered, together with other information in this Form 10-K and our other filings with the SEC, before making an investment decision regarding our common stock.
Risks Related to Public Health Crises
We face various risks and uncertainties related to public health crises, including the recent and ongoing global outbreak of the novel coronavirus COVID-19.
Risks Related to our Business and Operations
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 or the geographic markets in which we are concentrated.
We are exposed to risks associated with expansion and development, which could result in disappointing returns and unforeseen costs and liabilities.
A portion of our future growth depends upon acquisitions and we may be unable to identify, complete and successfully integrate acquisitions of suitable properties, which may impede our growth, and our future acquisitions may not yield the returns we expect.
A failure of our information technology systems, cybersecurity attacks or a breach of our information security systems, networks or processes could cause business disruptions and loss of confidential information and may materially adversely affect our business.
Privacy and data security concerns, and data collection and transfer restrictions and related foreign regulations may adversely affect our business.
Wage increases driven by applicable legislation and competitive pressures on employee wages and benefits could negatively affect our operating margins and our ability to attract qualified personnel.
Recent acquisitions, including the Agro Merchants Acquisition, may not achieve their intended benefits or may disrupt our plans and operations.
Our current and potential international operations and properties subject us to additional risks, including risks associated with entry into new markets and applicability of differing regulatory requirements.
Competition in our markets may increase over time if our competitors open new warehouses.
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.
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 may be subject to work stoppages, which could increase our operating costs and disrupt our operations.
Our warehouse business outside the United States exposes us to losses resulting from currency fluctuations.
We may incur liabilities or harm our reputation as a result of quality-control issues associated with our warehouse storage and other services.
Our temperature-controlled warehouse infrastructure may become obsolete or unmarketable, and we may not be able to upgrade our equipment cost-effectively or at all.
We use in-house trucking services and third-party trucking service providers to provide transportation services to our customers, and any increased severity or frequency of accidents or other claims, changes
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in regulations, delays or disruptions in providing theses transportation services, or damages caused to products during transportation, could have a material adverse effect on us.
We participate in multiemployer pension plans administered by labor unions. To the extent we or other employers withdraw from participation in any of these plans, we could face additional liability from our participation therein.
Power costs may increase or be subject to volatility, which could result in increased costs that we may be unable to hedge or recover.
We hold leasehold interests in 62 of our warehouses, and we may be forced to vacate our warehouses if we default on our obligations thereunder and we will be forced to vacate our warehouses if we are unable to renew such leases upon their expiration.
General Risks Related to the Real Estate Industry
Our performance and value are subject to economic conditions affecting the real estate market, temperature-controlled warehouses in particular, as well as the broader economy.
We could incur significant costs related to environmental conditions and liabilities.
Our insurance coverage may be insufficient to cover potential environmental liabilities.
Risks Related to our Debt Financings
We have a substantial amount of indebtedness that may limit our financial and operating activities.
We are dependent on external sources of capital, the continuing availability of which is uncertain.
Risks Related to our Organization and Structure
Our declaration of trust contains provisions that make removal of our trustees difficult, which could make it difficult for our shareholders to effect changes to our management.
Risks Related to our Common Shares
Our cash available for distribution to shareholders may not be sufficient to pay distributions at expected levels, or at all, and we may need to increase our borrowings or otherwise raise capital in order to make such distributions; consequently, we may not be able to make such distributions in full.
REIT and Tax Related Risks
Failure to qualify as a REIT for U.S. federal income tax purposes would have a material adverse effect on us.
Complying with REIT requirements may cause us to forgo otherwise attractive opportunities or liquidate certain of our investments.

Risk Factors

Set forth below are certain risk factors that could harm our business, results of operations and financial condition. You should carefully read the following risk factors, together with the financial statements, related notes and other information contained in this Annual Report on Form 10-K. Our business, financial condition and operating results may suffer if any of the following risks are realized. If any of these risks or uncertainties occur, the trading price of our common shares could decline and you might lose all or part of your investment. This Annual Report on Form 10-K contains forward-looking statements that contain risks and uncertainties. Please refer to the discussion of “Cautionary Statement Regarding Forward-Looking Statements.”

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Risks Related to Public Health Crises

We face various risks and uncertainties related to public health crises, including the recent and ongoing global outbreak of the novel coronavirus and variants (COVID-19). The COVID-19 pandemic is growing and its impacts are uncertain and hard to measure and may have a material adverse effect on us.

We face various risks and uncertainties related to public health crises, including the recent and ongoing global COVID-19 pandemic, which has disrupted financial markets and significantly impacted worldwide economic activity to date and is likely to continue to do so. Some of these risks include:
potential work stoppages, including due to spread of the disease among our associates or due to shutdowns that may be requested or mandated by governmental authorities;
that may be requested or mandated by governmental authorities;
labor unrest due to risks of disease from working with other associates and outside vendors;
economic impacts, including increased labor costs, from mitigation and other measures undertaken by us and/or third parties to support and protect our associates or the food supply;
or third parties to support and protect our associates or the food supply;
completing developments on time or an inability of our contractors to perform as a result of spread of disease among associates of our contractors and other construction partners or due to shutdowns that may be requested or mandated by governmental authorities;
limiting the ability of our customers to comply with the terms of their contracts with us, including in making timely payments to us;
increased political polarization;
limiting the ability of our suppliers and partners to comply with the terms of their contracts with us, including in making timely delivery of supplies to us such as ammonia necessary for the operation of our temperature-controlled warehouses;
long-term volatility in or reduced demand for temperature-controlled warehouse storage and related handling and other warehouse services;
adverse impact on the value of our real estate;
reduced ability to execute our growth strategies, including identifying and completing acquisitions and expanding into new markets; and
the exacerbation of other risks discussed in our Annual Report arising from the COVID-19 pandemic.

The COVID-19 pandemic has caused, and is likely to continue to cause, severe economic, market and other disruptions worldwide, which could lead to material impairments of our assets, increases in our allowance for credit losses and changes in judgments in determining the fair value of our assets. Conditions in the bank lending, capital and other financial markets may deteriorate, and our access to capital and other sources of funding may become constrained or more costly, which could materially and adversely affect the availability and terms of future borrowings, renewals, re-financings and other capital raises.

The extent to which COVID-19 impacts our operations will depend on future developments, which are highly uncertain and cannot be predicted with any degree of confidence, including the scope, severity, duration and geographies of the outbreak, the actions taken to contain the COVID-19 pandemic or mitigate its impact requested or mandated by governmental authorities or otherwise voluntarily taken by individuals or businesses, and the direct and indirect economic effects of the illness and containment measures, among others. As a result, we cannot at this time predict the impact of the COVID-19 pandemic, but it could have a material adverse effect on our business, financial condition, liquidity, results of operations and prospects.

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To the extent the COVID-19 pandemic adversely affects our business, financial condition, liquidity, results of operations or prospects, it may also have the effect of heightening many of the other risks described in this Annual Report under the heading “Risk Factors”.

Risks Related to our Business and Operations

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 or the markets for our customers’ products.

Our investments in real estate assets are concentrated in the industrial real estate industry, specifically in temperature-controlled warehouses. This concentration exposes us to the risk of economic downturns in this industry to a greater extent than if our business activities included a more significant portion of other sectors of the real estate market. We are also exposed to fluctuations in the markets for the commodities and finished products that we store in our warehouses. For example, the demand for poultry and poultry products directly impacts the need for temperature-controlled warehouse space to store poultry and poultry products for our customers. Although our customers store a diverse product mix in our temperature-controlled warehouses, declines in demand for their products could cause our customers to reduce their inventory levels at our warehouses, which could reduce the storage and other fees payable to us and materially and adversely affect us.

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

We have engaged, and expect to continue to engage, in expansion and development activities with respect to certain of our legacy or newly acquired properties. Expansion and development activities subject us to certain risks not present in the acquisition of existing properties (the risks of which are described below), including, without limitation, the following:

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our pipeline of expansion and development 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;
the availability and timing of financing on favorable terms or at all;
the availability and timely receipt of zoning and regulatory approvals, which could result in increased costs and could require us to abandon our activities entirely with respect to the warehouse for which we are unable to obtain permits or authorizations;
the cost and timely completion within budget of construction due to increased land, materials, labor or other costs (including risks beyond our control, such as weather or labor conditions, or material shortages), which could make completion of the warehouse or the expansion thereof uneconomical, and we may not be able to increase revenues to compensate for the increase in construction costs;
we may be unable to complete construction of a warehouse or the expansion thereof on schedule due to availability of labor or materials or other factors outside of our control, resulting in increased debt service expense and construction costs;
we may experience delays in receiving materials or support from vendors or contractors which could impact the timing of stabilization of expansion and development projects;
the potential that we may expend funds on and devote management time and attention to projects which we do not complete;
a completed expansion project or a newly-developed warehouse may fail to achieve, or take longer than anticipated to achieve, expected occupancy rates, and may fail to perform as expected; and
we may not be able to achieve targeted returns and budgeted stabilized returns on invested capital on our expansion and development opportunities due to the risks described above, and an expansion or development may not be profitable and could lose money.

These risks could create substantial unanticipated delays and expenses and, in certain circumstances, prevent the initiation or completion of expansion or development as contemplated or at all, any of which could materially and adversely affect us.

Our growth may strain our management and resources, which may have a material adverse affect on us.

We have grown rapidly over prior years, including by expanding our internal resources, making acquisitions, and entering new markets. Our growth will place a strain on our management, operational, financial and information systems, and procedures and controls to expand, train and control our employee base. Our need for working capital will increase as our operations grow. We can provide no assurance that we will be able to adapt our portfolio management, administrative, accounting, information technology and operational systems to support any growth we may experience. Failure to oversee our current portfolio of properties and manage our growth effectively, or to obtain necessary working capital and funds for capital improvements, could have a material adverse effect on our business, results of operations, cash flow, financial condition and stock price.

A portion of our future growth depends upon acquisitions and we may be unable to identify, complete and successfully integrate acquisitions , which may impede our growth, and our future acquisitions may not yield the returns we expect.

Our ability to expand through acquisitions requires us to identify and complete acquisitions that are compatible with our growth strategy and to successfully integrate and operate these newly-acquired businesses. We continually evaluate acquisition opportunities, but cannot guarantee that suitable opportunities currently exist or will exist in the future. Our ability to identify and acquire suitable properties on favorable terms and to successfully integrate and operate them may be constrained by the following risks:
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we face competition from other real estate investors with significant capital, including REITs, institutional investment funds and special purpose acquisition companies, which may be able to accept more risk than we can prudently manage, including risks associated with paying higher acquisition prices;
we face competition from other potential acquirers that may significantly increase the purchase price for a property we acquire, which could reduce our growth prospects or returns;
we may incur significant costs and divert management’s attention in connection with evaluating and negotiating potential acquisitions, including ones that we are subsequently unable to complete;
we may acquire properties that are not accretive to our operating and financial results upon acquisition, and we may be unsuccessful in integrating and operating such properties in accordance with our expectations;
our cash flow from an acquired property may be insufficient to meet our required principal and interest payments with respect to any debt used to finance the acquisition of such property;
we may discover unexpected items, such as unknown liabilities, during our due diligence investigation of a potential acquisition or other customary closing conditions may not be satisfied, causing us to abandon an acquisition opportunity after incurring expenses related thereto;
we may face opposition from governmental authorities or third parties alleging that potential acquisition transactions are anti-competitive, and as a result, we may have to spend a significant amount of time and expense to respond to related inquiries, or governmental authorities may prohibit the transaction or impose terms or conditions that are unacceptable to us;
we may fail to obtain financing for an acquisition on favorable terms or at all;
we may be unable to make, or may spend more than budgeted amounts to make, necessary improvements or renovations to acquired properties;
we may spend more than budgeted amounts to meet customer specifications on a newly-acquired warehouse;
market conditions may result in higher than expected vacancy rates and lower than expected storage charges, rent or fees; or
we may, without any recourse, or with only limited recourse, acquire properties subject to liabilities, such as liabilities for clean-up of undisclosed environmental contamination, claims by customers, vendors or other persons dealing with the former owners of the properties, liabilities incurred in the ordinary course of business and claims for indemnification by general partners, directors, officers and others indemnified by the former owners of the properties.

Our inability to identify and complete suitable property acquisitions on favorable terms or at all, or to integrate and operate newly-acquired properties to meet our financial, operational and strategic expectations, could have a material adverse effect on us.

A failure of our information technology systems, cybersecurity attacks or a breach of our information security systems, networks or processes could cause business disruptions and the loss of confidential information and may materially adversely affect our business.

We rely extensively on our computer systems to process transactions, operate and manage our business. Despite efforts to avoid or mitigate such risks, external and internal risks, such as malware, ransomware, insecure coding, data leakage and human error pose direct threats to the stability and effectiveness of our information technology systems. The failure of our information technology systems to perform as anticipated could adversely affect our business through transaction errors, billing and invoicing errors, processing inefficiencies or errors and
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loss of sales, receivables, collections and customers, in each case, which could result in reputational damage and have an ongoing adverse effect on our business, results of operation and financial condition.

We may also be subject to cybersecurity attacks and other intentional hacking. These attacks could include attempts to gain unauthorized access to our data and computer systems. In particular, as discussed further below, our operations have been, and may in the future be, subject to ransomware or cyber-extortion attacks, which could significantly disrupt our operations. Generally, such attacks involve restricting access to computer systems or vital data. We employ a number of measures to prevent, detect and mitigate these threats, which include password protection, frequent password changes, firewall detection systems, frequent backups, a redundant data system for core applications and annual penetration testing; however, there is no guarantee such efforts will be successful in preventing a cybersecurity attack. A cybersecurity attack or breach could compromise the confidential information of our associates, customers and vendors. A successful attack could result in service interruptions, operational difficulties, loss of revenue or market share, liability to our customers or others, diversion of corporate resources and injury to our reputation and increased costs. Addressing such issues could prove difficult or impossible and be very costly. Responding to claims or liability could similarly involve substantial costs. In addition, our customers rely extensively on computer systems to process transactions and manage their business and thus their businesses are also at risk from, and may be impacted by, cybersecurity attacks. An interruption in the business operations of our customers or a deterioration in their reputation resulting from a cybersecurity attack could indirectly impact our business operations.

On November 16, 2020 and on November 30, 2020, we filed Current Reports on Form 8-K disclosing that our computer network was affected by a cyber security incident. We incurred, and continue to incur, costs relating to this event, including to retain third party consultants and forensic experts to assist with the restoration and remediation of systems and, with the assistance of law enforcement, to investigate and respond to the incident, as well as increased expenditures for our information technology (IT) infrastructure, systems and network. We carry insurance, including cyber insurance commensurate with the size and nature of our operations. While the November 2020 incident did not have a material impact on us, there can be no assurance that this incident or future incidents will not have a material adverse effect on our business, consolidated results of operations, and consolidated financial condition.

Privacy and data security concerns, and data collection and transfer restrictions and related regulations may adversely affect our business.

Many foreign countries and governmental bodies, including the European Union, where we now conduct business, have laws and regulations concerning the collection and use of personal data obtained from their residents or by businesses operating within their jurisdiction. These laws and regulations often are more restrictive than those in the United States. Laws and regulations in these jurisdictions apply broadly to the collection, use, storage, disclosure and security of data that identifies or may be used to identify or locate an individual, such as names, email addresses and, in some jurisdictions, IP addresses.

Recently, there has been heightened interest and enforcement focus on data protection regulations and standards both in the United States and abroad. For example, in November 2020, California voters approved Proposition 24 (Consumer Personal Information Law and Agency Initiative), which will increase data privacy requirements for our business when its provisions take effect in 2023. We expect that there will continue to be new proposed laws, regulations and industry standards concerning privacy, data protection and information security in the United States, the European Union, and other jurisdictions. For example, the European Commission adopted a General Data Protection Regulation, or the GDPR, that became fully effective on May 25, 2018, superseding prior European Union data protection legislation, imposing more stringent European Union data protection requirements, and providing for greater penalties for noncompliance. The United Kingdom enacted the Data Protection Act that substantially implements the GDPR. More generally, we cannot yet fully determine the impact these or future laws, regulations and standards may have on our business. Privacy, data
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protection and information security laws and regulations are often subject to differing interpretations, may be inconsistent among jurisdictions, and may be alleged to be inconsistent with our current or future practices. Additionally, we may be bound by contractual requirements applicable to our collection, use, processing, and disclosure of various types of data, including personal data, and may be bound by, or voluntarily comply with, self-regulatory or other industry standards relating to these matters. These and other requirements could increase our costs, impair our ability to grow our business, or restrict our ability to store and process data or, in some cases, impact our ability to operate our business in some locations and may subject us to liability. Any failure or perceived failure to comply with applicable laws, regulations, industry standards, and contractual obligations may adversely affect our business.

Further, in view of new or modified foreign laws and regulations, industry standards, contractual obligations and other legal obligations, or any changes in their interpretation, we may find it necessary or desirable to fundamentally change our business activities and practices or to expend significant resources to adapt to these changes. We may be unable to make such changes and modifications in a commercially reasonable manner or at all.

The costs of compliance with and other burdens imposed by laws, regulations and standards may limit the use and adoption of our service and reduce overall demand for it. Failure to comply with applicable data protection regulations or standards may expose us to litigation, fines, sanctions or other penalties, which could damage our reputation and adversely impact our business, results of operation and financial condition. Privacy, information security, and data protection concerns may inhibit market adoption of our business, particularly in certain industries and foreign countries.

Wage increases driven by applicable legislation and competitive pressures on employee wages and benefits could negatively affect our operating margins and our ability to attract qualified personnel.

Our hourly associates in the U.S. and internationally are typically paid wage rates above the applicable minimum wage. However, increases in the minimum wage will increase our labor costs if we are to continue paying our hourly associates above the applicable minimum wage. If we are unable to continue paying our hourly associates above the applicable minimum wage, we may be unable to hire and retain qualified personnel. The U.S. federal minimum wage has been $7.25 per hour since July 24, 2009. From time to time, various U.S. federal, state and local legislators have proposed or enacted significant changes to the minimum wage requirements. For example, certain local or regional governments in places such as Chicago, Los Angeles, Seattle, San Francisco, Portland and New York have approved phased-in increases that eventually will take their minimum wage to as high as $16.00 per hour. In addition, specific legislative and regulatory proposals regarding an increase in the federal minimum wage were discussed during the most recent election campaigns and more recently. If such increases were to occur nationally or in specific markets in which we operate, our operating margins would be negatively affected unless we are able to increase our rent, storage fees and handling fees in order to pass increased labor costs on to our customers. Our standard contract forms include rate protection for uncontrollable costs such as labor, or costs associated with regulatory action, however, despite such provisions, we may not be able to fully pass through these increased costs.
Competitive pressures may also require that we enhance our pay and benefits package to compete effectively for such personnel (including costs associated with health insurance coverage or workers’ compensation insurance) or offer retention bonuses. If we fail to attract and retain qualified and skilled personnel, we could be materially and adversely affected.

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

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Although we own or hold leasehold interests in warehouses across the United States and globally, many of these warehouses are concentrated in a few geographic areas. For example, approximately 39.7% of our owned or leased warehouses are located in six states; with approximately 10.6% in Georgia, 6.3% in New Jersey, 6.3% in Pennsylvania, 5.8% in California, 5.4% in Texas and 5.2% in Arkansas (in each case, on a refrigerated cubic-foot basis based on information as of December 31, 2020). In addition, as a result of the Agro Merchants Acquisition, we now have a significantly increased presence in the European market (approximately 6.3%). We could be materially and adversely affected if conditions in any of the markets in which we have a concentration of properties become less favorable. Such conditions may include natural disasters, periods of economic slowdown or recession, localized oversupply in warehousing space or reductions in demand for warehousing space, adverse agricultural events, disruptions in logistics systems, such as transportation and tracking systems for our customers’ inventory, and power outages. Adverse agricultural events include, but are not limited to, the cost of commodity inputs, drought and disease. In addition, adverse weather patterns may affect local harvests, which could have an adverse effect on our customers and cause them to reduce their inventory levels at our warehouses, which could in turn materially and adversely affect us.

Acquisitions, including the Agro Merchants Acquisition, may not achieve its intended benefits or may disrupt our plans and operations.

On December 30, 2020, we completed the acquisition of Agro Merchants (the “Agro Merchants Acquisition”). The Agro Merchants Acquisition is a significant acquisition for us, and there can be no assurance that we will be able to successfully integrate Agro Merchants with our business or otherwise realize the expected benefits of the Agro Merchants Acquisition. Our ability to realize the anticipated benefits of the Agro Merchants Acquisition will depend, to a large extent, on our ability to integrate Agro Merchants with our business. The combination of two independent businesses may be a complex, costly and time-consuming process. Our business may be negatively impacted following the Agro Merchants Acquisition if we are unable to effectively manage our expanded operations. The integration process will require significant time and focus from our management, financial and human resources teams following the Agro Merchants Acquisition and may divert attention from the day-to-day operations of the combined business.

The expected synergies and operating efficiencies of our acquisitions, including the Agro Merchants Acquisition, may not be fully realized, which could result in increased costs and/or lower revenues and have a material adverse effect on us. In addition, the overall integration of the businesses may result in material unanticipated problems, expenses, liabilities, competitive responses, loss of customer relationships and diversion of management’s attention, among other potential adverse consequences. Acquired businesses may also be subject to unknown or contingent liabilities for which we may have no or limited recourse against the sellers. The total amount of costs and expenses that we may incur with respect to liabilities associated with acquisitions, including Agro Merchants, may exceed our expectations, which may materially and adversely affect us.

We are subject to additional risks with respect to our current and potential international operations and properties and our European operations and properties in particular in light of the Agro Merchants Acquisition.
As of December 31, 2020, we owned or had a leasehold interest in 40 temperature-controlled warehouses outside the United States, and we managed two warehouses outside the United States on behalf of third parties. 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. However, there is no assurance that our existing customer relationships will support our international operations in any meaningful way or at all. Our international operations and properties and in particular our newly acquired European operations and properties, could be affected by factors peculiar to the laws and business practices of the jurisdictions in which our warehouses are located. These laws and business practices expose us to risks that are different than or in addition
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to those commonly found in the United States. Risks relating to our international operations and properties include:
changing governmental rules and policies, including changes in land use and zoning laws;
enactment of laws relating to the international ownership and leasing of real property or mortgages and laws restricting the ability to remove profits earned from activities within a particular country to a person’s or company’s country of origin;
changes in laws or policies governing foreign trade or investment and use of foreign operations or workers, and any negative sentiments towards multinational companies as a result of any such changes to laws or policies or due to trends such as political populism and economic nationalism;
variations in currency exchange rates and the imposition of currency controls;
adverse market conditions caused by terrorism, civil unrest, natural disasters, infectious disease and changes in international, national or local governmental or economic conditions;
business disruptions arising from public health crises and outbreaks of communicable diseases, including the recent coronavirus outbreak;
the willingness of U.S. or international lenders to make mortgage loans in certain countries and changes in the availability, cost and terms of secured and unsecured debt resulting from varying governmental economic policies;
the imposition of unique tax structures and changes in real estate and other tax rates and other operating expenses in particular countries, including the potential imposition of adverse or confiscatory taxes;
the potential imposition of restrictions on currency conversions or the transfer of funds;
general political and economic instability;
our limited experience and expertise in foreign countries, particularly European countries, relative to our experience and expertise in the United States;

If any of the foregoing risks were to materialize, they could materially and adversely affect us.

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

We compete with other owners and operators of temperature-controlled warehouses (including our customers or potential customers who may choose to provide temperature-controlled warehousing in-house), some of which own properties similar to ours in similar geographic locations. In recent years, our competitors, including Lineage Logistics, LLC, United States Cold Storage, Inc. (an affiliate of John Swire & Sons), Interstate Warehousing, Burris Logistics, NewCold Advanced Cold Logistics, Hanson Logistics and Seafrigo Logistics have added, through construction, development and acquisition, temperature-controlled warehouses in certain of our markets. In addition, our customers or potential customers may choose to develop new temperature-controlled warehouses, expand their existing temperature-controlled warehouses or upgrade their equipment. Many of our warehouses are older, and as our warehouses and equipment age and newer warehouses and equipment come onto the market, we may lose existing or potential customers, and we may be pressured to reduce our rent and storage and other fees below those we currently charge in order to retain customers. If we lose one or more customers, we cannot assure you that we would be able to replace those customers on attractive terms or at all. We also may be forced to invest in new construction or reposition existing warehouses at significant costs in order to remain competitive. Increased capital expenditures or the loss of warehouse segment revenues resulting from lower occupancy or storage rates could have a material adverse effect on us.

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

If the opportunity arises, we may acquire or develop properties in new markets. In particular, we have determined to strategically grow our warehouse portfolio in attractive international markets. In addition to the
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risks described above under “—A portion of our future growth depends upon acquisitions and 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” and “—We are exposed to risks associated with expansion and development, which could result in disappointing returns and unforeseen costs and liabilities,” the acquisition or development of properties in new markets will subject us to the risks associated with a lack of understanding of the related economy and unfamiliarity with government and permitting procedures. We will also not possess the same level of familiarity with the dynamics and market conditions of any new market that we may enter, which could adversely affect our ability to successfully expand and operate in such market. We may be unable to build a significant market share or achieve a desired return on our investments in new markets. If we are unsuccessful in expanding and operating in new, high-growth markets, it could have a material adverse effect on us.

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

During the year ended December 31, 2020 and 2019, our 25 largest customers in our warehouse segment contributed approximately 55% and 60%, respectively, of our pro-forma warehouse segment revenues assuming all acquisitions occurred at the beginning of the year, excluding the Agro acquisition. As of December 31, 2020, we had one customer that accounted for 7.8% of our warehouse segment revenues and seven customers that each accounted for at least 2% of our warehouse segment revenues, also on a pro-forma basis, excluding the Agro acquisition. In addition, as of December 31, 2020, 43 of our warehouses were predominantly single-customer warehouses. If any of our most significant customers were to discontinue or otherwise reduce their use of our warehouses or other services, which they are generally free to do at any time unless they are party to a contract that includes a fixed storage commitment, we would be materially and adversely affected. While we have contracts with stated terms with certain of our customers, most of our contracts do not obligate our customers to use our warehouses or provide for fixed storage commitments. Moreover, a decrease in demand for certain commodities or products produced by our significant customers and stored in our temperature-controlled warehouses would lower our physical occupancy rates and use of our services, without lowering our fixed costs, which could have a material adverse effect on us. In addition, any of our significant customers could experience a downturn in their businesses as a result of the ongoing COVID-19 pandemic or otherwise, which may weaken their financial condition and liquidity and result in their failure to make timely payments to us or otherwise default under their contracts. Cancellation of, or failure of a significant customer to perform under, a contract could require us to seek replacement customers. However, there can be no assurance that we would be able to find suitable replacements on favorable terms in a timely manner or at all or reposition the warehouses without incurring significant costs. Moreover, a bankruptcy filing by or relating to any of our significant customers could prevent or delay us from collecting pre-bankruptcy obligations. The bankruptcy, insolvency or financial deterioration of our significant customers, could materially and adversely affect us.
In addition, while some of our warehouses are located in primary markets, others are located in secondary and tertiary markets that are specifically suited to the particular needs of the customer utilizing these warehouses. For example, our production advantaged warehouses typically serve one or a small number of customers. These warehouses are also 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. If customers who utilize this type of warehouse, which may be located in remote areas, relocate their processing or production plants, default or otherwise cease to use our warehouses, then we may be unable to find replacement customers for these warehouses on favorable terms or at all or, if we find replacement customers, we may have to incur significant costs to reposition these warehouses for the replacement customers’ needs, any of which could have a material adverse effect on us.

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.

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On a combined pro forma basis assuming all 2020 acquisitions occurred as of the beginning of the year with the exception of Agro, 46.5% of our warehouse segment revenues were generated from contracts with a fixed storage commitment or leases with customers as of December 31, 2020. On a combined pro forma basis, 40.7% of rent and storage revenue were generated from fixed commitment storage contracts for the year ended December 31, 2020.

Our customer contracts that do not contain fixed storage commitments typically do not require our customers to utilize a minimum number of pallet positions or provide for guaranteed fixed payment obligations from any customers to us. Moreover, a substantial number of Agro Merchants’ client contracts are short-term in nature, do not require a minimum fixed storage commitment obligation and/or are subject to termination at the client’s option or upon the occurrence of a change of control (like the Agro Merchants Acquisition). As a result, most of our customers may discontinue or otherwise reduce their use of our warehouses or other services in their discretion at any time, without lowering our fixed costs, which could have a material adverse effect on us. Additionally, we have discrete pricing for our customers based upon their unique profiles. Therefore, a shift in the mix of business types or customers could negatively impact our financial results.

The storage and other fees we generate from customers with month-to-month warehouse rate agreements may be adversely affected by declines in market storage and other fee rates more quickly than with respect to our contracts that contain stated terms. There also can be no assurance that we will be able to retain any customers upon the expiration of their contracts (whether month-to-month warehouse rate agreements or contracts) or leases. If we cannot retain our customers, or if our customers that are not party to contracts with fixed storage commitments elect not to store goods in our warehouses, we may be unable to find replacement customers on favorable terms or at all or on a timely basis and we may incur significant expenses in obtaining replacement customers and repositioning warehouses to meet their needs. Any of the foregoing could materially and adversely affect us.

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

Certain portions of our operations are subject to collective bargaining agreements. As of December 31, 2020, worldwide, we employed approximately 16,300 people, approximately 37% of which were represented by various local labor unions, and 84 of our 238 warehouses have unionized associates that are governed by 73 different collective bargaining agreements. Unlike owners of industrial warehouses, we hire our own workforce to handle product in and out of storage for our customers. Strikes, slowdowns, lockouts or other industrial disputes could cause us to experience a significant disruption in our operations, as well as increase our operating costs, which could materially and adversely affect us. If a greater percentage of our work force becomes unionized, we could be materially and adversely affected. Since January 1, 2016, we have successfully negotiated 95 collective bargaining agreements without any work stoppages. During the calendar year 2020 we successfully negotiated and renewed 19 agreements. If we fail to re-negotiate our expired or expiring collective bargaining agreements on favorable terms in a timely manner or at all, we could be materially and adversely affected.

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

Our warehouse business outside the United States exposes us to losses resulting from currency fluctuations, as the revenues associated with our international operations and properties are typically generated in the local currency of each of the countries in which the properties are located. Fluctuations in exchange rates between these currencies and the U.S. dollar will therefore give rise to non-U.S. currency exposure, which could materially and adversely affect us. We naturally hedge this exposure by incurring operating costs in the same currency as the revenue generated by the related property. We may attempt to mitigate any such effects by entering into currency exchange rate hedging arrangements where it is practical to do so and where such hedging arrangements are available. These hedging arrangements may bear substantial costs, however, and may not eliminate all related risks. We cannot assure you that our efforts will successfully mitigate our currency risks.                     
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Moreover, if we do engage in currency exchange rate hedging activities, any income recognized with respect to these hedges (as well as any foreign currency gain recognized with respect to changes in exchange rates) may not qualify under the 75% gross income test or the 95% gross income test that we must satisfy annually in order to qualify as a REIT under the Internal Revenue Code of 1986, as amended, or the Code.

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

We store frozen and perishable food and other products and provide food processing, repackaging and other services. Product contamination, spoilage, other adulteration, product tampering or other quality control issues could occur at any of our facilities or during the transportation of these products, which could cause our customers to lose all or a portion of their inventory. We could be liable for the costs incurred by our customers as a result of the lost inventory, and we also may be subject to liability, which could be material, if any of the frozen and perishable food products we stored, processed, repackaged or transported caused injury, illness or death. The occurrence of any of the foregoing may negatively impact our brand and reputation and otherwise have a material adverse effect on us.

Our temperature-controlled warehouse infrastructure may become obsolete or unmarketable, and we may not be able to upgrade our equipment cost-effectively or at all.

The infrastructure at our temperature-controlled warehouses may become obsolete or unmarketable due to the development of, or demand for, more advanced equipment or enhanced technologies, including increased automation of our warehouses. Increased automation may entail significant start-up costs and time and may not perform as expected. In addition, our information technology platform pursuant to which we provide inventory management and other services to our customers may become outdated. When customers demand new equipment or technologies, the cost could be significant and we may not be able to upgrade our warehouses on a cost-effective basis in a timely manner, or at all, due to, among other things, increased expenses to us that cannot be passed on to customers or insufficient resources to fund the necessary capital expenditures. The obsolescence of our infrastructure or our inability to upgrade our warehouses would likely reduce warehouse segment revenues, which could have a material adverse effect on us.

We use in-house trucking services to provide transportation services to our customers, and any increased severity or frequency of accidents or other claims, changes in regulations or disruptions in services could have a material adverse effect on us.

We use in-house transportation services to provide refrigerated transportation services to our customers. The potential liability associated with accidents in the trucking industry is severe and occurrences are unpredictable. A material increase in the frequency or severity of accidents or workers’ compensation claims or the unfavorable development of existing claims could materially and adversely affect our results of operations. In the event that accidents occur, we may be unable to obtain desired contractual indemnities, and our insurance my prove inadequate in certain cases. The occurrence of an event not fully insured or indemnified against or the failure or inability of a customer or insurer to meet its indemnification or insurance obligations could result in substantial losses.

In addition, our trucking services are subject to regulation as a motor carrier by the US Department of Transportation, by various state agencies and by similar authorities in our international operations, whose regulations include certain permit requirements of state highway and safety authorities. These regulatory authorities exercise broad powers over our trucking operations. The trucking industry is subject to possible regulatory and legislative changes that may impact our operations and affect the economics of the industry by requiring changes in operating practices or by changing the demand for or the costs of providing trucking services. Some of these possible changes include increasingly stringent fuel emission limits, changes in the
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regulations that govern the amount of time a driver may drive or work in any specific period, limits on vehicle weight and size and other matters including safety requirements.

We use third-party trucking service providers to provide transportation services to our customers and any delays or disruptions in providing these services or damages caused to products during transportation, could have a material averse effect on us.

We also use third-party trucking service providers to provide refrigerated transportation services to our customers. We do not have an exclusive or long-term contractual relationship with any of these third- party trucking service providers, and we can provide no assurance that our customer will have uninterrupted or unlimited access to their transportation assets or services. Any delays or disruptions in providing these transportation services to our customers could reduce the confidence our customers have in our ability to provide transportation services and could impair our ability to retain existing customers or attract new customers. Moreover, in connection with any such delays or disruptions, or if customers’ products are damaged or destroyed during transport, we may incur financial obligations or be subject to lawsuits by our customers. Any of these risks could have a material adverse effect on us.

We participate in multiemployer pension plans administered by labor unions. To the extent we or other employers withdraw from participation in any of these plans, we could face additional liability from our participation therein.

As of December 31, 2020, we participated in seven multiemployer pension plans under the terms of collective bargaining agreements with labor unions representing the Company’s associates. Approximately 13% of our associates were participants in such multiemployer pension plans as of December 31, 2020. We make periodic contributions to these plans pursuant to the terms of our collective bargaining agreements to allow the plans to meet their pension benefit obligations.

In the event that we withdraw from participation in any of the multiemployer pension plans in which we participate or should any of the pension plans in which we participate fail, the documents governing the applicable plan and applicable law could require us to make an additional contribution to the applicable plan in the amount of the unfunded vested benefits allocable to our participation in the plan, and we would have to reflect that as an expense on our Consolidated Statement of Operations and as a liability on our Consolidated Balance Sheet. Our liability for any multiemployer pension plan would depend on the extent of the plan’s funding of vested benefits as of the year in which the withdrawal or failure occurs, and may vary depending on the funded status of the applicable multiemployer pension plan, whether there is a mass withdrawal of all participating employers and whether any other participating employer in the applicable plan withdraws from the plan and is not able to contribute an amount sufficient to fund the unfunded liabilities associated with its participants in the plan. Based on the latest information available from plan administrators, we estimate our share of the aggregate withdrawal liability for the multiemployer pension plans in which we participate could have been as much as $726.9 million as of December 31, 2020, of which we estimate that certain of our customers are contractually obligated to make indemnification payments to us for approximately $699.7 million. However, there is no guarantee that, to the extent we incurred any such withdrawal liability, we would be successful in obtaining any indemnification payments therefor.

