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Oxford makes $360M cold storage investment

Oxford Properties Group has made a $360 million investment into Lineage Logistics, one of the world’s largest providers of temperature-controlled logistics solutions.

The transaction will help fund Lineage’s growth initiatives, including new acquisitions and organic expansions to provide added value to customers, and marks Oxford’s first investment in the cold storage logistics sector as it continues to diversify its real estate holdings.

“Our investment into Lineage is part of our strategy to capitalize on the increasing demand for infrastructure that serves the digital economy,” commented Kevin Egan, Head of Investments, North America, at Oxford Properties

KEVIN EGAN

“The cold storage sector has highly favorable tailwinds via a combination of population growth, a growing consumer preference for fresh food and the continued adoption of e-commerce in the grocery sector, which has accelerated due to the current pandemic. As a result, the value of the cold storage market is forecast to grow 13 percent annually reaching $275 billion by 2024.”

“The Lineage management team have transformed the company into the best-in-class operator and global market leader. Our investment demonstrates our confidence in its team, the Lineage platform and the sector as a whole,” added Egan.

Lineage owns and operates over 1.9 billion cubic feet and 56 million square feet of temperature-controlled capacity across more than 320 facilities in 13 countries, spanning North America, South America, Europe, Asia, Australia and New Zealand. It owns and operates approximately eight percent of the total global cold storage market, 70 percent more than its closest competitor.

The company, founded by Bay Grove Capital, was established in 2008 with a single cold storage facility in Seattle, Washington.

With grocers and the food industry grappling with the supply chain requirements of feeding growing cities, by 2019 the company had established itself as the world’s largest temperature-controlled logistics company, through a series of strategic acquisitions and organic growth.

As a result of its investment, Michael Turner, Oxford’s President will be appointed to the Lineage board of Directors.

“This significant investment is validation of Lineage’s business model, our innovative strategy and our plans to continue expanding our footprint as the world’s largest temperature-controlled warehousing and logistics company,” said Greg Lehmkuhl, President and CEO of Lineage.

“As we reimagine the food supply chain and execute on our company purpose to eliminate waste and help feed the world, we remain focused on driving value for our more than 5,000 customers by operating globally and deploying industry-changing technologies to create efficiencies across our 320 facilities.”

Increasing its exposure to the global logistics market represents one of Oxford’s highest conviction investment strategies.

Since the start of 2018, Oxford has built and invested in best-in-class logistics platforms across the globe to substantially increase its weighting to the sector.

At the start of 2018, logistics represented only four percent of Oxford’s assets; today, Oxford is rapidly closing in on its ambition to have approximately a third of its deployed equity in the asset class.

In July, Oxford made a follow-on investment in ESR, a leading APAC logistics real estate provider of US493 million and became its largest institutional shareholder. Oxford was a cornerstone investor in ESR’s IPO to the Hong Kong Stock Exchange in November 2019.

Added Egan, “The cold storage industry is a sector that is poised for growth and demonstrates great resilience and defensive attributes in this current climate. Our investment will provide access to the sector’s market leader and supports its management team to execute its growth strategy.”

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