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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)

☑ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
| For the quarterly period ended | September 30, 2020

or

☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
| For the transition period from to ,

Commission File Number: 001-34723
AMERICOLD REALTY TRUST
(Exact name of registrant as specified in its charter)

Maryland | (Americold Realty Trust) |  | 93-0295215
(State or other jurisdiction of incorporation or organization) |  | (IRS Employer Identification Number)
10 Glenlake Parkway, | Suite 600, South Tower |  |
Atlanta | Georgia |  | 30328
(Address of principal executive offices) |  | (Zip Code)

(678) 441-1400
(Registrant’s telephone number, including area code)
_________________________

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Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. |
Yes | x | No | ¨ |  |  |  |  |  |  |  |  |
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter periods that the registrant was required to submit such files). |
Yes | x | No | ¨ |  |  |  |  |  |  |  |  |
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act (check one): |
x | Large accelerated filer | ☐ | Accelerated filer |  |  |  |  |
☐ | Non-accelerated filer | ☐ | Smaller reporting company |  |  |  |  |
|  |  |  |  | ☐ | Emerging growth company |  |  |  |  |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. |
Yes | ¨ | No | ¨ |  |  |  |  |  |  |  |  |  |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934) |
Yes | ☐ | No | x |  |  |  |  |  |  |  |  |  |

Securities registered pursuant to Section 12(b) of the Act:

Title of each class |  | Trading symbol(s) |  | Name of each exchange on which registered
Common Shares of Beneficial Interest, $0.01 par value per share |  | COLD |  | New York Stock Exchange | (NYSE)

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class |  | Outstanding at November 4, 2020
Common Stock, $0.01 par value per share |  | 204,859,916

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TABLE OF CONTENTS |
| Page
PART I - FINANCIAL INFORMATION |
Item 1. Financial Statements | 4
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations | 61
Item 3. Quantitative and Qualitative Disclosures About Market Risk | 110
Item 4. Controls and Procedures | 110
PART II - OTHER INFORMATION |
Item 1. Legal Proceedings | 112
Item 1A. Risk Factors | 112
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds | 117
Item 3. Defaults Upon Senior Securities | 117
Item 4. Mine Safety Disclosures | 117
Item 5. Other Information | 117
Item 6. Exhibits | 118
SIGNATURES | 119

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains statements about future events and expectations that constitute forward-looking statements. Forward-looking statements are based on our beliefs, assumptions and expectations of our future financial and operating performance and growth plans, taking into account the information currently available to us. These statements are not statements of historical fact. Forward-looking statements involve risks and uncertainties that may cause our actual results to differ materially from the expectations of future results we express or imply in any forward-looking statements, and you should not place undue reliance on such statements. Factors that could contribute to these differences include the following:
•adverse economic or real estate developments in our geographic markets or the temperature-controlled warehouse industry;
•general economic conditions;
•uncertainties and risks related to natural disasters, global climate change and public health crises, including the ongoing COVID-19 pandemic;
•risks associated with the ownership of real estate and temperature-controlled warehouses in particular;
•defaults or non-renewals of contracts with customers;
•potential bankruptcy or insolvency of our customers, or the inability of our customers to otherwise perform under their contracts, including as a result of the ongoing COVID-19 pandemic;
•uncertainty of revenues, given the nature of our customer contracts;
•increased interest rates and operating costs, including as a result of the ongoing COVID-19 pandemic;
•our failure to obtain necessary outside financing;
•risks related to, or restrictions contained in, our debt financings;
•decreased storage rates or increased vacancy rates;
•risks related to current and potential international operations and properties;
•our failure to realize the intended benefits from our recent acquisitions including synergies, or disruptions to our plans and operations or unknown or contingent liabilities related to our recent acquisitions;
•our failure to complete the announced Agro Merchants acquisition;
•our failure to successfully integrate and operate acquired or developed properties or businesses;
•acquisition risks, including the failure to identify or complete attractive acquisitions or the failure of acquisitions to perform in accordance with projections and to realize anticipated cost savings and revenue improvements;
•risks related to expansions of existing properties and developments of new properties, including failure to meet budgeted or stabilized returns within expected time frames, or at all, in respect thereof;
•difficulties in expanding our operations into new markets, including international markets;
•risks related to the partial ownership of properties, including as a result of our lack of control over such investments and the failure of such entities to perform in accordance with projections;
•our failure to maintain our status as a REIT;
•our Operating Partnership’s failure to qualify as a partnership for federal income tax purposes;
•possible environmental liabilities, including costs, fines or penalties that may be incurred due to necessary remediation of contamination of properties presently or previously owned by us;
•financial market fluctuations;
•actions by our competitors and their increasing ability to compete with us;
•labor and power costs;
•changes in applicable governmental regulations and tax legislation, including in the international markets;
•additional risks with respect to the addition of European operations and properties;
•changes in real estate and zoning laws and increases in real property tax rates;
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•the competitive environment in which we operate;
•our relationship with our employees, including the occurrence of any work stoppages or any disputes under our collective bargaining agreements and employment related litigation;
•liabilities as a result of our participation in multi-employer pension plans;
•losses in excess of our insurance coverage;
•the cost and time requirements as a result of our operation as a publicly traded REIT;
•changes in foreign currency exchange rates;
•the impact of anti-takeover provisions in our constituent documents and under Maryland law, which could make an acquisition of us more difficult, limit attempts by our shareholders to replace our trustees and affect the price of our common shares of beneficial interest, $0.01 par value per share, or our common shares;
•the potential dilutive effect of our common share offerings; and
•risks related to any forward sale agreement, including the 2018 forward sale agreement, the 2020 ATM forward sale agreements and the 2020 forward sale agreements, or, collectively, our forward sale agreements, including substantial dilution to our earnings per share or substantial cash payment obligations.
The risks included here are not exhaustive, and additional factors could adversely affect our business and financial performance, including factors and risks included in other sections of this Quarterly Report on Form 10-Q. Words such as “anticipates,” “believes,” “continues,” “estimates,” “expects,” “goal,” “objectives,” “intends,” “may,” “opportunity,” “plans,” “potential,” “near-term,” “long-term,” “projections,” “assumptions,” “projects,” “guidance,” “forecasts,” “outlook,” “target,” “trends,” “should,” “could,” “would,” “will” and similar expressions are intended to identify such forward-looking statements. Examples of forward-looking statements included in this Quarterly Report on Form 10-Q include, among others, statements about our expected acquisitions and expected expansion and development pipeline and our targeted return on invested capital on expansion and development opportunities. We qualify any forward-looking statements entirely by these cautionary factors. Other risks, uncertainties and factors, including those discussed under “Risk Factors” herein, in our Annual Report on Form 10-K for the year ended December 31, 2019, in our Quarterly Report for the quarter ended March 31, 2020, in our Form 8-K filed on April, 16, 2020, and in our Form 8-K filed on October 13, 2020 could cause our actual results to differ materially from those projected in any forward-looking statements we make. We assume no obligation to update or revise these forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.
As used in this report, unless the context otherwise requires, references to “we,” “us,” “our,” “our Company” and “the Company” refer to Americold Realty Trust, a Maryland real estate investment trust, and its consolidated subsidiaries, including Americold Realty Operating Partnership, L.P., a Delaware limited partnership and the subsidiary through which we conduct our business, which we refer to as “our Operating Partnership” or “the Operating Partnership.”
In addition, unless otherwise stated herein, when we refer to “cubic feet” in one of our temperature-controlled facilities, we refer to refrigerated cubic feet (as opposed to total cubic feet, refrigerated and otherwise) therein.
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements

Americold Realty Trust and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)
(In thousands, except shares and per share amounts)
| September 30, 2020 |  | December 31, 2019
Assets |  |  |
Property, buildings and equipment: |  |  |
Land | $ | 533,822 |  |  | $ | 526,226 |
Buildings and improvements | 2,954,633 |  |  | 2,696,732 |
Machinery and equipment | 907,006 |  |  | 817,617 |
Assets under construction | 182,297 |  |  | 108,639 |
| 4,577,758 |  |  | 4,149,214 |
Accumulated depreciation and depletion | (1,339,562) |  |  | (1,216,553) |
Property, buildings and equipment – net | 3,238,196 |  |  | 2,932,661 |
Operating lease right-of-use assets | 68,512 |  |  | 77,723 |
Accumulated depreciation – operating leases | (22,065) |  |  | (18,110) |
Operating leases – net | 46,447 |  |  | 59,613 |
Financing leases: |  |  |
Buildings and improvements | 13,627 |  |  | 11,227 |
Machinery and equipment | 104,561 |  |  | 76,811 |
| 118,188 |  |  | 88,038 |
Accumulated depreciation – financing leases | (36,212) |  |  | (29,697) |
Financing leases – net | 81,976 |  |  | 58,341 |
Cash and cash equivalents | 173,913 |  |  | 234,303 |
Restricted cash | 7,441 |  |  | 6,310 |
Accounts receivable – net of allowance of $12,452 and $6,927 at September 30, 2020 and December 31, 2019, respectively | 217,486 |  |  | 214,842 |
Identifiable intangible assets – net | 363,698 |  |  | 284,758 |
Goodwill | 399,301 |  |  | 318,483 |
Investments in partially owned entities | 21,536 |  |  | — |
Other assets | 68,112 |  |  | 61,372 |
Total assets | $ | 4,618,106 |  |  | $ | 4,170,683 |
Liabilities and shareholders’ equity |  |  |
Liabilities: |  |  |
Accounts payable and accrued expenses | $ | 356,734 |  |  | $ | 350,963 |
Mortgage notes, senior unsecured notes and term loans – net of unamortized deferred financing costs of $13,607 and $12,996, in the aggregate, at September 30, 2020 and December 31, 2019, respectively | 1,827,484 |  |  | 1,695,447 |
Sale-leaseback financing obligations | 113,023 |  |  | 115,759 |
Financing lease obligations | 79,973 |  |  | 58,170 |
Operating lease obligations | 49,198 |  |  | 62,342 |
Unearned revenue | 17,172 |  |  | 16,423 |
Pension and postretirement benefits | 9,589 |  |  | 12,706 |
Deferred tax liability – net | 47,481 |  |  | 17,119 |
Multi-employer pension plan withdrawal liability | 8,580 |  |  | 8,736 |
Total liabilities | 2,509,234 |  |  | 2,337,665 |
Commitments and contingencies (Note 15) |  |  |
Shareholders’ equity: |  |  |
Common shares of beneficial interest, $0.01 par value – 325,000,000 and 250,000,000 authorized shares; 203,679,575 and 191,799,909 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively | 2,037 |  |  | 1,918 |
Paid-in capital | 2,936,762 |  |  | 2,582,087 |
Accumulated deficit and distributions in excess of net earnings | (797,935) |  |  | (736,861) |
Accumulated other comprehensive loss | (31,992) |  |  | (14,126) |
Total shareholders’ equity | 2,108,872 |  |  | 1,833,018 |
Total liabilities and shareholders’ equity | $ | 4,618,106 |  |  | $ | 4,170,683 |
See accompanying notes to condensed consolidated financial statements. |  |  |

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Americold Realty Trust and Subsidiaries |  |  |  |
Condensed Consolidated Statements of Operations (Unaudited) |  |  |  |
(In thousands, except per share amounts) |  |  |  |
| Three Months Ended September 30, |  | Nine Months Ended September 30, |  |
| 2020 |  | 2019 |  | 2020 |  | 2019 |  |  |  |
Revenues: |  |  |  |  |  |  |  |  |  |  |
Rent, storage and warehouse services | $ | 388,024 |  |  | $ | 365,593 |  |  | $ | 1,141,503 |  |  | $ | 993,439 |  |  |  |  |
Third-party managed services | 75,338 |  |  | 62,846 |  |  | 213,213 |  |  | 188,497 |  |  |  |  |
Transportation services | 34,096 |  |  | 35,685 |  |  | 104,874 |  |  | 109,273 |  |  |  |  |
Other | — |  |  | 2,058 |  |  | 4,459 |  |  | 6,512 |  |  |  |  |
Total revenues | 497,458 |  |  | 466,182 |  |  | 1,464,049 |  |  | 1,297,721 |  |  |  |  |
Operating expenses: |  |  |  |  |  |  |  |  |  |  |
Rent, storage and warehouse services cost of operations | 260,268 |  |  | 252,185 |  |  | 766,842 |  |  | 675,395 |  |  |  |  |
Third-party managed services cost of operations | 71,945 |  |  | 60,263 |  |  | 202,752 |  |  | 179,851 |  |  |  |  |
Transportation services cost of operations | 29,909 |  |  | 31,045 |  |  | 91,110 |  |  | 96,071 |  |  |  |  |
Cost of operations related to other revenues | 17 |  |  | 1,983 |  |  | 4,286 |  |  | 5,901 |  |  |  |  |
Depreciation, depletion and amortization | 53,569 |  |  | 45,065 |  |  | 157,572 |  |  | 115,598 |  |  |  |  |
Selling, general and administrative | 35,969 |  |  | 32,476 |  |  | 105,202 |  |  | 96,262 |  |  |  |  |
Acquisition, litigation and other | 5,282 |  |  | 3,780 |  |  | 9,771 |  |  | 30,237 |  |  |  |  |
Impairment of long-lived assets | 2,615 |  |  | — |  |  | 6,282 |  |  | 13,485 |  |  |  |  |
Loss (gain) from sale of real estate | 427 |  |  | — |  |  | (21,448) |  |  | 34 |  |  |  |  |
Total operating expenses | 460,001 |  |  | 426,797 |  |  | 1,322,369 |  |  | 1,212,834 |  |  |  |  |
Operating income | 37,457 |  |  | 39,385 |  |  | 141,680 |  |  | 84,887 |  |  |  |  |
Other income (expense): |  |  |  |  |  |  |  |  |  |  |
Interest expense | (23,066) |  |  | (24,907) |  |  | (70,114) |  |  | (70,581) |  |  |  |  |
Interest income | 179 |  |  | 1,798 |  |  | 1,027 |  |  | 5,206 |  |  |  |  |
Bridge loan commitment fees | — |  |  | — |  |  | — |  |  | (2,665) |  |  |  |  |
Loss on debt extinguishment and modifications | — |  |  | — |  |  | (781) |  |  | — |  |  |  |  |
Foreign currency exchange loss, net | (196) |  |  | (43) |  |  | (373) |  |  | (66) |  |  |  |  |
Other expense, net | (1,083) |  |  | (249) |  |  | (168) |  |  | (1,007) |  |  |  |  |
Gain from sale of partially owned entities | — |  |  | 4,297 |  |  | — |  |  | 4,297 |  |  |  |  |
Loss from investments in partially owned entities | (98) |  |  | (165) |  |  | (254) |  |  | (111) |  |  |  |  |
Income before income tax (expense) benefit | 13,193 |  |  | 20,116 |  |  | 71,017 |  |  | 19,960 |  |  |  |  |
Income tax (expense) benefit: |  |  |  |  |  |  |  |  |  |  |
Current | (2,103) |  |  | (834) |  |  | (6,823) |  |  | (4,828) |  |  |  |  |
Deferred | 1,284 |  |  | 7,809 |  |  | 4,353 |  |  | 12,221 |  |  |  |  |
Total income tax (expense) benefit | (819) |  |  | 6,975 |  |  | (2,470) |  |  | 7,393 |  |  |  |  |
Net income | $ | 12,374 |  |  | $ | 27,091 |  |  | $ | 68,547 |  |  | $ | 27,353 |  |  |  |  |
Weighted average common shares outstanding – basic | 204,289 |  |  | 192,325 |  |  | 202,380 |  |  | 175,010 |  |  |  |  |
Weighted average common shares outstanding – diluted | 208,500 |  |  | 197,363 |  |  | 206,051 |  |  | 178,970 |  |  |  |  |
Net income per common share of beneficial interest - basic | $ | 0.06 |  |  | $ | 0.14 |  |  | $ | 0.33 |  |  | $ | 0.15 |  |  |  |  |
Net income per common share of beneficial interest - diluted | $ | 0.06 |  |  | $ | 0.14 |  |  | $ | 0.33 |  |  | $ | 0.15 |  |  |  |  |

See accompanying notes to condensed consolidated financial statements.
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Americold Realty Trust and Subsidiaries |  |  |  |
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) |  |  |  |
(In thousands) |  |  |  |
| Three Months Ended September 30, |  | Nine Months Ended September 30, |  |
| 2020 |  | 2019 |  | 2020 |  | 2019 |  |  |  |
Net income | $ | 12,374 |  |  | $ | 27,091 |  |  | $ | 68,547 |  |  | $ | 27,353 |  |  |  |  |
Other comprehensive income (loss) - net of tax: |  |  |  |  |  |  |  |  |  |  |
Adjustment to accrued pension liability | 414 |  |  | 525 |  |  | 1,240 |  |  | 1,576 |  |  |  |  |
Change in unrealized net gain (loss) on foreign currency | 4,641 |  |  | (7,694) |  |  | (10,569) |  |  | (8,730) |  |  |  |  |
Unrealized (loss) gain on designated derivatives | (1,004) |  |  | 363 |  |  | (8,537) |  |  | (4,114) |  |  |  |  |
Other comprehensive income (loss) | 4,051 |  |  | (6,806) |  |  | (17,866) |  |  | (11,268) |  |  |  |  |
Total comprehensive income | $ | 16,425 |  |  | $ | 20,285 |  |  | $ | 50,681 |  |  | $ | 16,085 |  |  |  |  |
See accompanying notes to condensed consolidated financial statements. |  |  |  |  |  |  |  |  |  |

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Americold Realty Trust and Subsidiaries
Condensed Consolidated Statements of Shareholders’ Equity (Unaudited)
(In thousands, except shares and per share amounts)
| Common Shares of Beneficial Interest |  | Accumulated Deficit and Distributions in Excess of Net Earnings | Accumulated Other Comprehensive Loss |
| Number of Shares | Par Value | Paid-in Capital |
| Total
Balance - December 31, 2019 | 191,799,909 |  | $ | 1,918 |  | $ | 2,582,087 |  | $ | (736,861) |  | $ | (14,126) |  | $ | 1,833,018 |
Net income | — |  | — |  | — |  | 23,511 |  | — |  | 23,511 |
Other comprehensive loss | — |  | — |  | — |  | — |  | (29,172) |  | (29,172) |
Distributions on common shares of beneficial interest | — |  | — |  | — |  | (42,568) |  | — |  | (42,568) |
Share-based compensation expense | — |  | — |  | 4,298 |  | — |  | — |  | 4,298 |
Common share issuance related to share-based payment plans, net of shares withheld for employee taxes | 216,056 |  | 2 |  | (1,508) |  | — |  | — |  | (1,506) |
Issuance of common shares | 8,250,000 |  | 83 |  | 233,512 |  | — |  | — |  | 233,595 |
Cumulative effect of accounting change(1) | — |  | — |  | — |  | (500) |  | — |  | (500) |
Balance - March 31, 2020 | 200,265,965 |  | $ | 2,003 |  | $ | 2,818,389 |  | $ | (756,418) |  | $ | (43,298) |  | $ | 2,020,676 |
Net income | — |  | — |  | — |  | 32,662 |  | — |  | 32,662 |
Other comprehensive income | — |  | — |  | — |  | — |  | 7,255 |  | 7,255 |
Distributions on common shares of beneficial interest | — |  | — |  | — |  | (43,271) |  | — |  | (43,271) |
Share-based compensation expense | — |  | — |  | 4,449 |  | — |  | — |  | 4,449 |
Common share issuance related to share-based payment plans, net of shares withheld for employee taxes | 255,311 |  | 2 |  | 2,200 |  | — |  | — |  | 2,202 |
Issuance of common shares | 3,094,431 |  | 31 |  | 107,002 |  | — |  | — |  | 107,033 |
Balance - June 30, 2020 | 203,615,707 |  | $ | 2,036 |  | $ | 2,932,040 |  | $ | (767,027) |  | $ | (36,043) |  | $ | 2,131,006 |
Net income | — |  | — |  | — |  | 12,374 |  | — |  | 12,374 |
Other comprehensive income | — |  | — |  | — |  | — |  | 4,051 |  | 4,051 |
Distributions on common shares of beneficial interest | — |  | — |  | — |  | (43,282) |  | — |  | (43,282) |
Share-based compensation expense | — |  | — |  | 4,555 |  | — |  | — |  | 4,555 |
Common share issuance related to share-based payment plans, net of shares withheld for employee taxes | 63,868 |  | 1 |  | 167 |  | — |  | — |  | 168 |
Balance - September 30, 2020 | 203,679,575 |  | $ | 2,037 |  | $ | 2,936,762 |  | $ | (797,935) |  | $ | (31,992) |  | $ | 2,108,872 |

(1) Refer to Note 2 to the Condensed Consolidated Financial Statements for further discussion of the adoption of ASC 326.
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Americold Realty Trust and Subsidiaries
Condensed Consolidated Statements of Shareholders’ Equity (Unaudited)
(In thousands, except shares)
| Common Shares of |  | Accumulated Deficit and Distributions in Excess of Net Earnings | Accumulated Other Comprehensive Loss |
| Beneficial Interest |  |
| Number of Shares | Par Value | Paid-in Capital |
| Total
Balance - December 31, 2018 | 148,234,959 |  | $ | 1,482 |  | $ | 1,356,133 |  | $ | (638,345) |  | $ | (12,515) |  | $ | 706,755 |
Net loss | — |  | — |  | — |  | (4,629) |  | — |  | (4,629) |
Other comprehensive loss | — |  | — |  | — |  | — |  | (969) |  | (969) |
Distributions on common shares of beneficial interest | — |  | — |  | — |  | (30,235) |  | — |  | (30,235) |
Share-based compensation expense | — |  | — |  | 2,625 |  | — |  | — |  | 2,625 |
Share-based compensation expense (modification of Restricted Stock Units) | — |  | — |  | 3,044 |  | — |  | — |  | 3,044 |
Common share issuance related to share-based payment plans, net of shares withheld for employee taxes | 897,849 |  | 9 |  | 3,965 |  | — |  | — |  | 3,974 |
Other | — |  | — |  | — |  | (88) |  | — |  | (88) |
Balance - March 31, 2019 | 149,132,808 |  | $ | 1,491 |  | $1,365,767 | $ | (673,297) |  | $ | (13,484) |  | $ | 680,477 |
Net income | — |  | — |  | — |  | 4,891 |  | — |  | 4,891 |
Other comprehensive loss | — |  | — |  | — |  | — |  | (3,493) |  | (3,493) |
Distributions on common shares of beneficial interest | — |  | — |  | — |  | (38,764) |  | — |  | (38,764) |
Share-based compensation expense | — |  | — |  | 3,171 |  | — |  | — |  | 3,171 |
Common share issuance related to share-based payment plans, net of shares withheld for employee taxes | 439,152 |  | 4 |  | 2,323 |  | — |  | — |  | 2,327 |
Issuance of common shares | 42,062,500 |  | 421 |  | 1,206,627 |  | — |  | — |  | 1,207,048 |
Balance - June 30, 2019 | 191,634,460 |  | $ | 1,916 |  | $2,577,888 | $ | (707,170) |  | $ | (16,977) |  | $ | 1,855,657 |
Net income | — |  | — |  | — |  | 27,091 |  | — |  | 27,091 |
Other comprehensive loss | — |  | — |  | — |  | — |  | (6,806) |  | (6,806) |
Distributions on common shares of beneficial interest | — |  | — |  | — |  | (38,795) |  | — |  | (38,795) |
Share-based compensation expense | — |  | — |  | 3,359 |  | — |  | — |  | 3,359 |
Common share issuance related to share-based payment plans, net of shares withheld for employee taxes | 116,286 |  | 2 |  | (1,929) |  | — |  | — |  | (1,927) |
Balance - September 30, 2019 | 191,750,746 |  | $ | 1,918 |  | $2,579,318 | $ | (718,874) |  | $ | (23,783) |  | $ | 1,838,579 |

| Three Months Ended September 30, |  | Nine Months Ended September 30, |  |
| 2020 |  | 2019 |  | 2020 |  | 2019 |  |  |  |
Distributions declared per common share of beneficial interest | $ | 0.21 |  |  | $ | 0.20 |  |  | $ | 0.63 |  |  | $ | 0.60 |  |  |  |  |

See accompanying notes to condensed consolidated financial statements.
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Americold Realty Trust and Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In thousands)
| Nine Months Ended September 30,
| 2020 |  | 2019
Operating activities: |  |  |
Net income | $ | 68,547 |  |  | $ | 27,353 |
Adjustments to reconcile net income to net cash provided by operating activities: |  |  |
Depreciation, depletion and amortization | 157,572 |  |  | 115,598 |
Amortization of deferred financing costs and pension withdrawal liability | 3,945 |  |  | 4,504 |
Amortization of above/below market leases | 115 |  |  | 114 |
Loss on debt extinguishment and modification | 542 |  |  | — |
Foreign exchange loss | 373 |  |  | 66 |
Loss from investments in partially owned entities | 254 |  |  | 111 |
Gain from sale of partially owned entities | — |  |  | (4,297) |
Share-based compensation expense (modification of restricted stock units) | — |  |  | 3,044 |
Share-based compensation expense | 13,340 |  |  | 9,195 |
Deferred income tax benefit | (4,353) |  |  | (12,221) |
(Gain) loss from sale of real estate | (21,448) |  |  | 34 |
Loss on other asset disposals | 715 |  |  | 336 |
Impairment of long-lived assets | 6,282 |  |  | 13,485 |
Provision for doubtful accounts receivable | 5,523 |  |  | 1,483 |
Changes in operating assets and liabilities: |  |  |
Accounts receivable | (1,196) |  |  | (493) |
Accounts payable and accrued expenses | 4,262 |  |  | (22,060) |
Other | (7,275) |  |  | 15,669 |
Net cash provided by operating activities | 227,198 |  |  | 151,921 |
Investing activities: |  |  |
Return of investment in joint venture | — |  |  | 2,000 |
Proceeds from sale of investments in partially owned entities | — |  |  | 14,250 |
Investment in partially owned entities | (26,218) |  |  | — |
Proceeds from sale of property, buildings and equipment | 77,354 |  |  | 973 |
Proceeds from the settlement of net investment hedge | 3,034 |  |  | — |
Business combinations, net of cash acquired | (398,737) |  |  | (1,319,929) |
Acquisitions of property, buildings and equipment, net of cash acquired | (25,538) |  |  | (35,161) |
Additions to property, buildings and equipment | (241,614) |  |  | (151,065) |
Net cash used in investing activities | (611,719) |  |  | (1,488,932) |
Financing activities: |  |  |
Distributions paid on common shares | (124,025) |  |  | (96,811) |
Proceeds from stock options exercised | 6,748 |  |  | 10,204 |
Remittance of withholding taxes related to employee share-based transactions | (6,380) |  |  | (6,127) |
Proceeds from revolving line of credit | 186,753 |  |  | 100,000 |
Repayment on revolving line of credit | (177,075) |  |  | (100,000) |
Repayment of sale-leaseback financing obligations | (2,736) |  |  | (2,292) |
Repayment of financing lease obligations | (14,299) |  |  | (9,374) |
Payment of debt issuance costs | (8,345) |  |  | (2,047) |
Repayment of term loan, mortgage notes and notes payable | (55,028) |  |  | (8,735) |
Proceeds from term loan | 177,075 |  |  | — |
Proceeds from issuance of senior unsecured notes | — |  |  | 350,000 |
Net proceeds from issuance of common shares | 340,629 |  |  | 1,206,627 |
Net cash provided by financing activities | 323,317 |  |  | 1,441,445 |
Net (decrease) increase in cash, cash equivalents and restricted cash | (61,204) |  |  | 104,434 |
Effect of foreign currency translation on cash, cash equivalents and restricted cash | 1,945 |  |  | (1,543) |
Cash, cash equivalents and restricted cash: |  |  |
Beginning of period | 240,613 |  |  | 214,097 |
End of period | $ | 181,354 |  |  | $ | 316,988 |

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Americold Realty Trust and Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited) (Continued)
(In thousands)
| Nine Months Ended September 30,
Supplemental disclosures of cash flows information: | 2020 |  | 2019
Addition of fixed assets under financing lease obligations | $ | 41,184 |  |  | $ | 26,122 |
Addition of fixed assets under operating lease obligations | $ | 11,887 |  |  | $ | 8,308 |
Interest paid – net of amounts capitalized | $ | 79,156 |  |  | $ | 56,859 |
Income taxes paid – net of refunds | $ | 556 |  |  | $ | 3,091 |
Addition of property, buildings and equipment on accrual | $ | 38,079 |  |  | $ | 32,337 |
Reconciliation of cash, cash equivalents and restricted cash reported in the condensed consolidated balance sheets to the ending cash, cash equivalents and restricted cash balances above: | As of September 30,
2020 |  | 2019
Cash and cash equivalents | $ | 173,913 |  | $ | 310,116
Restricted cash | 7,441 |  | 6,872
Total cash, cash equivalents and restricted cash | $ | 181,354 |  | $ | 316,988 |
| As of September 30,
Allocation of purchase price of property, buildings and equipment to: | 2020 |  | 2019
Land | $ | 3,233 |  | $ | 20,715
Buildings and improvements | 15,940 |  | 10,846
Machinery and equipment | 6,022 |  | 3,410
Identifiable intangible assets | 140 |  | 351
Other assets | 303 |  | 601
Cash paid for acquisition of property, buildings and equipment | $ | 25,638 |  | $ | 35,923
| As of September 30,
| 2020 |  | 2019
Allocation of purchase price to business combinations: |  |  |
Land | $ | 43,812 |  | $ | 65,414
Buildings and improvements | 159,057 |  | 714,767
Machinery and equipment | 52,606 |  | 154,272
Assets under construction | 308 |  | 19,977
Operating and financing lease right-of-use assets | 4,161 |  | 1,336
Cash and cash equivalents | 2,214 |  | 4,978
Restricted cash | — |  | 526
Accounts receivable | 6,674 |  | 22,873
Goodwill | 81,202 |  | 125,550
Acquired identifiable intangibles: |  |  |
Customer relationships | 92,351 |  | 267,319
Trade names and trademarks | — |  | 1,626
Other assets | 120 |  | 7,017
Accounts payable and accrued expenses | (3,428) |  |  | (41,475) |
Notes payable | — |  |  | (3,878) |
Operating and financing lease obligations | (4,027) |  |  | (1,336) |
Unearned revenue | (1,068) |  |  | (3,536) |
Pension and postretirement benefits | — |  |  | (859) |
Deferred tax liability | (33,031) |  |  | (9,138) |
Total consideration | $ | 400,951 |  | $ | 1,325,433
See accompanying notes to condensed consolidated financial statements. |  |  |

