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Stock Strategist

Interest in Americold Heats Up

This REIT should be better insulated from the deleterious impacts of the COVID-19 pandemic.

Mentioned:

Americold Realty Trust (COLD) is the only publicly traded real estate investment trust in the United States that is focused on owning and managing cold storage real estate. The company, which is the second-largest owner of cold storage assets in the U.S., has received heightened interest as a result of increased scrutiny on global supply chains due to the coronavirus pandemic. We consider the cold storage industry to be the best positioned in the existing environment and expect significant short-term growth. Our $32 fair value estimate suggests that investors already recognize the opportunity that it represents. Despite our favorable outlook, we do not think Americold possesses a material advantage.

Americold has built its business by owning and operating cold storage facilities as well as providing ancillary services to attract and retain tenants. More than 80% of revenue derives from the U.S., where Americold is the second-largest player by market share behind Lineage Logistics. Although cold storage shares similarities with traditional industrial real estate, it is a unique space that contributes less than 3% of total industrial square footage in the U.S. While industrial real estate typically features multiyear commitments for space, much of cold storage space is rented on an as-needed basis, adding some risk but also allowing pricing to recalibrate more quickly.

Yousuf Hafuda does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.