Slide 1: Analysts' and Media Conference – 2019 Financial Year
Allreal Group Analysts’ and Media Conference Wednesday, 26 February 2020 2019 Financial Year Roger Herzog CEO Thomas Wapp CFO
Slide 2: Agenda
2019 Financial Year Agenda • Overview • 2019 Annual Results • Real Estate division • Projects & Development division • Outlook 26.02.2020 Allreal Group – 2019 Financial Year 2
Slide 3: Overview: 2019 financial year with outstanding result – Group
Overview 2019 financial Year with outstanding result Group • Operating net profit amounted to CHF 134.6 million based on improved performance in the Projects & Development division and excellent earnings reported by the Real Estate division • Considerable increase in revaluation gains of the portfol
Slide 4: Overview: Real Estate
Overview 2019 financial Year with outstanding result Real Estate • The market value of the entire portfolio amounted to CHF 4.38 billion as at cut-off date • Positive revaluation of yield-producing properties by CHF 139.1 million represents 3.3% of the portfolio • Portfolio changes in 2019 and addit
Slide 5: Overview: Real Estate
Overview 2019 financial Year with outstanding result Real Estate • In the period under review one yield-producing property was acquired and one disposed • The cumulated vacancy rate remains at a very low level (2.2%) 26.02.2020 Allreal Group – 2019 Financial Year 5
Slide 6: Overview: Projects & Development
Overview 2019 financial Year with outstanding result Projects & Development • Earnings from Project & Development division increased by 26% to CHF 66.3 million affected by high profits from the sale of development real estate • Acquisition of various sites lays foundation for development of own proj
Slide 7: Overview: Projects & Development
Overview 2019 financial Year with outstanding result Projects & Development • Gross margin achieved by means of development and implementation of third-party projects amounted to 13.3% and remains at a high level • The acquisition of numerous large projects resulted in an increase of the order backl
Slide 8: Overview: Finance
Overview 2019 financial Year with outstanding result Finance • High cash flow allows for reduction of debt and results in a decrease of financial liability by about CHF 71 million to CHF 2.00 billion • Equity ratio at 49.4% • Average interest rate on interest-bearing debt of 1.33% at a higher averag
Slide 9: Overview: Finance
Overview 2019 financial Year with outstanding result Finance • Average interest rate on interest-bearing debt of 1.33% at a higher average fixed-interest duration of 56 months • Positive one-off effect of CHF 4.8 million concerning the profit and loss statement due to tax reductions on the cantonal
Slide 10: Overview: Outlook
Overview 2019 financial Year with outstanding result Outlook • For the 2020 financial year, Allreal expects to report operating net profit below the record level seen in the year under review (CHF 134.6 million), but higher than in the 2018 financial year (CHF 115.6 million) • Allreal will report in
Slide 11: Agenda
2019 Financial Year Agenda • Overview • 2019 Annual Results – Group – Share • Real Estate division • Projects & Development division • Outlook 26.02.2020 Allreal Group – 2019 Financial Year 11
Slide 12: Group: Performance improvement at all levels
2019 Annual Results – Group Performance improvement at all levels 234.8 +45.8% 173.6 161.0 +16.4% 129.2 134.6 112.2 113.3 115.6 in CHF million 2016 2017 2018 2019 2016 2017 2018 2019 Net profit incl. revaluation effect Net profit excl. revaluation effect 26.02.2020 Allreal Group – 2019 Financial Yea
Slide 13: Group: Performance improvement at all levels
2019 Annual Results – Group Performance improvement at all levels in CHF million 2019 2018 Change Operating net profit 134.6 115.6 +16.4% Operating EBIT 189.7 175.0 +8.4% Net rental income 204.4 194.8 +4.9% Earnings from real estate 178.6 172.2 +3.7% Earnings from P&D 66.3 52.6 +26.0% Sales P&D 340.
Slide 14: Group: Performance improvement at all levels
2019 Annual Results – Group Performance improvement at all levels 2019 2018 2017 2016 ROE in % – excl. revaluation gains 6.8 5.9 5.9 5.9 – incl. revaluation gains 10.2 7.3 6.0 8.5 Net yield portfolio in % – Total 4.3 4.4 4.3 4.4 – Residential properties 3.1 3.5 3.4 3.9 – Commercial properties 4.6 4.