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Americold Realty Trust and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
1. General
The Company
Americold Realty Trust, together with its subsidiaries (ART, the Company, or we), is a real estate investment trust (REIT) organized under Maryland law.
During 2010, the Company formed a Delaware limited partnership, Americold Realty Operating Partnership, L.P. (the Operating Partnership), and transferred substantially all of its interests in entities and associated assets and liabilities to the Operating Partnership. This structure is commonly referred to as an umbrella partnership REIT or an UPREIT structure. The REIT is the sole general partner of the Operating Partnership, owning approximately 99% of the partnership interests as of September 30, 2020. Americold Realty Operations, Inc., a Delaware corporation and a wholly-owned subsidiary of the REIT, is a limited partner of the Operating Partnership, owning less than 1% of the partnership interests as of September 30, 2020. Additionally, the aggregate partnership interests of all other limited partners was less than 0.01% as of September 30, 2020. As the sole general partner of the Operating Partnership, the REIT has full, exclusive and complete responsibility and discretion in the day-to-day management and control of the Operating Partnership. The limited partners of the Operating Partnership do not have rights to replace Americold Realty Trust as the general partner nor do they have participating rights, although they do have certain protective rights. The terms “Americold,” the “Company,” “we,” “our” and “us” refer to Americold Realty Trust and all of its consolidated subsidiaries, including the Operating Partnership.
The Company grants Operating Partnership Profit Units (OP Units) to certain members of the Board of Trustees and certain members of management of the Company, which are described further in Note 11. Upon vesting these units represent interests in the Operating Partnership that are not owned by Americold Realty Trust. We expect that the expense associated with the OP Units in the Operating Partnership is immaterial to the condensed consolidated financial statements of the Company.
On March 9, 2020, the Company filed Articles of Amendment to the Company’s Amended and Restated Declaration of Trust with the State Department of Assessments and Taxation of Maryland to increase the number of authorized common shares of beneficial interest, $0.01 par value per share, from 250,000,000 to 325,000,000. The Articles of Amendment were effective upon filing. The Company also has 25,000,000 authorized preferred shares of beneficial interest, $0.01 par value per share; however, none are issued or outstanding as of September 30, 2020 or December 31, 2019.
The Operating Partnership includes numerous disregarded entities (“DRE”). Additionally, the Operating Partnership conducts various business activities in the United States (U.S.), Australia, New Zealand, Argentina, and Canada through several wholly-owned taxable REIT subsidiaries (TRSs).
Ownership
Initial Public Offering
On January 23, 2018, we completed an initial public offering of our common shares, or IPO, in which we issued and sold 33,350,000 of our common shares at a public offering price of $16.00 per share, including 4,350,000 common shares pursuant to the exercise in full of the underwriters’ option to purchase additional common shares. The common shares sold in the offering were registered under the Securities Act of 1933, as amended (the Securities Act) pursuant to our Registration Statement on Form S-11 (File No.
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Americold Realty Trust and Subsidiaries
Notes to Condensed Consolidated Financial Statements - (Unaudited)
333-221560), as amended, which was declared effective by the U.S. Securities and Exchange Commission (SEC) on January 18, 2018.
September 2018 Follow-On Public Offering
On September 18, 2018, the Company completed a follow-on public offering of 4,000,000 of its common shares at a public offering price of $24.50 per share, which generated net proceeds of approximately $92.5 million to the Company after deducting the underwriting discount and estimated offering expenses payable by the Company, and an additional 6,000,000 common shares pursuant to the 2018 forward sale agreement, which is currently expected to settle on or before March 2022. The term was extended from its original settlement of September 2019. The Company did not initially receive any proceeds from the sale of the common shares subject to the 2018 forward sale agreement that were sold by the forward purchaser or its affiliate. The Company accounts for the 2018 forward contract as equity and therefore is exempt from derivative and fair value accounting. Before the issuance of the Company’s common shares, if any, upon physical or net share settlement of the 2018 forward sale agreement, the common shares issuable upon settlement of the 2018 forward sale agreement will be reflected in its diluted earnings per share calculations using the treasury stock method. Under this method, the number of the Company’s common shares used in calculating diluted earnings per share is deemed to be increased by the excess, if any, of the number of common shares that would be issued upon full physical settlement of the 2018 forward sale agreement less the number of common shares that could be purchased by the Company in the market (based on the average market price during the period) using the proceeds receivable upon full physical settlement (based on the adjusted 2018 forward sale price at the end of the reporting period). If and when the Company physically or net share settles the 2018 forward sale agreement, the delivery of the Company’s common shares would result in an increase in the number of common shares outstanding and dilution to our earnings per share. As of September 30, 2020, the Company has not settled any portion of the 2018 forward sale agreement.
March 2019 Secondary Public Offering
In March 2019, the Company completed a secondary public offering in which certain funds affiliated with YF ART Holdings and The Goldman Sachs Group, Inc. (Goldman) sold their remaining interests in the Company of 38,422,583 and 8,061,228 common shares, respectively, at $27.75 per share, which included 6,063,105 shares purchased by the underwriters upon the exercise in full of their option to purchase additional shares. The selling shareholders received proceeds from the offering, which, net of underwriting fees, totaled $1.1 billion. The Company received no proceeds and incurred fees of $1.5 million related to this offering.
April 2019 Follow-On Public Offering
On April 22, 2019, the Company completed a follow-on public offering of 42,062,000 of its common shares, including 6,562,000 common shares pursuant to the exercise in full of the underwriters’ option to purchase additional common shares, at a public offering price of $29.75 per share, which generated net proceeds of approximately $1.21 billion to the Company after deducting the underwriting discount and estimated offering expenses payable by the Company, and an additional 8,250,000 common shares pursuant to the 2019 forward sale agreement. The Company did not initially receive any proceeds from the sale of the common shares subject to the 2019 forward sale agreement that were sold by the forward purchaser or its affiliate. The 2019 forward sale agreement was settled during the three months ended March 31, 2020 for net proceeds of $233.6 million. The proceeds of the follow-on public offering were used to fund the purchase of Chiller Holdco, LLC (Cloverleaf Cold Storage or Cloverleaf). The Company used the cash proceeds that we received upon settlement of the 2019 forward sale agreement on January 2, 2020 to fund a portion of the Nova Cold Logistics (Nova Cold) acquisition.
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Americold Realty Trust and Subsidiaries
Notes to Condensed Consolidated Financial Statements - (Unaudited)
At the Market (ATM) Equity Program
On August 23, 2019, the Company entered into an equity distribution agreement pursuant to which we may sell, from time to time, up to an aggregate sales price of $500.0 million of our common shares through an ATM Equity Program (“the 2019 ATM Equity Program”). Sales of our common shares made pursuant to the 2019 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 2019 ATM Equity Program for general corporate purposes, which may include funding acquisitions and development projects. There were no common shares sold under the 2019 ATM Equity Program.
On April 16, 2020, the 2019 ATM Equity Program was terminated and replaced with the 2020 ATM Equity Program. Under the 2020 ATM Equity Program, we may sell, from time to time, up to an aggregate sales price of $500.0 million of the Company’s common shares. We intend to use the net proceeds from sales of our common shares pursuant to the 2020 ATM Equity Program for general corporate purposes, which may include funding acquisitions and development projects.
During the nine months ended September 30, 2020, there were 3,094,431 common shares sold under the 2020 ATM Equity Program, resulting in gross proceeds of $110.4 million. The proceeds were offset by $2.4 million of fees which were capitalized related to the ATM Equity Program. In addition, during the nine months ended September 30, 2020, the Company entered into forward sale agreements in connection with the 2020 ATM Equity Program to sell 4,346,101 common shares for gross proceeds of $162.2 million. Pursuant to the respective forward sale agreements, 2,429,104 common shares for gross proceeds of $89.6 million must be settled by July 1, 2021 and 1,916,997 common shares for gross proceeds of $72.6 million must be settled by September 1, 2021.
After considering the common shares issued during 2020 and the shares subject to the forward sale agreements, the Company had approximately $227.4 million of availability remaining for distribution under the 2020 ATM Equity Program as of September 30, 2020.
Universal Shelf Registration Statement
In connection with filing the ATM Equity Offering Sales Agreement on April 16, 2020, the Company and the Operating Partnership filed with the SEC an automatic shelf registration statement on Form S-3 (Registration Nos. 333-237704 and 333-237704-01) (the “Registration Statement”), registering an indeterminate amount of (i) the Company’s common shares of beneficial interest, $0.01 par value per share, (ii) the Company’s preferred shares of beneficial interest, $0.01 par value per share, (iii) depositary shares representing entitlement to all rights and preferences of fractions of the Company’s preferred shares of a specified series and represented by depositary receipts, (iv) warrants to purchase the Company’s common shares or preferred shares or depositary shares and (v) debt securities of the Operating Partnership, which will be fully and unconditionally guaranteed by the Company. Refer to the Subsequent Events footnote for discussion of activity under the shelf registration statement after September 30, 2020, and above for the activity under the Company’s ATM program.
Acquisitions and Investments in Joint Ventures
On February 1, 2019, the Company acquired PortFresh Holdings, LLC (PortFresh). The Company paid aggregate cash consideration of $35.2 million, net of cash acquired. The consideration paid by the Company was funded using cash on hand.
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Americold Realty Trust and Subsidiaries
Notes to Condensed Consolidated Financial Statements - (Unaudited)
On May 1, 2019, the Company entered into an equity purchase agreement to acquire Cloverleaf Cold Storage (Cloverleaf). The Company refers to the completion of the acquisition of Cloverleaf pursuant to the executed purchase agreement as “the Cloverleaf Acquisition”. The Company paid aggregate cash consideration of approximately $1.24 billion to acquire Cloverleaf. The consideration paid by the Company was funded using net proceeds from the Company’s equity offering that closed on April 22, 2019, along with funds drawn under the Company’s senior unsecured revolving credit facility.
On May 1, 2019, the Company also acquired Lanier Cold Storage (Lanier). The Company paid aggregate cash consideration of approximately $81.9 million, net of cash acquired, to acquire Lanier. The consideration paid by the Company was funded using cash on hand.
On November 19, 2019, the Company acquired MHW Group Inc. (MHW). The Company paid aggregate cash consideration of approximately $50.8 million, net of cash acquired, to acquire MHW. The consideration paid by the Company was funded using cash on hand.
On January 2, 2020, the Company completed the purchase of all outstanding shares of Nova Cold for Canadian Dollars of $337.4 million, net of cash acquired ($259.6 million USD, net of cash acquired). 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 and cash on hand.
On January 2, 2020, the Company completed the purchase of all outstanding membership interests of Newport Cold for cash consideration of $56.7 million, net of cash acquired. The consideration paid by the Company was funded using cash on hand.
On March 6, 2020, the Company acquired a 14.99% ownership interest in Superfrio Armazéns Gerais S.A. (SuperFrio) for Brazil Reals of $117.8 million, or approximately USD $25.7 million, inclusive of certain legal fees. The consideration paid by the Company was funded using cash on hand.
On August 31, 2020, the Company acquired Caspers Cold Storage (Caspers). The Company paid aggregate cash consideration of approximately $25.5 million, net of cash acquired, to acquire Caspers. The consideration paid by the Company was funded using cash on hand.
Additionally, on August 31, 2020, the Company acquired AM-C Warehouses (AM-C). The Company paid aggregate cash consideration of approximately $82.5 million, net of cash acquired, to acquire AM-C. The consideration paid by the Company was funded using cash on hand.
Basis of Presentation and Principles of Consolidation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the U.S. (GAAP) for interim financial information, and with the rules and regulations of the SEC. These unaudited condensed consolidated financial statements do not include all disclosures associated with the Company’s consolidated annual financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2019, and, accordingly, should be read in conjunction with the referenced annual report. In the opinion of management, all adjustments (all of which are normal and recurring in nature) considered necessary for a fair presentation have been included. All significant intercompany balances and transactions have been eliminated in consolidation. Operating results for the interim periods presented are not necessarily indicative of the results that may be expected for the full year.
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Americold Realty Trust and Subsidiaries
Notes to Condensed Consolidated Financial Statements - (Unaudited)
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of (1) assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the financial statements, and (2) revenues and expenses during the reporting period. Actual results could differ from those estimates.
Significant Risks and Uncertainties
The COVID-19 pandemic has caused, and is likely to continue to cause severe economic, market and other disruptions worldwide, which could lead to material impairments of our assets, increases in our allowance for credit losses and changes in judgments in determining the fair value of our assets. Conditions in the bank lending, capital and other financial markets may deteriorate, and our access to capital and other sources of funding may become constrained or more costly, which could materially and adversely affect the availability and terms of future borrowings, renewals, re-financings and other capital raises.
The Company is closely monitoring the impact of the ongoing COVID-19 pandemic on all aspects of its business in all geographies, including how it will impact its customers and business partners. While the Company did not incur significant disruptions during the three and nine months ended September 30, 2020 from the COVID-19 pandemic, it continues to incur elevated labor related costs and incremental health and safety supplies costs but otherwise is unable to further predict the impact that the COVID-19 pandemic will have on its financial condition, results of operations and cash flows due to numerous uncertainties.
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 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 illness and containment measures, among others. 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.
Reclassifications
Certain immaterial, prior period amounts have been reclassified to conform to the current period presentation on the Condensed Consolidated Statements of Shareholders’ Equity. The Condensed Consolidated Statements of Shareholders’ Equity reflects the reclassification required in the prior period to condense the amount previously classified within ‘Other’ to be classified within ‘Other comprehensive loss’, both of which are a component of Accumulated Other Comprehensive Income (Loss).
2. Summary of Significant Accounting Policies
The following disclosure regarding certain of our significant accounting policies should be read in conjunction with Note 2 to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2019, which provides additional information with regard to the accounting policies set forth herein and other significant accounting policies.
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Notes to Condensed Consolidated Financial Statements - (Unaudited)
Impairment of Long-Lived Assets
For the nine months ended September 30, 2020, the Company recorded impairment charges totaling $6.3 million, which included an impairment charge of $3.7 million of Quarry segment assets related to the sale of the business and an impairment charge of $2.6 million of Managed segment assets due to the strategic decision to accelerate the exit of a leased managed facility during the third quarter of 2020 and another leased managed facility that the Company plans to exit by the end of 2020. The Company 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 leased facilities.
For the nine months ended September 30, 2019, the Company recorded impairment charges of $13.5 million. This was primarily due to the formal approval of the “Atlanta Major Market Strategy” plan by the Company’s Board of Trustees, which included the partial redevelopment of an existing warehouse facility. The partial redevelopment required the demolition of approximately 75% of the current warehouse, which was unused. As a result of this initiative, the Company wrote off the carrying value of the portion of the warehouse no longer in use resulting in an impairment charge of $9.6 million of Warehouse segment assets. Additionally, during the three months ended March 31, 2019, the Company recorded an impairment charge of $2.9 million of Warehouse segment assets related to a domestic idle warehouse facility in anticipation of a potential future sale of the asset. The estimated fair value of this asset was determined based on ongoing negotiations with prospective buyers. The sale of this property was completed during the second quarter of 2019. In addition, during the three months ended June 30, 2019, the Company recorded an asset impairment charge of $0.9 million related to international transportation software assets which were no longer needed.
Capitalization of Costs
Project costs that are clearly associated with the development of properties are capitalized as incurred. Project costs include all costs directly associated with the development of a property, including construction costs, interest, and costs of personnel working on the project. Costs that do not clearly relate to the projects under development are not capitalized and are charged to expense as incurred.
Capitalization of costs begins when the activities necessary to get the development project ready for its intended use commence, which include costs incurred before the beginning of construction. Capitalization of costs ceases when the development project is substantially complete and ready for its intended use. Determining when a development project commences and when it is substantially complete and ready for its intended use involves a degree of judgment. We generally consider a development project to be substantially complete and ready for its intended use upon receipt of a certificate of occupancy. If and when development of a property is suspended pursuant to a formal change in the planned use of the property, we will evaluate whether the accumulated costs exceed the estimated value of the project and write off the amount of any such excess accumulated costs. For a development project that is suspended for reasons other than a formal change in the planned use of such property, the accumulated project costs are written off. Capitalized costs are allocated to the specific components of a project that are benefited.
We capitalized interest of $1.0 million and $0.7 million for the three months ended September 30, 2020 and 2019, respectively. During the nine months ended September 30, 2020 and 2019, we capitalized interest of $2.2 million and $2.3 million, respectively. During each of the three months ended September 30, 2020 and 2019, we capitalized amounts relating to compensation and travel expense of employees direct and incremental to development of properties of approximately $0.2 million and $0.1 million, respectively. During the nine months ended September 30, 2020 and 2019, we capitalized amounts relating to compensation and travel expense of
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Notes to Condensed Consolidated Financial Statements - (Unaudited)
employees direct and incremental to development of properties of approximately $0.6 million and $0.4 million, respectively.
Business Combinations
For business combinations, the excess of purchase price over the net fair value of assets acquired and liabilities assumed is recorded as goodwill. In an asset acquisition where we have determined that the cost incurred differs from the fair value of the net assets acquired, we assess whether we have appropriately determined the fair value of the assets and liabilities acquired and we also confirm that all identifiable assets have been appropriately identified and recognized. After completing this assessment, we allocate the difference on a relative fair value basis to all assets acquired except for financial assets (as defined in ASC 860, Transfers and Servicing), deferred taxes, and assets defined as “current” (as defined in ASC 210, Balance Sheet).
Whether the acquired business is being accounted for as a business combination or an asset acquisition, the determination of fair values of identifiable assets and liabilities requires estimates and the use of valuation techniques. Significant judgment is involved specifically in determining the estimated fair value of the acquired land and buildings and improvements and intangible assets. For intangible assets, we typically use the excess earnings method. Significant estimates used in valuing intangible assets acquired in a business combination include, but are not limited to, revenue growth rates, customer attrition rates, operating costs and margins, capital expenditures, tax rates, long-term growth rates and discount rates. For land and buildings and improvements, we used a combination of methods including the cost approach to value buildings and improvements and the sales comparison approach to value the underlying land. Significant estimates used in valuing land and buildings and improvements acquired in a business combination include, but are not limited to estimates of indirect costs and entrepreneurial profit, which were added to the replacement cost of the acquired assets in order to estimate their fair value in the market.
Refer to Note 3 for the disclosures related to recent acquisitions accounted for as a business combination.
Asset Acquisitions
We acquired PortFresh in an asset acquisition on February 1, 2019 for $35.2 million, net of cash. The cost incurred in connection with this asset acquisition was allocated primarily to property, buildings and equipment. Additionally, we acquired MHW in an asset acquisition on November 19, 2019 for $50.8 million, net of cash. The cost incurred in connection with this asset acquisition was allocated primarily to $50.1 million of land, buildings and equipment, $0.6 million of an assembled workforce intangible asset and $0.1 million of other assets and liabilities, net. Additionally, the purchase agreement included a call option to purchase land from the holder of the ground lease for $4.1 million, which was exercised in January 2020.
We acquired Caspers in an asset acquisition on August 31, 2020 for $25.5 million, net of cash. The cost incurred in connection with this asset acquisition was allocated primarily to property, buildings and equipment.
Recently Adopted Accounting Standards
Fair Value Measurement - Disclosure Framework
In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement. This ASU modifies the disclosure requirements on fair value measurements. The ASU removes the requirement to disclose: the amount of and
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Notes to Condensed Consolidated Financial Statements - (Unaudited)
reasons for transfers between Level 1 and Level 2 of the fair value hierarchy; the policy for timing of transfers between levels; and the valuation processes for Level 3 fair value measurements. The ASU requires disclosure of changes in unrealized gains and losses for the period included in other comprehensive income (loss) for recurring Level 3 fair value measurements held at the end of the reporting period and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. For public business entities, this guidance is effective for fiscal years beginning after December 15, 2019 with early adoption permitted. The Company adopted this standard effective January 1, 2020 on a prospective basis, and it did not have a material impact on its condensed consolidated financial statements.
Credit Losses
Effective January 1, 2020, we adopted ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (also referred to as current expected credit losses, or “CECL”), using the modified retrospective transition method. This ASU amends the impairment model to utilize an expected loss methodology in place of the incurred loss methodology for financial instruments, including trade receivables, and off-balance sheet credit exposures. The amendment requires entities to consider a broader range of information to estimated expected credit losses, which may result in earlier recognition of losses. Upon adoption of the new standard, the Company recorded a non-cash cumulative effect adjustment to the opening accumulated deficit and distributions in excess of net earnings of $0.5 million as of January 1, 2020.
As of September 30, 2020, we had $426.8 million of assets in the scope of the credit loss standard. These assets consist primarily of cash equivalents measured at amortized cost and trade and other receivables. Counterparties associated with these assets are generally highly rated. The substantial majority of the allowance recorded on the aforementioned in-scope assets relates to our trade receivables and totaled $12.5 million as of September 30, 2020.
Financial Instruments
In March 2020, FASB issued ASU 2020-03, Codification Improvements to Financial Instruments. This ASU improves and clarifies various financial instruments topics, including the current expected credit losses standard issued in 2016. The ASU includes seven different issues that describe the areas of improvement and the related amendments to GAAP, intended to make the standards easier to understand and apply by eliminating inconsistencies and providing clarifications. The amendments have different effective dates. The Company adopted this standard effective January 1, 2020, and it did not have a material impact on its condensed consolidated financial statements.
Future Adoption of Accounting Standards
Defined Benefit Plans
In August 2018, the FASB issued ASU 2018-14, Compensation – Retirement Benefits – Defined Benefit Plans – General (Subtopic 715-20): Disclosure Framework – Changes to the Disclosure Requirements for Defined Benefit Plans. This update amends ASC 715 to remove disclosures that are no longer considered cost beneficial, clarifies the specific requirements of disclosures, and adds disclosure requirements identified as relevant to defined benefit pension and other postretirement plans. The ASU’s changes related to disclosures are part of the FASB’s disclosure framework project. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Early adoption is permitted for all entities and the amendments in this update are required to be applied on a retrospective basis to all periods presented. The Company does not
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Notes to Condensed Consolidated Financial Statements - (Unaudited)
expect the provisions of ASU 2018-14 will have a material impact on its condensed consolidated financial statements.
Simplifying the Accounting for Income Taxes
In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes (Topic 740). This ASU is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. ASU 2019-12 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020; however, early adoption is permitted for all entities. The Company continues to assess the impact of adopting this standard and does not believe the adoption of ASU 2019-12 will have a material effect on its condensed consolidated financial statements.
Reference Rate Reform
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848). This ASU contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. During the first quarter of 2020, the Company has elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. The Company continues to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur.
Investments - equity securities; Investments—Equity Method and Joint Ventures; Derivatives and Hedging
In January 2020, the FASB issued ASU 2020-01, Investments—Equity Securities (Topic 321), Investments—Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815). The amendments in this ASU clarify the interaction between the accounting for investments in equity securities, equity method investments and certain derivatives instruments. The ASU is expected to reduce diversity in practice and increase comparability of the accounting for these interactions. This ASU is effective for fiscal years beginning after December 15, 2020. The adoption of this ASU is not expected to have any impact on the Company's condensed consolidated financial statements.
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Notes to Condensed Consolidated Financial Statements - (Unaudited)
3. Business Combinations
Acquisitions Completed During the Nine Months Ended September 30, 2020
The Company completed the acquisition of privately-held Nova Cold on January 2, 2020 for total cash consideration of approximately CAD $337.4 million, net of cash received, or $259.6 million USD based upon the exchange rate between the CAD and USD on the closing date of the transaction. The preliminary purchase price allocation of consideration primarily included $171.9 million of land and buildings and equipment, $53.9 million of a customer relationship intangible asset, $33.0 million of deferred tax liabilities, and $64.6 million of goodwill, each of which are allocated to the Warehouse segment. The customer relationship asset has been preliminarily assigned a useful life of 25 years and will be amortized on a straight-line basis. The goodwill recorded is primarily attributable to the strategic benefits of the acquisition including the expanded presence in the Canada market and leveraging integration experience to drive synergies and further enhance the warehouse network for new and existing customers. The Nova Cold acquisition was completed through the acquisition of stock in Canada; as a result, no tax basis in goodwill exists for Canadian tax purposes. Deferred taxes may not be recorded for deductible goodwill unless the tax basis exceeds the book basis; therefore, the Company recorded no deferred taxes for tax deductible goodwill for Canadian tax purposes. Deductible goodwill will exist for U.S. federal income tax purposes and will be available to reduce taxable income at the REIT, including any Global Intangible Low-Taxed Income (“GILTI”) inclusion associated with the foreign TRS acquired. As the valuation of certain assets and liabilities for purposes of purchase price allocations are preliminary in nature, they are subject to adjustment as additional information is obtained about the facts and circumstances regarding these assets and liabilities that existed at the acquisition date. Any adjustments to our estimates of purchase price allocation will be made in the periods in which the adjustments are determined and the cumulative effect of such adjustments will be calculated as if the adjustments had been completed as of the acquisition date. The preliminary purchase price allocation will be finalized within one year from the date of acquisition. We have included the financial results of the acquired operations in our Warehouse segment since the date of the acquisition. During the nine months ended September 30, 2020, the Company recorded a $9.0 million reduction to its opening deferred tax liability originally recorded related to basis differences in fixed assets and net operating loss carryforwards. The adjustments recorded during the measurement period did not have a significant impact on our Condensed Consolidated Financial Statements for the three or nine months ended September 30, 2020.
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Notes to Condensed Consolidated Financial Statements - (Unaudited)
The Company completed the acquisition of privately-held Newport on January 2, 2020 for total cash consideration of $56.7 million, net of cash received. The preliminary purchase price allocation of consideration primarily included $30.2 million of land and buildings and equipment, $18.7 million of a customer relationship asset and $7.1 million of goodwill, each of which are allocated to the Warehouse segment. The customer relationship intangible asset has been preliminarily assigned a useful life of 25 years and will be amortized on a straight-line basis. The goodwill recorded is primarily attributable to the strategic benefits of the acquisition including the expanded presence in the Minneapolis-St. Paul market and leveraging integration experience to drive synergies and further enhance the warehouse network for new and existing customers. The Newport acquisition was completed through the acquisition of all of the membership interests of certain limited liability companies; the acquisition of all the membership interests allowed a portion of the goodwill recorded to be deductible for federal income tax purposes. Deferred taxes may not be recorded for deductible goodwill unless the tax basis exceeds the book basis; therefore, the Company recorded no deferred taxes for tax deductible goodwill as a result. Deductible goodwill will be available to reduce taxable income at both the REIT and its domestic TRS. As the valuation of certain assets and liabilities for purposes of purchase price allocations are preliminary in nature, they are subject to adjustment as additional information is obtained about the facts and circumstances regarding these assets and liabilities that existed at the acquisition date. Any adjustments to our estimates of purchase price allocation will be made in the periods in which the adjustments are determined and the cumulative effect of such adjustments will be calculated as if the adjustments had been completed as of the acquisition date. The preliminary purchase price allocation will be finalized within one year from the date of acquisition. We have included the financial results of the acquired operations in our Warehouse segment since the date of the acquisition. The adjustments recorded during the measurement period did not have a significant impact on our Condensed Consolidated Financial Statements for the nine months ended September 30, 2020.
The Company completed the acquisition of privately-held AM-C Warehouses on August 31, 2020 for total cash consideration of $82.5 million, net of cash received. The preliminary purchase price allocation of consideration primarily included $53.7 million of land and buildings and equipment, $19.8 million of a customer relationship asset and $9.5 million of goodwill, each of which are allocated to the Warehouse segment. The customer relationship intangible asset has been preliminarily assigned a useful life of 25 years and will be amortized on a straight-line basis. The goodwill recorded is primarily attributable to the strategic benefits of the acquisition including the expanded presence in the Dallas - Fort Worth market and expanding the Company’s relationship with a leading global protein producer. The AM-C acquisition was completed through the acquisition of substantially all of the assets from the seller and the acquisition allowed goodwill recorded to be deductible for federal income tax purposes. Deferred taxes may not be recorded for deductible goodwill unless the tax basis exceeds the book basis; therefore, the Company recorded no deferred taxes for tax deductible goodwill as a result. Deductible goodwill will be available to reduce taxable income at both the REIT and its domestic TRS. As the valuation of certain assets and liabilities for purposes of purchase price allocations are preliminary in nature, they are subject to adjustment as additional information is obtained about the facts and circumstances regarding these assets and liabilities that existed at the acquisition date. Any adjustments to our estimates of purchase price allocation will be made in the periods in which the adjustments are determined and the cumulative effect of such adjustments will be calculated as if the adjustments had been completed as of the acquisition date. The preliminary purchase price allocation will be finalized within one year from the date of acquisition. We have included the financial results of the acquired operations in our Warehouse segment since the date of the acquisition.
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Notes to Condensed Consolidated Financial Statements - (Unaudited)
Acquisitions Completed During 2019
The Company completed the acquisition of privately-held Cloverleaf on May 1, 2019. A summary of the final fair value of the assets acquired and liabilities assumed for total cash consideration of $1.24 billion, as well as adjustments made during the measurement period, is as follows (in thousands):

|  | Amounts Recognized as of the Acquisition Date |  | Measurement Period Adjustments (1) |  | Final Amounts Recognized as of the Acquisition Date (as Adjusted)(2)
Assets |  |  |  |  |  |
Land |  | $ | 59,363 |  |  | $ | 1,131 |  |  | $ | 60,494 |
Building and improvements |  | 687,821 |  |  | (19,670) |  |  | 668,151 |
Machinery and equipment |  | 144,825 |  |  | 822 |  |  | 145,647 |
Assets under construction |  | 20,968 |  |  | (3,994) |  |  | 16,974 |
Operating lease right-of-use assets |  | 1,254 |  |  | — |  |  | 1,254 |
Cash and cash equivalents |  | 4,332 |  |  | — |  |  | 4,332 |
Restricted cash |  | — |  |  | 526 |  |  | 526 |
Accounts receivable |  | 21,358 |  |  | 220 |  |  | 21,578 |
Goodwill |  | 107,643 |  |  | 18,453 |  |  | 126,096 |
Acquired identifiable intangibles: |  |  |  |  |  |
Customer relationships |  | 241,738 |  |  | 8,608 |  |  | 250,346 |
Trade names and trademarks |  | 1,623 |  |  | — |  |  | 1,623 |
Other assets |  | 18,720 |  |  | (11,668) |  |  | 7,052 |
Total assets |  | 1,309,645 |  |  | (5,572) |  |  | 1,304,073 |
Liabilities |  |  |  |  |  |
Accounts payable and accrued expenses |  | 30,905 |  |  | 12,598 |  |  | 43,503 |
Notes payable |  | 17,179 |  |  | (13,301) |  |  | 3,878 |
Operating lease obligations |  | 1,254 |  |  | — |  |  | 1,254 |
Unearned revenue |  | 3,536 |  |  | — |  |  | 3,536 |
Pension and postretirement benefits |  | 2,020 |  |  | (2,020) |  |  | — |
Deferred tax liability |  | 9,063 |  |  | (39) |  |  | 9,024 |
Total liabilities |  | 63,957 |  |  | (2,762) |  |  | 61,195 |
Total consideration for Cloverleaf acquisition |  | $ | 1,245,688 |  |  | $ | (2,810) |  |  | $ | 1,242,878 |

(1) The adjustments recorded during the measurement period did not have a significant impact on our Condensed Consolidated Financial Statements for the nine months ended September 30, 2020. The measurement period ended one year after the Cloverleaf Acquisition, on April 30, 2020.
(2) The measurement period adjustments were primarily due to refinements to third party appraisals and refinements in carrying amounts of certain assets and liabilities, as well as adjustments to certain tax accounts based on, among other things, adjustments to deferred tax liabilities. The net impact of the measurement period adjustments results in a net increase to goodwill.
All adjustments recorded during the measurement period were not material to the Condensed Consolidated Financial Statements. The final purchase price allocation is presented within the table above.
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Notes to Condensed Consolidated Financial Statements - (Unaudited)
As shown above, in connection with the Cloverleaf Acquisition the Company recorded an intangible asset of approximately $250.3 million for customer relationships which has been assigned a useful life of 25 years, and approximately $1.6 million for trade names and trademarks which has been assigned a useful life of 1.5 years. These intangible assets are being amortized on a straight-line basis over their respective useful lives. Based on the discussion under goodwill above, the Cloverleaf Acquisition resulted in federal income tax deductibility for a portion of the intangible assets. The deductible intangible assets will be available to reduce taxable income for both the REIT and its domestic TRS. The Company recorded a deferred tax liability of $1.9 million for intangible assets in 2019.
The unaudited pro forma financial information set forth below is based on the historical Condensed Consolidated Statements of Operations for the quarter ended September 30, 2019, adjusted to give effect to the Cloverleaf Acquisition as if it had occurred on January 1, 2019. The pro forma adjustments primarily relate to acquisition expenses, depreciation expense on acquired assets, amortization of acquired intangibles, and estimated interest expense related to financing transactions, the proceeds of which were used to fund the acquisition of Cloverleaf.
On March 1, 2019, Cloverleaf acquired Zero Mountain, Inc. and Subsidiaries (Zero Mountain). As a result, we have included the results of operations of Zero Mountain in the below pro forma financial information. The pro forma adjustments made include the acquisition expenses incurred in connection with Cloverleaf’s acquisition of Zero Mountain.
The accompanying unaudited pro forma consolidated financial statements exclude the results of all other acquisitions completed during 2019 and 2020, which were deemed immaterial. These statements are provided for illustrative purposes only and do not purport to represent what the actual Consolidated Statements of Operations of the Company would have been had the Cloverleaf Acquisition occurred on the dates assumed, nor are they necessarily indicative of what the results of operations would be for any future periods.

Pro forma (unaudited)
(in thousands, except per share data)
| Three Months Ended |  | Nine Months Ended
| September 30, 2019
Total revenue | $ | 466,182 |  |  | $ | 1,373,281 |
Net income available to common shareholders(1) | $ | 27,874 |  |  | $ | 36,296 |
Net income per share, diluted(2) | $ | 0.14 |  |  | $ | 0.18 |

(1) Pro forma net income available to common shareholders was adjusted to exclude $0.8 million and $26.5 million of acquisition related costs incurred by the Company during the three and nine months ended September 30, 2019.
(2)Adjusted to give effect to the issuance of approximately 42.1 million common shares in connection with the Cloverleaf Acquisition.
Since the date of acquisition, total revenues of approximately $53.9 million and $93.4 million and net income of approximately $2.8 million and $4.7 million associated with properties acquired in the Cloverleaf Acquisition are included in the Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2019, respectively.
Additionally, the Company completed the acquisition of privately-held Lanier on May 1, 2019 for total cash consideration of $81.9 million, net of cash received. The allocation of consideration primarily included $60.0 million of land and buildings and equipment, $6.4 million of goodwill, and $16.3 million of customer relationship intangible assets. The customer relationship asset has been assigned a useful life of 25 years and will be amortized on a straight-line basis. The goodwill recorded is primarily attributable to the strategic benefits of the acquisition including the increased presence in the north Georgia poultry market and leveraging integration
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Notes to Condensed Consolidated Financial Statements - (Unaudited)
experience to drive synergies and further enhance the warehouse network for new and existing customers. The Lanier acquisition was completed through the acquisition of both stock and partnership units; the acquisition of partnership units allowed a portion of the goodwill recorded to be deductible for federal income tax purposes. All adjustments recorded subsequent to the acquisition date were not material to the Condensed Consolidated Financial Statements. The final purchase price allocation was completed within one year from the date of acquisition and is reflected within our Condensed Consolidated Financial Statements as of September 30, 2020. We have included the financial results of the acquired operations in our Warehouse segment since the date of the acquisition.
4. Investment in Partially Owned Entities
During the first quarter of 2020, the Company purchased a 14.99% equity interest in a joint venture with Superfrio Armazéns Gerais S.A. (“SuperFrio” or “Brazil JV”) for Brazil reals of 117.8 million. Including certain transaction costs, the Company recorded an initial investment of USD $25.7 million in the joint venture. SuperFrio is a Brazilian-based company that provides temperature-controlled storage and logistics services including storage, warehouse services, and transportation. The debt of the unconsolidated joint venture is non-recourse to us, except for customary exceptions pertaining to such matters as intentional misuse of funds, environmental conditions and material misrepresentations.
As of September 30, 2020, our investment in partially owned entities accounted for under the equity method of accounting presented in our Condensed Consolidated Balance Sheet consists of the following (in thousands):

Joint Venture |  | Location |  | % Ownership |  | September 30, 2020
Superfrio |  | Brazil |  | 14.99% |  | $21,536

5. Acquisition, Litigation and Other Charges
The components of the charges and credits included in “Acquisition, litigation and other” in our Condensed Consolidated Statements of Operations are as follows (in thousands):

| Three Months Ended September 30, |  | Nine Months Ended September 30, |  |
Acquisition, litigation and other | 2020 |  | 2019 |  | 2020 |  | 2019 |  |  |  |
Acquisition related costs | $ | 4,861 |  |  | $ | 2,671 |  |  | $ | 8,278 |  |  | $ | 19,126 |  |  |  |  |
Litigation | 258 |  |  | 197 |  |  | 258 |  |  | 1,574 |  |  |  |  |
Severance, equity award modifications and acceleration | (50) |  |  | 1,031 |  |  | 1,022 |  |  | 7,965 |  |  |  |  |
Non-offering related equity issuance expenses | — |  |  | (29) |  |  | — |  |  | 1,318 |  |  |  |  |
Terminated site operations costs | (520) |  |  | (90) |  |  | (520) |  |  | 254 |  |  |  |  |
Other | 733 |  |  | — |  |  | 733 |  |  | — |  |  |  |  |
Total acquisition, litigation and other | $ | 5,282 |  |  | $ | 3,780 |  |  | $ | 9,771 |  |  | $ | 30,237 |  |  |  |  |

Acquisition related costs include costs associated with business 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 merger and acquisition integration, such as work associated with information systems and other projects including spending to support future acquisitions, and primarily consist of professional services. We consider acquisition related costs to be corporate costs regardless of the segment or segments involved in the transaction. Refer to Note 3 for further information regarding acquisitions completed during 2019 and 2020.
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Notes to Condensed Consolidated Financial Statements - (Unaudited)
Litigation costs consist of expenses incurred in order to defend the Company from litigation charges outside of the normal course of business as well as related settlements not in the normal course of business. Litigation costs incurred in connection with matters arising from the ordinary course of business are expensed as a component of “Selling, general and administrative expense” on the Condensed Consolidated Statements of Operations.
Severance costs represent 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 or businesses. Equity acceleration and modification costs represent the unrecognized expense for stock 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. For the nine months ended September 30, 2019, severance, equity modification and acceleration expense consists of $3.6 million of severance related to reduction in headcount as a result of the synergies created from the Cloverleaf Acquisition and organizational transformation of our international operations, $1.2 million of severance related to the departure of two former executives, as well as $3.1 million of accelerated equity award vesting. Refer to Note 11 for further details of all equity modifications and equity acceleration.
Non-offering related equity issuance expense consists of non-registration statement related legal fees associated with the selling shareholders’ secondary public offering completed during the first quarter of 2019, which consisted solely of shares sold by YF ART Holdings and Goldman Sachs and affiliates (see Note 1 for more information). The Company received no proceeds from the secondary offering.
Terminated site operations costs relates to repair 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 additional superannuation pension costs related to prior years upon review by the Australian Tax Office.
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Notes to Condensed Consolidated Financial Statements - (Unaudited)
6. Debt
The Company’s outstanding indebtedness as of September 30, 2020 and December 31, 2019 is as follows (in thousands):

|  |  |  | September 30, 2020 | December 31, 2019
Indebtedness | Stated Maturity Date | Contractual Interest Rate | Effective Interest Rate as of September 30, 2020 | Carrying Amount | Estimated Fair Value | Carrying Amount | Estimated Fair Value
2013 Mortgage Loans |  |  |  |  |
Senior note | 5/2023 | 3.81% | 4.14% | $ | 176,416 |  | $ | 181,707 |  | $ | 181,443 |  | $ | 184,618 |
Mezzanine A | 5/2023 | 7.38% | 7.55% | 70,000 |  | 71,575 |  | 70,000 |  | 70,525 |
Mezzanine B | 5/2023 | 11.50% | 11.75% | 32,000 |  | 32,880 |  | 32,000 |  | 32,320 |
Total 2013 Mortgage Loans |  |  |  | 278,416 |  | 286,162 |  | 283,443 |  | 287,463 |
Senior Unsecured Notes |  |  |  |  |  |  |
Series A 4.68% notes due 2026 | 1/2026 | 4.68% | 4.77% | 200,000 |  | 230,000 |  | 200,000 |  | 217,750 |
Series B 4.86% notes due 2029 | 1/2029 | 4.86% | 4.92% | 400,000 |  | 476,000 |  | 400,000 |  | 439,000 |
Series C 4.10% notes due 2030 | 1/2030 | 4.10% | 4.15% | 350,000 |  | 401,625 |  | 350,000 |  | 366,625 |
Total Senior Unsecured Notes |  |  |  | 950,000 |  | 1,107,625 |  | 950,000 |  | 1,023,375 |
2020 Senior Unsecured Term Loan Tranche A-1(1) | 3/2025 | L+0.95% | 2.64% | 425,000 |  | 420,750 |  | — |  | — |
2020 Senior Unsecured Term Loan Tranche A-2(2)(6) | 3/2025 | C+0.95% | 1.57% | 187,675 |  | 185,798 |  | — |  | — |
Total 2020 Senior Unsecured Term Loan A Facility(4) |  | 612,675 |  | 606,548 |  | — |  | — |
2018 Senior Unsecured Term Loan A Facility(1)(4) | 1/2023 | L+1.00% | 3.14% | — |  | — |  | 475,000 |  | 472,625 |
Total principal amount of indebtedness | $ | 1,841,091 |  | $ | 2,000,335 |  | $ | 1,708,443 |  | $ | 1,783,463 |
Less: unamortized deferred financing costs |  |  |  | (13,607) |  | n/a | (12,996) |  | n/a
Total indebtedness, net of unamortized deferred financing costs(3) | $ | 1,827,484 |  | $ | 2,000,335 |  | $ | 1,695,447 |  | $ | 1,783,463 |
2020 Senior Unsecured Revolving Credit Facility(3)(5) | 3/2024 | L+0.85% | 0.23% | $ | — |  | $ | — |  | N/A | N/A
2018 Senior Unsecured Revolving Credit Facility(1) (3) | 1/2021 | L+0.90% | 0.36% | N/A | N/A | $ | — |  | $ | — |

