Allreal Holding Ag · SIX:ALLN
Allreal — FY2020 Earnings Presentation
67 slides from Allreal's earnings presentation, Feb 24, 2021
Slide 1: Allreal Group: Analysts' and media conference
Allreal Group: Analysts’ and media conference Wednesday, 24 February 2021 Gratifying result in 2020 financial year despite coronavirus Roger Herzog CEO Thomas Wapp CFO
Slide 2: Agenda
2020 Financial Year Agenda • Overview • 2020 Annual Results • Real Estate division • Projects & Development division • Assessment and Summary 24.02.2021 Allreal Group – 2020 Financial Year 2
Slide 3: Overview: Gratifying result in 2020 financial year (Group)
Overview Gratifying result in 2020 financial year Group • Gratifying net operating profit of CHF 124.7 million, confirming the stability of Allreal despite the coronavirus crisis • At CHF 167.2 million, net profit incl. revaluation effect was significantly affected by revaluation gains – as in 2019
Slide 4: Overview: Gratifying result in 2020 financial year (Group)
Overview Gratifying result in 2020 financial year Group • The rent payments that were waived in the first lockdown in spring 2020 owing to the coronavirus crisis amount to CHF 1.5 million • Allreal came to an agreement for this period with every single tenant; no cases are outstanding • A similar re
Slide 5: Overview: Gratifying result in 2020 financial year (Group)
Overview Gratifying result in 2020 financial year Group • As at the balance sheet cut-off date, there were no major claims for rent arrears or insolvency-related defaults • Even though all construction sites were always kept in operation, the challenges are increasing owing to inefficiencies, staff
Slide 6: Overview: Gratifying result in 2020 financial year (Group)
Overview Gratifying result in 2020 financial year Group • Proposal by the Board of Directors for a stable profit distribution of CHF 6.75 per share – in line with the previous year • Distribution as an ordinary dividend (CHF 3.50) and as repayment of reserves from contribution of capital (CHF 3.25)
Slide 7: Overview: Real Estate
Overview Gratifying result in 2020 financial year Real Estate • As at the balance sheet cut-off date, the market value of the portfolio was CHF 4.53 billion • Investment real estate increased in value by CHF 55.2 mil- lion, or 1.2% of the portfolio value • In the period under review, Allreal acquire
Slide 8: Overview: Real Estate
Overview Gratifying result in 2020 financial year Real Estate • Rental income was stable on a comparable basis, standing just 1.3% below the previous year’s figure at CHF 200.4 mil- lion • The cumulative vacancy rate fell again to reach a record low for the company of 1.4% • The net yield of yield-p
Slide 9: Overview: Projects & Development division
Overview Gratifying result in 2020 financial year Projects & Development division • With the volume of projects rising slightly, by 6.7% to CHF 363.4 million, earnings from the Projects & Development division fell by 29.7% to CHF 46.6 million • The main reasons for this were the context of coronavir
Slide 10: Overview: Projects & Development division
Overview Gratifying result in 2020 financial year Projects & Development division • The gross margin in third-party business fell to 12.0%, which is still high. This was because the volume of projects to be completed did not increase quite as much as expected, particularly during the second half of
Slide 11: Agenda
2020 Financial Year Agenda • Overview • 2020 Annual Results – Group – Share • Real Estate division • Projects & Development division • Assessment and Summary 24.02.2021 Allreal Group – 2020 Financial Year 11
Slide 12: 2020 Results – Group
2020 Results – Group Gratifying result in 2020 financial year 243.2* -31.3% 161.0 167.2 -12.2% 142.0* 129.2 124.7 113.3 115.6 (CHF million) 2017 2018 2019 2020 2017 2018 2019 2020 * previous year’s figures adjusted Net profit incl. revaluation effect Net profit excl. revaluation effect (new Swiss GA
Slide 13: 2020 Results – Group
2020 Results – Group Gratifying result in 2020 financial year CHF million 2020 2019* Change Net operating profit 124.7 142.0 -12.2% Operating EBIT 170.1 189.8 -10.4% Net rental income 200.4 203.1 -1.3% Real estate earnings 172.5 175.5 -1.7% Earnings from P&D division 46.6 66.3 -29.7% Completed proje
Slide 14: 2020 Results – Group
2020 Results – Group Gratifying result in 2020 financial year threshold 31.12.20 31.12.19 31.12.18 31.12.17 Equity ratio >35% 48.4% 49.6%* 48.1% 49.3% Net Gearing <150% 88.6% 83.5%* 91.5% 87.2% Interest coverage ratio >2.0 11.0 11.1* 6.1 6.0 Ø Interest rate interest-bearing 0.71% 0.83% 1.48% 1.53% b
Slide 15: 2020 Results – Group
2020 Results – Group Gratifying result in 2020 financial year CHF 650 Mio. 1.50% CHF 550 Mio. CHF 450 Mio. 1.00% CHF 350 Mio. CHF 250 Mio. 0.50% CHF 150 Mio. Bonds Fixed advances CHF 50 Mio. and mortgages 2021 2022 2023 2024 2025 2026 2027 2028 2029 Interest rate on -CHF 50 Mio. 0.00% outstanding fi