In the ordinary course of our renegotiation of collective bargaining agreements with labor unions that maintain these plans, we could agree to discontinue participation in one or more plans, and in that event we could face a withdrawal liability. Additionally, we could be treated as withdrawing from a plan if the number of our associates participating in the plan is reduced to a certain degree over certain periods of time.

Some multiemployer pension plans, including ones in which we participate, are reported to have significant underfunded liabilities. Such underfunding could increase the size of our potential withdrawal liability.     
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Additionally, changes to multiemployer pension plan laws and regulations could increase our potential cost of withdrawing from one or more multiemployer pension plans.

Power costs may increase or be subject to volatility, which could result in increased costs that we may be unable to recover.

Power is a major operating cost for temperature-controlled warehouses, and the price of power varies substantially between the markets in which we operate, depending on the power source and supply and demand factors. For the years ended December 31, 2020 and 2019, power costs in our warehouse segment accounted for 8.8% and 8.9%, respectively, of the segment’s operating expenses. We have implemented programs across our warehouses to reduce overall consumption and to reduce consumption at peak demand periods, when power prices are typically highest. However, there can be no assurance that these programs will be effective in reducing our power consumption or cost of power.

We have entered into, or may in the future enter into, fixed price power purchase agreements in certain deregulated markets whereby we contract for the right to purchase an amount of electric capacity at a fixed rate per kilowatt. These contracts do not obligate us to purchase any minimum amounts but would require negotiation if our capacity requirements were to materially differ from historical usage or exceed the thresholds agreed upon. For example, exceeding these thresholds could have an adverse impact on our incremental power purchase costs if we were to be unable to obtain favorable rates on the incremental purchases.

If the cost of electric power to operate our warehouses increases dramatically or fluctuates widely and we are unable to pass such costs through to customers, we could be materially and adversely affected.

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

Our warehouses are subject to electrical power outages and breakdowns of our refrigeration equipment. We attempt to limit exposure to such occasions by conducting regular maintenance and upgrades to our refrigeration equipment, and using backup generators and power supplies, generally at a significantly higher operating cost than we would pay for an equivalent amount of power from a local utility. However, we may not be able to limit our exposure entirely even with these protections in place. Power outages that last beyond our backup and alternative power arrangements and refrigeration equipment breakdowns would harm our customers and our business. During prolonged power outages and refrigeration equipment breakdowns, changes in humidity and temperature could spoil or otherwise contaminate the frozen and perishable food and other products stored by our customers. We could incur financial obligations to, or be subject to lawsuits by, our customers in connection with these occurrences, which may not be covered by insurance. Any loss of services or product damage could reduce the confidence of our customers in our services and could consequently impair our ability to attract and retain customers. Additionally, in the event of the complete failure of our refrigeration equipment, we would incur significant costs in repairing or replacing our refrigeration equipment, which may not be covered by insurance. Any of the foregoing could have a material adverse effect on us. As of December 31, 2020, we have not had a significant power outage or breakdown of our refrigeration equipment.

We hold leasehold interests in 62 of our warehouses, and we may be forced to vacate our warehouses if we default on our obligations thereunder and we will be forced to vacate our warehouses if we are unable to renew such leases upon their expiration.

As of December 31, 2020, we held leasehold interests in 62 of our warehouses. These leases expire (taking into account our extension options) from December 2021 to September 2052, and have a weighted-average remaining term of 27 years. If we default on any of these leases, we may be liable for damages and could lose our leasehold interest in the applicable property, including all improvements. We would incur significant costs if we were forced to vacate any of these leased warehouses due to, among other matters, the high costs of
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relocating the equipment in our warehouses. If we were forced to vacate any of these leased warehouses, we could lose customers that chose our storage or other services based on our location, which could have a material adverse effect on us. Our landlords could attempt to evict us for reasons beyond our control. Further, we may be unable to maintain good working relationships with our landlords, which could adversely affect our relationship with our customers and could result in the loss of customers. In addition, we cannot assure you that we will be able to renew these leases prior to their expiration dates on favorable terms or at all. If we are unable to renew our lease agreements, we will lose our right to operate these warehouses and be unable to derive revenues from these warehouses and, in the case of ground leases, we forfeit all improvements on the land. We could also lose the customers using these warehouses who are unwilling to relocate to another one of our warehouses, which could have a material adverse effect on us. Furthermore, unless we purchase the underlying fee interests in these properties, as to which no assurance can be given, we will not share in any increase in value of the land or improvements beyond the term of such lease, notwithstanding any capital we have invested in the applicable warehouse, especially warehouses subject to ground leases. Even if we are able to renew these leases, the terms and other costs of renewal may be less favorable than our existing lease arrangements. Failure to sufficiently increase revenues from customers at these warehouses to offset these projected higher costs could have a material adverse effect on us.

Charges for impairment of goodwill or other long-lived assets could adversely affect our financial condition and results of operations.

We regularly monitor the recoverability of our long-lived assets, such as buildings and improvements and machinery and equipment, and evaluate their carrying value for impairment. whenever events or changes in circumstances indicate that the carrying amount of such assets may not be fully recoverable. We review goodwill on an annual basis to determine if impairment has occurred and review the recoverability of fixed assets, generally on a quarterly basis and whenever events or changes in circumstances indicate that impairment may have occurred or the value of such assets may not be fully recoverable. If such reviews indicate that impairment has occurred, we are required to record a non-cash impairment charge for the difference between the carrying value and fair value of the long-lived assets in the period the determination is made. The testing of long-lived assets and goodwill for impairment requires the use of estimates based on significant assumptions about our future revenue, profitability, cash flows, fair value of assets and liabilities, weighted average cost of capital, as well as other assumptions. Changes in these estimates, or changes in actual performance compared with these estimates, may affect the fair value of long-lived assets, which could result in an impairment charge.

General Risks Related to the Real Estate Industry

Our performance and value are subject to economic conditions affecting the real estate market, temperature-controlled warehouses in particular, as well as the broader economy.

Our performance and value depend on the amount of revenues earned, as well as the expenses incurred, in connection with operating our warehouses. If our temperature-controlled warehouses do not generate revenues and operating cash flows sufficient to meet our operating expenses, including debt service and capital expenditures, we could be materially and adversely affected. In addition, there are significant expenditures associated with our real estate (such as real estate taxes, maintenance costs and debt service payments) that generally do not decline when circumstances reduce the revenues from our warehouses. Accordingly, our expenditures may stay constant, or increase, even if our revenues decline. The real estate market is affected by many factors that are beyond our control, and revenues from, and the value of, our properties may be materially and adversely affected by:
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changes in the national, international or local economic climate;
availability, cost and terms of financing;
technological changes, such as expansion of e-commerce, reconfiguration of supply chains, automation, robotics or other technologies;
the attractiveness of our properties to potential customers;
inability to collect storage charges, rent and other fees from customers;
the ongoing need for, and significant expense of, capital improvements and addressing obsolescence in a timely manner, particularly in older structures;
changes in supply of, or demand for, similar or competing properties in an area;
customer retention and turnover;
excess supply in the market area;
financial difficulties, defaults or bankruptcies by our customers;
changes in operating costs and expenses and a general decrease in real estate property rental rates;
changes in or increased costs of compliance with governmental rules, regulations and fiscal policies, including changes in tax, real estate, environmental and zoning laws, and our potential liability thereunder;
our ability to provide adequate maintenance and insurance;
changes in the cost or availability of insurance, including coverage for mold or asbestos;
unanticipated changes in costs associated with known adverse environmental conditions, newly discovered environmental conditions and retained liabilities for such conditions;
changes in interest rates or other changes in monetary policy; and
disruptions in the global supply-chain caused by political, regulatory or other factors such as terrorism, political instability and public health crises.

In addition, periods of economic slowdown or recession, rising interest rates or declining demand for real estate, or the public perception that any of these events may occur, could result in a general decrease in rates or an increased occurrence of defaults under existing contracts, which could materially and adversely affect us.

We could incur significant costs under environmental laws relating to the presence and management of asbestos, ammonia and other chemicals and underground storage tanks.

Environmental laws in the United States require that owners or operators of buildings containing asbestos properly manage asbestos, adequately inform or train those who may come into contact with asbestos and undertake special precautions, including removal or other abatement, in the event that asbestos is damaged, is decayed, poses a health risk or is disturbed during building renovation or demolition. These laws impose fines and penalties on building owners or operators who fail to comply with these requirements and may allow third parties to seek recovery from owners or operators for personal injury associated with exposure to asbestos and other toxic or hazardous substances. Some of our properties may contain asbestos or asbestos-containing building materials.

Most of our warehouses utilize ammonia as a refrigerant. Ammonia is classified as a hazardous chemical regulated by the U.S. Environmental Protection Agency, or the EPA. Releases of ammonia occur at our warehouses from time to time, and any number of unplanned events, including severe storms, fires, earthquakes, vandalism, equipment failure, operational errors, accidents, deliberate acts of associates or third parties, and terrorist acts could result in a significant release of ammonia that could result in injuries, loss of life, property damage and a significant interruption at affected facilities. For example, in 2019, we identified and reported ammonia releases across refrigeration systems in three of our facilities. These releases resulted in no significant property damage or injury. In 2020, we identified, and reported, ammonia releases across refrigeration systems in
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three of our facilities. These releases resulted in no significant property damage or injury. Although our warehouses have risk management programs required by the Occupational Safety and Health Act of 1970, as amended, or OSHA, the EPA and other regulatory agencies in place, we could incur significant liability in the event of an unanticipated release of ammonia from one of our refrigeration systems. Releases could occur at locations or at times when trained personnel may not be available to respond quickly, increasing the risk of injury, loss of life or property damage. Some of our warehouses are not staffed 24 hours a day and, as a result, we may not respond to intentional or accidental events during closed hours as quickly as we could during open hours, which could exacerbate any injuries, loss of life or property damage. We also could incur liability in the event we fail to report such ammonia releases in a timely fashion.

Environmental laws and regulations subject us and our customers to liability in connection with the storage, handling and use of ammonia and other hazardous substances utilized in our operations. Our warehouses also may have under-floor heating systems, some of which utilize ethylene glycol, petroleum compounds, or other hazardous substances; releases from these systems could potentially contaminate soil and groundwater.

In addition, some of our properties have been operated for decades and have known or potential environmental impacts. Other than in connection with financings, we have not historically performed regular environmental assessments on our properties, and we may not do so in the future. Many of our properties contain, or may in the past have contained, features that pose environmental risks including underground tanks for the storage of petroleum products and other hazardous substances as well as floor drains and wastewater collection and discharge systems, hazardous materials storage areas and septic systems. All of these features create a potential for the release of petroleum products or other hazardous substances. Some of our properties are adjacent to or near properties that have known environmental impacts or have in the past stored or handled petroleum products or other hazardous substances that could have resulted in environmental impacts to soils or groundwater that could affect our properties. In addition, former owners, our customers, or third parties outside our control (such as independent transporters) have engaged, or may in the future engage, in activities that have released or may release petroleum products or other hazardous substances on our properties. Any of these activities or circumstances could materially and adversely affect us.

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

Our operations are subject to a wide range of environmental laws and regulations in each of the locations in which we operate, and compliance with these requirements involves significant capital and operating costs. Failure to comply with these environmental requirements can result in civil or criminal fines or sanctions, claims for environmental damages, remediation obligations, the revocation of environmental permits or restrictions on our operations. Future changes in environmental laws, or in the interpretation of those laws, including potential future climate change regulations, such as those affecting electric power providers or regulations related to the control of greenhouse gas emissions, or stricter requirements affecting our operations could result in increased capital and operating costs, which could materially and adversely affect us.

Under various U.S. federal, state and local environmental laws, including the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, commonly known as CERCLA, or the Superfund law, a current or previous owner or operator of real property may be liable for the entire cost of investigating, removing or remediating hazardous or toxic substances on such property. Such laws often impose liability whether or not the owner or operator knew of, or was responsible for, the contamination. Even if more than one person may have been responsible for the contamination, each person covered by the environmental laws may be held responsible for the entire cleanup cost. We may also be subject to environmental liabilities under the regulatory regimes in place in the other countries in which we operate.

The presence of hazardous or toxic substances on our properties, or the failure to properly remediate contaminated properties, could give rise to liens in favor of the government for failure to address the
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contamination, or otherwise adversely affect our ability to sell or lease properties or borrow using our properties as collateral. Environmental laws also may impose restrictions on the manner in which property may be used or our businesses may be operated.

Under environmental laws, a property owner or operator is subject to compliance obligations, potential government sanctions for violations or natural resource damages, claims from private parties for cleanup contribution or other environmental damages and investigation and remediation costs. In connection with the acquisition, ownership or operation of our properties, we may be exposed to such costs. The cost of resolving environmental, property damage or personal injury claims, of compliance with environmental regulatory requirements, of paying fines, or meeting new or stricter environmental requirements or of remediating contaminated properties could materially and adversely affect us.

Nearly all of our properties have been the subject of environmental assessments conducted by environmental consultants at some point in the past. Most of these assessments have not included soil sampling or subsurface investigations. Some of our older properties have not had asbestos surveys. In many instances, we have not conducted further investigations of environmental conditions disclosed in these environmental assessments nor can we be assured that these environmental assessments have identified all potential environmental liabilities associated with our properties. Material environmental conditions, liabilities or compliance concerns may have arisen or may arise after the date of the environmental assessments on our properties. Moreover, there can be no assurance that (i) future laws, ordinances or regulations will not impose new material environmental obligations or costs, including the potential effects of climate change or new climate change regulations, (ii) we will not incur material liabilities in connection with both known and undiscovered environmental conditions arising out of past activities on our properties or (iii) our properties will not be materially and adversely affected by the operations of customers, by environmental impacts or operations on neighboring properties (such as releases from underground storage tanks), or by the actions of parties unrelated to us.

In the future, our customers may demand lower indirect emissions associated with the storage and transportation of frozen and perishable foods, which could make us or our facilities less competitive. Further, such demand could require us to implement various processes to reduce emissions from our operations in order to remain competitive, which could materially and adversely affect us.

Our insurance coverage may be insufficient to cover potential environmental liabilities.

We maintain a portfolio environmental insurance policy that provides coverage for sudden and accidental environmental liabilities, subject to the policy’s coverage conditions, deductibles and limits, for most of our properties. There is no assurance that future environmental claims will be covered under these policies or that, if covered, the loss will not exceed policy limits. From time to time, we may acquire properties, or interests in properties, with known adverse environmental conditions where we believe that the environmental liabilities associated with these conditions are quantifiable and that the acquisition will yield an attractive risk-adjusted return. In such an instance, we factor the estimated costs of environmental investigation, cleanup and monitoring into the net cost. Further, in connection with property dispositions, we may agree to remain responsible for, and to bear the cost of, remediating or monitoring certain environmental conditions on the properties. A failure to accurately estimate these costs, or uninsured environmental liabilities, could materially and adversely affect us.

Our properties may contain or develop harmful molds or have other air quality issues, which could lead to financial liability for adverse health effects to our associates or third parties, and costs of remediating the problem.

Our properties may contain or develop harmful molds or suffer from other air quality issues, which could lead to liability for adverse health effects and costs of remediating the problem. When excessive moisture
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accumulates in buildings or on building materials, mold growth may occur, particularly if the moisture problem remains undiscovered or is not addressed over a period of time. Some molds produce airborne toxins or irritants. Indoor air quality issues can also stem from inadequate ventilation, poor equipment maintenance, chemical contamination from indoor or outdoor sources and other biological contaminants, such as pollen, viruses and bacteria. Indoor exposure to airborne toxins or irritants present above certain levels can cause a variety of adverse health effects and symptoms, including allergic or other reactions. As a result, the presence of significant mold or other airborne contaminants at any of our properties could require us to undertake a costly remediation program to contain or remove the mold or other airborne contaminants from the affected property, to reduce indoor moisture levels, or to upgrade ventilation systems to improve indoor air quality. In addition, the presence of significant mold or other airborne contaminants could expose us to liability from our associates, our customers, associates of our customers and others if property damage or health concerns arise.

Illiquidity of real estate investments, particularly our specialized temperature-controlled warehouses, could significantly impede our ability to respond to adverse changes in the performance of our business and properties.

Real estate investments are relatively illiquid, and given that our properties are highly specialized temperature-controlled warehouses, our properties may be more illiquid than other real estate investments. This illiquidity is driven by a number of factors, including the specialized and often customer-specific design of our warehouses, the relatively small number of potential purchasers of temperature-controlled warehouses, the difficulty and expense of repurposing our warehouses and the location of many of our warehouses in secondary or tertiary markets. As a result, we may be unable to complete an exit strategy or quickly sell properties in our portfolio in response to adverse changes in the performance of our properties or in our business generally. We cannot predict whether we will be able to sell any property for the price or on the terms set by us or whether any price or other terms offered by a prospective buyer would be acceptable to us. We also cannot predict the length of time it would take to complete the sale of any such property. Such sales might also require us to expend funds to mitigate or correct defects to the property or make changes or improvements to the property prior to its sale. The ability to sell assets in our portfolio may also be restricted by certain covenants in our mortgage loan agreement and other credit agreements. Code requirements relating to our status as a REIT may also limit our ability to vary our portfolio promptly in response to changes in economic or other conditions.

We could experience uninsured or under-insured losses relating to our warehouses and other assets, including our real property.

We carry insurance coverage on all of our properties in an amount that we believe adequately covers any potential casualty losses. However, there are certain losses, including losses from floods, earthquakes, acts of war or riots, that we are not generally insured against or that we are not generally fully insured against because it is not deemed economically feasible or prudent to do so. In addition, changes in the cost or availability of insurance could expose us to uninsured casualty losses. In the event that any of our properties incurs a casualty loss that is not covered by insurance (in part or at all), the value of our assets will be reduced by the amount of any such uninsured loss, and we could experience a significant loss of capital invested and potential revenues in these properties. Any such losses could materially and adversely affect us. In addition, we may have no source of funding to repair or reconstruct the damaged property, and we cannot assure you that any such sources of funding will be available to us for such purposes in the future on favorable terms or at all.

In the event of a fire, flood or other occurrence involving the loss of or damage to stored products held by us but belonging to others, we may be liable for such loss or damage. Although we have an insurance program in effect, there can be no assurance that such potential liability will not exceed the applicable coverage limits under our insurance policies. A number of our properties are located in areas that are known to be subject to earthquake activity, such as California, Washington, Oregon and New Zealand, or in flood zones, such as Appleton, Wisconsin and Fort Smith, Arkansas, in each case exposing them to increased risk of casualty.
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If we or one or more of our customers experiences a loss for which we are liable and that loss is uninsured or exceeds policy limits, we could lose the capital invested in the damaged properties as well as the anticipated future cash flows from those properties. In addition, if the damaged properties are subject to recourse indebtedness, we would continue to be liable for the indebtedness, even if these properties were irreparably damaged.

We are self-insured for workers’ compensation and health insurance under a large deductible program, meaning that we have accrued liabilities in amounts that we consider appropriate to cover losses in these areas. In addition, we maintain excess loss coverage to insure against losses in excess of the reserves that we have established for these claims in amounts that we consider appropriate. However, in the event that our loss experience exceeds our reserves and the limits of our excess loss policies, we could be materially and adversely affected.

We may not be reimbursed for increases in operating expenses and other real estate costs.

We may be limited in our ability to obtain reimbursement from customers under existing warehouse contracts for any increases in operating expenses such as labor, electricity charges, maintenance costs, taxes, including real estate and income taxes, or other real estate-related costs. Unless we are able to offset any unexpected costs with sufficient revenues through new warehouse contracts or new customers, increases in these costs would lower our operating margins and could materially and adversely affect us.

Costs of complying with governmental laws and regulations could adversely affect us and our customers.

Our business is highly regulated at the federal, state and local level. The food industry in all jurisdictions in which we operate is subject to numerous government standards and regulations. While we believe that we are currently in compliance with all applicable government standards and regulations, there can be no assurance that all of our warehouses or our customers’ operations are currently in compliance with, or will be able to comply in the future with, all applicable standards and regulations or that the costs of compliance will not increase in the future.

All real property and the operations conducted on real property are subject to governmental laws and regulations relating to environmental protection and human health and safety. In addition, our warehouses are subject to regulation and inspection by the United States Food and Drug Administration and the United States Department of Agriculture and our domestic trucking operations are subject to regulation by the U.S. Department of Transportation and the Federal Highway Administration. Our ability to operate and to satisfy our contractual obligations may be affected by permitting and compliance obligations arising under such laws and regulations. Some of these laws and regulations could increase our operating costs, result in fines or impose joint and several liability on customers, owners or operators for the costs to investigate or remediate contamination, regardless of fault or whether the acts causing the contamination were legal.

Some of these laws and regulations have been amended so as to require compliance with new or more stringent standards in the future. Compliance with new or more stringent laws or regulations or stricter interpretation of existing laws may require that we or our customers incur material expenditures. In addition, there are various governmental, environmental, fire, health, safety and similar regulations with which we and our customers may be required to comply and which may subject us and our customers to liability in the form of fines or damages for noncompliance. Any material expenditures, fines or damages imposed on our customers or us could directly or indirectly have a material adverse effect on us. In addition, changes in these governmental laws and regulations, or their interpretation by agencies and courts, could occur.

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The Americans with Disabilities Act of 1990, as amended, or the ADA, generally requires that public buildings, including portions of our warehouses, be made accessible to disabled persons. Noncompliance could result in the imposition of fines by the federal government or the award of damages to private litigants. If, under the ADA, we are required to make substantial alterations and capital expenditures in one or more of our warehouses, including the removal of access barriers, it could materially and adversely affect us.

Our properties are subject to regulation under OSHA, which requires employers to protect associates against many workplace hazards, such as exposure to harmful levels of toxic chemicals, excessive noise levels, mechanical dangers, heat or cold stress and unsanitary conditions. The cost of complying with OSHA and similar laws enacted by other jurisdictions in which we operate is substantial and any failure to comply with these regulations could expose us to penalties and potentially to liabilities to associates who may be injured at our warehouses, any of which could be material. Furthermore, any fines or violations that we face under OSHA could expose us to reputational risk.

We face ongoing litigation risks which could result in material liabilities and harm to our business regardless of whether we prevail in any particular matter.

We are a large company operating in multiple U.S. and international jurisdictions, with thousands of associates and business counterparts. As such, there is an ongoing risk that we may become involved in legal disputes or litigation with these parties or others. The costs and liabilities with respect to such legal disputes may be material and may exceed our amounts accrued, if any, for such liabilities and costs. In addition, our defense of legal disputes or resulting litigation could result in the diversion of our management’s time and attention from the operation of our business, each of which could impede our ability to achieve our business objectives. Some or all of the amounts we may be required to pay to defend or to satisfy a judgment or settlement of any or all of our disputes and litigation may not be covered by insurance.

We are currently invested in three joint ventures and may invest in joint ventures in the future and face risks stemming from our partial ownership interests in such properties which could materially and adversely affect the value of any such joint venture investments.

Both our current investments and future joint-venture investments involve risks not present in investments in which a third party is not involved, including the possibility that
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we and a co-venturer or partner may reach an impasse on a major decision that requires the approval of both parties;
we may not have exclusive control over the development, financing, management and other aspects of the property or joint venture, which may prevent us from taking actions that are in our best interest but opposed by a co-venturer or partner;
a co-venturer or partner may at any time have economic or business interests or goals that are or may become inconsistent with ours;
a co-venturer or partner may encounter liquidity or insolvency issues or may become bankrupt, which may mean that we and any other remaining co-venturers or partners generally would remain liable for the joint venture’s liabilities;
a co-venturer or partner may take action contrary to our instructions, requests, policies or investment objectives, including our current policy with respect to maintaining our qualification as a REIT under the Code;
a co-venturer or partner may take actions that subject us to liabilities in excess of, or other than, those contemplated;
in certain circumstances, we may be liable for actions of our co-venturer or partner, and the activities of a co-venturer or partner could adversely affect our ability to qualify as a REIT, even if we do not control the joint venture;
our joint venture agreements may restrict the transfer of a co-venturer’s or partner’s interest or otherwise restrict our ability to sell the interest when we desire or on advantageous terms;
our joint venture agreements may contain buy-sell provisions pursuant to which one co-venturer or partner may initiate procedures requiring the other co-venturer or partner to choose between buying the other co-venturer’s or partner’s interest or selling its interest to that co-venturer or partner;
if a joint venture agreement is terminated or dissolved, we may not continue to own or operate the interests or investments underlying the joint venture relationship or may need to purchase such interests or investments at a premium to the market price to continue ownership; or
disputes between us and a co-venturer or partner may result in litigation or arbitration that could increase our expenses and prevent our management from focusing their time and attention on our business.

Any of the above could materially and adversely affect the value of our current joint venture investment or any future joint venture investments and potentially have a material adverse effect on us.

Risks Related to Our Debt Financings

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

As of December 31, 2020, we had approximately $521.3 million of variable-rate indebtedness outstanding under our 2020 Senior Unsecured Credit Facility. Additionally, we had approximately $1.9 billion of fixed-rate indebtedness outstanding under our Debt Private Placement offerings and $276.7 million under our 2013 CMBS Notes. Additional information regarding our indebtedness may be found in our consolidated financial statements and in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in Item 7 in this Annual Report. Our organizational documents contain no limitations regarding the maximum level of indebtedness that we may incur or keep outstanding.

Payments of principal and interest on indebtedness may leave us with insufficient cash resources to operate our properties or to pay distributions to our shareholders at expected levels. Our substantial outstanding indebtedness could have other material and adverse consequences, including, without limitation, the following:
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our cash flows may be insufficient to meet our required principal and interest payments;
we may use a substantial portion of our cash flows to make principal and interest payments and we may be unable to obtain additional financing as needed or on favorable terms, which could, among other things, have a material adverse effect on our ability to invest in acquisition opportunities, fund capital improvements or meet operational needs;
we may be unable to refinance our indebtedness at maturity or the refinancing terms may be less favorable than the terms of our original indebtedness;
we may be forced to dispose of one or more of our properties, possibly on disadvantageous terms or in violation of certain covenants to which we may be subject;
we may default on our indebtedness by failing to make required payments or violating covenants, which would entitle holders of such indebtedness and other indebtedness with a cross-default provision to accelerate the maturity of their indebtedness and, if such indebtedness is secured, to foreclose on our properties that secure their loans;
we may be unable to effectively hedge floating rate debt with respect to our 2020 Senior Unsecured Credit Facilities or any successor facilities thereto;
we are required to maintain certain debt and coverage and other financial ratios at specified levels, thereby reducing our operating and financial flexibility;
our vulnerability to general adverse economic and industry conditions may be increased; and
we may be subject to greater exposure to increases in interest rates for our variable-rate debt and to higher interest expense upon refinancing of existing debt or the issuance of future fixed rate debt.

If any one of these events were to occur, we could be materially and adversely affected. In addition, any foreclosure on our properties could create taxable income without accompanying cash proceeds, which could materially and adversely affect our ability to meet the REIT distribution requirements imposed by the Code.

We are dependent on external sources of capital, the continuing availability of which is uncertain.

In order to qualify as a REIT, we are required each year to distribute to our shareholders at least 90% of our REIT taxable income (determined without regard to the dividends paid deduction and by excluding capital gains). In addition, we will be subject to income tax at regular corporate rates to the extent that we distribute less than 100% of our REIT taxable income, including any net capital gains. Because of these distribution requirements, we may not be able to fund all of our future capital needs, including capital for acquisitions, development activities and recurring and non-recurring capital improvements, from operating cash flows. Consequently, we intend to rely on third-party sources of capital to fund a substantial amount of our future capital needs. We may not be able to obtain additional financing on favorable terms or at all when needed. Any additional debt we incur will increase our leverage, expose us to the risk of default and impose operating and financial restrictions on us. In addition, any equity financing could be materially dilutive to the equity interests held by our shareholders. Our access to third-party sources of capital depends, in part, on general market conditions, the market’s perception of our growth potential, our leverage, our current and anticipated results of operations, liquidity, financial condition and cash distributions to shareholders and the market price of our common shares. If we cannot obtain sufficient capital on favorable terms when needed, we may not be able to execute our business and growth strategies, satisfy our debt service obligations, make the cash distributions to our shareholders necessary for us to qualify as a REIT (which would expose us to significant penalties and corporate-level taxation), or fund our other business needs, which could have a material adverse effect on us.

Adverse changes in our credit ratings could negatively impact our financing activity.

Our credit ratings are based on our operating performance, liquidity and leverage ratios, overall financial condition and other factors utilized by rating agencies in their analysis. Our credit ratings can affect the amount of
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capital that we can access, as well as the terms and pricing of any future debt. We can provide no assurance that we will be able to maintain our current credit ratings, and a downgrade of our credit ratings would likely cause us to incur higher borrowing costs and make additional financing more difficult to obtain. In addition, a downgrade could trigger higher costs under our existing credit facilities and may have other negative consequences. Adverse changes in our credit ratings could negatively impact our business, particularly our refinancing and other capital market activities, our future growth, development and acquisition activity.

At December 31, 2020, our credit ratings were “BBB” with an Under Review with Positive Implications outlook from DBRS Morningstar, Inc., “BBB” with a Stable outlook from Fitch Ratings, Inc. and “Baa3” with a Stable outlook from Moody’s. A securities rating is not a recommendation to buy, sell or hold securities and is subject to revision or withdrawal at any time by the rating organization.

Increases in interest rates could increase the amount of our debt payments.

As of December 31, 2020, $521.3 million of our outstanding consolidated indebtedness is variable-rate debt, and we may continue to incur variable-rate debt in the future. Increases in interest rates on such debt would raise our interest costs, reduce our cash flows and reduce our ability to make distributions to our shareholders. Increases in interest rates would also increase our interest expense on future fixed rate borrowings and have the same collateral effects. In addition, if we need to repay existing debt during periods of rising interest rates, we could be required to liquidate one or more of our investments in properties at times which may not permit realization of the maximum return on such investments.

Elimination of LIBOR may impact our financial statements

In July 2017, the Financial Conduct Authority (“FCA”) that regulates LIBOR announced it intends to stop compelling banks to submit rates for the calculation of LIBOR after 2021. As a result, the Federal Reserve Board and the Federal Reserve Bank of New York organized the Alternative Reference Rates Committee (“ARRC”) which identified the Secured Overnight Financing Rate (“SOFR”) as its preferred alternative to USD-LIBOR in derivatives and other financial contracts. On November 30, 2020, ICE Benchmark Administration, the administrator of LIBOR, with the support of the United States Federal Reserve and the United Kingdom’s Financial Conduct Authority, announced plans to consult on ceasing publication of USD LIBOR on December 31, 2021 for only the one week and two month USD LIBOR tenors, and on June 30, 2023 for all other USD Libor tenors. While this announcement extends the transition period to June 2023, the United States Federal Reserve concurrently issued a statement advising banks to stop new USD LIBOR issuances by the end of 2021. The Company is not able to predict when LIBOR will cease to be available or when there will be sufficient liquidity in the SOFR markets. Any changes adopted by FCA or other governing bodies in the method used for determining LIBOR may result in a sudden or prolonged increase or decrease in reported LIBOR. If that were to occur, our interest payments could change. In addition, uncertainty about the extent and manner of future changes may result in interest rates and/or payments that are higher or lower than if LIBOR were to remain available in its current form.

The Company has contracts that are indexed to LIBOR and is monitoring and evaluating the related risks, which include interest on loans, amounts paid on securities, and amounts received and paid on derivative instruments. These risks arise in connection with transitioning contracts to a new alternative rate, including any resulting value transfer that may occur. The value of loans, securities, or derivative instruments tied to LIBOR could also be impacted if LIBOR is limited or discontinued. For some instruments, the method of transitioning to an alternative rate may be challenging, as they may require negotiation with the respective counterparty.

If LIBOR is discontinued, the impact of such change on our contracts that are not transitioned to an alternative rate is uncertain and is likely to vary by contract. If LIBOR is discontinued or if the methods of
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calculating LIBOR change from their current form, interest rates on our current or future indebtedness may be adversely affected.

While we expect LIBOR to be available in substantially its current form until the end of 2021 or June 2023, as applicable, it is possible that LIBOR will become unavailable prior to that point. This could result, for example, if sufficient banks decline to make submissions to the LIBOR administrator. In that case, the risks associated with the transition to an alternative reference rate will be accelerated and magnified.

Our existing indebtedness contains, and any future indebtedness is likely to contain, covenants that restrict our ability to engage in certain activities.

Our outstanding indebtedness requires, and our future indebtedness is likely to require, us to comply with a number of financial covenants and operational covenants. The financial covenants under our 2020 Senior Unsecured Credit Facility include a maximum leverage ratio, a minimum fixed charge coverage ratio, a maximum secured leverage ratio, a minimum unsecured debt service coverage ratio, and a maximum unsecured indebtedness to unencumbered assets ratio. In addition, the financial covenants under the Series A, Series B, Series C, Series D and Series E Senior Unsecured Notes include, without limitation, a maximum total leverage ratio, a minimum fixed charge coverage ratio, a maximum total secured indebtedness ratio, a minimum unsecured debt service coverage ratio and a maximum unsecured indebtedness to qualified assets ratio. These covenants may limit our ability to engage in certain transactions that may be in our best interests. In order to be able to make distributions to our shareholders (other than minimum distributions required to maintain our status as a REIT), there may not be an event of default under such indebtedness. Our failure to meet the covenants could result in an event of default under the applicable indebtedness, which could result in the acceleration of the applicable indebtedness and other indebtedness with a cross-default provision as well as foreclosure, in the case of secured indebtedness, upon any of our assets that secure such indebtedness. If we are unable to refinance our indebtedness at maturity or meet our payment obligations, we would be materially and adversely affected.

As of December 31, 2020, a total of 15 of our warehouses were financed under mortgage loans grouped into a single pool. Certain covenants in the mortgage loan agreement place limits on our use of the cash flows associated with the pool, and place other restrictions on our use of the assets included within the pool. In particular, if our subsidiaries that are borrowers under the mortgage loan agreement fail to maintain certain cash flow minimums or a debt service coverage ratio, the cash generated by those subsidiaries will be restricted and unavailable for us to use, which we refer to as a “cash trap event.” If the pool under our mortgage loan agreement were to fail to maintain the applicable cash flow minimum or debt service coverage ratio, our ability to make capital expenditures and distributions to our shareholders could be limited. In addition, as a holder of equity interests in the borrowers under the pool, our claim to the assets contained in the pool is subordinate to the claims of the holders of the indebtedness under the mortgage loan agreement.

Secured indebtedness exposes us to the possibility of foreclosure, which could result in the loss of our investment in certain of our subsidiaries or in a property or group of properties or other assets subject to indebtedness.

We have granted certain of our lenders security interests in approximately 8% of our assets, including equity interests in certain of our subsidiaries and in certain of our real property. Incurring secured indebtedness, including mortgage indebtedness, increases our risk of asset and property losses because defaults on indebtedness secured by our assets, including equity interests in certain of our subsidiaries and in certain of our real property, may result in foreclosure actions initiated by lenders and ultimately our loss of the property or other assets securing any loans for which we are in default. Any foreclosure on a mortgaged property or group of properties could have a material adverse effect on the overall value of our portfolio of properties and more generally on us. For tax purposes, a foreclosure of any of our properties would be treated as a sale of the property for a purchase price equal to the outstanding balance of the indebtedness secured by the mortgage. If the outstanding balance of
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the indebtedness secured by the mortgage exceeds our tax basis in the property, we would recognize taxable income on foreclosure, but would not receive any cash proceeds, which could materially and adversely affect us.

Foreign exchange rates and other hedging activity exposes us to risks, including the risks that a counterparty will not perform and that the hedge will not yield the economic benefits we anticipate.

