The following discussion and analysis of our financial condition and results
of operations should be read in conjunction with our condensed consolidated
financial statements included in this Quarterly Report on Form 10-Q. In
addition, the following discussion contains forward-looking statements, such as
statements regarding our expectation for future performance, liquidity and
capital resources, that involve risks, uncertainties and assumptions that could
cause actual results to differ materially from our expectations. Our actual
results may differ materially from those contained in or implied by any
forward-looking statements. Factors that could cause such differences include
those identified below and those described under Part I, Item 1A of our Annual
Report on Form 10-K for the year ended December 31, 2020.
MANAGEMENT'S OVERVIEW
We are the world's largest publicly traded REIT focused on the ownership,
operation, acquisition and development of temperature-controlled warehouses. We
are organized as a self-administered and self-managed REIT with proven
operating, development and acquisition expertise. As of September 30, 2021, we
operated a global network of 248 temperature-controlled warehouses encompassing
over 1.5 billion cubic feet, with 202 warehouses in North America, 27 in Europe,
16 warehouses in Asia-Pacific, and three warehouses in South America. In
addition, we hold two minority interests in Brazilian-based joint ventures, one
with SuperFrio, which owns or operates 33 temperature-controlled warehouses and
one with Comfrio, which owns or operates 25 temperature-controlled warehouses.
Components of Our Results of Operations
Warehouse. Our primary source of revenues consists of rent, storage, and
warehouse services fees. Our rent, storage, and warehouse services revenues are
the key drivers of our financial performance. Rent and storage revenues consist
of recurring, periodic charges related to the storage of frozen, perishable or
other products in our warehouses by our customers. We also provide these
customers with a wide array of handling and other warehouse services, such as
(1) receipt, handling and placement of products into our warehouses for storage
and preservation, (2) retrieval of products from storage upon customer request,
(3) blast freezing, which involves the rapid freezing of non-frozen products,
including individual quick freezing for agricultural produce and seafood,
(4) case-picking, which involves selecting product cases to build customized
pallets, (5) kitting and repackaging, which involves assembling custom product
packages for delivery to retailers and consumers, and labeling services,
(6) order assembly and load consolidation, (7) exporting and importing support
services, (8) container handling, (9) cross-docking, which involves transferring
inbound products to outbound trucks utilizing our warehouse docks without
storing them in our warehouses, (10) government-approved temperature-controlled
storage and inspection services, (11) fumigation, (12) pre-cooling and cold
treatment services, and (13) ripening. We refer to these handling and other
warehouse services as our value-added services.
Cost of operations for our warehouse segment consist of power, other facilities
costs, labor, and other service costs. Labor, the largest component of the cost
of operations from our warehouse segment, consists primarily of employee wages,
benefits, and workers' compensation. Trends in our labor expense are influenced
by changes in headcount and compensation levels, changes in customer
requirements, workforce productivity, labor availability, governmental policies
and regulations, variability in costs associated with medical insurance and the
impact of workplace safety programs, inclusive of the number and severity of
workers' compensation claims. Labor expense can also be impacted as a result of
discretionary bonuses. In response to the COVID-19 pandemic, we have
incorporated certain activities such as staggered break schedules, social
distancing, and other changes to processes that can create inefficiencies, all
of which we expect to continue to incur going forward. Our second largest cost
of operations from our warehouse segment is power utilized in the operation of
our temperature-controlled
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warehouses. As a result, trends in the price for power in the regions where we
operate may have a significant effect on our financial results. We may from time
to time hedge our exposure to changes in power prices through fixed rate
agreements or, to the extent possible and appropriate, through rate escalations
or power surcharge provisions within our customer contracts. Additionally,
business mix impacts power expense depending on the temperature zone or type of
freezing capabilities required. Other facilities costs include utilities other
than power, property insurance, property taxes, sanitation (which include
incremental supplies as a result of COVID-19), repairs and maintenance on real
estate, rent under real property operating leases, where applicable, security,
and other related facilities costs. Other services costs include equipment
costs, warehouse consumables (e.g., shrink-wrap and uniforms), PPE to maintain
the health and safety of our associates, warehouse administration and other
related services costs.
Third-Party Managed. We receive a reimbursement of substantially all expenses
for warehouses that we manage on behalf of third-party owners, with all
reimbursements recognized as revenues under the relevant accounting guidance. We
also earn management fees, incentive fees upon achieving negotiated performance
and cost-savings results, or an applicable mark-up on costs. Cost of operations
for our third-party managed segment is reimbursed on a pass-through basis
(typically within two weeks).
Transportation. We charge transportation fees, including fuel surcharges, to our
customers for whom we arrange the transportation of their products. Cost of
operations for our transportation segment consists primarily of third-party
carrier charges, which are impacted by factors affecting those carriers. We
supplemented our regional, national and truckload consolidation business with
the Hall's acquisition, which services the Northeast corridor of the U.S. with
an owned and maintained fleet. Our acquisition of Agro Merchants further expands
our Transportation service offering. Agro Merchants operates its own fleet of
temperature-controlled vehicles in the U.S., Ireland and UK and also offers a
variety of non-asset based transportation management services. These include
multi-modal global freight forwarding services to support our customers' needs.
Other Consolidated Operating Expenses. We also incur depreciation and
amortization expenses, corporate-level selling, general and administrative
expenses and corporate-level acquisition, litigation and other, 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.
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
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merger and acquisition integration, such as employee retention expense and work
associated with information systems and other projects including spending to
support future acquisitions, which primarily consist of professional services.
•Litigation costs incurred in order to defend ourselves from litigation charges
outside of the normal course of business and related settlement costs.
•Severance costs representing certain contractual and negotiated severance and
separation costs from exited former executives, reduction in headcount due to
synergies achieved through acquisitions or operational efficiencies, and
reduction in workforce costs associated with exiting or selling non-strategic
warehouses.
•Equity acceleration costs representing the unrecognized expense for share-based
awards that vest and convert to common shares in advance of the original
negotiated vesting date and any other equity award changes resulting in
accounting for the award as a modification.
•Non-offering related equity issuance expenses whether incurred through our
initial public offering, follow-on offerings or secondary offerings.
•Terminated site operations costs represent expenses incurred to return leased
sites to their original physical state at lease inception in connection with the
termination of the applicable underlying lease. These terminations were part of
our strategic efforts to exit or sell non-strategic warehouses as opposed to
ordinary course lease expirations. Repair and maintenance expenses associated
with our ordinary course operations are reflected as operating expenses on our
condensed consolidated statement of operations.
•Other costs relate to insurance claim deductibles and related recoveries
(second quarter 2021) and additional superannuation pension costs related to
prior years upon review by the Australian Tax Office (third quarter 2020).

Key Factors Affecting Our Business and Financial Results
Acquisitions and Joint Ventures
On September 1, 2021, the Company acquired Newark Facility Management for
$391.4 million. The acquisition was funded using cash drawn on our 2020 Senior
Unsecured Revolving Credit Facility. Since the date of acquisition, we have
reported the results of this facility within our warehouse segment.
On August 2, 2021, the Company acquired the assets of the ColdCo Companies for
$20.7 million. The acquisition was funded using cash drawn on our 2020 Senior
Unsecured Revolving Credit Facility. ColdCo consisted of an owned facility in
St. Louis, Missouri, and a leased facility in Reno, Nevada as well as
transportation services. Since the date of acquisition, we have reported the
results of these facilities within our warehouse segment and the transportation
services within our transportation segment.
On May 28, 2021, we acquired Bowman Stores for £75.5 million, or $107.1 million
USD, based on the spot rate on the date of the transaction. The acquisition was
funded using cash drawn on our 2020 Senior Unsecured Revolving Credit Facility.
Bowman Stores consisted of a single campus located in Spalding, England. Since
the date of acquisition, we have reported the results of this campus within our
warehouse segment.
On May 5, 2021, we acquired KMT Brrr! for $70.8 million. The acquisition was
funded using cash drawn on our 2020 Senior Unsecured Revolving Credit Facility.
KMT Brrr! consisted of two owned facilities located in New Jersey. It also
provides transportation services to its customers. Since the date of
acquisition, we have reported the results of these facilities within our
warehouse and transportation segments.
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On March 1, 2021, we acquired Liberty Freezers for C$55.0 million. The
acquisition was funded using cash drawn on our 2020 Senior Unsecured Revolving
Credit Facility. Liberty consisted of four facilities in Toronto, Montreal and
London, Canada. Since the date of acquisition, we have reported the results of
these facilities within our warehouse segment.
On December 30, 2020, we completed the acquisition of Agro Merchants for total
consideration of $1.59 billion, including cash received of $47.5 million. This
was comprised of cash consideration totaling $1.08 billion, of which
$49.7 million was deferred, and the issuance of 14,166,667 common shares of
beneficial interest to Oaktree and Agro management, with a fair value of
$512.1 million based upon the closing share price on December 29, 2020 of
$36.15. Financing lease and sale-leaseback obligations associated with the
acquisition totaled $105.4 million and when added to the total consideration
transferred brings the total transaction cost to approximately $1.7 billion.
Agro Merchants operated more than 236 million cubic feet of
temperature-controlled warehouse and distribution space across 46 facilities and
provided transportation services in the United States, Europe, Australia and
Chile. The Chile facility and operations were subject to a joint venture
agreement whereby there was a non-controlling interest holder with a 35%
ownership interest. The results of this facility were consolidated in our
results of operations. During the second quarter of 2021, we purchased the 35%
ownership interest from the third party, and now own 100% of this facility and
the operations. Since the date of acquisition, we have reported the results of
the facilities within our warehouse segment, and the results of Agro's
transportation services within our transportation segment.
On November 2, 2020, we completed the acquisition of New Jersey based Hall's
Warehouse Corporation for $489.2 million. Hall's consisted of eight facilities
near the Port of Newark. Hall's also provides transportation services to its
customers. Since the date of acquisition, we have reported the results of the
facilities within our warehouse segment, and the results of Hall's
transportation services within our transportation segment.
On August 31, 2020, we completed the acquisition of Caspers Cold Storage for
cash consideration of approximately $25.6 million utilizing available cash on
hand. Caspers consisted of a single temperature-controlled warehouse located in
Tampa, Florida. Since the date of acquisition, we have reported the results of
this facility within our warehouse segment.
Additionally, on August 31, 2020, we completed the acquisition of AM-C
Warehouses for cash consideration of approximately $82.7 million utilizing
available cash on hand. AM-C Warehouses consisted of an owned facility in
Mansfield, Texas and a leased facility in Grand Prairie, Texas. Since the date
of acquisition, we have reported the results of these facilities within our
warehouse segment.
On March 6, 2020, we acquired a 14.99% ownership interest in Superfrio Armazéns
Gerais S.A. for Brazil Real Dollars of $117.8 million, or approximately USD
$25.7 million, inclusive of certain legal fees. We funded the purchase price
using cash on hand. Our pro-rata share of SuperFrio's results are included
within "(Loss) income from investments in partially owned entities". As of
September 30, 2021, SuperFrio owns or operates 33 temperature-controlled
warehouses in Brazil.
On January 2, 2020, we completed the purchase of all outstanding shares of Nova
Cold for cash consideration of C$338.7 million (USD $260.6 million), net of cash
received. Nova Cold consisted of four temperature-controlled facilities in
Toronto, Calgary and Halifax. The acquisition was funded utilizing proceeds from
the settlement of our April 2019 forward sale agreement combined with cash drawn
on our 2018 Senior Unsecured Revolving Credit Facility. Since the date of
acquisition, we have reported the results of these facilities within our
warehouse segment.
Also, on January 2, 2020, we completed the purchase of all outstanding
membership interests of Newport Cold for cash consideration of $57.7 million,
net of cash received, utilizing available cash on hand. Newport Cold consists
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of a single temperature-controlled warehouse located in St. Paul, Minnesota.
Since the date of acquisition, we have reported the results of this facility
within our warehouse segment.
Refer to Note 2, 3 and 4 of the Notes to the Condensed Consolidated Financial
Statements for further information.
COVID-19
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We are continuing to closely monitor the impact of the COVID-19 pandemic and any
variants on all aspects of our business and geographies, including how it will
impact our customers and business partners. While we did not incur significant
disruptions during 2020 from the COVID-19 pandemic, the nine-months ended
September 30, 2021 were negatively impacted by COVID-19 related disruptions in
(1) the food supply chain; (ii) our customers' production of goods; (iii) the
labor market impacting availability and cost; and (iv) the macroeconomic
environment including the impact of inflation on the cost to provide our
services. We expect that end-consumer demand for food will remain consistent
over the long-term with historic levels overall but varying between retail and
food service sectors. The consistent end consumer demand has driven down
holdings in our facilities as it remains steady and production has remained
challenged since the onset of the pandemic. We expect it will continue to do so
until our customers are able to ramp production back up to pre-pandemic levels
for an extended period of time in order to rebuild inventory in the supply
chain. However, uncertainty still surrounds the impact of the pandemic and
recovery ultimately depends on many factors. COVID-19 disruptions in certain
markets where we or our customers operate continue to impact the food supply
chain and our business. As a result, occupancy and throughput volume continue at
lower than historical levels experienced prior to COVID-19. As the Company
continues to protect its employees from the spread of COVID-19, it is incurring
elevated labor related costs and incremental health and safety supplies costs
relative to its pre-pandemic experience. The extent to which COVID-19 impacts
our operations will depend on future developments, which are highly uncertain
and cannot be predicted with any degree of confidence, including the scope,
severity, duration and geographies of the outbreak, the occurrence of additional
waves or spikes in infection rates (including the spread of variant strains),
the actions taken to contain the COVID-19 pandemic or mitigate its impact as
requested or mandated by governmental authorities or otherwise voluntarily taken
by individuals or businesses, and the direct and indirect economic effects of
the outbreak and containment measures, among others. We continue to expect to
see inflationary impacts in the cost of providing our services, but anticipate
that these will be partially mitigated through price increases that have either
taken effect or are expected to take effect during the remainder of the year.
Our business is deemed an "essential business" as defined by the Department of
Homeland Security, which means that our associates are able to continue working
in our facilities during "shelter-in-place" or "stay-at-home" orders. The
outbreak of COVID-19 in the United States and other countries in which we
operate, has significantly adversely impacted global economic activity and has
contributed to significant volatility and negative pressure in financial
markets. The global impact of the outbreak has led many nations, states and
local authorities to periodically institute "shelter-in-place" or "stay-at-home"
orders, mandate business and school closures and restrict travel. Certain states
and cities, including where we own properties, have development sites and where
our principal place of business is located, have also reacted by instituting
restrictions on travel, "shelter in place" rules, restrictions on types of
business that may continue to operate, and/or restrictions on the types of
construction projects that may continue during peak outbreaks. These
restrictions vary widely by jurisdiction and may continue to change as the
COVID-19 pandemic progresses. The negative impacts of the COVID-19 pandemic are
pervasive across a broad spectrum of industries, including industries in which
we, our customers and business partners operate. Negative impacts from COVID-19
may negatively impact the business and operations of our customers and business
partners (including our suppliers), which, in turn, may impact our business
negatively. Further, the impacts of a potentially worsening of global economic
conditions and the continued disruptions to, and volatility in, the credit and
financial markets, consumer and business spending as well as other unanticipated
consequences continue to remain unknown. The impacts of locations of outbreaks
and actions mandated by governmental authorities or taken voluntarily by
businesses and individuals to contain or mitigate the spread of COVID-19 and the
timing of the repeal or loosening of such restrictions are also unknown. As a
result, we cannot at this time predict the impact of the COVID-19 pandemic, but
it could have a material adverse effect on our business, financial condition,
liquidity, results of operations and prospects. Refer to our Annual Report on
Form 10-K/A for the year ended December 31, 2020 for further considerations,
"Risk Factors - Risks Related to Public Health Crises - We face various risks
and uncertainties related to public health crises, including the recent and
ongoing global outbreak of the novel coronavirus and variants (COVID-19). The
COVID-19 pandemic is growing and its impacts are uncertain and hard to measure
and may have a material adverse effect on us."
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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
hottest weather for our portfolio occurs 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     Prior period average
                                                                   Average foreign                                                           foreign exchange         foreign exchange
                                                                exchange rates used to Average foreign exchange                            rate used 

