Corporate Real Estate Management of BASF · PDF file3. Corporate Real Estate Management of BASF Group. OVERVIEW. Overview BASF Group. BASF‘s Verbund Concept. BASF‘s Property Portfolio

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Corporate Real Estate Management of BASF Group

Global Industrial Site Selection

Presentation by Thomas Glatte, BASF SE

CORENET Discovery ForumLondon, 27 September 2010

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Corporate Real Estate Management of BASF GroupOVERVIEW

Overview BASF Group

BASF‘s Verbund Concept

BASF‘s Property Portfolio

Managing BASF‘s Property

Industrial Property Developt.

Site Selection Process

Case Study

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Overview BASF Group






Case Study

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Overview BASF Group

BASF stands for…

The world’s leading chemical company

Adding value through growth and innovation

Oriented towardSustainable Development

Operating internationally

Active portfolio management

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BASF – a journey that started 1865

1865 – 1901 Founding of BASF – the age of dyes

1901 – 1925 The age of fertilizers

1925 – 1945 New high-pressure syntheses

1945 – 1953 Reconstruction and new beginning

1953 – 1965 The beginning of the plastics age

1965 – 2005 From Ludwigshafen to the world

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Overview BASF Group






Case Study

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Corporate Real Estate Management of BASF GroupThe Verbund一体化现场: The “chemis-tree” 化工树

Rock salt 岩盐

About 8,000 commercial products约8千种化学品

About 8,000 commercial products约8千种化学品

Major basic products and intermediatesAbout 200

约200种主要基础产品和中间体

Major basic products and intermediatesAbout 200

约200种主要基础产品和中间体

Raw materials原料Raw materials原料

Natural gas 天然气

Sulfur 硫Phosphate 磷酸盐 Water 水 Air 空气Crude oil 原油 Ores 矿石

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Corporate Real Estate Management of BASF GroupThe Verbund一体化现场: A competitive advantage

The Verbund networks:Production plantsEnergy and waste flows Logistics and infrastructure

Advantages for economic performance and the environment:

Extremely efficient use of raw materials and energy Conservation of natural resourcesLower emissions and waste

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Corporate Real Estate Management of BASF GroupOverview BASF Group – Ludwigshafen Verbund Site

⇒ Largest single chemical site (10 km2, 350 plants)

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Overview BASF Group






Case Study

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Global Presence (as of Dec 2009)

436 Production Sites (incl. mining)83 R&D Sites302 Office Sites174 Sales & Technical Offices176 Warehouses35 Residential Properties30 Specific Pipelines116 Others

1352 Grand Total “Sites/Properties”

Total land coverage of 427,727,611 m²Total office space (non-prod.-sites) of 520,997 m² in scope (thereof 243,276 m² in region EMEA)

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Corporate Real Estate Management of BASF GroupBASF‘s Property Portfolio - Industrial Sites

Chemical Site, Tarragona/Spain

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Corporate Real Estate Management of BASF GroupBASF‘s Property Portfolio - Warehouses

Warehouse Tsuen Wan/HongKong

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Corporate Real Estate Management of BASF GroupBASF‘s Property Portfolio - Offices

SSC Kuala Lumpur (Tenant)

Former H.Q. BASF Corp., Mt Olive (Owned)

BASF China, Beijing (Strata Title)

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Corporate Real Estate Management of BASF GroupBASF‘s Property Portfolio - Residential PropertiesExpatriate Residences, Shanghai Links / P.R. China

3 Liter Houses, Ludwigshafen

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Corporate Real Estate Management of BASF GroupGlobal Presence (as of Dec 2009) - Land Coverage in sqm

Ownership /Freehold

Long-termLeasehold

Leasehold

LudwigshafenWorks

9,928,702 0 267,324

RegionEMEA

35,058,773 396,370 827,870

RegionNAFTA

298,511,956 38,932,215 26,107,186

RegionSouth America

6,343,323 54,853 677,496

RegionAsia-Pacific

2,427,492 7,952,493 241,558

GRAND TOTAL

352,270,247 47,335,930 28,121,434 427,727,611

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Corporate Real Estate Management of BASF GroupGlobal Presence (as of Dec 2009) - Office space in sqm (non-production sites)

Owned Leased Total

RegionEMEA

122,605 120,671 243,276

RegionNAFTA

12,658 118,774 131,433

RegionSouth Amercia

29,214 24,398 53,612

RegionAsia-Pacific

14,351 78,325 92,676

Total 178,828 342,168 520,997

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BASF‘s Property Portfolio (Book Value 2009)

Residential 148

"Rest" BASF Group 2.200

BASF SE (Lu site) 468

PMCs 40

All figures are in Mio €

Total: 2.856

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Overview BASF Group






Case Study

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Managing BASF‘s Property Portfolio

The „Textbook approach“:

CORPORATE REAL ESTATE MANAGEMENT

Propertyor Site

Development

PortfolioManagement

DisposalManagement

FacilityManagement

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The „BASF Approach“:

CORPORATE REAL ESTATE MANAGEMENT

Propertyor Site

Development

StrategicPortfolio

Management

DisposalManagement

OperationalFacility

Management

CREM PlattformCREM Plattform

withlocal Site Mgmt.

