Supply Chain Council of European Union | Scceu.org
Warehousing

AMERICOLD REALTY TRUST Management’s Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q)

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, 2021 and our Quarterly
Report on Form 10-Q for the quarter ended March 31, 2022.

On May 25, 2022, we consummated our previously-disclosed conversion from a
Maryland real estate investment trust to a Maryland corporation (the
"Conversion"). Upon the consummation of the Conversion, each of our issued and
outstanding shares of beneficial interest was converted into one share of common
stock, and the rights of our stockholders began to be governed by the Maryland
General Corporation Law and our Articles of Incorporation and Bylaws. The
Conversion did not result in any change in CUSIP, trading symbol, federal tax
identification number, or any material change in business, offices, assets,
liabilities, obligations or net worth, or any change in directors, officers or
employees. Despite this conversion, the Company continues to operate as a REIT
for U.S. federal income tax purposes.

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, 2022, we
operated a global network of 249 temperature-controlled warehouses encompassing
approximately 1.5 billion cubic feet, with 202 warehouses in North America, 27
in Europe, 18 warehouses in Asia-Pacific, and two warehouses in South America.
In addition, we hold three minority interests in South American joint ventures,
one with SuperFrio, which owns or operates 38 temperature-controlled warehouses
in Brazil, one with Comfrio, which owns or operates 28 temperature-controlled
warehouses in Brazil, and one with the LATAM JV, which owns one
temperature-controlled warehouse in Chile. The LATAM joint-venture was created
during the second quarter of 2022 and intends to grow our presence in Latin
America, excluding Brazil, through development and acquisition over time.


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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, (13) produce grading and bagging, (14) protein boxing, (15)
e-commerce fulfillment, and (16) 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, changes in compensation levels and associated
performance incentives, the use of third-party labor to support our operations,
changes in terms of collective bargaining agreements, changes in customer
requirements and associated work content, 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 process 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, fluctuations 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
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), personal protective equipment 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, which may also include fuel and
capacity 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,
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including driver and equipment availability in certain markets. Additionally, in
certain markets we employ drivers and assets to serve our customers. Costs to
operate these assets include, wages, fuel, tolls, insurance and maintenance.

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, net 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. We have begun to integrate our recent acquisitions into this shared
services structure.

Our corporate-level acquisition, litigation and other, net consists 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.
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•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 relate to insurance claims, including deductibles, and related
recoveries.

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Key Factors Affecting Our Business and Financial Results

Market Conditions and COVID-19

During the three and six months ended June 30, 2022 and the year ended December
31, 2021, our business and financial results were negatively impacted by
COVID-19 related disruptions and other macro-economic conditions in (i) the food
supply chain; (ii) our customers' production and transportation of goods; (iii)
the labor market impacting availability and cost; and (iv) the impact of
inflation on the cost to provide our services. Despite the current headwinds, we
expect that end-consumer demand for food will remain consistent with historic
levels over the long-term. However, current end-consumer demand coupled with
food production and transportation challenges since the outset of the pandemic
has driven down holdings in our facilities. As a result, occupancy and
throughput volume continue at lower than historical levels experienced prior to
COVID-19. We expect this to continue until our customers are able to ramp
production back up to pre-pandemic levels for an extended period of time and
rebuild inventory in the supply chain.

The unprecedented labor environment continues to be challenging for many
companies, including our food manufacturing customers. Labor availability
continues to be the primary constraint on food production, along with the
continuing spread of COVID-19 and related variants, which also impacts the labor
market.

Our business has also been impacted due to inflation during the back half of
2021 and during the three and six months ended June 30, 2022. We believe we are
positioned to address continued inflationary pressure as it arises; however,
many of our contracts require that we experience sustained cost increases for an
extended period of time ranging up to 60 days before we are able to initiate
rate increases or seek remedies under our contracts. As a result of the
significant impact of inflation on the cost of providing our storage, services
and transportation to customers, during the second half of 2021 we initiated
out-of-cycle rate increases in our customer contracts (many of which contain
provisions for inflationary price escalators), and expect to continue to monitor
and implement further inflation and pricing increases required into 2022. We can
give no assurance that we will be able to offset the entire impact of inflation
or future inflationary cost increases through increased storage or service
charges or by operational efficiencies.

Additionally, global supply chains have been volatile following the invasion of
Ukraine by Russia which has resulted in sanctions against Russia from the U.S.
and a number of European countries. While we do not have warehouses or
operations in Russia or Ukraine, our global operations and specifically our
European operations may be impacted as a result of the ongoing conflict,
including increased power costs and disruptions in inventory transportation,
logistics systems and supply chain management. To date, our operations have not
been materially impacted by the ongoing conflict.

Refer to "Item 1A - Risk Factors" of our 2021 Annual Report on Form 10-K and our
Quarterly Report on Form 10-Q for the quarter ended March 31, 2022 as filed with
the SEC.

Acquisitions and Joint Ventures

There have been no acquisitions during the six months ended June 30, 2022. Refer
to Note 2 of the Notes to the Condensed Consolidated Financial Statements and
Note 3 of our 2021 Annual Report on Form 10-K for further information regarding
acquisitions.

On June 2, 2022, we formed a joint venture, Americold LATAM Holdings Ltd (the
"LATAM JV"), with Cold Latam Limited (our "JV partner"), in an effort to help us
grow our business and market presence in Latin
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America, excluding Brazil. Our JV partner committed to invest approximately
$209.0 million in exchange for 85% of the total equity interests, and we
contributed our Chilean business upon formation of the joint venture and
retained the remaining 15% equity interests in the joint venture.

Seasonality

We are involved in providing services to food producers, distributors, retailers
and e-tailers whose businesses, in some cases, are seasonal or cyclical. In
order to mitigate the volatility in our revenue and earnings caused by seasonal
business, we have implemented fixed commitment contracts with certain of our
customers. Our customers with fixed commitment contracts pay for guaranteed
warehouse space in order to maintain their required inventory levels, which is
especially helpful to them during periods of peak physical occupancy. The timing
of Easter fluctuates between the first and second quarter of the year, however,
on average the first and second quarter revenue and NOI are relatively
consistent. On a portfolio-wide basis, physical occupancy rates are generally
the lowest during May and June. Physical occupancy rates typically exhibit a
gradual increase after May and June as a result of annual harvests and our
customers building inventories in connection with end-of-year holidays and
generally peak between mid-September and early December as a result thereof. The
external temperature reaches annual peaks for a majority of our portfolio during
the third quarter of the year resulting in increase power expense that
negatively impacts NOI, and moderates during the fourth quarter. Typically, we
have higher than average physical occupancy levels in October or November, which
also tends to result in higher revenues. In light of the ongoing COVID-19
pandemic, we have seen variability in physical occupancy levels as compared to
the typical seasonality trends.

Additionally, the involvement of our customers in a cross-section of the food
industry mitigates, in part, the impact of seasonality as peak demand for
various products occurs at different times of the year (for example, demand for
ice cream is typically highest in the summer while demand for frozen turkeys
usually peaks in the late fall). Our southern hemisphere operations in
Australia, New Zealand and South America also help balance the impact of
seasonality in our global operations, as their growing and harvesting cycles are
complementary to North America and Europe. Each of our warehouses sets its own
operating hours based on demand, which is heavily driven by growing seasons and
seasonal consumer demand for certain products.

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.
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                                                                                                                                          Prior period
                                                          Average foreign                                              Prior period          average
                                                          exchange rates    Average foreign                               average       foreign exchange
                                                         used to translate   exchange rates                          foreign exchange     rate used to
                                                         actual operating  used to translate                        rate used to adjust   adjust actual
                                                          results for the   actual operating                         actual operating   operating results
                                     Foreign exchange      three months     results for the     Foreign exchange      results for the      for the six
                                        rates as of       ended June 30,    six months ended       rates as of      three months ended    months ended
                                       June 30, 2022           2022          June 30, 2022        June 30, 2021      June 30, 2022(1)   June 30, 2022(1)
Argentinian peso                           0.008                0.008              0.009              0.010                 0.011             0.011
Australian dollar                          0.690                0.715              0.719              0.750                 0.769             0.771
Brazilian real                             0.190                0.204              0.198              0.201                 0.191             0.187
British Pound                              1.218                1.257              1.300              1.383                 1.394             1.386
Canadian dollar                            0.777                0.784              0.786              0.807                 0.811             0.800
Chilean Peso                               0.001                0.001              0.001              0.001                 0.001             0.001
Euro                                       1.048                1.065              1.094              1.186                 1.208             1.207
New Zealand dollar                         0.624                0.651              0.664              0.698                 0.716             0.717
Poland Zloty                               0.223                0.229              0.236              0.262                 0.267             0.266

(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 managed warehouse
agreements, the exit of the China JV during 2019, and the sale of our quarry
business during 2020. Through our process of active portfolio management, we
continue to evaluate our markets and offerings.
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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, such as adding a
dedicated fleet service offering through acquisitions. We intend to continue
executing this strategy in the future.