As of December 31, 2020, we were a party to cross currency swaps on our intercompany loans. Periodically we enter into foreign currency forward contracts to manage its exposure to fluctuations in exchange rates. In addition, we have entered into certain forward contracts and other hedging arrangements in order to fix power costs for anticipated electricity requirements. These hedging transactions expose us to certain risks, such as the risk that counterparties may fail to honor their obligations under these arrangements, and that these arrangements may not be effective in reducing our exposure to foreign exchange rate, interest rate, and power cost changes. Moreover, there can be no assurance that our hedging arrangements will qualify for hedge accounting or that our hedging activities will have the desired beneficial impact on our results of operations or cash flows. Should we desire to terminate a hedging agreement, there could be significant costs and cash requirements involved to fulfill our obligation under the hedging agreement. Failure to hedge effectively against foreign exchange rates, interest rates, and power cost changes could have a material adverse effect on us.

While we have no current mortgage agreements requiring hedging agreements, when a hedging agreement is required under the terms of a mortgage loan, it is often a condition that the hedge counterparty maintains a specified credit rating. With the current volatility in the financial markets, there is an increased risk that hedge counterparties could have their credit ratings downgraded to a level that would not be acceptable under the loan provisions. If we were unable to renegotiate the credit rating condition with the lender or find an alternative counterparty with an acceptable credit rating, we could be in default under the loan and the lender could seize that property through foreclosure, which could have a material adverse effect on us.

Risks Related to our Organization and Structure

Provisions of Maryland law may limit the ability of a third party to acquire control of our company.

Under the Maryland General Corporation Law, or the MGCL, as applicable to Maryland real estate investment trusts, certain “business combinations” (including a merger, consolidation, share exchange or, in certain circumstances specified under the statute, an asset transfer or issuance or reclassification of equity securities) between a Maryland real estate investment trust and any person who beneficially owns, directly or indirectly, 10% or more of the voting power of the trust’s then outstanding voting shares or an affiliate or associate of the trust who, at any time within the two-year period before the date in question, was the beneficial owner, directly or indirectly, of 10% or more of the voting power of the trust’s then outstanding shares, which we refer to as an “interested shareholder,” or an affiliate thereof, are prohibited for five years after the most recent date on which the interested shareholder becomes an interested shareholder. Thereafter, any such business combination must be approved by two super-majority shareholder votes unless, among other conditions, the trust’s common shareholders receive a minimum price (as defined in the MGCL) for their shares and the consideration is received in cash or in the same form as previously paid by the interested shareholder for its voting shares. Pursuant to the statute, our board of trustees, by resolution, elected to opt out of the business combination provisions of the MGCL. This resolution may not be modified or repealed by our board of trustees without the approval of our shareholders by the affirmative vote of a majority of the votes cast on the matter. Accordingly, the five-year prohibition and the super-majority vote requirements described above do not apply to a business combination between us and any other person. As a result, any person may be able to enter into business combinations with us, which may not be in your best interest as a shareholder, within five years of becoming an interested shareholder and without compliance by us with the super-majority vote requirements and other provisions of the MGCL.

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The “control share” provisions of the MGCL provide that “control shares” of a Maryland real estate investment trust (defined as shares which, when aggregated with other shares controlled by the shareholder (except solely by virtue of a revocable proxy), entitle the shareholder to exercise one of three increasing ranges of voting power in electing trustees) acquired in a “control share acquisition” (defined as the direct or indirect acquisition of ownership or control of “control shares”) have no voting rights except to the extent approved by the trust’s shareholders by the affirmative vote of at least two-thirds of all the votes entitled to be cast on the matter, excluding votes entitled to be cast by the acquiror of control shares, the trust’s officers and the trust’s associates who are also the trust’s trustees. Our amended and restated bylaws, or our bylaws, contain a provision exempting from the control share acquisition provisions of the MGCL any and all acquisitions by any person of our shares. This provision may not be amended by our board of trustees without the affirmative vote at a duly called meeting of shareholders of at least a majority of the votes cast on the matter by shareholders entitled to vote generally in the election of trustees.

Subtitle 8 of Title 3 of the MGCL, or Subtitle 8, would permit our board of trustees, without shareholder approval, to implement certain takeover defenses (some of which, such as a classified board, we do not have), if we have a class of equity securities registered under the Exchange Act and at least three independent trustees. We have elected not to be subject to Subtitle 8 unless approved by the affirmative vote of at least a majority of the votes cast on the matter by shareholders entitled to vote generally in the election of trustees.

Any of the MGCL provisions, if then applicable to us, may have the effect of inhibiting a third party from making an acquisition proposal for us or of delaying, deferring or preventing a transaction or change in control which might involve a premium price for our common shares or otherwise be in the best interests of our shareholders.

Our board of trustees can take many actions even if you and other shareholders disagree with such actions or if they are otherwise not in your best interest as a shareholder.

Our board of trustees has overall authority to oversee our operations and determine our major policies. This authority includes significant flexibility to take certain actions without shareholder approval. For example, our board of trustees can do the following without shareholder approval:
issue additional shares, which could dilute your ownership;
amend our declaration of trust to increase or decrease the aggregate number of shares or the number of shares of any class or series that we have authority to issue;
classify or reclassify any unissued shares and set the preferences, rights and other terms of such classified or reclassified shares, which preferences, rights and terms could delay, defer or prevent a transaction or change in control which might involve a premium price for our common shares or otherwise be in your best interest as a shareholder;
employ and compensate affiliates;
change major policies, including policies relating to investments, financing, growth and capitalization;
enter into new lines of business or new markets; and
determine that it is no longer in our best interests to attempt to continue to qualify as a REIT.

Any of these actions without shareholder approval could increase our operating expenses, impact our ability to make distributions to our shareholders, reduce the market value of our real estate assets, negatively impact our share price, or otherwise not be in your best interest as a shareholder.

Our declaration of trust contains provisions that make removal of our trustees difficult, which could make it difficult for our shareholders to effect changes to our management.

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Our declaration of trust provides that, subject to the rights of holders of one or more classes or series of preferred shares to elect or remove one or more trustees, a trustee may be removed only for “cause” (as defined in our declaration of trust), and then only by the affirmative vote of shareholders entitled to cast two-thirds of the votes entitled to be cast generally in the election of trustees. The foregoing provision of our declaration of trust, when coupled with the power of our board of trustees to fill vacant trusteeships, will preclude shareholders from removing incumbent trustees except for cause and by a substantial affirmative vote and filling the vacancies created by such removal with their own nominees. These requirements make it more difficult to change our management by removing and replacing trustees and may prevent a change in control that is in the best interests of our shareholders.

The REIT ownership limit rules and the related restrictions on ownership and transfer contained in our declaration of trust have an anti-takeover effect.

In order for us to maintain our qualification as a REIT under the Code, not more than 50% in value of our outstanding shares of beneficial interest may be owned, directly or indirectly, by five or fewer individuals (as defined in the Code to include certain entities) at any time during the last half of each taxable year (other than the first taxable year for which the election to be treated as a REIT was made). To ensure that we will not fail to qualify as a REIT under this and other tests under the Code, our declaration of trust, subject to certain exceptions, authorizes our board of trustees to take such actions as are necessary and desirable to preserve our qualification as a REIT and does not permit individuals (including certain entities treated as individuals), other than excepted holders approved in accordance with our declaration of trust, to own, directly or indirectly, more than 9.8% (in value) of our outstanding shares. In addition, our declaration of trust prohibits: (a) any person from beneficially or constructively owning our shares of beneficial interest that would result in our company being “closely held” under Section 856(h) of the Code or otherwise cause us to fail to qualify as a REIT; (b) any person from transferring our shares of beneficial interest of our company if such transfer would result in our shares of beneficial interest being beneficially owned by fewer than 100 persons; and (c) any person from beneficially owning our shares of beneficial interest 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). Our board of trustees is required to exempt a person (prospectively or retrospectively) from the percentage ownership limit described above (but not the other restrictions) if the person seeking a waiver demonstrates that the waiver would not jeopardize our status as a REIT or violate the other conditions described above.

These ownership limitations are intended to provide added assurance of compliance with the tax law requirements and to minimize administrative burdens. Although our declaration of trust requires our board of trustees to grant a waiver of the percentage ownership limit described above if the person seeking a waiver demonstrates that such ownership would not jeopardize our status as a REIT or violate the other conditions described above, these limitations might still delay, defer or prevent a transaction or change in control which might involve a premium price for our common shares or otherwise not be in your best interest as a shareholder or result in the transfer of shares acquired in excess of the ownership limits to a trust for the benefit of a charitable beneficiary and, as a result, the forfeiture by the acquirer of the benefits of owning the additional shares.

Our rights and the rights of our shareholders to take action against our trustees and officers are limited.

Our declaration of trust eliminates our trustees’ and officers’ liability to us and our shareholders for money damages except for liability resulting from actual receipt of an improper benefit or profit in money, property or services or active and deliberate dishonesty established by a final judgment and which is material to the cause of action. Our declaration of trust and our bylaws require us to indemnify our trustees and officers to the maximum extent permitted by Maryland law for liability actually incurred in connection with any proceeding to which they may be made, or threatened to be made, a party, except to the extent that the act or omission of the trustee or officer was material to the matter giving rise to the proceeding and was either committed in bad faith or
42



the result of active and deliberate dishonesty, the trustee or officer actually received an improper personal benefit in money, property or services, or, in the case of any criminal proceeding, the trustee or officer had reasonable cause to believe that the act or omission was unlawful. As a result, we and our shareholders may have more limited rights against our trustees and officers than might otherwise exist under common law. In addition, we may be obligated to fund the defense costs incurred by our trustees and officers.

We have fiduciary duties as general partner to our Operating Partnership, which may result in conflicts of interests in representing your interests as shareholders of our company.

Conflicts of interest could arise in the future as a result of the relationships between us and our affiliates, and between us and our Operating Partnership or any partner thereof. Our trustees and officers have duties to our company under applicable Maryland law in connection with their management of our company. Additionally, we
have fiduciary duties as the general partner to our Operating Partnership and to its limited partners under Delaware law in connection with the management of our Operating Partnership. Our duties as a general partner to our Operating Partnership and any unaffiliated limited partners may come into conflict with the duties of our trustees and officers to our company and may be resolved in a manner that is not in your best interest as a shareholder.

Risks Related to our Common Shares

Our cash available for distribution to shareholders may not be sufficient to pay distributions at expected levels, or at all, and we may need to increase our borrowings or otherwise raise capital in order to make such distributions; consequently, we may not be able to make such distributions in full.

Our current annualized distributions to our shareholders are $0.84 per share. If cash available for distribution generated by our assets is less than our estimate, or if such cash available for distribution decreases in future periods, we may be unable to make distributions to our shareholders at expected levels, or at all, or we may need to increase our borrowings or otherwise raise capital in order to do so, and there can be no assurance that such capital will be available on attractive terms in sufficient amounts, or at all. Any of the foregoing could result in a decrease in the market price of our common shares. 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 therefore 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.

Any future debt, which would rank senior to our common shares upon liquidation, or equity securities, which could dilute our existing shareholders and may be senior to our common shares for the purposes of distributions, may adversely affect the market price of our common shares.

In the future, we may attempt to increase our capital resources by incurring additional debt, including term loans, borrowings under credit facilities, mortgage loans, commercial paper, senior or subordinated notes and secured notes, and making additional offerings of equity and equity-related securities, including preferred and common shares and convertible or exchangeable securities.

Upon our liquidation, holders of our debt securities and preferred shares and lenders with respect to other borrowings would receive a distribution of our available assets prior to the holders of our common shares. Additional offerings of common shares would dilute the holdings of our existing shareholders or may reduce the market price of our common shares or both. Additionally, any preferred shares or convertible or exchangeable securities that we issue in the future may have rights, preferences and privileges more favorable than those of our common shares and may result in dilution to holders of our common shares. Because our decision to incur debt or issue equity or equity-related securities in the future will depend on market conditions and other factors beyond
43



our control, we cannot predict or estimate the amount, timing, nature or success of our future capital raising. Thus, our shareholders bear the risk that our future capital raising will materially and adversely affect the market price of our common shares and dilute the value of their holdings in us.

Common shares eligible for future sale may have adverse effects on the market price of our common shares.
The market price of our common shares could decline as a result of sales or resales of a large number of our common shares in the market, or the perception that such sales or resales could occur. These sales or resales, or the possibility that these sales or resales may occur, also might make it more difficult for us to sell our common shares in the future at a desired time and at an attractive price. On August 26, 2019, we entered into a distribution agreement with a syndicate of banks through which we may sell from time to time up to an aggregate of $500.0 million of our common shares in an at the market equity program (an “ATM Offering”).

On April 16, 2020, this ATM Equity Program was terminated and replaced with a new ATM Equity Program, pursuant to which we may sell up to an aggregate sales price of $500.0 million of our common shares. There were 7,440,532 common shares sold under the ATM Equity Program during 2020. We intend to use any net proceeds from sales of our common shares pursuant to the new ATM Equity Program for working capital, capital expenditures and other general corporate purposes, which may include funding development, expansion and acquisitions opportunities and the repayment of outstanding indebtedness.

As of December 31, 2020, 251,702,603 common shares are issued and outstanding, and no Series A preferred shares, Series B preferred shares or Series C preferred shares are issued and outstanding.

As of December 31, 2020, the 14,773,725 common shares beneficially owned by our trustees, executive officers and other affiliates were “restricted securities” within the meaning of Rule 144 under the Securities Act and cannot be sold in the absence of registration under the Securities Act unless an exemption from registration is available, including the exemptions contained in Rule 144.

In addition, we have filed with the SEC a registration statement on Form S-8 covering common shares issuable pursuant to options, restricted stock units, performance units, operating partnership profits units and other stock-based awards issued under our outstanding equity incentive plans and a registration statement on Form S-8 covering shares issuable under our 2020 Employee Stock Purchase Plan.

We cannot predict the effect, if any, of future issuances, sales or resales of our common shares, or the availability of common shares for future issuances, sales or resales, on the market price of our common shares. Issuances, sales or resales of substantial amounts of common shares, or the perception that such issuances, sales or resales could occur, may materially and adversely affect the then prevailing market price for our common shares.

REIT and Tax Related Risks

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

We have elected to be taxed as a REIT under the Code. Our qualification as a REIT requires us to satisfy numerous requirements, some on an annual and quarterly basis, established under highly technical and complex Code provisions for which there are only limited judicial or administrative interpretations, and which involve the determination of various factual matters and circumstances not entirely within our control. We expect that our current organization and methods of operation will enable us to continue to qualify as a REIT, but we may not so qualify or we may not be able to remain so qualified in the future. In addition, U.S. federal income tax laws governing REITs and other corporations and the administrative interpretations of those laws may be amended at any time, potentially with retroactive effect. The Protecting Americans from Tax Hikes Act, or PATH Act, was enacted in December 2015, and included numerous changes in the U.S. federal income tax laws applicable to
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REITs, and comprehensive tax legislation passed on December 22, 2017, which is commonly known as the Tax Cuts and Jobs Act, or TCJA and, which is fully described in Note 16 to the consolidated financial statements included in this Annual Report on Form 10-K, made fundamental changes to the individual and corporate tax laws that will materially impact us and our shareholders. In addition, future legislation, new regulations, administrative interpretations or court decisions could materially and adversely affect our ability to qualify as a REIT or materially and adversely affect our company and shareholders.

As a result of the Agro Merchants Acquisition, we acquired interests in certain assets and earn certain items of income that are not, or may not be, qualifying assets or income for purposes of the REIT asset and income tests. In addition, although we intend to structure our post-acquisition operation of Agro Merchants in a way that would allow us to continue to qualify as a REIT for U.S. federal income tax purposes, no assurances can be given that we will be successful.

If we fail to qualify as a REIT in any taxable year, we would be subject to U.S. federal income tax on our REIT taxable income at regular corporate rates, and would not be allowed to deduct dividends paid to our shareholders in computing our REIT taxable income. Also, unless the Internal Revenue Service, or the IRS, granted us relief under certain statutory provisions, we could not re-elect REIT status until the fifth calendar year after the year in which we first failed to qualify as a REIT. The additional tax liability from the failure to qualify as a REIT would reduce or eliminate the amount of cash available for investment or distribution to our shareholders. This would materially and adversely affect us. In addition, we would no longer be required to make distributions to our shareholders. Even if we continue to qualify as a REIT, we will continue to be subject to certain U.S. federal, state and local taxes on our income and property.

To qualify as a REIT, we must meet annual distribution requirements, which could result in material harm to our company if they are not met.

To obtain the favorable tax treatment accorded to REITs, among other requirements, we normally will be required each year to distribute to our shareholders at least 90% of our REIT taxable income, determined without regard to the deduction for dividends paid and by excluding net capital gains. We will be subject to U.S. federal income tax on our undistributed REIT taxable income and net capital gains. In addition, if we fail to distribute to our shareholders during each calendar year at least the sum of (a) 85% of our ordinary income for such year; (b) 95% of our capital gain net income for such year; and (c) any undistributed REIT taxable income from prior periods, we will be subject to a 4% excise tax on the excess of the required distribution over the sum of (i) the amounts actually distributed by us and (ii) retained amounts on which we pay U.S. federal income tax at the corporate level. We intend to make distributions to our shareholders to comply with the requirements of the Code for REITs and to minimize or eliminate our U.S. federal income tax obligation. However, differences between the recognition of REIT taxable income and the actual receipt of cash could require us to sell assets or raise capital on a short-term or long-term basis to meet the distribution requirements of the Code. Certain types of assets generate substantial mismatches between REIT taxable income and available cash. Such assets include rental real estate that has been financed through financing structures which require some or all of available cash flows to be used to service borrowings. Further, under amendments to the Code made by TCJA, income must be accrued for U.S. federal income tax purposes no later than when such income is taken into account as revenue in our financial statements, subject to certain exceptions, which could also create mismatches between REIT taxable income and the receipt of cash attributable to such income. As a result, the requirement to distribute a substantial portion of our REIT taxable income could cause us to: (1) sell assets in adverse market conditions; (2) raise capital on unfavorable terms; or (3) distribute amounts that would otherwise be invested in future acquisitions, expansions or developments, capital expenditures or repayment of debt, in order to comply with REIT requirements. Further, amounts distributed will not be available to fund our operations. Under certain circumstances, covenants and provisions in our existing and future debt instruments may prevent us from making distributions that we deem necessary to comply with REIT requirements. Our inability to make required
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distributions as a result of such covenants could threaten our status as a REIT and could result in material adverse tax consequences for our company and shareholders.

We conduct a portion of our business through TRSs, which are subject to certain tax risks.

We have established taxable REIT subsidiaries, or TRSs, and may establish others in the future. Despite our qualification as a REIT, our TRSs must pay income tax on their taxable income. As a result of the enactment of the TCJA, effective for taxable years beginning on or after January 1, 2018, our domestic TRSs are subject to U.S. federal income tax on their taxable income at a flat rate of 21% (as well as applicable state and local income tax), but net operating loss, or NOL, carryforwards of TRS losses arising in taxable years beginning after December 31, 2017, may be deducted only to the extent of 80% of TRS taxable income in the carryforward year (computed without regard to the NOL deduction or our dividends paid deduction). In contrast to prior law, which permitted unused NOL carryforwards to be carried back two years and forward 20 years, TCJA provides that losses arising in taxable years ending after December 31, 2017, can no longer be carried back but can be carried forward indefinitely. In addition, we must comply with various tests to continue to qualify as a REIT for U.S. federal income tax purposes, and our income from, and investments in, our TRSs generally do not constitute permissible income and investments for certain of these tests. No more than 20% of the value of a REIT’s assets may consist of securities of one or more TRSs. Because TRS securities do not qualify for purposes of the 75% asset test described herein, and because we own other assets that do not, or may not, qualify for the 75% asset test, the 75% asset test may effectively limit the value of our TRS securities to less than 20% of our total assets. Our dealings with our TRSs may materially and adversely affect our REIT qualification. Furthermore, we may be subject to a 100% penalty tax, or our TRSs may be denied deductions, to the extent our dealings with our TRSs are determined not to be arm’s length in nature or are otherwise not permitted under the Code.

Complying with REIT requirements may cause us to forgo otherwise attractive opportunities or liquidate certain of our investments.

To qualify as a REIT for U.S. federal income tax purposes, we must continually satisfy tests concerning, among other things, the sources of our income, the nature and diversification of our assets, the amounts we distribute to our shareholders and the ownership of our shares. We may be required to make distributions to our shareholders at disadvantageous times or when we do not have funds readily available for distribution. Thus, compliance with the REIT requirements may, for instance, hinder our ability to make certain otherwise attractive investments or undertake other activities that might otherwise be beneficial to us and our shareholders, or may require us to raise capital or liquidate investments in unfavorable market conditions and, therefore, may hinder our performance.

As a REIT, at the end of each quarter, at least 75% of the value of our assets must consist of cash, cash items, government securities and qualified real estate assets. The remainder of our investments in securities (other than cash, cash items, government securities, securities issued by a TRS and qualified real estate assets) generally cannot include more than 10% of the outstanding voting securities of any one issuer or more than 10% of the total value of the outstanding securities of any one issuer. In addition, in general, no more than 5% of the value of our total assets (other than cash, cash items, government securities, securities issued by a TRS and qualified real estate assets) can consist of the securities of any one issuer, and no more than 20% of the value of our total securities can be represented by securities of one or more TRSs. If we fail to comply with these requirements at the end of any quarter, we must correct the failure within 30 days after the end of the quarter or qualify for certain statutory relief provisions to avoid losing our REIT qualification and suffering material adverse tax consequences. The need to comply with the 75% asset test and 20% TRS securities test on an ongoing basis potentially could require us in the future to limit the future acquisition of, or to dispose of, nonqualifying assets, limit the future expansion of our TRSs’ assets and operations or dispose of or curtail TRS assets and operations, which could adversely affect our business and could have the effect of reducing our income and amounts available for distribution to our shareholders.
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Future changes to the U.S. federal income tax laws could have an adverse impact on our business and financial results.

Changes to the U.S. federal income tax laws, including changes in applicable tax rates, are proposed regularly. Additionally, the REIT rules are constantly under review by persons involved in the legislative process and by the IRS and the U.S. Department of the Treasury, which may result in revisions to regulations and interpretations in addition to statutory changes. If enacted, such changes could have an adverse impact on our business and financial results.

Other legislative proposals could be enacted in the future that could affect REITs and their shareholders. Prospective investors are urged to consult their tax advisor regarding the effect of any potential tax law changes on an investment in our common shares.

Distributions payable by REITs generally do not qualify for the reduced tax rates that apply to certain other corporate distributions, potentially making an investment in our company less advantageous for certain persons than an investment in an entity with different tax attributes.

The maximum federal income tax rate applicable to “qualified dividend income” payable by non-REIT corporations to certain non-corporate U.S. stockholders is generally 20%, and a 3.8% Medicare tax may also apply. Dividends paid by REITs, however, generally are not eligible for the reduced rates applicable to qualified dividend income. Commencing with taxable years beginning on or after January 1, 2018 and continuing through 2025, TCJA temporarily reduces the effective tax rate on ordinary REIT dividends (i.e., dividends other than capital gain dividends and dividends attributable to certain qualified dividend income received by us) for U.S. holders of our common shares that are individuals, estates or trusts by permitting such holders to claim a deduction in determining their taxable income equal to 20% of any such dividends they receive. Taking into account TCJA’s reduction in the maximum individual federal income tax rate from 39.6% to 37%, this results in a maximum effective rate of regular income tax on ordinary REIT dividends of 29.6% through 2025 (as compared to the 20% maximum federal income tax rate applicable to qualified dividend income received from a non-REIT corporation). Under final regulations recently issued by the IRS, in order to qualify for this deduction with respect to a dividend on our common shares, a shareholder must hold such shares for more than 45 days during the 91-day period beginning on the date which is 45 days before the date on which such shares become ex-dividend with respect to such dividend (taking into account certain special holding period rules that may, among other consequences, reduce a shareholder’s holding period during any period in which the shareholder has diminished its risk of loss with respect to the shares). Shareholders are urged to consult their tax advisors as to their ability to claim this deduction. The more favorable rates applicable to regular corporate distributions could cause investors who are individuals to perceive investments in REITs to be relatively less attractive than investments in the stocks of non-REIT corporations that pay distributions. This could materially and adversely affect the value of the stock of REITs, including our common shares.

In certain circumstances, we may be subject to U.S. federal, state, local or foreign taxes, which would reduce our funds available for distribution to our shareholders.

Even if we qualify and maintain our status as a REIT, we may be subject to certain U.S. federal, state, local or foreign taxes. For example, net income from a “prohibited transaction,” including sales or other dispositions of property, other than foreclosure property, held primarily for sale in the ordinary course of business, will be subject to a 100% tax. While we do not intend to hold properties that would be characterized as held for sale in the ordinary course of business, unless a sale or disposition qualifies under statutory safe harbors, there can be no assurance that the IRS would agree with our characterization of our properties or that we will be able to make use of available safe harbors. In addition, we may not be able to make sufficient distributions to avoid income and excise taxes. We may also be subject to state, local, or foreign taxes on our income or property, either
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directly or at the level of our Operating Partnership or the other companies through which we indirectly own our assets. Any taxes we pay will reduce our funds available for distribution to our shareholders.
We may also decide to retain certain gains from the sale or other disposition of our property and pay income tax directly on such gains. In that event, our shareholders would be required to include such gains in income and would receive a corresponding credit for their share of taxes paid by us. Any net taxable income earned directly by a TRS will be subject to U.S. federal and state corporate income tax. Furthermore, even though we qualify for taxation as a REIT, if we acquire any asset from a corporation which is or has been a C-corporation in a transaction in which the basis of the asset in our hands is less than the fair market value of the asset determined at the time we acquired the asset, and we subsequently recognize a gain on the disposition of the asset during the five-year period beginning on the date on which we acquired the asset, then we will be required to pay tax at the highest regular corporate tax rate on this gain to the extent of the excess of (a) the fair market value of the asset over (b) our adjusted basis in the asset, in each case determined as of the date on which we acquired the asset. These requirements could limit, delay or impede future sales of our properties. We currently do not expect to sell any asset if the sale would result in the imposition of a material tax liability. We cannot, however, assure you that we will not change our plans in this regard.

Complying with REIT requirements may limit our ability to hedge effectively and may cause us to incur tax liabilities.

The REIT provisions of the Code limit our ability to hedge our liabilities. Generally, income from a hedging transaction we enter into either to manage risk of interest rate changes with respect to borrowings incurred or to be incurred to acquire or carry real estate assets, or to manage the risk of currency fluctuations with respect to any item of income or gain (or any property which generates such income or gain) that constitutes “qualifying income” for purposes of the 75% or 95% gross income tests applicable to REITs, does not constitute “gross income” for purposes of the 75% or 95% gross income tests, provided that we properly identify the hedging transaction pursuant to the applicable sections of the Code and Treasury Regulations. To the extent that we enter into other types of hedging transactions, the income from those transactions is likely to be treated as non-qualifying income for purposes of both gross income tests. As a result of these rules, we may need to limit our use of otherwise advantageous hedging techniques or implement those hedges through a TRS. The use of a TRS could increase the cost of our hedging activities (because our TRS would be subject to tax on income or gain resulting from hedges entered into by it) or expose us to greater risks than we would otherwise want to bear. In addition, net losses in any of our TRSs will generally not provide any tax benefit except for being carried forward for use against future taxable income of the TRS.

If our Operating Partnership fails to qualify as a partnership for U.S. federal income tax purposes, we would fail to qualify as a REIT.

As a partnership, our Operating Partnership is not subject to U.S. federal income tax on its income. For all tax periods during which the Operating Partnership is treated as a partnership, each of its partners, including us, will be allocated that partner’s share of the Operating Partnership’s income. Following the admission of additional limited partners, no assurance can be provided, however, that the IRS will not challenge the status of our Operating Partnership as a partnership for U.S. federal income tax purposes, or that a court would not sustain such a challenge. If the IRS were successful in treating our Operating Partnership as an association taxable as a corporation for U.S. federal income tax purposes, we would fail to meet the gross income tests and certain of the asset tests applicable to REITs and, accordingly, would cease to qualify as a REIT, which would have a material adverse effect on us and our shareholders. Also, our Operating Partnership would then be subject to U.S. federal corporate income tax, which would reduce significantly the amount of its funds available for debt service and for distribution to its partners, including us.

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ITEM 1B. Unresolved Staff Comments
 
None.

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ITEM 2. Properties

General
    In addition to the information in this Item 2, certain information regarding our portfolio is contained in Schedule III (Financial Statement Schedule) under Part IV, Item 15(a) (2) and which is included in Part II, Item 8.
Our Warehouse Portfolio
    As of December 31, 2020, we operated a global network of 238 warehouses that contained over 1.4 billion cubic feet and approximately 4 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 December 31, 2020.

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Country / Region
# of
warehouses(7)
Cubic feet
(in millions)(7)
 % of
total
cubic
feet
Pallet
positions
(in thousands)
Average
economic
occupancy (1)
Average
physical
occupancy (1)
Revenues (2)
(in millions)
Applicable
segment
contribution
(NOI) (2)(3)
(in millions)
Total
customers (4)
Owned / Leased (5)
North America
Central - United States44 273.6  20 %1,132.7 80 %73 %$364.0 $141.8 756 
East - United States38 293.4  21 %820.5 78 %71 %320.0 97.2 768 
Southeast - United States62 341.8  25 %859.4 80 %74 %354.4 111.0 775 
West - United States38 234.5  17 %974.3 74 %69 %269.3 101.3 657 
Canada25.5 %83.2 86 %86 %27.4 11.9 88 
North America Total / Average186 1,168.8  85 %3,870.1 78 %72 %$1,335.1 $463.2 2,361 
International
Europe26 111.2 %N/RN/RN/RN/RN/RN/R
Asia-Pacific14 70.0  %202.5 95 %82 %$206.5 $55.1 82 
South America17.3 %22.6 71 %71 %7.7 2.0 38 
International Total / Average43 198.5  15 %225.1 93 %81 %$214.2 $57.1 120 
Owned / Leased Total / Average229 1,367.3  100 %4,095.2 79 %72 %$1,549.3 $520.3 2,473 
Third-Party Managed
United States38.5  88 %— — — $259.3 $7.8 
Asia-Pacific (6)
—  — %— — — 18.3 2.8 
Canada5.3  12 %— — — 14.2 1.6 
Third-Party Managed Total / Average9 43.8  100 %   $291.8 $12.2 7 
Portfolio Total / Average238 1,411.1  100 %4,095.2 79 %72 %$1,841.1 $532.5 2,474 
 

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(1)We define average economic occupancy as the aggregate number of physically occupied pallets and any additional pallets otherwise contractually committed for a given period, without duplication. We estimate the number of contractually committed pallet positions by taking into account actual pallet commitments specified in each customer’s contract, and subtracting the physical pallet positions.
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 year ended December 31, 2020. 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 three to four 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)Year ended December 31, 2020.
(3)We use the term “segment contribution (NOI)” to mean a segment’s revenues less its cost of operations (excluding any depreciation 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.
(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 December 31, 2020, we owned 144 of our U.S. warehouses and 37 of our international warehouses, and we leased 38 of our U.S. warehouses and ten of our international warehouses. As of December 31, 2020, fourteen of our owned facilities were 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.
(7)Data for the Agro acquisition is only included under “number of warehouses” and “cubic feet”, data for operational metrics is not relevant (N/R) for the year ended December 31, 2020, as the Agro acquisition closed on December 30, 2020.
    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:
 
Distribution. As of December 31, 2020, we owned or leased 91 distribution centers with approximately 649.5 million cubic feet of temperature-controlled capacity and 1.8 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.
Public. As of December 31, 2020, we owned or leased 86 public warehouses with approximately 427.6 million cubic feet of temperature-controlled capacity and 1.2 million 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.
Production Advantaged. As of December 31, 2020, we owned or leased 47 production advantaged warehouses with approximately 270.7 million cubic feet of temperature-controlled capacity and 1.2 million 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.
Facility Leased. As of December 31, 2020, we had 5 facility leased warehouses with approximately 19.5 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.
Third-Party Managed. As of December 31, 2020, we managed 9 warehouses on behalf of third parties with approximately 43.8 million cubic feet of temperature-controlled capacity. We manage warehouses
52



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.

ITEM 3. Legal Proceedings
 
    From time to time, we may be party to a variety of legal proceedings arising in the ordinary course of our business. We are not a party to, nor is any of our property a subject of, any material litigation or legal proceedings or, to the best of our knowledge, any threatened litigation or legal proceedings which, in the opinion of management, individually or in the aggregate, would have a material impact on our business, financial condition, liquidity, results of operations and prospects.

ITEM 4. Mine Safety Disclosures
 
    We sold our limestone quarry on July 1, 2020, and therefore are no longer required to provide information required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K (17 CFR 229.104).
53



PART II

ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

    Americold Realty Trust’s common shares are listed on the NYSE under the trading symbol “COLD”. Our common shares have been publicly traded since January 19, 2018. Prior to that time, there was no public market for our common stock.
    On February 26, 2021, we had approximately 252,366,476 common shares outstanding. The number of holders of record of our common shares on February 26, 2021 was 48. This figure does not represent the actual number of beneficial owners of our common shares because our common shares are frequently held in “street name” by securities dealers and others for the benefit of beneficial owners who may vote the shares.
    Our future common shares dividends, if and as declared, may vary and will be determined by our Board of Trustees upon the circumstances prevailing at the time, including our financial condition, operating results, estimated taxable income and REIT distribution requirements. These dividends, if and as declared, may be adjusted at the discretion of our board of trustees during the year. Refer to Item 7 - Management’s Discussion & Analysis in this Annual Report on Form 10-K for further details on dividends declared.
    Subject to the distribution requirements applicable to REITs under the Code, Americold Realty Trust intends, to the extent practicable, to invest substantially all of the proceeds from sales and refinancing of its assets in real estate-related assets and other assets. Americold Realty Trust may, however, under certain circumstances, make a dividend of capital or of assets. Such dividends, if any, will be made at the discretion of Americold Realty Trust’s board of trustees.
    
54



Stock Performance Graph
The following graph compares the change in the cumulative total stockholder return on Americold Realty Trust common stock during the period from January 19, 2018 (the date of our IPO) through December 31, 2020, with the cumulative total returns on the MSCI US REIT Index (RMZ) and the S&P 500 Market Index. The comparison assumes that $100 was invested on January 19, 2018 in Americold Realty Trust common stock and in each of these indices and assumes reinvestment of dividends, if any.

Comparison of Cumulative Total Returns
Among Americold Realty Trust, S&P 500, and RMZ Index

Assumes $100 invested on January 19, 2018
Assumes dividends reinvested
To fiscal year ended December 31, 2020
art-20201231_g1.jpg
55



Pricing DateCOLD ($)S&P 500($)RMZ($)
1/19/2018100.00 100.00 100.00 
3/29/2018109.00 94.22 95.84 
6/29/2018127.97 97.57 104.38 
9/28/2018147.59 105.03 104.43 
12/31/2018151.79 90.82 96.30 
3/29/2019188.35 103.00 113.59 
6/28/2019202.61 107.35 113.93 
9/30/2019234.25 109.24 121.52 
12/31/2019224.06 119.05 119.34 
3/31/2020225.00 95.01 87.63 
6/30/2020242.79 114.17 96.97 
9/30/2020241.88 124.49 97.65 
12/31/2020255.61 139.57 107.88 
This graph and the accompanying text are not “soliciting material,” are not deemed filed with the SEC and are not to be incorporated by reference in any filing by us under the Securities Act of 1933, as amended, or the Security Exchange Act of 1934, as amended, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.
The stock price performance shown on the graph is not necessarily indicative of future price performance.
The hypothetical investment in Americold Realty Trust’s common stock presented in the stock performance graph above is based on the closing price of the common stock on January 19, 2018.
Sales of Unregistered Securities
 
None.

