þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 31, 2019 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to , |
Maryland (Americold Realty Trust) | 93-0295215 | |
Delaware (Americold Realty Operating Partnership, L.P.) | 01-0958815 | |
(State or other jurisdiction of incorporation or organization) | (IRS Employer Identification Number) | |
10 Glenlake Parkway, Suite 600, South Tower | ||
Atlanta, Georgia | 30328 | |
(Address of principal executive offices) | (Zip Code) |
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. | ||||||||
Americold Realty Trust | Yes x | No ¨ | Americold Realty Operating Partnership, L.P. | Yes ¨ | No x | |||
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted 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). | ||||||||
Americold Realty Trust | Yes x | No ¨ | Americold Realty Operating Partnership, L.P. | Yes x | No ¨ | |||
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 (check one): | ||||||||
Americold Realty Trust | Americold Realty Operating Partnership, L.P. | |||||||
¨ Large accelerated filer | ¨ Accelerated filer | ¨ Large accelerated filer | ¨ Accelerated filer | |||||
x Non-accelerated filer | ¨ Smaller reporting company | x Non-accelerated filer | ¨ Smaller reporting company | |||||
¨ Emerging growth 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. | ||||||||
Americold Realty Trust | Yes ¨ | No ¨ | Americold Realty Operating Partnership, L.P. | 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) | ||||||||
Americold Realty Trust | Yes ¨ | No x | Americold Realty Operating Partnership, L.P. | Yes ¨ | No x |
Title of each class | Trading symbol(s) | Name of each exchange on which registered | ||
Common shares | COLD | New York Stock Exchange (NYSE) |
Class | Outstanding at May 8, 2019 | |
Common Stock, $0.01 par value per share | 191,529,223 |
– | enhancing investors’ understanding of our Company and our operating partnership by enabling investors to view the business as a whole in the same manner as management views and operates the business; |
– | eliminating duplicative disclosure and providing a more streamlined and readable presentation since a substantial portion of the disclosure applies to both our Company and our operating partnership; and |
– | creating time and cost efficiencies through the preparation of one combined report instead of two separate reports. |
• | condensed consolidated financial statements; |
• | the following notes to the condensed consolidated financial statements: |
◦ | Debt of the Company and Debt of the Operating Partnership; |
◦ | Partners' Capital; and |
• | Liquidity and Capital Resources in Management's Discussion and Analysis of Financial Condition and Results of Operations. |
TABLE OF CONTENTS | |
Page | |
PART I - FINANCIAL INFORMATION | |
Item 1. Financial Statements | |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations | |
Item 3. Quantitative and Qualitative Disclosures About Market Risk | |
Item 4. Controls and Procedures | |
PART II - OTHER INFORMATION | |
Item 1. Legal Proceedings | |
Item 1A. Risk Factors | |
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds | |
Item 3. Defaults Upon Senior Securities | |
Item 4. Mine Safety Disclosures | |
Item 5. Other Information | |
Item 6. Exhibits | |
SIGNATURES | |
• | 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; |
• | defaults or non-renewals of contracts with customers; |
• | potential bankruptcy or insolvency of our customers; |
• | uncertainty of revenues, given the nature of our customer contracts; |
• | increased interest rates and operating costs; |
• | our failure to obtain necessary outside financing; |
• | risks related to, or restrictions contained in, our debt financing; |
• | decreased storage rates or increased vacancy rates; |
• | risks related to current and potential international operations and properties; |
• | our failure to realize the intended benefits from including synergies, or disruptions to our plans and operations or unknown or contingent liabilities related to our recent acquisitions; |
• | our failure to successfully integrate and operate acquired or developed properties or businesses, including but not limited to: Cloverleaf Cold Storage, Lanier Cold Storage and PortFresh Holdings LLC; |
• | difficulties in identifying properties to be acquired and completing acquisitions; |
• | acquisition risks, including the failure of such acquisitions to perform in accordance with projections; |
• | risks related to expansions of existing properties and developments of new properties, including failure to meet budgeted or stabilized returns within expected time frames in respect thereof; |
• | difficulties in expanding our operations into new markets, including international markets; |
• | our failure to maintain our status as a REIT; |
• | our operating partnership’s failure to qualify as a partnership for federal income tax purposes; |
• | uncertainties and risks related to natural disasters and global climate change; |
• | 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 real estate and zoning laws and increases in real property tax rates; |
• | the competitive environment in which we operate; |
• | our relationship with our employees, including the occurrence of any work stoppages or any disputes under our collective bargaining agreements; |
• | liabilities as a result of our participation in multi-employer pension plans; |
• | losses in excess of our insurance coverage; |
• | the cost and time requirements as a result of our operation as a publicly traded REIT; |
• | risks related to joint venture investments, including as a result of our lack of control of such investments; |
• | changes in foreign currency exchange rates; and |
• | 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, or our common shares. |
Americold Realty Trust and Subsidiaries | |||||||
Condensed Consolidated Balance Sheets (Unaudited) | |||||||
(In thousands, except shares and per share amounts) | |||||||
March 31, 2019 | December 31, 2018 | ||||||
Assets | |||||||
Property, plant, and equipment: | |||||||
Land | $ | 408,982 | $ | 385,232 | |||
Buildings and improvements | 1,862,064 | 1,849,749 | |||||
Machinery and equipment | 600,148 | 577,175 | |||||
Assets under construction | 74,937 | 85,983 | |||||
2,946,131 | 2,898,139 | ||||||
Accumulated depreciation and depletion | (1,127,419 | ) | (1,097,624 | ) | |||
Property, plant, and equipment – net | 1,818,712 | 1,800,515 | |||||
Operating lease right-of-use assets | 83,663 | — | |||||
Accumulated depreciation-operating leases | (6,181 | ) | — | ||||
Operating leases-net | 77,482 | — | |||||
Financing leases: | |||||||
Buildings and improvements | 11,227 | 11,227 | |||||
Machinery and equipment | 49,835 | 49,276 | |||||
61,062 | 60,503 | ||||||
Accumulated depreciation- financing leases | (21,415 | ) | (21,317 | ) | |||
Financing leases – net | 39,647 | 39,186 | |||||
Cash and cash equivalents | 172,838 | 208,078 | |||||
Restricted cash | 6,812 | 6,019 | |||||
Accounts receivable – net of allowance of $6,146 and $5,706 at March 31, 2019 and December 31, 2018, respectively | 193,599 | 194,279 | |||||
Identifiable intangible assets – net | 25,003 | 25,056 | |||||
Goodwill | 186,359 | 186,095 | |||||
Investments in partially owned entities | 13,167 | 14,541 | |||||
Other assets | 54,110 | 58,659 | |||||
Total assets | $ | 2,587,729 | $ | 2,532,428 | |||
Liabilities and shareholders’ equity | |||||||
Liabilities: | |||||||
Accounts payable and accrued expenses | 258,055 | 253,080 | |||||
Mortgage notes, senior unsecured notes and term loan - net of unamortized discount and deferred financing costs of $13,207 and $13,943, in the aggregate, at March 31, 2019 and December 31, 2018, respectively | 1,350,120 | 1,351,014 | |||||
Sale-leaseback financing obligations | 118,181 | 118,920 | |||||
Financing lease obligations | 40,888 | 40,787 | |||||
Operating lease obligations | 80,257 | — | |||||
Unearned revenue | 17,994 | 18,625 | |||||
Pension and postretirement benefits | 15,721 | 16,317 | |||||
Deferred tax liability - net | 17,110 | 17,992 | |||||
Multi-Employer pension plan withdrawal liability | 8,926 | 8,938 | |||||
Total liabilities | 1,907,252 | 1,825,673 | |||||
Shareholders’ equity: | |||||||
Common shares of beneficial interest, $0.01 par value – authorized 250,000,000 shares; 149,132,808 and 148,234,959 shares issued and outstanding at March 31, 2019 and December 31, 2018, respectively | 1,491 | 1,482 | |||||
Paid-in capital | 1,365,767 | 1,356,133 | |||||
Accumulated deficit and distributions in excess of net earnings | (673,297 | ) | (638,345 | ) | |||
Accumulated other comprehensive loss | (13,484 | ) | (12,515 | ) | |||
Total shareholders’ equity | 680,477 | 706,755 | |||||
Total liabilities and shareholders’ equity | $ | 2,587,729 | $ | 2,532,428 | |||
See accompanying notes to condensed consolidated financial statements. |
Americold Realty Trust and Subsidiaries | |||||||
Condensed Consolidated Statements of Operations (Unaudited) | |||||||
(In thousands, except per share amounts) | |||||||
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
Revenues: | |||||||
Rent, storage, and warehouse services | $ | 289,615 | $ | 286,517 | |||
Third-party managed services | 64,136 | 63,876 | |||||
Transportation services | 37,096 | 38,345 | |||||
Other | 2,232 | 2,403 | |||||
Total revenues | 393,079 | 391,141 | |||||
Operating expenses: | |||||||
Rent, storage, and warehouse services cost of operations | 198,796 | 196,947 | |||||
Third-party managed services cost of operations | 60,877 | 60,099 | |||||
Transportation services cost of operations | 32,740 | 34,751 | |||||
Cost of operations related to other revenues | 1,988 | 2,057 | |||||
Depreciation, depletion, and amortization | 30,096 | 29,408 | |||||
Selling, general and administrative | 31,117 | 28,106 | |||||
Acquisition, litigation, and other | 8,493 | 3,841 | |||||
Impairment of long-lived assets | 12,555 | — | |||||
Total operating expenses | 376,662 | 355,209 | |||||
Operating income | 16,417 | 35,932 | |||||
Other income (expense): | |||||||
Income (loss) from investments in partially owned entities | 122 | (139 | ) | ||||
Interest expense | (21,576 | ) | (24,495 | ) | |||
Interest income | 1,003 | 623 | |||||
Loss on debt extinguishment and modifications | — | (21,385 | ) | ||||
Foreign currency exchange gain, net | 60 | 680 | |||||
Other (expense) income, net | (167 | ) | 56 | ||||
Loss before income tax (expense) benefit | (4,141 | ) | (8,728 | ) | |||
Income tax (expense) benefit: | |||||||
Current | (1,548 | ) | (1,067 | ) | |||
Deferred | 1,060 | 1,156 | |||||
Total income tax (expense) benefit | (488 | ) | 89 | ||||
Net loss | $ | (4,629 | ) | $ | (8,639 | ) | |
Less distributions on preferred shares of beneficial interest - Series A | — | (1 | ) | ||||
Less distributions on preferred shares of beneficial interest - Series B | — | (1,817 | ) | ||||
Net loss attributable to common shares of beneficial interest | $ | (4,629 | ) | $ | (10,457 | ) | |
Weighted average common shares outstanding – basic | 149,404 | 124,433 | |||||
Weighted average common shares outstanding – diluted | 149,404 | 124,433 | |||||
Net loss per common share of beneficial interest - basic | $ | (0.03 | ) | $ | (0.08 | ) | |
Net loss per common share of beneficial interest - diluted | $ | (0.03 | ) | $ | (0.08 | ) | |
See accompanying notes to condensed consolidated financial statements. |
Americold Realty Trust and Subsidiaries | |||||||
Condensed Consolidated Statements of Comprehensive Loss (Unaudited) | |||||||
(In thousands) | |||||||
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
Net loss | $ | (4,629 | ) | $ | (8,639 | ) | |
Other comprehensive income (loss) - net of tax: | |||||||
Adjustment to accrued pension liability | 524 | 499 | |||||
Change in unrealized net gain (loss) on foreign currency | 1,221 | (1,473 | ) | ||||
Unrealized (loss) gain on cash flow hedge derivatives | (2,714 | ) | 36 | ||||
Other comprehensive loss | (969 | ) | (938 | ) | |||
Total comprehensive loss | $ | (5,598 | ) | $ | (9,577 | ) | |
See accompanying notes to condensed consolidated financial statements. |
Americold Realty Trust and Subsidiaries | |||||||||||||||||
Condensed Consolidated Statements of Shareholders’ Equity (Unaudited) | |||||||||||||||||
(In thousands, except shares and per share amounts) | |||||||||||||||||
Common Shares of | Accumulated Deficit and Distributions in Excess of Net Earnings | Accumulated Other Comprehensive Loss | |||||||||||||||
Beneficial Interest | |||||||||||||||||
Number of Shares | Par Value | Paid-in Capital | |||||||||||||||
Total | |||||||||||||||||
Balance - December 31, 2018 | 148,234,959 | $ | 1,482 | $ | 1,356,133 | $ | (638,345 | ) | $ | (12,515 | ) | $ | 706,755 | ||||
Net loss | — | — | — | (4,629 | ) | — | (4,629 | ) | |||||||||
Other comprehensive loss | — | — | — | — | (2,832 | ) | (2,832 | ) | |||||||||
Distributions on common shares of beneficial interest | — | — | — | (30,235 | ) | — | (30,235 | ) | |||||||||
Stock-based compensation expense (Stock Options and Restricted Stock Units) | — | — | 2,625 | — | — | 2,625 | |||||||||||
Share-based compensation expense (modification and acceleration of equity awards) | — | — | 3,044 | — | — | 3,044 | |||||||||||
Common stock issuance related to share-based payment plans, net of shares withheld for employee taxes | 897,849 | 9 | 3,965 | — | — | 3,974 | |||||||||||
Other | — | — | — | (88 | ) | 1,863 | 1,775 | ||||||||||
Balance - March 31, 2019 | 149,132,808 | $ | 1,491 | $ | 1,365,767 | $ | (673,297 | ) | $ | (13,484 | ) | $ | 680,477 |
Americold Realty Trust and Subsidiaries | ||||||||||||||||||||||
Condensed Consolidated Statements of Shareholders’ Equity (Deficit) (Unaudited) | ||||||||||||||||||||||
(In thousands, except shares) | ||||||||||||||||||||||
Preferred Shares of | ||||||||||||||||||||||
Beneficial Interest | Common Shares of | Accumulated Deficit and Distributions in Excess of Net Earnings | Accumulated Other Comprehensive Loss | |||||||||||||||||||
Series A | Beneficial Interest | |||||||||||||||||||||
Number of Shares | Par Value | Number of Shares | Par Value | Paid-in Capital | ||||||||||||||||||
Total | ||||||||||||||||||||||
Balance - December 31, 2017 | 125 | $ | — | 69,370,609 | $ | 694 | $ | 394,082 | $ | (581,470 | ) | $ | (230 | ) | $ | (186,924 | ) | |||||
Net loss | — | — | — | — | — | (8,639 | ) | — | (8,639 | ) | ||||||||||||
Other comprehensive loss | — | — | — | — | — | — | (938 | ) | (938 | ) | ||||||||||||
Redemption and distributions 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 | — | — | — | — | — | (21,436 | ) | — | (21,436 | ) | ||||||||||||
Stock-based compensation expense (Stock Options and Restricted Stock Units) | — | — | — | — | 1,839 | — | — | 1,839 | ||||||||||||||
Stock-based compensation expense (modification of Restricted Stock Units) | — | — | — | — | 2,600 | — | — | 2,600 | ||||||||||||||
Common stock issuance related to share-based payment plans, net of shares withheld for employee taxes | — | — | 125,763 | 1 | (260 | ) | — | — | (259 | ) | ||||||||||||
Warrants exercise | — | — | 6,426,818 | 64 | (64 | ) | — | — | — | |||||||||||||
Issuance of common shares | — | — | 33,350,000 | 334 | 484,571 | — | — | 484,905 | ||||||||||||||
Conversion of mezzanine Series B Preferred shares | — | — | 33,240,258 | 332 | 372,459 | — | — | 372,791 | ||||||||||||||
Balance - March 31, 2018 | — | $ | — | 142,513,448 | $ | 1,425 | $1,255,094 | $ | (613,363 | ) | $ | (1,168 | ) | $ | 641,988 |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
Distributions declared per common share of beneficial interest | $ | 0.2024 | $ | 0.1504 |
Americold Realty Trust and Subsidiaries | |||||||
Condensed Consolidated Statements of Cash Flows (Unaudited) | |||||||
(In thousands) | |||||||
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
Operating activities: | |||||||
Net loss attributable to Americold Realty Trust | $ | (4,629 | ) | $ | (8,639 | ) | |
Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||
Depreciation, depletion, and amortization | 30,096 | 29,408 | |||||
Amortization of deferred financing costs, debt discount and pension withdrawal liability | 1,456 | 1,560 | |||||
Amortization of above/below market leases | 38 | 38 | |||||
Loss on debt extinguishment and modification, non-cash | — | 21,105 | |||||
Foreign exchange gain | (60 | ) | (680 | ) | |||
(Income) loss from investments in partially owned entities | (122 | ) | 139 | ||||
Share-based compensation expense | 2,640 | 1,918 | |||||
Share-based compensation expense (modification and acceleration of equity awards) | 3,044 | 2,600 | |||||
Deferred income tax benefit | (1,060 | ) | (1,156 | ) | |||
Loss (gain) on other asset disposals | 20 | (137 | ) | ||||
Impairment of long-lived assets | 12,555 | — | |||||
Provision for doubtful accounts receivable | 444 | 103 | |||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | (257 | ) | 20,115 | ||||
Accounts payable and accrued expenses | 2,039 | (23,810 | ) | ||||
Other | 6,808 | 7,683 | |||||
Net cash provided by operating activities | 53,012 | 50,247 | |||||
Investing activities: | |||||||
Return of investment in joint venture | 2,000 | — | |||||
Proceeds from the sale of property, plant, and equipment | 152 | 352 | |||||
Acquisitions of property, plant, and equipment, net of cash acquired | (35,923 | ) | — | ||||
Additions to property, plant, and equipment and intangible assets | (24,934 | ) | (28,271 | ) | |||
Net cash used in investing activities | (58,705 | ) | (27,919 | ) | |||
Financing activities: | |||||||
Redemption and distributions paid on preferred shares of beneficial interest – Series A | — | (134 | ) | ||||
Distributions paid on preferred shares of beneficial interest – Series B | — | (1,817 | ) | ||||
Distributions paid on common shares | (28,098 | ) | (1,291 | ) | |||
Proceeds from stock options exercised | 5,567 | — | |||||
Share purchases for taxes, net of proceeds from employee share-based transactions | (1,593 | ) | — | ||||
Payment of underwriters' costs | — | (5,750 | ) | ||||
Reimbursement of underwriters' costs | — | 5,750 | |||||
Repayment of sale-leaseback financing obligations | (740 | ) | (605 | ) | |||
Repayment of financing lease obligations | (2,616 | ) | (2,374 | ) | |||
Payment of debt issuance costs | — | (8,676 | ) | ||||
Repayment of term loan, mortgage notes and construction loans | (1,629 | ) | (883,556 | ) | |||
Proceeds from term loans and mortgage notes | — | 525,000 | |||||
Net proceeds from initial public offering | — | 493,557 | |||||
Proceeds from construction loans | — | 1,097 | |||||
Net cash (used in) provided by financing activities | (29,109 | ) | 121,201 | ||||
Net (decrease) increase in cash, cash equivalents and restricted cash | (34,802 | ) | 143,529 | ||||
Effect of foreign currency translation on cash, cash equivalents and restricted cash | 355 | (230 | ) | ||||
Cash, cash equivalents and restricted cash: | |||||||
Beginning of period | 214,097 | 69,963 | |||||
End of period | $ | 179,650 | $ | 213,262 | |||
See accompanying notes to condensed consolidated financial statements. |
Americold Realty Trust and Subsidiaries | |||||||
Condensed Consolidated Statements of Cash Flows (Unaudited) (Continued) | |||||||
(In thousands) | |||||||
Three Months Ended March 31, | |||||||
Supplemental disclosures of cash flows information: | 2019 | 2018 | |||||
Acquisition of fixed assets under financing lease obligations | $ | 2,710 | $ | 330 | |||
Acquisition of fixed assets under operating lease obligations | $ | 4,923 | $ | — | |||
Interest paid – net of amounts capitalized | $ | 13,076 | $ | 23,068 | |||
Income taxes paid – net of refunds | $ | 1,577 | $ | 1,262 | |||
Acquisition of property, plant, and equipment on accrual | $ | 13,768 | $ | 18,210 | |||
Reconciliation of cash, cash equivalents and restricted cash reported in the condensed consolidated balance sheets to the ending cash, cash equivalents and restricted cash balances above: | As of March 31, | ||||||
2019 | 2018 | ||||||
Cash and cash equivalents | $ | 172,838 | $ | 193,868 | |||
Restricted cash | 6,812 | 19,394 | |||||
Total cash, cash equivalents and restricted cash | $ | 179,650 | 213,262 | ||||
As of March 31, | |||||||
Allocation of purchase price of property, plant and equipment to: | 2019 | 2018 | |||||
Investments in land, building and improvements | $ | 31,561 | $ | — | |||
Machinery and equipment | 3,410 | — | |||||
Assembled workforce | 351 | — | |||||
Other assets | 601 | — | |||||
Cash paid for acquisition of property, plant and equipment | $ | 35,923 | $ | — | |||
See accompanying notes to condensed consolidated financial statements. |
Americold Realty Operating Partnership, L.P. and Subsidiaries | |||||||
Condensed Consolidated Balance Sheets (Unaudited) | |||||||
(In thousands, except shares and per unit amounts) | |||||||
March 31, | December 31, | ||||||
2019 | 2018 | ||||||
Assets | |||||||
Property, plant, and equipment: | |||||||
Land | $ | 408,982 | $ | 385,232 | |||
Buildings and improvements | 1,862,064 | 1,849,749 | |||||
Machinery and equipment | 600,148 | 577,175 | |||||
Assets under construction | 74,937 | 85,983 | |||||
2,946,131 | 2,898,139 | ||||||
Accumulated depreciation and depletion | (1,127,419 | ) | (1,097,624 | ) | |||
Property, plant, and equipment – net | 1,818,712 | 1,800,515 | |||||
Operating lease right-of-use assets | 83,663 | — | |||||
Accumulated depreciation-operating leases | (6,181 | ) | — | ||||
Operating leases-net | 77,482 | — | |||||
Financing leases: | |||||||
Buildings and improvements | 11,227 | 11,227 | |||||
Machinery and equipment | 49,835 | 49,276 | |||||
61,062 | 60,503 | ||||||
Accumulated depreciation- financing leases | (21,415 | ) | (21,317 | ) | |||
Financing leases – net | 39,647 | 39,186 | |||||
Cash and cash equivalents | 172,838 | 208,078 | |||||
Restricted cash | 6,812 | 6,019 | |||||
Accounts receivable – net of allowance of $6,146 and $5,706 at March 31, 2019 and December 31, 2018, respectively | 193,599 | 194,279 | |||||
Identifiable intangible assets – net | 25,003 | 25,056 | |||||
Goodwill | 186,359 | 186,095 | |||||
Investments in partially owned entities | 13,167 | 14,541 | |||||
Other assets | 54,110 | 58,659 | |||||
Total assets | $ | 2,587,729 | $ | 2,532,428 | |||
Liabilities and partners' capital | |||||||
Liabilities: | |||||||
Borrowings under revolving line of credit | $ | — | $ | — | |||
Accounts payable and accrued expenses | 258,055 | 253,080 | |||||
Mortgage notes, senior unsecured notes and term loan - net of unamortized discount and deferred financing costs of $13,207 and $13,943, in the aggregate, at March 31, 2019 and December 31, 2018, respectively | 1,350,120 | 1,351,014 | |||||
Sale-leaseback financing obligations | 118,181 | 118,920 | |||||
Financing lease obligations | 40,888 | 40,787 | |||||
Operating lease obligations | 80,257 | — | |||||
Unearned revenue | 17,994 | 18,625 | |||||
Pension and postretirement benefits | 15,721 | 16,317 | |||||
Deferred tax liability - net | 17,110 | 17,992 | |||||
Multi-Employer pension plan withdrawal liability | 8,926 | 8,938 | |||||
Total liabilities | 1,907,252 | 1,825,673 | |||||
Commitments and Contingencies (Note 17) | |||||||
Partners' capital: | |||||||
General partner - 147,641,480 and 146,752,609 units issued and outstanding as of March 31, 2019 and December 31, 2018, respectively | 687,021 | 712,078 | |||||
Limited partner - 1,491,328 and 1,482,350 units issued and outstanding as of March 31, 2019 and December 31, 2018, respectively | 6,940 | 7,192 | |||||
Accumulated other comprehensive loss | (13,484 | ) | (12,515 | ) | |||
Total partners' capital | 680,477 | 706,755 | |||||
Total liabilities and partners' capital | $ | 2,587,729 | $ | 2,532,428 | |||
See accompanying notes to condensed consolidated financial statements. |
Americold Realty Operating Partnership, L.P. and Subsidiaries | |||||||
Condensed Consolidated Statements of Operations (Unaudited) | |||||||
(In thousands, except per unit amounts) | |||||||
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
Revenues: | |||||||
Rent, storage, and warehouse services | $ | 289,615 | $ | 286,517 | |||
Third-party managed services | 64,136 | 63,876 | |||||
Transportation services | 37,096 | 38,345 | |||||
Other | 2,232 | 2,403 | |||||
Total revenues | 393,079 | 391,141 | |||||
Operating expenses: | |||||||
Rent, storage, and warehouse services cost of operations | 198,796 | 196,947 | |||||
Third-party managed services cost of operations | 60,877 | 60,099 | |||||
Transportation services cost of operations | 32,740 | 34,751 | |||||
Cost of operations related to other revenues | 1,988 | 2,057 | |||||
Depreciation, depletion, and amortization | 30,096 | 29,408 | |||||
Selling, general and administrative | 31,117 | 28,106 | |||||
Acquisition, litigation, and other | 8,493 | 3,841 | |||||
Impairment of long-lived assets | 12,555 | — | |||||
Total operating expenses | 376,662 | 355,209 | |||||
Operating income | 16,417 | 35,932 | |||||
Other (expense) income: | |||||||
Loss from partially owned entities | 122 | (139 | ) | ||||
Interest expense | (21,576 | ) | (24,495 | ) | |||
Interest income | 1,003 | 623 | |||||
Loss on debt extinguishment and modifications | — | (21,385 | ) | ||||
Foreign currency exchange gain, net | 60 | 680 | |||||
Other (expense) income, net | (167 | ) | 56 | ||||
Loss before income tax (expense) benefit | (4,141 | ) | (8,728 | ) | |||
Income tax (expense) benefit: | |||||||
Current | (1,548 | ) | (1,067 | ) | |||
Deferred | 1,060 | 1,156 | |||||
Total income tax (expense) benefit | (488 | ) | 89 | ||||
Net loss attributable to the Partnership | $ | (4,629 | ) | $ | (8,639 | ) | |
General partners' interest in net loss attributable to unitholders | $ | (4,583 | ) | $ | (8,553 | ) | |
Limited partners' interest in net loss attributable to unitholders | $ | (46 | ) | $ | (86 | ) | |
General partner weighted average units outstanding | 147,910 | 123,188 | |||||
Limited partner weighted average units outstanding | 1,494 | 1,244 | |||||
General partners' net loss per unit | $ | (0.03 | ) | $ | (0.07 | ) | |
Limited partners' net loss per unit | $ | (0.03 | ) | $ | (0.07 | ) | |
See accompanying notes to condensed consolidated financial statements. |
Americold Realty Operating Partnership, L.P. and Subsidiaries | |||||||
Condensed Consolidated Statements of Comprehensive Loss (Unaudited) | |||||||
(In thousands) | |||||||
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
Net loss attributable to Americold Realty Operating Partnership, L.P. | $ | (4,629 | ) | $ | (8,639 | ) | |
Other comprehensive income (loss) - net of tax: | |||||||
Adjustment to accrued pension liability | 524 | 499 | |||||
Change in unrealized net gain (loss) on foreign currency | 1,221 | (1,473 | ) | ||||
Unrealized (loss) gain on cash flow hedge | (2,714 | ) | 36 | ||||
Other comprehensive loss attributable to Americold Realty Operating Partnership. L.P. | (969 | ) | (938 | ) | |||
Total comprehensive loss | $ | (5,598 | ) | $ | (9,577 | ) | |
See accompanying notes to condensed consolidated financial statements. |
Americold Realty Operating Partnership, L.P. and Subsidiaries | ||||||||||||||||
Condensed Consolidated Statements of Partners' Capital (Unaudited) | ||||||||||||||||
(In thousands, except units and per unit amounts) | ||||||||||||||||
Limited Partners' Units | Limited Partners' Capital | General Partners' Units | General Partners' Capital | Accumulated Other Comprehensive Loss | Total Capital | |||||||||||
Balance - December 31, 2018 | 1,482,350 | $ | 7,192 | 146,752,609 | $ | 712,078 | $ | (12,515 | ) | $ | 706,755 | |||||
Net loss | (46 | ) | (4,583 | ) | — | (4,629 | ) | |||||||||
Other comprehensive loss | — | — | (2,832 | ) | (2,832 | ) | ||||||||||
Distributions to parent | (302 | ) | (29,933 | ) | — | (30,235 | ) | |||||||||
Stock-based compensation expense | 57 | 5,612 | — | 5,669 | ||||||||||||
Contributions to partners' capital | 8,978 | 40 | 888,871 | 3,934 | — | 3,974 | ||||||||||
Other | (1 | ) | (87 | ) | 1,863 | 1,775 | ||||||||||
Balance - March 31, 2019 | 1,491,328 | $ | 6,940 | 147,641,480 | $ | 687,021 | $ | (13,484 | ) | $ | 680,477 |
Limited Partners' Units | Limited Partners' Capital | General Partners' Units | General Partners' Capital | Accumulated Other Comprehensive Loss | Total Capital | |||||||||||
Balance - December 31, 2017 | 693,706 | $ | 1,860 | 68,676,903 | $ | 184,240 | $ | (230 | ) | $ | 185,870 | |||||
Net loss | (86 | ) | (8,553 | ) | — | (8,639 | ) | |||||||||
Other comprehensive loss | — | — | (938 | ) | (938 | ) | ||||||||||
Distributions to parent | (234 | ) | (23,155 | ) | — | (23,389 | ) | |||||||||
Stock-based compensation expense | 42 | 4,137 | — | 4,179 | ||||||||||||
Contributions to partners' capital | 731,428 | 4,849 | 72,411,411 | 480,056 | — | 484,905 | ||||||||||
Balance - March 31, 2018 | 1,425,134 | $ | 6,431 | 141,088,314 | $ | 636,725 | $ | (1,168 | ) | $ | 641,988 |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