to adjust the rate used to adjust

                                                                   translate actual    rates used to translate                           

actual operating results actual operating results

                                           Foreign exchange     operating results for  actual operating results     Foreign exchange       for the three months     for the nine months
                                             rates as of        the three months ended   for the nine months          rates as of          ended September 30,      ended September 30,
                                          September 30, 2021      September 30, 2021   ended September 30, 2021    September 30, 2020            2021(1)                  2021(1)
Canadian Dollar                                   0.789                   0.794                    0.799                   0.751                     0.751                    0.739
Euro                                              1.158                   1.179                    1.196                             N/A             1.197                    1.144
British Pound                                     1.347                   1.378                    1.385                             N/A             1.334                    1.286
Poland Zloty                                      0.251                   0.258                    0.263                             N/A             0.263                    0.262
Australian Dollar                                 0.723                   0.735                    0.759                   0.716                     0.715                    0.675
New Zealand Dollar                                0.690                   0.701                    0.712                   0.662                     0.662                    0.637
Argentinian Peso                                  0.010                   0.010                    0.011                   0.013                     0.014                    0.015
Chilean Peso                                      0.001                   0.001                    0.001                             N/A             0.001                    0.001
Brazilian Real                                    0.184                   0.191                    0.188                   0.178                     0.186                    0.186


(1)Represents the relevant average foreign exchange rates in effect in the
comparable prior period applied to the activity for the current period. The
average foreign currency exchange rates we apply to our operating results are
derived from third party reporting sources for the periods indicated.
Focus on Our Operational Effectiveness and Cost Structure
We continuously seek to execute on various initiatives aimed at streamlining our
business processes and reducing our cost structure, including: realigning and
centralizing key business processes and fully integrating acquired assets and
businesses; implementing standardized operational processes; integrating and
launching new information technology tools and platforms; instituting key
health, safety, leadership and training programs; and capitalizing on the
purchasing power of our network. Through the realignment of our business
processes, we have acquired new talent and strengthened our service offerings.
In order to reduce costs in our facilities, we have invested in energy
efficiency projects, including LED lighting, thermal energy storage,
motion-sensor technology, variable frequency drives for our fans and
compressors, third party efficiency reviews and real-time monitoring of energy
consumption, rapid open and close doors, and alternative-power generation
technologies to improve the energy efficiency of our warehouses. We have also
performed fine-tuning of our refrigeration systems, deployed efficient energy
management practices, such as time-of-use and awareness, and have increased our
participation in Power Demand Response programs with some of our power
suppliers. These initiatives have allowed us to reduce our consumption of
kilowatt hours and energy spend.
As part of our initiatives to streamline our business processes and to reduce
our cost structure, we have evaluated and exited less strategic and profitable
markets or business lines, including the sale of certain warehouse assets, the
exit of certain leased facilities, the exit of certain transportation
operations, the exit of certain managed warehouse agreements, the exit of the
China JV, and the sale of our quarry business. Through our process of active
portfolio management, we continue to evaluate our markets and offerings.
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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, for example, we
have also added a dedicated fleet service offering through acquisitions such as
Agro and Hall's. We intend to continue executing this strategy in the future.
Historically Significant Customer
For the three and nine months ended September 30, 2021 and 2020, one customer
accounted for more than 10% of our total revenues. For the three months ended
September 30, 2021 and 2020, sales to this customer were $79.8 million and $66.7
million, respectively. For the nine months ended September 30, 2021 and 2020,
sales to this customer were $209.8 million and $186.7 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,
$74.9 million and $62.2 million represented reimbursements for certain expenses
we incurred during the three months ended September 30, 2021 and 2020,
respectively, and $199.6 million and $173.0 million for the nine months ended
were September 30, 2021 and 2020, respectively, were offset by matching expenses
included in our third party managed cost of operations.
Economic Occupancy of our Warehouses
We define average economic occupancy as the aggregate number of physically
occupied pallets and any additional pallets otherwise contractually committed
for a given period, without duplication. We estimate the number of contractually
committed pallet positions by taking into account the actual pallet commitment
specified in each customers' contract, and subtracting the physical pallet
positions. We regard economic occupancy as an important driver of our financial
results. Historically, providers of temperature-controlled warehouse space have
offered storage services to customers on an as-utilized, on-demand basis. We
actively seek to enter into contracts that implement our commercial business
rules which contemplate, among other things, fixed storage commitments in
connection with establishing new customer relationships. Additionally, we
actively seek opportunities to transition our current customers to contracts
that feature a fixed storage commitment when renewing existing agreements or
upon the change in the anticipated profile of our customer. This strategy
mitigates the impact of changes in physical occupancy throughout the course of
the year due to seasonality, as well as other factors that can impact physical
occupancy while ensuring our customers have the necessary space they need to
support their business.
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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 and consumer preferences, may impact inbound
pallets. Similarly, a change in inventory turnover due to shift in customer
demand may impact outbound pallets.
How We Assess the Performance of Our Business
Segment Contribution (Net Operating Income or "NOI")
We evaluate the performance of our primary business segments based on their
contribution (NOI) to our overall results of operations. We use the term
"segment contribution (NOI)" to mean a segment's revenues less its cost of
operations (excluding any depreciation, depletion and amortization, impairment
charges, corporate-level selling, general and administrative and corporate-level
acquisition, litigation and other, 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
Effective January 1, 2020, we define our "same store" population once a year at
the beginning of the current calendar year. Our same store population includes
properties that were owned or leased for the entirety of two comparable periods
and that have reported at least twelve months of consecutive normalized
operations prior to January 1 of the prior calendar year. We define "normalized
operations" as properties that have been open for operation or lease after
development or significant modification, including the expansion of a warehouse
footprint or a warehouse rehabilitation subsequent to an event, such as a
natural disaster or similar event causing disruption to operations. In addition,
our definition of "normalized operations" takes into account changes in the
ownership
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structure (e.g., purchase of a previously leased warehouse would result in
different charges in the compared periods), which would impact comparability in
our warehouse segment contribution (NOI).
Acquired properties will be included in the "same store" population if owned by
us as of the first business day of each year, of the prior calendar year and
still owned by us as of the end of the current reporting period, unless the
property is under development. The "same store" pool is also adjusted to remove
properties that were sold or entering development subsequent to the beginning of
the current calendar year. As such, the "same store" population for the period
ended September 30, 2021 includes all properties that we owned at January 2,
which had both been owned and had reached "normalized operations" by January 2,
2020.
We calculate "same store contribution (NOI)" as revenues for the same store
population less its cost of operations (excluding any depreciation and
amortization, impairment charges, corporate-level selling, general and
administrative expenses, corporate-level acquisition, litigation and other, 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 September 30, 2021. The number of warehouses owned or operated in as of
September 30, 2021 and excluded as same-store warehouses for the period ended
September 30, 2021 is listed below. While not included in the non-same store
warehouse count in the table below, the results of operations for the non-same
store warehouses includes the partial period impact of sites that were exited
during the periods presented.
Total Warehouses                   248
Same Store Warehouses              162
Non-Same Store Warehouses (1)       77
Third-Party Managed Warehouses       9