(1) L = one-month LIBOR.
(2) C = one-month CDOR.
(3) During the first quarter of 2020, the Company refinanced its Senior Unsecured Credit Facility. As such, the 2020 Senior Unsecured Revolving Credit Facility was in effect as of September 30, 2020 and the 2018 Senior Unsecured Revolving Credit Facility was in effect as of December 31, 2019. The above disclosure reflects N/A for the reporting date that the respective instrument was not in effect.
(4) During the first quarter of 2020, the Company refinanced its Senior Unsecured Term Loan A. As such, the 2020 Senior Unsecured Term Loan A Facility was in effect as of September 30, 2020 and the 2018 Senior Unsecured Term Loan A Facility was in effect as of December 31, 2019.
(5) The Company has the option to extend the 2020 Senior Unsecured Revolving Credit Facility up to two times for a six-month period each.
(6) The 2020 Senior Unsecured Term Loan Tranche A-2 is denominated in Canadian dollars and aggregates to CAD $250.0 million. The carrying value in the table above is the US dollar equivalent as of September 30, 2020.
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Notes to Condensed Consolidated Financial Statements - (Unaudited)
2020 Senior Unsecured Credit Facility
On March 26, 2020, we entered into a five-year Senior Unsecured Term Loan A Facility and a four-year $800 million Senior Unsecured Revolving Credit Facility, which we refer to as the 2020 Senior Unsecured Credit Facility. The proceeds were used to refinance the existing $800 million 2018 Senior Unsecured Revolving Credit Facility maturing January 23, 2021 and USD denominated $475 million 2018 Senior Unsecured Term Loan maturing January 23, 2023. The total borrowing capacity of the 2020 Senior Unsecured Credit Facility is approximately $1.4 billion USD. The Company reduced the margin on the 2020 Senior Unsecured Term Loan A Facility and 2020 Senior Unsecured Revolving Credit Facility by five basis points.
The 2020 Senior Unsecured Term Loan A Facility is broken into two tranches. Tranche A-1 is comprised of a $425.0 million USD term loan and Tranche A-2 is comprised of a CAD $250.0 million term loan, both are five-year loans maturing in 2025. Tranche A-2 provides a natural hedge to the Company’s investment in Canada. We refer to Tranches A-1 and A-2 in aggregate as the 2020 Senior Unsecured Term Loan Facility. In connection with entering into the agreement, we capitalized approximately $3.2 million of debt issuance costs related to the term loan, which we amortize as interest expense under the effective interest method. As of September 30, 2020, $7.4 million of unamortized debt issuance costs related to the 2020 Senior Unsecured Term Loan A Facility are included in “Mortgage notes, senior unsecured notes and term loans” in the accompanying Condensed Consolidated Balance Sheets.
The maturity of the 2020 Senior Unsecured Revolving Credit Facility is March, 26 2024; however, the Company has the option to extend the maturity up to two times, each for a six-month period. The Company must meet certain criteria in order to extend the maturity. All representations and warranties must be in effect, it must obtain updated resolutions from loan parties, and an additional 6.25 basis points extension fee must be paid. In connection with entering into the agreement, we capitalized approximately $5.2 million of debt issuance costs for the 2020 Senior Unsecured Revolving Credit Facility, which we amortize as interest expense under the straight-line method. Unamortized deferred financing costs as of December 31, 2019 of $2.8 million will continue to be amortized over the life of the 2020 Senior Unsecured Revolving Credit Facility. As of September 30, 2020, $6.3 million of unamortized debt issuance costs related to the revolving credit facility are included in “Other assets” in the accompanying Condensed Consolidated Balance Sheets.
Our 2020 Senior Unsecured Credit Facility contains representations, covenants and other terms customary for a publicly traded REIT. In addition, it contains certain financial covenants, as defined in the credit agreement, including:
•a maximum leverage ratio of less than or equal to 60% of our total asset value. Following a material acquisition, leverage ratio shall not exceed 65%;
•a maximum unencumbered leverage ratio of less than or equal to 60% to unencumbered asset value. Following a material acquisition, unencumbered leverage ratio shall not exceed 65%;
•a maximum secured leverage ratio of less than or equal to 40% to total asset value. Following a material acquisition, secured leverage ratio shall not exceed 45%;
•a minimum fixed charge coverage ratio of greater than or equal to 1.50x; and
•a minimum unsecured interest coverage ratio of greater than or equal to 1.75x.
Material Acquisition in our 2020 Senior Unsecured Credit Facility is defined as one in which assets acquired exceeds an amount equal to 5% of total asset value as of the last day of the most recently ended fiscal quarter publicly available. Obligations under our 2020 Senior Unsecured Credit Facility are general unsecured obligations of our Operating Partnership and are guaranteed by the Company and certain subsidiaries of the Company. As of September 30, 2020, the Company was in compliance with all debt covenants.
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Notes to Condensed Consolidated Financial Statements - (Unaudited)
There were $21.0 million letters of credit issued on the Company’s 2020 Senior Unsecured Revolving Credit Facility as of September 30, 2020.
2018 Senior Unsecured Credit Facility
On December 4, 2018, we entered into the 2018 Senior Unsecured Credit Facility to, among other things, (i) increase the revolver borrowing capacity from $450.0 million to $800.0 million, (ii) convert the credit facility (term loan and revolver) from a secured credit facility to an unsecured credit facility, and (iii) decrease the applicable interest rate margins from 2.35% to 1.45% and decrease the fee on unused borrowing capacity by five basis points. The terms of the revolver allow for the ability to draw proceeds in multiple currencies, up to $400 million. In connection with entering into the original agreement and subsequent amendments for the Term Loan A Credit Facility, we capitalized approximately $8.9 million of debt issuance costs, which we amortize as interest expense under the effective interest method. As of December 31, 2019, the unamortized balance of Term Loan A debt issuance costs was $6.1 million and was included in “Mortgage notes, senior unsecured notes and term loans” on the accompanying Condensed Consolidated Balance Sheets.
On September 24, 2019, we reduced our interest rate margins from 1.45% to 1.00% and decreased the fee on unused borrowing capacity by five basis points for usage greater than 50% of the total commitment and 15 basis points for usage less than 50% of commitment. The fee for unused borrowing capacity was 20 basis points regardless of the percentage of total commitment used. During the third quarter of 2019, the Company received a favorable credit rating. This rating, when combined with existing ratings, allowed the Company to transition to a favorable ratings-based pricing grid during the third quarter of 2019.
There were $23.0 million letters of credit issued on the Company’s 2018 Senior Unsecured Revolving Credit Facility as of December 31, 2019. During the first quarter of 2020, the 2018 Senior Unsecured Revolving Credit Facility was refinanced and is no longer outstanding as of September 30, 2020.
Series A, B and C Senior Unsecured Notes
On April 26, 2019, we priced a debt private placement transaction consisting of $350.0 million senior unsecured notes with a coupon of 4.10% due January 8, 2030 (“Series C”). The transaction closed on May 7, 2019. Interest is payable on January 8 and July 8 of each year until maturity, with the first payment occurring January 8, 2020. The initial January 8, 2020 payment included interest accrued since May 7, 2019. The notes are general unsecured obligations of the Operating Partnership and are guaranteed by the Company and certain subsidiaries of the Company. The Company applied the proceeds of the private placement transaction to repay the indebtedness outstanding under our senior unsecured revolving credit facility incurred in connection with the funding of the Cloverleaf and Lanier acquisitions.
On November 6, 2018, we priced a debt private placement transaction consisting of (i) $200.0 million senior unsecured notes with a coupon of 4.68% due January 8, 2026 (“Series A”) and (ii) $400.0 million senior unsecured notes with a coupon of 4.86% due January 8, 2029 (“Series B”). The transaction closed on December 4, 2018. Interest is payable on January 8 and July 8 of each year until maturity, with the first payment occurring July 8, 2019. The notes are general unsecured senior obligations of the Operating Partnership and are guaranteed by the Company and certain subsidiaries of the Company. The Company used a portion of the proceeds of the private placement transaction to repay the outstanding balances of the $600.0 million Americold 2010 LLC Trust, Commercial Mortgage Pass-Through Certificates, Series 2010, ART (2010 Mortgage Loans). The Company also used the remaining proceeds to extinguish the Australian term loan and the New Zealand term loan (ANZ Loans).
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Notes to Condensed Consolidated Financial Statements - (Unaudited)
The Series A, Series B, and Series C senior notes (collectively referred to as the “Senior Unsecured Notes”) and guarantee agreement includes a prepayment option executable at any time during the term of the loans. The prepayment can be either a partial payment or payment in full, as long as the partial payment is at least 5% of the outstanding principal. Any prepayment in full must include a make-whole amount, which is the discounted remaining scheduled payments due to the lender. The discount rate to be used is equal to 0.50% plus the yield to maturity reported for the most recently actively traded U.S. Treasury Securities with a maturity equal to the remaining average life of the prepaid principal. The Company must give each lender at least 10 days written notice whenever it intends to prepay any portion of the debt.
If a change in control occurs for the Company, the Company must issue an offer to prepay the remaining portion of the debt to the lenders. The prepayment amount will be 100% of the principal amount, as well as accrued and unpaid interest.
The Company is required to maintain at all times an investment grade debt rating for each series of notes from a nationally recognized statistical rating organization. In addition, the Senior Unsecured Notes contain certain financial covenants required on a quarterly or occurrence basis, as defined in the credit agreement, including:
•a maximum leverage ratio of less than or equal to 60% of our total asset value;
•a maximum unsecured indebtedness to qualified assets ratio of less than 0.60 to 1.00;
•a maximum total secured indebtedness ratio of less than 0.40 to 1.00;
•a minimum fixed charge coverage ratio of greater than or equal to 1.50 to 1.00; and
•a minimum unsecured debt service ratio of greater than or equal to 2.00 to 1.00.
As of September 30, 2020, the Company was in compliance with all debt covenants.
2013 Mortgage Loans
On May 1, 2013, we entered into a mortgage financing in an aggregate principal amount of $322.0 million, which the Company refers to as the 2013 Mortgage Loans. The debt consists of a senior debt note and two mezzanine notes. The components are cross-collateralized and cross-defaulted. The senior debt note requires monthly principal payments. The mezzanine notes require no principal payments until the stated maturity date in May 2023. The interest rates on the notes are fixed and range from 3.81% to 11.50% per annum. The senior debt note and the two mezzanine notes remain subject to yield maintenance provisions. The Company used the net proceeds of these loans to refinance certain of the 2006 Mortgage Loans, acquire two warehouses, and fund general corporate purposes.
The 2013 Mortgage Loans are collateralized by 15 warehouses. The terms governing the 2013 Mortgage Loans require us to maintain certain cash amounts in accounts that are restricted as to their use for the respective warehouses. As of September 30, 2020, the amount of restricted cash associated with the 2013 Mortgage Loans was $4.0 million. Additionally, if we do not maintain certain financial thresholds, including a debt service coverage ratio of 1.10x, the cash generated will further be temporarily restricted and limited to the use for scheduled debt service and operating costs. The 2013 Mortgage Loans are non-recourse to the Company, subject to customary non-recourse provisions as stipulated in the agreements.
The mortgage loan also requires compliance with other financial covenants, including a debt coverage ratio and cash flow calculation, as defined. As of September 30, 2020, the Company was in compliance with all debt covenants.
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Notes to Condensed Consolidated Financial Statements - (Unaudited)
Debt Covenants
Our Senior Unsecured Credit Facilities, the Senior Unsecured Notes and 2013 Mortgage Loans all require financial statement reporting, periodic reporting of compliance with financial covenants, other established thresholds and performance measurements, and compliance with affirmative and negative covenants that govern our allowable business practices. The affirmative and negative covenants include, among others, continuation of insurance, maintenance of collateral (in the case of the 2013 Mortgage Loans), the maintenance of REIT status, and restrictions on our ability to enter into certain types of transactions or take on certain exposures. As of September 30, 2020, we were in compliance with all debt covenants.
Loss on debt extinguishment and modifications
In connection with the refinancing of the 2018 Senior Unsecured Credit Facility during the first quarter of 2020, the Company recorded $0.8 million to “Loss on debt extinguishment and modifications” in the accompanying Condensed Consolidated Statements of Operations, representing the write-off of unamortized deferred financing costs from the 2018 Senior Unsecured Credit Facility. These write-offs were a result of two lenders in the 2018 Senior Unsecured Term Loan A Facility that did not participate in the 2020 Senior Unsecured Term Loan A Facility, accordingly those lenders’ portion of unamortized deferred financing costs were written off. Similarly, two lenders in the 2018 Senior Unsecured Revolving Credit Facility did not participate in the 2020 Senior Unsecured Revolving Credit Facility, and those lender’s portions of unamortized deferred financing costs were written off.
Aggregate future repayments of indebtedness
The aggregate maturities of the Company’s total indebtedness as of September 30, 2020, including amortization of principal amounts due under the mortgage notes, for each of the next five years and thereafter, are as follows:

As of September 30, 2020: | (In thousands)
September 30, 2021 | $ | 6,967
September 30, 2022 | 7,242
September 30, 2023 | 264,206
September 30, 2024 | — |
September 30, 2025 | 612,676
Thereafter | 950,000
Aggregate principal amount of debt | 1,841,091
Less unamortized deferred financing costs | (13,607) |
Total debt net of unamortized deferred financing costs | $ | 1,827,484

7. Derivative Financial Instruments
The Company is subject to volatility in interest rates due to variable-rate debt. To manage this risk, the Company has entered into multiple interest rate swap agreements. The January 2019 agreement hedges $100.0 million of variable interest-rate debt, or 16%, of the Company’s outstanding variable-rate debt as of September 30, 2020. The August 2019 agreement hedges $225.0 million of variable interest-rate debt, or 37%, of the Company’s outstanding variable-rate debt as of September 30, 2020. Each agreement converts the Company’s variable-rate debt to a fixed-rate basis into 2024, thus reducing the impact of interest rate changes on future interest expense.
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Notes to Condensed Consolidated Financial Statements - (Unaudited)
These agreements involve the receipt of variable-rate amounts in exchange for fixed-rate interest payments over the life of the respective agreement without an exchange of the underlying notional amount. The Company’s objective for utilizing these derivative instruments is to reduce its exposure to fluctuations in cash flows due to changes in interest rates.
For derivatives designated and that qualify as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in Accumulated Other Comprehensive Income and subsequently reclassified into interest expense in the same period during which the hedged transaction affects earnings. Amounts reported in Accumulated Other Comprehensive Income related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt. During the next twelve months, the Company estimates that an additional $5.0 million will be reclassified as an increase to interest expense. The Company classifies cash inflow and outflows from derivatives within operating activities on the Condensed Consolidated Statements of Cash Flows.
The Company is subject to volatility in foreign exchange rates due to foreign-currency denominated intercompany loans. The Company implemented cross-currency swaps to manage the foreign currency exchange rate risk on these intercompany loans. These agreements effectively mitigate the Company’s exposure to fluctuations in cash flows due to foreign exchange rate risk by converting the Company’s floating exchange rate to a fixed-rate basis for the life of the intercompany loans. These agreements involve the receipt of fixed USD amounts in exchange for payment of fixed AUD and NZD amounts over the life of the respective intercompany loan. The entirety of the Company’s outstanding intercompany loans receivable balances, $153.5 million AUD and $37.5 million NZD, were hedged under the cross-currency swap agreements at September 30, 2020.
For derivatives designated and that qualify as cash flow hedges of foreign exchange risk, the gain or loss on the derivative is recorded in Accumulated Other Comprehensive Income and subsequently reclassified in the period(s) during which the hedged transaction affects earnings within the same income statement line item as the earnings effect of the hedged transaction. During the next twelve months, the Company estimates a nominal amount will be reclassified as a decrease to interest expense. The Company classifies cash inflow and outflows from derivatives within operating activities on the Condensed Consolidated Statements of Cash Flows.
The Company is subject to volatility in foreign currencies against its functional currency, the US dollar. Periodically, the Company uses foreign currency derivatives including currency forward contracts to manage its exposure to fluctuations in exchange rates. While these derivatives are hedging the fluctuations in foreign currencies, they do not meet the requirements to be accounted for as hedging instruments. As a result, the changes in the fair value of derivatives not designated in hedging relationships are recorded directly in earnings. During the first quarter of 2020, the Company’s previous two outstanding foreign exchange forward contracts, which were entered into in conjunction with the funding of the Nova Cold Acquisition that were not designated as hedges in a qualifying hedging relationship, matured. The first contract was entered into in December 2019 with a notional to purchase CAD $217.0 million and sell USD matured on January 2, 2020 and settled for a gain of $2.1 million. The second contract was entered into simultaneously with a notional to sell CAD $217.0 million and purchase USD maturing on January 31, 2020 and was subsequently designated as a net investment hedge on January 2, 2020. The net unrealized gain on the change in fair value of the foreign exchange forward contracts included within “Foreign currency exchange gain (loss), net” on the accompanying Condensed Consolidated Statement of Operations for the nine months ended September 30, 2020 was $0.1 million.
The Company is also exposed to fluctuations in foreign exchange rates on property investments it holds in foreign countries. The Company uses forward currency forwards to hedge its exposure to changes in exchange rates on certain of its foreign investments as well. For derivatives designated as net investment hedges, the changes in the fair value of the derivatives are reported in Accumulated Other Comprehensive Income as part of the cumulative
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Notes to Condensed Consolidated Financial Statements - (Unaudited)
translation adjustment. Amounts are reclassified out of accumulated other comprehensive income into earnings when the hedged net investment is either sold or substantially liquidated.
On January 2, 2020, the Company designated the above noted forward currency contract with a notional to sell CAD $217.0 million and purchase USD maturing on January 31, 2020. This contract was then settled for a gain of $0.2 million and a new contract was entered into with same notional to sell CAD $217.0 million and purchase USD which matured on February 28, 2020. The second contract was settled for a gain of $2.8 million upon the maturity date of February 28, 2020.
As of September 30, 2020 and December 31, 2019, the Company did not have any currency forwards that were designated as net investment hedges outstanding.
The Company determines the fair value of these derivative instruments using a present value calculation with significant observable inputs classified as Level 2 of the fair value hierarchy. Derivative asset balances are recorded on the Condensed Consolidated Balance Sheets within “Other assets” and derivative liability balances are recorded on the Condensed Consolidated Balance Sheets within “Accounts payable and accrued expenses”. The following table illustrates the disclosure in tabular format of fair value amounts of derivative instruments at September 30, 2020 and December 31, 2019 (in thousands):

|  | Derivative Assets |  |  | Derivative Liabilities |  |
|  | September 30, 2020 |  |  | December 31, 2019 |  |  | September 30, 2020 |  |  | December 31, 2019 |  |  |  |
Designated derivatives |  |  |  |  |  |  |  |
Foreign exchange contracts |  | $ | 2,572 |  |  |  | $ | 1,376 |  |  |  | $ | — |  |  |  | $ | — |  |  |  |  |
Interest rate contracts |  | — |  |  |  | 2,933 |  |  |  | 17,466 |  |  |  | 3,505 |  |  |  |  |
Undesignated derivatives |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Foreign exchange forwards |  | — |  |  |  | 2,546 |  |  |  | — |  |  |  | 2,589 |  |  |  |  |
Total derivatives | $ | 2,572 |  |  |  | $ | 6,855 |  |  |  | $ | 17,466 |  |  |  | $ | 6,094 |  |  |  |  |

The following table presents the effect of the Company’s derivative financial instruments on the accompanying Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2020 and 2019, including the impacts to Accumulated Other Comprehensive Income (AOCI) (in thousands):

| Amount of Gain or (Loss) Recognized in Other Comprehensive Income on Derivative |  | Location of Gain or (Loss) Reclassified from AOCI into Income |  | Amount of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income
| Three Months Ended September 30, |  |  | Three Months Ended September 30,
| 2020 |  | 2019 |  |  | 2020 |  | 2019
Interest rate contracts | $ | 1,099 |  |  | $ | 5 |  |  | Interest expense |  | $ | (1,243) |  |  | $ | 102 |
Foreign exchange contracts | (7,196) |  |  | 6,082 |  |  | Foreign currency exchange gain, net |  | (3,807) |  |  | 5,512 |
Foreign exchange contracts | — |  |  | — |  |  | Interest expense |  | (43) |  |  | 110 |
Total designated cash flow hedges | $ | (6,097) |  |  | $ | 6,087 |  |  |  |  | $ | (5,093) |  |  | $ | 5,724 |

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| Amount of Gain or (Loss) Recognized in Other Comprehensive Income on Derivative |  | Location of Gain or (Loss) Reclassified from AOCI into Income |  | Amount of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income
| Nine Months Ended September 30, |  |  | Nine Months Ended September 30,
| 2020 |  | 2019 |  |  | 2020 |  | 2019
Interest rate contracts | $ | (16,895) |  |  | $ | (3,633) |  |  | Interest expense |  | $ | (2,181) |  |  | $ | 102 |
Foreign exchange contracts | 1,168 |  |  | 5,736 |  |  | Foreign currency exchange loss, net |  | 77 |  |  | 6,005 |
Foreign exchange contracts |  |  |  |  | Interest expense |  | 164 |  |  | 110 |
Foreign exchange forwards | 5,250 |  |  | — |  |  |  |  | — |  |  | — |
Total designated cash flow hedges | $ | (10,477) |  |  | $ | 2,103 |  |  |  |  | $ | (1,940) |  |  | $ | 6,217 |

Interest expense recorded in the accompanying Condensed Consolidated Statements of Operations was $23.1 million and $24.9 million during the three months ended September 30, 2020 and 2019, respectively, and $70.1 million and $70.6 million during the nine months ended September 30, 2020 and 2019, respectively. The Company recorded total foreign currency exchange loss, net in its Condensed Consolidated Statements of Operations of $0.2 million and $0.4 million for the three and nine months ended September 30, 2020, respectively. During the nine months ended September 30, 2019, the Company recorded total foreign currency exchange loss, net in its Condensed Consolidated Statements of Operations of $0.1 million. The total foreign currency exchange loss for the three months ended September 30, 2019 was nominal.
The table below presents a gross presentation, the effects of offsetting, and a net presentation of the Company’s derivatives as of September 30, 2020 and December 31, 2019. The net amounts of derivative assets or liabilities can be reconciled to the tabular disclosure of fair value. The tabular disclosure of fair value provides the location that derivative assets and liabilities are presented on the accompanying Condensed Consolidated Balance Sheets (in thousands):

September 30, 2020
Offsetting of Derivative Assets |  |  |  |  |  |  |  |
|  |  |  |  |  |  | Gross Amounts Not Offset in the Condensed Consolidated Balance Sheet |  |
| Gross Amounts of Recognized Assets |  | Gross Amounts Offset in the Condensed Consolidated Balance Sheet |  | Net Amounts of Assets presented in the Condensed Consolidated Balance Sheet |  | Financial Instruments |  | Cash Collateral Received |  | Net Amount
Derivatives | $ | 2,572 |  |  | $ | — |  |  | $ | 2,572 |  |  | $ | (2,572) |  |  | $ | — |  |  | $ | — |
Offsetting of Derivative Liabilities |  |  |  |  |  |  |  |
|  |  |  |  |  |  | Gross Amounts Not Offset in the Condensed Consolidated Balance Sheet |  |
| Gross Amounts of Recognized Liabilities |  | Gross Amounts Offset in the Condensed Consolidated Balance Sheet |  | Net Amounts of Liabilities presented in the Condensed Consolidated Balance Sheet |  | Financial Instruments |  | Cash Collateral Received |  | Net Amount
Derivatives | $ | (17,466) |  |  | $ | — |  |  | $ | (17,466) |  |  | $ | 2,572 |  |  | $ | — |  |  | $ | (14,894) |

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December 31, 2019
Offsetting of Derivative Assets |  |  |  |  |  |  |  |
|  |  |  |  |  |  | Gross Amounts Not Offset in the Condensed Consolidated Balance Sheet |  |
| Gross Amounts of Recognized Assets |  | Gross Amounts Offset in the Condensed Consolidated Balance Sheet |  | Net Amounts of Assets presented in the Condensed Consolidated Balance Sheet |  | Financial Instruments |  | Cash Collateral Received |  | Net Amount
Derivatives | $ | 6,855 |  |  | $ | — |  |  | $ | 6,855 |  |  | $ | (3,966) |  |  | $ | — |  |  | $ | 2,889 |
Offsetting of Derivative Liabilities |  |  |  |  |  |  |  |
|  |  |  |  |  |  | Gross Amounts Not Offset in the Condensed Consolidated Balance Sheet |  |
| Gross Amounts of Recognized Liabilities |  | Gross Amounts Offset in the Condensed Consolidated Balance Sheet |  | Net Amounts of Liabilities presented in the Condensed Consolidated Balance Sheet |  | Financial Instruments |  | Cash Collateral Received |  | Net Amount
Derivatives | $ | (6,094) |  |  | $ | — |  |  | $ | (6,094) |  |  | $ | 3,966 |  |  | $ | — |  |  | $ | (2,128) |

As of September 30, 2020, the fair value of derivatives in a net liability position, which includes accrued interest but excludes any adjustment for nonperformance risk, related to these agreements was $17.6 million. As of September 30, 2020, the Company has not posted any collateral related to these agreements. .
The Company has agreements with each of its derivative counterparties that contain a provision where the Company could be declared in default on its derivative obligations if repayment of the underlying indebtedness is accelerated by the lender due to the Company’s default on the indebtedness. In addition, termination events such as the Company’s credit agreement not being secured, or not being guaranteed pursuant to the Company, could cause the Company to be in default on its derivative obligations. The Company has not defaulted on any of its derivative obligations.
If the Company had breached any of these provisions at September 30, 2020, it could have been required to settle its obligations under the agreements at their termination value of $17.7 million
Refer to Note 16 for additional details regarding the impact of the Company’s derivatives on AOCI for the three and nine months ended September 30, 2020 and 2019, respectively.
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8. Sale-Leasebacks of Real Estate
The Company’s outstanding sale-leaseback financing obligations of real estate-related long-lived assets as of September 30, 2020 and December 31, 2019 are as follows:

| Maturity |  | Interest Rate as of September 30, 2020 | September 30, 2020 |  | December 31, 2019
|  |  |  | (In thousands)
1 warehouse – 2010 | 7/2030 |  | 10.34% | $ | 18,769 |  |  | $ | 18,994 |
11 warehouses – 2007 | 9/2027 |  | 7.00%-19.59% | 94,254 |  |  | 96,765 |
Total sale-leaseback financing obligations | $ | 113,023 |  |  | $ | 115,759 |

9. Fair Value Measurements
The Company categorizes assets and liabilities that are recorded at fair values into one of three tiers based upon fair value hierarchy. These tiers include: Level 1, defined as quoted market prices in active markets for identical assets or liabilities; Level 2, defined as inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, model-based valuation techniques for which all significant assumptions are observable in the market, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and Level 3, defined as unobservable inputs that are not corroborated by market data. The carrying amounts of cash and cash equivalents, restricted cash, accounts receivable, accounts payable, accrued expenses and revolving line of credit approximate their fair values due to the short-term maturities of the instruments.
The Company’s mortgage notes, senior unsecured notes and term loans are reported at their aggregate principal amount less unamortized deferred financing costs on the accompanying Condensed Consolidated Balance Sheets. The fair value of these financial instruments is estimated based on the present value of the expected coupon and principal payments using a discount rate that reflects the projected performance of the collateral asset as of each valuation date. The inputs used to estimate the fair value of the Company’s mortgage notes, senior unsecured notes and term loans are comprised of Level 2 inputs, including senior industrial commercial real estate loan spreads, corporate industrial loan indexes, risk-free interest rates, and Level 3 inputs, such as future coupon and principal payments, and projected future cash flows.
The Company’s financial assets and liabilities recorded at fair value on a recurring basis include derivative instruments. The fair value of interest rate swap and cross currency swap agreements, which are designated as cash flow hedges, and foreign currency forward contracts designated as net investment hedges, is based on inputs other than quoted market prices that are observable (Level 2). The fair value of foreign currency forward contracts is based on adjusting the spot rate utilized at the balance sheet date for translation purposes by an estimate of the forward points observed in active markets (Level 2). Additionally, the fair value of derivatives includes a credit valuation adjustment to appropriately incorporate nonperformance risk for the Company and the respective counterparty. Although the credit valuation adjustments associated with derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by us and our counterparties, the significance of the impact on the overall valuation of our derivative positions is insignificant. The Company’s cash equivalent money market funds and restricted cash assets are valued at quoted market prices in active markets for identical assets (Level 1), which the Company receives from the financial institutions that hold such investments on its behalf. The fair value hierarchy discussed above is also applicable to the Company’s pension
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and other post-retirement plans. The Company uses the fair value hierarchy to measure the fair value of assets held by various plans. The Company recognizes transfers between levels within the hierarchy as of the beginning of the reporting period. There were no transfers between levels within the hierarchy as of September 30, 2020 and December 31, 2019, respectively.
The Company’s assets and liabilities recorded at fair value on a non-recurring basis include long-lived assets when events or changes in circumstances indicate that the carrying amounts may not be recoverable. The Company estimates the fair values using unobservable inputs classified as Level 3 of the fair value hierarchy.
The Company’s assets and liabilities measured or disclosed at fair value are as follows:

| Fair Value Hierarchy |  | Fair Value
|  | September 30, 2020 |  | December 31, 2019
|  |  | (In thousands)
Measured at fair value on a recurring basis: |  |  |  |  |
Interest rate swap asset | Level 2 |  | $ | — |  |  | $ | 2,936 |
Interest rate swap liability | Level 2 |  | 17,466 |  |  | 3,507 |
Cross-currency swap asset | Level 2 |  | 2,572 |  |  | 1,404 |
Foreign exchange forward contract asset | Level 2 |  | — |  |  | 2,546 |
Foreign exchange forward contract liability | Level 2 |  | — |  |  | 2,589 |
Disclosed at fair value: |  |  |  |  |
Mortgage notes, senior unsecured notes and term loans(1) | Level 3 |  | $ | 2,000,335 |  |  | $ | 1,783,463 |

(1)The carrying value of mortgage notes, senior unsecured notes and term loans is disclosed in Note 6.
10. Dividends and Distributions
In order to comply with the REIT requirements of the Internal Revenue Code, or the Code, the Company is generally required to make common share distributions (other than capital gain distributions) to its shareholders at least equal to 90% of its REIT taxable income, as defined in the Code, computed without regard to the dividends paid deduction and net capital gains. The Company’s common share dividend policy is to distribute a percentage of cash flow to ensure distribution requirements of the IRS are met while allowing the Company to retain cash to meet other needs, such as principal amortization, capital improvements and other investment activities.
Common share dividends are characterized for U.S. federal income tax purposes as ordinary income, qualified dividend, capital gains, non-taxable income return of capital, or a combination of the four. Common share dividends that exceed current and accumulated earnings and profits (calculated for tax purposes) constitute a return of capital rather than a dividend and generally reduce the shareholder’s basis in the common share. At the beginning of each year, we notify our shareholders of the taxability of the common share dividends paid during the preceding year. The payment of common share dividends is dependent upon our financial condition, operating results, and REIT distribution requirements and may be adjusted at the discretion of the Company’s Board of Trustees.
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The following tables summarize dividends declared and distributions paid to the holders of common shares for the nine months ended September 30, 2020 and 2019.

