Richmond investor group stays hot for cold storage

Richmond-based AgCold just acquired the warehouse complex in blue to add to its existing operations in red. (Images courtesy AgCold)

Less than three years after making their first leap into the world of cold storage warehousing, a group of Richmond investors are biting off another piece of the niche real estate segment.

Longtime business partners Yogi Singh, Stewart Garland and Pushkal Basavaraj, through their company AgCold, are kicking off an eight-figure project that will add 72,000 square feet to their existing 255,000 square feet of refrigerated industrial space in Suffolk.

They began the expansion process by acquiring a three-section warehouse complex at 160 County St. in July. They jumped on the property for two reasons: it was set to be decommissioned by its existing tenant, animal feed producer Nuts For Wildlife; and it happened to be adjacent to two of AgCold’s other facilities at 190 County St.

As Nuts For Wildlife consolidates its operations in the buildings to the Midwest, Singh said the group will retrofit the complex to complement its warehouses next door, essentially creating an expanded campus. The investment will total around $10 million all in.

The AgCold leadership team (from left) of Pushkal Basavaraj, Yogi Singh and Stewart Garland.

“We are starting a full renovation of the facility to create human-grade cold storage that will be an extension of our current operations,” Singh said.

Those current operations include renting warehouse “pallet positions” to food processors and food manufacturers who need storage space for their goods coming in and out of the nearby Port of Virginia. The company’s customer base has come mainly from the nut business – its existing warehouses have room for about 50 million pounds of shelled and unshelled nuts used for products like peanut paste, peanut butter and peanut brittle. The products are mainly moved in standard-unit 2,200-pound bags that come in and out on tractor-trailers on their way to and from processing.

AgCold spent more than $17 million in late 2021 to buy into the industry and be in an industrial center of a city that for decades was known as the world’s peanut capital and the original home of Planters Peanuts, which still has production operations nearby. Birdsong, another major player in the nut business, has a shelling operation that is also in the vicinity, Singh said.

The expansion on County Street will add approximately 9,000 pallet positions to AgCold’s existing capacity in Hampton Roads, for a total of 35,000 pallet positions.

Singh said the expansion is driven by both current customer demand for nut storage and a bet that demand for storage for other food products will continue to increase.

“As we see port traffic increase, we believe in and are very bullish on the future of cold storage” Singh said. “In our region we’re starting to see the import of cheese, cured meats, tropical fruits, different types of vegetables. We also know the coffee, wine and alcohol industry is under-supplied as it pertains to cold storage in that market.”

Upgrades to the new Suffolk facilities will include installation of modern and monitorable refrigeration, high-speed doors, security enhancements, and improvements to the building exteriors.

The company will hire six to eight employees for the new facilities, adding to around 20 workers at its other nearby warehouses.

AgCold has enlisted S.B. Ballard as general contractor for the project.

It’s financing the project with a loan from FNB Bank. Singh said favorable funding for such projects wasn’t easy to come by in the current lending environment.

“This project really was an eye opener for all of us as far as the challenge that still exists for small business in securing financing for expansion,” he said. “We saw capitulation in our local lending relationships, especially from banks that have outsized market share locally.”

Peanuts at the cold storage facilities are mainly moved in 2,000-pound containers. (Photos courtesy of AgCold LLC)

AgCold operates as a subsidiary of 1850 Investments, an umbrella company Singh and his group started a few years ago to oversee their various investments in several real estate sectors. One of AgCold’s sister companies is National Land Lease Capital, which owns around 10 campgrounds and RV parks in multiple states. The group also owns office buildings in Richmond, including Clay Suites and Summit Suites in Scott’s Addition.

But Singh said cold storage is the group’s particular focus for growth for the time being. It owns an additional 10 acres of undeveloped land in Suffolk next to another of its existing warehouses a few miles away, where it will eventually build a multi-temperature facility with 25,000-30,000 pallet positions. It paid $1.2 million for that site earlier this year.

Singh said the group is in discussions to add cold storage space in Pennsylvania and Texas later this year and hopes to add freezer warehouse space in Virginia by 2026.

He said they see the sector as growing, but it is still untapped in many ways, despite its importance to the overall consumer supply chain.

“It boils down to the fact that cold storage today as it exists is less of a real estate sector than one might think and more of a critical infrastructure need in our country,” he said. “The pandemic stretched supply chains to the brink and what we saw is that with the reshoring that we’re doing with the domestic pharma supply coming back home and food safety being paramount to national security, all of those trends have a necessity at their very core… and that necessity is cold storage.”