June 26, 2018

MDOT 'ready to dig in' on building freezer warehouse without Americold

Photo / Renee Cordes
Photo / Renee Cordes
Jonathan Nass, deputy commissioner of the Maine Department of Transportation, shown at the International Marine Terminal in Portland, says the department will proceed with plans to build a cold-storage warehouse in Portland without Americold Realty Trust as a partner.

The Maine Department of Transportation will go ahead with plans to build a cold-storage warehouse in Portland without Americold Realty Trust (NYSE: COLD) as a partner, welcoming the chance to take a more hands-on role in the long-awaited project.

"We think it's good news," Jonathan Nass, deputy commissioner with the Maine Department of Transportation, said of Americold's decision to pull out. "We spent a lot of time waiting for other folks' decisions for this project … and we've been ready to go for some time."

He added that state officials remain "firmly convinced" the market is there for a cold-storage facility, backed by various studies, saying: "We are absolutely certain of this that need and we're ready to dig in and get this thing done."

Eimskip USA, the Icelandic logistics firm that brought container shipping back to Portland in 2013 and was to be the Americold facility's anchor tenant, reiterated its commitment to Portland on Tuesday.

"Eimskip's customers are in need of cold storage options at the port. Unfortunately Americold has decided to pull out after spending 2.5 years trying to get their plans through the city," Larus Isfeld, managing director of Eimskip USA, said via email to Mainebiz from Russia. "Over these 2.5 years other investment projects have seemed to take priority over this one. Eimskip will continue to work on ideas to develop the waterfront as Eimskip believes in the future of the Portland port in Maine."

What Americold said

Atlanta-based Americold, which has a current market value of around $3.2 billion, won the bid to design and build a cold-storage warehouse on Portland's western waterfront in 2015 and pledged to invest up to $30 million.

But the company kept a low profile throughout a long-drawn out planning process that dragged on for about a year and a half, keeping quiet until Monday's sudden announcement.

"After three years of careful study, Americold has decided to forego development of a new facility at the 40 West Commercial St. site along the Fore River in Portland, Maine," the company said in a written statement emailed to Mainebiz.

It added: "Americold is proud to have been a part of the Portland community for more than 66 years, and appreciates the work and support of the City of Portland, the Maine DOT, and the Maine Port Authority throughout the due diligence process. We have considered regional economics, construction costs, and industry analysis, and our conclusion is that the cost to operate a state-of-the-art temperature-controlled facility on the 6.6-acre parcel of land at the waterfront does not meet Americold's underwriting criteria. Consequently, we will not be building a new facility at the port."

Americold is not leaving Portland altogether, saying that it will continue to operate from its Read Street facility, "where our focus has always been, and will continue to be, centered around providing outstanding service and support for our customers and our community."

Flexibility on what gets built

As for what happens next, Nass said officials would still seek private money but aim to set up a public-private partnership in which the MDOT assumes more of a leadership role than was the case with Americold.

"We need to design the building, we need to line up the customers who we know are out there, we need to line up the financing and then we need to build it," Nass said. "One of the nice things about this announcement is that it give us flexibility on exactly what we build."

Greg Mitchell, the city's economic development director, was equally optimistic, saying, "I'm more positive than I have been in a long time, and it has do with having a site, having the infrastructure in place, having the right zoning in place, and having an active port to support the growth."

Mitchell also doesn't anticipate any problems finding another partner amid a 'shortlist' of possibilities.

"I'd been involved in outreach years ago to cold-storage companies," Mitchell said. "There's a shortlist of companies that are out there that do this kind of investment. It's just a matter of being organized to approach them to present the opportunity to see if we can find a partner."

Americold's move comes less than a year after Portland's Planning Board gave the green light, by a vote of 8 to 1, for a zoning change that would allow for the construction of a 68-foot-tall facility while increasing building heights elsewhere on the western waterfront from 45 feet to 65 feet.

Cold-storage proponents have emphasized the importance of a waterfront warehouse for Maine's growing food and beverage industries, not just seafood processed in Portland but also blueberries and potatoes grown in other parts of the state.

MDOT's Nass said that a second crane is still due for delivery in July, and that he doesn't expect the current anti-trade climate to put a damper on busy port activity in Portland.

"The port is hustling," he said. "We're doing very well at the port, and we think no one's going to stop buying haddock from Iceland or Norway."


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