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Vornado's name rhymes with tornado--and it often acts like one. Last week the Saddle Brook-based real estate investment trust announced a deal that hit the market like a hurricane. In partnership with Crescent Real Estate Equities, an investment company in Fort Worth, Texas, Vornado said it was taking over Americold in Portland, Oregon, and URS Logistics in Georgia, the country's two biggest cold-storage warehouse companies. The two giants control 79 warehouses with 368 million cubic feet of space. The price tag for the transaction: A whopping $950 million, including assumed debt.
When news of the transaction hit the wires, it stunned Wall Street. The company's shares started rising, and by the end of the day, they had risen by a hefty 21% to reach a high of $86.88. Though Vornado has struck several large deals in the past year, this is the biggest yet.
Americold and URS Logistics are relatively unknown outside their industry, but their clients--companies like Kraft Foods and Pillsbury--are household names. Vornado and Crescent plan to buy the cold-storage warehousing companies from Kelso & Co., a New York City investment firm. When the deal closes at the end of the year, Vornado will own 60% of the cold-storage companies, and Crescent will own 40%. Says Ron Dyehouse, Americold's chief executive officer: "Vornado intends to provide growth capital to support long-term development of our nationwide distribution network."
This latest transaction makes Vornado a leading player in the cold-storage warehouse market. Real estate experts warn that this is a risky market, because tenants who leave are difficult to replace. Vornado...