Slide 15: Group: Performance improvement at all levels
2019 Annual Results – Group Performance improvement at all levels Marginal value 31.12.19 31.12.18 31.12.17 31.12.16 Equity ratio 49.4% 48.1% 49.3% 52.3% Net Gearing >35% 83.2% 91.5% 87.5% 75.7% Interest covering coefficient <150% 7.3 6.1 6.0 4.8 Ø Interest on interest-bearing debt >2.0 1.33% 1.48%
Slide 16: Group: Debt maturity profile
2019 Annual Results – Group Performance improvement at all levels CHF CHF 500 500 Mio. million 1.50% CHF 400 CHF million 400 Mio. 1.00% CHF CHF 300 300 Mio. million CHF CHF 200 200 Mio. million 0.50% Bonds CHF 100 CHF million 100 Mio. Fixed advances and mortgages Interest rate CHF 0 Mio. 0.00% outst
Slide 17: Group: Financing structure
2019 Annual Results – Group Performance improvement at all levels Financing structure 2019 2018 2017 2016 Capital market (bonds) 57.7% 52.1% 49.9% 40.3% Fixed-rate mortgages banks 15.2% 14.9% 8.5% 10.4% Fixed-rate mortgages insurance companies / 14.6% 14.1% 12.6% 6.9% pension funds Bank loans with s
Slide 18: Group: Bond repayment and placement
2019 Annual Results – Group Performance improvement at all levels • Repayment of a 1.25% bond 2014-2019 of CHF 125 million expiring on 2 April 2019 • Successful placement of a 0.4% bond issue amounting to CHF 200 million with a 10-year duration expiring 2029 • Financial expense was charged with depr
Slide 19: Agenda
2019 Financial Year Agenda • Overview • 2019 Annual Results – Group – Share • Real Estate division • Projects & Development division • Outlook 26.02.2020 Allreal Group – 2019 Financial Year 19
Slide 20: Share: Overview key figures
2019 Annual results – Share Overview key figures 2019 / 2018 / Change in CHF 31.12.2019 31.12.2018 EPS excl. revaluation effect 8.47 7.28 +16.3% EPS incl. revaluation effect 14.78 10.13 +45.9% NAV per share on cut-off date 149.00 139.65 +6.7% Share price on cut-off date 192.40 153.10 +25.7% Market c
Slide 21: Share: Proposal for increased profit distribution of CHF 6.75 per share
2019 Annual results – Share Proposal for increased profit distribution of CHF 6.75 per share 7.28 8.47 7.04 7.11 98.0 98.7 94.4 90.5 6.50 6.751 6.25 5.75 Operating EPS incl. distribution in CHF Distribution in CHF 2016 2017 2018 2019 2016 2017 2018 2019 Net profit per share (excl. revaluation effect
Slide 22: Agenda
2019 Financial Year Agenda • Overview • 2019 Annual Results • Real Estate division – Portfolio – Results • Projects & Development division • Outlook 26.02.2020 Allreal Group – 2019 Financial Year 22
Slide 23: Real Estate division: Overview
Real Estate division Overview • Changes to the portfolio and the positive value development result in a growth of the market value of yield-producing properties by 4.3% to a total of CHF 4.38 billion • High revaluation gains of about CHF 139 million due to beneficial letting situation and persistent
Slide 24: Portfolio: Growth by changes and positive value development
Real Estate division – Portfolio Growth by means of changes and positive value development 4.3 4.1 3.9 3.5 3.5 3.5 in CHF billion / million 2.6 2.5 2.5 76% as at 31.12. (rounded) 2.4 2.2 (without Real estate under construction) 3266 2699 3113 3226* 2817 2756 1010 2099 911 Commercial 1811 2085 2078 8
Slide 25: Portfolio: Strengthening yield-producing properties (acquisition)
Real Estate division – Portfolio Strengthening yield-producing properties Addition by acquisition: Heerenwiesen 23-41, Zurich Schwamendingen: Residential property, year of construction: 1996, comprising a total of 80 flats and commercial space with a total useful area of 7,782 m2; acquisition of the
Slide 26: Portfolio: Strengthening yield-producing properties (disposal)
Real Estate division – Portfolio Strengthening yield-producing properties Disposal by divestment: Thurgauerstrasse 111, Glattbrugg ZH: Commercial property built in 1969 with useful space of 7,417 m2; targeted rental income: CHF 1.7 million; vacancy rate (H1/2019): 15.5%; divestment as at 01.09.2019
Slide 27: Portfolio: Stable mix of tenants and usage
