Cold-Storage Firm Lineage Predicts $4B Windfall in Upcoming IPO
The company expects an up to $19.2 billion valuation after it goes public
A temperature-controlled distribution center jointly operated by Lineage and Dreisbach Enterprises in Oakland, Calif. PHOTO: Paul Chinn/The San Francisco Chronicle via Getty Images
Real estate investors have only seen the tip of the iceberg when it comes to cold storage, with refrigerated warehouse company Lineage expecting to reach an up to $19.2 billion valuation once it goes public later this year.
Lineage hopes to raise up to $3.9 billion in its initial public offering (IPO) of 47 million shares of its common stock, priced between $70 and $82 per share, the company announced Tuesday.
SEE ALSO: Orange County Industrial Market Continues Cool-Off This Summer
The 16-year-old company, founded in Michigan by Adam Forste and Kevin Marchetti, is the dominant force in the booming cold-storage market and owns some 482 temperature-controlled warehouses comprising more than 84 million square feet. Its planned IPO price will make it one of the largest public offerings of the year, the Wall Street Journal reported.
“Our IPO is the opposite of an exit,” Forste and Marchetti wrote in their pitch to potential investors. “It is a new beginning.”
The company told investors it plans to use the proceeds from its IPO to repay some of its $9.3 billion of total outstanding debt and fund one-time bonuses for certain employees. Lineage warned of a few risk factors, including the potential impact of adverse weather events on the local level and the “inability to quickly and effectively restore operations.”
Lineage’s massive IPO windfall comes as investors can’t get enough of the cold-storage market.
The confluence of American consumers’ evolving grocery shopping habits, and demand for pharmaceutical storage, have made cold storage a critical part of the U.S. supply chain. The country is now humming with some 3.7 billion square feet of refrigerated warehouses, Commercial Observer reported earlier this year.
And the asset type is predicted to grow at an annual rate of 13.2 percent for the remainder of this decade, according to a Colliers report.
Lineage announced plans to go public as a real estate investment trust last month and plans to list under the ticker symbol “LINE” on the Nasdaq Global Select Market, pending the approval of the offering by the Securities and Exchange Commission.
Abigail Nehring can be reached at anehring@commercialobserver.com.
Adam Forste, Kevin Marchetti, Nasdaq Global Select Market, Securities and Exchange Commission, Lineage