Distributions declared per unit | $ | 0.2024 | $ | 0.1504 |
Americold Realty Operating Partnership, L.P. and Subsidiaries | |||||||
Condensed Consolidated Statements of Cash Flows (Unaudited) | |||||||
(In thousands) | |||||||
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
Operating activities: | |||||||
Net loss attributable to Americold Realty Operating Partnership, L.P. | $ | (4,629 | ) | $ | (8,639 | ) | |
Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||
Depreciation, depletion, and amortization | 30,096 | 29,408 | |||||
Amortization of deferred financing costs, debt discount and pension withdrawal liability | 1,456 | 1,560 | |||||
Amortization of above/below market leases | 38 | 38 | |||||
Loss on debt extinguishment and modification, non-cash | — | 21,105 | |||||
Foreign exchange gain | (60 | ) | (680 | ) | |||
(Income) loss from investments in partially owned entities | (122 | ) | 139 | ||||
Share-based compensation expense | 2,640 | 1,918 | |||||
Share-based compensation expense (modification and acceleration of equity awards) | 3,044 | 2,600 | |||||
Deferred income tax benefit | (1,060 | ) | (1,156 | ) | |||
Loss (gain) on other asset disposals | 20 | (137 | ) | ||||
Impairment of long-lived assets | 12,555 | — | |||||
Provision for doubtful accounts receivable | 444 | 103 | |||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | (257 | ) | 20,115 | ||||
Accounts payable and accrued expenses | 2,039 | (23,810 | ) | ||||
Other | 6,808 | 7,683 | |||||
Net cash provided by operating activities | 53,012 | 50,247 | |||||
Investing activities: | |||||||
Return of investment in joint venture | 2,000 | — | |||||
Proceeds from the sale of property, plant, and equipment | 152 | 352 | |||||
Acquisitions of property, plant, and equipment, net of cash acquired | (35,923 | ) | — | ||||
Additions to property, plant, and equipment and intangible assets | (24,934 | ) | (28,271 | ) | |||
Net cash used in investing activities | (58,705 | ) | (27,919 | ) | |||
Financing activities: | |||||||
Distributions to parent | (28,098 | ) | (8,992 | ) | |||
Repayment of sale-leaseback financing obligations | (740 | ) | (605 | ) | |||
Repayment of financing lease obligations | (2,616 | ) | (2,374 | ) | |||
Payment of debt issuance costs | — | (8,676 | ) | ||||
Repayment of term loan, mortgage notes and construction loans | (1,629 | ) | (883,556 | ) | |||
Proceeds from term loans and mortgage notes | — | 525,000 | |||||
Proceeds from construction loans | — | 1,097 | |||||
General partner contributions | 3,974 | 499,307 | |||||
Net cash (used in) provided by financing activities | (29,109 | ) | 121,201 | ||||
Net (decrease) increase in cash, cash equivalents and restricted cash | (34,802 | ) | 143,529 | ||||
Effect of foreign currency translation on cash, cash equivalents and restricted cash | 355 | (230 | ) | ||||
Cash, cash equivalents and restricted cash: | |||||||
Beginning of period | 214,097 | 69,963 | |||||
End of period | $ | 179,650 | $ | 213,262 | |||
See accompanying notes to condensed consolidated financial statements. |
Americold Realty Operating Partnership, L.P. and Subsidiaries | |||||||
Condensed Consolidated Statements of Cash Flows (Unaudited) (Continued) | |||||||
(In thousands) | |||||||
Three Months Ended March 31, | |||||||
Supplemental disclosures of cash flows information: | 2019 | 2018 | |||||
Acquisition of fixed assets under financing lease obligations | $ | 2,710 | $ | 330 | |||
Acquisition of fixed assets under operating lease obligations | $ | 4,923 | $ | — | |||
Interest paid – net of amounts capitalized | $ | 13,076 | $ | 23,068 | |||
Income taxes paid – net of refunds | $ | 1,577 | $ | 1,262 | |||
Acquisition of property, plant, and equipment on accrual | $ | 13,768 | $ | 18,210 | |||
Reconciliation of cash, cash equivalents and restricted cash reported in the condensed consolidated balance sheets to the ending cash, cash equivalents and restricted cash balances above: | As of March 31, | ||||||
2019 | 2018 | ||||||
Cash and cash equivalents | $ | 172,838 | $ | 193,868 | |||
Restricted cash | 6,812 | 19,394 | |||||
Total cash, cash equivalents and restricted cash | $ | 179,650 | $ | 213,262 | |||
As of March 31, | |||||||
Allocation of purchase price of property, plant and equipment to: | 2019 | 2018 | |||||
Investments in land, building and improvements | $ | 31,561 | $ | — | |||
Machinery and equipment | 3,410 | — | |||||
Assembled workforce | 351 | — | |||||
Other assets | 601 | — | |||||
Cash paid for acquisition of property, plant and equipment | $ | 35,923 | $ | — | |||
See accompanying notes to condensed consolidated financial statements. |
Acquisition | Land | Building and Improvements | Machinery and Equipment | Assembled Workforce | Other Assets / Liabilities | |||||||||||||||
PortFresh Holdings, LLC | $ | 20,715 | $ | 10,846 | $ | 3,410 | $ | 351 | $ | 601 | ||||||||||
Total | $ | 20,715 | $ | 10,846 | $ | 3,410 | $ | 351 | $ | 601 | ||||||||||
Weighted average remaining intangible amortization life (in months) | 34 |
Three Months Ended March 31, 2019 | |||||||||||
Condensed consolidated results of operations | CMAL | CMAH | Total | ||||||||
(In thousands) | |||||||||||
Revenues | $ | 9,226 | $ | 3,528 | $ | 12,754 | |||||
Operating income | $ | 127 | $ | 694 | $ | 821 | |||||
Net income | $ | 183 | $ | 326 | $ | 509 | |||||
Company’s income from investments in partially owned entities | $ | 26 | $ | 96 | $ | 122 |
Three Months Ended March 31, 2018 | |||||||||||
Condensed consolidated results of operations | CMAL | CMAH | Total | ||||||||
(In thousands) | |||||||||||
Revenues | $ | 9,741 | $ | 2,867 | $ | 12,608 | |||||
Operating income | $ | 23 | $ | 84 | $ | 107 | |||||
Net (loss) income | $ | (2 | ) | $ | 71 | $ | 69 | ||||
Company’s loss from investments in partially owned entities | $ | (121 | ) | $ | (18 | ) | $ | (139 | ) |
Three Months Ended March 31, | |||||||
Acquisition, litigation, and other | 2019 | 2018 | |||||
Acquisition related costs | $ | 1,441 | $ | — | |||
Litigation | 910 | — | |||||
Other: | |||||||
Severance, equity award modifications and acceleration | 4,293 | 2,600 | |||||
Non-offering related equity issuance expenses | 1,511 | 1,241 | |||||
Terminated site operations costs | 338 | — | |||||
Total other | 6,142 | 3,841 | |||||
Total acquisition, litigation, and other | $ | 8,493 | $ | 3,841 |
March 31, 2019 | December 31, 2018 | |||||||||||||||
Indebtedness | Stated Maturity Date | Contractual Interest Rate | Effective Interest Rate as of March 31, 2019 | Carrying Amount | Estimated Fair Value | Carrying Amount | Estimated Fair Value | |||||||||
2013 Mortgage Loans | ||||||||||||||||
Senior note | 5/2023 | 3.81% | 4.14% | $ | 186,327 | $ | 185,861 | $ | 187,957 | $ | 184,667 | |||||
Mezzanine A | 5/2023 | 7.38% | 7.55% | 70,000 | 69,125 | 70,000 | 67,900 | |||||||||
Mezzanine B | 5/2023 | 11.50% | 11.75% | 32,000 | 31,760 | 32,000 | 31,120 | |||||||||
Total 2013 Mortgage Loans | 288,327 | 286,746 | 289,957 | 283,687 | ||||||||||||
Senior Unsecured Notes | ||||||||||||||||
Series A 4.68% notes due 2026 | 1/2026 | 4.68% | 4.77% | 200,000 | 209,000 | 200,000 | 202,500 | |||||||||
Series B 4.86% notes due 2029 | 1/2029 | 4.86% | 4.92% | 400,000 | 418,000 | 400,000 | 407,000 | |||||||||
Total Senior Unsecured Notes | 600,000 | 627,000 | 600,000 | 609,500 | ||||||||||||
2018 Senior Unsecured Term Loan A Facility(1) | 1/2023 | L+1.45% | 4.38% | 475,000 | 477,375 | 475,000 | 472,625 | |||||||||
Total principal amount of mortgage notes, unsecured senior notes and term loans | $ | 1,363,327 | $ | 1,391,121 | $ | 1,364,957 | $ | 1,365,812 | ||||||||
Less: deferred financing costs | (12,946 | ) | n/a | (13,666 | ) | n/a | ||||||||||
Less: debt discount | (261 | ) | n/a | (277 | ) | n/a | ||||||||||
Total mortgage notes and term loans, net of unamortized deferred financing costs and debt discount | $ | 1,350,120 | $ | 1,391,121 | $ | 1,351,014 | $ | 1,365,812 | ||||||||
2018 Senior Unsecured Revolving Credit Facility(1) | 1/2021 | L+1.45% | 0.35% | $ | — | $ | — | $ | — | $ | — |
• | a maximum leverage ratio of less than or equal to 60% of our total asset value; |
• | a minimum borrowing base coverage ratio of greater than or equal to 1.00 to 1.00; |
• | a minimum pro forma fixed charge coverage ratio of greater than or equal to 1.40 to 1.00, which increased to 1.50 to 1.00 in the first quarter of 2018; |
• | a minimum borrowing base debt service coverage ratio of greater than or equal to 2.00 to 1.00; |
• | a minimum tangible net worth requirement of greater than or equal to $900 million plus 70% of any future net equity proceeds following the completion of the IPO transactions; and |
• | a maximum recourse secured debt ratio of less than or equal to 20% of our total asset value. |
• | 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 minimum fixed charge coverage ratio of greater than or equal to 1.50 to 1.00; |
• | a minimum unsecured debt service ratio of greater than or equal to 2.00 to 1.00; |
• | a maximum total secured indebtedness ratio of less than 0.40 to 1.00 |
As of March 31, 2019: | (In thousands) | ||
Year 1 | $ | 6,557 | |
Year 2 | 6,833 | ||
Year 3 | 7,102 | ||
Year 4 | 482,381 | ||
Year 5 | 260,454 | ||
Thereafter | 600,000 | ||
Aggregate principal amount of debt | 1,363,327 | ||
Less unamortized discount and deferred financing costs | (13,207 | ) | |
Total debt net of unamortized discount and deferred financing costs | $ | 1,350,120 |
Derivative Assets | Derivative Liabilities | ||||||||||||||
March 31, 2019 | December 31, 2018 | March 31, 2019 | December 31, 2018 | ||||||||||||
(In thousands) | |||||||||||||||
Derivatives formally designated as hedging instruments | |||||||||||||||
Foreign exchange contracts | $ | 47 | $ | 2,283 | $ | 340 | $ | — | |||||||
Interest rate contracts | — | — | 1,406 | — | |||||||||||
Total derivatives formally designated as hedging instruments | $ | 47 | $ | 2,283 | $ | 1,746 | $ | — |
Amount of Gain or (Loss) Recognized in Other Comprehensive Income on Derivative | Location of Gain or (Loss) Reclassified from AOCI into Income | Amount of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income | |||||||||||||||
Three Months Ended March 31, | Three Months Ended March 31, | ||||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||||
Derivatives in cash flow hedging relationships | |||||||||||||||||
Interest rate contracts | $ | (1,406 | ) | $ | (329 | ) | Interest expense | $ | — | $ | 365 | ||||||
Foreign exchange contracts | (2,576 | ) | $ | — | Foreign currency exchange gain, net | 1,268 | — | ||||||||||
Total designated cash flow hedges | $ | (3,982 | ) | $ | (329 | ) | $ | 1,268 | $ | 365 |
Maturity | Interest Rate as of March 31, 2019 | March 31, 2019 | December 31, 2018 | |||||||
(In thousands) | ||||||||||
1 warehouse – 2010 | 7/2030 | 10.34% | $ | 19,205 | $ | 19,265 | ||||
11 warehouses – 2007 | 9/2027 | 7.00%-19.59% | 98,976 | 99,655 | ||||||
Total sale-leaseback financing obligations | $ | 118,181 | $ | 118,920 |
Three Months Ended March 31, 2019 | |||
(In thousands) | |||
Components of lease expense: | |||
Operating lease cost (a) | $ | 8,075 | |
Financing lease cost: | |||
Depreciation | 2,256 | ||
Interest on lease liabilities | 650 | ||
Sublease income (b) | (122 | ) | |
Net lease expense | $ | 10,859 |
Three Months Ended March 31, 2019 | |||
(In thousands) | |||
Supplemental Cash Flow Information | |||
Cash paid for amounts included in the measurement of lease liabilities | |||
Operating cash flows from operating leases | $ | (7,360 | ) |
Operating cash flows from finance leases | (650 | ) | |
Financing cash flows from finance leases | (2,616 | ) | |
Right-of-use assets obtained in exchange for lease obligations | |||
Operating leases | 4,923 | ||
Finance leases | $ | 2,710 | |
Weighted-average remaining lease term (years) | |||
Operating leases | 6.0 | ||
Finance leases | 4.8 | ||
Weighted-average discount rate | |||
Operating leases | 4.0 | % | |
Finance leases | 6.4 | % |
Years ending December 31, | Operating Lease Payments | Finance Lease Payments | Total Lease Payments | ||||||
(In thousands) | |||||||||
2019 (excluding 3 months ended March 31, 2019) | $ | 19,653 | $ | 9,730 | $ | 29,383 | |||
2020 | 22,476 | 12,380 | 34,856 | ||||||
2021 | 14,134 | 11,101 | 25,235 | ||||||
2022 | 9,487 | 5,902 | 15,389 | ||||||
2023 | 7,863 | 3,153 | 11,016 | ||||||
Thereafter | 18,764 | 6,341 | 25,105 | ||||||
Total future minimum lease payments | 92,377 | 48,607 | 140,984 | ||||||
Less: Interest | (11,925 | ) | (7,712 | ) | (19,637 | ) | |||
Total future minimum lease payments less interest | $ | 80,452 | $ | 40,895 | $ | 121,347 | |||
Reported as of March 31, 2019 | |||||||||
Accounts payable and accrued expenses | $ | 195 | $ | 7 | $ | 202 | |||
Operating lease obligations | 80,257 | — | 80,257 | ||||||
Finance lease obligations | — | 40,888 | 40,888 | ||||||
Total lease obligations | $ | 80,452 | $ | 40,895 | $ | 121,347 |
Operating Leases | |||
Year ending December 31, | |||
2019 (excluding 3 months ended March 31, 2019) | $ | 10,819 | |
2020 | 11,507 | ||
2021 | 8,826 | ||
2022 | 7,669 | ||
2023 | 6,375 | ||
Thereafter | 17,974 | ||
Total | $ | 63,170 |
Fair Value | ||||||||||
Fair Value Hierarchy | March 31, 2019 | December 31, 2018 | ||||||||
(In thousands) | ||||||||||
Measured at fair value on a recurring basis: | ||||||||||
Cash and cash equivalents | Level 1 | $ | 172,838 | $ | 208,078 | |||||
Restricted cash | Level 1 | 6,812 | 6,019 | |||||||
Interest rate swap liability | Level 2 | 1,406 | — | |||||||
Cross-currency swap asset | Level 2 | 47 | 2,283 | |||||||
Cross-currency swap liability | Level 2 | 340 | — | |||||||
Measured at fair value on a non-recurring basis: | ||||||||||
Long-lived assets written down at March 31, 2019: | ||||||||||
Property, plant and equipment | Level 3 | $ | 9,080 | $ | — | |||||
Disclosed at fair value: | ||||||||||
Mortgage notes, term loans and senior unsecured notes(1) | Level 3 | $ | 1,391,121 | $ | 1,365,812 |
Three Months Ended March 31, 2019 | ||||||||||||||||||||
Month Declared/Paid | Dividend Per Share | Distributions Declared | Distributions Paid | |||||||||||||||||
Common Shares | Series B Preferred Shares | Common Shares | Series B Preferred Shares | |||||||||||||||||
(In thousands, except per share amounts) | ||||||||||||||||||||
December (2018)/January | $ | 0.1875 | $ | 28,218 | $ | — | $ | 28,218 | $ | — | ||||||||||
December(a) | — | (127 | ) | — | Dividend equivalents accrued on unvested restricted stock units to be paid when the awards vest. | |||||||||||||||
December (2018)/January | — | 7 | — | Dividend equivalents paid on unvested restricted stock units that are not expected to vest (recognized as additional compensation). | ||||||||||||||||
March/April | 0.2000 | 30,235 | — | — | — | |||||||||||||||
$ | 30,235 | $ | — | $ | 28,098 | $ | — |
(a) | Declared in December 2018 and included in the $28.2 million declared, see description to the right regarding timing of payment. |
Three Months Ended March 31, 2018 | ||||||||||||||||||||
Month Declared/Paid | Dividend Per Share | Distributions Declared | Distributions Paid | |||||||||||||||||
Common Shares | Series B Preferred Shares | Common Shares | Series B Preferred Shares | |||||||||||||||||
(In thousands, except per share amounts) | ||||||||||||||||||||
January (a) | $ | 0.0186 | $ | 1,291 | $ | 619 | $ | 1,291 | $ | 619 | ||||||||||
March/April | 0.1396 | 20,145 | — | — | ||||||||||||||||
$ | 21,436 | $ | 1,232 | |||||||||||||||||
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. |
Three Months Ended March 31, 2019 | ||||||||
Month Declared/Paid | Distributions Declared | Distributions Paid | ||||||
(In thousands) | ||||||||
January | $ | — | $ | 28,098 | ||||
March/April | $ | 30,235 | $ | — | ||||
$ | 30,235 | $ | 28,098 |
Three Months Ended March 31, 2018 | ||||||||
Month Declared/Paid | Distributions Declared | Distributions Paid | ||||||
(In thousands) | ||||||||
January (a) | $ | 3,242 | $ | 3,242 | ||||
January (b) | 5,750 | 5,750 | ||||||
March/April | 20,145 | — | ||||||
$ | 29,137 | $ | 8,992 |
(a) | Stub period distribution paid to Parent immediately prior to the IPO. |
(b) | Distribution was paid to Parent for payment of underwriters' costs in conjunction with the offering completed in the respective quarter, and for conversion of Series A Preferred shares in connection with the IPO. |
Three Months Ended March 31, | Grantee Type | # of Restricted Stock Units Granted | Vesting Period | Grant Date Fair Value (in thousands) | ||
2019 | Trustee group | 12,285 | 1 year | $ | 375 | |
2019 | Employee group | 455,504 | 1-3 years | $ | 15,169 | |
2018 | Trustee group | 373,438 | 1-3 years | $ | 5,975 | |
2018 | Employee group | 897,125 | 2-4 years | $ | 12,677 |
Three Months Ended March 31, 2019 | |||||||||||||||
Restricted Stock | Number of Time-Based Restricted Stock Units | Aggregate Intrinsic Value (in millions) | Number of Performance-Based Restricted Stock Units | Aggregate Intrinsic Value (in millions) | Number of Market Performance-Based Restricted Stock Units | Aggregate Intrinsic Value (in millions) | |||||||||
Non-vested as of December 31, 2018 | 1,028,256 | $ | 26.3 | 71,428 | $ | 1.8 | 587,500 | $ | 15.0 | ||||||
Granted | 235,222 | — | 232,567 | ||||||||||||
Vested (1) | (359,901 | ) | (14,286 | ) | — | ||||||||||
Forfeited | (119,792 | ) | — | (33,918 | ) | ||||||||||
Non-vested as of March 31, 2019 | 783,785 | $ | 23.9 | 57,142 | $ | 1.7 | 786,149 | $ | 24.0 |
(1) | For certain vested restricted stock units, common shares shall not be issued until the first to occur of: (1) termination of service; (2) change in control; (3) death; or (4) disability, as defined in the 2010 Plan. Of these vested restricted stock units, 568,753 belong to the member of the Board of Trustees who has resigned and common shares shall not be issued until the first to occur: (1) change in control; or (2) April 13, 2022. Holders of these certain vested restricted stock units are entitled to receive dividends, but are not entitled to vote the shares until common shares are issued. The amount of vested restricted stock units was 627,890 as of March 31, 2019 and had a related aggregate intrinsic value of $19.2 million at $30.51 per unit. |
Performance Level Thresholds | RMS Relative Market Performance | Market Performance Vesting Percentage |
High Level | above 75th percentile | 200% |
Target Level | 55th percentile | 100% |
Threshold Level | 33th percentile | 50% |
Below Threshold Level | below 30th percentile | 0% |
Performance Level Thresholds | TSR | Market Performance Percentage |
Maximum | 12% | 150% of Target Award |
Target | 10% | 100% of Target Award |
Minimum | 8% | 50% of Target Award |
Award Date | Expected Stock Price Volatility | Risk-Free Interest Rate | Dividend Yield |
2/26/2018 | 30% | 2.35% | 4.70% |
4/2/2018 | 30% | 2.34% | 4.04% |
7/1/2018 | 30% | 2.58% | 3.41% |
10/1/2018 | 25% | 2.85% | 3.01% |
3/8/2019 | 22% | 2.43% | 2.70% |
3/15/2019 | 22% | 2.40% | 2.62% |
Options | Shares (In thousands) | Weighted-Average Exercise Price | Weighted-Average Remaining Contractual Terms (Years) | |||
Outstanding as of December 31, 2018 | 2,355,787 | $ | 9.81 | 5.4 | ||
Granted | — | — | ||||
Exercised | (607,374 | ) | 9.81 | |||
Forfeited or expired | (173,000 | ) | 9.81 | |||
Outstanding as of March 31, 2019 | 1,575,413 | 9.81 | 5.7 | |||
Exercisable as of March 31, 2019 | 1,350,316 | $ | 9.81 | 5.5 |
Outstanding as of December 31, 2017 | 5,477,617 | $ | 9.72 | 6.0 | ||
Granted | — | — | ||||
Exercised | (95,000 | ) | 7.85 | |||
Forfeited or expired | (70,000 | ) | 9.81 | |||
Outstanding as of March 31, 2018 | 5,312,617 | 9.76 | 5.8 | |||
Exercisable as of March 31, 2018 | 3,665,864 | $ | 9.73 | 4.9 |
Three Months Ended March 31, 2019 | |||||||||||||||
Retirement Income Plan | National Service-Related Pension Plan | Other Post-Retirement Benefits | Superannuation | Total | |||||||||||
Components of net periodic benefit cost: | (In thousands) | ||||||||||||||
Service cost | $ | — | $ | — | $ | — | $ | 20 | $ | 20 | |||||
Interest cost | 397 | 311 | 6 | 13 | 727 | ||||||||||
Expected return on plan assets | (440 | ) | (294 | ) | — | (19 | ) | (753 | ) | ||||||
Amortization of net loss | 377 | 141 | (1 | ) | — | 517 | |||||||||
Amortization of prior service cost | — | — | — | 7 | 7 | ||||||||||
Net pension benefit cost | $ | 334 | $ | 158 | $ | 5 | $ | 21 | $ | 518 |
Three Months Ended March 31, 2018 | |||||||||||||||
Retirement Income Plan | National Service-Related Pension Plan | Other Post-Retirement Benefits | Superannuation | Total | |||||||||||
Components of net periodic benefit cost: | (In thousands) | ||||||||||||||
Service cost | $ | 8 | $ | 19 | $ | — | $ | 58 | $ | 85 | |||||
Interest cost | 354 | 300 | 5 | 27 | 686 | ||||||||||
Expected return on plan assets | (512 | ) | (342 | ) | — | (45 | ) | (899 | ) | ||||||
Amortization of net loss | 311 | 179 | — | — | 490 | ||||||||||
Amortization of prior service cost | — | 0 | — | 8 | 8 | ||||||||||
Net pension benefit cost | $ | 161 | $ | 156 | $ | 5 | $ | 48 | $ | 370 |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
(In thousands) | |||||||
Pension and other postretirement benefits: | |||||||
Balance at beginning of period, net of tax | $ | (8,027 | ) | $ | (7,126 | ) | |
Gain arising during the period | 517 | 491 | |||||
Less: Tax expense | — | — | |||||
Net gain arising during the period | 517 | 491 | |||||
Amortization of prior service cost (1) | 7 | 8 | |||||
Less: Tax expense | — | — | |||||
Net amount reclassified from AOCI to net income/loss | 7 | 8 | |||||
Other comprehensive income, net of tax | 524 | 499 | |||||
Balance at end of period, net of tax | (7,503 | ) | (6,627 | ) | |||
Foreign currency translation adjustments: | |||||||
Balance at beginning of period, net of tax | (3,322 | ) | 8,318 | ||||
Gain (loss) on foreign currency translation | 1,221 | (1,473 | ) | ||||
Less: Tax expense/(Tax benefit) | — | — | |||||
Net gain (loss) on foreign currency translation | 1,221 | (1,473 | ) | ||||
Balance at end of period, net of tax | (2,101 | ) | 6,845 | ||||
Cash flow hedge derivatives: | |||||||
Balance at beginning of period, net of tax | (1,166 | ) | (1,422 | ) | |||
Unrealized loss on cash flow hedge derivatives | (3,982 | ) | (314 | ) | |||
Less: Tax expense | — | 15 | |||||
Net loss on cash flow hedge derivatives | (3,982 | ) | (329 | ) | |||
Net amount reclassified from AOCI to net loss (interest expense) | — | 365 | |||||
Net reclassified from AOCI to net loss (foreign exchange gain (loss)) | 1,268 | — | |||||
Balance at end of period, net of tax | (3,880 | ) | (1,386 | ) | |||
Accumulated other comprehensive loss | $ | (13,484 | ) | $ | (1,168 | ) |
(1) | Amounts reclassified from AOCI for pension liabilities are recorded in selling, general, and administrative expenses in the condensed consolidated statements of operations. |
• | Warehouse. Our primary source of revenues consists of rent and storage and warehouse services fees. Our rent and 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. 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, and (10) government-approved temperature-controlled storage and inspection services. We may charge our customers in advance for storage and outbound handling fees. Cost of operations for our warehouse segment consists of power, other facilities costs, labor and other services costs. |
• | Third-Party Managed. We receive management and incentive fees, as well as reimbursement of substantially all expenses, for warehouses and logistics services that we manage on behalf of third-party owners/customers. Cost of operations for our third-party managed segment are reimbursed on a pass-through basis (typically within two weeks), with all reimbursements, plus an applicable mark-up, recognized as revenues under the relevant accounting guidance. |
• | 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 consist primarily of third-party carrier charges, which are impacted by factors affecting those carriers. |
• | Other. In addition to our primary business segments, we own a limestone quarry in Carthage, Missouri. Revenues are generated from the sale of limestone mined at our quarry. Cost of operations for our quarry consist primarily of labor, equipment, fuel and explosives. |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
(In thousands) | |||||||
Segment revenues: | |||||||
Warehouse | $ | 289,615 | $ | 286,517 | |||
Third-Party Managed | 64,136 | 63,876 | |||||
Transportation | 37,096 | 38,345 | |||||
Other | 2,232 | 2,403 | |||||
Total revenues | 393,079 | 391,141 | |||||
Segment contribution: | |||||||
Warehouse | 90,819 | 89,570 | |||||
Third-Party Managed | 3,259 | 3,777 | |||||
Transportation | 4,356 | 3,594 | |||||
Other | 244 | 346 | |||||
Total segment contribution | 98,678 | 97,287 | |||||
Reconciling items: | |||||||
Depreciation, depletion, and amortization | (30,096 | ) | (29,408 | ) | |||
Selling, general and administrative expense | (31,117 | ) | (28,106 | ) | |||
Acquisition, litigation, and other | (8,493 | ) | (3,841 | ) | |||
Impairment of long-lived assets | (12,555 | ) | — | ||||
Income (loss) from investments in partially owned entities | 122 | (139 | ) | ||||
Interest expense | (21,576 | ) | (24,495 | ) | |||
Interest income | 1,003 | 623 | |||||
Loss on debt extinguishment and modification | — | (21,385 | ) | ||||
Foreign currency exchange gain | 60 | 680 | |||||
Other (expense) income, net | (167 | ) | 56 | ||||
Loss before income tax (expense) benefit | $ | (4,141 | ) | $ | (8,728 | ) |
Three Months Ended March 31, | |||||
2019 | 2018 | ||||
(In thousands) | |||||
Weighted average common shares outstanding – basic | 149,404 | 124,433 | |||
Dilutive effect of share-based awards | — | — | |||
Equity forward contract | — | — | |||
Weighted average common shares outstanding – diluted | 149,404 | 124,433 |
Three Months Ended March 31, | |||||
2019 | 2018 | ||||
(In thousands) | |||||
Series B Convertible Preferred Stock | — | 8,495 | |||
Common share warrants | — | 1,642 | |||
Employee stock options | 1,856 | 5,347 | |||
Restricted stock | 1,493 | 612 | |||
Equity forward contract shares | 6,000 | — | |||
9,349 | 16,096 |
Three Months Ended March 31, 2019 | ||||||||||||||||||
United States | Australia | New Zealand | Argentina | Canada | Total | |||||||||||||
(In thousands) | ||||||||||||||||||
Warehouse rent and storage | $ | 106,823 | $ | 9,368 | $ | 3,980 | $ | 1,137 | $ | — | $ | 121,308 | ||||||
Warehouse services | 128,891 | 29,998 | 3,495 | 851 | — | 163,235 | ||||||||||||
Third-party managed | 57,013 | 2,860 | — | — | 4,245 | 64,118 | ||||||||||||
Transportation | 23,648 | 12,828 | 109 | 511 | — | 37,096 | ||||||||||||
Other | 2,226 | — | — | — | — | 2,226 | ||||||||||||
Total revenues (1) | 318,601 | 55,054 | 7,584 | 2,499 | 4,245 | 387,983 | ||||||||||||
Lease revenue (2) | 5,096 | — | — | — | — | 5,096 | ||||||||||||
Total revenues from contracts with all customers | $ | 323,697 | $ | 55,054 | $ | 7,584 | $ | 2,499 | $ | 4,245 | $ | 393,079 |
Three Months Ended March 31, 2018 | ||||||||||||||||||
United States | Australia | New Zealand | Argentina | Canada | Total | |||||||||||||
(In thousands) | ||||||||||||||||||
Warehouse rent and storage | $ | 104,360 | $ | 10,339 | $ | 3,872 | $ | 1,553 | $ | — | $ | 120,124 | ||||||
Warehouse services | 125,248 | 30,438 | 4,117 | 987 | — | 160,790 | ||||||||||||
Third-party managed | 56,015 | 3,249 | — | — | 4,562 | 63,826 | ||||||||||||
Transportation | 23,064 | 14,199 | 204 | 878 | — | 38,345 | ||||||||||||
Other | 2,398 | — | — | — | — | 2,398 | ||||||||||||
Total revenues (1) | 311,085 | 58,225 | 8,193 | 3,418 | 4,562 | 385,483 | ||||||||||||
Lease revenue (2) | 5,658 | — | — | — | — | 5,658 | ||||||||||||
Total revenues from contracts with all customers | $ | 316,743 | $ | 58,225 | $ | 8,193 | $ | 3,418 | $ | 4,562 | $ | 391,141 |
(1) | Revenues are within the scope of ASC 606, Revenue From Contracts with Customers. Elements of contracts or arrangements that are in the scope of other standards (e.g., leases) are separated and accounted for under those standards. |
(2) | Revenues are within the scope of ASC 840, Leases and ASC 842, Leases. |
• | 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 work associated with information systems and other projects including spending to support future acquisitions, and primarily consist of professional services. |
• | Litigation costs incurred in order to resolve material litigation charges. |
• | Severance costs representing certain contractual and negotiated severance and separation costs from exited former executives, and reduction in workforce costs associated with exiting or selling non-strategic warehouses. |
• | Equity acceleration costs representing the unrecognized expense for stock 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 an initial public offering, follow-on offering or secondary offering. |