Purchases of Equity Securities
 
None.
Securities Authorized For Issuance Under Equity Compensation Plans 
    Information relating to compensation plans under which our common shares are authorized for issuance is set forth under Part III, Item 12 of this Annual Report on Form 10-K and such information is incorporated by reference herein.
Use of Proceeds
On April 16, 2020, the 2019 ATM Equity Program was terminated and replaced with the 2020 ATM Equity Program. Under the 2020 ATM Equity Program, we may sell, from time to time, up to an aggregate sales price of $500.0 million of the Company’s common shares. We intend to use the net proceeds from sales of our common shares pursuant to the 2020 ATM Equity Program for general corporate purposes, which may include funding acquisitions and development projects.
During the year ended December 31, 2020, there were 7,440,532 common shares sold under the 2020 ATM Equity Program, resulting in gross proceeds of $272.6 million. The proceeds were offset by $3.0 million of fees. Included in the shares sold under the 2020 ATM Equity Program were forward sale agreements to sell
56



4,346,101 common shares for gross proceeds of $162.2 million. During the year ended December 31, 2020, the Company settled 5,011,428 common shares for gross proceeds of $183.0 million under its ATM equity program. Pursuant to the respective forward sale agreements, the remaining 2,428,604 of shares must be settled by September 1, 2021 for gross proceeds of $89.6 million.
After considering the common shares issued during 2020 and the shares subject to the forward sale agreements, the Company had approximately $227.4 million of availability remaining for distribution under the 2020 ATM Equity Program as of December 31, 2020.
On October 13, 2020, the Company completed an underwritten registered public offering pursuant to forward sale agreements in which the forward purchasers borrowed and sold to the underwriters in the public offering 31,900,000 common shares, as well as an option for the underwriters to purchase 4,785,000 additional common shares. The initial forward sale price was $36.67 per share, which is the public offering price per share, less the underwriting discount per share. On November 9, 2020, the underwriters exercised in full its option to purchase 4,785,000 additional common shares. On December 29, 2020, the Company issued 31,900,000 common shares generating net proceeds of $1.17 billion, upon settlement of its forward contract in order to fund the Agro acquisition, and through the issuance of 14,166,667 common shares of the Company (the “Acquisition Shares”) to the Sellers at closing on December 30, 2020. As of December 31, 2020, the underwriter’s option to purchase 4,785,000 additional common shares is outstanding under forward contracts.

Other Shareholder Matters

None.

ITEM 6. Selected Financial Data
None.
57



ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
    The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements included in this Annual Report on Form 10-K. In addition, the following discussion contains forward-looking statements, such as statements regarding our expectation for future performance, liquidity and capital resources, that involve risks, uncertainties and assumptions that could cause actual results to differ materially from our expectations. Our actual results may differ materially from those contained in or implied by any forward-looking statements. Factors that could cause such differences include those identified below and those described under Item 1A of this Annual Report on Form 10-K. Refer to our Annual Report on Form 10-K as filed on March 2, 2020, for a discussion of the comparative results of operations for the years ended December 31, 2019 and 2018.
Management’s Overview
    We are the world’s largest publicly traded REIT focused on the ownership, operation, acquisition and development of temperature-controlled warehouses. We are organized as a self-administered and self-managed REIT with proven operating, development and acquisition expertise. As of December 31, 2020, we operated a global network of 238 temperature-controlled warehouses encompassing over 1.4 billion cubic feet, with 194 warehouses in North America, 26 in Europe, 15 warehouses in Asia-Pacific, and 3 warehouses in South America. We view and manage our business through three primary business segments: warehouse, third–party managed and transportation. In addition, we hold two minority interests in Brazilian-based joint ventures, one with SuperFrio, which owns or operates 22 temperature-controlled warehouses and one with Comfrio, which owns or operates 13 temperature-controlled warehouses.
Components of Our Results of Operations
    Warehouse. Our primary source of revenues consists of rent, storage and warehouse services fees. Our rent, storage and warehouse services revenues are the key drivers of our financial performance. Rent and storage revenues consist of recurring, periodic charges related to the storage of frozen and perishable food and other products in our warehouses by our customers. We also provide these customers with a wide array of handling and other warehouse services, such as (1) receipt, handling and placement of products into our warehouses for storage and preservation, (2) retrieval of products from storage upon customer request, (3) blast freezing, which involves the rapid freezing of non-frozen products, including individual quick freezing for agricultural produce and seafood, (4) case-picking, which involves selecting product cases to build customized pallets, (5) kitting and repackaging, which involves assembling custom product packages for delivery to retailers and consumers, and labeling services, (6) order assembly and load consolidation, (7) exporting and importing support services, (8) container handling, (9) cross-docking, which involves transferring inbound products to outbound trucks utilizing our warehouse docks without storing them in our warehouses, (10) government-approved temperature-controlled storage and inspection services, (11) fumigation, (12) pre-cooling and cold treatment services, and (13) ripening. We refer to these handling and other warehouse services as our value-added services.
    Cost of operations for our warehouse segment consists of power, other facilities costs, labor, and other services costs. Labor, the largest component of the cost of operations from our warehouse segment, consists primarily of employee wages, benefits, and workers’ compensation. Trends in our labor expense are influenced by changes in headcount and compensation levels, changes in customer requirements, workforce productivity, variability in costs associated with medical insurance and the impact of workplace safety programs, inclusive of the number and severity of workers’ compensation claims. Labor expense is also impacted as a result of discretionary bonuses. In response to the COVID-19 pandemic, we have incorporated certain inefficiencies such as staggered break schedules, social distancing, and other changes to process, all of which we expect to continue



to incur going forward. Our second largest cost of operations from our warehouse segment is power utilized in the operation of our temperature-controlled warehouses. As a result, trends in the price for power in the regions where we operate may have a significant effect on our financial results. We may from time to time hedge our exposure to changes in power prices through fixed rate agreements or, to the extent possible and appropriate, through rate escalations or power surcharge provisions within our customer contracts. Additionally, business mix impacts power expense depending on the temperature zone or type of freezing required. Other facilities costs include utilities other than power, property insurance, property taxes, sanitation (which include incremental supplies as a result of COVID-19), repairs and maintenance on real estate, rent under real property operating leases, where applicable, security, and other related facilities costs. Other services costs include equipment costs, warehouse consumables (e.g., shrink-wrap and uniforms), personal protective equipment to maintain the health and safety of our associates, warehouse administration and other related services costs.
    Third-Party Managed. We receive a reimbursement of substantially all expenses for warehouses that we manage on behalf of third-party owners, with all reimbursements recognized as revenues under the relevant accounting guidance. We also earn management fees, incentive fees upon achieving negotiated performance and cost-savings results, or an applicable mark-up on costs. Cost of operations for our third-party managed segment is reimbursed on a pass-through basis (typically within two weeks).
    Transportation. We charge transportation fees, including fuel surcharges, to our customers for whom we arrange the transportation of their products. Cost of operations for our transportation segment consists primarily of third-party carrier charges, which are impacted by factors affecting those carriers. Additionally, in connection with the Cloverleaf Acquisition, we acquired trucks and associates that support certain customers within the geographic area. We supplemented our regional, national and truckload consolidation business with the Hall’s acquisition, which services the Northeast corridor of the U.S. with an owned and maintained fleet. Our acquisition of Agro Merchants further expands our Transportation service offering. Agro Merchants operates its own fleet of temperature-controlled vehicles in the U.S., Ireland and UK and also offers a variety of non-asset based transportation management services. These include multi-modal global freight forwarding services to support our customers’ needs.
    Other. In addition to our primary business segments, we owned and operated a limestone quarry in Carthage, Missouri for the first half of 2020. Revenues were generated from the sale of limestone mined at our quarry. Cost of operations for our quarry consisted primarily of labor, equipment, fuel and explosives. The sale of our quarry business segment was completed on July 1, 2020.
    Other Consolidated Operating Expenses. We also incur depreciation and amortization expenses, corporate-level selling, general and administrative expenses and corporate-level acquisition, litigation and other expenses.
    Our depreciation and amortization charges result primarily from the capital-intensive nature of our business. The principal components of depreciation relate to our warehouses, including buildings and improvements, refrigeration equipment, racking, leasehold improvements, material handling equipment, furniture and fixtures, and our computer hardware and software. Amortization relates primarily to intangible assets for customer relationships.
    Our corporate-level selling, general and administrative expenses consist primarily of wages and benefits for management, administrative, business development, account management, project management, marketing, engineering, supply-chain solutions, human resources and information technology personnel, as well as expenses related to equity incentive plans, communications and data processing, travel, professional fees, bad debt, training, office equipment and supplies. Trends in corporate-level selling, general and administrative expenses are



influenced by changes in headcount and compensation levels and achievement of incentive compensation targets. To position ourselves to meet the challenges of the current business environment, we have implemented a shared services support structure to better manage costs and enhance the efficiency of our operations.
    Our corporate-level acquisition, litigation and other expenses consist of costs that we view outside of selling, general and administrative expenses with a high level of variability from period-to-period, and include the following:
Acquisition related costs include costs associated with transactions, whether consummated or not, such as advisory, legal, accounting, valuation and other professional or consulting fees. We also include integration costs pre- and post-acquisition that reflect work being performed to facilitate merger and acquisition integration, such as employee retention expense and work associated with information systems and other projects including spending to support future acquisitions, which primarily consist of professional services.
Litigation costs incurred in order to defend ourselves from litigation charges outside of the normal course of business and related settlement costs.
Severance costs representing certain contractual and negotiated severance and separation costs from exited former executives, reduction in headcount due to synergies achieved through acquisitions or operational efficiencies, and reduction in workforce costs associated with exiting or selling non-strategic warehouses.
Equity acceleration costs representing the unrecognized expense for share-based awards that vest and convert to common shares in advance of the original negotiated vesting date and any other equity award changes resulting in accounting for the award as a modification.
Non-offering related equity issuance expenses whether incurred through our initial public offering, follow-on offerings or secondary offerings.
Non-recurring public company implementation costs associated with the implementation of financial reporting systems and processes needed to convert the organization to a public reporting company.
Terminated site operations costs represent expenses incurred to return leased sites to their original physical state at lease inception in connection with the termination of the applicable underlying lease. These terminations were part of our strategic efforts to exit or sell non-strategic warehouses as opposed to ordinary course lease expirations. Repair and maintenance expenses associated with our ordinary course operations are reflected as operating expenses on our consolidated statement of operations.
Other costs relate to additional superannuation pension costs related to prior years upon review by the Australian Tax Office.
Key Factors Affecting Our Business and Financial Results
Acquisitions and Joint Ventures
    On February 1, 2019, we completed the PortFresh Acquisition for a purchase price of approximately $35.9 million, utilizing available cash on hand. PortFresh consisted of one facility operating near the port of Savannah, Georgia and adjacent land upon which we have constructed a newly developed facility. This newly constructed facility received its certificate of occupancy during the second quarter of 2020. Since the date of acquisition, we have reported the results of the acquired facility within our Warehouse segment.



    On May 1, 2019, we completed the Cloverleaf Acquisition for a purchase price of approximately $1.24 billion, utilizing the $1.21 billion net proceeds from our April 2019 follow-on offering and cash drawn from our senior unsecured revolving credit facility. Cloverleaf was the fifth largest temperature-controlled warehousing provider in the United States, based in Sioux City, Iowa and consisted of 22 facilities in nine states. Cloverleaf also generates income through a small component of transportation operations. Since the date of acquisition, we have reported the results of 21 facilities within our warehouse segment, the results of one facility within our third-party managed segment and the results of Cloverleaf’s transportation operations within our transportation segment.
    Also, on May 1, 2019, we completed the Lanier Acquisition for approximately $82.5 million utilizing cash drawn from our senior unsecured revolving credit facility. Lanier consisted of two temperature-controlled storage facilities in Georgia serving the poultry industry. Since the date of acquisition, we have reported the results of these facilities within our warehouse segment.
    On November 19, 2019, we completed the MHW Acquisition for a purchase price of approximately $51.6 million, utilizing available cash on hand. MHW consisted of two temperature-controlled storage facilities, one located in Chambersburg, Pennsylvania and another in Perryville, Maryland. Since the date of acquisition, we have reported the results of these facilities within our warehouse segment.
    On January 2, 2020, we completed the purchase of all outstanding shares of Nova Cold for cash consideration of C$338.7 million (USD $260.6 million). Nova Cold consisted of four temperature-controlled facilities in Toronto, Calgary and Halifax. The acquisition was funded utilizing proceeds from the settlement of our April 2019 forward sale agreement combined with funds drawn on our 2018 Senior Unsecured Revolving Credit Facility. Since the date of acquisition, we have reported the results of these facilities within our warehouse segment.
Also, on January 2, 2020, we completed the purchase of all outstanding membership interests of Newport Cold for cash consideration of $57.7 million, utilizing available cash on hand. Newport Cold consists of a single temperature-controlled warehouse located in St. Paul, Minnesota. Since the date of acquisition, we have reported the results of this facility within our warehouse segment.
On March 6, 2020, we acquired a 14.99% ownership interest in Superfrio Armazéns Gerais S.A. (SuperFrio) for Brazil Real Dollars of R$117.8 million, or approximately USD $25.7 million, inclusive of certain legal fees. We funded the purchase price using cash on hand. Our pro-rata share of the Brazil JV’s results are included within “(Loss) income from investments in partially owned entities”. As of December 31, 2020, SuperFrio owns or operates 22 temperature-controlled warehouses in Brazil.
On August 31, 2020, we completed the acquisition of Caspers Cold Storage for cash consideration of approximately $25.6 million, utilizing available cash on hand. Caspers consisted of a single temperature-controlled warehouse located in Tampa, Florida. Since the date of acquisition, we have reported the results of this facility within our warehouse segment.
Additionally, on August 31, 2020, we completed the acquisition of AM-C Warehouses for cash consideration of approximately $82.7 million, utilizing available cash on hand. AM-C Warehouses consisted of an owned facility in Mansfield, Texas and a leased facility in Grand Prairie, Texas. Since the date of acquisition, we have reported the results of these facilities within our warehouse segment.
On November 2, 2020, we completed the acquisition of New Jersey based Halls Warehouse Corporation for $489.2 million. Halls consisted of eight facilities near the Port of Newark. Halls also provides transportation



services to its customers. Since the date of acquisition, we have reported the results of the facilities within our warehouse segment, and the results of Halls transportation services within our transportation segment.

On December 30, 2020, we completed the acquisition of Agro Merchants for total consideration of $1.59 billion, including cash received of $47.5 million. This was comprised of cash consideration totaling $1.08 billion, of which $49.7 million was deferred, and the issuance of 14,166,667 common shares of beneficial interest to Oaktree, with a fair value of $512.1 million based upon the closing share price on December 29, 2020 of $36.15. Financing lease and sale-leaseback obligations associated with the acquisition totaled $119.9 million, and when added to the total consideration transferred brings the total transaction cost to approximately $1.7 billion. The one business day of results was immaterial to the Consolidated Statement of Operations for the year ended December 31, 2020. Agro Merchants operates more than 236 million cubic feet of temperature-controlled warehouse and distribution space across 46 facilities and provides transportation services in the United States, Europe, Australia and Chile. We expect to report the results of these facilities within our warehouse segment in 2021, and the results of the transportation operations within our transportation segment in 2021.
Our results of operations for the year ended December 31, 2020 includes the four months for the activity of the AM-C and Caspers acquisitions, and the two months for the activity of the Halls acquisition. Our results of operations for the year ended December 31, 2019 includes the one month and partial period of November for the activity of the MHW Acquisition, eight months of activity for the Cloverleaf Acquisition and Lanier Acquisition, and eleven months of activity for the PortFresh Acquisition. Refer to Notes 2 and 3 to the Consolidated Financial Statements in this Annual Report on Form 10-K for further information.



COVID-19
We are continuing to closely monitor the impact of the COVID-19 pandemic on all aspects of our business and geographies, including how it will impact our customers and business partners. While we have not experienced significant disruptions on our operations from the COVID-19 pandemic thus far, we are unable to predict the future impact that the COVID-19 pandemic may have on our financial condition, results of operations and cash flows due to numerous uncertainties arising from the pandemic. The extent to which COVID-19 impacts our operations will depend on future developments, which are highly uncertain and cannot be predicted with any degree of confidence, including the scope, severity, duration and geographies of the outbreak, the actions taken to contain the COVID-19 pandemic or mitigate its impact as requested or mandated by governmental authorities or otherwise voluntarily taken by individuals or businesses, and the direct and indirect economic effects of the outbreak and containment measures, among others. Our business is deemed an “essential business” as defined by the Department of Homeland Security, which means that our associates are able to continue working in our facilities during “shelter-in-place” or “stay-at-home” orders. The outbreak of COVID-19 in the United States and other countries in which we operate, has significantly adversely impacted global economic activity and has contributed to significant volatility and negative pressure in financial markets. The global impact of the outbreak has led many nations, states and local authorities to institute “shelter-in-place” or “stay-at-home” orders, mandate business and school closures and restrict travel. Certain states and cities, including where we own properties, have development sites and where our principal place of business is located, have also reacted by instituting restrictions on travel, “shelter in place” rules, restrictions on types of business that may continue to operate, and/or restrictions on the types of construction projects that may continue. Many states and cities have begun implementing “reopening” plans, however, these restrictions vary widely by jurisdiction and may continue to change as the COVID-19 pandemic progresses. The negative impacts of the COVID-19 pandemic are pervasive across a broad spectrum of industries, including industries in which we, our customers and business partners operate. Negative impacts from COVID-19 may negatively impact the business and operations of our customers and business partners (including our suppliers). Further, the impacts of a potentially worsening of global economic conditions and the continued disruptions to, and volatility in, the credit and financial markets, consumer and business spending as well as other unanticipated consequences continue to remain unknown. The impacts of locations of outbreaks and actions mandated by governmental authorities or taken voluntarily by businesses and individuals to contain or mitigate the spread of COVID-19 and the timing of the repeal or loosening of such restrictions are also unknown. As a result, we cannot at this time predict the impact of the COVID-19 pandemic, but it could have a material adverse effect on our business, financial condition, liquidity, results of operations and prospects. Refer to “Risk Factors - Risks Related to Public Health Crises - We face various risks and uncertainties related to public health crises, including the recent and ongoing global outbreak of the novel coronavirus and variants (COVID-19). The COVID-19 pandemic is growing and its impacts are uncertain and hard to measure and may have a material adverse effect on us.
Foreign Currency Translation Impact on Our Operations
    Our consolidated revenues and expenses are subject to variations caused by the net effect of foreign currency translation on revenues and expenses incurred by our operations outside the United States. Future fluctuations of foreign currency exchange rates and their impact on our Consolidated Statements of Operations are inherently uncertain. As a result of the relative size of our international operations, these fluctuations may be material on our results of operations. Our revenues and expenses from our international operations are typically denominated in the local currency of the country in which they are derived or incurred. Therefore, the impact of foreign currency fluctuations on our results of operations and margins is partially mitigated.
    The following table shows a comparison of underlying average exchange rates of the foreign currencies that impacted our U.S. dollar-reported revenues and expenses during the periods discussed herein together with a



comparison against the exchange rates of such currencies at the end of the applicable periods presented herein. The rates below represent the U.S. dollar equivalent of one unit of the respective foreign currency. Amounts presented in constant currency within our results of operations are calculated by applying the average foreign exchange rate from the comparable prior year period to actual local currency results in the current period, rather than the actual exchange rates in effect during the respective period. While constant currency metrics are a non-GAAP calculation and do not represent actual results, the comparison allows the reader to understand the impact of the underlying operations in addition to the impact of changing foreign exchange rates.
Foreign CurrencyForeign
exchange
rates as of
December 31,
2020
Average foreign exchange rates used to translate actual operating results for the year ended December 31, 2020Foreign
exchange
rates as of
December 31,
2019
Prior period average
foreign exchange rate
used to adjust actual operating results for the year ended
December 31, 2020(1)
Australian dollar0.769 0.688 0.703 0.699 
New Zealand dollar0.718 0.649 0.675 0.664 
Argentine peso0.012 0.014 0.017 0.022 
Canadian dollar0.785 0.746 0.772 0.752 
Euro(2)
1.222 N/AN/AN/A
British pound(2)
1.367 N/AN/AN/A
Chilean peso(2)
0.141 N/AN/AN/A
Poland Zloty(2)
0.268 N/AN/AN/A
Brazilian real(3)
0.193 0.185 N/AN/A
(1)Represents the relevant average foreign exchange rates in effect in the comparable prior period applied to the activity for the current period. The average foreign currency exchange rates we apply to our operating results are derived from third party reporting sources for the periods indicated.
(2)Included due to our acquisition of Agro on December 30, 2020, no rates are reflected prior to our investment.
(3)Included due to our investment in the Brazil JV in March 2020, thus prior year rates not included during period prior to our investment. The average rate used for the year ended December 31, 2020 reflects the average rate from the date of our initial investment through the end of the year.
 
Focus on Our Operational Effectiveness and Cost Structure
    We continuously seek to execute on various initiatives aimed at streamlining our business processes and reducing our cost structure, including: realigning and centralizing key business processes and fully integrating acquired assets and businesses; implementing standardized operational processes; integrating and launching new information technology tools and platforms; instituting key health, safety, leadership and training programs; and capitalizing on the purchasing power of our network. Through the realignment of our business processes, we have acquired new talent and strengthened our service offerings. In order to reduce costs in our facilities, we have invested in energy efficiency projects, including LED lighting, thermal energy storage, motion-sensor technology, variable frequency drives for our fans and compressors, third party efficiency reviews and real-time monitoring of energy consumption, rapid open and close doors, and alternative-power generation technologies to improve the energy efficiency of our warehouses. We have also performed fine-tuning of our refrigeration systems, deployed efficient energy management practices, such as time-of-use and awareness, and have increased our participation in Power Demand Response programs with some of our power suppliers. These initiatives have allowed us to reduce our consumption of kilowatt hours and energy spend.
    As part of our initiatives to streamline our business processes and to reduce our cost structure, we have evaluated and exited less strategic and profitable markets or business lines, including the sale of certain warehouse assets, the exit of certain leased facilities, the exit of certain managed warehouse agreements, the sale of our quarry business and the exit of the China JV (see Note 4 to the Consolidated Financial Statements in this



Annual Report on Form 10-K for more information regarding the China JV). Through our process of active portfolio management, we continue to evaluate our markets and offerings.
Strategic Shift within Our Transportation Segment
    Several years ago, we initiated a strategic shift in our transportation segment services and solutions. The intention of this strategic shift was to better focus our business on the operation of our temperature-controlled warehouses. Specifically, we have gradually exited certain commoditized, non-scalable, or low margin services we historically offered to our customers, in favor of more profitable and value-added programs, such as regional, national, truckload and retailer-specific multi-vendor consolidation services. We designed each value-added program to improve efficiency and reduce transportation and logistics costs to our warehouse customers, whose transportation spend typically represents the majority of their supply-chain costs. We believe this efficiency and cost reduction helps to drive increased client retention, as well as maintain high occupancy levels in our temperature-controlled warehouses. Over the last several years, we have made significant progress in implementing our strategic initiative of growing our transportation service offering in a way that complements our temperature-controlled warehouse business, for example, we have also added a dedicated fleet service offering through acquisitions. We intend to continue executing this strategy in the future.
Historically Significant Customer
    For the years ended December 31, 2020, 2019, and 2018 one customer accounted for more than 10% of our total revenues, with revenues received of $257.3 million, $211.1 million and $212.8 million, respectively. The substantial majority of this customer’s business relates to our third-party managed segment. We are reimbursed for substantially all expenses we incur in managing warehouses on behalf of third-party owners. We recognize these reimbursements as revenues under applicable accounting guidance, but generally do not affect our financial results because they are offset by the corresponding expenses that we recognize in our third-party managed segment cost of operations. Of the revenues received from this customer, $241.8 million, $195.4 million, and $196.3 million represented reimbursements for certain expenses we incurred during the years ended December 31, 2020, 2019 and 2018, respectively, that were offset by matching expenses included in our third-party managed cost of operations.
Economic Occupancy of our Warehouses
We define average economic occupancy as the aggregate number of physically occupied pallets and any additional pallets otherwise contractually committed for a given period, without duplication. We estimate the number of contractually committed pallet positions by taking into account the actual pallet commitment specified in each customers’ contract, and subtracting the physical pallet positions. We regard economic occupancy as an important driver of our financial results. 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. Additionally, we actively seek opportunities to transition our current customers to contracts that feature a fixed storage commitment when renewing existing agreements or upon the change in the anticipated profile of our customer. This strategy mitigates the impact of changes in physical occupancy throughout the course of the year due to seasonality, as well as other factors that can impact physical occupancy while ensuring our customers have the necessary space they need to support their business.
Throughput at our Warehouses



    The level and nature 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. The nature of throughput may be driven by the expected turn of the underlying product or commodity. Throughput pallets can be influenced both by the food manufacturers as well as shifts in demand preferences. Food manufacturers’ production levels, which respond to market conditions and consumer preferences, may impact inbound pallets. Similarly, a change in inventory turnover due to shift in customer demand may impact outbound pallets.
How We Assess the Performance of Our Business
Segment Contribution (Net Operating Income or “NOI”)
    We evaluate the performance of our primary business segments based on their contribution (NOI) to our overall results of operations. We use the term “segment contribution (NOI)” to mean a segment’s revenues less its cost of operations (excluding any depreciation and amortization, impairment charges, corporate-level selling, general and administrative expenses and corporate-level acquisition, litigation and other expenses). We use segment contribution (NOI) to evaluate our segments for purposes of making operating decisions and assessing performance in accordance with FASB ASC, Topic 280, Segment Reporting.
    We also analyze the “segment contribution (NOI) margin” for each of our business segments, which we calculate as segment contribution (NOI) divided by segment revenues.
    In addition to our segment contribution (NOI) and segment contribution (NOI) margin, we analyze the contribution (NOI) of our warehouse rent and storage operations and our warehouse services operations within our warehouse segment. We calculate the contribution (NOI) of our warehouse rent and storage operations as rent and storage revenues less power and other facilities cost. We calculate the contribution (NOI) of our warehouse services operations as warehouse services revenues less labor and other service costs. We calculate the contribution (NOI) margin for each of these operations as the applicable contribution (NOI) measure divided by the applicable revenue measure. We believe the presentation of these contribution (NOI) and contribution (NOI) margin measures helps investors understand the relative revenues, costs and earnings resulting from each of these separate types of services we provide to our customers in the same manner reviewed by our management in connection with the operation of our business. These contribution (NOI) measures within our warehouse segment are not measurements of financial performance under U.S. GAAP, and these measures should be considered as supplements, but not as alternatives, to our results calculated in accordance with U.S. GAAP. We provide reconciliations of these measures in the discussions of our comparative results of operations below.
Same Store Analysis
    We define our “same store” population once a year at the beginning of the current calendar year. Our same store population includes properties that were owned or leased for the entirety of two comparable periods and that have reported at least twelve months of consecutive normalized operations prior to January 1 of the prior calendar year. We define “normalized operations” as properties that have been open for operation or lease after development or significant modification, including the expansion of a warehouse footprint or a warehouse rehabilitation subsequent to an event, such as a natural disaster or similar event causing disruption to operations. In addition, our definition of “normalized operations” takes into account changes in the ownership structure (e.g., purchase of a previously leased warehouse would result in different charges in the compared periods), which would impact comparability in our warehouse segment contribution (NOI).



Acquired properties will be included in the “same store” population if owned by us as of the first business day of each year, of the prior calendar year and still owned by us as of the end of the current reporting period, unless the property is under development. The “same store” pool is also adjusted to remove properties that were sold or entering development subsequent to the beginning of the current calendar year. As such, the “same store” population for the period ended December 31, 2020 includes all properties that we owned at January 2, which had both been owned and had reached “normalized operations” by January 2, 2019.
    We calculate “same store contribution (NOI)” as revenues for the same store population less its cost of operations (excluding any depreciation and amortization, impairment charges and corporate-level selling, general and administrative expenses, corporate-level acquisition, litigation and other expenses and gain or loss on sale of real estate). In order to derive an appropriate measure of period-to-period operating performance, we also calculate our same store contribution (NOI) on a constant currency basis to remove the effects of foreign currency exchange rate movements by using the comparable prior period exchange rate to translate from local currency into U.S. dollars for both periods. We evaluate the performance of the warehouses we own or lease using a “same store” analysis, and we believe that same store contribution (NOI) is helpful to investors as a supplemental performance measure because it includes the operating performance from the population of properties that is consistent from period to period and also on a constant currency basis, thereby eliminating the effects of changes in the composition of our warehouse portfolio and currency fluctuations on performance measures.
    The following table shows the number of same-store warehouses in our portfolio and the number of warehouses excluded as same-store warehouses for the year ended December 31, 2020. While not included in the non-same store warehouse count in the table below, the results of operations for the non-same store warehouses includes the partial period impact of the sites that were exited during the year ended December 31, 2020, as described in footnote 2 following the table. In addition, we hold two minority interests in Brazilian-based joint ventures, one with SuperFrio, which owns or operates 22 temperature-controlled warehouses and one with Comfrio, which owns or operates 13 temperature-controlled warehouses; these joint ventures are not included in the table below.
Total Warehouses238
Same Store Warehouses (1)
135
Non-Same Store Warehouses (1)
94
Third-Party Managed Warehouses (2)
9
    (1) At the beginning of 2020 we reclassified one facility in our portfolio to the same store population from the non-same store population as a result of achieving normalized operations, two facilities were reclassified from to our non-same store population from our same store population as a result of the redevelopment impact to the Atlanta Major Market Strategy that is in progress, and one facility that was in the same-store population was sold. During 2020, we acquired four facilities in connection with the Nova Cold Acquisition, one facility in connection with the Newport Acquisition, two facilities in connection with the AM-C Acquisition, one facility in connection with the Caspers Acquisition, eight facilities in connection with the Halls Acquisition and 46 facilities in connection with the Agro Acquisition, all of which were added to the non-same store population. Additionally, during 2020 we completed a development upon land that was acquired in connection with the PortFresh Acquisition, which was added to the non-same store population.
    (2) During 2020, we exited two third-party managed warehouses, which were not renewed upon expiration of the operating agreement.
     Same store contribution (NOI) is not a measurement of financial performance under U.S. GAAP. In addition, other companies providing temperature-controlled warehouse storage and handling and other warehouse services may not define same store or calculate same store contribution (NOI) in a manner consistent with our definition or calculation. Same store contribution (NOI) should be considered as a supplement, but not as an alternative, to our results calculated in accordance with U.S. GAAP. We provide reconciliations of these measures in the discussions of our comparative results of operations below.



Constant Currency Metrics
    As discussed above under “Key Factors Affecting Our Business and Financial Results—Foreign Currency Translation Impact on Our Operations,” our consolidated revenues and expenses are subject to variations outside our control that are caused by the net effect of foreign currency translation on revenues generated and expenses incurred by our operations outside the United States. As a result, in order to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency fluctuations, we analyze our business performance based on certain constant currency reporting that represents current period results translated into U.S. dollars at the relevant average foreign exchange rates applicable in the comparable prior period. We believe that the presentation of constant currency results provides a measurement of our ongoing operations that is meaningful to investors because it excludes the impact of these foreign currency movements that we cannot control. Constant currency results are not measurements of financial performance under U.S. GAAP, and our constant currency results should be considered as a supplement, but not as an alternative, to our results calculated in accordance with U.S. GAAP. The constant currency performance measures should not be considered a substitute for, or superior to, the measures of financial performance prepared in accordance with U.S. GAAP. We provide reconciliations of these measures in the discussions of our comparative results of operations below. Our discussion of the drivers of our performance below are based upon U.S. GAAP.
SEC Amendments to Financial Disclosures about Acquired and Disposed Businesses
In May 2020, the SEC adopted the final rule under SEC release No. 33-10786, Amendments to Financial Disclosures about Acquired and Disposed Businesses, amending Rule 1-02(w)(2) which includes amendments to certain of its rules and forms related to the disclosure of financial information regarding acquired or disposed businesses. Among other changes, the amendments impact SEC rules relating to (1) the definition of “significant” subsidiaries, (2) requirements to provide financial statements for “significant” acquisitions, and (3) revisions to the formulation and usage of pro forma financial information. The final rule is effective on January 1, 2021; however, voluntary early adoption is permitted. The Company early adopted the provisions of the final rule in the third quarter of 2020. We have applied the new rules to the contemplated and completed acquisitions since the date of adoption. The Agro acquisition met the SEC’s revised definition of significance, requiring one year of audited financial statements and pro forma financial information and was filed on Form 8-K/A on February 26, 2021.
Presentation
    A detailed discussion of the 2020 year-over-year changes can be found below and a detailed discussion of the 2019 year-over-year changes can be found in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” on Form 10-K filed with the SEC on March 2, 2020.



Results of Operations
Comparison of Results for the Years Ended December 31, 2020 and 2019
Warehouse Segment
The following table presents the operating results of our warehouse segment for the years ended December 31, 2020 and 2019.
Year ended December 31,Change
2020 actual
2020 constant currency(1)
2019 actualActualConstant currency
(Dollars in thousands)
Rent and storage$666,150 $669,154 $582,509 14.4 %14.9 %
Warehouse services883,164 885,728 794,708 11.1 %11.5 %
Total warehouse segment revenue1,549,314 1,554,882 1,377,217 12.5 %12.9 %
Power90,533 91,039 82,380 9.9 %10.5 %
Other facilities costs (2)
137,216 137,887 113,551 20.8 %21.4 %
Labor677,039 679,306 614,049 10.3 %10.6 %
Other services costs (3)
124,193 124,767 119,646 3.8 %4.3 %
Total warehouse segment cost of operations1,028,981 1,032,999 929,626 10.7 %11.1 %
Warehouse segment contribution (NOI)$520,333 $521,883 $447,591 16.3 %16.6 %
Warehouse rent and storage contribution (NOI) (4)
$438,401 $440,228 $386,578 13.4 %13.9 %
Warehouse services contribution (NOI) (5)
$81,932 $81,655 $61,013 34.3 %33.8 %
Total warehouse segment margin33.6 %33.6 %32.5 %109 bps106 bps
Rent and storage margin(6)
65.8 %65.8 %66.4 %-55 bps-58 bps
Warehouse services margin(7)
9.3 %9.2 %7.7 %160 bps154 bps
(1)The adjustments from our U.S. GAAP operating results to calculate our operating results on a constant currency basis are the effect of changes in foreign currency exchange rates relative to the comparable prior period.
(2)Includes real estate rent expense of $12.9 million and $12.3 million for the year ended December 31, 2020 and 2019, respectively.
(3)Includes non-real estate rent expense (equipment lease and rentals) of $9.4 million and $12.0 million for the year ended December 31, 2020 and 2019, respectively.
(4)Calculated as rent and storage revenue less power and other facilities costs.
(5)Calculated as warehouse services revenue less labor and other services costs.
(6)Calculated as warehouse rent and storage contribution (NOI) divided by warehouse rent and storage revenue.
(7)Calculated as warehouse services contribution (NOI) divided by warehouse services revenue.
Warehouse segment revenue was $1.55 billion for the year ended December 31, 2020, an increase of $172.1 million, or 12.5%, compared to $1.38 billion for the year ended December 31, 2019. On a constant currency basis, our warehouse segment revenue was $1.55 billion for the year ended December 31, 2020, an increase of $177.7 million, or 12.9%, compared to the prior year. Approximately $158.7 million of the increase, on an actual basis, was primarily driven by acquisitions completed during 2019 and 2020, including the growth experienced period-over-period during overlapping periods of ownership. We acquired 23 warehouse facilities as a result of the Cloverleaf and Lanier acquisitions on May 1, 2019, two facilities in connection with the MHW acquisition on November 19, 2019 and one facility as a result of the PortFresh acquisition on February 1, 2019, and therefore did not have ownership of these facilities during the entirety of the comparable prior period. In 2020, we acquired 62 facilities in the warehouse segment in the Agro, AM-C, Caspers, Halls, Newport and Nova Cold acquisitions. Agro’s revenue is not reflected in the operating results of our warehouse segment as the



acquisition closed on December 30, 2020 with only one day of results for the year ended December 31, 2020. We consider the results to be immaterial and have excluded it for the year ended December 31, 2020.
Throughout 2020, revenue growth has been driven by the impact of acquisitions. Additionally, we experienced higher than seasonal grocery demand within the retail sector due to the COVID-19 pandemic. However, this was mostly offset by decreased consumption in the food services sector due to stay-at-home orders and continued social distancing which resulted in lower services revenue due to the shift in demand. Later in the second quarter of 2020, the food service sector volumes began to increase as re-opening plans were implemented but still significantly lower than the prior comparable period. The increase was also partially due to higher economic occupancy in our same-store pool from higher commodity holdings and a slowdown in food service activity and exports, coupled with an increase in fixed committed contracts. The remaining increase was primarily due to a more favorable customer mix, improvements in our commercial terms and contractual rate escalations, the incremental revenue from our expansion of the Rochelle, Illinois facility and the opening of the development in Savannah. The foreign currency translation of revenue received by our foreign operations had a $5.6 million unfavorable impact during the year ended December 31, 2020, which was mainly driven by the strengthening of the U.S. dollar over the Australian dollar and to a lesser extent the strengthening of the U.S. dollar over the Argentine peso.
Warehouse segment cost of operations was $1.03 billion for the year ended December 31, 2020, an increase of $99.4 million, or 10.7%, compared to $929.6 million for the year ended December 31, 2019. On a constant currency basis, our warehouse segment cost of operations was $1.03 billion for the year ended December 31, 2020, an increase of $103.4 million, or 11.1%, compared to the prior year. Approximately $97.8 million of the increase, on an actual basis,was primarily driven by the additional facilities we acquired in connection with the aforementioned acquisitions. In addition, we incurred increases in our cost of operations in response to COVID-19. We undertook initiatives to ensure the health and safety of our associates, incurring higher costs for items such as labor, due to social distancing requirements, cleaning and sanitation supplies, and other personal protective equipment (“PPE”). These incremental COVID-19 expenses include higher sanitation costs of $3.2 million and higher PPE costs of $0.8 million for the year ended December 31, 2020. Additionally, we experienced higher property taxes and property insurance expense during 2020, due primarily to our growing portfolio. During the second quarter of 2020, we also paid a front-line appreciation bonus to our associates in recognition of their dedication and efforts during the COVID-19 pandemic, which totaled $4.3 million. The foreign currency translation of expenses incurred by our foreign operations had a $4.0 million favorable impact during the year ended December 31, 2020.
Warehouse segment contribution (NOI) was $520.3 million for the year ended December 31, 2020, an increase of $72.7 million, or 16.3%, compared to $447.6 million for the year ended December 31, 2019. On a constant currency basis, warehouse segment contribution was $521.9 million for the year ended December 31, 2020, an increase of $74.3 million, or 16.6%, compared to the prior year. The foreign currency translation of our results of operations had a $1.6 million unfavorable impact to the warehouse segment contribution period-over-period. The increase was primarily driven by the additional facilities in the warehouse segment as a result of the aforementioned acquisitions, including the growth and synergies experienced period-over-period during overlapping periods of ownership. The remainder of the increase was driven by improvements in our core business, same store economic occupancy growth, and disciplined cost controls through the Americold Operating System of our power and other services costs, which allowed us to generate higher contribution margins. The increases were partially offset by the currency translation impact of the strengthening of the U.S. dollar, the appreciation bonus paid to front-line associates to recognize the efforts of our associates during the COVID-19 pandemic, increases in the cost of property taxes and property insurance, as well as the increase in costs related to the COVID-19 response efforts to maintain the health and safety of our associates.