(1) During the third quarter of 2021, we completed the acquisition of ColdCo
resulting in the addition of two facilities and the acquisition of Newark
Facility Management resulting in the addition of one facility. Additionally, we
exited a facility in Canada for which the lease expired on September 30, 2021.
As of September 30, 2021, our portfolio consisted of 248 total warehouses,
including 239 within the warehouse segment and nine in the third-party managed
segment. In addition, we hold minority interests in two Brazilian joint
ventures, Superfrio, which owns or operates 33 temperature-controlled
warehouses, and Comfrio, which owns or operates 25 temperature-controlled
warehouses.
Same store contribution (NOI) is not a measurement of financial performance
under U.S. GAAP. In addition, other companies providing temperature-controlled
warehouse storage and handling and other warehouse services may not define same
store or calculate same store contribution (NOI) in a manner consistent with our
definition or calculation. Same store contribution (NOI) should be considered as
a supplement, but not as an alternative, to our results calculated in accordance
with U.S. GAAP. We provide reconciliations of these measures in the discussions
of our comparative results of operations below.
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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.
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RESULTS OF OPERATIONS
Comparison of Results for the Three Months Ended September 30, 2021 and 2020
Warehouse Segment
The following table presents the operating results of our warehouse segment for
the three months ended September 30, 2021 and 2020.
                                                    Three Months Ended September 30,                                    Change
                                                              2021 constant                                                        Constant
                                         2021 actual           currency(1)           2020 actual             Actual                currency
                                                         (Dollars in thousands)
Rent and storage                        $   225,234          $   224,210            $  166,355                   35.4  %                34.8  %
Warehouse services                          316,813              315,105               221,669                   42.9  %                42.2  %
Total warehouse segment revenues            542,047              539,315               388,024                   39.7  %                39.0  %

Power                                        38,931               38,774                27,145                   43.4  %                42.8  %
Other facilities costs (2)                   53,050               52,533                35,752                   48.4  %                46.9  %
Labor                                       245,515              244,106               166,491                   47.5  %                46.6  %
Other services costs (3)                     59,559               59,447                30,880                   92.9  %                92.5  %
Total warehouse segment cost of
operations                              $   397,055          $   394,860            $  260,268                   52.6  %                51.7  %

Warehouse segment contribution (NOI)        144,992              144,455               127,756                   13.5  %                13.1  %
Warehouse rent and storage contribution
(NOI) (4)                                   133,253              132,903               103,458                   28.8  %                28.5  %
Warehouse services contribution (NOI)
(5)                                          11,739               11,552                24,298                  (51.7) %               (52.5) %

Total warehouse segment margin                 26.7  %              26.8    %             32.9  %               -618 bps               -614 bps
Rent and storage margin(6)                     59.2  %              59.3    %             62.2  %               -303 bps               -291 bps
Warehouse services margin(7)                    3.7  %               3.7    %             11.0  %               -726 bps               -730 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 $11.2 million and $3.4 million, on an
actual basis, for the third quarter of 2021 and 2020, respectively.
(3)Includes non-real estate rent expense (equipment lease and rentals) of
$2.9 million and $2.2 million, on an actual basis, for the third quarter of 2021
and 2020, respectively.
(4)Calculated as rent and storage revenues less power and other facilities
costs.
(5)Calculated as warehouse services revenues less labor and other services
costs.
(6)Calculated as warehouse rent and storage contribution (NOI) divided by
warehouse rent and storage revenues.
(7)Calculated as warehouse services contribution (NOI) divided by warehouse
services revenues.
Warehouse segment revenues were $542.0 million for the three months ended
September 30, 2021, an increase of $154.0 million, or 39.7%, compared to $388.0
million for the three months ended September 30, 2020. On a constant currency
basis, our warehouse segment revenues were $539.3 million for the three months
ended September 30, 2021, an increase of $151.3 million, or 39.0%, from the
three months ended September 30, 2020. Approximately $141.4 million of the
increase, on an actual currency basis, was driven by acquisitions completed
between October 2020 and September 2021. We acquired 61 warehouse facilities as
a result of the Agro, Hall's, Liberty, Bowman, KMT Brrr! acquisitions between
October 1, 2020 and June 30, 2021. As a result, these facilities are reflected
in the entirety of the current period but none of the comparable prior period.
Additionally, we acquired two facilities on August 2, 2021 as a result of the
ColdCo acquisition and one facility on September 1, 2021 as a result of the
Newark Facility Management acquisition, and the results of these facilities are
included in the current period since the date of acquisition. Revenue growth was
also due to contractual and market-driven
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rate escalations and our recently completed developments. The foreign currency
translation of revenues earned by our foreign operations had a net $2.7 million
favorable impact during the three months ended September 30, 2021, which was
mainly driven by the weakening of the U.S. dollar against the Australian dollar
and the Euro.
Warehouse segment cost of operations was $397.1 million for the three months
ended September 30, 2021, an increase of $136.8 million, or 52.6%, compared to
the three months ended September 30, 2020. On a constant currency basis, our
warehouse segment cost of operations was $394.9 million for the three months
ended September 30, 2021, an increase of $134.6 million, or 51.7%, from the
three months ended September 30, 2020. Approximately $113.2 million of the
increase, on an actual basis, was driven by the additional facilities in the
warehouse segment we acquired in connection with the aforementioned
acquisitions. In addition, we incurred increases in our cost of operations of
our same store facilities related to labor, power and property insurance costs,
all of which are reflective of current market trends. Additionally, the foreign
currency translation of expenses incurred by our foreign operations had a net
$2.2 million unfavorable impact during the three months ended September 30,
2021.
For the three months ended September 30, 2021, warehouse segment contribution
(NOI), increased $17.2 million, or 13.5%, to $145.0 million for the third
quarter of 2021 compared to $127.8 million for the third quarter of 2020. The
foreign currency translation of our results of operations had a $0.5 million
favorable impact to the warehouse segment contribution period-over-period due to
the weakening of the U.S. dollar. On a constant currency basis, warehouse
segment NOI increased 13.1% from the three months ended September 30, 2020.
Approximately $28.2 million of the increase, on an actual basis, was primarily
driven by the additional facilities in the warehouse segment as a result of the
aforementioned acquisitions, and the growth and modest synergies experienced
period-over-period during overlapping periods of ownership for sites acquired
during 2020. The growth is also attributable to revenue increases, partially
offset by the following factors that impacted our same-store facilities: lower
economic occupancy driven by the impact of COVID-19 on the food manufacturing
supply chain and increased costs including labor, power and related travel
costs, as well as property insurance.
Same Store and Non-Same Store Analysis
We had 162 same stores for the three months ended September 30, 2021. Please see
"How We Assess the Performance of Our Business-Same Store Analysis" above for a
reconciliation of the change in the same store portfolio from period to period.
Amounts related to the acquisitions of Agro, AM-C Warehouses, Bowman Stores,
Caspers, ColdCo, Halls, KMT Brrr!, Liberty Freezers, Newark Facility Management,
one recently leased warehouse in Australia, as well as certain expansion and
development projects not yet stabilized are reflected within non-same store
results.
The following table presents revenues, cost of operations, contribution (NOI)
and margins for our same stores and non-same stores with a reconciliation to the
total financial metrics of our warehouse segment for the three months ended
September 30, 2021 and 2020.


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                                                    Three Months Ended September 30,                                    Change
                                                              2021 constant                                                        Constant
                                         2021 actual           currency(1)           2020 actual             Actual                currency
Number of same store sites                   162                                         162                         n/a                    n/a
Same store revenues:                                     (Dollars in thousands)
Rent and storage                        $   157,233          $   157,108            $  154,926                    1.5  %                 1.4  %
Warehouse services                          216,351              215,316               210,309                    2.9  %                 2.4  %
Total same store revenues                   373,584              372,424               365,235                    2.3  %                 2.0  %
Same store cost of operations:
Power                                        25,676               25,721                25,497                    0.7  %                 0.9  %
Other facilities costs                       31,743               31,700                32,859                   (3.4) %                (3.5) %
Labor                                       168,426              167,673               155,114                    8.6  %                 8.1  %
Other services costs                         30,530               30,531                28,237                    8.1  %                 8.1  %

Total cost of same store operations $ 256,375 $ 255,625

        $  241,707                    6.1  %                 5.8  %

Same store contribution (NOI)           $   117,209          $   116,799            $  123,528                   (5.1) %                (5.4) %
Same store rent and storage
contribution (NOI)(2)                   $    99,814          $    99,687            $   96,570                    3.4  %                 3.2  %
Same store services contribution
(NOI)(3)                                $    17,395          $    17,112            $   26,958                  (35.5) %               (36.5) %

Total same store margin                        31.4  %              31.4    %             33.8  %               -245 bps               -246 bps
Same store rent and storage margin(4)          63.5  %              63.5    %             62.3  %                115 bps                112 bps
Same store services margin(5)                   8.0  %               7.9    %             12.8  %               -478 bps               -487 bps


                                                     Three Months Ended September 30,                                      Change
                                                               2021 constant                                                          Constant
                                          2021 actual           currency(1)           2020 actual              Actual                 currency
Number of non-same store sites(6)             77                                           13                           n/a                    n/a
Non-same store revenues:                                  (Dollars in thousands)
Rent and storage                        $    68,001           $    67,102            $    11,429                   495.0  %               487.1  %
Warehouse services                          100,462                99,789                 11,360                   784.3  %               778.4  %
Total non-same store revenues               168,463               166,891                 22,789                   639.2  %               632.3  %
Non-same store cost of operations:
Power                                        13,255                13,053                  1,648                   704.3  %               692.1  %
Other facilities costs                       21,307                20,833                  2,893                   636.5  %               620.1  %
Labor                                        77,089                76,433                 11,377                   577.6  %               571.8  %
Other services costs                         29,029                28,916                  2,643                   998.3  %               994.1  %
Total non-same store cost of operations $   140,680           $   139,235            $    18,561                   657.9  %               650.1  %

Non-same store contribution (NOI)       $    27,783           $    27,656            $     4,228                   557.1  %               554.1  %
Non-same store rent and storage
contribution (NOI)(2)                   $    33,439           $    33,216            $     6,888                   385.5  %               382.2  %
Non-same store services contribution
(NOI)(3)                                $    (5,656)          $    (5,560)           $    (2,660)                 (112.6) %              (109.0) %

Total non-same store margin                    16.5   %              16.6    %              18.6  %                -206 bps               -198 bps
Non-same store rent and storage
margin(4)                                      49.2   %              49.5    %              60.3  %               -1109 bps              -1077 bps
Non-same store services margin(5)              (5.6)  %              (5.6)   %             (23.4) %                1779 bps               1784 bps


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                                                        Three Months Ended September 30,                                      Change
                                                                   2021 constant                                                        Constant
                                            2021 actual             currency(1)            2020 actual             Actual               currency
Total warehouse segment revenues        $    542,047              $     539,315          $    388,024                 39.7  %                39.0  %
Total warehouse cost of operations      $    397,055              $     394,860          $    260,268                 52.6  %                51.7  %
Total warehouse segment contribution    $    144,992              $     144,455          $    127,756                 13.5  %                13.1  %


(1)The adjustments from our U.S. GAAP operating results to calculate our
operating results on a constant currency basis is the effect of changes in
foreign currency exchange rates relative to the comparable prior period.
(2)Calculated as rent and storage revenues less power and other facilities
costs.
(3)Calculated as warehouse services revenues less labor and other services
costs.
(4)Calculated as rent and storage contribution (NOI) divided by rent and storage
revenues.
(5)Calculated as warehouse services contribution (NOI) divided by warehouse
services revenues.
(6)Non-same store warehouse count of 77 includes one recently leased warehouse
in Australia, 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, 46 warehouses acquired through the Agro
acquisition on December 30, 2020, eight warehouses acquired through the Hall's
acquisition on November 2, 2020, three warehouses acquired through the Casper's
and AM-C warehouse acquisitions on August 31, 2020 and ten legacy facilities.
During the third quarter of 2021, a leased facility from the Liberty Freezers
acquisition was exited upon expiration of the lease. The results of these
acquisitions are reflected in the results above since date of ownership.
n/a - not applicable, the change in actual and constant currency metrics does
not apply to site count.

The following table provides selected operating metrics to explain the drivers of our comparable store performance.

