AMERICOLD REALTY TRUST - Quarter Report: 2021 June (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☑	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended	June 30, 2021


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the transition period from to ,

Commission File Number: 001-34723

AMERICOLD REALTY TRUST

(Exact name of registrant as specified in its charter)


Maryland	(Americold Realty Trust)	93-0295215
(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)

(678) 441-1400

(Registrant’s telephone number, including area code)

_________________________

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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.

Yes

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter periods that the registrant was required to submit such files).

Yes

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):

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Yes

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934)

Yes

☐

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading symbol(s)

Name of each exchange on which registered

Common Shares of Beneficial Interest, $0.01 par value per share

COLD

New York Stock Exchange

(NYSE)

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.


Class						Outstanding at August 4, 2021
Common Stock, $0.01 par value per share						261,078,912

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TABLE OF CONTENTS
			Page
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements			4
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			60
Item 3. Quantitative and Qualitative Disclosures About Market Risk			101
Item 4. Controls and Procedures			101

PART II - OTHER INFORMATION
Item 1. Legal Proceedings			103
Item 1A. Risk Factors			103
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			103
Item 3. Defaults Upon Senior Securities			103
Item 4. Mine Safety Disclosures			103
Item 5. Other Information			103
Item 6. Exhibits			104

SIGNATURES			105

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

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

•uncertainties and risks related to public health crises, including the ongoing COVID-19 pandemic;

•adverse economic or real estate developments in our geographic markets or the temperature-controlled warehouse industry;

•general economic conditions;

•risks associated with the ownership of real estate and temperature-controlled warehouses in particular;

•acquisition risks, including the failure to identify or complete attractive acquisitions or the failure of acquisitions to perform in accordance with projections and to realize anticipated cost savings and revenue improvements;

•our failure to realize the intended benefits from our recent acquisitions including synergies, or disruptions to our plans and operations or unknown or contingent liabilities related to our recent acquisitions;

•risks related to expansions of existing properties and developments of new properties, including failure to meet budgeted or stabilized returns within expected time frames, or at all, in respect thereof;

•a failure of our information technology systems, cybersecurity attacks or a breach of our information security systems, networks or processes could cause business disruptions or loss of confidential information;

•risks related to privacy and data security concerns, and data collection and transfer restrictions and related foreign regulations;

•uncertainty of revenues, given the nature of our customer contracts;

•defaults or non-renewals of significant customer contracts, including as a result of the ongoing COVID-19 pandemic;

•increased interest rates and operating costs, including as a result of the ongoing COVID-19 pandemic;

•our failure to obtain necessary outside financing;

•risks related to, or restrictions contained in, our debt financings;

•decreased storage rates or increased vacancy rates;

•risks related to current and potential international operations and properties;

•difficulties in expanding our operations into new markets, including international markets;

•risks related to the partial ownership of properties, including as a result of our lack of control over such investments and the failure of such entities to perform in accordance with projections;

•our failure to maintain our status as a REIT;

•possible environmental liabilities, including costs, fines or penalties that may be incurred due to necessary remediation of contamination of properties presently or previously owned by us;

•financial market fluctuations;

•actions by our competitors and their increasing ability to compete with us;

•labor and power costs;

•labor shortages;

•changes in applicable governmental regulations and tax legislation, including in the international markets;

•additional risks with respect to the addition of European operations and properties;

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•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, the occurrence of any work stoppages or any disputes under our collective bargaining agreements and employment related litigation;

•liabilities as a result of our participation in multi-employer pension plans;

•losses in excess of our insurance coverage;

•the potential liabilities, costs and regulatory impacts associated with our in-house trucking services and the potential disruptions associated with our use of third-party trucking service providers to provide transportation services to our customers;

•the cost and time requirements as a result of our operation as a publicly traded REIT;

•changes in foreign currency exchange rates;

•the impact of anti-takeover provisions in our constituent documents and under Maryland law, which could make an acquisition of us more difficult, limit attempts by our shareholders to replace our trustees and affect the price of our common shares of beneficial interest, $0.01 par value per share, or our common shares;

•the potential dilutive effect of our common share offerings; and

•risks related to any forward sale agreement, including the 2018 forward sale agreement, the 2020 ATM forward sale agreements and the 2020 forward sale agreements, or, collectively, our forward sale agreements, including substantial dilution to our earnings per share or substantial cash payment obligations.

The risks included here are not exhaustive, and additional factors could adversely affect our business and financial performance, including factors and risks included in other sections of this Quarterly Report on Form 10-Q. Words such as “anticipates,” “believes,” “continues,” “estimates,” “expects,” “goal,” “objectives,” “intends,” “may,” “opportunity,” “plans,” “potential,” “near-term,” “long-term,” “projections,” “assumptions,” “projects,” “guidance,” “forecasts,” “outlook,” “target,” “trends,” “should,” “could,” “would,” “will” and similar expressions are intended to identify such forward-looking statements. Examples of forward-looking statements included in this Quarterly Report on Form 10-Q include, among others, statements about our expected acquisitions and expected expansion and development pipeline and our targeted return on invested capital on expansion and development opportunities. We qualify any forward-looking statements entirely by these cautionary factors. Other risks, uncertainties and factors, including those discussed under “Risk Factors”, in our Annual Report on Form 10-K for the year ended December 31, 2020, could cause our actual results to differ materially from those projected in any forward-looking statements we make. We assume no obligation to update or revise these forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.

As used in this report, unless the context otherwise requires, references to “we,” “us,” “our,” “our Company” and “the Company” refer to Americold Realty Trust, a Maryland real estate investment trust, and its consolidated subsidiaries, including Americold Realty Operating Partnership, L.P., a Delaware limited partnership and the subsidiary through which we conduct our business, which we refer to as “our Operating Partnership” or “the Operating Partnership.”

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

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Americold Realty Trust and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)
(In thousands, except shares and per share amounts)
	June 30, 2021		December 31, 2020
Assets
Property, buildings and equipment:
Land	$	705,862	$	662,885
Buildings and improvements	3,847,631		4,004,824
Machinery and equipment	1,274,690		1,177,572
Assets under construction	382,730		303,531
	6,210,913		6,148,812
Accumulated depreciation	(1,504,758)		(1,382,298)
Property, buildings and equipment – net	4,706,155		4,766,514

Operating lease right-of-use assets	352,880		291,797
Accumulated depreciation – operating leases	(40,202)		(24,483)
Operating leases – net	312,678		267,314

Financing leases:
Buildings and improvements	24,761		60,513
Machinery and equipment	148,408		109,416
	173,169		169,929
Accumulated depreciation – financing leases	(53,785)		(40,937)
Financing leases – net	119,384		128,992

Cash, cash equivalents and restricted cash	316,077		621,051

Accounts receivable – net of allowance of $15,197 and $12,286 at June 30, 2021 and December 31, 2020, respectively	325,440		324,221
Identifiable intangible assets – net	875,038		797,423
Goodwill	1,018,288		794,335
Investments in partially owned entities	42,742		44,907
Other assets	107,518		86,394
Total assets	$	7,823,320	$	7,831,151

Liabilities and equity
Liabilities:
Borrowings under revolving line of credit	$	139,105	$	—
Accounts payable and accrued expenses	563,566		552,547
Mortgage notes, senior unsecured notes and term loans – net of unamortized deferred financing costs of $11,994 and $15,952, in the aggregate, at June 30, 2021 and December 31, 2020, respectively	2,427,164		2,648,266
Sale-leaseback financing obligations	184,515		185,060
Financing lease obligations	111,703		125,926
Operating lease obligations	285,715		269,147
Unearned revenue	20,344		19,209
Pension and postretirement benefits	7,880		9,145
Deferred tax liability – net	208,799		220,502
Multi-employer pension plan withdrawal liability	8,354		8,528
Total liabilities	3,957,145		4,038,330
Commitments and contingencies (Note 14)
Equity
Shareholders’ equity:
Common shares of beneficial interest, $0.01 par value – 500,000,000 and 325,000,000 authorized shares; 261,015,053 and 251,702,603 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively	2,610		2,517
Paid-in capital	4,900,398		4,687,823
Accumulated deficit and distributions in excess of net earnings	(1,036,987)		(895,521)
Accumulated other comprehensive loss	(4,628)		(4,379)
Total shareholders’ equity	3,861,393		3,790,440
Noncontrolling interests:
Noncontrolling interests in operating partnership and consolidated joint venture	4,782		2,381
Total equity	3,866,175		3,792,821

Total liabilities and equity	$	7,823,320	$	7,831,151
See accompanying notes to condensed consolidated financial statements.

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Americold Realty Trust and Subsidiaries
Condensed Consolidated Statements of Operations (Unaudited)
(In thousands, except per share amounts)
	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Revenues:
Rent, storage and warehouse services	$	503,734	$	372,411	$	989,185	$	753,479
Third-party managed services	72,173		72,954		145,245		137,875
Transportation services	78,800		34,861		155,072		70,778
Other	—		2,296		—		4,459
Total revenues	654,707		482,522		1,289,502		966,591
Operating expenses:
Rent, storage and warehouse services cost of operations	359,355		252,279		698,625		506,574
Third-party managed services cost of operations	70,480		69,655		139,170		130,807
Transportation services cost of operations	69,550		30,089		139,119		61,201
Cost of operations related to other revenues	33		2,161		59		4,269
Depreciation and amortization	84,459		52,399		161,670		104,003
Selling, general and administrative	42,475		32,340		87,527		69,233
Acquisition, litigation and other	3,922		2,801		24,673		4,489
Impairment of long-lived assets	1,528		3,667		1,528		3,667
Gain from sale of real estate	—		(19,414)		—		(21,875)
Total operating expenses	631,802		425,977		1,252,371		862,368

Operating income	22,905		56,545		37,131		104,223

Other income (expense):
Interest expense	(26,579)		(23,178)		(52,535)		(47,048)
Interest income	191		261		415		848

Loss on debt extinguishment, modifications and termination of derivative instruments	(925)		—		(4,424)		(781)
Foreign currency exchange (loss) gain, net	(140)		315		33		(177)
Other expense, net	184		44		689		915

Loss from investments in partially owned entities	(61)		(129)		(761)		(156)
(Loss) income before income tax benefit (expense)	(4,425)		33,858		(19,452)		57,824
Income tax (expense) benefit
Current	(2,406)		(2,163)		(3,617)		(4,720)
Deferred	(6,568)		967		(4,566)		3,069
Total income tax expense	(8,974)		(1,196)		(8,183)		(1,651)

Net (loss) income	$	(13,399)	$	32,662	$	(27,635)	$	56,173
Net (loss) income attributable to non controlling interests	(29)		—		149		—
Net (loss) income attributable to Americold Realty Trust	$	(13,370)	$	32,662	$	(27,784)	$	56,173

Weighted average common shares outstanding – basic	253,213		201,787		253,076		201,294
Weighted average common shares outstanding – diluted	253,213		205,298		253,076		204,587

Net (loss) income per common share of beneficial interest - basic	$	(0.05)	$	0.16	$	(0.11)	$	0.28
Net (loss) income per common share of beneficial interest - diluted	$	(0.05)	$	0.16	$	(0.11)	$	0.27

See accompanying notes to condensed consolidated financial statements.

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Americold Realty Trust and Subsidiaries
Condensed Consolidated Statements of Comprehensive (Loss) Income (Unaudited)
(In thousands)
	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Net (loss) income	$	(13,399)	$	32,662	$	(27,635)	$	56,173
Other comprehensive income (loss) - net of tax:
Adjustment to accrued pension liability	396		412		777		826
Change in unrealized net gain (loss) on foreign currency	7,026		10,337		(3,656)		(15,210)
Unrealized gain (loss) on cash flow hedge	1,609		(3,494)		2,630		(7,533)
Other comprehensive (loss) income - net of tax	9,031		7,255		(249)		(21,917)
Other comprehensive income attributable to noncontrolling interests	20		—		8		—
Total comprehensive (loss) income attributable to Americold Realty Trust	$	(4,348)	$	39,917	$	(27,876)	$	34,256

See accompanying notes to condensed consolidated financial statements.

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Americold Realty Trust and Subsidiaries
Condensed Consolidated Statements of Equity (Unaudited)
(In thousands, except shares and per share amounts)

	Common Shares of Beneficial Interest					Accumulated Deficit and Distributions in Excess of Net Earnings		Accumulated Other Comprehensive Loss		Noncontrolling Interests in Operating Partnership and Consolidated Joint Venture

	Number of Shares	Par Value		Paid-in Capital
												Total
Balance - December 31, 2020	251,702,603	$	2,517	$	4,687,823	$	(895,521)	$	(4,379)	$	2,381	$	3,792,821
Net (loss) income	—	—		—		(14,414)		—		178		(14,236)
Other comprehensive loss	—	—		—		–		(9,280)		(12)		(9,292)
Distributions on common shares, restricted stock and OP units	—	—		—		(55,909)		—		(120)		(56,029)
Share-based compensation expense	—	—		4,075		—		—		949		5,024

Common share issuance related to share-based payment plans, net of shares withheld for employee taxes	816,915	8		(10,089)		—		—		—		(10,081)

Balance - March 31, 2021	252,519,518	$	2,525	$	4,681,809	$	(965,844)	$	(13,659)	$	3,376	$	3,708,207
Net loss	—	—		—		(13,370)		—		(29)		(13,399)
Other comprehensive income	—	—		—		–		9,031		20		9,051
Distributions on common shares, restricted stock and OP units	—	—		—		(57,773)		—		(124)		(57,897)
Share-based compensation expense	—	—		3,922		—		—		1,539		5,461
Common share issuance related to share-based payment plans, net of shares withheld for employee taxes	66,431	1		(108)		—		—		—		(107)
Issuance of common shares	8,429,104	84		214,775		—		—		—		214,859

Balance - June 30, 2021	261,015,053	$	2,610	$	4,900,398	$	(1,036,987)	$	(4,628)	$	4,782	$	3,866,175

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	Common Shares of Beneficial Interest					Accumulated Deficit and Distributions in Excess of Net Earnings		Accumulated Other Comprehensive Loss

	Number of Shares	Par Value		Paid-in Capital
										Total
Balance - December 31, 2019	191,799,909	$	1,918	$	2,582,087	$	(736,861)	$	(14,126)	$	1,833,018
Net income	—	—		—		23,511		—		23,511
Other comprehensive loss	—	—		—		—		(29,172)		(29,172)
Distributions on common shares, restricted stock and OP units	—	—		—		(42,568)		—		(42,568)
Share-based compensation expense	—	—		4,298		—		—		4,298

Common share issuance related to share-based payment plans, net of shares withheld for employee taxes	216,056	2		(1,508)		—		—		(1,506)
Issuance of common shares	8,250,000	83		233,512		—		—		233,595
Cumulative effect of accounting change(1)	—	—		—		(500)		—		(500)
Balance - March 31, 2020	200,265,965	$	2,003	$	2,818,389	$	(756,418)	$	(43,298)	$	2,020,676
Net income	—	—		—		32,662		—		32,662
Other comprehensive income	—	—		—		—		7,255		7,255
Distributions on common shares of beneficial interest	—	—		—		(43,271)		—		(43,271)
Share-based compensation expense	—	—		4,449		—		—		4,449

Common share issuance related to share-based payment plans, net of shares withheld for employee taxes	255,311	2		2,200		—		—		2,202
Issuance of common shares	3,094,431	31		107,002		—		—		107,033

Balance - June 30, 2020	203,615,707	$	2,036	$	2,932,040	$	(767,027)	$	(36,043)	$	2,131,006

(1) Refer to Note 2 to the Condensed Consolidated Financial Statements for further discussion of the adoption of ASC 326.

See accompanying notes to condensed consolidated financial statements.

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Americold Realty Trust and Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In thousands)
	Six Months Ended June 30,
	2021		2020
Operating activities:
Net (loss) income	$	(27,635)	$	56,173
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization	161,670		104,003
Amortization of deferred financing costs and pension withdrawal liability	2,233		2,742
Amortization of above/below market leases	401		76
Loss on debt extinguishment, modifications and termination of derivative instruments	4,301		542
Foreign exchange (gain) loss	(33)		177
Loss from investments in partially owned entities	761		156


Share-based compensation expense	10,498		8,730
Deferred income tax benefit	4,566		(3,069)
Gain from sale of real estate	—		(21,875)
Gain on sale of assets	(475)		(420)
Impairment of long-lived assets	1,528		3,667
Provision for doubtful accounts receivable	2,910		3,554
Changes in operating assets and liabilities:
Accounts receivable	(1,775)		13,364
Accounts payable and accrued expenses	(14,332)		5,028
Other	(16,865)		(8,868)
Net cash provided by operating activities	127,753		163,980
Investing activities:

Proceeds from sale of investments in partially owned entities	596		—
Investment in partially owned entities	(6,260)		(26,197)
Proceeds from sale of property, buildings and equipment	1,063		69,051
Proceeds from the settlement of net investment hedge	—		3,034
Business combinations, net of cash acquired	(215,329)		(315,668)

Additions to property, buildings and equipment	(207,292)		(173,245)
Purchase of noncontrolling interest holders share in consolidated joint venture	(11,600)		—
Net cash used in investing activities	(438,822)		(443,025)
Financing activities:


Distributions paid on common shares, restricted stock units and noncontrolling interests in Operating Partnership	(110,813)		(80,976)
Proceeds from stock options exercised	5,191		5,882
Remittance of withholding taxes related to employee share-based transactions	(15,791)		(5,650)
Proceeds from revolving line of credit	210,841		186,753
Repayment on revolving line of credit	(70,000)		(177,075)



Repayment of sale-leaseback financing obligations	(1,184)		(1,785)
Repayment of financing lease obligations	(19,337)		(8,853)
Payment of debt issuance costs	(3,110)		(8,345)
Repayment of term loan and mortgage notes	(203,493)		(53,342)
Proceeds from term loan	—		177,075

Net proceeds from issuance of common shares	214,775		340,628


Net cash provided by financing activities	7,079		374,312
Net (decrease) increase in cash, cash equivalents and restricted cash	(303,990)		95,267
Effect of foreign currency translation on cash, cash equivalents and restricted cash	(984)		(4,040)
Cash, cash equivalents and restricted cash:
Beginning of period	621,051		240,613
End of period	$	316,077	$	331,840

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Americold Realty Trust and Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited) (Continued)
(In thousands)
	Six Months Ended June 30,
	2021		2020
Supplemental disclosures of non-cash investing and financing activities:


Addition of property, buildings and equipment on accrual	$	63,587	$	25,607
Addition of fixed assets under financing lease obligations	$	11,553	$	23,505
Addition of fixed assets under operating lease obligations	$	3,368	$	510

Supplemental cash flow information:
Interest paid – net of amounts capitalized	$	43,328	$	46,877
Income taxes paid – net of refunds	$	6,147	$	1,405
















	As of June 30,
	2021		2020
Allocation of purchase price to business combinations:
Land	$	17,245	$	33,829
Buildings and improvements	97,448		127,868
Machinery and equipment	19,073		40,105
Assets under construction	191		308
Operating and financing lease right-of-use assets	28,785		926
Cash and cash equivalents	6,107		1,997

Accounts receivable	3,796		5,271
Goodwill	42,579		66,950
Acquired identifiable intangible assets:


Customer relationships	52,003		78,286

Other assets	482		120
Accounts payable and accrued expenses	(5,527)		(2,282)

Operating and financing lease obligations	(20,467)		(590)
Unearned revenue	(84)		(607)

Deferred tax liability	(20,195)		(34,516)

Total consideration	$	221,436	$	317,665

See accompanying notes to condensed consolidated financial statements.

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Americold Realty Trust and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

1. 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. The Company is the world’s largest publicly traded REIT focused on the ownership, operation and development of temperature-controlled warehouses. The Company is organized as a self-administered and self-managed REIT with proven operating, acquisition and development experience. As of June 30, 2021, we operated a global network of 246 temperature-controlled warehouses encompassing over 1.4 billion cubic feet, with 200 warehouses in North America, 27 in Europe, 16 warehouses in Asia-Pacific, and three warehouses in South America. In addition, we hold two minority interests in Brazilian-based joint ventures, one with SuperFrio, which owns or operates 33 temperature-controlled warehouses and one with Comfrio, which owns or operates 24 temperature-controlled warehouses.

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 approximately 99% of the partnership interests as of June 30, 2021. Americold Realty Operations, Inc., a Delaware corporation and a wholly-owned subsidiary of the REIT, is a limited partner of the Operating Partnership, owning less than 1% of the partnership interests as of June 30, 2021. Additionally, the aggregate partnership interests of all other limited partners was less than 1% as of June 30, 2021. As the sole general partner of the Operating Partnership, the REIT has full, exclusive and complete responsibility and discretion in the day-to-day management and control of the Operating Partnership. The limited partners of the Operating Partnership do not have rights to replace Americold Realty Trust as the general partner nor do they have participating rights, although they do have certain protective rights. The terms “Americold,” the “Company,” “we,” “our” and “us” refer to Americold Realty Trust and all of its consolidated subsidiaries, including the Operating Partnership.

The Company grants Operating Partnership Profit Units (OP Units) to certain members of the Board of Trustees and certain members of management of the Company, which are described further in Note 11. Upon vesting these units represent interests in the Operating Partnership that are not owned by Americold Realty Trust.

On March 22, 2021, the Company filed Articles of Amendment to the Company’s Amended and Restated Declaration of Trust with the State Department of Assessments and Taxation of Maryland to increase the number of authorized common shares of beneficial interest, $0.01 par value per share, from 325,000,000 to 500,000,000. The Articles of Amendment were effective upon filing. The Company also has 25,000,000 authorized preferred shares of beneficial interest, $0.01 par value per share; however, none are issued or outstanding as of June 30, 2021 or December 31, 2020.

The Operating Partnership includes numerous disregarded entities (“DRE”). Additionally, the Operating Partnership conducts various business activities in North America, Europe, Asia-Pacific and South America through several wholly-owned taxable REIT subsidiaries (TRSs).

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Americold Realty Trust and Subsidiaries

Notes to Condensed Consolidated Financial Statements - (Unaudited)

Recent Capital Markets Activity

At the Market (ATM) Equity Program

On April 16, 2020, the Company entered into an equity distribution agreement pursuant to which we may sell, from time to time, up to an aggregate sales price of $500.0 million of our common shares through an ATM Equity Program (“the 2020 ATM Equity Program”). Sales of our common shares made pursuant to the 2020 ATM Equity Program may be made in negotiated transactions or transactions that are deemed to be “at the market” offerings as defined in Rule 415 under the Securities Act, including sales made directly on the NYSE, or sales made to or through a market maker other than on an exchange, or as otherwise agreed between the applicable Agent and us. Sales may also be made on a forward basis pursuant to separate forward sale agreements. We intend to use the net proceeds from sales of our common shares pursuant to the 2020 ATM Equity Program for general corporate purposes, which may include funding acquisitions and development projects.

At December 31, 2020, there were 2,429,104 shares sold under the 2020 ATM Equity Program that were subject to forward sale agreements. These shares were settled for gross proceeds of $86.6 million during the three month period ended June 30, 2021. As of June 30, 2021, there were no forward shares outstanding under the 2020 ATM Equity Program.

On May 10, 2021, the Company entered into an equity distribution agreement pursuant to which we may sell, from time to time, up to an aggregate sales price of $900.0 million of our common shares through an ATM Equity Program (the “2021 ATM Equity Program”). Sales of our common shares made pursuant to the 2021 ATM Equity Program may be made in negotiated transactions or transactions that are deemed to be “at the market” offerings as defined in Rule 415 under the Securities Act, including sales made directly on the NYSE, or sales made to or through a market maker other than on an exchange, or as otherwise agreed between the applicable Agent and us. Sales may also be made on a forward basis pursuant to separate forward sale agreements. We intend to use the net proceeds from sales of our common shares pursuant to the 2021 ATM Equity Program for general corporate purposes, which may include funding acquisitions and development projects. During the six months ended June 30, 2021, there were 1,530,034 common shares sold under the 2021 ATM Equity Program under forward sale agreements which must be settled by July 1, 2022 for gross proceeds of $59.6 million.

Universal Shelf Registration Statement

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

Other Equity Forwards and Activity

The Company has 4,785,000 forward shares outstanding as of June 30, 2021 that were originally entered into in connection with its October 2020 underwritten equity offering. Additionally, during the second quarter of 2021, the Company settled its forward sale agreement of 6,000,000 shares for proceeds of $128.5 million, originally issued in connection with its September 2018 underwritten equity offering.

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Americold Realty Trust and Subsidiaries

Notes to Condensed Consolidated Financial Statements - (Unaudited)

Acquisitions and Investments in Joint Ventures

On May 28, 2021, the Company acquired Bowman Stores for £75.5 million, or $107.1 million USD, based on the spot rate on the date of the transaction. The acquisition was funded using cash drawn on our 2020 Senior Unsecured Revolving Credit Facility.

On May 5, 2021, the Company acquired KMT Brrr! for $70.8 million. The acquisition was funded using cash drawn on our 2020 Senior Unsecured Revolving Credit Facility.

On March 1, 2021, the Company acquired Liberty Freezers for Canadian Dollars of C$55.0 million, or $43.5 million USD, based on the spot rate on the date of the transaction. The acquisition was funded using cash drawn on our 2020 Senior Unsecured Revolving Credit Facility.

On December 30, 2020, the Company completed the acquisition of privately-held Agro from an investor group led by funds managed by Oaktree Capital Management, L.P. (Oaktree) for consideration of $1.59 billion, including cash received of $47.5 million. This was comprised of cash consideration totaling $1.08 billion, of which $49.7 million was deferred, and the issuance of 14,166,667 common shares of beneficial interest to Oaktree and Agro management, with a fair value of $512.1 million based upon the closing share price on December 29, 2020 of $36.15. Financing lease and sale-leaseback obligations associated with the acquisition totaled $112.7 million and when added to the total consideration transferred brings the total transaction cost to approximately $1.7 billion.

On November 2, 2020, the Company acquired Hall’s Warehouse Corporation (Hall’s) for $489.2 million. The acquisition was funded using proceeds from our 2020 ATM equity forward sale agreements combined with funds drawn on our 2020 Senior Unsecured Revolving Credit Facility.

On August 31, 2020, the Company acquired AM-C Warehouses (AM-C) for approximately $82.7 million. The acquisition was funded using cash on hand.

On August 31, 2020, the Company acquired Caspers Cold Storage (Caspers) for $25.6 million. The acquisition was funded using cash on hand.

On March 6, 2020, the Company acquired a 14.99% ownership interest in Superfrio Armazéns Gerais S.A. (SuperFrio) for Brazil Reals of R$117.8, or approximately USD $25.7 million, inclusive of certain legal fees. The investment was funded using cash on hand.

On January 2, 2020, the Company completed the purchase of all outstanding membership interests of Newport Cold for cash consideration of $57.7 million. The acquisition was funded using cash on hand.

On January 2, 2020, the Company completed the purchase of all outstanding shares of Nova Cold for C$338.7 million ($260.6 million USD). The acquisition was funded utilizing proceeds from the settlement of our April 2019 forward sale agreement combined with cash drawn on our 2018 Senior Unsecured Revolving Credit Facility and cash on hand.