Same Store Analysis
We had 135 same stores for the years ended December 31, 2020 and 2019. The following table presents revenues, cost of operations, contribution (NOI) and margins for our same stores and non-same stores with a reconciliation to the total financial metrics of our warehouse segment for the years ended December 31, 2020 and December 31, 2019. Amounts related to the AM-C, Cloverleaf, Caspers, Hall’s, Lanier, MHW, Newport and Nova Cold acquisitions are reflected within non-same store results. The operational results from one day of ownership from the Agro acquisition is not material for the year ended December 31, 2020.
The following table presents revenues, cost of operations, contribution (NOI) and margins for our same stores and non-same stores with a reconciliation to the total financial metrics of our warehouse segment for the years ended December 31, 2020 and 2019.



Year ended December 31,Change
2020 actual2020 constant currency(1)2019 actualActualConstant currency
Number of same store sites135135n/an/a
Same store revenue:(Dollars in thousands)
Rent and storage$507,848 $510,614 $494,273 2.7 %3.3 %
Warehouse services668,717 671,079 660,843 1.2 %1.5 %
Total same store revenue1,176,565 1,181,693 1,155,116 1.9 %2.3 %
Same store cost of operations:
Power64,088 64,576 66,648 (3.8)%(3.1)%
Other facilities costs104,537 105,122 95,772 9.2 %9.8 %
Labor521,880 524,044 518,652 0.6 %1.0 %
Other services costs84,773 85,308 92,835 (8.7)%(8.1)%
Total same store cost of operations$775,278 $779,050 $773,907 0.2 %0.7 %
Same store contribution (NOI)$401,287 $402,643 $381,209 5.3 %5.6 %
Same store rent and storage contribution (NOI)(2)
$339,223 $340,916 $331,853 2.2 %2.7 %
Same store services contribution (NOI)(3)
$62,064 $61,727 $49,356 25.8 %25.1 %
Total same store margin34.1 %34.1 %33.0 %110 bps107 bps
Same store rent and storage margin(4)
66.8 %66.8 %67.1 %-34 bps-37 bps
Same store services margin(5)
9.3 %9.2 %7.5 %181 bps173 bps
Year ended December 31,Change
2020 actual2020 constant currency(1)2019 actualActualConstant currency
Number of non-same store sites(6)
9432n/an/a
Non-same store revenue:(Dollars in thousands)
Rent and storage$158,302 $158,540 $88,236 79.4 %79.7 %
Warehouse services214,447 214,649 133,865 60.2 %60.3 %
Total non-same store revenue372,749 373,189 222,101 67.8 %68.0 %
Non-same store cost of operations:
Power26,445 26,463 15,732 68.1 %68.2 %
Other facilities costs32,679 32,765 17,779 83.8 %84.3 %
Labor155,159 155,262 95,397 62.6 %62.8 %
Other services costs39,420 39,459 26,811 47.0 %47.2 %
Total non-same store cost of operations$253,703 $253,949 $155,719 62.9 %63.1 %
Non-same store contribution (NOI)$119,046 $119,240 $66,382 79.3 %79.6 %
Non-same store rent and storage contribution (NOI)(2)
$99,178 $99,312 $54,725 81.2 %81.5 %
Non-same store services contribution (NOI)(3)
$19,868 $19,928 $11,657 70.4 %71.0 %
Total non-same store margin31.9 %32.0 %29.9 %205 bps206 bps
Non-same store rent and storage margin(4)
62.7 %62.6 %62.0 %63 bps62 bps
Non-same store services margin(5)
9.3 %9.3 %8.7 %56 bps58 bps
Total warehouse segment revenue$1,549,314 $1,554,882 $1,377,217 12.5 %12.9 %
Total warehouse cost of operations$1,028,981 $1,032,999 $929,626 10.7 %11.1 %
Total warehouse segment contribution$520,333 $521,883 $447,591 16.3 %16.6 %
(1)The adjustments from our U.S. GAAP operating results to calculate our operating results on a constant currency basis is the effect of changes in foreign currency exchange rates relative to the comparable prior period.
(2)Calculated as rent and storage revenues less power and other facilities costs.



(3)Calculated as warehouse services revenues less labor and other services costs.
(4)Calculated as rent and storage contribution (NOI) divided by rent and storage revenue.
(5)Calculated as warehouse services contribution (NOI) divided by warehouse services revenue.
(6)Non-same store warehouse count of 94 includes 46 warehouses acquired through the Agro acquisition on December 30, 2020, eight warehouses acquired through the Hall’s acquisition on November 2, 2020, three warehouses acquired through the Casper’s and AM-C warehouse acquisitions on August 31, 2020, and five warehouses acquired through the Nova Cold and Newport acquisitions on January 2, 2020. The results of these acquisitions are reflected in the results above since date of ownership. The operational results from one day of ownership of the Agro warehouses is immaterial to the three months and year ended December 31, 2020.
n/r - not relevant
The following table provides certain operating metrics to explain the drivers of our same store performance.
Year ended December 31,Change
Units in thousands except per pallet and site number data - unaudited20202019
Number of same store sites135 135 n/a
Same store rent and storage:
Economic occupancy(1)
Average occupied economic pallets2,440 2,405 1.5 %
Economic occupancy percentage80.5 %79.4 %110 bps
Same store rent and storage revenue per economic occupied pallet$208.10 $205.53 1.3 %
Constant currency same store rent and storage revenue per economic occupied pallet$209.23 $205.53 1.8 %
Physical occupancy(2)
Average physical occupied pallets2,204 2,282 (3.4)%
Average physical pallet positions3,031 3,028 0.1 %
Physical occupancy percentage72.7 %75.4 %-265 bps
Same store rent and storage revenue per physical occupied pallet$230.45 $216.62 6.4 %
Constant currency same store rent and storage revenue per physical occupied pallet$231.70 $216.62 7.0 %
Same store warehouse services:
Throughput pallets (in thousands)25,133 25,842 (2.7)%
Same store warehouse services revenue per throughput pallet$26.61 $25.57 4.1 %
Constant currency same store warehouse services revenue per throughput pallet$26.70 $25.57 4.4 %
Number of non-same store sites(3)
9432n/a
Non-same store rent and storage:
Economic occupancy(1)
Average occupied economic pallets793 460 72.2 %
Economic occupancy percentage74.5 %79.9 %-542 bps
Physical occupancy(2)
Average physical occupied pallets762 446 70.8 %
Average physical pallet positions1,065 576 84.8 %
Physical occupancy percentage71.6 %77.5 %-586 bps
Non-same store warehouse services:
Throughput pallets (in thousands)6,990 4,249 64.5 %
(1)We define average economic occupancy as the aggregate number of physically occupied pallets and any additional pallets otherwise contractually committed for a given period, without duplication. We estimate the number of contractually committed pallet positions by taking into account actual pallet commitment specified in each customers’ contract, and subtracting the physical pallet positions.
(2)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 applicable period. 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 a formula utilizing 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 three to four 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.
(3)Non-same store warehouse count of 94 includes 46 warehouses acquired through the Agro acquisition on December 30, 2020, eight warehouses acquired through the Hall’s acquisition on November 2, 2020, three warehouses acquired through the Casper’s and AM-C warehouse acquisitions on August 31, 2020, and five warehouses acquired through the Nova Cold and Newport acquisitions on January 2, 2020. The results of these acquisitions are reflected in the results above since date of ownership. The operational results from one day of ownership of the Agro warehouses is immaterial to the three months and year ended December 31, 2020.
Economic occupancy at our same stores was 80.5% for the year ended December 31, 2020, an increase of 110 basis points compared to 79.4% for the year ended December 31, 2019. This change was primarily the result of an increase in fixed storage contracts. Our economic occupancy at our same stores for the year ended December 31, 2020 was 781 basis points higher than our corresponding average physical occupancy of 72.7%. The decrease of 265 basis points in average physical occupancy compared to 75.4% for the year ended December 31, 2019 was partially driven by lower protein occupancy and lower food service business occupancy due to “stay-at-home” orders as well as port congestion as a result of COVID-19, which generated lower throughput of inventory within our warehouses. This was partially offset by the increase in physical occupancy related to the retail products as a result of higher grocery demand related to COVID-19.
Same store rent and storage revenues per economic occupied pallet increased 1.3% period-over-period, primarily driven by improvements in our commercial terms and contractual rate escalations. On a constant currency basis, our same store rent and storage revenues per occupied pallet increased 1.8% period-over-period.
Throughput pallets at our same stores were 25.1 million pallets for the year ended December 31, 2020, a decrease of 2.7% from 25.8 million pallets for the year ended December 31, 2019. This decrease was the result of the COVID related impacts in various sectors and commodities, including the initial surge and ongoing elevated demand from our grocery retail sector, offset by the decrease in throughput in the food service sector and protein commodity. Same store warehouse services revenue per throughput pallet increased 4.1% compared to the prior year primarily as a result of contractual rate escalations, favorable business mix and an increase in higher-priced, value-added warehouse services such as repackaging, blast freezing, and case-picking, partially offset by unfavorable foreign currency translation as previously discussed. On a constant currency basis, our same store services revenue per throughput pallet increased 4.4% compared to the prior year.
Third-Party Managed Segment
The following table presents the operating results of our third-party managed segment for the years ended December 31, 2020 and 2019.
Year ended December 31,Change
2020 actual2020 constant currency(1)2019 actualActualConstant currency
Number of managed sites11 
(Dollars in thousands)
Third-party managed revenue$291,751 $292,019 $252,939 15.3 %15.5 %
Third-party managed cost of operations279,523 279,809 241,178 15.9 %16.0 %
Third-party managed segment contribution$12,228 $12,210 $11,761 4.0 %3.8 %
Third-party managed margin4.2 %4.2 %4.6 %-46 bps-47 bps



(1)The adjustments from our U.S. GAAP operating results to calculate our operating results on a constant currency basis are the effect of changes in foreign currency exchange rates relative to the comparable prior period.
Third-party managed revenue was $291.8 million for the year ended December 31, 2020, an increase of $38.8 million, or 15.3%, compared to $252.9 million for the year ended December 31, 2019. On a constant currency basis, third-party managed revenue was $292.0 million for the year ended December 31, 2020, an increase of $39.1 million, or 15.5%, compared to the prior year. This increase was a result of higher business volume in our domestic and Australia managed operations due to the consumer demand shift to retail. This increase was partially offset by the unfavorable impact of foreign currency translation related to our Canadian and Australian managed revenues, and the impacts from the exit of two Canadian managed facilities during 2020 and the exit of one domestic managed facility during the third quarter of 2019.
Third-party managed cost of operations was $279.5 million for the year ended December 31, 2020, an increase of $38.3 million, or 15.9%, compared to $241.2 million for the year ended December 31, 2019. On a constant currency basis, third-party managed cost of operations was $279.8 million for the year ended December 31, 2020, an increase of $38.6 million, or 16.0%, compared to the prior year. The increase was a result of higher business volume and is in line with the increase in revenues, partially offset by the exit of the facilities described above.
Third-party managed segment contribution (NOI) was $12.2 million for the year ended December 31, 2020, an increase of $0.5 million, or 4.0%, compared to $11.8 million for the year ended December 31, 2019. On a constant currency basis, third-party managed segment contribution (NOI) was $12.2 million for the year ended December 31, 2020, an increase of $0.4 million, or 3.8%, compared to the prior year. The increase in segment contribution was a result of the factors mentioned above.
Transportation Segment
The following table presents the operating results of our transportation segment for the years ended December 31, 2020 and 2019.
Year ended December 31,Change
2020 actual2020 constant currency(1)2019 actualActualConstant currency
(Dollars in thousands)
Transportation revenue$142,203 $143,742 $144,844 (1.8)%(0.8)%
Brokered transportation102,230 103,575 104,393 (2.1)%(0.8)%
Other cost of operations21,166 21,194 22,384 (5.4)%(5.3)%
Total transportation cost of operations123,396 124,769 126,777 (2.7)%(1.6)%
Transportation segment contribution (NOI)$18,807 $18,973 $18,067 4.1 %5.0 %
Transportation margin13.2 %13.2 %12.5 %75 bps73 bps
(1)The adjustments from our U.S. GAAP operating results to calculate our operating results on a constant currency basis are the effect of changes in foreign currency exchange rates relative to the comparable prior period.
Our transportation segment continued its strategic shift to focus on more profitable solutions, which create value for our customers while driving and supporting our warehouse business including consolidation offerings. Transportation revenue was $142.2 million for the year ended December 31, 2020, a decrease of $2.6 million, or 1.8%, compared to $144.8 million for the year ended December 31, 2019. On a constant currency basis, transportation revenue was $143.7 million for the year ended December 31, 2020, a decrease of $1.1



million, or 0.8%, compared to the prior year. The decrease was primarily driven by the exit of certain low-margin international and domestic transportation business, paired with the unfavorable impact from the foreign currency translation of revenues earned by our foreign operations. Domestically, our transportation operations experienced an increase due to the revenue associated with transportation operations from the Hall’s acquisition, which closed on November 2, 2020, and resulted in an increase of $4.6 million for the year ended December 31, 2020. Additionally, revenue increased from the Cloverleaf Acquisition, which contributed an increase of $2.0 million due to 12 months of results during the year ended December 31, 2020 as compared to eight months of ownership during the year ended December 31, 2019.
Transportation cost of operations was $123.4 million for the year ended December 31, 2020, a decrease of $3.4 million, or 2.7%, compared to $126.8 million for the year ended December 31, 2019. On a constant currency basis, transportation cost of operations was $124.8 million for the year ended December 31, 2020, a decrease of $2.0 million, or 1.6%, compared to the prior year. Domestically, our transportation cost of operations experienced an increase due to the cost associated with transportation operations from the Hall’s acquisition, which closed on November 2, 2020, and resulted in an increase of $3.5 million for the year ended December 31, 2020. Additionally, cost of operations increased from the Cloverleaf Acquisition, which contributed an increase of $1.2 million due to 12 months of results during the year ended December 31, 2020 as compared to eight months of ownership during the year ended December 31, 2019. Excluding the increases in transportation cost of operations resulting from the aforementioned acquisitions, the strategic shift referenced above, paired with the impact of the foreign currency translation of our international costs, led to a decline in transportation cost of operations for the segment.
Transportation segment contribution (NOI) was $18.8 million for the year ended December 31, 2020, an increase of $0.7 million, or 4.1%, compared to $18.1 million for the year ended December 31, 2019. Transportation segment margin increased 75 basis points from the prior year, to 13.2% from 12.5%. On a constant currency basis, transportation segment contribution was $19.0 million for the year ended December 31, 2020, an increase of $0.9 million, or 5.0%, compared to the prior year. The overall increase in margin was primarily due to the strategic shift referenced above, which resulted in more profitable business.
Quarry Segment
The following table presents the operating results of our quarry segment for the years ended December 31, 2020 and 2019. We sold our quarry business on July 1, 2020.
Year ended December 31,Change
20202019
(Dollars in thousands)
Quarry revenue$4,459 $8,705 (48.8)%
Quarry cost of operations4,329 7,867 (45.0)%
Quarry segment contribution (NOI)$130 $838 (84.5)%
Quarry margin2.9 %9.6 %670 bps
Quarry revenue was $4.5 million for the year ended December 31, 2020, a decrease of $4.2 million, or 48.8%, compared to $8.7 million for the year ended December 31, 2019. Quarry cost of operations was $4.3 million for the year ended December 31, 2020, a decrease of $3.5 million, or 45.0%, compared to $7.9 million for the year ended December 31, 2019. The decrease in both revenues and cost of operations was a result of the sale of the limestone quarry which closed on July 1, 2020.



Quarry segment contribution (NOI) was $0.1 million for the year ended December 31, 2020, as compared to $0.8 million for the year ended December 31, 2019, due to the sale of the quarry segment.
Other Consolidated Operating Expenses
Depreciation and amortization. Depreciation and amortization expense was $215.9 million for the year ended December 31, 2020, an increase of $52.5 million, or 32.2%, compared to $163.3 million for the year ended December 31, 2019. This increase was primarily due to the 2019 and 2020 acquisitions, expansions and developments.
Selling, general and administrative. Corporate-level selling, general and administrative expenses were $144.7 million for the year ended December 31, 2020, an increase of $15.4 million, or 11.9%, compared to $129.3 million for the year ended December 31, 2019. Included in these amounts are business development expenses attributable to new business pursuits, supply chain solutions and underwriting, facility development, customer onboarding, and engineering and consulting services to support our customers in the cold chain. Business development expenses represented approximately 13% and 14% of corporate-level selling, general and administrative expenses for the year ended December 31, 2020 and 2019, respectively. We believe these costs are comparable to leasing costs for other publicly-traded REITs. The increase in corporate-level selling, general and administrative expenses compared to the prior year was primarily due to higher share-based compensation and higher payroll and benefits related to additional investments to support our expanded development pipeline and higher professional fees. This was offset by a reduction in travel expense due to stay-at-home orders and travel restrictions as a result of the COVID-19 pandemic, paired with net synergies realized from acquisitions. For the years ended December 31, 2020 and 2019, corporate-level selling, general and administrative expenses were 7.3% and 7.2%, respectively, of total revenues.
Acquisition, litigation and other. Corporate-level acquisition, litigation and other expenses were $36.3 million for the year ended December 31, 2020, a decrease of $4.3 million compared to $40.6 million for the year ended December 31, 2019. Included in these amounts are business acquisition related costs, litigation costs associated with litigation charges outside of the normal course of business or resulting from a settlement, severance and equity acceleration costs incurred in connection with former executives, severance as a result of synergies realized from acquisitions or operational realignment, non-offering related equity issuance expenses, and terminated site operations costs. We view all of these costs as corporate in nature regardless of the segment or segments involved in certain transactions. During the year ended December 31, 2020, we incurred $26.5 million of acquisition related expenses primarily composed of professional fees and integration related costs in connection with completed and potential acquisitions, primarily related to the recently completed Agro Merchants Acquisition, and employee retention. Additionally, we incurred $1.1 million of severance primarily related to reduction in headcount as a result of the synergies from acquisitions, and partially related to the realignment of our international operations. During the fourth quarter of 2020 we were subject to a cybersecurity incident and incurred $7.9 million of costs related to it. The cyber incident costs include third-party fees incurred in connection with the cyber incident that occurred in November 2020, as well as any incremental costs, internal and external, incurred to restore operations at our facilities. During the year ended December 31, 2019, we incurred $24.3 million of acquisition related expenses primarily composed of professional fees and integration related costs in connection with completed and potential acquisitions, primarily related to the Cloverleaf Acquisition, and employee retention. In addition, we incurred $4.3 million of severance and equity acceleration expenses related to exited former executives and the resignation of a member of the Board of Trustees and $5.4 million of severance related to reduction in headcount as a result of the synergies created from the Cloverleaf and Lanier acquisitions and organizational realignment of our international operations. We also incurred $4.6 million of legal settlement and related litigation professional fees and $1.4 million of costs in connection with the secondary offering of



common shares on behalf of our previously significant shareholders in March 2019, for which we received no proceeds.
Impairment of long-lived assets. For the years ended December 31, 2020 and 2019, we recorded impairment charges of $8.2 million and $13.5 million, respectively. During the year ended December 31, 2020, we recorded impairment charges of $3.7 million for Quarry segment assets related to the sale of our quarry business, $2.1 million for Third-party managed segment assets within the leased facilities that we exited which could not be repurposed, $1.7 million for Warehouse segment assets related to a potential development project which we are no longer moving forward with and $0.5 million for Warehouse segment assets which were deemed unusable subsequent to the sale of our Boston facility. During the first quarter of 2019, management and our Board of Trustees formally approved the “Atlanta Major Market Strategy” plan which included the partial redevelopment of an existing warehouse facility. The partial redevelopment required the demolition of 75% of the current warehouse. As a result of this initiative, we recorded an impairment charge of $9.6 million during the first quarter of 2019. Additionally, during the first quarter of 2019, we recorded an impairment charge of $2.9 million related to a domestic idle warehouse facility in anticipation of sale of the asset, which was completed during the second quarter of 2019. Each of these impaired assets previously mentioned related to the Warehouse segment. In addition, during the second quarter of 2019, management determined that certain international transportation related assets were going to be idled and we recorded an impairment charge of $0.9 million as a result. These impaired assets related to the transportation segment.
Gain from sale of real estate. For the year ended December 31, 2020, we recorded a $22.1 million gain from the sale of real estate. On June 19, 2020, we completed the sale of a facility in our Warehouse segment, and began to transition the business to other nearby facilities, resulting in a $20.1 million gain from sale of real estate. On January 31, 2020, we received official notice from a customer to exercise its contractual call option to purchase land from us in Sydney, Australia, which we previously purchased for future development. We received sale proceeds upon exercise of the call option during the first quarter of 2020, resulting in a $2.5 million gain on sale.
Other Expense
The following table presents other items of income and expense for the years ended December 31, 2020 and 2019.
Year ended December 31,Change
20202019%
Other (expense) income:(Dollars in thousands)
Interest expense$(91,481)$(94,408)(3.1)%
Interest income1,162 6,286 (81.5)%
Bridge loan commitment fees(2,438)(2,665)(8.5)%
Loss on debt extinguishment, modifications and termination of derivative instruments(9,975)— (100.0)%
Foreign currency exchange (loss) gain, net(45,278)10 n/r
Other expense - net(2,563)(1,870)37.1 %
Loss from partially owned entities(250)(111)125.2 %
Gain from sale of partially owned entities— 4,297 (100.0)%
n/r= not relevant
Interest expense. Interest expense was $91.5 million for the year ended December 31, 2020, a decrease of $2.9 million, or 3.1%, compared to $94.4 million for the year ended December 31, 2019. The decrease was primarily due to the decrease in interest expense on the unhedged portion of our Senior Unsecured Term Loan A



Facility due to the decrease in the LIBOR rate. This was offset by the increase in the Senior Unsecured Term Loan A which was expanded to fund the Nova Cold acquisition and the private placement of $350.0 million aggregate principal amount of Series C Senior Unsecured Notes on May 7, 2019, which were used to fund a portion of the Cloverleaf and Lanier acquisitions. While our average outstanding principal has increased from the comparable prior period, on average, the effective interest rate of our outstanding debt has decreased from 4.79% for the year ended December 31, 2019 to 3.94% for the year ended December 31, 2020.
Interest income. Interest income of $1.2 million for the year ended December 31, 2020 decreased $5.1 million when compared to $6.3 million for the year ended December 31, 2019. This change was primarily driven by a lower interest rate of 0.51% earned during the year ended December 31, 2020 as compared to 2.3% during the year ended December 31, 2019, as well as a lower average cash balance as compared to the prior year.
Bridge loan commitment fees. Corporate-level bridge loan commitment fees were $2.4 million for the year ended December 31, 2020. In 2020 and 2019, we obtained a bridge loan to support the Agro and Cloverleaf acquisitions, respectively. The bridge loan facility for Agro and Cloverleaf ultimately did not need to be funded, and accordingly, we expensed the lender commitment and loan fee.
Loss on debt extinguishment, modifications and termination of derivative instruments. During the first quarter of 2020 we refinanced our Senior Unsecured Credit Facility, which resulted in the write-off of certain unamortized deferred financing costs of $0.8 million. During the fourth quarter of 2020, we closed on a debt private placement of €750 million senior unsecured notes. In connection with this issuance, we repaid $100.0 million of our outstanding Senior Unsecured Term Loan A-1 facility, resulting in a write-off of $1.5 million of unamortized deferred financing costs. In connection with the partial repayment of this debt we also terminated the related interest rate swaps, resulting in the recognition of a portion of the remaining unamortized balance in accumulated other comprehensive loss on the previously designated hedges for $7.7 million. The unamortized balance of $8.7 million will be recognized through 2024. No such costs were incurred during the year ended December 31, 2019.
Foreign currency exchange (loss) gain, net. We reported a foreign currency exchange loss of $45.3 million for the year ended December 31, 2020 compared to a nominal gain for the year ended December 31, 2019. During the fourth quarter of 2020, the Company entered into an undesignated foreign currency forward contract to lock in the conversion of the expected proceeds of the €750 million denominated debt issuance to USD, which settled on December 30, 2020, and resulted in $45.0 million in foreign currency exchange loss when compared to the USD equivalent of the Euro denominated debt at market rates, on the date of issuance.
Other expense - net. Other expense, net was $2.6 million for the year ended December 31, 2020 compared to $1.9 million for the year ended December 31, 2019. The increase of $0.7 million was primarily driven by the loss on asset disposal that was offset by a decrease in pension non-service costs.
Loss from partially owned entities. We reported a loss of $0.3 million for the year ended December 31, 2020 compared to a loss of $0.1 million for the year ended December 31, 2019. During the year ended December 31, 2020, we entered into the Brazil JV for which we recorded our portion of loss generated by SuperFrio. During the year ended December 31, 2019, the loss related to the China JV, which we exited during the third quarter of 2019.
Gain from sale of partially owned entities. During the year ended December 31, 2019, we sold our interest in the China JV which resulted in the $4.3 million gain.



Income Tax Benefit (Expense)
Income tax benefit for the year ended December 31, 2020 was $6.9 million, which represented an increase of $1.7 million, from an income tax benefit of $5.2 million for the year ended December 31, 2019. This increase was primarily due to recognition by our U.S. TRS of a deferred income tax benefit to reduce its valuation allowance by $2.0 million. The reduction in the valuation allowance is primarily attributable to net deferred tax liabilities acquired that are a positive source of income for valuation allowance assessment purposes. This deferred income tax benefit was offset by an increase in income tax expense of $0.3 million primarily attributable to our foreign operations.



Non-GAAP Financial Measures

We use the following non-GAAP financial measures as supplemental performance measures of our business: FFO, Core FFO, Adjusted FFO, EBITDAre and Core EBITDA.
We calculate funds from operations, or FFO, in accordance with the standards established by the Board of Governors of the National Association of Real Estate Investment Trusts, or NAREIT. NAREIT defines FFO as net income or loss determined in accordance with U.S. GAAP, excluding extraordinary items as defined under U.S. GAAP and gains or losses from sales of previously depreciated operating real estate assets, plus specified non-cash items, such as real estate asset depreciation and amortization, real estate asset impairment and our share of reconciling items for partially owned entities. We believe that FFO is helpful to investors as a supplemental performance measure because it excludes the effect of depreciation, amortization and gains or losses from sales of real estate, all of which are based on historical costs, which implicitly assumes that the value of real estate diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, FFO can facilitate comparisons of operating performance between periods and among other equity REITs.
We calculate core funds from operations, or Core FFO, as FFO adjusted for the effects of gain or loss on the sale of non-real estate assets, non-real estate impairment, acquisition, litigation and other, share-based compensation expense for the IPO retention grants, bridge loan commitment fees, loss on debt extinguishment, modifications and termination of derivative instruments, foreign currency exchange loss and gain from sale of partially owned entities. We also adjust for the impact of Core FFO attributable to partially owned entities. We have elected to reflect our share of Core FFO attributable to partially owned entities since the Brazil JV is a strategic partnership which we continue to actively participate in on an ongoing basis. The previous joint venture, the China JV, was considered for disposition during the periods presented. We believe that Core FFO is helpful to investors as a supplemental performance measure because it excludes the effects of certain items which can create significant earnings volatility, but which do not directly relate to our core business operations. We believe Core FFO can facilitate comparisons of operating performance between periods, while also providing a more meaningful predictor of future earnings potential.
However, because FFO and Core FFO add back real estate depreciation and amortization and do not capture the level of maintenance capital expenditures necessary to maintain the operating performance of our properties, both of which have material economic impacts on our results from operations, we believe the utility of FFO and Core FFO as a measure of our performance may be limited.
We calculate adjusted funds from operations, or Adjusted FFO, as Core FFO adjusted for the effects of amortization of deferred financing costs, pension withdrawal liability and above or below market leases, straight-line net rent, provision or benefit from deferred income taxes, share-based compensation expense from grants of stock options and restricted stock units under our equity incentive plans, excluding IPO grants, non-real estate depreciation and amortization, and maintenance capital expenditures. We also adjust for AFFO attributable to our share of reconciling items of partially owned entities. We believe that Adjusted FFO is helpful to investors as a meaningful supplemental comparative performance measure of our ability to make incremental capital investments in our business and to assess our ability to fund distribution requirements from our operating activities.
FFO, Core FFO and Adjusted FFO are used by management, investors and industry analysts as supplemental measures of operating performance of equity REITs. FFO, Core FFO and Adjusted FFO should be evaluated along with U.S. GAAP net income and net income per diluted share (the most directly comparable U.S. GAAP measures) in evaluating our operating performance. FFO, Core FFO and Adjusted FFO do not represent net income or cash flows from operating activities in accordance with U.S. GAAP and are not indicative of our results of operations or cash flows from operating activities as disclosed in our consolidated statements of operations included elsewhere in this Quarterly Report on Form 10-Q. FFO, Core FFO and Adjusted FFO should be considered as supplements, but not alternatives, to our net income or cash flows from operating activities as indicators of our operating performance. Moreover, other REITs may not calculate FFO in accordance with the NAREIT definition or may interpret the NAREIT definition differently than we do. Accordingly, our FFO may not be comparable to FFO as calculated by other REITs. In addition, there is no industry definition of Core FFO or Adjusted FFO and, as a result, other REITs may also calculate Core FFO or Adjusted FFO, or other similarly-captioned metrics, in a manner different than we do. The table below reconciles FFO, Core FFO and Adjusted FFO to net income, which is the most directly comparable financial measure calculated in accordance with U.S. GAAP.



Reconciliation of Net Income to NAREIT FFO, Core FFO, and Adjusted FFO
(in thousands)
 Year Ended December 31,
202020192018
Net income$24,555 $48,162 $47,985 
Adjustments:
Real estate related depreciation146,417 114,976 88,246 
Net (gain) loss on sale of real estate, net of withholding taxes (a)
(21,759)34 (7,471)
Net loss (gain) on asset disposals2,045 382 (65)
Impairment charges on real estate assets5,630 12,555 747 
Real estate depreciation on partially owned entities— 790 1,202 
Our share of reconciling items related to partially owned entities449 — — 
NAREIT Funds from operations157,337 176,899 130,644 
Less distributions on preferred shares of beneficial interest— — (1,817)
NAREIT Funds from operations applicable to common shareholders$157,337 $176,899 $128,827 
Adjustments:
Net loss (gain) on sale of non-real estate assets595 488 (739)
Non-real estate asset impairment2,606 930 — 
Acquisition, litigation, and other excluding 2018 RSU modification expenses36,306 40,614 1,893 
Share-based compensation expense, IPO grants972 2,432 4,208 
Bridge loan commitment fees2,438 2,665 — 
Loss on debt extinguishment, modifications and termination of derivative instruments9,975 — 47,559 
Foreign currency exchange loss (gain)45,278 (10)(2,882)
     Excise tax settlement— — (128)
Alternative Minimum Tax receivable from Tax Cuts & Jobs Act— — (3,745)
Gain from sale of partially owned entities— (4,297)— 
Our share of reconciling items related to partially owned entities194 — — 
Core FFO applicable to common shareholders255,701 219,721 174,993 
Adjustments:
Amortization of deferred financing costs and pension withdrawal liability5,147 6,028 6,176 
Amortization of below/above market leases152 151 151 
Straight-line net rent(628)(521)(179)
Deferred income taxes benefit(13,732)(10,701)(3,152)
Share-based compensation expense, excluding IPO grants16,939 10,463 6,474 
Non-real estate depreciation and amortization69,474 48,372 29,407 
Non-real estate depreciation and amortization on partially owned entities— 317 538 
Maintenance capital expenditures (b)
(65,547)(59,300)(43,975)
Our share of reconciling items related to partially owned entities371 — — 
Adjusted FFO applicable to common shareholders$267,877 $214,530 $170,433 
(a)(Gain) loss on sale of real estate, net of withholding tax include withholding tax on the sale of Sydney land which is included in income tax expense on the Consolidated Statement of Operations.
(b)Maintenance capital expenditures include capital expenditures 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.



We calculate EBITDA for Real Estate, or EBITDAre, in accordance with the standards established by the Board of Governors of NAREIT, defined as, earnings before interest expense, taxes, depreciation and amortization, gains or losses on disposition of depreciated property, including gains or losses on change of control, impairment write-downs of depreciated property and of investments in unconsolidated affiliates caused by a decrease in value of depreciated property in the affiliate, and adjustment to reflect share of EBITDAre of unconsolidated affiliates. EBITDAre is a measure commonly used in our industry, and we present EBITDAre to enhance investor understanding of our operating performance. We believe that EBITDAre provides investors and analysts with a measure of operating results unaffected by differences in capital structures, capital investment cycles and useful life of related assets among otherwise comparable companies.
We also calculate our Core EBITDA as EBITDAre further adjusted for acquisition, litigation and other expenses, bridge loan commitment fees, impairment of long-lived assets, loss on debt extinguishment and modification, share-based compensation expense, foreign currency exchange gain or loss, loss or gain on other asset disposals, loss or income on partially owned entities and reduction in EBITDAre from partially owned entities. We believe that the presentation of Core EBITDA provides a measurement of our operations that is meaningful to investors because it excludes the effects of certain items that are otherwise included in EBITDAre but which we do not believe are indicative of our core business operations. EBITDAre and Core EBITDA are not measurements of financial performance under U.S. GAAP, and our EBITDAre and Core EBITDA may not be comparable to similarly titled measures of other companies. You should not consider our EBITDAre and Core EBITDA as alternatives to net income or cash flows from operating activities determined in accordance with U.S. GAAP. Our calculations of EBITDAre and Core EBITDA have limitations as analytical tools, including:

these measures do not reflect our historical or future cash requirements for maintenance capital expenditures or growth and expansion capital expenditures;
these measures do not reflect changes in, or cash requirements for, our working capital needs;
these measures do not reflect the interest expense, or the cash requirements necessary to service interest or principal payments, on our indebtedness;
these measures do not reflect our tax expense or the cash requirements to pay our taxes; and
although depreciation and amortization are non-cash charges, the assets being depreciated will often have to be replaced in the future and these measures do not reflect any cash requirements for such replacements.
We use EBITDAre and Core EBITDA as measures of our operating performance and not as measures of liquidity. The table below reconciles EBITDAre and Core EBITDA to net income, which is the most directly comparable financial measure calculated in accordance with U.S. GAAP.