• | Terminated site operations costs represent expenses incurred to repair 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 condensed consolidated statement of operations. |
Foreign exchange rates as of March 31, 2019 | Average foreign exchange rates used to adjust actual operating results for the three months ended March 31, 2019 | Foreign exchange rates as of March 31, 2018 | Prior period average foreign exchange rate used to adjust actual operating results for the three months ended March 31, 2019 (1) | |||||||
Australian dollar | 0.710 | 0.712 | 0.769 | 0.785 | ||||||
New Zealand dollar | 0.682 | 0.682 | 0.723 | 0.727 | ||||||
Argentinian peso | 0.023 | 0.026 | 0.050 | 0.051 | ||||||
Canadian dollar | 0.749 | 0.752 | 0.775 | 0.788 |
(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. |
March 31, 2019 | |
Total Warehouses | 155 |
Same Store Warehouses (1) | 137 |
Non-Same Store Warehouses (1) | 7 |
Third-Party Managed Warehouses (2) | 11 |
Three months ended March 31, | Change | ||||||||||||||||
2019 actual | 2019 constant currency(1) | 2018 actual | Actual | Constant currency | |||||||||||||
(Dollars in thousands) | |||||||||||||||||
Rent and storage | $ | 126,380 | $ | 128,727 | $ | 125,727 | 0.5 | % | 2.4 | % | |||||||
Warehouse services | 163,235 | 167,400 | 160,790 | 1.5 | % | 4.1 | % | ||||||||||
Total warehouse segment revenues | 289,615 | 296,127 | 286,517 | 1.1 | % | 3.4 | % | ||||||||||
Power | 15,071 | 15,599 | 16,114 | (6.5 | )% | (3.2 | )% | ||||||||||
Other facilities costs (2) | 26,388 | 27,007 | 26,782 | (1.5 | )% | 0.8 | % | ||||||||||
Labor | 132,918 | 136,572 | 131,306 | 1.2 | % | 4.0 | % | ||||||||||
Other services costs (3) | 24,419 | 24,938 | 22,745 | 7.4 | % | 9.6 | % | ||||||||||
Total warehouse segment cost of operations | 198,796 | 204,116 | 196,947 | 0.9 | % | 3.6 | % | ||||||||||
Warehouse segment contribution (NOI) | $ | 90,819 | $ | 92,011 | $ | 89,570 | 1.4 | % | 2.7 | % | |||||||
Warehouse rent and storage contribution (NOI) (4) | $ | 84,921 | $ | 86,121 | $ | 82,831 | 2.5 | % | 4.0 | % | |||||||
Warehouse services contribution (NOI) (5) | $ | 5,898 | $ | 5,890 | $ | 6,739 | (12.5 | )% | (12.6 | )% | |||||||
Total warehouse segment margin | 31.4 | % | 31.1 | % | 31.3 | % | 10 bps | -19 bps | |||||||||
Rent and storage margin(6) | 67.2 | % | 66.9 | % | 65.9 | % | 131 bps | 102 bps | |||||||||
Warehouse services margin(7) | 3.6 | % | 3.5 | % | 4.2 | % | -58 bps | -67 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 $3.2 million and $3.7 million for the first quarter of 2019 and 2018, respectively. |
(3) | Includes non-real estate rent expense (equipment lease and rentals) of $3.4 million for the first quarter of both 2019 and 2018. |
(4) | Calculated as rent and storage revenues less power and other facilities costs. |
(5) | Calculated as warehouse services revenues less labor and other services costs. |
(6) | Calculated as warehouse rent and storage contribution (NOI) divided by warehouse rent and storage revenues. |
(7) | Calculated as warehouse services contribution (NOI) divided by warehouse services revenues. |
Three Months Ended March 31, | Change | ||||||||||||||||
2019 actual | 2019 constant currency(1) | 2018 actual | Actual | Constant currency | |||||||||||||
Same store revenues: | (Dollars in thousands) | ||||||||||||||||
Rent and storage | $ | 122,559 | $ | 124,905 | $ | 122,356 | 0.2 | % | 2.1 | % | |||||||
Warehouse services | 159,455 | 163,621 | 158,511 | 0.6 | % | 3.2 | % | ||||||||||
Total same store revenues | 282,014 | 288,526 | 280,867 | 0.4 | % | 2.7 | % | ||||||||||
Same store cost of operations: | |||||||||||||||||
Power | 14,684 | 15,212 | 15,643 | (6.1 | )% | (2.8 | )% | ||||||||||
Other facilities costs | 25,331 | 25,949 | 25,273 | 0.2 | % | 2.7 | % | ||||||||||
Labor | 129,956 | 133,612 | 129,465 | 0.4 | % | 3.2 | % | ||||||||||
Other services costs | 23,792 | 24,310 | 22,378 | 6.3 | % | 8.6 | % | ||||||||||
Total same store cost of operations | $ | 193,763 | $ | 199,083 | $ | 192,759 | 0.5 | % | 3.3 | % | |||||||
Same store contribution (NOI) | $ | 88,251 | $ | 89,443 | $ | 88,108 | 0.2 | % | 1.5 | % | |||||||
Same store rent and storage contribution (NOI)(2) | $ | 82,544 | $ | 83,744 | $ | 81,440 | 1.4 | % | 2.8 | % | |||||||
Same store services contribution (NOI)(3) | $ | 5,707 | $ | 5,699 | $ | 6,668 | (14.4 | )% | (14.5 | )% | |||||||
Total same store margin | 31.3 | % | 31.0 | % | 31.4 | % | -8 bps | -37 bps | |||||||||
Same store rent and storage margin(4) | 67.4 | % | 67.0 | % | 66.6 | % | 79 bps | 49 bps | |||||||||
Same store services margin(5) | 3.6 | % | 3.5 | % | 4.2 | % | -63 bps | -72 bps | |||||||||
Non-same store revenues: | |||||||||||||||||
Rent and storage | $ | 3,821 | $ | 3,821 | $ | 3,371 | 13.3 | % | 13.3 | % | |||||||
Warehouse services | 3,780 | 3,780 | 2,279 | 65.9 | % | 65.9 | % | ||||||||||
Total non-same store revenues | 7,601 | 7,601 | 5,650 | 34.5 | % | 34.5 | % | ||||||||||
Non-same store cost of operations: | |||||||||||||||||
Power | 387 | 387 | 470 | (17.7 | )% | (17.7 | )% | ||||||||||
Other facilities costs | 1,057 | 1,057 | 1,509 | (30.0 | )% | (30.0 | )% | ||||||||||
Labor | 2,962 | 2,962 | 1,842 | 60.8 | % | 60.8 | % | ||||||||||
Other services costs | 627 | 627 | 367 | 70.8 | % | 70.8 | % | ||||||||||
Total non-same store cost of operations | $ | 5,033 | $ | 5,033 | $ | 4,188 | 20.2 | % | 20.2 | % | |||||||
Non-same store contribution (NOI) | $ | 2,568 | $ | 2,568 | $ | 1,462 | 75.6 | % | 75.6 | % | |||||||
Non-same store rent and storage contribution (NOI)(2) | $ | 2,377 | $ | 2,377 | $ | 1,392 | 70.8 | % | 70.8 | % | |||||||
Non-same store services contribution (NOI)(3) | $ | 191 | $ | 191 | $ | 70 | 172.9 | % | 172.9 | % | |||||||
Total warehouse segment revenues | $ | 289,615 | $ | 296,127 | $ | 286,517 | 1.1 | % | 3.4 | % | |||||||
Total warehouse cost of operations | $ | 198,796 | $ | 204,116 | $ | 196,947 | 0.9 | % | 3.6 | % | |||||||
Total warehouse segment contribution | $ | 90,819 | $ | 92,011 | $ | 89,570 | 1.4 | % | 2.7 | % |
(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 same store rent and storage contribution (NOI) divided by same store rent and storage revenues. |
(5) | Calculated as same store warehouse services contribution (NOI) divided by same store warehouse services revenues. |
Three Months Ended March 31, | Change | |||||||||
Units in thousands except per pallet data - unaudited | 2019 | 2018 | ||||||||
Same store rent and storage: | ||||||||||
Physical occupancy(1) | ||||||||||
Average physical occupied pallets | 2,276 | 2,364 | (3.7 | )% | ||||||
Average physical pallet positions | 3,061 | 3,076 | (0.5 | )% | ||||||
Physical occupancy percentage | 74.3 | % | 76.8 | % | -249 bps | |||||
Same store rent and storage revenues per physical occupied pallet | $ | 53.86 | $ | 51.77 | 4.0 | % | ||||
Constant currency same store rent and storage revenues per physical occupied pallet | $ | 54.89 | $ | 51.77 | 6.0 | % | ||||
Economic occupancy(2) | ||||||||||
Average occupied economic pallets | 2,405 | 2,474 | (2.8 | )% | ||||||
Economic occupancy percentage | 78.6 | % | 80.4 | % | -186 bps | |||||
Same store rent and storage revenues per economic occupied pallet | $ | 50.95 | $ | 49.46 | 3.0 | % | ||||
Constant currency same store rent and storage revenues per economic occupied pallet | $ | 51.93 | $ | 49.46 | 5.0 | % | ||||
Same store warehouse services: | ||||||||||
Throughput pallets (in thousands) | 6,384 | 6,549 | (2.5 | )% | ||||||
Same store warehouse services revenues per throughput pallet | $ | 24.98 | $ | 24.21 | 3.2 | % | ||||
Constant currency same store warehouse services revenues per throughput pallet | $ | 25.63 | $ | 24.21 | 5.9 | % | ||||
Non-same store rent and storage: | ||||||||||
Physical occupancy(1) | ||||||||||
Average physical occupied pallets | 98 | 84 | 16.7 | % | ||||||
Average physical pallet positions | 121 | 136 | (11.0 | )% | ||||||
Physical occupancy percentage | 81.2 | % | 61.4 | % | ||||||
Economic occupancy(2) | ||||||||||
Average economic occupied pallets | 102 | 87 | 17.2 | % | ||||||
Economic occupancy percentage | 84.3 | % | 64.0 | % | ||||||
Non-same store warehouse services: | ||||||||||
Throughput pallets (in thousands) | 137 | 94 | 45.7 | % |
(1) | 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. |
(2) | 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. |
Three Months Ended March 31, | Change | ||||||||||||||||
2019 actual | 2019 constant currency(1) | 2018 actual | Actual | Constant currency | |||||||||||||
Number of managed sites | 11 | 12 | n/a | n/a | |||||||||||||
(Dollars in thousands) | |||||||||||||||||
Third-party managed revenues | $ | 64,136 | $ | 64,672 | $ | 63,876 | 0.4 | % | 1.2 | % | |||||||
Third-party managed cost of operations | 60,877 | 61,314 | 60,099 | 1.3 | % | 2.0 | % | ||||||||||
Third-party managed segment contribution | $ | 3,259 | $ | 3,358 | $ | 3,777 | (13.7 | )% | (11.1 | )% | |||||||
Third-party managed margin | 5.1 | % | 5.2 | % | 5.9 | % | -83 bps | -72 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. |
Three Months Ended March 31, | Change | ||||||||||||||||
2019 actual | 2019 constant currency(1) | 2018 actual | Actual | Constant currency | |||||||||||||
(Dollars in thousands) | |||||||||||||||||
Transportation revenues | $ | 37,096 | $ | 38,927 | $ | 38,345 | (3.3 | )% | 1.5 | % | |||||||
Brokered transportation | 27,347 | 28,626 | 28,121 | (2.8 | )% | 1.8 | % | ||||||||||
Other cost of operations | 5,393 | 5,716 | 6,630 | (18.7 | )% | (13.8 | )% | ||||||||||
Total transportation cost of operations | 32,740 | 34,342 | 34,751 | (5.8 | )% | (1.2 | )% | ||||||||||
Transportation segment contribution (NOI) | $ | 4,356 | $ | 4,585 | $ | 3,594 | 21.2 | % | 27.6 | % | |||||||
Transportation margin | 11.7 | % | 11.8 | % | 9.4 | % | 237 bps | 241 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. |
Three Months Ended March 31, | Change | |||||||||
2019 | 2018 | |||||||||
(Dollars in thousands) | ||||||||||
Quarry revenues | $ | 2,232 | $ | 2,403 | (7.1 | )% | ||||
Quarry cost of operations | 1,988 | 2,057 | (3.4 | )% | ||||||
Quarry segment contribution (NOI) | $ | 244 | $ | 346 | (29.5 | )% | ||||
Quarry margin | 10.9 | % | 14.4 | % | -346.7 bps |
Three Months Ended March 31, | Change | |||||||||
2019 | 2018 | % | ||||||||
Other (expense) income: | (In thousands) | |||||||||
Interest expense | $ | (21,576 | ) | $ | (24,495 | ) | (11.9 | )% | ||
Interest income | 1,003 | 623 | 61.0 | % | ||||||
Loss on debt extinguishment and modification | — | (21,385 | ) | n/m | ||||||
Foreign currency exchange gain | 60 | 680 | (91.2 | )% | ||||||
Other (expense) income - net | (167 | ) | 56 | n/m |
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, and after adjustments for unconsolidated partnerships and joint ventures. 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-offering related equity issuance expenses, stock-based compensation expense for the IPO retention grants, severance, reduction in workforce costs and equity acceleration, acquisition, diligence and integration related costs, litigation and other related settlements, loss on debt extinguishment and modification, and foreign currency exchange gain or loss. 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 recurring 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 loan costs, debt discounts and above or below market leases, straight-line rent, provision or benefit from deferred income taxes, stock-based compensation expense from grants of stock options and restricted stock units under our equity incentive plans, non-real estate depreciation, depletion or amortization (including in respect of the China JV), and recurring maintenance capital expenditures. 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 above reconciles FFO, Core FFO and Adjusted FFO to net loss, which is the most directly comparable financial measure calculated in accordance with U.S. GAAP. |
Reconciliation of Net Loss to NAREIT FFO, Core FFO, and Adjusted FFO | |||||||
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
Net loss | $ | (4,629 | ) | $ | (8,639 | ) | |
Adjustments: | |||||||
Real estate related depreciation and depletion | 22,665 | 22,174 | |||||
Net loss on sale of depreciable real estate | 138 | — | |||||
Impairment charges on certain real estate assets | 12,555 | — | |||||
Real estate depreciation on China JV | 289 | 270 | |||||
NAREIT Funds from operations | 31,018 | 13,805 | |||||
Less distributions on preferred shares of beneficial interest | — | (1,817 | ) | ||||
NAREIT Funds from operations applicable to common shareholders | $ | 31,018 | $ | 11,988 | |||
Adjustments: | |||||||
Net gain on sale of non-real estate assets | (118 | ) | (148 | ) | |||
Non-offering related equity issuance expenses (a) | 1,511 | 1,245 | |||||
Acquisition, diligence and integration costs (b) | 1,441 | — | |||||
Stock-based compensation expense, IPO grants | 607 | 965 | |||||
Severance, reduction in workforce costs, and equity acceleration (c) | 4,294 | 11 | |||||
Terminated site operations costs (d) | 338 | — | |||||
Litigation and other related settlement costs (e) | 910 | — | |||||
Loss on debt extinguishment and modification | — | 21,385 | |||||
Foreign currency exchange gain | (60 | ) | (680 | ) | |||
Core FFO applicable to common shareholders | $ | 39,941 | $ | 34,766 | |||
Adjustments: | |||||||
Amortization of deferred financing costs, debt discount and pension withdrawal liability | 1,456 | 1,674 | |||||
Amortization of below/above market leases | 38 | 38 | |||||
Straight-line net rent | (137 | ) | (5 | ) | |||
Deferred income taxes benefit | (1,060 | ) | (1,156 | ) | |||
Stock-based compensation expense, excluding IPO grants | 2,032 | 3,553 | |||||
Non-real estate depreciation and amortization | 7,431 | 7,234 | |||||
Non-real estate depreciation and amortization on China JV | 102 | 156 | |||||
Recurring maintenance capital expenditures (f) | (5,487 | ) | (6,383 | ) | |||
Adjusted FFO applicable to common shareholders | $ | 44,316 | $ | 39,877 |
(a) | Represents one-time costs and professional fees associated with secondary offerings on behalf of selling shareholders and non-offering related expenses in connection with the IPO in 2018. |
(b) | Represents costs associated with M&A activity including: advisory, legal, accounting, valuation and other professional or consulting fees. Integration costs include pre- and post-acquisition costs of work performed to facilitate integration into the Company’s "Americold Operating System", information systems and processes. The majority of integration costs consist of professional service fees. |
(c) | Represents certain contractual and negotiated severance and separation costs from exited former executives, reduction in workforce costs associated with exiting or selling non-strategic warehouses, and accelerated expense for stock awards that vest in advance of the original vesting date due to executive termination and trustee resignation. |
(d) | Represents repair 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 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 statement of operations. |
(e) | Represents costs associated with material litigation charges including professional service fees and settlement amounts. |
(f) | Recurring 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, depletion 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 impairment charges on intangible and long-lived assets, gain or loss on depreciable real property asset disposals, severance, reduction in workforce costs and equity acceleration, non-offering related equity issuance expenses, acquisition, diligence and integration related costs, litigation and other related settlements, loss on debt extinguishment and modification, stock-based compensation expense, foreign currency exchange gain or loss, loss 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 recurring 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, depletion and amortization are non-cash charges, the assets being depreciated, depleted and amortized 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 Loss to NAREIT EBITDAre and Core EBITDA | |||||||
(In thousands) | |||||||
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
Net loss | $ | (4,629 | ) | $ | (8,639 | ) | |
Adjustments: | |||||||
Depreciation, depletion and amortization | 30,096 | 29,408 | |||||
Interest expense | 21,576 | 24,495 | |||||
Income tax expense (benefit) | 488 | (89 | ) | ||||
Adjustment to reflect share of EBITDAre of partially owned entities | 615 | 557 | |||||
NAREIT EBITDAre | $ | 48,146 | $ | 45,732 | |||
Adjustments: | |||||||
Severance, reduction in workforce costs, and equity acceleration(d) | 4,294 | 11 | |||||
Terminated site operations cost | 338 | — | |||||
Non-offering related equity issuance expenses (a) | 1,511 | 1,245 | |||||
Acquisition, diligence, and integration costs (b) | 1,441 | — | |||||
Litigation and other related settlement costs (c) | 910 | — | |||||
Loss from investments in partially owned entities | (122 | ) | 139 | ||||
Impairment of inventory and long-lived assets | 12,555 | — | |||||
Gain on foreign currency exchange | (60 | ) | (680 | ) | |||
Stock-based compensation expense | 2,639 | 4,518 | |||||
Loss on debt extinguishment and modification | — | 21,385 | |||||
Loss (gain) on other asset disposals | 20 | (137 | ) | ||||
Reduction In EBITDAre from partially owned entities | (615 | ) | (557 | ) | |||
Core EBITDA | $ | 71,057 | $ | 71,656 |
(a) | Represents one-time costs and professional fees associated with secondary offerings on behalf of selling shareholders and non-offering related expenses in connection with the IPO in 2018. |
(b) | Represents costs associated with M&A activity including: advisory, legal, accounting, valuation and other professional or consulting fees. Integration costs include pre- and post-acquisition costs of work performed to facilitate integration into the Company’s AOS, information systems and processes. The majority of integration costs consist of professional service fees. |
(c) | Represents costs associated with material litigation including professional service fees and settlement amounts. |
(d) | Represents certain contractual and negotiated severance and separation costs from exited former executives, reduction in workforce costs associated with exiting or selling non-strategic warehouses, and accelerated expense for stock awards that vest in advance of the original vesting date due to executive termination and trustee resignation. |
Three Months Ended March 31, 2019 | ||||||||||||||||||||
Month Declared/Paid | Dividend Per Share | Distributions Declared | Distributions Paid | |||||||||||||||||
Common Shares | Series B Preferred Shares | Common Shares | Series B Preferred Shares | |||||||||||||||||
(In thousands, except per share amounts) | ||||||||||||||||||||
December (2018)/January | $ | 0.1875 | $ | 28,218 | $ | — | $ | 28,218 | $ | — | ||||||||||
December(a) | (127 | ) | — | Dividend equivalents accrued on unvested restricted stock units to be paid when the awards vest. | ||||||||||||||||
December (2018)/January | 7 | — | Dividend equivalents paid on unvested restricted stock units that are not expected to vest (recognized as additional compensation). | |||||||||||||||||
March/April | 0.2000 | 30,235 | — | — | — | |||||||||||||||
$ | 30,235 | $ | 28,098 |
(a) | Declared in December 2018 and included in the $28.2 million declared, see description to the right regarding timing of payment. |
Three Months Ended March 31, 2018 | ||||||||||||||||||||
Month Declared/Paid | Dividend Per Share | Distributions Declared | Distributions Paid | |||||||||||||||||
Common Shares | Series B Preferred Shares | Common Shares | Series B Preferred Shares | |||||||||||||||||
(In thousands, except per share amounts) | ||||||||||||||||||||
January (a) | $ | 0.0186 | $ | 1,291 | $ | 619 | $ | 1,291 | $ | 619 | ||||||||||
March/April | 0.1396 | 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). | |||||||||||||||||
$ | 21,436 | $ | 21,377 | |||||||||||||||||
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. |
• | current cash balances; |
• | cash flows from operations; |
• | borrowings under our 2018 Senior Secured Credit Facilities; and |
• | other forms of secured or unsecured debt financings and equity offerings. |
• | operating activities and overall working capital; |
• | capital expenditures; |
• | debt service obligations; and |
• | quarterly shareholder distributions. |
Three Months Ended March 31, 2019 | ||||||||
Month Declared/Paid | Distributions Declared | Distributions Paid | ||||||
(In thousands) | ||||||||
January | $ | — | $ | 28,098 | ||||
March/April | 30,235 | — | ||||||
$ | 30,235 | $ | 28,098 |
Three Months Ended March 31, 2018 | ||||||||
Month Declared/Paid | Distributions Declared | Distributions Paid | ||||||
(In thousands) | ||||||||
January (a) | $ | 3,242 | $ | 3,242 | ||||
January (b) | 5,750 | 5,750 | ||||||
March/April | 20,145 | — | ||||||
$ | 29,137 | $ | 8,992 |
(a) | Stub period distribution paid to Parent immediately prior to the IPO. |
(b) | Distribution was paid to Parent for payment of underwriters' costs in conjunction with the offering completed in the respective quarter, and for conversion of Series A Preferred shares in connection with the IPO. |
Stated maturity date | Contractual interest rate (1) | Effective interest rate (2) as of March 31, 2019 | |||||||||||
Outstanding principal amount at | |||||||||||||
Indebtedness | March 31, 2019 | December 31, 2018 | |||||||||||
(In thousands) | |||||||||||||
2013 Mortgage Loans | |||||||||||||
Senior note | 5/2023 | 3.81% | 4.14% | 186,327 | 187,957 | ||||||||
Mezzanine A | 5/2023 | 7.38% | 7.55% | 70,000 | 70,000 | ||||||||
Mezzanine B | 5/2023 | 11.50% | 11.75% | 32,000 | 32,000 | ||||||||
Total 2013 Mortgage Loans | 288,327 | 289,957 | |||||||||||
Senior Unsecured Notes | |||||||||||||
Series A 4.68% notes due 2026 | 1/2026 | 4.68% | 4.77% | 200,000 | 200,000 | ||||||||
Series B 4.86% notes due 2029 | 1/2029 | 4.86% | 4.92% | 400,000 | 400,000 | ||||||||
Total Senior Unsecured Notes | 600,000 | 600,000 | |||||||||||
2018 Senior Unsecured Term Loan A Facility (1) | 1/2023 | L+1.45% | 4.38% | 475,000 | 475,000 | ||||||||
Total principal amount of mortgage notes, unsecured senior and term loans | 1,363,327 | 1,364,957 | |||||||||||
Less deferred financing costs | (12,946 | ) | (13,666 | ) | |||||||||
Less debt discount | (261 | ) | (277 | ) | |||||||||
Total mortgage notes, unsecured senior notes and term loans, net of deferred financing costs and debt discount | $ | 1,350,120 | $ | 1,351,014 | |||||||||
2018 Senior Unsecured Revolving Credit Facility(1) | 1/2021 | L+1.45% | 0.35% | $ | — | $ | — |
(1) | References in this table to L are references to one-month LIBOR. |
(2) | The effective interest rate includes effects of amortization of the deferred financing costs and debt discount. The weighted average effective interest rate for total debt was 5.10% and 5.04% as of March 31, 2019 and December 31, 2018, respectively. |
• | a maximum leverage ratio of less than or equal to 60% of our total asset value; |
• | a minimum borrowing base coverage ratio of greater than or equal to 1.00 to 1.00; |
• | a minimum pro forma fixed charge coverage ratio of greater than or equal to 1.40 to 1.00 which increased to 1.50 to 1.00 in the first quarter of 2018; |
• | a minimum borrowing base debt service coverage ratio of greater than or equal to 2.00 to 1.00; |
• | a minimum tangible net worth requirement of greater than or equal to $900 million plus 70% of any future net equity proceeds following the completion of the IPO transactions; and |
• | a maximum recourse secured debt ratio of less than or equal to 20% of our total asset value. |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
(In thousands, except per cubic foot amounts) | |||||||
Real estate | $ | 4,485 | $ | 5,809 | |||
Personal property | 171 | 252 | |||||
Information technology | 831 | 322 | |||||
Total recurring maintenance capital expenditures | $ | 5,487 | $ | 6,383 | |||
Total recurring maintenance capital expenditures per cubic foot | $ | 0.006 | $ | 0.007 |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
(In thousands, except per cubic foot amounts) | |||||||
Real estate | $ | 5,309 | $ | 5,197 | |||
Personal property | 7,896 | 7,992 | |||||
Total repair and maintenance expenses | $ | 13,205 | $ | 13,189 | |||
Repair and maintenance expenses per cubic foot | $ | 0.014 | $ | 0.014 |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
(In thousands) | |||||||
Acquisitions | $ | 39,523 | $ | — | |||
Expansion and development initiatives | 10,415 | 18,236 | |||||
Information technology | 722 | 800 | |||||
Total growth and expansion capital expenditures | $ | 50,660 | $ | 19,036 |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
(In thousands) | |||||||
Net cash provided by operating activities | $ | 53,012 | $ | 50,247 | |||
Net cash used in investing activities | $ | (58,705 | ) | $ | (27,919 | ) | |
Net cash (used in) provided by financing activities | $ | (29,109 | ) | $ | 121,201 |
• | we may have underestimated the costs to make any necessary improvements to Cloverleaf’s properties; |
• | Cloverleaf’s properties may be subject to reassessment, which may result in higher than expected tax payments; |
• | market conditions may result in higher than expected vacancy rates and lower than expected storage rates; |
• | we may face difficulties in integrating Cloverleaf’s employees and in attracting and retaining key personnel; |
• | we may face difficulties in the pursuit of expansion and development opportunities, resulting in higher costs or an inability to complete the identified expansions of Cloverleaf in a timely manner, or at all; |
• | encroachments by certain Cloverleaf properties over existing easements may result in costs to correct such encroachments if challenged by easement holders; and |
• | we may face challenges in keeping existing Cloverleaf customers or transitioning our existing customers to Cloverleaf facilities, which could adversely impact interconnection revenue. |
Exhibit No. | Description | |
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 Section 302 of the Sarbanes-Oxley Act of 2002 - Americold Realty Operating Partnership, L.P. | ||
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 - Americold Realty Operating Partnership, L.P. | ||
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 | ||
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 Operating Partnership, L.P. | ||
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 Operating Partnership, L.P. | ||
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 | ||
101.INS | XBRL Instance Document | |
101.SCH | XBRL Taxonomy Extension Schema Document | |
101.CAL | XBRL Extension Calculation Linkbase Document | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB | XBRL Taxonomy Extension Labels Linkbase Document | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document |
AMERICOLD REALTY TRUST | ||||
(Registrant) | ||||
Date: | May 10, 2019 | By: | /s/ Marc Smernoff | |
Name: | Marc Smernoff | |||
Title: | Chief Financial Officer and Executive Vice President | |||
(On behalf of the registrant and as principal financial officer) |
/s/ Fred W Boehler |
Fred W Boehler |
Chief Executive Officer, President and Trustee |
/s/ Marc Smernoff |
Marc Smernoff |
Chief Financial Officer and Executive Vice President |
/s/ Fred W. Boehler |
Fred W. Boehler |
Chief Executive Officer, President and Trustee |
/s/ Marc Smernoff |
Marc Smernoff |
Chief Financial Officer and Executive Vice President |
1. | The Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ Fred W. Boehler |
Fred W. Boehler |
President, Chief Executive Officer and Trustee |
1. | The Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ Marc Smernoff |
Marc Smernoff |
Chief Financial Officer and Executive Vice President |
1. | The Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Operating Partnership. |
/s/ Fred W. Boehler |
Fred W. Boehler |
President, Chief Executive Officer and Trustee |
1. | The Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Operating Partnership. |
/s/ Marc Smernoff |
Marc Smernoff |
Chief Financial Officer and Executive Vice President |
Mine or Operating Name (MSHA Identification Number) | Section 104 S&S Citations | Section 104(b) Orders | Section 104(d) Citations and Orders | Section 110(b)(2) Violations | Section 107(a) Orders | Total Dollar Value of MSHA Assessments Proposed | Total Number of Mining Related Fatalities | Received Notice of Pattern of Violations Under Section 104(e) | Received Notice of Potential to Have Pattern Under Section 104(e) | Legal Actions Pending as of Last Day of Period (1) | Legal Actions Initiated During Period | Legal Actions Resolved During Period | ||||||||||||
Carthage Crushed Limestone (23-00028) | 1 | 0 | 0 | 0 | 0 | $735 | 0 | No | No | 1 | 1 | 1 |
