Transaction Support - Logistics Investment

Purpose

In 2015 SEGRO plc acquired 90% of Vailog Srl, one of the leading logistics real estate development companies in northern Italy, allowing SEGRO to establish a presence and operating platform within the important northern Italy logistics market. The acquisition is part of SEGRO plc's ongoing growth and portfolio restructuring process, and provides a portfolio of 124,000m² built assets with future development opportunity of c 500,000m².

Project Vancouver was the name given for the acquisition; Delta-Simons due diligence activities were associated with the assessment of 27 assets across Italy, France, Netherlands and Romania. The objective of the works was to establish and assess potential environmental risks and liabilities associated with historical land uses, both on-site and in surrounding areas, as well as identifying potential impacts as a result of tenant activities. This was to provide SEGRO plc with the financial and technical risks that might be associated with the acquisition. 

Outline / Scope of Works

Delta-Simons delivered the project with the support of the Inogen Environmental Alliance (Inogen), using the in-country expertise of the Alliance partners (HPC Consulting) to gather relevant data to support each country's regulatory and compliance procedures, deliver intrusive ground investigations and provide a portfolio risk register/red flags report detailing any required works to address issues. 

The services provided included: 

• Desk study and risk register reporting to detail required works to address issues, including outline of budgets for capital or operational expenditure, with proposed timescales for completion. 
• Site visits (18 sites). 
• Phase I/Phase II geo-environmental investigations, including the completion of archaeological investigations in Rome. 
• Drainage surveys (including CCTV surveys), hazardous materials surveys. 
• ICPE auditing for assets in France. 

Outcome / Client Benefits

SEGRO plc were informed and kept appraised of the investment risks posed by all environmental issues in order to revise their commercial position accordingly. Environmental risks were duly managed through technical due diligence combined with practical commercial consultancy advice, enabling a suitable capital expenditure figure to be allocated for statutory risks and liabilities.

A Portfolio Management Plan was used to prioritise post-acquisition tenant and site management activities, allowing appropriate operational expenditure budgets to be allocated to asset managers. This was supported with clear audit trails demonstrating compliance and mitigation of risk to future due diligence issues and asset devaluation. 

About SEGRO

SEGRO is a UK Real Estate Investment Trust (REIT), and a leading owner, manager and developer of modern warehouses and light industrial property. It owns or manages over six million square metres of space valued at £7.4 billion serving customers from a wide range of industry sectors. Its properties are located in and around major cities and at key transportation hubs in the UK and in nine other European countries.

See our Transaction Support services.