Gratifying Half-year Results in 2021

  • Significant increase in net operating profit
  • Gratifying result in Real Estate division strengthened even further by revaluation gains
  • Projects & Development division performs well thanks to gains on sales
  • Clear vision for sustainability: portfolio of yield-producing properties will be fully carbon neutral by 2050
  • Net operating profit for 2021 now expected to be above CHF 130 million

Allreal reported net profit including revaluation effect of CHF 111.3 million in the first half of 2021, compared with CHF 86.4 million in the same period 2020 – a rise of 28.8%. This gratifying performance was partly a result of an upward revaluation of the portfolio by CHF 41.8 million before tax compared with CHF 27.7 million in the first half of 2020.

Both divisions performed well overall and made a positive contribution to net op-erating profit of CHF 79.1 million. This represents an impressive increase on a year-on-year basis of 25.6% (1st half-year 2020: CHF 63.0 million).

On the cut-off date, Allreal’s share price closed at CHF 182.20, which was 10.5% below the closing price on 31 December 2020. If the distribution of CHF 6.75 per share in April 2021 is included, an overall performance of –7.1% was recorded in the first half of 2021.

Strong real estate earnings and revaluation gains in the Real Estate division

In the Real Estate division, Allreal’s rental income rose by 1.7% to CHF 101.8 million owing to various additions to the portfolio generating income for the first time. In connection with the pandemic, the company waived rent payments to the amount of CHF 0.5 million in the first half of 2021 – much less than in the first half of 2020. The cumulative vacancy rate of 1.5% made a significant contribution to the healthy net yield of 4.2%. In the first half of 2021, Allreal stepped up its efforts to extend leases early for several large customers. The company is confident that early extensions will be agreed for a number of the rental agreements that are due to expire in 2023. The valuation of the investment real estate resulted in a net upward revaluation of CHF 41.8 million and portfolio value of CHF 4.58 billion as at the balance sheet cut-off date.

“The vision is clear: the portfolio of yield-producing properties will be fully carbon neutral by 2050.”

Projects & Development division generates high level of income from the sale of development real estate

Earnings from the Projects & Development division went up by 52.4% to CHF 37.5 million. Allreal benefited from the high price level on the transaction market and generated a high level of income from the sale of two pieces of land. Meanwhile, business was challenging for the Realisation department in the first half of 2021. The impact of the coronavirus could be seen in inefficiencies in the construction process and a rise in additional expenses as a result. Prices and margins are under increased pressure. Because of this, the markets need to be watched even more closely and the services provided need to be kept under review.

Clear commitment to sustainability

The company continued to work on developing a clear and measurable sustainability strategy in the first half of 2021. The vision is clear: the portfolio of yield-producing properties will be fully carbon neutral by 2050 and the share of fossil fuels in energy consumption will be halved by 2030. Among the factors contributing to this will be the active management of tenants’ behaviour, the broad-based expansion of photovoltaic systems and parking spaces for electric vehicles, and the consistent use of reusable materials. Allreal will also provide information also about the ESG strategy at an Investors’ Day in November 2021.

Improved outlook for full-year 2021

Allreal remains to be very solidly financed. This allows it to take advantage of opportunities in the real estate market, including those that arise at short notice. As at the cut-off date, the equity ratio amounted to 48.1%, net gearing to 90.8% and the interest coverage ratio to 15.1.

Allreal now expects a net operating profit for 2021 as a whole that is likely to come in above CHF 130 million.

The Board of Directors and Group Management would like to take this opportunity to thank employees for their hard work and commitment during these challenging times, as well as shareholders for their trust and support.