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                                                        Three Months Ended 

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

                                             2021                  2020                 Change
Number of same store sites                                   162                   162                           n/a
Same store rent and storage:

Economic occupancy(1)
Average occupied economic pallets                              2,878               2,942                     (2.2) %
Economic occupancy percentage                                   76.5   %            78.3  %                 -179 bps
Same store rent and storage revenues per economic
occupied pallet                                       $        54.62           $   52.66                      3.7  %
Constant currency same store rent and storage
revenues per economic occupied pallet                 $        54.58           $   52.66                      3.7  %

Physical occupancy(2)
Average physical occupied pallets                              2,553               2,661                     (4.1) %
Average physical pallet positions                              3,760               3,756                      0.1  %
Physical occupancy percentage                                   67.9   %            70.8  %                 -295 bps
Same store rent and storage revenues per physical
occupied pallet                                       $        61.59           $   58.23                      5.8  %
Constant currency same store rent and storage
revenues per physical occupied pallet                 $        61.54           $   58.23                      5.7  %

Same store warehouse services:
Throughput pallets (in thousands)                              7,328               7,467                     (1.9) %

Same-store warehouse services revenue per debit pallet

                                                $        29.52           $   28.16                      4.8  %
Constant currency same store warehouse services
revenues per throughput pallet                        $        29.38           $   28.16                      4.3  %

Number of non-same store sites(3)                             77                    13                           n/a

Non-identical rental and storage:

Economic occupancy(1)
Average economic occupied pallets                              1,182                 202                    485.5  %
Economic occupancy percentage                                   74.3   %            63.5  %                 1086 bps

Different warehouse rent and storage revenue per occupied economic pallet

                                       $        57.51           $   56.59                      1.6  %
Constant currency non-same store rent and storage
revenues per economic occupied pallet                 $        56.75           $   56.59                      0.3  %

Physical occupancy(2)
Average physical occupied pallets                              1,156                 188                    515.0  %
Average physical pallet positions                              1,591                 318                    399.9  %
Physical occupancy percentage                                   72.7   %            59.1  %                 1360 bps

Different warehouse rent and storage revenue per physical pallet occupied

                                       $        58.81           $   60.79                     (3.3) %
Constant currency non-same store rent and storage
revenues per physical occupied pallet                 $        58.04           $   60.79                     (4.5) %

Non-same store warehouse services:
Throughput pallets (in thousands)                              2,814                 451                    523.9  %
Non-same store warehouse services revenues per
throughput pallet                                     $        35.71           $   25.19                     41.7  %

Constant Currency Warehouse Warehouse Services Revenue by Debit Pallet

                        $        35.47           $   25.19                     40.8  %



(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 77 includes one recently leased warehouse
in Australia, 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, 46 warehouses acquired through the Agro
acquisition on December 30, 2020, eight warehouses acquired through the Hall's
acquisition on November 2, 2020, three warehouses acquired through the Casper's
and AM-C warehouse acquisitions on August 31, 2020 and ten legacy facilities.
During the third quarter of 2021, a leased facility from the Liberty Freezers
acquisition was exited upon expiration of the lease. The results of these
acquisitions are reflected in the results above since date of ownership.
Economic occupancy at our same stores was 76.5% for the three months ended
September 30, 2021, a decrease of 179 basis points compared to 78.3% for the
quarter ended September 30, 2020. Storage levels were lower than prior year
levels due to ongoing supply chain disruption as a result of the COVID-19
pandemic, as well as food manufacturers producing at less than full capacity. As
such, our customers' existing inventories have continued to be drawn down to
support steady consumer demand. Additionally, recent acquisitions came into the
same store pool on January 1, 2021 which have a lower percentage of fixed
commitment revenue compared to our legacy same stores. Our economic occupancy at
our same stores for the three months ended September 30, 2021 was 866 basis
points higher than our corresponding average physical occupancy of 67.9%. The
decrease of 295 basis points in average physical occupancy compared to 70.8% for
the quarter ended September 30, 2020 was partially driven by the factors
mentioned above. Same store rent and storage revenues per economic occupied
pallet increased 3.7% period-over-period, primarily driven by improvements in
our commercial terms and contractual rate escalations and business mix. On a
constant currency basis, our same store rent and storage revenues per occupied
pallet increased 3.7% period-over-period.
Throughput pallets at our same stores were 7.3 million pallets for the three
months ended September 30, 2021, a decrease of 1.9% from 7.5 million pallets for
the three months ended September 30, 2020. This decrease was the result of the
food manufacturers production decreasing as compared to the prior comparable
period, also evidenced by the decrease in average physical occupancy. Food
manufacturers have been unable to rebuild holdings in the supply chain primarily
due to challenges in the labor market. Same store warehouse services revenue per
throughput pallet increased 4.8% compared to the prior year primarily as a
result of contractual rate escalations and favorable foreign currency
translation as previously discussed. On a constant currency basis, our same
store services revenue per throughput pallet increased 4.3% 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 September 30, 2021 and 2020.
                                                        Three Months Ended September 30,                                      Change
                                                                    2021 constant                                                       Constant
                                          2021 actual                currency(1)           2020 actual             Actual               currency
Number of managed sites                           9                                                11                     n/a                    n/a
                                                             (Dollars in thousands)
Third-party managed revenues            $    87,782               $     87,610            $    75,338                 16.5  %                16.3  %
Third-party managed cost of operations       83,231                     83,095                 71,945                 15.7  %                15.5  %
Third-party managed segment
contribution                            $     4,551               $      4,515            $     3,393                 34.1  %                33.1  %

Third-party managed margin                      5.2   %                    5.2    %               4.5  %               68 bps                 65 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 $87.8 million for the three months ended
September 30, 2021, an increase of $12.4 million, or 16.5%, compared to $75.3
million for the three months ended September 30, 2020. On a constant currency
basis, third-party managed revenues were $87.6 million for the three months
ended September 30, 2021, an increase of $12.3 million, or 16.3%, from the three
months ended September 30, 2020. This increase was a result of higher
pass-through labor expenses in our domestic and foreign managed operations due
to the consumer demand shift to retail, higher business volume from Australia
managed and paired with its favorable impact of foreign currency translation,
partially offset by the exit of one Canadian managed site in August 2020.
Third-party managed cost of operations was $83.2 million for the three months
ended September 30, 2021, an increase of $11.3 million, or 15.7%, compared to
$71.9 million for the three months ended September 30, 2020. Third-party managed
cost of operations increased as a result of the higher labor costs and
management fee as discussed in the revenue trends above.
Third-party managed segment contribution (NOI) was $4.6 million for the three
months ended September 30, 2021, an increase of $1.2 million, or 34.1%, compared
to $3.4 million for the three months ended September 30, 2020.
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Transportation Segment
The following table presents the operating results of our transportation segment
for the three months ended September 30, 2021 and 2020.
                                                          Three Months Ended September 30,                                       Change
                                                                      2021 constant                                                         Constant
                                            2021 actual                currency(1)           2020 actual              Actual                currency
                                                               (Dollars in thousands)
Transportation revenues                   $    78,979               $     78,068            $    34,096                  131.6  %               129.0 

%

Transportation cost of operations              72,728                     71,942                 29,909                  143.2  %               140.5 

%

Transportation segment contribution (NOI) $     6,251               $      6,126            $     4,187                   49.3  %                46.3  %

Transportation margin                             7.9   %                    7.8    %              12.3  %               -437 bps               -443 

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 $79.0 million for the three months ended
September 30, 2021, an increase of $44.9 million, or 131.6%, compared to $34.1
million for the three months ended September 30, 2020. The increase was
primarily due to the revenue associated with transportation operations from the
Hall's acquisition, which closed on November 2, 2020, the Agro acquisition,
which closed on December 30, 2020 and to a much lesser extent the KMT Brrr!
acquisition which closed in early May 2021 and the ColdCo acquisition which
closed on August 2, 2021. The increase was partially offset by the net decrease
in revenue from the rationalization of certain domestic legacy market
operations.
Transportation cost of operations was $72.7 million for the three months ended
September 30, 2021, an increase of $42.8 million, or 143.2%, compared to $29.9
million for the three months ended September 30, 2020. The increase was driven
by the acquisitions and revenue trends mentioned above and a reduction in market
capacity due to the COVID-19 pandemic, which has caused an increase in carrier
fees. Additionally, this is partially offset by the net decrease of costs from
the exit of certain domestic market operations.
Transportation segment contribution (NOI) was $6.3 million for the three months
ended September 30, 2021, an increase of 49.3% compared to the three months
ended September 30, 2020. Transportation segment margin decreased 437 basis
points from the three months ended September 30, 2020, to 7.9% from 12.3%. The
decrease in margin was primarily due to the acquisition of lower-margin
transportation business compared to our legacy operations, coupled with higher
carrier fees as a result of the COVID-19 pandemic.

Other Consolidated Operating Expenses
Depreciation and amortization. Depreciation and amortization expense was $70.6
million for the three months ended September 30, 2021, an increase of $17.0
million, or 31.7%, compared to $53.6 million for the three months ended
September 30, 2020. This increase was primarily due to the acquisitions in late
2020 and 2021.
Selling, general and administrative. Corporate-level selling, general and
administrative expenses were $45.5 million for the three months ended
September 30, 2021, an increase of $9.6 million, or 26.6%, compared to $36.0
million for the three months ended September 30, 2020. Included in these amounts
are business development expenses attributable to new business pursuits, supply
chain solutions and underwriting, facility development, customer on-boarding,
and engineering and consulting services to support our customers in the cold
chain. We believe these costs are comparable to leasing costs for other
publicly-traded REITs. The increase was driven by costs assumed from the Agro
and Hall's acquisitions, net of synergies realized and higher third-party
professional
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and legal fees, partially offset by lower short-term incentive plan expense
based on underperformance compared to budget.
Acquisition, litigation and other, net. Corporate-level acquisition, litigation
and other, net expenses were $6.3 million for the three months ended
September 30, 2021, an increase of $1.1 million compared to the three months
ended September 30, 2020. During the three months ended September 30, 2021, we
incurred $6.3 million of acquisition related expenses primarily comprised of
professional fees and integration related costs in connection with completed and
potential acquisitions. During the three months ended September 30, 2020, we
incurred an aggregate $5.3 million of acquisition, litigation and other, net
expenses, of which $4.9 million related to acquisition expenses primarily
composed of professional fees and integration related costs in connection with
the Agro acquisition as well as other potential acquisitions.
Impairment of long-lived assets. For the three months ended September 30, 2021,
we recorded impairment charges totaling $1.8 million, related to the write-off
of certain software costs for programs which would no longer be used and costs
incurred for development projects which management determined it would not
continue to pursue. For the three months ended September 30, 2020, we recorded
an impairment charge of $2.6 million due to the strategic decision to accelerate
our exit of a managed facility and another managed facility that we planned to
exit by the end of 2020. We recorded an impairment charge for the remaining net
book value related to the long-lived assets, including building improvements and
racking, which would not be removed prior to our exit of these facilities.
Other Expense and Income
The following table presents other items of expense and income for the three
months ended September 30, 2021 and 2020.
                                                       Three Months Ended September 30,            Change
                                                           2021                2020                   %
Other (expense) income:                                     (Dollars in thousands)
Interest expense                                       $  (25,303)         $ (23,066)                    9.7  %
Loss on debt extinguishment, modifications and
termination of derivative instruments                  $     (627)         $       -                   100.0  %
Other, net                                             $     (523)         $  (1,198)                  (56.3) %


Interest expense. Interest expense was $25.3 million for the three months ended
September 30, 2021, an increase of $2.2 million, or 9.7%, compared to $23.1
million for the three months ended September 30, 2020. The increase was
primarily due to the issuance of the Series D and Series E Senior Unsecured
Notes in December 2020, combined with short-term withdrawals on our Senior
Unsecured Revolving Credit Facility. This was partially offset by the decrease
in interest expense on our Senior Unsecured Term Loan A Facility due to the
early principal repayment of $100.0 million and $200.0 million in December 2020
and January 2021, respectively. The effective interest rate of our outstanding
debt decreased from 4.13% in the third quarter of 2020 to 3.09% in the third
quarter of 2021.
Loss on debt extinguishment, modifications and termination of derivative
instruments. Loss on debt extinguishment, modifications, and termination of
derivative instruments of $0.6 million for the three months ended September 30,
2021 was primarily driven by the amortization of fees paid for the termination
of interest rate swaps during 2020.
Other expense, net. Other expense, net was $0.5 million for the three months
ended September 30, 2021, a decrease of $0.7 million, compared to $1.2 million
for the three months ended September 30, 2020. This decrease is due to loss on
various asset disposals in 2020 that did not recur in 2021.
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Income Tax Expense
Income tax benefit for the three months ended September 30, 2021 was $0.2
million, an increase of $1.0 million from an income tax expense of $0.8 million
for the three months ended September 30, 2020. The change in income tax expense
was primarily attributable to the decrease in valuation allowance related to
recent acquisitions. The remainder was primarily attributable to losses
generated from our foreign operations during 2021.
Comparison of Results for the Nine Months Ended September 30, 2021 and 2020
Warehouse Segment
The following table presents the operating results of our warehouse segment for
the nine months ended September 30, 2021 and 2020.
                                                     Nine Months Ended September 30,                                    Change
                                                              2021 constant                                                        Constant
                                         2021 actual           currency(1)           2020 actual             Actual                currency
                                                         (Dollars in thousands)
Rent and storage                        $   642,787          $     633,774          $  492,328                   30.6  %                28.7  %
Warehouse services                          888,445                869,710             649,175                   36.9  %                34.0  %
Total warehouse segment revenues          1,531,232              1,503,484           1,141,503                   34.1  %                31.7  %