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 SEC. These unaudited condensed consolidated financial statements do not include all

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Americold Realty Trust and Subsidiaries

Notes to Condensed Consolidated Financial Statements - (Unaudited)

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, 2020, 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. The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries where the Company exerts control. Investments in which the Company does not have control, and is not considered to be the primary beneficiary of a Variable Interest Entity (VIE), but where the Company exercises significant influence over the operating and financial policies of the investee, are accounted for using the equity method of accounting. Intercompany balances and transactions have been eliminated. Operating results for the interim periods presented are not necessarily indicative of the results that may be expected for the full year.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of (1) assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the financial statements, and (2) revenues and expenses during the reporting period. Actual results could differ from those estimates.

Significant Risks and Uncertainties

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

The Company is closely monitoring the impact of the ongoing COVID-19 pandemic on all aspects of its business in all geographies, including how it will impact its customers and business partners. While the Company did not incur significant disruptions during 2020 from the COVID-19 pandemic, the six-months ended June 30, 2021 were negatively impacted by COVID-19 related disruptions in (1) the food supply chain; (ii) our customers’ production of goods; and (iii) the labor market impacting availability and cost. COVID-19 restrictions in certain markets where we or our customers operate continue to impact the food supply chain and our business. As a result, occupancy and throughput volume continue at lower than normal levels experienced prior to COVID-19. As the Company continues to protect its employees from the spread of COVID-19, it is incurring elevated labor related costs and incremental health and safety supplies costs relative to its pre-pandemic experience. The Company is unable to predict the impact that the COVID-19 pandemic will have on its financial condition, results of operations and cash flows due to numerous uncertainties.

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

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Notes to Condensed Consolidated Financial Statements - (Unaudited)

2. 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, 2020, which provides additional information with regard to the accounting policies set forth herein and other significant accounting policies.

Impairment of Long-Lived Assets

For the three and six months ended June 30, 2021, the Company recorded impairment charges totaling $1.5 million related to costs associated with development projects which management determined it would no longer pursue. For the three and six months ended June 30, 2020, the Company recorded impairment charges totaling $3.7 million, related to the anticipated sale of our quarry business, which was subsequently completed on July 1, 2020.

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.

We capitalized interest of $3.5 million and $0.4 million for the three months ended June 30, 2021 and 2020, respectively. During the six months ended June 30, 2021 and 2020, we capitalized interest of $5.7 million and $1.2 million, respectively. During the three months ended June 30, 2021 and 2020, we capitalized amounts relating to insurance, property taxes, and compensation and travel expense of employees direct and incremental to development of properties of approximately $0.8 million and $0.2 million, respectively, and during each of the six months ended June 30, 2021 and 2020, we capitalized $1.4 million and $0.3 million, respectively.

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Americold Realty Trust and Subsidiaries

Notes to Condensed Consolidated Financial Statements - (Unaudited)

Business Combinations

For business combinations, the excess of purchase price over the net fair value of assets acquired and liabilities assumed is recorded as goodwill. In an asset acquisition where we have determined that the cost incurred differs from the fair value of the net assets acquired, we assess whether we have appropriately determined the fair value of the assets and liabilities acquired and we also confirm that all identifiable assets have been appropriately identified and recognized. After completing this assessment, we allocate the difference on a relative fair value basis to all assets acquired except for financial assets (as defined in ASC 860, Transfers and Servicing), deferred taxes, and assets defined as “current” (as defined in ASC 210, Balance Sheet).

Whether the acquired business is being accounted for as a business combination or an asset acquisition, the determination of fair values of identifiable assets and liabilities requires estimates and the use of valuation techniques. Significant judgment is involved specifically in determining the estimated fair value of the acquired land and buildings and improvements and intangible assets. For intangible assets, we typically use the excess earnings method. Significant estimates used in valuing intangible assets acquired in a business combination include, but are not limited to, revenue growth rates, customer attrition rates, operating costs and margins, capital expenditures, tax rates, long-term growth rates and discount rates. For land and buildings and improvements, we used a combination of methods including the cost approach to value buildings and improvements and the sales comparison approach to value the underlying land. Significant estimates used in valuing land and buildings and improvements acquired in a business combination include, but are not limited to estimates of indirect costs and entrepreneurial profit, which were added to the replacement cost of the acquired assets in order to estimate their fair value in the market.

Refer to Note 3 for the disclosures related to recent acquisitions accounted for as a business combination.

Recently Adopted Accounting Standards

Defined Benefit Plans

Effective January 1, 2021, we adopted ASU 2018-14, Compensation – Retirement Benefits – Defined Benefit Plans – General (Subtopic 715-20): Disclosure Framework – Changes to the Disclosure Requirements for Defined Benefit Plans, on a retrospective basis. 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. Adoption of the new standard did not have a material impact on the condensed consolidated financial statements.

Future Adoption of Accounting Standards

Reference Rate Reform

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848). This ASU contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. The Company has certain borrowings which are currently indexed to LIBOR. In March 2021, the administrator of LIBOR announced that the publication of LIBOR will cease for all GBP, EUR, CHF and JPY LIBOR settings and the one-week and two-month USD LIBOR settings immediately after December 31, 2021. It will stop publishing all remaining USD LIBOR settings (i.e. the overnight and the one-, three-, six- and 12-month settings) based on bank submissions immediately after June 30, 2023. The Company intends to apply the FASB’s optional

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Americold Realty Trust and Subsidiaries

Notes to Condensed Consolidated Financial Statements - (Unaudited)

expedients, when available, as it transitions to SOFR for its borrowings currently indexed to LIBOR. Accordingly, we do not believe that the transition to SOFR will have a material impact on the condensed consolidated financial statements.

3. Business Combinations

Acquisitions Completed During the Six Months Ended June 30, 2021

Acquisition of Liberty Freezers

The Company completed the acquisition of Liberty Freezers on March 1, 2021 for total consideration of C$55.0 million, or $43.5 million, including cash received of C$1.8 million, or $1.4 million based on the exchange rate between the CAD and USD on the closing date of the transaction. The acquisition accounting related to the consideration transferred primarily included the preliminary fair values of the assets acquired and liabilities assumed including $2.9 million of land, $16.1 million of buildings and improvements, $1.9 million of machinery and equipment, $12.6 million of goodwill, $8.0 million of a customer relationship intangible asset, $28.8 million of operating right-of-use assets adjusted to reflect the favorable terms of the lease when compared with market terms, and $7.2 million of deferred tax liabilities, all of which are allocated to the Warehouse segment. The customer relationship asset has been preliminarily assigned a useful life of 25 years and is being amortized on a straight-line basis. The goodwill recorded is primarily attributable to the strategic benefits of the acquisition including the expanded presence in the Canadian market and leveraging integration experience to drive synergies.

The acquisition was completed through the acquisition of stock in Canada; as a result, no tax basis in goodwill exists for Canadian tax purposes. Deferred taxes may not be recorded for deductible goodwill unless the tax basis exceeds the book basis; therefore, the Company recorded no deferred taxes for tax deductible goodwill for Canadian tax purposes. Deductible goodwill exists for U.S. federal income tax purposes and will be available to reduce taxable income at the REIT, including any Global Intangible Low-Taxed Income (“GILTI”) inclusion associated with the foreign TRS in Canada. The preliminary acquisition accounting is based upon the Company’s estimates of fair value. The estimated fair values of the assets acquired and liabilities assumed and the related preliminary acquisition accounting are based on management’s estimates and assumptions, as well as other information compiled by management. The estimates and assumptions are subject to change during the measurement period, not to exceed one year from the acquisition date. The financial results of the acquired operations are included in the Warehouse segment since the date of the acquisition. We believe that the information gathered to date provides a reasonable basis for estimating the preliminary fair values of assets acquired and liabilities assumed. We will continue to evaluate these items until they are satisfactorily resolved and adjust our acquisition accounting accordingly, within the allowable measurement period (not to exceed one year from the date of acquisition), as defined by ASC 805.

Acquisition of KMT Brrr!

The Company completed the acquisition of KMT Brrr! on May 5, 2021 for total consideration of $70.8 million, including cash received of $1.2 million. The acquisition accounting related to the consideration transferred primarily included the preliminary fair values of the assets acquired and liabilities assumed including $8.4 million of land, $42.0 million of buildings and improvements, $8.6 million of machinery and equipment, $6.2 million of goodwill, and $5.0 million of a customer relationship intangible asset, all of which are allocated to the Warehouse segment. The customer relationship asset has been preliminarily assigned a useful life of 25 years and is being amortized on a straight-line basis. The goodwill recorded is primarily attributable to the strategic benefits of the acquisition including the expanded presence in the New Jersey market and leveraging integration experience to drive synergies.

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Americold Realty Trust and Subsidiaries

Notes to Condensed Consolidated Financial Statements - (Unaudited)

The KMT Brrr! acquisition was completed through the acquisition of all of the membership interests of certain limited liability companies and the acquisition allowed goodwill recorded to be deductible for federal income tax purposes. Deferred taxes may not be recorded for deductible goodwill unless the tax basis exceeds the book basis; therefore, the Company recorded no deferred taxes for tax deductible goodwill as a result. Deductible goodwill will be available to reduce taxable income at both the REIT and its domestic TRS. The preliminary acquisition accounting is based upon the Company’s estimates of fair value. The estimated fair values of the assets acquired and liabilities assumed and the related preliminary acquisition accounting are based on management’s estimates and assumptions, as well as other information compiled by management. The estimates and assumptions are subject to change during the measurement period, not to exceed one year from the acquisition date. The financial results of the acquired operations are included in the Warehouse segment since the date of the acquisition. We believe that the information gathered to date provides a reasonable basis for estimating the preliminary fair values of assets acquired and liabilities assumed. We will continue to evaluate these items until they are satisfactorily resolved and adjust our acquisition accounting accordingly, within the allowable measurement period (not to exceed one year from the date of acquisition), as defined by ASC 805.

Acquisition of Bowman Stores

The Company completed the acquisition of Bowman Stores on May 28, 2021 for total consideration of £75.5 million, or $107.1 million, including cash received of £2.4 million, or $3.4 million based on the exchange rate between the Pound Sterling and USD on the closing date of the transaction. The acquisition accounting related to the consideration transferred primarily included the preliminary fair values of the assets acquired and liabilities assumed including $6.0 million of land, $30.5 million of buildings and improvements, $17.5 million of machinery and equipment, $23.8 million of goodwill, $39.0 million of a customer relationship intangible asset, and $13.0 million of deferred tax liabilities, all of which are allocated to the Warehouse segment. The customer relationship asset has been preliminarily assigned a useful life of 25 years and is being amortized on a straight-line basis. The goodwill recorded is primarily attributable to the strategic benefits of the acquisition including the expanded presence in the European market and leveraging integration experience to drive synergies.

The Bowman acquisition was completed through the acquisition of stock in the UK; as a result, no additional step-up in tax basis in goodwill in the UK was created aside from the inherited carryover tax basis that existed prior to the acquisition. The Company’s US deemed asset election under IRC section 338 will reduce the US income taxability of future foreign profits under the GILTI regime. The estimated fair values of the assets acquired and liabilities assumed and the related preliminary acquisition accounting are based on management’s estimates and assumptions, as well as other information compiled by management. The estimates and assumptions are subject to change during the measurement period, not to exceed one year from the acquisition date. The financial results of the acquired operations are included in the Warehouse segment since the date of the acquisition. We believe that the information gathered to date provides a reasonable basis for estimating the preliminary fair values of assets acquired and liabilities assumed. We will continue to evaluate these items until they are satisfactorily resolved and adjust our acquisition accounting accordingly, within the allowable measurement period (not to exceed one year from the date of acquisition), as defined by ASC 805.

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Americold Realty Trust and Subsidiaries

Notes to Condensed Consolidated Financial Statements - (Unaudited)

Acquisitions Completed During 2020

Acquisition of Nova Cold

The Company completed the acquisition of privately-held Nova Cold on January 2, 2020 for total consideration of approximately C$338.7 million, including cash received of C$1.3 million, or $260.6 million USD including cash received of $1.0 million. The acquisition accounting related to the consideration transferred primarily included $34.8 million of land, $106.1 million of buildings and improvements, $30.6 million of machinery and equipment, $64.6 million of goodwill, $53.9 million of a customer relationship intangible asset and $33.0 million of deferred tax liabilities, all of which were allocated to the Warehouse segment. The customer relationship asset has been assigned a useful life of 25 years and is being amortized on a straight-line basis. The goodwill recorded is primarily attributable to the strategic benefits of the acquisition including the expanded presence in the Canadian market and leveraging integration experience to drive synergies.

The Nova Cold acquisition was completed through the acquisition of stock in Canada; as a result, no tax basis in goodwill exists for Canadian tax purposes. Deferred taxes may not be recorded for deductible goodwill unless the tax basis exceeds the book basis; therefore, the Company recorded no deferred taxes for tax deductible goodwill for Canadian tax purposes. Deductible goodwill exists for U.S. federal income tax purposes and will be available to reduce taxable income at the REIT, including any GILTI inclusion associated with the foreign TRS acquired. The acquisition accounting was finalized within one year from the date of acquisition and is reflected within the Consolidated Financial Statements for the year ended December 31, 2020. The financial results of the acquired operations are included in the Warehouse segment since the date of the acquisition.

Acquisition of Newport

The Company completed the acquisition of privately-held Newport on January 2, 2020 for total cash consideration of $57.7 million, including cash received of $1.0 million. The acquisition accounting related to the consideration transferred primarily included $30.2 million of property, buildings and equipment, $18.7 million of a customer relationship asset and $7.1 million of goodwill, each of which are allocated to the Warehouse segment. The customer relationship intangible asset has been assigned a useful life of 25 years and is being amortized on a straight-line basis. The goodwill recorded is primarily attributable to the strategic benefits of the acquisition including the expanded presence in the Minneapolis-St. Paul market and leveraging integration experience to drive synergies.

The Newport acquisition was completed through the acquisition of all of the membership interests of certain limited liability companies; the acquisition of all the membership interests allowed a portion of the goodwill recorded to be deductible for federal income tax purposes. Deferred taxes may not be recorded for deductible goodwill unless the tax basis exceeds the book basis; therefore, the Company recorded no deferred taxes for tax deductible goodwill as a result. Deductible goodwill will be available to reduce taxable income at the REIT. The acquisition accounting was finalized within one year from the date of acquisition. The financial results of the acquired operations are included in the Warehouse segment since the date of the acquisition.

Acquisition of AM-C Warehouses

The Company completed the acquisition of privately-held AM-C Warehouses on August 31, 2020 for total cash consideration of $82.7 million. The preliminary acquisition accounting related to the consideration transferred primarily included $53.2 million of property, buildings and equipment, $19.7 million of a customer relationship asset and $10.7 million of goodwill, each of which are allocated to the Warehouse segment. The customer

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Notes to Condensed Consolidated Financial Statements - (Unaudited)

relationship intangible asset has been assigned a useful life of 25 years and is being amortized on a straight-line basis. The goodwill recorded is primarily attributable to the strategic benefits of the acquisition including the expanded presence in the Dallas - Fort Worth market and expanding the Company’s relationship with a leading global protein producer.

The AM-C acquisition was completed through the acquisition of substantially all of the assets from the seller and the acquisition allowed goodwill recorded to be deductible for federal income tax purposes. Deferred taxes may not be recorded for deductible goodwill unless the tax basis exceeds the book basis; therefore, the Company recorded no deferred taxes for tax deductible goodwill as a result. Deductible goodwill will be available to reduce taxable income at the REIT. As the valuation of certain assets and liabilities for purposes of purchase price allocations are preliminary in nature, they are subject to adjustment as additional information is obtained about the facts and circumstances regarding these assets and liabilities that existed at the acquisition date. Any adjustments to our estimates of acquisition accounting will be made in the periods in which the adjustments are determined and the cumulative effect of such adjustments will be calculated as if the adjustments had been completed as of the acquisition date. The preliminary acquisition accounting will be finalized within one year from the date of acquisition. The financial results of the acquired operations are included in the Warehouse segment since the date of the acquisition. The adjustments recorded during the measurement period did not have a significant impact on our Condensed Consolidated Financial Statements for the three and six months ended June 30, 2021.

Acquisition of Hall’s Warehouses

The Company completed the acquisition of Hall’s Warehouses on November 2, 2020 for total cash consideration of $489.2 million, including cash received of $7.9 million. A summary of the preliminary fair values of the assets acquired and liabilities assumed and the measurement period adjustments recorded during this quarter is as follows (in thousands):

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Notes to Condensed Consolidated Financial Statements - (Unaudited)


	Initial Amounts Recognized as of the Acquisition Date		Measurement Period Adjustments		Preliminary Amounts Recognized as of the Acquisition Date (as Adjusted)
Assets
Land	$	29,352	$	3,208	$	32,560
Buildings and improvements	239,708		(87,428)		152,280
Machinery and equipment	63,596		(38,248)		25,348
Assets under construction	—		41		41
Operating lease right-of-use assets	26,400		1,400		27,800

Cash and cash equivalents	7,894		—		7,894

Accounts receivable	11,894		—		11,894
Goodwill	42,737		130,744		173,481
Acquired identifiable intangibles:
Customer relationships	102,732		(7,232)		95,500



Other assets	303		—		303
Total assets	524,616		2,485		527,101
Liabilities
Accounts payable and accrued expenses	4,006		2,047		6,053

Operating lease obligations	26,400		—		26,400




Deferred tax liability	5,012		438		5,450
Total liabilities	35,418		2,485		37,903
Total consideration for the Hall’s acquisition	$	489,198	$	—	$	489,198

During the second quarter of 2021, we continued to refine the initial estimates and assumptions included in the valuation studies, including appraisals, necessary to assess the fair values of the tangible and intangible assets acquired and liabilities assumed, and the amount of goodwill to be recognized as of the acquisition date. These valuation studies are preliminary and we are continuing to review the inputs used, assumptions made and the underlying cash flows used to determine the fair value of the identified tangible and intangible assets. The initial preliminary acquisition accounting was based upon management’s estimates and assumptions, as well as other information compiled by management, including the books and records of Hall’s. The measurement period adjustments recorded during the three months ended June 30, 2021 resulted from changes in fair values based on the drafts of the third-party valuations received. The final values may also result in changes to amortization expense related to intangible assets and depreciation expense related to property and equipment. Any potential adjustments made could be material in relation to the values presented in the table above. The primary areas of the preliminary acquisition accounting that are not yet finalized relate to the following: (i) finalizing the review and valuation of land, land improvements, building and machinery and equipment (including the models, key assumptions, estimates and inputs used) and assignment of remaining useful lives associated with the depreciable assets, (ii) finalizing the review and valuation of customer related intangible assets (including key assumptions, inputs and estimates), (iii) finalizing the valuation of certain in-place contracts or contractual relationships (including but not limited to leases), including determining the appropriate amortization period, (iv) finalizing our review of certain assets acquired and liabilities assumed, (v) finalizing the evaluation and valuation of certain legal matters and/or other loss contingencies, including those that we may not yet be aware of but meet the requirement to quality as a pre-acquisition contingency, and (vi) finalizing our estimate of the impact of acquisition accounting on deferred income taxes or liabilities. As the acquisition accounting is based on our

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preliminary assessments and draft valuations, actual values may differ (possibly materially) when final information becomes available that differs from our current estimates. We will continue to evaluate these items until they are satisfactorily resolved and adjust our acquisition accounting accordingly, within the allowable measurement period (not to exceed one year from the date of acquisition), as defined by ASC 805.

The customer relationship intangible asset has been assigned a preliminary useful life of 25 years and will be amortized on a straight-line basis. The goodwill recorded is primarily attributable to the strategic benefits of the acquisition including the expanded presence in the New Jersey market. The financial results of the acquired operations are included in the Warehouse and Transportation segments since the date of the acquisition. This transaction will allow us to grow our market share with key customers while diversifying our overall customer base. All of the acquired facilities are located within 15 miles of each other and 30 miles of Newark Port. The Hall’s acquisition was completed through the acquisition of the outstanding stock of certain Hall’s entities and the direct purchase of real estate assets from the sellers. The acquisition allowed a portion of the goodwill recorded to be deductible for federal income tax purposes. Deductible goodwill will be available to reduce taxable income at both the REIT and potentially the domestic TRS.

Acquisition of Agro

The Company completed the acquisition of Agro on December 30, 2020 for total consideration of $1.59 billion, including cash received of $47.5 million. This was comprised of cash consideration totaling $1.08 billion, of which $49.7 million was deferred, and the issuance of 14,166,667 common shares of beneficial interest to Oaktree, with a fair value of $512.1 million based upon the closing share price on December 29, 2020 of $36.15. Financing lease and sale-leaseback obligations associated with the acquisition totaled $112.7 million, as indicated in the table below, and when added to the total consideration transferred brings the total transaction cost to approximately $1.7 billion. A summary of the preliminary fair values of the assets acquired and liabilities assumed and the measurement period adjustments recorded during this quarter is as follows (in thousands):

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	Initial Amounts Recognized as of the Acquisition Date		Measurement Period Adjustments		Preliminary Amounts Recognized as of the Acquisition Date (as Adjusted)
Assets
Land	$	95,286	$	20,779	$	116,065
Building and improvements	778,170		(237,877)		540,293
Machinery and equipment	206,453		52,954		259,407
Assets under construction	—		15,416		15,416
Operating lease right-of-use assets	191,229		22,924		214,153
Financing lease asset	46,845		(4,679)		42,166
Cash and cash equivalents	47,534		(1)		47,533
Accounts receivable	78,423		(1,132)		77,291
Goodwill	346,673		47,406		394,079
Acquired identifiable intangibles:
Customer relationships	333,501		56,599		390,100
Investment in partially owned entities	21,638		(9,738)		11,900
Other assets	20,038		12,528		32,566
Total assets	2,165,790		(24,821)		2,140,969
Liabilities
Accounts payable and accrued expenses	90,860		14,843		105,703
Operating lease obligations	191,229		2,975		194,204
Financing lease obligations	46,845		(7,190)		39,655
Sale-leaseback obligations	73,075		—		73,075
Deferred tax liability	175,719		(35,449)		140,270

Total liabilities	577,728		(24,821)		552,907
Total consideration for the Agro acquisition	$	1,588,062	$	—	$	1,588,062

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Notes to Condensed Consolidated Financial Statements - (Unaudited)

During the second quarter of 2021, we continued to refine the estimates and assumptions included in the valuation studies, including appraisals, necessary to assess the fair values of the tangible and intangible assets acquired and liabilities assumed, and the amount of goodwill to be recognized as of the acquisition date. These valuation studies are preliminary and we are continuing to review the inputs used, assumptions made and the underlying cash flows used to determine the fair value of the identified tangible and intangible assets. The initial preliminary acquisition accounting was based upon management’s estimates and assumptions, as well as other information compiled by management, including information from prior valuations of similar entities and the books and records of Agro. The measurement period adjustments recorded during the three months ended June 30, 2021 resulted from changes in fair values based on the drafts of the third-party valuations received. The final values may also result in changes to amortization expense related to intangible assets and depreciation expense related to property and equipment. Any potential adjustments made could be material in relation to the values presented in the table above. The primary areas of the acquisition accounting that are not yet finalized relate to the following: (i) finalizing the review and valuation of land, land improvements, building and machinery and equipment (including the models, key assumptions, estimates and inputs used) and assignment of remaining useful lives associated with the depreciable assets, (ii) finalizing the review and valuation of customer related intangible assets (including key assumptions, inputs and estimates), (iii) finalizing our review of certain assets acquired and liabilities assumed, (iv) finalizing the valuation of certain in-place contracts or contractual relationships (including but not limited to leases), including determining the appropriate amortization period, (v) finalizing the evaluation and valuation of certain legal matters and/or other loss contingencies, including those that we may not yet be aware of but meet the requirement to quality as a pre-acquisition contingency, and (vi) finalizing our estimate of the impact of acquisition accounting on deferred income taxes or liabilities. As the acquisition accounting is based on our preliminary assessments and draft valuations, actual values may differ (possibly materially) when final information becomes available. Additionally, the total consideration transferred is subject to certain post-close adjustments. We will continue to evaluate these items until they are satisfactorily resolved and adjust our acquisition accounting accordingly, within the allowable measurement period (not to exceed one year from the date of acquisition), as defined by ASC 805.

As shown above, the Company recorded approximately $394.1 million of goodwill related to the Agro Acquisition. Strategic benefits of the acquisition include: (i) establishing a strategic footprint in Europe, which enhances its ability to serve their multinational customers on a global scale, (ii) adding depth to the existing networks in North America, Australia and South America, and (iii) providing significant growth opportunities through potential future acquisitions, given Europe's fragmented temperature controlled storage industry. These factors contributed to the goodwill that was recorded upon consummation of the transaction. The Agro Acquisition was completed through the acquisition of stock of various Agro entities in the U.S. and foreign jurisdictions; as a result, no tax basis exists in each of these jurisdictions for tax purposes, except for minimal tax basis that existed prior to the acquisition. We expect that the goodwill will be assigned to the Warehouse and Transportation segments during the measurement period. The Company’s deemed asset elections for the foreign operations under IRC section 338 will reduce the US income taxability of future foreign profits under the GILTI regime.

Also shown above, in connection with the Agro Acquisition the Company recorded an intangible asset of approximately $390.1 million for customer relationships which has been assigned a preliminary useful life of 25 years and will be amortized on a straight-line basis. Based on the discussion under goodwill above, the Agro Acquisition resulted in federal income tax deductibility for a minimal portion of the intangible assets. The deductible intangible assets will be available to reduce taxable income for the REIT and reduce any GILTI inclusion in the US associated with foreign entities acquired.

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Notes to Condensed Consolidated Financial Statements - (Unaudited)

Pro Forma Consolidated Results (Unaudited)

The following table presents the unaudited pro forma financial results as if the 2020 acquisition of Agro had occurred on January 1, 2020. The pro forma adjustments primarily relate to depreciation expense on acquired assets, amortization of acquired intangibles, and estimated interest expense related to financing transactions, the proceeds of which were used to partially fund the acquisition of Agro.

The accompanying unaudited pro forma consolidated financial statements exclude the results of the AM-C, Bowman Stores, Halls, KMT Brrr!, Lanier and Liberty Freezers acquisitions, which were deemed immaterial individually and in the aggregate based on quantitative and qualitative considerations. Additionally, the Company has not presented pro forma combined results of operations for the acquisitions of Nova Cold and Newport, because the results of operations as reported in the accompanying Condensed Consolidated Statements of Operations would not have been materially different. These statements are provided for illustrative purposes only and do not purport to represent what the actual Consolidated Statements of Operations of the Company would have been had the Agro acquisition occurred on the dates assumed, nor are they necessarily indicative of what the results of operations would be for any future periods.


Pro forma (unaudited)
(in thousands, except per share data)
	Three Months Ended		Six Months Ended
	June 30, 2020
Total revenue	$	603,944	$	1,216,189
Net income attributable to Americold Realty Trust	$	21,473	$	27,746
Net income per share, diluted(1)	$	0.09	$	0.11

(1)Adjusted to give effect to the issuance of 46.1 million common shares in connection with the Agro Acquisition.

Total revenues of approximately $132.6 million and $256.9 million and net loss of approximately $19.1 million and $23.6 million associated with properties and operations acquired in the Agro Acquisition are included in the Consolidated Statements of Operations for the three and six months ended June 30, 2021, respectively. The revenues and net income associated with properties and operations acquired in the Agro Acquisition included in the Consolidated Statements of Operations for the year ended December 31, 2020 was immaterial as the acquisition closed on December 30, 2020.

