S-11/A: Lineage, Inc. Files Amendment for Proposed IPO, Aiming to Transform Food Supply Chain

• Lineage, Inc. has filed an amendment to its Form S-11 registration statement for a proposed IPO.
• The company plans to offer 47 million shares of its common stock to the public.
• The expected initial public offering price is between $70.00 and $82.00 per share.
• The company intends to list its common stock on the Nasdaq Global Select Market under the symbol LINE.
• Lineage, Inc. operates as a temperature-controlled warehouse REIT, commencing with its taxable year ended December 31, 2020.
• Affiliates of Bay Grove Capital Group, LLC will continue to own a majority of the voting power after the IPO, making Lineage a controlled company.
• The underwriters have a 30-day option to purchase up to an additional 7,050,000 shares.
• Norges Bank Investment Management has indicated an interest in purchasing up to $900 million in shares.
• The company's purpose is to transform the global food supply chain to eliminate waste and help feed the world.
• For the twelve months ended March 31, 2024, Lineage generated $5.3 billion in revenue and $1.3 billion of Adjusted EBITDA.
• The company operates through two segments: Global warehousing and Global integrated solutions.
• Since 2019, Lineage has invested over $725 million in transformational technology initiatives.
• The company has a robust presence in key metropolitan statistical areas, or MSAs, and ports throughout the United States with a larger number of facilities in such locations relative to its largest competitor, which drives a significantly higher weighted average population density of approximately 3,100 persons per square mile.
• In 2023, Lineage's same warehouse NOI was $1,210.9 million, representing growth of 15.3% compared to same warehouse NOI of $1,050.6 million the prior year.
• The company has a cross functional network optimization, data science and automation team that has overseen 39 major greenfield or expansion projects since the start of 2019, with total cost of approximately $1.2 billion, representing an NOI yield of approximately 9% to 11%.

Score: 7

Explanation: The document is generally positive, highlighting Lineage's market leadership, growth strategy, and commitment to sustainability. However, the reported net loss and the preliminary estimates indicating a decrease in same warehouse NOI growth temper the overall sentiment.

• Lineage is the world's largest temperature-controlled warehouse REIT.
• The company has a diversified customer base, with no single customer accounting for more than 3.3% of revenues.
• Lineage has a strong and flexible balance sheet and access to debt and equity capital.
• The company is committed to sustainability and has signed The Climate Pledge.
• Lineage has a history of robust same warehouse growth with strong operating leverage and cash flow generation.

• The company reported a net loss of $162.8 million for the twelve months ended March 31, 2024.
• The company will be a controlled company after the IPO, which may reduce corporate governance standards.
• The company's Co-Founders will have substantial influence over the business, and their interests may differ from those of other stockholders.
• The company's investments are concentrated in the temperature-controlled warehouse industry, and its business would be materially and adversely affected by an economic downturn in that industry or the market for our customers products.
• The temperature-controlled warehouses that comprise our global warehousing business are concentrated in certain geographic areas, some of which are particularly susceptible to adverse local conditions.

• Economic downturns in the temperature-controlled warehouse industry could negatively impact Lineage's business.
• Geographic concentration of warehouses exposes the company to adverse local conditions.
• Global market and economic conditions may materially and adversely affect Lineage.
• Labor shortages, increased turnover and work stoppages may disrupt operations and increase costs.
• Supply chain disruptions may negatively impact Lineage's business.
• Expansion and development activities involve risks that could result in returns below expectations.
• Lineage's integrated solutions business depends on the performance of its global warehousing business.
• Growth may strain management and resources, which may have a material adverse effect on Lineage.
• Acquisitions may be difficult to integrate and may not achieve intended benefits.
• Dependence on Bay Grove for certain services poses a risk if those services are disrupted.
• Security breaches or cyber-attacks could disrupt operations and have a material adverse effect.
• IT system issues could have a material adverse effect on Lineage's business.
• International operations and properties are subject to additional risks.
• Power costs may increase or be subject to volatility, which could result in increased costs that Lineage may be unable to recover.
• Dependence on key personnel and specialty personnel, and a deterioration of employee relations could harm Lineage's business and operating and financial results.
• As a controlled company, Lineage will qualify for, and may rely on, exemptions from certain corporate governance requirements.
• Lineage could incur significant costs under environmental laws.
• Investments in joint ventures face risks stemming from partial ownership interests.
• Lineage has significant indebtedness outstanding, which may expose it to the risk of default under its debt obligations.
• Increases in interest rates could increase the amount of Lineage's debt payments.
• Market conditions could adversely affect Lineage's ability to refinance existing indebtedness or obtain additional financing for growth on acceptable terms or at all.
• Lineage's Co-Founders will have substantial influence over its business, and their interests, and the interests of certain members of its management, will differ from its interests and those of its other stockholders in certain respects.
• Lineage's charter and bylaws contain provisions that may delay, defer or prevent an acquisition of its common stock or a change in control.
• There can be no assurance that Lineage will be able to make or maintain cash distributions.
• Future contractual repurchase obligations may materially and adversely affect the market price of shares of Lineage's common stock and may reduce future distributions.
• Failure to qualify as a REIT would cause Lineage to be taxed as a regular C corporation.

