One of the world’s largest temperature-controlled warehousing companies is floating itself on the Nasdaq Global Select Market. Lineage is America’s leading independent temperature-controlled warehouse property owner and operator as well as a significant owner of temperature-controlled facilities in various economies in Europe, South East Asia and Australia.
Pulled together over ten years through a process of acquisition by the private equity company Bay Grove Capital, Lineage is structured as a Real Estate Investment Trust or REIT. The company now operates 480 warehouses and cross-docks totalling more than 84m square feet. Its principal customers are food manufacturers and retailers.
Bay Grove is reported to be hopeful of raising US$3.85bn from the floatation, which ought to give the company a valuation of in excess of US$19bn. The float is aiming to realise a share price in the region of $70 to $82, issuing 47 million shares. Bay Capital said that it was embarking on the sale in order to “repay borrowings outstanding under its delayed draw term loan, repay borrowings outstanding under its revolving credit facility, fund one-time cash grants to certain of its employees”
The temperature-controlled warehousing market is a distinct segment of the wider warehousing market. It has been much less exposed to the dynamics of internet retailing than ambient non-food logistics property. However, it has experienced change. The level of penetration of chilled and frozen-foods varies between markets, however in developed markets temperature-controlled products have been increasing steadily in terms of volume but have also become more complex. There is a continuing need for larger, more sophisticated facilities that have the flexibility to support changing retailing patterns. For a company such as Lineage this is both an opportunity and a threat, with the latter emerging from the new warehousing technology companies. However, the potential for growth in emerging markets in regions such as South East Asia must be very substantial.
Author: Thomas Cullen
Source: Ti Insight
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