Case study — valuing a food-processing plant in Sidi Bernoussi (DRC VPGA 5 + income)

1. Presentation of the asset (anonymised case)

• Location: Sidi Bernoussi industrial zone, Casablanca, on the axis toward Mohammedia. Historic industrial district, mature infrastructure, scarce land coming to market on cessation of activity.
• Land: ~1.2 hectares (12,000 sqm), individual land title, I2 industrial zoning.
• Buildings: food-production plant 4,800 sqm (process, packaging, dispatch zones) + integrated cold rooms 1,100 sqm (positive and negative) + administrative offices over two levels 600 sqm + dispatch dock canopy 400 sqm.
• Fixed equipment integrated into the building: cold-room insulation (PUR sandwich, 100-150 mm thick), isothermal doors, loading airlocks, food-grade industrial floors (epoxy resin), water / compressed air / steam networks, solar panels (partial self-consumption).
• Tenant / occupier: owner-operator (family SME). A case of a sale between parties (owner-operator selling to a third-party acquirer).
• Purpose of the report: valuation assignment for a sale between parties — to support the balance of the transaction with the notary and the DGI (tax authority).
• Valuation date: Q2 2026.

2. Methodological choice — why DRC as primary

The asset has three features that steer the methodological choice toward depreciated replacement cost (DRC, VPGA 5):

• Bespoke — the buildings and integrated equipment were designed for a specific food-processing process. The secondary market for comparable plants in Morocco is narrow and illiquid.
• No referent rental market — there are few rental transactions on this type of owner-occupied asset (vs standard logistics warehouses). The income approach therefore remains a cross-check, not a primary.
• Strong equipment component — the cold rooms and their equipment represent a significant share of the use value, which is measured more naturally as reinstatement cost than as rental flow.

In line with RICS Red Book Global Standards 2025 (VPGA 5) and IVS 105, when the market is limited and the asset is use-specific, the DRC method is appropriate. The income and comparable methods are retained as cross-checks to bound the DRC value.

3. Building the DRC (VPGA 5)

The DRC is built in three steps: (a) reinstatement cost as-new to an equivalent standard, (b) application of depreciation, (c) addition of the land value.

Step (a) — Reinstatement cost as-new. Each component is reconstituted:

• Process & packaging zone: food-sector reference to ISO 22000 standard, within an indicative market range above that of a standard warehouse (process + utilities + resin floors + partitions).
• Cold rooms: sector reference for isothermal structures + insulated slab + integrated equipment (airlocks, doors, impact-resistant floors). Cost per sqm markedly higher than standard buildings, to be integrated as a distinct component.
• Administrative offices over two levels: sector reference for peripheral Casablanca offices.
• Dispatch dock canopy: light steel structure + hydraulic dock levellers.
• External works & site development: heavy concrete roadways, signage, fencing, HGV parking.

Step (b) — Depreciation to apply component by component:

• Physical depreciation — prorated to residual useful life. Standard buildings have a useful life of 30-40 years; cold-room insulation equipment 15-20 years; process finishes 8-12 years.
• Functional depreciation — the gap between the current standard of the building and the 2026 market standard (e.g. 80 mm PUR panels vs the 120 mm standard today for negative cold rooms).
• External economic depreciation — depending on the local market (saturated industrial zone vs brownfields, land tension, food-sector demand).

Step (c) — Land value. Sidi Bernoussi is a mature industrial land market where scarce land holds value. The comparative method is retained on transactions of serviced industrial land in the zone (12-24 months), adjusted for size, accessibility, condition (immediately buildable or requiring demolition).

4. Cross-check by income (IVS 105)

The market economic rent (ERV) the asset would generate if let to a third-party food operator is reconstructed, then capitalised. This approach is secondary (shallow food-processing rental market) but useful to verify that the DRC does not stray too far from an investor logic. The assumptions:

• Reconstructed ERV — composed of a building ERV (process zone + cold rooms + offices) calibrated on sector ranges, and an equipment ERV (cold rooms in particular).
• Cap rate — the bespoke asset carries a tenant risk premium (small pool of candidates in the event of vacancy) that translates into a cap rate above that of a standard logistics warehouse. The retained range is the high end of Moroccan industrial yields.
• Vacancy and turnover — a higher vacancy rate than a standard warehouse, and a longer re-letting period in the event of departure.

If the DRC comes out significantly above the income result, this can signal that the asset is over-invested for its market (a frequent case in food processing — ISO 22000 and BRC compliance is expensive to reinstate but does not translate linearly into sale value). The report then makes this gap explicit.

5. Cross-check by comparable

Search for transactions on sales of food-processing industrial units over the last 24 months — a sample often narrow in Morocco. We broaden to the Mohammedia, Aïn Sebaâ, Sidi Maarouf zones if comparable transactions exist (typology, size, equipment). Documented adjustments on: (a) location and accessibility; (b) condition of the buildings and obsolescence; (c) equipment included in or excluded from the sale; (d) applicable tax regime.

6. Reconciliation of the three results

The report presents the three results with their relative weights:

• DRC (primary) — bounds the use value of the owner-operator. Relevant when the acquirer takes over the operation.
• Income (secondary) — bounds the value in an investor logic if the acquirer intends to let to a third-party food operator.
• Comparable (validation) — verifies the order of magnitude against the recent sales market.

The retained valueis arbitrated according to the acquirer's profile. If the transaction is between operators (the acquirer resumes the activity), the DRC weighs more. If the acquirer is a rental investor, one moves closer to the income value. The report documents this logic for the notary and the DGI.

7. Sensitivities and limits

The report presents sensitivity tests: variation in the reinstatement cost (± 10%), variation in the external economic depreciation (± 5 points), variation in the income cap rate (± 100 bps). The objective is to show the defensible value range rather than a point value.

Limits set out in the report:

• Strong assumption — the asset is sold as-is with the integrated equipment. If some equipment is removed or bought separately, the value changes significantly.
• Regulatory compliance — the value assumes the maintenance of certifications (ISO 22000, BRC, ONSSA approvals) that are tied to the operation, not the buildings. To be documented for the notary.
• Technical condition of the equipment — a non-destructive diagnosis of the integrated equipment (cold rooms in particular) is recommended as a complement.

8. Articulation with the sale between parties

For a sale between parties (typically a Moroccan director or an MRE acquiring a seller's production tool), the report serves:

• The notary — to set the price in the deed and justify the base of the registration duties (5% standard).
• The DGI — to defend the declared value in the event of an audit. Without a report, the DGI can reassess on the basis of internal references — 15% surcharge + interest.
• The seller — for the calculation of the TPI (tax on real estate profits, 20% of the net gain or 3% minimum).
• The acquirer's bank — if the sale is bank-financed, the report is the basis of the mortgage appraisal.

9. What the report does not say

A real estate valuation of the production tool does not cover the value of the business as a going concern (clientele, contracts, goodwill, brand). For a business sale, the real estate valuation (our scope) must be combined with a business valuation by a chartered accountant or a business valuer. The report is explicit on this scope.

Note: This case study is anonymised and methodological. The ranges mentioned are market orders of magnitude that depend on the economic climate, the comparables available, and the precise characteristics of the asset. The final value of a real asset always results from case-by-case field analysis. See more on the ReaConsult blog or our real estate appraisal service.