4. Investment in Partially Owned Entities

Superfrio Joint Venture

During the first quarter of 2020, the Company purchased a 14.99% equity interest in a joint venture with Superfrio Armazéns Gerais S.A. (“SuperFrio”) for Brazil reals of 117.8 million. Including certain transaction costs, the Company recorded an initial investment of USD $25.7 million in the joint venture.

During the first quarter of 2021, the Company contributed an additional R$9.3 million (or $1.6 million USD) in capital to the SuperFrio joint venture. Additionally, during the second quarter of 2021, the Company contributed an additional R$24.1 million (or $4.6 million USD) in capital to the SuperFrio joint venture. The capital calls from SuperFrio were issued to each owner based on their ownership percentage, therefore, the Company’s ownership percentage remains unchanged.

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Notes to Condensed Consolidated Financial Statements - (Unaudited)

SuperFrio is a Brazilian-based company that provides temperature-controlled storage and logistics services including storage, warehouse services, and transportation. The debt of the unconsolidated joint venture is non-recourse to us, except for customary exceptions pertaining to such matters as intentional misuse of funds, environmental conditions and material misrepresentations.

Comfrio Joint Venture

As a result of the Agro acquisition which closed on December 30, 2020, the Company acquired Agro’s 22.12% share of ownership in Agrofundo Brazil II Fundode Investimento em Participações (“FIP”) or the “Comfrio” joint venture. The FIP owns all the issued and outstanding shares of common stock of Agro Improvement Participações S.A. (“Agro Improvement”), a sociedade anônima, duly organized and existing under the laws of Brazil. The Company has a call right that enables it to purchase all the issued and outstanding shares of Agro Improvement starting on January 1, 2019 through January 7, 2023. The FIP has a put right that requires the Company when exercised to purchase from it all the issued and outstanding shares of Agro Improvement starting on July 1, 2019 through January 7, 2023. The fair value of the call and put rights will be recorded through acquisition accounting finalization during the measurement period, and was not included in the preliminary acquisition accounting as of December 31, 2020.

The debt of the unconsolidated joint venture is non-recourse to the Company, except for customary exceptions pertaining to such matters as intentional misuse of funds, environmental conditions and material misrepresentations.

As of June 30, 2021, our investment in partially owned entities accounted for under the equity method of accounting presented in our Condensed Consolidated Balance Sheet consists of the following (in thousands):

Joint Venture

Location

% Ownership

June 30, 2021

Superfrio

Brazil

14.99%

$30,251

Comfrio

Brazil

22.12%

$12,491

5. Acquisition, Litigation and Other Charges

The components of the charges and credits included in “Acquisition, litigation and other” in our Condensed Consolidated Statements of Operations are as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
Acquisition, litigation and other	2021		2020		2021		2020
Acquisition and integration related costs	$	3,075	$	2,651	$	16,550	$	3,417
Litigation	117		—		117		—
Severance costs	255		150		2,701		1,072
Terminated site operations costs	13		—		72		—
Cyber incident related costs	(289)		—		4,482		—
Other	751		—		751		—
Total acquisition, litigation and other	$	3,922	$	2,801	$	24,673	$	4,489

Acquisition related costs include costs associated with business 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,

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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. Refer to Note 3 for further information regarding acquisitions completed during 2021 and 2020.

Severance costs represent certain contractual and negotiated severance and separation costs from exited former executives, reduction in headcount due to synergies achieved through acquisitions or operational efficiencies and reduction in workforce costs associated with exiting or selling non-strategic warehouses or businesses.

Terminated site operations costs 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.

Cyber incident related costs include third-party fees incurred in connection with the cyber incident that occurred in November 2020, as well as any incremental costs, internal and external, incurred to restore operations at our facilities and damage claims. Any subsequent reimbursements from insurance coverage for expenses incurred in connection with the event are also reflected within this category.

Other costs represent the deductibles incurred for various other insurance claims. Any subsequent reimbursements from insurance coverage for expenses incurred in connection with the claims are also reflected within this category.

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6. Debt

The Company’s outstanding indebtedness as of June 30, 2021 and December 31, 2020 was as follows (in thousands):


				June 30, 2021				December 31, 2020
Indebtedness	Stated Maturity Date	Contractual Interest Rate	Effective Interest Rate as of June 30, 2021	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
2013 Mortgage Loans
Senior note	5/2023	3.81%	4.14%	$	171,197	$	177,189	$	174,693	$	180,807
Mezzanine A	5/2023	7.38%	7.55%	70,000		71,925		70,000		71,925
Mezzanine B	5/2023	11.50%	11.75%	32,000		33,040		32,000		33,040
Total 2013 Mortgage Loans				273,197		282,154		276,693		285,772

Senior Unsecured Notes
Series A notes	1/2026	4.68%	4.77%	200,000		224,000		200,000		231,000
Series B notes	1/2029	4.86%	4.92%	400,000		465,000		400,000		475,000
Series C notes	1/2030	4.10%	4.15%	350,000		389,375		350,000		400,750
Series D notes(5)	1/2031	1.62%	1.67%	474,281		471,356		488,640		488,640
Series E notes(6)	1/2033	1.65%	1.70%	415,030		411,398		427,560		427,560
Total Senior Unsecured Notes				1,839,311		1,961,129		1,866,200		2,022,950

2020 Senior Unsecured Term Loan Tranche A-1(1)	3/2025	L+0.95%	1.42%	125,000		124,063		325,000		323,375
2020 Senior Unsecured Term Loan Tranche A-2(2)(4)	3/2025	C+0.95%	1.51%	201,650		200,138		196,325		195,343
Total 2020 Senior Unsecured Term Loan A Facility				326,650		324,201		521,325		518,718

2020 Senior Unsecured Revolving Credit Facility-1(3)(7)	3/2024	C+0.85%	1.34%	44,363		44,363		$	—	$	—
2020 Senior Unsecured Revolving Credit Facility-2(3)(8)(9)	3/2024	G+0.85%	1.07%	94,742		94,742		—		—
Total 2020 Senior Unsecured Revolving Credit Facility				$	139,105	$	139,105	$	—	$	—

Total principal amount of indebtedness				$	2,578,263	$	2,706,589	$	2,664,218	$	2,827,440
Less: unamortized deferred financing costs				(11,994)		n/a		(15,952)		n/a
Total indebtedness, net of unamortized deferred financing costs				$	2,566,269	$	2,706,589	$	2,648,266	$	2,827,440

(1) L = one-month LIBOR.

(2) C = one-month CDOR.

(3) The Company has the option to extend the 2020 Senior Unsecured Revolving Credit Facility up to two times for a six-month period each.

(4) The 2020 Senior Unsecured Term Loan Tranche A-2 is denominated in Canadian dollars and aggregates to CAD $250.0 million. The carrying value in the table above is the US dollar equivalent as of June 30, 2021.

(5) The Senior Unsecured Notes Series D is denominated in Euros and aggregates to €400.0 million. The carrying value in the table above is the US dollar equivalent as of June 30, 2021.

(6) The Senior Unsecured Notes Series E is denominated in Euros and aggregates to €350.0 million. The carrying value in the table above is the US dollar equivalent as of June 30, 2021.

(7) The Senior Unsecured Revolving Credit Facility Draw 1 as of June 30, 2021, is denominated in CAD and aggregates to CAD $55.0 million. The carrying value in the table above is the US dollar equivalent as of June 30, 2021.

(8) The Senior Unsecured Revolving Credit Facility Draw 2 as of June 30, 2021, is denominated in GBP and aggregates to GBP $68.5 million. The carrying value in the table above is the US dollar equivalent as of June 30, 2021.

(9) G = one-month GBP LIBOR.

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Notes to Condensed Consolidated Financial Statements - (Unaudited)

2020 Senior Unsecured Credit Facility

On March 26, 2020, we entered into a five-year Senior Unsecured Term Loan A Facility and a four-year $800 million Senior Unsecured Revolving Credit Facility, which we refer to as the 2020 Senior Unsecured Credit Facility. The proceeds were used to refinance the existing $800 million 2018 Senior Unsecured Revolving Credit Facility maturing January 23, 2021 and USD denominated $475 million 2018 Senior Unsecured Term Loan maturing January 23, 2023. The total facility size of the 2020 Senior Unsecured Credit Facility was approximately $1.4 billion USD prior to the partial repayment discussed below. The Company reduced the margin on the 2020 Senior Unsecured Term Loan A Facility and 2020 Senior Unsecured Revolving Credit Facility by five basis points.

On December 30, 2020, we repaid $100 million on our Term Loan A Tranche A-1 facility. On January 29, 2021, we executed an amendment to our existing credit agreement which expanded our revolving credit facility borrowing capacity by $200 million to $1 billion. Other terms associated with the credit facility, such as the interest rate, fees, and maturity, remained unchanged. In tandem with the amendment, we repaid $200 million of our Term Loan A Tranche A-1 facility.

The 2020 Senior Unsecured Term Loan A Facility is broken into two tranches. Tranche A-1 is comprised of a $125.0 million USD term loan and Tranche A-2 is comprised of a CAD $250.0 million term loan, both are five-year loans maturing in 2025. Tranche A-2 provides a natural hedge to the Company’s investment in Canada. We refer to Tranches A-1 and A-2 in aggregate as the 2020 Senior Unsecured Term Loan Facility. In connection with entering into the agreement, we capitalized approximately $3.2 million of debt issuance costs related to the term loan, which we amortize as interest expense under the effective interest method. As of June 30, 2021, $2.4 million of unamortized debt issuance costs related to the 2020 Senior Unsecured Term Loan A Facility are included in “Mortgage notes, senior unsecured notes and term loans” in the accompanying Condensed Consolidated Balance Sheets.

The maturity of the 2020 Senior Unsecured Revolving Credit Facility is March, 26 2024; however, the Company has the option to extend the maturity up to two times, each for a six-month period. The Company must meet certain criteria in order to extend the maturity. All representations and warranties must be in effect, it must obtain updated resolutions from loan parties, and an additional 6.25 basis points extension fee must be paid. In connection with entering into the agreement, we capitalized approximately $5.2 million of debt issuance costs for the 2020 Senior Unsecured Revolving Credit Facility, which we amortize as interest expense under the straight-line method. Additionally, there were unamortized deferred financing costs at the time of entering into the agreement of $2.8 million which will continue to be amortized over the life of the 2020 Senior Unsecured Revolving Credit Facility. As of June 30, 2021, $5.3 million of unamortized debt issuance costs related to the revolving credit facility are included in “Other assets” in the accompanying Condensed Consolidated Balance Sheets.

Our 2020 Senior Unsecured Credit Facility contains representations, covenants and other terms customary for a publicly traded REIT. In addition, it contains certain financial covenants, as defined in the credit agreement, including:

•a maximum leverage ratio of less than or equal to 60% of our total asset value. Following a material acquisition, leverage ratio shall not exceed 65%;

•a maximum unencumbered leverage ratio of less than or equal to 60% to unencumbered asset value. Following a material acquisition, unencumbered leverage ratio shall not exceed 65%;

•a maximum secured leverage ratio of less than or equal to 40% to total asset value. Following a material acquisition, secured leverage ratio shall not exceed 45%;

•a minimum fixed charge coverage ratio of greater than or equal to 1.50x; and

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•a minimum unsecured interest coverage ratio of greater than or equal to 1.75x.

Material Acquisition in our 2020 Senior Unsecured Credit Facility is defined as one in which assets acquired exceeds an amount equal to 5% of total asset value as of the last day of the most recently ended fiscal quarter publicly available. Obligations under our 2020 Senior Unsecured Credit Facility are general unsecured obligations of our Operating Partnership and are guaranteed by the Company and certain subsidiaries of the Company. As of June 30, 2021, the Company was in compliance with all debt covenants.

There were $21.9 million letters of credit issued on the Company’s 2020 Senior Unsecured Revolving Credit Facility as of June 30, 2021.

Series A, B, C, D and E Senior Unsecured Notes

On December 30, 2020, we completed a debt private placement transaction consisting of (i) €400.00 million senior unsecured notes with a coupon of 1.62% due January 7, 2031 (“Series D”) and (ii) €350.00 million senior unsecured notes with a coupon of 1.65% due January 7, 2033 (“Series E”). Interest is payable on January 7 and July 7 of each year until maturity, with the first payment occurring July 7, 2021. The notes are general unsecured senior obligations of the Operating Partnership and are guaranteed by the Company and certain subsidiaries of the Company. In connection with entering into the agreement, we incurred approximately $4.5 million of debt issuance costs related to the issuance, which we amortize as interest expense under the effective interest method. The proceeds of the Series D and Series E issuance were used to provide long-term financing for the Halls acquisition, general corporate purposes and to repay a portion of the 2020 Senior Unsecured Term Loan Tranche A-1.

On April 26, 2019, we priced a debt private placement transaction consisting of $350.0 million senior unsecured notes with a coupon of 4.10% due January 8, 2030 (“Series C”). The transaction closed on May 7, 2019. Interest is payable on January 8 and July 8 of each year until maturity, with the first payment occurring January 8, 2020. The initial January 8, 2020 payment included interest accrued since May 7, 2019. The notes are general unsecured obligations of the Operating Partnership and are guaranteed by the Company and certain subsidiaries of the Company. The Company applied the proceeds of the private placement transaction to repay the indebtedness outstanding under our senior unsecured revolving credit facility incurred in connection with the funding of the Cloverleaf and Lanier acquisitions.

On November 6, 2018, we completed a debt private placement transaction consisting of (i) $200.0 million senior unsecured notes with a coupon of 4.68% due January 8, 2026 (“Series A”) and (ii) $400.0 million senior unsecured notes with a coupon of 4.86% due January 8, 2029 (“Series B”). The transaction closed on December 4, 2018. Interest is payable on January 8 and July 8 of each year until maturity, with the first payment occurring July 8, 2019. The notes are general unsecured senior obligations of the Operating Partnership and are guaranteed by the Company and certain subsidiaries of the Company. The Company used a portion of the proceeds of the private placement transaction to repay the outstanding balances of the $600.0 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).

The Series A, B, C, D, and E senior notes (collectively referred to as the “Senior Unsecured Notes”) and guarantee agreement includes a prepayment option executable at any time during the term of the loans. The prepayment can be either a partial payment or payment in full, as long as the partial payment is at least 5% of the outstanding principal. Any prepayment in full must include a make-whole amount, which is the discounted remaining scheduled payments due to the lender. The discount rate to be used is equal to 0.50% plus the yield to maturity reported for the most recently actively traded U.S. Treasury Securities with a maturity equal to the

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Notes to Condensed Consolidated Financial Statements - (Unaudited)

remaining average life of the prepaid principal. The Company must give each lender at least 10 days written notice whenever it intends to prepay any portion of the debt.

If a change in control occurs for 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 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 relevant note agreement, including:

•a maximum leverage ratio of less than or equal to 60% of our total asset value;

•a maximum unsecured indebtedness to qualified assets ratio of less than 0.60 to 1.00;

•a maximum total secured indebtedness ratio of less than 0.40 to 1.00;

•a minimum fixed charge coverage ratio of greater than or equal to 1.50 to 1.00; and

•a minimum unsecured debt service ratio of greater than or equal to 2.00 to 1.00.

As of June 30, 2021, 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 the Company refers 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. The Company 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 June 30, 2021, the amount of restricted cash associated with the 2013 Mortgage Loans was $3.6 million. Additionally, if we do not maintain certain financial thresholds, including a debt service coverage ratio of 1.10x, the cash generated will further be temporarily restricted and limited to the use for scheduled debt service and operating costs. The 2013 Mortgage Loans are non-recourse to the Company, subject to customary non-recourse provisions as stipulated in the agreements.

Debt Covenants

Our Senior Unsecured Credit Facilities, the Senior Unsecured Notes and 2013 Mortgage Loans all require financial statement reporting, periodic reporting of compliance with financial covenants, other established thresholds and performance measurements, and compliance with affirmative and negative covenants that govern our allowable business practices. The affirmative and negative covenants include, among others, continuation of insurance, maintenance of collateral (in the case of the 2013 Mortgage Loans), the maintenance of REIT status, and restrictions on our ability to enter into certain types of transactions or take on certain exposures. As of June 30, 2021, we were in compliance with all debt covenants.

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Americold Realty Trust and Subsidiaries

Notes to Condensed Consolidated Financial Statements - (Unaudited)

Loss on debt extinguishment, modifications and termination of derivative instruments

In connection with the refinancing of the 2018 Senior Unsecured Credit Facility during the first quarter of 2020, the Company recorded $0.8 million to “Loss on debt extinguishment, modifications and termination of derivative instruments” in the accompanying Condensed Consolidated Statements of Operations, representing the write-off of unamortized deferred financing costs from the 2018 Senior Unsecured Credit Facility. These write-offs were a result of two lenders in the 2018 Senior Unsecured Term Loan A Facility that did not participate in the 2020 Senior Unsecured Term Loan A Facility, accordingly those lenders’ portion of unamortized deferred financing costs were written off. Similarly, two lenders in the 2018 Senior Unsecured Revolving Credit Facility did not participate in the 2020 Senior Unsecured Revolving Credit Facility, and those lender’s portions of unamortized deferred financing costs were written off.

In the first quarter of 2021, the Company repaid $200 million of principal on the Senior Unsecured Term Loan A Facility and recorded $2.9 million to “Loss on debt extinguishment, modifications and termination of derivative instruments” in the accompanying Condensed Consolidated Statements of Operations, representing the write-off of unamortized deferred financing costs. Additionally, the Company recorded a reclassification from other comprehensive income to earnings to “Loss on debt extinguishment, modification, and termination of derivative instruments” related to the amortization of the portion deferred following the termination of interest rate swaps related to the Senior Unsecured Term Loan A Facility.

Aggregate future repayments of indebtedness

The aggregate maturities of the Company’s total indebtedness as of June 30, 2021, including amortization of principal amounts due under the mortgage notes, for each of the next five years and thereafter, are as follows:


As of June 30, 2021:	(In thousands)
June 30, 2022	$	7,129
June 30, 2023	405,134
June 30, 2024	—
June 30, 2025	326,650
June 30, 2026	200,000
Thereafter	1,639,350
Aggregate principal amount of debt	2,578,263
Less unamortized deferred financing costs	(11,994)
Total debt net of unamortized deferred financing costs	$	2,566,269

7. Derivative Financial Instruments

Designated Nonderivative Financial Instruments

As of June 30, 2021, the Company has designated €750 million debt and accrued interest as a hedge of our net investment in the international subsidiaries resulting from the Agro Acquisition. The remeasurement of these instruments is recorded in “Change in unrealized net gain (loss) on foreign currency” on the accompanying Condensed Consolidated Statements of Comprehensive Income.

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Notes to Condensed Consolidated Financial Statements - (Unaudited)

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 multiple interest rate swap agreements. The January 2019 agreement hedged $100.0 million of variable interest-rate debt and the August 2019 agreement hedged $225.0 million of variable interest-rate debt. Each agreement converted the Company’s variable-rate debt to a fixed-rate basis into 2024, thus reducing the impact of interest rate changes on future interest expense. These agreements involved the receipt of variable-rate amounts in exchange for fixed-rate interest payments over the life of the respective agreement without an exchange of the underlying notional amount. The Company’s objective for utilizing these derivative instruments was to reduce its exposure to fluctuations in cash flows due to changes in interest rates. Both of these interest rate swaps were terminated during the fourth quarter of 2020. The Company records a reclassification from other comprehensive income to earnings to “Loss on debt extinguishment, modification, and termination of derivative instruments” related to the amortization of the portion deferred following the termination, which totaled $1.4 million on the accompanying Condensed Consolidated Statement of Operations for the six months ended June 30, 2021. Additionally, during the next twelve months, the Company estimates that an additional $2.5 million will be reclassified as an increase to “Loss on debt extinguishment, modification, and termination of derivative instruments”. The Company classifies cash inflows and outflows from derivatives that hedge interest rate risk within operating activities on the Condensed Consolidated Statements of Cash Flows.

The Company is subject to volatility in foreign exchange rates due to foreign-currency denominated intercompany loans. The Company implemented cross-currency swaps on certain of these loans to manage the foreign currency exchange rate risk. 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 Company’s intercompany loan receivable balances of $153.5 million AUD and $37.5 million NZD were hedged under the cross-currency swap agreements at June 30, 2021 and December 31, 2020.

For derivatives designated and that qualify as cash flow hedges of foreign exchange risk, the gain or loss on the derivative is recorded in Accumulated Other Comprehensive Income and subsequently reclassified in the period(s) during which the hedged transaction affects earnings within the same income statement line item as the earnings effect of the hedged transaction. During the next twelve months, the Company estimates that an additional $0.3 million will be reclassified as an increase to gain/loss on foreign exchange.

The Company is subject to volatility in foreign currencies against its functional currency, the US dollar. Periodically, the Company uses foreign currency derivatives including currency forward contracts to manage its exposure to fluctuations in exchange rates. While these derivatives are hedging the fluctuations in foreign currencies, they do not meet the requirements to be accounted for as hedging instruments. As a result, the changes in the fair value of derivatives not designated in hedging relationships are recorded directly in earnings.

During 2019, in conjunction with the funding of the Nova Cold Acquisition, the Company entered into a foreign exchange forward with a notional to purchase CAD $217.0 million and sell USD with a maturity date of January 2, 2020. The Company simultaneously entered into a second contract with a notional to sell CAD $217.0 million and purchase USD with a maturity of January 31, 2020. These forwards were not designated as hedges in a qualifying hedging relationships. During the first quarter of 2020, the two outstanding foreign exchange forward contracts matured. The first contract with a notional to purchase CAD $217.0 million and sell USD matured on January 2, 2020 and settled for a gain of $2.1 million. The second contract with a notional to sell CAD $217.0 million and purchase USD maturing on January 31, 2020 was subsequently designated as a net investment hedge on January 2, 2020.

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Notes to Condensed Consolidated Financial Statements - (Unaudited)

The Company is also exposed to fluctuations in foreign exchange rates on property investments it holds in foreign countries. The Company uses forward currency forwards to hedge its exposure to changes in exchange rates on certain of its foreign investments as well. For derivatives designated as net investment hedges, the changes in the fair value of the derivatives are reported in Accumulated Other Comprehensive Income as part of the cumulative translation adjustment. Amounts are reclassified out of accumulated other comprehensive income into earnings when the hedged net investment is either sold or substantially liquidated.

On January 2, 2020, the Company designated the above noted forward currency contract with a notional to sell CAD $217.0 million and purchase USD maturing on January 31, 2020. This contract was then settled for a gain of $0.2 million and a new contract was entered into with same notional to sell CAD $217.0 million and purchase USD which matured on February 28, 2020. The second contract was settled for a gain of $2.8 million upon the maturity date of February 28, 2020.

As of June 30, 2021 and December 31, 2020, the Company did not have any foreign currency forwards that were designated as net investment hedges outstanding.

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 June 30, 2021 and December 31, 2020 (in thousands):


			Derivative Assets						Derivative Liabilities
			June 30, 2021				December 31, 2020				June 30, 2021				December 31, 2020


Designated derivatives
Foreign exchange contracts			$	5			$	—			$	4,594			$	9,611




Total derivatives	$	5			$	—			$	4,594			$	9,611

The following table presents the effect of the Company’s derivative financial instruments on the accompanying Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2021 and 2020, including the impacts to Accumulated Other Comprehensive Income (AOCI) (in thousands):

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Notes to Condensed Consolidated Financial Statements - (Unaudited)


	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 June 30,					Three Months Ended June 30,
	2021		2020			2021		2020

Interest rate contracts	$	—	$	(1,729)	Interest expense	$	—	$	(949)
Interest rate contracts	—		—		Loss on debt extinguishment, modifications and termination of derivative instruments(1)	(801)		—
Foreign exchange contracts	2,350		(15,097)		Foreign currency exchange gain, net	1,588		(12,309)
Foreign exchange contracts	—		—		Interest expense	(46)		(74)

Total designated cash flow hedges	$	2,350	$	(16,826)		$	741	$	(13,332)

(1) In conjunction with the termination of the interest rate swaps in 2020, the Company recorded amounts in other comprehensive income that will be reclassified as an adjustment to earnings over the term of the original hedges and respective borrowings. As of June 30, 2021, the Company recorded an increase to “Loss on debt extinguishment, modifications and termination of derivative instruments” related to this transaction.


	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

	Six Months Ended June 30,					Six Months Ended June 30,
	2021		2020			2021		2020

Interest rate contracts	$	—	$	(17,994)	Interest expense	$	—	$	(939)
Interest rate contracts	—		—		Loss on debt extinguishment, modifications and termination of derivative instruments(1)	(1,428)		—
Foreign exchange contracts	5,022		8,364		Foreign currency exchange gain, net	3,959		3,885
Foreign exchange contracts			—		Interest expense	(139)		207
Foreign exchange forwards	—		5,250			—		—
Total designated cash flow hedges	$	5,022	$	(4,380)		$	2,392	$	3,153

Interest expense recorded in the accompanying Condensed Consolidated Statements of Operations was $26.6 million and $23.2 million during the three months ended June 30, 2021 and 2020, respectively, and $52.5 million and $47.0 million during the six months ended June 30, 2021 and 2020, respectively. The Company recorded total foreign currency exchange loss, net in its Condensed Consolidated Statements of Operations of $0.1 million for

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Notes to Condensed Consolidated Financial Statements - (Unaudited)

the three months ended June 30, 2021 and a nominal gain for total foreign currency exchange gain, net for the six months ended June 30, 2021, During the three months ended June 30, 2020, the Company recorded total foreign currency exchange gain, net in its Condensed Consolidated Statements of Operations of $0.3 million. The total foreign currency exchange loss, net for the six months ended June 30, 2020 was $0.2 million.

The table below presents a gross presentation, the effects of offsetting, and a net presentation of the Company’s derivatives as of June 30, 2021 and December 31, 2020. The net amounts of derivative assets or liabilities can be reconciled to the tabular disclosure of fair value. The tabular disclosure of fair value provides the location that derivative assets and liabilities are presented on the accompanying Condensed Consolidated Balance Sheets (in thousands):


June 30, 2021
Offsetting of Derivative Assets
							Gross Amounts Not Offset in the Condensed Consolidated Balance Sheet
	Gross Amounts of Recognized Assets		Gross Amounts Offset in the Condensed Consolidated Balance Sheet		Net Amounts of Assets presented in the Condensed Consolidated Balance Sheet		Financial Instruments		Cash Collateral Received		Net Amount
Derivatives	$	5	$	—	$	5	$	(5)	$	—	$	—

Offsetting of Derivative Liabilities
							Gross Amounts Not Offset in the Condensed Consolidated Balance Sheet
	Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Condensed Consolidated Balance Sheet		Net Amounts of Liabilities presented in the Condensed Consolidated Balance Sheet		Financial Instruments		Cash Collateral Received		Net Amount
Derivatives	$	(4,594)	$	—	$	(4,594)	$	5	$	—	$	(4,589)

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Notes to Condensed Consolidated Financial Statements - (Unaudited)


December 31, 2020
Offsetting of Derivative Assets
							Gross Amounts Not Offset in the Condensed Consolidated Balance Sheet
	Gross Amounts of Recognized Assets		Gross Amounts Offset in the Condensed Consolidated Balance Sheet		Net Amounts of Assets presented in the Condensed Consolidated Balance Sheet		Financial Instruments		Cash Collateral Received		Net Amount
Derivatives	$	—	$	—	$	—	$	—	$	—	$	—

Offsetting of Derivative Liabilities
							Gross Amounts Not Offset in the Condensed Consolidated Balance Sheet
	Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Condensed Consolidated Balance Sheet		Net Amounts of Liabilities presented in the Condensed Consolidated Balance Sheet		Financial Instruments		Cash Collateral Received		Net Amount
Derivatives	$	9,611	$	—	$	9,611	$	—	$	—	$	9,611

As of June 30, 2021, the fair value of derivatives in a net liability position, which includes accrued interest but excludes any adjustment for nonperformance risk, related to these agreements was $4.9 million. As of June 30, 2021, the Company has not posted any collateral related to these agreements.