Nine Months Ended September 30, 2020
Month Declared/Paid | Dividend Per Share | Distributions Declared |  | Distributions Paid |  |
|  | Common Shares |  | Common Shares |  |
(In thousands, except per share amounts)
December (2019)/January | $ | 0.2000 |  | $ | — |  |  | $ | 38,796 |  |  |
December(a) |  | — |  |  | (169) |  | Dividend equivalents accrued on unvested restricted stock units to be paid when the awards vest.
December (2019)/January |  | — |  |  | 4 |  | Dividend equivalents paid on unvested restricted stock units that are not expected to vest (recognized as additional compensation).
March/April | 0.2100 |  | 42,568 |  |  | 42,568 |  |  |
March(b) |  | — |  |  | (233) |  | Dividend equivalents accrued on unvested restricted stock units to be paid when the awards vest.
March/April |  | — |  |  | 10 |  | Dividend equivalents paid on unvested restricted stock units that are not expected to vest (recognized as additional compensation).
May/July | 0.2100 |  | 43,271 |  |  | 43,271 |  |  |
May (c) |  | — |  |  | (232) |  | Dividend equivalents accrued on unvested restricted stock units to be paid when the awards vest.
May/July |  | — |  |  | 10 |  | Dividend equivalents paid on unvested restricted stock units that are not expected to vest (recognized as additional compensation).
September/October | $ | 0.2100 |  | 43,282 |  |  | — |  |  |
|  | $ | 129,121 |  |  | $ | 124,025 |  |  |

(a)Declared in December 2019 and included in the $38.8 million declared, see description to the right regarding timing of payment.
(b)Declared in March and included in the $42.6 million declared, see description to the right regarding timing of payment.
(c)Declared in May and included in the $43.3 million declared, see description to the right regarding timing of payment.
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Nine Months Ended September 30, 2019
Month Declared/Paid | Dividend Per Share | Distributions Declared |  | Distributions Paid |  |
|  | Common Shares |  | Common Shares |  |
(In thousands, except per share amounts)
December (2018)/January | $ | 0.1875 |  | $ | — |  |  | $ | 28,218 |  |  |
December(a) |  |  |  | (127) |  | Dividend equivalents accrued on unvested restricted stock units to be paid when the awards vest.
December (2018)/January |  |  |  | 7 |  | Dividend equivalents paid on unvested restricted stock units that are not expected to vest (recognized as additional compensation).
March/April | 0.2000 |  | 30,235 |  |  | 30,235 |  |  |
March (b) |  |  |  | (142) |  | Dividend equivalents accrued on unvested restricted stock units to be paid when the awards vest.
March/April |  |  |  | 15 |  | Dividend equivalents paid on unvested restricted stock units that are not expected to vest (recognized as additional compensation).
May/July | 0.2000 |  | 38,764 |  |  | 38,764 |  |  |
May (c) |  | — |  |  | (172) |  | Dividend equivalents accrued on unvested restricted stock units to be paid when the awards vest.
May/July |  | — |  |  | 13 |  | Dividend equivalents paid on unvested restricted stock units that are not expected to vest (recognized as additional compensation).
August/October | $ | 0.2000 |  | 38,795 |  |  | — |  |  |
|  | $ | 107,794 |  |  | $ | 96,811 |  |  |

(a)Declared in December 2018 and included in the $28.2 million declared, see description to the right regarding timing of payment.
(b)Declared in March and included in the $30.2 million declared, see description to the right regarding timing of payment.
(c)Declared in May and included in the $38.8 million declared, see description to the right regarding timing of payment.
11. Share-Based Compensation
All share-based compensation cost is measured at the grant date, based on the estimated fair value of the award. The Company issues time-based, performance-based and market performance-based equity awards. Time-based awards and cliff vesting market performance-based awards are recognized on a straight-line basis over the employees’ requisite service period, as adjusted for estimate of forfeitures. Performance-based awards are recognized ratably over the vesting period using a graded vesting attribution model upon the achievement of the performance target, as adjusted for estimate of forfeitures. The only performance-based awards issued by the Company were granted in 2016 and 2017.
Aggregate share-based compensation charges were $4.6 million and $3.4 million during the three months ended September 30, 2020 and 2019, respectively, and $13.3 million and $12.2 million during the nine months ended September 30, 2020 and 2019, respectively. Routine share-based compensation expense is included as a component of “Selling, general and administrative” expense on the accompanying Condensed Consolidated
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Statements of Operations. During the first quarter of 2019, approximately $3.1 million of share-based compensation expense was recorded as a component of “Acquisition, litigation and other” expense on the accompanying Condensed Consolidated Statements of Operations due to accelerated vesting of awards outstanding to former executives and an equity award modification upon trustee resignation. The award modifications and awards with accelerated vesting are discussed further under the section Modification of Restricted Stock Units and Accelerated Vesting of Awards. As of September 30, 2020, there was $25.3 million of unrecognized share-based compensation expense related to stock options and restricted stock units, which will be recognized over a weighted-average period of 1.9 years.
Americold Realty Trust 2010 Equity Incentive Plans
During December 2010, the Company and the common shareholders approved the Americold Realty Trust 2010 Equity Incentive Plan (2010 Plan), whereby the Company could issue stock options, stock appreciation rights, restricted stock, restricted stock units, stock bonus awards, and/or dividend equivalents with respect to the Company’s common shares, cash bonus awards, and/or performance compensation awards to certain eligible participants, as defined, based upon a reserved pool of 3,849,976 of the Company’s common shares. No additional awards may be granted under the 2010 Plan.
Americold Realty Trust 2017 Equity Incentive Plan
On January 4, 2018, the Company’s Board of Trustees adopted the Americold Realty Trust 2017 Equity Incentive Plan (2017 Plan), which permits the grant of various forms of equity- and cash-based awards from a reserved pool of 9,000,000 common shares of the Company. On January 17, 2018, the Company’s shareholders approved the 2017 Plan. Equity-based awards issued under the 2017 Plan have the rights to receive dividend equivalents on an accrual basis. Dividend equivalents for market performance-based awards are forfeitable in the event of termination for cause or when voluntary departure occurs during the vesting period. Otherwise, dividend equivalents are accrued at the time of declaration and are paid upon the vesting of the awards. Time-based awards have the right to receive non-forfeitable dividend equivalent distributions on unvested units throughout the vesting period. As of September 30, 2020 and December 31, 2019, the Company accrued $1.8 million and $1.1 million, respectively, of dividend equivalents on unvested units payable to employees and non-employee trustees.
All awards granted under the 2017 Plan dated on March 8, 2020 and thereafter include a retirement provision. The retirement provision allows that if a participant has either attained the age of 65, or has attained the age of 55 and has ten full years of service with the Company, and there are no facts, circumstances or events exist which would give the Company a basis to effect a termination of service for cause, then the award recipient is entitled to continued vesting of any outstanding equity-based awards which include the retirement provision. Should the participant choose to retire from the Company, the awards with the retirement provision would continue to vest. Accordingly, grants of time-based awards to an employee who has met the retirement criteria on or before the date of grant will be expensed at the date of grant. In addition, grants of time-based awards to employees who will meet the retirement criteria during the awards normal vesting period will be expensed between the date of grant and the date upon which the award recipient meets the retirement criteria. Time-based awards granted to recipients who meet the retirement criteria, and decide to retire, will continue vesting on the original vesting schedule as determined at grant date. A pro-rated portion of market-performance based awards granted to recipients who meet the retirement criteria will remain outstanding and eligible to vest based on actual performance through the last day of the performance period based on the number of days during the performance period that the recipient was employed.
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Modification of Restricted Stock Units and Accelerated Vesting of Awards
During the first quarter of 2019, the Company’s Compensation Committee approved the modification of an award issued in 2018 to a member of the Board of Trustees upon his resignation. This modification immediately accelerated the next vesting tranche of 100,000 restricted stock units which otherwise would not have vested until 2020 assuming the trustee continued service, under the original award agreement. As a result of this modification, the Company recognized approximately $2.9 million of share-based compensation expense during the first quarter of 2019.
Additionally, during the first quarter of 2019, the Company recognized accelerated share-based compensation expense of $0.2 million upon the termination of former executives, in accordance with the terms of their original award agreements.
Restricted Stock Units Activity
Restricted stock units are nontransferable until vested. Prior to the issuance of a common share, the grantees of restricted stock units are not entitled to vote the shares. Time-based restricted stock unit awards vest in equal annual increments over the vesting period. Performance-based and market performance-based restricted stock unit awards cliff vest upon the achievement of the performance target, as well as completion of the performance period.
The following table summarizes restricted stock unit grants under the 2017 Plan during the three and nine months ended September 30, 2020 and 2019, respectively:

Three Months Ended September 30, | Grantee Type | Number of Restricted Stock Units Granted | Vesting Period | Grant Date Fair Value (in thousands)
2020 | Employees | 10,608 | 1-3 years | $ | 403 |
2019 | Trustees | 5,982 | 1 year | $ | 200 |
2019 | Employees | 10,489 | 1-3 years | $ | 376 |

Nine Months Ended September 30, | Grantee Type | Number of Restricted Stock Units Granted | Vesting Period | Grant Date Fair Value (in thousands)
2020 | Trustees | 8,517 | 1 year | $ | 300 |
2020 | Employees | 295,274 | 1-3 years | $ | 9,137 |
2019 | Trustees | 18,267 | 1 year | $ | 575 |
2019 | Employees | 501,035 | 1-3 years | $ | 16,708 |

Of the restricted stock units granted for the nine months ended September 30, 2020, (i) 8,517 were time-based restricted stock units with a one year vesting period issued to non-employee trustees as part of their annual compensation, (ii) 186,464 were time-based graded vesting restricted stock units with various vesting periods ranging from one to three years issued to certain employees and (iii) 108,810 were market performance-based cliff vesting restricted stock units with a three-year vesting period issued to certain employees. The vesting of such market performance-based awards will be determined based on Americold Realty Trust’s total shareholder
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return (TSR) relative to the MSCI US REIT Index (RMZ), computed for the performance period that began January 1, 2020 and will end December 31, 2022.
Of the restricted stock units granted for the nine months ended September 30, 2019, (i) 12,285 were time-based graded vesting restricted stock units with a one-year vesting period issued to non-employee trustees in recognition of their efforts and oversight in the first year as a public company, ii) 5,982 were time-based restricted stock units with a one-year vesting period issued to non-employee trustees as part of their annual compensation (iii) 257,867 were time-based graded vesting restricted stock units with various vesting periods ranging from one to three years issued to certain employees and (iv) 243,168 were market performance-based cliff vesting restricted stock units with a three-year vesting period issued to certain employees. The vesting of such market performance-based awards will be determined based on Americold Realty Trust’s total shareholder return (TSR) relative to the MSCI US REIT Index (RMZ), computed for the performance period that began January 1, 2019 and will end December 31, 2021.
The following table provides a summary of restricted stock awards activity under the 2010 and 2017 Plans during the nine months ended September 30, 2020:

Nine Months Ended September 30, 2020
Restricted Stock | Number of Time-Based Restricted Stock Units | Aggregate Intrinsic Value (in millions) | Number of Performance-Based Restricted Stock Units | Aggregate Intrinsic Value (in millions) | Number of Market Performance-Based Restricted Stock Units(2) | Aggregate Intrinsic Value (in millions)
Non-vested as of December 31, 2019 | 714,063 |  | $ | 25.0 |  | 57,142 |  | $ | 2.0 |  | 779,188 |  | $ | 27.3 |
Granted | 194,981 |  |  | — |  |  | 108,810 |  |
Vested | (272,971) |  |  | (14,286) |  |  | — |  |
Forfeited | (11,689) |  |  | — |  |  | (14,417) |  |
Non-vested as of September 30, 2020 | 624,384 |  | $ | 22.3 |  | 42,856 |  | $ | 1.5 |  | 873,581 |  | $ | 31.2 |
Shares vested, but not released(1) | 615,643 |  | 22.0 |  | 28,572 |  | 1.0 |  | — |  | — |
Total outstanding restricted stock units | 1,240,027 |  | $ | 44.3 |  | 71,428 |  | $ | 2.5 |  | 873,581 |  | $ | 31.2 |

(1)For certain vested restricted stock units, common share issuance is contingent upon the first to occur of: (1) termination of service; (2) change in control; (3) death; or (4) disability, as defined in the 2010 Plan. Of these vested restricted stock units, 568,753 belong to a member of the Board of Trustees who has resigned and common shares shall not be issued until the first to occur: (1) change in control; or (2) April 13, 2022. Holders of these certain vested restricted stock units are entitled to receive dividends, but are not entitled to vote the shares until common shares are issued. The weighted average grant date fair value of these units is $9.38 per unit. During 2020 an additional 14,286 of these restricted stock units vested. Of the total restricted stock units vested, but not yet released, 615,643 time-based restricted stock units and 14,286 performance-based restricted stock units vested prior to January 1, 2020.
(2)The number of market performance-based restricted stock units are reflected within this table based upon the number of shares issuable upon achievement of the performance metric at target.
The weighted average grant date fair value of restricted stock units granted during the nine months ended September 30, 2020 was $31.06 per unit, for vested and converted restricted stock units was $20.93, for forfeited restricted stock units was $26.13. The weighted average grant date fair value of non-vested restricted stock units was $24.32 and $22.50 per unit as of September 30, 2020 and December 31, 2019, respectively.
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OP Units Activity
During 2019, upon recommendation by the Compensation Committee, the Board of Trustees approved the grant of OP units in connection with the annual grant to the Board of Trustees. The trustees have the option to elect their annual grant in the form of either time-vested restricted stock units or time-vested OP units. Additionally, the Board of Trustees approved the future award of grants for certain members of management to receive their awards in the form of either OP units or restricted stock units (applicable to time-vested and market-performance based awards). The terms of the OP units mirror the terms of the restricted stock units granted in the respective period.
The following table summarizes OP unit grants under the 2017 Plan during the three months ended September 30, 2019 and the three and nine months ended September 30, 2020 and 2019 (none were issued during the three months ended September 30, 2020):

Three Months Ended September 30, | Grantee Type | Number of OP Units Granted | Vesting Period | Grant Date Fair Value (in thousands)
2019 | Trustees | 20,190 | 1 year | $ | 675 |

Nine Months Ended September 30, | Grantee Type | Number of OP Units Granted | Vesting Period | Grant Date Fair Value (in thousands)
2020 | Trustees | 16,325 | 1 year | $ | 575 |
2020 | Employees | 255,720 | 1-3 years | $ | 7,719 |
2019 | Trustees | 20,190 | 1 year | $ | 675 |

The following table provides a summary of the OP unit awards activity under the 2017 Plan during the nine months ended September 30, 2020:

Nine Months Ended September 30, 2020
OP Units | Number of Time-Based OP Units | Aggregate Intrinsic Value (in millions) |  | Number of Market Performance-Based OP Units | Aggregate Intrinsic Value (in millions)
Non-vested as of December 31, 2019 | 20,190 |  | $ | 0.7 |  |  | — |  | $ | 0.0 |
Granted | 93,180 |  |  |  | 178,865 |  |
Vested | (20,190) |  |  |  | — |  |
Forfeited | — |  |  |  | — |  |
Non-vested as of September 30, 2020 | 93,180 |  | $ | 3.3 |  |  | 178,865 |  | $ | 6.4 |
Shares vested, but not released | 17,199 |  | 0.6 |  |  | — |  | 0.0 |
Total outstanding OP units | 110,379 |  | $ | 3.9 |  |  | 178,865 |  | $ | 6.4 |

The OP units granted for the nine months ended September 30, 2020 had an aggregate grant date fair value of $8.3 million.
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Stock Options Activity
The following table provides a summary of option activity for the nine months ended September 30, 2020:

Options | Shares (In thousands) | Weighted-Average Exercise Price | Weighted-Average Remaining Contractual Terms (Years)
Outstanding as of December 31, 2019 | 794,498 |  | $ | 9.81 |  | 5.8
Granted | — |  | — |  |
Exercised | (321,000) |  | 9.81 |  |
Forfeited or expired | (8,000) |  | 9.81 |  |
Outstanding as of September 30, 2020 | 465,498 |  | 9.81 |  | 5.0
Exercisable as of September 30, 2020 | 190,500 |  | $ | 9.81 |  | 3.8

The total grant date fair value of stock option awards that vested during the nine months ended for both September 30, 2020 and 2019 was approximately $0.6 million and $0.4 million, respectively. The total intrinsic value of options exercised for the nine months ended September 30, 2020 and 2019 was $8.2 million and $27.5 million, respectively.
12. Income Taxes
Income taxes are accounted for under the provisions of ASC 740, Income Taxes, which generally requires the Company to record deferred income taxes for the tax effect of differences between book and tax bases of its assets and liabilities.
Deferred income taxes reflect the available net operating losses and the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Realization of the future tax benefits related to deferred tax assets is dependent on many factors, including the Company’s past earnings history, expected future earnings, the character and jurisdiction of such earnings, unsettled circumstances that, if unfavorably resolved, would adversely affect utilization of its deferred tax assets, carryback and carryforward periods, and tax strategies that could potentially enhance the likelihood of realization of a deferred tax asset.
The Company recorded an income tax expense of approximately $0.8 million and a benefit of $7.0 million for the three months ended September 30, 2020 and 2019, respectively, and an expense of $2.5 million and a benefit of $7.4 million for the nine months ended September 30, 2020 and 2019, respectively. As a REIT, the Company is entitled to a deduction for dividends paid, resulting in a substantial reduction in the amount of federal income tax expense it recognizes. Substantially all of the Company’s income tax expense is incurred based on the earnings generated by its foreign operations and a portion of those earnings is permanently reinvested.
On March 27, 2020, President Trump signed into law the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”). The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer side social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax
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depreciation methods for qualified improvement property. Based on our assessment of the legislation, we do not expect there to be a material impact to our Condensed Consolidated Financial Statements at this time. During the quarter ended June 30, 2020, the Company filed to receive a refund of approximately $1.9 million in previously paid alternative minimum taxes accelerated under CARES Act. The Company received the refund during the three months ended September 30, 2020.
The Company recorded an opening deferred tax liability of $8.9 million and $0.7 million in 2019 for the purchase of Cloverleaf and Lanier, respectively, further discussed in Note 3. Deferred taxes for the acquisition arose primarily from book to tax differences in the basis of fixed and intangible assets. The Company recorded an additional deferred tax liability of approximately $1.0 million in purchase accounting for the quarter ended March 31, 2020, based on additional information obtained during the quarter, which also resulted in a reduction in the Company’s existing valuation allowance during the same quarter as the deferred tax liability became available to be used as a positive source of income for valuation allowance assessment purposes. Purchase accounting for Cloverleaf and Lanier was completed during the quarter ended June 30, 2020, and the deferred tax liability recorded through March 31, 2020 remained unchanged during the quarter.
The Company originally recorded an opening deferred tax liability of $42.0 million for the purchase of Nova Cold in January of 2020, further discussed in Note 3. Deferred taxes for the acquisition arose primarily from book to tax differences in the basis of fixed assets, intangible assets and net operating loss carryforwards. The Company recorded a reduction to the existing deferred tax liability of approximately $7.5 million for the quarter ended June 30, 2020 resulting in an opening deferred tax liability of $34.5 million as of June 30, 2020. During the three months ended September 30, 2020 the Company recorded an additional $1.5 million reduction to its opening deferred tax liability resulting in a $9.0 million reduction for the nine months ended September 30, 2020. The change is based on additional information obtained during the quarter. Purchase accounting for Nova Cold has not yet been completed, and additional amounts may be recorded as additional information is obtained.
Income Tax Contingencies
ASC 740 prescribes a recognition threshold and measurement attribute for the financial statements recognition and measurement of a tax position taken or expected to be taken in a tax return. The guidance prescribed in ASC 740 establishes a recognition threshold of more likely than not that a tax position will be sustained upon examination. The measurement attribute requires that a tax position be measured at the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement.
The Company has $0.2 million and $0.4 million of uncertain tax positions outstanding as of September 30, 2020 and December 31, 2019, respectively. The Company recognizes interest and penalties related to unrecognized tax positions in income tax expense.
13. Variable Interest Entities
New Market Tax Credit
On May 1, 2019, the Company assumed a financing arrangement born out of the New Market Tax Credit (“NMTC” or “NMTC Transactions”) program. These financing arrangements were originated by Cloverleaf in 2015 to monetize state and federal tax credits related to the construction of a cold storage warehouse in Monmouth, Illinois. The NMTC program was provided for in the Community Renewal Tax Relief Act of 2000 (“the Act”) and is intended to induce capital investment in qualified lower income communities.
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The structure of the financing arrangement is such that Cloverleaf lent money to investment funds into which tax credit investors also made capital contributions. The tax credit investors receive the benefit of the resulting tax credits in exchange for their capital contributions to the investment funds. Tax credits were generated through contribution of the investment fund’s proceeds into special purpose entities having authority from the U.S. Department of Treasury to receive tax credits in exchange for qualifying investments. These entities, known as a Community Development Entities (“CDE”), made qualifying investments in the Monmouth, Illinois cold storage facility in the form of loans payable by Cloverleaf.
The loan agreements for monies lent to the investments funds and amounts payable to the CDEs extend through 2045 but contain provisions permitting dissolution in 2022. This coincides with the conclusion of the seven-year compliance period during which the tax credits may be recognized and the NMTCs are subject to 100% recapture. Based on the nature of the arrangements, we expect them to dissolve in 2022.
The Company has determined that the financing arrangement with the investment funds and CDEs contains a variable interest entity (“VIE”). The ongoing activities of the investment funds - collecting and remitting interest and fees and NMTC compliance - were all considered in the initial design and are not expected to significantly affect economic performance throughout the life of the investment funds. Management considered the contractual arrangements that obligate the Company to deliver tax benefits and provide various other guarantees to the structure; the tax credit investor’s lack of a material interest in the underling economics of the project; and the fact that the Company is obligated to absorb losses of the investment funds. The Company concluded that it is the primary beneficiary of the VIE and consolidated the investments funds and CDEs, as VIEs, in accordance with the accounting standards for consolidation.
Through NMTC Transactions, the Company effectively received net loan proceeds equal to the tax credit investor’s contributions to the investment funds. At inception of the arrangement in 2015, the benefit of contributions by tax credit investor’s totaled approximately $5.6 million. The Company is recognizing the benefit of the contributions ratably over the life of the project which these proceeds were used to fund.
As of September 30, 2020 and December 31, 2019, the balance of the deferred contribution liability was $4.8 million and $4.9 million, respectively, which is classified as “Accounts payable and accrued expenses” on the Condensed Consolidated Balance Sheets.
The Company is required to be in compliance with various regulations and contractual provisions that apply to the NMTC arrangement. Non-compliance with applicable requirements could result in projected tax benefits not being realized and, therefore, could require the Company to indemnify the tax credit investors for any loss or recapture of NMTCs related to the financing until such time as the obligation to deliver tax benefits is relieved. The Company is in compliance with all applicable requirements and does not anticipate any credit recaptures will result in connection with this arrangement.
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14. Employee Benefit Plans
The components of net period benefit cost for the three and nine months ended September 30, 2020 and 2019, respectively, are as follows:

| Three Months Ended September 30, 2020
| Retirement Income Plan | National Service-Related Pension Plan | Other Post-Retirement Benefits | Superannuation | Total
Components of net periodic benefit cost: | (In thousands)
Service cost | $ | — |  | $ | — |  | $ | — |  | $ | 18 |  | $ | 18 |
Interest cost | 315 |  | 279 |  | 4 |  | 8 |  | 606 |
Expected return on plan assets | (500) |  | (366) |  | — |  | (20) |  | (886) |
Amortization of net loss | 255 |  | 152 |  | — |  | — |  | 407 |
Amortization of prior service cost | — |  | — |  | — |  | 7 |  | 7 |
Net pension benefit cost | $ | 70 |  | $ | 65 |  | $ | 4 |  | $ | 13 |  | $ | 152 |

| Three Months Ended September 30, 2019
| Retirement Income Plan | National Service-Related Pension Plan | Other Post-Retirement Benefits | Superannuation | Total
Components of net periodic benefit cost: | (In thousands)
Service cost | $ | — |  | $ | — |  | $ | — |  | $ | 17 |  | $ | 17 |
Interest cost | 397 |  | 312 |  | 5 |  | 12 |  | 726 |
Expected return on plan assets | (440) |  | (294) |  | — |  | (17) |  | (751) |
Amortization of net loss | 377 |  | 141 |  | (1) |  | — |  | 517 |
Amortization of prior service cost | — |  | — |  | — |  | 8 |  | 8 |
Net pension benefit cost | $ | 334 |  | $ | 159 |  | $ | 4 |  | $ | 20 |  | $ | 517 |

| Nine Months Ended September 30, 2020
| Retirement Income Plan | National Service-Related Pension Plan | Other Post-Retirement Benefits | Superannuation | Total
Components of net periodic benefit cost: | (In thousands)
Service cost | $ | — |  | $ | — |  | $ | — |  | $ | 46 |  | $ | 46 |
Interest cost | 946 |  | 838 |  | 11 |  | 20 |  | 1,815 |
Expected return on plan assets | (1,501) |  | (1,099) |  | — |  | (51) |  | (2,651) |
Amortization of net loss | 763 |  | 455 |  | — |  | — |  | 1,218 |
Amortization of prior service cost | — |  | — |  | — |  | 22 |  | 22 |
Net pension benefit cost | $ | 208 |  | $ | 194 |  | $ | 11 |  | $ | 37 |  | $ | 450 |

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| Nine Months Ended September 30, 2019
| Retirement Income Plan | National Service-Related Pension Plan | Other Post-Retirement Benefits | Superannuation | Total
Components of net periodic benefit cost: | (In thousands)
Service cost | $ | — |  | $ | — |  | $ | — |  | $ | 52 |  | $ | 52 |
Interest cost | 1,192 |  | 934 |  | 17 |  | 37 |  | 2,180 |
Expected return on plan assets | (1,320) |  | (882) |  | — |  | (55) |  | (2,257) |
Amortization of net loss | 1,132 |  | 422 |  | (3) |  | — |  | 1,551 |
Amortization of prior service cost | — |  | — |  | — |  | 25 |  | 25 |
Net pension benefit cost | $ | 1,004 |  | $ | 474 |  | $ | 14 |  | $ | 59 |  | $ | 1,551 |

The service cost component of defined benefit pension cost and postretirement benefit cost are reported within “Selling, general and administrative” and all other components of net period benefit cost are presented in “Other (expense) income, net” on the Condensed Consolidated Statements of Operations.
The Company expects to contribute to all plans an aggregate of $2.5 million in 2020, of which $2.3 million has been contributed through September 30, 2020.
Multi-Employer Plans
The Company contributes to a number of multi-employer benefit plans under the terms of collective bargaining agreements that cover union-represented employees. These plans generally provide for retirement, death, and/or termination benefits for eligible employees within the applicable collective bargaining units, based on specific eligibility/participation requirements, vesting periods, and benefit formulas.
The New England Teamsters & Trucking Industry Multi-Employer Fund (Fund) was significantly underfunded in accordance with Employee Retirement Income Security Act of 1974 (ERISA) funding standards and, therefore, ERISA required the Fund to develop a Rehabilitation Plan, creating a new fund that minimizes the pension withdrawal liability. As a result, current employers participating in the Fund were given the opportunity to exit the Fund and convert to a new fund. During the third quarter of 2017, the Company took the option to exit the Fund and convert to the new fund. The Company’s portion of the unfunded liability (undiscounted), estimated at $13.7 million, will be repaid in equal monthly installments of approximately $38,000 over 30 years, interest free. The Company recognized an expense and related liability equal to the present value of the withdrawal liability upon exiting the Fund, and amortizes the difference between such present value and the estimated unfunded liability through interest expense over the repayment period.
15. Commitments and Contingencies
Letters of Credit
As of September 30, 2020 and December 31, 2019, there were $21.0 million and $23.0 million, respectively, of letters of credit issued on the Company’s Senior Unsecured Revolving Credit Facility.
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Bonds
The Company had outstanding surety bonds of $9.0 million and $4.3 million as of September 30, 2020 and December 31, 2019, respectively. These bonds were issued primarily in connection with insurance requirements, special real estate assessments and construction obligations.
Collective Bargaining Agreements
As of September 30, 2020, approximately 47% of the Company’s labor force is covered by collective bargaining agreements. Collective bargaining agreements covering less than 10% of the labor force are set to expire during the remaining three months ended December 31, 2020.
Legal Proceedings
In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company and its legal counsel evaluate the merits of any legal proceedings or unasserted claims, as well as the perceived merits of the amount of relief sought or expected to be sought. If the assessment of a contingency suggests that a loss is probable, and the amount can be reasonably estimated, then a loss is recorded.
In addition to the matters discussed below, the Company may be subject to litigation and claims arising from the ordinary course of business. In the opinion of management, after consultation with legal counsel, the outcome of such matters is not expected to have a material impact on the Company’s financial condition, results of operations, or cash flows.
Kansas Breach of Settlement Agreement Litigation
This case was served against the Company in Wyandotte County, Kansas, on January 17, 2013, alleging breach of a 1994 Settlement Agreement reached with customers of our predecessor company, Americold Corporation. The plaintiffs originally brought claims in 1992 arising from a fire the previous year in an underground warehouse facility.
In 1994, a settlement was reached whereby Americold Corporation agreed to the entry of a $58.7 million judgment against it and assigned its rights to proceed against its insurer to satisfy the judgment. The settlement agreement contained a standard “cooperation provision” in which Americold Corporation agreed to execute any additional documents necessary to fulfill the intent of the settlement agreement. The plaintiffs then sued Americold Corporation’s insurer to recover on the consent judgment. The case was ultimately dismissed in 2012, and the Kansas Supreme Court ruled that the 1994 consent judgment had expired and was not revivable as a matter of law.
On September 24, 2012, the plaintiffs filed a separate claim in the district court of Wyandotte County, Kansas, alleging that the Company and one of its subsidiaries, Americold Logistics, LLC, as successors to Americold Corporation, are liable for the full amount of the judgment, based upon the allegation that the Company failed to execute a document or take action to keep the judgment alive and viable.
On February 7, 2013, the Company removed the case to the U.S. federal court and ultimately filed a motion for summary judgment, which the plaintiffs vigorously opposed. On October 4, 2013, the court granted the Company’s motion and dismissed the case in full. Only one plaintiff appealed the dismissal to the U.S. Court of Appeals. The Court of Appeals ordered that the case be remanded to the Kansas State Court and the judgment in
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favor of Americold be vacated, finding U.S. federal diversity jurisdiction did not exist over the Company. The Company petitioned the U.S. Supreme Court for certiorari and oral argument occurred on January 19, 2016.
On March 7, 2016, the United States Supreme Court ruled that there was no federal diversity jurisdiction. Following the decision, the United States District Court for the District of Kansas entered an Order vacating the summary judgment and remanding the case to Kansas state court. Regardless of the venue, the Company remains confident that its defenses on the merits of plaintiffs’ claims are strong under Kansas law.
Following remand to Kansas state court, Plaintiffs initially petitioned the court to amend their complaint to drop their claim for damages and only seek an Order of Specific Performance requiring Americold to sign a new document reinstating the consent judgment assigned in the 1994 Settlement Agreement. Plaintiffs filed a later motion to add back the damages claim, which was granted in February 2018.
Since December 31, 2018, the court granted the Company’s motions to dismiss Kraft and Safeway from the case given they did not appeal the District Court’s Order dismissing their claims and are bound by the judgment entered against them. The Kraft and Safeway plaintiffs have appealed their dismissals. The trial court has stayed the proceedings pending the appeal. In addition, the Company has sued the Chubb Group seeking the court’s declaration that Chubb owes coverage of the amounts sought by Plaintiffs and for bad faith damages for denying coverage. Given the status of the proceedings to date, a liability amount cannot be reasonably estimated. The Company believes the ultimate outcome of this matter will not have a material adverse impact on its condensed consolidated financial statements.
Preferred Freezer Services, LLC Litigation
On February 11, 2019, Preferred Freezer Services, LLC (“PFS”) moved by Order to Show Cause in the Supreme Court of the State of New York, New York County, asserting breach of contract and other claims against the Company and seeking to preliminarily enjoin the Company from acting to acquire certain properties leased by PFS. In its complaint and request for preliminary injunctive relief, PFS alleged that the Company breached a confidentiality agreement entered into in connection with the Company’s participation in a bidding process for the sale of PFS by contacting PFS’s landlords and by using confidential PFS information in bidding for the properties leased by PFS (the “PFS Action”).
PFS’s request for a preliminary injunction was denied after oral argument on February 26, 2019. On March 1, 2019, PFS filed an application for interim injunctive relief from the Appellate Division of the Supreme Court, First Judicial Department.
On April 2, 2019, while its application to the First Department was pending, PFS voluntarily dismissed its state court action, and First Department application, and re-filed substantially the same claims against the Company in the U.S. District Court for the Southern District of New York. In addition to an order enjoining Americold from making offers to purchase the properties leased by PFS, PFS sought compensatory, consequential and/or punitive damages. The Company filed a motion to require PFS to reimburse the Company for its legal fees it incurred for the state court action before PFS is allowed to proceed in the federal court action. On February 18, 2020, the Court granted Americold’s request for an award of legal fees from PFS but declined to stay the case pending payment of that award. As to the amount of the award, the Company and PFS have entered into a stipulation that PFS will pay Americold $550,000 to reimburse the Company for its legal fees upon the conclusion of the case. PFS has since amended its complaint, and Americold has filed a motion to dismiss that amended complaint.
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On June 25, 2020, Fenway Polar Representative (“Fenway”), an entity alleging to represent the interests of the former shareholders of PFS, filed a lawsuit in the Supreme Court of the State of New York, New York County alleging based on similar factual allegations made in the PFS Action it is seeking damages in excess of $400 million due to the Company’s alleged fraudulent and tortious interference in the sale of PFS (the “Fenway Action”).
The Company denies the allegations of the PFS Action and the Fenway Action and believes the plaintiffs’ claims are without merit and intends to vigorously defend itself against the allegations. Given the status of the proceedings to date, a liability cannot be reasonably estimated. The Company believes the ultimate outcome of this matter will not have a material adverse impact on its condensed consolidated financial statements.
Employment Putative Class Action
On February 22, 2019, a former employee filed a putative class action against the Company in the San Bernardino County Superior Court asserting that the Company: (1) failed to pay minimum wages; (2) failed to pay overtime wages; (3) failed to pay all vacation wages; (4) failed to provide meal periods; (5) failed to provide accurate wage statements; (6) failed to pay wages timely to terminated employees; and (7) violated California unfair business practices. On April 10, 2019, the Company filed an Answer and Affirmative Defenses in response to the complaint and successfully removed the case to federal court in the U.S. District Court for the Central District of California. On May 2, 2019, plaintiff filed a separate lawsuit for civil penalties under California’s Private Attorneys General Act (“PAGA”) in the San Bernardino Superior Court against the Company, Case No. CIV-DS-1913525 based on similar factual allegations that are asserted in the complaint. The Company successfully obtained a dismissal of the San Bernardino Superior Court Action. On June 18, 2019, the plaintiff amended his complaint in the pending federal court action to add a rest period violation claim and PAGA penalty claims based on similar allegations that are asserted in the complaint. Plaintiff’s counsel later dismissed plaintiff’s vacation wages claim from his first amended complaint.
The Company entered into a settlement agreement in the case for $2.5 million, which was approved by the court on September 21, 2020.
Environmental Matters
The Company is subject to a wide range of environmental laws and regulations in each of the locations in which the Company operates. Compliance with these requirements can involve significant capital and operating costs. Failure to comply with these requirements can result in civil or criminal fines or sanctions, claims for environmental damages, remediation obligations, the revocation of environmental permits, or restrictions on the Company’s operations.
The Company records accruals for environmental matters when it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated based on current law and existing technologies. The Company adjusts these accruals periodically as assessment and remediation efforts progress or as additional technical or legal information become available. The Company recorded nominal environmental liabilities in accounts payable and accrued expenses as of September 30, 2020 and December 31, 2019. The Company believes it is in compliance with applicable environmental regulations in all material respects. Under various U.S. federal, state, and local environmental laws, a current or previous owner or operator of real estate may be liable for the entire cost of investigating, removing, and/or remediating hazardous or toxic substances on such property. Such laws often impose liability whether or not the owner or operator knew of, or was responsible for, the contamination. Even if more than one person may have been responsible for the contamination, each person
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covered by the environmental laws may be held responsible for the entire clean-up cost. There are no material unrecorded liabilities as of September 30, 2020. Most of the Company’s warehouses utilize ammonia as a refrigerant. Ammonia is classified as a hazardous chemical regulated by the Environmental Protection Agency, and an accident or significant release of ammonia from a warehouse could result in injuries, loss of life, and property damage.
Occupational Safety and Health Act (OSHA)
The Company’s warehouses located in the U.S. are subject to regulation under OSHA, which requires employers to provide employees with an environment free from hazards, such as exposure to toxic chemicals, excessive noise levels, mechanical dangers, heat or cold stress, and unsanitary conditions. The cost of complying with OSHA and similar laws enacted by states and other jurisdictions in which we operate can be substantial, and any failure to comply with these regulations could expose us to substantial penalties and potentially to liabilities to employees who may be injured at our warehouses. The Company records accruals for OSHA matters when it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated. The Company believes that it is in substantial compliance with all OSHA regulations and that no material unrecorded liabilities exist as of September 30, 2020 and December 31, 2019.
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16. Accumulated Other Comprehensive Loss
The Company reports activity in AOCI for foreign currency translation adjustments, including the translation adjustment for investments in partially owned entities, unrealized gains and losses on cash flow hedge derivatives, and minimum pension liability adjustments (net of tax). The activity in AOCI for the three and nine months ended September 30, 2020 and 2019 is as follows (in thousands):

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2020 |  | 2019 |  | 2020 |  | 2019
Pension and other postretirement benefits: |  |  |  |  |  |  |
Balance at beginning of period, net of tax | $ | (3,932) |  |  | $ | (6,976) |  |  | $ | (4,758) |  |  | $ | (8,027) |
Gain arising during the period | 407 |  |  | 517 |  |  | 1,218 |  |  | 1,551 |
Less: Tax expense | — |  |  | — |  |  | — |  |  | — |
Net gain arising during the period | 407 |  |  | 517 |  |  | 1,218 |  |  | 1,551 |
Amortization of prior service cost (1) | 7 |  |  | 8 |  |  | 22 |  |  | 25 |
Less: Tax expense | — |  |  | — |  |  | — |  |  | — |
Net amount reclassified from AOCI to net income | 7 |  |  | 8 |  |  | 22 |  |  | 25 |
Other comprehensive income, net of tax | 414 |  |  | 525 |  |  | 1,240 |  |  | 1,576 |
Balance at end of period, net of tax | (3,518) |  |  | (6,451) |  |  | (3,518) |  |  | (6,451) |
Foreign currency translation adjustments: |  |  |  |  |  |  |
Balance at beginning of period, net of tax | (21,920) |  |  | (4,358) |  |  | (6,710) |  |  | (3,322) |
Gain (loss) on foreign currency translation | 4,641 |  |  | (5,089) |  |  | (10,569) |  |  | (6,125) |
Derecognition of cumulative foreign currency translation gain upon sale of partially owned entities (2) | — |  |  | (2,605) |  |  | — |  |  | (2,605) |
Less: Tax expense | — |  |  | — |  |  | — |  |  | — |
Net gain (loss) on foreign currency translation | 4,641 |  |  | (7,694) |  |  | (10,569) |  |  | (8,730) |
Balance at end of period, net of tax | (17,279) |  |  | (12,052) |  |  | (17,279) |  |  | (12,052) |
Designated derivatives: |  |  |  |  |  |  |
Balance at beginning of period, net of tax | (10,191) |  |  | (5,643) |  |  | (2,658) |  |  | (1,166) |
Unrealized loss on cash flow hedge derivatives | (6,097) |  |  | 6,087 |  |  | (15,727) |  |  | 2,103 |
Unrealized gain on net investment hedge derivative | — |  |  | — |  |  | 5,250 |  |  | — |
Less: Tax expense | — |  |  | — |  |  | — |  |  | — |
Net loss on designated derivatives | (6,097) |  |  | 6,087 |  |  | (10,477) |  |  | 2,103 |
Net amount reclassified from AOCI to net income (loss) (interest expense) | 1,286 |  |  | (212) |  |  | 2,017 |  |  | (212) |
Net reclassified from AOCI to net income (loss) (foreign exchange (gain) loss) | 3,807 |  |  | (5,512) |  |  | (77) |  |  | (6,005) |
Balance at end of period, net of tax | (11,195) |  |  | (5,280) |  |  | (11,195) |  |  | (5,280) |
Accumulated other comprehensive loss | $ | (31,992) |  |  | $ | (23,783) |  |  | $ | (31,992) |  |  | $ | (23,783) |

