Editorial

• Uninterrupted course of success reflected by excellent net profit
• Continuous expansion of real-estate portfolio with a high net yield
• Projects & Development division with clearly higher project volume
• Further investments based on well-hedged financing
• Carefully optimistic assessment of future prospects
• Proposal for unchanged payment of CHF 5.50 per share

In 2011, Allreal again reports a better result compared to the previous year. Net profit including revaluation gains amounted to CHF 140.8 million, or 21% above that of 2010. Earnings from business activity and the generally higher valuation of investment real estate contributed toward the very good result.

The outstanding result serves as confirmation of the company’s excellent condition.

Net profit excluding revaluation gains amounted to CHF 109.0 million and is characterised by a rise in rental income, the stable and profitable course of business in the Projects & Development division and the low cost of financing. The convincing result reflects the company’s operating strength and confirms its advantageous position in an increasingly demanding real estate market.

Total sales grew significantly to CHF 886.1 million, or 22% above the previous year’s value, due on the one hand to numerous ongoing and newly established projects and on the other to a clear rise in rental income from income-producing properties.

In an environment characterised by debt crisis, currency-related turmoil and strong currency fluctuations, Allreal’s share stood its ground well and closed clearly above the overall market. The development of the share price and the CHF 5.50 paid out per share for the 2010 financial year provided shareholders with a gratifying overall yield of 4.3%.

Continuation of shareholder-friendly payout policy

At the annual meeting of shareholders scheduled for 30 March 2012, the Board of Directors will propose paying a profit distribution of CHF 5.50 per share, corresponding to a shareholder-friendly cash yield on the year-end share price of a respectable 4.0%. The profit distribution will be paid from reserves from capital contributions instead of a dividend and without the deduction of a withholding tax and tax-free for private shareholders.

Real Estate division convinces in a demanding environment

The portfolio of income-producing properties continued to grow in 2011. The two properties added during the period under review amounting in total to approximately CHF 134 million represent a larger residential complex from own project development and realisation in Adliswil near Zurich and an office building in Geneva-Cointrin. Both new additions affect net income from mid-2011 and are almost fully let.

Within the parameters of continuously optimising its portfolio, Allreal sold at a profit an older residential building in Zurich and a smaller commercial building in Basel amounting to CHF 10 million in total.

The reclassification of three properties so far reported as development properties and the acquisition of a residential complex under construction resulted in a clear growth of the portfolio of investment real estate under construction.

The valuation of income-producing real estate and investment real estate under construction resulted in a positive value correction in total of CHF 44.7 million, or 1.5% of the market value of the entire investment real estate.

As a result, the value of the entire portfolio as at 31 December 2011 amounted to CHF 2.95 billion. The share of income-producing real estate was CHF 2.53 billion and that of investment real estate under construction CHF 0.42 billion.

Rental income in 2011 grew to CHF 142.9 million as a result of additions to the portfolio of two income-producing properties affecting net income and lower revenue loss from vacancies.

The vacancy rate in the 2011 financial year declined to 4.4% of the target rental income thanks to successful marketing activities and the almost fully let additions to the portfolio.

Favoured by a low vacancy rate and stable real-estate expenses remaining at a long-term average, net yield achieved from renting the 65 income-producing properties amounted to a very gratifying 5.1%.

Projects & Development division with a higher project volume

The project volume completed by the Projects & Development division in the year under review grew significantly to CHF 743.2 million. Third-party projects represented 58.4%. Of the entire project volume, 79.1% accounted for new buildings and 20.9% for refurbishment and conversion.

Despite a lower number of project completions during the period under review, the operating result amounted to a respectable CHF 108.3 million. Continued consistent sale of residential property and revenue resulting from the awarding of contracts to sub-contractors contributed toward cyclical profits from completed projects.

Capacity expansion resulting from the positive order situation in the period under review caused higher staff and other expenses. Due to this, the operating result of CHF 56.1 million was reported slightly below that of the previous year.

The order backlog of CHF 2.1 billion will secure utilisation of available capacity for clearly more than two years.

Favourable financing for continued investment activity

Allreal took advantage of the favourable market conditions in the year under review for advantageous refinancing. The average interest rate on interest-bearing debt of 2.3% was again lower than the previous year while duration to maturity was extended to 51 months.

As a result of the financial means obtained within the parameters of the 2.50% bond 2011–2016 of CHF 150 million successfully issued in the second quarter of 2011 and despite a lower equity ratio, Allreal enjoys the necessary investment scope to finance both own projects and the continued expansion of its portfolio. On the cut-off date Allreal’s short-term borrowing capacity amounted to about CHF 800 million.

Confident outlook despite insecurity concerning future economic development

Allreal expects economic growth to slow down further and lose momentum. Nevertheless, the Board of Directors and Group Management remain carefully optimistic concerning the current reporting period.

Thanks especially to stable rental income and a high order backlog in the Projects & Development division, Allreal expects operating results for 2012 to remain very good, probably only slightly below the previous year’s level.

The Board of Directors and Group Management wish to take this opportunity to thank all staff members for their contribution toward the outstanding financial results and our shareholders for their trust and support.