Greetings, and welcome to the Americold Realty Trust Fourth Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. Please note this conference is being recorded. I will now turn the conference over to your host, Scott Anderson, Investor Relations.
Good afternoon. We would like to thank you for joining us today for Americold Realty Trust's 4th quarter 2019 earnings conference call. In addition to the press release distributed this afternoon, we have filed a supplemental package with additional detail on our results, which is available in the Investors section on our website at www.americold.com. On today's call, management's prepared remarks and answers to your questions may contain forward looking statements. Forward looking statements address matters that are subject to risks and uncertainties that may cause actual results to differ from those discussed today.
A number of factors could cause actual results to differ materially from those anticipated. Forward looking statements are based on current expectations, assumptions and beliefs as well as information available to us at this time and speak only as of the date they are made, and management undertakes no obligation to update publicly any of them in light of new information or future events. During this call, we will discuss certain non GAAP financial measures. More information about these non GAAP financial measures and reconciliations to the comparable GAAP financial measures is contained in the supplemental information package available on the company's website. We also would like to note that numbers presented in today's prepared remarks have been rounded to the nearest million with the exception of per share amounts.
This afternoon's conference call is hosted by Americold's Chief Executive Officer, Fred Bohler and Executive Vice President and Chief Financial Officer, Mark Smernoff. Management will make some prepared comments, after which we will open up the call to your questions. Now, I will turn the call over to Fred. Thank you, and welcome to our Q4 2019 earnings conference call. This afternoon, I will provide highlights of our full year results and comment on current market conditions.
I will then take a moment to update you on our growth activity and a few exciting internal developments here at Americold. Mark will follow with a review of our Q4 and full year results in more detail and then discuss our balance sheet and outlook for 2020. After our prepared remarks, we will open the call for your questions. Our full year 2019 results reflect the continued execution of our strategy to drive long term cash flow growth and shareholder value. We did this in 3 ways by organically growing our core business, by completing and integrating strategic acquisitions and by developing advanced temperature controlled warehouses.
We are very pleased with our results on all fronts and ended the year with a portfolio that contains in excess of 1,000,000,000 refrigerated cubic feet. This significant growth is even more notable in light of our ability to maintain our financial flexibility and low leverage. For the full year 2019, we grew total revenue by 11.2% and total company NOI by 17.9%. This was driven by growth in our warehouse segment revenue and NOI of 17% 19.5%, respectively. These strong results came from our recent acquisitions and organic growth.
I'm also very pleased to report that our Global Warehouse same store pool generated total revenue growth and NOI growth of 3.5% and 5.1% respectively on a constant currency basis. We delivered same store NOI growth that was approximately 160 basis points higher than our same store revenue growth, and we believe this highlights the strength of the Americold operating platform. Now let me discuss our acquisition and development activity in more detail. In 2019, we acquired 27 facilities, which added approximately 170,000,000 cubic feet to our portfolio for a total of $1,400,000,000 This comprised of PortFresh Holdings, a single facility and development land parcel in Savannah, Georgia Cloverleaf Cold Storage, a 22 facility portfolio that was previously the 5th largest cold storage operator in the U. S.
Lanier Cold Storage, a 2 facility operator outside of Atlanta and MHW Group, a 2 facility operator in Chambersburg, Pennsylvania and Perryville, Maryland. With respect to these 2019 acquisitions, we remain focused on integration. We spent much of the second half of twenty nineteen transitioning Cloverleaf's SG and A functions to our headquarters and are on track to capture the expected synergies. For all four transactions, we are focused on implementing our commercial business practices to drive revenue growth and rolling out the Americold operating system to drive efficiency gains. We are very pleased with our progress to date transitioning these acquisitions onto our platform and expect that we will fully capture the upside from these investments by year 3 of our ownership.
We are off to a strong start in 2020. We acquired Newport Cold, a single facility located in St. Paul, Minnesota for 50 $6,000,000 Additionally, we expanded our infrastructure and presence in Canada through the completion of our acquisition of Novocold Logistics, which consisted of 4 facilities in Toronto, Calgary and Halifax for approximately US257 million dollars Finally, we announced today that Americold will be entering into a strategic joint venture with SuperCreo, a leading temperature controlled storage operator in Brazil. Brazil is a key market in the global food chain as it is leading exporter of beef, poultry and other commodities. This joint venture provides an attractive entry point in a high consumption market with a population of 210,000,000 people and the world's 9th largest economy.
Superfrio is a leading operator in the country and is very similar to Americold in their strategic approach to running their business. Superfrio currently operates 16 locations comprised of 35,000,000 cubic feet. Under the terms of the agreement, Americold will acquire 15% of Super Frio for approximately US28 $1,000,000 Super Frio is currently owned by Patria, an experienced Brazilian based private equity firm affiliated with Blackstone. The company is executing an acquisition and development growth plan in the Brazilian market. We will co invest at our pro rata share.
Americold will have a seat on Super 3o's Board and retains the exclusive option to acquire the remaining 85% of the company starting in 2023. We are investing with the best in class local market operator in Superpreo and partner in Patria, both of which have strong market knowledge of Brazil. We are excited to expand our global platform with this and our Canadian investment. Now turning to our development pipeline. We delivered our state of the art expansion project in Chicago at the end of the Q2 2019.
