Americold Reports Q4 NOI Decline as Increased Labor Costs More Than Offset Strong Rent Growth

Fourth-quarter results for Americold Realty were relatively in line with our expectations, leading us to reaffirm our $37.50 fair value estimate for the no-moat company. While same-store physical occupancy is down 260 basis points year over year to 70.8%, sequentially occupancy is up 290 basis points over the third quarter. Despite the occupancy decline, same-store revenue was up 2.5% year over year as rent per occupied pallet increased 6.9%. However, same-store operating expenses were up 8.9% in the fourth quarter, driven by a 9.1% increase in labor costs. As a result, same-store net operating income margins fell 390 basis points year over year to 33.2% and same-store NOI fell 8.2%. The drop in portfolio income led to Americold reporting adjusted funds from operations of $0.31 per share in the fourth quarter, which was in line with our fourth-quarter estimate, 4 cents better than the third quarter of 2021, but 6 cents worse than the fourth quarter of 2020.