Client Situation

A modern logistics park comprising warehouse buildings of more than 200,000 m2 is to be constructed under a concession scheme. The location of the park is renowned for its convenient rail and road connectivity.

It is expected that over 100 million euros will be invested in the park. The majority of the funds will be covered by a bank loan.

In such occasions, project finance is key for ensuring a successful investment. Our client, a financial institution, needed a comprehensive review of project official documents and a thorough risk assessment before the financial close of the project.

M-Prime was asked to participate in the due diligence process before signing the loan agreement, focusing on the supply chain design and operations aspects of the investment.

The way to problem solving

The scope of M-Prime’s review was twofold: first we examined the revenues, operating expenditure and maintenance and lifecycle costs used in the financial model for the Project. Doing so, we:

• Performed benchmarking of the fundamental assumptions considering operations of similar scope and size to ensure that assumptions implemented are reasonable
• Validated the related inputs of the financial model
• Confirmed the alignment of those inputs with the official project documentation

Second, M-Prime reviewed the master plan and the design drawings of the project and:

• Analysed the park’s external road and rail access, as well as the internal access to the individual warehouse buildings and the number of parking spaces
• Crosschecked that key features and functions of the warehouse buildings meet industry requirements

All project activities took place in close collaboration with the Concessionaire.

Impact

M-Prime reviewed the assumptions for revenues, operating expenses and maintenance and lifecycle costs of the investment and confirmed their validity. We also provided recommendations for the Concessionaire to perform sensitivity analysis on the rental fees and to take into consideration additional revenues from non rental activities.

With respect to the master plan and warehouse designs of the project, M-Prime assessed the respective risks and made several recommendations related to the design of the entry gates to the park, disabled parking, the number of truck ramps per warehouse, the height, column spacing and floor specifications of some buildings and the design of the apron space.

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