Management preliminarily expects to report for the quarter ended June 30, 3024: total revenue between $1,324 million and $1,337 million, NOI between $441 and $446 million, same warehouse NOI reflecting a decrease between 2.0% and 2.5%, Adjusted EBITDA between $327 million and $333 million, average physical occupancy of approximately 76.7%, average economic occupancy of approximately 83.1%, and throughput pallets (in thousands) of approximately 13,177.

• We are fond of saying that our IPO is the opposite of an exit. It is a new beginning.
• We have no pressure to go public and believe a significant portion of our current investors will want to remain long-term owners of Lineage as a publicly traded company, ourselves included.
• Becoming a publicly traded company is the best way to deliver growth at scale by providing us with the advantages of a liquid currency and direct access to a lower cost of capital to further fuel our growth flywheel.
• We believe we are still in the very early innings of a long, successful journey.
• We are also confident we can continue to do good while doing well by driving greater sustainability and reducing food waste at a global scale.

The temperature-controlled warehousing market is large, growing, and resilient, driven by the durability of food consumption, global population growth, and shifting consumer preferences towards perishable foods. The market remains fragmented, with the top ten temperature-controlled warehousing operators representing only 23.5% of the global public temperature-controlled warehousing cubic feet capacity.

• Lineage is approximately twice the size of its next largest competitor globally and is as large as its next nine global competitors combined.
• Lineage's same warehouse NOI margins of 40.3% in 2023 compare favorably to those of its largest publicly traded competitor.
• Lineage has a weighted average population density of approximately 3,100 persons per square mile, which is significantly higher than that of its largest competitor.
• Lineage has industry-leading automation capabilities, including 24 fully automated facilities and 57 semi-automated facilities.
• Lineage's cubic-foot weighted average facility age is approximately 21 years, which is significantly younger than that of the broader temperature-controlled warehousing industry.
• Lineage's total global recordable incidence rate (TIR) of 3.4 for the year ended December 31, 2023 is approximately 35% better than the industry average of 4.6 for cold warehouses.

• Shareholders: The IPO provides an opportunity for new investors to participate in Lineage's growth, while existing shareholders may experience changes in ownership and control.
• Employees: The IPO includes provisions for employee equity ownership and cash bonuses, potentially increasing employee engagement and retention.
• Customers: The IPO aims to improve Lineage's ability to invest in technology and expand its network, which could lead to better service and more efficient supply chain solutions for customers.
• Suppliers: The IPO may strengthen Lineage's financial position, potentially leading to more stable and reliable partnerships with suppliers.
• Communities: Lineage's commitment to sustainability and reducing food waste could benefit the communities in which it operates.

• The underwriters expect to deliver the shares of common stock to purchasers on or about a specified date.
• The company intends to use the net proceeds from this offering to repay borrowings outstanding under the Delayed Draw Term Loan, repay borrowings outstanding under the Revolving Credit Facility, fund one-time cash grants to certain of its employees in connection with this offering and estimated cash withholdings associated with stock grants and redeem its Series A preferred stock.
• Following such uses, the company expects to use the remainder of the net proceeds for general corporate purposes, which may include the repayment of additional borrowings outstanding under the Revolving Credit Facility.

