10   Investment real estate

The changes in the first half of 2014 can be summarised as follows:

The additional purchase within the commercial real estate portfolio (CHF 6.0 million) relates to the acquisition of a 1 750 square-metre plot at Schiffbaustrasse in Zurich-West to round off the Escher-Wyss-Areal (commercial building project at Schiffbauplatz).

Within the commercial real estate portfolio, value-enhancing investments were made in the buildings at Eggbühlstrasse 21–25, Zurich (CHF 0.5 million), Oberdorfstrasse 9–13, Baar (CHF 1.8 million), Missionstrasse 60–64a, Basel (CHF 0.5 million), and at the Escher-Wyss-Areal, Zurich (CHF 6.4 million).

The disposals of yield-producing properties relate to the sale of the commercial property at Buckhauserstrasse 32, Zurich (CHF 5.9 million), and the Allianz office building, Wallisellen (CHF 3.6 million). For the latter, project and construction costs stated under acquisition costs were booked as a disposal as these expenses were no longer incurred.

Reclassifications of investment real estate under construction (CHF 627.5 million) relate to the transfer of the residential properties in Eikenøtt Gland, Favrehof Wallisellen and Escher-Terrassen Zurich and to Toni-Areal Zurich. The tenant fit-outs pre-financed by Allreal (CHF 141.7 million) were reclassified as financial assets. These assets are amortised by the tenant over the 20-year term of the contract.

Largest tenants, commercial real estate

Share in total rental income from commercial real estate:

In the first half of 2014, the five largest tenants account for 36% of rental income from commercial real estate. The ten largest tenants generate 48% of rental income from commercial real estate.

The five largest tenants' share of total rental income from all yield-producing properties (commercial and residential) declined to 30% in the first half of 2014 (1^st half-year 2013: 28%).

The weighted remaining term of fixed-term rental contracts is 8.7 years (versus 6.8 years on 31 December 2013).

Lilienthal-Boulevard, Opfikon

New-build six-floor office building with conference facilities and cafeteria on the ground floor, total lettable floor space of 13 131 square metres and 124 parking spaces. A ten-year rental agreement has been signed with Mondelez International (Kraft Foods Europe GmbH) for 6 960 square metres of floor space. The project is being built by the Projects & Development division and, upon completion in the second half of 2014, will be reported under the portfolio of yield-producing properties. For the market valuation as at the balance sheet cut-off date, nominal discount and capitalisation rates of 5.20% were applied (31.12.2013: 5.20%).

Richtiring, Wallisellen

New-build commercial building with five main storeys, a penthouse level, retail space on the ground floor and a 200-space basement car park. Of the total lettable floor space of approximately 25 571 square metres, around 19 876 square metres are for offices and 4 400 square meters for retail space (Richti Shopping). A ten-year rental agreement has been signed with UPC Cablecom for the total office space as well as storage areas and garage parking spaces. The project is being built by the Projects & Development division and, upon completion in the second half of 2014, will be transferred to the portfolio of yield-producing properties. For the market valuation as at the balance sheet cut-off date, nominal discount and capitalisation rates of 5.00% were applied (31.12.2013: 5.00%).

Herostrasse, Zurich

New-build seven-floor commercial building with restaurants/café on the ground floor, total lettable floor space of 10 839 square metres and 22 parking spaces. A ten-year rental agreement has been signed with Pöyry Switzerland Ltd for 5 922 square metres of office space as well as storage areas and parking spaces. The project is being built by the Projects & Development division and, upon completion in the second half of 2014, will be transferred to the portfolio of yield-producing properties. For the market valuation as at the balance sheet cut-off date, nominal discount and capitalisation rates of 5.20% were applied (31.12.2013: 5.20%).

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

Yield-producing properties (CHF 3253.2 million) and investment real estate under construction (CHF 210.8 million) are recognised as at 30 June 2014 at fair values according to category 3. No adjustments were made to valuation techniques or processes during the period under review.