The Company has agreements with each of its derivative counterparties that contain a provision where the Company could be declared in default on its derivative obligations if repayment of the underlying indebtedness is accelerated by the lender due to the Company’s default on the indebtedness. In addition, termination events such as the Company’s credit agreement not being secured, or not being guaranteed pursuant to the Company, could cause the Company to be in default on its derivative obligations. The Company has not defaulted on any of its derivative obligations.

If the Company had breached any of these provisions at June 30, 2021, it could have been required to settle its obligations under the agreements at their termination value of $4.9 million.

Refer to Note 15 for additional details regarding the impact of the Company’s derivatives on AOCI for the three and six months ended June 30, 2021 and 2020, respectively.

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Notes to Condensed Consolidated Financial Statements - (Unaudited)

8. Sale-Leasebacks of Real Estate

The Company’s outstanding sale-leaseback financing obligations of real estate-related long-lived assets as of June 30, 2021 and December 31, 2020 are as follows:


	Maturity	Interest Rate as of June 30, 2021	June 30, 2021		December 31, 2020
			(In thousands)
1 warehouse – 2010	7/2030	10.34%	$	18,460	18,669
11 warehouses – 2007	9/2027	7.00%-19.59%	91,358		93,316
3 facilities – 2007 (Agro)	7/2031	10%	68,721		67,229
1 facility – 2013 (Agro)	12/2033	10%	5,976		5,846
Total sale-leaseback financing obligations			$	184,515	$	185,060

9. 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, senior unsecured notes and term loans are reported at their aggregate principal amount less unamortized 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, senior unsecured notes and term loans 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.

The Company’s financial assets and liabilities recorded at fair value on a recurring basis include derivative instruments. The fair value of interest rate swap and cross currency swap agreements, which are designated as cash flow hedges, and foreign currency forward contracts designated as net investment hedges, is based on inputs other than quoted market prices that are observable (Level 2). The fair value of foreign currency forward contracts is based on adjusting the spot rate utilized at the balance sheet date for translation purposes by an estimate of the forward points observed in active markets (Level 2). Additionally, the fair value of derivatives includes a credit valuation adjustment to appropriately incorporate nonperformance risk for the Company and the respective counterparty. Although the credit valuation adjustments associated with derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by us and our counterparties, the significance of the impact on the overall valuation of our derivative positions is insignificant. The Company’s cash equivalent money market funds and restricted cash assets are valued at quoted market prices in active

F-38

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Notes to Condensed Consolidated Financial Statements - (Unaudited)

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 June 30, 2021 and December 31, 2020, respectively.

The Company’s assets and liabilities recorded at fair value on a non-recurring basis include long-lived assets when events or changes in circumstances indicate that the carrying amounts may not be recoverable. The Company estimates the fair values using unobservable inputs classified as Level 3 of the fair value hierarchy.

The Company’s assets and liabilities measured or disclosed at fair value are as follows:


	Fair Value	Fair Value
	Hierarchy	June 30, 2021		December 31, 2020
		(In thousands)
Measured at fair value on a recurring basis:




Cross-currency swap asset	Level 2	$	5	$	—
Cross-currency swap liability	Level 2	$	4,594	$	9,611








Disclosed at fair value:
Mortgage notes, senior unsecured notes and term loans(1)	Level 3	$	2,706,589	$	2,827,440

(1)The carrying value of mortgage notes, senior unsecured notes and term loans is disclosed in Note 6.

10. 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. 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.

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Americold Realty Trust and Subsidiaries

Notes to Condensed Consolidated Financial Statements - (Unaudited)

The following tables summarize dividends and distributions declared and paid to the holders of common shares, restricted stock and OP units for the six months ended June 30, 2021 and 2020.


Six Months Ended June 30, 2021
Month Declared/Paid	Distribution Per Share		Distributions Declared		Distributions Paid
(In thousands, except per share amounts)
December (2020)/January	$	0.21	$	—	$	53,820
December(a)			—		(693)		Dividend equivalents accrued on unvested restricted stock units to be paid when the awards vest.
December (2020)/January			—		6		Dividend equivalents paid on unvested restricted stock units that are not expected to vest (recognized as additional compensation).
December (2020)/January(b)			—		1,823		Dividend equivalents paid on vested restricted stock units related to the market performance-based awards granted in 2018.
March/April	0.22		56,029		56,029
March(c)			—		(179)		Dividend equivalents accrued on unvested restricted stock units to be paid when the awards vest.
March/April			—		7		Dividend equivalents paid on unvested restricted stock units that are not expected to vest (recognized as additional compensation).
May/July	0.22		57,897		—






			$	113,926	$	110,813

(a)Declared in December 2020 and included in the $53.8 million declared, see description to the right regarding timing of payment.

(b)Dividend equivalents accrued related to the market performance-based awards granted in 2018 paid in January following award vesting date of January 8, 2021.

(c)Declared in March and included in the $56.0 million declared, see description to the right regarding timing of payment.

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Notes to Condensed Consolidated Financial Statements - (Unaudited)


Six Months Ended June 30, 2020
Month Declared/Paid	Dividend Per Share		Distributions Declared		Distributions Paid
(In thousands, except per share amounts)
December (2019)/January	$	0.20	$	—	$	38,796
December(a)			—		(169)		Dividend equivalents accrued on unvested restricted stock units to be paid when the awards vest.
December (2019)/January			—		4		Dividend equivalents paid on unvested restricted stock units that are not expected to vest (recognized as additional compensation).
March/April	0.21		42,568		42,568
March(b)			—		(233)		Dividend equivalents accrued on unvested restricted stock units to be paid when the awards vest.
March/April			—		10		Dividend equivalents paid on unvested restricted stock units that are not expected to vest (recognized as additional compensation).
May/July	0.21		43,271		—
			$	85,839	$	80,976

(a)Declared in December 2019 and included in the $38.8 million declared, see description to the right regarding timing of payment.

(b)Declared in March and included in the $42.6 million declared, see description to the right regarding timing of payment.

11. 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 awards and cliff vesting market performance-based awards are recognized on a straight-line basis over the associates’ 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.

The Company implemented an Employee Stock Purchase Plan (ESPP) which became effective on December 8, 2020. Under the ESPP, eligible employees are granted options to purchase common shares at the lower of 85% of the fair market value of the stock at the time of grant or 85% of the fair market value at the time of exercise. Options to purchase shares are granted twice yearly on or about January 1 and July 1, and exercisable on or about the succeeding July 1, and January 1, respectively, of each year. No participant may purchase more than $25,000 worth of common shares in a six-month offering period, or a maximum of 2,400 common shares. Additionally, employees may reduce their percentage election once during an offering period, but not increase that election until the next offering period. There are 5,000,000 common shares available for issuance under the ESPP. The share-based compensation cost of the ESPP options are measured based on grant date at fair value and are recognized on a straight-line basis over the offering period. ESPP assumptions and the related fair value per share table are disclosed in the three month period in which there is ESPP activity, such as an ESPP purchase. The ESPP did not have a material impact on share-based compensation expense during the three and six months ended June 30, 2021.

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Notes to Condensed Consolidated Financial Statements - (Unaudited)

Aggregate share-based compensation charges were $5.5 million and $4.5 million during the three months ended June 30, 2021 and 2020, respectively, and $10.5 million and $8.8 million during the six months ended June 30, 2021 and 2020, respectively. Routine share-based compensation expense is included as a component of “Selling, general and administrative” expense on the accompanying Condensed Consolidated Statements of Operations. As of June 30, 2021, there was $30.2 million of unrecognized share-based compensation expense related to stock options and restricted stock units, which will be recognized over a weighted-average period of 2.0 years.

Americold Realty Trust 2010 Equity Incentive Plans

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 for market performance-based awards are forfeitable in the event of termination for cause or when voluntary departure occurs during the vesting period. Otherwise, dividend equivalents are accrued at the time of declaration and are paid upon the vesting of the awards. Time-based awards have the right to receive non-forfeitable dividend equivalent distributions on unvested units throughout the vesting period. As of June 30, 2021 and December 31, 2020, the Company accrued $1.3 million and $2.5 million, respectively, of dividend equivalents on unvested units payable to associates and trustees.

All awards granted under the 2017 Plan dated on March 8, 2020 and thereafter include a retirement provision. The retirement provision allows that if a participant has either attained the age of 65, or has attained the age of 55 and has ten full years of service with the Company, and there are no facts, circumstances or events exist which would give the Company a basis to effect a termination of service for cause, then the award recipient is entitled to continued vesting of any outstanding equity-based awards which include the retirement provision. Should the participant choose to retire from the Company, the awards with the retirement provision would continue to vest. Accordingly, grants of time-based awards to an associate who has met the retirement criteria on or before the date of grant will be expensed at the date of grant. In addition, grants of time-based awards to associates who will meet the retirement criteria during the awards normal vesting period will be expensed between the date of grant and the date upon which the award recipient meets the retirement criteria. Time-based awards granted to recipients who meet the retirement criteria, and decide to retire, will continue vesting on the original vesting schedule as determined at grant date. A pro-rated portion of market-performance based awards granted to recipients who meet the retirement criteria will remain outstanding and eligible to vest based on actual performance through the last day of the performance period based on the number of days during the performance period that the recipient was employed.

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Notes to Condensed Consolidated Financial Statements - (Unaudited)

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 performance-based restricted stock unit awards cliff vest upon the achievement of the performance target, as well as completion of the performance period.

The following table summarizes restricted stock unit grants under the 2017 Plan during the three and six months ended June 30, 2021 and 2020, respectively:


Three Months Ended June 30,	Grantee Type	Number of Restricted Stock Units Granted	Vesting Period	Grant Date Fair Value (in thousands)
2021	Trustees	6,616	1 year	$	250
2021	Associates	6,581	1-3 years	$	252
2020	Trustees	8,517	1 year	$	300
2020	Associates	1,195	1 year	$	35


Six Months Ended June 30,	Grantee Type	Number of Restricted Stock Units Granted	Vesting Period	Grant Date Fair Value (in thousands)
2021	Trustees	6,616	1 year	$	250
2021	Associates	303,191	1-3 years	$	10,137
2020	Trustees	8,517	1 year	$	300
2020	Associates	284,666	1-3 years	$	8,734

Of the restricted stock units granted for the six months ended June 30, 2021, (i) 6,616 were time-based restricted stock units with a one year vesting period issued to non-employee trustees as part of their annual compensation, (ii) 194,410 were time-based graded vesting restricted stock units with various vesting periods ranging from one to three years issued to certain associates and (iii) 108,781 were market performance-based cliff vesting restricted stock units with a three-year vesting period issued to certain associates. The vesting of such market performance-based awards will be determined based on Americold Realty Trust’s total shareholder return (TSR) relative to the MSCI US REIT Index (RMZ), computed for the performance period that began January 1, 2021 and will end December 31, 2023.

Of the restricted stock units granted for the six months ended June 30, 2020, (i) 8,517 were time-based restricted stock units with a one year vesting period issued to non-employee trustees as part of their annual compensation, (ii) 175,856 were time-based graded vesting restricted stock units with various vesting periods ranging from one to three years issued to certain associates and (iii) 108,810 were market performance-based cliff vesting restricted stock units with a three-year vesting period issued to certain associates. The vesting of such market performance-based awards will be determined based on Americold Realty Trust’s total shareholder return (TSR) relative to the MSCI US REIT Index (RMZ), computed for the performance period that began January 1, 2020 and will end December 31, 2022.

In January 2021, following the completion of the applicable market-performance period, the Compensation Committee determined that the high level had been achieved for the 2018 awards and, accordingly, 799,591 units vested immediately, representing a vesting percentage of 150%.

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The following table provides a summary of restricted stock awards activity under the 2010 and 2017 Plans during the six months ended June 30, 2021:


Six Months Ended June 30, 2021
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(2)	Aggregate Intrinsic Value (in millions)
Non-vested as of December 31, 2020	563,224	$	21.0	42,856	$	1.6	873,581	$	42.6
Granted	201,026			—			108,781
Market-performance adjustment(3)	—			—			266,531
Vested	(212,697)			(14,286)			(799,591)
Forfeited	(27,689)			—			(19,201)
Non-vested as of June 30, 2021	523,864	$	19.8	28,570	$	1.1	430,101	$	16.3
Shares vested, but not released(1)	615,643	23.3		42,858	1.6		—	—
Total outstanding restricted stock units	1,139,507	$	43.1	71,428	$	2.7	430,101	$	16.3

(1)For certain vested restricted stock units, common share issuance is contingent upon 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 a 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 weighted average grant date fair value of these units is $9.38 per unit. During 2021 an additional 14,286 of these restricted stock units vested. Of the total restricted stock units vested, but not yet released, 615,643 time-based restricted stock units and 28,570 performance-based restricted stock units vested prior to January 1, 2020.

(2)The number of market performance-based restricted stock units are reflected within this table based upon the number of shares issuable upon achievement of the performance metric at target.

(3)Represents the increase in the number of original market-performance units awarded based on the final performance criteria achievement at the end of the defined performance period.

The weighted average grant date fair value of restricted stock units granted during the six months ended June 30, 2021 was $33.53 per unit, for vested and converted restricted stock units was $18.04, for forfeited restricted stock units was $32.06. The weighted average grant date fair value of non-vested restricted stock units was $31.08 and $24.27 per unit as of June 30, 2021 and December 31, 2020, respectively.

OP Units Activity

The Trustees and certain members of management may elect to receive their awards in the form of either OP units or restricted stock units (applicable to time-vested and market-performance based awards). The terms of the OP units mirror the terms of the restricted stock units granted in the respective period.

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The following table summarizes OP unit grants under the 2017 Plan during the three and six months ended June 30, 2021 and June 30, 2020:


Three Months Ended June 30,	Grantee Type	Number of OP Units Granted	Vesting Period	Grant Date Fair Value (in thousands)
2021	Trustees	17,863	1 year	$	675

2020	Trustees	16,325	1 year	$	575


Six Months Ended June 30,	Grantee Type	Number of OP Units Granted	Vesting Period	Grant Date Fair Value (in thousands)
2021	Trustees	17,863	1 year	$	675
2021	Associates	258,479	1-3 years	$	8,434
2020	Trustees	16,325	1 year	$	575
2020	Associates	255,720	1-3 years	$	7,719

The following table provides a summary of the OP unit awards activity under the 2017 Plan during the six months ended June 30, 2021:


Six Months Ended June 30, 2021
OP Units	Number of Time-Based OP Units	Aggregate Intrinsic Value (in millions)		Number of Market Performance-Based OP Units	Aggregate Intrinsic Value (in millions)
Non-vested as of December 31, 2020	93,180	$	3.5	178,865	$	6.7
Granted	78,335			198,007
Vested	(41,922)			—
Forfeited	—			—
Non-vested as of June 30, 2021	129,593	$	4.9	376,872	$	14.3
Shares vested, but not released	59,121	2.2		—	—
Total outstanding OP units	188,714	$	7.1	376,872	$	14.3

The OP units granted for the six months ended June 30, 2021 had an aggregate grant date fair value of $9.1 million.

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Stock Options Activity

The following table provides a summary of option activity for the six months ended June 30, 2021:


Options	Shares (In thousands)	Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Terms (Years)
Outstanding as of December 31, 2020	465,498	$	9.81	4.7
Granted	—	—
Exercised	(199,200)	9.81
Forfeited or expired	—	—
Outstanding as of June 30, 2021	266,298	9.81		3.7

Exercisable as of June 30, 2021	190,300	$	9.81	3.0

The total grant date fair value of stock option awards that vested during the six months ended for both June 30, 2021 and 2020 was approximately $0.6 million and $0.4 million, respectively. The total intrinsic value of options exercised for the six months ended June 30, 2021 and 2020 was $5.6 million and $6.7 million, respectively.

12. Income Taxes

The Company’s effective tax rates for the three and six months ended June 30, 2021 vary from the statutory U.S. federal income tax rate primarily due to the Company being designated as a REIT that is generally treated as a non-tax paying entity. During the three and six months ended June 30, 2021, the effective tax rates were benefited by the release of a valuation allowance as a result of deferred tax liabilities created through acquisitions that provide a positive source of income for valuation allowance assessment purposes and were negatively impacted by an increase to the statutory tax rate in the United Kingdom enacted during the quarter. These two discrete items increased the Company’s deferred tax expense by $10.8 million for the three and six months ended June 30, 2021.

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13. Employee Benefit Plans

The components of net period benefit cost for the three and six months ended June 30, 2021 and 2020, respectively, are as follows:


	Three Months Ended June 30, 2021
	Retirement Income Plan		National Service-Related Pension Plan		Other Post-Retirement Benefits		Superannuation		Total
Components of net periodic benefit cost:	(In thousands)
Service cost	$	—	$	—	$	—	$	16	$	16
Interest cost	237		234		2		5		478
Expected return on plan assets	(596)		(427)		—		(19)		(1,042)
Amortization of net loss	218		163		—		—		381
Amortization of prior service cost	—		—		—		15		15
Net pension benefit cost	$	(141)	$	(30)	$	2	$	17	$	(152)


	Three Months Ended June 30, 2020
	Retirement Income Plan		National Service-Related Pension Plan		Other Post-Retirement Benefits		Superannuation		Total
Components of net periodic benefit cost:	(In thousands)
Service cost	$	—	$	—	$	—	$	14	$	14
Interest cost	316		280		3		6		605
Expected return on plan assets	(501)		(367)		—		(15)		(883)
Amortization of net loss	254		151		—		—		405
Amortization of prior service cost	—		—		—		7		7

Net pension benefit cost	$	69	$	64	$	3	$	12	$	148


	Six Months Ended June 30, 2021
	Retirement Income Plan		National Service-Related Pension Plan		Other Post-Retirement Benefits		Superannuation		Total
Components of net periodic benefit cost:	(In thousands)
Service cost	$	—	$	—	$	—	$	32	$	32
Interest cost	474		468		4		10		956
Expected return on plan assets	(1,192)		(854)		—		(38)		(2,084)
Amortization of net loss	436		326		—		—		762
Amortization of prior service cost	—		—		—		15		15
Net pension benefit cost	$	(282)	$	(60)	$	4	$	19	$	(319)

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Notes to Condensed Consolidated Financial Statements - (Unaudited)


	Six Months Ended June 30, 2020
	Retirement Income Plan		National Service-Related Pension Plan		Other Post-Retirement Benefits		Superannuation		Total
Components of net periodic benefit cost:	(In thousands)
Service cost	$	—	$	—	$	—	$	28	$	28
Interest cost	631		559		7		12		1,209
Expected return on plan assets	(1,001)		(733)		—		(31)		(1,765)
Amortization of net loss	508		303		—		—		811
Amortization of prior service cost	—		—		—		15		15

Net pension benefit cost	$	138	$	129	$	7	$	24	$	298

The service cost component of defined benefit pension cost and postretirement benefit cost are reported within “Selling, general and administrative” and all other components of net period benefit cost are presented in “Other (expense) income, net” on the Condensed Consolidated Statements of Operations.

The Company expects to contribute to all plans an aggregate of $2.5 million in 2021, of which $1.2 million has been contributed through June 30, 2021.

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.

The New England Teamsters & Trucking Industry Multi-Employer Fund (Fund) was significantly 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. During the third quarter of 2017, the Company took the option to exit the Fund and convert to the new fund. The Company’s portion of the unfunded liability (undiscounted), estimated at $13.7 million, will be repaid in equal monthly installments of approximately $38,000 over 30 years, interest free. The Company recognized an expense and related liability equal to the present value of the withdrawal liability upon exiting the Fund, and amortizes the difference between such present value and the estimated unfunded liability through interest expense over the repayment period.

14. Commitments and Contingencies

Letters of Credit

As of June 30, 2021 and December 31, 2020, there were $21.9 million and $21.7 million, respectively, of letters of credit issued on the Company’s Senior Unsecured Revolving Credit Facility.

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Bonds

The Company had outstanding surety bonds of $10.9 million and $10.1 million as of June 30, 2021 and December 31, 2020, respectively. These bonds were issued primarily in connection with insurance requirements, special real estate assessments and construction obligations.

Collective Bargaining Agreements

As of June 30, 2021, approximately 36% of the Company’s labor force is covered by collective bargaining agreements. Collective bargaining agreements covering less than 2% of the labor force are set to expire during the remaining six months ended December 31, 2021.

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” in which Americold Corporation agreed to execute any additional documents necessary to fulfill the intent of the settlement agreement. The plaintiffs then sued Americold Corporation’s insurer to recover on the consent judgment. The case was ultimately dismissed in 2012, and the Kansas Supreme Court ruled that the 1994 consent judgment had expired and was not revivable 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. The Court of Appeals ordered that the case be remanded to the Kansas State Court and the judgment in

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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 occurred on January 19, 2016.

On March 7, 2016, the United States Supreme Court ruled that there was no federal diversity jurisdiction. Following the decision, the United States District Court for the District of Kansas entered an Order vacating the summary judgment and remanding the case to Kansas state court. 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 requiring Americold to sign a new document reinstating the consent judgment assigned in the 1994 Settlement Agreement. 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. The Kraft and Safeway plaintiffs have appealed their dismissals. The trial court has stayed the proceedings pending the appeal. 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. Given the status of the proceedings to date, a liability amount cannot be reasonably estimated. The Company believes the ultimate outcome of this matter 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 (the “PFS Action”).

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 addition to an order enjoining Americold from making offers to purchase the properties leased by PFS, PFS sought compensatory, consequential and/or punitive damages. The Company filed a motion to require PFS to reimburse the Company for its legal fees it incurred for the state court action before PFS is allowed to proceed in the federal court action. On February 18, 2020, the Court granted Americold’s request for an award of legal fees from PFS but declined to stay the case pending payment of that award. As to the amount of the award, the Company and PFS have entered into a stipulation that PFS will pay Americold $550,000 to reimburse the Company for its legal fees upon the conclusion of the case. PFS has since amended its complaint, and Americold has filed a motion to dismiss that amended complaint.

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On June 25, 2020, Fenway Polar Representative (“Fenway”), an entity alleging to represent the interests of the former shareholders of PFS, filed a lawsuit in the Supreme Court of the State of New York, New York County alleging based on similar factual allegations made in the PFS Action it is seeking damages in excess of $400 million due to the Company’s alleged fraudulent and tortious interference in the sale of PFS (the “Fenway Action”). On May 10, 2021, the trial court dismissed the Fenway case with prejudice finding that Fenway did not have standing to assert their claims. Fenway has appealed this decision.

The Company denies the allegations of the PFS Action and the Fenway Action and believes the plaintiffs’ claims are without merit and intends to vigorously defend itself against the allegations. 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 condensed 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 June 30, 2021 and December 31, 2020. 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 June 30, 2021. 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 June 30, 2021 and December 31, 2020.

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15. Accumulated Other Comprehensive Loss

The Company reports activity in AOCI for foreign currency translation adjustments, including the translation adjustment for investments in partially owned entities, unrealized gains and losses on cash flow hedge derivatives, and minimum pension liability adjustments (net of tax). The activity in AOCI for the three and six months ended June 30, 2021 and 2020 is as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Pension and other postretirement benefits:
Balance at beginning of period, net of tax	$	(2,944)	$	(4,344)	$	(3,325)	$	(4,758)
Gain arising during the period	381		405		762		811
Less: Tax expense	—		—		—		—
Net gain arising during the period	381		405		762		811
Amortization of prior service cost (1)	15		7		15		15
Less: Tax expense	—		—		—		—
Net amount reclassified from AOCI to net (loss) income	15		7		15		15
Other comprehensive income, net of tax	396		412		777		826
Balance at end of period, net of tax	(2,548)		(3,932)		(2,548)		(3,932)
Foreign currency translation adjustments:
Balance at beginning of period, net of tax	(7,448)		(32,257)		3,234		(6,710)
Gain (loss) on foreign currency translation	7,026		10,337		(3,656)		(15,210)

Less: Tax expense	—		—		—		—
Net gain (loss) on foreign currency translation	7,026		10,337		(3,656)		(15,210)
Balance at end of period, net of tax	(422)		(21,920)		(422)		(21,920)
Designated derivatives:
Balance at beginning of period, net of tax	(3,267)		(6,697)		(4,288)		(2,658)
Unrealized gain (loss) on cash flow hedge derivatives	2,350		(16,826)		5,022		(9,630)
Unrealized gain on net investment hedge derivative	—		—		—		5,250
Less: Tax expense	—		—		—		—
Net gain (loss) on designated derivatives	2,350		(16,826)		5,022		(4,380)
Net amount reclassified from AOCI to net (loss) income (interest expense)	46		1,023		139		732
Net amount reclassified from AOCI to net (loss) income (loss on debt extinguishment, modifications and termination of derivative instruments)	801		—		1,428		—
Net reclassified from AOCI to net (loss) income (foreign exchange (gain) loss)	(1,588)		12,309		(3,959)		(3,885)
Balance at end of period, net of tax	(1,658)		(10,191)		(1,658)		(10,191)

Accumulated other comprehensive loss	$	(4,628)	$	(36,043)	$	(4,628)	$	(36,043)

(1)Amounts reclassified from AOCI for pension liabilities are recognized in “Selling, general and administrative” in the accompanying condensed consolidated statements of operations.

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16. Segment Information

Our principal operations are organized into four reportable segments: Warehouse, Third-party managed, Transportation and Other.

•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 (10) government-approved temperature-controlled storage and inspection services, (11) fumigation, (12) pre-cooling and cold treatment services, and (13) ripening. 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 owned a limestone quarry in Carthage, Missouri. Revenues were generated from the sale of limestone mined at our quarry. Cost of operations for our quarry consisted primarily of labor, equipment, fuel and explosives. We do not view the operation of the quarry as an integral part of our business, and as a result this business segment was subsequently sold on July 1, 2020.

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, acquisition, litigation and other expense, impairment of long-lived assets, gain or loss on sale of real estate and all components of non-operating other income and expense. 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.