Historically Significant Customer

For the three and six months ended June 30, 2022 and 2021, one customer
accounted for more than 10% of our total revenues. For the three months ended
June 30, 2022 and 2021, revenues attributable to this customer were $75.2
million and $64.1 million, respectively. For the six months ended June 30, 2022
and 2021, revenues attributable to this customer were $153.2 million and $130.0
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, $73.0 million and $63.3 million represented reimbursements for
certain expenses we incurred during the three months ended June 30, 2022 and
2021, respectively, and $147.8 million and $124.6 million for the six months
ended June 30, 2022 and 2021, 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.
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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, labor availability, supply chain dynamics
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 and amortization, impairment charges,
corporate-level selling, general and administrative expenses and corporate-level
acquisition, litigation and other, net). 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

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

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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, 2022 includes all properties that we owned at January 3, which
had both been owned and had reached "normalized operations" by January 3, 2022.

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, net
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, 2022. The number of warehouses owned or operated in as of
June 30, 2022 and excluded as same-store warehouses for the period ended
June 30, 2022 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                   249
Same Store Warehouses              213
Non-Same Store Warehouses (1)       27
Third-Party Managed Warehouses       9


(1) During the second quarter of 2022, we purchased a facility that was
previously leased, which is now included in the non-same store population as a
result. Additionally, a recently constructed facility received its certificate
of occupancy and began operations.

As of June 30, 2022, our portfolio consisted of 249 total warehouses, including
240 within the warehouse segment and nine in the third-party managed segment. In
addition, we hold minority interests in three Brazilian-based joint ventures,
Superfrio, which owns or operates 38 temperature-controlled warehouses, and
Comfrio, which owns or operates 28 temperature-controlled warehouses. Finally,
we hold a minority interest in a recently created LATAM joint venture, which
owns one temperature-controlled warehouse, which we contributed to the joint
venture during the second quarter of 2022. Our joint venture partner is expected
to contribute assets to this joint venture over time.

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
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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.
                                       43

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RESULTS OF OPERATIONS

Comparison of Results for the Three Months Ended June 30, 2022 and 2021

Warehouse Segment

The following table presents the operating results of our warehouse segment for
the three months ended June 30, 2022 and 2021.

                                                      Three Months Ended June 30,                                      Change
                                                             2022 Constant                                                        Constant
                                         2022 Actual          Currency(1)           2021 Actual             Actual                Currency
                                                         (Dollars in thousands)
Rent and storage                        $  242,351          $   247,225            $  212,277                   14.2  %                16.5  %
Warehouse services                         322,028              329,225               291,457                   10.5  %                13.0  %
Total warehouse segment revenues           564,379              576,450               503,734                   12.0  %                14.4  %

Power                                       36,070               37,180                32,180                   12.1  %                15.5  %
Other facilities costs (2)                  57,676               58,757                51,562                   11.9  %                14.0  %
Labor                                      250,711              256,194               224,411                   11.7  %                14.2  %
Other services costs (3)                    68,937               70,713                51,202                   34.6  %                38.1  %
Total warehouse segment cost of
operations                              $  413,394          $   422,844            $  359,355                   15.0  %                17.7  %

Warehouse segment contribution (NOI)       150,985              153,606               144,379                    4.6  %                 6.4  %
Warehouse rent and storage contribution
(NOI) (4)                                  148,605              151,288               128,535                   15.6  %                17.7  %
Warehouse services contribution (NOI)
(5)                                          2,380                2,318                15,844                  (85.0) %               (85.4) %

Total warehouse segment margin                26.8  %              26.6    %             28.7  %               -191 bps               -201 bps
Rent and storage margin(6)                    61.3  %              61.2    %             60.6  %                 77 bps                 64 bps
Warehouse services margin(7)                   0.7  %               0.7    %              5.4  %               -470 bps               -473 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 $10.7 million and $10.1 million, on an
actual basis, for the second quarter of 2022 and 2021, respectively.
(3)Includes non-real estate rent expense (equipment lease and rentals) of
$2.6 million and $2.9 million, on an actual basis, for the second quarter of
2022 and 2021, 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 $564.4 million for the three months ended
June 30, 2022, an increase of $60.6 million, or 12.0%, compared to $503.7
million for the three months ended June 30, 2021. On a constant currency basis,
our warehouse segment revenues were $576.5 million for the three months ended
June 30, 2022, an increase of $72.7 million, or 14.4%, from the three months
ended June 30, 2021. This growth was driven by $38.0 million of growth in our
same store pool on a constant currency basis primarily due to our pricing
initiatives, rate escalations, and improvements in economic occupancy, partially
offset by a slight decline in throughput. Approximately $27.1 million of the
increase, on a constant currency basis, was driven by acquisitions completed
between May 2021 and June 2022, including the growth experienced
period-over-period during overlapping periods of ownership. 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 acquisitions are reflected since the date of our ownership for
the comparable prior period. Additionally, we acquired two facilities

                                       44

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on August 2, 2021 as a result of the ColdCo acquisition, one facility on
September 1, 2021 as a result of the Newark Facility Management acquisition and
three facilities on November 15, 2021 as a result of the Lago Cold Stores
acquisition (including one leased facility that was exited upon expiration
during the first quarter of 2022), and therefore we did not have ownership of
these facilities for the entirety of the prior comparable period. Approximately
$7.6 million of the increase, on a constant currency basis, was related to
growth in our our recently completed expansion and developments in our non-same
store pool. The foreign currency translation of revenues earned by our foreign
operations had a net $12.1 million unfavorable impact during the three months
ended June 30, 2022, which was mainly driven by the strengthening of the U.S.
dollar against our foreign subsidiaries' currencies.

Warehouse segment cost of operations was $413.4 million for the three months
ended June 30, 2022, an increase of $54.0 million, or 15.0%, compared to the
three months ended June 30, 2021. On a constant currency basis, our warehouse
segment cost of operations was $422.8 million for the three months ended
June 30, 2022, an increase of $63.5 million, or 17.7%, from the three months
ended June 30, 2021. The cost of operations for our same store pool increased
$33.6 million on a constant currency basis, across most of our cost categories,
reflective of labor inefficiencies and inflationary pressure. Approximately
$20.5 million of the increase, on a constant currency basis, was driven by the
additional facilities in the warehouse segment we acquired in connection with
the aforementioned acquisitions. Approximately $9.4 million of the increase was
related to growth in our recently completed expansions and developments in our
non-same store pool, including incremental start-up costs of $2.4 million during
the second quarter of 2022, which have not yet stabilized. These increases are
offset by the foreign currency translation of expenses incurred by our foreign
operations which had a net $9.5 million favorable impact during the three months
ended June 30, 2022.

For the three months ended June 30, 2022, warehouse segment contribution (NOI),
increased $6.6 million, or 4.6%, to $151.0 million for the second quarter of
2022 compared to $144.4 million for the second quarter of 2021. On a constant
currency basis, warehouse segment NOI increased 6.4% from the three months ended
June 30, 2021. The NOI for our same store pool increased $4.4 million on a
constant currency basis, attributable to revenue and cost of operations factors
previously described. Approximately $6.5 million of the increase, on a constant
currency basis, was driven by the additional facilities in the warehouse segment
as a result of the aforementioned acquisitions, as well as the growth and modest
synergies experienced period-over-period during overlapping periods of ownership
for sites acquired during 2021. Warehouse segment NOI was negatively impacted by
the start-up costs incurred in connection with our expansion and development
projects in the non-same store pool as they continue to ramp up prior to
stabilization. The foreign currency translation of our results of operations had
a $2.6 million unfavorable impact to warehouse segment NOI period-over-period
due to the strengthening of the U.S. dollar.

Same Store and Non-Same Store Analysis

We had 213 same stores for the three months ended June 30, 2022. 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 Bowman Stores, ColdCo, KMT Brrr!, Lago
Cold Stores, Liberty, Newark, one recently leased warehouse in Australia, a
recently constructed facility in Denver purchased in November 2021, a leased
facility which we purchased during the second quarter of 2022, 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, 2022 and 2021.