Power                                        97,315                 96,098              68,918                   41.2  %                39.4  %
Other facilities costs (2)                  155,143                152,699             102,499                   51.4  %                49.0  %
Labor                                       684,475                669,918             502,087                   36.3  %                33.4  %
Other services costs (3)                    158,747                156,781              93,338                   70.1  %                68.0  %
Total warehouse segment cost of
operations                              $ 1,095,680          $   1,075,496          $  766,842                   42.9  %                40.3  %

Contribution of the warehouse segment (NOI) $ 435,552 $ 427,988

         $  374,661                   16.3  %                14.2  %
Warehouse rent and storage contribution
(NOI) (4)                               $   390,329          $     384,977          $  320,911                   21.6  %                20.0  %
Warehouse services contribution (NOI)
(5)                                     $    45,223          $      43,011          $   53,750                  (15.9) %               (20.0) %

Total warehouse segment margin                 28.4  %                28.5  %             32.8  %               -438 bps               -436 bps
Rent and storage margin(6)                     60.7  %                60.7  %             65.2  %               -446 bps               -444 bps
Warehouse services margin(7)                    5.1  %                 4.9  %              8.3  %               -319 bps               -333 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 $30.7 million and $9.2 million, on an
actual basis, for the nine months ended September 30, 2021 and 2020,
respectively.
(3)Includes non-real estate rent expense (equipment lease and rentals) of
$8.7 million and $7.5 million, on an actual basis, for the nine months ended
September 30, 2021 and 2020, respectively.
(4)Calculated as rent and storage revenues less power and other facilities
costs.
(5)Calculated as warehouse services revenues less labor and other services
costs.
(6)Calculated as warehouse rent and storage contribution (NOI) divided by
warehouse rent and storage revenues.
(7)Calculated as warehouse services contribution (NOI) divided by warehouse
services revenues.
Warehouse segment revenues were $1,531.2 million for the nine months ended
September 30, 2021 an increase of $389.7 million, or 34.1%, compared to $1,141.5
million for the nine months ended September 30, 2020. On a constant currency
basis, our warehouse segment revenues were $1,503.5 million for the nine months
ended
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September 30, 2021, an increase of $362.0 million or 31.7%, from the nine months
ended September 30, 2020. Approximately $371.1 million of the increase, on an
actual currency basis, was driven by acquisitions completed during 2020 and
2021, including the growth experienced period-over-period during overlapping
periods of ownership. We acquired 54 warehouse facilities as a result of the
Agro and Hall's acquisitions between October 1, 2020 and December 31, 2020. As a
result, these facilities are reflected in the entirety of the current period but
none of the comparable prior period. On August 31, 2020, we completed the
acquisition of two facilities as a result of the AM-C acquisition and one
facility as a result of the Caspers acquisition, and the results of these
acquisitions are included in the results of prior period since the date of
acquisition and for the entirety of the current period. Additionally, we
acquired four facilities on March 1, 2021 as a result of the Liberty
acquisition, 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 and one facility on September 1, 2021 as a result of the Newark
Facility Management acquisition, and the results of these facilities are
included in the current period since the date of acquisition. Revenue growth was
also due to contractual rate escalations and our recently completed
developments. This was partially offset by COVID-19 and the related labor
challenges which continued to impact food production. The foreign currency
translation of revenues earned by our foreign operations had a $27.7 million
favorable impact during the nine months ended September 30, 2021, which was
mainly driven by the weakening of the U.S. dollar over the Australian dollar,
Euro, and Canadian dollar.
Warehouse segment cost of operations was $1,095.7 million for the nine months
ended September 30, 2021, an increase of $328.8 million, or 42.9%, compared to
the nine months ended September 30, 2020. On a constant currency basis, our
warehouse segment cost of operations was $1,075.5 million for the three months
ended September 30, 2021, an increase of $308.7 million, or 40.3%, from the nine
months ended September 30, 2020. Approximately $288.2 million of the increase,
on an actual basis, was driven by the additional facilities in the warehouse
segment we acquired in connection with the aforementioned acquisitions. In
addition, we incurred increases in our cost of operations in response to
COVID-19, power, labor, property tax and insurance costs, all of which are
reflective of current market trends. This is partially offset by the
appreciation bonus we paid to front-line associates to recognize the dedication
and efforts of our associates during the COVID-19 pandemic during the second
quarter of 2020, which totaled $4.3 million. Additionally, the foreign currency
translation of expenses incurred by our foreign operations had a net $20.2
million unfavorable impact during the nine months ended September 30, 2021.
For the nine months ended September 30, 2021, warehouse segment contribution
(NOI), increased $60.9 million, or 16.3%, to $435.6 million for the nine months
ended September 30, 2021, compared to $374.7 million for the nine months ended
September 30, 2020. The foreign currency translation of our results of
operations had a $7.6 million favorable impact to the warehouse segment
contribution period-over-period. On a constant currency basis, warehouse segment
NOI increased $53.3 million. Approximately $82.9 million of the increase, on an
actual basis, was driven by the additional facilities in the warehouse segment
as a result of the aforementioned acquisitions, including the growth and
synergies experienced period-over-period during overlapping periods of
ownership. The remainder of the increase was driven by contractual rate
escalations, the impact of the appreciation bonus paid during the second quarter
of 2020 and disciplined cost controls through the Americold Operating System of
our other services costs, which allowed us to generate higher contribution
margins. The increases were partially offset by the currency translation impact
of the strengthening of the U.S. dollar, lower holdings driven by the impact of
COVID-19 on the food manufacturing supply chain and the increase in costs
including power, property insurance and taxes and facility leasing costs.
Same Store and Non-Same Store Analysis
We had 162 same stores for the nine months ended September 30, 2021. Please see
"How We Assess the Performance of Our Business-Same Store Analysis" above for a
reconciliation of the change in the same store
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portfolio from period to period. Amounts related to the acquisitions of Agro,
AM-C Warehouses, Bowman Stores, Caspers, ColdCo, Halls, KMT Brrr!, Liberty,
Newark, ColdCo, one recently leased warehouse in Australia, as well as certain
expansion and development projects not yet stabilized are reflected within
non-same store results.
The following table presents revenues, cost of operations, contribution (NOI)
and margins for our same stores and non-same stores with a reconciliation to the
total financial metrics of our warehouse segment for the nine months ended
September 30, 2021 and 2020.
                                                    Nine Months Ended September 30,                                    Change
                                                             2021 constant                                                        Constant
                                         2021 actual          currency(1)           2020 actual             Actual                currency
Number of same store sites                   162                                        162                         n/a                    n/a
Same store revenues:                                     (Dollars in thousands)
Rent and storage                        $  457,384          $   453,945            $  460,623                   (0.7) %                (1.4) %
Warehouse services                         631,694              619,336               619,002                    2.1  %                 0.1  %
Total same store revenues                1,089,078            1,073,281             1,079,625                    0.9  %                (0.6) %
Same store cost of operations:
Power                                       65,287               65,068                64,742                    0.8  %                 0.5  %
Other facilities costs                      97,735               96,917                94,818                    3.1  %                 2.2  %
Labor                                      488,382              478,435               468,955                    4.1  %                 2.0  %
Other services costs                        85,747               85,374                85,435                    0.4  %                (0.1) %

Total cost of same store operations $ 737,151 $ 725,794

       $  713,950                    3.2  %                 1.7  %

Same store contribution (NOI)           $  351,927          $   347,487            $  365,675                   (3.8) %                (5.0) %
Same store rent and storage
contribution (NOI)(2)                   $  294,362          $   291,960            $  301,063                   (2.2) %                (3.0) %
Same store services contribution
(NOI)(3)                                $   57,565          $    55,527            $   64,612                  (10.9) %               (14.1) %

Total same store margin                       32.3  %              32.4    %             33.9  %               -156 bps               -149 bps
Same store rent and storage margin(4)         64.4  %              64.3    %             65.4  %               -100 bps               -104 bps
Same store services margin(5)                  9.1  %               9.0    %             10.4  %               -133 bps               -147 bps


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                                                   Nine Months Ended September 30,                                     Change
                                                            2021 constant                                                         Constant
                                        2021 actual          currency(1)           2020 actual             Actual                 currency
Number of non-same store sites              77                                         13                           n/a                    n/a
Non-same store revenues:                                (Dollars in thousands)
Rent and storage                       $  185,403          $   179,829            $   31,705                   484.8  %               467.2  %
Warehouse services                        256,751              250,373                30,173                   750.9  %               729.8  %
Total non-same store revenues             442,154              430,202                61,878                   614.6  %               595.2  %
Non-same store cost of operations:
Power                                      32,028               31,030                 4,176                   667.0  %               643.1  %
Other facilities costs                     57,408               55,782                 7,681                   647.4  %               626.2  %
Labor                                     196,092              191,483                33,132                   491.9  %               477.9  %
Other services costs                       73,000               71,407                 7,904                   823.6  %               803.4  %
Total non-same store cost of
operations                             $  358,528          $   349,702            $   52,893                   577.8  %               561.1  %

Non-comparable contribution (NOI) $ 83,626 $ 80,500

       $    8,985                   830.7  %               795.9  %
Non-same store rent and storage
contribution (NOI)(2)                  $   95,967          $    93,017            $   19,848                   383.5  %               368.6  %
Non-same store services contribution
(NOI)(3)                               $  (12,341)         $   (12,517)           $  (10,863)                  (13.6) %               (15.2) %

Total non-same store margin                  18.9  %              18.7    %             14.5  %       439 bps                 419 bps
Non-same store rent and storage
margin(4)                                    51.8  %              51.7    %             62.6  %       -1084 bps               -1088 bps
Non-same store services margin(5)            (4.8) %              (5.0)   %            (36.0) %       3120 bps                3100 bps


                                                     Nine Months Ended September 30,                                    Change
                                                              2021 constant                                                       Constant
                                         2021 actual           currency(1)           2020 actual             Actual               currency

Warehouse segment total revenue $ 1,531,232 $ 1,503,484

         $ 1,141,503                 34.1  %                31.7  %

Total cost of warehouse operations $ 1,095,680 $ 1,075,496

         $   766,842                 42.9  %                40.3  %

Total contribution from the warehouse segment $ 435,552 $ 427,988

         $   374,661                 16.3  %                14.2  %


(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 77 includes one recently leased warehouse
in Australia, 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, 46 warehouses acquired through the Agro
acquisition on December 30, 2020, eight warehouses acquired through the Hall's
acquisition on November 2, 2020, three warehouses acquired through the Casper's
and AM-C warehouse acquisitions on August 31, 2020 and ten legacy facilities.
During the third quarter of 2021, a leased facility from the Liberty Freezers
acquisition was exited upon expiration of the lease. The results of these
acquisitions are reflected in the results above since date of ownership.
n/a - not applicable, the change in actual and constant currency metrics does
not apply to site count

The following table provides selected operating metrics to explain the drivers of our comparable store performance.

