Case Study

Unilever & DHL

Project Highlights

  • Distribution Warehousing
  • Commercial Property Lease
  • £51m Development & Operating Finance
  • Off-Balance Sheet for Unilever over 15 years
  • Fixed low cost term finance

UKSF has completed a highly innovative transaction on behalf of the DHL group. The transaction fully financed a distribution centre on behalf of the Unilever group as an operating lease on exceptionally competitive terms.

The Dedicated Consumer Division of DHL selected UKSF as its financial adviser as it had worked with the UKSF team on previous transactions and knew that cost effective finance would form an important part of the bid. The capital cost of the Doncaster facility was £51 million, which includes land, buildings, plant and machinery, construction period interest and professional fees. Bidders for the Contract were told there was a preference that any lease be an operating lease. The maximum term of any operating contract between DHL and the Unilever subsidiary, Unilever UK Foods (its Client) was 15 years; furthermore an option for the Client to break was required at both years 5 and 10.

As part of the bid, UKSF and DHL had to deliver a solution which fully financed all facility costs, but provided the client with the right to walk away from the lease at the end of the term without any liability! Furthermore, rentals had to be fixed for the full lease term.

Commenting on the transaction, Dan McNut, (now President Technology North America at DHL Supply Chain) said “UKSF delivered the finance that helped to underpin this highly competitive bid.” The UKSF team agree, and feel strongly that the finance for this contract was delivered on terms that just cannot be matched in the conventional property market.