(1) | See table below for additional detail regarding Legal Actions Pending as of March 31, 2019. With respect to Contests of Proposed Penalties, we have included the number of dockets (as opposed to citations) when counting the number of Legal Actions Pending as of March 31, 2019. |
Contests of proposed penalties (b) | ||||||||||||||
Mine or Operating Name (MSHA Identification Number) | Contests of citations and orders (a) | Dockets | Citations | Complaints for compensation (c) | Complaints of discharge, discrimination or interference (d) | Applications for temporary relief (e) | Appeals of judges' decisions or orders (f) | |||||||
Carthage Crushed Limestone (23-00028) | 0 | 1 | 1 | 0 | 0 | 0 | 0 |
(a) | Represents (if any) contests of citations and orders, which typically are filed prior to an operator's receipt of a proposed penalty assessment from MSHA or relate to orders for which penalties are not assessed (such as imminent danger orders under Section 107 of the Mine Act). This category includes: (i) contests of citations or orders issued under section 104 of the Mine Act, (ii) contests of imminent danger withdrawal orders under section 107 of the Mine Act, and (iii) Emergency response plan dispute proceedings (as required under the Mine Improvement and New Emergency Response Act of 2006, Pub. L. No. 109-236, 120 Stat. 493). |
(b) | Represents (if any) contests of proposed penalties, which are administrative proceedings before the Federal Mine Safety and Health Review Commission (“FMSHRC”) challenging a civil penalty that MSHA has proposed for the violation contained in a citation or order. This column includes zero actions involving civil penalties against agents of the operator that has been contested and zero appeals of a decision or order. |
(c) | Represents (if any) complaints for compensation, which are cases under section 111 of the Mine Act that may be filed with the FMSHRC by miners idled by a closure order issued by MSHA who are entitled to compensation. |
(d) | Represents (if any) complaints of discharge, discrimination or interference under section 105 of the Mine Act, which cover: (i) discrimination proceedings involving a miner's allegation that he or she has suffered adverse employment action because he or she engaged in activity protected under the Mine Act, such as making a safety complaint, and (ii) temporary reinstatement proceedings involving cases in which a miner has filed a complaint with MSHA stating that he or she has suffered such discrimination and has lost his or her position. Complaints of Discharge, Discrimination, or Interference are also included in Contests of Proposed Penalties, column (b). |
(e) | Represents (if any) applications for temporary relief, which are applications under section 105(b)(2) of the Mine Act for temporary relief from any modification or termination of any order or from any order issued under section 104 of the Mine Act (other than citations issued under section 104(a) or (f) of the Mine Act). |
(f) | Represents (if any) appeals of judges' decisions or orders to the FMSHRC, including petitions for discretionary review and review by the FMSHRC on its own motion. |
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | |
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Mar. 31, 2019 |
Mar. 31, 2018 |
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Net loss | $ (4,629) | $ (8,639) |
Other comprehensive income (loss) - net of tax: | ||
Other comprehensive loss | (969) | (938) |
Total comprehensive loss | (5,598) | (9,577) |
Americold Realty Operating Partnership, L.P. | ||
Net loss | (4,629) | (8,639) |
Other comprehensive income (loss) - net of tax: | ||
Adjustment to accrued pension liability | 524 | 499 |
Change in unrealized net gain (loss) on foreign currency | 1,221 | (1,473) |
Unrealized (loss) gain on cash flow hedge derivatives | (2,714) | 36 |
Other comprehensive loss | (969) | (938) |
Total comprehensive loss | $ (5,598) | $ (9,577) |
General |
3 Months Ended |
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Mar. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
General | General 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. 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 interest as of March 31, 2019. Americold Realty Operations, Inc., a Delaware corporation and a wholly-owned subsidiary of the REIT, is the sole limited partner of the operating partnership, owning 1% of the common general partnership interests as of March 31, 2019. 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 operating partnership includes numerous qualified REIT subsidiaries (QRSs). Additionally, the Operating Partnership conducts various business activities in the United States (U.S.), Australia, New Zealand, Argentina, and Canada through several wholly owned taxable REIT subsidiaries (TRSs). Ownership Pre-Initial Public Offering (IPO) Prior to the IPO, YF ART Holdings, a partnership among investment funds affiliated with The Yucaipa Companies (Yucaipa), Fortress Investment Group, LLC (Fortress), and affiliates of The Goldman Sachs Group, Inc. (Goldman) owned approximately 100% of the Company’s common shares of beneficial interest. In addition, affiliates of The Goldman Sachs Group, Inc. (Goldman) owned 325,000 Series B Preferred Shares, which were converted to 28,808,224 common shares in connection with the IPO. Initial Public Offering On January 23, 2018, we completed an initial public offering of our common shares, or IPO, 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 common shares sold in the offering were registered under the Securities Act pursuant to our Registration Statement on Form S-11 (File No. 333-221560), as amended, which was declared effective by the SEC on January 18, 2018. The common shares were sold at an initial offering price of $16.00 per share, which generated net proceeds of approximately $493.6 million to us, after deducting underwriting fees and other offering costs of approximately $40.0 million. We primarily used the net proceeds from the IPO to repay (i) $285.1 million of indebtedness outstanding under our Senior Secured Term Loan B Facility, including $3.0 million of accrued and unpaid interest and closing expense of $0.2 million (ii) $20.9 million of indebtedness outstanding under our Clearfield, Utah and Middleboro, Massachusetts construction loans, including a nominal amount of accrued and unpaid interest; and (iii) to pay a stub period dividend totaling $3.1 million to the holders of record of our common shares, Series A Preferred Shares and Series B Preferred Shares as of January 22, 2018. Holders of the Series A Preferred Shares also received a redemption payment from the offering proceeds of $0.1 million. The remaining $184.4 million net proceeds from the IPO were used for general corporate purposes. Follow-On Public Offering On September 18, 2018, the Company completed a follow-on public offering of 4,000,000 of its common shares at a public offering price of $24.50 per share, which generated net proceeds of approximately $92.5 million to the Company after deducting the underwriting discount and estimated offering expenses payable by the Company, and an additional 6,000,000 common shares that are subject to a forward sale agreement to be settled within one year. The Company did not initially receive any proceeds from the sale of the common shares subject to the forward sale agreement that were sold by the forward purchaser or its affiliate. The Company accounts for the forward contract as equity and therefore is exempt from derivative and fair value accounting. Before the issuance of the Company’s common shares, if any, upon physical or net share settlement of the forward sale agreement, the Company expects that the common shares issuable upon settlement of the forward sale agreement will be reflected in its diluted earnings per share calculations using the treasury stock method. Under this method, the number of the Company’s common shares used in calculating diluted earnings per share is deemed to be increased by the excess, if any, of the number of common shares that would be issued upon full physical settlement of the forward sale agreement over the number of common shares that could be purchased by the Company in the market (based on the average market price during the period) using the proceeds receivable upon full physical settlement (based on the adjusted forward sale price at the end of the reporting period). If and when the Company physically or net share settles the forward sale agreement, the delivery of the Company’s common shares would result in an increase in the number of common shares outstanding and dilution to our earnings per share. As of March 31, 2019, the Company has not settled any portion of the forward sale agreement. In connection with the the follow-on public offering, YF ART Holdings GP, LLC (YF ART Holdings), a partnership among investment funds affiliated with Yucaipa, sold 16.5 million common shares, affiliates of Goldman sold approximately 9.1 million common shares, and affiliates of Fortress sold approximately 7.2 million common shares. Secondary Public Offering In March 2019, the Company completed a secondary public offering in which certain funds affiliated with YF ART Holdings and Goldman sold their remaining interest in the Company of 38,422,583 and 8,061,228 shares of common stock, respectively, at $27.75 per share, which included 6,063,105 shares purchased by the underwriters upon the exercise in full of their option to purchase additional shares. The selling shareholders received proceeds from the offering, which, net of underwriting fees, totaled $1.1 billion. The Company received no proceeds and incurred fees of $1.5 million related to this offering. Basis of Presentation and Principles of Consolidation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the U.S. (GAAP) for interim financial information, and with the rules and regulations of the U.S. Securities and Exchange Commission (SEC). These unaudited condensed consolidated financial statements do not include all disclosures associated with the Company’s consolidated annual financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2018, and, accordingly, should be read in conjunction with the referenced annual report. In the opinion of management, all adjustments (all of which are normal and recurring in nature) considered necessary for a fair presentation have been included. All significant intercompany balances and transactions have been eliminated in consolidation. Operating results for the interim periods presented are not necessarily indicative of the results that may be expected for the full year. Reclassifications Certain immaterial, prior period amounts have been reclassified to conform to the current period presentation on the Condensed Consolidated Statement of Operations, the Condensed Consolidated Statements of Shareholders' Equity and the Condensed Consolidated Statements of Cash Flows. The Condensed Consolidated Statement of Operations reflects the reclassification required in the prior period upon addition of a new financial statement line item described as 'Acquisition, litigation and other', which was previously classified within 'Selling, general and administrative', refer to Note 5 for further detail of this caption. The Condensed Consolidated Statements of Shareholders' Equity reflects the reclassification required in the prior period upon addition of a new financial statement line item described as 'Common stock issuance related to share-based payment plans, net of shares withheld for employee taxes', which was previously classified within 'Stock-based compensation expense (Stock Options and Restricted Stock Units)'. The Condensed Consolidated Statements of Cash Flows reflects the reclassification required in the prior period upon elimination of the financial statement line item described as 'Payment on Multi-employer pension plan withdrawal obligation' which is now classified within 'Amortization of deferred financing costs, debt discount and pension withdrawal liability'. |
Summary of Significant Accounting Policies |
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Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies The following disclosure regarding certain of our significant accounting policies should be read in conjunction with Note 2 to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2018, which provides additional information with regard to the accounting policies set forth herein and other significant accounting policies. Impairment of Long-Lived Assets During the first quarter of 2019, the Company recorded impairment charges of $12.6 million. During the first quarter, management and the Company's Board of Trustees formally approved the "Atlanta Major Market Strategy" plan which includes the partial redevelopment of an existing warehouse facility. The partial redevelopment requires the demolition of approximately 75% of the current warehouse, which is unused. We expect the remainder of the site to continue operating as normal during the construction period. As a result of this initiative, the Company wrote off the carrying value of the portion of the warehouse no longer in use resulting in an impairment charge of $9.6 million. Additionally, during the first quarter the Company recorded an impairment charge of $2.9 million related to a domestic idle warehouse facility in anticipation of a potential future sale of the asset. The estimated fair value of this asset was determined based on ongoing negotiations with prospective buyers. These impaired assets were reported under the Warehouse segment, and the related impairment charges are included in the “Impairment of long-lived assets” line item of the Condensed Consolidated Statements of Operations for the three months ended March 31, 2019. No impairment charges were recorded during the three months ended March 31, 2018. Capitalization of Costs Project costs that are clearly associated with the development of properties are capitalized as incurred. Project costs include all costs directly associated with the development of a property, including construction costs, interest, and costs of personnel working on the project. Costs that do not clearly relate to the projects under development are not capitalized and are charged to expense as incurred. Capitalization of costs begins when the activities necessary to get the development project ready for its intended use commence, which include costs incurred before the beginning of construction. Capitalization of costs ceases when the development project is substantially complete and ready for its intended use. Determining when a development project commences and when it is substantially complete and ready for its intended use involves a degree of judgment. We generally consider a development project to be substantially complete and ready for its intended use upon receipt of a certificate of occupancy. If and when development of a property is suspended pursuant to a formal change in the planned use of the property, we will evaluate whether the accumulated costs exceed the estimated value of the project and write off the amount of any such excess accumulated costs. For a development project that is suspended for reasons other than a formal change in the planned use of such property, the accumulated project costs are written off. Capitalized costs are allocated to the specific components of a project that are benefited. During the three months ended March 31, 2019 and March 31, 2018, we capitalized interest of approximately $0.8 million and $0.4 million, respectively. During the three months ended March 31, 2019 and March 31, 2018, we capitalized amounts relating to compensation and travel expense of employees direct and incremental to development of properties of approximately $0.2 million and $0.1 million, respectively. Purchase Accounting For business combinations, the excess of cost over fair value is recorded as goodwill. In an asset acquisition, the difference between the sum of the identified tangible and intangible assets and liabilities and the total purchase price (including transactions costs) is allocated to the identified tangible and intangible assets and liabilities on a relative fair value basis. If the fair value of the real estate acquired exceeds its cost it is allocated to the acquired tangible assets, consisting primarily of land, land improvements, buildings, tenant improvements, and identified intangible assets and liabilities, consisting of the value of assembled workforce, above-market and below-market leases, value of in-place leases and acquired ground leases and in the case of a business combination, tenant relationship value, based in each case on their fair values. We make estimates of the acquisition date fair value of the tangible and intangible assets and acquired liabilities using information from multiple sources as a result of pre-acquisition due diligence, tax records and other sources. Our allocation of fair value is generally determined by third party appraisals or, in the case of land, valuations based on comparable sales. For site improvements we consider replacement costs adjusted for physical and market obsolescence. Based on these estimates, we recognize the acquired assets and liabilities at their estimated fair values. The determination of fair value involves the use of significant judgment and estimation. Lease Accounting Arrangements wherein we are the lessee: At the inception of a contract, we determine if the contract is or contains a lease. Leases are classified as either financing or operating based upon criteria within ASC 842 and a right-of-use (ROU) asset and liability are established for leases with an initial term greater than 12 months. Leases with an initial term of 12 months or less are not recorded on the balance sheet and expense is recognized on a straight-line basis over the lease term. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and liabilities are recognized at commencement date based on the present value of the lease payments over the lease term, as adjusted for prepayments, incentives and initial direct costs. When available, we use the rate implicit in the lease to discount lease payments to present value; however, most of our leases do not provide a readily determinable implicit rate. Therefore, we must estimate our incremental borrowing rate to discount the lease payments based on information available at lease commencement. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. The depreciable lives of assets are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. Operating leases are included in operating lease ROU assets, accounts payable and accrued expenses and operating lease obligations on our condensed consolidated balance sheet. Finance leases assets are included in financing leases-net, accounts payable and accrued expenses and financing lease obligations on our condensed consolidated balance sheet. Arrangements wherein we are the lessor: Each new lease contract is evaluated for classification as a sales-type lease, direct financing or operating lease. A lease is a sales-type lease if any one of five criteria are met, each of which indicate the lease, in effect, transfers control of the underlying asset to the lessee. If none of those five criteria are met, but two additional criteria are both met, indicating we have transferred substantially all the risks and benefits of the underlying asset to the lessee and a third party, the lease is a direct financing lease. All leases that are not sales-type or direct financing leases are operating leases. We do not currently have sales-type or direct financing leases. For operating leases wherein we are the lessor, we assess the probability of payments at commencement of the lease contract and subsequently recognize lease income, including variable payments based on an index or rate, over the lease term on a straight-line basis. We continue to measure and disclose the underlying assets subject to operating leases based on our policies for application of ASC 360 Property, Plant and Equipment. For all asset classes we have elected to not separate the lease and non-lease components which generally relate to taxes and common area maintenance. Additionally, we elected a practical expedient to present all funds collected from lessees for sales and other similar taxes net of the related sales tax expense. Our lease contracts are structured in a manner to reduce risks associated with the residual value of leased assets. Asset Acquisitions We acquired PortFresh Holdings, LLC in an asset acquisition during the three months ended March 31, 2019 for $35.9 million. The table below reflects the purchase price allocation (in thousands):
Recently Adopted Accounting Standards Lease Accounting In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), as amended, which the Company adopted using a modified retrospective transition approach effective January 1, 2019. All leases that commenced prior to our adoption of this new standard are accounted for and disclosed in accordance with our existing policies for application of ASC 840 Leases. Accordingly, prior year amounts were not recast under the new standard. Upon adoption, we elected a package of practical expedients for expired and existing contracts whereby we will (1) not reassess our prior conclusions about lease identification, lease classification and initial direct costs, (2) continue to apply existing accounting policies for all land easements that existed or expire before the date of adoption, (3) not recognize ROU assets or liabilities for leases that qualify as short-term leases for all classes of underlying assets, and (4) not separate lease an non-lease components for all classes of underlying assets. The Company did not elect to apply the hindsight practical expedient when determining the term for our leases. The new standard requires disclosure of additional quantitative and qualitative information for lessee and lessor arrangements which has been included above in the Summary of Significant Accounting Policies and in Note 10. Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. This ASU refines and expands hedge accounting for both financial (e.g., interest rate) and commodity risks. Its provisions create more transparency around how economic results are presented, both on the face of the financial statements and in the footnotes. It also makes certain targeted improvements to simplify the application of hedge accounting guidance. ASU 2017-12 is effective for public business entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption, including adoption in an interim period, is permitted. The Company adopted ASU 2017-12 on January 1, 2019 and it did not have a material impact on our consolidated financial statements. In October 2018, the FASB issued ASU 2018-16, Derivatives and Hedging (Topic 815): Inclusion of the Secured Overnight Financing Rate ("SOFR") Overnight Index Swap ("OIS") Rate as a Benchmark Interest Rate for Hedge Accounting Purposes. This ASU permits the use of the OIS rate based upon SOFR as a U.S. benchmark interest rate for purposes of applying hedge accounting under Topic 815. The Alternative Reference Rates Committee announced that it identified the Secured Overnight Funding Rate (SOFR) as its preferred alternative to LIBOR. The Company intends to continue to use LIBOR until its extermination date in 2021, and intends to replace LIBOR with SOFR at that time. The Company does not believe that the transition from LIBOR to SOFR will have a material impact on its financial statements. Improvements to Nonemployee Share-Based Payment Accounting In June 2018, the FASB issued ASU 2018-07, Improvements to Nonemployee Share-Based Payment Accounting, which more closely aligns the accounting for employee and nonemployee share-based payments. The standard will be effective for interim and annual reporting periods beginning after December 15, 2018. Early adoption is permitted, but no earlier than an entity’s adoption date of Topic 606. The Company adopted this standard on January 1, 2019, and it did not have a material impact on its consolidated financial statements. Future Adoption of Accounting Standards Fair Value Measurement - Disclosure Framework In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement. This ASU modifies the disclosure requirements on fair value measurements. The ASU removes the requirement to disclose: the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy; the policy for timing of transfers between levels; and the valuation processes for Level 3 fair value measurements. The ASU requires disclosure of changes in unrealized gains and losses for the period included in other comprehensive income (loss) for recurring Level 3 fair value measurements held at the end of the reporting period and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. For public business entities, this guidance is effective for fiscal years beginning after December 15, 2019 with early adoption permitted. The Company is currently evaluating the effect that this guidance will have on its condensed consolidated financial statements. Collaborative Arrangements In November 2018, the FASB issued ASU 2018-18, Collaborative Arrangements (Topic 808): Clarifying the interaction between Topic 808 and Topic 606. ASU 2018-18 clarifies that certain transactions between participants in a collaborative arrangement should be accounted for under ASC 606 when the counterparty is a customer and precludes an entity from presenting consideration from a transaction in a collaborative arrangement as revenue from contracts with customers if the counterparty is not a customer for that transaction. For public business entities, these amendments are effective for fiscal years beginning after December 15, 2019, and interim periods therein. The Company believes the adoption of ASU 2018-18 will not have a material effect on its consolidated financial statements. Credit Losses In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326). This ASU introduces new guidance for the accounting for credit losses. For trade receivables, the Company will be required to use a forward-looking expected loss model rather than the incurred loss model for recognizing credit losses which reflects losses that are probable. The standard will be effective for interim and annual reporting periods beginning after December 15, 2019, with early adoption permitted. The Company is evaluating the impact of adopting ASU 2016-13 on its condensed consolidated financial statements. Simplifying the Test for Goodwill Impairment In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. This update eliminates step two of the goodwill impairment test, and specifies that goodwill impairment should be measured by comparing the fair value of a reporting unit with its carrying amount. Additionally, the amount of goodwill allocated to each reporting unit with a zero or negative carrying amount of net assets should be disclosed. For public business entities that are SEC filers, this ASU is effective for annual and any interim impairment tests for periods beginning after December 15, 2019. Early adoption is allowed for all entities as of January 1, 2017, for annual and any interim impairment tests occurring after January 1, 2017. The Company does not expect the provisions of ASU 2017-04 to have a material impact on its consolidated financial statements. Defined Benefit Plans In August 2018, the FASB issued ASU 2018-14, Compensation – Retirement Benefits – Defined Benefit Plans – General (Subtopic 715-20): Disclosure Framework – Changes to the Disclosure Requirements for Defined Benefit Plans. This update amends ASC 715 to remove disclosures that are no longer considered cost beneficial, clarifies the specific requirements of disclosures, and adds disclosure requirements identified as relevant to defined benefit pension and other postretirement plans. The ASU’s changes related to disclosures are part of the FASB’s disclosure framework project. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Early adoption is permitted for all entities and the amendments in this update are required to be applied on a retrospective basis to all periods presented. The Company does not expect the provisions of ASU 2018-14 to have a material impact on its consolidated financial statements. |
Equity-Method Investments |
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Equity Method Investments and Joint Ventures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity-Method Investments | Equity-Method Investments The Company has investments in certain ventures that are accounted for under the equity method of accounting. The following tables summarize the financial information of the Company’s largest joint ventures (CMAL and CMAH, or the China JV, as defined in our Annual Report on Form 10-K for the year ended December 31, 2018) for the interim periods presented. The Company has a 49% equity interest in the China JV.