We are now fully focused on ramping the project of stabilization. Our expectation is unchanged from last quarter. We expect this asset to continue to ramp throughout 2020 and deliver its underwritten stabilized returns in fiscal year 2021. We will continue to update you on our progress. Also, during the Q4, we completed 2 of the expansion projects that we purchased as a part of our Cloverleaf acquisition at Chesapeake, Virginia and North Little Rock, Arkansas.
In the Q1 2020, we also delivered the expansion project in Columbus, Ohio. We believe we are on track to achieve stabilization at each of these facilities over the 1st 12 months. We continue to make progress on the rest of our active development pipeline, which consists of 2 projects currently underway in Savannah and Atlanta, totaling approximately 33,000,000 cubic feet and representing approximately $211,000,000 of investment. Now I'd like to take a moment to update you on our activities in Australia. At this time, we are not moving forward with developments contemplated under the previously announced letter of intent we executed with the top customer.
This is because the scope of the projects materially changed. Let me emphasize that we maintain a good relationship with this customer who we have served for over 30 years. We continue to work with them on their future supply chain needs. And to that end, we are announcing a new US42 $1,000,000 expansion project in Auckland, New Zealand. This expansion will add 4,600,000 cubic feet to an existing facility that exclusively houses the same customer.
We have signed a definitive agreement under which they will anchor the new expansion with room to upsize in the future. Construction is scheduled to start at the Q2 of 2020 with completion in the Q2 of 2021 and stabilization is expected 1 year thereafter. As this agreement demonstrates, we have plenty of opportunities to grow our customer base over the long term. At this time, our development pipeline remains robust with over $1,200,000,000 of potential opportunities. All of this external growth was supported by our strong low levered balance sheet.
Throughout 2019, we remain good stewards of capital. We de risked our growth by proactively raising capital to fund acquisitions and developments with forward components where possible. We issued private placement debt and now benefit from multiple investment grade credit ratings, which reduced our cost of capital. We transformed our shareholder base and increased our flow through the successful secondary offering completed by our legacy financial sponsors who have fully exited their investment. Additionally, we launched an ATM program to further diversify our capital sourcing option.
As we stand now at the start of 2020, market conditions underpinning the temperature controlled storage industry remain attractive. Demand growth is tied to population and consumption growth along with customer driven shifts in supply chain optimization strategies. This is coupled with the continued shift in consumer preferences towards healthy, perishable food, which increases the need for temperature controlled storage. We are well positioned to capitalize on these trends with our outsized market share and our fully integrated infrastructure. From a supply perspective, barriers remain high for new development.
Over the course of many years, we have invested 1,000,000 of dollars in technology, process and infrastructure in our facility. Just as important is our deep relationship with our customers who trust us to maintain the integrity of their brand. Our customer centric focus and leading supply chain innovation combined with our portfolio that has the right assets in the right location will serve us well as we deliver consistent and profitable growth over the long term. Before I turn the call over to Mark, I'd like to comment on a few exciting internal developments here at Americold. As an organization, we continue to focus on our corporate responsibility to serve the public good by maintaining the integrity of the food supply and reducing waste.
Further, we remain committed to sustainability as we seek to reduce our energy consumption. In 2018, the Global Cold Chain Alliance awarded 56 of our facilities Gold and Silver Certification as a part of their energy excellence recognition program. We are pleased to announce that in 2019, the GCCA has certified an additional 76 facilities. We now have 132 sites certified by the GCCA, which represents 77% of our warehouse segment portfolio. I'm very pleased with our team's dedication to this important sustainability effort.
From a personnel standpoint, we continue to promote safety for our Americold associates as a top priority. 2019 was another exceptional year in terms of record low incidents at our facility. This is our 5th consecutive year of reduction and we are very proud of our industry leading safety performance. Additionally, we continue to ensure our bench of executive talent is deep and positions us for growth. Over the course of 2019, we made several key executive hires and welcomed 3 new directors to our Board.
During the Q1 of 2020, we announced the hiring of Rob Chambers as Chief Commercial Officer to head our business development effort. Rob was most recently at a publicly traded logistics company. Prior to that, he was here with us at Americold as Vice President of Commercial Finance, where he was instrumental in developing our commercial business rules and underwriting process. Rob will lead global business development and focus on growing and expanding our customer base. We are excited to have Rob back on our team.
In summary, 2019 was another exciting and transformative year here at Americold. We are very grateful to our entire team for their efforts to lead innovation in our industry, continue to serve our customers, drive same store growth, complete acquisition and execute on our development. We are off to a great start in 2020. I'll now turn the call over to Mark, who will provide more details on our quarterly results balance sheet and outlook for 2020. Thank you, Fred, and good afternoon, everyone.
Today, we will provide updates on our actual performance as well as certain metrics on a constant currency basis. I will also provide details on our guidance for 2020. For the Q4, we reported total company revenue of $486,000,000 and total company NOI of $138,000,000 which reflects a 16.9% increase and a 26.8% increase year over year, respectively. Core EBITDA was $109,000,000 for the Q4 of 2019, an increase of 28 0.8% year over year. This was driven by our 2019 acquisition and solid growth within our core portfolio.
Our core EBITDA margin grew by 208 basis points to 22.4%. Please note our strong core EBITDA growth and margin improvement overcame the following factors. The J curve associated with implementing and aligning our recent acquisitions to the Americold operating system and practices, the startup expenses related to our recent development project and the currency translation impact of the strengthening of the U. S. Dollar.