CREM Plattform with BC and

local Site Mgmt.

Delegated Country Governance (EMEA – Region only !)

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Ressort II(Arbeitsdirektor)

Verbund SiteManagement

HumanRessources

SiteManagement

InfrastructureLudwigshafen

Corporate RealEstate Mgmt.

Property Mgmt.Ludwigshafen

Region EU(EMEA)

BusinessCenter

Facility Mgmt.

Ressort V

CREM Platforms NA, SA, AS

Residential Co.(LUWOGE, GEWOGE,

SEWOGE)

Pension Fund(BASF Pensionskasse VVaG)

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Managing BASF‘s Property Portfolio (2009)

BASF AG(LU Site)€ 468 M

PMCs€ 40 M

Pensions-kasse

€ 188 M

OwnershipPM LU Site

BASF Group and BASF AG (ex LU)~ € 2.200 Bn

OwnershipCREM

Governanceand Service

CREM

LUWOGE,GEWOGE,SEWOGE€ 148 M

SupervisoryService for

ThirdParties

(BP, K+S,Esco, etc)

Third PartyService

Responsibilityof CREM

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The global Corporate Real Estate Management:3 regional platforms and a virtual network structure in countries/sites

CREM Team - Ludwigshafen H.Q. (global headship & regional responsibility for EMEA and SA)

25 professionals and office staff

Korea

PRC

MY SEA Verbund Sites

Italy

Spain

UKCREM TeamNAFTA

4 professionals+ 1 staff Facility

Management

CREM TeamAsia

2 professionals+ 10 staff for

HKG office admin.TrostbergSite PM1 staff

Japan

India

Brazil

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The work scope consists of:

Acquisition,

Management

and Disposal

of real property

as a contribution

to the

company‘s

corporate

goals.

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Managing BASF‘s Property Portfolio (VIII)

Acquisition/Establishment Management Divestiture

Site selectionAcquisition and JVDue Diligence (active)AppraisalNegotiation of real estaterelated contracts(Acquisition, Leasing, FinanceLease, Utilities, Services)Site Master Planning

Asset managementStrategic site development Determination of real estatestrategies based on companystrategyDefining of real estate relatedcompany standards/guidelines- area standards- equipment standards- performance standardsManagement of real estatedata baseContract management Benchmarking / reporting /controllingManagement of real estatecompaniesBusiness Registration of BASF-Group Companies (Germany only)

Due Diligence (passive)Analysis of potentials for realestate developmentValue development based onpublic master planning Concept of commercialisation Negotiation of real estaterelated contractsSale of assets

The tasks of BASF‘s Corporate Real Estate Management:

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Overview BASF Group






Case Study

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Initiation Phase

Project Idea seeksSite and Capital

Site seeksCapital and Idea

Capital seeks (Invest) Idea and Site

rough description of project (shopping list)and first simple project calculation

Concept Phase

MarketAnalysis

SiteAnalysis

Prod. Process Analysis

RiskAnalysis

CompetitorAnalysis

Economic Valuation

Preparation Phase

Implementation Phase

Securing the P

roject and respective Land/Properties

SiteOptimization Time Factor

Feasibility Analysis

ImplementionDecision

Project PartnerSelection

Permits andApprovals

Land Acquisition

ContractNegotionation

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Overview BASF Group






Case Study

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Industrial Site Selection Process

Operational Factors

a) Market

b) Raw Material Supply

c) Logistic Connections

d) Land / Properties / Ground Conditions

e) Infrastructures und Energies

f) Personnel

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Functional Factors

a) Legal Conditions

b) Investment Regulations

c) Taxation

d) Customs

e) Financial Conditions

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Identification of potential sites

Assessement: land, infrastructure, urban planning, contamination risks

Property appraisal

Secure land and land acquisition

Contract Negotiation: land, utilitiesand infrastructure, site services

Securing long-term development

Work Scope of CREM:

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Global Challenges from a CREM perspective

How to compare the sites ?

Compare comprehensive, complex situationsCross-country evaluation: “Apples and Oranges”Methodology of assessment (qualitative/quantitative)

When to enter a market?

