AMERICOLD REALTY TRUST [COLD] Filings

10-Q 1 art-20220331.htm 10-Q art-20220331

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	March 31, 2022


☐			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		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 May 3, 2022
Common Stock, $0.01 par value per share						269,275,929

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			Page
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements			4
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			29
Item 3. Quantitative and Qualitative Disclosures About Market Risk			58
Item 4. Controls and Procedures			58

PART II - OTHER INFORMATION
Item 1. Legal Proceedings			60
Item 1A. Risk Factors			60
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			61
Item 3. Defaults Upon Senior Securities			61
Item 4. Mine Safety Disclosures			61
Item 5. Other Information			61
Item 6. Exhibits			62

SIGNATURES			63

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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:

•the impact of supply chain disruptions, including, among others, the impact on labor availability, raw material availability, manufacturing and food production, construction materials and transportation;

•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;

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

•labor and power costs;

•labor shortages;

•general economic conditions;

•risks associated with the ownership of real estate generally 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 and 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 target completion dates and budgeted or stabilized returns within expected time frames, or at all, in respect thereof;

•a failure of our information technology systems, systems conversions and integrations, 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;

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

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

•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;

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•financial market fluctuations;

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

•geopolitical conflicts, such as the ongoing conflict between Russia and Ukraine;

•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;

•changes in real estate and zoning laws and increases in real property tax rates;

•our relationship with our associates, 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;

•uninsured losses or 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, of our common shares; and

•the potential dilutive effect of our common share offerings.

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, 2021, 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)
	March 31, 2022		December 31, 2021
Assets
Property, buildings and equipment:
Land	$	811,442	$	807,495
Buildings and improvements	4,163,054		4,152,763
Machinery and equipment	1,361,741		1,352,399
Assets under construction	512,694		450,153
	6,848,931		6,762,810
Accumulated depreciation	(1,708,031)		(1,634,909)
Property, buildings and equipment – net	5,140,900		5,127,901

Operating lease right-of-use assets	369,706		377,536
Accumulated depreciation – operating leases	(61,359)		(57,483)
Operating leases – net	308,347		320,053

Financing leases:
Buildings and improvements	13,557		13,552
Machinery and equipment	141,443		146,341
	155,000		159,893
Accumulated depreciation – financing leases	(56,471)		(58,165)
Financing leases – net	98,529		101,728

Cash, cash equivalents and restricted cash	50,965		82,958

Accounts receivable – net of allowance of $20,725 and $18,755 at March 31, 2022 and December 31, 2021, respectively	419,348		380,014
Identifiable intangible assets – net	968,099		980,966
Goodwill	1,068,479		1,072,980
Investments in partially owned entities	43,526		37,458
Other assets	109,676		112,139
Total assets	$	8,207,869	$	8,216,197

Liabilities and equity
Liabilities:
Borrowings under revolving line of credit	$	513,824	$	399,314
Accounts payable and accrued expenses	535,617		559,412
Mortgage notes, senior unsecured notes and term loans – net of unamortized deferred financing costs of $10,492 and $11,050, in the aggregate, at March 31, 2022 and December 31, 2021, respectively	2,422,570		2,443,806
Sale-leaseback financing obligations	177,305		178,817
Financing lease obligations	91,436		97,633
Operating lease obligations	291,050		301,765
Unearned revenue	28,349		26,143
Pension and postretirement benefits	3,057		2,843
Deferred tax liability – net	165,331		169,209
Multi-employer pension plan withdrawal liability	8,091		8,179
Total liabilities	4,236,630		4,187,121
Commitments and contingencies (Note 7)
Equity
Shareholders’ equity:
Common shares of beneficial interest, $0.01 par value – 500,000,000 authorized shares; 268,672,465 and 268,282,592 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively	2,687		2,683
Paid-in capital	5,177,642		5,171,690
Accumulated deficit and distributions in excess of net earnings	(1,234,875)		(1,157,888)
Accumulated other comprehensive income	15,926		4,522
Total shareholders’ equity	3,961,380		4,021,007
Noncontrolling interests:
Noncontrolling interests in operating partnership	9,859		8,069
Total equity	3,971,239		4,029,076