For the Q4 2019, we reported net income of $21,000,000 compared to net income of $3,000,000 for the same quarter of the prior year. Our 4th quarter core FFO was $65,000,000 or $0.33 per diluted share. Our 4th quarter AFFO was $60,000,000 or $0.30 per diluted share. As a reminder, the full definition and reconciliation of core EBITDA, core FFO and AFFO to reported net income can be found in our supplemental. For the Q4 of 2019, Global Warehouse segment revenue was $384,000,000 which reflects growth of 25.6 percent year over year.
Global Warehouse segment NOI was 130,000,000 dollars which reflects growth of 28.9 percent. Global Warehouse segment margin was 33.8% for the 4th quarter, an 86 basis point increase compared to the same quarter of the prior year. This increase in margin was primarily due to improvements in our core business, accretive acquisitions, same store economic occupancy growth and the benefit of the Americold operating system. At year end, $251,000,000 of our rent and storage revenue was derived from customers with fixed commitment storage contracts as compared to $244,000,000 at the end of the Q3 of 2019 $220,000,000 at the end of 2018. For the Q4 of 2019, 40.6 percent of rent and storage revenue was generated from fixed commitment storage contracts on a combined pro form a basis, which is a 60 basis point increase over the sequential quarter.
As of December 31, 2019, our global portfolio consisted of 178 facilities, 2 more than we reported at the end of the Q3 2019 due to the acquisition of the Pennsylvania and Maryland facilities completed in November. We ended the year with 167 facilities in our Global Warehouse segment portfolio and 11 facilities in our 3rd party managed segment portfolio. Now I will turn to our same store results in the Global Warehouse segment. For the Q4 2019, our same store Global Warehouse segment revenue was $308,000,000 which reflects growth of 3.4% year over year and 4.5% on a constant currency basis. Same store global warehouse NOI was $107,000,000 dollars which reflects growth of 9.1 percent year over year and 10% on a constant currency basis.
Same store global warehouse NOI margin increased 182 basis points to 34.8%. Drilling into these results a little further for the Q4, same store global rent and storage revenue grew by 1% year over year or 1.8% on a constant currency basis. This was driven by improvements in economic occupancy, partially offset by business mix and the impact of the strength of the U. S. Dollar.
Our same store economic occupancy was 84.6%, which reflects an increase of 112 basis points from the prior year. Our same store rent and storage NOI grew by 1.4% year over year or 2.2% on a constant currency basis. Same store global rent and storage NOI margin increased 30 basis points to 69.3%. The NOI growth and margin expansion was a result of continued portfolio management combined with our efforts to grow our fixed commitment storage contract and disciplined cost controls through the Americold operating system of our power and facility related costs. Same store global warehouse services revenue for the 4th quarter increased 5.2% year over year or 6.5% on a constant currency basis.
This revenue increase resulted from a favorable mix, which generated 6.9% growth in our same store warehouse services revenue per throughput pallet on a constant currency basis. Our same store global warehouse services NOI increased 85.8% year over year or 88% on a constant currency basis, driven by cost control embedded within the Americold operating system, better pricing and a more favorable customer mix. Finally, the same store warehouse services NOI margin was 9.4% for the quarter, an expansion of 406 basis points driven by the same factors. Within our Global Warehouse segment, we had no material changes to the composition of our top 25 customers who on a pro form a basis account for approximately 60% of our global warehouse revenue and who have been with us on average for over 30 years. Additionally, our turn rate was approximately 3% of total warehouse revenue, a 40 basis point reduction from the prior year end.
We continue to focus on customer service and active portfolio management as we seek to optimize our customer mix and retain customers over the long term. Corporate SG and A totaled $33,000,000 for the Q4 of 2019 as compared to $28,000,000 for the comparable prior year quarter. This increase is primarily a result of additional investments made to support our expanded development pipeline, the SG and A absorbed with our recent acquisitions net of realized synergies, higher stock compliance costs and increased stock compensation expense. Additionally, we incurred total cost of $10,000,000 for the 4th quarter as shown in the acquisition, litigation and other line within our statement of operations, which primarily reflects M and A related professional fees, litigation costs and severance costs. Finally, we believe the best way to measure our success is on an annual basis due to the seasonal nature of our business.
To recap our full year 2019 growth, total revenues were $1,780,000,000 and Global Warehouse segment revenues were $1,380,000,000 an 11.2% and 17% increase respectively. Total contribution or NOI was $478,000,000 an increase of 17.9%. Global Warehouse segment NOI was $448,000,000 an increase of 19.5%. For the same store pool, Global Warehouse segment revenue grew 1.9% or 3.5% on a constant currency basis and same store segment NOI grew 3.9% or 5.1% on a constant currency basis. Core EBITDA was $367,000,000 an increase of 19.7% or 21% on a constant currency basis.
