Americold - Why is it a REIT?
Hi - curious to hear some more informed opinions. I cam across Americold & I was doing some very light DD. I am not a RE expert at all & I was curious why Americold was formed as a REIT. As most of its business is operating its assets, what are the benefits of the structure?
Is it valued as a RE play or as an operating business? It trades at 25x its EBITDA is believe. Why would Americold want to be a REIT vs. a regular operating co.?
Would love to hear from folks much smarter than me weigh in on what they are trying to accomplish
Thanks!
bump
REIT is just an IRS tax classification, if a firm qualifies (i.e... meets the REIT rules), then it gets taxed as a passthrough entity (meaning no double taxation, all passes to shareholders without paying any corporate income tax). Nothing more to it or implied by being a "REIT".
Thanks guys. That is clear. I had no idea if there were additional structures in place that created the difference.
It trades at 25x its EBITDA is believe. Why would Americold want to be a REIT vs. a regular operating co.?
Well there's your answer. Not so different from the Opco / Propco structures of yesteryear. A nice bit of financial alchemy that transforms corporate earnings into yieldy fixed income cashflows, allowing a multiple uplift (flip your EBITDA multiple to a rental yield) and greater debt capacity.
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