• Sound financial results
  • Real-estate portfolio with significant growth
  • Projects & Development division assertive in a demanding environment
  • Strategic financing with a focus on opportunities
  • Proposal for unchanged profit distribution of CHF 5.50 per share

Net profit excluding revaluation effect amounting to CHF 109.1 million represents a sound result for Allreal’s 2014 financial year. Thanks to higher rental income and lower operating expenses, operating profit is reported at only 6% below that of the previous year which was characterised by exceptional sales profits.

The portfolio of investment real estate experienced a negative value adjustment during the period under review of CHF 5.9 million. Correspondingly, net profit including revaluation effect amounted to CHF 104.4 million, or 14.3% below that of the previous year.

Income from renting and real estate management and the completed project volume resulted in a total operating performance of CHF 1 036.4 million.

The number of staff employed on the cut-off date in Basel, Bern, Cham, St. Gallen and Zurich amounted to 376 persons. As staff capacity was adjusted to the lower project volume owing to the completion of projects, the number of full-time positions decreased by 23 to 348 through natural fluctuation.

Adherence to investor-friendly distribution policy

Allreal’s share closed at CHF 137.10 on the cut-off date. The year-end price was therefore 11% above that of the previous year. The positive share-price development and the profit distribution of CHF 5.50 per share for the 2014 financial year resulted in a considerable overall performance of 15.5%. At the Shareholders’ Meeting scheduled for 17 April 2015, the Board of Directors will propose the distribution of CHF 5.50 per share. Related to the year-end share price, the pay-out corresponds to a cash yield of 4.0%. As the necessary means for this pay-out will be generated for capital reserves, the paid-out amount will be cash-free for private investors.

Real Estate division with higher rental income

Continued expansion of the portfolio of yield-producing properties during the period under review resulted in growth of rental income by 7.2% to CHF 159.2 million.

Despite a higher vacancy rate and higher real estate expenses compared to 2013, net yield on the real estate portfolio of 4.5% was gratifying compared to other industries.

Growth of the portfolio of yield-producing properties resulted exclusively through reclassification of investment real estate under construction completed in the 2014 financial year, namely two apartment buildings in Gland (Canton Vaud), one apartment complex and one office building in Wallisellen, one apartment high-rise in Zurich, two commercial buildings in Zurich, and one office building in Opfikon.

The sale of three yield-producing buildings at a total value of about CHF 54 million resulted in profit before tax of CHF 3.1 million. The buildings concern one older residential building in Schlieren and two commercial buildings in Zurich.

On the cut-off date, the portfolio of yield-producing properties comprised 20 residential and 44 commercial buildings.

In the period under review, a six-storey residential and commercial complex under construction in Zurich-West measuring 3 400 square metres was added to the portfolio of investment real estate under construction, and seven buildings in the portfolio were reclassified to yield-producing properties. Therefore, as at 31 December 2014, the portfolio of investment real estate under construction comprised one building.

The valuation of the portfolio of investment real estate by an external estimator resulted in total value reduction of CHF 5.9 million. While the value of residential buildings increased, that of commercial buildings decreased. The estimator primarily took into consideration the oversupply of commercial space in the Zurich metropolitan area.

The overall value of the portfolio as at 31 December 2014 amounted to CHF 3.51 billion, or CHF 67.8 million above the previous year’s value.

Projects & Development division with stable results

With earnings from operations of CHF 102.8 million, the Projects & Development division stood its ground well in a very demanding market environment. Sales of development real estate have made a significant contribution toward the result, which is below that of the previous year.

The reduction in operating expenses as a result of lower labour costs nearly matched the reduction in fees and profits. A credit note affecting personnel costs in connection with the IAS 19 accounting standard amounting to CHF 4.5 million significantly contributed toward lower overall expenses. EBIT for 2014 grew by CHF 46.2 million, or 2.2% above the previous year’s value.

In 2014, the Project Development department worked on own and third-party projects representing a consistently high potential order volume of about CHF 1.0 billion. The largest and most important developments completed during the period under review included a nearly fully rented office building (13 100 sq. metres floor space) located on the Escher-Wyss-Areal in Zurich-West, two commercial buildings (40 000 sq. metres floor space) on the Bäuler-Areal in Rümlang, the Bülachguss-Areal (some 450 apartments and trade) in Bülach, the Neuwisen-Areal (about 200 apartments and trade) in Dielsdorf, and the Dietlimoos-Moos site (about 400 apartments and trade) in Adliswil. The projects transferred to the Realisation department in 2014 include the Pfruendmattstrasse complex in Mettmenstetten comprising 35 single-family terraced houses and the Schiffbaustrasse residential and commercial building in Zurich-West comprising 23 rental apartments and commercial space at street level and on the first floor.

The project volume completed in the period under review by the Realisation department amounted to CHF 870.6 million, or 19.9% below the previous year’s value, reflecting the completion of several large projects. Of the completed project volume, 62.8% apply to third-party projects, 20.9% to own projects and 16.3% to development projects for sale to third parties.

On 1 May 2014, following a construction period of nearly five-and-a-half years, the Toni-Areal was handed over to the main tenant, the Canton of Zurich. The realisation of this large project proved to be extremely complex and demanding. Teaching operations by the two universities in the building began as scheduled in September 2014. The rental agreement negotiated between the Canton of Zurich and Allreal foresees duration of at least 20 years.

In October 2014, UPC Cablecom took over the Richtiring office building at Richti-Areal in Wallisellen, representing the completion of the second phase of new development on the site located between Wallisellen railway station and Glatt Center. On the 72 000 square-metre site, Allreal developed and implemented three apartment buildings, one residential and commercial building, one office high-rise and two office buildings. The investment volume required for Richti Wallisellen amounted to more than CHF 800 million in total.

Secured order backlog on the cut-off date amounted to some CHF 820 million, representing full utilisation for a period of about twelve months.

Sound capital base permits financing of investments and projects

In the period under review, financing of ongoing projects for Allreal’s own portfolio resulted in additional debt of about CHF 131 million, taking total debt capacity to CHF 1.75 billion. Refinancing was carried out by means of a 1.25% five-year bond loan amounting to CHF 125 million issued in the first half of 2014. The amount of the 2.125% convertible bond redeemed on 9 October 2014 totalled CHF 199.79 million.

With an additionally lower average interest rate for debt compared to the previous year of 1.93% and a slightly shorter average term to maturity of 50 months, Allreal’s financing remained favourable.

A free credit line of over CHF 543 million available short-term allows for financing of ongoing projects, especially the purchase of suitable land and buildings. Debt capacity on the cut-off date amounted to CHF 1.3 billion.

Due to the decline of Allreal’s equity ratio to 47.6%, net gearing on the cut-off date increased to 87.9%. The 5.4% return on equity excluding revaluation gains is reported 0.8% below the previous year’s value.

Assessment of future prospects characterised by imponderables

The demanding market situation will continue to throw its shadows on both the Real Estate and the Projects & Development division and, as a result, economic parameters will remain challenging.

However, in 2015 only few rental agreements are up for renewal or extension. Moreover, thanks to the available development properties and secured plots of land, Allreal is capable of developing and implementing own projects with the option of a subsequent sale to private or institutional investors.

Despite the challenges and imponderables, the company expects net profit for the 2015 financial year to be comparable at least to that of the year under review.

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


Thomas Lustenberger

Bruno Bettoni
Chief Executive Officer

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