Net income was $48,000,000 Core funds from operation was $220,000,000 or $1.19 per diluted share and AFFO was $215,000,000 or $1.17 per diluted share using a weighted average share count of 184,000,000 Now let me update you on our development and acquisition activity. In aggregate, we spent $211,000,000 in 2019 on expansion and development capital, including $56,000,000 in the 4th quarter, mostly related to spending at our Atlanta major market expansion and our Savannah, Georgia newbuild. We delivered our automated expansion project in Chicago in late second quarter and 2 of the expansions that we acquired as part of Cloverleaf in late Q4. We delivered the 3rd acquired development project in Ohio shortly after year end. In our supplemental, we have provided additional disclosure on expected yields and target stabilization dates for these projects.
Also at the end of 2019, we acquired 2 facilities in Pennsylvania and Maryland for 54,000,000 dollars Post quarter end, we completed the previously announced acquisition of Novocode Logistics in Canada for CAD 337 million, which translates to approximately CAD 257 1,000,000. Also, we completed the acquisition of Newport Gold in Minnesota for CAD 56,000,000. Dollars Again, we have enhanced the disclosure in our supplemental and now outline our expected net entry NOI yield and our expected year 3 yields at stabilization. Today, we also announced that we'd be entering into a strategic joint venture with Brazil based Superfrio, whereby we will invest BRL118 1,000,000, which translates to approximately US28 $1,000,000 for a 15% ownership in the business. This transaction will result in an implied 9% forward NOI yield for the entire in place business, which we expect to improve through accretive acquisitions and development in that market.
We believe this valuation reflects the quality of the operator and the facilities and our exclusive call right to purchase the remainder of the business in 2023. We expect to fund our pro rata share of the joint venture's acquisition and development activity over the next 2 years, which we expect to be up to BRL127 million or approximately US30 million dollars The investment is accretive on a leverage neutral basis and we intend to fund it with cash on hand. We will not hedge our currency exposure at this time and we expect to close the transaction in the Q1. Finally, regarding our customer in Australia, as Fred mentioned, we are starting a new expansion project in New Zealand with this customer for NZ65 $1,000,000 or approximately US42 $1,000,000 Also with regard to the projects for which we will not be moving forward, our customer is expected to reimburse us for certain development costs that have been capitalized, including our costs for the purchase of land in Sydney. Now turning to our balance sheet.
As of December 31, 2019, total debt outstanding was $1,900,000,000 of which 76% was in an unsecured structure and 92% was at a fixed rate. Our real estate debt has a weighted average remaining term of 6.3 years and carries a weighted average contractual interest rate of 4.23%. At quarter end, we had total liquidity of approximately $1,400,000,000 and we had no activity on our ATM program. Our net debt to pro form a core EBITDA was approximately 4.2 times, which demonstrates our commitment to improve balance sheet management as we maintain modest leverage while executing our growth plan. Pro form a for the closing of our Novakold and Newport acquisitions development, our total liquidity is approximately $1,000,000,000 consisting of the revolver availability, cash on hand and approximately $136,000,000 of equity forward from our September 2018 offering.
We used our April 2019 forward to fund a portion of the NOVICOLD acquisition on January 2, which increased our fully diluted shares outstanding to approximately $205,000,000 Our pro form a net debt to core EBITDA is approximately 4.5 times as a result of these transactions. I'd like to remind you that our recent acquisition, the initial Brazilian joint venture investment and remaining development Savannah Atlanta and just announced Auckland New Zealand projects are all fully funded at this point. Now I'd like to take a moment to provide our outlook for 2020. First, I'd like to discuss the integration of the 32 facilities that we have acquired since start of 2019 as well as our development activity, both which have a meaningful impact on our 2020 expectations. First, by the end of 2019, we have taken action to eliminate all $10,000,000 in total cost savings that we expected to realize from Cloverleaf integration.
The capture of these synergies is reflected in our SG and A guidance. 2nd, let me note that we continue to incur meaningful expenses as we work to bring all of our recent acquisitions onto the Americold operating platform. We view these costs as critical to achieve our targeted yield at stabilization by the end of year 3 and believe the work we do in 2020 will set the stage for long term growth. Given the size of these acquisitions relative to our overall portfolio, none of which are in our same store pool, we have incorporated this impact into our guidance. Finally, during 2020, we expect to continue to incur start up expenses in our completed development as we hire and train employees, bring down temperature, calibrate our system and automation where applicable and onboard new customers.
We typically expect this ramp period to stabilization to take 12 months. As we previously mentioned on our last call, we expect our Chicago project will take between 12 18 months. During part of this period, our operational expenses, including our startup expenses, may exceed the revenue generated from that site. This is reflected in our guidance. With this in mind, for the full year, we expect AFFO per share in the range of $1.22 to 1 $0.30 Our assumptions are as follows: Global Warehouse segment same store revenue growth to range between 2% and 4% on an actual and constant currency basis.
Global Warehouse segment same store NOI growth to be 100 to 200 basis points higher than the associated revenue growth. Managed and Transportation segment NOI in the range of $28,000,000 to $31,000,000 total SG and A expense of $135,000,000 to 140,000,000 dollars current income tax expense of $11,000,000 to $13,000,000 deferred income tax benefit of $1,000,000 to 3,000,000 dollars non real estate depreciation and amortization expense of $66,000,000 to $68,000,000 total recurring maintenance capital expenditures in the range of $65,000,000 to $75,000,000 development starts of $75,000,000 to $200,000,000 And finally, please refer to our supplemental for currency translation rates embedded in this guidance. Please keep in mind that the ranges for these metrics do not include the impact of acquisitions, dispositions or capital markets activity beyond which has been previously announced. Lastly, in 2020, we have revised our methodology around our same store pool, which will reflect 136 facilities at the beginning of the year. Our revised definition now requires that for a facility to be in the same store pool, it must meet that definition at the beginning of the year.