                                       45
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                                                      Three Months Ended June 30,                                      Change
                                                             2022 Constant                                                        Constant
                                         2022 Actual          Currency(1)           2021 Actual             Actual                Currency
Number of same store sites                   213                                        213                         n/a                    n/a
Same store revenues:                                     (Dollars in thousands)
Rent and storage                        $  211,562          $   215,439            $  194,608                    8.7  %                10.7  %
Warehouse services                         286,634              293,008               275,843                    3.9  %                 6.2  %
Total same store revenues                  498,196              508,447               470,451                    5.9  %                 8.1  %
Same store cost of operations:
Power                                       30,701               31,570                29,119                    5.4  %                 8.4  %
Other facilities costs                      49,813               50,657                46,545                    7.0  %                 8.8  %
Labor                                      217,406              222,292               206,813                    5.1  %                 7.5  %
Other services costs                        56,148               57,628                46,096                   21.8  %                25.0  %

Total same store cost of operations $ 354,068 $ 362,147

       $  328,573                    7.8  %                10.2  %

Same store contribution (NOI)           $  144,128          $   146,300            $  141,878                    1.6  %                 3.1  %
Same store rent and storage
contribution (NOI)(2)                   $  131,048          $   133,212            $  118,944                   10.2  %                12.0  %
Same store services contribution
(NOI)(3)                                $   13,080          $    13,088            $   22,934                  (43.0) %               (42.9) %

Total same store margin                       28.9  %              28.8    %             30.2  %               -123 bps               -138 bps
Same store rent and storage margin(4)         61.9  %              61.8    %             61.1  %                 82 bps                 71 bps
Same store services margin(5)                  4.6  %               4.5    %              8.3  %               -375 bps               -385 bps


                                                       Three Months Ended June 30,                                      Change
                                                             2022 Constant
                                         2022 Actual          Currency(1)           2021 Actual            Actual           Constant Currency
Number of non-same store sites(6)            27                                          24                      n/a                        n/a
Non-same store revenues:                                 (Dollars in thousands)
Rent and storage                        $   30,789          $    31,786            $    17,669                   n/r                        n/r
Warehouse services                          35,394               36,217                 15,614                   n/r                        n/r
Total non-same store revenues               66,183               68,003                 33,283                   n/r                        n/r
Non-same store cost of operations:
Power                                        5,369                5,610                  3,061                   n/r                        n/r
Other facilities costs                       7,863                8,100                  5,017                   n/r                        n/r
Labor                                       33,305               33,902                 17,598                   n/r                        n/r
Other services costs                        12,789               13,085                  5,106                   n/r                        n/r

Total non-same store cost of operations $ 59,326 $ 60,697

        $    30,782                   n/r                        n/r

Non-same store contribution (NOI) $ 6,857 $ 7,306

        $     2,501                   n/r                        n/r
Non-same store rent and storage
contribution (NOI)(2)                   $   17,557          $    18,076            $     9,591                   n/r                        n/r
Non-same store services contribution
(NOI)(3)                                $  (10,700)         $   (10,770)           $    (7,090)                  n/r                        n/r

Total non-same store margin                   10.4  %              10.7    %               7.5  %                n/r                        n/r
Non-same store rent and storage
margin(4)                                     57.0  %              56.9    %              54.3  %                n/r                        n/r
Non-same store services margin(5)            (30.2) %             (29.7)   %             (45.4) %                n/r                        n/r


                                       46
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                                                        Three Months Ended June 30,                                       Change
                                                               2022 Constant                                                        Constant
                                          2022 Actual           Currency(1)            2021 Actual             Actual               Currency

Total warehouse segment revenues $ 564,379 $ 576,450

          $    503,734                 12.0  %                14.4  %

Total warehouse cost of operations $ 413,394 $ 422,844

          $    359,355                 15.0  %                17.7  %

Total warehouse segment contribution $ 150,985 $ 153,606

          $    144,379                  4.6  %                 6.4  %


(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 27 includes one recently leased warehouse
in Australia, one recently constructed facility in Denver we purchased in
November 2021, three facilities acquired through the Lago Cold Stores
acquisition on November 15, 2021, one warehouse acquired through the Newark
Facility Management acquisition on September 1, 2021, two facilities acquired
through the ColdCo acquisition on August 2, 2021, 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, and 12 facilities under
development or expansion, one of which was completed during the second quarter
of 2022. During the third quarter of 2021, a leased facility from the Liberty
Freezers acquisition was exited upon expiration of the lease. During the first
quarter of 2022, a leased facility from the Lago Cold Stores acquisition was
exited upon expiration of the lease, and we ceased operations within a facility
that is being prepared for lease to a third-party. During the second quarter of
2022, we purchased a previously leased facility. The results of the facilities
exited are included in the results above, and 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.
n/r - not relevant

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

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                                                          Three Months 

Ended June 30,
Units in thousands except per pallet and site number
data – unaudited

                                            2022                  2021                Change
Number of same store sites                                   213                  213                          n/a
Same store rent and storage:

Economic occupancy(1)
Average occupied economic pallets                             3,798               3,656                     3.9  %
Economic occupancy percentage                                  78.1   %            75.3  %                 288 bps
Same store rent and storage revenues per economic
occupied pallet                                       $       55.71           $   53.23                     4.7  %
Constant currency same store rent and storage
revenues per economic occupied pallet                 $       56.73           $   53.23                     6.6  %

Physical occupancy(2)
Average physical occupied pallets                             3,503               3,343                     4.8  %
Average physical pallet positions                             4,860               4,859                     0.0  %
Physical occupancy percentage                                  72.1   %            68.8  %                 328 bps
Same store rent and storage revenues per physical
occupied pallet                                       $       60.39           $   58.22                     3.7  %
Constant currency same store rent and storage
revenues per physical occupied pallet                 $       61.49           $   58.22                     5.6  %

Same store warehouse services:
Throughput pallets (in thousands)                             9,032               9,171                    (1.5) %

Same store warehouse services revenues per throughput
pallet

                                                $       31.74           $   30.08                     5.5  %
Constant currency same store warehouse services
revenues per throughput pallet                        $       32.44           $   30.08                     7.9  %

Number of non-same store sites(3)                            27                    24                          n/a

Non-same store rent and storage:

Economic occupancy(1)
Average economic occupied pallets                               407                 288                        n/r
Economic occupancy percentage                                  71.1   %            75.2  %                     n/r

Non-same store rent and storage revenues per economic
occupied pallet

                                       $       75.74           $   61.39                        n/r
Constant currency non-same store rent and storage
revenues per economic occupied pallet                 $       78.19           $   61.39                        n/r

Physical occupancy(2)
Average physical occupied pallets                               380                 264                        n/r
Average physical pallet positions                               572                 383                        n/r
Physical occupancy percentage                                  66.4   %            69.0  %                     n/r

Non-same store rent and storage revenues per physical
occupied pallet

                                       $       81.03           $   66.92                        n/r
Constant currency non-same store rent and storage
revenues per physical occupied pallet                 $       83.66           $   66.92                        n/r

Non-same store warehouse services:
Throughput pallets (in thousands)                             1,023                 748                        n/r
Non-same store warehouse services revenues per
throughput pallet                                     $       34.59           $   20.87                        n/r

Constant currency non-same store warehouse services
revenues per throughput pallet

                        $       35.40           $   20.87                        n/r



(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.
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(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 27 includes one recently leased warehouse
in Australia, one recently constructed facility in Denver we purchased in
November 2021, three facilities acquired through the Lago Cold Stores
acquisition on November 15, 2021, one warehouse acquired through the Newark
Facility Management acquisition on September 1, 2021, two facilities acquired
through the ColdCo acquisition on August 2, 2021, 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, and 12 facilities under
development or expansion, one of which was completed during the second quarter
of 2022. During the third quarter of 2021, a leased facility from the Liberty
Freezers acquisition was exited upon expiration of the lease. During the first
quarter of 2022, a leased facility from the Lago Cold Stores acquisition was
exited upon expiration of the lease, and we ceased operations within a facility
that is being prepared for lease to a third-party. During the second quarter of
2022, we purchased a previously leased facility. The results of the facilities
exited are included in the results above, and the results of these acquisitions
are reflected in the results above since date of ownership.

Economic occupancy at our same stores was 78.1% for the three months ended
June 30, 2022, a increase of 288 basis points compared to 75.3% for the quarter
ended June 30, 2021. Economic occupancy growth as compared to the prior year was
due to improvements in the labor market which allowed our customers to increase
food production levels. Additionally, while end-consumer demand for
temperature-controlled food remains strong, the challenging inflationary market
has started to change consumer behavior. Some consumers are buying less at the
grocery store as they are stretched by inflation, which also had a positive
impact on our holdings. Same store rent and storage revenues per economic
occupied pallet increased 4.7% period-over-period, primarily driven by our
pricing initiative and contractual rate escalations and business mix. On a
constant currency basis, our same store rent and storage revenues per occupied
pallet increased 6.6% period-over-period. Our economic occupancy at our same
stores for the three months ended June 30, 2022 was 606 basis points higher than
our corresponding average physical occupancy of 72.1%.

Throughput pallets at our same stores were 9.0 million pallets for the three
months ended June 30, 2022, a decrease of 1.5% from 9.2 million pallets for the
three months ended June 30, 2021. This decrease was the result of a slight
change in business mix. Same store warehouse services revenue per throughput
pallet increased 5.5% compared to the prior year primarily as a result of our
pricing initiative and contractual rate escalations, offset by unfavorable
foreign currency translation as previously discussed. On a constant currency
basis, our same store services revenue per throughput pallet increased 7.9%
compared to the prior year.



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Third-Party Managed Segment

The following table presents the operating results of our third-party managed
segment for the three months ended June 30, 2022 and 2021.