Real Estate division – Portfolio Stable mix of tenants and usage in % of rental income (rounded) Mix of usage Tenants commercial properties yield-producing properties Canton of Zurich 15% Office / Services 61% Generali Switzerland 7% Residential 20% Allianz Suisse 7% Trade / Warehousing
Slide 28: Portfolio: Balanced distribution of expiry
Real Estate division – Portfolio Balanced distribution of expiry without short term changes 24 16 15 11 10 5 5 5 in % of target rental income 4 3 commercial real estate 2 (rounded) Rental agreements by sector Banks / Insurance 23% 2028 2026 2020 2021 2022 2023 2024 2025 2027 2029ff indefinite Se
Slide 29: Portfolio: Properties in Basel operated by in-house management
Real Estate division – Portfolio Properties in Basel operated by in-house real estate management from mid 2019 2019 2018 Managed by Allreal Third party Allreal Third party Residential properties 34.6% 65.4% 32.5% 67.5% Zurich metropolitan area* Residential properties 65.2% 34.8% 0.0% 100.0% remainin
Slide 30: Portfolio: High-quality portfolio focused on Zurich
Real Estate division – Portfolio High-quality portfolio with focus on Zurich metropolitan area Regional distribution of 2.1 1.7 2.7 2.2 yield-producing 5.5 0.8 5.3 0.7 4.4 4.3 1.0 0.9 8.1 5.8 5.6 properties in % of market 5.7 5.6 8.4 4.9 4.8 value as at 31.12. 62.5 60.5 30.0 28.5 37.2 36.1 City of Z
Slide 31: Portfolio: Vacancy rate nearly unchanged and very low
Real Estate division – Portfolio Vacancy rate nearly unchanged and at very low level 3.8 3.3 in % 2.9 2.8 (cumulated from targeted 2.6 gross profit) 2.2 2.0 1.9 1.8 1.8 1.6 1.5 As at 31.12.2017 As at 31.12.2018 As at 30.06.2019 As at 31.12.2019 Yield-producing properties Residential properties Comme
Slide 32: Portfolio: Cooperative customer relationships as success factor
Real Estate division – Portfolio Cooperative customer relationships as success factor for renting In 2019, existing agreements concerning yield-producing properties were renewed or extended for a total of 14,000 m2, especially for the following properties: 6,735 m2 Office building Sonnentalstrasse,
Slide 33: Agenda
2019 Financial Year Agenda • Overview • 2019 Annual Results • Real Estate division – Portfolio – Results • Projects & Development division • Outlook 26.02.2020 Allreal Group – 2019 Financial Year 33
Slide 34: Real Estate Results: Overview
Real Estate division – Results Overview • Increase in portfolio value by 4.3%, or net CHF 181.8 million to CHF 4.38 billion • Changes in investment real estate (in CHF million): Revaluation +139.1 Additions yield-producing properties +28.0 Investments in investment real estate under constructi
Slide 35: Real Estate Results: Overview
Real Estate division – Results Overview • The increase in rental earnings of CHF 9.6 million is structured as follows (in CHF million): Additions to the portfolio +11.0 Re-classification of investment real estate -1.0 under construction Disposals of the portfolio -0.6 Reduction in vacancies
Slide 36: Real Estate Results: Overview
Real Estate division – Results Overview • Changes in rents (like-for-like) of –0.03% (commercial properties) and 0.75% (residential properties) • Share of largest vacancies in total rate amounts to 59.2%: Lindbergh-Allee, Opfikon ZH Baarermatte, Baar ZG Fangletenstrasse, Bülach ZH Route Fran
Slide 37: Real Estate Results: Overview
Real Estate division – Results Overview • No substantial impact on vacancy rate expected in 2020 from expiring rental agreements • Average reduction of discount rates by 22 basis points to 3.93% of which by 26 basis points to 3.36% for residential properties of which by 19 basis points to 4.11%
Slide 38: Results: High revaluation gains reflect portfolio quality
Real Estate division – Results High revaluation gains reflect quality of the portfolio Residential Commercial Investment real Revaluation properties properties estate under in total construction +139.1 +51.4 23.2 +70.7 8.3 130.7 93.3 in CHF million 42.0 +17.0 City of Zurich 20.4 Remaining -14.8 -18.
