Half-year report
- Convincing half-year report at a high level
- Continuous expansion of stable-income real-estate portfolio
- Significant increase in completed project volume
- Continued growth thanks to favourable financing
With a convincing result for the first half of 2011, Allreal continued along the lines of the previous year’s record high result. Total sales grew significantly by 24% to CHF 380.9 million. The strong growth of completed projects, especially, represented a major contribution to the distinct sales growth.
On the earnings side, also, Allreal again reported strong results. Net profit including revaluation gains is reported as CHF 66.5 million, or 6.7% above the previous year’s result. Even though the Projects & Development division showed a lower profit from completed projects for the period under review when compared to the previous year, operating net profit (excluding revaluation gains) amounted to a considerable CHF 54.1 million (1st half-year 2010: CHF 57.4 million).
As at 30 June 2011, the Allreal share closed at CHF 138.50 or 1.7% above the closing price the previous year (31.12.2010: CHF 136.20), clearly exceeding the total market. The positive price development and the payout of reserves from capital contributions to shareholders of CHF 5.50 per share resulted in a respectable overall performance of 5.7%.
The successful placement of the 2.50% bond 2011–2016 of CHF 150 million will allow advantageous financing of Allreal’s ongoing own projects and the acquisition of additional buildings or entire real-estate portfolios.
Real Estate division
In the period under review, the portfolio of yield-producing real estate experienced two significant additions. As planned, the Moos-/Grütstrasse residential complex in Adliswil was added on 1 June 2011. The project, which was developed and realised jointly with Helvetia Insurance Company, comprises a total of 207 rental apartments and two studio workshops in twelve apartment buildings all complying with the Minergie standard. The part of the complex transferred to the portfolio of yield-producing properties comprises 137 rental apartments and two studio workshops in eight apartment buildings, affecting net income from the date of transfer.
At the end of June 2011, a commercial building was acquired in the French-speaking part of Switzerland. The “Le Lumion” office building was erected in 2004 and is located in close proximity to Geneva’s Cointrin Airport in the city’s suburb of Le Grand-Saconnex. The property with a floor space of some 5,500 square metres is nearly fully let. With a budgeted annual rental income of about CHF 3.6 million, the building will affect net income as from 1 July 2011.
In the first half-year of 2011, an older residential building in Zurich-Affoltern was sold at a profit. While the sale of a smaller commercial building in Basel was certificated during the first half-year, ownership will be transferred only in the second half-year.
Consequently, on the cut-off date, Allreal’s portfolio of income-producing buildings included 47 commercial and 19 residential buildings at a total average market value of CHF 38 million.
In the period under review, two buildings were added to the portfolio of investment real estate under construction and one property was retired. The additions concern the Escher-Terrassen residential tower in Zurich-West, which so far had been reported as development real estate, and the office complex in the Richti-Areal in Wallisellen, which will be occupied by Allianz Suisse insurance company. Upon completion, both projects will be transferred to the portfolio of yield-producing properties. The retired property concerns the Moos-/ Grütstrasse residential complex in Adliswil, which was added to Allreal’s portfolio of yield-producing properties.
The revaluation of yield-producing and investment properties under construction resulted in a gain of CHF 18.1 million before tax, corresponding to 0.6% of total market value of the investment properties held in the portfolio on the cut-off date. The value gain was due mainly to the additions to the portfolio of investment real estate made during the second half of 2010 and the first six months of 2011.
As a result of the revaluation, the value on the cut-off date of the entire portfolio of investment real estate (yield-producing real estate and investment real estate under construction) amounted to CHF 2,844.4 million (31.12.2010: CHF 2,619.3 million). Of this amount, CHF 2,507.3 million represent yield-producing real estate and CHF 337.1 million investment real estate under construction.
Rental income during the first half of 2011 grew slightly by 0.3% to CHF 69.8 million.
The vacancy rate on the cut-off date amounted to a low 4.6%, corresponding to a slight decrease of 0.2% when compared to the previous year. Thanks to achievements in leasing office and commercial space, the vacancy rate is expected to decrease even further by year-end.
Investments made in the period under review in value-maintaining measures and ongoing maintenance expenses amounted to CHF 8.5 million in total. Despite a larger portfolio, real estate expenses decreased when compared to the comparable period the previous year and correspond to 12.2% of rental income (1st half-year 2010: 15.2%). Due to extensive value-maintaining refurbishment work, which will be started in the second half of 2011, the percentage will rise to an average level of 13% to 15% of rental income by the end of the year.
The rental of residential and commercial real estate generated a respectable net yield of 5.1% (1st half-year 2010: 5.1%).