                                                        Three Months Ended June 30,                                       Change
                                                               2022 Constant                                                        Constant
                                         2022 Actual            Currency(1)           2021 Actual             Actual                Currency
Number of managed sites                           9                                            9                      n/a                    n/a
                                                          (Dollars in thousands)
Third-party managed revenues            $    83,486          $     83,918            $    72,173                  15.7  %                16.3  %
Third-party managed cost of operations       79,765                80,116                 70,480                  13.2  %                13.7  %
Third-party managed segment
contribution                            $     3,721          $      3,802            $     1,693                 119.8  %               124.6  %

Third-party managed margin                      4.5  %                4.5    %               2.3  %               211 bps                218 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.

Third-party managed revenues were $83.5 million for the three months ended
June 30, 2022, an increase of $11.3 million, or 15.7%, compared to $72.2 million
for the three months ended June 30, 2021. On a constant currency basis,
third-party managed revenues were $83.9 million for the three months ended
June 30, 2022, an increase of $11.7 million, or 16.3%, from the three months
ended June 30, 2021. This increase was a result of higher pass-through labor
expenses and related costs due to inflation and the challenging labor market.

Third-party managed cost of operations was $79.8 million for the three months
ended June 30, 2022, an increase of $9.3 million, or 13.2%, compared to $70.5
million for the three months ended June 30, 2021. Third-party managed cost of
operations increased as a result of the higher labor costs as discussed in the
revenue trends above.

Third-party managed segment contribution (NOI) was $3.7 million for the three
months ended June 30, 2022, an increase of $2.0 million, or 119.8%, compared to
$1.7 million for the three months ended June 30, 2021.


Transportation Segment The following table presents the operating results of our
transportation segment for the three months ended June 30, 2022 and 2021.

                                                          Three Months Ended June 30,                                       Change
                                                                 2022 Constant                                                        Constant
                                           2022 Actual            Currency(1)           2021 Actual             Actual                Currency
                                                            (Dollars in thousands)
Transportation revenues                   $    81,891          $     86,794            $    78,800                   3.9  %                10.1  %
Transportation cost of operations              68,306                72,875                 69,550                  (1.8) %                 4.8  %

Transportation segment contribution (NOI) $ 13,585 $ 13,919

           $     9,250                  46.9  %                50.5  %

Transportation margin                            16.6  %               16.0    %              11.7  %               485 bps                430 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.

Transportation revenues were $81.9 million for the three months ended June 30,
2022, an increase of $3.1 million, or 3.9%, compared to $78.8 million for the
three months ended June 30, 2021. The increase was primarily due to higher rates
in our consolidation business, the KMT Brrr! acquisition which closed in early
May 2021, acquisitions and expansions in Australia, and the higher revenue
associated with brokered transportation costs, inflation in wage and fuel rates
and capacity surcharges due to challenges with driver availability. This is
partially

                                       50

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offset by the net decrease in revenue from the rationalization of certain
domestic market operations and the unfavorable impact of foreign currency
translation.

Transportation cost of operations was $68.3 million for the three months ended
June 30, 2022, a decrease of $1.2 million, or 1.8%, compared to $69.6 million
for the three months ended June 30, 2021. The increase was due to capacity
constraints driving spot market higher than contract rate, which has caused an
increase in carrier fees, higher wage and fuel costs impacted by inflation and
the acquisitions mentioned above. This is partially offset by the net decrease
of costs from the exit of certain domestic market operations and favorable
impact of foreign currency translation.

Transportation segment contribution (NOI) was $13.6 million for the three months
ended June 30, 2022, an increase of 46.9% compared to the three months ended
June 30, 2021. Transportation segment margin increased 485 basis points from the
three months ended June 30, 2021, to 16.6%. The increase in margin was primarily
due to the rate increases implemented during 2022, paired with the exit of
certain less profitable market operations.


Other Consolidated Operating Expenses

Depreciation and amortization. Depreciation and amortization expense was $82.7
million for the three months ended June 30, 2022, a decrease of $1.8 million, or
2.1%, compared to $84.5 million for the three months ended June 30, 2021. This
decrease was primarily due to the impact of foreign currency remeasurement.

Selling, general and administrative. Corporate-level selling, general and
administrative expenses were $56.3 million for the three months ended June 30,
2022, an increase of $13.8 million, or 32.5%, compared to $42.5 million for the
three months ended June 30, 2021. 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 the resumption of performance-based
compensation expense in connection with the short-term incentive plan, higher
third-party legal and professional fees and higher share-based compensation
expense in connection with the November 2021 retention grant.

Acquisition, litigation and other, net. Corporate-level acquisition, litigation
and other, net expenses were $5.7 million for the three months ended June 30,
2022, an increase of $1.7 million compared to the three months ended June 30,
2021. During the three months ended June 30, 2022, we incurred $3.8 million of
acquisition and integration related costs, $1.2 million of litigation settlement
costs, $0.9 million of severance related expenses due to the realignment of
certain international operations, $0.8 million of facility termination costs in
connection with a site we intend to vacate upon lease expiration, partially
offset by an aggregate $1.0 million insurance claim recoveries. Refer to Note 3
of the condensed consolidated financial statements for details. 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 of
insurance claim deductibles partially offset by recoveries under the claims.

Impairment of long-lived assets. There were no impairment charges recorded
during the three months ended June 30, 2022. For the three months ended June 30,
2021, we recorded impairment charges of $1.5 million related to costs incurred
for development projects which management determined it would not continue to
pursue.

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Other Expense and Income

The following table presents other items of expense and income for the three
months ended June 30, 2022 and 2021.

                                                           Three Months Ended June 30,                 Change
                                                             2022                  2021                   %
Other (expense) income:                                       (Dollars in thousands)
Interest expense                                       $      (26,545)         $ (26,579)                   (0.1) %
Loss on debt extinguishment, modifications and
termination of derivative instruments                  $         (627)         $    (925)                  (32.2) %
Other, net                                             $       (4,609)         $     141                        n/r


Interest expense. Interest expense was $26.5 million for the three months ended
June 30, 2022, which is flat compared to $26.6 million for the three months
ended June 30, 2021. While the effective interest rate of our outstanding debt
increased from 3.16% in the second quarter of 2021 to 3.39% in the second
quarter of 2022, the majority of our debt is at a fixed interest rate.

Loss on debt extinguishment, modifications and termination of derivative
instruments. Loss on debt extinguishment, modifications, and termination of
derivative instruments of $0.6 million and $0.9 million for the three months
ended June 30, 2022 and 2021, respectively, was related to the amortization of
fees paid for the termination of interest rate swaps during 2020.

Other expense, net. Other expense, net was $4.6 million for the three months
ended June 30, 2022, a decrease of $4.5 million, compared to $0.1 million for
the three months ended June 30, 2021. This is primarily due to our loss from
partially owned entities of $3.6 million as a result of higher interest expense
as our joint ventures have debt that is indexed to inflation, paired with a $4.1
million loss in connection with the deconsolidation of our Chile operations upon
contribution to the LATAM joint venture. These charges are partially offset by a
$3.4 million gain related to the planned dissolution of the New Market Tax
Credit entities during the quarter.


Income Tax Benefit (Expense)

Income tax benefit for the three months ended June 30, 2022 was $12.1 million,
an increase of $21.0 million from an income tax expense of $9.0 million for the
three 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 in 2021. Additionally, we
recognized a $6.5 million deferred tax benefit during the second quarter of 2022
in connection with the deconsolidation of our Chilean operations upon
contribution to the LATAM JV.

                                       52

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Comparison of Results for the Six Months Ended June 30, 2022 and 2021

Warehouse Segment

The following table presents the operating results of our warehouse segment for
the six months ended June 30, 2022 and 2021.

                                                       Six Months Ended June 30,                                       Change
                                                             2022 Constant                                                        Constant
                                         2022 Actual          Currency(1)           2021 Actual             Actual                Currency
                                                         (Dollars in thousands)
Rent and storage                        $  472,108          $   479,670            $  417,553                   13.1  %                14.9  %
Warehouse services                         633,196              645,502               571,632                   10.8  %                12.9  %
Total warehouse segment revenues         1,105,304            1,125,172               989,185                   11.7  %                13.7  %

Power                                       69,105               70,806                58,384                   18.4  %                21.3  %
Other facilities costs (2)                 114,247              116,116               102,093                   11.9  %                13.7  %
Labor                                      494,872              504,063               438,959                   12.7  %                14.8  %
Other services costs (3)                   129,837              132,622                99,189                   30.9  %                33.7  %
Total warehouse segment cost of
operations                              $  808,061          $   823,607            $  698,625                   15.7  %                17.9  %

Warehouse segment contribution (NOI) $ 297,243 $ 301,565

        $  290,560                    2.3  %                 3.8  %
Warehouse rent and storage contribution
(NOI) (4)                               $  288,756          $   292,748            $  257,076                   12.3  %                13.9  %
Warehouse services contribution (NOI)
(5)                                     $    8,487          $     8,817            $   33,484                  (74.7) %               (73.7) %

