Analysis: Project Ceres heats up

As bidders for the DHL prime Europe logistics portfolio await feedback, here we set out what they are fighting for.

Last week, it is understood bids went in for DHL’s Project Ceres through broker JLL.

As previously reported, the portfolio has attracted plenty of interest not least because of the structure of the deal.

In a confidential brochure seen by PropertyEU, DHL is looking to offer up for sale a portfolio of strategically located logistics development sites that are earmarked to begin construction from Q1 2022 onwards.

One of the interesting facets is that DHL or customers of the 3PL giant have pre-committed as occupiers to 52% by income (which is €12.5mln) before the start of construction, which gives any buyer that security of income.

But what about the rest? Well, DHL will develop it out as future pipeline assets. The expectation is that these assets will be leased to DHL or an external third party within 6 months of practical completion. So that element of the portfolio has no precommitment in terms of rent that can be assessed with complete certaintly right now.

The assets are located in Italy, Germany, Netherlands, Poland, Finland, and Sweden.

It is being called a unique pan European investment opportunity to acquire prime logistics development sites in locations that DHL – whose knowledge of good locations is hard to doubt – has hand-picked.

Picking over the details, there is certainly scope for much development. There are 10 sites totalling 90 hectares all within major markets of Milan, Frankfurt, Dortmund, Munster, Helsinki and Warsaw. Three sites are owned by DHL and several have purchase options. Building permits have been granted on a number of sites.

Seven assets are committed to DHL with a WALT of 11.38 years to be used by the logistics subsidiary, DHL Supply Chain, as a key part of its operations and growth plan.

There are already mapped out details for each unit. For example, it is known that 14 units will be constructed across the 10 development sites, four of which are temperature controlled – that will cause buyers to possibly lick their lips even more with temperature-controlled units being one of the fastest growing sub-sectors of logistics.

The largest asset is a warehouse in Poland called Phase 2A&2B at 140,499 m2. Rents per square metre across the rented warehouses show a notable variation. That Warsaw asset is the cheapest at €38.16 per m2 while the most expensive is €142.05 per m2 at Everwinkel in Munster, Germany.

A buyer is taking its largest exposure to Germany in terms of value of committed and pipeline assets, followed by Poland, Sweden, Finland, Italy and the Netherlands.

Wide variations occur in terms of what percentage of assets in each country DHL is already committed to. For example, it is committed to all the assets in the Netherlands, but to 36% in Italy.

Buyers are being told that the ESG strategy and credentials are strong – a crucial aspect nowadays. As developer and occupier, DHL is committed to carbon neutral design for all buildings. It is working on phasing out fossil fuels and rolling out sustainable energy sources for heating at more than 50% of buildings by 2030.

By 2030, it is targeting net zero carbon operations of its warehouses.

Bidders have put in bids for the whole portfolio with each asset priced up. It is here that things will get most interesting as JLL compares pricing built upon the assumption of forward funding of the assets pre-leased to DHL or its customers, and forward funding of the pipeline of assets based on a potential lease to DHL or an equivalent occupier, and also based on speculative investment value post practical completion and DHL’s 6 months' exclusivity period.


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