In addition to the China JV, the Company had an investment in a joint venture accounted for under the equity-method, for which a complete return of capital totaling $2.0 million was received during the first quarter of 2019, eliminating the Company's involvement in the joint venture. |
Redeemable Preferred Shares |
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Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Redeemable Preferred Shares | Redeemable Preferred Shares Series A Cumulative Non-Voting Preferred Shares In January 2009, the Company issued 125 Series A Cumulative Non-Voting Preferred Shares of beneficial interest, par value $0.01 per share (Series A Preferred Shares) for proceeds of $0.1 million. The Series A Preferred Shares were redeemable by the Company at any time by notice for a price, payable in cash, equal to 100% of each share’s liquidation value of $1,000, plus all accrued and unpaid dividends, plus, if applicable, a redemption premium. Holders of the Series A Preferred Shares were entitled to receive dividends semiannually at a per annum rate equal to 12.5% of the liquidation value. In 2018, in connection with the IPO, all outstanding Series A Preferred Shares were redeemed resulting in a cash payment of approximately $0.1 million, including accrued and unpaid dividends. Series B Cumulative Convertible Voting Preferred Shares During 2010, the Company’s Board of Trustees approved a series of agreements and documents that effected the conversion of 375,000 authorized and unissued preferred shares of the Company into 375,000 Series B Cumulative Convertible Voting Preferred Shares of beneficial interest, par value $0.01 per share (Series B Preferred Shares), and simultaneously authorized the sale and issuance of the 375,000 Series B Preferred Shares. On December 15, 2010, the Company issued 375,000 Series B Cumulative Convertible Voting Preferred Shares of beneficial interest, par value $0.01 per share (Series B Preferred Shares), for proceeds of $368.5 million. Of the total issuance, 325,000 Series B Preferred Shares were issued to affiliates of Goldman and 50,000 were issued to an affiliate of China Merchant Holdings International (CMHI), an affiliate of the majority partner in the China JV. In connection with the IPO, Goldman and CMHI converted their Series B Preferred Shares into 28,808,224 and 4,432,034 common shares of the Company, respectively, after taking into account a cash payment of approximately $1.8 million of accrued and unpaid dividends. Goldman sold 5,163,716 common shares of the Company soon after the conversion of the Series B Preferred Shares. Subsequent to the IPO, Goldman has sold its remaining shares of the Company. Refer to Note 1 for further details. Dividends and Distributions In order to comply with the REIT requirements of the Internal Revenue Code, or the Code, the Company is generally required to make common share distributions (other than capital gain distributions) to its shareholders at least equal to 90% of its REIT taxable income, as defined in the Code, computed without regard to the dividends paid deduction and net capital gains. The Company’s common share dividend policy is to distribute a percentage of cash flow to ensure distribution requirements of the IRS are met while allowing the Company to retain cash to meet other needs, such as principal amortization, capital improvements and other investment activities. Common share dividends are characterized for U.S. federal income tax purposes as ordinary income, qualified dividend, capital gains, non-taxable income return of capital, or a combination of the four. Common share dividends that exceed current and accumulated earnings and profits (calculated for tax purposes) constitute a return of capital rather than a dividend and generally reduce the shareholder’s basis in the common share. To the extent that a dividend exceeds both current and accumulated earnings and profits and the shareholder’s basis in the common share, it will generally be treated as a gain from the sale or exchange of that shareholder’s common share. At the beginning of each year, we notify our shareholders of the taxability of the common share dividends paid during the preceding year. The payment of common share dividends is dependent upon our financial condition, operating results, and REIT distribution requirements and may be adjusted at the discretion of the Company’s Board of Trustees. The following tables summarize dividends declared and distributions paid to the holders of common shares and Series B Preferred Shares for the three months ended March 31, 2019 and 2018.
Partners' Capital Allocations of Net Income and Net Losses to Partners The operating partnership’s net income will generally be allocated to Americold Realty Trust (the general partner) and the operating partnership’s limited partner, Americold Realty Operations Inc., in accordance with the respective percentage interests in the units issued by the Operating Partnership. Net loss will generally be allocated to the general partner and the operating partnership’s limited partners in accordance with the respective common percentage interests in the operating partnership until the limited partner’s capital is reduced to zero and any remaining net loss would be allocated to the general partner. However, in some cases, losses may be disproportionately allocated to partners who have guaranteed our debt. The allocations described above are subject to special allocations relating to depreciation deductions and to compliance with the provisions of Sections 704(b) and 704(c) of the Code, and the associated Treasury Regulations. Distributions All distributions on our units are at the discretion of Americold Realty Trust's Board of Trustees. We have declared and paid the following distributions to the Parent for the years ended March 31, 2019 and 2018:
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Acquisition, Litigation and Other Special Charges |
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Acquisition, Litigation and Other Special Charges [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisition, Litigation and Other Special Charges | Acquisition, litigation, and other charges The components of the charges included in acquisition, litigation, and other in our Condensed Consolidated Statements of Operations are as follows (in thousands):
Business 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 work associated with information systems and other projects including spending to support future acquisitions, and primarily consist of professional services. We consider acquisition related costs to be Corporate costs regardless of the segment or segments involved in the transaction. Business acquisition costs of $1.4 million for the three months ended March 31, 2019 primarily consisted of non-capitalizable legal and professional fees related to acquisitions under consideration. Refer to Note 23 for further information regarding acquisitions completed subsequent to March 31, 2019. Litigation costs consist of expenses incurred in order to resolve material litigation charges. Litigation costs incurred in connection with immaterial matters from time-to-time are expensed as a component of Selling, general and administrative expense on the Condensed Consolidated Statements of Operations. Litigation costs of $0.9 million for the three months ended March 31, 2019 primarily relate to professional fees incurred in connection with ongoing potential material litigation charges. Refer to Note 17 for discussion of ongoing material litigation. No litigation costs were incurred for the three months ended March 31, 2018 relating to material litigation charges. Severance costs represent certain contractual and negotiated severance and separation costs from exited former executives, and reduction in workforce costs associated with exiting or selling non-strategic warehouses. Equity acceleration and modification costs represent the unrecognized expense for stock 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. For the three months ended March 31, 2019, severance, equity modification and acceleration expense consists of $1.2 million of severance related to the departure of two former executives as well as $3.1 million of accelerated equity award vesting. The accelerated stock compensation charges related primarily to the resignation of a member of the Board of Trustees, which accelerated the vesting of 100,000 restricted stock units in accordance with the modified award agreement. For the three months ended March 31, 2018, equity modification expense consists of $2.6 million due to the grant made by the Board of Trustees to permit dividend equivalents to all participants in the 2010 Plan. Refer to Note 14 for further details of all equity modifications and equity acceleration. Non-offering related equity issuance expense of $1.5 million for the three months ended March 31, 2019 consists of legal fees associated with the selling shareholder's secondary public offering, which consisted solely of shares sold by YF ART Holdings and Goldman Sachs and affiliates (see Note 1 for more information). The Company received no proceeds from the secondary offering. Non-offering related equity issuance expense of $1.2 million for the three months ended March 31, 2018 consisted of non-registration statement related costs and an Australian stamp duty tax related to the Company's IPO. Terminated site operations costs of $0.3 million for the three months ended March 31, 2019 relates to repair 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 condensed consolidated statement of operations. No such event occurred for the three months ended March 31, 2018. |
Debt of the Company |
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Debt of the Company | Debt of the Company In this Note 6, the "Company" refers only to Americold Realty Trust and not to any of its subsidiaries. The Company itself does not have any indebtedness. All debt is held directly or indirectly by the operating partnership. The Company guarantees the Operating Partnership's obligations with respect to its outstanding debt as of March 31, 2019 and December 31, 2018, as detailed in Note 7, with the exception of the 2013 Mortgage Loans which have limited guarantees for fraud and environmental carve-outs by Americold Realty Operating Partnership, L.P. Debt of the Operating Partnership A summary of outstanding indebtedness of the operating partnership as of March 31, 2019 and December 31, 2018 is as follows (in thousands):
(1) L = one-month LIBOR. 2018 Recast Credit Facility On December 4, 2018, we entered into a recast credit agreement 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 capitalized approximately $8.9 million of debt issuance costs, which we amortize as interest expense under the effective interest method. The unamortized balance of Term Loan A debt issuance costs are included in "Mortgage notes, senior unsecured notes, and term loans" on the accompanying Condensed Consolidated Balance Sheets. As of March 31, 2019, $4.9 million of unamortized debt issuance costs related to revolving credit facility is included in "Other assets" in the accompanying Condensed Consolidated Balance Sheets. Our 2018 Senior Unsecured Revolving Credit Facility is structured to include a borrowing base, which allows us to borrow against the lesser of our Senior Unsecured Term Loan A Facility balance outstanding and $800 million in revolving credit commitments, and the value of certain owned real estate assets and ground leased assets. At March 31, 2019, the gross value of our assets included in the calculations under our 2018 Recast Credit Facility, was in excess of $3.2 billion, and had an effective borrowing base collateral value (after concentration limits and advance rates as calculated under the anticipated terms of our 2018 Recast Credit Agreement) in excess of $1.9 billion. Our 2018 Recast Credit Facility contains representations, covenants and other terms customary for a publicly traded REIT. In addition, our 2018 Recast Credit Facility contains certain financial covenants, as defined in the credit agreement, including:
Our 2018 Recast Credit Facility is fully recourse to our operating partnership. As of March 31, 2019, the Company was in compliance with all debt covenants. There were $29.2 million and $29.6 million letters of credit issued on the Company’s 2018 Senior Unsecured Revolving Credit Facility as of March 31, 2019 and December 31, 2018, respectively. $200 million Senior Unsecured 4.68% Notes due 2026 and $400 million Senior Unsecured 4.86% Notes due 2029 On November 6, 2018, the Company priced a debt private placement transaction consisting of (i) $200 million senior unsecured notes with a coupon of 4.68% due January 8, 2026 (“Series A”) and (ii) $400 million senior unsecured notes with a coupon of 4.86% due January 8, 2029 (“Series B”), (collectively referred to as the “Senior Unsecured Notes”). The transaction closed on December 4, 2018. Interest will be paid on January 8 and July 8 of each year until maturity, with the first payment occurring July 8, 2019. The initial July 8, 2019 payment will include interest accrued since December 4, 2018. The notes are general unsecured senior obligations of the Company and are guaranteed by the Company and the subsidiaries of the Company. The Company used a portion of the proceeds of the private placement transaction to repay the outstanding balances of the $600 million Americold 2010 LLC Trust, Commercial Mortgage Pass-Through Certificates, Series 2010, ART (2010 Mortgage Loans). The Company also used the remaining proceeds to extinguish the Australian term loan and the New Zealand term loan (ANZ Loans). See below for further detail regarding the early extinguishment of debt under 2010 Mortgage Loans and ANZ Loans. The Series A and Series B senior 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 day’s written notice whenever it intends to prepay any portion of the debt. If a change in control occurs for the Company, the Company 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, the Company is required to maintain at all times an investment grade debt rating for each series of notes from a nationally recognized statistical rating organization. In addition, the Senior Unsecured Notes contain certain financial covenants required on a quarterly or occurrence basis, as defined in the credit agreement, including:
As of March 31, 2019, the Company was 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 March 31, 2019, the amount of restricted cash associated with the 2013 Mortgage Loans was $3.4 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 debt service coverage ratio was 1.72x as of March 31, 2019. The 2013 Mortgage Loans are non-recourse to the Company, subject to customary non-recourse provisions as stipulated in the agreements. The mortgage loan also requires compliance with other financial covenants, including a debt coverage ratio and cash flow calculation, as defined. As of March 31, 2019, the Company was in compliance with all debt covenants. Debt Covenants The Company’s Senior Unsecured Credit Facilities, the Senior Unsecured Notes, and 2013 Mortgage Loans require financial statements reporting, periodic requirements to report compliance with established thresholds and performance measurements, and affirmative and negative covenants that govern allowable business practices of the Company. The affirmative and negative covenants include continuation of insurance, maintenance of collateral, the maintenance of REIT status, and the Company’s ability to enter into certain types of transactions or exposures in the normal course of business. As of March 31, 2019, the Company was in compliance with all debt covenants. The aggregate maturities of the Company’s total indebtedness as of March 31, 2019, including amortization of principal amounts due under the mortgage notes for each of the next five years and thereafter, are as follows:
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Debt of the Operating Partnership |
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt of the Operating Partnership | Debt of the Company In this Note 6, the "Company" refers only to Americold Realty Trust and not to any of its subsidiaries. The Company itself does not have any indebtedness. All debt is held directly or indirectly by the operating partnership. The Company guarantees the Operating Partnership's obligations with respect to its outstanding debt as of March 31, 2019 and December 31, 2018, as detailed in Note 7, with the exception of the 2013 Mortgage Loans which have limited guarantees for fraud and environmental carve-outs by Americold Realty Operating Partnership, L.P. Debt of the Operating Partnership A summary of outstanding indebtedness of the operating partnership as of March 31, 2019 and December 31, 2018 is as follows (in thousands):
(1) L = one-month LIBOR. 2018 Recast Credit Facility On December 4, 2018, we entered into a recast credit agreement 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 capitalized approximately $8.9 million of debt issuance costs, which we amortize as interest expense under the effective interest method. The unamortized balance of Term Loan A debt issuance costs are included in "Mortgage notes, senior unsecured notes, and term loans" on the accompanying Condensed Consolidated Balance Sheets. As of March 31, 2019, $4.9 million of unamortized debt issuance costs related to revolving credit facility is included in "Other assets" in the accompanying Condensed Consolidated Balance Sheets. Our 2018 Senior Unsecured Revolving Credit Facility is structured to include a borrowing base, which allows us to borrow against the lesser of our Senior Unsecured Term Loan A Facility balance outstanding and $800 million in revolving credit commitments, and the value of certain owned real estate assets and ground leased assets. At March 31, 2019, the gross value of our assets included in the calculations under our 2018 Recast Credit Facility, was in excess of $3.2 billion, and had an effective borrowing base collateral value (after concentration limits and advance rates as calculated under the anticipated terms of our 2018 Recast Credit Agreement) in excess of $1.9 billion. Our 2018 Recast Credit Facility contains representations, covenants and other terms customary for a publicly traded REIT. In addition, our 2018 Recast Credit Facility contains certain financial covenants, as defined in the credit agreement, including:
Our 2018 Recast Credit Facility is fully recourse to our operating partnership. As of March 31, 2019, the Company was in compliance with all debt covenants. There were $29.2 million and $29.6 million letters of credit issued on the Company’s 2018 Senior Unsecured Revolving Credit Facility as of March 31, 2019 and December 31, 2018, respectively. $200 million Senior Unsecured 4.68% Notes due 2026 and $400 million Senior Unsecured 4.86% Notes due 2029 On November 6, 2018, the Company priced a debt private placement transaction consisting of (i) $200 million senior unsecured notes with a coupon of 4.68% due January 8, 2026 (“Series A”) and (ii) $400 million senior unsecured notes with a coupon of 4.86% due January 8, 2029 (“Series B”), (collectively referred to as the “Senior Unsecured Notes”). The transaction closed on December 4, 2018. Interest will be paid on January 8 and July 8 of each year until maturity, with the first payment occurring July 8, 2019. The initial July 8, 2019 payment will include interest accrued since December 4, 2018. The notes are general unsecured senior obligations of the Company and are guaranteed by the Company and the subsidiaries of the Company. The Company used a portion of the proceeds of the private placement transaction to repay the outstanding balances of the $600 million Americold 2010 LLC Trust, Commercial Mortgage Pass-Through Certificates, Series 2010, ART (2010 Mortgage Loans). The Company also used the remaining proceeds to extinguish the Australian term loan and the New Zealand term loan (ANZ Loans). See below for further detail regarding the early extinguishment of debt under 2010 Mortgage Loans and ANZ Loans. The Series A and Series B senior 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 day’s written notice whenever it intends to prepay any portion of the debt. If a change in control occurs for the Company, the Company 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, the Company is required to maintain at all times an investment grade debt rating for each series of notes from a nationally recognized statistical rating organization. In addition, the Senior Unsecured Notes contain certain financial covenants required on a quarterly or occurrence basis, as defined in the credit agreement, including:
As of March 31, 2019, the Company was 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 March 31, 2019, the amount of restricted cash associated with the 2013 Mortgage Loans was $3.4 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 debt service coverage ratio was 1.72x as of March 31, 2019. The 2013 Mortgage Loans are non-recourse to the Company, subject to customary non-recourse provisions as stipulated in the agreements. The mortgage loan also requires compliance with other financial covenants, including a debt coverage ratio and cash flow calculation, as defined. As of March 31, 2019, the Company was in compliance with all debt covenants. Debt Covenants The Company’s Senior Unsecured Credit Facilities, the Senior Unsecured Notes, and 2013 Mortgage Loans require financial statements reporting, periodic requirements to report compliance with established thresholds and performance measurements, and affirmative and negative covenants that govern allowable business practices of the Company. The affirmative and negative covenants include continuation of insurance, maintenance of collateral, the maintenance of REIT status, and the Company’s ability to enter into certain types of transactions or exposures in the normal course of business. As of March 31, 2019, the Company was in compliance with all debt covenants. The aggregate maturities of the Company’s total indebtedness as of March 31, 2019, including amortization of principal amounts due under the mortgage notes for each of the next five years and thereafter, are as follows:
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Derivative Financial Instruments |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Financial Instruments | Derivative Financial Instruments The Company is subject to volatility in interest rates due to variable-rate debt. To manage this risk, the Company has entered into an interest rate swap agreement of $100 million of variable interest-rate debt, which hedges 21% of the Company's outstanding variable-rate debt as of March 31, 2019. The agreement converts the Company’s floating-rate debt to a fixed-rate basis for the next five years, thus reducing the impact of interest rate changes on future interest expense. This agreement involves the receipt of floating-rate amounts in exchange for fixed-rate interest payments over the life of the agreement without an exchange of the underlying notional amount. The Company's objective for utilizing this derivative instrument is to reduce its exposure to fluctuations in cash flows due to changes in interest rates. The Company is subject to volatility in foreign exchange rates due to foreign-currency denominated intercompany loans between Australia and U.S. entities and the New Zealand and U.S. entities. The Company implemented cross-currency swaps to manage the foreign currency exchange rate risk on these intercompany loans. These agreements effectively mitigate the Company’s exposure to fluctuations in cash flows due to foreign exchange rate risk by converting the Company’s floating exchange rate to a fixed-rate basis for the life of the intercompany loans. These agreements involve the receipt of fixed USD amounts in exchange for payment of fixed AUD and NZD amounts over the life of the respective intercompany loan. The entirety of the Company’s outstanding intercompany loans receivable balances, $153.5 million AUD and $37.5 million NZD, were hedged under the cross-currency swap agreements at March 31, 2019. In accordance with ASC 815, the Company designates the cross-currency swaps as cash flow hedges of future interest and principal repayments. The Company designates the interest rate swap as a cash flow hedge of variable-rate loans. The Company classifies cash inflow and outflows from derivatives within operating activities on the Condensed Consolidated Statements of Cash Flows. The Company determines the fair value of these derivative instruments using a present value calculation with significant observable inputs classified as Level 2 of the fair value hierarchy. Derivative asset balances are recorded on the Condensed Consolidated Balance Sheets within 'Other assets' and derivative liability balances are recorded on the Condensed Consolidated Balance Sheets within 'Accounts payable and accrued expenses'. The following table illustrates the disclosure in tabular format of fair value amounts of derivative instruments at March 31, 2019 and December 31, 2018:
The following tables present the amounts in the Condensed Consolidated Statements of Operations in which the effects of cash flow hedges are recorded and the effects of cash flow hedge activity on these line items for the three months ended March 31, 2019 and March 31, 2018, including the impacts to Accumulated Other Comprehensive Income (AOCI):
The amount of gains (losses), net of tax, related to the effective portion of derivative instruments designated as cash flow hedges included in accumulated other comprehensive loss for the three months ended March 31, 2019. Company’s derivatives have been designated as cash flow hedges; therefore, the changes in the fair value of derivatives are recognized in AOCI and are reclassified into earnings in the same period or periods during which the hedged transaction affects earnings and is presented in the same income statement line item as the earnings effect of the hedged item. The Company classifies cash inflows and outflows from derivatives within operating activities on the statement of cash flows. Amounts reclassified from AOCI into earnings related to realized gains and losses on the interest rate swap are recognized when payments or receipts occur related to the swap contracts, which correspond to when interest payments are made on the Company’s hedged debt. Amounts reclassified from AOCI into earnings related to realized gains and losses on foreign exchange rate swaps are recognized on each remeasurement date and the impact is recorded through foreign currency exchange gain (loss), net. Refer to Note 18 for additional details regarding the impact of the Company’s derivatives on AOCI for the three months ended March 31, 2019 and March 31, 2018. |
Sale-Leasebacks of Real Estate |
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Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Sale-Leasebacks of Real Estate | Sale-Leasebacks of Real Estate The Company’s outstanding sale-leaseback financing obligations of real estate-related long-lived assets as of March 31, 2019 and December 31, 2018 are as follows:
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Lease Accounting |
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Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lease Accounting | Lease Accounting Arrangements wherein we are the lessee: We have operating and finance leases for land, warehouses, offices, vehicles, and equipment with remaining lease terms ranging from 1 to 34 years. Many of our leases include one or more options to extend the lease term from 1 to 10 years that may be exercised at our sole discretion. Additionally, many of our leases for vehicles and equipment include options to purchase the underlying asset at or before expiration of the lease agreement. Rental payments are generally fixed over the term of the lease agreement with the exception of certain equipment leases for which the rental payment may vary based on usage of the asset. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. As of March 31, 2019, the rights and obligations with respect to leases which have been signed but have not yet commenced are not material to our financial position or results of operations. The components of lease expense were as follows:
(a) Includes short-term lease and variable lease costs, which are immaterial. (b) Sublease income relates to two warehouses in the U.S. and New Zealand. Other information related to leases is as follows:
Future minimum lease payments under non-cancellable leases as of March 31, 2019 were as follows:
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Lease Accounting | Lease Accounting Arrangements wherein we are the lessee: We have operating and finance leases for land, warehouses, offices, vehicles, and equipment with remaining lease terms ranging from 1 to 34 years. Many of our leases include one or more options to extend the lease term from 1 to 10 years that may be exercised at our sole discretion. Additionally, many of our leases for vehicles and equipment include options to purchase the underlying asset at or before expiration of the lease agreement. Rental payments are generally fixed over the term of the lease agreement with the exception of certain equipment leases for which the rental payment may vary based on usage of the asset. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. As of March 31, 2019, the rights and obligations with respect to leases which have been signed but have not yet commenced are not material to our financial position or results of operations. The components of lease expense were as follows:
(a) Includes short-term lease and variable lease costs, which are immaterial. (b) Sublease income relates to two warehouses in the U.S. and New Zealand. Other information related to leases is as follows:
Future minimum lease payments under non-cancellable leases as of March 31, 2019 were as follows:
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Lease Accounting | Lease Accounting Arrangements wherein we are the lessee: We have operating and finance leases for land, warehouses, offices, vehicles, and equipment with remaining lease terms ranging from 1 to 34 years. Many of our leases include one or more options to extend the lease term from 1 to 10 years that may be exercised at our sole discretion. Additionally, many of our leases for vehicles and equipment include options to purchase the underlying asset at or before expiration of the lease agreement. Rental payments are generally fixed over the term of the lease agreement with the exception of certain equipment leases for which the rental payment may vary based on usage of the asset. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. As of March 31, 2019, the rights and obligations with respect to leases which have been signed but have not yet commenced are not material to our financial position or results of operations. The components of lease expense were as follows:
(a) Includes short-term lease and variable lease costs, which are immaterial. (b) Sublease income relates to two warehouses in the U.S. and New Zealand. Other information related to leases is as follows:
Future minimum lease payments under non-cancellable leases as of March 31, 2019 were as follows:
Arrangements wherein we are the lessor: We receive lease income as the lessor for certain buildings and warehouses or space within a warehouse. The remaining term on existing leases ranges from 1 to 10 years. Lease income is generally fixed over the duration of the contract and each lease contract contains clauses permitting extension or termination. Lease incentives and options for purchase of the leased asset by the lessee are generally not included. The Company is party to operating leases only and currently does not have sales-type or direct financing leases. Lease income is included within “Rent, Storage, and Warehouse Services Revenue” in the Condensed Consolidated Statements of Operations as denoted in Note 22 Revenues from Contracts with Customers. Property, plant and equipment underlying operating leases is included in “Land and Buildings and improvements” on the Condensed Consolidated Balance Sheets. The gross value and net value of these assets was $368.6 million and $327.4 million, for Land and Buildings and improvements as of March 31, 2019. Depreciation expense for such assets was $4.8 million for the three months ended March 31, 2019. Future minimum lease payments as of March 31, 2019 were as follows (in thousands):
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Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements The Company categorizes assets and liabilities that are recorded at fair values into one of three tiers based upon fair value hierarchy. These tiers include: Level 1, defined as quoted market prices in active markets for identical assets or liabilities; Level 2, defined as inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, model-based valuation techniques for which all significant assumptions are observable in the market, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and Level 3, defined as unobservable inputs that are not corroborated by market data. The carrying amounts of cash and cash equivalents, restricted cash, accounts receivable, accounts payable, accrued expenses and revolving line of credit approximate their fair values due to the short-term maturities of the instruments. The Company’s mortgage notes, term loan and senior unsecured notes are reported at their aggregate principal amount less unamortized original issue discount and deferred financing costs on the accompanying condensed consolidated balance sheets. The fair value of these financial instruments is estimated based on the present value of the expected coupon and principal payments using a discount rate that reflects the projected performance of the collateral asset as of each valuation date. The inputs used to estimate the fair value of the Company’s mortgage notes, term loans and senior unsecured notes are comprised of Level 2 inputs, including senior industrial commercial real estate loan spreads, corporate industrial loan indexes, risk-free interest rates, and Level 3 inputs, such as future coupon and principal payments, and projected future cash flows of the collateral asset. The Company’s financial assets and liabilities recorded at fair value on a recurring basis include certain investments included in cash equivalent money market funds and restricted cash assets. The Company’s cash equivalent money market funds and restricted cash assets are valued at quoted market prices in active markets for identical assets (Level 1), which the Company receives from the financial institutions that hold such investments on its behalf. The fair value hierarchy discussed above is also applicable to the Company’s pension and other post-retirement plans. The Company uses the fair value hierarchy to measure the fair value of assets held by various plans. The Company recognizes transfers between levels within the hierarchy as of the beginning of the reporting period. There were no transfers between levels within the hierarchy as of March 31, 2019 and December 31, 2018, respectively. The Company’s assets and liabilities measured or disclosed at fair value are as follows:
(1)The carrying value of mortgage notes, term loans and senior unsecured notes is disclosed in Note 7. |
Dividends and Distributions |