Pioneer status: “Early bird is catching the worm”???Need of JV partnersAuthority restrictions (e.g. developing countries)

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Global Challenges from a CREM perspective

Where to set feet?

Pioneer status: “Early bird is catching the worm”???JV partner: benefits vs. pre-set site selectionDevelopment Zones: incentives, ready infrastructures

What to be discovered?

Visionary site development: promises vs. realitiesGreenfield sites: How “green” can it really get ?Colliding processes: government decisions vs. corporate planning

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Overview BASF Group






Case Study

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Work Scope of Corporate Real Estate Management

Case Study: Production Site Shanghai

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h

h

Shanghai/ Caojingh

Nanjing

hBeijing

Hong Kong

Shanghai Center

50km

Hongqiao Dom. Airport

Pudong Intl. Airport

Planned Shanghai

International Deep-Water

Port

ExpresswayMain RoadRailway

1000 km5000

Yangtse River

Hangzhou Bay

SCIP


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Backround:

Main Verbund site in Nanjing could not accommodate polyurethane production for environmental reasons (more than 2km safety distance to residences needed)

Production primarily for domestic market

Review of numerous potential sites across China

Main Site Selection Factors depend on:

Type and Scope of planned productionLong-term development planning

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CREM Tasks 1999 - 2004:

Site Selection

Site Masterplanning (SCIP park and BASF sites)

Negotiation of Land & Option Contracts (60 + 90 ha total)

Negotiation of Utility and Site Service Contracts

Authority Approval Process (SSR, JSFR, PlanningPermits, Land Acquisition, etc)

SCIP Site Administration Regulations

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Case Study: Production Site ShanghaiOverview Chemical Parks and Development Zones in China (2004):

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CREM Site Evaluation:

Urban Planning & Environmental Limits

⇒

Industrial zoning⇒

Economic feasibility of planning requirements (greenery ratio, min./max. coverage ratio)

⇒

Emmission limits(air, acoustic limits, waste water)

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CREM Site Evaluation (cont’d):

Industrial Park ManagementExperienceLong-term masterplan vs. Short-term invest cost

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Soil conditions for production plants(load bearing capacity, ground water)⇒

Reclaimed land, shore line

Environmental soil / groundwater conditions⇒

Reclaimed greenfield (discharges/fertilizers)

⇒

“suspicious metal objects”

Risks through natural disasters(flooding, typhoon, earth quakes, …)⇒

Dyke level (100 vs. 200 years, global warming)

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Case Study: Production Site ShanghaiSatellite Photo Status: End of 2002

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Logistics for mass goods= Accessibility and Availability of

* Sea and River ports* Railway links* Road and Highway network* Storage and loading facilities

⇒

Availaibility of easements for access, pipelines, etc.

⇒

BASF-Verbund: Network of suppliers and customers

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Infrastructures: Availability and Cost

Power Supply (Chemicals: huge power consumption)Water Supply (Chemical process: cooling water)Steam, Industrial GasesSewerage (process waste waterDrainage(Chemical) Waste disposal (dump site, incinerator)Telecommunication & IT-network

⇒

Make or Buy assessments (Invest vs. Charges)⇒

Reliability, Investors, Capacities, Cost Allocation

⇒

Restrictions for own solutions (power, steam)

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Type No. Unternehmen Mio USD

Infra- structurund

Utility

12 SCIP Cogen Co., Ltd 376

13 Shanghai Vopak Logistics Co.,Ltd 210

14 SCIP Sino-French Water Development Co.,Ltd 86

15 SCIP Corridor Co.,Ltd 30

16 SCIP Swire Sita Waste Services Co., Ltd 66

17 SCIP Development Co., Ltd 374

18 SCIP Industrial Gases Co., Ltd 128

19 Schutz Container Systems (Shanghai) Co., Ltd 7

20 SCIP Oil Station Co., Ltd 1

Total 1,278

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Land Acquisition and Reservation

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Looking back and „lessons learnt“:

SCIP is now No.1 Chemical Park in Chinamost investorsmost professional managementbut, sadly, also most expensive (land, infrastructures)

Thus, not economically viable for small fine chemicals

Most CRE but not all operational expectations fulfilled

Diligence requires time – pushing to hard does not help

Political support has been essential

Long-term planning vs. expectations of developer

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Thank you for your attention

Thomas GlatteHead of Real Estate & Facility ManagementBASF SEWLS/RD-C13, 67056 LudwigshafenPhone: +49 621 60-42275E-Mail: [email protected]

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Corporate Real Estate Management of BASF · PDF file3. Corporate Real Estate Management of BASF Group. OVERVIEW. Overview BASF Group. BASF‘s Verbund Concept. BASF‘s Property Portfolio