Total warehouse segment margin                26.9  %              26.8    %             29.4  %               -248 bps               -257 bps
Rent and storage margin(6)                    61.2  %              61.0    %             61.6  %                -40 bps                -54 bps
Warehouse services margin(7)                   1.3  %               1.4    %              5.9  %               -452 bps               -449 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 $21.3 million and $19.4 million, on an
actual basis, for the six months ended June 30, 2022 and 2021, respectively.
(3)Includes non-real estate rent expense (equipment lease and rentals) of
$5.7 million and $5.8 million, on an actual basis, for the six months ended
June 30, 2022 and 2021, 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 $1.11 billion for the six months ended June 30,
2022 an increase of $116.1 million, or 11.7%, compared to $989.2 million for the
six months ended June 30, 2021. On a constant currency basis, our warehouse
segment revenues were $1.13 billion for the six months ended June 30, 2022, an
increase of $136.0 million, or 13.7%, from the six months ended June 30, 2021.
This growth was driven by $65.5 million of growth in our same store pool on a
constant currency basis primarily due to our pricing initiative and rate
escalations and a slight improvement in economic occupancy, partially offset by
COVID-19 and the related labor challenges which continued to negatively impact
food production during the first half of 2022. Approximately $57.8 million of
the increase, on a constant currency basis, was driven by acquisitions completed
during 2021, including the growth experienced period-over-period during
overlapping periods of ownership. We acquired four facilities on March 1, 2021
as a result of the Liberty acquisition (including one leased facility that was
exited upon expiration during the fourth quarter of 2021), two facilities on May
5, 2021 as a result of the KMT Brrr! acquisition, one facility on May 28, 2021
as a result of the Bowman Stores acquisition, two facilities on August 2, 2021
as a result of the ColdCo acquisition, one facility on September 1, 2021 as a
result of the Newark Facility

                                       53
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Management acquisition and three facilities on November 15, 2021 as a result of
the Lago Cold Stores acquisition (including one leased facility that was exited
upon expiration during the first quarter of 2022), and therefore we did not have
ownership of these facilities for the entirety of the prior comparable period.
Revenue growth was also due to our recently completed expansion and developments
in our non-same store pool, which increased approximately $12.7 million, on a
constant currency basis. The foreign currency translation of revenues earned by
our foreign operations had a $19.9 million unfavorable impact during the six
months ended June 30, 2022, which was mainly driven by the strengthening of the
U.S. dollar over the local currencies in our foreign subsidiaries.

Warehouse segment cost of operations was $808.1 million for the six months ended
June 30, 2022, an increase of $109.4 million, or 15.7%, compared to the six
months ended June 30, 2021. On a constant currency basis, our warehouse segment
cost of operations was $823.6 million for the three months ended June 30, 2022,
an increase of $125.0 million, or 17.9%, from the six months ended June 30,
2021. The cost of operations for our same store pool increased $66.6 million on
a constant currency basis, across most of our cost categories, reflective of the
labor inefficiencies and inflationary pressure. Labor was also impacted by
employee absenteeism and associated disruption throughout the first quarter of
2022 due to the Omicron variant. Approximately $42.0 million of the increase, on
a constant currency basis, was driven by the additional facilities in the
warehouse segment we acquired in connection with the aforementioned
acquisitions. We also incurred higher costs of $16.4 million related to our
recently completed and in progress expansion and development projects, inclusive
of incremental start-up costs of $4.4 million during the first six months of
2022, which have not yet stabilized. Additionally, the foreign currency
translation of expenses incurred by our foreign operations had a net $15.5
million favorable impact during the six months ended June 30, 2022.

For the six months ended June 30, 2022, warehouse segment contribution (NOI),
increased $6.7 million, or 2.3%, to $297.2 million for the six months ended
June 30, 2022, compared to $290.6 million for the six months ended June 30,
2021. On a constant currency basis, warehouse segment NOI increased
$11.0 million period-over-period. Approximately $15.9 million of the increase,
on a constant currency 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 NOI for our same store pool decreased $1.1 million on a
constant currency basis, attributable to revenue and cost of operations factors
previously described. This was the result of the various factors previously
discussed, and notably the lag in timing of implementing our price initiative as
compared to the inflationary pressure on our cost of operations. Additionally,
warehouse segment NOI was negatively impacted by the start-up costs incurred in
connection with our expansion and development projects in the non-same store
pool as they continue to ramp up prior to stabilization. The foreign currency
translation of our results of operations had a $4.3 million unfavorable impact
to the warehouse segment contribution period-over-period.

Same Store and Non-Same Store Analysis

We had 213 same stores for the six months ended June 30, 2022. 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 Bowman Stores, ColdCo, KMT Brrr!, Lago
Cold Stores, Liberty, Newark, one recently leased warehouse in Australia, a
recently constructed facility in Denver purchased in November 2021, a leased
facility which we purchased during the second quarter of 2022, 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 six months ended
June 30, 2022 and 2021.

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                                                       Six Months Ended June 30,                                       Change
                                                             2022 Constant                                                        Constant
                                         2022 Actual          Currency(1)           2021 Actual             Actual                Currency
Number of same store sites                   213                                        213                         n/a                    n/a
Same store revenues:                                     (Dollars in thousands)
Rent and storage                        $  413,868          $   419,875            $  387,000                    6.9  %                 8.5  %
Warehouse services                         564,742              575,799               543,160                    4.0  %                 6.0  %
Total same store revenues                  978,610              995,674               930,160                    5.2  %                 7.0  %
Same store cost of operations:
Power                                       59,028               60,373                53,492                   10.3  %                12.9  %
Other facilities costs                      98,531               99,994                92,908                    6.1  %                 7.6  %
Labor                                      431,142              439,416               406,838                    6.0  %                 8.0  %
Other services costs                       107,857              110,248                90,215                   19.6  %                22.2  %

Total same store cost of operations $ 696,558 $ 710,031

       $  643,453                    8.3  %                10.3  %

Same store contribution (NOI)           $  282,052          $   285,643            $  286,707                   (1.6) %                (0.4) %
Same store rent and storage
contribution (NOI)(2)                   $  256,309          $   259,508            $  240,600                    6.5  %                 7.9  %
Same store services contribution
(NOI)(3)                                $   25,743          $    26,135            $   46,107                  (44.2) %               (43.3) %

Total same store margin                       28.8  %              28.7    %             30.8  %               -200 bps               -214 bps
Same store rent and storage margin(4)         61.9  %              61.8    %             62.2  %                -24 bps                -36 bps
Same store services margin(5)                  4.6  %               4.5    %              8.5  %               -393 bps               -395 bps


                                                      Six Months Ended June 30,                                       Change
                                                            2022 Constant
                                        2022 Actual          Currency(1)           2021 Actual           Actual           Constant Currency
Number of non-same store sites              27                                         24                      n/a                        n/a
Non-same store revenues:                                (Dollars in thousands)
Rent and storage                       $   58,240          $    59,795            $   30,552                   n/r                        n/r
Warehouse services                         68,454               69,704                28,473                   n/r                        n/r
Total non-same store revenues             126,694              129,499                59,025                   n/r                        n/r
Non-same store cost of operations:
Power                                      10,077               10,433                 4,891                   n/r                        n/r
Other facilities costs                     15,716               16,122                 9,186                   n/r                        n/r
Labor                                      63,730               64,647                32,121                   n/r                        n/r
Other services costs                       21,980               22,374                 8,974                   n/r                        n/r
Total non-same store cost of
operations                             $  111,503          $   113,576            $   55,172                   n/r                        n/r

Non-same store contribution (NOI) $ 15,191 $ 15,923

       $    3,853                   n/r                        n/r
Non-same store rent and storage
contribution (NOI)(2)                  $   32,447          $    33,240            $   16,475                   n/r                        n/r
Non-same store services contribution
(NOI)(3)                               $  (17,256)         $   (17,317)           $  (12,622)                  n/r                        n/r

Total non-same store margin                  12.0  %              12.3    %              6.5  %                n/r                        n/r
Non-same store rent and storage
margin(4)                                    55.7  %              55.6    %             53.9  %                n/r                        n/r
Non-same store services margin(5)           (25.2) %             (24.8)   %            (44.3) %                n/r                        n/r


                                       55
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                                                         Six Months Ended June 30,                                       Change
                                                              2022 Constant                                                        Constant
                                         2022 Actual           Currency(1)            2021 Actual             Actual               Currency

Total warehouse segment revenues $ 1,105,304 $ 1,125,172

         $    989,185                 11.7  %                13.7  %

Total warehouse cost of operations $ 808,061 $ 823,607

         $    698,625                 15.7  %                17.9  %

Total warehouse segment contribution $ 297,243 $ 301,565

         $    290,560                  2.3  %                 3.8  %


(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 27 includes one recently leased warehouse
in Australia, one recently constructed facility in Denver we purchased in
November 2021, three facilities acquired through the Lago Cold Stores
acquisition on November 15, 2021, one warehouse acquired through the Newark
Facility Management acquisition on September 1, 2021, two facilities acquired
through the ColdCo acquisition on August 2, 2021, 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, and 12 facilities under
development or expansion, one of which was completed during the second quarter
of 2022. During the third quarter of 2021, a leased facility from the Liberty
Freezers acquisition was exited upon expiration of the lease. During the first
quarter of 2022, a leased facility from the Lago Cold Stores acquisition was
exited upon expiration of the lease, and we ceased operations within a facility
that is being prepared for lease to a third-party. During the second quarter of
2022, we purchased a previously leased facility. The results of the facilities
exited are included in the results above, and 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
n/r - not relevant