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Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends and Distributions | Redeemable Preferred Shares Series A Cumulative Non-Voting Preferred Shares In January 2009, the Company issued 125 Series A Cumulative Non-Voting Preferred Shares of beneficial interest, par value $0.01 per share (Series A Preferred Shares) for proceeds of $0.1 million. The Series A Preferred Shares were redeemable by the Company at any time by notice for a price, payable in cash, equal to 100% of each share’s liquidation value of $1,000, plus all accrued and unpaid dividends, plus, if applicable, a redemption premium. Holders of the Series A Preferred Shares were entitled to receive dividends semiannually at a per annum rate equal to 12.5% of the liquidation value. In 2018, in connection with the IPO, all outstanding Series A Preferred Shares were redeemed resulting in a cash payment of approximately $0.1 million, including accrued and unpaid dividends. Series B Cumulative Convertible Voting Preferred Shares During 2010, the Company’s Board of Trustees approved a series of agreements and documents that effected the conversion of 375,000 authorized and unissued preferred shares of the Company into 375,000 Series B Cumulative Convertible Voting Preferred Shares of beneficial interest, par value $0.01 per share (Series B Preferred Shares), and simultaneously authorized the sale and issuance of the 375,000 Series B Preferred Shares. On December 15, 2010, the Company issued 375,000 Series B Cumulative Convertible Voting Preferred Shares of beneficial interest, par value $0.01 per share (Series B Preferred Shares), for proceeds of $368.5 million. Of the total issuance, 325,000 Series B Preferred Shares were issued to affiliates of Goldman and 50,000 were issued to an affiliate of China Merchant Holdings International (CMHI), an affiliate of the majority partner in the China JV. In connection with the IPO, Goldman and CMHI converted their Series B Preferred Shares into 28,808,224 and 4,432,034 common shares of the Company, respectively, after taking into account a cash payment of approximately $1.8 million of accrued and unpaid dividends. Goldman sold 5,163,716 common shares of the Company soon after the conversion of the Series B Preferred Shares. Subsequent to the IPO, Goldman has sold its remaining shares of the Company. Refer to Note 1 for further details. Dividends and Distributions In order to comply with the REIT requirements of the Internal Revenue Code, or the Code, the Company is generally required to make common share distributions (other than capital gain distributions) to its shareholders at least equal to 90% of its REIT taxable income, as defined in the Code, computed without regard to the dividends paid deduction and net capital gains. The Company’s common share dividend policy is to distribute a percentage of cash flow to ensure distribution requirements of the IRS are met while allowing the Company to retain cash to meet other needs, such as principal amortization, capital improvements and other investment activities. Common share dividends are characterized for U.S. federal income tax purposes as ordinary income, qualified dividend, capital gains, non-taxable income return of capital, or a combination of the four. Common share dividends that exceed current and accumulated earnings and profits (calculated for tax purposes) constitute a return of capital rather than a dividend and generally reduce the shareholder’s basis in the common share. To the extent that a dividend exceeds both current and accumulated earnings and profits and the shareholder’s basis in the common share, it will generally be treated as a gain from the sale or exchange of that shareholder’s common share. At the beginning of each year, we notify our shareholders of the taxability of the common share dividends paid during the preceding year. The payment of common share dividends is dependent upon our financial condition, operating results, and REIT distribution requirements and may be adjusted at the discretion of the Company’s Board of Trustees. The following tables summarize dividends declared and distributions paid to the holders of common shares and Series B Preferred Shares for the three months ended March 31, 2019 and 2018.
Partners' Capital Allocations of Net Income and Net Losses to Partners The operating partnership’s net income will generally be allocated to Americold Realty Trust (the general partner) and the operating partnership’s limited partner, Americold Realty Operations Inc., in accordance with the respective percentage interests in the units issued by the Operating Partnership. Net loss will generally be allocated to the general partner and the operating partnership’s limited partners in accordance with the respective common percentage interests in the operating partnership until the limited partner’s capital is reduced to zero and any remaining net loss would be allocated to the general partner. However, in some cases, losses may be disproportionately allocated to partners who have guaranteed our debt. The allocations described above are subject to special allocations relating to depreciation deductions and to compliance with the provisions of Sections 704(b) and 704(c) of the Code, and the associated Treasury Regulations. Distributions All distributions on our units are at the discretion of Americold Realty Trust's Board of Trustees. We have declared and paid the following distributions to the Parent for the years ended March 31, 2019 and 2018:
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Partners Capital |
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Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends and Distributions | Redeemable Preferred Shares Series A Cumulative Non-Voting Preferred Shares In January 2009, the Company issued 125 Series A Cumulative Non-Voting Preferred Shares of beneficial interest, par value $0.01 per share (Series A Preferred Shares) for proceeds of $0.1 million. The Series A Preferred Shares were redeemable by the Company at any time by notice for a price, payable in cash, equal to 100% of each share’s liquidation value of $1,000, plus all accrued and unpaid dividends, plus, if applicable, a redemption premium. Holders of the Series A Preferred Shares were entitled to receive dividends semiannually at a per annum rate equal to 12.5% of the liquidation value. In 2018, in connection with the IPO, all outstanding Series A Preferred Shares were redeemed resulting in a cash payment of approximately $0.1 million, including accrued and unpaid dividends. Series B Cumulative Convertible Voting Preferred Shares During 2010, the Company’s Board of Trustees approved a series of agreements and documents that effected the conversion of 375,000 authorized and unissued preferred shares of the Company into 375,000 Series B Cumulative Convertible Voting Preferred Shares of beneficial interest, par value $0.01 per share (Series B Preferred Shares), and simultaneously authorized the sale and issuance of the 375,000 Series B Preferred Shares. On December 15, 2010, the Company issued 375,000 Series B Cumulative Convertible Voting Preferred Shares of beneficial interest, par value $0.01 per share (Series B Preferred Shares), for proceeds of $368.5 million. Of the total issuance, 325,000 Series B Preferred Shares were issued to affiliates of Goldman and 50,000 were issued to an affiliate of China Merchant Holdings International (CMHI), an affiliate of the majority partner in the China JV. In connection with the IPO, Goldman and CMHI converted their Series B Preferred Shares into 28,808,224 and 4,432,034 common shares of the Company, respectively, after taking into account a cash payment of approximately $1.8 million of accrued and unpaid dividends. Goldman sold 5,163,716 common shares of the Company soon after the conversion of the Series B Preferred Shares. Subsequent to the IPO, Goldman has sold its remaining shares of the Company. Refer to Note 1 for further details. Dividends and Distributions In order to comply with the REIT requirements of the Internal Revenue Code, or the Code, the Company is generally required to make common share distributions (other than capital gain distributions) to its shareholders at least equal to 90% of its REIT taxable income, as defined in the Code, computed without regard to the dividends paid deduction and net capital gains. The Company’s common share dividend policy is to distribute a percentage of cash flow to ensure distribution requirements of the IRS are met while allowing the Company to retain cash to meet other needs, such as principal amortization, capital improvements and other investment activities. Common share dividends are characterized for U.S. federal income tax purposes as ordinary income, qualified dividend, capital gains, non-taxable income return of capital, or a combination of the four. Common share dividends that exceed current and accumulated earnings and profits (calculated for tax purposes) constitute a return of capital rather than a dividend and generally reduce the shareholder’s basis in the common share. To the extent that a dividend exceeds both current and accumulated earnings and profits and the shareholder’s basis in the common share, it will generally be treated as a gain from the sale or exchange of that shareholder’s common share. At the beginning of each year, we notify our shareholders of the taxability of the common share dividends paid during the preceding year. The payment of common share dividends is dependent upon our financial condition, operating results, and REIT distribution requirements and may be adjusted at the discretion of the Company’s Board of Trustees. The following tables summarize dividends declared and distributions paid to the holders of common shares and Series B Preferred Shares for the three months ended March 31, 2019 and 2018.
Partners' Capital Allocations of Net Income and Net Losses to Partners The operating partnership’s net income will generally be allocated to Americold Realty Trust (the general partner) and the operating partnership’s limited partner, Americold Realty Operations Inc., in accordance with the respective percentage interests in the units issued by the Operating Partnership. Net loss will generally be allocated to the general partner and the operating partnership’s limited partners in accordance with the respective common percentage interests in the operating partnership until the limited partner’s capital is reduced to zero and any remaining net loss would be allocated to the general partner. However, in some cases, losses may be disproportionately allocated to partners who have guaranteed our debt. The allocations described above are subject to special allocations relating to depreciation deductions and to compliance with the provisions of Sections 704(b) and 704(c) of the Code, and the associated Treasury Regulations. Distributions All distributions on our units are at the discretion of Americold Realty Trust's Board of Trustees. We have declared and paid the following distributions to the Parent for the years ended March 31, 2019 and 2018:
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Share-Based Compensation |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Compensation | Share-Based Compensation All share-based compensation cost is measured at the grant date, based on the estimated fair value of the award. The Company issues time-based, performance-based and market performance-based equity awards. Time-based and market performance-based awards are recognized on a straight-line basis over the employees’ requisite service period, as adjusted for estimate of forfeitures. Performance-based awards are recognized ratably over the vesting period using a graded vesting attribution model upon the achievement of the performance target, as adjusted for estimate of forfeitures. The only performance-based awards issued by the Company were granted in 2016 and 2017. Aggregate stock-based compensation charges were $5.7 million and $4.5 million during the three months ended March 31, 2019 and 2018, respectively. Approximately $2.6 million and $1.9 million of these charges were considered routine stock compensation expense, and were included as a component of “Selling, general and administrative” expense on the accompanying Condensed Consolidated Statements of Operations during the three months ended March 31, 2019 and 2018, respectively. Approximately $3.1 million was recorded during the three months ended March 31, 2019 due to accelerated vesting of awards outstanding to former executives and an equity award modification upon trustee resignation, and were included as a component of “Acquisition, litigation, and other” expense on the accompanying Condensed Consolidated Statements of Operations. Approximately $2.6 million was recorded during the three months ended March 31, 2018 to modify restricted stock units, and were included as a component of “Acquisition, litigation, and other” expense on the accompanying Condensed Consolidated Statements of Operations. The award modifications and awards with accelerated vesting are discussed further under the section “Modification of Restricted Stock Units and Accelerated Vesting of Awards”. As of March 31, 2019, there was $35.8 million of unrecognized stock‑based compensation expense related to stock options and restricted stock units, which will be recognized over a weighted-average period of 2.6 years. Americold Realty Trust 2008 and 2010 Equity Incentive Plans During December 2008, the Company and the common shareholders approved the Americold Realty Trust 2008 Equity Incentive Plan (2008 Plan), whereby the Company issued either stock options or stock appreciation rights based upon a reserved pool of 4,900,025 common shares. The only active awards remaining under the 2008 Plan were exercised during 2018. No additional awards may be granted under the 2008 Plan. During December 2010, the Company and the common shareholders approved the Americold Realty Trust 2010 Equity Incentive Plan (2010 Plan), whereby the Company could issue stock options, stock appreciation rights, restricted stock, restricted stock units, stock bonus awards, and/or dividend equivalents with respect to the Company’s common shares, cash bonus awards, and/or performance compensation awards to certain eligible participants, as defined, based upon a reserved pool of 3,849,976 of the Company’s common shares. No additional awards may be granted under the 2010 Plan. Americold Realty Trust 2017 Equity Incentive Plan On January 4, 2018, the Company’s Board of Trustees adopted the Americold Realty Trust 2017 Equity Incentive Plan (2017 Plan), which permits the grant of various forms of equity- and cash-based awards from a reserved pool of 9,000,000 common shares of the Company. On January 17, 2018, the Company’s shareholders approved the 2017 Plan. Equity-based awards issued under the 2017 Plan have the rights to receive dividend equivalents on an accrual basis. Dividend equivalents accrued are paid upon the vesting of the awards, and for awards that are forfeited during the vesting period no dividend equivalents will be paid. Certain restricted stock units issued in connection with the IPO to retain key employees of the Company have the right to receive nonforfeitable dividend equivalent distributions on unvested units. As of March 31, 2019, the Company accrued $0.6 million of dividend equivalents on unvested units payable to employees and non-employee trustees. Modification of Restricted Stock Units and Accelerated Vesting of Awards On January 4, 2018, the Company’s Board of Trustees approved the modification of awards to allow the grant of dividend equivalents to all participants in the 2010 Plan with respect to any and all vested restricted stock units of the Company that have not been settled pursuant to the 2010 Plan. On the same day, the Company’s Board of Trustees resolved that no further awards may be granted under the 2010 Plan after the approval of the 2017 Plan. As a result, the Company recognized stock-based compensation expense of $2.6 million to reflect the change in fair value associated with the modification of the dividend equivalents rights of the outstanding equity awards under the 2010 Plan. This expense is included in the aggregate stock-based compensation charge for the three months ended March 31, 2018. During the first quarter of 2019, the Company’s Compensation Committee approved the modification of an award issued in 2018 to a member of the Board of Trustees upon his resignation. This modification immediately accelerated the next vesting tranche of 100,000 restricted stock units which otherwise would not have vested until 2020 assuming the trustee continued service, under the original award agreement. As a result of this modification, the Company recognized approximately $2.9 million of share-based compensation expense during the first quarter of 2019. Additionally, during the first quarter of 2019, the Company recognized accelerated share-based compensation expense of $0.2 million upon the termination of former executives, in accordance with the terms of their original award agreements. Restricted Stock Units Activity Restricted stock units are nontransferable until vested. Prior to the issuance of a common share, the grantees of restricted stock units are not entitled to vote the shares. Time-based restricted stock unit awards vest in equal annual increments over the vesting period. Performance-based and market-based restricted stock unit awards vest upon the achievement of the performance target. The following table summarizes restricted stock unit grants under the 2017 Plan during the three months ended March 31, 2019 and 2018, respectively:
Of the restricted stock units granted for the three months ended March 31, 2019, (i) 12,285 were time-based restricted stock units with a one-year vesting period issued to non-employee trustees in recognition of their efforts and oversight in the first year as a public company, (ii) 222,937 were time-based restricted stock units with various vesting periods ranging from one to three years issued to certain employees and (iii) 232,567 were market-based restricted stock units with a three-year vesting period issued to certain employees. The vesting of such market-based awards will be determined based on Americold Realty Trust's TSR relative to the MSCI US REIT Index, or RMS, computed for the performance period that began January 1, 2019 and will end December 31, 2021. Of the restricted stock units granted for the three months ended March 31, 2018, (i) 331,250 were time-based restricted stock units with a three-year vesting period issued to non-employee trustees in connection with the IPO, (ii) 42,188 were time-based restricted stock units with a one year vesting period issued to non-employee trustees as part of their annual compensation, (iii) 398,125 were time-based restricted stock units with various vesting periods ranging from two to four years issued to certain employees and and (iv) 499,000 were market-based restricted stock units issued to certain employees. The vesting of such market-based awards will be determined based on the Company's "total shareholder return", as described in the agreement granting such awards, computed for the performance period that began January 18, 2018 and will end December 31, 2020. The following table provides a summary of restricted stock awards activity under the 2010 and 2017 Plans as of March 31, 2019:
The weighted average grant-date fair value of restricted stock units granted during three months ended March 31, 2019 was $33.23 per unit, for vested restricted stock units was $15.89, for forfeited restricted stock units was $15.43, and non-vested restricted stock units was $22.13 per unit. Market Performance-Based Restricted Stock Units During the three months ended March 31, 2019, the Compensation Committee of the Board of Trustees approved the annual grant of market performance-based restricted stock units under the 2017 Plan to employees of the Company. The awards, which were determined to contain a market condition, utilize total shareholder return (TSR) over a three-year measurement period as the market performance metric. Awards will vest based on the Company's TSR relative to the MSCI US REIT Index (RMS) over a three-year market performance period, or the Market Performance Period, commencing in January 1, 2019 and ending on December 31, 2021, as applicable (or, if earlier, ending on the date on which a change in control of the Company occurs), subject to continued services. Vesting with respect to the market condition is measured based on the difference between the Company’s TSR percentage and the TSR percentage of the RMS, or the RMS Relative Market Performance. In the event that the RMS Relative Market Performance during the Market Performance Period is achieved at the “threshold,” “target” or “high” level as set forth below, the awards will become vested as to the market condition with respect to the percentage of RSUs, as applicable, set forth below:
If the RMS Relative Market Performance falls between the levels specified above, the percentage of the award that will vest with respect to the market condition will be determined using straight-line linear interpolation between such levels. Market performance-based restricted units granted during the three months ended March 31, 2018, which were determined to contain a market condition, utilize absolute TSR over a three-year measurement period as the market performance metric. Awards will vest based on the Company’s TSR relative to the percentage appreciation (rounded to the nearest tenth of a percent), in the value per share of the Company's stock during the performance period, over a three-year market performance period, commencing on January 18, 2018 and ending on December 31, 2020 (or, if earlier, ending on the date on which a change in control of the Company occurs), subject to continued services. In the event that the TSR upon completion of the market performance period is achieved at the “minimum,” “target” or “maximum” level as set forth below, the awards will become vested as to the market condition with respect to the percentage RSUs, as applicable, set forth below:
In the event TSR falls between 8% and 10%, TSR shall be determined using a straight line linear interpolation between 50% and 100% and in the event it falls between 10% and 12%, TSR shall be determined using a straight line linear interpolation between 100% and 150%. In the event that the Company’s TSR does not meet 50% of the Target Award (i.e., the minimum threshold listed above), the Restricted Stock Units shall be automatically forfeited and neither the Company nor any Subsidiary shall have any further obligations to the participant under the agreement. In no event will the number of RSUs that vest pursuant to the agreement exceed 150% of the Target Award. The fair values of the market-performance awards were measured using a Monte Carlo simulation to estimate the probability of the market vesting condition being satisfied. The Company’s achievement of the market vesting condition is contingent on its TSR over a three-year market performance period, relative to the previously defined metrics. Monte Carlo simulation is well-accepted for pricing market based awards, where the number of shares that will vest depends on the future stock price movements. For each simulated path, the TSR is calculated at the end of the performance period and determines the vesting percentage based on achievement of the performance target. Upon achieving the minimum performance target, RSUs will vest on the date and their payout will be the stock price at the time of vesting multiplied by the vesting percentage, plus cumulative dividends paid; then discounted at the future payout of vested RSUs to the valuation date by the risk free rate. The fair value of the RSUs is the average discounted payout across all simulation paths. Assumptions used in the valuations are summarized by grant date as follows:
Stock Options Activity The following tables provide a summary of option activity for the three months ended March 31, 2019 and 2018, respectively:
The total fair value at grant date of stock option awards that vested during the three months ended March 31, 2019 and 2018 was approximately $0.1 million and $0.3 million, respectively. The total intrinsic value of options exercised for the three months ended March 31, 2019 and 2018, was $11.0 million and $1.0 million, respectively. |
Income Taxes |
3 Months Ended |
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Mar. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Income taxes are accounted for under the provisions of ASC 740, Income Taxes, which generally requires the Company to record deferred income taxes for the tax effect of differences between book and tax bases of its assets and liabilities. Deferred income taxes reflect the available net operating losses and the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Realization of the future tax benefits related to deferred tax assets is dependent on many factors, including the Company’s past earnings history, expected future earnings, the character and jurisdiction of such earnings, unsettled circumstances that, if unfavorably resolved, would adversely affect utilization of its deferred tax assets, carryback and carryforward periods, and tax strategies that could potentially enhance the likelihood of realization of a deferred tax asset. The Company recorded an income tax expense of approximately $0.5 million and an income tax benefit of approximately $0.1 million for the three months ended March 31, 2019 and 2018, respectively. As a REIT, the Company is entitled to a deduction for dividends paid, resulting in a substantial reduction in the amount of federal income tax expense it recognizes. Substantially all of the Company’s income tax expense is incurred based on the earnings generated by its foreign operations, and a significant portion of those earnings is permanently reinvested. Income Tax Contingencies ASC 740 prescribes a recognition threshold and measurement attribute for the financial statements recognition and measurement of a tax position taken or expected to be taken in a tax return. The guidance prescribed in ASC 740 establishes a recognition threshold of more likely than not that a tax position will be sustained upon examination. The measurement attribute requires that a tax position be measured at the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement. The Company had liabilities of $0.4 million recorded for uncertain tax positions as of March 31, 2019 and December 31, 2018. The Company recognizes interest and penalties related to unrecognized tax positions in income tax expense. |
Employee Benefit Plans |
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Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Employee Benefit Plans | Employee Benefit Plans The components of net period benefit cost for the three months ended March 31, 2019 and 2018 are as follows:
The service cost component of defined benefit pension cost and postretirement benefit cost are reported within sales, general, and administration and all other components of net period benefit cost are presented in other (expense) income, net on the consolidated statements of operations. The Company expects to contribute an aggregate of $2.5 million to all plans in 2019. Multi-Employer Plans The Company contributes to a number of multi-employer benefit plans under the terms of collective bargaining agreements that cover union-represented employees. These plans generally provide for retirement, death, and/or termination benefits for eligible employees within the applicable collective bargaining units, based on specific eligibility/participation requirements, vesting periods, and benefit formulas. Details on multi-employer benefit plans can be found in the Annual Report on Form 10-K for the year ended December 31, 2018. The New England Teamsters & Trucking Industry Multi-Employer Fund (Fund) was grossly underfunded in accordance with Employee Retirement Income Security Act of 1974 (ERISA) funding standards and, therefore, ERISA required the Fund to develop a Rehabilitation Plan, creating a new fund that minimizes the pension withdrawal liability. As a result, current employers participating in the Fund were given the opportunity to exit the Fund and convert to a new fund. The Company took the option to exit the Fund and convert to the new fund. The Company’s portion of the unfunded liability, estimated at $13.7 million, will be repaid in equal monthly installments of approximately $38,000 over 30 years, interest free. Under the relevant U.S. GAAP standard, a participating employer withdrawing from a multi-employer plan should account for a loss contingency equal to the present value of the withdrawal liability, and amortize difference between such present value and the estimated unfunded liability through interest expense over the repayment period. |
Commitments and Contingencies |
3 Months Ended |
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Mar. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Letters of Credit As of March 31, 2019, there were $29.2 million letters of credit issued on the Company’s 2018 Revolving Line of Credit and as of December 31, 2018, there were $29.6 million of outstanding letters of credit issued on the Company’s 2018 Revolving Line of Credit. Bonds The Company had outstanding surety bonds of $2.7 million as of March 31, 2019 and December 31, 2018, respectively. These bonds were issued primarily in connection with insurance requirements, special real estate assessments and construction obligations. Collective Bargaining Agreements As of March 31, 2019, approximately 58% of the Company’s labor force is covered by collective bargaining agreements. Collective bargaining agreements covering approximately 4% of the labor force are set to expire during the remaining nine months ended December 31, 2019. Legal Proceedings In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company and its legal counsel evaluate the merits of any legal proceedings or unasserted claims, as well as the perceived merits of the amount of relief sought or expected to be sought. If the assessment of a contingency suggests that a loss is probable, and the amount can be reasonably estimated, then a loss is recorded. In addition to the matters discussed below, the Company may be subject to litigation and claims arising from the ordinary course of business. In the opinion of management, after consultation with legal counsel, the outcome of such matters is not expected to have a material impact on the Company’s financial condition, results of operations, or cash flows. Kansas Breach of Settlement Agreement Litigation This case was served against the Company in Wyandotte County, Kansas, on January 17, 2013, alleging breach of a 1994 Settlement Agreement reached with customers of our predecessor company, Americold Corporation. The plaintiffs originally brought claims in 1992 arising from a fire the previous year in an underground warehouse facility. In 1994, a settlement was reached whereby Americold Corporation agreed to the entry of a $58.7 million judgment against it and assigned its rights to proceed against its insurer to satisfy the judgment. The settlement agreement contained a standard “cooperation provision” where Americold Corporation agreed to execute any additional documents necessary to fulfill the intent of the settlement agreement. The plaintiffs then sued Americold Corporation’s insurance company to recover on the consent judgments. The case was ultimately dismissed in 2012, and the Kansas Supreme Court ruled that the 1994 consent judgment had expired and were unrevivable as a matter of law. On September 24, 2012, the plaintiffs filed a separate claim in the district court of Wyandotte County, Kansas, alleging that the Company and one of its subsidiaries, Americold Logistics, LLC, as successors to Americold Corporation, are liable for the full amount of the judgment, based upon the allegation that the Company failed to execute a document or take action to keep the judgment alive and viable. On February 7, 2013, the Company removed the case to the U.S. federal court and ultimately filed a motion for summary judgment, which the plaintiffs vigorously opposed. On October 4, 2013, the court granted the Company's motion and dismissed the case in full. Only one plaintiff appealed the dismissal to the U.S. Court of Appeals where oral argument was heard in November 2014 before the Tenth Circuit in Denver. The Court of Appeals ordered that the case be remanded to the Kansas State Court and the judgment in favor of Americold be vacated, finding U.S. federal diversity jurisdiction did not exist over the Company. The Company petitioned the U.S. Supreme Court for certiorari and oral argument that occurred on January 19, 2016. On March 7, 2016, the United States Supreme Court handed down a decision in the Kansas Breach of Settlement Agreement Litigation case. The decision was contrary to the position that the Company argued. Following the decision, the United States District Court for the District of Kansas entered an Order vacating the judgment and remanding the case to Kansas state court for further proceedings. Regardless of the venue, the Company remains confident that its defenses on the merits of plaintiffs’ claims are strong under Kansas law. Following remand to Kansas state court, Plaintiffs initially petitioned the court to amend their complaint to drop their claim for damages and only seek an Order of Specific Performance-namely to require Americold sign a new document reinstating the consent judgment assigned in the 1994 Settlement Agreement. No amended complaint was filed, however, and plaintiffs filed a later motion to add back the damages claim, which was granted in February 2018. Since December 31, 2018, the court granted the Company's motions to dismiss Kraft and Safeway from the case given they did not appeal the District Court's Order dismissing their claims and are bound by the judgment entered against them. In addition, the Company has sued the Chubb Group seeking the court’s declaration that Chubb owes coverage of the amounts sought by Plaintiffs and for bad faith damages for denying coverage. Conagra, Chubb and the Company recently agreed to settle their claims and as part of that settlement Conagra has agreed to dismiss its claims against the Company. The Kraft and Safeway plaintiffs have indicated to the court that they intend to appeal their dismissals. The Company believes the ultimate outcome of these matters will not have a material adverse impact on its condensed consolidated financial statements. Preferred Freezer Services, LLC Litigation On February 11, 2019, Preferred Freezer Services, LLC (“PFS”) moved by Order to Show Cause in the Supreme Court of the State of New York, New York County, asserting breach of contract and other claims against the Company and seeking to preliminarily enjoin the Company from acting to acquire certain properties leased by PFS. In its complaint and request for preliminary injunctive relief, PFS alleged that the Company breached a confidentiality agreement entered into in connection with the Company’s participation in a bidding process for the sale of PFS by contacting PFS’s landlords and by using confidential PFS information in bidding for the properties leased by PFS. PFS’s request for a preliminary injunction was denied after oral argument on February 26, 2019. On March 1, 2019, PFS filed an application for interim injunctive relief from the Appellate Division of the Supreme Court, First Judicial Department. On April 2, 2019, while its application to the First Department was pending, PFS voluntarily dismissed its state court action, and First Department application, and re-filed substantially the same claims against the Company in the U.S. District Court for the Southern District of New York. In particular, in its District Court action PFS again alleges that the Company breached its confidentiality agreement with PFS by contacting PFS’s landlords regarding the purchase of properties leased by PFS and by using PFS confidential information when so-doing. The complaint alleges breach of contract, misappropriation, and violation of the federal Defend Trade Secrets Act (18 U.S.C. § 1836), amongst other claims. In addition to an order enjoining Americold from making offers to purchase the properties leased by PFS, PFS seeks compensatory, consequential and/or punitive damages in an amount to be determined at trial. The Company denies the allegations and believes PFS’s claims are without merit and intends to vigorously defend this claim. Given the status of the proceedings to date, a liability cannot be reasonably estimated. The Company believes the ultimate outcome of this matter will not have a material adverse impact on its consolidated financial statements. Environmental Matters The Company is subject to a wide range of environmental laws and regulations in each of the locations in which the Company operates. Compliance with these requirements can involve significant capital and operating costs. Failure to comply with these requirements can result in civil or criminal fines or sanctions, claims for environmental damages, remediation obligations, the revocation of environmental permits, or restrictions on the Company’s operations. The Company records accruals for environmental matters when it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated based on current law and existing technologies. The Company adjusts these accruals periodically as assessment and remediation efforts progress or as additional technical or legal information become available. The Company recorded nominal environmental liabilities in accounts payable and accrued expenses as of March 31, 2019 and December 31, 2018. The Company believes it is in compliance with applicable environmental regulations in all material respects. Under various U.S. federal, state, and local environmental laws, a current or previous owner or operator of real estate may be liable for the entire cost of investigating, removing, and/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 clean-up cost. There are no material unrecorded liabilities as of March 31, 2019. Most of the Company’s warehouses utilize ammonia as a refrigerant. Ammonia is classified as a hazardous chemical regulated by the Environmental Protection Agency, and an accident or significant release of ammonia from a warehouse could result in injuries, loss of life, and property damage. Occupational Safety and Health Act (OSHA) The Company’s warehouses located in the U.S. are subject to regulation under OSHA, which requires employers to provide employees with an environment free from hazards, such as exposure to 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 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 employees who may be injured at our warehouses. The Company records accruals for OSHA matters when it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated. The Company believes that it is in substantial compliance with all OSHA regulations and that no material unrecorded liabilities exist as of March 31, 2019 and December 31, 2018. |