(1)Amounts reclassified from AOCI for pension liabilities are recognized in “Selling, general and administrative” in the accompanying condensed consolidated statements of operations.
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17. Segment Information
Our principal operations are organized into four reportable segments: Warehouse, Third-party managed, Transportation and Other.
•Warehouse. Our primary source of revenues consists of rent and storage and warehouse services fees. Our rent and 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 and perishable food and other products in our warehouses. 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, and (10) government-approved temperature-controlled storage and inspection services. We may charge our customers in advance for storage and outbound handling fees. Cost of operations for our warehouse segment consists of power, other facilities costs, labor and other services costs.
•Third-party managed. We receive management and incentive fees, as well as reimbursement of substantially all expenses, for warehouses and logistics services that we manage on behalf of third-party owners/customers. Cost of operations for our third-party managed segment are reimbursed on a pass-through basis (typically within two weeks), with all reimbursements, plus an applicable mark-up, recognized as revenues under the relevant accounting guidance.
•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 consist primarily of third-party carrier charges, which are impacted by factors affecting those carriers.
•Other. In addition to our primary business segments, we owned a limestone quarry in Carthage, Missouri. Revenues were generated from the sale of limestone mined at our quarry. Cost of operations for our quarry consist primarily of labor, equipment, fuel and explosives. We do not view the operation of the quarry as an integral part of our business, and as a result this business segment was subsequently sold on July 1, 2020.
Our reportable segments are strategic business units separated by service offerings. Each reportable segment is managed separately and requires different operational and marketing strategies. The accounting polices used in the preparation of our reportable segments financial information are the same as those used in the preparation of its condensed consolidated financial statements.
Our chief operating decision maker uses revenues and segment contribution to evaluate segment performance. We calculate segment contribution as earnings before interest expense, taxes, depreciation and amortization, and exclude selling, general and administrative expense, acquisition, litigation and other expense, impairment of long-lived assets, gain or loss on sale of real estate and all components of non-operating other income and expense. Selling, general and administrative functions support all the business segments. Therefore, the related expense is not allocated to segments as the chief operating decision maker does not use it to evaluate segment performance.
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Segment contribution is not a measurement of financial performance under GAAP, and may not be comparable to similarly titled measures of other companies. You should not consider our segment contribution as an alternative to operating income determined in accordance with GAAP.
The following table presents segment revenues and contributions with a reconciliation to income before income tax for the three and nine months ended September 30, 2020 and 2019 (in thousands):

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2020 |  | 2019 |  | 2020 |  | 2019
Segment revenues: |  |  |  |  |  |  |
Warehouse | $ | 388,024 |  |  | $ | 365,593 |  |  | $ | 1,141,503 |  |  | $ | 993,439 |
Third-party managed | 75,338 |  |  | 62,846 |  |  | 213,213 |  |  | 188,497 |
Transportation | 34,096 |  |  | 35,685 |  |  | 104,874 |  |  | 109,273 |
Other | — |  |  | 2,058 |  |  | 4,459 |  |  | 6,512 |
Total revenues | 497,458 |  |  | 466,182 |  |  | 1,464,049 |  |  | 1,297,721 |
Segment contribution: |  |  |  |  |  |  |
Warehouse | 127,756 |  |  | 113,408 |  |  | 374,661 |  |  | 318,044 |
Third-party managed | 3,393 |  |  | 2,583 |  |  | 10,461 |  |  | 8,646 |
Transportation | 4,187 |  |  | 4,640 |  |  | 13,764 |  |  | 13,202 |
Other | (17) |  |  | 75 |  |  | 173 |  |  | 611 |
Total segment contribution | 135,319 |  |  | 120,706 |  |  | 399,059 |  |  | 340,503 |
Reconciling items: |  |  |  |  |  |  |
Depreciation, depletion and amortization | (53,569) |  |  | (45,065) |  |  | (157,572) |  |  | (115,598) |
Selling, general and administrative | (35,969) |  |  | (32,476) |  |  | (105,202) |  |  | (96,262) |
Acquisition, litigation and other | (5,282) |  |  | (3,780) |  |  | (9,771) |  |  | (30,237) |
Impairment of long-lived assets | (2,615) |  |  | — |  |  | (6,282) |  |  | (13,485) |
(Loss) gain from sale of real estate | (427) |  |  | — |  |  | 21,448 |  |  | (34) |
Interest expense | (23,066) |  |  | (24,907) |  |  | (70,114) |  |  | (70,581) |
Interest income | 179 |  |  | 1,798 |  |  | 1,027 |  |  | 5,206 |
Bridge loan commitment fees | — |  |  | — |  |  | — |  |  | (2,665) |
Loss on debt extinguishment and modifications | — |  |  | — |  |  | (781) |  |  | — |
Foreign currency exchange loss | (196) |  |  | (43) |  |  | (373) |  |  | (66) |
Other expense, net | (1,083) |  |  | (249) |  |  | (168) |  |  | (1,007) |
Loss from investments in partially owned entities | (98) |  |  | (165) |  |  | (254) |  |  | (111) |
Gain from sale of partially owned entities | — |  |  | 4,297 |  |  | — |  |  | 4,297 |
Income before income tax (expense) benefit | $ | 13,193 |  |  | $ | 20,116 |  |  | $ | 71,017 |  |  | $ | 19,960 |

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Notes to Condensed Consolidated Financial Statements - (Unaudited)
The following table details our assets by reportable segments, with a reconciliation to total assets reported for each of the periods presented in the accompanying Condensed Consolidated Balance Sheets.

| September 30, 2020 |  | December 31, 2019
| (In thousands)
Assets: |  |  |
Warehouse | $ | 4,352,787 |  |  | $ | 3,684,391 |
Managed | 45,143 |  |  | 47,867 |
Transportation | 43,473 |  |  | 50,666 |
Other | 14 |  |  | 13,467 |
Total segments assets | 4,441,417 |  |  | 3,796,391 |
Reconciling items: |  |  |
Corporate assets | 155,153 |  |  | 374,292 |
Investments in partially owned entities | 21,536 |  |  | — |
Total reconciling items | 176,689 |  |  | 374,292 |
Total assets | $ | 4,618,106 |  |  | $ | 4,170,683 |

18. Earnings per Common Share
Basic and diluted earnings per common share are calculated by dividing the net income or loss attributable to common shareholders by the basic and diluted weighted-average number of common shares outstanding in the period, respectively, using the allocation method prescribed by the two-class method. The Company applies this method to compute earnings per share because it distributes non-forfeitable dividend equivalents on restricted stock units and OP units granted to certain employees and non-employee trustees who have the right to participate in the distribution of common dividends while the restricted stock units and OP units are unvested.
The shares issuable upon settlement of forward sale agreements are reflected in the diluted earnings per share calculations using the treasury stock method. Under this method, the number of the Company’s common shares used in calculating diluted earnings per share is deemed to be increased by the excess, if any, of the number of common shares that would be issued upon full physical settlement of the forward sale agreements over the number of common shares that could be purchased by the Company in the market (based on the average market price during the period) using the proceeds receivable upon full physical settlement (based on the adjusted forward sale price at the end of the reporting period). If and when the Company physically or net share settles the forward sale agreements, the delivery of common shares would result in an increase in the number of shares outstanding and dilution to earnings per share.
A reconciliation of the basic and diluted weighted-average number of common shares outstanding for the three and nine months ended September 30, 2020 and 2019 is as follows (in thousands):
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Notes to Condensed Consolidated Financial Statements - (Unaudited)

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2020 |  | 2019 |  | 2020 |  | 2019
Weighted average common shares outstanding – basic | 204,289 |  |  | 192,325 |  |  | 202,380 |  |  | 175,010 |
Dilutive effect of share-based awards | 1,642 |  |  | 1,533 |  |  | 1,520 |  |  | 1,696 |
Equity forward contracts | 2,569 |  |  | 3,505 |  |  | 2,151 |  |  | 2,264 |
Weighted average common shares outstanding – diluted | 208,500 |  |  | 197,363 |  |  | 206,051 |  |  | 178,970 |

The table below presents the weighted-average number of antidilutive potential common shares that are not considered in the calculation of diluted income per share:

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2020 |  | 2019 |  | 2020 |  | 2019
| (In thousands) |  |  |  |
Employee stock options | — |  |  | — |  |  | — |  |  | — |
Restricted stock units | 168 |  |  | — |  |  | 192 |  |  | — |
OP units | — |  |  | — |  |  | — |  |  | — |
Equity forward contracts | 690 |  |  | — |  |  | 233 |  |  | — |
| 858 |  |  | — |  |  | 425 |  |  | — |

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Notes to Condensed Consolidated Financial Statements - (Unaudited)
19. Revenue from Contracts with Customers
Disaggregated Revenue
The following tables represent a disaggregation of revenue from contracts with customers for the three and nine months ended September 30, 2020 and 2019 by segment and geographic region:

| Three Months Ended September 30, 2020
| United States | Australia | New Zealand | Argentina | Canada | Total
| (In thousands)
Warehouse rent and storage | $ | 140,773 |  | $ | 9,978 |  | $ | 3,821 |  | $ | 1,465 |  | $ | 3,306 |  | $ | 159,343 |
Warehouse services | 177,524 |  | 36,898 |  | 3,516 |  | 663 |  | 3,068 |  | 221,669 |
Third-party managed | 66,588 |  | 4,882 |  | — |  | — |  | 3,868 |  | 75,338 |
Transportation | 28,582 |  | 4,902 |  | 150 |  | 462 |  | — |  | 34,096 |
Other | — |  | — |  | — |  | — |  | — |  | — |
Total revenues (1) | 413,467 |  | 56,660 |  | 7,487 |  | 2,590 |  | 10,242 |  | 490,446 |
Lease revenue (2) | 6,179 |  | — |  | — |  | — |  | 833 |  | 7,012 |
Total revenues from contracts with all customers | $ | 419,646 |  | $ | 56,660 |  | $ | 7,487 |  | $ | 2,590 |  | $ | 11,075 |  | $ | 497,458 |

| Three Months Ended September 30, 2019
| United States | Australia | New Zealand | Argentina | Canada | Total
| (In thousands)
Warehouse rent and storage | $ | 134,903 |  | $ | 9,386 |  | $ | 3,972 |  | $ | 1,308 |  | $ | — |  | $ | 149,569 |
Warehouse services | 175,008 |  | 30,521 |  | 3,328 |  | 738 |  | — |  | 209,595 |
Third-party managed | 53,800 |  | 4,383 |  | — |  | — |  | 4,663 |  | 62,846 |
Transportation | 26,633 |  | 8,533 |  | 102 |  | 417 |  | — |  | 35,685 |
Other | 2,058 |  | — |  | — |  | — |  | — |  | 2,058 |
Total revenues (1) | 392,402 |  | 52,823 |  | 7,402 |  | 2,463 |  | 4,663 |  | 459,753 |
Lease revenue (2) | 6,429 |  | — |  | — |  | — |  | — |  | 6,429 |
Total revenues from contracts with all customers | $ | 398,831 |  | $ | 52,823 |  | $ | 7,402 |  | $ | 2,463 |  | $ | 4,663 |  | $ | 466,182 |

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Notes to Condensed Consolidated Financial Statements - (Unaudited)

| Nine Months Ended September 30, 2020
| United States | Australia | New Zealand | Argentina | Canada | Total
| (In thousands)
Warehouse rent and storage | $ | 420,002 |  | $ | 28,321 |  | $ | 11,117 |  | $ | 3,931 |  | $ | 9,037 |  | $ | 472,408 |
Warehouse services | 527,126 |  | 100,918 |  | 10,191 |  | 1,966 |  | 8,974 |  | 649,175 |
Third-party managed | 187,042 |  | 13,275 |  | — |  | — |  | 12,896 |  | 213,213 |
Transportation | 84,130 |  | 19,036 |  | 292 |  | 1,416 |  | — |  | 104,874 |
Other | 4,448 |  | — |  | — |  | — |  | — |  | 4,448 |
Total revenues (1) | 1,222,748 |  | 161,550 |  | 21,600 |  | 7,313 |  | 30,907 |  | 1,444,118 |
Lease revenue (2) | 17,591 |  | — |  | — |  | — |  | 2,340 |  | 19,931 |
Total revenues from contracts with all customers | $ | 1,240,339 |  | $ | 161,550 |  | $ | 21,600 |  | $ | 7,313 |  | $ | 33,247 |  | $ | 1,464,049 |

| Nine Months Ended September 30, 2019
| United States | Australia | New Zealand | Argentina | Canada | Total
| (In thousands)
Warehouse rent and storage | $ | 363,547 |  | $ | 28,071 |  | $ | 12,020 |  | $ | 3,600 |  | $ | — |  | $ | 407,238 |
Warehouse services | 466,418 |  | 90,016 |  | 10,230 |  | 2,372 |  | — |  | 569,036 |
Third-party managed | 164,332 |  | 10,590 |  | — |  | — |  | 13,556 |  | 188,478 |
Transportation | 75,441 |  | 32,131 |  | 315 |  | 1,386 |  | — |  | 109,273 |
Other | 6,496 |  | — |  | — |  | — |  | — |  | 6,496 |
Total revenues (1) | 1,076,234 |  | 160,808 |  | 22,565 |  | 7,358 |  | 13,556 |  | 1,280,521 |
Lease revenue (2) | 17,200 |  | — |  | — |  | — |  | — |  | 17,200 |
Total revenues from contracts with all customers | $ | 1,093,434 |  | $ | 160,808 |  | $ | 22,565 |  | $ | 7,358 |  | $ | 13,556 |  | $ | 1,297,721 |

(1)Revenues are within the scope of ASC 606, Revenue From Contracts with Customers. Elements of contracts or arrangements that are in the scope of other standards (e.g., leases) are separated and accounted for under those standards.
(2)Revenues are within the scope of Topic 842, Leases.
Performance Obligations
Substantially all our revenue for warehouse storage and handling services, and management and incentive fees earned under third-party managed and other contracts is recognized over time as the customer benefits throughout the period until the contractual term expires. Typically, revenue is recognized over time using an output measure (e.g. passage of time) to measure progress. Revenue recognized at a point in time upon delivery when the customer typically obtains control, include most accessorial services, transportation services, reimbursed costs and quarry product shipments.
For arrangements containing non-cancellable contract terms, any variable consideration related to storage renewals or incremental handling charges above stated minimums are 100% constrained and not included in aggregate amount of the transaction price allocated to the unsatisfied performance obligations disclosed below, given the degree in difficulty in estimation. Payment terms are generally 0 - 30 days upon billing, which is typically monthly, either in advance or subsequent to the performance of services. The same payment terms typically apply for arrangements containing variable consideration.
The Company has no material warranties or obligations for allowances, refunds or other similar obligations.
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Notes to Condensed Consolidated Financial Statements - (Unaudited)
As of September 30, 2020, the Company had $600.7 million of remaining unsatisfied performance obligations from contracts with customers subject to non-cancellable terms and have an original expected duration exceeding one year. These obligations also do not include variable consideration beyond the non-cancellable term, which due to the inability to quantify by estimate, is fully constrained. The Company expects to recognize approximately 8% of these remaining performance obligations as revenue in 2020, and the re maining 92% to be recognized over a weighted average period of 16.4 years through 2038.
Contract Balances
The timing of revenue recognition, billings and cash collections results in accounts receivable (contract assets), and unearned revenue (contract liabilities) on the accompanying Condensed Consolidated Balance Sheets. Generally, billing occurs monthly, subsequent to revenue recognition, resulting in contract assets. However, the Company may bill and receive advances on storage and handling services, before revenue is recognized, resulting in contract liabilities. These assets and liabilities are reported on the accompanying Condensed Consolidated Balance Sheets on a contract-by-contract basis at the end of each reporting period. Changes in the contract asset and liability balances during the three and nine months ended September 30, 2020, were not materially impacted by any other factors.
Opening and closing receivables balances related to contracts with customers accounted for under ASC 606 were $215.1 million and $213.2 million as of September 30, 2020 and December 31, 2019, respectively, and $209.0 million and $192.1 million as of September 30, 2019 and December 31, 2018, respectively. All other trade receivable balances relate to contracts accounted for under ASC 842.
Opening and closing balances in unearned revenue related to contracts with customers were $17.2 million and $16.4 million as of September 30, 2020 and December 31, 2019, respectively, and $17.9 million and $18.6 million as of September 30, 2019 and December 31, 2018, respectively. Substantially all revenue that was included in the contract liability balances at the beginning of 2020 and 2019 has been recognized as of September 30, 2020 and September 30, 2019, respectively, and represents revenue from the satisfaction of monthly storage and handling services with inventory that turns on average every 30 days.
20. Subsequent Events
On October 13, 2020, the Company announced that it has entered into a definitive agreement to acquire privately held Agro Merchants Group (“Agro”) from an investor group led by funds managed by Oaktree Capital Management, L.P. (“Oaktree”) for a total of $1.74 billion. The acquisition is subject to customary and regulatory closing conditions and closing is expected to occur late in the fourth quarter of 2020 or early in the first quarter of 2021. The Company refers to this transaction as the Agro Merchants Acquisition.
On October 15, 2020, the Company completed an underwritten registered public offering pursuant to forward sale agreements in which the forward purchasers borrowed and sold to the underwriters in the public offering 31,900,000 common shares, as well as an option for the underwriters to purchase 4,785,000 additional common shares. The initial forward sale price is $36.67 per share, which is the public offering price per share, less the underwriting discount per share. The Company expects to fund the remainder of the acquisition price with borrowings from its revolving credit facility and through the issuance of 14,166,667 common shares of the Company (the “Acquisition Shares”) to the Sellers.
On October 30, 2020, the Company priced a debt private placement of €750 million senior unsecured notes which are expected to close on December 30, 2020. In addition, the Company entered into a foreign exchange forward
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Notes to Condensed Consolidated Financial Statements - (Unaudited)
contract to convert the €750 million dollars received to $877 million U.S. dollars at the time of closing. The notes are expected to consist of €400 million with a coupon of 1.62% and a term of 10 years, and €350 million with a coupon of 1.65% and a term of 12 years. The notes are expected to be general senior unsecured obligations of the operating partnership and are guaranteed by the Company and the subsidiaries of the Company. The Company expects to apply a portion of the proceeds of the transaction to fund acquisitions, general corporate purposes and expansion and development projects.
On November 2, 2020, the Company completed the acquisition of Halls Warehouse Corporation and affiliates for $480 million initially utilizing cash drawn on its Senior Unsecured Revolving Credit Facility and a portion of its outstanding equity forward contracts. The draw on the Senior Unsecured Revolving Credit Facility will be repaid upon closing of the previously discussed debt private placement and upon exercise of certain outstanding equity forward contracts.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
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 II, Item 1A of this Quarterly Report on Form 10-Q, in our Form 8-K filed on October 13, 2020, in our Form 8-K filed on April, 16, 2020, Part II, Item 1A of the Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 and Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2019.
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, 2020, we operated a global network of 185 temperature-controlled warehouses encompassing over one billion cubic feet, with 164 warehouses in the United States, six warehouses in Australia, seven warehouses in New Zealand, two warehouses in Argentina and six warehouses in Canada. We view and manage our business through three primary business segments, warehouse, third–party managed and transportation. In addition, we hold a minority interest in the Brazil JV, which owns or operates 21 temperature-controlled warehouses in Brazil. We also owned and operated a limestone quarry through a separate business segment, which was sold on July 1, 2020.
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, and (10) government-approved temperature-controlled storage and inspection services. 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, 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 is also impacted as a result of discretionary bonuses. In response to the COVID-19 pandemic, we have incorporated certain inefficiencies such as staggered
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break schedules, social distancing, and other changes to process, 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 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 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), 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. Additionally, in connection with the Cloverleaf Acquisition we acquired trucks and employees that support certain customers within the Cloverleaf network.
Other. In addition to our primary business segments, we owned and operated a limestone quarry in Carthage, Missouri. Revenues were generated from the sale of limestone mined at our quarry. Cost of operations for our quarry consisted primarily of labor, equipment, fuel and explosives. The sale of our quarry business segment was completed on July 1, 2020.
Other Consolidated Operating Expenses. We also incur depreciation, depletion and amortization expenses, corporate-level selling, general and administrative expenses and corporate-level acquisition, litigation and other expenses.
Our depreciation, depletion 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. Depletion relates to the reduction of mineral resources resulting from the operation of our limestone quarry. The quarry was sold as of July 1, 2020, and we no longer own the mineral resources that generate depletion expense. 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.
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Our corporate-level acquisition, litigation and other expenses consist 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 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 additional superannuation pension costs related to prior years upon review by the Australian Tax Office.
Key Factors Affecting Our Business and Financial Results
Acquisitions and Joint Ventures
On February 1, 2019, we completed the acquisition of PortFresh for a purchase price of approximately $35.2 million, net of cash received, utilizing available cash on hand. PortFresh consisted of one facility operating near the port of Savannah, Georgia and adjacent land upon which we have constructed a newly developed facility. Since the date of acquisition, we have reported the results of the acquired facility within our warehouse segment.
On May 1, 2019, we completed the acquisition of Cloverleaf for a purchase price of approximately $1.24 billion (the “Cloverleaf Acquisition”), net of cash received, utilizing the $1.21 billion net proceeds from our April 2019 follow-on offering and cash drawn from our senior unsecured revolving credit facility. Cloverleaf was the fifth largest temperature-controlled warehousing provider in the United States, based in Sioux City, Iowa and consisted of 22 facilities in nine states. Cloverleaf also generates income through a small component of transportation operations. Since the date of acquisition, we have reported the results of 21 facilities within our warehouse segment, the results of one facility within our third-party managed segment and the results of Cloverleaf’s transportation operations within our transportation segment.
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Also, on May 1, 2019, we completed the acquisition of Lanier for approximately $81.9 million, net of cash received, utilizing cash drawn from our senior unsecured revolving credit facility. Lanier consisted of two temperature-controlled storage facilities in Georgia serving the poultry industry. Since the date of acquisition, we have reported the results of these facilities within our warehouse segment.
On November 19, 2019, we completed the acquisition of MHW for a purchase price of approximately $50.8 million, net of cash received, utilizing available cash on hand. MHW consisted of two temperature-controlled storage facilities, one located in Chambersburg, Pennsylvania and another in Perryville, Maryland. Since the date of acquisition, we have reported the results of these facilities within our warehouse segment.
On January 2, 2020, we completed the purchase of all outstanding shares of Nova Cold for cash consideration of CAD $337.4 million (USD $259.6 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 $56.7 million, net of cash received, utilizing available cash on hand. Newport Cold consists 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.
On March 6, 2020, we acquired a 14.99% ownership interest in Superfrio Armazéns Gerais S.A. (SuperFrio) 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 the Brazil JV’s results are included within “(Loss) income from investments in partially owned entities”. As of September 30, 2020, SuperFrio owns or operates 21 temperature-controlled warehouses in Brazil.
On August 31, 2020, we completed the acquisition of Caspers Cold Storage for cash consideration of approximately $25.5 million, net of cash received, 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 $82.5 million, net of cash received, 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 October 13, 2020, we announced the entry into a definitive agreement to acquire Agro Merchants for total consideration of $1.74 billion. The acquisition is subject to customary and regulatory closing conditions and closing is expected to occur late in the fourth quarter of 2020 or early in the first quarter of 2021. Agro Merchants operates more than 236 million cubic feet of temperature-controlled warehouse and distribution space across 46 facilities and provides transportation services in the United States, United Kingdom, the Netherlands, Portugal, Ireland, Austria, Spain, Poland, Australia and Chile.
Refer to Note 2, 3 and 20 of the Notes to the Condensed Consolidated Financial Statements for further information.
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COVID-19
We are continuing to closely monitor the impact of the COVID-19 pandemic on all aspects of our business and geographies, including how it will impact our customers and business partners. While we have not experienced significant disruptions on our operations from the COVID-19 pandemic thus far, we are unable to predict the future impact that the COVID-19 pandemic may have on our financial condition, results of operations and cash flows due to numerous uncertainties arising from the pandemic. 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 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. Our business is deemed an “essential business” as defined by the Department of Homeland Security, which means that our employees 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 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. Many states and cities have begun implementing “reopening” plans, however, 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). 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 Item 1A. Risk Factors on our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 for further considerations.
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 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
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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.

|  | Foreign exchange rates as of September 30, 2020 | Average foreign exchange rates used to translate actual operating results for the three months ended September 30, 2020 |  | Average foreign exchange rates used to translate actual operating results for the nine months ended September 30, 2020 | Foreign exchange rates as of September 30, 2019 | Prior period average foreign exchange rate used to adjust actual operating results for the three months ended September 30, 2020(1) | Prior period average foreign exchange rate used to adjust actual operating results for the nine months ended September 30, 2020(1) |
Australian dollar |  | 0.716 |  | 0.715 |  |  | 0.675 |  | 0.675 |  | 0.685 |  | 0.699 |  |
New Zealand dollar |  | 0.662 |  | 0.662 |  |  | 0.637 |  | 0.626 |  | 0.649 |  | 0.664 |  |
Argentinian peso |  | 0.013 |  | 0.014 |  |  | 0.015 |  | 0.017 |  | 0.021 |  | 0.022 |  |
Canadian dollar |  | 0.751 |  | 0.751 |  |  | 0.739 |  | 0.755 |  | 0.758 |  | 0.752 |  |
Brazilian real |  | 0.178 |  | 0.186 |  |  | 0.186 |  | N/A | N/A | N/A |

(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 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. We intend to continue executing this strategy in the future. We’ve also added a dedicated fleet service offering through acquisitions.
Historically Significant Customer
For the three and nine months ended September 30, 2020 and 2019, one customer accounted for more than 10% of our total revenues. For the three months ended September 30, 2020 and 2019, sales to this customer were $65.4 million and $52.4 million, respectively. For the nine months ended September 30, 2020 and 2019, sales to this customer were $185.4 million and $156.0 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, $62.1 million and $48.7 million represented reimbursements for certain expenses we incurred during the three months ended September 30, 2020 and 2019, respectively, and $173.0 million and $144.6 million for the nine months ended September 30, 2020 and 2019, 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.
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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 expenses). 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, 2020 includes all properties that we owned at January 2, which had both been owned and had reached “normalized operations” by January 2, 2019.
We calculate “same store contribution (NOI)” as revenues for the same store population less its cost of operations (excluding any depreciation, depletion and amortization, impairment charges, corporate-level selling, general and administrative expenses, corporate-level acquisition, litigation and other expenses 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, 2020. The number of warehouses owned or operated in as of September 30, 2020 and excluded as same-store warehouses for the period ended September 30, 2020 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 | 185 |  |
Same Store Warehouses | 135 |  |
Non-Same Store Warehouses (1) | 40 |  |
Third-Party Managed Warehouses (2) | 10 |  |

(1) During the third quarter of 2020, we completed the acquisition of AM-C Warehouses resulting in the addition of two facilities, and the acquisition of Caspers resulting in the addition of one facility.
(2) During the third quarter of 2020, we did not renew the management agreement in one of our Canadian Managed warehouses, resulting in the decrease of sites during the third quarter of 2020. An additional managed agreement in Canada is planned to expire at the end of 2020, with no intention to renew.
As of September 30, 2020, our portfolio consisted of 185 total warehouses, including 175 within the warehouse segment and 10 in the third-party managed segment. In addition, we hold a minority interest in the Brazil JV, which owns or operates 21 temperature-controlled warehouses in Brazil.
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.
SEC Amendments to Financial Disclosures about Acquired and Disposed Businesses
In May 2020, the SEC adopted the final rule under SEC release No. 33-10786, Amendments to Financial Disclosures about Acquired and Disposed Businesses, amending Rule 1-02(w)(2) which includes amendments to certain of its rules and forms related to the disclosure of financial information regarding acquired or disposed businesses. Among other changes, the amendments impact SEC rules relating to (1) the definition of “significant” subsidiaries, (2) requirements to provide financial statements for “significant” acquisitions, and (3) revisions to the formulation and usage of pro forma financial information. The final rule is effective on January 1, 2021; however, voluntary early adoption is permitted. The Company early adopted the provisions of the final rule in the third quarter of 2020. We have applied the new rules to the contemplated and completed acquisitions since the date of adoption. As of September 30, 2020, there have been no acquisitions since the date of adoption that met the SEC’s revised definition of significance. Upon closing, we expect that the Agro acquisition will meet the SEC’s significance threshold, requiring one year of audited financial statements and pro forma financial information.
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RESULTS OF OPERATIONS
Comparison of Results for the Three Months Ended September 30, 2020 and 2019
Warehouse Segment
The following table presents the operating results of our warehouse segment for the three months ended September 30, 2020 and 2019.

| Three Months Ended September 30, |  | Change
| 2020 actual |  | 2020 constant currency(1) |  | 2019 actual |  | Actual |  | Constant currency
| (Dollars in thousands) |  |  |  |
Rent and storage | $ | 166,355 |  |  | $ | 166,641 |  |  | $ | 155,998 |  |  | 6.6 | % |  | 6.8 | %
Warehouse services | 221,669 |  |  | 220,414 |  |  | 209,595 |  |  | 5.8 | % |  | 5.2 | %
Total warehouse segment revenues | 388,024 |  |  | 387,055 |  |  | 365,593 |  |  | 6.1 | % |  | 5.9 | %
Power | 27,145 |  |  | 27,210 |  |  | 26,356 |  |  | 3.0 | % |  | 3.2 | %
Other facilities costs (2) | 35,752 |  |  | 35,750 |  |  | 29,529 |  |  | 21.1 | % |  | 21.1 | %
Labor | 166,491 |  |  | 165,601 |  |  | 162,014 |  |  | 2.8 | % |  | 2.2 | %
Other services costs (3) | 30,880 |  |  | 30,898 |  |  | 34,286 |  |  | (9.9) | % |  | (9.9) | %
Total warehouse segment cost of operations | $ | 260,268 |  |  | $ | 259,459 |  |  | $ | 252,185 |  |  | 3.2 | % |  | 2.9 | %
Warehouse segment contribution (NOI) | $ | 127,756 |  |  | $ | 127,596 |  |  | $ | 113,408 |  |  | 12.7 | % |  | 12.5 | %
Warehouse rent and storage contribution (NOI) (4) | $ | 103,458 |  |  | $ | 103,681 |  |  | $ | 100,113 |  |  | 3.3 | % |  | 3.6 | %
Warehouse services contribution (NOI) (5) | $ | 24,298 |  |  | $ | 23,915 |  |  | $ | 13,295 |  |  | 82.8 | % |  | 79.9 | %
Total warehouse segment margin | 32.9 | % |  | 33.0 | % |  | 31.0 | % |  | 190 bps |  | 195 bps
Rent and storage margin(6) | 62.2 | % |  | 62.2 | % |  | 64.2 | % |  | -198 bps |  | -196 bps
Warehouse services margin(7) | 11.0 | % |  | 10.9 | % |  | 6.3 | % |  | 462 bps |  | 451 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 $3.4 million and $3.1 million, on an actual basis, for the third quarter of 2020 and 2019, respectively.
(3)Includes non-real estate rent expense (equipment lease and rentals) of $2.2 million and $2.7 million, on an actual basis, for the third quarter of 2020 and 2019, 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 $388.0 million for the three months ended September 30, 2020, an increase of $22.4 million, or 6.1%, compared to $365.6 million for the three months ended September 30, 2019. On a constant currency basis, our warehouse segment revenues were $387.1 million for the three months ended September 30, 2020, an increase of $21.5 million, or 5.9%, from the three months ended September 30, 2019. Approximately $20.6 million of the increase, on an actual currency basis, was primarily driven by acquisitions completed during 2019 and 2020, including the growth experienced period-over-period during overlapping periods of ownership. We acquired seven warehouse facilities as a result of the MHW, Newport, and Nova Cold acquisitions subsequent to the third quarter of 2019. As a result, these seven facilities are reflected in the entirety of the current period but none of the comparable prior period. Additionally, we acquired three facilities on August 31, 2020 as a result of the AM-C Warehouses and Caspers transactions. During the third quarter of 2020, revenue growth was also due to contractual rate escalations and growth in fixed commitment storage contracts. Higher
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than seasonal grocery demand within the retail sector due to the COVID-19 pandemic continued into the third quarter of 2020. This was offset by the decline in the holdings and throughput of protein commodities. The protein industry has been significantly impacted by COVID-19 outbreaks which has impacted our holdings and throughput. Additionally, during the third quarter of 2020, the consumption in food services continued to increase as re-opening plans progressed, but at a much lower level when compared to the prior year. Finally, growth in revenue was attributable to new business, and increased volume in our Australia and Argentina facilities driven by the impact of COVID-19 within those markets. The foreign currency translation of revenues earned by our foreign operations had a net $1.0 million favorable impact during the three months ended September 30, 2020, which was mainly driven by the weakening of the U.S. dollar against the Australian dollar, partially offset by the strengthening of the U.S. dollar over the Argentinian peso.
Warehouse segment cost of operations was $260.3 million for the three months ended September 30, 2020, an increase of $8.1 million, or 3.2%, compared to the three months ended September 30, 2019. On a constant currency basis, our warehouse segment cost of operations was $259.5 million for the three months ended September 30, 2020, an increase of $7.3 million, or 2.9%, from the three months ended September 30, 2019. Approximately $12.2 million of the increase, on an actual basis, was driven by the additional ten facilities in the warehouse segment we acquired in connection with the aforementioned acquisitions. In addition, we continued to incur increases in our cost of operations in response to COVID-19. These incremental COVID-19 expenses include higher sanitation costs of $0.9 million and higher personal protective equipment (“PPE”) costs of $0.3 million. We have experienced certain inefficiencies due to social distancing, staggered schedules, and other changes to processes, which also contributed to the increase in costs. The prior comparable period included a $3.4 million health care insurance expense charge driven by the volume and severity of individual large claims, and start up costs associated with our expansion of the Rochelle facility, neither of which recurred during the three months ended September 30, 2020. Additionally, the foreign currency translation of expenses incurred by our foreign operations had a net $0.8 million unfavorable impact during the three months ended September 30, 2020.
For the three months ended September 30, 2020, warehouse segment contribution (NOI), increased $14.3 million, or 12.7%, to $127.8 million for the third quarter of 2020 compared to $113.4 million for the third quarter of 2019. The foreign currency translation of our results of operations had a $0.2 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 12.5%. Approximately $8.4 million of the increase, on an actual basis, was primarily driven by the addition of ten 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 the first three quarters of 2019. The increase was also due to the health care insurance and Rochelle start up costs incurred in the prior comparable period, and was partially offset by the COVID-19 cost of response efforts to maintain the health and safety of our employees.
Same Store and Non-Same Store Analysis
We had 135 same stores for the three months ended September 30, 2020. 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 AM-C Warehouses, Caspers, Cloverleaf, Lanier, MHW, Newport, Nova Cold and PortFresh 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, 2020 and 2019.
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| Three Months Ended September 30, |  | Change
| 2020 actual |  | 2020 constant currency(1) |  | 2019 actual |  | Actual |  | Constant currency
Number of same store sites | 135 |  |  |  | 135 |  | n/a |  | n/a
Same store revenues: | (Dollars in thousands) |  |  |  |
Rent and storage | $ | 127,551 |  |  | $ | 127,816 |  |  | $ | 125,824 |  |  | 1.4 | % |  | 1.6 | %
Warehouse services | 169,514 |  |  | 168,233 |  |  | 166,639 |  |  | 1.7 | % |  | 1.0 | %
Total same store revenues | 297,065 |  |  | 296,049 |  |  | 292,463 |  |  | 1.6 | % |  | 1.2 | %
Same store cost of operations: |  |  |  |  |  |  |  |  |
Power | 19,222 |  |  | 19,286 |  |  | 20,120 |  |  | (4.5) | % |  | (4.1) | %
Other facilities costs | 27,387 |  |  | 27,389 |  |  | 24,545 |  |  | 11.6 | % |  | 11.6 | %
Labor | 129,438 |  |  | 128,535 |  |  | 130,763 |  |  | (1.0) | % |  | (1.7) | %
Other services costs | 21,308 |  |  | 21,325 |  |  | 24,836 |  |  | (14.2) | % |  | (14.1) | %
Total same store cost of operations | $ | 197,355 |  |  | $ | 196,535 |  |  | $ | 200,264 |  |  | (1.5) | % |  | (1.9) | %
Same store contribution (NOI) | $ | 99,710 |  |  | $ | 99,514 |  |  | $ | 92,199 |  |  | 8.1 | % |  | 7.9 | %
Same store rent and storage contribution (NOI)(2) | $ | 80,942 |  |  | $ | 81,141 |  |  | $ | 81,159 |  |  | (0.3) | % |  | — | %
Same store services contribution (NOI)(3) | $ | 18,768 |  |  | $ | 18,373 |  |  | $ | 11,040 |  |  | 70.0 | % |  | 66.4 | %
Total same store margin | 33.6 | % |  | 33.6 | % |  | 31.5 | % |  | 204 bps |  | 209 bps
Same store rent and storage margin(4) | 63.5 | % |  | 63.5 | % |  | 64.5 | % |  | -104 bps |  | -102 bps
Same store services margin(5) | 11.1 | % |  | 10.9 | % |  | 6.6 | % |  | 445 bps |  | 430 bps

| Three Months Ended September 30, |  | Change
| 2020 actual |  | 2020 constant currency(1) |  | 2019 actual |  | Actual |  | Constant currency
Number of non-same store sites | 40 |  |  |  | 30 |  | n/a |  | n/a
Non-same store revenues: | (Dollars in thousands) |  |  |  |
Rent and storage | $ | 38,804 |  |  | $ | 38,825 |  |  | $ | 30,174 |  |  | 28.6 | % |  | 28.7 | %
Warehouse services | 52,155 |  |  | 52,181 |  |  | 42,956 |  |  | 21.4 | % |  | 21.5 | %
Total non-same store revenues | 90,959 |  |  | 91,006 |  |  | 73,130 |  |  | 24.4 | % |  | 24.4 | %
Non-same store cost of operations: |  |  |  |  |  |  |  |  |
Power | 7,923 |  |  | 7,924 |  |  | 6,236 |  |  | 27.1 | % |  | 27.1 | %
Other facilities costs | 8,365 |  |  | 8,361 |  |  | 4,984 |  |  | 67.8 | % |  | 67.8 | %
Labor | 37,053 |  |  | 37,066 |  |  | 31,251 |  |  | 18.6 | % |  | 18.6 | %
Other services costs | 9,572 |  |  | 9,573 |  |  | 9,450 |  |  | 1.3 | % |  | 1.3 | %
Total non-same store cost of operations | $ | 62,913 |  |  | $ | 62,924 |  |  | $ | 51,921 |  |  | 21.2 | % |  | 21.2 | %
Non-same store contribution (NOI) | $ | 28,046 |  |  | $ | 28,082 |  |  | $ | 21,209 |  |  | 32.2 | % |  | 32.4 | %
Non-same store rent and storage contribution (NOI)(2) | $ | 22,516 |  |  | $ | 22,540 |  |  | $ | 18,954 |  |  | 18.8 | % |  | 18.9 | %
Non-same store services contribution (NOI)(3) | $ | 5,530 |  |  | $ | 5,542 |  |  | $ | 2,255 |  |  | 145.2 | % |  | 145.8 | %
Total non-same store margin | 30.8 | % |  | 30.9 | % |  | 29.0 | % |  | 183 bps |  | 186 bps
Non-same store rent and storage margin(4) | 58.0 | % |  | 58.1 | % |  | 62.8 | % |  | -479 bps |  | -476 bps
Non-same store services margin(5) | 10.6 | % |  | 10.6 | % |  | 5.2 | % |  | 535 bps |  | 537 bps