Slide 16: 2020 Results – Group
2020 Results – Group Gratifying result in 2020 financial year • Repayment of the 2% bond issue 2013-2020 of CHF 150 mil- lion on 23 September 2020 • Simultaneous placement of a 0.7% bond issue of CHF 175 million maturing in 2028 • As at the balance sheet cut-off date, 55.9% of total financial liabil
Slide 17: Agenda
2020 Financial Year Agenda • Overview • 2020 Annual Results – Group – Share • Real Estate division • Projects & Development division • Assessment and Summary 24.02.2021 Allreal Group – 2020 Financial Year 17
Slide 18: 2020 Results – Shares: Decent overall performance of 9.3%
2020 Results – Shares Decent overall performance of 9.3% 24.02.2021 Allreal Group – 2020 Financial Year 18
Slide 19: Around 47% of the share capital is held by major shareholders
2020 Results – Shares Around 47% of the share capital is held by major shareholders Largest shareholders Shareholder structure Helvetia Group 8.8% Credit Suisse Funds AG >6% 23.9% 22.3% Swiss Mobiliar Group 3.3% Basellandschaftliche Pensionskasse 3.1% 4.4% BlackRock Inc. >3% Dimensional Holdings Inc
Slide 20: Proposal for a stable profit distribution of CHF 6.75 per share
2020 Results – Shares Proposal for a stable profit distribution of CHF 6.75 per share 8.94* 7.84 7.11 7.28 98.7 94.6 90.7 6.751 85.9* 6.50 6.75 6.25 Operating EPS incl. distribution (CHF) Distribution (CHF) 2017 2018 2019 2020 2017 2018 2019 2020 Net profit per share (excl. revaluation effect) Payou
Slide 21: Agenda
2020 Financial Year Agenda • Overview • 2020 Annual Results • Real Estate division – Portfolio – Results • Projects & Development division • Assessment and Summary 24.02.2021 Allreal Group – 2020 Financial Year 21
Slide 22: Real Estate division: Overview
Real Estate division Overview • Expansion of the portfolio and positive change in the value lead to the market value of investment real estate going up by 4.2% to CHF 4.53 billion • Large increases in value amounting to more than CHF 55 million as a result of a strong rental situation and ongoing yi
Slide 23: Strengthening of the portfolio of yield-producing properties
Real Estate division – Portfolio Strengthening of the portfolio of yield- producing properties Addition through acquisitions: Binzstrasse 32, Wetzikon ZH: Office and commercial property; year of construction: 2009; property is a very long-term let to Reichle & De- Massari with a total floor space of
Slide 24: Strengthening of the portfolio of yield-producing properties
Real Estate division – Portfolio Strengthening of the portfolio of yield- producing properties Addition through reclassification: Hardstrasse 299/301, Zurich-West: Replacement building of an office building through Projects & Development division; floor space of 5,960 m2 fully let; main tenant is Pa
Slide 25: Strengthening of the portfolio of yield-producing properties
Real Estate division – Portfolio Strengthening of the portfolio of yield- producing properties Addition through reclassification: Badenerstrasse 131, Zurich Aussersihl (Grünhof site): Replacement building through in-house Projects & Development division with eight rental apartments and commercial sp
Slide 26: Stable mix of uses and tenants
Real Estate division – Portfolio Stable mix of uses and tenants As a percentage of rental income (rounded) Mix of uses for yield-producing Commercial real estate tenants properties Office and services 60% Canton of Zurich 15% Residential 20% Generali Switzerland 7% Trade and warehousing 9%
Slide 27: Favourable maturity profile and well-balanced distribution of tenants
Real Estate division – Portfolio Favourable maturity profile and well-balanced distribution of tenants 22 15 15 12 10 5 5 5 5 As a percentage of 4 target rental income 2 for commercial real Leases broken down by sector estate (rounded) Banks/Insurance companies 22% 2030 et seq. Unlimited 2029 2027
Slide 28: Geographical distribution of residential units
Real Estate division – Portfolio Geographical distribution of residential units 1,842 576 979 287 Total number of rental City of Zurich Rest of Canton of Zurich Other regions apartments 800 250 450 100 405 88 700 697 400 90 204 200 80 600 350 74 543 171 308 70 300 64 500 150 146 60 250 55 400 377 50
Slide 29: Vacancy rate falls to record low
Real Estate division – Portfolio Vacancy rate falls to record low thanks to customer focus and major internally generated assets 3.3 2.9 as a percentage (cumulative from gross 2.2 2.1 target yield) 2.0 2.0 1.8 1.5 1.4 1.6 as at 31/12/2018 1.3 1.3 as at 31/12/2019 as at 30/06/2020 as at 31/12/2020 Yi
Slide 30: Agenda
2020 Financial Year Agenda • Overview • 2020 Annual Results • Real Estate division – Portfolio – Results • Projects & Development division • Assessment and Summary 24.02.2021 Allreal Group – 2020 Financial Year 30