Slide 39: Results: Real estate expenses influenced by refurbishment projects
Real Estate division – Results Real estate expenses periodically influenced by large refurbishment and renovation projects 18.2 normalised range 15.8 15–17% 14.8 14.9 15.0 13.9 13.3 13.8 13.3 13.7 13.5 11.6 Real estate expenses for yield-producing properties in % of rental income 2008 2009 2010 2011
Slide 40: Agenda
2019 Financial Year Agenda • Overview • 2019 Annual Results • Real Estate division • Projects & Development division – Business operations – Results • Outlook 26.02.2020 Allreal Group – 2019 Financial Year 40
Slide 41: Projects & Development division: Overview
Projects & Development division Overview • Earnings from business activities grew by 26% to CHF 66.3 million • High profits from sales of development properties of CHF 22.9 million in Bülach ZH and Rümlang ZH 26.02.2020 Allreal Group – 2019 Financial Year 41
Slide 42: Projects & Development division: Overview
Projects & Development division Overview • Decrease in completed project volume by 3.2% to CHF 340.7 million represents deliberate focus on projects with calculable risks and influenced by project delays • Gross margin for third-party projects amounts to high 13.3% • Allreal intends to increase the
Slide 43: Projects & Development division: Overview
Projects & Development division Overview • Order backlog of about CHF 820 million as at cut-off date allows utilisation of existing capacity for a period of more than 24 month • Of the currently secured order backlog, an amount of about CHF 500 million was added in the period under review, of which
Slide 44: Projects & Development division: Overview
Projects & Development division Overview 2019 2018 2017 2016 Earnings from operations in CHF million 66.3 52.6 66.7 84.0 Share of third-party projects in P&D 54.0 71.9 67.5 50.8 earnings in % Gross margin third-party projects in % 13.3 13.0 13.1 10.3 Net profit P&D in CHF million 18.9 9.0 15.1 21.4
Slide 45: Development: Projects with long-term profitability
Projects & Development division - Development Projects with long-term profitability for third parties and own portfolio • Projects for the own portfolio and for third parties processed by the Development department correspond to a potential construction volume of several hundred million francs and w
Slide 46: Development: Design of projects (Luzern, Adliswil)
Projects & Development division - Development Design of projects with long-term profitability for third parties and own portfolio Eggen, Luzern: Winning project of project competition by Dietlimoos, Adliswil ZH: Site development for third Caruso St John Architects comprising 77 condominiums. parties
Slide 47: Development: Design of projects (Zurich)
Projects & Development division - Development Design of projects with long-term profitability for third parties and own portfolio Bellerivestrasse 36, Zurich Riesbach: Refurbishment of a Spiserstrasse, Zurich Albisrieden: Implementation of a commercial building according to plans by C.F. Møller stud
Slide 48: Development: Design of projects (Zufikon, Winterthur)
Projects & Development division - Development Design of projects with long-term profitability for third parties and own portfolio Alter Züriweg, Zufikon AG near Bremgarten: Planning Florenstrasse, Winterthur Seen ZH: Planning and and execution of 20 terraced apartments with 2½ to execution of eight
Slide 49: Realisation: Department with high gross margin
Projects & Development – Realisation Realisation department with high gross margin Key figures reflect strategy for limitation to third-party projects with a calculable risk and sound profit expectations: 2019 2018 2017 2016 Completed third-party project volume 270.0 290.3 343.3 414.7 in CHF million
Slide 50: Realisation: Projects completed in 2019
Projects & Development – Realisation Projects completed in 2019 and transferred to owners Bülachguss, Bülach ZH: Ten apartment buildings Bubenbergplatz/Christoffelgasse, Bern: Refurbishment comprising a total of 343 rental units, conversion of and conversion of listed commercial building. Owner: UBS
Slide 51: Realisation: Projects completed in 2019
Projects & Development – Realisation Projects completed in 2019 and transferred to owners Mühlacker, Gerlafingen SO: Four apartment buildings Brandriet, Effretikon ZH: Seven six- to eight-storey comprising a total of 77 rental units plus service and apartment buildings comprising a total of 81 renta
Slide 52: Realisation: Projects completed in 2019
Projects & Development – Realisation Projects completed in 2019 and transferred to owners Ankerstrasse, Zurich Aussersihl: Six-storey residential Badenerstrasse 119+123, Zurich Aussersihl: Interior building with 36 rooms, two flats, seminar rooms and refurbishment and partial renovation of the build
Slide 53: Realisation: Up to 70 projects being processed
Projects & Development – Realisation Up to 70 projects currently being processed Bellariarain, Zurich Wollishofen: Nine five-storey Datacenter ZUR2, Glattbrugg ZH: Three-storey data apartment buildings with a total of 172 rental units. centre comprising 7,132 m2 of useful space located in the Owner:
Slide 54: Realisation: Projects started in 2019
Projects & Development – Realisation Projects started on in 2019 Letzi Turm, Zurich Altstetten: New construction of two Badenerstrasse 170-172, Zurich Wiedikon: Comprehen- apartment towers comprising more than 27,000 m2 floor sive refurbishment and extension of an office building space. Owner: SBB R
Slide 55: Realisation: High share of third-party projects
Projects & Development – Realisation High share of third-party projects in completed project volume in % of completed project volume 2019 Third-party projects / own portfolio Distribution of sales P&D Third-party projects 79.2% New construction 65.9% Own projects for portfolio 14.8% Renovati
Slide 56: Agenda
2019 Financial Year Agenda • Overview • 2019 Annual Results • Real Estate division • Projects & Development division – Business operations – Results • Outlook 26.02.2020 Allreal Group – 2019 Financial Year 56
Slide 57: Realisation: Overview
Projects & Development – Realisation Overview in CHF 2019 2018 Change Third-party business 35.8 37.8 -5.3% (Earnings from construction and fees) Earnings from sales 22.9 5.5 +416.4% Capitalised in-house activity 6.7 6.6 +1.5% Various earnings 0.9 2.7 -66.7% Earnings form P&D division 66.3 52.6 +26.0
Slide 58: Realisation: Result characterised by lower sales gains
Projects & Development – Realisation Result characterised by lower sales gains Earnings from P&D 2019 2018 division in % (rounded) 1% - 5% - 6% 6% Earnings from construction 28% 10% 34% Architects’ and P&D fees 34% 13% Capitalised in-house activity Earnings from sales 32% 10% 44% Various earnings Re
Slide 59: Agenda
2019 Financial Year Agenda • Overview • 2019 Annual Results • Real Estate division • Projects & Development division • Outlook 26.02.2020 Allreal Group – 2019 Financial Year 59
Slide 60: Outlook 2020: Assessment of real estate market
Outlook on 2020 Financial Year Allreal expects stable business continuation Assessment of real estate market: • Strong demand for yield-producing properties, land and developments • As a result of lower yield expectations, market participants are showing restraint while, occasionally, exaggerations
Slide 61: Outlook 2020: Assessment of real estate market
Outlook on 2020 Financial Year Allreal expects stable business continuation Assessment real estate market: • Strong demand for residential ownership in the low- and medium-price segment • Demand for office space in the centres of larger cities still very high, while large capacities continue to be a
Slide 62: Outlook 2020: Assessment of general contracting market
Outlook on 2020 Financial Year Allreal expects stable business continuation Assessment of general contracting market: • Pressure on price and margins remains high • It is essential for companies to specialise further, extend their range of services, limit their area of activity to a certain region,
Slide 63: Outlook 2020: Real Estate division
Outlook on 2020 Financial Year Allreal expects stable business continuation Real Estate division: • Risk of new vacancies remains low due to the fact that less than 2% of the total rental volume will expire in 2020 • In 2020 the vacancy rate will decrease • Real estate expenses rate will remain on t
Slide 64: Outlook 2020: Real Estate division
Outlook on 2020 Financial Year Allreal expects stable business continuation Real Estate division: • Earnings from Real Estate division will decrease slightly based on lower rental income (owner occupier in Lindbergh-Allee) in 2020 • In 2020, investment real estate properties Grünhof in Zurich Ausser
Slide 65: Outlook 2020: Projects & Development division
Outlook on 2020 Financial Year Allreal expects stable business continuation Projects & Development division: • Completed project volume will increase owing to the start of several large projects • Development and Realisation departments are operating at full capacity; requests for new contracts star
Slide 66: Outlook 2020: Projects & Development division
Outlook on 2020 Financial Year Allreal expects stable business continuation Projects & Development division: • Earnings from Projects & Development division will decrease compared to 2019 due to lower profits from the sale of development projects • Development department will focus stronger on the a
Slide 67: Outlook 2020: Finance
Outlook on 2020 Financial Year Allreal expects stable business continuation Finance: • Starting with the 2020 financial year, Allreal will report according to Swiss GAAP FER • High transparency and significance will be maintained and the cost of financing will decrease owing to the discontinuation o
Slide 68: Outlook 2020: Operating net profit expectation
Outlook on 2020 Financial Year Allreal expects stable business continuation • For the 2020 financial year, Allreal expects to report operating net profit below the record level seen in the year under review (CHF 134.6 million), but higher than in the 2018 financial year (CHF 115.6 million) 26.02.202
Slide 69: Allreal builds value
qal|lreal builds value