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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 income before income tax for the three and six months ended June 30, 2021 and 2020 (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Segment revenues:
Warehouse	$	503,734	$	372,411	$	989,185	$	753,479
Third-party managed	72,173		72,954		145,245		137,875
Transportation	78,800		34,861		155,072		70,778
Other	—		2,296		—		4,459
Total revenues	654,707		482,522		1,289,502		966,591

Segment contribution:
Warehouse	144,379		120,132		290,560		246,905
Third-party managed	1,693		3,299		6,075		7,068
Transportation	9,250		4,772		15,953		9,577
Other	(33)		135		(59)		190
Total segment contribution	155,289		128,338		312,529		263,740

Reconciling items:
Depreciation and amortization	(84,459)		(52,399)		(161,670)		(104,003)
Selling, general and administrative	(42,475)		(32,340)		(87,527)		(69,233)
Acquisition, litigation and other	(3,922)		(2,801)		(24,673)		(4,489)
Impairment of long-lived assets	(1,528)		(3,667)		(1,528)		(3,667)
Gain from sale of real estate	—		19,414		—		21,875
Interest expense	(26,579)		(23,178)		(52,535)		(47,048)
Interest income	191		261		415		848

Loss on debt extinguishment, modifications and termination of derivative instruments	(925)		—		(4,424)		(781)
Foreign currency exchange (loss) gain, net	(140)		315		33		(177)
Other expense, net	184		44		689		915
Loss from investments in partially owned entities	(61)		(129)		(761)		(156)

(Loss) income before income tax benefit (expense)	$	(4,425)	$	33,858	$	(19,452)	$	57,824

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Americold Realty Trust and Subsidiaries

Notes to Condensed Consolidated Financial Statements - (Unaudited)

The following table details our assets by reportable segments, with a reconciliation to total assets reported for each of the periods presented in the accompanying Condensed Consolidated Balance Sheets.


	June 30, 2021		December 31, 2020
	(In thousands)
Assets:
Warehouse	$	5,078,094	$	4,815,587
Managed	47,064		52,818
Transportation	157,096		151,872
Other	—		35
Total segments assets	5,282,254		5,020,312

Reconciling items:
Corporate assets	357,353		621,836
Unallocated acquisitions(1)	2,140,971		2,144,096
Investments in partially owned entities	42,742		44,907
Total reconciling items	2,541,066		2,810,839
Total assets	$	7,823,320	$	7,831,151

(1) The assets acquired in 2020 related to the Agro acquisition are reflected in the tables above within the row titled ‘Unallocated Acquisitions’ as the acquired assets have not yet been assigned to the respective segments as of June 30, 2021 or December 31, 2020. The assets will be assigned to the Warehouse and Transportation segments during the measurement period.

17. Earnings 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 and OP units granted to certain employees and non-employee trustees who have the right to participate in the distribution of common dividends while the restricted stock units and OP units are unvested.

The shares issuable upon settlement of forward sale agreements 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 agreements 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 agreements, the delivery of common shares would result in an increase in the number of shares outstanding and dilution to earnings per share.

A reconciliation of the basic and diluted weighted-average number of common shares outstanding for the three and six months ended June 30, 2021 and 2020 is as follows (in thousands):

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Americold Realty Trust and Subsidiaries

Notes to Condensed Consolidated Financial Statements - (Unaudited)


	Three Months Ended June 30,		Six Months Ended June 30,
	2021	2020	2021	2020
Weighted average common shares outstanding – basic	253,213	201,787	253,076	201,294
Dilutive effect of share-based awards	—	1,634	—	1,459
Equity forward contracts	—	1,877	—	1,834
Weighted average common shares outstanding – diluted	253,213	205,298	253,076	204,587

For the three and six months ended June 30, 2021, potential common shares under the treasury stock method and the if-converted method were antidilutive because the Company reported a net loss in both periods. Consequently, the Company did not have any adjustments in this period between basic and diluted loss per share related to share-based awards and equity forward contract stock shares.

The table below presents the weighted-average number of antidilutive potential common shares that are not considered in the calculation of diluted (loss) income per share (in thousands):


	Three Months Ended June 30,		Six Months Ended June 30,
	2021	2020	2021	2020
Employee stock options	292	—	353	—
Restricted stock units	965	165	965	—
OP units	497	—	428	—
Equity forward contracts	603	—	5,134	—
	2,357	165	6,880	—

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Americold Realty Trust and Subsidiaries

Notes to Condensed Consolidated Financial Statements - (Unaudited)

18. Revenue from Contracts with Customers

Disaggregated Revenue

The following tables represent a disaggregation of revenue from contracts with customers for the three and six months ended June 30, 2021 and 2020 by segment and geographic region:


	Three Months Ended June 30, 2021
	North America		Europe		Asia-Pacific		South America		Total
	(In thousands)
Warehouse rent and storage	$	167,038	$	19,622	$	15,078	$	2,902	$	204,640
Warehouse services(1)	220,622		27,926		41,260		1,649		291,457
Third-party managed	67,006		—		5,167		—		72,173
Transportation	39,037		33,838		5,497		428		78,800

Total revenues (2)	493,703		81,386		67,002		4,979		647,070
Lease revenue (3)	7,637		—		—		—		7,637
Total revenues from contracts with all customers	$	501,340	$	81,386	$	67,002	$	4,979	$	654,707


	Three Months Ended June 30, 2020
	North America		Europe		Asia-Pacific		South America		Total
	(In thousands)
Warehouse rent and storage	$	144,104	$	—	$	12,639	$	1,433	$	158,176
Warehouse services(1)	173,510		—		34,566		672		208,748
Third-party managed	68,756		—		4,198		—		72,954
Transportation	28,065		—		6,327		469		34,861
Other	2,296		—		—		—		2,296
Total revenues (2)	416,731		—		57,730		2,574		477,035
Lease revenue (3)	5,487		—		—		—		5,487
Total revenues from contracts with all customers	$	422,218	$	—	$	57,730	$	2,574	$	482,522

(1)Warehouse services revenue includes sales of product that Americold purchases on the spot market, repackages, and sells to customers. Such revenues totaled $3.5 million for the three months ended June 30, 2021. This revenue is generated by an entity acquired in December 2020, therefore there was no related revenue during the three months ended and June 30, 2020.

(2)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.

(3)Revenues are within the scope of Topic 842, Leases.

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Americold Realty Trust and Subsidiaries

Notes to Condensed Consolidated Financial Statements - (Unaudited)


	Six Months Ended June 30, 2021
	North America		Europe		Asia-Pacific		South America		Total
	(In thousands)
Warehouse rent and storage	$	331,285	$	36,874	$	30,254	$	5,328	$	403,741
Warehouse services	431,466		53,262		83,730		3,174		571,632
Third-party managed	134,702		—		10,543		—		145,245
Transportation	79,352		64,450		10,470		800		155,072

Total revenues (1)	976,805		154,586		134,997		9,302		1,275,690
Lease revenue (2)	13,812		—		—		—		13,812
Total revenues from contracts with all customers	$	990,617	$	154,586	$	134,997	$	9,302	$	1,289,502


	Six Months Ended June 30, 2020
	North America		Europe		Asia-Pacific		South America		Total
	(In thousands)
Warehouse rent and storage	$	286,466	$	—	$	25,640	$	2,465	$	314,571
Warehouse services	355,509		—		70,694		1,302		427,505
Third-party managed	129,482		—		8,393		—		137,875
Transportation	55,549		—		14,276		953		70,778
Other	4,448		—		—		—		4,448
Total revenues (1)	831,454		—		119,003		4,720		955,177
Lease revenue (2)	11,414		—		—		—		11,414
Total revenues from contracts with all customers	$	842,868	$	—	$	119,003	$	4,720	$	966,591

(1)Warehouse services revenue includes sales of product that Americold purchases on the spot market, repackages, and sells to customers. Such revenues totaled $6.4 million for the six months ended June 30, 2021. This revenue is generated by an entity acquired in December 2020, therefore there was no related revenue during the six months ended June 30, 2020.

(3)Revenues are within the scope of Topic 842, Leases.

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.

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Americold Realty Trust and Subsidiaries

Notes to Condensed Consolidated Financial Statements - (Unaudited)

The Company has no material warranties or obligations for allowances, refunds or other similar obligations.

As of June 30, 2021, the Company had $642.6 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 16% of these remaining performance obligations as revenue in 2021, and the remaining 84% to be recognized over a weighted average period of 14.0 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 accompanying 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 storage and handling services, before revenue is recognized, resulting in contract liabilities. These assets and liabilities are reported on the accompanying 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 and six months ended June 30, 2021, were not materially impacted by any other factors.

Opening and closing receivables balances related to contracts with customers accounted for under ASC 606 were $319.8 million and $321.5 million as of June 30, 2021 and December 31, 2020, respectively, and $198.4 million and $213.2 million as of June 30, 2020 and December 31, 2019, 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 $20.3 million and $19.2 million as of June 30, 2021 and December 31, 2020, respectively, and $15.3 million and $16.4 million as of June 30, 2020 and December 31, 2019, respectively. Substantially all revenue that was included in the contract liability balances at the beginning of 2020 and 2019 has been recognized as of June 30, 2021 and June 30, 2020, respectively, and represents revenue from the satisfaction of monthly storage and handling services with inventory that turns on average every 30 days.

19. Subsequent Events

On August 3, 2021, the Company entered into an equity purchase agreement to acquire Newark Facility Management for $390 million. The Company expects the transaction to close in September 2021.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q. In addition, the following discussion contains forward-looking statements, such as statements regarding our expectation for future performance, liquidity and capital resources, that involve risks, uncertainties and assumptions that could cause actual results to differ materially from our expectations. Our actual results may differ materially from those contained in or implied by any forward-looking statements. Factors that could cause such differences include those identified below and those described under Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2020.

MANAGEMENT’S OVERVIEW

We are the world’s largest publicly traded REIT focused on the ownership, operation, acquisition and development of temperature-controlled warehouses. We are organized as a self-administered and self-managed REIT with proven operating, development and acquisition expertise. As of June 30, 2021, we operated a global network of 246 temperature-controlled warehouses encompassing over 1.4 billion cubic feet, with 200 warehouses in North America, 27 in Europe, 16 warehouses in Asia-Pacific, and three warehouses in South America. In addition, we hold two minority interests in Brazilian-based joint ventures, one with SuperFrio, which owns or operates 33 temperature-controlled warehouses and one with Comfrio, which owns or operates 24 temperature-controlled warehouses.

Components of Our Results of Operations

Warehouse. Our primary source of revenues consists of rent, storage, and warehouse services fees. Our rent, storage, and warehouse services revenues are the key drivers of our financial performance. Rent and storage revenues consist of recurring, periodic charges related to the storage of frozen, perishable or other products in our warehouses by our customers. We also provide these customers with a wide array of handling and other warehouse services, such as (1) receipt, handling and placement of products into our warehouses for storage and preservation, (2) retrieval of products from storage upon customer request, (3) blast freezing, which involves the rapid freezing of non-frozen products, including individual quick freezing for agricultural produce and seafood, (4) case-picking, which involves selecting product cases to build customized pallets, (5) kitting and repackaging, which involves assembling custom product packages for delivery to retailers and consumers, and labeling services, (6) order assembly and load consolidation, (7) exporting and importing support services, (8) container handling, (9) cross-docking, which involves transferring inbound products to outbound trucks utilizing our warehouse docks without storing them in our warehouses, (10) government-approved temperature-controlled storage and inspection services, (11) fumigation, (12) pre-cooling and cold treatment services, and (13) ripening. We refer to these handling and other warehouse services as our value-added services.

Cost of operations for our warehouse segment consist of power, other facilities costs, labor, and other service costs. Labor, the largest component of the cost of operations from our warehouse segment, consists primarily of employee wages, benefits, and workers’ compensation. Trends in our labor expense are influenced by changes in headcount and compensation levels, changes in customer requirements, workforce productivity, labor availability, governmental policies and regulations, variability in costs associated with medical insurance and the impact of workplace safety programs, inclusive of the number and severity of workers’ compensation claims. Labor expense can also be impacted as a result of discretionary bonuses. In response to the COVID-19 pandemic, we have incorporated certain activities such as staggered break schedules, social distancing, and other changes to processes that can create inefficiencies, all of which we expect to continue to incur going forward. Our second largest cost of operations from our warehouse segment is power utilized in the operation of our temperature-controlled

warehouses. As a result, trends in the price for power in the regions where we operate may have a significant effect on our financial results. We may from time to time hedge our exposure to changes in power prices through fixed rate agreements or, to the extent possible and appropriate, through rate escalations or power surcharge provisions within our customer contracts. Additionally, business mix impacts power expense depending on the temperature zone or type of freezing capabilities required. Other facilities costs include utilities other than power, property insurance, property taxes, sanitation (which include incremental supplies as a result of COVID-19), repairs and maintenance on real estate, rent under real property operating leases, where applicable, security, and other related facilities costs. Other services costs include equipment costs, warehouse consumables (e.g., shrink-wrap and uniforms), PPE to maintain the health and safety of our associates, warehouse administration and other related services costs.

Third-Party Managed. We receive a reimbursement of substantially all expenses for warehouses that we manage on behalf of third-party owners, with all reimbursements recognized as revenues under the relevant accounting guidance. We also earn management fees, incentive fees upon achieving negotiated performance and cost-savings results, or an applicable mark-up on costs. Cost of operations for our third-party managed segment is reimbursed on a pass-through basis (typically within two weeks).

Transportation. We charge transportation fees, including fuel surcharges, to our customers for whom we arrange the transportation of their products. Cost of operations for our transportation segment consists primarily of third-party carrier charges, which are impacted by factors affecting those carriers. We supplemented our regional, national and truckload consolidation business with the Hall’s acquisition, which services the Northeast corridor of the U.S. with an owned and maintained fleet. Our acquisition of Agro Merchants further expands our Transportation service offering. Agro Merchants operates its own fleet of temperature-controlled vehicles in the U.S., Ireland and UK and also offers a variety of non-asset based transportation management services. These include multi-modal global freight forwarding services to support our customers’ needs.

Other Consolidated Operating Expenses. We also incur depreciation and amortization expenses, corporate-level selling, general and administrative expenses and corporate-level acquisition, litigation and other expenses.

Our depreciation and amortization charges result primarily from the capital-intensive nature of our business. The principal components of depreciation relate to our warehouses, including buildings and improvements, refrigeration equipment, racking, leasehold improvements, material handling equipment, furniture and fixtures, and our computer hardware and software. Amortization relates primarily to intangible assets for customer relationships.

Our corporate-level selling, general and administrative expenses consist primarily of wages and benefits for management, administrative, business development, account management, project management, marketing, engineering, supply-chain solutions, human resources and information technology personnel, as well as expenses related to equity incentive plans, communications and data processing, travel, professional fees, bad debt, training, office equipment and supplies. Trends in corporate-level selling, general and administrative expenses are influenced by changes in headcount and compensation levels and achievement of incentive compensation targets. To position ourselves to meet the challenges of the current business environment, we have implemented a shared services support structure to better manage costs and enhance the efficiency of our operations.

Our corporate-level acquisition, litigation and other expenses consist of costs that we view outside of selling, general and administrative expenses with a high level of variability from period-to-period, and include the following:

•Acquisition related costs include costs associated with transactions, whether consummated or not, such as advisory, legal, accounting, valuation and other professional or consulting fees. We also

include integration costs pre- and post-acquisition that reflect work being performed to facilitate merger and acquisition integration, such as employee retention expense and work associated with information systems and other projects including spending to support future acquisitions, which primarily consist of professional services.

•Litigation costs incurred in order to defend ourselves from litigation charges outside of the normal course of business and related settlement costs.

•Severance costs representing certain contractual and negotiated severance and separation costs from exited former executives, reduction in headcount due to synergies achieved through acquisitions or operational efficiencies, and reduction in workforce costs associated with exiting or selling non-strategic warehouses.

•Equity acceleration costs representing the unrecognized expense for share-based awards that vest and convert to common shares in advance of the original negotiated vesting date and any other equity award changes resulting in accounting for the award as a modification.

•Non-offering related equity issuance expenses whether incurred through our initial public offering, follow-on offerings or secondary offerings.

•Terminated site operations costs represent expenses incurred to return leased sites to their original physical state at lease inception in connection with the termination of the applicable underlying lease. These terminations were part of our strategic efforts to exit or sell non-strategic warehouses as opposed to ordinary course lease expirations. Repair and maintenance expenses associated with our ordinary course operations are reflected as operating expenses on our condensed consolidated statement of operations.

•Other costs relate to insurance claim deductibles and related recoveries (second quarter 2021) and additional superannuation pension costs related to prior years upon review by the Australian Tax Office (third quarter 2020).

Key Factors Affecting Our Business and Financial Results

Acquisitions and Joint Ventures

On May 28, 2021, we acquired Bowman Stores for £75.5 million, or $107.1 million USD, based on the spot rate on the date of the transaction. The acquisition was funded using cash drawn on our 2020 Senior Unsecured Revolving Credit Facility.

On May 5, 2021, we acquired KMT Brrr! for $70.8 million. The acquisition was funded using cash drawn on our 2020 Senior Unsecured Revolving Credit Facility.

On March 1, 2021, we acquired Liberty Freezers for C$55.0 million. The acquisition was funded using cash drawn on our 2020 Senior Unsecured Revolving Credit Facility.

On December 30, 2020, we completed the acquisition of Agro Merchants for total consideration of $1.59 billion, including cash received of $47.5 million. This was comprised of cash consideration totaling $1.08 billion, of which $49.7 million was deferred, and the issuance of 14,166,667 common shares of beneficial interest to Oaktree and Agro management, with a fair value of $512.1 million based upon the closing share price on December 29, 2020 of $36.15. Financing lease and sale-leaseback obligations associated with the acquisition totaled $112.7 million and when added to the total consideration transferred brings the total transaction cost to approximately $1.7 billion. Agro Merchants operated more than 236 million cubic feet of temperature-controlled warehouse and distribution space across 46 facilities and provided transportation services in the United States, Europe, Australia and Chile. The Chile facility and operations were subject to a joint venture agreement whereby

there was a non-controlling interest holder with a 35% ownership interest. The results of this facility were consolidated in our results of operations. During the second quarter of 2021, we purchased the 35% ownership interest from the third party, and now own 100% of this facility and the operations. Since the date of acquisition, we have reported the results of the facilities within our warehouse segment, and the results of Agro’s transportation services within our transportation segment.

On November 2, 2020, we completed the acquisition of New Jersey based Hall’s Warehouse Corporation for $489.2 million. Hall’s consisted of eight facilities near the Port of Newark. Hall’s also provides transportation services to its customers. Since the date of acquisition, we have reported the results of the facilities within our warehouse segment, and the results of Hall’s transportation services within our transportation segment.

On August 31, 2020, we completed the acquisition of Caspers Cold Storage for cash consideration of approximately $25.6 million utilizing available cash on hand. Caspers consisted of a single temperature-controlled warehouse located in Tampa, Florida. Since the date of acquisition, we have reported the results of this facility within our warehouse segment.

Additionally, on August 31, 2020, we completed the acquisition of AM-C Warehouses for cash consideration of approximately $82.7 million utilizing available cash on hand. AM-C Warehouses consisted of an owned facility in Mansfield, Texas and a leased facility in Grand Prairie, Texas. Since the date of acquisition, we have reported the results of these facilities within our warehouse segment.

On March 6, 2020, we acquired a 14.99% ownership interest in Superfrio Armazéns Gerais S.A. for Brazil Real Dollars of $117.8 million, or approximately USD $25.7 million, inclusive of certain legal fees. We funded the purchase price using cash on hand. Our pro-rata share of SuperFrio’s results are included within “(Loss) income from investments in partially owned entities”. As of June 30, 2021, SuperFrio owns or operates 33 temperature-controlled warehouses in Brazil.

On January 2, 2020, we completed the purchase of all outstanding shares of Nova Cold for cash consideration of C$338.7 million (USD $260.6 million), net of cash received. Nova Cold consisted of four temperature-controlled facilities in Toronto, Calgary and Halifax. The acquisition was funded utilizing proceeds from the settlement of our April 2019 forward sale agreement combined with cash drawn on our 2018 Senior Unsecured Revolving Credit Facility. Since the date of acquisition, we have reported the results of these facilities within our warehouse segment.

Also, on January 2, 2020, we completed the purchase of all outstanding membership interests of Newport Cold for cash consideration of $57.7 million, net of cash received, utilizing available cash on hand. Newport Cold consists of a single temperature-controlled warehouse located in St. Paul, Minnesota. Since the date of acquisition, we have reported the results of this facility within our warehouse segment.

Refer to Note 2, 3 and 4 of the Notes to the Condensed Consolidated Financial Statements for further information.

COVID-19

We are continuing to closely monitor the impact of the COVID-19 pandemic on all aspects of our business and geographies, including how it will impact our customers and business partners. While we did not incur significant disruptions during 2020 from the COVID-19 pandemic, the six-months ended June 30, 2021 were negatively impacted by COVID-19 related disruptions in (1) the food supply chain; (ii) our customers’ production of goods; and (iii) the labor market impacting availability and cost. COVID-19 restrictions in certain markets where we or our customers operate continue to impact the food supply chain and our business. As a result, occupancy and throughput volume continue at lower than normal levels experienced prior to COVID-19. As the Company continues to protect its employees from the spread of COVID-19, it is incurring elevated labor related costs and incremental health and safety supplies costs relative to its pre-pandemic experience. The extent to which COVID-19 impacts our operations will depend on future developments, which are highly uncertain and cannot be predicted with any degree of confidence, including the scope, severity, duration and geographies of the outbreak, the occurrence of additional waves or spikes in infection rates (including the spread of variant strains), the actions taken to contain the COVID-19 pandemic or mitigate its impact as requested or mandated by governmental authorities or otherwise voluntarily taken by individuals or businesses, and the direct and indirect economic effects of the outbreak and containment measures, among others. Our business is deemed an “essential business” as defined by the Department of Homeland Security, which means that our associates are able to continue working in our facilities during “shelter-in-place” or “stay-at-home” orders. The outbreak of COVID-19 in the United States and other countries in which we operate, has significantly adversely impacted global economic activity and has contributed to significant volatility and negative pressure in financial markets. The global impact of the outbreak has led many nations, states and local authorities to periodically institute “shelter-in-place” or “stay-at-home” orders, mandate business and school closures and restrict travel. Certain states and cities, including where we own properties, have development sites and where our principal place of business is located, have also reacted by instituting restrictions on travel, “shelter in place” rules, restrictions on types of business that may continue to operate, and/or restrictions on the types of construction projects that may continue during peak outbreaks. These restrictions vary widely by jurisdiction and may continue to change as the COVID-19 pandemic progresses. The negative impacts of the COVID-19 pandemic are pervasive across a broad spectrum of industries, including industries in which we, our customers and business partners operate. Negative impacts from COVID-19 may negatively impact the business and operations of our customers and business partners (including our suppliers). Further, the impacts of a potentially worsening of global economic conditions and the continued disruptions to, and volatility in, the credit and financial markets, consumer and business spending as well as other unanticipated consequences continue to remain unknown. The impacts of locations of outbreaks and actions mandated by governmental authorities or taken voluntarily by businesses and individuals to contain or mitigate the spread of COVID-19 and the timing of the repeal or loosening of such restrictions are also unknown. As a result, we cannot at this time predict the impact of the COVID-19 pandemic, but it could have a material adverse effect on our business, financial condition, liquidity, results of operations and prospects. Refer to our Annual Report on Form 10-K/A for the year ended December 31, 2020 for further considerations, “Risk Factors - Risks Related to Public Health Crises - We face various risks and uncertainties related to public health crises, including the recent and ongoing global outbreak of the novel coronavirus and variants (COVID-19). The COVID-19 pandemic is growing and its impacts are uncertain and hard to measure and may have a material adverse effect on us.”

Foreign Currency Translation Impact on Our Operations

Our consolidated revenues and expenses are subject to variations caused by the net effect of foreign currency translation on revenues and expenses incurred by our operations outside the United States. Future fluctuations of foreign currency exchange rates and their impact on our Condensed Consolidated Statements of Operations are inherently uncertain. As a result of the relative size of our international operations, these fluctuations may be

material on our results of operations. Our revenues and expenses from our international operations are typically denominated in the local currency of the country in which they are derived or incurred. Therefore, the impact of foreign currency fluctuations on our results of operations and margins is partially mitigated.

The following table shows a comparison of underlying average exchange rates of the foreign currencies that impacted our U.S. dollar-reported revenues and expenses during the periods discussed herein together with a comparison against the exchange rates of such currencies at the end of the applicable periods presented herein. The rates below represent the U.S. dollar equivalent of one unit of the respective foreign currency. Amounts presented in constant currency within our Results of Operations are calculated by applying the average foreign exchange rate from the comparable prior year period to actual local currency results in the current period, rather than the actual exchange rates in effect during the respective period. While constant currency metrics are a non-GAAP calculation and do not represent actual results, the comparison allows the reader to understand the impact of the underlying operations in addition to the impact of changing foreign exchange rates.


	Foreign exchange rates as of June 30, 2021	Average foreign exchange rates used to translate actual operating results for the three months ended June 30, 2021	Average foreign exchange rates used to translate actual operating results for the six months ended June 30, 2021	Foreign exchange rates as of June 30, 2020	Prior period average foreign exchange rate used to adjust actual operating results for the three months ended June 30, 2021(1)	Prior period average foreign exchange rate used to adjust actual operating results for the six months ended June 30, 2021(1)
Canadian Dollar	0.807	0.811	0.800	0.734	0.726	0.731
Euro	1.186	1.208	1.207	N/A	1.127	1.116
British Pound	1.383	1.394	1.386	N/A	1.243	1.258
Poland Zloty	0.262	0.267	0.266	N/A	0.237	0.244
Australian Dollar	0.750	0.769	0.771	0.689	0.668	0.656
New Zealand Dollar	0.698	0.716	0.717	0.644	0.626	0.623
Argentinian Peso	0.010	0.011	0.011	0.014	0.015	0.015
Chilean Peso	0.001	0.001	0.001	N/A	0.001	0.001
Brazilian Real	0.201	0.191	0.187	0.182	0.186	N/A

(1)Represents the relevant average foreign exchange rates in effect in the comparable prior period applied to the activity for the current period. The average foreign currency exchange rates we apply to our operating results are derived from third party reporting sources for the periods indicated.

Focus on Our Operational Effectiveness and Cost Structure

We continuously seek to execute on various initiatives aimed at streamlining our business processes and reducing our cost structure, including: realigning and centralizing key business processes and fully integrating acquired assets and businesses; implementing standardized operational processes; integrating and launching new information technology tools and platforms; instituting key health, safety, leadership and training programs; and capitalizing on the purchasing power of our network. Through the realignment of our business processes, we have acquired new talent and strengthened our service offerings. In order to reduce costs in our facilities, we have invested in energy efficiency projects, including LED lighting, thermal energy storage, motion-sensor technology, variable frequency drives for our fans and compressors, third party efficiency reviews and real-time monitoring of energy consumption, rapid open and close doors, and alternative-power generation technologies to improve the energy efficiency of our warehouses. We have also performed fine-tuning of our refrigeration systems, deployed efficient energy management practices, such as time-of-use and awareness, and have increased our participation in Power Demand Response programs with some of our power suppliers. These initiatives have allowed us to reduce our consumption of kilowatt hours and energy spend.

As part of our initiatives to streamline our business processes and to reduce our cost structure, we have evaluated and exited less strategic and profitable markets or business lines, including the sale of certain warehouse assets, the exit of certain leased facilities, the exit of certain transportation operations, the exit of certain managed warehouse agreements, the exit of the China JV, and the sale of our quarry business. Through our process of active portfolio management, we continue to evaluate our markets and offerings.