Total liabilities and equity	$	8,207,869	$	8,216,197
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 March 31,
		2022		2021
Revenues:
Rent, storage and warehouse services		$	540,925	$	485,451
Third-party managed services		85,860		73,072
Transportation services		78,910		76,272

Total revenues		705,695		634,795
Operating expenses:
Rent, storage and warehouse services cost of operations		394,667		339,270
Third-party managed services cost of operations		82,359		68,690
Transportation services cost of operations		70,381		69,569

Depreciation and amortization		82,620		77,211
Selling, general and administrative		57,602		45,052
Acquisition, litigation and other, net		10,075		20,751


Total operating expenses		697,704		620,543

Operating income		7,991		14,252

Other income (expense):
Interest expense		(25,773)		(25,956)
Loss on debt extinguishment, modifications and termination of derivative instruments		(616)		(3,499)
Other, net		245		176






Loss before income tax benefit		(18,153)		(15,027)
Income tax (expense) benefit
Current		(1,181)		(1,211)
Deferred		1,889		2,002
Total income tax benefit		708		791

Net loss		$	(17,445)	$	(14,236)
Net (loss) income attributable to non controlling interests		(38)		178
Net loss attributable to Americold Realty Trust		$	(17,407)	$	(14,414)

Weighted average common shares outstanding – basic		269,164		252,938
Weighted average common shares outstanding – diluted		269,164		252,938

Net loss per common share of beneficial interest - basic		$	(0.06)	$	(0.06)
Net loss per common share of beneficial interest - diluted		$	(0.06)	$	(0.06)

See accompanying notes to condensed consolidated financial statements.

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Americold Realty Trust and Subsidiaries
Condensed Consolidated Statements of Comprehensive Loss (Unaudited)
(In thousands)
	Three Months Ended March 31,
	2022		2021
Net loss	$	(17,445)	$	(14,236)
Other comprehensive income (loss) - net of tax:
Adjustment to accrued pension liability	67		381
Change in unrealized net gain (loss) on foreign currency	11,186		(10,682)
Unrealized gain on cash flow hedge	151		1,021
Other comprehensive income (loss) - net of tax attributable to Americold Realty Trust	11,404		(9,280)
Other comprehensive income (loss) attributable to noncontrolling interests	23		(12)
Total comprehensive loss	$	(6,018)	$	(23,528)

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 Income		Noncontrolling Interests in Operating Partnership

	Number of Shares	Par Value		Paid-in Capital
												Total
Balance - December 31, 2021	268,282,592	$	2,683	$	5,171,690	$	(1,157,888)	$	4,522	$	8,069	$	4,029,076
Net loss	—	—		—		(17,407)		—		(38)		(17,445)
Other comprehensive income	—	—		—		–		11,404		23		11,427
Distributions on common shares, restricted stock and OP units	—	—		—		(59,580)		—		(180)		(59,760)
Share-based compensation expense	—	—		6,108		—		—		1,985		8,093

Common share issuance related to share-based payment plans, net of shares withheld for employee taxes	318,729	3		(2,140)		—		—		—		(2,137)
Common shares issuance related to employee stock purchase plan	71,144	1		1,984		—		—		—		1,985
Balance - March 31, 2022	268,672,465	$	2,687	$	5,177,642	$	(1,234,875)	$	15,926	$	9,859	$	3,971,239



	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

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)
	Three Months Ended March 31,
	2022		2021
Operating activities:
Net loss	$	(17,445)	$	(14,236)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	82,620		77,211
Amortization of deferred financing costs and pension withdrawal liability	1,146		1,148
Amortization of above/below market leases	508		39
Loss on debt extinguishment, modifications and termination of derivative instruments	616		3,499
Foreign exchange loss	(325)		(173)
Loss from investments in partially owned entities	2,112		700


Share-based compensation expense	8,093		5,030
Deferred income taxes	(1,889)		(2,002)

Gain on other asset disposals	(165)		(158)

Provision for doubtful accounts receivable	1,970		579
Changes in operating assets and liabilities:
Accounts receivable	(41,994)		16,519
Accounts payable and accrued expenses	(35,572)		(38,446)
Other	15,911		(3,179)
Net cash provided by operating activities	15,586		46,531
Investing activities:


Investment in partially owned entities	(1,925)		(1,642)
Proceeds from sale of property, buildings and equipment	98		327

Business combinations, net of cash acquired	603		(41,956)

Additions to property, buildings and equipment	(93,020)		(100,466)

Net cash used in investing activities	(94,244)		(143,737)
Financing activities:


Distributions paid on common shares, restricted stock units and noncontrolling interests in Operating Partnership	(59,940)		(54,956)
Proceeds from stock options exercised	575		4,345
Proceeds from employee stock purchase plan	1,985		—
Remittance of withholding taxes related to employee share-based transactions	(3,226)		(14,922)
Proceeds from revolving line of credit	115,000		43,489




Repayment of sale-leaseback financing obligations	(1,619)		(1,453)
Repayment of financing lease obligations	(4,695)		(7,218)
Payment of debt issuance costs	—		(3,045)
Repayment of term loan and mortgage notes	(1,824)		(201,770)





Net cash provided by financing activities	46,256		(235,530)
Net decrease in cash, cash equivalents and restricted cash	(32,402)		(332,736)
Effect of foreign currency translation on cash, cash equivalents and restricted cash	409		(624)
Cash, cash equivalents and restricted cash:
Beginning of period	82,958		621,051
End of period	$	50,965	$	287,691

Supplemental disclosures of non-cash investing and financing activities:
Addition of property, buildings and equipment on accrual	$	52,931	$	56,197
Addition of property, buildings and equipment under financing lease obligations	$	5,717	$	6,191
Addition of property, buildings and equipment under operating lease obligations	$	1,828	$	3,209

Supplemental cash flow information:
Interest paid – net of amounts capitalized	$	38,751	$	31,845
Income taxes paid – net of refunds	$	2,252	$	1,481

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 all of its consolidated subsidiaries (ART, Americold, the Company, us 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.

Basis of Presentation and Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the U.S. (GAAP) for interim financial information, and with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). These unaudited condensed consolidated financial statements do not include all disclosures associated with the Company’s consolidated annual financial statements included in its 2021 Annual Report on Form 10-K as filed with the SEC, 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.

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 2021 Annual Report on Form 10-K as filed with the SEC, which provides additional information with regard to the accounting policies set forth herein and other significant accounting policies.

Impairment of Long-Lived Assets

There were no impairment charges recorded during the three months ended March 31, 2022 or 2021.

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Americold Realty Trust and Subsidiaries

Notes to Condensed Consolidated Financial Statements - (Unaudited)

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. During the first quarter of 2020, the Company has elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. The Company continues to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur.

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 future 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 and any variants on all aspects of its business in all geographies, including how it will impact its customers and business partners. The three months ended March 31, 2022 and the year ended December 31, 2021 were negatively impacted by COVID-19 related disruptions in (i) the food supply chain; (ii) our customers’ production of goods; (iii) the labor market impacting availability and cost; and (iv) the overall impact of inflation on the cost to provide our services. We expect that end-consumer demand for food will remain consistent over the long-term with historic levels overall but varying between retail and food service sectors. The consistent end consumer demand has negatively impacted holdings in our facilities as it remains steady while food production has remained challenged since the onset of the pandemic. We expect it will continue to do so until our customers are able to ramp production back up to pre-pandemic levels for an extended period of time in order to rebuild inventory in the supply chain. However, uncertainty still surrounds the impact of the pandemic and recovery ultimately depends on many factors. COVID-19 disruptions 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 historical 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. We continue to expect to see inflationary impacts in the cost of providing our storage and services, but anticipate that these will be partially mitigated through price increases that have either taken effect or are expected to take effect in the near future. 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.

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Americold Realty Trust and Subsidiaries

Notes to Condensed Consolidated Financial Statements - (Unaudited)

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, the direct and indirect economic effects of the illness and containment measures, and supply chain disruption, 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.

