11   Investment real estate

The changes in the first half of 2012 can be summarised as follows:

Disposals of income-producing real estate

[1]CP = commercial property

As in the previous year, the valuation of investment real estate by the DCF method as at 30 June 2012 was performed by Jones Lang LaSalle AG acting as a real estate valuer on a contract basis for Allreal.

Within the commercial real estate portfolio, in light of the successful re-letting of the office building Hohlstrasse 600 in Zurich, value-enhancing investments of CHF 4.1 million were made.

Reclassifications of investment real estate under construction in the amount of CHF 11.6 million (acquisition costs as at 1 January 2012) relate to the transfer of the Favrehof project in Wallisellen, previously reported under development real estate, to income-producing real estate after expected completion in 2014.

For details of the income-producing real estate as at 30 June 2012, see pages 32 to 37.

Largest tenants, commercial real estate

In the first half of 2012, the five largest tenants account for 29% of rental income from commercial real estate. The ten largest tenants generate 43% of total rental income from commercial real estate.

The five largest tenants’ share of total rental income from all income-producing real estate (commercial and residential) declined to 26% in the first half of 2012.

The weighted remaining term of fixed-term rental contracts is 6.1 years (31.12.2011: 5.6 years).

Investment real estate under construction as at 30 June 2012

[1]According to valuation 30.06.2012

[2]Building and land costs

Eikenøtt, Gland

New-build residential development comprising 53 rental apartments and 60 parking spaces, with an aggregate net living area of 4 958 square metres in Gland, Canton Vaud. The project is being built by Losinger Construction SA and, upon completion in 2013, will be transferred to the portfolio of income-producing real estate. For the purposes of calculating the market value as at the balance sheet cut-off date, nominal discount and capitalisation rates of 4.90% were applied (31.12.2011: 4.90%).

Allianz office building, Wallisellen

New 18-floor office building plus adjoining six-floor office block with floor space totalling some 45 900 square metres. Upon occupation in 2013, the building’s main tenant, with 1 500 workplaces, will be Allianz Suisse insurance company, which has signed a 10-year rental contract with Allreal. The project is being built by the Projects & Development division and, upon completion in 2013, will be reported under the portfolio of income-producing real estate. For the purposes of calculating the market value as at the balance sheet cut-off date, nominal discount and capitalisation rates of 5.00% were applied (31.12.2011: 5.00%).

Favrehof, Wallisellen

New-build residential development comprising 118 rental apartments and 136 parking spaces. Together with the 1 173 square metres of lettable floor space for offices and retail outlets, this equates to total floor space of 13 815 square meters. The project is being built by the Projects & Development division and, upon completion in 2014, will be reported under the portfolio of income-producing real estate. For the first-time, market valuation as at the balance sheet cut-off date, nominal discount and capitalisation rates of 4.90% were applied.

Escher-Terrassen, Zurich

19-floor residential high-rise comprising 51 rental apartments with an aggregate net living area of 6 127 square metres, rehearsal facilities for the opera house and a 35-space basement car park on the Escher-Wyss site in Zurich-West. The project is being built by the Projects & Development division and is likely to be transferred to the portfolio of income-producing real estate in 2014. For the purposes of calculating the market value as at the balance sheet cut-off date, nominal discount and capitalisation rates of 5.00% were applied (31.12.2011: 5.00%).

Neunbrunnenstrasse, Zurich

New-build residential development comprising 40 rental apartments and 30 parking spaces, with an aggregate net living area of 4 665 square metres in Neu-Oerlikon. The project is being built by the Projects & Development division and, upon completion in 2013, will be transferred to the portfolio of income-producing real estate. For the purposes of calculating the market value as at the balance sheet cut-off date, nominal discount and capitalisation rates of 4.90% were applied (31.12.2011: 4.90%).

Toni site, Zurich

University of applied sciences (Fachhochschule) development for some 5 000 students, lecturers and employees, including events venues, commercial premises and 100 rental apartments in Zurich-West, being built by Projects & Development division. The lettable floor space, including housing, totals around 87 500 square metres, of which at least 73 100 square metres will be occupied by Canton Zurich/Zurich Universities of Applied Sciences (on a 20-year rental contract). The aggregate net living area of the 100 rental apartments runs to 9 992 square metres. Upon completion in 2013, the Toni site will be transferred to the portfolio of income-producing real estate. For the purposes of calculating the market value as at the balance sheet cut-off date, nominal discount and capitalisation rates of 4.80% were applied (31.12.2011: 4.80%).

All investment real estate properties under construction are 100% solely owned by Allreal.