Now, let me turn the call back to Fred for some closing remarks. Thanks, Mark. Since the start of 2019, we have closed 6 acquisitions, completed 4 development projects, started 3 additional development projects and entered into a new joint venture. As we move into 2020, we are starting with strong momentum and we will continue to expand our platform to position Americold for our customers around the globe. We would like to welcome the many new associates to the Americold family who've joined us as a part of our recent acquisition.
And I'd like to thank all of our team members for their continued hard work and dedication to our success. Finally, we thank our shareholders for their continued support as we focus on driving growth and creating value through 2020 beyond. Thanks again for joining us today and we will now open the call for your questions. Operator?
Thank you. At this time, we will be conducting a question and answer session. We ask that you please limit yourself to one question and one follow-up question. The first questions come from the line of Nate Crossett of Berenberg Capital Markets. Please proceed with your question.
Hey, guys. Good evening.
Good evening. I guess just
a question on the Sydney project. What does it mean when you say the scope of the project changed? I mean that was what $600,000,000 potential project. It sounds like that tenant is going to be at this other location. So what's the total scope of that new project, I guess?
Yes. I think if you go back, gosh, it's been a year and a half, almost 2 years now. And we entered into an LOI with this particular customer. And it was more than one site. It was multi site.
It was looking at their supply chain. Once we enter that LOI, you start to get into detailed design. And as you're going through detailed design, things kind of changed and shifted. And remember that we continue to do the current work for them today. This is talking about potentially getting into a new infrastructure, if you will, for the future.
And we've gone through several different iterations with them. And as I sit here today, we look at it and we say, we're probably not going to proceed in the way that was originally intended. However, we continue to work with them as evidenced by the new build that we're doing over in Auckland, New Zealand for them with a new 15 year commitment anchoring that facility. And then we continue to work with them around the rest of Australia, if you will. But at this time, we know that that's not going to be like what we originally had hoped.
And we'll continue to work with them as we move forward.
Okay. So when we that's helpful. Thank you. So we're thinking about the drivers of growth this year. Is it more just M and A and same store in margin improvement?
Because it looks like there's less development CapEx spend that you're guiding to. We all know the trends in this space seem to be good, but I would have thought there have been more kind of new starts or development CapEx spend if there was a lot of new demand out there for cold storage? Right.
Excuse me, it's hard to comment on timing in specific. And so we've been guiding $75,000,000 to $200,000,000 in new starts for the last 2 years here. Our pipeline is still in excess of $1,200,000,000 We have several great projects that are out there and I know that some of those will come to fruition here. It's a matter of timing. And again, the size and the scale of those differ depending on the particular customer that we're building for.
Another key attribute and a reminder to everyone is we don't build on spec. And so most of our builds, most of our development projects are driven by real customer demand and engagement with those customers. And as a result, that timing can kind of move around a bit. One thing I would just add to that as it relates to external growth, we also don't provide guidance on M and A. So as you've heard us say over the time, the M and A in our industry can be somewhat lumpy.
That's not to say we're not active. Year, but there's no further guidance than what's been put forth in the overall guidance.
Okay, that's helpful. I'll get back in the queue. Thanks.
Great. Thanks.
The next question comes from the line of Emmanuel Korchman of Citi. Please proceed with your question.
Hey, everyone. Maybe Fred or Mark, just following up on that, you talked about the pipeline of developments. Can you talk about what your pipeline on acquisitions looks like and split that between U. S. Opportunities and international ones?
Yes. I mean, what I would say is kind of what we always say that the pipeline of acquisition opportunities is plentiful, both in existing countries as well as the potential to expand into others. We work with and talk to a lot of different folks. And I think I've joked before, you got to kiss a lot of frogs to find the right one that we're looking for. And remember, we're not just acquiring to get big.
We're pretty picky and choosy, if you will, in terms of identifying the right acquisitions that we know that can be fully integrated into our enterprise. So, those are going to be lumpy. I can't comment on size and scale of those because it's so unpredictable in terms of when or if those will come to fruition. Great. And just switching to guidance, we do appreciate the added line items that you've given us.
I am going to be annoying for a second and say what you haven't given us is the payout ratio. So what you used to give us, you don't give us. So how do we think about the dividend and the payout ratio in comparison to the new AFFO per share guidance that you have given us? Yes, absolutely. Our Board evaluates our position on a quarterly basis and determines the dividend.
So, we would expect further guidance around the dividend to be announced later this quarter consistent with prior years. But I guess just as you think about the guidance for the year and sort of cash flow allocation, what level are you assuming in the guidance that you've given at this point? I think especially given the robust development pipeline that Fred mentioned, we would expect payout ratios to be consistent with prior periods, probably in that 65% to 68%. Thanks.
Our next question comes from the line of Michael Carroll of RBC Capital Markets. Please proceed with your question.
Yes, thanks. I just want to go back to the Woolworths project in Australia. So what is that customer plan on doing right now if they don't want to have the, I guess, the 3 large automated facilities? Do they still have, I guess, growing needs for temperature control space? Are you going to be providing that for them?