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

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                                                           Six Months Ended 

June 30,
Units in thousands except per pallet and site number
data – unaudited

                                            2022                 2021                Change
Number of same store sites                                     213                 213                        n/a
Same store rent and storage:

Economic occupancy(1)
Average occupied economic pallets                            3,785               3,700                     2.3  %
Economic occupancy percentage                                 77.8   %            76.3  %                 156 bps
Same store rent and storage revenues per economic
occupied pallet                                       $     109.34           $  104.60                     4.5  %
Constant currency same store rent and storage
revenues per economic occupied pallet                 $     110.93           $  104.60                     6.0  %

Physical occupancy(2)
Average physical occupied pallets                            3,468               3,380                     2.6  %
Average physical pallet positions                            4,865               4,852                     0.3  %
Physical occupancy percentage                                 71.3   %            69.7  %                 162 bps
Same store rent and storage revenues per physical
occupied pallet                                       $     119.35           $  114.49                     4.2  %
Constant currency same store rent and storage
revenues per physical occupied pallet                 $     121.08           $  114.49                     5.8  %

Same store warehouse services:
Throughput pallets (in thousands)                           17,885              18,077                    (1.1) %

Same store warehouse services revenues per throughput
pallet

                                                $      31.58           $   30.05                     5.1  %
Constant currency same store warehouse services
revenues per throughput pallet                        $      32.19           $   30.05                     7.1  %

Number of non-same store sites(3)                               27                  24                        n/a

Non-same store rent and storage:

Economic occupancy(1)
Average economic occupied pallets                              404                 261                        n/r
Economic occupancy percentage                                 70.9   %            75.0  %                     n/r

Non-same store rent and storage revenues per economic
occupied pallet

                                       $     144.02           $  117.01                        n/r
Constant currency non-same store rent and storage
revenues per economic occupied pallet                 $     147.87           $  117.01                        n/r

Physical occupancy(2)
Average physical occupied pallets                              376                 237                        n/r
Average physical pallet positions                              570                 348                        n/r
Physical occupancy percentage                                 66.0   %            68.1  %                     n/r

Non-same store rent and storage revenues per physical
occupied pallet

                                       $     154.83           $  128.93                        n/r
Constant currency non-same store rent and storage
revenues per physical occupied pallet                 $     158.97           $  128.93                        n/r

Non-same store warehouse services:
Throughput pallets (in thousands)                            2,029               1,372                        n/r
Non-same store warehouse services revenues per
throughput pallet                                     $      33.73           $   20.75                        n/r

Constant currency non-same store warehouse services
revenues per throughput pallet

                        $      34.35           $   20.75                        n/r



(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.
                                       57

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(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 27 includes one recently leased warehouse
in Australia, one recently constructed facility in Denver we purchased in
November 2021, three facilities acquired through the Lago Cold Stores
acquisition on November 15, 2021, one warehouse acquired through the Newark
Facility Management acquisition on September 1, 2021, two facilities acquired
through the ColdCo acquisition on August 2, 2021, 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, and 12 facilities under
development or expansion, one of which was completed during the second quarter
of 2022. During the third quarter of 2021, a leased facility from the Liberty
Freezers acquisition was exited upon expiration of the lease. During the first
quarter of 2022, a leased facility from the Lago Cold Stores acquisition was
exited upon expiration of the lease, and we ceased operations within a facility
that is being prepared for lease to a third-party. During the second quarter of
2022, we purchased a previously leased facility. The results of the facilities
exited are included in the results above, and the results of these acquisitions
are reflected in the results above since date of ownership.

(4)n/r – not relevant

Economic occupancy at our same stores was 77.8% for the six months ended
June 30, 2022, a increase of 156 basis points compared to 76.3% for the six
months ended June 30, 2021. Economic occupancy was slightly higher than the
prior year due to improvements in the labor market which allowed our customers
to increase food production levels during the second quarter of 2022, partially
offset by food production challenges throughout the first quarter of 2022 as a
result of the Omicron variant impacting employee absenteeism. Additionally,
while end-consumer demand for temperature-controlled food remains strong, the
challenging inflationary market has started to change consumer behavior. Some
consumers are buying less at the grocery store as they are stretched by
inflation, which also had a positive impact on our holdings. Same store rent and
storage revenues per economic occupied pallet increased 4.5% period-over-period,
primarily driven by our pricing initiative and contractual rate escalations,
partially offset by unfavorable foreign currency translation. On a constant
currency basis, our same store rent and storage revenues per occupied pallet
increased 6.0% period-over-period. Our economic occupancy at our same stores was
652 basis points higher than our corresponding average physical occupancy of
71.3%.

Throughput pallets at our same stores were 17.9 million pallets for the six
months ended June 30, 2022, a decrease of 1.1% from the six months ended
June 30, 2021. This decrease was the result of a change in business mix year
over year. Same store warehouse services revenues per throughput pallet
increased 5.1% period-over-period, as a result of by our our pricing initiative
and contractual rate escalations and an increase in higher priced value-added
services within the retail sector such as case-picking, blast freezing and
repackaging, partially offset by unfavorable foreign currency translation as
previously discussed. On a constant currency basis, our same store services
revenues per throughput pallet increased 7.1% from the six months ended June 30,
2021.


Third-Party Managed Segment

The following table presents the operating results of our third-party managed
segment for the six months ended June 30, 2022 and 2021.

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                                                       Six Months Ended June 30,                                      Change
                                                             2022 Constant                                                      Constant
                                         2022 Actual          Currency(1)           2021 Actual            Actual               Currency
Number of managed sites                          9                                          9                     n/a                    n/a
                                                         (Dollars in thousands)
Third-party managed revenues            $  169,346          $   170,117            $  145,245                 16.6  %                17.1  %
Third-party managed cost of operations     162,124              162,747               139,170                 16.5  %                16.9  %
Third-party managed segment
contribution                            $    7,222          $     7,370            $    6,075                 18.9  %                21.3  %

Third-party managed margin                     4.3  %               4.3    %              4.2  %                8 bps                 15 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.

Third-party managed revenues were $169.3 million for the six months ended
June 30, 2022, an increase of $24.1 million, or 16.6%, compared to
$145.2 million for the six months ended June 30, 2021. On a constant currency
basis, third-party managed revenues were $170.1 million for the six months ended
June 30, 2022, an increase of $24.9 million, or 17.1%, from the six months ended
June 30, 2021. The increase was a result of higher business volume in our
domestic managed operations paired with higher pass-through costs associated
with this business, primarily labor and related costs due to inflation and the
challenging labor market.

Third-party managed cost of operations was $162.1 million for the six months
ended June 30, 2022, an increase of $23.0 million, or 16.5%, compared to
$139.2 million for the six months ended June 30, 2021. On a constant currency
basis, third-party managed cost of operations was $162.7 million for the six
months ended June 30, 2022, an increase of $23.6 million, or 16.9%, from the six
months ended June 30, 2021. Third-party managed cost of operations increased as
a result of the revenue trends described above.

Third-party managed segment contribution (NOI) was $7.2 million for the six
months ended June 30, 2022, an increase of $1.1 million, or 18.9%, compared to
$6.1 million for the six months ended June 30, 2021. On a constant currency
basis, third-party managed segment contribution (NOI) was $7.4 million for the
six months ended June 30, 2022, an increase of $1.3 million, or 21.3%.

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Transportation Segment

The following table presents the operating results of our transportation segment
for the six months ended June 30, 2022 and 2021.

                                                         Six Months Ended June 30,                                       Change
                                                               2022 Constant                                                       Constant
                                           2022 Actual          Currency(1)           2021 Actual            Actual                Currency
                                                           (Dollars in thousands)
Transportation revenues                   $  160,801          $   167,746            $  155,072                   3.7  %                 8.2  %

Total transportation cost of operations      138,687              145,113               139,119                  (0.3) %                 4.3  %

Transportation segment contribution (NOI) $ 22,114 $ 22,633

         $   15,953                  38.6  %                41.9  %

Transportation margin                           13.8  %              13.5    %             10.3  %               346 bps                320 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.

Transportation revenues were $160.8 million for the six months ended June 30,
2022, an increase of $5.7 million, or 3.7%, compared to $155.1 million for the
six months ended June 30, 2021. On a constant currency basis, transportation
revenues were $167.7 million for the six months ended June 30, 2022, an increase
of $12.7 million, or 8.2%, from the six months ended June 30, 2021. The increase
was primarily due to higher rates in our consolidation business, the KMT Brrr!
acquisition which closed in early May 2021, acquisitions and expansions in
Australia, and the higher revenue associated with brokered transportation costs,
inflation in wage and fuel rates and capacity surcharges due to challenges with
driver availability. This is partially offset by the net decrease in revenue
from the rationalization of certain domestic market operations and the
unfavorable impact of foreign currency translation.