• Litigation with respect to the Statesville incident is ongoing and while we believe we have strong defenses to claims arising from this incident, there can be no assurance that we will prevail on any claim.

• BG Cold will hold a continuing right to receive the Founders Equity Share from our operating partnership through its C-Piece Sub-Units in the Legacy Class A OP Units and similar amounts from BGLH, our majority stockholder.
• Affiliates of Bay Grove will continue to hold 71.3% of the Legacy Class B OP Units of our operating partnership.
• The stockholders agreement will provide that we, on our own behalf and in our capacity as general partner of the operating partnership, must use commercially reasonable efforts to structure certain significant exit transactions in a manner that is tax-deferred to Messrs. Marchetti and Forste.
• Bay Grove will have received a one-time increase in its profit share attributable to the existing profits interest it holds in Lineage Holdings equal to $200.0 million.
• Affiliates of Bay Grove will have received $75.0 million in cash from Lineage Holdings repurchase of 986,842 OPEUs from Bay Grove pursuant to the formation transactions.
• We will have entered into a transition services agreement with Bay Grove, pursuant to which Bay Grove will provide us with certain transition services supporting capital deployment and mergers and acquisitions activity for three years following the closing of this offering, and we will pay Bay Grove an annual fee equal to $8.0 million.
• We will have entered into a registration rights agreement with BGLH, pursuant to which we will grant it and certain of its affiliates with certain demand registration rights and customary piggyback registration rights.
• We, our operating partnership and Lineage Holdings will have entered into an agreement providing successive special repurchase rights and cash and equity top-up rights to certain legacy investors that benefits BGLH by ensuring that all Guarantee Rights will ultimately be satisfied by Lineage Holdings.
• Lineage Holdings will have entered into an expense reimbursement and indemnification agreement with BGLH, the LHR and Bay Grove pursuant to which Lineage Holdings will agree to advance to or reimburse such entities for all of their expenses in any way related to our company.
• We will have entered into indemnification agreements with each of our directors and executive officers providing for the indemnification by us for certain liabilities and expenses incurred as a result of actions brought, or threatened to be brought, against our directors and executive officers in their capacities as such.
• We will have entered into certain agreements with Messrs. Forste and Marchetti, pursuant to which Messrs. Forste and Marchetti will agree that for a period of three years following the completion of this offering they will not compete with our business.
• We will have purchased in exchange for 80,950 shares of our common stock the vested awards of LMEP Units valued at less than $3.0 million per individual that are held by certain of our officers and employees who are not named executive officers.
• We will have adopted the 2024 Plan, under which we will grant cash and equity-based incentive awards to eligible service providers in order to attract, motivate and retain the talent for which we compete.
• In connection with the completion of this offering, we will grant certain of our executive officers and employees one-time awards in the form of an aggregate of $52.9 million in cash, 184,946 restricted stock units and 1,362,248 shares of our common stock.
• As discussed above regarding holders of LMEP Units with a value less than $3.0 million, we will issue to certain of our employees, other than our executive officers, an aggregate of 80,950 shares of our common stock.
• As discussed above, in connection with the completion of this offering, we will grant certain of our executive officers and employees one-time awards covering an aggregate of 346,722 restricted stock units and 720,041 LTIP units in respect of certain vested LMEP Units and/or the cancellation of unvested LMEP Units.
• As part of our annual equity award program, we will grant certain of our executive officers and employees an aggregate of 2,677,622 restricted stock units and/or LTIP units.
• In connection with the completion of this offering, we will grant certain of our non-employee directors an aggregate of 8,226 restricted stock units.
• In connection with the completion of this offering, we will grant certain of our employees one-time awards covering an aggregate of 657,190 restricted stock units in respect of certain vested LVCP Awards and/or the cancellation of unvested LVCP Awards.

• December 12, 2020: Elected to be taxed as a REIT for U.S. federal income tax purposes commencing with the taxable year ended December 31, 2020.
• March 31, 2024: As of March 31, 2024, operated an interconnected global temperature-controlled warehouse network, comprising over 84.1 million square feet and 3.0 billion cubic feet of capacity across 482 warehouses.
• July 16, 2024: Date of the S-11/A filing.