Provender Partners of Newport Beach, Calif., and an affiliate of Cerberus Capital Management L.P. have formed a joint venture with the mission of assembling “a multibillion-dollar portfolio of cold storage processing facilities in the U.S.”
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The joint venture reportedly will seek “a broad range of acquisition opportunities in all U.S. markets.” Since Provender’s founding in 2014, the company has acquired nearly $500 million of refrigerated real estate totaling 5 million square feet. For its part, Cerberus Real Estate has deployed about $29 billion of equity in more than 575 diverse transactions around the world.
According to Neil Johnson, founder & CEO of Provender, the partnership will broaden the company’s ability to help farmers and distributors as global conditions continue to impact the food supply chain.
Tom Wagner, head of North American real estate at Cerberus, said in prepared remarks that the cold storage industrial segment plays an integral role in the U.S. food supply chain and there are strong opportunities to build on the market dynamics.
Provender intends to use the venture to, among other things, expand is strategic Break Bulk Freezer Facilities program, which enables farmers and food processors to pivot between bulk and individual packaging. This, according to Provender, helps to eliminate waste, save potentially billions of dollars, and provide farmers with alternative solutions for their products during times when market conditions are subject to disruptions.
Provender describes itself as the premier U.S. investor in food-related industrial buildings, as well as the only investor that is 100 percent dedicated to such assets.
Cold storage not cooling down
Barely two months ago, Provender nailed down a seven-year, nearly $26 million lease for 363,872 square feet at its Mid Atlantic Food Center in Severn, Md. The tenant is Nash Finch Co., a grocery wholesaler/distributor owned by SpartanNash Co., of Byron Center, Mich.
A mid-year report from CBRE called cold storage “one of the most sought-after asset classes for opportunistic investors and increasingly institutional capital,” driven by growth in online food sales, especially in perishables and refrigerated and frozen foods.
CBRE also acknowledged, however, that the niche has its downsides, including high capital and operating expenses, the risk that reduced restaurant activity in the COVID-19 era could undercut demand, and the need for specialized knowledge of the sector.