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| Three Months Ended September 30, |  | Change
| 2020 actual |  | 2020 constant currency(1) |  | 2019 actual |  | Actual |  | Constant currency
Total warehouse segment revenues | $ | 388,024 |  |  | $ | 387,055 |  |  | $ | 365,593 |  |  | 6.1 | % |  | 5.9 | %
Total warehouse cost of operations | $ | 260,268 |  |  | $ | 259,459 |  |  | $ | 252,185 |  |  | 3.2 | % |  | 2.9 | %
Total warehouse segment contribution | $ | 127,756 |  |  | $ | 127,596 |  |  | $ | 113,408 |  |  | 12.7 | % |  | 12.5 | %

(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.
n/a - not applicable, the change in actual and constant currency metrics does not apply to site count.
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The following table provides certain operating metrics to explain the drivers of our same store performance.

| Three Months Ended September 30, |  | Change
Units in thousands except per pallet and site number data - unaudited | 2020 |  | 2019 |
Number of same store sites | 135 |  |  | 135 |  |  | n/a
Same store rent and storage: |  |  |  |  |
Economic occupancy(1) |  |  |  |  |
Average occupied economic pallets | 2,381 |  |  | 2,382 |  |  | — | %
Economic occupancy percentage | 78.6 | % |  | 78.7 | % |  | -13 bps
Same store rent and storage revenues per economic occupied pallet | $ | 53.58 |  |  | $ | 52.82 |  |  | 1.4 | %
Constant currency same store rent and storage revenues per economic occupied pallet | $ | 53.69 |  |  | $ | 52.82 |  |  | 1.6 | %
Physical occupancy(2) |  |  |  |  |
Average physical occupied pallets | 2,130 |  |  | 2,261 |  |  | (5.8) | %
Average physical pallet positions | 3,030 |  |  | 3,027 |  |  | 0.1 | %
Physical occupancy percentage | 70.3 | % |  | 74.7 | % |  | -442 bps
Same store rent and storage revenues per physical occupied pallet | $ | 59.89 |  |  | $ | 55.64 |  |  | 7.6 | %
Constant currency same store rent and storage revenues per physical occupied pallet | $ | 60.02 |  |  | $ | 55.64 |  |  | 7.9 | %
Same store warehouse services: |  |  |  |  |
Throughput pallets (in thousands) | 6,286 |  |  | 6,538 |  |  | (3.9) | %
Same store warehouse services revenues per throughput pallet | $ | 26.97 |  |  | $ | 25.49 |  |  | 5.8 | %
Constant currency same store warehouse services revenues per throughput pallet | $ | 26.76 |  |  | $ | 25.49 |  |  | 5.0 | %
Number of non-same store sites | 40 |  |  | 30 |  |  | n/a
Non-same store rent and storage: |  |  |  |  |
Economic occupancy(1) |  |  |  |  |
Average economic occupied pallets | 763 |  |  | 616 |  |  | 23.9 | %
Economic occupancy percentage | 73.1 | % |  | 80.6 | % |  | -747 bps
Physical occupancy(2) |  |  |  |  |
Average physical occupied pallets | 719 |  |  | 596 |  |  | 20.7 | %
Average physical pallet positions | 1,044 |  |  | 765 |  |  | 36.5 | %
Physical occupancy percentage | 68.9 | % |  | 77.9 | % |  | -901 bps
Non-same store warehouse services: |  |  |  |  |
Throughput pallets (in thousands) | 1,633 |  |  | 1,437 |  |  | 13.6 | %

(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.
(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.
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Economic occupancy at our same stores was 78.6% for the three months ended September 30, 2020, and decreased 13 basis points compared to 78.7% for the three months ended September 30, 2019. We have increased our contractually committed pallet positions compared to the prior comparable period, maintaining our economic occupancy despite the decline in physical occupancy during the same comparative period. Our third quarter 2020 economic occupancy at our same stores was 829 basis points higher than our corresponding average physical occupancy of 70.3%. The decrease of 442 basis points in average physical occupancy compared to 74.7% for the three months ended September 30, 2019 was driven by supply chain fluctuations caused by the COVID-19 pandemic.
Same store rent and storage revenues per economic occupied pallet increased 1.4% 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 1.6% period-over-period.
Throughput pallets at our same stores were 6.3 million pallets for the three months ended September 30, 2020, a decrease of 3.9% from the three months ended September 30, 2019. This decrease was primarily attributable to decreased throughput from protein commodity customers and food service providers, partially offset by increased demand from our grocery retail sector due to COVID-19. Same store warehouse services revenues per throughput pallet increased 5.8% 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 5.0% from the three months ended September 30, 2019.
Third-Party Managed Segment
The following table presents the operating results of our third-party managed segment for the three months ended September 30, 2020 and 2019.

| Three Months Ended September 30, |  | Change
| 2020 actual |  | 2020 constant currency(1) |  | 2019 actual |  | Actual |  | Constant currency
Number of managed sites | 10 |  |  |  |  | 11 |  |  | n/a |  | n/a
| (Dollars in thousands) |  |  |  |
Third-party managed revenues | $ | 75,338 |  |  | $ | 75,197 |  |  | $ | 62,846 |  |  | 19.9 | % |  | 19.7 | %
Third-party managed cost of operations | 71,945 |  |  | 71,816 |  |  | 60,263 |  |  | 19.4 | % |  | 19.2 | %
Third-party managed segment contribution | $ | 3,393 |  |  | $ | 3,381 |  |  | $ | 2,583 |  |  | 31.4 | % |  | 30.9 | %
Third-party managed margin | 4.5 | % |  | 4.5 | % |  | 4.1 | % |  | 39 bps |  | 39 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 $75.3 million for the three months ended September 30, 2020, an increase of $12.5 million, or 19.9%, compared to $62.8 million for the three months ended September 30, 2019. This increase was a result of higher business volume in our domestic and foreign managed operations due to the consumer demand shift to retail and the favorable impact of foreign currency translation related to our Australian managed revenues. This was partially offset by the slight impact from the exit of a domestic managed site during the third quarter of 2019 and the exit of a Canadian managed site during the later part of the third quarter of 2020.
Third-party managed cost of operations was $71.9 million for the three months ended September 30, 2020, an increase of $11.7 million, or 19.4%, compared to $60.3 million for the three months ended September 30, 2019. Third-party managed cost of operations increased as a result of the revenue trends described above.
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Third-party managed segment contribution (NOI) was $3.4 million for the three months ended September 30, 2020, an increase of $0.8 million, or 31.4%, compared to $2.6 million for the three months ended September 30, 2019.
Transportation Segment
The following table presents the operating results of our transportation segment for the three months ended September 30, 2020 and 2019.

| Three Months Ended September 30, |  | Change
| 2020 actual |  | 2020 constant currency(1) |  | 2019 actual |  | Actual |  | Constant currency
| (Dollars in thousands) |  |  |  |
Transportation revenues | $ | 34,096 |  |  | $ | 34,124 |  |  | $ | 35,685 |  |  | (4.5) | % |  | (4.4) | %
Brokered transportation | 24,909 |  |  | 24,954 |  |  | 25,616 |  |  | (2.8) | % |  | (2.6) | %
Other cost of operations | 5,000 |  |  | 4,979 |  |  | 5,429 |  |  | (7.9) | % |  | (8.3) | %
Total transportation cost of operations | 29,909 |  |  | 29,933 |  |  | 31,045 |  |  | (3.7) | % |  | (3.6) | %
Transportation segment contribution (NOI) | $ | 4,187 |  |  | $ | 4,191 |  |  | $ | 4,640 |  |  | (9.8) | % |  | (9.7) | %
Transportation margin | 12.3 | % |  | 12.3 | % |  | 13.0 | % |  | -72 bps |  | -72 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 $34.1 million for the three months ended September 30, 2020, a decrease of $1.6 million, or 4.5%, compared to $35.7 million for the three months ended September 30, 2019. The decrease was primarily driven by the exit of certain international transportation business. This was partially offset by an increase in volume from new business domestically.
Transportation cost of operations was $29.9 million for the three months ended September 30, 2020, a decrease of $1.1 million, or 3.7%, compared to $31.0 million for the three months ended September 30, 2019. The exit of certain international transportation referenced above led to a decline in transportation cost of operations for the segment.
Transportation segment contribution (NOI) was $4.2 million for the three months ended September 30, 2020, a decrease of 9.8% compared to the three months ended September 30, 2019. Transportation segment margin decreased 72 basis points from the three months ended September 30, 2019, to 12.3% from 13.0%. The decrease in margin was primarily due to the exit of certain international transportation business.
Other Consolidated Operating Expenses
Depreciation, depletion and amortization. Depreciation, depletion and amortization expense was $53.6 million for the three months ended September 30, 2020, an increase of $8.5 million, or 18.9%, compared to $45.1 million for the three months ended September 30, 2019. This increase was primarily due to the acquisitions in 2019 and 2020, as well as the Rochelle expansion completed during the second quarter of 2019 and Savannah development that was placed into service during the second quarter of 2020.
Selling, general and administrative. Corporate-level selling, general and administrative expenses were $36.0 million for the three months ended September 30, 2020, a increase of $3.5 million, or 10.8%, compared to $32.5 million for the three months ended September 30, 2019. Included in these amounts are business development expenses attributable to new business pursuits, supply chain solutions and underwriting, facility development,
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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 higher share-based compensation expense, higher payroll and benefits related to additional investments to support our expanded development pipeline and higher executive management headcount and higher professional fees. This is partially offset by lower travel costs due to the ongoing COVID-19 pandemic and related travel restrictions paired with net synergies realized from recently completed acquisitions.
Acquisition, litigation and other. Corporate-level acquisition, litigation and other expenses were $5.3 million for the three months ended September 30, 2020, an increase of $1.5 million compared to the three months ended September 30, 2019. Included in these amounts are business acquisition related costs, litigation costs associated with litigation charges outside of the normal course of business or resulting from a settlement, severance and equity acceleration costs incurred in connection with former executives, severance as a result of synergies realized from acquisitions or operational transformation, non-offering related equity issuance expenses and terminated site operations costs. We view all of these costs as corporate in nature regardless of the segment or segments involved in certain transactions. Additionally, we view these costs as having a high level of variability from period-to-period, and therefore, in order to enhance our disclosure and provide greater transparency, we have isolated them from selling, general and administrative expenses. During the three months ended September 30, 2020, we incurred $4.9 million of acquisition related expenses 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. During the three months ended September 30, 2019, we incurred $2.7 million of acquisition related expenses primarily composed of employee retention, professional fees and integration related costs in connection with the Cloverleaf acquisition and other potential acquisitions. Additionally, we incurred $1.0 million of severance related to reduction in headcount as a result of the synergies created from the Cloverleaf acquisition and realignment of our international operations.
Impairment of long-lived assets. 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 plan 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 income and expense for the three months ended September 30, 2020 and 2019.

| Three Months Ended September 30, |  | Change
| 2020 |  | 2019 |  | %
Other (expense) income: | (Dollars in thousands) |  |
Interest expense | $ | (23,066) |  |  | $ | (24,907) |  |  | (7.4) | %
Interest income | $ | 179 |  |  | $ | 1,798 |  |  | (90.0) | %
Foreign currency exchange loss | $ | (196) |  |  | $ | (43) |  |  | n/r
Other expense - net | $ | (1,083) |  |  | $ | (249) |  |  | n/r
Loss from investments in partially owned entities | $ | (98) |  |  | $ | (165) |  |  | (40.6) | %
Gain from sale of partially owned entities | $ | — |  |  | $ | 4,297 |  |  | (100.0) |

n/r: not relevant
Interest expense. Interest expense was $23.1 million for the three months ended September 30, 2020, a decrease of $1.8 million, or 7.4%, compared to $24.9 million for the three months ended September 30, 2019. The decrease was primarily due to the decrease in interest expense on the unhedged portion of our Senior Unsecured Term
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Loan A Facility due to the decrease in the LIBOR rate. The effective interest rate of our outstanding debt has decreased from 4.59% in the third quarter of 2019 to 4.13% in the third quarter of 2020. This decrease is partially offset by the increase in interest expense incurred in connection with the increase in the senior unsecured term loan A which was expanded in March 2020 to fund the Nova Cold acquisition.
Interest income. Interest income of $0.2 million for the three months ended September 30, 2020 decreased by $1.6 million when compared to the $1.8 million reported for three months ended September 30, 2019. This change was primarily driven by a lower interest rate of 0.2% ea rned during the third quarter of 2020 as compared to 2.3% during the third quarter of 2019.
Other expense - net. Other expense - net of $1.1 million for the three months ended September 30, 2020 was primarily due to loss on various asset disposals.
Loss from investments in partially owned entities. During the first quarter of 2020, we entered into the Brazil JV for which we recorded a nominal amount as our portion of loss generated by SuperFrio for the third quarter of 2020. During the third quarter of 2019, we recorded a nominal amount as our portion of loss generated from the China JV of $0.2 million, prior to our disposition which also occurred during the third quarter of 2019.
Gain from sale of partially owned entities. During the third quarter of 2019, we sold our interest in the China JV which resulted in the $4.3 million gain.
Income Tax (Expense) Benefit
Income tax expense for the three months ended September 30, 2020 was $0.8 million, an increase of $7.8 million from an income tax benefit of $7.0 million for the three months ended September 30, 2019. The increase was primarily due to a non-recurring deferred tax benefit of $8.5 million associated with a deferred tax liability for the Cloverleaf and Lanier acquisitions recorded during the three months ended September 30, 2019 that became available to be used as a positive source of income for valuation allowance assessment purposes. This was offset by approximately $0.7 million of a decrease in tax expense for the three months ended September 30, 2020 primarily due to a non-recurring lease termination cost incurred by one of our Canadian operations.
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Comparison of Results for the Nine Months Ended September 30, 2020 and 2019
Warehouse Segment
The following table presents the operating results of our warehouse segment for the nine months ended September 30, 2020 and 2019.

| Nine Months Ended September 30, |  | Change
| 2020 actual |  | 2020 constant currency(1) |  | 2019 actual |  | Actual |  | Constant currency
| (Dollars in thousands) |  |  |  |
Rent and storage | $ | 492,328 |  |  | $ | 496,019 |  |  | $ | 424,403 |  |  | 16.0 | % |  | 16.9 | %
Warehouse services | 649,175 |  |  | 654,138 |  |  | 569,036 |  |  | 14.1 | % |  | 15.0 | %
Total warehouse segment revenues | 1,141,503 |  |  | 1,150,157 |  |  | 993,439 |  |  | 14.9 | % |  | 15.8 | %
Power | 68,918 |  |  | 69,479 |  |  | 61,738 |  |  | 11.6 | % |  | 12.5 | %
Other facilities costs (2) | 102,499 |  |  | 103,354 |  |  | 83,545 |  |  | 22.7 | % |  | 23.7 | %
Labor | 502,087 |  |  | 506,345 |  |  | 443,346 |  |  | 13.2 | % |  | 14.2 | %
Other services costs (3) | 93,338 |  |  | 94,027 |  |  | 86,766 |  |  | 7.6 | % |  | 8.4 | %
Total warehouse segment cost of operations | $ | 766,842 |  |  | $ | 773,205 |  |  | $ | 675,395 |  |  | 13.5 | % |  | 14.5 | %
Warehouse segment contribution (NOI) | $ | 374,661 |  |  | $ | 376,952 |  |  | $ | 318,044 |  |  | 17.8 | % |  | 18.5 | %
Warehouse rent and storage contribution (NOI) (4) | $ | 320,911 |  |  | $ | 323,186 |  |  | $ | 279,120 |  |  | 15.0 | % |  | 15.8 | %
Warehouse services contribution (NOI) (5) | $ | 53,750 |  |  | $ | 53,766 |  |  | $ | 38,924 |  |  | 38.1 | % |  | 38.1 | %
Total warehouse segment margin | 32.8 | % |  | 32.8 | % |  | 32.0 | % |  | 81 bps |  | 76 bps
Rent and storage margin(6) | 65.2 | % |  | 65.2 | % |  | 65.8 | % |  | -59 bps |  | -61 bps
Warehouse services margin(7) | 8.3 | % |  | 8.2 | % |  | 6.8 | % |  | 144 bps |  | 138 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 $9.2 million and $9.4 million, on an actual basis, for the nine months ended September 30, 2020 and 2019, respectively.
(3)Includes non-real estate rent expense (equipment lease and rentals) of $7.5 million and $8.7 million, on an actual basis, for the nine months ended September 30, 2020 and 2019, 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 $1,141.5 million for the nine months ended September 30, 2020, an increase of $148.1 million, or 14.9%, compared to $993.4 million for the nine months ended September 30, 2019. On a constant currency basis, our warehouse segment revenues were $1,150.2 million for the nine months ended September 30, 2020, an increase of $156.7 million, or 15.8%, from the nine months ended September 30, 2019. Approximately $130.5 million of the increase, on an actual currency basis, was primarily driven by acquisitions completed during 2019 and 2020, including the growth experienced period-over-period during overlapping periods of ownership. We acquired 23 warehouse facilities as a result of the Cloverleaf and Lanier acquisitions on May 1, 2019 and one facility as a result of the PortFresh acquisition on February 1, 2019, and therefore did not have ownership of these facilities during the entirety of the comparable prior period. In addition, we acquired seven warehouse facilities as a result of the MHW, Newport, and Nova Cold acquisitions subsequent to the third quarter of 2019. As a result, these seven facilities are reflected in the entirety of the current period but none of the comparable period. Finally, we acquired three facilities on August 31, 2020 as a result of the AM-C Warehouses
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and Caspers transactions. Throughout 2020 revenue growth has been driven by higher than seasonal grocery demand within the retail sector due to the COVID-19 pandemic. Increased purchases in the retail sector due to higher consumer grocery demand generated higher throughput pallets. However, this is partially offset by decreased consumption in the food services sector due to stay-at-home orders and continued social distancing resulted in lower services revenue due to the shift in demand. Later in the second quarter of 2020, the food service sector volumes began to increase as re-opening plans were implemented but still significantly lower than the prior comparable period. The increase was also partially due to higher economic occupancy from higher commodity holdings and a slowdown in food service activity and exports. The foreign currency translation of revenues earned by our foreign operations had a $8.7 million unfavorable impact during the nine months ended September 30, 2020, which was mainly driven by the strengthening of the U.S. dollar over the Australian dollar, New Zealand dollar and Argentinian peso.
Warehouse segment cost of operations was $766.8 million for the nine months ended September 30, 2020, an increase of $91.4 million, or 13.5%, compared to the nine months ended September 30, 2019. On a constant currency basis, our warehouse segment cost of operations was $773.2 million for the nine months ended September 30, 2020, an increase of $97.8 million, or 14.5%, from the nine months ended September 30, 2019. Approximately $81.7 million of the increase, on an actual basis, was primarily driven by the additional facilities we acquired in connection with the aforementioned acquisitions. In addition, we incurred increases in our cost of operations in response to COVID-19. We undertook initiatives to ensure the health and safety of our employees, incurring higher costs for items such as labor, due to social distancing requirements, cleaning and sanitation supplies, and other PPE. These incremental COVID-19 expenses include higher sanitation costs of $2.2 million and higher personal protective equipment (“PPE”) costs of $0.7 million for the nine months ended September 30, 2020. During the second quarter of 2020, we also paid a front-line appreciation bonus to our associates in recognition of their dedication and efforts during the COVID-19 pandemic, which totaled $4.3 million. This is partially offset by cost control measures through our Americold Operating System. Additionally, the foreign currency translation of expenses incurred by our foreign operations had a $6.4 million favorable impact during the nine months ended September 30, 2020.
For the nine months ended September 30, 2020, warehouse segment contribution (NOI), increased $56.6 million, or 17.8%, to $374.7 million for the nine months ended September 30, 2020, compared to $318.0 million for the nine months ended September 30, 2019. The foreign currency translation of our results of operations had a $2.3 million unfavorable impact to the warehouse segment contribution period-over-period. On a constant currency basis, warehouse segment NOI increased 18.5%. Approximately $48.8 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, including the growth and synergies experienced period-over-period during overlapping periods of ownership. The remainder of the increase was driven by improvements in our core business, same store economic occupancy growth, and disciplined cost controls through the Americold Operating System of our power and 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, the appreciation bonus paid to front-line associates to recognize the efforts of our associates during the COVID-19 pandemic and the increase in costs related to the COVID-19 response efforts to maintain the health and safety of our employees.
Same Store and Non-Same Store Analysis
We had 135 same stores for the nine months ended September 30, 2020. 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 AM-C Warehouses, Caspers, Cloverleaf, Lanier, MHW, Newport, Nova Cold and PortFresh are reflected within non-same store results.
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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, 2020 and 2019.

| Nine Months Ended September 30, |  | Change
| 2020 actual |  | 2020 constant currency(1) |  | 2019 actual |  | Actual |  | Constant currency
Number of same store sites | 135 |  |  |  | 135 |  | n/a |  | n/a
Same store revenues: | (Dollars in thousands) |  |  |  |
Rent and storage | $ | 378,390 |  |  | $ | 381,754 |  |  | $ | 365,551 |  |  | 3.5 | % |  | 4.4 | %
Warehouse services | 495,785 |  |  | 500,499 |  |  | 485,737 |  |  | 2.1 | % |  | 3.0 | %
Total same store revenues | 874,175 |  |  | 882,253 |  |  | 851,288 |  |  | 2.7 | % |  | 3.6 | %
Same store cost of operations: |  |  |  |  |  |  |  |  |
Power | 49,131 |  |  | 49,650 |  |  | 51,224 |  |  | (4.1) | % |  | (3.1) | %
Other facilities costs | 79,293 |  |  | 80,038 |  |  | 71,974 |  |  | 10.2 | % |  | 11.2 | %
Labor | 390,623 |  |  | 394,723 |  |  | 383,543 |  |  | 1.8 | % |  | 2.9 | %
Other services costs | 64,907 |  |  | 65,555 |  |  | 70,156 |  |  | (7.5) | % |  | (6.6) | %
Total same store cost of operations | $ | 583,954 |  |  | $ | 589,966 |  |  | $ | 576,897 |  |  | 1.2 | % |  | 2.3 | %
Same store contribution (NOI) | $ | 290,221 |  |  | $ | 292,287 |  |  | $ | 274,391 |  |  | 5.8 | % |  | 6.5 | %
Same store rent and storage contribution (NOI)(2) | $ | 249,966 |  |  | $ | 252,066 |  |  | $ | 242,353 |  |  | 3.1 | % |  | 4.0 | %
Same store services contribution (NOI)(3) | $ | 40,255 |  |  | $ | 40,221 |  |  | $ | 32,038 |  |  | 25.6 | % |  | 25.5 | %
Total same store margin | 33.2 | % |  | 33.1 | % |  | 32.2 | % |  | 97 bps |  | 90 bps
Same store rent and storage margin(4) | 66.1 | % |  | 66.0 | % |  | 66.3 | % |  | -24 bps |  | -27 bps
Same store services margin(5) | 8.1 | % |  | 8.0 | % |  | 6.6 | % |  | 152 bps |  | 144 bps

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| Nine Months Ended September 30, |  | Change
| 2020 actual |  | 2020 constant currency(1) |  | 2019 actual |  | Actual |  | Constant currency
Number of non-same store sites | 40 |  |  |  | 30 |  | n/a |  | n/a
Non-same store revenues: | (Dollars in thousands) |  |  |  |
Rent and storage | $ | 113,938 |  |  | $ | 114,265 |  |  | $ | 58,852 |  |  | 93.6 | % |  | 94.2 | %
Warehouse services | 153,390 |  |  | 153,639 |  |  | 83,299 |  |  | 84.1 | % |  | 84.4 | %
Total non-same store revenues | 267,328 |  |  | 267,904 |  |  | 142,151 |  |  | 88.1 | % |  | 88.5 | %
Non-same store cost of operations: |  |  |  |  |  |  |  |  |
Power | 19,787 |  |  | 19,829 |  |  | 10,514 |  |  | 88.2 | % |  | 88.6 | %
Other facilities costs | 23,206 |  |  | 23,316 |  |  | 11,571 |  |  | 100.6 | % |  | 101.5 | %
Labor | 111,464 |  |  | 111,622 |  |  | 59,803 |  |  | 86.4 | % |  | 86.6 | %
Other services costs | 28,431 |  |  | 28,472 |  |  | 16,610 |  |  | 71.2 | % |  | 71.4 | %
Total non-same store cost of operations | $ | 182,888 |  |  | $ | 183,239 |  |  | $ | 98,498 |  |  | 85.7 | % |  | 86.0 | %
Non-same store contribution (NOI) | $ | 84,440 |  |  | $ | 84,665 |  |  | $ | 43,653 |  |  | 93.4 | % |  | 94.0 | %
Non-same store rent and storage contribution (NOI)(2) | $ | 70,945 |  |  | $ | 71,120 |  |  | $ | 36,767 |  |  | 93.0 | % |  | 93.4 | %
Non-same store services contribution (NOI)(3) | $ | 13,495 |  |  | $ | 13,545 |  |  | $ | 6,886 |  |  | 96.0 | % |  | 96.7 | %
Total non-same store margin | 31.6 | % |  | 31.6 | % |  | 30.7 | % |  | 88 bps |  | 89 bps
Non-same store rent and storage margin(4) | 62.3 | % |  | 62.2 | % |  | 62.5 | % |  | -21 bps |  | -23 bps
Non-same store services margin(5) | 8.8 | % |  | 8.8 | % |  | 8.3 | % |  | 53 bps |  | 55 bps

| Nine Months Ended September 30, |  | Change
| 2020 actual |  | 2020 constant currency(1) |  | 2019 actual |  | Actual |  | Constant currency
Total warehouse segment revenues | $ | 1,141,503 |  |  | $ | 1,150,157 |  |  | $ | 993,439 |  |  | 14.9 | % |  | 15.8 | %
Total warehouse cost of operations | $ | 766,842 |  |  | $ | 773,205 |  |  | $ | 675,395 |  |  | 13.5 | % |  | 14.5 | %
Total warehouse segment contribution | $ | 374,661 |  |  | $ | 376,952 |  |  | $ | 318,044 |  |  | 17.8 | % |  | 18.5 | %

(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.
n/a - not applicable, the change in actual and constant currency metrics does not apply to site count
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The following table provides certain operating metrics to explain the drivers of our same store performance.

| Nine Months Ended September 30, |  |
Units in thousands except per pallet and site number data - unaudited | 2020 |  | 2019 |  | Change
Number of same store sites | 135 |  |  | 135 |  |  | n/a
Same store rent and storage: |  |  |  |  |
Economic occupancy(1) |  |  |  |  |
Average occupied economic pallets | 2,417 |  |  | 2,355 |  |  | 2.6 | %
Economic occupancy percentage | 79.8 | % |  | 77.8 | % |  | 201 bps
Same store rent and storage revenues per economic occupied pallet | $ | 156.57 |  |  | $ | 155.25 |  |  | 0.9 | %
Constant currency same store rent and storage revenues per economic occupied pallet | $ | 157.96 |  |  | $ | 155.25 |  |  | 1.7 | %
Physical occupancy(2) |  |  |  |  |
Average physical occupied pallets | 2,190 |  |  | 2,232 |  |  | (1.9) | %
Average physical pallet positions | 3,028 |  |  | 3,027 |  |  | 0.1 | %
Physical occupancy percentage | 72.3 | % |  | 73.7 | % |  | -142 bps
Same store rent and storage revenues per physical occupied pallet | $ | 172.80 |  |  | $ | 163.81 |  |  | 5.5 | %
Constant currency same store rent and storage revenues per physical occupied pallet | $ | 174.34 |  |  | $ | 163.81 |  |  | 6.4 | %
Same store warehouse services: |  |  |  |  |
Throughput pallets (in thousands) | 18,890 |  |  | 19,170 |  |  | (1.5) | %
Same store warehouse services revenues per throughput pallet | $ | 26.25 |  |  | $ | 25.34 |  |  | 3.6 | %
Constant currency same store warehouse services revenues per throughput pallet | $ | 26.49 |  |  | $ | 25.34 |  |  | 4.6 | %
Number of non-same store sites | 40 |  |  | 30 |  |  | n/a
Non-same store rent and storage: |  |  |  |  |
Economic occupancy(1) |  |  |  |  |
Average economic occupied pallets | 772 |  |  | 404 |  |  | 91.0 | %
Economic occupancy percentage | 76.1 | % |  | 80.7 | % |  | -464 bps
Physical occupancy(2) |  |  |  |  |
Average physical occupied pallets | 740 |  |  | 391 |  |  | 89.3 | %
Average physical pallet positions | 1,015 |  |  | 501 |  |  | 102.7 |
Physical occupancy percentage | 72.9 | % |  | 78.0 | % |  | -514 bps
Non-same store warehouse services: |  |  |  |  |
Throughput pallets (in thousands) | 4,943 |  |  | 2,692 |  |  | 83.6 | %

(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.
(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.
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Economic occupancy at our same stores was 79.8% for the nine months ended September 30, 2020, an increase of 201 basis points compared to 77.8% for the nine months ended September 30, 2019. This change was primarily the result of an increase in fixed storage contracts. Our economic occupancy at our same stores was 750 basis points higher than our corresponding average physical occupancy of 72.3%. The decrease of 142 basis points in average physical occupancy compared to 73.7% for the nine months ended September 30, 2019 was partially driven by higher protein occupancy and higher food service business occupancy due to “stay-at-home” orders as well as port congestion as a result of COVID-19, which generated lower throughput of inventory within our warehouses. This was partially offset by the decline in physical occupancy related to the retail products as a result of higher grocery demand related to COVID-19.
Same store rent and storage revenues per economic occupied pallet increased 0.9% period-over-period, primarily driven by a more favorable customer mix, improvements in our commercial terms and contractual rate escalations, partially offset by unfavorable foreign currency translation, which was largely driven by the strengthening of the U.S. dollar. On a constant currency basis, our same store rent and storage revenues per occupied pallet increased 1.7% period-over-period.
Throughput pallets at our same stores were 18.9 million pallets for the nine months ended September 30, 2020, a slight decrease of 1.5% from the nine months ended September 30, 2019. This decrease was the result of the COVID related impacts in various sectors and commodities, including the initial surge and ongoing elevated demand from our grocery retail sector, offset by the decrease in throughput in the food service sector and protein commodity. Same store warehouse services revenues per throughput pallet increased 3.6% period-over-period, primarily as a result of a more favorable customer mix, increase in higher priced value-added services such as case-picking, blast freezing and repackaging and contractual rate escalations, partially offset by unfavorable foreign currency translation as previously discussed. On a constant currency basis, our same store services revenues per throughput pallet increased 4.5% from the nine months ended September 30, 2019.
Third-Party Managed Segment
The following table presents the operating results of our third-party managed segment for the nine months ended September 30, 2020 and 2019.