Accumulated Other Comprehensive (Loss) Income |
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Accumulated Other Comprehensive (Loss) Income | Accumulated Other Comprehensive (Loss) Income The Company reports activity in AOCI for foreign currency translation adjustments, including the translation adjustment for the investment in the China JV, unrealized gains and losses on cash flow hedge derivatives, and minimum pension liability adjustments (net of tax). The activity in AOCI for the three months ended March 31, 2019 and 2018 is as follows:
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Related-Party Transactions |
3 Months Ended |
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Mar. 31, 2019 | |
Related Party Transactions [Abstract] | |
Related-Party Transactions | Related Party Transactions Transactions with Goldman Affiliates of Goldman are part of the lending group under the 2018 Recast Credit Facility, and has $90.0 million, or approximately 7.1%, of the total commitment. Another affiliate of Goldman was one of the participating lenders in the ANZ Loans (with a 2.5% participation in the Australia Term Loan and 31.8% in the New Zealand Term Loan), which the company repaid during December 2018. Goldman was also the counterparty to the interest rate swap agreements related to the ANZ Loans, which were terminated in December 2018 in connection with the extinguishment of the ANZ Loan. As a member of the previously described lending groups, the Company is required to pay certain fees to Goldman, which may include interest on borrowings, unused facility fees, letter of credit participation fees, and letter of credit facility fees. The Company paid interest expense and fees to Goldman totaling approximately $0.4 million and $0.9 million for the three months ended March 31, 2019 and 2018, respectively. Interest payable to Goldman was nominal as of March 31, 2019 and December 31, 2018. In December 2018, the Company entered into a cross-currency swap with Goldman to hedge the changes in the cash flows of interest and principal payment on foreign-currency denominated intercompany loans. Payments under the cross-currency swap agreements will not commence until the third quarter of 2019. From time-to-time the Company has entered into foreign exchange spot trades with Goldman to facilitate the movement of funds between our international subsidiaries and the U.S., including the funding of the previously mentioned intercompany loans. In connection with the IPO, Goldman converted their Series B Preferred Shares into 28,808,224 common shares. After giving effect to the full exercise of the underwriters’ option to purchase additional common shares during the IPO, and after giving effect to the sale by Goldman of 5,163,716 common shares in the IPO, Goldman owned approximately 16.7% of the Company’s common shares. In connection with the IPO, Goldman received a refund from the underwriters of approximately $1.6 million, which represents the underwriting discount on the gross proceeds received by the selling shareholders. In connection with the follow-on offering completed in September 2018, Goldman sold 9,083,280 common shares, and after giving effect to the sale owned approximately 9.9% of the Company's common shares. In connection with the follow-on offering, Goldman received an underwriting fee of approximately $5.0 million, and received a refund of approximately $0.7 million representing the underwriting discount on the gross proceeds received by the selling shareholders. In connection with the secondary offering completed in March 2019, Goldman sold their remaining common shares of the Company, totaling 8,061,228 common shares, in an underwritten public offering. The Company did not receive any proceeds from the shares sold by Goldman and its affiliates in this offering. In connection with this transaction, Goldman received an underwriting fee of approximately $2.6 million. Although Goldman is no longer a significant shareholder of the Company, Bradley Gross, a partner at Goldman Sachs, remains on the Board of Trustees as of March 31, 2019. Mr. Gross will not stand for re-election to the Board of Trustees in connection with the Company's annual meeting of shareholders on May 22, 2019. As a result, Goldman continues to be disclosed as a related party until Mr. Gross is no longer serving on the Board of Trustees. Transactions with YF ART Holdings L.P. In connection with the IPO, YF ART Holdings L.P. (YF ART Holdings) received a refund from the underwriters of approximately $4.2 million, which represents the underwriting discount on the gross proceeds received by the selling shareholders. On March 8, 2018, YF ART Holdings entered into a financing agreement pledging 54,952,774 common shares of beneficial interest, $0.01 par value per share, representing approximately 38.6% of the Company’s issued and outstanding common shares as of March 8, 2018. YF ART Holdings used the proceeds from the financing agreement to pay in full the outstanding investment, including the preferred return on an investment vehicle affiliated with Fortress Investment Group LLC, which directly beneficially owned 7,235,529 common shares of the company. As of March 31, 2019, Fortress no longer owns any common shares of the company. In connection with the pledge by YF ART Holdings described above, the Company delivered a consent and acknowledgment to YF ART Holdings and the lenders under such margin loan agreement in which the Company, among other matters, agreed, subject to applicable law and stock exchange rules, not to take any actions that would adversely affect the enforcement of the rights of the lenders under the loan documents. The Company is not a party to the margin loan agreement and has no obligations thereunder. The Company also entered into an amendment of the shareholders agreement, which addresses certain matters related to the margin loan agreement and related documents. In connection with the the follow-on public offering completed in September 2018, YF ART Holdings sold 16,530,191 common shares of the Company and, following the sale, owned approximately 26.0% of the Company's common shares. In connection with the secondary offering completed on March 5, 2019, YF ART Holdings and its affiliates sold its remaining ownership consisting of 38,422,583 common shares in an underwritten public offering. Following the sale, YF ART Holdings was no longer a shareholder of the Company. The Company did not receive any proceeds from the common shares sold by YF ART Holdings in this offering. In addition, on March 5, 2019, Ronald W. Burkle, who indirectly controls YF Art Holdings, resigned from the Board of Trustees. Therefore, as of March 31, 2019, YF Art Holdings is no longer considered a related party of the Company. |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information | Segment Information Our principal operations are organized into four reportable segments: Warehouse, Third-Party Managed, Transportation and Other.
Our reportable segments are strategic business units separated by service offerings. Each reportable segment is managed separately and requires different operational and marketing strategies. The accounting polices used in the preparation of our reportable segments financial information are the same as those used in the preparation of its condensed consolidated financial statements. Our chief operating decision maker uses revenues and segment contribution to evaluate segment performance. We calculate segment contribution as earnings before interest expense, taxes, depreciation and amortization, and exclude selling, general and administrative expense, impairment charges, restructuring charges, acquisition related costs, other income and expense, and certain one-time charges. Selling, general and administrative functions support all the business segments. Therefore, the related expense is not allocated to segments as the chief operating decision maker does not use it to evaluate segment performance. Segment contribution is not a measurement of financial performance under GAAP, and may not be comparable to similarly titled measures of other companies. You should not consider our segment contribution as an alternative to operating income determined in accordance with GAAP. The following table presents segment revenues and contributions with a reconciliation to loss before income tax for the three months ended March 31, 2019 and 2018:
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Loss per Common Share |
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Loss per Common Share | Loss per Common Share Basic and diluted earnings per common share are calculated by dividing the net income or loss attributable to common shareholders by the basic and diluted weighted-average number of common shares outstanding in the period, respectively, using the allocation method prescribed by the two-class method. The Company applies this method to compute earnings per share because it distributes non-forfeitable dividend equivalents on restricted stock units granted to certain employees and non-employee directors who have the right to participate in the distribution of common dividends while the restricted stock units are unvested. During the three months ended March 31, 2019, the weighted-average number of restricted stock units that participated in the distribution of common dividends was 1,266,323, of which 627,891 restricted stock units currently have vested but will not be settled until additional criteria are met. The shares issuable upon settlement of the forward sale agreement are reflected in the diluted earnings per share calculations using the treasury stock method. Under this method, the number of the Company’s common shares used in calculating diluted earnings per share is deemed to be increased by the excess, if any, of the number of common shares that would be issued upon full physical settlement of the forward sale agreement over the number of common shares that could be purchased by the Company in the market (based on the average market price during the period) using the proceeds receivable upon full physical settlement (based on the adjusted forward sale price at the end of the reporting period). If and when the Company physically or net share settles the forward sale agreement, the delivery of common shares would result in an increase in the number of shares outstanding and dilution to earnings per share. Prior to the IPO, holders of Series B Preferred Shares were entitled to cumulative dividends, which were added to the reported net loss whether or not declared or paid to determine the net loss attributable to common shareholders under the two-class method. A reconciliation of the basic and diluted weighted-average number of common shares outstanding for the three months ended March 31, 2019 and 2018 is as follows:
For the three months ended March 31, 2019 and 2018, potential common shares under the treasury stock method and the if-converted method were antidilutive because the Company reported a net loss in current and prior period. Consequently, the Company did not have any adjustments in these periods between basic and diluted loss per share related to stock options, restricted stock units, equity forward contract stock shares, warrants and convertible preferred shares. The table below presents the weighted-average number of antidilutive potential common shares that are not considered in the calculation of diluted income (loss) per share:
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Revenue from Contracts with Customers |
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Revenue from Contracts with Customers | Revenue from Contracts with Customers Disaggregated Revenue The following tables represent a disaggregation of revenue from contracts with customers for the three months ended March 31, 2019 and 2018 by segment and geographic region:
Performance Obligations Substantially all our revenue for warehouse storage and handling services, and management and incentive fees earned under third-party managed and other contracts is recognized over time as the customer benefits throughout the period until the contractual term expires. Typically, revenue is recognized over time using an output measure (e.g. passage of time) to measure progress. Revenue recognized at a point in time upon delivery when the customer typically obtains control, include most accessorial services, transportation services, reimbursed costs and quarry product shipments. For arrangements containing non-cancellable contract terms, any variable consideration related to storage renewals or incremental handling charges above stated minimums are 100% constrained and not included in aggregate amount of the transaction price allocated to the unsatisfied performance obligations disclosed below, given the degree in difficulty in estimation. Payment terms are generally 0 - 30 days upon billing, which is typically monthly, either in advance or subsequent to the performance of services. The same payment terms typically apply for arrangements containing variable consideration. The Company has no material warranties or obligations for allowances, refunds or other similar obligations. As of March 31, 2019, the Company had $608.2 million of remaining unsatisfied performance obligations from contracts with customers subject to non-cancellable terms and have an original expected duration exceeding one year. These obligations also do not include variable consideration beyond the non-cancellable term, which due to the inability to quantify by estimate, is fully constrained. The Company expects to recognize approximately 18% of these remaining performance obligations as revenue in 2019, an the remaining 82% to be recognized over a weighted average period of 15.8 years through 2038. Contract Balances The timing of revenue recognition, billings and cash collections results in accounts receivable (contract assets), and unearned revenue (contract liabilities) on the Condensed Consolidated Balance Sheets. Generally, billing occurs monthly, subsequent to revenue recognition, resulting in contract assets. However, the Company may bill and receive advances on handling services, before revenue is recognized, resulting in contract liabilities. These assets and liabilities are reported on the Condensed Consolidated Balance Sheets on a contract-by-contract basis at the end of each reporting period. Changes in the contract asset and liability balances during the three months ended March 31, 2019, were not materially impacted by any other factors. Opening and closing receivables balances related to contracts with customers accounted for under ASC 606 were $191.8 million and $192.1 million as of March 31, 2019 and December 31, 2018, respectively, and $177.0 million and $198.3 million as of March 31, 2018 and December 31, 2017, respectively. All other trade receivable balances relate to contracts accounted for under ASC 842. Opening and closing balances in unearned revenue related to contracts with customers were $18.0 million and $18.6 million as of March 31, 2019 and December 31, 2018, respectively, and $18.2 million and $18.8 million as of March 31, 2018 and December 31, 2017, respectively. Substantially all revenue that was included in the contract liability balances at the beginning of 2019 and 2018 has been recognized as of March 31, 2019 and March 31, 2018, respectively, and represents revenue from the satisfaction of monthly storage and handling services with inventory that turns on average every 30 days. |
Subsequent Events |
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Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events On April 22, 2019, the Company completed a follow-on public offering pursuant to which it issued 50,312,500 common shares (including 6,562,500 common shares issued in connection with the underwriters’ exercise of their option to purchase additional common shares) for net proceeds of approximately $1.21 billion. In addition, pursuant to a forward sale agreement (the “Forward Sale Agreement”) entered into by the Company on April 16, 2019, the forward purchaser under the Forward Sale Agreement borrowed and sold to the underwriters in the public offering an additional 8,250,000 common shares. On May 1, 2019, the Company completed the acquisition of privately-held Chiller Holdco, LLC, (“Cloverleaf Cold Storage” or “Cloverleaf”) from Cloverleaf management and an investor group led by a private equity firm for a purchase price of $1.26 billion inclusive of certain closing costs and adjustments (the “Cloverleaf Acquisition”) utilizing the net proceeds from the follow-on offering previously discussed, along with cash drawn from its senior unsecured revolving credit facility. Under the agreement, the Company acquired a temperature-controlled warehousing company based in Sioux City, Iowa that consists of 22 facilities in nine states, of which 21 are owned and one is managed. Additionally, on May 1, 2019, the Company completed the acquisition of privately-held Lanier Cold Storage for $82 million. Lanier Cold Storage consists of two temperature-controlled storage facilities in Georgia serving the poultry industry. The Company utilized the capacity of its senior unsecured revolving credit facility to fund the acquisition. On May 7, 2019, the operating partnership completed a debt private placement transaction consisting of $350 million senior unsecured notes with a coupon of 4.10% and a term of 10.7 years. The notes will be general unsecured senior obligations of the operating partnership and are guaranteed by the Company and the subsidiaries of the Company. The Company expects to apply a portion of the proceeds of the transaction to repay funds drawn on the revolving credit facility in connection with the previously discussed acquisitions, and for expansion and development projects. |
Summary of Significant Accounting Policies (Policies) |
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Mar. 31, 2019 | |
Accounting Policies [Abstract] | |
Basis of Accounting, Policy | The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the U.S. (GAAP) for interim financial information, and with the rules and regulations of the U.S. Securities and Exchange Commission (SEC). |
Consolidation, Policy | These unaudited condensed consolidated financial statements do not include all disclosures associated with the Company’s consolidated annual financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2018, and, accordingly, should be read in conjunction with the referenced annual report. In the opinion of management, all adjustments (all of which are normal and recurring in nature) considered necessary for a fair presentation have been included. All significant intercompany balances and transactions have been eliminated in consolidation. |
Reclassifications | Reclassifications Certain immaterial, prior period amounts have been reclassified to conform to the current period presentation on the Condensed Consolidated Statement of Operations, the Condensed Consolidated Statements of Shareholders' Equity and the Condensed Consolidated Statements of Cash Flows. The Condensed Consolidated Statement of Operations reflects the reclassification required in the prior period upon addition of a new financial statement line item described as 'Acquisition, litigation and other', which was previously classified within 'Selling, general and administrative', refer to Note 5 for further detail of this caption. The Condensed Consolidated Statements of Shareholders' Equity reflects the reclassification required in the prior period upon addition of a new financial statement line item described as 'Common stock issuance related to share-based payment plans, net of shares withheld for employee taxes', which was previously classified within 'Stock-based compensation expense (Stock Options and Restricted Stock Units)'. The Condensed Consolidated Statements of Cash Flows reflects the reclassification required in the prior period upon elimination of the financial statement line item described as 'Payment on Multi-employer pension plan withdrawal obligation' which is now classified within 'Amortization of deferred financing costs, debt discount and pension withdrawal liability'. |
Impairment of Long-Lived Assets | The estimated fair value of this asset was determined based on ongoing negotiations with prospective buyers. These impaired assets were reported under the Warehouse segment, and the related impairment charges are included in the “Impairment of long-lived assets” line item of the Condensed Consolidated Statements of Operations for the three months ended March 31, 2019 |
Capitalization of Costs | Capitalization of Costs Project costs that are clearly associated with the development of properties are capitalized as incurred. Project costs include all costs directly associated with the development of a property, including construction costs, interest, and costs of personnel working on the project. Costs that do not clearly relate to the projects under development are not capitalized and are charged to expense as incurred. Capitalization of costs begins when the activities necessary to get the development project ready for its intended use commence, which include costs incurred before the beginning of construction. Capitalization of costs ceases when the development project is substantially complete and ready for its intended use. Determining when a development project commences and when it is substantially complete and ready for its intended use involves a degree of judgment. We generally consider a development project to be substantially complete and ready for its intended use upon receipt of a certificate of occupancy. If and when development of a property is suspended pursuant to a formal change in the planned use of the property, we will evaluate whether the accumulated costs exceed the estimated value of the project and write off the amount of any such excess accumulated costs. For a development project that is suspended for reasons other than a formal change in the planned use of such property, the accumulated project costs are written off. Capitalized costs are allocated to the specific components of a project that are benefited. |
Purchase Accounting | Purchase Accounting For business combinations, the excess of cost over fair value is recorded as goodwill. In an asset acquisition, the difference between the sum of the identified tangible and intangible assets and liabilities and the total purchase price (including transactions costs) is allocated to the identified tangible and intangible assets and liabilities on a relative fair value basis. If the fair value of the real estate acquired exceeds its cost it is allocated to the acquired tangible assets, consisting primarily of land, land improvements, buildings, tenant improvements, and identified intangible assets and liabilities, consisting of the value of assembled workforce, above-market and below-market leases, value of in-place leases and acquired ground leases and in the case of a business combination, tenant relationship value, based in each case on their fair values. |
Lease Accounting | Lease Accounting Arrangements wherein we are the lessee: At the inception of a contract, we determine if the contract is or contains a lease. Leases are classified as either financing or operating based upon criteria within ASC 842 and a right-of-use (ROU) asset and liability are established for leases with an initial term greater than 12 months. Leases with an initial term of 12 months or less are not recorded on the balance sheet and expense is recognized on a straight-line basis over the lease term. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and liabilities are recognized at commencement date based on the present value of the lease payments over the lease term, as adjusted for prepayments, incentives and initial direct costs. When available, we use the rate implicit in the lease to discount lease payments to present value; however, most of our leases do not provide a readily determinable implicit rate. Therefore, we must estimate our incremental borrowing rate to discount the lease payments based on information available at lease commencement. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. The depreciable lives of assets are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. Operating leases are included in operating lease ROU assets, accounts payable and accrued expenses and operating lease obligations on our condensed consolidated balance sheet. Finance leases assets are included in financing leases-net, accounts payable and accrued expenses and financing lease obligations on our condensed consolidated balance sheet. Arrangements wherein we are the lessor: Each new lease contract is evaluated for classification as a sales-type lease, direct financing or operating lease. A lease is a sales-type lease if any one of five criteria are met, each of which indicate the lease, in effect, transfers control of the underlying asset to the lessee. If none of those five criteria are met, but two additional criteria are both met, indicating we have transferred substantially all the risks and benefits of the underlying asset to the lessee and a third party, the lease is a direct financing lease. All leases that are not sales-type or direct financing leases are operating leases. We do not currently have sales-type or direct financing leases. For operating leases wherein we are the lessor, we assess the probability of payments at commencement of the lease contract and subsequently recognize lease income, including variable payments based on an index or rate, over the lease term on a straight-line basis. We continue to measure and disclose the underlying assets subject to operating leases based on our policies for application of ASC 360 Property, Plant and Equipment. For all asset classes we have elected to not separate the lease and non-lease components which generally relate to taxes and common area maintenance. Additionally, we elected a practical expedient to present all funds collected from lessees for sales and other similar taxes net of the related sales tax expense. Our lease contracts are structured in a manner to reduce risks associated with the residual value of leased assets. |
Recently Adopted Accounting Standards and Future Adoption of Accounting Standards | Recently Adopted Accounting Standards Lease Accounting In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), as amended, which the Company adopted using a modified retrospective transition approach effective January 1, 2019. All leases that commenced prior to our adoption of this new standard are accounted for and disclosed in accordance with our existing policies for application of ASC 840 Leases. Accordingly, prior year amounts were not recast under the new standard. Upon adoption, we elected a package of practical expedients for expired and existing contracts whereby we will (1) not reassess our prior conclusions about lease identification, lease classification and initial direct costs, (2) continue to apply existing accounting policies for all land easements that existed or expire before the date of adoption, (3) not recognize ROU assets or liabilities for leases that qualify as short-term leases for all classes of underlying assets, and (4) not separate lease an non-lease components for all classes of underlying assets. The Company did not elect to apply the hindsight practical expedient when determining the term for our leases. The new standard requires disclosure of additional quantitative and qualitative information for lessee and lessor arrangements which has been included above in the Summary of Significant Accounting Policies and in Note 10. Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. This ASU refines and expands hedge accounting for both financial (e.g., interest rate) and commodity risks. Its provisions create more transparency around how economic results are presented, both on the face of the financial statements and in the footnotes. It also makes certain targeted improvements to simplify the application of hedge accounting guidance. ASU 2017-12 is effective for public business entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption, including adoption in an interim period, is permitted. The Company adopted ASU 2017-12 on January 1, 2019 and it did not have a material impact on our consolidated financial statements. In October 2018, the FASB issued ASU 2018-16, Derivatives and Hedging (Topic 815): Inclusion of the Secured Overnight Financing Rate ("SOFR") Overnight Index Swap ("OIS") Rate as a Benchmark Interest Rate for Hedge Accounting Purposes. This ASU permits the use of the OIS rate based upon SOFR as a U.S. benchmark interest rate for purposes of applying hedge accounting under Topic 815. The Alternative Reference Rates Committee announced that it identified the Secured Overnight Funding Rate (SOFR) as its preferred alternative to LIBOR. The Company intends to continue to use LIBOR until its extermination date in 2021, and intends to replace LIBOR with SOFR at that time. The Company does not believe that the transition from LIBOR to SOFR will have a material impact on its financial statements. Improvements to Nonemployee Share-Based Payment Accounting In June 2018, the FASB issued ASU 2018-07, Improvements to Nonemployee Share-Based Payment Accounting, which more closely aligns the accounting for employee and nonemployee share-based payments. The standard will be effective for interim and annual reporting periods beginning after December 15, 2018. Early adoption is permitted, but no earlier than an entity’s adoption date of Topic 606. The Company adopted this standard on January 1, 2019, and it did not have a material impact on its consolidated financial statements. Future Adoption of Accounting Standards Fair Value Measurement - Disclosure Framework In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement. This ASU modifies the disclosure requirements on fair value measurements. The ASU removes the requirement to disclose: the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy; the policy for timing of transfers between levels; and the valuation processes for Level 3 fair value measurements. The ASU requires disclosure of changes in unrealized gains and losses for the period included in other comprehensive income (loss) for recurring Level 3 fair value measurements held at the end of the reporting period and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. For public business entities, this guidance is effective for fiscal years beginning after December 15, 2019 with early adoption permitted. The Company is currently evaluating the effect that this guidance will have on its condensed consolidated financial statements. Collaborative Arrangements In November 2018, the FASB issued ASU 2018-18, Collaborative Arrangements (Topic 808): Clarifying the interaction between Topic 808 and Topic 606. ASU 2018-18 clarifies that certain transactions between participants in a collaborative arrangement should be accounted for under ASC 606 when the counterparty is a customer and precludes an entity from presenting consideration from a transaction in a collaborative arrangement as revenue from contracts with customers if the counterparty is not a customer for that transaction. For public business entities, these amendments are effective for fiscal years beginning after December 15, 2019, and interim periods therein. The Company believes the adoption of ASU 2018-18 will not have a material effect on its consolidated financial statements. Credit Losses In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326). This ASU introduces new guidance for the accounting for credit losses. For trade receivables, the Company will be required to use a forward-looking expected loss model rather than the incurred loss model for recognizing credit losses which reflects losses that are probable. The standard will be effective for interim and annual reporting periods beginning after December 15, 2019, with early adoption permitted. The Company is evaluating the impact of adopting ASU 2016-13 on its condensed consolidated financial statements. Simplifying the Test for Goodwill Impairment In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. This update eliminates step two of the goodwill impairment test, and specifies that goodwill impairment should be measured by comparing the fair value of a reporting unit with its carrying amount. Additionally, the amount of goodwill allocated to each reporting unit with a zero or negative carrying amount of net assets should be disclosed. For public business entities that are SEC filers, this ASU is effective for annual and any interim impairment tests for periods beginning after December 15, 2019. Early adoption is allowed for all entities as of January 1, 2017, for annual and any interim impairment tests occurring after January 1, 2017. The Company does not expect the provisions of ASU 2017-04 to have a material impact on its consolidated financial statements. Defined Benefit Plans In August 2018, the FASB issued ASU 2018-14, Compensation – Retirement Benefits – Defined Benefit Plans – General (Subtopic 715-20): Disclosure Framework – Changes to the Disclosure Requirements for Defined Benefit Plans. This update amends ASC 715 to remove disclosures that are no longer considered cost beneficial, clarifies the specific requirements of disclosures, and adds disclosure requirements identified as relevant to defined benefit pension and other postretirement plans. The ASU’s changes related to disclosures are part of the FASB’s disclosure framework project. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Early adoption is permitted for all entities and the amendments in this update are required to be applied on a retrospective basis to all periods presented. The Company does not expect the provisions of ASU 2018-14 to have a material impact on its consolidated financial statements. |
Summary of Significant Accounting Policies (Tables) |
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Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Purchase Price Allocation of Asset Acquisitions | The table below reflects the purchase price allocation (in thousands):
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Equity-Method Investments (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity Method Investments and Joint Ventures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Joint ventures between CMAL and CMAH | The following tables summarize the financial information of the Company’s largest joint ventures (CMAL and CMAH, or the China JV, as defined in our Annual Report on Form 10-K for the year ended December 31, 2018) for the interim periods presented. The Company has a 49% equity interest in the China JV.