Strategic Shift within Our Transportation Segment

Several years ago, we initiated a strategic shift in our transportation segment services and solutions. The intention of this strategic shift was to better focus our business on the operation of our temperature-controlled warehouses. Specifically, we have gradually exited certain commoditized, non-scalable, or low margin services we historically offered to our customers, in favor of more profitable and value-added programs, such as regional, national, truckload and retailer-specific multi-vendor consolidation services. We designed each value-added program to improve efficiency and reduce transportation and logistics costs to our warehouse customers, whose transportation spend typically represents the majority of their supply-chain costs. We believe this efficiency and cost reduction helps to drive increased client retention, as well as maintain high occupancy levels in our temperature-controlled warehouses. Over the last several years, we have made significant progress in implementing our strategic initiative of growing our transportation service offering in a way that complements our temperature-controlled warehouse business, for example, we have also added a dedicated fleet service offering through acquisitions such as Agro and Hall’s. We intend to continue executing this strategy in the future.

Historically Significant Customer

For the three and six months ended June 30, 2021 and 2020, one customer accounted for more than 10% of our total revenues. For the three months ended June 30, 2021 and 2020, sales to this customer were $64.1 million and $64.4 million, respectively. For the six months ended June 30, 2021 and 2020, sales to this customer were $130.0 million and $120.0 million, respectively. The substantial majority of this customer’s business relates to our third-party managed segment. We are reimbursed for substantially all expenses we incur in managing warehouses on behalf of third-party owners. We recognize these reimbursements as revenues under applicable accounting guidance, but these reimbursements generally do not affect our financial results because they are offset by the corresponding expenses that we recognize in our third-party managed segment cost of operations. Of the revenues received from this customer, $63.3 million and $59.8 million represented reimbursements for certain expenses we incurred during the three months ended June 30, 2021 and 2020, respectively, and $124.6 million and $110.8 million for the six months ended were June 30, 2021 and 2020, respectively, were offset by matching expenses included in our third party managed cost of operations.

Economic Occupancy of our Warehouses

We define average economic occupancy as the aggregate number of physically occupied pallets and any additional pallets otherwise contractually committed for a given period, without duplication. We estimate the number of contractually committed pallet positions by taking into account the actual pallet commitment specified in each customers’ contract, and subtracting the physical pallet positions. We regard economic occupancy as an important driver of our financial results. Historically, providers of temperature-controlled warehouse space have offered storage services to customers on an as-utilized, on-demand basis. We actively seek to enter into contracts that implement our commercial business rules which contemplate, among other things, fixed storage commitments in connection with establishing new customer relationships. Additionally, we actively seek opportunities to transition our current customers to contracts that feature a fixed storage commitment when renewing existing agreements or upon the change in the anticipated profile of our customer. This strategy mitigates the impact of changes in physical occupancy throughout the course of the year due to seasonality, as

well as other factors that can impact physical occupancy while ensuring our customers have the necessary space they need to support their business.

Throughput at our Warehouses

The level and nature of throughput at our warehouses is an important factor impacting our warehouse services revenues in our warehouse segment. Throughput refers to the volume of pallets that enter and exit our warehouses. Higher levels of throughput drive warehouse services revenues in our warehouse segment as customers are typically billed on a basis that takes into account the level of throughput of the goods they store in our warehouses. The nature of throughput may be driven by the expected turn of the underlying product or commodity. Throughput pallets can be influenced both by the food manufacturers as well as shifts in demand preferences. Food manufacturers’ production levels, which respond to market conditions and consumer preferences, may impact inbound pallets. Similarly, a change in inventory turnover due to shift in customer demand may impact outbound pallets.

How We Assess the Performance of Our Business

Segment Contribution (Net Operating Income or “NOI”)

We evaluate the performance of our primary business segments based on their contribution (NOI) to our overall results of operations. We use the term “segment contribution (NOI)” to mean a segment’s revenues less its cost of operations (excluding any depreciation, depletion and amortization, impairment charges, corporate-level selling, general and administrative and corporate-level acquisition, litigation and other expenses). We use segment contribution (NOI) to evaluate our segments for purposes of making operating decisions and assessing performance in accordance with FASB ASC, Topic 280, Segment Reporting.

We also analyze the “segment contribution (NOI) margin” for each of our business segments, which we calculate as segment contribution (NOI) divided by segment revenues.

In addition to our segment contribution (NOI) and segment contribution (NOI) margin, we analyze the contribution (NOI) of our warehouse rent and storage operations and our warehouse services operations within our warehouse segment. We calculate the contribution (NOI) of our warehouse rent and storage operations as rent and storage revenues less power and other facilities cost. We calculate the contribution (NOI) of our warehouse services operations as warehouse services revenues less labor and other service costs. We calculate the contribution (NOI) margin for each of these operations as the applicable contribution (NOI) measure divided by the applicable revenue measure. We believe the presentation of these contribution (NOI) and contribution (NOI) margin measures helps investors understand the relative revenues, costs and earnings resulting from each of these separate types of services we provide to our customers in the same manner reviewed by our management in connection with the operation of our business. These contribution (NOI) measures within our warehouse segment are not measurements of financial performance under U.S. GAAP, and these measures should be considered as supplements, but not as alternatives, to our results calculated in accordance with U.S. GAAP. We provide reconciliations of these measures in the discussions of our comparative results of operations below.

Same Store Analysis

Effective January 1, 2020, we define our “same store” population once a year at the beginning of the current calendar year. Our same store population includes properties that were owned or leased for the entirety of two comparable periods and that have reported at least twelve months of consecutive normalized operations prior to January 1 of the prior calendar year. We define “normalized operations” as properties that have been open for operation or lease after development or significant modification, including the expansion of a warehouse footprint

or a warehouse rehabilitation subsequent to an event, such as a natural disaster or similar event causing disruption to operations. In addition, our definition of “normalized operations” takes into account changes in the ownership structure (e.g., purchase of a previously leased warehouse would result in different charges in the compared periods), which would impact comparability in our warehouse segment contribution (NOI).

Acquired properties will be included in the “same store” population if owned by us as of the first business day of each year, of the prior calendar year and still owned by us as of the end of the current reporting period, unless the property is under development. The “same store” pool is also adjusted to remove properties that were sold or entering development subsequent to the beginning of the current calendar year. As such, the “same store” population for the period ended June 30, 2021 includes all properties that we owned at January 2, which had both been owned and had reached “normalized operations” by January 2, 2020.

We calculate “same store contribution (NOI)” as revenues for the same store population less its cost of operations (excluding any depreciation and amortization, impairment charges, corporate-level selling, general and administrative expenses, corporate-level acquisition, litigation and other expenses and gain or loss on sale of real estate). In order to derive an appropriate measure of period-to-period operating performance, we also calculate our same store contribution (NOI) on a constant currency basis to remove the effects of foreign currency exchange rate movements by using the comparable prior period exchange rate to translate from local currency into U.S. dollars for both periods. We evaluate the performance of the warehouses we own or lease using a “same store” analysis, and we believe that same store contribution (NOI) is helpful to investors as a supplemental performance measure because it includes the operating performance from the population of properties that is consistent from period to period and also on a constant currency basis, thereby eliminating the effects of changes in the composition of our warehouse portfolio and currency fluctuations on performance measures.

The following table shows the number of same-store warehouses in our portfolio as of June 30, 2021. The number of warehouses owned or operated in as of June 30, 2021 and excluded as same-store warehouses for the period ended June 30, 2021 is listed below. While not included in the non-same store warehouse count in the table below, the results of operations for the non-same store warehouses includes the partial period impact of sites that were exited during the periods presented.


Total Warehouses			246
Same Store Warehouses			162
Non-Same Store Warehouses (1)			75
Third-Party Managed Warehouses			9

(1) During the second quarter of 2021, we completed the acquisition of Bowman Stores resulting in the addition of one facility and the acquisition of KMT Brrr! resulting in the addition of two facilities. Additionally, we entered into a lease of a facility in Australia resulting in an increase to our total warehouses.

As of June 30, 2021, our portfolio consisted of 246 total warehouses, including 237 within the warehouse segment and nine in the third-party managed segment. In addition, we hold minority interests in two Brazilian joint ventures, Superfrio, which owns or operates 33 temperature-controlled warehouses, and Comfrio, which owns or operates 24 temperature-controlled warehouses.

Same store contribution (NOI) is not a measurement of financial performance under U.S. GAAP. In addition, other companies providing temperature-controlled warehouse storage and handling and other warehouse services may not define same store or calculate same store contribution (NOI) in a manner consistent with our definition or calculation. Same store contribution (NOI) should be considered as a supplement, but not as an alternative, to our results calculated in accordance with U.S. GAAP. We provide reconciliations of these measures in the discussions of our comparative results of operations below.

Constant Currency Metrics

As discussed above under “Key Factors Affecting Our Business and Financial Results—Foreign Currency Translation Impact on Our Operations,” our consolidated revenues and expenses are subject to variations outside our control that are caused by the net effect of foreign currency translation on revenues generated and expenses incurred by our operations outside the United States. As a result, in order to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency fluctuations, we analyze our business performance based on certain constant currency reporting that represents current period results translated into U.S. dollars at the relevant average foreign exchange rates applicable in the comparable prior period. We believe that the presentation of constant currency results provides a measurement of our ongoing operations that is meaningful to investors because it excludes the impact of these foreign currency movements that we cannot control. Constant currency results are not measurements of financial performance under U.S. GAAP, and our constant currency results should be considered as a supplement, but not as an alternative, to our results calculated in accordance with U.S. GAAP. The constant currency performance measures should not be considered a substitute for, or superior to, the measures of financial performance prepared in accordance with U.S. GAAP. We provide reconciliations of these measures in the discussions of our comparative results of operations below. Our discussion of the drivers of our performance below are based upon U.S. GAAP.

RESULTS OF OPERATIONS

Comparison of Results for the Three Months Ended June 30, 2021 and 2020

Warehouse Segment

The following table presents the operating results of our warehouse segment for the three months ended June 30, 2021 and 2020.


	Three Months Ended June 30,									Change
	2021 actual			2021 constant currency(1)			2020 actual			Actual		Constant currency
	(Dollars in thousands)
Rent and storage	$	212,277		$	207,878		$	163,664		29.7	%	27.0	%
Warehouse services	291,457			282,712			208,747			39.6	%	35.4	%
Total warehouse segment revenues	503,734			490,590			372,411			35.3	%	31.7	%

Power	32,180			31,574			22,069			45.8	%	43.1	%
Other facilities costs (2)	51,562			50,467			34,645			48.8	%	45.7	%
Labor	224,411			217,575			165,458			35.6	%	31.5	%
Other services costs (3)	51,202			50,283			30,107			70.1	%	67.0	%
Total warehouse segment cost of operations	$	359,355		$	349,899		$	252,279		42.4	%	38.7	%

Warehouse segment contribution (NOI)	$	144,379		$	140,691		$	120,132		20.2	%	17.1	%
Warehouse rent and storage contribution (NOI) (4)	$	128,535		$	125,837		$	106,950		20.2	%	17.7	%
Warehouse services contribution (NOI) (5)	$	15,844		$	14,854		$	13,182		20.2	%	12.7	%

Total warehouse segment margin	28.7		%	28.7		%	32.3		%	-360 bps		-358 bps
Rent and storage margin(6)	60.6		%	60.5		%	65.3		%	-480 bps		-481 bps
Warehouse services margin(7)	5.4		%	5.3		%	6.3		%	-88 bps		-106 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 $10.1 million and $3.0 million, on an actual basis, for the second quarter of 2021 and 2020, respectively.

(3)Includes non-real estate rent expense (equipment lease and rentals) of $2.9 million and $2.4 million, on an actual basis, for the second quarter of 2021 and 2020, respectively.

(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.

Warehouse segment revenues were $503.7 million for the three months ended June 30, 2021, an increase of $131.3 million, or 35.3%, compared to $372.4 million for the three months ended June 30, 2020. On a constant currency basis, our warehouse segment revenues were $490.6 million for the three months ended June 30, 2021, an increase of $118.2 million, or 31.7%, from the three months ended June 30, 2020. Approximately $120.6 million of the increase, on an actual currency basis, was driven by acquisitions completed between July 2020 and June 2021. We acquired 64 warehouse facilities as a result of the Agro, Hall’s, AM-C, Caspers, Liberty, Bowman, and KMT Brrr! acquisitions between July 1, 2020 and June 30, 2021. As a result, these facilities are reflected in the entirety of the current period but none of the comparable prior period. Revenue growth was also due to contractual rate escalations, our recently completed developments and an increase in services revenue in our same store pool. This was partially offset by a decrease in storage revenue in our same store pool, driven by the decline in holdings due to lower food production. The foreign currency translation of

revenues earned by our foreign operations had a net $13.1 million favorable impact during the three months ended June 30, 2021, which was mainly driven by the weakening of the U.S. dollar against the Australian dollar and the Euro.

Warehouse segment cost of operations was $359.4 million for the three months ended June 30, 2021, an increase of $107.1 million, or 42.4%, compared to the three months ended June 30, 2020. On a constant currency basis, our warehouse segment cost of operations was $349.9 million for the three months ended June 30, 2021, an increase of $97.6 million, or 38.7%, from the three months ended June 30, 2020. Approximately $92.6 million of the increase, on an actual basis, was driven by the additional facilities in the warehouse segment we acquired in connection with the aforementioned acquisitions. In addition, we incurred increases in our cost of operations related to power, labor, property tax and insurance costs, all of which are reflective of current market trends. This was partially offset by the appreciation bonus we paid to front-line associates to recognize the dedication and efforts of our associates during the COVID-19 pandemic during the second quarter of 2020, which totaled $4.3 million. Additionally, the foreign currency translation of expenses incurred by our foreign operations had a net $9.5 million unfavorable impact during the three months ended June 30, 2021.

For the three months ended June 30, 2021, warehouse segment contribution (NOI), increased $24.2 million, or 20.2%, to $144.4 million for the second quarter of 2021 compared to $120.1 million for the second quarter of 2020. The foreign currency translation of our results of operations had a $3.7 million favorable impact to the warehouse segment contribution period-over-period due to the weakening of the U.S. dollar. On a constant currency basis, warehouse segment NOI increased 17.1% from the three months ended June 30, 2020. Approximately $28.0 million of the increase, on an actual basis, was primarily driven by the additional facilities in the warehouse segment as a result of the aforementioned acquisitions, and the growth and modest synergies experienced period-over-period during overlapping periods of ownership for sites acquired during 2020. The growth is also attributable to contractual rate escalations and the impact of the appreciation bonus paid during the second quarter of 2020. The increase was partially offset by the following factors that impacted our same-store facilities: lower holdings driven by the impact of COVID-19 on the food manufacturing supply chain and increased costs including property insurance and taxes, labor, power and facility leasing costs.

Same Store and Non-Same Store Analysis

We had 162 same stores for the three months ended June 30, 2021. Please see “How We Assess the Performance of Our Business—Same Store Analysis” above for a reconciliation of the change in the same store portfolio from period to period. Amounts related to the acquisitions of Agro, AM-C Warehouses, Bowman Stores, Caspers, Halls, KMT Brrr! and Liberty Freezers, one recently leased warehouse in Australia, as well as certain expansion and development projects not yet stabilized are reflected within non-same store results.

The following table presents revenues, cost of operations, contribution (NOI) and margins for our same stores and non-same stores with a reconciliation to the total financial metrics of our warehouse segment for the three months ended June 30, 2021 and 2020.


	Three Months Ended June 30,									Change
	2021 actual			2021 constant currency(1)			2020 actual			Actual		Constant currency
Number of same store sites	162						162			n/a		n/a
Same store revenues:	(Dollars in thousands)
Rent and storage	$	150,984		$	149,320		$	152,893		(1.2)	%	(2.3)	%
Warehouse services	209,258			203,647			199,832			4.7	%	1.9	%
Total same store revenues	360,242			352,967			352,725			2.1	%	0.1	%
Same store cost of operations:
Power	21,754			21,623			20,816			4.5	%	3.9	%
Other facilities costs	33,043			32,615			32,132			2.8	%	1.5	%
Labor	161,052			156,443			154,934			3.9	%	1.0	%
Other services costs	28,109			27,941			27,622			1.8	%	1.2	%
Total same store cost of operations	$	243,958		$	238,622		$	235,504		3.6	%	1.3	%

Same store contribution (NOI)	$	116,284		$	114,345		$	117,221		(0.8)	%	(2.5)	%
Same store rent and storage contribution (NOI)(2)	$	96,187		$	95,082		$	99,945		(3.8)	%	(4.9)	%
Same store services contribution (NOI)(3)	$	20,097		$	19,263		$	17,276		16.3	%	11.5	%

Total same store margin	32.3		%	32.4		%	33.2		%	-95 bps		-84 bps
Same store rent and storage margin(4)	63.7		%	63.7		%	65.4		%	-166 bps		-169 bps
Same store services margin(5)	9.6		%	9.5		%	8.6		%	96 bps		81 bps


	Three Months Ended June 30,									Change
	2021 actual			2021 constant currency(1)			2020 actual			Actual		Constant currency
Number of non-same store sites(6)	75						10			n/a		n/a
Non-same store revenues:	(Dollars in thousands)
Rent and storage	$	61,293		$	58,558		$	10,771		469.1	%	443.7	%
Warehouse services	82,199			79,065			8,915			822.0	%	786.9	%
Total non-same store revenues	143,492			137,623			19,686			628.9	%	599.1	%
Non-same store cost of operations:
Power	10,426			9,951			1,253			732.1	%	694.2	%
Other facilities costs	18,519			17,852			2,513			636.9	%	610.4	%
Labor	63,359			61,132			10,524			502.0	%	480.9	%
Other services costs	23,093			22,342			2,485			829.3	%	799.1	%
Total non-same store cost of operations	$	115,397		$	111,277		$	16,775		587.9	%	563.4	%

Non-same store contribution (NOI)	$	28,095		$	26,346		$	2,911		865.1	%	805.0	%
Non-same store rent and storage contribution (NOI)(2)	$	32,348		$	30,755		$	7,005		361.8	%	339.0	%
Non-same store services contribution (NOI)(3)	$	(4,253)		$	(4,409)		$	(4,094)		(3.9)	%	(7.7)	%

Total non-same store margin	19.6		%	19.1		%	14.8		%	479 bps		436 bps
Non-same store rent and storage margin(4)	52.8		%	52.5		%	65.0		%	-1226 bps		-1252 bps
Non-same store services margin(5)	(5.2)		%	(5.6)		%	(45.9)		%	4075 bps		4035 bps


	Three Months Ended June 30,						Change
	2021 actual		2021 constant currency(1)		2020 actual		Actual		Constant currency
Total warehouse segment revenues	$	503,734	$	490,590	$	372,411	35.3	%	31.7	%
Total warehouse cost of operations	$	359,355	$	349,899	$	252,279	42.4	%	38.7	%
Total warehouse segment contribution	$	144,379	$	140,691	$	120,132	20.2	%	17.1	%

(1)The adjustments from our U.S. GAAP operating results to calculate our operating results on a constant currency basis is the effect of changes in foreign currency exchange rates relative to the comparable prior period.

(2)Calculated as rent and storage revenues less power and other facilities costs.

(3)Calculated as warehouse services revenues less labor and other services costs.

(4)Calculated as rent and storage contribution (NOI) divided by rent and storage revenues.

(5)Calculated as warehouse services contribution (NOI) divided by warehouse services revenues.

(6)Non-same store warehouse count of 75 includes one recently leased warehouse in Australia, one warehouse acquired through the Bowman stores acquisition on May 28, 2021, two warehouses acquired through the KMT Brrr! acquisition on May 5, 2021, four warehouses acquired through the Liberty Freezers acquisition on March 1, 2021, 46 warehouses acquired through the Agro acquisition on December 30, 2020, eight warehouses acquired through the Hall’s acquisition on November 2, 2020, and three warehouses acquired through the Casper’s and AM-C warehouse acquisitions on August 31, 2020. The results of these acquisitions are reflected in the results above since date of ownership.

n/a - not applicable, the change in actual and constant currency metrics does not apply to site count.

The following table provides certain operating metrics to explain the drivers of our same store performance.


	Three Months Ended June 30,						Change
Units in thousands except per pallet and site number data - unaudited	2021			2020
Number of same store sites	162			162			n/a
Same store rent and storage:

Economic occupancy(1)
Average occupied economic pallets	2,830			2,971			(4.7)	%
Economic occupancy percentage	75.2		%	79.2		%	-403 bps
Same store rent and storage revenues per economic occupied pallet	$	53.35		$	51.45		3.7	%
Constant currency same store rent and storage revenues per economic occupied pallet	$	52.76		$	51.45		2.5	%

Physical occupancy(2)
Average physical occupied pallets	2,515			2,705			(7.0)	%
Average physical pallet positions	3,763			3,750			0.3	%
Physical occupancy percentage	66.8		%	72.1		%	-531 bps
Same store rent and storage revenues per physical occupied pallet	$	60.03		$	56.52		6.2	%
Constant currency same store rent and storage revenues per physical occupied pallet	$	59.37		$	56.52		5.0	%

Same store warehouse services:
Throughput pallets (in thousands)	7,351			7,333			0.3	%
Same store warehouse services revenues per throughput pallet	$	28.47		$	27.25		4.5	%
Constant currency same store warehouse services revenues per throughput pallet	$	27.70		$	27.25		1.7	%

Number of non-same store sites(3)	75			10			n/a
Non-same store rent and storage:

Economic occupancy(1)
Average economic occupied pallets	1,114			194			474.2	%
Economic occupancy percentage	75.3		%	64.7		%	1062 bps
Non-same store rent and storage revenues per economic occupied pallet	$	55.03		$	55.63		(1.1)	%
Constant currency non-same store rent and storage revenues per economic occupied pallet	$	52.57		$	55.63		(5.5)	%

Physical occupancy(2)
Average physical occupied pallets	1,092			186			486.6	%
Average physical pallet positions	1,479			299			394.6	%
Physical occupancy percentage	73.8		%	62.2		%	1164 bps
Non-same store rent and storage revenues per physical occupied pallet	$	56.13		$	57.87		(3.0)	%
Constant currency non-same store rent and storage revenues per physical occupied pallet	$	53.63		$	57.87		(7.3)	%

Non-same store warehouse services:
Throughput pallets (in thousands)	2,568			384			569.3	%
Non-same store warehouse services revenues per throughput pallet	$	32.01		$	23.23		37.8	%
Constant currency non-same store warehouse services revenues per throughput pallet	$	30.79		$	23.23		32.5	%

(1)We define average economic occupancy as the aggregate number of physically occupied pallets and any additional pallets otherwise contractually committed for a given period, without duplication. We estimate the number of contractually committed pallet positions by taking into account actual pallet commitments specified in each customer’s contract, and subtracting the physical pallet positions.

(2)We define average physical occupancy as the average number of occupied pallets divided by the estimated number of average physical pallet positions in our warehouses for the applicable period. We estimate the number of physical pallet positions by taking into account actual racked space and by estimating unracked space on an as-if racked basis. We base this estimate on a formula utilizing the total cubic feet of each room within the warehouse that is unracked divided by the volume of an assumed rack space that is consistent with the characteristics of the relevant warehouse. On a warehouse by warehouse basis, rack space generally ranges from three to four feet depending upon the type of facility and the nature of the customer goods stored therein. The number of our pallet positions is reviewed and updated quarterly, taking into account changes in racking configurations and room utilization.

(3)Non-same store warehouse count of 75 includes one recently leased warehouse in Australia, one warehouse acquired through the Bowman stores acquisition on May 28, 2021, two warehouses acquired through the KMT Brrr! acquisition on May 5, 2021, four warehouses acquired through the Liberty Freezers acquisition on March 1, 2021, 46 warehouses acquired through the Agro acquisition on December 30, 2020, eight warehouses acquired through the Hall’s acquisition on November 2, 2020, and three warehouses acquired through the Casper’s and AM-C warehouse acquisitions on August 31, 2020. The results of these acquisitions are reflected in the results above since date of ownership.

Economic occupancy at our same stores was 75.2% for the three months ended June 30, 2021, a decrease of 403 basis points compared to 79.2% for the quarter ended June 30, 2020. Storage levels were lower than prior year levels due to ongoing supply chain disruption as a result of the COVID-19 pandemic, as well as food manufacturers producing at less than full capacity. As such, our customers’ existing inventories have continued to be drawn down to support steady consumer demand. Additionally, recent acquisitions came into the same store pool during the first quarter of 2021 which have a lower percentage of fixed commitment revenue compared to our legacy same stores. Our economic occupancy at our same stores for the three months ended June 30, 2021 was 838 basis points higher than our corresponding average physical occupancy of 66.8%. The decrease of 531 basis points in average physical occupancy compared to 72.1% for the quarter ended June 30, 2020 was partially driven by the factors mentioned above. Same store rent and storage revenues per economic occupied pallet increased 3.7% period-over-period, primarily driven by improvements in our commercial terms and contractual rate escalations and business mix. On a constant currency basis, our same store rent and storage revenues per occupied pallet increased 2.5% period-over-period.

Throughput pallets at our same stores were 7.4 million pallets for the three months ended June 30, 2021, an increase of 0.3% from 7.3 million pallets for the three months ended June 30, 2020. This modest increase was the result of the food manufacturers efforts to increase production to support steady consumer demand. Food manufacturers have been unable to rebuild holdings in the supply chain due to challenges in the labor market. Same store warehouse services revenue per throughput pallet increased 4.5% compared to the prior year primarily as a result of contractual rate escalations and favorable foreign currency translation as previously discussed. On a constant currency basis, our same store services revenue per throughput pallet increased 1.7% compared to the prior year.

Third-Party Managed Segment

The following table presents the operating results of our third-party managed segment for the three months ended June 30, 2021 and 2020.


	Three Months Ended June 30,									Change
	2021 actual			2021 constant currency(1)			2020 actual			Actual		Constant currency
Number of managed sites	9						11			n/a		n/a
	(Dollars in thousands)
Third-party managed revenues	$	72,173		$	71,340		$	72,954		(1.1)	%	(2.2)	%
Third-party managed cost of operations	70,480			69,797			69,655			1.2	%	0.2	%
Third-party managed segment contribution	$	1,693		$	1,543		$	3,299		(48.7)	%	(53.2)	%

Third-party managed margin	2.3		%	2.2		%	4.5		%	-218 bps		-236 bps

Third-party managed revenues were $72.2 million for the three months ended June 30, 2021, a decrease of $0.8 million, or 1.1%, compared to $73.0 million for the three months ended June 30, 2020. On a constant currency basis, third-party managed revenues were $71.3 million for the three months ended June 30, 2021, a decrease of $1.6 million, or 2.2%, from the three months ended June 30, 2020. This decrease was primarily a result of the exit of two Canadian managed sites during the second half of 2020, partially offset by higher labor costs, a portion of which is passed through to customers, in our domestic managed operations. Additionally, our foreign operations experienced slightly higher volumes, as well as favorable impact of foreign currency translation.

Third-party managed cost of operations was $70.5 million for the three months ended June 30, 2021, an increase of $0.8 million, or 1.2%, compared to $69.7 million for the three months ended June 30, 2020. Third-party managed cost of operations increased as a result of the higher labor costs domestically as discussed in the revenue trends above.