2. Business Combinations

Acquisitions Completed During 2021

There were no businesses acquired during the three months ended March 31, 2022. Total consideration paid for Liberty Freezers which was acquired during the three months ended March 31, 2021 was C$56.8 million, or $44.9 million, and the acquisition accounting was finalized this quarter. No material adjustments were made to the acquisition accounting during this period. The acquisition accounting for KMT Brrr!, Bowman Stores, ColdCo, Newark Facility Management and Lago Cold Stores, which were businesses acquired during 2021, remained preliminary as of March 31, 2022. No material adjustments were made to the preliminary acquisition accounting for these businesses during the three months ended March 31, 2022. We will continue to evaluate the preliminary fair values of the assets acquired and liabilities assumed until they are satisfactorily resolved and adjust our acquisition accounting accordingly and within the allowable measurement period (not to exceed one year from the date of acquisition as defined by ASC 805). For more detailed descriptions of these acquisitions refer to Note 3 of the consolidated financial statements in the Company’s 2021 Annual Report on Form 10-K as filed with the SEC.

3. Acquisition, Litigation and Other, net

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


	Three Months Ended March 31,
Acquisition, litigation and other, net	2022		2021
Acquisition and integration related costs	$	6,285	$	13,475
Litigation	1,200		—
Severance costs	2,564		2,446
Terminated site operations costs	—		59
Cyber incident related costs, net of insurance recoveries	26		4,771

Total acquisition, litigation and other, net	$	10,075	$	20,751

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, 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 of the consolidated financial statements in the Company’s 2021 Annual Report on Form 10-K as filed with the SEC for further information regarding acquisitions completed during 2021.

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Notes to Condensed Consolidated Financial Statements - (Unaudited)

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.

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Notes to Condensed Consolidated Financial Statements - (Unaudited)

4. Debt

The Company’s outstanding indebtedness as of March 31, 2022 and December 31, 2021 was as follows (in thousands):


				March 31, 2022				December 31, 2021
Indebtedness	Stated Maturity Date	Contractual Interest Rate	Effective Interest Rate as of March 31, 2022	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
2013 Mortgage Loans
Senior note	5/2023	3.81%	4.14%	$	165,719	$	165,720	$	167,545	$	170,503
Mezzanine A	5/2023	7.38%	7.55%	70,000		70,000		70,000		70,875
Mezzanine B	5/2023	11.50%	11.75%	32,000		32,080		32,000		32,560
Total 2013 Mortgage Loans				267,719		267,800		269,545		273,938

Chile Mortgages(12)	2022 - 2029	4.01%	4.01%	10,443		10,443		9,761		9,761

Senior Unsecured Notes
Series A Notes	1/2026	4.68%	4.77%	200,000		204,000		200,000		217,500
Series B Notes	1/2029	4.86%	4.92%	400,000		415,000		400,000		454,000
Series C Notes	1/2030	4.10%	4.15%	350,000		350,000		350,000		385,000
Series D Notes(5)	1/2031	1.62%	1.67%	442,680		392,879		454,800		441,724
Series E Notes(6)	1/2033	1.65%	1.70%	387,345		338,927		397,950		388,499
Total Senior Unsecured Notes				1,780,025		1,700,806		1,802,750		1,886,723

2020 Senior Unsecured Term Loan Tranche A-1(1)	3/2025	L+0.95%	1.69%	174,875		174,001		175,000		173,688
2020 Senior Unsecured Term Loan Tranche A-2(2)(4)	3/2025	C+0.95%	2.03%	200,000		199,000		197,800		196,811
Total 2020 Senior Unsecured Term Loan A Facility				374,875		373,001		372,800		370,499

2020 Senior Unsecured Revolving Credit Facility-1(2)(3)(7)	3/2024	C+0.85%	2.22%	43,973		43,973		43,516		43,407
2020 Senior Unsecured Revolving Credit Facility-2(3)(8)(9)	3/2024	SONIA+0.85%	2.02%	89,995		89,995		92,694		92,462
2020 Senior Unsecured Revolving Credit Facility-3(1)(3)	3/2024	L+0.85%	1.75%	320,000		320,000		205,000		204,488
2020 Senior Unsecured Revolving Credit Facility-4(3)(10)(11)	3/2024	BBSW+0.85%	1.36%	59,856		59,856		58,104		57,959
Total 2020 Senior Unsecured Revolving Credit Facility				$	513,824	$	513,824	$	399,314	$	398,316

Total principal amount of indebtedness				$	2,946,886	$	2,865,874	$	2,854,170	$	2,939,237
Less: unamortized deferred financing costs				(10,492)		n/a		(11,050)		n/a
Total indebtedness, net of unamortized deferred financing costs				$	2,936,394	$	2,865,874	$	2,843,120	$	2,939,237

(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 March 31, 2022.