Yes. Remember, as a reminder, we currently have all of their infrastructure for the bulk of their temperature control needs. So we continue to operate those facilities. And like I said, we're kind of exploring other alternatives. So is it for example, hypothetically, is it better to build a single greenfield automated facility or is it better to expand onto an existing facility or is it better to add a conventional facility instead of automation.
So all three of those things continue to be explored. So but we handle the bulk of their business today and we'll continue to do so as we have for the last 30 years.
Okay. And then should we expect, I guess, some smaller projects to be announced because obviously they had a pretty big growth strategy before that seems to be off the table, but should we still expect what I know they did what a $40,000,000 project in New Zealand, is there other $40,000,000 to $50,000,000 projects on tap for the rest of this year?
Potentially, our pipeline is over $1,200,000,000
Okay, great.
And
then just last for me, can you talk a little bit about your plans with Brazil? I mean, how much do you want to or can you scale in that market? Or do you plan on just making this initial investment with that joint venture partner and see where that goes currently?
Yes. We're really excited about this partnership with Patria down there in Brazil. Superfrio is one of the leaders in there and they're very much like us. They use the same operating systems, have a lot of similarities in terms of customer base and how they commercialize that business. So we really like that platform down there.
It's currently 16 sites. And as we mentioned, they've got growth expectations both from a development and from an acquisition standpoint. The marketplace down there is very similar to what we see here in the U. S. It's very fragmented.
So, there are lots of opportunities. And again, they'll go about it pretty much the same way that we do here. And we'll continue that partnership over the next 2 years and we have that ability to buy it out in 20 23. Thanks. Sure.
Our next question comes from the line of Dave Rodgers of Baird. Please proceed with your question.
Hey, guys. Good afternoon. I wanted to ask about the physical occupancy and the trends there. You had been trending lower in the 1st three quarters of the year. Year over year in the Q4 on the same store basis, you did step back up.
So can you talk a little bit about kind of what your expectations are for physical occupancy as you move into next year, the 2% to 4% revenue guidance, does that assume some increase in occupancy and rate? And can you kind of talk about where that occupancy increase would come from? Thanks.
Yes. I think the number we reported this quarter was the economic occupancy. Remember, we commitments. Economic occupancy, yes, we continue to expect it to tick up. We like where it settled in for the Q4.
As you'll recall, we don't really want it to get that much higher because then you start to drive physical occupancy might be. And see that we're doing that regardless of what the physical occupancy might be and that's just a function of how we commercialize our business. So rate, throughput, fixed commitments. So yes, we expect that it will continue to make progress as we do our portfolio management and onboard new customers and then of course open up new capacity for our development opportunities.
I guess just looking to that answer, Fred, with 2% to 4% revenue guidance on the same store, do you expect most of that then to come through rate if you're happy with where occupancy is today?
Yes. Again, I think there's lots of occupancy opportunities because of the seasonality of our business, right? So we're always trying to find ways to find off cycle type of business that we can put into facilities that maybe have a lower physical occupancy during the summer, for example. So we believe that there's still white space to fill. Most of our occupancy occupancy is driven by key markets during the Q4.
So actually, if you look at core markets where our major distribution points are getting product to the consumer during the most critical time of the year, those markets are and during the Q4, as we've talked about, those are pushing 90%, ninety 2%, right? So the number we're quoting is across our entire enterprise. So we do have sites that have lower physical occupancy during the Q4 than the 85%. And Dave, just to reiterate, as you've heard us say before, we're working on maximizing the mix, as Fred said, that drives the most 4 wall cash flow. So if there's one metric more than anything other, not raising out occupancy, it's how do we drive actual 4 wall cash flow.
Great. And then maybe just a follow-up on that. Is there a mechanism where you would take out Patria? Has there been a predetermined price for that? And the second is, can you just comment on the income tax expense and deferred benefit in the 2020 guidance versus what you did in 2019 and the reason for the change there?
Thank you.
Yes. So just on the first part in terms of the takeout of Patria, yes, as we said, we have the exclusive option to buy out the other 85% of the business as we bought in at 15% come 2023. And then as it relates to the taxes, so the taxes reflect growth in the overall business as well as our recent acquisition into Canada, which obviously we will be paying corporate level tax for our operations in Canada at that level, consistent with what we pay in Australia. So, the combination and tax reflects growth of our core businesses abroad, where we do pay cash tax. Thank you.
Thanks, Dan.
Our next question comes from the line of Ki Bin Kim of SunTrust Robinson Humphrey. Please proceed with your question.
Thanks. Good evening, everyone. Going back to the Australia development for $600,000,000 I was wondering if you can just provide a little more details behind it because it was a big deal. It was an important catalyst for your company and your stock. So I'm just curious how much of the scope change did you lose any of that business for the 3 buildings to competing developers or other owners.
Was it a point of pricing or just something very different than that?
It's a combination of things quite frankly. They do own their own dry network. They brought up a fully automated facility that they were tied up with. They've had some other things going on their business, changes that I can't really comment on, but you can read the press on them. They've made a lot of divestitures and some other adjustments to their business.
And then just during this time horizon, number 1, I just want to remind everybody, it was a letter of intent. It wasn't a binding contract. It was an intent to work with each other. So we did not lose the business to anybody else. That wasn't what was at play.