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                                                         Nine Months Ended 

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

                                             2021                   2020                 Change
Number of same store sites                                        162                 162                         n/a
Same store rent and storage:

Economic occupancy(1)
Average occupied economic pallets                               2,865               3,003                     (4.6) %
Economic occupancy percentage                                    76.2   %            80.1  %                 -393 bps
Same store rent and storage revenues per economic
occupied pallet                                       $        159.64           $  153.38                      4.1  %
Constant currency same store rent and storage
revenues per economic occupied pallet                 $        158.44           $  153.38                      3.3  %

Physical occupancy(2)
Average physical occupied pallets                               2,543               2,753                     (7.6) %
Average physical pallet positions                               3,762               3,750                      0.3  %
Physical occupancy percentage                                    67.6   %            73.4  %                 -582 bps
Same store rent and storage revenues per physical
occupied pallet                                       $        179.85           $  167.31                      7.5  %
Constant currency same store rent and storage
revenues per physical occupied pallet                 $        178.50           $  167.31                      6.7  %

Same store warehouse services:
Throughput pallets (in thousands)                              21,805              22,547                     (3.3) %

Same-store warehouse services revenue per debit pallet

                                                $         28.97           $   27.45                      5.5  %
Constant currency same store warehouse services
revenues per throughput pallet                        $         28.40           $   27.45                      3.5  %

Number of non-same store sites(3)                                  77                  13                         n/a

Non-identical rental and storage:

Economic occupancy(1)
Average economic occupied pallets                               1,129                 185                    509.0  %
Economic occupancy percentage                                    75.9   %            63.3  %                 1260 bps

Different warehouse rent and storage revenue per occupied economic pallet

                                       $        164.21           $  171.00                     (4.0) %
Constant currency non-same store rent and storage
revenues per economic occupied pallet                 $        159.27           $  171.00                     (6.9) %

Physical occupancy(2)
Average physical occupied pallets                               1,105                 176                    525.9  %
Average physical pallet positions                               1,488                 293                    407.9
Physical occupancy percentage                                    74.2   %            60.2  %                 1400 bps

Different warehouse rent and storage revenue per physical pallet occupied

                                       $        167.84           $  179.65                     (6.6) %
Constant currency non-same store rent and storage
revenues per physical occupied pallet                 $        162.79           $  179.65                     (9.4) %

Non-same store warehouse services:
Throughput pallets (in thousands)                               7,786               1,286                    505.3  %
Non-same store warehouse services revenues per
throughput pallet                                     $         32.97           $   23.46                     40.6  %

Constant Currency Warehouse Warehouse Services Revenue by Debit Pallet

                        $         32.16           $   23.46                     37.1  %



(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 77 includes one recently leased warehouse
in Australia, 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, 46 warehouses acquired through the Agro
acquisition on December 30, 2020, eight warehouses acquired through the Hall's
acquisition on November 2, 2020, three warehouses acquired through the Casper's
and AM-C warehouse acquisitions on August 31, 2020 and ten legacy facilities.
During the third quarter of 2021, a leased facility from the Liberty Freezers
acquisition was exited upon expiration of the lease. The results of these
acquisitions are reflected in the results above since date of ownership.
Economic occupancy at our same stores was 76.2% for the nine months ended
September 30, 2021, a decrease of 393 basis points compared to 80.1% for the
nine months ended September 30, 2020. Storage levels were lower than prior year
levels due to ongoing supply chain disruption as a result of the COVID-19
pandemic, as well as food manufacturers producing at less than full capacity. As
such, our customers' existing inventories have continued to be drawn down to
support steady consumer demand. Additionally, recent acquisitions came into the
same store pool during the first quarter of 2021 which have a lower percentage
of fixed commitment revenue compared to our legacy same stores. Our third
quarter 2020 economic occupancy at our same stores was 856 basis points lower
than our corresponding average physical occupancy of 67.6%. The decrease of 582
basis points in average physical occupancy compared to 73.4% for the nine months
ended September 30, 2020 was driven by supply chain fluctuations caused by the
COVID-19 pandemic. Same store rent and storage revenues per economic occupied
pallet increased 4.1% period-over-period, primarily driven by improvements in
our commercial terms and contractual rate escalations. On a constant currency
basis, our same store rent and storage revenues per occupied pallet increased
3.3% period-over-period.
Throughput pallets at our same stores were 21.8 million pallets for the nine
months ended September 30, 2021, a decrease of 3.3% from the nine months ended
September 30, 2020. This decrease was the result of the COVID-19 related impacts
in various sectors and commodities, and was primarily driven by the
unprecedented surge in demand in retail during the first half of 2020. As food
manufacturers production has not reached full pre-pandemic capacity, throughput
has been impacted, with modest improvement during the second quarter of 2021.
Food manufacturers have been unable to rebuild holdings in the supply chain due
to challenges in the labor market. Same store warehouse services revenues per
throughput pallet increased 5.5% period-over-period, as a result of a more
favorable customer mix, contractual rate escalations and an increase in higher
priced value-added services within the retail sector such as case-picking, blast
freezing and repackaging and contractual rate escalations, paired with favorable
foreign currency translation as previously discussed. On a constant currency
basis, our same store services revenues per throughput pallet increased 3.5%
from the nine months ended September 30, 2020.

Third-Party Managed Segment
The following table presents the operating results of our third-party managed
segment for the nine months ended September 30, 2021 and 2020.
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                                                    Nine Months Ended September 30,                                    Change
                                                             2021 constant                                                       Constant
                                         2021 actual          currency(1)           2020 actual            Actual                currency
Number of managed sites                          9                                         11                      n/a                    n/a
                                                         (Dollars in thousands)
Third-party managed revenues            $  233,027          $   231,211            $  213,213                   9.3  %                 8.4  %
Third-party managed cost of operations     222,401              220,895               202,752                   9.7  %                 8.9  %
Third-party managed segment
contribution                            $   10,626          $    10,316            $   10,461                   1.6  %                (1.4) %

Third-party managed margin                     4.6  %               4.5    %              4.9  %               -35 bps                -44 bps

(1) The adjustments of our we GAAP operating results to calculate our operating results at constant exchange rates are the effect of changes in exchange rates from the prior comparable period.

Third-party managed revenues were $233.0 million for the nine months ended
September 30, 2021, an increase of $19.8 million, or 9.3%, compared to
$213.2 million for the nine months ended September 30, 2020. On a constant
currency basis, third-party managed revenues were $231.2 million for the nine
months ended September 30, 2021, an increase of $18.0 million, or 8.4%, from the
nine months ended September 30, 2020. This increase was a result of higher
pass-through labor expenses in our domestic and foreign managed operations due
to the consumer demand shift to retail, higher business volume from Australia
managed and paired with its favorable impact of foreign currency translation,
partially offset by the exit of two Canadian managed sites during the second
half of 2020.

Third-party managed cost of operations was $222.4 million for the nine months
ended September 30, 2021, an increase of $19.6 million, or 9.7%, compared to
$202.8 million for the nine months ended September 30, 2020. On a constant
currency basis, third-party managed cost of operations was $220.9 million for
the nine months ended September 30, 2021, an increase of $18.1 million, or 8.9%,
from the nine months ended September 30, 2020. Third-party managed cost of
operations increased as a result of the revenue trends described above.
Third-party managed segment contribution (NOI) was $10.6 million for the nine
months ended September 30, 2021, an increase of $0.2 million, or 1.6%, compared
to $10.5 million for the nine months ended September 30, 2020. On a constant
currency basis, third-party managed segment contribution (NOI) was $10.3 million
for the nine months ended September 30, 2021, a decrease of $0.1 million, or
1.4%.
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Transport sector

The following table presents the operating results of our transportation segment for the nine-month period ended. September 30, 2021 and 2020.

                                                      Nine Months Ended September 30,                                    Change
                                                               2021 constant                                                        Constant
                                           2021 actual          currency(1)           2020 actual             Actual                currency
                                                           (Dollars in thousands)
Transportation revenues                   $  234,051          $   232,332            $  104,874                  123.2  %               121.5  %

Total transportation cost of operations      211,847              210,770                91,110                  132.5  %               131.3  %

Contribution of the Transport segment (NOI) $ 22,204 $ 21,562

         $   13,764                   61.3  %                56.7  %

Transportation margin                            9.5  %               9.3    %             13.1  %               -364 bps               -384 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 $234.1 million for the nine months ended
September 30, 2021, an increase of $129.2 million, or 123.2%, compared to $104.9
million for the nine months ended September 30, 2020. The increase was primarily
due to the revenue associated with transportation operations from the Hall's
acquisition, which closed on November 2, 2020, the Agro acquisition, which
closed on December 30, 2020 and to a much lesser extent the KMT Brrr!
acquisition which closed in early May 2021 and the ColdCo acquisition which
closed on August 2, 2021. Furthermore, this is offset by the net decrease in
revenue from the rationalization of certain domestic market operations. On a
constant currency basis, transportation revenues were $232.3 million for the
nine months ended September 30, 2021, an increase of $127.5 million, or 121.5%,
from the nine months ended September 30, 2020.
Transportation cost of operations was $211.8 million for the nine months ended
September 30, 2021, an increase of $120.7 million, or 132.5%, compared to $91.1
million for the nine months ended September 30, 2020. On a constant currency
basis, transportation cost of operations was $210.8 million for the nine months
ended September 30, 2021, an increase of $119.7 million, or 131.3%, from the
nine months ended September 30, 2020. The increase was driven by the
acquisitions mentioned above and due to a reduction in market capacity due to
the COVID-19 pandemic, which has caused an increase in carrier fees.
Additionally, this is partially offset by the net decrease of costs from the
exit of certain domestic market operations.
Transportation segment contribution (NOI) was $22.2 million for the nine months
ended September 30, 2021, an increase of $8.4 million compared to the nine
months ended September 30, 2020. Transportation segment margin decreased 364
basis points from the nine months ended September 30, 2020, to 9.5% from 13.1%.
On a constant currency basis, transportation segment contribution was $21.6
million for the nine months ended September 30, 2021, an increase of $7.8
million compared to the nine months ended September 30, 2020. The decrease in
margin was primarily due to the acquisition of lower-margin transportation
business compared to our legacy operations, coupled with higher carrier fees as
a result of the COVID-19 pandemic.

Other Consolidated Operating Expenses
Depreciation and amortization. Depreciation and amortization expense was
$232.2 million for the nine months ended September 30, 2021, an increase of
$74.7 million, or 47.4%, compared to $157.6 million for the nine months ended
September 30, 2020. This increase was primarily due to the acquisitions in late
2020 and 2021.
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Selling, general and administrative. Corporate-level selling, general and
administrative expenses were $133.1 million for the nine months ended
September 30, 2021, an increase of $27.9 million, or 26.5%, compared to
$105.2 million for the nine months ended September 30, 2020. Included in these
amounts are business development expenses attributable to new business pursuits,
supply chain solutions and underwriting, facility development, customer
on-boarding, and engineering and consulting services to support our customers in
the cold chain. We believe these costs are comparable to leasing costs for other
publicly-traded REITs. The increase was driven by costs assumed from the Agro
and Hall's acquisitions, net of synergies realized and higher third-party
professional fees, partially offset by lower bonus compensation expense in
connection with the short-term incentive plan, due to underperformance as
compared to budget.
Acquisition, litigation and other, net. Corporate-level acquisition, litigation
and other, net expenses were $31.0 million for the nine months ended
September 30, 2021, an increase of $21.2 million compared to the nine months
ended September 30, 2020. During the nine months ended September 30, 2021, we
incurred $22.9 million of acquisition related expenses primarily composed of
professional fees and integration related costs, including severance and
employee retention expenses, in connection with completed and potential
acquisitions, primarily related to the Agro acquisition. We also incurred
$3.5 million of ongoing costs related to the cyber event that occurred in late
2020. During the nine months ended September 30, 2020, we incurred $8.3 million
of acquisition related expenses primarily primarily composed of professional
fees and integration related costs in connection with completed and potential
acquisitions, primarily related to the recently announced Agro Merchants
Acquisition, and employee retention. Additionally, we incurred $1.0 million of
severance related to reduction in headcount as a result of the synergies from
acquisitions and realignment of our international operations during the nine
months ended September 30, 2020.
Impairment of long-lived assets. For the nine months ended September 30, 2021,
we recorded impairment charges totaling $3.3 million, of which $1.7 million
related to costs associated with development projects which management
determined it would no longer pursue, and a charge of $1.6 million for certain
software costs that were determined no longer usable. For the nine months ended
September 30, 2020, we recorded impairment charges of $6.3 million, which
included a $3.7 million impairment charge related to the anticipated sale of our
quarry business, which was subsequently completed on July 1, 2020, and an
impairment charge of $2.6 million related to the remaining net book value of
assets due to the exit of two leased managed facilities during 2020.
Gain from sale of real estate. For the nine months ended September 30, 2020, we
recorded a $21.4 million gain from the sale of real estate. On January 31, 2020,
we received official notice from a customer to exercise its contractual call
option to purchase land from us in Sydney, Australia, which we previously
purchased for future development. We received sale proceeds upon exercise of the
call option during the first quarter of 2020, resulting in a $2.5 million gain
on sale. Additionally, on June 19, 2020, we completed the sale of a facility in
our Warehouse segment, and began to transition the business to other nearby
facilities, resulting in a $19.4 million gain from sale of real estate.
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Other income and expenses The following table presents the other items of income and expenses for the nine months ended. September 30, 2021 and 2020.