| Nine Months Ended September 30, |  | Change
| 2020 actual |  | 2020 constant currency(1) |  | 2019 actual |  | Actual |  | Constant currency
Number of managed sites | 10 |  |  |  |  | 11 |  |  | n/a |  | n/a
| (Dollars in thousands) |  |  |  |
Third-party managed revenues | $ | 213,213 |  |  | $ | 213,829 |  |  | $ | 188,497 |  |  | 13.1 | % |  | 13.4 | %
Third-party managed cost of operations | 202,752 |  |  | 203,332 |  |  | 179,851 |  |  | 12.7 | % |  | 13.1 | %
Third-party managed segment contribution | $ | 10,461 |  |  | $ | 10,497 |  |  | $ | 8,646 |  |  | 21.0 | % |  | 21.4 | %
Third-party managed margin | 4.9 | % |  | 4.9 | % |  | 4.6 | % |  | 32 bps |  | 32 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 $213.2 million for the nine months ended September 30, 2020, an increase of $24.7 million, or 13.1%, compared to $188.5 million for the nine months ended September 30, 2019. On a constant currency basis, third-party managed revenues were $213.8 million for the nine months ended September 30, 2020, an increase of $25.3 million, or 13.4%, from the nine months ended September 30, 2019. This increase was a result of the addition of one managed site in connection with the Cloverleaf Acquisition on May 1, 2019 and higher business volume in our domestic and Australia managed operations. This increase was
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partially offset by the unfavorable impact of foreign currency translation related to our Canadian and Australian managed revenues, and the impacts from the exit of two domestic managed sites during 2019.
Third-party managed cost of operations was $202.8 million for the nine months ended September 30, 2020, an increase of $22.9 million, or 12.7%, compared to $179.9 million for the nine months ended September 30, 2019. On a constant currency basis, third-party managed cost of operations was $203.3 million for the nine months ended September 30, 2020, an increase of $23.5 million, or 13.1%, from the nine months ended September 30, 2019. Third-party managed cost of operations increased as a result of the revenue trends described above.
Third-party managed segment contribution (NOI) was $10.5 million for the nine months ended September 30, 2020, an increase of $1.8 million, or 21.0%, compared to $8.6 million for the nine months ended September 30, 2019. On a constant currency basis, third-party managed segment contribution (NOI) was $10.5 million for the nine months ended September 30, 2020, an increase of $1.9 million, or 21.4%.
Transportation Segment
The following table presents the operating results of our transportation segment for the nine months ended September 30, 2020 and 2019.

| Nine Months Ended September 30, |  | Change
| 2020 actual |  | 2020 constant currency(1) |  | 2019 actual |  | Actual |  | Constant currency
| (Dollars in thousands) |  |  |  |
Transportation revenues | $ | 104,874 |  |  | $ | 106,559 |  |  | $ | 109,273 |  |  | (4.0) | % |  | (2.5) | %
Brokered transportation | 76,359 |  |  | 77,783 |  |  | 78,805 |  |  | (3.1) | % |  | (1.3) | %
Other cost of operations | 14,751 |  |  | 14,827 |  |  | 17,266 |  |  | (14.6) | % |  | (14.1) | %
Total transportation cost of operations | 91,110 |  |  | 92,610 |  |  | 96,071 |  |  | (5.2) | % |  | (3.6) | %
Transportation segment contribution (NOI) | $ | 13,764 |  |  | $ | 13,949 |  |  | $ | 13,202 |  |  | 4.3 | % |  | 5.7 | %
Transportation margin | 13.1 | % |  | 13.1 | % |  | 12.1 | % |  | 104 bps |  | 101 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.
Our transportation segment continued its strategic shift to focus on more profitable solutions, which create value for our customers while driving and supporting our warehouse business, including multi-vendor consolidation offerings. Transportation revenues were $104.9 million for the nine months ended September 30, 2020, a decrease of $4.4 million, or 4.0%, compared to $109.3 million for the nine months ended September 30, 2019. The decrease was primarily driven by the exit of certain low-margin international and domestic transportation business, paired with the unfavorable impact from the foreign currency translation of revenues earned by our foreign operations. Domestically, our transportation operations experienced an increase due to the revenue associated with transportation operations from the Cloverleaf Acquisition, which contributed approximately $2.7 million during the nine months ended September 30, 2020. On a constant currency basis, transportation revenues were $106.6 million for the nine months ended September 30, 2020, a decrease of $2.7 million, or 2.5%, from the nine months ended September 30, 2019.
Transportation cost of operations was $91.1 million for the nine months ended September 30, 2020, a decrease of $5.0 million, or 5.2%, compared to $96.1 million for the nine months ended September 30, 2019. On a constant currency basis, transportation cost of operations was $92.6 million for the nine months ended September 30, 2020, a decrease of $3.5 million, or 3.6%, from the nine months ended September 30, 2019. The strategic shift referenced above paired with the impact of the foreign currency translation of our international costs led to a
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decline in transportation cost of operations for the segment. The decrease was partially offset by the related cost associated with transportation operations from the Cloverleaf Acquisition.
Transportation segment contribution (NOI) was $13.8 million for the nine months ended September 30, 2020, an increase of 4.3% compared to the nine months ended September 30, 2019. Transportation segment margin increased 104 basis points from the nine months ended September 30, 2019, to 13.1% from 12.1%. The increase in margin was primarily due to the strategic shift referenced above, which resulted in more profitable business. Additionally, the increase is driven by four additional months in 2020 of operations from the Cloverleaf Acquisition, paired with improvements in operating margins for the Cloverleaf transportation business for the nine months ended 2020. On a constant currency basis, transportation segment contribution was $13.9 million for the nine months ended September 30, 2020, an increase of 5.7% compared to the nine months ended September 30, 2019.
Quarry Segment
The following table presents the operating results of our quarry segment for the nine months ended September 30, 2020 and 2019. The Quarry segment was sold on July 1, 2020, resulting in an impairment charge of $3.7 million during the three months ended June 30, 2020.

| Nine Months Ended September 30, |  | Change
| 2020 |  | 2019 |  | %
| (Dollars in thousands) |  |
Quarry revenues | $ | 4,459 |  |  | $ | 6,512 |  |  | (31.5) | %
Quarry cost of operations | 4,286 |  |  | 5,901 |  |  | (27.4) | %
Quarry segment contribution (NOI) | $ | 173 |  |  | $ | 611 |  |  | (71.7) | %
Quarry margin | 3.9 | % |  | 9.4 | % |  | (58.6) | %

Quarry revenues were $4.5 million for the nine months ended September 30, 2020, a decrease of $2.1 million compared to $6.5 million for the nine months ended September 30, 2019. The decrease is primarily due to the disposition of this segment on July 1, 2020.
Quarry cost of operations was $4.3 million for the nine months ended September 30, 2020, a decrease of $1.6 million, or 27.4%, compared to $5.9 million for the nine months ended September 30, 2019. The decrease is primarily due to the disposition of this segment on July 1, 2020.
Quarry segment contribution (NOI) was $0.2 million for the nine months ended September 30, 2020, a decrease of $0.4 million from the nine months ended September 30, 2019, due to the reasons listed above.
Other Consolidated Operating Expenses
Depreciation, depletion and amortization. Depreciation, depletion and amortization expense was $157.6 million for the nine months ended September 30, 2020, an increase of $42.0 million, or 36.3%, compared to $115.6 million for the nine months ended September 30, 2019. This increase was primarily due to the acquisitions in 2019 and 2020, as well as the Rochelle expansion facility which was placed into service during the second quarter of 2019 and the Savannah expansion that was completed during 2020.
Selling, general and administrative. Corporate-level selling, general and administrative expenses were $105.2 million for the nine months ended September 30, 2020, an increase of $8.9 million, or 9.3%, compared to $96.3 million for the nine months ended September 30, 2019. 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
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chain. We believe these costs are comparable to leasing costs for other publicly-traded REITs. The increase was primarily driven by higher share-based compensation expense and higher payroll and benefits related to additional investments to support our expanded development pipeline, partially offset by lower travel costs due to the ongoing COVID-19 pandemic and related travel restrictions and synergies realized from acquisitions.
Acquisition, litigation and other. Corporate-level acquisition, litigation and other expenses were $9.8 million for the nine months ended September 30, 2020, a decrease of $20.5 million compared to the nine months ended September 30, 2019. Included in these amounts are business acquisition related costs, litigation costs associated with litigation charges outside of the normal course of business or resulting from a settlement, severance and equity acceleration costs incurred in connection with former executives, severance as a result of synergies realized from acquisitions or operational transformation, non-offering related equity issuance expenses and terminated site operations costs. We view all of these costs as corporate in nature regardless of the segment or segments involved in certain transactions. Additionally, we view these costs as having a high level of variability from period-to-period, and therefore, in order to enhance our disclosure and provide greater transparency, we have isolated them from selling, general and administrative expenses. During the nine months ended September 30, 2020, we incurred $8.3 million of acquisition related expenses 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 primarily related to reduction in headcount as a result of the synergies from acquisitions, and partially related to realignment of our international operations during the nine months ended September 30, 2020. During the nine months ended September 30, 2019, we incurred $10 million in investment advisory fees related to the Cloverleaf and Lanier acquisitions. Other professional fees, integration costs and employee retention expenses incurred in connection with completed and potential acquisitions totaled $9.1 million for the nine months ended September 30, 2019. In addition, we incurred $4.3 million of severance and equity acceleration expenses related to exited former executives and the resignation of a member of the Board of Trustees and $3.6 million of severance related to reduction in headcount as a result of the synergies created from the Cloverleaf and Lanier acquisitions and organizational transformation of our international operations. We also incurred $1.4 million of litigation related professional fees and $1.3 million of costs in connection with the secondary offering of common shares on behalf of our significant shareholders in March 2019, for which we received no proceeds.
Impairment of long-lived assets. 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. For the nine months ended September 30, 2019, we recorded impairment charges of $13.5 million. During the first quarter of 2019, management and our Board of Trustees formally approved the “Atlanta Major Market Strategy” plan which included the partial redevelopment of an existing warehouse facility. The partial redevelopment required the demolition of 75% of the current warehouse, which was unused. As a result of this initiative, we recorded an impairment charge of $9.6 million. Additionally, during the first quarter of 2019, we recorded an impairment charge of $2.9 million related to a domestic idle warehouse facility in anticipation of sale of the asset, which was completed during the second quarter of 2019. Each of these impaired assets previously mentioned related to the Warehouse segment. As previously discussed, during the second quarter of 2019, management determined that certain international transportation related assets were going to be idled and we recorded an impairment charge of $0.9 million as a result.
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
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Warehouse segment, and began to transition the business to other nearby facilities, resulting in a $19.4 million gain from sale of real estate.
Other Expense and Income
The following table presents other items of income and expense for the nine months ended September 30, 2020 and 2019.

| Nine Months Ended September 30, |  | Change
| 2020 |  | 2019 |  | %
Other (expense) income: | (Dollars in thousands) |  |
Interest expense | $ | (70,114) |  |  | $ | (70,581) |  |  | (0.7) | %
Interest income | $ | 1,027 |  |  | $ | 5,206 |  |  | (80.3) | %
Bridge loan commitment fees | $ | — |  |  | $ | (2,665) |  |  | (100.0) | %
Loss on debt extinguishment and modification | $ | (781) |  |  | $ | — |  |  | 100.0 | %
Foreign currency exchange loss | $ | (373) |  |  | $ | (66) |  |  | n/r
Other expense - net | $ | (168) |  |  | $ | (1,007) |  |  | n/r
Loss from investments in partially owned entities | $ | (254) |  |  | $ | (111) |  |  | 128.8 | %
Gain from sale of partially owned entities | $ | — |  |  | $ | 4,297 |  |  | (100.0) | %

n/r: not relevant
Interest expense. Interest expense was $70.1 million for the nine months ended September 30, 2020, a decrease of $0.5 million, or 0.7%, compared to $70.6 million for the nine months ended September 30, 2019. The decrease was primarily due to the decrease in interest expense on the unhedged portion of our Senior Unsecured Term Loan A Facility due to the decrease in the LIBOR rate. This was offset by the increase in the senior unsecured term loan A which was expanded in March 2020 to fund the Nova Cold acquisition and the private placement of $350.0 million aggregate principal amount of Series C senior unsecured notes on May 7, 2019, which were used to fund a portion of the Cloverleaf and Lanier acquisitions. The effective interest rate of our outstanding debt has decreased from 5.00% for the nine months ended September 30, 2019 to 4.19% for the nine months ended September 30, 2020, however, outstanding principal has increased from $1.7 billion as of September 30, 2019 to $1.8 billion as of September 30, 2020.
Interest income. Interest income was $1.0 million for the nine months ended September 30, 2020, a decrease of $4.2 million when compared to the $5.2 million reported for the nine months ended September 30, 2019. This change was primarily driven by a lower interest rate of 0.62% earned during the nine months ended September 30, 2020 as compared to 2.4% during the nine months ended September 30, 2019.
Bridge loan commitment fees. Corporate-level bridge loan commitment fees were $2.7 million for the nine months ended September 30, 2019. We obtained a bridge loan commitment to support the acquisition of Cloverleaf. The bridge loan facility ultimately did not need to be funded and accordingly we expensed the lender commitment and loan fee.
Loss on debt extinguishment and modification. 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.
Foreign currency exchange loss. We reported a $0.4 million foreign currency exchange loss for the nine months ended September 30, 2020 as compared to a nominal foreign currency exchange loss for the nine months ended September 30, 2019. The periodic re-measurement of intercompany payables with quarterly settlement denominated in U.S. dollars resulted in a foreign currency exchange loss during the nine months ended September 30, 2020 as the U.S. dollar strengthened against the Australian dollar.
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Other expense - net. During the nine months ended September 30, 2020, we reported other expense of $0.2 million, compared to other expense of $1.0 million for the nine months ended September 30, 2019. During the nine months ended September 30, 2020, other expense was mainly due to a net loss from asset disposals, offset by a lease restoration payment received from a tenant in one of our facilities. During the nine months ended September 30, 2019, other expense was mainly due to pension non-service costs. These costs have decreased during the nine months ended September 30, 2020 as compared to the prior year.
Loss from investments in partially owned entities. During the nine months ended September 30, 2020, we entered into the Brazil JV for which we recorded $0.3 million as our portion of loss generated by SuperFrio. During the nine months ended September 30, 2019, we recorded a loss of $0.1 million related to the China JV, which we exited during the third quarter of 2019.
Gain from sale of partially owned entities. During the third quarter of 2019, we sold our interest in the China JV which resulted in the $4.3 million gain.
Income Tax (Expense) Benefit
Income tax expense for the nine months ended September 30, 2020 was $2.5 million, an increase of $9.9 million when compared to the $7.4 million benefit reported for the nine months ended September 30, 2019. This increase was primarily due to a non-recurring deferred tax benefit of $8.5 million associated with a deferred tax liability for the Cloverleaf acquisition recorded during the nine month period ended September 30, 2019 that became available to be used as a positive source of income for valuation allowance assessment purposes. The remainder of the increase is primarily due to an increase in tax expense for the nine months ended September 30, 2020 as a result of higher income generated by our domestic and foreign operations.
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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-real estate impairment, acquisition, litigation and other, share-based compensation expense for the IPO retention grants, bridge loan commitment fees, loss on debt extinguishment and modification, foreign currency exchange loss and gain from sale of partially owned entities. 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 JV is a strategic partnership 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, 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 income, which is the most directly comparable financial measure calculated in accordance with U.S. GAAP.

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Reconciliation of Net Income to NAREIT FFO, Core FFO, and Adjusted FFO
(in thousands)
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2020 |  | 2019 |  | 2020 |  | 2019
Net income | $ | 12,374 |  |  | $ | 27,091 |  |  | $ | 68,547 |  |  | $ | 27,353 |
Adjustments: |  |  |  |  |  |  |
Real estate related depreciation and depletion | 36,289 |  |  | 31,238 |  |  | 107,289 |  |  | 82,421 |
Net loss (gain) on sale of real estate, net of withholding taxes | 427 |  |  | — |  |  | (21,083) |  |  | 34 |
Net loss on asset disposals | 1,160 |  |  | 7 |  |  | 1,157 |  |  | 145 |
Impairment charges on certain real estate assets | — |  |  | — |  |  | 3,181 |  |  | 12,555 |
Real estate depreciation on partially owned entities | — |  |  | 232 |  |  | — |  |  | 790 |
Our share of reconciling items related to partially owned entities | 111 |  |  | — |  |  | 267 |  |  | — |
NAREIT Funds from operations | 50,361 |  |  | 58,568 |  |  | 159,358 |  |  | 123,298 |
Adjustments: |  |  |  |  |  |  |
Net (gain) loss on sale of non-real estate assets | (100) |  |  | 212 |  |  | (517) |  |  | 261 |
Non-real estate asset impairment | 2,615 |  |  | — |  |  | 3,101 |  |  | 930 |
Acquisition, litigation and other | 5,282 |  |  | 3,780 |  |  | 9,771 |  |  | 30,237 |
Share-based compensation expense, IPO grants | 196 |  |  | 777 |  |  | 772 |  |  | 1,940 |
Bridge loan commitment fees | — |  |  | — |  |  | — |  |  | 2,665 |
Loss on debt extinguishment and modifications | — |  |  | — |  |  | 781 |  |  | — |
Foreign currency exchange loss | 196 |  |  | 43 |  |  | 373 |  |  | 66 |
Gain from sale of partially owned entities | — |  |  | (4,297) |  |  | — |  |  | (4,297) |
Our share of reconciling items related to partially owned entities | 76 |  |  | — |  |  | 155 |  |  | — |
Core FFO applicable to common shareholders | 58,626 |  |  | 59,083 |  |  | 173,794 |  |  | 155,100 |
Adjustments: |  |  |  |  |  |  |
Amortization of deferred financing costs and pension withdrawal liability | 1,203 |  |  | 1,526 |  |  | 3,945 |  |  | 4,504 |
Amortization of below/above market leases | 39 |  |  | 38 |  |  | 115 |  |  | 114 |
Straight-line net rent | (87) |  |  | (150) |  |  | (304) |  |  | (438) |
Deferred income taxes benefit | (1,284) |  |  | (7,809) |  |  | (4,353) |  |  | (12,221) |
Share-based compensation expense, excluding IPO grants | 4,373 |  |  | 2,593 |  |  | 12,568 |  |  | 7,253 |
Non-real estate depreciation and amortization | 17,280 |  |  | 13,828 |  |  | 50,283 |  |  | 33,178 |
Non-real estate depreciation and amortization on partially owned entities | — |  |  | 108 |  |  | — |  |  | 317 |
Maintenance capital expenditures (a) | (17,534) |  |  | (16,772) |  |  | (45,256) |  |  | (32,993) |
Our share of reconciling items related to partially owned entities | 125 |  |  | — |  |  | 203 |  |  | — |
Adjusted FFO applicable to common shareholders | $ | 62,741 |  |  | $ | 52,445 |  |  | $ | 190,995 |  |  | $ | 154,814 |

(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, depletion and amortization, gains or losses on disposition of depreciated property, including gains or losses on change of control, impairment write-downs of depreciated property and of investments in unconsolidated affiliates caused by a decrease in value of depreciated property in the affiliate, and adjustment to reflect share of EBITDAre of unconsolidated affiliates. 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 expenses, bridge loan commitment fees, impairment of long-lived assets, loss on debt extinguishment and modification, share-based compensation expense, foreign currency exchange gain or loss, loss or gain on other asset disposals, loss or income on partially owned entities 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 income, which is the most directly comparable financial measure calculated in accordance with U.S. GAAP.

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Reconciliation of Net Income to NAREIT EBITDAre and Core EBITDA
(In thousands)
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2020 |  | 2019 |  | 2020 |  | 2019
Net income | $ | 12,374 |  |  | $ | 27,091 |  |  | $ | 68,547 |  |  | $ | 27,353 |
Adjustments: |  |  |  |  |  |  |
Depreciation, depletion and amortization | 53,569 |  |  | 45,065 |  |  | 157,572 |  |  | 115,598 |
Interest expense | 23,066 |  |  | 24,907 |  |  | 70,114 |  |  | 70,581 |
Income tax expense (benefit) | 819 |  |  | (6,975) |  |  | 2,105 |  |  | (7,393) |
Net loss (gain) on sale of real estate, net of withholding taxes | 427 |  |  | — |  |  | (21,083) |  |  | 34 |
Adjustment to reflect share of EBITDAre of partially owned entities | 293 |  |  | 519 |  |  | 590 |  |  | 1,726 |
NAREIT EBITDAre | $ | 90,548 |  |  | $ | 90,607 |  |  | $ | 277,845 |  |  | $ | 207,899 |
Adjustments: |  |  |  |  |  |  |
Acquisition, litigation, and other | 5,282 |  |  | 3,780 |  |  | 9,771 |  |  | 30,237 |
Bridge loan commitment fees | — |  |  | — |  |  | — |  |  | 2,665 |
Loss from investments in partially owned entities | 98 |  |  | 165 |  |  | 254 |  |  | 111 |
Impairment of long-lived assets | 2,615 |  |  | — |  |  | 6,282 |  |  | 13,485 |
Loss on foreign currency exchange | 196 |  |  | 43 |  |  | 373 |  |  | 66 |
Share-based compensation expense | 4,569 |  |  | 3,372 |  |  | 13,340 |  |  | 9,196 |
Loss on debt extinguishment and modifications | — |  |  | — |  |  | 781 |  |  | — |
Net loss on sale of non-real estate assets | 1,060 |  |  | 218 |  |  | 641 |  |  | 406 |
Gain from sale of partially owned entities | — |  |  | (4,297) |  |  | — |  |  | (4,297) |
Reduction in EBITDAre from partially owned entities | (293) |  |  | (519) |  |  | (590) |  |  | (1,726) |
Core EBITDA | $ | 104,075 |  |  | $ | 93,369 |  |  | $ | 308,697 |  |  | $ | 258,042 |

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LIQUIDITY AND CAPITAL RESOURCES
In March 2020, the Securities and Exchange Commission (SEC) adopted amendments to Rule 3-10 of Regulation S-X and created Rule 13-01 to simplify disclosure requirements related to certain registered securities. The rule is effective January 4, 2021 but earlier compliance is permitted. 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. As a result of the amendments to Rule 3-10 of Regulation S-X, subsidiary issuers of obligations guaranteed by the parent are not required to provide separate financial statements, provided that the subsidiary obligor is consolidated into the parent company’s consolidated financial statements, the parent guarantee is “full and unconditional” and, subject to certain exceptions as set forth below, the alternative disclosure required by Rule 13-01 is provided, which includes narrative disclosure and summarized financial information. Accordingly, separate consolidated financial statements of the Operating Partnership have not been presented. 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 2018 forward sale agreement;
•our ATM Equity Program 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 three or nine months ended September 30, 2020 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
95

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.
On August 23, 2019, we entered into an equity distribution agreement pursuant to which we may sell, from time to time, up to an aggregate sales price of $500.0 million of our common shares through an ATM equity program (an “ATM Equity Program”). There were no common shares sold under the ATM Equity Program during the first quarter of 2020. On April 16, 2020, this ATM Equity Program was terminated and replaced with a new ATM Equity Program, pursuant to which we may sell up to an aggregate sales price of $500.0 million of our common shares. Sales of our common shares made pursuant to the 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 any net proceeds from sales of our common shares pursuant to the new ATM Equity Program for working capital, capital expenditures and other general corporate purposes, which may include funding development, expansion and acquisitions opportunities and the repayment of outstanding indebtedness.
During the nine months ended September 30, 2020, there were 3,094,431 common shares sold under the 2020 ATM Equity Program, resulting in gross proceeds of $110.4 million. The proceeds were offset by $2.4 million of fees which were capitalized related to the ATM Equity Program. In addition, during the nine months ended September 30, 2020, the Company entered into forward sale agreements in connection with the 2020 ATM Equity Program to sell 4,346,101 common shares for gross proceeds of $162.2 million. Pursuant to the respective forward sale agreements, 2,429,104 common shares for gross proceeds of $89.6 million must be settled by July 1, 2021 and 1,916,997 common shares for gross proceeds of $72.6 million must be settled by September 1, 2021.
After considering the common shares issued during the second quarter of 2020 and the shares subject to the forward sale agreements entered into during the second and third quarter of 2020, the Company had approximately $227.4 million availability remaining for distribution under the ATM Equity Program as of September 30, 2020.
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 saleable 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 $0.1 million and $0.9 million for the three months ended September 30, 2020 and 2019, respectively, and $1.6 million and $1.5 million for the nine months ended September 30, 2020 and 2019, respectively. As of September 30, 2020, we maintained bad debt allowances of approximately $12.5 million, which we believed to be adequate.
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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 to use borrowings under our revolving credit facility, if necessary, to meet REIT distribution requirements and maintain our REIT status.
We declared the following dividends on its common shares during the nine months ended September 30, 2020 and 2019 (in thousands, except per share amounts):
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Nine Months Ended September 30, 2020
Month Declared/Paid | Dividend Per Share | Distributions Declared |  | Distributions Paid |  |
December (2019)/January | $ | 0.2000 |  | $ | — |  |  | $ | 38,796 |  |  |
December(a) |  | — |  |  | (169) |  | Dividend equivalents accrued on unvested restricted stock units to be paid when the awards vest.
December (2019)/January |  | — |  |  | 4 |  | Dividend equivalents paid on unvested restricted stock units that are not expected to vest (recognized as additional compensation).
March/April | 0.2100 |  | 42,568 |  |  | 42,568 |  |  |
March(b) |  | — |  |  | (233) |  | Dividend equivalents accrued on unvested restricted stock units to be paid when the awards vest.
March/April |  | — |  |  | 10 |  | Dividend equivalents paid on unvested restricted stock units that are not expected to vest (recognized as additional compensation).
May/July | 0.2100 |  | 43,271 |  |  | 43,271 |  |  |
May (c) |  | — |  |  | (232) |  | Dividend equivalents accrued on unvested restricted stock units to be paid when the awards vest.
May/July |  | — |  |  | 10 |  | Dividend equivalents paid on unvested restricted stock units that are not expected to vest (recognized as additional compensation).
September/October | $ | 0.2100 |  | 43,282 |  |  | — |  |  |
|  | $ | 129,121 |  |  | $ | 124,025 |  |  |

(a)Declared in December 2019 and included in the $38.8 million declared, see description to the right regarding timing of payment.
(b)Declared in March and included in the $42.6 million declared, see description to the right regarding timing of payment.
(c)Declared in May and included in the $43.3 million declared, see description to the right regarding timing of payment.
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Nine Months Ended September 30, 2019
Month Declared/Paid | Dividend Per Share | Distributions Declared |  | Distributions Paid |  |
December (2018)/January | $ | 0.1875 |  | $ | — |  |  | $ | 28,218 |  |  |
December(a) |  |  |  | (127) |  | Dividend equivalents accrued on unvested restricted stock units to be paid when the awards vest.
December (2018)/January |  |  |  | 7 |  | Dividend equivalents paid on unvested restricted stock units that are not expected to vest (recognized as additional compensation).
March/April | 0.2000 |  | 30,235 |  |  | 30,235 |  |  |
March (b) |  |  |  | (142) |  | Dividend equivalents accrued on unvested restricted stock units to be paid when the awards vest.
March/April |  |  |  | 15 |  | Dividend equivalents paid on unvested restricted stock units that are not expected to vest (recognized as additional compensation).
May/July | 0.2000 |  | 38,764 |  |  | 38,764 |  |  |
May (c) |  | — |  |  | (172) |  | Dividend equivalents accrued on unvested restricted stock units to be paid when the awards vest.
May/July |  | — |  |  | 13 |  | Dividend equivalents paid on unvested restricted stock units that are not expected to vest (recognized as additional compensation).
August/October | $ | 0.2000 |  | 38,795 |  |  | — |  |  |
|  | $ | 107,794 |  |  | $ | 96,811 |  |  |

(a)Declared in December 2018 and included in the $28.2 million declared, see description to the right regarding timing of payment.
(b)Declared in March and included in the $30.2 million declared, see description to the right regarding timing of payment.
(c)Declared in May and included in the $38.8 million declared, see description to the right regarding timing of payment.
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Outstanding Indebtedness
The following table presents our outstanding indebtedness as of September 30, 2020 and December 31, 2019.

| Stated Maturity Date |  | Effective Interest Rate as of September 30, 2020(7) | Outstanding principal amount at
Indebtedness | Contractual Interest Rate | September 30, 2020 |  | December 31, 2019
2013 Mortgage Loans |  |  |  |
Senior note | 5/2023 | 3.81% | 4.14% | $ | 176,416 |  |  | $ | 181,443 |
Mezzanine A | 5/2023 | 7.38% | 7.55% | 70,000 |  |  | 70,000 |
Mezzanine B | 5/2023 | 11.50% | 11.75% | 32,000 |  |  | 32,000 |
Total 2013 Mortgage Loans |  |  |  | 278,416 |  |  | 283,443 |
Senior Unsecured Notes |  |  |  |  |  |
Series A 4.68% notes due 2026 | 1/2026 | 4.68% | 4.77% | 200,000 |  |  | 200,000 |
Series B 4.86% notes due 2029 | 1/2029 | 4.86% | 4.92% | 400,000 |  |  | 400,000 |
Series C 4.10% notes due 2030 | 1/2030 | 4.10% | 4.15% | 350,000 |  |  | 350,000 |
Total Senior Unsecured Notes |  |  |  | 950,000 |  |  | 950,000 |
2020 Senior Unsecured Term Loan Tranche A-1(1) | 3/2025 | L+0.95% | 2.64% | 425,000 |  |  | — |
2020 Senior Unsecured Term Loan Tranche A-2(2)(6) | 3/2025 | C+0.95% | 1.57% | 187,675 |  |  | — |
Total 2020 Senior Unsecured Term Loan A Facility(4) |  | 612,675 |  |  | — |
2018 Senior Unsecured Term Loan A Facility(1)(4) | 1/2023 | L+1.00% | 3.14% | — |  |  | 475,000 |
Total principal amount of indebtedness | $ | 1,841,091 |  |  | $ | 1,708,443 |
Less: unamortized deferred financing costs |  |  |  | (13,607) |  |  | (12,996) |
Total indebtedness, net of unamortized deferred financing costs | $ | 1,827,484 |  |  | $ | 1,695,447 |
2020 Senior Unsecured Revolving Credit Facility(3)(5) | 3/2024 | L+0.85% | 0.23% | $ | — |  |  | N/A
2018 Senior Unsecured Revolving Credit Facility(1)(3) | 01/2021 | L+0.90% | 0.36% | N/A |  | $ | — |