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Acquisition, Litigation and Other Special Charges (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisition, Litigation and Other Special Charges [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Acquisition, Litigation and Other Special Charges | The components of the charges included in acquisition, litigation, and other in our Condensed Consolidated Statements of Operations are as follows (in thousands):
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Debt (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of outstanding borrowings | outstanding indebtedness of the operating partnership as of March 31, 2019 and December 31, 2018 is as follows (in thousands):
(1) L = one-month LIBOR. |
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Schedule of aggregate maturities of total indebtedness | The aggregate maturities of the Company’s total indebtedness as of March 31, 2019, including amortization of principal amounts due under the mortgage notes for each of the next five years and thereafter, are as follows:
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Derivative Financial Instruments (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Derivative Results | The following table illustrates the disclosure in tabular format of fair value amounts of derivative instruments at March 31, 2019 and December 31, 2018:
The following tables present the amounts in the Condensed Consolidated Statements of Operations in which the effects of cash flow hedges are recorded and the effects of cash flow hedge activity on these line items for the three months ended March 31, 2019 and March 31, 2018, including the impacts to Accumulated Other Comprehensive Income (AOCI):
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Sale-Leasebacks of Real Estate (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of outstanding sale-leaseback financing obligations | The Company’s outstanding sale-leaseback financing obligations of real estate-related long-lived assets as of March 31, 2019 and December 31, 2018 are as follows:
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Lease Accounting Lease Accounting (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lease, Cost | Other information related to leases is as follows:
The components of lease expense were as follows:
(a) Includes short-term lease and variable lease costs, which are immaterial. (b) Sublease income relates to two warehouses in the U.S. and New Zealand. |
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Finance Lease, Liability, Maturity | Future minimum lease payments under non-cancellable leases as of March 31, 2019 were as follows:
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Lessee, Operating Lease, Liability, Maturity | Future minimum lease payments under non-cancellable leases as of March 31, 2019 were as follows:
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Lessor, Operating Lease, Payments to be Received, Maturity | Future minimum lease payments as of March 31, 2019 were as follows (in thousands):
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Fair Value Measurements (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Assets and Liabilities Measured at Fair Value | The Company’s assets and liabilities measured or disclosed at fair value are as follows:
(1)The carrying value of mortgage notes, term loans and senior unsecured notes is disclosed in Note 7. |
Dividends and Distributions (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of dividends declared and distributions paid |
The following tables summarize dividends declared and distributions paid to the holders of common shares and Series B Preferred Shares for the three months ended March 31, 2019 and 2018.
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Partners Capital Partners Capital (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Distributions | We have declared and paid the following distributions to the Parent for the years ended March 31, 2019 and 2018:
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Share-Based Compensation (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Restricted Stock Units Activity | The following table provides a summary of restricted stock awards activity under the 2010 and 2017 Plans as of March 31, 2019:
The following table summarizes restricted stock unit grants under the 2017 Plan during the three months ended March 31, 2019 and 2018, respectively:
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Schedule of Performance Thresholds | In the event that the TSR upon completion of the market performance period is achieved at the “minimum,” “target” or “maximum” level as set forth below, the awards will become vested as to the market condition with respect to the percentage RSUs, as applicable, set forth below:
In the event that the RMS Relative Market Performance during the Market Performance Period is achieved at the “threshold,” “target” or “high” level as set forth below, the awards will become vested as to the market condition with respect to the percentage of RSUs, as applicable, set forth below:
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|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Valuation Assumptions | Assumptions used in the valuations are summarized by grant date as follows:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Stock Option Activity | The following tables provide a summary of option activity for the three months ended March 31, 2019 and 2018, respectively:
|
Employee Benefit Plans (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Employee Benefit Plans | The components of net period benefit cost for the three months ended March 31, 2019 and 2018 are as follows:
|
Accumulated Other Comprehensive (Loss) Income (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accumulated Other Comprehensive (Loss) Income | The activity in AOCI for the three months ended March 31, 2019 and 2018 is as follows:
|
Segment Information (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Segment Reporting Information | The following table presents segment revenues and contributions with a reconciliation to loss before income tax for the three months ended March 31, 2019 and 2018:
|
Loss per Common Share (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of weighted average number of common shares outstanding | A reconciliation of the basic and diluted weighted-average number of common shares outstanding for the three months ended March 31, 2019 and 2018 is as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of antidilutive securities excluded from computation of earnings (loss) per share | The table below presents the weighted-average number of antidilutive potential common shares that are not considered in the calculation of diluted income (loss) per share:
|
Revenue from Contracts with Customers (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation of Revenue | The following tables represent a disaggregation of revenue from contracts with customers for the three months ended March 31, 2019 and 2018 by segment and geographic region:
|
Summary of Significant Accounting Policies - Additional Information (Details) - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Property, Plant and Equipment [Line Items] | ||
Impairment of long-lived assets | $ 12,555,000 | $ 0 |
Interest expensed | 800,000 | 400,000 |
Compensation and travel expense capitalized | 200,000 | 100,000 |
Payments for asset acquisitions | 35,923,000 | 0 |
Partially Used Warehouse | ||
Property, Plant and Equipment [Line Items] | ||
Impairment of long-lived assets | $ 9,600,000 | |
Percentage of facility to be demolished | 75.00% | |
Idle Warehouse | ||
Property, Plant and Equipment [Line Items] | ||
Impairment of long-lived assets | $ 2,900,000 | |
Pot Fresh Holdings, LLC | ||
Property, Plant and Equipment [Line Items] | ||
Payments for asset acquisitions | $ 35,923,000 | $ 0 |
Summary of Significant Accounting Policies - Purchase Price Allocation of Asset Acquisitions (Details) - Pot Fresh Holdings, LLC $ in Thousands |
3 Months Ended |
---|---|
Mar. 31, 2019
USD ($)
| |
Schedule of Asset Acquisitions [Line Items] | |
Other Assets / Liabilities | $ 601 |
Assembled Workforce | |
Schedule of Asset Acquisitions [Line Items] | |
Intangible assets | $ 351 |
Weighted average remaining intangible amortization life (in months) | 34 months |
Land | |
Schedule of Asset Acquisitions [Line Items] | |
Property, plant and equipment | $ 20,715 |
Building and Improvements | |
Schedule of Asset Acquisitions [Line Items] | |
Property, plant and equipment | 10,846 |
Machinery and Equipment | |
Schedule of Asset Acquisitions [Line Items] | |
Property, plant and equipment | $ 3,410 |
Acquisition, Litigation and Other Special Charges - Components of Charges (Details) - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Acquisition, Litigation and Other Special Charges [Abstract] | ||
Acquisition related costs | $ 1,441,000 | $ 0 |
Litigation | 910,000 | 0 |
Severance, equity award modifications and acceleration | 4,293,000 | 2,600,000 |
Non-offering related equity issuance expenses | 1,511,000 | 1,241,000 |
Terminated site operations costs | 338,000 | 0 |
Total other | 6,142,000 | 3,841,000 |
Total acquisition, litigation, and other | $ 8,493,000 | $ 3,841,000 |
Acquisition, Litigation and Other Special Charges - Narrative (Details) - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Acquisition, Litigation and Other Special Charges [Abstract] | ||
Acquisition related costs | $ 1,441,000 | $ 0 |
Litigation | 910,000 | 0 |
Severance | 1,200,000 | |
Accelerated equity award vesting | $ 3,100,000 | |
Accelerated equity award vesting (in shares) | 100,000 | |
Share-based compensation expense (modification and acceleration of equity awards) | $ 2,900,000 | 2,600,000 |
Non-offering related equity issuance expenses | 1,511,000 | 1,241,000 |
Terminated site operations costs | $ 338,000 | $ 0 |
Debt - Schedule of Aggregate Maturities of Total Indebtedness (Details) - Americold Realty Operating Partnership, L.P. $ in Thousands |
Mar. 31, 2019
USD ($)
|
---|---|
Debt Instrument [Line Items] | |
Year 1 | $ 6,557 |
Year 2 | 6,833 |
Year 3 | 7,102 |
Year 4 | 482,381 |
Year 5 | 260,454 |
Thereafter | 600,000 |
Aggregate principal amount of debt | 1,363,327 |
Less unamortized discount and deferred financing costs | (13,207) |
Total mortgage notes and term loans, net of unamortized deferred financing costs and debt discount | $ 1,350,120 |
Derivative Financial Instruments - Narrative (Details) - Mar. 31, 2019 $ in Millions, $ in Millions |
USD ($) |
AUD ($) |
NZD ($) |
---|---|---|---|
Interest Rate Swap | |||
Derivative [Line Items] | |||
Notional amount | $ 100,000,000 | ||
Intercompany Loan | Australian Intercompany Loan | Foreign Exchange Forward | |||
Derivative [Line Items] | |||
Receivable hedged | $ 153.5 | ||
Intercompany Loan | New Zealand Intercompany Loan | Foreign Exchange Forward | |||
Derivative [Line Items] | |||
Receivable hedged | $ 37.5 |
Derivative Financial Instruments - Fair Value Amounts of Derivative Instruments (Details) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Derivative [Line Items] | ||
Derivative Assets | $ 47 | $ 2,283 |
Derivative Liabilities | 1,746 | 0 |
Foreign exchange contracts | ||
Derivative [Line Items] | ||
Derivative Assets | 47 | 2,283 |
Derivative Liabilities | 340 | 0 |
Interest rate contracts | ||
Derivative [Line Items] | ||
Derivative Assets | 0 | 0 |
Derivative Liabilities | $ 1,406 | $ 0 |
Sale-Leasebacks of Real Estate (Details) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019
USD ($)
warehouse
|
Dec. 31, 2018
USD ($)
|
|
Sale Leaseback Transaction [Line Items] | ||
Total sale-leaseback financing obligations | $ 118,181 | $ 118,920 |
1 warehouse – 2010 | ||
Sale Leaseback Transaction [Line Items] | ||
Number of warehouses | warehouse | 1 | |
Interest Rate as of March 31, 2019 | 10.34% | |
Total sale-leaseback financing obligations | $ 19,205 | 19,265 |
11 warehouses – 2007 | ||
Sale Leaseback Transaction [Line Items] | ||
Number of warehouses | warehouse | 11 | |
Total sale-leaseback financing obligations | $ 98,976 | $ 99,655 |
11 warehouses – 2007 | Minimum | ||
Sale Leaseback Transaction [Line Items] | ||
Interest Rate as of March 31, 2019 | 7.00% | |
11 warehouses – 2007 | Maximum | ||
Sale Leaseback Transaction [Line Items] | ||
Interest Rate as of March 31, 2019 | 19.59% |
Lease Accounting Lease Accounting - Lessee Narrative (Details) |
3 Months Ended |
---|---|
Mar. 31, 2019 | |
Minimum | |
Lessee, Lease, Description [Line Items] | |
Remaining lease term | 1 year |
Extended lease term | 1 year |
Maximum | |
Lessee, Lease, Description [Line Items] | |
Remaining lease term | 34 years |
Extended lease term | 10 years |
Lease Accounting Lease Accounting - Lessee, Lease Expenses (Details) $ in Thousands |
3 Months Ended |
---|---|
Mar. 31, 2019
USD ($)
warehouse
| |
Leases [Abstract] | |
Operating lease cost | $ 8,075 |
Financing lease cost: | |
Depreciation | 2,256 |
Interest on lease liabilities | 650 |
Sublease income | (122) |
Net lease expense | $ 10,859 |
Number of properties subleased | warehouse | 2 |
Lease Accounting Lease Accounting - Lessee, Other Information (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Cash paid for amounts included in the measurement of lease liabilities | ||
Operating cash flows from operating leases | $ (7,360) | |
Operating cash flows from finance leases | (650) | |
Financing cash flows from finance leases | (2,616) | |
Right-of-use assets obtained in exchange for lease obligations | ||
Operating leases | 4,923 | $ 0 |
Finance leases | $ 2,710 | $ 330 |
Weighted-average remaining lease term (years) | ||
Operating leases | 6 years | |
Finance leases | 4 years 9 months 18 days | |
Weighted-average discount rate | ||
Operating leases | 4.00% | |
Finance leases | 6.40% |
Lease Accounting Lease Accounting - Lessor, Narrative (Details) $ in Millions |
3 Months Ended |
---|---|
Mar. 31, 2019
USD ($)
| |
Minimum | |
Lessor, Lease, Description [Line Items] | |
Remaining term | 1 year |
Maximum | |
Lessor, Lease, Description [Line Items] | |
Remaining term | 10 years |
Equipment Leased to Other Party | |
Lessor, Lease, Description [Line Items] | |
Land and buildings and improvements, gross value | $ 368.6 |
Land and buildings and improvements, net value | 327.4 |
Depreciation | $ 4.8 |
Lease Accounting Lease Accounting - Future Minimum Payments to be Received (Details) $ in Thousands |
Mar. 31, 2019
USD ($)
|
---|---|
Leases [Abstract] | |
2019 (excluding 3 months ended March 31, 2019) | $ 10,819 |
2020 | 11,507 |
2021 | 8,826 |
2022 | 7,669 |
2023 | 6,375 |
Thereafter | 17,974 |
Total | $ 63,170 |
Partners Capital Partners Capital (Details) - Americold Realty Operating Partnership, L.P. - USD ($) $ in Thousands |
1 Months Ended | 2 Months Ended | 4 Months Ended | |||||
---|---|---|---|---|---|---|---|---|
Jan. 31, 2018 |
Jan. 23, 2018 |
Jan. 31, 2019 |
Apr. 30, 2018 |
Apr. 30, 2019 |
Apr. 30, 2018 |
Apr. 30, 2019 |
Apr. 30, 2018 |
|
Incentive Distribution Made to Managing Member or General Partner [Line Items] | ||||||||
Distributions Declared | $ 5,750 | $ 3,242 | $ 0 | $ 20,145 | $ 29,137 | |||
Distributions Paid | $ 5,750 | $ 3,242 | $ 28,098 | $ 0 | $ 8,992 | |||
Subsequent Event | ||||||||
Incentive Distribution Made to Managing Member or General Partner [Line Items] | ||||||||
Distributions Declared | $ 30,235 | $ 30,235 | ||||||
Distributions Paid | $ 0 | $ 28,098 |
Share-Based Compensation - Performance Thresholds (Details) |
Mar. 31, 2019 |
Mar. 31, 2018 |
---|---|---|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
RMS Relative Market Performance, High Level | 75.00% | |
RMS Relative Market Performance, Target Level | 55.00% | |
RMS Relative Market Performance, Threshold Level | 33.00% | |
RMS Relative Market Performance, Below Threshold Level | 30.00% | |
Market-Based Restricted Stock Units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Market Performance Vesting Percentage, High Level | 200.00% | |
Market Performance Vesting Percentage, Target Level | 100.00% | |
Market Performance Vesting Percentage, Threshold Level | 50.00% | |
Market Performance Vesting Percentage, Below Threshold Level | 0.00% | |
TSR, Maximum | 12.00% | |
Market Performance Percentage, Maximum | 150.00% | |
TSR, Target | 10.00% | |
Market Performance Percentage, Target | 100.00% | |
TSR, Minimum | 8.00% | |
Market Performance Percentage, Minimum | 50.00% |
Share-Based Compensation - Assumptions for Valuation of RSUs (Details) - Market-Based Restricted Stock Units |
Mar. 15, 2019 |
Mar. 08, 2019 |
Oct. 01, 2018 |
Jul. 01, 2018 |
Apr. 02, 2018 |
Feb. 26, 2018 |
---|---|---|---|---|---|---|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Expected Stock Price Volatility | 22.00% | 22.00% | 25.00% | 30.00% | 30.00% | 30.00% |
Risk-Free Interest Rate | 2.40% | 2.43% | 2.85% | 2.58% | 2.34% | 2.35% |
Dividend Yield | 2.62% | 2.70% | 3.01% | 3.41% | 4.04% | 4.70% |
Income Taxes (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
Dec. 31, 2018 |
|
Income Tax Disclosure [Abstract] | |||
Income tax expense (benefit) | $ 488 | $ (89) | |
Liability for uncertain tax positions | $ 400 | $ 400 |
Employee Benefit Plans - Additional Information (Details) $ in Thousands |
3 Months Ended |
---|---|
Mar. 31, 2019
USD ($)
| |
Retirement Benefits [Abstract] | |
Expected contribution plan in 2019 | $ 2,500 |
Unfunded liability on multiemployer plan | 13,700 |
Monthly installments on multiemployer plan | $ 38 |
Contribution term of multiemployer plan | 30 years |
Commitments and Contingencies (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 1994 |
Mar. 31, 2019 |
Dec. 31, 2018 |
|
Loss Contingencies [Line Items] | |||
Collective-bargaining arrangement, percentage of participants | 58.00% | ||
Collective-bargaining arrangement, percentage of participants expiring in 2018 | 4.00% | ||
Kansas Breach of Settlement Agreement | |||
Loss Contingencies [Line Items] | |||
Litigation settlement | $ 58.7 | ||
Surety Bond | |||
Loss Contingencies [Line Items] | |||
Outstanding surety bond | $ 2.7 | $ 2.7 | |
Americold Realty Operating Partnership, L.P. | Line of Credit and Medium-Term Notes | 2018 Senior Unsecured Revolving Credit Facility | |||
Loss Contingencies [Line Items] | |||
Letter of credit amount outstanding | $ 29.2 | $ 29.6 |
Loss per Common Share - Reconciliation of Weighted Average Number of Common Shares Outstanding (Details) - shares shares in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Earnings Per Share [Abstract] | ||
Weighted average common shares outstanding – basic (in shares) | 149,404 | 124,433 |
Dilutive effect of share-based awards (in shares) | 0 | 0 |
Equity forward contract (in shares) | 0 | 0 |
Weighted average common shares outstanding – diluted (in shares) | 149,404 | 124,433 |
Revenue from Contracts with Customers - Performance Obligations, Narrative (Details) $ in Millions |
3 Months Ended |
---|---|
Mar. 31, 2019
USD ($)
| |
Disaggregation of Revenue [Line Items] | |
Variable consideration, percentage constrained | 100.00% |
Unsatisfied performance obligation | $ 608.2 |
Minimum | |
Disaggregation of Revenue [Line Items] | |
Payment terms | 0 days |
Maximum | |
Disaggregation of Revenue [Line Items] | |
Payment terms | 30 days |
Revenue from Contracts with Customers - Performance Obligations, Expected Timing of Recognition, Narrative (Details) |
Mar. 31, 2019 |
---|---|
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-04-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Performance obligation, percentage of revenue | 18.00% |
Performance obligation, period for recognition | 9 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Performance obligation, percentage of revenue | 82.00% |
Performance obligation, period for recognition | 15 years 9 months 18 days |
Revenue from Contracts with Customers - Contract Balances, Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | |||
---|---|---|---|---|
Mar. 31, 2019 |
Dec. 31, 2018 |
Mar. 31, 2018 |
Dec. 31, 2017 |
|
Revenue from Contract with Customer [Abstract] | ||||
Receivables from contracts with customers | $ 191,800 | $ 192,100 | $ 177,000 | $ 198,300 |
Unearned revenue | $ 17,994 | $ 18,625 | $ 18,200 | $ 18,800 |
Inventory turn period | 30 days |
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