In the period under review, operating profit (EBIT) excluding revaluation gains amounted to CHF 58.8 million (1st half-year 2010: CHF 55.9 million). The share contributed by the Real Estate division to the Group’s operating profit amounted to 68.6% (1st half-year 2010: 56.0%).
Projects & Development division
The Projects & Development division again reported an outstanding result from business activity of CHF 51.7 million. Although this amount is 17.9% below the previous year’s record result, it was strongly characterised by cyclically arising profits from completed own projects (1st half-year 2010: CHF 63.0 million). It is therefore not surprising that the result for the 1st half of 2011 is the second highest in the history of the company.
Operating profit (EBIT) for the 1st half of 2011 amounted to CHF 26.7 million (1st half-year 2010: CHF 38.2 million). It was characterised equally by lower project earnings and slightly higher personnel expenses following a rise in the number of employees.
The Projects Development department again confirmed its role as a significant driver of sales and earnings. Significant own and customer projects are represented on the one hand by the Richti Wallisellen complex and the Escher-Wyss development in Zurich-West constructed on own land, and on the other by the development commissioned by the authorities and private land owners in Adliswil and the commercial and residential complex “Superblock” in Winterthur realised for AXA Winterthur insurance company as investor. The projects, which as a rule are managed up to construction start, represent a potential investment volume not yet included in the order backlog of clearly above CHF 1 billion.
The Realisation department initiated preparatory and construction work for numerous larger projects for Allreal’s own portfolio and for customers. These include, especially, the Escher-Terrassen residential high-rise in Zurich-West, the Richtiring office building with some 1,400 workplaces in Wallisellen, the Schinebüel residential complex in Birmenstorf comprising 63 apartments for ownership, the Promenade residential complex with 80 rental and 51 condominium apartments in Horgen, and the Polygon residential and commercial development in Wetzikon comprising 40 rental apartments and commercial units.
The Richti-Areal in Wallisellen and the Toni-Areal in Zurich-West represent two large construction sites attracting wide public interest. The realisation of these two projects representing a combined investment volume of roughly CHF 1.2 billion is proceeding just as smoothly as is that of most of the other 120 projects under construction during the first half of 2011.
The project volume completed in the period under review amounted to CHF 347.8 million or 33.6% above the previous year’s value (1st half-year 2010: CHF 260.3 million).
Secured order backlog on the cut-off date of CHF 1.9 billion guarantees full capacity utilisation for clearly more than two years.
The Markthalle project, which Allreal is currently working on, represents an investment volume of CHF 87 million. The complex is in close vicinity to Basel’s main railway station and comprises a striking domed structure, two perimeter buildings with office and commercial space, as well as a new 14-floor residential high-rise containing 45 rental apartments. In April 2011, the Credit Suisse Anlagestiftung decided to acquire the partly let building. Transfer of ownership and settlement of profits will be carried out following project completion in the spring of 2012.
In the period under review, Allreal sold 106 residential units (1st half-year 2010: 72 units), which is considered a great success confirming both the quality of the units and the ability to develop residential space that meets market demand.
During the first half of 2011, Allreal acquired building land in Mönchaltorf (Canton Zurich) exceptionally well suited for the development and realisation of about 50 condominium apartments. Furthermore, Allreal acquired 44,000 square metres of land in Bülach, a conveniently located regional centre north of Zurich Airport, as well as 20,000 square metres of land in Zurich (Zurich Unterstrass) intended for approximately 200 condominium apartments.
The share of the group’s EBIT by the Projects & Development division in the 1st half-year of 2011 is reported at 31.4% (1st half-year 2010: 44.0%).
Advantageous and well-secured financing
With an average interest rate of 2.52% and a duration of 43 months on the cut-off date, financial liabilities continued to be advantageously financed (31.12.2010: 2.59%/46 months).
The 2.50% bond issued in May 2011 allows the company to finance own projects and acquire land and yield-producing properties without additionally mortgaging the portfolio. The company therefore currently benefits from a disposable credit line of about CHF 350 million. Depending on the construction progress of individual projects, the credit lines may be increased by another CHF 350 million.
As a result of investments in own projects and payments to shareholders, the equity share has decreased. As at 30 June 2011, the equity share was reported as 44.9% with a net gearing of 97.8% (31.12.2010: 48.7%/84.2%).
Positive outlook
Based on the favourable half-year results and the business development expected for the second half-year, Allreal anticipates operating results for the entire 2011 financial year at the previous year’s level.
The Board of Directors and the Management Board wish to take this opportunity to thank all staff members for their contribution to the outstanding half-year results and our shareholders for their trust and support.
|
|
|
Dr. Thomas Lustenberger | Bruno Bettoni | |
|
|