Third-party managed segment contribution (NOI) was $1.7 million for the three months ended June 30, 2021, a decrease of $1.6 million, or 48.7%, compared to $3.3 million for the three months ended June 30, 2020.

Transportation Segment

The following table presents the operating results of our transportation segment for the three months ended June 30, 2021 and 2020.


	Three Months Ended June 30,									Change
	2021 actual			2021 constant currency(1)			2020 actual			Actual		Constant currency
	(Dollars in thousands)
Transportation revenues	$	78,800		$	80,686		$	34,861		126.0	%	131.5	%



Transportation cost of operations	69,550			71,784			30,089			131.1	%	138.6	%
Transportation segment contribution (NOI)	$	9,250		$	8,902		$	4,772		93.8	%	86.5	%

Transportation margin	11.7		%	11.0		%	13.7		%	-195 bps		-266 bps

Transportation revenues were $78.8 million for the three months ended June 30, 2021, an increase of $43.9 million, or 126.0%, compared to $34.9 million for the three months ended June 30, 2020. The increase was primarily due to the revenue associated with transportation operations from the Hall’s acquisition, which closed

on November 2, 2020, the Agro acquisition, which closed on December 30, 2020 and to a much lesser extent the KMT Brrr! acquisition which closed in early May 2021. The increase was partially offset by the net decrease in revenue from the rationalization of certain domestic legacy market operations.

Transportation cost of operations was $69.6 million for the three months ended June 30, 2021, an increase of $39.5 million, or 131.1%, compared to $30.1 million for the three months ended June 30, 2020. The increase was driven by the acquisitions and revenue trends mentioned above and a reduction in market capacity due to the COVID-19 pandemic, which has caused an increase in carrier fees.

Transportation segment contribution (NOI) was $9.3 million for the three months ended June 30, 2021, an increase of 93.8% compared to the three months ended June 30, 2020. Transportation segment margin decreased 195 basis points from the three months ended June 30, 2020, to 11.7% from 13.7%. The decrease in margin was primarily due to the acquisition of lower-margin transportation business compared to our legacy operations, coupled with higher carrier fees as a result of the COVID-19 pandemic.

Other Consolidated Operating Expenses

Depreciation and amortization. Depreciation and amortization expense was $84.5 million for the three months ended June 30, 2021, an increase of $32.1 million, or 61.2%, compared to $52.4 million for the three months ended June 30, 2020. This increase was primarily due to the acquisitions in late 2020 and 2021.

Selling, general and administrative. Corporate-level selling, general and administrative expenses were $42.5 million for the three months ended June 30, 2021, an increase of $10.1 million, or 31.3%, compared to $32.3 million for the three months ended June 30, 2020. Included in these amounts are business development expenses attributable to new business pursuits, supply chain solutions and underwriting, facility development, customer on-boarding, and engineering and consulting services to support our customers in the cold chain. We believe these costs are comparable to leasing costs for other publicly-traded REITs. The increase was driven by costs assumed from the Agro and Hall’s acquisitions, net of synergies realized and higher third-party professional fees.

Acquisition, litigation and other. Corporate-level acquisition, litigation and other expenses were $3.9 million for the three months ended June 30, 2021, an increase of $1.1 million compared to the three months ended June 30, 2020. During the three months ended June 30, 2021, we incurred $3.1 million of acquisition related expenses primarily comprised of professional fees and integration related costs in connection with completed and potential acquisitions, and $0.8 million related to insurance claim deductibles partially offset by recoveries under the claims. During the three months ended June 30, 2020, we incurred $2.7 million of acquisition related expenses primarily composed of professional fees and integration related costs in connection with potential acquisitions.

Impairment of long-lived assets. For the three and six months ended June 30, 2021, we recorded impairment charges totaling $1.5 million, related to costs incurred for development projects which management determined it would not continue to pursue. For the three months ended June 30, 2020, we recorded an impairment charge of $3.7 million related to the anticipated sale of our quarry business, which was subsequently completed on July 1, 2020.

Gain from sale of real estate. For the three months ended June 30, 2020, we recorded a $19.4 million gain from the sale of owned property. On June 19, 2020, we completed the sale of a facility in our Warehouse segment, and began to transition the business to other nearby facilities, resulting in the aforementioned gain from sale of real estate.

Other Expense and Income

The following table presents other items of expense and income for the three months ended June 30, 2021 and 2020.


	Three Months Ended June 30,				Change
	2021		2020		%
Other (expense) income:	(Dollars in thousands)
Interest expense	$	(26,579)	$	(23,178)	14.7	%
Interest income	191		261		(26.8)	%

Loss on debt extinguishment, modifications and termination of derivative instruments	(925)		—		100.0	%
Foreign currency exchange (loss) gain, net	(140)		315		144.4	%
Other income - net	184		44		318.2	%
Loss from investments in partially owned entities	(61)		(129)		(52.7)	%

Interest expense. Interest expense was $26.6 million for the three months ended June 30, 2021, an increase of $3.4 million, or 14.7%, compared to $23.2 million for the three months ended June 30, 2020. The increase was primarily due to the issuance of the Series D and Series E Senior Unsecured Notes in December 2020. This was partially offset by the decrease in interest expense on our Senior Unsecured Term Loan A Facility due to the early principal repayment of $100.0 million and $200.0 million in December 2020 and January 2021, respectively. The effective interest rate of our outstanding debt decreased from 4.15% in the second quarter of 2020 to 3.16% in the second quarter of 2021.

Interest income. Interest income was $0.2 million for the three months ended June 30, 2021, which decreased by $0.1 million when compared to the $0.3 million for three months ended June 30, 2020. This change was primarily driven by a lower interest rate of 0.10% earned during the second quarter of 2021 compared to 0.20% during the second quarter of 2020, paired with lower average cash balances in 2021 compared to 2020.

Other income - net. Other income - net was $0.2 million for the three months ended June 30, 2021. The increase of $0.1 million was primarily driven by the gain on disposal of miscellaneous personal property.

Loss from investments in partially owned entities. During the second quarter of 2021 we incurred $0.1 million as our portion of net loss from the SuperFrio joint venture, partially offset by net income from the Comfrio joint venture stemming from a gain on sale of real estate during the current period. During the second quarter of 2020, we entered into the Superfrio joint venture for which we recorded a nominal amount as our portion of loss for the second quarter of 2020.

Income Tax Expense

Income tax expense for the three months ended June 30, 2021 was $9.0 million, an increase of $7.8 million from an income tax expense of $1.2 million for the three months ended June 30, 2020. The change in income tax expense was primarily attributable to the tax effects of the rate change from 19% to 25% in the United Kingdom, enacted during the second quarter of 2021, for which we recorded deferred income tax expense of $14.5 million and a decrease in our valuation allowance for which we recorded a deferred tax benefit of $3.7 million attributable

to recent acquisitions. The remainder was primarily attributable to losses generated from our foreign operations during the quarter ended June 30, 2021 which did not occur during the three months ended June 30, 2020.

Comparison of Results for the Six Months Ended June 30, 2021 and 2020

Warehouse Segment

The following table presents the operating results of our warehouse segment for the six months ended June 30, 2021 and 2020.


	Six Months Ended June 30,									Change
	2021 actual			2021 constant currency(1)			2020 actual			Actual		Constant currency
	(Dollars in thousands)
Rent and storage	$	417,553		$	409,564		$	325,973		28.1	%	25.6	%
Warehouse services	571,632			554,605			427,506			33.7	%	29.7	%
Total warehouse segment revenues	989,185			964,169			753,479			31.3	%	28.0	%

Power	58,384			57,324			41,773			39.8	%	37.2	%
Other facilities costs (2)	102,093			100,166			66,747			53.0	%	50.1	%
Labor	438,959			425,813			335,596			30.8	%	26.9	%
Other services costs (3)	99,189			97,334			62,458			58.8	%	55.8	%
Total warehouse segment cost of operations	$	698,625		$	680,637		$	506,574		37.9	%	34.4	%

Warehouse segment contribution (NOI)	$	290,560		$	283,532		$	246,905		17.7	%	14.8	%
Warehouse rent and storage contribution (NOI) (4)	$	257,076		$	252,074		$	217,453		18.2	%	15.9	%
Warehouse services contribution (NOI) (5)	$	33,484		$	31,458		$	29,452		13.7	%	6.8	%

Total warehouse segment margin	29.4		%	29.4		%	32.8		%	-340 bps		-336 bps
Rent and storage margin(6)	61.6		%	61.5		%	66.7		%	-514 bps		-516 bps
Warehouse services margin(7)	5.9		%	5.7		%	6.9		%	-103 bps		-122 bps

(2)Includes real estate rent expense of $19.4 million and $5.8 million, on an actual basis, for the six months ended June 30, 2021 and 2020, respectively.

(3)Includes non-real estate rent expense (equipment lease and rentals) of $5.8 million and $5.3 million, on an actual basis, for the six months ended June 30, 2021 and 2020, respectively.

(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.

Warehouse segment revenues were $989.2 million for the six months ended June 30, 2021 an increase of $235.7 million, or 31.3%, compared to $753.5 million for the six months ended June 30, 2020. On a constant currency basis, our warehouse segment revenues were $964.2 million for the six months ended June 30, 2021, an increase of $210.7 million or 28.0%, from the six months ended June 30, 2020. Approximately $229.8 million of the increase, on an actual currency basis, was driven by acquisitions completed during 2020 and 2021, including the growth experienced period-over-period during overlapping periods of ownership. We acquired 61 warehouse facilities as a result of the Agro, Hall’s, AM-C, Caspers and Liberty acquisitions between July 1, 2020 and March 31, 2021. As a result, these facilities are reflected in the entirety of the current period but none of the comparable prior period. Additionally, we acquired two facilities on May 5, 2021 as a result of the KMT Brrr! acquisition and one facility on May 28, 2021 as a result of the Bowman Stores acquisition, and the results of these facilities are

included in the current period since the date of acquisition. Revenue growth was also due to contractual rate escalations and our recently completed developments. This was partially offset by COVID-19 and the related labor challenges which continued to impact food production. The foreign currency translation of revenues earned by our foreign operations had a $25.0 million favorable impact during the six months ended June 30, 2021, which was mainly driven by the weakening of the U.S. dollar over the Australian dollar, Euro, and Canadian dollar.

Warehouse segment cost of operations was $698.6 million for the six months ended June 30, 2021, an increase of $192.1 million, or 37.9%, compared to the six months ended June 30, 2020. On a constant currency basis, our warehouse segment cost of operations was $680.6 million for the three months ended June 30, 2021, an increase of $174.1 million, or 34.4%, from the six months ended June 30, 2020. Approximately $175.0 million of the increase, on an actual basis, was driven by the additional facilities in the warehouse segment we acquired in connection with the aforementioned acquisitions. In addition, we incurred increases in our cost of operations in response to COVID-19, power, labor, property tax and insurance costs, all of which are reflective of current market trends. This is partially offset by the appreciation bonus we paid to front-line associates to recognize the dedication and efforts of our associates during the COVID-19 pandemic during the second quarter of 2020, which totaled $4.3 million. Additionally, the foreign currency translation of expenses incurred by our foreign operations had a net $18.0 million unfavorable impact during the six months ended June 30, 2021.

For the six months ended June 30, 2021, warehouse segment contribution (NOI), increased $43.7 million, or 17.7%, to $290.6 million for the six months ended June 30, 2021, compared to $246.9 million for the six months ended June 30, 2020. The foreign currency translation of our results of operations had a $7.0 million favorable impact to the warehouse segment contribution period-over-period. On a constant currency basis, warehouse segment NOI increased $36.6 million. Approximately $54.8 million of the increase, on an actual basis, was driven by the additional facilities in the warehouse segment as a result of the aforementioned acquisitions, including the growth and synergies experienced period-over-period during overlapping periods of ownership. The remainder of the increase was driven by contractual rate escalations, the impact of the appreciation bonus paid during the second quarter of 2020 and disciplined cost controls through the Americold Operating System of our other services costs, which allowed us to generate higher contribution margins. The increases were partially offset by the currency translation impact of the strengthening of the U.S. dollar, lower holdings driven by the impact of COVID-19 on the food manufacturing supply chain and the increase in costs including power, property insurance and taxes and facility leasing costs.

Same Store and Non-Same Store Analysis

We had 162 same stores for the six months ended June 30, 2021. Please see “How We Assess the Performance of Our Business—Same Store Analysis” above for a reconciliation of the change in the same store portfolio from period to period. Amounts related to the acquisitions of Agro, AM-C Warehouses, Bowman Stores, Caspers, Halls, KMT Brrr! and Liberty Freezers, one recently leased warehouse in Australia, as well as certain expansion and development projects not yet stabilized are reflected within non-same store results.


	Six Months Ended June 30,									Change
	2021 actual			2021 constant currency(1)			2020 actual			Actual		Constant currency
Number of same store sites	162						162			n/a		n/a
Same store revenues:	(Dollars in thousands)
Rent and storage	$	300,150		$	296,836		$	305,698		(1.8)	%	(2.9)	%
Warehouse services	415,343			404,021			408,693			1.6	%	(1.1)	%
Total same store revenues	715,493			700,857			714,391			0.2	%	(1.9)	%
Same store cost of operations:
Power	39,611			39,347			39,244			0.9	%	0.3	%
Other facilities costs	65,982			65,208			61,959			6.5	%	5.2	%
Labor	319,956			310,763			313,841			1.9	%	(1.0)	%
Other services costs	55,217			54,843			57,198			(3.5)	%	(4.1)	%
Total same store cost of operations	$	480,766		$	470,161		$	472,242		1.8	%	(0.4)	%

Same store contribution (NOI)	$	234,727		$	230,696		$	242,149		(3.1)	%	(4.7)	%
Same store rent and storage contribution (NOI)(2)	$	194,557		$	192,281		$	204,495		(4.9)	%	(6.0)	%
Same store services contribution (NOI)(3)	$	40,170		$	38,415		$	37,654		6.7	%	2.0	%

Total same store margin	32.8		%	32.9		%	33.9		%	-109 bps		-98 bps
Same store rent and storage margin(4)	64.8		%	64.8		%	66.9		%	-207 bps		-212 bps
Same store services margin(5)	9.7		%	9.5		%	9.2		%	46 bps		29 bps


	Six Months Ended June 30,									Change
	2021 actual			2021 constant currency(1)			2020 actual			Actual		Constant currency
Number of non-same store sites	75						10			n/a		n/a
Non-same store revenues:	(Dollars in thousands)
Rent and storage	$	117,403		$	112,728		$	20,275		479.1	%	456.0	%
Warehouse services	156,289			150,584			18,813			730.8	%	700.4	%
Total non-same store revenues	273,692			263,312			39,088			600.2	%	573.6	%
Non-same store cost of operations:
Power	18,773			17,977			2,529			642.3	%	610.8	%
Other facilities costs	36,111			34,958			4,788			654.2	%	630.1	%
Labor	119,003			115,050			21,755			447.0	%	428.8	%
Other services costs	43,972			42,491			5,260			736.0	%	707.8	%
Total non-same store cost of operations	$	217,859		$	210,476		$	34,332		534.6	%	513.1	%

Non-same store contribution (NOI)	$	55,833		$	52,836		$	4,756		1,073.9	%	1,010.9	%
Non-same store rent and storage contribution (NOI)(2)	$	62,519		$	59,793		$	12,958		382.5	%	361.4	%
Non-same store services contribution (NOI)(3)	$	(6,686)		$	(6,957)		$	(8,202)		18.5	%	15.2	%

Total non-same store margin	20.4		%	20.1		%	12.2		%	823 bps		790 bps
Non-same store rent and storage margin(4)	53.3		%	53.0		%	63.9		%	-1066 bps		-1087 bps
Non-same store services margin(5)	(4.3)		%	(4.6)		%	(43.6)		%	3932 bps		3898 bps


	Six Months Ended June 30,						Change
	2021 actual		2021 constant currency(1)		2020 actual		Actual		Constant currency
Total warehouse segment revenues	$	989,185	$	964,169	$	753,479	31.3	%	28.0	%
Total warehouse cost of operations	$	698,625	$	680,637	$	506,574	37.9	%	34.4	%
Total warehouse segment contribution	$	290,560	$	283,532	$	246,905	17.7	%	14.8	%

(2)Calculated as rent and storage revenues less power and other facilities costs.

(3)Calculated as warehouse services revenues less labor and other services costs.

(4)Calculated as rent and storage contribution (NOI) divided by rent and storage revenues.

(5)Calculated as warehouse services contribution (NOI) divided by warehouse services revenues.

n/a - not applicable, the change in actual and constant currency metrics does not apply to site count

The following table provides certain operating metrics to explain the drivers of our same store performance.


	Six Months Ended June 30,
Units in thousands except per pallet and site number data - unaudited	2021			2020			Change
Number of same store sites	162			162			n/a
Same store rent and storage:

Economic occupancy(1)
Average occupied economic pallets	2,858			3,033			(5.8)	%
Economic occupancy percentage	76.0		%	80.9		%	-498 bps
Same store rent and storage revenues per economic occupied pallet	$	105.01		$	100.80		4.2	%
Constant currency same store rent and storage revenues per economic occupied pallet	$	103.85		$	100.80		3.0	%

Physical occupancy(2)
Average physical occupied pallets	2,538			2,799			(9.3)	%
Average physical pallet positions	3,763			3,747			0.4	%
Physical occupancy percentage	67.4		%	74.7		%	-725 bps
Same store rent and storage revenues per physical occupied pallet	$	118.25		$	109.20		8.3	%
Constant currency same store rent and storage revenues per physical occupied pallet	$	116.94		$	109.20		7.1	%

Same store warehouse services:
Throughput pallets (in thousands)	14,476			15,080			(4.0)	%
Same store warehouse services revenues per throughput pallet	$	28.69		$	27.10		5.9	%
Constant currency same store warehouse services revenues per throughput pallet	$	27.91		$	27.10		3.0	%

Number of non-same store sites(3)	75			10			n/a
Non-same store rent and storage:

Economic occupancy(1)
Average economic occupied pallets	1,102			178			519.1	%
Economic occupancy percentage	76.7		%	63.4		%	1332 bps
Non-same store rent and storage revenues per economic occupied pallet	$	106.49		$	114.02		(6.6)	%
Constant currency non-same store rent and storage revenues per economic occupied pallet	$	102.25		$	114.02		(10.3)	%

Physical occupancy(2)
Average physical occupied pallets	1,079			171			531.0	%
Average physical pallet positions	1,437			280			413.2
Physical occupancy percentage	75.1		%	60.9		%	1421 bps
Non-same store rent and storage revenues per physical occupied pallet	$	108.82		$	118.76		(8.4)	%
Constant currency non-same store rent and storage revenues per physical occupied pallet	$	104.49		$	118.76		(12.0)	%

Non-same store warehouse services:
Throughput pallets (in thousands)	4,973			835			495.6	%
Non-same store warehouse services revenues per throughput pallet	$	31.43		$	22.52		39.6	%
Constant currency non-same store warehouse services revenues per throughput pallet	$	30.28		$	22.52		34.5	%

Economic occupancy at our same stores was 76.0% for the six months ended June 30, 2021, a decrease of 498 basis points compared to 80.9% for the six months ended June 30, 2020. Storage levels were lower than prior year levels due to ongoing supply chain disruption as a result of the COVID-19 pandemic, as well as food manufacturers producing at less than full capacity. As such, our customers’ existing inventories have continued to be drawn down to support steady consumer demand. Additionally, recent acquisitions came into the same store pool during the first quarter of 2021 which have a lower percentage of fixed commitment revenue compared to our legacy same stores. Our second quarter 2020 economic occupancy at our same stores was 851 basis points higher than our corresponding average physical occupancy of 67.4%. The decrease of 725 basis points in average physical occupancy compared to 74.7% for the six months ended June 30, 2020 was driven by supply chain fluctuations caused by the COVID-19 pandemic. Same store rent and storage revenues per economic occupied pallet increased 4.2% period-over-period, primarily driven by improvements in our commercial terms and contractual rate escalations. On a constant currency basis, our same store rent and storage revenues per occupied pallet increased 3.0% period-over-period.

Throughput pallets at our same stores were 14.5 million pallets for the six months ended June 30, 2021, a decrease of 4.0% from the six months ended June 30, 2020. This decrease was the result of the COVID-19 related impacts in various sectors and commodities, and was primarily driven by the unprecedented surge in demand in retail during the first half of 2020. As food manufacturers production has not reached full pre-pandemic capacity, throughput has been impacted, with modest improvement during the second quarter of 2021. Food manufacturers have been unable to rebuild holdings in the supply chain due to challenges in the labor market. Same store warehouse services revenues per throughput pallet increased 5.9% period-over-period, as a result of a more favorable customer mix, contractual rate escalations and an increase in higher priced value-added services within the retail sector such as case-picking, blast freezing and repackaging and contractual rate escalations, paired with favorable foreign currency translation as previously discussed. On a constant currency basis, our same store services revenues per throughput pallet increased 3.0% from the six months ended June 30, 2020.

Third-Party Managed Segment

The following table presents the operating results of our third-party managed segment for the six months ended June 30, 2021 and 2020.


	Six Months Ended June 30,									Change
	2021 actual			2021 constant currency(1)			2020 actual			Actual		Constant currency
Number of managed sites	9						11			n/a		n/a
	(Dollars in thousands)
Third-party managed revenues	$	145,245		$	143,602		$	137,875		5.3	%	4.2	%
Third-party managed cost of operations	139,170			137,800			130,807			6.4	%	5.3	%
Third-party managed segment contribution	$	6,075		$	5,802		$	7,068		(14.0)	%	(17.9)	%

Third-party managed margin	4.2		%	4.0		%	5.1		%	-94 bps		-109 bps

Third-party managed revenues were $145.2 million for the six months ended June 30, 2021, an increase of $7.4 million, or 5.3%, compared to $137.9 million for the six months ended June 30, 2020. On a constant currency basis, third-party managed revenues were $143.6 million for the six months ended June 30, 2021, an increase of $5.7 million, or 4.2%, from the six months ended June 30, 2020. This increase was a result of higher business volume and higher pass-through labor expenses in our domestic and foreign managed operations due to the consumer demand shift to retail paired with the favorable impact of foreign currency translation related to our Australian managed revenues. This increase was partially offset by the exit of two Canadian managed sites during the second half of 2020.

Third-party managed cost of operations was $139.2 million for the six months ended June 30, 2021, an increase of $8.4 million, or 6.4%, compared to $130.8 million for the six months ended June 30, 2020. On a constant currency basis, third-party managed cost of operations was $137.8 million for the six months ended June 30, 2021, an increase of $7.0 million, or 5.3%, from the six months ended June 30, 2020. Third-party managed cost of operations increased as a result of the revenue trends described above.

Third-party managed segment contribution (NOI) was $6.1 million for the six months ended June 30, 2021, a decrease of $1.0 million, or 14.0%, compared to $7.1 million for the six months ended June 30, 2020. On a constant currency basis, third-party managed segment contribution (NOI) was $5.8 million for the six months ended June 30, 2021, a decrease of $1.3 million, or 17.9%.

Transportation Segment

The following table presents the operating results of our transportation segment for the six months ended June 30, 2021 and 2020.


	Six Months Ended June 30,									Change
	2021 actual			2021 constant currency(1)			2020 actual			Actual		Constant currency
	(Dollars in thousands)
Transportation revenues	$	155,072		$	154,264		$	70,778		119.1	%	118.0	%



Total transportation cost of operations	139,119			138,828			61,201			127.3	%	126.8	%
Transportation segment contribution (NOI)	$	15,953		$	15,436		$	9,577		66.6	%	61.2	%

Transportation margin	10.3		%	10.0		%	13.5		%	-324 bps		-352 bps

Transportation revenues were $155.1 million for the six months ended June 30, 2021, an increase of $84.3 million, or 119.1%, compared to $70.8 million for the six months ended June 30, 2020. The increase was primarily due to the revenue associated with transportation operations from the Hall’s acquisition, which closed on November 2, 2020, the Agro acquisition, which closed on December 30, 2020 and to a much lesser extent the KMT Brrr! acquisition which closed in early May 2021. Furthermore, this is offset by the net decrease in revenue from the rationalization of certain domestic market operations. On a constant currency basis, transportation revenues were $154.3 million for the six months ended June 30, 2021, an increase of $83.5 million, or 118.0%, from the six months ended June 30, 2020.

Transportation cost of operations was $139.1 million for the six months ended June 30, 2021, an increase of $77.9 million, or 127.3%, compared to $61.2 million for the six months ended June 30, 2020. On a constant currency basis, transportation cost of operations was $138.8 million for the six months ended June 30, 2021, an increase of $77.6 million, or 126.8%, from the six months ended June 30, 2020. The increase was driven by the acquisitions mentioned above and due to a reduction in market capacity due to the COVID-19 pandemic, which has caused an increase in carrier fees. Additionally, this is partially offset by the net decrease of costs from the exit of certain domestic market operations.

Transportation segment contribution (NOI) was $16.0 million for the six months ended June 30, 2021, an increase of $6.4 million compared to the six months ended June 30, 2020. Transportation segment margin decreased 324 basis points from the six months ended June 30, 2020, to 10.3% from 13.5%. On a constant currency basis, transportation segment contribution was $15.4 million for the six months ended June 30, 2021, an increase of $5.9 million compared to the six months ended June 30, 2020. The decrease in margin was primarily due to the acquisition of lower-margin transportation business compared to our legacy operations, coupled with higher carrier fees as a result of the COVID-19 pandemic.

Other Consolidated Operating Expenses

Depreciation and amortization. Depreciation and amortization expense was $161.7 million for the six months ended June 30, 2021, an increase of $57.7 million, or 55.4%, compared to $104.0 million for the six months ended June 30, 2020. This increase was primarily due to the acquisitions in late 2020 and 2021.

Selling, general and administrative. Corporate-level selling, general and administrative expenses were $87.5 million for the six months ended June 30, 2021, an increase of $18.3 million, or 26.4%, compared to

$69.2 million for the six months ended June 30, 2020. Included in these amounts are business development expenses attributable to new business pursuits, supply chain solutions and underwriting, facility development, customer on-boarding, and engineering and consulting services to support our customers in the cold chain. We believe these costs are comparable to leasing costs for other publicly-traded REITs. The increase was driven by costs assumed from the Agro and Hall’s acquisitions, net of synergies realized and higher third-party professional fees.

Acquisition, litigation and other. Corporate-level acquisition, litigation and other expenses were $24.7 million for the six months ended June 30, 2021, an increase of $20.2 million compared to the six months ended June 30, 2020. During the six months ended June 30, 2021, we incurred $16.6 million of acquisition related expenses primarily composed of professional fees and integration related costs, including severance and employee retention expenses, in connection with completed and potential acquisitions, primarily related to the Agro acquisition. We also incurred $4.5 million of ongoing costs related to the cyber event that occurred in late 2020. During the six months ended June 30, 2020, we incurred $3.4 million of acquisition related expenses primarily composed of employee retention, professional fees and integration related costs in connection with completed and potential acquisitions. Additionally, we incurred $1.1 million of severance related to reduction in headcount as a result of the synergies from acquisitions and realignment of our international operations during the first half of 2020.