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(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 March 31, 2022.

(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 March 31, 2022.

(7) The Senior Unsecured Revolving Credit Facility Draw 1 as of March 31, 2022, 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 March 31, 2022.

(8) The Senior Unsecured Revolving Credit Facility Draw 2 as of March 31, 2022, 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 March 31, 2022.

(9) SONIA = Sterling Overnight Interbank Average Rate.

(10) BBSW = Bank Bill Swap Rate

(11) The Senior Unsecured Revolving Credit Facility Draw 4 as of March 31, 2022, is denominated in AUD and aggregates to AUD 80.0 million. The carrying value in the table above is the US dollar equivalent as of March 31, 2022.

(12) The Chile Mortgages have varying maturities and interest rates. The above aggregates these given the immaterial balance of each individually.

There have been no new debt agreements entered into during 2022. Refer to our 2021 Form 10-K and below for details regarding our debt instruments.

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 March 31, 2022, we were in compliance with all debt covenants.

Loss on debt extinguishment, modifications and termination of derivative instruments

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 for $0.8 million and $0.6 million during the three months ended March 31, 2021 and 2022, respectively.

5. 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.

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Notes to Condensed Consolidated Financial Statements - (Unaudited)

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 markets for identical assets (Level 1), which the Company receives from the financial institutions that hold such investments on its behalf. The fair value hierarchy discussed above is also applicable to the Company’s pension and other post-retirement plans. The Company uses the fair value hierarchy to measure the fair value of assets held by various plans. The Company recognizes transfers between levels within the hierarchy as of the beginning of the reporting period. There were no transfers between levels within the hierarchy as of March 31, 2022 and 2021, 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	March 31, 2022		December 31, 2021
		(In thousands)
Measured at fair value on a recurring basis:




Cross-currency swap asset	Level 2	$	191	$	2,015
Cross-currency swap liability	Level 2	$	2,502	$	—








Disclosed at fair value:
Mortgage notes, senior unsecured notes and term loans(1)	Level 3	$	2,865,874	$	2,939,237

(1)The carrying value of mortgage notes, senior unsecured notes and term loans is disclosed in Note 4.

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Notes to Condensed Consolidated Financial Statements - (Unaudited)

6. Share-Based Compensation

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. The details of the 2017 Plan are disclosed in greater detail in the 2021 Form 10-K as filed with the SEC.

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. 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 each of the three months ended March 31, 2022 and 2021.

Aggregate share-based compensation charges were $8.3 million and $5.0 million during the three months ended March 31, 2022 and 2021, 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 March 31, 2022, there was $44.1 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. As of March 31, 2022 and December 31, 2021, the Company accrued $1.2 million and $1.5 million, respectively, of dividend equivalents on unvested units payable to associates and trustees.

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.

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Notes to Condensed Consolidated Financial Statements - (Unaudited)

The following table summarizes restricted stock unit grants under the 2017 Plan during the three months ended March 31, 2022 and 2021, respectively:


Three Months Ended March 31,	Grantee Type	Number of Restricted Stock Units Granted	Vesting Period	Grant Date Fair Value (in thousands)

2022	Associates	481,099	1-3 years	$	12,857

2021	Associates	296,610	1-3 years	$	9,885

Restricted stock units granted for the three months ended March 31, 2022 consisted of: (i) 350,641 time-based graded vesting restricted stock units with various vesting periods ranging from one to three years issued to certain associates and (ii) 130,458 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, 2022 and will end December 31, 2024.

Restricted stock units granted for the three months ended March 31, 2021 consisted of (i) 188,088 time-based graded vesting restricted stock units with various vesting periods ranging from one to three years issued to certain associates and (ii) 108,522 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.

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%.