Transportation cost of operations was $138.7 million for the six months ended
June 30, 2022, a decrease of $0.4 million, or 0.3%, compared to $139.1 million
for the six months ended June 30, 2021. On a constant currency basis,
transportation cost of operations was $145.1 million for the six months ended
June 30, 2022, an increase of $6.0 million, or 4.3%, from the six months ended
June 30, 2021. The decrease was due to the decrease of costs from the exit of
certain domestic market operations paired with the favorable impact of foreign
currency translation, partially offset by capacity constraints driving spot
market higher than contract rate, which has caused an increase in carrier fees,
higher wage and fuel costs impacted by inflation and the acquisitions mentioned
above.

Transportation segment contribution (NOI) was $22.1 million for the six months
ended June 30, 2022, an increase of $6.2 million compared to the six months
ended June 30, 2021. Transportation segment margin increased 346 basis points
from the six months ended June 30, 2021, to 13.8% from 10.3%. On a constant
currency basis, transportation segment contribution was $22.6 million for the
six months ended June 30, 2022, an increase of $6.7 million compared to the six
months ended June 30, 2021. The increase in margin was primarily due to the rate
increases implemented during 2022.


Other Consolidated Operating Expenses

Depreciation and amortization. Depreciation and amortization expense was
$165.3 million for the six months ended June 30, 2022, an increase of
$3.6 million, or 2.3%, compared to $161.7 million for the six months ended
June 30, 2021. This increase was primarily due to the acquisitions and recently
completed developments in 2021.

Selling, general and administrative. Corporate-level selling, general and
administrative expenses were $113.9 million for the six months ended June 30,
2022
, an increase of $26.3 million, or 30.1%, compared to

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$87.5 million for the six months ended June 30, 2021. 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 the resumption of
performance-based compensation expense in connection with the short-term
incentive plan, higher third-party legal and professional fees, and higher
share-based compensation expense in connection with the November 2021 retention
grant.

Acquisition, litigation and other, net. Corporate-level acquisition, litigation
and other, net expenses were $15.7 million for the six months ended June 30,
2022, a decrease of $8.9 million compared to the six months ended June 30, 2021.
During the six months ended June 30, 2022, we incurred $10.1 million of
acquisition and integration related expenses, an aggregate $3.5 million of
severance related expenses due to the realignment of certain international
operations and senior leadership changes, $2.4 million of litigation fees and
$0.8 million of facility termination costs in connection with a site we intend
to vacate upon lease expiration, partially offset by an aggregate $1.0 million
insurance claim recoveries. During the six months ended June 30, 2021, we
incurred $16.6 million of acquisition related expenses 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 costs related
to the cyber event that happened in late 2020.

Impairment of long-lived assets. There were no impairment charges recorded
during the six months ended June 30, 2022. For the six months ended June 30,
2021, we recorded impairment charges of $1.5 million related to costs incurred
for development projects which management determined it would not continue to
pursue.

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Other Expense and Income

The following table presents other items of income and expense for the six
months ended June 30, 2022 and 2021.

                                                            Six Months Ended June 30,                  Change
                                                             2022                  2021                   %
Other (expense) income:                                       (Dollars in thousands)
Interest expense                                       $      (52,318)         $ (52,535)                   (0.4) %
Loss on debt extinguishment, modifications and
termination of derivative instruments                  $       (1,244)         $  (4,424)                  (71.9) %
Other, net                                             $       (4,363)         $     317                        n/r


Interest expense. Interest expense was $52.3 million for the six months ended
June 30, 2022, a decrease of $0.2 million, or 0.4%, compared to $52.5 million
for the six months ended June 30, 2021. Our effective interest rate of our
outstanding debt was relatively consistent at 3.24% for the six months ended
June 30, 2021 and 3.23% for the six months ended June 30, 2022, as the majority
of our debt is at a fixed rate.

Loss on debt extinguishment, modifications and termination of derivative
instruments. Loss on debt extinguishment, modifications, and termination of
derivative instruments of $1.2 million for the six months ended June 30, 2022
decreased as compared to the six months ended June 30, 2021 primarily due to the
early repayment of $200 million of principal on the Senior Unsecured Term Loan A
Facility during the first quarter of 2021, which resulted in a charge of
$2.9 million for the write-off of unamortized deferred financing costs.
Additionally, during the six months ended June 30, 2022 and 2021, we recorded
$1.3 million and $1.4 million, respectively, for the amortization of fees paid
for the interest rate swaps terminated during 2020.

Other expense, net. Other expense was $4.4 million for the six months ended
June 30, 2022, a decrease of $4.7 million, compared to other income of
$0.3 million for the six months ended June 30, 2021. This is primarily due to
our loss from partially owned entities of $5.8 million as a result of higher
interest expense as our joint ventures have debt that is indexed to inflation,
paired with a $4.1 million loss in connection with the deconsolidation of our
Chilean operations upon contribution to the LATAM JV. These charges are
partially offset by a $3.4 million gain related to the planned dissolution of
the New Market Tax Credit entities during 2022 and a $1.0 million foreign
exchange gain for the six months ended June 30, 2022.

Income Tax Benefit (Expense)

Income tax benefit for the six months ended June 30, 2022 was $12.8 million, an
increase of $21.0 million when compared to $8.2 million of income tax expense
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 in 2021. Additionally, we
recognized a $6.5 million deferred tax benefit during the second quarter of 2022
in connection with the deconsolidation of our Chilean operations upon
contribution to the LATAM JV.
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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 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, acquisition, litigation and other, net,
share-based compensation expense for the IPO retention grants, loss on debt extinguishment,
modifications and termination of derivative instruments, foreign currency exchange loss,
gain on extinguishment of New Market Tax Credit structure, and loss on deconsolidation of
subsidiary contributed to joint venture. 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 and pension withdrawal liability,
amortization of above or below market leases, straight-line net rent, 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.


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                           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,
                                                           2022                  2021                 2022                  2021
Net income (loss)                                    $        3,953        

$ (13,399) $ (13,492) $ (27,635)
Adjustments:
Real estate related depreciation

                             51,738             44,871                 103,938             97,151

Net loss (gain) on asset disposals                                4                (13)                     67                (52)
Impairment charges on certain real estate assets                  -              1,528                       -              1,528

Our share of reconciling items related to partially
owned entities

                                                1,346                861                   2,379              1,127
NAREIT Funds from operations                                 57,041             33,848                  92,892             72,119

Adjustments:

Net loss (gain) on sale of non-real estate assets                72               (304)                   (163)              (423)

Acquisition, litigation and other                             5,663              3,922                  15,738             24,673
Share-based compensation expense, IPO grants                      -                  -                       -                163

Loss on debt extinguishment, modifications and
termination of derivative instruments                           628                925                   1,244              4,424

Foreign currency exchange loss (gain)                         1,290                140                     965                (33)
Gain on extinguishment of New Market Tax Credit
structure                                                    (3,410)                 -                  (3,410)                 -

Loss on deconsolidation of subsidiary contributed to
joint venture

                                                 4,148                  -                   4,148                  -

Our share of reconciling items related to partially
owned entities

                                                  (36)                89                     311                243
Core FFO applicable to common shareholders                   65,396             38,620                 111,725            101,166

Adjustments:

Amortization of deferred financing costs and pension
withdrawal liability

                                          1,160              1,085                   2,306              2,233
Amortization of below/above market leases                       549                362                   1,057                401
Straight-line net rent                                           77               (170)                    281               (325)
Deferred income taxes (benefit) expense                     (12,886)             6,568                 (14,775)             4,566
Share-based compensation expense, excluding IPO
grants                                                        7,032              5,467                  15,381             10,334
Non-real estate depreciation and amortization                30,952             39,588                  61,372             64,519

Maintenance capital expenditures (a)                        (20,118)           (20,488)                (36,224)           (36,219)

Our share of reconciling items related to partially
owned entities

                                                1,713                711                   1,606                989

Adjusted FFO applicable to common shareholders $ 73,875

$ 71,743 $ 142,729 $ 147,664


(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.
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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, 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, net, loss from investments in partially owned entities, asset impairment,
foreign currency exchange loss or gain, share-based compensation expense, loss on debt
extinguishment, modifications and termination of derivative instruments, net gain on other
asset disposals, gain on extinguishment of New Market Tax Credit, loss on deconsolidation
of subsidiary contributed to joint venture, 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 and amortization are non-cash charges, the assets being
depreciated 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.