But over the course of the 2 years, automation costs certainly increased steel prices went up. So construction costs in Australia, land costs in Australia, all of that kind of factored into, if you will, the dance as we were going through detailed design and negotiation. So now we have lost the business. We have all the business and proceed continuing to. As I mentioned, we'll continue to work with them.
And again, that strong pipeline that we have, I'm confident that we'll have additional ways to put capital to work.
So you're saying the 3 buildings that were originally contemplated, there isn't another party doing part of
that business instead of a There are not 3 automated buildings going up for this customer.
Okay. And is a micro fulfillment center part of the reason at all, just going a different route instead of like a centralized warehouse, maybe doing that to the store? Is that was that part of the equation at all?
No, that's I mean kind of a separate process. I know they are experimenting with micro fulfillment, but remember that micro fulfillment is done in the back end of the store and doesn't really supply it doesn't really change the supply chain in terms of the physical distribution centers. So, I can't comment further on what they may be doing. That's probably something for you to look at.
Okay. And it sounds like in the comments though, you've left yourself with a little bit of an opening that you might do further development business with them. Could you just expand upon that?
Yes. I mean, again, I would say that we have a pipeline of $1,200,000,000 They are a part of that. We just announced the $42,000,000 that we're going to put to work in Auckland, which is on their behalf. So we currently house them in several facilities across New Zealand, Auckland being the largest one. We're expanding that site to support their growth and we've entered into a definitive agreement, not an LOI, a definitive contract for 15 years for them to be the anchor on that expansion.
So I think that just shows the continuing working
development to happen again in Australia? I see. But it's not like there's a chance for the development to happen again in Australia. That's not what you meant, right?
There's always a chance. We continue the conversations have not been called off, I guess, is the way that I would describe it. So there isn't an end. We just don't see it happening right now. So we're just kind of taking that off and hopefully it develops into something into the future.
But we can't control that 100%. We kind of at their timing and at their mercy when it comes to that.
Okay. Thank you, guys.
Our next question comes from the line of Michael Mueller of JPMorgan. Please proceed with your question.
Yes. Hi. If we start off with your AFFO guidance, add back CapEx and then back out the non real estate depreciation and the tax benefit, we get $1.21 to $1.32 Is that your core FFO guidance for the year?
Yes. What we did is we provided the core reconciling items and that's not inconsistent with our thought. I think, Mike, the key thing we really do want to emphasize about our business is we believe AFFO is the best metric to understand our overall business just because there's a significant operational component as well as true cash CapEx in the business that we want to make sure is being captured, NAREIT definition of FFO or even our adjusted definition of core. So, we view as the most relevant metric for our business is that best approximates the cash flow we generate to be our adjusted funds from operation.
Got it. Yes. It's just the FFO numbers get reported a lot and obviously come up in discussions quite a bit. So Yes. Okay.
And the second question was for Brazil, what's the magic of 2023? What happens then where you can buy it
out? Mike? Yes. We're investing with a private equity investor that has finite life of their funds. And so we're working with them and we have a plan with them to grow the business through that period.
And that was an ideal day for us to make a decision. And as Fred mentioned earlier, we have exclusive call rate if we want to purchase in the rest of it. Got it. Okay. That was it.
Thank you.
Our next question comes from the line of Bill Crow of Raymond James. Please proceed with your question.
Good evening, guys. I apologize for asking one more on Australia. As you underwrite the health of the tenant, has anything changed with them? Is this scope changing because their outlook has changed?
No, absolutely not. They're the premier grocer in that marketplace. Their business continues to be strong. So no underwriting concerns there whatsoever.
That's fine. I think seasonality came up earlier and I'm just wondering if you could help us think about seasonality as it evolves into 2020. Should we consider that kind of the same contribution per quarter that we saw in 20 19 would play out again in 2020 or has that changed because of your acquisitions?
No, it's pretty much the same pattern. I mean, there's some commodities that have different types of patterns, but like ice cream or like some of the harvest, if you will. But the vast bulk of our product follows the cyclicality every single year. Q4, kind of the end of third quarter, Q4 is the busiest time of the year for us. That's when all the volume is getting pushed out to support Thanksgiving and Christmas.
And I think you saw that in our Q4 results. And if you go back a year ago, you'd see the same thing.
All right. Then 2 quick financial questions for you. G and A continues to ramp up and given the J curves we're dealing with and postponed developments and different things, I'm just I'm trying to get my arms around the pace at which it's ramping up visavis that what it's delivering to the bottom line. And at the top end of your guidance, I think it'd be about 8.5% increase in 2020. So at what point do you get to the size of the headquarters that you need, so we don't see G and A continue to ramp up at this rate that's 4 or 5 times CPI?
Yes. No, absolutely. And I think there's 2 things around that just to understand. So, we maintain a lot of our own in house development resources, so the engineering teams, our project management offices that are working on our development project. We have a tremendous as we just announced, we have effectively 4 completed projects where we don't even have the benefit of the stabilized earnings yet in our stream.
So, those will be ramping up throughout this year and really beginning to stabilize in 2021 and beyond. And then we have other development projects underway. So, I think what you see and this is typical of development, you see those costs come on in advance and then you get the benefit as those projects ramp and reach stabilization, which you'll then start to see the G and A leverage, especially as you're looking at as a
percentage of revenue. All right. And then finally for me, since we spent an hour last quarter talking about $3,000,000 healthcare cost, the $10,000,000 acquisition litigation and other charge, if you could give us details on that. And it's I think it's $40,000,000 for the year. So how do we think about what was in there for the Q4 and what happens going forward?