                                                       Nine Months Ended September 30,              Change
                                                           2021                2020                   %
Other (expense) income:                                     (Dollars in thousands)
Interest expense                                       $  (77,838)         $ (70,114)                    11.0  %
Loss on debt extinguishment, modifications and
termination of derivative instruments                  $   (5,051)         $    (781)                        n/r
Other, net                                             $     (147)         $     232                   (163.4) %


n/r: not relevant
Interest expense. Interest expense was $77.8 million for the nine months ended
September 30, 2021, an increase of $7.7 million, or 11.0%, compared to
$70.1 million for the nine months ended September 30, 2020. The increase was
primarily due to the issuance of the Series D and Series E Senior Unsecured
Notes in December 2020. This was partially offset by the decrease in interest
expense on our Senior Unsecured Term Loan A Facility due to the early principal
repayment of $100.0 million and $200.0 million in December 2020 and January
2021, respectively. The effective interest rate of our outstanding debt has
decreased from 4.19% for the nine months ended September 30, 2020 to 3.19% for
the nine months ended September 30, 2021, however, outstanding principal has
increased from $1.8 billion as of September 30, 2020 to $2.7 billion as of
September 30, 2021.
Loss on debt extinguishment, modifications and termination of derivative
instruments. Loss on debt extinguishment, modifications, and termination of
derivative instruments of $5.1 million for the nine months ended September 30,
2021 was primarily driven by the early repayment of $200 million of principal on
the Senior Unsecured Term Loan A Facility, which resulted in a charge of
$2.9 million for the write-off of unamortized deferred financing costs.
Additionally, we recorded a charge of $2.1 million for the amortization of fees
paid for the termination of interest rate swaps during 2020. During the first
quarter of 2020 we refinanced our Senior Unsecured Credit Facility, which
resulted in the write-off of certain unamortized deferred financing costs.

Income Tax Expense
Income tax expense for the nine months ended September 30, 2021 was
$8.0 million, a decrease of $5.5 million when compared to $2.5 million for the
nine months ended September 30, 2020. The change in income tax expense was
primarily attributable to the tax effects of the rate change from 19% to 25% in
the United Kingdom, enacted during the second quarter of 2021, for which we
recorded deferred income tax expense of $11.7 million and a decrease in our
valuation allowance for which we recorded a deferred tax benefit of $7.9 million
attributable to recent acquisitions. The remainder was primarily attributable to
losses generated from our foreign operations which did not occur during the nine
months ended September 30, 2020.
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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, real estate asset impairment and our share
of reconciling items for partially owned entities. We believe that FFO is helpful to
investors as a supplemental performance measure because it excludes the effect of
depreciation, amortization and gains or losses from sales of real estate, all of which are
based on historical costs, which implicitly assumes that the value of real estate diminishes
predictably over time. Since real estate values instead have historically risen or fallen
with market conditions, FFO can facilitate comparisons of operating performance between
periods and among other equity REITs.
We calculate core funds from operations, or Core FFO, as FFO adjusted for the effects of
gain or loss on the sale of non-real estate assets, non-core asset impairment, acquisition,
litigation and other, net, share-based compensation expense for the IPO retention grants,
loss on debt extinguishment, modifications and termination of derivative instruments and
foreign currency exchange loss. We also adjust for the impact of Core FFO attributable to
partially owned entities. We have elected to reflect our share of Core FFO attributable to
partially owned entities since the Brazil joint ventures are strategic partnerships, which
we continue to actively participate in on an ongoing basis. The previous joint venture, the
China JV, was considered for disposition during the periods presented. We believe that Core
FFO is helpful to investors as a supplemental performance measure because it excludes the
effects of certain items which can create significant earnings volatility, but which do not
directly relate to our core business operations. We believe Core FFO can facilitate
comparisons of operating performance between periods, while also providing a more meaningful
predictor of future earnings potential.
However, because FFO and Core FFO add back real estate depreciation and amortization and do
not capture the level of maintenance capital expenditures necessary to maintain the
operating performance of our properties, both of which have material economic impacts on our
results from operations, we believe the utility of FFO and Core FFO as a measure of our
performance may be limited.
We calculate adjusted funds from operations, or Adjusted FFO, as Core FFO adjusted for the
effects of amortization of deferred financing costs, pension withdrawal liability and above
or below market leases, straight-line net rent, provision or benefit from deferred income
taxes, share-based compensation expense from grants of stock options and restricted stock
units under our equity incentive plans, excluding IPO grants, non-real estate depreciation
and amortization, non-real estate asset impairment 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 Income (Loss) to NAREIT FFO, 

Base FFO and Adjusted FFO

                                                       (in thousands)
                                                     Three Months Ended September 30,       Nine Months Ended September 30,
                                                         2021                2020               2021                2020
Net income (loss)                                    $    5,308          $  12,374          $  (22,327)         $  68,547
Adjustments:
Real estate related depreciation                         48,217             36,289             145,368            107,289
Net loss (gain) on sale of real estate, net of
withholding taxes                                             -                427                   -            (21,083)
Net (gain) loss on asset disposals                           (1)             1,160                 (53)             1,157
Impairment charges on certain real estate assets            224                  -               1,752              3,181

Our share of reconciling items related to partially owned entities

                                              463                111               1,590                267
NAREIT Funds from operations                             54,211             50,361             126,330            159,358

Adjustments:

Net gain on sale of non-real estate assets                 (171)              (100)               (594)              (517)
Non-core asset impairment                                     -              2,615                   -              3,101

Acquisition, litigation and other, net                    6,338              5,282              31,011              9,771
Share-based compensation expense, IPO grants                  -                196                 163                772

Loss on debt extinguishment, modifications and
termination of derivative instruments                       627                  -               5,051                781

Foreign currency exchange loss                              349                196                 316                373

Our share of reconciling items related to partially owned entities

                                              122                 76                 365                155
Core FFO applicable to common shareholders               61,476             58,626             162,642            173,794

Adjustments:

Amortization of deferred financing costs and pension withdrawal liability

                                      1,088              1,203               3,321              3,945
Non-real estate asset impairment                          1,560                  -               1,560                  -
Amortization of below/above market leases                 1,017                 39               1,418                115
Straight-line net rent                                      411                (87)                 86               (304)
Deferred income taxes (benefit) expense                  (3,562)            (1,284)              1,004             (4,353)
Share-based compensation expense, excluding IPO
grants                                                    4,291              4,373              14,625             12,568
Non-real estate depreciation and amortization            22,352             17,280              86,871             50,283

Maintenance capital expenditures (a)                    (18,938)           (17,534)            (55,157)           (45,256)

Our share of reconciling items related to partially owned entities

                                             (100)               125                 889                203

Adjusted FFO applicable to common shareholders $ 69,595 $ 62,741 $ 217,259 $ 190,995


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


•these measures do not reflect our historical or future cash requirements for
maintenance capital expenditures or growth and expansion capital expenditures;
•these measures do not reflect changes in, or cash requirements for, our working
capital needs;
•these measures do not reflect the interest expense, or the cash requirements
necessary to service interest or principal payments, on our indebtedness;
•these measures do not reflect our tax expense or the cash requirements to pay
our taxes; and
•although depreciation, depletion and amortization are non-cash charges, the
assets being depreciated, depleted and amortized will often have to be replaced
in the future and these measures do not reflect any cash requirements for such
replacements.
We use EBITDAre and Core EBITDA as measures of our operating performance and not as
measures of liquidity. The table below reconciles EBITDAre and Core EBITDA to net (loss)
income, which is the most directly comparable financial measure calculated in accordance
with U.S. GAAP.


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                           Reconciliation of Net (Loss) Income to NAREIT 

EBITDAre and Core EBITDA

                                                       (In thousands)
                                                      Three Months Ended September 30,       Nine Months Ended September 30,
                                                          2021                2020               2021                2020
Net income (loss)                                     $    5,308          $  12,374          $  (22,327)         $  68,547
Adjustments:
Depreciation and amortization                             70,569             53,569             232,239            157,572
Interest expense                                          25,303             23,066              77,838             70,114
Income tax (benefit) expense                                (226)               819               7,957              2,105
Net loss (gain) on sale of real estate, net of
withholding taxes                                              -                427                   -            (21,083)
Adjustment to reflect share of EBITDAre of partially
owned entities                                             1,854                293               4,288                590
NAREIT EBITDAre                                       $  102,808          $  90,548          $  299,995          $ 277,845
Adjustments:
Acquisition, litigation and other, net                     6,338              5,282              31,011              9,771

Loss from investments in partially owned entities            490                 98               1,251                254
Impairment of long-lived assets                            1,784              2,615               3,312              6,282
Loss on foreign currency exchange                            349                196                 316                373
Share-based compensation expense                           4,291              4,569              14,788             13,340
Loss on debt extinguishment, modifications and
termination of derivative instruments                        627                  -               5,051                781
Net (gain) loss on sale of non-real estate assets           (172)             1,060                (647)               641

Reduction in EBITDAre of partially owned entities (1,854)

   (293)             (4,288)              (590)
Core EBITDA                                           $  114,661          $ 104,075          $  350,789          $ 308,697


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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 shareholders will include:

•current cash balances;
•cash flows from operations;
•our 2020 Senior Unsecured Revolving Credit Facility;
•our outstanding equity forward sale agreements;
•our ATM Equity Programs and related forward sale agreements; and
•other forms of debt financings and equity offerings.
We expect that our funding sources as noted above are adequate and will continue
to be adequate to meet our short-term liquidity requirements and capital
commitments. These liquidity requirements and capital commitments include:

•operating activities and overall working capital;
•capital expenditures;
•debt service obligations; and
•quarterly shareholder distributions.
We expect to utilize the same sources of capital we will rely on to meet our
short-term liquidity requirements to also meet our long-term liquidity
requirements, which include funding our operating activities, our debt service
obligations and shareholder distributions, and our future development and
acquisition activities. As previously discussed, the COVID-19 pandemic has
created disruption among several industries. The outbreak of COVID-19 has
significantly adversely impacted global economic activity and has contributed to
significant volatility and negative pressure in financial markets. While we did
not incur significant disruption during the nine months ended September 30, 2021
from the COVID-19 pandemic, we are unable to predict the impact that the
pandemic may have on the sources of capital upon which we rely.
We are a well-known seasoned issuer with an effective shelf registration
statement filed on April 16, 2020, which registered an indeterminate amount of
common shares, preferred shares, depositary shares and warrants, as well as debt
securities of the Operating Partnership, which will be fully and unconditionally
guaranteed by us. As circumstances warrant, we may issue equity securities from
time to time on an opportunistic basis, dependent upon market conditions and
available pricing. We may use the proceeds for general corporate purposes, which
may include the repayment of outstanding indebtedness, the funding of
development, expansion and acquisition opportunities and to increase working
capital.

