Allreal achieved a net operating profit of CHF 81.8 million in the first half of 2022, compared with CHF 79.1 million in the first half of 2021 – a year-on-year rise of 3.4%. Both divisions performed well overall.
However, net profit including revaluation effect fell by 25.7% year-on-year from CHF 111.3 million to CHF 82.7 million. At CHF 1.1 million before tax, revaluation effect was lacklustre, falling significantly below the previous year’s level of CHF 41.8 million.
Allreal’s share price was not immune to the global stock market slump in the first half of 2022 or the rises in interest rates. On the cut-off date, it closed at CHF 157.80, which represents a decline of 21.9% compared with the closing price on 31 December 2021. If the distribution of CHF 7.00 per share in April is included, a negative overall performance of 18.4% was recorded in the first half of 2022.
“For the financial year 2022, Allreal now expects net operating profit of at least CHF 135 million.”
Rental income in the Real Estate division increased by 4.9% to CHF 106.8 million. The reasons for the significant growth were the expansion of the portfolio of yield-producing properties in Western Switzerland, low vacancy rates and low real estate costs. At 1.5%, the cumulative vacancy rate remained at a very low level. This had a positive impact on the attractive net yield of 3.9%. Allreal had already significantly improved the maturity profile of real estate leases in the previous year. The company continued its work to extend leases early with the same intensity. The valuation of the investment real estate resulted in a net upward revaluation of CHF 1.1 million before tax. As a result of the investments made in the period under review, the portfolio value rose to CHF 5.13 billion in total as at the balance sheet cut-off date, with no acquisitions or sales being completed in the period under review.
Earnings from the Projects & Development division amounted to CHF 34.9 million, compared with CHF 37.5 million in the first half of 2021. As in the previous year, one-off effects resulting from the sale of development real estate contributed to the stable income of the division, albeit to a somewhat lesser extent. Business remained challenging for the Realisation department in the first half of 2022. In particular, supply shortages for various construction materials are a major challenge in respect of meeting deadlines. Nevertheless, the gross margin rose by 2.1 percentage points to 11.2% – a considerable improvement on the financial year 2021.
Allreal set itself ambitious targets in the sustainability strategy it developed in the previous year. Initial measures towards achieving these targets began to be implemented in the first half of 2022. For example, the company identified a number of properties for which a broad-based expansion of solar power systems will begin in the second half of 2022. In addition, more charging stations are being installed to promote e-mobility. Allreal will equip at least 20% of garage parking spaces at yield-producing properties with electric vehicle charging stations by the end of the first half of 2024. The two initiatives comprise an investment volume of around CHF 10 million.
The first half of 2022 was shaped by rising inflation and the about-turn in interest rates performed by central banks. Despite the sharp rise in long-term interest rates, they remain at a low level by historical standards. The Swiss economy is robust and demand for Swiss real estate in central locations is undiminished.
In the Real Estate division, Allreal is expecting higher profits and a further rise in income as a result of the expansion of its portfolio. In the Projects & Development division, the company expects business to proceed as forecasted. The strategy of combining the two divisions is paying off and securing potential for growth in the future.
For the financial year 2022, Allreal now expects net operating profit of at least CHF 135 million.
Given the geopolitical changes and their impact on the economy, the first half of 2022 was a challenge for everyone. Allreal’s Board of Directors and Group Management would like to thank employees for their tireless commitment, without which much of the company’s success would not have been possible. Thanks also to our shareholders for the trust they have placed in us in such uncertain times.