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                            Reconciliation of Net Loss to NAREIT EBITDAre 

and Core EBITDA

                                                   (In thousands)
                                                        Three Months Ended June 30,      Six Months Ended June 30,
                                                            2022            2021            2022            2021
Net income (loss)                                     $        3,953    $  (13,399)   $      (13,492)   $  (27,635)
Adjustments:
Interest expense                                              26,545        26,579            52,318        52,535
Income taxes (benefit) expense                               (12,069)        8,974           (12,777)        8,183
Depreciation and amortization                                 82,690        84,459           165,310       161,670

Adjustment to reflect share of EBITDAre of partially
owned entities                                                 6,215         1,838             9,413         2,487
NAREIT EBITDAre                                       $      107,334    $  108,451    $      200,772    $  197,240
Adjustments:
Acquisition, litigation and other, net                         5,663         3,922            15,738        24,673
Loss on partially owned entities                               3,647            61             5,759           761
Asset impairment                                                   -         1,528                 -         1,528
Foreign currency exchange loss (gain)                          1,290           140               965           (33)
Share-based compensation expense                               7,032         5,467            15,381        10,498
Loss on debt extinguishment, modifications, and
termination of derivative instruments                            627           925             1,244         4,424

Net loss (gain) on other asset disposals                          76          (317)              (96)         (475)
Gain on extinguishment of New Market Tax Credit
structure                                                     (3,410)            -            (3,410)            -

Loss on deconsolidation of subsidiary contributed to
joint venture

                                                  4,148             -             4,148             -
Reduction in EBITDAre from partially owned entities           (6,215)       (1,838)           (9,413)       (2,487)

Core EBITDA                                           $      120,192    $  118,339    $      231,088    $  236,129


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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 stockholders will include:

•current cash balances;
•cash flows from operations;
•our 2020 Senior Unsecured Revolving Credit Facility;
•our ATM Equity Programs; 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;
•capital contributions and investments in joint ventures;
•debt service obligations; and
•quarterly stockholder 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 stockholder distributions, and our future development and
acquisition activities.

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 stock 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

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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 stock pursuant to the 2021 ATM Equity Program for general
corporate purposes, which may include funding acquisitions and development
projects. There was no activity under the 2021 ATM Equity Program during the six
months ended June 30, 2022, and we have approximately $809.4 million
availability remaining for distribution under the 2021 ATM Equity Program as of
June 30, 2022.

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 salable 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 $2.5 million and $0.9 million for the three months
ended June 30, 2022 and 2021, respectively, and $3.8 million and $1.8 million
for the six months ended June 30, 2022 and 2021, respectively. As of June 30,
2022, we maintained bad debt allowances of approximately $10.5 million, which we
believed to be adequate.

Collective Bargaining Agreements

As of June 30, 2022, approximately 37% of the Company's labor force is covered
by collective bargaining agreements. Collective bargaining agreements covering
less than 4% of the labor force are set to expire through the end of the year.

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 stockholders from cash flows
from our operating activities. While historically we have satisfied this
distribution requirement by making cash distributions to our stockholders, 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
Directors. 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 stockholders are
invested primarily in interest-bearing accounts 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.
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For further information regarding dividends and distributions, see Note 14 to
our consolidated financial statements included in our 2021 Annual Report on Form
10-K as filed with the SEC.

Outstanding Indebtedness

The following table summarizes our outstanding indebtedness as of June 30, 2022:

Debt Summary:
Fixed rate                                                                 $    2,002,221
Variable rate - unhedged                                                          953,530

Total mortgage notes, senior unsecured notes, term loans and borrowings
under revolving line of credit

2,955,751

Sale-leaseback financing obligations                                        

175,340

Financing lease obligations                                                 

91,926

Total debt and debt-like obligations                                       

$ 3,223,017

Percent of total debt and debt-like obligations:
Fixed rate                                                                             70  %
Variable rate                                                                          30  %

Effective interest rate as of June 30, 2022                                 

3.39 %


The variable rate debt shown above bears interest at interest rates based on
various one-month LIBOR, CDOR, BBSW, and SONIA rates, depending on the
respective agreement governing the debt, including our global revolving credit
facilities. As of June 30, 2022, our debt had a weighted average term to initial
maturity of approximately 5.5 years, assuming exercise of extension options.

For further information regarding outstanding indebtedness, please see Note 4 to
our condensed consolidated financial statements included in this Quarterly
Report on Form 10-Q and Note 9 to our consolidated financial statements included
in our 2021 Annual Report on Form 10-K as filed with the SEC.

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 a
Positive Trends 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.
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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, 2022 and 2021.

                                          Three Months Ended June 30,                 Six Months Ended June 30,
                                           2022                  2021                  2022                 2021
                                                      (In thousands, except per cubic foot amounts)
Real estate                          $       17,825          $   17,974          $      31,689          $   30,902
Personal property                             1,457               1,428                  2,431               3,210
Information technology                          836               1,086                  2,104               2,107

Maintenance capital expenditures $ 20,118 $ 20,488

$ 36,224 $ 36,219

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, 2022 and 2021.

                                          Three Months Ended June 30,                 Six Months Ended June 30,
                                           2022                  2021                  2022                 2021
                                                      (In thousands, except per cubic foot amounts)
Real estate                          $       10,288          $    5,949          $      19,131          $   14,325
Personal property                            13,809              13,622                 28,255              25,076

Repair and maintenance expenses $ 24,097 $ 19,571

$ 47,386 $ 39,401

Repair and maintenance expenses per
cubic foot                           $        0.016          $    0.014          $       0.032          $    0.027


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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

There were no acquisitions completed during the six months ended June 30, 2022.
For information regarding acquisitions completed during 2021, refer to our 2021
Annual Report on Form 10-K which includes details of the purchase price
allocation for each acquisition.

Expansion and development

The expansion and development expenditures for the six months ended June 30,
2022 are primarily driven by $23.0 million related to our two fully-automated,
build-to-suit, development sites in Connecticut and Pennsylvania, $15.4 million
for the Spearwood, Australia expansion, $11.5 million million related to the
Dunkirk, NY development, $11.1 million in our Dublin expansion, $4.3 million for
the Barcelona expansion, $19.1 million related to our Russellville expansion and
$3.2 million related to Atlanta Major Market Strategy Phase 2.

Expansion and development initiatives also include $3.3 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 $21.3 million during the six months ended
June 30, 2022 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, 2022 and 2021.

                                             Three Months Ended June 30,                  Six Months Ended June 30,
                                              2022                  2021                  2022                  2021
                                                                         (In thousands)
Acquisitions, net of cash acquired and
adjustments                             $         (209)         $  173,373          $         (812)         $  215,329
Expansion and development initiatives           53,646              83,844                 112,167             167,112
Information technology                           1,020               2,045                   1,761               3,573
Growth and expansion capital
expenditures                            $       54,457          $  259,262          $      113,116          $  386,014


                                       71

--------------------------------------------------------------------------------
Historical Cash Flows

                                                  Six Months Ended June 30,
                                                    2022                 2021
                                                       (In thousands)
Net cash provided by operating activities   $      133,242           $  

127,753

Net cash used in investing activities $ (191,960) $ (438,822)
Net cash provided by financing activities $ 52,219

           $    7,079


Operating Activities

For the six months ended June 30, 2022, our net cash provided by operating
activities was $133.2 million, an increase of $5.5 million, compared to $127.8
million for the six months ended June 30, 2021. The increase is primarily due to
an increase in segment contribution, partially offset by higher selling, general
and administrative expenses.

Investing Activities

Our net cash used in investing activities was $192.0 million for the six months
ended June 30, 2022 compared to $438.8 million for the six months ended June 30,
2021. Additions to property, buildings and equipment were $181.7 million,
reflecting maintenance capital expenditures and investments in our various
expansion and development projects. Additionally, we invested $6.9 million in
acquisitions of property, buildings, and equipment for the buyout of a
previously leased facility. Finally, we invested $4.4 million in the formation
of the LATAM joint venture and capital contributions to the SuperFrio joint
venture.

Net cash used in investing activities was $438.8 million for the six months
ended June 30, 2021. 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
our various 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.

Financing Activities

Net cash provided by financing activities was $52.2 million for the six months
ended June 30, 2022 compared to $7.1 million for the six months ended June 30,
2021. Cash provided by financing activities for the current period primarily
consisted of $198.3 million in proceeds from our 2020 Senior Unsecured Credit
Facility, net of repayments, offset by $119.5 million of quarterly dividend
distributions paid and $20.8 million aggregate lease repayments.

Net cash provided by financing activities was $7.1 million for the six months
ended June 30, 2021. This primarily consisted of $214.8 million net proceeds
from equity forward contracts settled during the period upon the issuance of
common shares, $140.8 million in proceeds from our revolving line of credit, net
of repayments, 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,
$15.8 million in payment of withholding taxes related to share-based payment
arrangements and $20.5 million of aggregate lease repayments.
                                       72


--------------------------------------------------------------------------------

SIGNIFICANT ACCOUNTING POLICIES UPDATE

See Note 1 to our condensed consolidated financial statements included in this
Quarterly Report on Form 10-Q.

NEW ACCOUNTING PRONOUNCEMENTS

See Note 1 to our condensed consolidated financial statements included in this
Quarterly Report on Form 10-Q.

                                       73

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© Edgar Online, source Glimpses

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