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On May 10, 2021, we entered into an equity distribution agreement pursuant to
which we may sell, from time to time, up to an aggregate sales price of
$900.0 million of our common shares through an ATM equity program (the "2021 ATM
Equity Program"). Sales of our common shares made pursuant to the 2021 ATM
Equity Program may be made in negotiated transactions or transactions that are
deemed to be "at the market" offerings as defined in Rule 415 under the
Securities Act, including sales made directly on the NYSE, or sales made to or
through a market maker other than on an exchange, or as otherwise agreed between
the applicable Agent and us. Sales may also be made on a forward basis pursuant
to separate forward sale agreements. We intend to use the net proceeds from
sales of our common shares pursuant to the 2021 ATM Equity Program for general
corporate purposes, which may include funding acquisitions and development
projects.
During the nine months ended September 30, 2021, there were 2,332,846 common
shares sold under the 2021 ATM Equity Program under forward sale agreements
which must be settled by July 1, 2022 for gross proceeds of $90.6 million. After
considering the forward sale agreements entered into during the nine months
ended September 30, 2021, we had approximately $809.4 million availability
remaining for distribution under the 2021 ATM Equity Program as of September 30,
2021.
Security Interests in Customers' Products
By operation of law and in accordance with our customer contracts (other than
leases), we typically receive warehouseman's liens on products held in our
warehouses to secure customer payments. Such liens permit us to take control of
the products and sell them to third parties in order to recover any monies
receivable on a delinquent account, but such products may be perishable or
otherwise not readily 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 $0.7 million and $0.1 million for the three months
ended September 30, 2021 and 2020, respectively, and $2.5 million and
$1.6 million for the nine months ended September 30, 2021 and 2020,
respectively. As of September 30, 2021, we maintained bad debt allowances of
approximately $17.0 million, which we believed to be adequate.
Dividends and Distributions
We are required to distribute 90% of our taxable income (excluding capital
gains) on an annual basis in order to continue to qualify as a REIT for federal
income tax purposes. Accordingly, we intend to make, but are not contractually
bound to make, regular quarterly distributions to shareholders from cash flows
from our operating activities. While historically we have satisfied this
distribution requirement by making cash distributions to our shareholders, we
may choose to satisfy this requirement by making distributions of cash or other
property. All such distributions are at the discretion of our Board of Trustees.
We consider market factors and our performance in addition to REIT requirements
in determining distribution levels. We have distributed at least 100% of our
taxable income annually since inception to minimize corporate-level federal
income taxes. Amounts accumulated for distribution to shareholders are invested
primarily in interest-bearing accounts and short-term interest-bearing
securities, which are consistent with our intention to maintain our status as a
REIT.
As a result of this distribution requirement, we cannot rely on retained
earnings to fund our ongoing operations to the same extent that other companies
which are not REITs can. We may need to continue to raise capital in the debt
and equity markets to fund our working capital needs, as well as potential
developments in new or existing properties, acquisitions or investments in
existing or newly created joint ventures. In addition, we may be required
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to use borrowings under our revolving credit facility, if necessary, to meet
REIT distribution requirements and maintain our REIT status.
For further information regarding dividends and distributions, see Note 10 to
our condensed consolidated financial statements included in this Quarterly
Report on Form 10-Q.
Outstanding Indebtedness
The following table summarizes our outstanding indebtedness as of September 30,
2021:
Debt Summary:
Fixed rate                                         $ 2,089,915
Variable rate - unhedged                               627,788
Total outstanding indebtedness                       2,717,703

Percent of total debt:
Fixed rate                                               76.90  %
Variable rate                                            23.10  %

Effective interest rate at September 30, 2021 3.09%



As of September 30, 2021, we had approximately $2.7 billion of outstanding debt
as set forth in the table above, which excludes deferred financing costs.
The variable rate debt shown above bears interest at interest rates based on
various one-month LIBOR, CDOR, and SONIA rates, depending on the respective
agreement governing the debt, including our global revolving credit facilities.
As of September 30, 2021, our debt had a weighted average term to initial
maturity of approximately 6.7 years, assuming exercise of extension options.
For further information regarding outstanding indebtedness, please see Note 6 to
our condensed consolidated financial statements included in this Quarterly
Report on Form 10-Q.
Credit Ratings
Our capital structure and financial practices have earned us investment grade
credit ratings from three nationally recognized credit rating agencies. We have
investment grade ratings of BBB with a stable outlook from Fitch, BBB with an
Under Review with Positive Implications outlook from DBRS Morningstar, and an
investment grade rating of Baa3 with a stable outlook from Moody's. These credit
ratings are important to our ability to issue debt at favorable rates of
interest, among other terms. Refer to our risk factor "Adverse changes in our
credit ratings could negatively impact our financing activity" in our Annual
Report on Form 10-K.
Maintenance Capital Expenditures and Repair and Maintenance Expenses
We utilize a strategic and preventative approach to maintenance capital
expenditures and repair and maintenance expenses to maintain the high quality
and operational efficiency of our warehouses and ensure that our warehouses meet
the "mission-critical" role they serve in the cold chain.
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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 nine months ended September 30, 2021 and
2020.
                                      Three Months Ended September 30,             Nine Months Ended September 30,
                                          2021                 2020                   2021                   2020
                                       (In thousands, except per cubic
                                                foot amounts)
Real estate                          $     14,497          $   15,896          $         45,398          $   39,425
Personal property                           1,231                 906                     4,441               3,967
Information technology                      3,210                 732                     5,318               1,864

Maintenance investments (1) $ 18,938 $ 17,534

$ 55,157 $ 45,256

Maintenance capital expenditures per
cubic foot                           $      0.013          $    0.016       

$ 0.038 $ 0.041

(1) Excludes $ 9.1 million capital expenditures to maintain deferred acquisitions incurred for the nine-month period ended September 30, 2021. Repair and maintenance costs

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
nine months ended September 30, 2021 and 2020.
                                        Three Months Ended September 30,               Nine Months Ended September 30,
                                            2021                   2020                   2021                   2020
                                                         (In thousands, except per cubic foot amounts)
Real estate                          $          6,435          $    7,333          $         20,760          $   21,278
Personal property                              15,655               7,368                    40,731              22,766

Repair and maintenance costs $ 22,090 $ 14,701

$ 61,491 $ 44,044

Repair and maintenance expenses per
cubic foot                           $          0.015          $    0.013          $          0.042          $    0.040


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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
The acquisitions completed during the nine months ended September 30, 2021
relate to Bowman Stores, ColdCo, KMT Brrr!, Liberty Freezers and Newark Facility
Management. The acquisitions completed during the nine months ended September
30, 2020 relate to AM-C Warehouses, MHW, Caspers, Newport and Nova Cold. Refer
to Notes 2 and 3 of the Condensed Consolidated Financial Statements and our 2020
Form 10-K for details of the purchase price allocation for each acquisition.
Expansion and development
The expansion and development expenditures for the nine months ended September
30, 2021 are primarily driven by $88.5 million related to our two
fully-automated, build-to-suit, development sites in Connecticut and
Pennsylvania, $17.3 million related to the Atlanta major markets strategy
project (Phase 1) and $14.1 million related to Phase 2, $33.4 million related to
our Russellville expansion, $8.1 million related to our Calgary, Canada
expansion, $19.6 million related to the Auckland, New Zealand expansion project,
$12.0 million million related to the Dunkirk, NY development and $3.7 million in
our Dublin expansion. The Atlanta Phase 1 and Auckland projects were
substantially completed during the second quarter of 2021, with the remaining
spend to be incurred within the next six months. As a result of the Agro
Acquisition on December 30, 2020, we acquired an expansion project in Lurgan,
Northern Ireland, which was completed during the second quarter of 2021. We
incurred $4.0 million during 2021 for this expansion project.
Expansion and development initiatives also include $11.7 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 $25.9 million for probable future expansion
or development projects.
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The following table sets forth our acquisition, expansion and development
capital expenditures for the three and nine months ended September 30, 2021 and
2020.
                                         Three Months Ended September 30,            Nine Months Ended September 30,
                                             2021                2020                   2021                   2020
                                                                         (In thousands)
Acquisitions, net of cash acquired and
adjustments                             $   400,987          $  108,040          $        616,316          $  423,708
Expansion and development initiatives        75,960              59,806                   243,072             174,585
Information technology                        1,682               2,189                     5,255               5,169
Growth and expansion capital
expenditures                            $   478,629          $  170,035          $        864,643          $  603,462



Historical Cash Flows
                                                   Nine Months Ended September 30,
                                                        2021                     2020
                                                           (In thousands)
Net cash provided by operating activities   $        164,319                 $  227,198
Net cash used in investing activities       $       (945,491)                $ (611,719)
Net cash provided by financing activities   $        315,269                

$ 323,317


Operating Activities
For the nine months ended September 30, 2021, our net cash provided by operating
activities was $164.3 million, a decrease of $62.9 million, compared to $227.2
million for the nine months ended September 30, 2020. The decrease is primarily
due to higher acquisition and integration related costs and selling, general and
administrative expense. This was partially offset by higher segment contribution
as a result of our recent acquisitions.
Investing Activities

Our net cash used in investing activities was $945.5 million for the nine months
ended September 30, 2021 compared to $611.7 million for the nine months ended
September 30, 2020. Cash used in connection with business combinations during
2021 was $616.3 million and related to the Bowman, ColdCo, KMT Brrr!, Liberty
and Newark Facility Management acquisitions. Additions to property, buildings
and equipment were $313.2 million, reflecting maintenance capital expenditures
and investments in the Ahold, Atlanta, New Zealand, Calgary and Russellville
expansion and development projects. Additionally, we invested $6.3 million in
the SuperFrio joint venture for the nine months ended September 30, 2021, and
paid $11.6 million to purchase the noncontrolling interest holders share in the
Chilean business, which we now wholly own.
Net cash used in investing activities of $611.7 million for the nine months
ended September 30, 2020 primarily related to cash used for the acquisitions of
AM-C, Newport and Nova Cold totaling $398.7 million, cash used for acquisitions
of property, buildings and equipment accounted for as an asset acquisition of
$25.5 million related to the Caspers acquisition, cash used for additions to
property, buildings and equipment of $241.6 million reflecting maintenance
capital expenditures and investments in the Atlanta, Connecticut, Pennsylvania,
New Zealand and Savannah expansion and development projects, and our initial
investment of $26.2 million in the SuperFrio joint venture. These investments
were offset by $77.4 million in proceeds from the sale of land and property,
buildings and equipment related to the sale of land in Sydney, the Quarry
segment and the sale of the Boston facility.
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Financing Activities
Net cash provided by financing activities was $315.3 million for the nine months
ended September 30, 2021 compared to $323.3 million for the nine months ended
September 30, 2020. Cash provided by financing activities for the current period
primarily consisted of $420.2 million net proceeds from equity forward contracts
settled during the period upon the issuance of common shares, $590.8 million in
proceeds from our revolving line of credit, and $5.2 million of proceeds
received upon exercise of stock options, offset by cash outflows of $280.0
million in repayments on the revolving line of credit, $205.2 million for
repayments on term loan and mortgage notes, $168.5 million of quarterly dividend
distributions paid, $27.5 million of financing lease payments, and $15.8 million
in payment of withholding taxes related to share-based payment arrangements.
Net cash provided by financing activities was $323.3 million for the nine months
ended September 30, 2020 and primarily consisted of $340.6 million net proceeds
from equity offerings under our prior ATM equity program and the April 2019
equity forward contract settled in January 2020, the $177.1 million received in
connection with the refinancing of our Senior Unsecured Term Loan and $186.8
million in proceeds from our revolving credit facility. These cash inflows were
partially offset by $177.1 million of repayment on the revolving credit facility
using the proceeds from our refinancing of our Senior Unsecured Term Loan,
$124.0 million of quarterly dividend distributions paid, $55.0 million of
repayments on our term loan and mortgage notes and $8.3 million of payments
related to debt issuance costs.
CRITICAL ACCOUNTING POLICIES UPDATE
See Note 2 to our condensed consolidated financial statements included in this
Quarterly Report on Form 10-Q.

NEW ACCOUNTING POSITIONS

See note 2 of our condensed consolidated financial statements included in this quarterly report on Form 10-Q.

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