Lineage Raises AFFO Outlook as Warehouse Margins Narrow
The cold-storage operator lifted its 2026 AFFO forecast to $2.80 to $3.05 a share.
Lineage (LINE), the temperature-controlled warehouse operator, recorded 0.8% second-quarter revenue growth as rising costs and weaker storage pricing pressured warehouse margins.
Revenue increased to $1.361 billion, accelerating from 0.4% growth in the first quarter and reversing the fourth quarter’s 0.2% decline. Sequentially, revenue rose $64 million, or 4.9%.
The company reported a net loss of $32 million, or $0.13 a share, compared with a loss of $7 million, or $0.03 a share, a year earlier. The loss narrowed from $51 million in the first quarter. Adjusted EBITDA fell 1.8% to $320 million, while its margin contracted 60 basis points to 23.5%.
Adjusted funds from operations declined 6.2% to $198 million, or $0.76 a share. Both measures also slipped sequentially from $201 million and $0.78 a share in the first quarter, extending the decline from the fourth quarter.
Global warehousing net operating income was flat at $367 million as costs increased 5.8%, compressing the segment margin by 130 basis points to 36.5%. Economic occupied pallets rose 1.9% and throughput increased 5.9%, while storage revenue per occupied pallet fell 1.7%.
Newer facilities supplied the stronger growth. Revenue from non-same warehouses rose 45.6% to $99 million and NOI increased 50% to $30 million, while same-warehouse revenue grew 0.4% and NOI declined 2.9%. Same-warehouse occupancy increased 90 basis points to 75.8%, though throughput fell 1.8%.
Global Integrated Solutions revenue declined 6.3% to $356 million, and NOI fell 10.3% to $61 million. Interest expense climbed 30% to $87 million, contributing to the wider year-over-year loss despite operating income rising to $54 million from $23 million.
Lineage now expects 2026 AFFO of $2.80 to $3.05 a share, up $0.05 at both ends of its previous range. It narrowed adjusted EBITDA guidance to $1.26 billion to $1.29 billion, retaining the $1.275 billion midpoint.
External growth investment fell to $110 million from $535 million after acquisition spending dropped sharply, while greenfield and expansion spending increased to $78 million. Lineage also disclosed a fire at its Big Bear facility and said it remained committed to a full recovery.