Yes. If you look at page 22 of our supplement, broken out. The vast majority of that $40,000,000 for the year is M and A related costs, specifically professional fees, success fees to bankers, synergies related to rationalizing the headcount from the Cloverleaf facility. So, we have a lot of severance costs, which you see down in the line below. And then litigation, which is disclosed in our 10 ks, but we did settle one outstanding litigation case that we had in the quarter, which was roughly the $3,000,000 charge you see in Q4.
Okay. Thanks.
Sure. Thanks, Bill.
Our next question comes from the line of Emmanuel Korchman
of Citi. Please proceed with your question. Hey, Mark, just a couple of guidance follow ups. You spoke about the forward drawdowns you've taken so far. How do we think about the rest of the timing of the forward drawdowns?
Yes. So our capital plan does not have a draw down the forward to meet the guidance. Now, as Fred mentioned, we have a significant amount of both development and M and A opportunities we are looking at. So, we may draw that down to support those growth opportunities as we move forward. So, in the past, I think you've given us the share assumption in your guidance number.
What is that share assumption for the year and now for 2020? Yes. Roughly, as I mentioned, pro form a for having completed the acquisitions we completed this January, we mentioned that we had roughly 205,000,000 shares outstanding. And there's nothing beyond that assumed in the guidance number? Yes.
There's regular dilutive impact of your annual equity grants with Visa. Okay. And then follow-up on Bill's question or Joe, should we think about any other sort of outside cost on healthcare or other that would be we'd be happy in just taking this year's and replicating next year? Yes. No, look, as I said, one of the things and I think we mentioned this on Q3 and it gave us guidance for Comfort.
We're really proud, like we delivered 3.5% same store revenue growth on a constant currency basis and that 5.1% and those overcame as we said we would the headwind we saw in healthcare throughout the year as well as the unfavorable comp we had in the Q1 as it relates to workers' comp. And so those actual those results I gave you are the actual results, they don't they're not pro form a for those items. So as we mentioned, of the reasons you hear us say over and over and over again, please look at our business on a full year basis. It does reflect out the seasonality and usually those types of expansion when you look on a full year basis will be normalized through the PO ball business. Thanks.
Our next question comes from the line of Ki Bin Kim of SunTrust Robinson Humphrey. Please proceed with your question.
Thanks. Pammi, it's another question about Australia. So can you just talk about the business trends that you're seeing, just if you can expand on those? And it was interesting to see your economic occupancy pick up a little bit for the first time in a while. What kind of drove that?
Do you think that's sustainable into 2020? And then conversely, your same store revenue growth for your rent revenue growth decelerated a little bit. I don't want to split hairs here, but if you can talk about what drove that?
Yes. You usually don't see that expand too much in the Q4 because you're already well established, if you will. So, Yeah. And speaking specifically, this is some of what the impact of mix will be within our business. So, you can see we'll have different mix.
And as we said, we focus on mix and profiles that maximize cash flow. So, sometimes you'll outmanifest their occupancy. Sometimes it will manifest through the throughput of the business that we're doing. And I think if you look, the real headwind on the rate on occupancy in the 4th quarter was actually FX. So if you look on a constant currency basis, the rate continued to grow.
So we had some headwind from the strength of GSL. But the business as a whole continues to be strong. So the same fundamentals that we've talked about over the last 2 years remain there. Our churn rate is extremely low. So we're providing outstanding customer service, customer satisfaction.
Continue to expand our penetration with customers through these acquisitions and commercialize them onto our Americold standards as well as continuing to roll out the Americold operating system. So business fundamentals are continue to be strong. Consumption, population growth continues to remain steady. And we continue to feed off of the trends that you see in the industry towards fresh and healthy products. So yes, the pipeline hasn't flinched.
We continue to have over $1,200,000,000 worth of development opportunities. So yes, I'd say that the business and the industry as a whole is strong.
And on G and A guidance for 2020, how much of that is real cash dollars increasing versus capitalization of G and A rolling off?
There's very limited G and A that we capitalized in the year. It's probably less than $2,000,000 or so a year that is capitalized into our development projects. So, it's not a lot of G and A rolling from what was being capitalized to not. Remember, we've completed, as Fred mentioned, a significant number of acquisitions since the beginning of 2019 that reflects the impact of those businesses on boarding. Some of those acquisitions too were platform acquisitions in new markets where we didn't operate.
So obviously, part of what we're investing in is those strong teams in those markets where we hope to partner with them and grow those businesses. Okay. Thank you. Thanks, Kabin.
We have reached the end of the question and answer session. I will now turn the call back over to management for any closing remarks.
Great. Thank you. And thanks everyone for joining us. We are very excited about what we are able to accomplish in 2019. And just to reiterate some of those things, the strong same store sales results of 3.5% 5.1% show that we continue to show great leverage in our business.
And we're excited about being able to continue that as we head into 2020. The 6 acquisitions, 7 development projects, the new JV that we just entered into and a strong development pipeline just really sets us up well for 2020. So very excited heading into 2020 and just would like to thank all of you for your continued support.