Impairment of long-lived assets. For the six months ended June 30, 2021, we recorded impairment charges totaling $1.5 million, resulting from the write off of costs incurred for development projects which management determined it would not continue to pursue. For the six months ended June 30, 2020, we recorded impairment charges of $3.7 million, which related to the anticipated sale of our quarry business, which was subsequently completed on July 1, 2020.

Gain from sale of real estate. For the six months ended June 30, 2020, we recorded a $21.9 million gain from the sale of real estate. On January 31, 2020, we received official notice from a customer to exercise its contractual call option to purchase land from us in Sydney, Australia, which we previously purchased for future development. We received sale proceeds upon exercise of the call option during the first quarter of 2020, resulting in a $2.5 million gain on sale. Additionally, on June 19, 2020, we completed the sale of a facility in our Warehouse segment, and began to transition the business to other nearby facilities, resulting in a $19.4 million gain from sale of real estate.

Other Expense and Income

The following table presents other items of income and expense for the six months ended June 30, 2021 and 2020.


	Six Months Ended June 30,				Change
	2021		2020		%
Other (expense) income:	(Dollars in thousands)
Interest expense	$	(52,535)	$	(47,048)	11.7	%
Interest income	$	415	$	848	(51.1)	%

Loss on debt extinguishment, modifications and termination of derivative instruments	$	(4,424)	$	(781)	n/r
Foreign currency exchange gain (loss)	$	33	$	(177)	n/r
Other expense - net	$	689	$	915	(24.7)	%
Loss from investments in partially owned entities	$	(761)	$	(156)	n/r

n/r: not relevant

Interest expense. Interest expense was $52.5 million for the six months ended June 30, 2021, an increase of $5.5 million, or 11.7%, compared to $47.0 million for the six months ended June 30, 2020. The increase was primarily due to the issuance of the Series D and Series E Senior Unsecured Notes in December 2020. This was partially offset by the decrease in interest expense on our Senior Unsecured Term Loan A Facility due to the early principal repayment of $100.0 million and $200.0 million in December 2020 and January 2021, respectively. The effective interest rate of our outstanding debt has decreased from 4.22% for the six months ended June 30, 2020 to 3.24% for the six months ended June 30, 2021, however, outstanding principal has increased from $1.8 billion as of June 30, 2020 to $2.6 billion as of June 30, 2021.

Interest income. Interest income was $0.4 million for the six months ended June 30, 2021, a decrease of $0.4 million when compared to the $0.8 million reported for the six months ended June 30, 2020. This change was primarily driven by a lower interest rate of 0.12% earned during the six months ended June 30, 2021 as compared to 0.82% during the six months ended June 30, 2020.

Loss on debt extinguishment, modifications and termination of derivative instruments. Loss on debt extinguishment, modifications, and termination of derivative instruments of $4.4 million for the six months ended June 30, 2021 was primarily driven by the early repayment of $200 million of principal on the Senior Unsecured Term Loan A Facility, which resulted in a charge of $2.9 million for the write-off of unamortized deferred financing costs. Additionally, we recorded a charge of $1.4 million for the amortization of fees paid for the termination of interest rate swaps during 2020. During the first quarter of 2020 we refinanced our Senior Unsecured Credit Facility, which resulted in the write-off of certain unamortized deferred financing costs.

Other income, net. During the six months ended June 30, 2021, we reported other income of $0.7 million, compared to other income of $0.9 million for the six months ended June 30, 2020. During the six months ended June 30, 2021, other income was mainly due to a net gain from asset disposals. During the six months ended June 30, 2020, other income was mainly due to a lease restoration payment received from a tenant in one of our facilities, and net gains from asset disposals.

Loss from investments in partially owned entities. During the six months ended June 30, 2021, we incurred $0.8 million as our portion of net loss from the SuperFrio and Comfrio joint ventures. During the six months ended June 30, 2020, we entered into the Superfrio joint venture for which we recorded a nominal amount as our portion of loss for the period of our ownership.

Income Tax Expense

Income tax expense for the six months ended June 30, 2021 was $8.2 million, a decrease of $6.5 million when compared to $1.7 million for the six months ended June 30, 2021. The change in income tax expense was primarily attributable to the tax effects of the rate change from 19% to 25% in the United Kingdom, enacted during the second quarter of 2021, for which we recorded deferred income tax expense of $14.5 million and a decrease in our valuation allowance for which we recorded a deferred tax benefit of $3.7 million attributable to recent acquisitions. The remainder was primarily attributable to losses generated from our foreign operations which did not occur during the six months ended June 30, 2020.

Non-GAAP Financial Measures

We use the following non-GAAP financial measures as supplemental performance measures of our business: FFO, Core FFO, Adjusted FFO, EBITDAre and Core EBITDA.


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


Reconciliation of Net (Loss) Income to NAREIT FFO, Core FFO, and Adjusted FFO
(in thousands)
	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Net (loss) income	$	(13,399)	$	32,662	$	(27,635)	$	56,173
Adjustments:
Real estate related depreciation	44,871		35,558		97,151		71,000
Net gain on sale of real estate, net of withholding taxes	—		(19,414)		—		(21,510)
Net gain on asset disposals	(13)		(3)		(52)		(3)
Impairment charges on certain real estate assets	1,528		3,181		1,528		3,181

Our share of reconciling items related to partially owned entities	861		122		1,127		156
NAREIT Funds from operations	33,848		52,106		72,119		108,997


Adjustments:
Net gain on sale of non-real estate assets	(304)		(252)		(423)		(417)
Non-real estate asset impairment	—		486		—		486


Acquisition, litigation and other	3,922		2,801		24,673		4,489
Share-based compensation expense, IPO grants	—		203		163		576






Loss on debt extinguishment, modifications and termination of derivative instruments	925		—		4,424		781

Foreign currency exchange loss (gain)	140		(315)		(33)		177



Our share of reconciling items related to partially owned entities	89		79		243		79
Core FFO applicable to common shareholders	38,620		55,108		101,166		115,168
Adjustments:
Amortization of deferred financing costs and pension withdrawal liability	1,085		1,196		2,233		2,742
Amortization of below/above market leases	362		—		401		76
Straight-line net rent	(170)		(108)		(325)		(217)
Deferred income taxes expense (benefit)	6,568		(967)		4,566		(3,069)
Share-based compensation expense, excluding IPO grants	5,467		4,261		10,334		8,195
Non-real estate depreciation and amortization	39,588		16,841		64,519		33,003

Maintenance capital expenditures (a)	(20,488)		(15,284)		(36,219)		(27,722)
Our share of reconciling items related to partially owned entities	711		56		989		78
Adjusted FFO applicable to common shareholders	$	71,743	$	61,103	$	147,664	$	128,254

(a)Maintenance capital expenditures include capital expenditures made to extend the life of, and provide future economic benefit from, our existing temperature-controlled warehouse network and its existing supporting personal property and information technology.


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

•these measures do not reflect our historical or future cash requirements for maintenance capital expenditures or growth and expansion capital expenditures;

•these measures do not reflect changes in, or cash requirements for, our working capital needs;

•these measures do not reflect the interest expense, or the cash requirements necessary to service interest or principal payments, on our indebtedness;

•these measures do not reflect our tax expense or the cash requirements to pay our taxes; and

•although depreciation, 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 (loss) income, which is the most directly comparable financial measure calculated in accordance with U.S. GAAP.


Reconciliation of Net (Loss) Income to NAREIT EBITDAre and Core EBITDA
(In thousands)
	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Net (loss) income	$	(13,399)	$	32,662	$	(27,635)	$	56,173
Adjustments:
Depreciation and amortization	84,459		52,399		161,670		104,003
Interest expense	26,579		23,178		52,535		47,048
Income tax expense	8,974		1,196		8,183		1,287
Net gain on sale of real estate, net of withholding taxes	—		(19,414)		—		(21,510)
Adjustment to reflect share of EBITDAre of partially owned entities	1,838		237		2,487		297
NAREIT EBITDAre	$	108,451	$	90,258	$	197,240	$	187,298
Adjustments:
Acquisition, litigation and other	3,922		2,801		24,673		4,489


Loss from investments in partially owned entities	61		129		761		156
Impairment of long-lived assets	1,528		3,667		1,528		3,667
Loss (gain) on foreign currency exchange	140		(315)		(33)		177
Share-based compensation expense	5,467		4,464		10,497		8,771
Loss on debt extinguishment, modifications and termination of derivative instruments	925		—		4,424		781
Net gain on sale of non-real estate assets	(317)		(255)		(475)		(420)

Reduction in EBITDAre from partially owned entities	(1,838)		(237)		(2,487)		(297)
Core EBITDA	$	118,339	$	100,512	$	236,128	$	204,622

LIQUIDITY AND CAPITAL RESOURCES

The Company and the Operating Partnership have filed a registration statement on Form S-3 with the SEC registering, among other securities, debt securities of the Operating Partnership, which will be fully and unconditionally guaranteed by the Company. Separate consolidated financial statements of the Operating Partnership have not been presented in accordance with the amendments to Rule 3-10 of Regulation S-X. Furthermore, as permitted under Rule 13-01(a)(4)(vi), the Company has excluded the summarized financial information for the Operating Partnership as the assets, liabilities and results of operations of the Company and the Operating Partnership are not materially different than the corresponding amounts presented in the consolidated financial statements of the Company, and management believes such summarized financial information would be repetitive and not provide incremental value to investors.

We currently expect that our principal sources of funding for working capital, facility acquisitions, business combinations, expansions, maintenance and renovation of our properties, developments projects, debt service and distributions to our shareholders will include:

•current cash balances;

•cash flows from operations;

•our 2020 Senior Unsecured Revolving Credit Facility;

•our outstanding equity forward sale agreements;

•our ATM Equity Programs and related forward sale agreements; and

•other forms of debt financings and equity offerings.

We expect that our funding sources as noted above are adequate and will continue to be adequate to meet our short-term liquidity requirements and capital commitments. These liquidity requirements and capital commitments include:

•operating activities and overall working capital;

•capital expenditures;

•debt service obligations; and

•quarterly shareholder distributions.

We expect to utilize the same sources of capital we will rely on to meet our short-term liquidity requirements to also meet our long-term liquidity requirements, which include funding our operating activities, our debt service obligations and shareholder distributions, and our future development and acquisition activities. As previously discussed, the COVID-19 pandemic has created disruption among several industries. The outbreak of COVID-19 has significantly adversely impacted global economic activity and has contributed to significant volatility and negative pressure in financial markets. While we did not incur significant disruption during the six months ended June 30, 2021 from the COVID-19 pandemic, we are unable to predict the impact that the pandemic may have on the sources of capital upon which we rely.

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

On May 10, 2021, we entered into an equity distribution agreement pursuant to which we may sell, from time to time, up to an aggregate sales price of $900.0 million of our common shares through an ATM equity program (the “2021 ATM Equity Program”). Sales of our common shares made pursuant to the 2021 ATM Equity Program may be made in negotiated transactions or transactions that are deemed to be “at the market” offerings as defined in Rule 415 under the Securities Act, including sales made directly on the NYSE, or sales made to or through a market maker other than on an exchange, or as otherwise agreed between the applicable Agent and us. Sales may also be made on a forward basis pursuant to separate forward sale agreements. We intend to use the net proceeds from sales of our common shares pursuant to the 2021 ATM Equity Program for general corporate purposes, which may include funding acquisitions and development projects.

During the six months ended June 30, 2021, there were 1,530,034 common shares sold under the 2021 ATM Equity Program under forward sale agreements which must be settled by July 1, 2022 for gross proceeds of $59.6 million. After considering the forward sale agreements entered into during the six months ended June 30, 2021, we had approximately $840.4 million availability remaining for distribution under the 2021 ATM Equity Program as of June 30, 2021.

Security Interests in Customers’ Products

By operation of law and in accordance with our customer contracts (other than leases), we typically receive warehouseman’s liens on products held in our warehouses to secure customer payments. Such liens permit us to take control of the products and sell them to third parties in order to recover any monies receivable on a delinquent account, but such products may be perishable or otherwise not readily saleable by us. Historically, in instances where we have warehouseman’s liens and our customer sought bankruptcy protection, we have been successful in receiving “critical vendor” status, which has allowed us to fully collect on our accounts receivable during the pendency of the bankruptcy proceeding.

Our bad debt expense was $0.9 million and $0.9 million for the three months ended June 30, 2021 and 2020, respectively, and $1.8 million and $1.5 million for the six months ended June 30, 2021 and 2020, respectively. As of June 30, 2021, we maintained bad debt allowances of approximately $15.2 million, which we believed to be adequate.

Dividends and Distributions

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

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

to use borrowings under our revolving credit facility, if necessary, to meet REIT distribution requirements and maintain our REIT status.

For further information regarding dividends and distributions, see Note 10 to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

Outstanding Indebtedness

The following table summarizes our outstanding indebtedness as of June 30, 2021.


Debt Summary:
Fixed rate	$	2,112,508
Variable rate - unhedged	465,755
Total outstanding indebtedness	2,578,263

Percent of total debt:
Fixed rate	81.94		%
Variable rate	18.06		%

Effective interest rate as of June 30, 2021	3.16		%

As of June 30, 2021, we had approximately $2.6 billion of outstanding debt as set forth in the table above, which excludes deferred financing costs.

The variable rate debt shown above bears interest at interest rates based on various one-month LIBOR, CDOR, and GBP LIBOR rates, depending on the respective agreement governing the debt, including our global revolving credit facilities. As of June 30, 2021, our debt had a weighted average term to initial maturity of approximately 7.0 years, assuming exercise of extension options.

For further information regarding outstanding indebtedness, please see Note 6 to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

Credit Ratings

Our capital structure and financial practices have earned us investment grade credit ratings from three nationally recognized credit rating agencies. We have investment grade ratings of BBB with a stable outlook from Fitch, BBB with an Under Review with Positive Implications outlook from DBRS Morningstar, and an investment grade rating of Baa3 with a stable outlook from Moody’s. These credit ratings are important to our ability to issue debt at favorable rates of interest, among other terms. Refer to our risk factor “Adverse changes in our credit ratings could negatively impact our financing activity” in our Annual Report on Form 10-K.

Maintenance Capital Expenditures and Repair and Maintenance Expenses

We utilize a strategic and preventative approach to maintenance capital expenditures and repair and maintenance expenses to maintain the high quality and operational efficiency of our warehouses and ensure that our warehouses meet the “mission-critical” role they serve in the cold chain.

Maintenance Capital Expenditures

Maintenance capital expenditures are capitalized investments made to extend the life of, and provide future economic benefit from, our existing temperature-controlled warehouse network and its existing supporting personal property and information technology systems. Examples of maintenance capital expenditures related to our existing temperature-controlled warehouse network include replacing roofs and refrigeration equipment, and upgrading our racking systems. Examples of maintenance capital expenditures related to personal property include expenditures on material handling equipment (e.g., fork lifts and pallet jacks) and related batteries. Examples of maintenance capital expenditures related to information technology include expenditures on existing servers, networking equipment and current software. Maintenance capital expenditures do not include acquisition costs contemplated when underwriting the purchase of a building or costs which are incurred to bring a building up to Americold’s operating standards. The following table sets forth our maintenance capital expenditures for the three and six months ended June 30, 2021 and 2020.


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
	(In thousands, except per cubic foot amounts)
Real estate	$	17,974	$	14,140	$	30,902	$	23,530
Personal property	1,428		762		3,210		3,061
Information technology	1,086		382		2,107		1,132
Maintenance capital expenditures	$	20,488	$	15,284	$	36,219	$	27,723

Maintenance capital expenditures per cubic foot	$	0.014	$	0.014	$	0.025	$	0.025

Repair and Maintenance Expenses

We incur repair and maintenance expenses that include costs of normal maintenance and repairs and minor replacements that do not materially extend the life of the property or provide future economic benefits. Repair and maintenance expenses consist of expenses related to our existing temperature-controlled warehouse network and its existing supporting personal property and are reflected as operating expenses on our income statement. Examples of repair and maintenance expenses related to our warehouse portfolio include ordinary repair and maintenance on roofs, racking, walls, doors, parking lots and refrigeration equipment. Examples of repair and maintenance expenses related to personal property include ordinary repair and maintenance expenses on material handling equipment (e.g., fork lifts and pallet jacks) and related batteries. The following table sets forth our repair and maintenance expenses for the three and six months ended June 30, 2021 and 2020.


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
	(In thousands, except per cubic foot amounts)
Real estate	$	5,949	$	7,148	$	14,325	$	13,945
Personal property	13,622		7,214		25,076		15,398
Repair and maintenance expenses	$	19,571	$	14,362	$	39,401	$	29,343

Repair and maintenance expenses per cubic foot	$	0.014	$	0.013	$	0.027	$	0.027

External Growth, Expansion and Development Capital Expenditures

External growth expenditures represent asset acquisitions or business combinations. Expansion and development capital expenditures are capitalized investments made to support both our customers and our warehouse expansion and development initiatives. It also includes investments in enhancing our information technology platform. Examples of capital expenditures associated with expansion and development initiatives include funding of construction costs, increases to warehouse capacity and pallet positions, acquisitions of reusable incremental material handling equipment, and implementing energy efficiency projects, such as thermal energy storage, LED lighting, motion-sensor technology, variable frequency drives for our fans and compressors, rapid-close doors and alternative-power generation technologies. Examples of capital expenditures to enhance our information technology platform include the delivery of new systems and software and customer interface functionality.

Acquisitions

The acquisitions completed during the six months ended June 30, 2021 relate to Bowman Stores, KMT Brrr! and Liberty Freezers. The acquisitions completed during the six months ended June 30, 2020 relate to Newport and Nova Cold. Refer to Notes 2 and 3 of the Condensed Consolidated Financial Statements for details of the purchase price allocation for each acquisition.

Expansion and development

The expansion and development expenditures for the six months ended June 30, 2021 are primarily driven by $63.5 million related to our two fully-automated, build-to-suit, development sites in Connecticut and Pennsylvania, $15.7 million related to the Atlanta major markets strategy project, $16.2 million related to our Russellville expansion, $7.0 million related to our Calgary, Canada expansion and $17.8 million related to the Auckland, New Zealand expansion project. The Atlanta and Auckland projects were substantially completed during the second quarter of 2021, with the remaining spend to be incurred during the third quarter of 2021.

During the three months ended June 30, 2021, we announced new development projects. The Atlanta major market phase 2 project began, and we invested $8.7 million in this project. Additionally, the Dunkirk NY expansion begin, and we invested $4.5 million in this project. Finally, we invested $6.7 million in our newly announced Dublin expansion.

As a result of the Agro Acquisition on December 30, 2020, we acquired an expansion project in Lurgan, Northern Ireland, which was completed during the second quarter of 2021. We incurred $4.1 million during the six months ended June 30, 2021 for this expansion project.

Expansion and development initiatives also include $7.4 million of corporate initiatives, which are projects designed to reduce future spending over the course of time. This category reflects return on investment projects, conversion of leases to owned assets, and other cost-saving initiatives.

Finally, we incurred approximately $15.5 million for contemplated future expansion or development projects.

The following table sets forth our acquisition, expansion and development capital expenditures for the three and six months ended June 30, 2021 and 2020.


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
	(In thousands)
Acquisitions, net of cash acquired and adjustments	$	173,373	$	85	$	215,329	$	315,668
Expansion and development initiatives	83,844		85,193		167,112		114,779
Information technology	2,045		2,029		3,573		2,980
Growth and expansion capital expenditures	$	259,262	$	87,307	$	386,014	$	433,427

Historical Cash Flows


	Six Months Ended June 30,
	2021		2020
	(In thousands)
Net cash provided by operating activities	$	127,753	$	163,980
Net cash used in investing activities	$	(438,822)	$	(443,025)
Net cash provided by financing activities	$	7,079	$	374,312

Operating Activities

For the six months ended June 30, 2021, our net cash provided by operating activities was $127.8 million, a decrease of $36.2 million, compared to $164.0 million for the six months ended June 30, 2020. The decrease is primarily due to higher acquisition and integration related costs and selling, general and administrative expense. This was partially offset by higher segment contribution as a result of our recent acquisitions.

Investing Activities

Our net cash used in investing activities was $438.8 million for the six months ended June 30, 2021 compared to $443.0 million for the six months ended June 30, 2020. Cash used in connection with business combinations during 2021 was $215.3 million and related to the Bowman Stores, Liberty Freezers and KMT Brrr! acquisitions. Additions to property, buildings and equipment were $207.3 million, reflecting maintenance capital expenditures and investments in the Ahold, Atlanta, New Zealand, Calgary and Russellville expansion and development projects. Additionally, we invested $6.3 million in the SuperFrio joint venture for the six months ended June 30, 2021, and paid $11.6 million to purchase the noncontrolling interest holders share in the Chilean business, which we now wholly-own.

Net cash used in investing activities of $443.0 million for the six months ended June 30, 2020 primarily related to cash used for the acquisitions of Newport and Nova Cold totaling $315.7 million, cash used for additions to property, buildings and equipment of $173.2 million reflecting maintenance capital expenditures and investments in the Ahold, Savannah and Atlanta expansion and development projects, and our initial investment of $26.2 million in the SuperFrio joint venture. These investments were offset by $69.1 million in proceeds from the sale of land and property, buildings and equipment related to the sale of land in Sydney and the sale of the Boston facility.

Financing Activities

Net cash provided by financing activities was $7.1 million for the six months ended June 30, 2021 compared to $374.3 million for the six months ended June 30, 2020. Cash provided by financing activities for the current period primarily consisted of $214.8 million net proceeds from equity forward contracts settled during the period upon the issuance of common shares, $210.8 million in proceeds from our revolving line of credit, and $5.2 million of proceeds received upon exercise of stock options, offset by cash outflows of $203.5 million for repayments on term loan and mortgage notes, $110.8 million of quarterly dividend distributions paid, $70.0 million in repayments on the revolving line of credit, $15.8 million in payment of withholding taxes related to share-based payment arrangements and $19.3 million of financing lease payments.

Net cash provided by financing activities was $374.3 million for the six months ended June 30, 2020 and primarily consisted of $340.6 million net proceeds from equity offerings under our prior ATM equity program and the April 2019 equity forward contract settled in January 2020, the $177.1 million received in connection with the refinancing of our Senior Unsecured Term Loan and $186.8 million in proceeds from our revolving credit facility. These cash inflows were partially offset by $177.1 million of repayment on the revolving credit facility using the proceeds from our refinancing of our Senior Unsecured Term Loan, $81.0 million of quarterly dividend distributions paid, $53.3 million of repayments on our term loan and mortgage notes and $8.3 million of payments related to debt issuance costs.

CRITICAL ACCOUNTING POLICIES UPDATE

See Note 2 to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

NEW ACCOUNTING PRONOUNCEMENTS

See Note 2 to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

100

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Risk

Our future income and cash flows relevant to financial instruments are dependent upon prevalent market interest rates. Market risk refers to the risk of loss from adverse changes in market prices and interest rates.

As of June 30, 2021, we had $125 million of outstanding USD-denominated variable-rate debt and $250 million of outstanding CAD-denominated variable-rate debt. This consisted of our Senior Unsecured Term Loan A Facility bearing interest at one-month LIBOR for the USD tranche and one-month CDOR for the CAD tranche, plus a margin up to 0.95%. Additionally, we had C$55.0 million and £68.5 million outstanding of Senior Unsecured Revolving Credit Facility draws. At June 30, 2021, one-month LIBOR was at approximately 0.10%, one-month CDOR was at 0.41%, and one-month LIBOR GBP was at 0.06%, therefore a 100 basis point increase in market interest rates would result in an increase in annual interest expense to service our variable-rate debt of approximately $4.7 million. A 100 basis point decrease in market interest rates would result in a $1.2 million decrease in annual interest expense.

Foreign Currency Risk

As it relates to the currency of countries where we own and operate warehouse facilities and provide logistics services, our foreign currency risk exposure at June 30, 2021 was not materially different than what we disclosed in our Annual Report on Form 10-K for the year ended December 31, 2020. The information concerning market risk in Item 7A under the caption “Quantitative and Qualitative Disclosures about Market Risk” of our Annual Report on Form 10-K for the year ended December 31, 2020, is hereby incorporated by reference in this Quarterly Report on Form 10-Q.

Item 4. Controls and Procedures

Evaluation of Controls and Procedures

In accordance with Rule 13a-15(b) of the Exchange Act, the Company’s management, with the participation of the Chief Executive Officer and the Chief Financial Officer, carried out an evaluation of the effectiveness of the Company’s “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act, as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of June 30, 2021.

Our management is responsible for establishing and maintaining adequate “internal control over financial reporting,” as defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Our management, including the Chief Executive Officer and Chief Financial Officer do not expect that our internal controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected.

101

Changes in Internal Control over Financial Reporting

On December 30, 2020, we acquired Agro, refer to Note 3 - Business Combinations of this Form 10-Q for further discussion of the acquisition. We are currently in the process of integrating the internal controls and procedures of Agro into our internal controls over financial reporting. Changes to certain processes, information technology systems and other components of internal control over financial reporting (as defined in Rule 13a - 15(f) of the Exchange Act) resulting from the acquisition of Agro may occur and will be evaluated by management as such integration activities are implemented. As provided under the Sarbanes-Oxley Act of 2002 and the applicable rules and regulations of the Securities and Exchange Commission, we intend to include the internal controls and procedures of Agro in our annual assessment of the effectiveness of our internal control over financial reporting for our 2021 fiscal year.

Excluding the Agro acquisition, there has not been any change in our internal control over financial reporting (as defined in Rule 13a - 15(f) of the Exchange Act) identified in connection with the evaluation required by Rule 13a-15(d) under the Exchange Act during the quarter ended June 30, 2021 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

102

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

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

See Note 14 - Commitments and Contingencies to our Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for information regarding material legal proceedings in which we are involved.

Item 1A. Risk Factors

Risk factors that could harm our business, results of operations and financial condition are discussed in Part I, Item 1A. Risk Factors of our Annual Report on Form 10-K for the year ended December 31, 2020.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

None.

Item 5. Other Information

None.

103

Item 6. Exhibits

Index to Exhibits


Exhibit No.						Description

10.1						First Amendment to 2020 Note and Guaranty Agreement
10.2						Second Amendment to 2019 Note and Guaranty Agreement
10.3						Third Amendment to 2018 Note and Guaranty Agreement
31.1						Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 - Americold Realty Trust
31.2						Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 - Americold Realty Trust
32.1						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
32.2						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

101						The following financial statements of Americold Realty Trust’s Form 10-Q for the quarter ended June 30, 2021, formatted in XBRL interactive data files: (i) Condensed Consolidated Balance Sheets as of June 30, 2021 and December 31, 2020; (ii) Condensed Consolidated Income Statements for the three and six months ended June 30, 2021 and 2020; (iii) Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2021 and 2020; (iv) Condensed Consolidated Statements of Equity for the three and six months ended June 30, 2021 and 2020; (v) Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2021 and 2020; and (vi) Notes to Condensed Consolidated Financial Statements.
104						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
#						This document has been identified as a management contract or compensatory plan or arrangement.

104

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

AMERICOLD REALTY TRUST

(Registrant)

Date:

August 6, 2021

By:

/s/ Marc J. Smernoff

Name:

Marc J. Smernoff

Title:

Chief Financial Officer and Executive Vice President

(On behalf of the registrant and as principal financial officer)