(1) L = one-month LIBOR.
(2) C = one-month CDOR.
(3) During the first quarter of 2020, the Company refinanced its Senior Unsecured Credit Facility. As such, the 2020 Senior Unsecured Revolving Credit Facility was in effect as of September 30, 2020 and the 2018 Senior Unsecured Revolving Credit Facility was in effect as of December 31, 2019. The above disclosure reflects N/A for the reporting date that the respective instrument was not in effect.
(4) During the first quarter of 2020, the Company refinanced its Senior Unsecured Term Loan A. As such, the 2020 Senior Unsecured Term Loan A Facility was in effect as of September 30, 2020 and the 2018 Senior Unsecured Term Loan A Facility was in effect as of December 31, 2019.
(5) The Company has the option to extend the 2020 Senior Unsecured Revolving Credit Facility up to two times for a six-month period each.
(6) The 2020 Senior Unsecured Term Loan Tranche A-2 is denominated in Canadian dollars and aggregates to CAD $250.0 million. The carrying value in the table above is the US dollar equivalent as of September 30, 2020.
(7) The effective interest rate includes effects of amortization of the deferred financing costs. The weighted average effective interest rate for total debt was 4.13% and 4.57% as of September 30, 2020 and December 31, 2019, respectively.
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2020 Senior Unsecured Credit Facility
On March 26, 2020, we entered into a five-year Senior Unsecured Term Loan A Facility and a four-year $800 million Senior Unsecured Revolving Credit Facility, which we refer to as the 2020 Senior Unsecured Credit Facility. The proceeds were used to refinance the existing $800 million 2018 Senior Unsecured Revolving Credit Facility maturing January 23, 2021 and USD denominated $475 million 2018 Senior Unsecured Term Loan maturing January 23, 2023. The total borrowing capacity of the 2020 Senior Unsecured Credit Facility is approximately $1.4 billion USD. The Company reduced the margin on 2020 Senior Unsecured Term Loan A Facility and 2020 Senior Unsecured Credit Facility by five basis points.
The 2020 Senior Unsecured Term Loan A Facility is broken into two tranches. Tranche A-1 is comprised of a $425.0 million USD term loan and Tranche A-2 is comprised of a CAD $250.0 million term loan, both are five-year loans maturing in 2025. Tranche A-2 provides a natural hedge for the Company’s investment in the recently completed Nova Cold acquisition. We refer to Tranches A-1 and A-2 in aggregate as the 2020 Senior Unsecured Term Loan Facility. In connection with entering into the agreement, we capitalized approximately $3.2 million of debt issuance costs related to the term loan, which we amortize as interest expense under the effective interest method. As of September 30, 2020, $7.4 million of unamortized debt issuance costs related to the 2020 Senior Unsecured Term Loan A Facility are included in “Mortgage notes, senior unsecured notes and term loan” in the accompanying Condensed Consolidated Balance Sheets.
The maturity of the 2020 Senior Unsecured Revolving Credit Facility is March 26, 2024, with the option to extend the maturity up to two times, each for a six-month period. In order to extend, the Company must not be in default, all representations and warranties must be in effect, obtain updated resolutions from loan parties, and an additional 6.25 bps extension fee must be paid. In connection with entering into the agreement, we capitalized approximately $5.2 million of debt issuance costs for the 2020 Senior Unsecured Revolving Credit Facility, which we amortize as interest expense under the straight-line method. Unamortized deferred financing costs as of December 31, 2019 of $2.8 million will continue to be amortized over the life of the 2020 Senior Unsecured Revolving Credit Facility. As of September 30, 2020, $6.3 million of unamortized debt issuance costs related to the revolving credit facility are included in “Other assets” in the accompanying Condensed Consolidated Balance Sheet.
Our 2020 Senior Unsecured Credit Facility contains representations, covenants and other terms customary for a publicly traded REIT. In addition, it contains certain financial covenants, as defined in the credit agreement, including:
•a maximum leverage ratio of less than or equal to 60% of our total asset value. Following a material acquisition, leverage ratio shall not exceed 65%;
•a maximum unencumbered leverage ratio of less than or equal to 60% to unencumbered asset value. Following a material acquisition, unencumbered leverage ratio shall not exceed 65%;
•a maximum secured leverage ratio of less than or equal to 40% to total asset value. Following a material acquisition, secured leverage ratio shall not exceed 45%;
•a minimum fixed charge coverage ratio of greater than or equal to 1.50x; and
•a minimum unsecured interest coverage ratio of greater than or equal to 1.75x.
Material Acquisition in our 2020 Senior Unsecured Credit Facility is defined as one in which assets acquired exceeds an amount equal to 5% of total asset value as of the last day of the most recently ended fiscal quarter publicly available. Obligations under our 2020 Senior Unsecured Credit Facility are general unsecured obligations of our Operating Partnership and are guaranteed by the Company and certain subsidiaries of the Company. As of September 30, 2020, the Company was in compliance with all debt covenants.
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There were $21.0 million letters of credit issued on the Company’s 2020 Senior Unsecured Revolving Credit Facility as of September 30, 2020.
2018 Senior Unsecured Credit Facility
On December 4, 2018, we entered into the 2018 Senior Unsecured Revolving Credit Facility to, among other things, (i) increase the revolver borrowing capacity from $450 million to $800 million, (ii) convert the credit facility (term loan and revolver) from a secured credit facility to an unsecured credit facility, and (iii) decrease the applicable interest rate margins from 2.35% to 1.45% and decrease the fee on unused borrowing capacity by 5 basis points. The terms of the revolver allow for the ability to draw proceeds in multiple currencies, up to $400 million. In connection with entering into the original agreement and subsequent amendments for the Term Loan A Credit Facility, we capitalized approximately $8.9 million of debt issuance costs, which we amortize as interest expense under the effective interest method. As of December 31, 2019, the unamortized balance of Term Loan A debt issuance costs was $6.1 million and was included in “Mortgage notes, senior unsecured notes and term loans” on the accompanying Condensed Consolidated Balance Sheets.
On September 24, 2019, we reduced our interest rate margins from 1.45% to 1.00% and decreased the fee on unused borrowing capacity by 5 basis points for usage greater than 50% of the total commitment and 15 basis points for usage less than 50% of commitment. The fee for unused borrowing capacity was 20 basis points regardless of the percentage of total commitment used. During the third quarter of 2019, the Company received a favorable credit rating. This rating, when combined with existing ratings, allowed the Company to transition to a favorable ratings-based pricing grid during the third quarter of 2019.
There were $23.0 million letters of credit issued on the Company’s 2018 Senior Unsecured Revolving Credit Facility as of December 31, 2019. During the first quarter of 2020, the 2018 Senior Unsecured Revolving Credit Facility was refinanced and no longer in effect as of September 30, 2020.
Series A, B and C Senior Unsecured Notes
On April 26, 2019, we priced a debt private placement transaction consisting of $350.0 million senior unsecured notes with a coupon of 4.10% due January 8, 2030 (“Series C”). The transaction closed on May 7, 2019. Interest is paid on January 8 and July 8 of each year until maturity, with the first payment occurring January 8, 2020. The notes are general unsecured obligations of the Company and are guaranteed by the Company and the subsidiaries of the Company. The Company applied the proceeds of the private placement transaction to repay the indebtedness outstanding under our senior unsecured revolving credit facility incurred in connection with the funding of the Cloverleaf and Lanier acquisitions.
On November 6, 2018, we priced a debt private placement transaction consisting of (i) $200.0 million senior unsecured notes with a coupon of 4.68% due January 8, 2026 (“Series A”) and (ii) $400.0 million senior unsecured notes with a coupon of 4.86% due January 8, 2029 (“Series B”), collectively referred to as the debt private placement. The transaction closed on December 4, 2018. Interest is paid on January 8 and July 8 of each year until maturity, with the first payment occurring July 8, 2019. The notes are our general unsecured senior obligations and are guaranteed by us and our subsidiaries. We applied a portion of the proceeds of the debt private placement to complete the defeasance of the $600.0 million Americold 2010 LLC Trust, Commercial Mortgage Pass-Through Certificates, Series 2010, ART, or the 2010 Mortgage Loans. We applied the remaining proceeds to the Australian term loan and the New Zealand term loan, or the ANZ Loans.
The Series A, Series B, and Series C senior notes and guarantee agreement includes a prepayment option executable at any time during the term of the loans. The prepayment can be either a partial payment or payment in
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full, as long as the partial payment is at least 5% of the outstanding principal. Any prepayment in full must include a make-whole amount, which is the discounted remaining scheduled payments due to the lender. The discount rate to be used is equal to 0.50% plus the yield to maturity reported for the most recently actively traded U.S. Treasury Securities with a maturity equal to the remaining average life of the prepaid principal. The Company must give each lender at least 10 day’s written notice whenever it intends to prepay any portion of the debt.
If a change in control occurs for us, we must issue an offer to prepay the remaining portion of the debt to the lenders. The prepayment amount will be 100% of the principal amount, as well as accrued and unpaid interest.
The Senior Unsecured Notes require compliance with leverage ratios, secured and unsecured indebtedness ratios, and unsecured indebtedness to qualified assets ratios. In addition, we are required to maintain at all times a credit rating for each series of notes from a nationally recognized statistical rating organization. The 2018 Senior Unsecured Notes agreement includes the following financial covenants:
•a maximum leverage ratio of less than or equal to 60% of our total asset value;
•a maximum unsecured indebtedness to qualified assets ratio of less than 0.60 to 1.00;
•a maximum total secured indebtedness ratio of less than 0.40 to 1.00;
•a minimum fixed charge coverage ratio of greater than or equal to 1.50 to 1.00; and
•a minimum unsecured debt service ratio of greater than or equal to 2.00 to 1.00.
As of September 30, 2020, we were in compliance with all debt covenants.
2013 Mortgage Loans
On May 1, 2013, we entered into a mortgage financing in an aggregate principal amount of $322.0 million, which we refer to as the 2013 Mortgage Loans. The debt consists of a senior debt note and two mezzanine notes. The components are cross-collateralized and cross-defaulted. The senior debt note requires monthly principal payments. The mezzanine notes require no principal payments until the stated maturity date in May 2023. The interest rates on the notes are fixed and range from 3.81% to 11.50% per annum. The senior debt note and the two mezzanine notes remain subject to yield maintenance provisions. We used the net proceeds of these loans to refinance certain of the 2006 Mortgage Loans, acquire two warehouses, and fund general corporate purposes.
The 2013 Mortgage Loans are collateralized by 15 warehouses. The terms governing the 2013 Mortgage Loans require us to maintain certain cash amounts in accounts that are restricted as to their use for the respective warehouses. As of September 30, 2020, the amount of restricted cash associated with the 2013 Mortgage Loans was $4.0 million. Additionally, if we do not maintain certain financial thresholds, including a debt service coverage ratio of 1.10x, the cash generated will further be temporarily restricted and limited to the use for scheduled debt service and operating costs. The 2013 Mortgage Loans are non-recourse to us subject to customary non-recourse carve-outs.
The 2013 Mortgage Loans also require compliance with other financial covenants, including a debt coverage ratio and cash flow calculation, as defined.
Debt Covenants
Our Senior Unsecured Credit Facilities, the Senior Unsecured Notes and 2013 Mortgage Loans all require financial statement reporting, periodic reporting of compliance with financial covenants, other established thresholds and performance measurements, and compliance with affirmative and negative covenants that govern
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our allowable business practices. The affirmative and negative covenants include, among others, continuation of insurance, maintenance of collateral (in the case of the 2013 Mortgage Loans), the maintenance of REIT status, and restrictions on our ability to enter into certain types of transactions or take on certain exposures. As of September 30, 2020, we were in compliance with all debt covenants.
Loss on debt extinguishment and modifications
In connection with the refinancing of the Senior Unsecured Credit Facility during the first quarter of 2020 the Company recorded $0.8 million to “Loss on debt extinguishment and modifications” in the accompanying Condensed Consolidated Statements of Operations, representing the write-off of unamortized deferred financing costs from the 2018 Senior Unsecured Credit Facility. These write-offs were a result of two lenders in the 2018 Senior Unsecured Term Loan A Facility that did not participate in the 2020 Senior Unsecured Term Loan A Facility, accordingly those lenders’ portion of unamortized deferred financing costs were written off. Similarly, two lenders in the 2018 Senior Unsecured Revolving Credit Facility did not participate in the 2020 Senior Unsecured Revolving Credit Facility, and those lender’s portions of unamortized deferred financing costs were written off.
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.
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, 2020 and 2019.
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| Three Months Ended September 30, |  | Nine Months Ended September 30,
2020 |  | 2019 |  | 2020 |  | 2019
| (In thousands, except per cubic foot amounts)
Real estate | $ | 15,896 |  |  | $ | 15,172 |  |  | $ | 39,425 |  |  | $ | 27,474 |
Personal property | 906 |  |  | 1,081 |  |  | 3,967 |  |  | 2,805 |
Information technology | 732 |  |  | 519 |  |  | 1,864 |  |  | 2,714 |
Maintenance capital expenditures | $ | 17,534 |  |  | $ | 16,772 |  |  | $ | 45,256 |  |  | $ | 32,993 |
Maintenance capital expenditures per cubic foot | $ | 0.016 |  |  | $ | 0.016 |  |  | $ | 0.041 |  |  | $ | 0.030 |

Repair and Maintenance Expenses
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, 2020 and 2019.

| Three Months Ended September 30, |  | Nine Months Ended September 30,
2020 |  | 2019 |  | 2020 |  | 2019
| (In thousands, except per cubic foot amounts)
Real estate | $ | 7,333 |  |  | $ | 6,171 |  |  | $ | 21,278 |  |  | $ | 18,060 |
Personal property | 7,368 |  |  | 7,879 |  |  | 22,766 |  |  | 23,899 |
Repair and maintenance expenses | $ | 14,701 |  |  | $ | 14,050 |  |  | $ | 44,044 |  |  | $ | 41,959 |
Repair and maintenance expenses per cubic foot | $ | 0.013 |  |  | $ | 0.013 |  |  | $ | 0.040 |  |  | $ | 0.039 |

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.
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Acquisitions
The acquisitions completed during the first quarter of 2020 relate to Newport and Nova Cold. The acquisitions completed during the third quarter of 2020 relate to AM-C Warehouses and Caspers. The acquisitions completed during the nine months ended September 30, 2019 relate to Cloverleaf, Lanier and PortFresh, and excludes amounts related to the assets under construction for expansion and development projects, further detailed below. The PortFresh acquisition cost included approximately $15.9 million allocated to land on which we are developing a new facility, and have classified within Expansion and development expenditures in order to reflect the total cost of the project. The Cloverleaf acquisition included approximately $16.0 million allocated to assets under construction which we have classified within Expansion and development expenditures in order to reflect the total cost of the projects discussed further below. Refer to Notes 2 and 3 of the Condensed Consolidated Financial Statements 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, 2020 are primarily driven by $89.3 million related to our two fully-automated development sites for Ahold Delhaize, $28.8 million related to the ongoing Atlanta major markets strategy project, $14.8 million in construction costs related to our Savannah expansion site, which was completed during the second quarter of 2020 and $8.6 million related to the Auckland, New Zealand expansion project which was started during the second quarter of 2020. Subsequent to the acquisition of MHW, during the first quarter of 2020, we exercised our call option to purchase land from the holder of the ground lease for $4.1 million. We also invested an additional $2.2 million for the Rochelle facility, which was previously opened during the second quarter of 2019.
As a result of the Cloverleaf Acquisition on May 1, 2019, we acquired expansion projects which were substantially completed during 2019. We incurred an additional $2.9 million during the nine months ended September 30, 2020 for these expansion projects.
Expansion and development initiatives also include $12.4 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 $11.5 million for contemplated future expansion or development projects.
The following table sets forth our external growth, expansion and development and capital expenditures for the three and nine months ended September 30, 2020 and 2019.

| Three Months Ended September 30, |  | Nine Months Ended September 30,
2020 |  | 2019 |  | 2020 |  | 2019
| (In thousands)
Acquisitions, net of cash acquired and adjustments | $ | 108,040 |  |  | $ | (3,338) |  |  | $ | 423,708 |  |  | $ | 1,326,663 |
Expansion and development initiatives | 59,806 |  |  | 50,106 |  |  | 174,585 |  |  | 154,962 |
Information technology | 2,189 |  |  | 1,147 |  |  | 5,169 |  |  | 3,198 |
Growth and expansion capital expenditures | $ | 170,035 |  |  | $ | 47,915 |  |  | $ | 603,462 |  |  | $ | 1,484,823 |

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Future Sources and Uses of Cash
On October 13, 2020 we announced that we entered into a definitive agreement to acquire privately held Agro from an investor group led by funds managed by Oaktree for a total of $1.74 billion. The acquisition is subject to customary and regulatory closing conditions and closing is expected to occur late in the fourth quarter of 2020 or early in the first quarter of 2021.
On October 15, 2020, we completed an underwritten registered public offering pursuant to forward sale agreements in which the forward purchasers borrowed and sold to the underwriters in the public offering 31,900,000 common shares, as well as an option for the underwriters to purchase 4,785,000 additional common shares. The initial forward sale price is $36.67 per share, which is the public offering price per share less the underwriting discount per share. We expect to fund the remainder of the acquisition price with borrowings through a debt private placement which will close in conjunction with the Agro acquisition and through the issuance of 14,166,667 common shares of the Company (the “Acquisition Shares”) to the Sellers.
On October 30, 2020, we priced a debt private placement of €750 million senior unsecured notes which we expect to close on December 30, 2020. In addition, we entered into a foreign exchange forward contract to convert the €750 million received to $877 million at the time of closing. The notes are expected to consist of €400 million with a coupon of 1.62% and a term of 10 years, and €350 million with a coupon of 1.65% and a term of 12 years. The notes are expected to be general senior unsecured obligations of the operating partnership and are guaranteed by the Company and its subsidiaries. We expect to apply a portion of the proceeds of the transaction to fund acquisitions, expansion and development projects and for general corporate purposes.
On November 2, 2020, we completed the Halls acquisition for $480 million initially funded with draws on our Senior Unsecured Revolving Credit Facility and a portion of our equity forward contracts. The draws on our Senior Unsecured Revolving Credit Facility will be repaid upon closing of the previously discussed debt private placement and upon exercise of certain outstanding equity forward contracts. Additionally, we announced the expansion of two of our facilities, Russellville, Arkansas for approximately $84 million and Calgary in Canada for approximately $11 million. The expansion projects will commence during the fourth quarter of 2020. The expansion projects will be funded utilizing outstanding equity forward contracts.
Historical Cash Flows

| Nine Months Ended September 30,
| 2020 |  | 2019
| (In thousands)
Net cash provided by operating activities | $ | 227,198 |  |  | $ | 151,921 |
Net cash used in investing activities | $ | (611,719) |  |  | $ | (1,488,932) |
Net cash provided by financing activities | $ | 323,317 |  |  | $ | 1,441,445 |

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Operating Activities
For the nine months ended September 30, 2020, our net cash provided by operating activities was $227.2 million, an increase of $75.3 million, compared to $151.9 million for the nine months ended September 30, 2019. The increase is due to higher segment contribution in our same store results and as a result of our acquisitions during 2019 and 2020. In addition, a reduction in acquisition related costs contributed to the increase.
Investing Activities
Our net cash used in investing activities was $611.7 million for the nine months ended September 30, 2020 compared to $1.5 billion for the nine months ended September 30, 2019. Cash used in connection with business combinations during 2020 was $398.7 million and relate to the AM-C, Newport and Nova Cold acquisitions. Acquisitions of property, buildings, and equipment was $25.5 million and relates to the Caspers acquisition. Additions to property, buildings and equipment were $241.6 million for the nine months ended September 30, 2020 reflecting maintenance capital expenditures and investments in the Ahold, Atlanta, New Zealand and Savannah expansion and development projects. Additionally, we invested $26.2 million in the Brazil JV during the first quarter of 2020. These outflows were offset by $77.4 million in proceeds from the sale of land and property, buildings, and equipment for the nine months ended September 30, 2020 related to the sale of land in Sydney, the Quarry segment and the sale of the Boston facility.
Net cash used in investing activities of $1.5 billion for the nine months ended September 30, 2019 primarily related to cash used for the acquisitions of Cloverleaf and Lanier totaling $1.3 billion, cash used of $35.2 million for the acquisition of PortFresh, additions to property, buildings and equipment of $151.1 million, partially offset by the $14.3 million in proceeds from the sale of the China JV and $2.0 million return of investment in a joint venture.
Financing Activities
Net cash provided by financing activities was $323.3 million for the nine months ended September 30, 2020 compared to net cash provided by financing activities of $1.4 billion for the nine months ended September 30, 2019. Cash provided by financing activities for the current period primarily consisted of $340.6 million net proceeds from equity offerings under the ATM Equity Program and the 2019 forward sale agreement which was 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 line of credit. These cash inflows were partially offset by $177.1 million of repayment on our revolving line of credit 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 term loan and mortgage notes and $8.3 million of payments related to debt issuance costs.
Net cash provided by financing activities was $1.4 billion for the nine months ended September 30, 2019 and primarily consisted of $1.2 billion net proceeds from the April 2019 follow-on equity offering, the $350.0 million received in connection with the issuance of our Series C senior unsecured notes in May 2019, $100.0 million in proceeds from our revolving line of credit, and $10.2 million in proceeds from stock options exercised. These cash inflows were partially offset by $100.0 million of repayment on the revolving line of credit, $96.8 million of quarterly dividend distributions paid, $11.7 million of repayments on lease obligations, $8.7 million of repayments on mortgage notes and notes payable, $6.1 million paid for tax withholdings remitted to authorities related to stock options exercised, and $2.0 million of payments related to debt issuance costs.
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Off-Balance Sheet Arrangements
As of September 30, 2020, we had no material off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
CRITICAL ACCOUNTING POLICIES UPDATE
See Note 2 to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.
NEW ACCOUNTING PRONOUNCEMENTS
See Note 2 to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk
Interest Rate Risk
Our future income and cash flows relevant to financial instruments are dependent upon prevalent market interest rates. Market risk refers to the risk of loss from adverse changes in market prices and interest rates.
As of September 30, 2020, we had $425 million of outstanding USD-denominated variable-rate debt and $250 million of outstanding CAD-denominated variable-rate debt. This consisted of our Senior Unsecured Term Loan A Facility bearing interest at one-month LIBOR for the USD tranche and one-month CDOR for the CAD tranche, plus a margin up to 0.95%. $100 million of the USD-denominated debt is hedged by an interest rate swap that effectively locks the floating LIBOR rate at 2.48%. An additional $225 million of the USD-denominated debt is hedged by an interest rate swap that effectively locks the floating LIBOR rate at 1.30%. The pay-fixed, receive-variable interest expense hedge on the $225 million of USD-denominated debt does not include a contingency if LIBOR drops below 0%. In this scenario, we would be required to remit the variable portion of interest expense below 0% in addition to the fixed portion.
After incorporating the effects of the interest rate swap, our outstanding variable rate debt is $100 million USD and CAD $250 million. At September 30, 2020, one-month LIBOR was at approximately 0.15% and one-month CDOR was at 0.48%, therefore a 100 basis point increase in market interest rates would result in an increase in interest expense to service our variable-rate debt of approximately $2.9 million. A 100 basis point decrease in market interest rates would result in a $0.9 million increase in interest expense to service our variable-rate debt, assuming that a reduction of 100 bps would result in a negative LIBOR rate. The increase in interest expense despite a decrease in rates is a direct result of the $225 million swap that does not include a LIBOR floor.
Foreign Currency Risk
As it relates to the currency of countries where we own and operate warehouse facilities and provide logistics services, our foreign currency risk exposure at September 30, 2020 was not materially different than what we disclosed in our Annual Report on Form 10-K for the year ended December 31, 2019. The information concerning market risk in Item 7A under the caption “Quantitative and Qualitative Disclosures about Market Risk” of our Annual Report on Form 10-K for the year ended December 31, 2019, is hereby incorporated by reference in this Quarterly Report on Form 10-Q.
Item 4. Controls and Procedures
Evaluation of Controls and Procedures
In accordance with Rule 13a-15(b) of the Exchange Act, the Company’s management, with the participation of the Chief Executive Officer and the Chief Financial Officer, carried out an evaluation of the effectiveness of the Company’s “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act, as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of September 30, 2020.
Our management is responsible for establishing and maintaining adequate “internal control over financial reporting,” as defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Our management, including the Chief Executive Officer and Chief Financial Officer does not expect that our internal controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must
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reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting (as defined in Rule 13a - 15(f) of the Exchange Act) identified in connection with the evaluation required by Rule 13a-15(d) under the Exchange Act during the quarter ended September 30, 2020 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings
From time to time, we may be party to a variety of legal proceedings arising in the ordinary course of our business. We are not a party to, nor is any of our property a subject of, any material litigation or legal proceedings or, to the best of our knowledge, any threatened litigation or legal proceedings which, in the opinion of management, individually or in the aggregate, would have a material impact on our business, financial condition, liquidity, results of operations and prospects.
See Note 15 - Commitments and Contingencies to our Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for information regarding material legal proceedings in which we are involved.
Item 1A. Risk Factors
Risk factors that could harm our business, results of operations and financial condition are discussed in Part I, Item 1A. Risk Factors of our Annual Report on Form 10-K for the year ended December 31, 2019, our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, our Form 8-K filed on April, 16, 2020, and on our Form 8-K filed on October 13, 2020 continue to apply and should be supplemented with the following risk factors:
Refer to Management’s Overview within Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations for details regarding the previously announced Agro Merchants Acquisition. The following risk factors pertain to the pending Agro Merchants Acquisition.
Risks Related to the Agro Merchants Acquisition
We cannot assure you that the Agro Merchants Acquisition will be completed on a timely basis or at all.
There are a number of risks and uncertainties relating to the Agro Merchants Acquisition. For example, the Agro Merchants Acquisition may not be completed, or may not be completed in the timeframe, on the terms or in the manner currently anticipated, as a result of a number of factors, including the failure of the parties to satisfy one or more of the conditions to closing. There can be no assurance that the conditions to closing of the Agro Merchants Acquisition will be satisfied or waived or that other events, including obtaining any applicable required approvals from governmental authorities under competition and antitrust laws, will not intervene to delay or result in the failure to close the Agro Merchants Acquisition. The Transaction Agreement may be terminated by the parties thereto under certain circumstances, including, without limitation, if the Agro Merchants Acquisition has not been completed within six months of the date of signing (subject to certain limited exceptions). Delays in closing the Agro Merchants Acquisition or the failure to close the Agro Merchants Acquisition at all may result in our incurring significant additional costs in connection with such delay or termination of the Transaction Agreement and/or failing to achieve the anticipated benefits of the Agro Merchants Acquisition. Any delay in closing or a failure to close the Agro Merchants Acquisition could have a negative impact on our business and the market price of our common shares.
In the event the Agro Merchants Acquisition is not consummated, we expect to use the net proceeds that we receive upon the settlement of the 2020 forward sale agreements (and from the sale of any of our common shares that we may sell to the underwriters in lieu of the forward purchasers (or their respective affiliates) selling our common shares to the underwriters) for general business purposes, including repayment of outstanding indebtedness and the funding of other development, expansion and acquisition opportunities. However, we would
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have broad authority to use such net proceeds for other purposes that may not be accretive to our earnings per share and funds from operations per share.
If completed, the Agro Merchants Acquisition may not achieve its intended benefits or may disrupt our plans and operations.
The Agro Merchants Acquisition is a significant acquisition for us, and there can be no assurance that we will be able to successfully integrate Agro Merchants with our business or otherwise realize the expected benefits of the Agro Merchants Acquisition. Our ability to realize the anticipated benefits of the Agro Merchants Acquisition will depend, to a large extent, on our ability to integrate Agro Merchants with our business. The combination of two independent businesses may be a complex, costly and time-consuming process. Our business may be negatively impacted following the Agro Merchants Acquisition if we are unable to effectively manage our expanded operations. The integration process will require significant time and focus from our management team following the Agro Merchants Acquisition and may divert attention from the day-to-day operations of the combined business. Additionally, consummation of the Agro Merchants Acquisition could disrupt our current plans and operations, which could delay the achievement of our strategic objectives. In this regard, the Agro Merchants portfolio is different than our portfolio in certain respects, and this may impair our ability to integrate the Agro Merchants operations and achieve the anticipated benefits. For example, Agro Merchants does not own the real estate at 25 of its 46 properties and instead leases those properties from the owners thereof. Certain of these leases are subject to termination upon the occurrence of a change of control (like the Agro Merchants Acquisition). Moreover, a substantial number of Agro Merchants’ client contracts are short-term in nature, do not require a minimum fixed storage commitment obligation and/or are subject to termination at the client’s option or upon the occurrence of a change of control (like the Agro Merchants Acquisition). In addition, the Agro Merchants business plan contemplates significant capital expenditures for expansion and development opportunities in the next several years that will require funding.
The expected synergies and operating efficiencies of the Agro Merchants Acquisition may not be fully realized, which could result in increased costs and/or lower revenues and have a material adverse effect on us. In addition, the overall integration of the businesses may result in material unanticipated problems, expenses, liabilities, competitive responses, loss of customer relationships and diversion of management’s attention, among other potential adverse consequences. The risks of combining our operations of the businesses include, among others:

• |  | we may have underestimated the costs to make any necessary improvements to Agro Merchants’ properties;

• |  | Agro Merchants’ properties may be subject to reassessment, which may result in higher than expected tax payments;

• |  | market conditions may result in higher than expected vacancy rates and lower than expected storage rates;

• |  | we may face difficulties in integrating Agro Merchants’ employees and in attracting and retaining key personnel;

• |  | we may face challenges relating to our expansion into Europe as discussed below;

• |  | we may face difficulties in the pursuit of expansion and development opportunities, resulting in higher costs or an inability to complete the identified expansions of Agro Merchants in a timely manner, or at all;

• |  | encroachments by certain Agro Merchants properties over existing easements may result in costs to correct such encroachments if challenged by easement holders; and

• |  | we may face challenges in keeping existing Agro Merchants customers or transitioning our existing customers to Agro Merchants facilities, which could adversely impact interconnection revenue.

Additionally, over the past year or so, there has been significant appreciation in the market price for temperature-controlled warehouses. There can be no assurance that the market price for temperature-controlled warehouses
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will be sustained or continue to appreciate. Any decline in the market prices for temperature-controlled warehouses, including for the warehouses that we are acquiring in the Agro Merchants Acquisition, could materially and adversely affect us.
Many of these risks will be outside of our control and any one of them could result in increased costs, decreases in the amount of expected revenue and diversion of our management’s time and focus, which could have a material adverse effect on us. In addition, even if our operations are integrated successfully with Agro Merchants’, we may not realize the full benefits of the Agro Merchants Acquisition, including the synergies, operating efficiencies, or sales or growth opportunities that are expected. These benefits may not be achieved within the anticipated time frame or at all. All of these factors could cause dilution to our earnings per share, decrease or delay the expected benefits of the Agro Merchants Acquisition, and/or negatively impact the market price of our common shares.
We are subject to additional risks with respect to the addition of European operations and properties.
If we complete the Agro Merchants Acquisition, we could be affected by factors specific to the laws and business practices of the European jurisdictions in which we will operate. These laws and business practices expose us to risks that are different than or in addition to those commonly found in the United States. Risks relating to our European operations and properties include:

• |  | changing governmental rules and policies, including changes in land use and zoning laws;

• |  | enactment of laws relating to the international ownership and leasing of real property or mortgages and laws restricting the ability to remove profits earned from activities within a particular country to a person’s or company’s country of origin;

• |  | changes in laws or policies governing foreign trade or investment and use of foreign operations or workers, and any negative sentiments towards multinational companies as a result of any such changes to laws or policies or due to trends such as political populism and economic nationalism;

• |  | variations in currency exchange rates;

• |  | instability of the Eurozone, which, were it to persist in the near-term, could potentially lead to the reintroduction of individual currencies for Member States which would force certain Euro-denominated assets and liabilities to be re-denominated to such individual currencies, which could result in a mismatch in the values of assets and liabilities and expose us and certain of our investments to additional currency risks;

• |  | adverse market conditions caused by terrorism, civil unrest, natural disasters, infectious disease and changes in European, national or local governmental or economic conditions;

• |  | business disruptions arising from public health crises and outbreaks of communicable diseases, including the recent coronavirus outbreak;

• |  | the willingness of U.S. or international lenders to make mortgage loans in certain countries and changes in the availability, cost and terms of secured and unsecured debt resulting from varying European governmental economic policies;

• |  | the imposition of unique tax structures and changes in real estate and other tax rates and other operating expenses in particular countries, including the potential imposition of adverse or confiscatory taxes;

• |  | the potential imposition of restrictions on currency conversions or the transfer of funds;

• |  | general political and economic instability;

• |  | the United Kingdom’s withdrawal from the European Union, or Brexit, and the significant political and economic uncertainty stemming from it could depress economic activity;

• |  | potential liability under the Foreign Corrupt Practices Act of 1977, as amended, which generally prohibits U.S. companies and their intermediaries from bribing or making other prohibited payments to non-U.S. officials for the purpose of obtaining or retaining business or other benefits;

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• |  | our limited experience and expertise in European countries relative to our experience and expertise in the United States;

• |  | provisions of the Tax Cuts and Jobs Act, or TCJA, that require the United States parent to include income from certain international operations into U.S. taxable income, and adverse tax consequences in the applicable jurisdictions; and

• |  | potential liability under, and costs of complying with, more stringent environmental laws or changes in the requirements or interpretation of existing laws, or environmental consequences of less stringent environmental management practices in foreign countries relative to the United States.

If any of the foregoing risks were to materialize, they could materially and adversely affect us.
Privacy and data security concerns, and data collection and transfer restrictions and related domestic or foreign regulations may adversely affect our business.
Personal privacy, information security, and data protection are significant issues in the United States, Europe and many other jurisdictions where we have or plan to have operations. The regulatory framework governing the collection, processing, storage and use of confidential and proprietary business information and personal data is rapidly evolving. The United States federal and various state and foreign governments have adopted or proposed requirements regarding the collection, distribution, use, security and storage of personally identifiable information and other data relating to individuals, and federal and state consumer protection laws are being applied to enforce regulations related to the online collection, use and dissemination of data. Privacy and data security concerns, and data collection and transfer restrictions and related domestic or foreign regulations may limit the use and adoption of our solutions and adversely affect our business.
Further, many foreign countries and governmental bodies, including the European Union, where we plan to conduct business, have laws and regulations concerning the collection and use of personal data obtained from their residents or by businesses operating within their jurisdiction. These laws and regulations often are more restrictive than those in the United States. Laws and regulations in these jurisdictions apply broadly to the collection, use, storage, disclosure and security of data that identifies or may be used to identify or locate an individual, such as names, email addresses and, in some jurisdictions, IP addresses.
We also expect that there will continue to be new proposed laws, regulations and industry standards concerning privacy, data protection and information security in the United States, the European Union, and other jurisdictions. For example, the European Commission adopted a General Data Protection Regulation, or the GDPR, that became fully effective on May 25, 2018, superseding prior European Union data protection legislation, imposing more stringent European Union data protection requirements, and providing for greater penalties for noncompliance. The United Kingdom enacted the Data Protection Act that substantially implements the GDPR. We are evaluating obligations imposed on us by the GDPR and we may be required to incur substantial expense in order to make significant changes to our business operations in connection with obtaining and maintaining compliance with the GDPR and similar legislation, such as the UK Data Protection Act, all of which may adversely affect our revenue. More generally, we cannot yet fully determine the impact these or future laws, regulations and standards may have on our business. Privacy, data protection and information security laws and regulations are often subject to differing interpretations, may be inconsistent among jurisdictions, and may be alleged to be inconsistent with our current or future practices. Additionally, we may be bound by contractual requirements applicable to our collection, use, processing, and disclosure of various types of data, including personal data, and may be bound by, or voluntarily comply with, self-regulatory or other industry standards relating to these matters. These and other requirements could increase our costs, impair our ability to grow our business, or restrict our ability to store and process data or, in some cases, impact our ability to operate our business in some locations and may subject us to liability. Any failure or perceived failure to comply with applicable laws, regulations, industry standards, and contractual obligations may adversely affect our business.
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Further, in view of new or modified foreign laws and regulations, industry standards, contractual obligations and other legal obligations, or any changes in their interpretation, we may find it necessary or desirable to fundamentally change our business activities and practices or to expend significant resources to adapt to these changes. We may be unable to make such changes and modifications in a commercially reasonable manner or at all.
The costs of compliance with and other burdens imposed by laws, regulations and standards may limit the use and adoption of our service and reduce overall demand for it, or lead to significant fines, penalties or liabilities for any noncompliance. Privacy, information security, and data protection concerns, whether valid or not valid, may inhibit market adoption of our business, particularly in certain industries and foreign countries.
The United Kingdom’s withdrawal from the European Union may have a negative effect on global economic conditions, financial markets and our business, which could materially and adversely affect our results of operations.
Following a national referendum and enactment of legislation by the government of the United Kingdom, the United Kingdom formally withdrew from the European Union on January 31, 2020 and entered into a transition period (currently set to last until December 31, 2020) during which it will continue its ongoing and complex negotiations with the European Union relating to the future trading relationship between the parties. Significant political and economic uncertainty remains about whether the terms of the relationship will differ materially from the terms before withdrawal, as well as about the possibility that a so-called “no deal” separation will occur if negotiations are not completed by the end of the transition period. Assuming the Agro Merchants Acquisition is completed, we will operate in markets throughout Europe, including in Austria, Ireland, the Netherlands, Poland, Portugal, Spain and the United Kingdom, and, as a result, Brexit may impact our business in a number of ways.
These developments, or the perception that any of them could occur, have had and may continue to have a material adverse effect on global economic conditions and the stability of global financial markets, and could significantly reduce global market liquidity and restrict the ability of key market participants to operate in certain financial markets. Asset valuations, currency exchange rates and credit ratings may be especially subject to increased market volatility. Lack of clarity about future United Kingdom laws and regulations as the United Kingdom determines which European Union laws to replace or replicate could depress economic activity and restrict our access to capital in the United Kingdom. Any of these factors could have a material adverse effect on our business, financial condition and liquidity and results of operations.
We may be subject to unknown or contingent liability related to Agro Merchants for which we may have no or limited recourse against the sellers to us.
Agro Merchants may be subject to unknown or contingent liabilities for which we may have no or limited recourse against the sellers to us. Unknown or contingent liabilities might include liabilities for clean-up or remediation of environmental conditions, claims of customers, vendors or other persons dealing with Agro Merchants, tax liabilities and other liabilities, whether incurred in the ordinary course of business or otherwise. In addition, the total amount of costs and expenses that we may incur with respect to liabilities associated with Agro Merchants may exceed our expectations, which may materially and adversely affect us.
Our qualification as a REIT will depend in part on the nature of the assets and rights to income we acquire as part of the Agro Merchants Acquisition.
Although we intend to structure our acquisition and post-acquisition operation of Agro Merchants in a way that would allow us to continue to qualify as a REIT for U.S. federal income tax purposes, no assurances can be given that we will be successful.
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Agro Merchants is not currently organized or operated as a REIT. As a result of the Agro Merchants Acquisition, we expect to acquire interests in certain assets and earn certain items of income that are not, or may not be, qualifying assets or income for purposes of the REIT asset and income tests. After the closing of the Agro Merchants Acquisition we expect to integrate Agro Merchants into our existing structure and conduct its business in a manner that would allow us to continue to qualify as a REIT, but there is no guarantee that our efforts to do so will be successful. Further, our review of the Agro Merchants Acquisition is ongoing, and we may discover additional non-qualifying assets or income. We may not have the immediate right to change the terms of pre-existing arrangements that generate non-qualifying items or may have to incur significant penalties to terminate such arrangements. To maintain our REIT qualification we may be required to hold significant assets acquired in connection with the Agro Merchants Acquisition through our taxable REIT subsidiaries, or TRSs. Our domestic TRSs are subject to U.S. tax as regular corporations. If we acquire nonqualifying assets or earn nonqualifying income as a result of the Agro Merchants Acquisition that causes us to fail to meet the REIT requirements, we could lose our REIT status if certain relief provisions do not apply, or we could incur a material tax liability in connection with the application of such relief provisions, which would materially and adversely affect us.
If we do not consummate the Agro Merchants Acquisition, we will have incurred substantial expenses without realizing the expected benefits.
If we are unable to consummate the Agro Merchants Acquisition, we will have incurred significant due diligence, legal, accounting and other transaction costs in connection with the Agro Merchants Acquisition without realizing the anticipated benefits. We cannot assure you that we will acquire Agro Merchants because the Agro Merchants Acquisition is subject to a variety of conditions, including the satisfaction of customary closing conditions. See “—We cannot assure you that the Agro Merchants Acquisition will be completed on a timely basis or at all.”
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
We sold our limestone quarry on July 1, 2020, and therefore are no longer required to provide information required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K (17 CFR 229.104).
Item 5. Other Information
None.
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Item 6. Exhibits
Index to Exhibits

Exhibit No. |  | Description
31.1 |  | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 - Americold Realty Trust
31.2 |  | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 - Americold Realty Trust
32.1 |  | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 - Americold Realty Trust
32.2 |  | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 - Americold Realty Trust
101 |  |  | The following financial statements of Americold Realty Trust’s Form 10-Q for the quarter ended September 30, 2020, formatted in XBRL interactive data files: (i) Condensed Consolidated Balance Sheets as of September 30, 2020 and December 31, 2019; (ii) Condensed Consolidated Income Statements for the three and nine months ended September 30, 2020 and 2019; (iii) Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2020 and 2019; (iv) Condensed Consolidated Statements of Equity for the three and nine months ended September 30, 2020 and 2019; (v) Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2020 and 2019; and (vi) Notes to Condensed Consolidated Financial Statements.
104 |  |  | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

|  | AMERICOLD REALTY TRUST
|  | (Registrant) |
Date: | November 6, 2020 | By: | /s/ Marc J. Smernoff
|  | Name: | Marc J. Smernoff
|  | Title: | Chief Financial Officer and Executive Vice President
|  | (On behalf of the registrant and as principal financial officer)