In January 2022, following the completion of the applicable market-performance period, the Compensation Committee determined that the 51st percentile had been achieved for the 2019 awards and, accordingly, 194,111 units vested immediately, representing a vesting percentage of 91.4%.

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Notes to Condensed Consolidated Financial Statements - (Unaudited)

The following table provides a summary of restricted stock awards activity during the three months ended March 31, 2022:


Three Months Ended March 31, 2022
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, 2021	1,071,959	$	35.1	—	$	—	374,048	$	12.3
Granted	350,641			—			130,458
Market-performance adjustment(3)	—			—			(18,253)
Vested	(171,176)			—			(194,111)
Forfeited	(45,597)			—			(8,044)
Non-vested as of March 31, 2022	1,205,827	$	33.6	—	$	—	284,098	$	7.9
Shares vested, but not released(1)	615,643	17.2		42,856	1.2		—	—
Total outstanding restricted stock units	1,821,470	$	50.8	42,856	$	1.2	284,098	$	7.9

(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. This is comprised of 568,753 vested time-based restricted stock units which 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. The weighted average grant date fair value of these units is $9.38 per unit. This is also comprised of 46,890 vested time-based restricted stock units which belong to an active member of the Board of Trustees and the date of issuance is therefore unknown at this time. The weighted average grant date fair value of these units is $8.42 per unit. Finally, this is comprised of 42,856 vested performance-based restricted stock units which belong to the former CEO and common shares shall not be issued until May 2, 2022 in accordance with the terms of the award. The weighted average grant date fair value of these units is $13.43 per unit. The holders of these vested restricted stock units are entitled to receive distributions, but are not entitled to vote the shares until common shares are issued.in exchange for these vested restricted stock units.

(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 decrease 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 three months ended March 31, 2022 was $26.73 per unit, for vested and converted restricted stock units was $33.68, for forfeited restricted stock units was $30.50. The weighted average grant date fair value of non-vested restricted stock units was $29.30 and $31.40 per unit as of March 31, 2022 and December 31, 2021, 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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Notes to Condensed Consolidated Financial Statements - (Unaudited)

The following table summarizes OP unit grants during the three months ended March 31, 2022 and March 31, 2021:


Three Months Ended March 31,	Grantee Type	Number of OP Units Granted	Vesting Period	Grant Date Fair Value (in thousands)

2022	Associates	342,980	1-3 years	$	9,001

2021	Associates	258,479	1-3 years	$	8,434

OP units granted for the year ended March 31, 2022 consisted of: (i) 98,994 time-based graded vesting OP units with various vesting periods ranging from one to three years issued to certain associates in connection with the annual grant provided in March and (ii) 243,986 market performance-based cliff vesting OP units with a three-year vesting period issued to certain associates in connection with the annual grant provided in March.

OP units granted for the year ended March 31, 2021 consisted of: (i) 60,472 time-based graded vesting OP units with various vesting periods ranging from one to three years issued to certain associates and (ii) 198,007 market performance-based cliff vesting OP units with a three-year vesting period issued to certain associates.

The following table provides a summary of the OP unit awards activity during the three months ended March 31, 2022:


Three Months Ended March 31, 2022
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, 2021	140,222	$	4.6	288,165	$	9.4
Granted	98,994			243,986
Vested	(28,179)			—
Forfeited	(7,635)			(20,366)
Non-vested as of March 31, 2022	203,402	$	5.7	511,785	$	14.3
Shares vested, but not released	104,874	2.9		—	—
Total outstanding OP units	308,276	$	8.6	511,785	$	14.3

The weighted average grant date fair value of OP units granted for the three months ended March 31, 2022 was $26.49 per unit, for vested OP units was $32.93 and forfeited OP units was $31.94. The weighted average grant date fair value of non-vested OP units was $29.45 and $31.30 per unit as of March 31, 2022 and December 31, 2021, respectively.

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Notes to Condensed Consolidated Financial Statements - (Unaudited)

Stock Options Activity

The following table provides a summary of option activity for the three months ended March 31, 2022:


Options	Shares (In thousands)	Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Terms (Years)
Outstanding as of December 31, 2021	206,298	$	9.81	2.9
Granted	—	—