Reconciliation of Net Income to NAREIT EBITDAre and Core EBITDA
(In thousands)
 Year Ended December 31,
202020192018
Net income$24,555 $48,162 $47,985 
Adjustments:
Depreciation and amortization215,891 163,348 117,653 
Interest expense91,481 94,408 93,312 
Income tax benefit(7,292)(5,157)(3,619)
EBITDA324,635 300,761 255,331 
Adjustments:
Net (gain) loss on sale of real estate, net of withholding taxes(21,759)34 — 
Adjustment to reflect share of EBITDAre of partially owned entities1,022 1,726 — 
NAREIT EBITDAre$303,898 $302,521 $255,331 
Adjustments:
Acquisition, litigation, and other excluding 2018 RSU modification expenses36,306 40,614 1,893 
Bridge loan commitment fees2,438 2,665 — 
Loss from investments in partially owned entities250 111 1,069 
Impairment of long-lived assets8,236 13,485 747 
Foreign currency exchange loss (gain)45,278 (10)(2,882)
Share-based compensation expense17,911 12,895 10,683 
Loss on debt extinguishment, modifications and termination of derivative instruments9,975 — 47,559 
Net loss (gain) on sale of non-real estate assets2,640 870 (7,623)
Gain from sale of partially owned entities— (4,297)— 
Reduction in EBITDAre from partially owned entities(1,022)(1,726)— 
Core EBITDA$425,910 $367,128 $306,777 

 As of December 31,
 202020192018
Ratio Data:
Net debt to pro-forma Core EBITDA (1)
4.4 x4.2 x4.3 x
(1)Net debt to Core EBITDA represents (i) our gross debt (defined as total debt plus discount and deferred financing costs) less cash and cash equivalents divided by (ii) Core EBITDA. Core EBITDA for 2020 and 2019 for purposes of this calculation assumes ownership of our acquisitions for the full twelve months of the year. Our management believes that this ratio is useful because it provides investors with information regarding gross debt less cash and cash equivalents, which could be used to repay debt, compared to our performance as measured using Core EBITDA.

The following table reconciles net debt to total debt, which is the most directly comparable financial measure calculated in accordance with U.S. GAAP:







 As of December 31,
20202019
(In thousands)
Total debt$2,959,252 $1,869,376 
Deferred financing costs15,952 12,996 
Gross debt2,975,204 1,882,372 
Adjustments:
Less: cash and cash equivalents609,537 234,303 
Net debt$2,365,667 $1,648,069 



Liquidity and Capital Resources
In March 2020, the Securities and Exchange Commission (SEC) adopted amendments to Rule 3-10 of Regulation S-X and created Rule 13-01 to simplify disclosure requirements related to certain registered securities. The rule is effective January 4, 2021 but earlier compliance is permitted. The Company and the Operating Partnership have filed a registration statement on Form S-3 with the SEC registering, among other securities, debt securities of the Operating Partnership, which will be fully and unconditionally guaranteed by the Company. As a result of the amendments to Rule 3-10 of Regulation S-X, subsidiary issuers of obligations guaranteed by the parent are not required to provide separate financial statements, provided that the subsidiary obligor is consolidated into the parent company’s consolidated financial statements, the parent guarantee is “full and unconditional” and, subject to certain exceptions as set forth below, the alternative disclosure required by Rule 13-01 is provided, which includes narrative disclosure and summarized financial information. Accordingly, separate consolidated financial statements of the Operating Partnership have not been presented. Furthermore, as permitted under Rule 13-01(a)(4)(vi), the Company has excluded the summarized financial information for the Operating Partnership as the assets, liabilities and results of operations of the Company and the Operating Partnership are not materially different than the corresponding amounts presented in the consolidated financial statements of the Company, and management believes such summarized financial information would be repetitive and not provide incremental value to investors.

We currently expect that our principal sources of funding for working capital, facility acquisitions, business combinations, expansions, maintenance and renovation of our properties, developments projects, debt service and distributions to our shareholders will include:
current cash balances;
cash flows from operations;
our outstanding equity forward sale agreements;
our 2020 Senior Unsecured Revolving Credit Facility;
our ATM Equity Program and related forward sale agreements; and
other forms of debt financings and equity offerings.

We expect that our funding sources as noted above are adequate and will continue to be adequate to meet our short-term liquidity requirements and capital commitments. These liquidity requirements and capital commitments include:
operating activities and overall working capital;
capital expenditures;
debt service obligations; and
quarterly shareholder distributions.

We expect to utilize the same sources of capital we will rely on to meet our short-term liquidity requirements to also meet our long-term liquidity requirements, which include funding our operating activities, our debt service obligations and shareholder distributions, and our future development and acquisition activities. As previously discussed, the COVID-19 pandemic has created disruption among several industries. The outbreak of COVID-19 has significantly adversely impacted global economic activity and has contributed to significant volatility and negative pressure in financial markets. While we did not incur significant disruption during the year ended December 31, 2020 from the COVID-19 pandemic, we are unable to predict the impact that the pandemic may have on the sources of capital upon which we rely.




We are a well-known seasoned issuer with an effective shelf registration statement filed on April 16, 2020, which registered an indeterminate amount of common shares, preferred shares, depositary shares and warrants, as well as debt securities of the Operating Partnership, which will be fully and unconditionally guaranteed by us. As circumstances warrant, we may issue equity securities from time to time on an opportunistic basis, dependent upon market conditions and available pricing. We may use the proceeds for general corporate purposes, which may include the repayment of outstanding indebtedness, the funding of development, expansion and acquisition opportunities and to increase working capital.

On August 26, 2019, we entered into an equity distribution agreement pursuant to which we may sell, from time to time, up to an aggregate sales price of $500.0 million of our common shares through an ATM equity program (an “ATM Equity Program”). There were no common shares sold under the ATM Equity Program during the first quarter of 2020. On April 16, 2020, this ATM Equity Program was terminated and replaced with a new ATM Equity Program, pursuant to which we may sell up to an aggregate sales price of $500.0 million of our common shares. Sales of our common shares made pursuant to the ATM Equity Program may be made in negotiated transactions or transactions that are deemed to be “at the market” offerings as defined in Rule 415 under the Securities Act, including sales made directly on the NYSE, or sales made to or through a market maker other than on an exchange, or as otherwise agreed between the applicable agent and us. Sales may also be made on a forward basis pursuant to separate forward sale agreements. We intend to use any net proceeds from sales of our common shares pursuant to the new ATM Equity Program for working capital, capital expenditures and other general corporate purposes, which may include funding development, expansion and acquisitions opportunities and the repayment of outstanding indebtedness.

During the year ended December 31, 2020, there were 7,440,532 common shares sold under the 2020 ATM Equity Program, resulting in gross proceeds of $272.6 million. The proceeds were offset by $3.0 million of fees. Included in the shares sold under the 2020 ATM Equity Program were forward sale agreements to sell 4,346,101 common shares for gross proceeds of $162.2 million. During the year ended December 31, 2020, the Company settled 5,011,428 common shares for gross proceeds of $183.0 million under its ATM equity program. Pursuant to the respective forward sale agreements, the remaining 2,428,604 of shares must be settled by September 1, 2021 for gross proceeds of $89.6 million.

After considering the common shares issued during 2020 and the shares subject to the forward sale agreements, the Company had approximately $227.4 million of availability remaining for distribution under the 2020 ATM Equity Program as of December 31, 2020.
Security Interests in Customers’ Products
    By operation of law and in accordance with our customer contracts (other than leases), we typically receive warehouseman’s liens on products held in our warehouses to secure customer payments. Such liens permit us to take control of the products and sell them to third parties in order to recover any monies receivable on a delinquent account, but such products may be perishable or otherwise not available to us for re-sale. Historically, in instances where we have warehouseman’s liens and our customer sought bankruptcy protection, we have been successful in receiving “critical vendor” status, which has allowed us to fully collect on our accounts receivable during the pendency of the bankruptcy proceeding.
    Our bad debt expense was $1.6 million and $1.8 million for the years ended December 31, 2020 and 2019, respectively. As of December 31, 2020, we maintained bad debt allowances of approximately $12.3 million, which we believed to be adequate.
Dividends and Distributions



    We are required to distribute 90% of our taxable income (excluding capital gains) on an annual basis in order to continue to qualify as a REIT for federal income tax purposes. Accordingly, we intend to make, but are not contractually bound to make, regular quarterly distributions to shareholders from cash flows from our operating activities. While historically we have satisfied this distribution requirement by making cash distributions to our shareholders, we may choose to satisfy this requirement by making distributions of cash or other property. All such distributions are at the discretion of our Board of Trustees. We consider market factors and our performance in addition to REIT requirements in determining distribution levels. We have distributed at least 100% of our taxable income annually since inception to minimize corporate-level federal income taxes. Amounts accumulated for distribution to shareholders are invested primarily in interest-bearing accounts and short-term interest-bearing securities, which are consistent with our intention to maintain our status as a REIT.

As a result of this distribution requirement, we cannot rely on retained earnings to fund our ongoing operations to the same extent that other companies which are not REITs can. We may need to continue to raise capital in the debt and equity markets to fund our working capital needs, as well as potential developments in new or existing properties, acquisitions or investments in existing or newly created joint ventures. In addition, we may be required to use borrowings under our revolving credit facility, if necessary, to meet REIT distribution requirements and maintain our REIT status.

We declared the following dividends on our common shares during the years ended December 31, 2020 and 2019 (in thousands, except per share amounts):




2020 (Common Shares)
Month Declared/PaidDividend Per ShareDistributions DeclaredDistributions Paid
Common SharesCommon Shares
(In thousands, except per share amounts)
December (2019)/January$0.2000 $— $38,796 
December(a)
— (169)Dividend equivalents accrued on unvested restricted stock units to be paid when the awards vest.
December (2019)/January— Dividend equivalents paid on unvested restricted stock units that are not expected to vest (recognized as additional compensation).
March/April0.2100 42,568 42,568 
March(b)
— (233)Dividend equivalents accrued on unvested restricted stock units to be paid when the awards vest.
March/April— 10 Dividend equivalents paid on unvested restricted stock units that are not expected to vest (recognized as additional compensation).
May/July0.2100 43,271 43,271 
May (c)
— (232)Dividend equivalents accrued on unvested restricted stock units to be paid when the awards vest.
May/July— 10 Dividend equivalents paid on unvested restricted stock units that are not expected to vest (recognized as additional compensation).
September/October0.2100 43,282 43,282 
October— (231)Dividend equivalents accrued on unvested restricted stock units to be paid when the awards vest.
September/October— 10 Dividend equivalents paid on unvested restricted stock units that are not expected to vest (recognized as additional compensation).
December$0.210 53,820 — 
$182,941 $167,086 
(a)Declared in December 2019 and included in the $38.8 million declared, see description to the right regarding timing of payment.
(b)Declared in March and included in the $42.6 million declared, see description to the right regarding timing of payment.
(c)Declared in May and included in the $43.3 million declared, see description to the right regarding timing of payment.
(d)Declared in September and included in the $43.3 million declared, see description to the right regarding timing of payment.



2019 (Common Shares)
Month Declared/PaidDividend Per ShareDistributions DeclaredDistributions Paid
(In thousands, except per share amounts)
December (2018)/January$0.1875 $— $28,218 
December (a)
— (127)Dividend equivalents accrued on unvested restricted stock units to be paid when the awards vest.
December (2018)/January— Dividend equivalents paid on unvested restricted stock units that are not expected to vest (recognized as additional compensation).
March/April0.2000 30,235 30,235 
March (b)
— (142)Dividend equivalents accrued on unvested restricted stock units to be paid when the awards vest.
March/April— 15 Dividend equivalents paid on unvested restricted stock units that are not expected to vest (recognized as additional compensation).
June/July0.2000 38,764 38,764 
June (c)
— (172)Dividend equivalents accrued on unvested restricted stock units to be paid when the awards vest.
June/July— 13 Dividend equivalents paid on unvested restricted stock units that are not expected to vest (recognized as additional compensation).
September/October0.2000 38,795 38,795 
October (d)
— (170)Dividend equivalents accrued on unvested restricted stock units to be paid when the awards vest.
September/October— Dividend equivalents paid on unvested restricted stock units that are not expected to vest (recognized as additional compensation).
December/January (2020)$0.200 38,796 — 
$146,590 $135,443 
(a)Declared in December 2018 and included in the $28.2 million declared, see description to the right regarding timing of payment.
(b)Declared in March and included in the $30.2 million declared, see description to the right regarding timing of payment.
(c)Declared in June and included in the $38.8 million declared, see description to the right regarding timing of payment.
(d)Declared in September and included in the $38.8 million declared, see description to the right regarding timing of payment.



2018
Month Declared/PaidDividend Per ShareDistributions DeclaredDistributions Paid
Common SharesSeries B Preferred SharesCommon SharesSeries B Preferred Shares
(In thousands, except per share amounts)
January (a)
$0.0186 $1,291 $619 $1,291 $619 
March/April0.1396 20,145 — 20,145 
March (c)
— — (79)— Dividend equivalents accrued on unvested restricted stock units to be paid when the awards vest.
March/April— — 20 — Dividend equivalents paid on unvested restricted stock units that are not expected to vest (recognized as additional compensation).
June/July0.1875 27,250 — 27,250 — 
June (d)
— — (118)— Dividend equivalents accrued on unvested restricted stock units to be paid when the awards vest.
June/July— — 28 — Dividend equivalents paid on unvested restricted stock units that are not expected to vest (recognized as additional compensation).
September/October0.1875 28,072 — 28,072 
October(e)
— — (114)— Dividend equivalents accrued on unvested restricted stock units to be paid when the awards vest.
September/October— — 28 — Dividend equivalents paid on unvested restricted stock units that are not expected to vest (recognized as additional compensation).
December/January 2019$0.1875 28,218 — — — 
$104,976 $76,523 
Series B Preferred Shares - Fixed Dividend
January (a)
1,198 1,198 
Total distributions paid to holders of Series B Preferred Shares (b)
$1,817 $1,817 
(a)Stub period dividend paid to shareholders of record prior to the IPO.
(b)Last participating and fixed dividend paid to holders of Series B Preferred Shares in connection with the conversion to common shares on the IPO date.
(c)Declared in March and included in the $20.1 million declared, see description to the right regarding timing of payment.
(d)Declared in June and included in the $27.3 million declared, see description to the right regarding timing of payment.
(e)Declared in September and included in the $28.1 million declared, see description to the right regarding timing of payment.



Outstanding Indebtedness
    The following table presents our outstanding and available indebtedness as of December 31, 2020 and 2019.
Stated Maturity DateContractual interest rate
Effective interest rate as of  December 31, 2020 (9)
Outstanding principal amount at
IndebtednessDecember 31, 2020December 31, 2019
2013 Mortgage Loans
Senior note5/1/20233.81%4.14%$174,693 $181,443 
Mezzanine A5/1/20237.38%7.55%70,000 70,000 
Mezzanine B5/1/202311.50%11.75%32,000 32,000 
Total 2013 Mortgage Loans276,693 283,443 
Senior Unsecured Notes
Series A notes1/20264.68%4.77%200,000 200,000 
Series B notes1/20294.86%4.92%400,000 400,000 
Series C notes1/20304.10%4.15%350,000 350,000 
Series D notes(7)
1/20311.62%1.66%488,640 — 
Series E notes(8)
1/20331.65%1.69%427,560 — 
Total Senior Unsecured Notes1,866,200 950,000 
2020 Senior Unsecured Term loan Tranche A-1(1)
3/2025L+0.95%1.45%325,000 — 
2020 Senior Unsecured Term loan Tranche A-2 (2)(6)
3/2025C+0.95%1.55%196,325 — 
Total 2020 Senior Unsecured Term Loan A Facility(4)
521,325 — 
2018 Senior Unsecured Term Loan A Facility (1)(4)
1/2023L+1.00%3.14%— 475,000 
Total principal amount of indebtedness$2,664,218 $1,708,443 
Less: unamortized deferred financing costs(15,952)(12,996)
Total indebtedness, net of unamortized deferred financing costs (3)
$2,648,266 $1,695,447 
2020 Senior Unsecured Revolving Credit Facility (3)(5)
3/2024L+0.85%0.23%$— N/A
2018 Senior Unsecured Revolving Credit Facility(1)(3)
1/2021L+0.90%0.36%N/A$— 
 
(1)L = one-month LIBOR
(2)C=one month CDOR
(3)During the first quarter of 2020, the Company refinanced its Senior Unsecured Credit Facility. As such, the 2020 Senior Unsecured Revolving Credit Facility was in effect as of December 31, 2020 and the 2018 Senior Unsecured Revolving Credit Facility was in effect as of December 31, 2019. The above disclosure reflects N/A for the reporting date that the respective instrument was not in effect.
(4)During the first quarter of 2020, the Company refinanced its Senior Unsecured Term Loan A. As such, the 2020 Senior Unsecured Term Loan A Facility was in effect as of December 31, 2020 and the 2018 Senior Unsecured Term Loan A Facility was in effect as of December 31, 2019.
(5)The Company has the option to extend the 2020 Senior Unsecured Revolving Credit Facility up to two times for a six-month period each.



(6)The 2020 Senior Unsecured Term Loan Tranche A-2 is denominated in Canadian dollars and aggregates to CAD $250.0 million. The carrying value in the table above is the US dollar equivalent as of December 31, 2020.
(7)The Senior Unsecured Notes Series D is denominated in Euros and aggregates to Euro $400.0 million. The carrying value in the table above is the US dollar equivalent as of December 31, 2020.
(8)The Senior Unsecured Notes Series E is denominated in Euros and aggregates to Euro $350.0 million. The carrying value in the table above is the US dollar equivalent as of December 31, 2020.
(9)The effective interest rate includes effects of amortization of the deferred financing costs. The weighted average effective interest rate for total debt was 3.19% and 4.57% as of December 31, 2020 and 2019, respectively.
2020 Senior Unsecured Credit Facility
On March 26, 2020, we entered into a five-year Senior Unsecured Term Loan A Facility and a four-year $800 million Senior Unsecured Revolving Credit Facility, which we refer to as the 2020 Senior Unsecured Credit Facility. The proceeds were used to refinance the existing $800 million 2018 Senior Unsecured Revolving Credit Facility maturing January 23, 2021 and USD denominated $475 million 2018 Senior Unsecured Term Loan maturing January 23, 2023. The total borrowing capacity of the 2020 Senior Unsecured Credit Facility is approximately $1.4 billion USD. The Company reduced the margin on 2020 Senior Unsecured Term Loan A Facility and 2020 Senior Unsecured Credit Facility by five basis points.
The 2020 Senior Unsecured Term Loan A Facility is broken into two tranches. Tranche A-1 is comprised of a $425.0 million USD term loan and Tranche A-2 is comprised of a CAD $250.0 million term loan, both are five-year loans maturing in 2025. Tranche A-2 provides a natural hedge for the Company’s investment in the recently completed Nova Cold acquisition. We refer to Tranches A-1 and A-2 in aggregate as the 2020 Senior Unsecured Term Loan Facility. In connection with entering into the agreement, we incurred approximately $3.2 million of debt issuance costs related to the term loan, which we amortize as interest expense under the effective interest method. As of December 31, 2020, $5.6 million of unamortized debt issuance costs related to the 2020 Senior Unsecured Term Loan A Facility are included in “Mortgage notes, senior unsecured notes and term loan” in the accompanying Condensed Consolidated Balance Sheets.
The maturity of the 2020 Senior Unsecured Revolving Credit Facility is March 26, 2024, with the option to extend the maturity up to two times, each for a six-month period. In order to extend, the Company must not be in default, all representations and warranties must be in effect, obtain updated resolutions from loan parties, and an additional 6.25 bps extension fee must be paid. In connection with entering into the agreement, we incurred approximately $5.2 million of debt issuance costs for the 2020 Senior Unsecured Revolving Credit Facility, which we amortize as interest expense under the straight-line method. Unamortized deferred financing costs as of December 31, 2019 of $2.8 million will continue to be amortized over the life of the 2020 Senior Unsecured Revolving Credit Facility. As of December 31, 2020, $5.8 million of unamortized debt issuance costs related to the revolving credit facility are included in “Other assets” in the accompanying Condensed Consolidated Balance Sheet.
On December 30, 2020, we repaid $100.0 million of the 425000000 USD Tranche A-1 2020 Senior Unsecured Term Loan A. This was funded using the Series D and E debt private placement issuance, more details on this debt issuance can be found under the “Series A, B, C, D, and E Senior Unsecured Notes” section below. In connection with this repayment, approximately $1.5 million of unamortized deferred financing costs associated with the 2020 Senior Unsecured Credit Facility were written off. In addition, the interest rate swaps associated with the 2020 Senior Unsecured Term Loan A were terminated, resulting in an extinguishment fee of $16.4 million. After accounting for the refinance, the total borrowing capacity of the 2020 Senior Unsecured Credit Facility is approximately $1.3 billion USD.



Our 2020 Senior Unsecured Credit Facility contains representations, covenants and other terms customary for a publicly traded REIT. In addition, it contains certain financial covenants, as defined in the credit agreement, including:
a maximum leverage ratio of less than or equal to 60% of our total asset value. Following a material acquisition, leverage ratio shall not exceed 65%;
a maximum unencumbered leverage ratio of less than or equal to 60% to unencumbered asset value. Following a material acquisition, unencumbered leverage ratio shall not exceed 65%;
a maximum secured leverage ratio of less than or equal to 40% to total asset value. Following a material acquisition, secured leverage ratio shall not exceed 45%;
a minimum fixed charge coverage ratio of greater than or equal to 1.50x; and
a minimum unsecured interest coverage ratio of greater than or equal to 1.75x.
Material Acquisition in our 2020 Senior Unsecured Credit Facility is defined as one in which assets acquired exceeds an amount equal to 5% of total asset value as of the last day of the most recently ended fiscal quarter publicly available. Obligations under our 2020 Senior Unsecured Credit Facility are general unsecured obligations of our Operating Partnership and are guaranteed by the Company and certain subsidiaries of the Company. As of December 31, 2020, the Company was in compliance with all debt covenants.
There were $21.7 million letters of credit issued on the Company’s 2020 Senior Unsecured Revolving Credit Facility as of December 31, 2020.
2018 Senior Unsecured Credit Facility
On December 4, 2018, we entered into the 2018 Senior Unsecured Revolving Credit Facility to, among other things, (i) increase the revolver borrowing capacity from $450 million to $800 million, (ii) convert the credit facility (term loan and revolver) from a secured credit facility to an unsecured credit facility, and (iii) decrease the applicable interest rate margins from 2.35% to 1.45% and decrease the fee on unused borrowing capacity by 5 basis points. The terms of the revolver allow for the ability to draw proceeds in multiple currencies, up to $400 million. In connection with entering into the original agreement and subsequent amendments for the Term Loan A Credit Facility, we incurred approximately $8.9 million of debt issuance costs, which we amortize as interest expense under the effective interest method. As of December 31, 2019, the unamortized balance of Term Loan A debt issuance costs was $6.1 million and was included in “Mortgage notes, senior unsecured notes and term loans” on the accompanying Condensed Consolidated Balance Sheets.
On September 24, 2019, we reduced our interest rate margins from 1.45% to 1.00% and decreased the fee on unused borrowing capacity by 5 basis points for usage greater than 50% of the total commitment and 15 basis points for usage less than 50% of commitment. The fee for unused borrowing capacity was 20 basis points regardless of the percentage of total commitment used. During the third quarter of 2019, the Company received a favorable credit rating. This rating, when combined with existing ratings, allowed the Company to transition to a favorable ratings-based pricing grid during the third quarter of 2019.
There were $23.0 million letters of credit issued on the Company’s 2018 Senior Unsecured Revolving Credit Facility as of December 31, 2019. During the first quarter of 2020, the 2018 Senior Unsecured Revolving Credit Facility was refinanced and no longer outstanding as of December 31, 2020.
Series A, B, C, D, and E Senior Unsecured Notes
On April 26, 2019, we completed a debt private placement transaction consisting of $350.0 million senior unsecured notes with a coupon of 4.10% due January 8, 2030 (“Series C”). The transaction closed on May 7, 2019. Interest is paid on January 8 and July 8 of each year until maturity, with the first payment occurring January



8, 2020. The notes are general unsecured obligations of the Company and are guaranteed by the Company and the subsidiaries of the Company. The Company applied the proceeds of the private placement transaction to repay the indebtedness outstanding under our senior unsecured revolving credit facility incurred in connection with the funding of the Cloverleaf and Lanier acquisitions.
On November 6, 2018, we completed a debt private placement transaction consisting of (i) $200.0 million senior unsecured notes with a coupon of 4.68% due January 8, 2026 (“Series A”) and (ii) $400.0 million senior unsecured notes with a coupon of 4.86% due January 8, 2029 (“Series B”), collectively referred to as the debt private placement. The transaction closed on December 4, 2018. Interest is paid on January 8 and July 8 of each year until maturity, with the first payment occurring July 8, 2019. The notes are our general unsecured senior obligations and are guaranteed by us and our subsidiaries. We applied a portion of the proceeds of the debt private placement to complete the defeasance of the $600.0 million Americold 2010 LLC Trust, Commercial Mortgage Pass-Through Certificates, Series 2010, ART, or the 2010 Mortgage Loans. We applied the remaining proceeds to the Australian term loan and the New Zealand term loan, or the ANZ Loans.
On December 30, 2020 we completed a debt private placement transaction consisting of (i) €400.00 million senior unsecured notes with a coupon of 1.62% due January 7, 2031 (“Series D”) and (ii) €350.00 million senior unsecured notes with a coupon of 1.65% due January 7, 2033 (“Series E”). Interest is payable on January 7 and July 7 of each year until maturity, with the first payment occurring July 7, 2021. The notes are general unsecured senior obligations of the Operating Partnership and are guaranteed by the Company and certain subsidiaries of the Company. In connection with entering into the agreement, we incurred approximately $4.5 million of debt issuance costs related to the issuance, which we amortize as interest expense under the effective interest method. The proceeds of the Series D and Series E issuance were used to fund a portion of the Agro acquisition, provide long-term financing for the Halls acquisition and repay a portion of the 2020 Senior Unsecured Term Loan Tranche A-1.
The Series A, B, C, D, and E senior notes (collectively referred to as the “Senior Unsecured Notes”) and guarantee agreement includes a prepayment option executable at any time during the term of the loans. The prepayment can be either a partial payment or payment in full, as long as the partial payment is at least 5% of the outstanding principal. Any prepayment in full must include a make-whole amount, which is the discounted remaining scheduled payments due to the lender. The discount rate to be used is equal to 0.50% plus the yield to maturity reported for the most recently actively traded U.S. Treasury Securities with a maturity equal to the remaining average life of the prepaid principal. The Company must give each lender at least 10 days written notice whenever it intends to prepay any portion of the debt.
If a change in control occurs for us, we must issue an offer to prepay the remaining portion of the debt to the lenders. The prepayment amount will be 100% of the principal amount, as well as accrued and unpaid interest.
The Senior Unsecured Notes require compliance with leverage ratios, secured and unsecured indebtedness ratios, and unsecured indebtedness to qualified assets ratios. In addition, we are required to maintain at all times a credit rating for each series of notes from a nationally recognized statistical rating organization. The 2018 Senior Unsecured Notes agreement includes the following financial covenants:
a maximum leverage ratio of less than or equal to 60% of our total asset value;
a maximum unsecured indebtedness to qualified assets ratio of less than 0.60 to 1.00;
a maximum total secured indebtedness ratio of less than 0.40 to 1.00;
a minimum fixed charge coverage ratio of greater than or equal to 1.50 to 1.00; and
a minimum unsecured debt service ratio of greater than or equal to 2.00 to 1.00.



As of December 31, 2020, we were in compliance with all debt covenants.
2013 Mortgage Loans
    On May 1, 2013, we entered into a mortgage financing in an aggregate principal amount of $322.0 million, which we refer to as the 2013 Mortgage Loans. The debt consists of a senior debt note and two mezzanine notes. The components are cross-collateralized and cross-defaulted. The senior debt note requires monthly principal payments. The mezzanine notes require no principal payments until the stated maturity date in May 2023. The interest rates on the notes are fixed and range from 3.81% to 11.50% per annum. The senior debt note and the two mezzanine notes remain subject to yield maintenance provisions. We used the net proceeds of these loans to refinance certain of the 2006 Mortgage Loans, acquire two warehouses, and fund general corporate purposes.
    The 2013 Mortgage Loans are collateralized by 15 warehouses. The terms governing the 2013 Mortgage Loans require us to maintain certain cash amounts in accounts that are restricted as to their use for the respective warehouses. As of December 31, 2020, the amount of restricted cash associated with the 2013 Mortgage Loans was $3.6 million. Additionally, if we do not maintain certain financial thresholds, including a debt service coverage ratio of 1.10x, the cash generated will further be temporarily restricted and limited to the use for scheduled debt service and operating costs. The 2013 Mortgage Loans are non-recourse to us subject to customary non-recourse carve-outs.
    The 2013 Mortgage Loans also require compliance with other financial covenants, including a debt coverage ratio and cash flow calculation, as defined.
Debt Covenants
    Our Senior Unsecured Credit Facilities, the Senior Unsecured Notes and 2013 Mortgage Loans all require financial statement reporting, periodic reporting of compliance with financial covenants, other established thresholds and performance measurements, and compliance with affirmative and negative covenants that govern our allowable business practices. The affirmative and negative covenants include continuation of insurance, maintenance of collateral, the maintenance of REIT status, and our ability to enter into certain types of transactions or exposures in the normal course of business. As of December 31, 2020, we were in compliance with all debt covenants.
Loss on debt extinguishment, modifications and termination of derivative instruments
In connection with the early repayment of a portion of the 2020 Senior Unsecured Credit Facility during the fourth quarter of 2020, the Company recorded $1.5 million to “Loss on debt extinguishment and modifications” in the accompanying Consolidated Statements of Operations, representing the write-off of the proportionate unamortized deferred financing costs from the 2020 Senior Unsecured Credit Facility. In addition, the Company terminated the two interest rate swaps related to the 2020 Senior Unsecured Credit Facility for a fee of $16.4 million. Approximately $8.7 million of this fee will remain in “Accumulated Other Comprehensive Income” and will be amortized to expense through 2024, while $7.7 million was expensed to “Loss on debt extinguishment, modifications, and termination of derivative instruments” in the accompanying Consolidated Statements of Operations during the year ended December 31, 2020.
In connection with the refinancing of the Senior Unsecured Credit Facility during the first quarter of 2020 the Company recorded $0.8 million to “Loss on debt extinguishment and modifications” in the accompanying Condensed Consolidated Statements of Operations, representing the write-off of unamortized deferred financing costs from the 2018 Senior Unsecured Credit Facility. These write-offs were a result of two lenders in the 2018



Senior Unsecured Term Loan A Facility that did not participate in the 2020 Senior Unsecured Term Loan A Facility, accordingly those lenders’ portion of unamortized deferred financing costs were written off. Similarly, two lenders in the 2018 Senior Unsecured Revolving Credit Facility did not participate in the 2020 Senior Unsecured Revolving Credit Facility, and those lender’s portions of unamortized deferred financing costs were written off.
Credit Ratings
    Our capital structure and financial practices have earned us investment grade credit ratings from three nationally recognized credit rating agencies. We have investment grade ratings of BBB with a stable outlook from Fitch, BBB with an Under Review with Positive Implications outlook from DBRS Morningstar, and an investment grade rating of Baa3 with a stable outlook from Moody’s. These credit ratings are important to our ability to issue debt at favorable rates of interest, among other terms. Refer to our risk factor “Adverse changes in our credit ratings could negatively impact our financing activity” for further details regarding the potential impacts from changes to our credit ratings.
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.
Maintenance Capital Expenditures
    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 maintenance capital expenditures related to our existing temperature-controlled warehouse network include replacing roofs and refrigeration equipment, and upgrading our racking systems. Examples of 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 maintenance capital expenditures related to information technology include expenditures on existing servers, networking equipment and current software. Maintenance capital expenditures do not include acquisition costs contemplated when underwriting the purchase of a building or costs which are incurred to bring a building up to Americold’s operating standards. The following table sets forth our recurring maintenance capital expenditures for the years ended December 31, 2020 and 2019.
Year ended December 31,
20202019
(In thousands, except per cubic foot amounts)
Real estate$55,967 $50,966 
Personal property4,768 4,357 
Information technology4,812 3,977 
Maintenance capital expenditures$65,547 $59,300 
Maintenance capital expenditures per cubic foot$0.055 $0.055 



Repair and Maintenance Expenses
    We 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 years ended December 31, 2020 and 2019.
Year ended December 31,
20202019
(In thousands, except per cubic foot amounts)
Real estate$27,797 $22,378 
Personal property30,105 33,150 
Repair and maintenance expenses$57,902 $55,528 
Repair and maintenance expenses per cubic foot$0.049 $0.051 
External Growth, Expansion and Development Capital Expenditures
    External growth expenditures represent asset acquisitions or business combinations. Expansion and development capital expenditures are investments made to support both our customers and our warehouse expansion and development initiatives. It also includes investments in enhancing our information technology platform. Examples of capital expenditures associated with expansion and development initiatives include funding of construction costs, increases to warehouse capacity and pallet positions, acquisitions of reusable incremental material handling equipment, and implementing energy efficiency projects, such as thermal energy storage, LED lighting, motion-sensor technology, variable frequency drives for our fans and compressors, rapid-close doors and alternative-power generation technologies. Examples of capital expenditures to enhance our information technology platform include the delivery of new systems and software and customer interface functionality.
Acquisitions
The acquisitions completed during the first quarter of 2020 relate to Newport and Nova Cold. The acquisitions completed during the third quarter of 2020 relate to AM-C Warehouses and Caspers. The acquisitions completed during the fourth quarter of 2020 related to Hall’s and Agro. The acquisitions completed during 2019 relate to Cloverleaf, Lanier, PortFresh, and MHW, and excludes amounts related to the assets under construction for expansion and development projects, further detailed below.
The PortFresh acquisition cost included approximately $15.9 million allocated to land on which we have developed a new facility, and have classified within Expansion and development expenditures in order to reflect the total cost of the project. The Cloverleaf acquisition included approximately $17.0 million allocated to assets under construction which we have classified within Expansion and development expenditures in order to reflect the total cost of the projects discussed further below. Refer to Notes 2 and 3 of the Consolidated Financial Statements for details of the purchase price allocation for each acquisition.



Expansion and development
    The expansion and development expenditures for the year ended December 31, 2020 are primarily driven by $74.8 million related to Plainville, Connecticut and $73.3 million related to Lancaster, Pennsylvania, which are our two fully-automated development sites for Ahold Delhaize, $62.2 million related to the ongoing Atlanta major markets strategy project, $12.5 million in construction costs related to our Savannah expansion site, which was completed during the second quarter of 2020 and $22.0 million related to the Auckland, New Zealand expansion project which was started during the second quarter of 2020. Additionally, during the fourth quarter of 2020, we invested $11.7 million in our Russellville expansion.
Subsequent to the acquisition of MHW, during the first quarter of 2020, we exercised our call option to purchase land from the holder of the ground lease for $4.1 million. We also invested an additional $4.7 million for the Rochelle facility, which was previously opened during the second quarter of 2019.

