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!
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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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