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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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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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Corporate Real Estate Management of BASF Group
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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Corporate Real Estate Management of BASF Group
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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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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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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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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Corporate Real Estate Management of BASF Group
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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Corporate Real Estate Management of BASF Group
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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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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Corporate Real Estate Management of BASF Group
Managing BASF‘s Property Portfolio
The „Textbook approach“:
CORPORATE REAL ESTATE MANAGEMENT
Propertyor Site
Development
PortfolioManagement
DisposalManagement
FacilityManagement
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Corporate Real Estate Management of BASF Group
Managing BASF‘s Property Portfolio
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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Corporate Real Estate Management of BASF Group
Managing BASF‘s Property Portfolio
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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Corporate Real Estate Management of BASF Group
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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Corporate Real Estate Management of BASF Group
Managing BASF‘s Property Portfolio
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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Corporate Real Estate Management of BASF Group
Managing BASF‘s Property Portfolio
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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Corporate Real Estate Management of BASF Group
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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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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Corporate Real Estate Management of BASF Group
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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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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Corporate Real Estate Management of BASF Group
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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Corporate Real Estate Management of BASF Group
Industrial Site Selection Process
Functional Factors
a) Legal Conditions
b) Investment Regulations
c) Taxation
d) Customs
e) Financial Conditions
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Corporate Real Estate Management of BASF Group
Industrial Site Selection Process
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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Corporate Real Estate Management of BASF Group
Industrial Site Selection Process
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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Corporate Real Estate Management of BASF Group
Industrial Site Selection Process
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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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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Corporate Real Estate Management of BASF Group
Work Scope of Corporate Real Estate Management
Case Study: Production Site Shanghai
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Corporate Real Estate Management of BASF Group
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
Case Study: Production Site Shanghai
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Corporate Real Estate Management of BASF Group
Case Study: Production Site Shanghai
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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Corporate Real Estate Management of BASF Group
Case Study: Production Site Shanghai
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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Corporate Real Estate Management of BASF Group
Case Study: Production Site ShanghaiOverview Chemical Parks and Development Zones in China (2004):
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Corporate Real Estate Management of BASF Group
Case Study: Production Site Shanghai
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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Corporate Real Estate Management of BASF Group
Case Study: Production Site Shanghai
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Corporate Real Estate Management of BASF Group
Case Study: Production Site Shanghai
CREM Site Evaluation (cont’d):
Industrial Park ManagementExperienceLong-term masterplan vs. Short-term invest cost
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Corporate Real Estate Management of BASF Group
Case Study: Production Site Shanghai
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Corporate Real Estate Management of BASF Group
Case Study: Production Site Shanghai
CREM Site Evaluation (cont’d):
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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Corporate Real Estate Management of BASF Group
Case Study: Production Site ShanghaiSatellite Photo Status: End of 2002
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Corporate Real Estate Management of BASF Group
Case Study: Production Site Shanghai
CREM Site Evaluation (cont’d):
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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Corporate Real Estate Management of BASF Group
Case Study: Production Site Shanghai
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Corporate Real Estate Management of BASF Group
Case Study: Production Site Shanghai
CREM Site Evaluation (cont’d):
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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Corporate Real Estate Management of BASF Group
Case Study: Production Site Shanghai
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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Corporate Real Estate Management of BASF Group
Case Study: Production Site Shanghai
CREM Site Evaluation (cont’d):
Land Acquisition and Reservation
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Corporate Real Estate Management of BASF Group
Case Study: Production Site Shanghai
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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Corporate Real Estate Management of BASF Group
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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