As a result of the Cloverleaf Acquisition on May 1, 2019, we acquired expansion projects which were substantially completed during 2019. We incurred an additional $2.9 million during the year ended December 31, 2020 for these expansion projects.

Expansion and development initiatives also include $20.0 million of corporate initiatives, which are projects designed to reduce future spending over the course of time. This category reflects return on investment projects, conversion of leases to owned assets, and other cost-saving initiatives.

Finally, we incurred approximately $10.6 million for contemplated future expansion or development projects.
    The following table sets forth our acquisitions, expansion and development capital expenditures for the years ended December 31, 2020 and 2019 (in thousands). 
Year ended December 31,
20202019
Acquisitions, net of cash acquired and adjustments(1)
$1,858,937 $1,377,220 
Expansion and development initiatives298,794 210,594 
Information technology7,804 5,857 
Growth and expansion capital expenditures$2,165,535 $1,593,671 
(1) Acquisitions, net of cash acquired and adjustments does not include $512 million of equity issued directly to Oaktree Capital, the former owners of Agro, as consideration for the Agro acquisition.
Future Sources and Uses of Cash
On January 29, 2021, the Company expanded its 2020 Senior Unsecured Revolving Credit Facility by $200 million. In addition, the Company paid $200 million of principal on Tranche A-1 of the 2020 Senior Unsecured Term Loan. The maturity, margin, and other terms of the 2020 Senior Unsecured Credit Facility remain unchanged.
Historical Cash Flows
    The following summary discussion of our cash flows is based on the Consolidated Statements of Cash Flows and is not meant to be an all-inclusive discussion of the changes in our cash flows for the periods presented below.



 Year ended December 31,
 20202019
(In thousands)
Net cash provided by operating activities$293,680 $236,189 
Net cash used in investing activities $(2,249,125)$(1,604,934)
Net cash provided by financing activities$2,329,901 $1,395,371 
Operating Activities
    For the year ended December 31, 2020, our net cash provided by operating activities was $293.7 million, an increase of $57.5 million, or 24.3%, compared to $236.2 million for the year ended December 31, 2019. The increase is due to higher segment contribution in our same store results and as a result of our acquisitions during 2019 and 2020.
Investing Activities
    Our net cash used in investing activities was $2.2 billion for the year ended December 31, 2020 compared to $1.6 billion for the year ended December 31, 2019. Cash used for the acquisitions of Agro, AM-C, Hall’s, Newport and Nova Cold and accounted for as business combinations totaled $1.9 billion. Cash used in the acquisition of real estate was $25.5 million, which related to the asset acquisition of Caspers during the third quarter of 2020. Additionally, the net payment in settlement of a foreign currency forward contract in connection with the issuance of the Series D and Series E senior unsecured notes was $45.0 million. Additions to property, buildings and equipment were $376.8 million and $217.2 million for the years ended December 31, 2020 and 2019, respectively. The increase in additions to property, buildings and equipment were driven by the Ahold, Atlanta, New Zealand, Savannah, Calgary, and Russellville expansion and development projects. Additionally, we invested $26.2 million in the Brazil JV during the first quarter of 2020. These outflows were offset by $80.2 million in proceeds from the sale of land and property, buildings, and equipment related to the sale of land in Sydney, the Quarry segment and the sale of the Boston facility.
Net cash used in investing activities was $1.6 billion for the year ended December 31, 2019 and primarily consisted of $1.3 billion paid for the acquisitions of Cloverleaf and Lanier, $85.2 million paid for the acquisitions of real estate, which related to the asset acquisitions of Portfresh and MHW, and $217.2 million used in additions to property, buildings and equipment. These cash outflows were partially offset by the proceeds from the sale of our investment in the China JV for $14.3 million and $2.0 million return of investment in a joint venture during 2019.
Financing Activities
    Our net cash provided by financing activities was $2.3 billion for the year ended December 31, 2020 compared to $1.4 billion for the year ended December 31, 2019. Cash provided by financing activities for the current period primarily consisted of $1.6 billion net proceeds from equity offerings during 2020, the $922.4 million received in connection with the issuance of the Series D and Series E senior unsecured notes which was partially offset by the related debt issuance costs of $10.1 million, the $177.1 million received in connection with the refinancing of our Senior Unsecured Term Loan and $636.8 million in proceeds from our revolving line of credit. These cash inflows were partially offset by $627.1 million of repayment on our revolving line of credit using the proceeds from the issuance of the Series D and Series E senior unsecured notes, $167.1 million of distributions paid, $156.8 million of repayments on term loan and mortgage notes and $23.7 million of payments related to lease obligations.



    Net cash provided by financing activities was $1.40 billion for the year ended December 31, 2019 and primarily consisted of $1.21 billion net proceeds from the April 2019 follow-on offering, $350.0 million in proceeds from the issuance of our Series C senior unsecured notes in May 2019, $100.0 million in proceeds received from revolving line of credit and $10.2 million in proceeds from stock options exercised. These cash inflows were partially offset by $135.4 million of distributions paid, $100.0 million of repayment to revolving line of credit, $16.5 million of repayments on lease obligations, $10.4 million of repayment of mortgage notes and notes payable, $7.1 million paid for tax withholdings remitted to authorities related to stock options exercised and $2.1 million paid related to debt issuance costs.
Withdrawal Liability from Multi-employer Plans
    As of December 31, 2020, we participated in seven multiemployer pension plans administered by labor unions representing approximately 13% of our associates. We make periodic contributions to these plans pursuant to the terms of our collective bargaining agreements to allow the plans to meet their pension benefit obligations.
    In the event that we withdraw from participation in any of the multiemployer pension plans in which we participate, the documents governing the applicable plan and applicable law could require us to make an additional contribution to the applicable plan in the amount of the unfunded vested benefits allocable to our participation in the plan, and we would have to reflect that as an expense on our Consolidated Statement of Operations and as a liability on our Consolidated Balance Sheet. Our withdrawal liability for any multiemployer pension plan would depend on the extent of the plan’s funding of vested benefits as of the year in which the withdrawal occurs, and may vary depending on the funded status of the applicable multiemployer pension plan, whether there is a mass withdrawal of all participating employers and whether any other participating employer in the applicable plan withdraws from the plan due to insolvency and is not able to contribute an amount sufficient to fund the unfunded liabilities associated with its participants in the plan. The present value of all benefits vested under each of the multiemployer plans that we participated in as of December 31, 2020 (based on the labor union’s assumptions used to fund such plan) did not, as of the last annual valuation date applicable thereto, exceed the value of the assets of such plan allocable to such vested benefits. Based on the latest information available from plan administrators, we estimate our share of the aggregate withdrawal liability for the multiemployer pension plans in which we participate could have been as much as $726.9 million as of December 31, 2020, of which we estimate that certain of our customers are contractually obligated to make indemnification payments to us for approximately $699.7 million. However, there is no guarantee that, to the extent we incurred any such withdrawal liability, we would be successful in obtaining any indemnification payments therefore.
    In the ordinary course of our renegotiation of collective bargaining agreements with labor unions that maintain these plans, we could agree to discontinue participation in one or more plans, and in that event we could face a withdrawal liability. Additionally, we could be treated as withdrawing from a plan if the number of our associates participating in the plan is reduced to a certain degree over certain periods of time.
Inflation
    Our business could be impacted due to inflation. We believe, however, that we are well positioned to be able to manage our business in an inflationary environment. Certain of our expenses are subject to normal inflationary pressures and this could lead to increases in the operating costs of our properties, such as wages and benefits, insurance, real estate taxes, utility expenses, equipment repair and replacement and other operating expenses. Although to date we have been able to offset inflationary cost increases with increased operating efficiencies and the ability to increase prices in our customer contracts (many of which contain provisions for inflationary price escalators), we can give no assurance that we will be able to offset any future inflationary cost increases through similar efficiencies or increased storage or service charges.



Critical Accounting Policies and Estimates
    Our discussion and analysis of our historical financial condition and results of operations for the periods described is based on our audited consolidated financial statements and our unaudited interim condensed consolidated financial statements, each of which has been prepared in accordance with U.S. GAAP. The preparation of these historical financial statements in conformity with U.S. GAAP requires management to make estimates, assumptions and judgments in certain circumstances that affect the reported amounts of assets, liabilities and contingencies as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. We evaluate our assumptions and estimates on an ongoing basis. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. For more information on our significant accounting policies, see Note 2 to our Consolidated Financial Statements included in this Annual Report on Form 10-K. The following critical accounting discussion pertains to accounting policies management believes are most critical to the portrayal of our historical financial condition and results of operations and that require significant, difficult, subjective or complex judgments. Other companies in similar businesses may use different estimation policies and methodologies, which may impact the comparability of our financial condition, results of operations and cash flows to those of other companies.
Goodwill Impairment Evaluation
    We perform impairment testing of goodwill as of October 1 of each year, and between annual evaluations if events occur or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. Such events or changes in circumstances may include a significant deterioration in overall economic conditions, changes in the business climate of our industry, a decline in our market capitalization, operating performance indicators and competition. As of October 1, 2020, our reporting units included the following: North American warehouse, U.S. transportation, North America third-party managed, international warehouse, international third-party managed, and international transportation. Our reporting units may change with the integration of Agro’s operations in Europe, North America, South America, and Australia. However, since the Agro acquisition closed on December 30, 2020, it was not included in the 2020 annual goodwill impairment evaluation.
We may use both qualitative and quantitative approaches when testing goodwill for impairment. For selected reporting units where we use the qualitative approach, we perform a qualitative evaluation of events and circumstances impacting the reporting unit to determine the likelihood of goodwill impairment. Based on that qualitative evaluation, if we determine it is more likely than not that the fair value of a reporting unit exceeds its carrying amount, no further evaluation is necessary. Otherwise, we perform a quantitative impairment test. We may also perform a quantitative evaluation periodically, even if there is no change of events or circumstances.
    To perform the quantitative impairment test, we compare the fair value of a reporting unit to its carrying value, including goodwill. If the fair value of a reporting unit exceeds its carrying value, goodwill of the reporting unit is not impaired. If the carrying value of the reporting unit, including goodwill, exceeds its fair value, a goodwill impairment loss is recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. We generally estimate the fair value of each reporting unit using a combination of a discounted cash flow analysis and market-based valuation methodologies such as comparable public company trading values and values observed in recent business acquisitions. The estimation of the net present value of future cash flows is based upon varying economic assumptions, including significant assumptions such as revenue growth rates, operating costs and margins, capital expenditures, tax rates, long-term growth rates and discount



rates. These assumptions are based on risk-adjusted growth rates and discount factors accommodating conservative viewpoints that consider the full range of variability contemplated in the current and potential future economic situations. The discount rates utilized in the discounted cash flow analysis are based on the respective reporting units weighted average cost of capital, which takes into account the relative weights of each component of capital structure (equity and debt) and represents the expected cost of new capital, adjusted as appropriate to consider the risk inherent in future cash flows of the respective reporting unit. The carrying value of each reporting unit includes the assets and liabilities employed in its operations, goodwill and allocations of amounts held at the business segment and corporate levels. We also assess market-based multiples of other market-participant companies, further corroborating that our discounted cash flow models reflect fair value assumptions that are appropriately aligned with market-participant valuation multiples.
Historically, our reporting units have generated sufficient returns to recover the value of goodwill. The results of our 2020 impairment test indicated that the estimated fair value of each of our reporting units was substantially in excess of the corresponding carrying amount as of October 1, and no impairment of goodwill existed.
We have completed various acquisitions over the past year, which have increased our consolidated goodwill balance. On January 2, 2020, the Company completed the acquisitions of Nova Cold and Newport. The resulting intangible assets included goodwill of $71.7 million for the warehouse segment. On August 31, 2020, the Company completed the acquisition of AM-C. The resulting intangible assets included goodwill of $10.4 million for the warehouse segment. The goodwill from Nova Cold, Newport, and AM-C was included in the annual goodwill impairment test as these acquisitions closed prior to October 1, 2020.

On November 2, 2020 the Company completed the acquisition of Hall’s. The resulting intangible assets associated with the Hall’s acquisition included goodwill of $42.7 million that has been allocated to the warehouse and transportation segments. On December 30, 2020 the Company completed the acquisition of Agro Merchants. The resulting intangible assets associated with the acquisition included goodwill of $346.7 million that has been allocated to the warehouse and transportation segments. The goodwill from Hall’s and Agro was excluded from the annual goodwill impairment test, as the test was completed as of October 1, 2020. However, we have not identified any indicators of impairment subsequent to the closing of the aforementioned acquisitions that would necessitate the need for us to perform a quantitative impairment test subsequent to the annual quantitative test performed as of October 1, 2020.



Business Combinations
    From time to time, we may enter into business combinations. In accordance with ASC 805, “Business Combinations”, we generally recognize the identifiable assets acquired and the liabilities assumed at their fair values as of the date of acquisition. We measure goodwill as the excess of consideration transferred over the net of the acquisition date fair values of the identifiable assets acquired and liabilities assumed. Goodwill is assigned to each reporting unit based upon the expected proportionate gross margin. The acquisition method of accounting requires us to make significant estimates and assumptions regarding the fair values of the elements of a business combination as of the date of acquisition, including the fair values of identifiable intangible assets, land and buildings and improvements. Significant estimates and assumptions include subjective and/or complex judgments regarding items such as revenue growth rates, operating costs and margins, capital expenditures, tax rates, long-term growth rates, discount rates, customer attrition rates, economic lives and other factors, including estimating future cash flows that we expect to generate from the acquired assets. The significant assumptions impacting the fair value of the acquired real property include estimates of indirect costs and entrepreneurial profit on the transaction, which were added to the replacement cost of the acquired assets in order to estimate their fair value in the market.
    The acquisition method of accounting also requires us to refine these estimates over a measurement period not to exceed one year to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the measurement of the amounts recognized as of that date. If we are required to adjust provisional amounts that we have recorded for the fair values of assets and liabilities in connection with acquisitions, these adjustments could have a material impact on our financial condition and results of operations. If the subsequent actual results and updated projections of the underlying business activity change compared with the assumptions and projections used to develop these values, we could record future impairment charges. In addition, we have estimated the economic lives of certain acquired assets and these lives are used to calculate depreciation and amortization expense.
On November 2, 2020, we completed the acquisition of Halls for total consideration of $489.2 million. On December 30, 2020, we completed the acquisition of Agro Merchants for total consideration of $1.59 billion. The acquisition accounting for both of these business combinations is based upon a preliminary valuation. Our estimates and assumptions are subject to change during the measurement period, not to exceed one year from the acquisition date. The primary areas of the purchase price allocation that are not yet finalized relate to the following: finalizing the review and valuation of land, land improvements, building and machinery and equipment (including the models, key assumptions, estimates and inputs) and assignment of remaining useful lives associated with the depreciable assets), (ii) finalizing the review and valuation of customer related intangible assets (including key assumptions, inputs and estimates), (iii) finalizing our review of certain current and non-current assets acquired and liabilities assumed, (iv) finalizing the valuation of certain in-place contracts or contractual relationships (including but not limited to leases), including determining the appropriate amortization period, (v) finalizing the evaluation and valuation of certain legal matters and/or other loss contingencies, including those that we may not yet be aware of but meet the requirement to qualify as a pre-acquisition contingency, and (vi) finalizing our estimate of the impact of purchase accounting on deferred income tax liabilities.
To the extent possible, estimates have been considered and recorded, as appropriate, for the items above based on the information available as of December 31, 2020. We will continue to evaluate these items until they are satisfactorily resolved and adjust our acquisition accounting accordingly, within the allowable measurement period (not to exceed one year from the date of acquisition), as defined by ASC 805.




Revenue Recognition
    Our primary revenue source consists of rent, storage and warehouse services revenues. Additionally, we charge transportation fees to those customers who use our transportation services, where we act as the principal in the arrangement of the services. We also receive a reimbursement of substantially all expenses for warehouses that we manage on behalf of third-party owners, with all reimbursements recognized as revenues under the relevant accounting guidance. We also earn management fees, incentive fees upon achieving negotiated performance and cost-savings results, or an applicable mark-up on costs. Revenues from storage and handling are recognized over the period consistent with the transfer of the service to the customer. Multiple contracts with a single counterparty are accounted for as separate arrangements. We recognize transportation fees and expenses on a gross basis upon delivery of products on behalf of our customers. We also recognize management fees and related expense reimbursements as revenues as we perform management services and incur the expense.
New Accounting Pronouncements
See Note 2 to our consolidated financial statements included in this Annual Report on Form 10-K. 



ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk
Interest Rate Risk
    Our future income and cash flows relevant to financial instruments are dependent upon prevalent market interest rates. Market risk refers to the risk of loss from adverse changes in market prices and interest rates.
    As of December 31, 2020, we had $325 million of outstanding USD-denominated variable-rate debt and $250 million of outstanding CAD-denominated variable-rate debt. This consisted of our Senior Unsecured Term Loan A Facility bearing interest at one-month LIBOR for the USD tranche and one-month CDOR for the CAD tranche, plus a margin up to 0.95%. Through November 2020, $100 million of the USD-denominated debt was hedged by an interest rate swap that effectively locked the floating LIBOR rate at 2.48%. Additionally, through November 2020, $225 million of the USD-denominated debt was hedged by an interest rate swap that effectively locked the floating LIBOR rate at 1.30%. These interest rate swaps were terminated during November 2020.
At December 31, 2020, one-month LIBOR was approximately 0.15% and one-month CDOR was approximately 0.46%, therefore a 100 basis point increase in market interest rates would result in an increase in interest expense to service our variable-rate debt of approximately $1.4 million. A 100 basis point decrease in market interest rates would result in a decrease in interest of approximately $1.4 million.
Foreign Currency Risk
    Our international revenues and expenses are generated in the currencies of the countries in which we operate, including Australia, New Zealand, Argentina, Canada, several European countries and Chile. We are exposed to foreign currency exchange variability related to investments in and earnings from our foreign investments. Foreign currency market risk is the possibility that our results of operations or financial position could be better or worse than planned because of changes in foreign currency exchange rates. When the local currencies in these countries decline relative to our reporting currency, the U.S. dollar, our consolidated revenues, contribution (NOI) margins and net investment in properties and operations outside the United States decrease. The impact of currency fluctuations on our earnings is partially mitigated by the fact that most operating and other expenses are also incurred and paid in the local currency. The impact of devaluation or depreciating currency on an entity depends on the residual effect on the local economy and the ability of an entity to raise prices and/or reduce expenses. Due to our constantly changing currency exposure and the potential substantial volatility of currency exchange rates, we cannot predict the effect of exchange rate fluctuations on our business. As a result, changes in the relation of the currency of our international operations to U.S. dollars may also affect the book value of our assets and the amount of total equity. A 10% depreciation in the year-end functional currencies of our international operations, relative to the U.S. dollar, would have resulted in a reduction in our total equity of approximately $20.1 million as of December 31, 2020.
    Our operations in Argentina are reported using highly inflationary accounting. The Argentina subsidiary’s functional currency is the Australian dollar, which is the reporting and functional currency of their immediate parent company. The entity’s statements of operations and balance sheets have been measured in Australian dollars using both current and historical exchange rates prior to translation into U.S. dollars in consolidation. As of December 31, 2020, the net monetary assets of the Argentina subsidiary were immaterial and, therefore, a 10% unfavorable change in the exchange rate would not be material. Additionally, the operating income of the Argentina subsidiary was less than 3.5% of our consolidated operating income for the years ended December 31, 2020 and 2019.



    For the years ended December 31, 2020 and 2019, revenues from our international operations were $258.1 million and $256.4 million, respectively, which represented 13.0% and 14.4% of our consolidated revenues, respectively.
    Net assets in international operations were approximately $1.2 billion and $70.3 million as of December 31, 2020 and 2019, respectively. The amount of net assets attributable to the Agro acquisition, which has net assets in both domestic and international operations, totaled $1.6 billion as of December 31, 2020.
    The effect of a change in foreign exchange rates on our net investment in foreign subsidiaries is reflected in the Accumulated other comprehensive loss component of equity of our Consolidated Financial Statements included in this Annual Report on Form 10-K.
    We attempt to mitigate a portion of the risk of currency fluctuation by financing certain of our foreign investments in local currency denominations, effectively providing a natural hedge. However, given the volatility of currency exchange rates, there can be no assurance that this strategy will be effective. The Company has entered into cross-currency swaps on its foreign denominated intercompany loans to hedge the cash flow variability from the impact of changes in foreign currency on the interest payments on the intercompany loan as well as the final principal payment. Since the critical terms of the derivatives match the critical terms of the intercompany loans, the hedge is considered perfectly effective. All changes in fair value will be recorded to Accumulated other comprehensive loss.
On December 30, 2020, we closed on the Agro acquisition, which conducts a significant amount of its operations in Europe. In tandem with this acquisition, we closed on the Series D and E Senior Unsecured Notes in aggregate of €750 million. The debt was designated as a net investment hedge for the Agro operations, as the principal is greater than the equity residing in the European entities. Quarterly, effectiveness will be measured according to the amount of principal compared to the equity of the European entities. A portion of the Series D and E Senior Unsecured Notes may be undesignated if the equity is insufficient to hedge the principal from the Series D and E Senior Unsecured Notes issuance. The remeasurement on the Series D and E Senior Unsecured Notes will be recorded to Accumulated other comprehensive loss.
Additionally, we entered into a foreign currency forward to exchange the €750 million proceeds for $877.4 million USD. On the date of issuance, the €750 million issuance was equivalent to $922.4 million USD, based on the spot rate. The difference between the proceeds from the foreign currency forward and the market equivalent on the date of debt issuance of $45 million was recorded to Foreign currency exchange (loss) gain, net, a component of other (expense) income of our Consolidated Statements of Operations included in this Annual Report on Form 10-K.
As a result of the Agro acquisition, multiple intercompany loans were generated, denominated in various foreign currencies. These intercompany loans have been designated as long-term, permanent investments, whereby the periodic remeasurement will be recorded through Accumulated other comprehensive loss on the Consolidated Balance Sheet.
ITEM 8. Financial Statements and Supplementary Data 
    The independent registered public accounting firm’s reports, consolidated financial statements and schedule listed in the “Index to Financial Statements” on page F-1 of this Annual Report are filed as part of this report and incorporated herein by reference.



ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
 None. 



ITEM 9A. Controls and Procedures
Management’s Report on Internal Control over Financial Reporting
Management is responsible for the preparation and fair presentation of the consolidated financial statements included in this annual report. The consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles and reflect management’s judgments and estimates concerning events and transactions that are accounted for or disclosed.
Management is also responsible for establishing and maintaining effective internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Management recognizes that there are inherent limitations in the effectiveness of any internal control and effective internal control over financial reporting can provide only reasonable assurance with respect to financial statement preparation. Additionally, because of changes in conditions, the effectiveness of internal control over financial reporting may vary over time.
Management assessed the effectiveness of our internal control over financial reporting as of December 31, 2020. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework (2013 framework). The scope of our efforts to comply with Section 404 of the Sarbanes-Oxley Act with respect to 2020 included all of our operations other than those we acquired in 2020 as described in Note 1 to the consolidated financial statements. In accordance with the SEC’s published guidance, because we acquired these operations during the year, we excluded these operations from our efforts to comply with Section 404 with respect to 2020. These acquired businesses constituted 40% of total assets as of December 31, 2020 and 3% of revenue for the year then ended. Of these acquisitions, the acquisition of Agro Merchants represented 28% of total assets and less than 1% of revenue for the year ended December 31, 2020. The SEC’s published guidance specifies that the period in which management may omit an assessment of an acquired business’s internal control over financial reporting from its assessment of the Company’s internal control may not extend beyond one year from the date of acquisition. Based on our assessment, which as discussed herein excluded the operations of the businesses acquired, management believes that the Company maintained effective internal control over financial reporting as of December 31, 2020.
The effectiveness of our internal control over financial reporting has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their report which is included in this Annual Report.
Changes in Internal Control over Financial Reporting
    There were no changes in our internal control over financial reporting (as defined in Rule 13a - 15(f) of the Exchange Act) identified in connection with the evaluation required by Rule 13a-15(d) under the Exchange Act during the year ended December 31, 2020 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.




Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Trustees of Americold Realty Trust and Subsidiaries

Opinion on Internal Control over Financial Reporting

We have audited Americold Realty Trust and subsidiaries’ internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Americold Realty Trust and subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on the COSO criteria.

As indicated in the accompanying Management’s Report on Internal Control over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of businesses acquired during the year ended December 31, 2020, which are included in Note 2 and 3 of the 2020 consolidated financial statements of the Company and constituted approximately 40% of total assets as of December 31, 2020 and approximately 3% of revenue for the year then ended. Of these acquisitions, the acquisition of Agro Merchants Group represented approximately 28% of total assets as of December 31, 2020 and less than 1% of revenue for the year then ended. Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of the businesses acquired during the year ended December 31, 2020.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2020 and 2019, the related consolidated statements of operations, comprehensive income, equity, and cash flows for each of the three years in the period ended December 31, 2020, and the related notes and the financial statement schedule listed in the index at Item 15(a) and our report dated March 1, 2021 expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting




A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.


/s/ Ernst & Young LLP

Atlanta, Georgia
March 1, 2021




ITEM 9B. Other Information
None.




PART III
ITEM 10. Directors, Executive Officers and Corporate Governance 
    The information required by Item 10 will be included in the definitive proxy statement relating to the 2021 Annual Meeting of Shareholders of Americold Realty Trust and is incorporated herein by reference.
ITEM 11. Executive Compensation
    The information required by Item 11 will be included in the definitive proxy statement relating to the 2021 Annual Meeting of Shareholders of Americold Realty Trust and is incorporated herein by reference.
ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    The information required by Item 12 will be included in the definitive proxy statement relating to the 2021 Annual Meeting of Shareholders of Americold Realty Trust and is incorporated herein by reference.
ITEM 13. Certain Relationships and Related Transactions, and Director Independence
    The information required by Item 13 will be included in the definitive proxy statement relating to the 2021 Annual Meeting of Shareholders of Americold Realty Trust and is incorporated herein by reference.
ITEM 14. Principal Accounting Fees and Services
    The information required by Item 14 will be included in the definitive proxy statement relating to the 2021 Annual Meeting of Shareholders of Americold Realty Trust and is incorporated herein by reference.



PART IV




ITEM 15. Exhibits, Financial Statements and Schedules

 Americold Realty Trust and Subsidiaries

The following documents are filed as a part of this Annual Report on Form 10-K:
a.Financial Statements and Schedules
Financial Statements:Page
Americold Realty Trust and Subsidiaries
Report of Independent Registered Public Accounting Firm
F-1
F-4
F-5
F-6
F-7
F-10
Notes to the Consolidated Financial Statements of Americold Realty Trust and Subsidiaries
F-11
Schedule III – Real Estate and Accumulated Depreciation
F-104
b.Exhibits
EXHIBIT INDEX
Exhibit No.Description
Equity Purchase Agreement, dated as of April 16, 2019 (incorporated by reference to Exhibit 2.1 to Americold Realty Trust’s Current Report on Form 8-K filed on April 16, 2019 (File No. 001-34723))
Transaction Agreement, dated as of October 12, 2020 (incorporated by reference to Exhibit 2.1 to Americold Realty Trust’s Current Report on Form 8-K filed on October 13, 2020 (File No. 001-34723))
Amended and Restated Declaration of Trust of Americold Realty Trust, dated as of January 22, 2018 (incorporated by reference to Exhibit 3.1 to Americold Realty Trust’s Current Report on Form 8-K filed on January 23, 2018 (File No. 001-34723))
Amended and Restated Bylaws of Americold Realty Trust (incorporated by reference to Exhibit 3.1 to Americold Realty Trust’s Current Report on Form 8-K filed on May 23, 2019 (File No. 001-34723))
Certificate of Limited Partnership of Americold Realty Operating Partnership, L.P. (incorporated by reference to Exhibit 3.3 to Americold Realty Trust’s Annual Report on Form 10-K filed on February 26, 2019 (File No. 001-34723))
Amended and Restated Limited Partnership Agreement of Americold Realty Operating Partnership, L.P. (incorporated by reference to Exhibit 3.1 to Americold Realty Trust’s Current Report on Form 8-K filed on July 2, 2019 (File No. 001-34723))
Articles of Amendment to Declaration of Trust of Americold Realty Trust, dated as of March 9, 2020 (incorporated by reference to Exhibit 3.1 to Americold Realty Trust’s Current Report on Form 8-K filed on March 10, 2020 (File No. 001-34723))
Description of shares of Beneficial Interest (incorporated by reference to Exhibit 4.1 to Americold Realty Trust’s Annual Report on Form 10-K filed on March 2, 2020 (File No. 001-34723))
Registration Rights Agreement, dated as of December 30, 2020 by and among Americold Realty Trust and the Holders named therein.
Credit Agreement, dated as of December 4, 2018, by and among the Operating Partnership, the Company, the Several Lenders and Letter of Credit Issuers from Time to Time Parties Thereto and Bank of America, National Association, as Administrative Agent (incorporated by reference to Exhibit 10.1 to Americold Realty Trust’s Current Report on Form 8-K filed on December 5, 2018 (File No. 001-34723))
Consent and First Amendment to Credit Agreement, dated as of December 23, 2019, by and among the Company, the Operating Partnership and the guarantors, lenders and letter of credit issues named therein (incorporated by reference to Exhibit 10.1 to Americold Realty Trust’s Current Form on Form 8-K filed on January 9, 2020 (File No. 001-34723))
Credit Agreement, dated as of March 26, 2020, by and among the Company, the Operating Partnership, certain of their subsidiaries, Several Lenders and Letter of Credit Issuers named therein and Bank of America, National Association, as Administrative Agent (incorporated by reference to Exhibit 10.1 to Americold Realty Trust’s Current Report on Form 8-K filed on March 30, 2020 (File No. 001-34723))
115



Note and Guaranty Agreement, dated as of December 4, 2018, by and among the Operating Partnership, the Company and the purchasers named therein (incorporated by reference to Exhibit 10.2 to Americold Realty Trust’s Current Report on Form 8-K filed on December 5, 2018 (File No. 001-34723))
Note and Guaranty Agreement, dated as of May 7, 2019, by and among the Operating Partnership, the Company and the purchasers named therein (incorporated by reference to Exhibit 10.1 to Americold Realty Trust’s Current Report on Form 8-K filed on May 8, 2019 (File No. 001-34723))
Amendment No. 1 to the Note and Guaranty Agreement, dated as of May 7, 2019, dated as of December 30, 2020, by and among the Operating Partnership, the Company and the purchasers named therein (incorporated by reference to Exhibit 10.2 to Americold Realty Trust’s Current Report on Form 8-K filed on January 6, 2021 (File No. 001-34723))
Amendment No. 2 to the Note and Guaranty Agreement, dated as of December 4, 2018, dated as of December 30, 2020, by and among the Operating Partnership, the Company and the purchasers named therein (incorporated by reference to Exhibit 10.3 to Americold Realty Trust’s Current Report on Form 8-K filed on January 6, 2021 (File No. 001-34723))
Note and Guaranty Agreement, dated as of December 30, 2020, by and among the Operating Partnership, the Company and the Purchasers (incorporated by reference to Exhibit 10.1 to Americold Realty Trust’s Current Report on Form 8-K filed on January 6, 2021 (File No. 001-34723))
Employment Agreement, dated as of January 23, 2018, by and between AmeriCold Logistics, LLC and Fred Boehler (incorporated by reference to Exhibit 10.3 to Americold Realty Trust’s Current Report on Form 8-K filed on January 23, 2018 (Registration No. 333-221560))
Employment Agreement, dated as of January 23, 2018, by and between AmeriCold Logistics, LLC and Marc Smernoff (incorporated by reference to Exhibit 10.4 to Americold Realty Trust’s Current Report on Form 8-K filed on January 23, 2018 (Registration No. 333-221560))
Employment Agreement, dated as of January 23, 2018, by and between AmeriCold Logistics, LLC and Thomas Novosel (incorporated by reference to Exhibit 10.5 to Americold Realty Trust’s Current Report on Form 8-K filed on January 23, 2018 (Registration No. 333-221560))
Letter Agreement, dated May 11, 2018, by and between Americold Realty Trust and Marc Smernoff (incorporated by reference to Exhibit 10.5 to Americold Realty Trust’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2018, filed on May 15, 2018 (File No. 001-34723))
Employment Agreement, dated as of September 11, 2018, by and between AmeriCold Logistics, LLC and Carlos Rodriguez (incorporated by reference to Exhibit 10.1 to Americold Realty Trust’s Current Report on Form 8-K/A filed on September 11, 2018 (File No. 001-34723)
Employment Agreement, dated as of March 26, 2018, by and between AmeriCold Logistics, LLC and James Snyder (incorporated by reference to Exhibit 10.10 to Americold Realty Trust’s Annual Report on Form 10-K for the year ended December 31, 2018, filed on February 27, 2019 (File No. 001-34723))
Employment Agreement, dated as of September 25, 2018, by and between AmeriCold Logistics, LLC and James Harron (incorporated by reference to Exhibit 10.11 to Americold Realty Trust’s Annual Report on Form 10-K for the year ended December 31, 2018, filed on February 27, 2019 (File No. 001-34723))
Employment Agreement, dated as of September 13, 2018, by and between AmeriCold Logistics, LLC and David Stuver (incorporated by reference to Exhibit 10.10 to Americold Realty Trust’s Annual Report on Form 10-K for the year ended December 31, 2018, filed on February 27, 2019 (File No. 001-34723))
Employment Agreement, dated January 7, 2020, by and between Americold Realty Trust and Robert Chambers (incorporated by reference to Exhibit 10.1 to Americold Realty Trust’s Current Report on Form 8-K filed on January 10, 2020 (File No. 001-34723))
Form of Indemnification Agreement (incorporated by reference to Exhibit 10.16 to Americold Realty Trust’s Registration Statement on Form S-11/A, filed on December 19, 2017 (Registration No. 333-221560))
Americold Realty Trust 2008 Equity Incentive Plan (incorporated by reference to Exhibit 10.21 to Americold Realty Trust’s Registration Statement on Form S-11/A, filed on January 12, 2018 (Registration No. 333-221560))
Americold Realty Trust 2010 Equity Incentive Plan (incorporated by reference to Exhibit 10.14 to Americold Realty Trust’s Registration Statement on Form S-11/A, filed on December 20, 2017 (Registration No. 333-221560))
Americold Realty Trust 2017 Equity Incentive Plan, effective as of January 23, 2018 (incorporated by reference to Exhibit 10.8 to Americold Realty Trust’s Current Report on Form 8-K filed on January 23, 2018 (Registration No. 333-221560))
Form of Annual Trustee Restricted Stock Unit Agreement (incorporated by reference to Exhibit 10.2 to Americold Realty Trust’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2018, filed on May 15, 2018 (File No. 001-34723))
Form of Retention Restricted Stock Unit Agreement (incorporated by reference to Exhibit 10.3 to Americold Realty Trust’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2018, filed on May 15, 2018 (File No. 001-34723))
Form of Performance Restricted Stock Unit Agreement (incorporated by reference to Exhibit 10.4 to Americold Realty Trust’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2018, filed on May 15, 2018 (File No. 001-34723))
Form of Annual Trustee OP Unit Award Agreement (incorporated by referenced to Exhibit 10.1 to Americold Realty Trust’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2019, filed on August 9, 2019 (File No. 001-34723))
116



Form of Retention OP Unit Award Agreement (incorporated by referenced to Exhibit 10.2 to Americold Realty Trust’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2019, filed on August 9, 2019 (File No. 001-34723))
Form of Performance OP Unit Award Agreement (incorporated by referenced to Exhibit 10.3 to Americold Realty Trust’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2019, filed on August 9, 2019 (File No. 001-34723))
Form of Performance Restricted Stock Unit Agreement (incorporated by reference to Exhibit 10.26 to Americold Realty Trust’s Annual Report on Form 10-K filed on March 2, 2020 (File No. 001-34723))
List of Subsidiaries
Consent of Ernst & Young LLP
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 - Americold Realty Trust
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 - Americold Realty Trust
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 - Americold Realty Trust
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 - Americold Realty Trust
Information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
104 Cover Page Interactive Data File (embedded within the Inline XBRL document)
# This document has been identified as a management contract or compensatory plan or arrangement.
    Certain agreements and other documents filed as exhibits to this Annual Report on Form 10-K contain representations and warranties that the parties thereto made to each other. These representations and warranties have been made solely for the benefit of the other parties to such agreements and may have been qualified by certain information that has been disclosed to the other parties to such agreements and other documents and that may not be reflected in such agreements and other documents. In addition, these representations and warranties may be intended as a way of allocating risks among parties if the statements contained therein prove to be incorrect, rather than as actual statements of fact. Accordingly, there can be no reliance on any such representations and warranties as characterizations of the actual state of facts. Moreover, information concerning the subject matter of any such representations and warranties may have changed since the date of such agreements and other documents.
117



ITEM 16. Form 10-K Summary 
Not Applicable.









Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Trustees of Americold Realty Trust and Subsidiaries

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Americold Realty Trust and subsidiaries (the Company) as of December 31, 2020 and 2019, the related consolidated statements of operations, comprehensive income, equity and cash flows for each of the three years in the period ended December 31, 2020, and the related notes and financial statement schedule listed in the index at Item 15(a) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated March 1, 2021 expressed an unqualified opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

F-1


Accounting for the Acquisition of Nova Cold
Description of the MatterAs more fully described in Note 3 to the consolidated financial statements, the Company acquired Nova Cold Logistics (“Nova Cold”) in January 2020 for aggregate cash consideration of approximately $260.6 million. The acquisition was accounted for as a business combination and, as such, the Company measured the assets acquired and liabilities assumed at their acquisition-date fair values, including fair values of the acquired land, buildings and improvements, and the customer relationships intangible asset of $34.8 million, $106.1 million, and $53.9 million, respectively.

Auditing management's accounting for the acquisition of Nova Cold involved especially subjective judgments and complex analyses related to the fair value estimates of the acquired land, buildings and improvements, and customer relationships intangible asset due to the significant estimation required in determining fair value. The estimate of fair value of the acquired land and buildings and improvements is sensitive to changes in assumptions of comparable transactions in the market. The estimate of fair value of the acquired customer relationships intangible asset is sensitive to changes in assumptions impacting the net present value of future cash flows expected from the future performance of the acquired business. The significant assumptions impacting the fair value of the acquired land and buildings and improvements included estimates of indirect costs and entrepreneurial profit, which were added to the replacement cost of the acquired assets in order to estimate their fair value in the market, and the significant assumptions used to estimate the fair value of the acquired customer relationships intangible asset include revenue growth rates, customer attrition rates, operating costs and margins, capital expenditures, tax rates, long-term growth rates, and discount rates, which are affected by expectations about future market and economic conditions.
How We Addressed the Matter in Our Audit
We obtained an understanding, evaluated the design and tested the operating effectiveness over the Company's controls related to the accounting for the Nova Cold acquisition process. For example, we tested controls over the recognition and measurement of the acquired land and buildings and improvements, and customer relationships intangible asset, including the Company’s controls over the valuation approach and method selected, and the significant assumptions used in the fair value measurement described above.

To test the fair value of the acquired land and buildings and improvements, our audit procedures, which involved the assistance of our valuation specialists, included evaluating the Company's valuation methods and related significant assumptions used as well as testing the completeness and accuracy of the underlying data supporting the significant assumptions and estimates. For example, we compared the significant assumptions used to estimate the concluded fair value of the acquired land and buildings and improvements to recent, historical transactions within the industry.

To test the fair value of the acquired customer relationships intangible asset, our audit procedures included evaluating the Company's valuation method and significant assumptions used and testing the completeness and accuracy of the underlying data supporting the significant assumptions and estimates. We compared the significant assumptions used by management to current economic trends, where applicable, the historical results of the acquired business, and other relevant factors. We involved our valuation specialists to assist with our evaluation of the valuation method and certain significant assumptions, including the discount rate used in determining the fair value of
F-2


the customer relationships intangible asset.

Test of Goodwill for Impairment
Description of the MatterAs more fully described in Note 2 to the consolidated financial statements, the Company evaluates the carrying value of goodwill each year as of October 1 and between annual evaluations if events occur or circumstances change that would more likely than not reduce the fair value of a reporting unit to which goodwill has been allocated below its carrying amount. The carrying value of the Company’s goodwill balance totaled $794.3 million as of December 31, 2020

Auditing management’s goodwill impairment test involved especially subjective judgments due to the significant estimation required in determining the fair value of the reporting units to which goodwill has been allocated. In particular, the estimates of fair value are sensitive to changes in assumptions impacting the net present value of future cash flows attributable to the reporting units, including revenue growth rates, operating costs and margins, capital expenditures, tax rates, long-erm growth rates, and discount rates, which are affected by expectations about future market and economic conditions.
How We Addressed the Matter in Our AuditWe obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s goodwill impairment review process. For example, we tested controls over the estimation of the fair values of the reporting units to which goodwill has been allocated, including the Company’s controls over the valuation models, the mathematical accuracy of the valuation models and development of underlying assumptions used to determine the fair values of the reporting units. We also tested controls over management’s review of the reconciliation of the aggregate estimated fair value of the reporting units to the market capitalization of the Company.
To test the estimated fair values of the Company’s reporting units, our audit procedures included, among others, assessing the valuation methodology and the underlying data used by the Company in its analysis, including testing the significant assumptions discussed above. We compared the significant assumptions used by management to current economic trends, historical results, and other relevant factors. We assessed the historical accuracy of management’s assumptions of future expected net cash flows and performed sensitivity analyses of significant assumptions to evaluate the changes in the fair values of the reporting units that would result from changes in the assumptions. We involved valuation specialists to assist in our evaluation of the valuation methodology and the significant assumptions, including the discount rate used in determining the fair values of the reporting units. We also tested the reconciliation of the aggregate estimated fair value of the reporting units to the market capitalization of the Company.

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 2010.

Atlanta, Georgia
March 1, 2021

F-3


Americold Realty Trust and Subsidiaries
Consolidated Balance Sheets
(In thousands, except shares and per share amounts)
December 31,
20202019
Assets
 Property, buildings and equipment:
Land$662,885 $526,226 
Buildings and improvements4,004,824 2,696,732 
Machinery and equipment1,177,572 817,617 
Assets under construction303,531 108,639 
6,148,812 4,149,214 
Accumulated depreciation(1,382,298)(1,216,553)
Property, buildings and equipment – net4,766,514 2,932,661 
Operating lease right-of-use assets291,797 77,723 
Accumulated depreciation – operating leases(24,483)(18,110)
Operating leases – net267,314 59,613 
 Financing leases:
Buildings and improvements60,513 11,227 
Machinery and equipment109,416 76,811 
169,929 88,038 
Accumulated depreciation – financing leases(40,937)(29,697)
Financing leases – net128,992 58,341 
 Cash, cash equivalents, and restricted cash621,051 240,613 
 Accounts receivable – net of allowance of $12,286 and $6,927 at December 31, 2020 and 2019, respectively324,221 214,842 
 Identifiable intangible assets – net797,423 284,758 
 Goodwill794,335 318,483 
 Investments in partially owned entities44,907 
 Other assets86,394 61,372 
 Total assets$7,831,151 $4,170,683 
 Liabilities and equity
 Liabilities:
Borrowings under revolving line of credit$$
Accounts payable and accrued expenses552,547 350,963 
Mortgage notes, senior unsecured notes and term loan – net of deferred financing costs of $15,952 and $12,996 in the aggregate, at December 31, 2020 and 2019, respectively2,648,266 1,695,447 
Sale-leaseback financing obligations185,060 115,759 
Financing lease obligations125,926 58,170 
Operating lease obligations269,147 62,342 
Unearned revenue19,209 16,423 
Pension and postretirement benefits9,145 12,706 
Deferred tax liability – net220,502 17,119 
Multiemployer pension plan withdrawal liability8,528 8,736 
Total liabilities4,038,330 2,337,665 
Commitments and contingencies (see Commitments and Contingencies footnote 19 )00
Equity
 Shareholders’ equity:
Common shares of beneficial interest, $0.01 par value – 325,000,000 and 250,000,000 authorized shares; 251,702,603 and 191,799,909 issued and outstanding at December 31, 2020 and 2019, respectively2,517 1,918 
Paid-in capital4,687,823 2,582,087 
Accumulated deficit and distributions in excess of net earnings(895,521)(736,861)
Accumulated other comprehensive loss(4,379)(14,126)
Total shareholders’ equity3,790,440 1,833,018 
Noncontrolling interests:
Noncontrolling interests in operating partnership2,381 
Total equity3,792,821 1,833,018 
Total liabilities and equity$7,831,151 $4,170,683 
See accompanying notes to consolidated financial statements.
F-4


Americold Realty Trust and Subsidiaries
Consolidated Statements of Operations
(In thousands, except per share amounts)
Years Ended December 31,
202020192018
Revenues:
Rent, storage and warehouse services$1,549,314 $1,377,217 $1,176,912 
Third-party managed services291,751 252,939 259,034 
Transportation services142,203 144,844 158,790 
Other4,459 8,705 8,899 
Total revenues1,987,727 1,783,705 1,603,635 
Operating expenses:
Rent, storage and warehouse services cost of operations1,028,981 929,626 802,378 
Third-party managed services cost of operations279,523 241,178 244,274 
Transportation services cost of operations123,396 126,777 143,055 
Cost of operations related to other revenues4,329 7,867 8,279 
Depreciation and amortization215,891 163,348 117,653 
Selling, general and administrative144,738 129,310 110,825 
Acquisition, litigation and other36,306 40,614 3,935 
Impairment of long-lived assets8,236 13,485 747 
(Gain) loss from sale of real estate(22,124)34 (7,471)
Total operating expenses1,819,276 1,652,239 1,423,675 
Operating income168,451 131,466 179,960 
Other (expense) income:
Interest expense(91,481)(94,408)(93,312)
Interest income1,162 6,286 3,996 
Bridge loan commitment fees(2,438)(2,665)
Loss on debt extinguishment, modifications and termination of derivative instruments(9,975)(47,559)
Foreign currency exchange (loss) gain, net(45,278)10 2,882 
Other expense, net(2,563)(1,870)(532)
Loss from partially owned entities(250)(111)(1,069)
Gain from sale of partially owned entities4,297 
Income before income tax benefit17,628 43,005 44,366 
Income tax benefit:
Current(6,805)(5,544)467 
Deferred13,732 10,701 3,152 
Total income tax benefit6,927 5,157 3,619 
Net income$24,555 $48,162 $47,985 
Net income attributable to noncontrolling interests15 
Net income attributable to Americold Realty Trust$24,540 $48,162 $47,985 
Less distributions on preferred shares of beneficial interest - Series A(1)
Less distributions on preferred shares of beneficial interest - Series B(1,817)
Net income available to common shareholders of beneficial interest$24,540 $48,162 $46,167 
Weighted average common shares outstanding – basic203,255 179,598 141,415 
Weighted average common shares outstanding – diluted206,940 183,950 144,338 
Net income per common share of beneficial interest - basic$0.11 $0.26 $0.31 
Net income per common share of beneficial interest - diluted$0.11 $0.26 $0.31 
See accompanying notes to consolidated financial statements.
F-5


Americold Realty Trust and Subsidiaries
Consolidated Statements of Comprehensive Income
(In thousands)
Years Ended December 31,
202020192018
Net income$24,555 $48,162 $47,985 
Other comprehensive income (loss) - net of tax:
Adjustment to accrued pension liability1,433 3,269 (901)
Change in unrealized net gain (loss) on foreign currency9,944 (3,388)(11,640)
Unrealized (loss) gain on cash flow hedge(1,630)(1,492)256 
Other comprehensive income (loss) - net of tax9,747 (1,611)(12,285)
Other comprehensive income attributable to noncontrolling interests
Total comprehensive income attributable to Americold Realty Trust$34,306 $46,551 $35,700 
See accompanying notes to consolidated financial statements.
F-6


Americold Realty Trust and Subsidiaries
Consolidated Statements of Equity
(In thousands, except shares)
Preferred Shares of
Beneficial InterestCommon Shares ofAccumulated Deficit and Distributions in Excess of Net EarningsAccumulated Other Comprehensive Loss
Series ABeneficial Interest
Number of SharesPar ValueNumber of SharesPar ValuePaid-in Capital
Total Equity
Balance - December 31, 2017125 $69,370,609 $694 $394,082 $(581,470)$(230)$(186,924)
Net income— — — — — 47,985 — 47,985 
Other comprehensive loss— — — — — — (9,492)(9,492)
Distribution on preferred shares of beneficial interest - Series A(125)— — — (133)(1)— (134)
Distributions on preferred shares of beneficial interest - Series B— — — — — (1,817)— (1,817)
Distributions on common shares of beneficial interest— — — — — (104,976)— (104,976)
Share-based compensation expense— — — — 8,556 — — 8,556 
Share-based compensation expense (modification of Restricted Stock Units)— — — — 2,042 — — 2,042 
Common share issuance related to share-based payment plans, net of shares withheld for employee taxes— — 1,847,274 18 2,649 — — 2,667 
Warrants exercise— — 6,426,818 64 (64)— — 
Issuance of common shares— — 37,350,000 374 576,964 — — 577,338 
Conversion of mezzanine Series B Preferred shares— — 33,240,258 332 372,459 — — 372,791 
Other— — — — (422)1,934 (2,793)(1,281)
Balance - December 31, 2018$148,234,959 $1,482 $1,356,133 $(638,345)$(12,515)$706,755 
See accompanying notes to consolidated financial statements.
F-7


Americold Realty Trust and Subsidiaries
Consolidated Statements of Equity (Continued)
(In thousands, except shares)
Accumulated Deficit and Distributions in Excess of Net EarningsAccumulated Other Comprehensive Loss
Common Shares of
Beneficial InterestPaid-in Capital
Number of SharesPar ValueTotal Equity
Balance - December 31, 2018148,234,959 $1,482 $1,356,133 $(638,345)$(12,515)$706,755 
Net income— — — 48,162 — 48,162 
Other comprehensive loss— — — — (1,611)(1,611)
Distributions on common shares of beneficial interest— — — (146,590)— (146,590)
Share-based compensation expense— — 12,822 — — 12,822 
Share-based compensation expense (modification of Restricted Stock Units)— — 3,044 — — 3,044 
Common share issuance related to share-based payment plans, net of shares withheld for employee taxes1,502,450 15 3,461 — — 3,476 
Issuance of common shares42,062,500 421 1,206,627 — — 1,207,048 
Other— — (88)(88)
Balance - December 31, 2019191,799,909 $1,918 $2,582,087 $(736,861)$(14,126)$1,833,018 
See accompanying notes to consolidated financial statements.

F-8


Americold Realty Trust and Subsidiaries
Consolidated Statements of Equity (Continued)
(In thousands, except shares)
Accumulated Deficit and Distributions in Excess of Net EarningsAccumulated Other Comprehensive LossNoncontrolling interests in Operating Partnership
Common Shares of
Beneficial InterestPaid-in Capital
Number of SharesPar ValueTotal Equity
Balance - December 31, 2019191,799,909 $1,918 $2,582,087 $(736,861)$(14,126)$$1,833,018 
Net income— — — 24,540 — 15 24,555 
Other comprehensive income— — — — 9,747 9,751 
Distributions on common shares of beneficial interest— — — (182,700)— (241)(182,941)
Share-based compensation expense— — 15,259 — — 2,603 17,862 
Common share issuance related to share-based payment plans, net of shares withheld for employee taxes574,599 286 — — — 292 
Issuance of common shares45,161,428 451 1,578,208 — — — 1,578,659 
Issuance of common shares as consideration in the Agro acquisition14,166,667 142 511,983 — — — 512,125 
Cumulative effect of accounting change (refer to Note 2)— (500)(500)
Balance - December 31, 2020251,702,603 $2,517 $4,687,823 $(895,521)$(4,379)$2,381 $3,792,821 
See accompanying notes to consolidated financial statements.
F-9


Americold Realty Trust and Subsidiaries
Consolidated Statements of Cash Flows
(In thousands)
Years Ended December 31,
202020192018
Operating activities:
Net income$24,555 $48,162 $47,985 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization215,891 163,348 117,653 
Amortization of deferred financing costs and pension withdrawal liability5,147 6,028 6,177 
Amortization of above/below market leases152 151 151 
Loss on debt extinguishment and modification1,995 28,446 
Loss (gain) from foreign exchange45,278 (10)(2,882)
Loss from investments in partially owned entities250 111 1,069 
Gain from sale of partially owned entities(4,297)
Share-based compensation expense17,897 12,822 8,639 
Share-based compensation expense (modification of restricted stock units)3,044 2,042 
Deferred tax benefit(13,732)(10,701)(3,152)
(Gain) loss from sale of real estate(22,124)34 (7,471)
Loss (gain) on other asset disposals2,494 870 (152)
Impairment of long-lived assets8,236 13,485 747 
Provision for doubtful accounts receivable5,356 1,218 2,324 
Changes in operating assets and liabilities:
 Accounts receivable(12,897)(3,681)(1,940)
 Accounts payable and accrued expenses19,471 841 (5,219)
 Other(4,289)4,764 (6,246)
 Net cash provided by operating activities293,680 236,189 188,171 
Investing activities:
Return of investment in joint venture2,000 
Proceeds from sale of investments in partially owned entities154 14,250 
Proceeds from sale of property, buildings and equipment80,193 1,151 19,513 
Business combinations, net of cash acquired(1,858,937)(1,319,905)
Acquisitions of property, buildings and equipment, net of cash acquired(25,538)(85,216)
Additions to property, buildings and equipment(376,817)(217,214)(145,216)
Cash paid for investment in joint venture(26,229)
Proceeds from the settlement of net investment hedges, net3,034 
Proceeds from the settlement of foreign currency forward contract877,365 
Payment in settlement of foreign currency forward contract(922,350)
Net cash used in investing activities (2,249,125)(1,604,934)(125,703)
Financing activities:
Distributions paid on beneficial interest shares – preferred – Series A(134)
Distributions paid on beneficial interest shares – preferred – Series B(1,817)
Distributions paid on common shares and noncontrolling interests in operating partnership(167,086)(135,443)(76,523)
Proceeds from revolving line of credit636,753 100,000 
Repayment of revolving line of credit(627,075)(100,000)
Proceeds from stock options exercised6,748 10,204 14,842 
Remittance of withholding taxes related to employee share-based transactions(6,953)(7,063)(12,680)
Payment of underwriters’ costs(8,205)
Reimbursement of underwriters’ costs8,952 
Repayment of sale-leaseback financing obligations(3,774)(3,161)(2,595)
Repayment of financing lease obligations(19,970)(13,339)(10,360)
Payment of debt issuance costs(10,076)(2,062)(16,563)
Repayment of term loans, mortgage notes, notes payable and construction loans(156,750)(10,392)(1,522,347)
Proceeds from senior unsecured notes922,350 350,000 600,000 
Proceeds from term loans177,075 525,000 
Proceeds from construction loans1,097 
Net proceeds from issuance of common shares1,578,659 1,206,627 586,275 
Net cash provided by financing activities2,329,901 1,395,371 84,942 
Net increase in cash, cash equivalents and restricted cash374,456 26,626 147,410 
Effect of foreign currency translation on cash, cash equivalents and restricted cash5,982 (110)(3,276)
Cash, cash equivalents and restricted cash:
Beginning of period240,613 214,097 69,963 
End of period$621,051 $240,613 $214,097 
F-10


Americold Realty Trust and Subsidiaries
Consolidated Statements of Cash Flows (Continued)
(In thousands)
Years Ended December 31,
202020192018
Supplemental disclosures of non-cash investing and financing activities:
Common shares issued as consideration for Agro acquisition$512,125 $$
Deferred cash consideration for foreign investment in real property tax$49,710 $$
Addition of property, buildings and equipment on accrual$51,115 $51,335 $18,799 
Addition of fixed assets under financing lease obligations$38,858 $30,416 $13,290 
Addition of fixed assets under operating lease obligations$44,919 $12,492 $
Supplemental disclosures of cash flows information:
Interest paid – net of amounts capitalized$82,775 $68,016 $85,595 
Income taxes paid – net of refunds$1,485 $2,207 $5,509 
As of December 31,As of December 31,
Allocation of purchase price of property, buildings and equipment to:20202019
Land$3,233$23,439
Building and improvements15,940 41,913 
Machinery and equipment6,022 19,027 
Identifiable intangible assets140 854 
Other assets and liabilities, net303 1,577 
Cash paid for acquisition of property, buildings and equipment$25,638 $86,810 
As of December 31,As of December 31,
20202019
Allocation of purchase price to business combinations:
Land$167,989$65,074
Buildings and improvements1,176,924706,795
Machinery and equipment322,652162,389
Assets under construction30816,974
Operating and finance lease right-of-use assets268,6331,336
Cash and cash equivalents57,4564,977
Restricted cash0526
Accounts receivable96,99222,959
Goodwill470,987 132,527
Acquired identifiable intangible assets:
Customer relationships528,517 266,633
Trade names and trademarks1,623
 Investments in partially owned entities21,6380
Other assets20,4057,127
Accounts payable and accrued expenses(97,964)(45,000)
Notes payable(3,878)
Sale-leaseback financing obligations(73,075)
Operating and financing lease obligations(268,500)(1,336)
Unearned revenue(1,068)(3,536)
Deferred tax liability(213,666)(9,782)
Total consideration, including common shares issued and deferred consideration$2,478,228$1,325,408
See accompanying notes to consolidated financial statements.

F-11

Americold Realty Trust and Subsidiaries
Notes to Consolidated Financial Statements

1. Description of the Business
The Company
Americold Realty Trust, together with its subsidiaries (ART, the Company, or we) is a real estate investment trust (REIT) organized under Maryland law. The Company is the world’s largest publicly traded REIT focused on the ownership, operation and development of temperature-controlled warehouses. The Company is organized as a self-administered and self-managed REIT with proven operating, acquisition and development experience. As of December 31, 2020, we operated a global network of 238 temperature-controlled warehouses encompassing over 1.4 billion cubic feet, with 194 warehouses in North America, 26 in Europe, 15 warehouses in Asia-Pacific, and 3 warehouses in South America.
During 2010, the Company formed a Delaware limited partnership, Americold Realty Operating Partnership, L.P. (the Operating Partnership), and transferred substantially all of its interests in entities and associated assets and liabilities to the Operating Partnership. This structure is commonly referred to as an umbrella partnership REIT or an UPREIT structure. The REIT is the sole general partner of the Operating Partnership, owning 99% of the common general partnership interests as of December 31, 2020. Americold Realty Operations, Inc., a Delaware corporation and wholly-owned subsidiary of the REIT, is a limited partner of the Operating Partnership, owning less than 1% of the common general partnership interests as of December 31, 2020. Additionally, the aggregate partnership interests of all other limited partners was less than 0.1% as of December 31, 2020. As the sole general partner of the Operating Partnership, the REIT has full, exclusive and complete responsibility and discretion in the day-to-day management and control of the Operating Partnership. The limited partners of the Operating Partnership do not have rights to replace Americold Realty Trust as the general partner nor do they have participating rights, although they do have certain protective rights. The terms “Americold,” the “Company,” “we,” “our” and “us” refer to Americold Realty Trust and all of its consolidated subsidiaries, including the Operating Partnership.
No limited partner shall be liable for any debts, liabilities, contracts or obligations of the Operating Partnership. A limited partner shall be liable to the Operating Partnership only to make payments of capital contribution, if any, as and when due. After a capital contribution is fully paid, no limited partner shall, except as otherwise may be legally required under Delaware law, be required to make any further contribution or other payments or lend any funds to the Operating Partnership. The limited partners of the Operating Partnership do not have rights to replace Americold Realty Trust as the general partner nor do they have participating rights, although they do have certain protective rights.
The Company grants Operating Partnership Profit Units (OP Units) to certain members of the Board of Trustees and certain members of management of the Company, which are described further in Note 15. These units represent noncontrolling interests in the Operating Partnership that are not owned by Americold Realty Trust.
On March 9, 2020, the Company filed Articles of Amendment to the Company’s Amended and Restated Declaration of Trust with the State Department of Assessments and Taxation of Maryland to increase the number of authorized common shares of beneficial interest, $0.01 par value per share, from 250,000,000 to 325,000,000. The Articles of Amendment were effective upon filing. The Company also has 25,000,000 authorized preferred shares of beneficial interest, $0.01 par value per share; however, 0ne are issued or outstanding as of December 31, 2020.
F-12

Americold Realty Trust and Subsidiaries
Notes to Consolidated Financial Statements-(Continued)




The Operating Partnership includes numerous disregarded entities (“DRE”). Additionally, the Operating Partnership conducts various business activities in North America, Europe, Asia-Pacific, and South America through several wholly-owned taxable REIT subsidiaries (TRSs).
Recent Capital Markets Activity
At the Market (ATM) Equity Program
On August 26, 2019, the Company entered into an equity distribution agreement pursuant to which we may sell, from time to time, up to an aggregate sales price of $500.0 million of our common shares through an ATM Equity Program (“the 2019 ATM Equity Program”). Sales of our common shares made pursuant to the 2019 ATM Equity Program may be made in negotiated transactions or transactions that are deemed to be “at the market” offerings as defined in Rule 415 under the Securities Act, including sales made directly on the NYSE, or sales made to or through a market maker other than on an exchange, or as otherwise agreed between the applicable Agent and us. Sales may also be made on a forward basis pursuant to separate forward sale agreements. There were 0 common shares sold under the 2019 ATM Equity Program.
On April 16, 2020, the 2019 ATM Equity Program was terminated and replaced with the 2020 ATM Equity Program. Under the 2020 ATM Equity Program, we may sell, from time to time, up to an aggregate sales price of $500.0 million of the Company’s common shares. We intend to use the net proceeds from sales of our common shares pursuant to the 2020 ATM Equity Program for general corporate purposes, which may include funding acquisitions and development projects.
During the year ended December 31, 2020, there were 7,440,532 common shares sold under the 2020 ATM Equity Program, resulting in gross proceeds of $272.6 million. The proceeds were offset by equity issuance costs of $3.0 million. Included in the shares sold under the 2020 ATM Equity Program were forward sale agreements in connection with the 2020 ATM Equity Program to sell 4,346,101 common shares for gross proceeds of $162.2 million. During the year ended December 31, 2020, the Company settled 5,011,428 common shares for gross proceeds of $183.0 million under its ATM equity program. Pursuant to the respective forward sale agreements, the remaining 2,428,604 of shares must be settled by September 1, 2021 for gross proceeds of $89.6 million.

After considering the common shares issued during 2020 and the shares subject to the forward sale agreements, the Company had approximately $227.4 million of availability remaining for distribution under the 2020 ATM Equity Program as of December 31, 2020.

Universal Shelf Registration Statement

In connection with filing the ATM Equity Offering Sales Agreement on April 16, 2020, the Company and the Operating Partnership filed with the SEC an automatic shelf registration statement on Form S-3 (Registration Nos. 333-237704 and 333-237704-01) (the “Registration Statement”), registering an indeterminate amount of (i) the Company’s common shares of beneficial interest, $0.01 par value per share, (ii) the Company’s preferred shares of beneficial interest, $0.01 par value per share, (iii) depositary shares representing entitlement to all rights and preferences of fractions of the Company’s preferred shares of a specified series and represented by depositary receipts, (iv) warrants to purchase the Company’s common shares or preferred shares or depositary shares and (v) debt securities of the Operating Partnership, which will be fully and unconditionally guaranteed by the Company.

F-13

Americold Realty Trust and Subsidiaries
Notes to Consolidated Financial Statements-(Continued)




October 2020 Follow-On Public Offering

On October 13, 2020, the Company completed an underwritten registered public offering pursuant to forward sale agreements in which the forward purchasers borrowed and sold to the underwriters in the public offering 31,900,000 common shares, as well as an option for the underwriters to purchase 4,785,000 additional common shares. The initial forward sale price was $36.67 per share, which is the public offering price per share, less the underwriting discount per share. On November 9, 2020, the underwriters exercised in full its option to purchase the additional 4,785,000 common shares. The initial forward for 31,900,000 common shares was settled on December 29, 2020, and the proceeds were used to fund the cash portion of the Agro Merchants Group (“Agro”) acquisition, which closed on December 30, 2020. The 4,785,000 forward shares remain outstanding as of December 31, 2020.

Agro Acquisition Shares

In the Agro transaction, the Company acquired 46 temperature-controlled facilities operated in the United States, Europe, Asia-Pacific, and South America, and a minority equity interest in a Brazilian joint venture. In addition to the cash portion of the purchase price of the Agro acquisition discussed above, at closing on December 30, 2020, the Company also issued 14,166,667 common shares (the “Acquisition Shares”) to Oaktree Capital Management L.P. (“Oaktree”) and Agro management.

Recent Acquisitions and Investments in Joint Ventures
On December 30, 2020, the Company completed the acquisition of privately-held Agro from an investor group led by funds managed by Oaktree for consideration of $1.59 billion, including cash received of $47.5 million. This was comprised of cash consideration totaling $1.08 billion, of which $49.7 million was deferred, and the issuance of 14,166,667 common shares of beneficial interest to Oaktree and Agro management, with a fair value of $512.1 million based upon the closing share price on December 29, 2020 of $36.15. Financing lease and sale-leaseback obligations associated with the acquisition totaled $119.9 million and when added to the total consideration transferred brings the total transaction cost to approximately $1.7 billion.
On November 2, 2020, the Company acquired Hall’s Warehouse Corporation (Hall’s) for $489.2 million. The acquisition was funded using proceeds from our 2020 ATM equity forward sale agreements combined with funds drawn on our 2020 Senior Unsecured Revolving Credit Facility.
On August 31, 2020, the Company acquired AM-C Warehouses (AM-C) for approximately $82.7 million. The acquisition was funded using cash on hand.
On August 31, 2020, the Company acquired Caspers Cold Storage (Caspers) for $25.6 million. The consideration paid by the company was funded using cash on hand.
On March 6, 2020, the Company acquired a 14.99% ownership interest in Superfrio Armazéns Gerais S.A. (SuperFrio) for Brazil Reals of R$117.8 million, or approximately USD $25.7 million, inclusive of certain legal fees. The investment was funded using cash on hand.
On January 2, 2020, the Company completed the purchase of all outstanding membership interests of Newport Cold for cash consideration of $57.7 million. The acquisition was funded using cash on hand.
On January 2, 2020, the Company completed the purchase of all outstanding shares of Nova Cold for C$338.7 million ($260.6 million USD). The acquisition was funded utilizing proceeds from the settlement of our
F-14

Americold Realty Trust and Subsidiaries
Notes to Consolidated Financial Statements-(Continued)




April 2019 forward sale agreement combined with cash drawn on our 2018 Senior Unsecured Revolving Credit Facility and cash on hand.
On November 19, 2019, the Company acquired MHW Group Inc. (MHW). The Company paid aggregate cash consideration of approximately $51.6 million. The acquisition was funded using cash on hand.
On May 1, 2019, the Company acquired Lanier Cold Storage (Lanier). The Company paid aggregate cash consideration of approximately $82.5 million. The acquisition was funded using cash on hand.
On May 1, 2019, the Company entered into an equity purchase agreement to acquire Cloverleaf. The Company refers to the completion of the acquisition of Cloverleaf pursuant to the executed purchase agreement as “the Cloverleaf Acquisition”. The Company paid aggregate cash consideration of approximately $1.24 billion. The acquisition was funded using net proceeds from the Company’s equity offering that closed on April 22, 2019, along with funds drawn under the Company’s senior unsecured revolving credit facility.
On February 1, 2019, the Company acquired PortFresh Holdings, LLC (PortFresh). The Company paid aggregate cash consideration of $35.9 million. The acquisition was funded using cash on hand.

2. Summary of Significant Accounting Policies
Basis of Presentation and Principles of Consolidation
The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the U.S. (GAAP). The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries where the Company exerts control. Investments in which the Company does not have control, and is not considered to be the primary beneficiary of a Variable Interest Entity (VIE), but where the Company exercises significant influence over the operating and financial policies of the investee, are accounted for using the equity method of accounting. Intercompany balances and transactions have been eliminated.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of (1) assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the financial statements, and (2) revenues and expenses during the reporting period. Actual results could differ from those estimates.

Significant Risks and Uncertainties
The COVID-19 pandemic has caused, and is likely to continue to cause severe economic, market and other disruptions worldwide, which could lead to material impairments of our assets, increases in our allowance for credit losses and changes in judgments in determining the fair value of our assets. Conditions in the bank lending, capital and other financial markets may deteriorate, and our access to capital and other sources of funding may become constrained or more costly, which could materially and adversely affect the availability and terms of future borrowings, renewals, re-financings and other capital raises.
F-15

Americold Realty Trust and Subsidiaries
Notes to Consolidated Financial Statements-(Continued)




The Company is closely monitoring the impact of the ongoing COVID-19 pandemic on all aspects of its business in all geographies, including how it will impact its customers and business partners. While the Company did not incur significant disruptions during the year ended December 31, 2020 from the COVID-19 pandemic, it continues to incur elevated labor related costs and incremental health and safety supplies costs but otherwise is unable to further predict the impact that the COVID-19 pandemic will have on its financial condition, results of operations and cash flows due to numerous uncertainties.
The extent to which COVID-19 impacts our operations will depend on future developments, which are highly uncertain and cannot be predicted with any degree of confidence, including the scope, severity, duration and geographies of the outbreak, the actions taken to contain the COVID-19 pandemic or mitigate its impact as requested or mandated by governmental authorities or otherwise voluntarily taken by individuals or businesses, and the direct and indirect economic effects of the illness and containment measures, among others. As a result, we cannot at this time predict the impact of the COVID-19 pandemic, but it could have a material adverse effect on our business, financial condition, liquidity, results of operations and prospects.
Property, Buildings and Equipment
Property, buildings and equipment is stated at cost, less accumulated depreciation. Depreciation is computed on a straight-line basis over the estimated useful lives of the respective assets or, if less, the term of the underlying lease. Depreciation begins in the month an asset is placed into service. Useful lives range from 5 to 43 years for buildings and building improvements and 3 to 12 years for machinery and equipment. For the years ended December 31, 2020, 2019 and 2018, the Company recorded depreciation expense of $198.8 million, $153.9 million and $116.0 million, respectively. The Company periodically reviews the appropriateness of the estimated useful lives of its long-lived assets.
Costs of normal maintenance and repairs and minor replacements are charged to expense as incurred. When non-real estate assets are sold or otherwise disposed of, the cost and related accumulated depreciation are removed, and any resulting gain or loss is included in “Other expense, net” on the accompanying Consolidated Statements of Operations. Gains or losses from the sale of real estate assets are reported in the accompanying Consolidated Statement of Operations as a component of operating expenses.
Costs incurred to develop software for internal use and purchased software are capitalized and included in “Machinery and equipment” on the accompanying Consolidated Balance Sheets. Capitalized software is amortized over the estimated life of the software which ranges from 3 to 10 years. Amortization of previously capitalized amounts was $7.3 million, $6.4 million and $5.2 million for 2020, 2019 and 2018, respectively, and is included in “Depreciation and amortization” on the accompanying Consolidated Statements of Operations.
F-16

Americold Realty Trust and Subsidiaries
Notes to Consolidated Financial Statements-(Continued)




Activity in real estate facilities during the years ended December 31, 2020 and 2019 is as follows:
20202019
(In thousands)
Operating facilities, at cost:
Beginning balance$3,729,589 $2,575,367 
Capital expenditures287,220 177,268 
Acquisitions1,662,650 975,045 
Newly developed warehouse facilities58,807 21,316 
Disposition(62,225)(7,409)
Impairment(2,153)(12,555)
Conversion of leased assets to owned7,956 
Impact of foreign exchange rate changes24,916 557 
Ending balance5,706,760 3,729,589 
Accumulated depreciation: