Lineage Q2 FFO of 68 cents misses 72-cent consensus as warehouse occupancy drops to 82.9%. CEO Lehmkuhl flags faster destocking and cuts 2026 development target by 15-20%.
Lineage Inc. reported second-quarter funds from operations that missed analyst estimates as the cold-storage operator saw occupancy slip from year-ago levels, a sign that the post-pandemic inventory glut is fading faster than expected.
FFO came in at 68 cents a share, the company said Wednesday, below the 72-cent consensus compiled by Bloomberg. Revenue rose 15% to $1.44 billion, roughly in line with expectations.
The miss was driven by a 130-basis-point drop in warehouse occupancy to 82.9% from a year earlier. Chief Executive Officer Greg Lehmkuhl told analysts on the earnings call that customers are drawing down inventories faster than the company projected three months ago.
"We are seeing more rapid destocking across our customer base than we anticipated coming into the quarter," Lehmkuhl said. He cited food-service and retail clients in particular as pulling back on storage volumes.
Same-store revenue per square foot, a key metric for warehouse operators, rose 2.1% year over year, a deceleration from 4.7% in the first quarter. The trend suggests pricing power is weakening as supply of cold-storage space continues to grow from new builds that broke ground during the pandemic-era boom.
Lineage, the world's largest operator of temperature-controlled warehouses, went public in July 2025. The company owns or manages roughly 3 billion cubic feet of space across North America, Europe and Asia-Pacific.
Lehmkuhl said the company is responding by slowing its pace of new development. Lineage now expects to deliver 65 million to 70 million cubic feet of new capacity this year, down from an earlier target of 80 million to 90 million cubic feet.
"We are being disciplined on new supply in the face of customer uncertainty," he said.
Chief Financial Officer Robb LeMasters said the company still expects full-year core FFO of $2.95 to $3.05 a share, a range that implies the second half of the year needs to accelerate. The implied back-half run rate of roughly 77 cents a quarter is above the 68 cents delivered in Q2.
The company's stock market analysis page tracks the broader sector. Lineage shares have fallen about 12% since the IPO, compared with a 4% gain for the S&P 500 over the same period.
Lehmkuhl said he expects destocking to moderate in the second half as customers prepare for holiday-season demand. "We have good visibility into our customers' order patterns through the fall, and those suggest volumes will pick up," he said.
Analysts on the call pressed for more detail on when occupancy would trough. Lehmkuhl declined to give a specific quarter, saying only that the company expects occupancy to bottom before year-end.
On the capital side, Lineage maintained its quarterly dividend of 45 cents a share. The company ended the quarter with $1.2 billion in liquidity, including cash and undrawn credit facilities.
Lineage's JPM stock page shows the stock's performance relative to financial-sector peers.
The company reports its next quarterly results in November.
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