Slide 31: Real Estate division – Earnings: Overview
Real Estate division – Earnings Overview • Rents (like-for-like) down 1.2% for commercial real estate and up 1.7% for residential real estate • In like-for-like terms and excluding the rent payments waived as a result of the coronavirus crisis, rents were down 0.2% for commercial real estate and up
Slide 32: Increases in growth in all areas
Real Estate division – Earnings Increases in growth in all areas • 4.2% increase in the value of the portfolio to CHF 4.53 billion (in CHF +55.2 +84.1 +29.4 +14.9 -0.3 +183.3 million) Rent-free periods Total yield-producing properties Investments: under construction Investments: investment real esta
Slide 33: Rental income change overview
Real Estate division – earnings Overview • The decrease in rental income of CHF 2.7 million to CHF 200.4 million breaks down as follows: (in CHF +0.5 -0.9 million) Portfolio disposals in 2019 Total Lightcube Reduction in vacancies Internal use of the Rise in loss of earnings result of coronavirus cr
Slide 34: Positive contribution from revaluation reflects robustness of the portfolio
Real Estate division – Earnings Positive contribution from revaluation reflects the robustness of the portfolio Residential Commercial Investment real Revaluation real estate real estate estate under Total construction +18.9 +6.9 +29.4 +55.2 73.2 (in CHF million) 1.0 33.0 7.1 29.4 City of Zurich 10.
Slide 35: Real estate expenses are approaching normalised bandwidths
Real Estate division – Earnings Real estate expenses are approaching normalised bandwidths 18.2 normalised bandwidth 15.8 15-17% 14.8 14.9 15.0 13.3 13.8 13.3 13.7 13.5 13.9 11.6 Real estate expenses for yield-producing properties as a percentage of rental income 2009 2010 2011 2012 2013 2014 2015 2
Slide 36: Agenda
2020 Financial Year Agenda • Overview • 2020 Annual Results • Real Estate division • Projects & Development division - Business operation - Earnings • Assessment and Summary 24.02.2021 Allreal Group – 2020 Financial Year 36
Slide 37: Projects & Development division: Overview
Projects & Development division Overview • Simon Räbsamen has been Head of Realisation and a member of Group Management since 1 June 2020, thereby strengthening the Projects & Development division • The volume of projects completed increased by 6.7% to CHF 363.4 million, even though the coronavirus
Slide 38: Projects & Development division: Overview
Projects & Development division Overview • The order backlog as at the cut-off date amounting to CHF 741 million ensures capacity utilisation for around 24 months • Of the secured order backlog, roughly CHF 284 million was added in the period under review, with three major projects accounting for ar
Slide 39: P&D division – project development
P&D division – project development Development of profitable long-term projects for Allreal’s own portfolio and retail Eggen, Lucerne: Winning project from the competition, Spiserstrasse, Zurich Albisrieden: Winning project from submitted by Caruso St John Architects, with 77 the competition, submit
Slide 40: P&D division – project development
P&D division – project development Development of profitable long-term projects for Allreal’s own portfolio and retail Bellerivestrasse 36, Zurich Riesbach: Comprehensive Badenerstrasse 501-505, Zurich Albisrieden: Land refurbishment of the six-storey commercial building in spanning 1,739 m2 right n
Slide 41: Projects completed and handed over in 2020
P&D division – Realisation Projects completed and handed over to the owner in the 2020 financial year ZUR2 data centre, Glattbrugg ZH: Three-storey data Post office site, Baden AG: Comprehensive centre in the Bäuler industrial area, with 7,132 m2 of floor refurbishment and conversion (with an extens
Slide 42: Projects completed and handed over in 2020
P&D division – Realisation Projects completed and handed over to the owner in the 2020 financial year Mühlacker, Gerlafingen SO: Four apartment buildings Ettenfeldstrasse, Zurich Seebach: Handover of comprising a total of 77 rental units plus services and replacement building of the residential comp
Slide 43: Over 90 new and conversion projects under construction
P&D division – Realisation In the 2020 financial year, over 90 new and conversion projects were under construction Bellariarain, Zurich Wollishofen: Nine five-floor Dietlimoos, Adliswil ZH: Site development for third party apartment buildings comprising 180 rental apartments with a total of 325 apar
Slide 44: Over 90 new and conversion projects under construction
P&D division – Realisation In the 2020 financial year, over 90 new and conversion projects were under construction Letzi Turm, Zurich Altstetten: New construction Badenerstrasse 170-172, Zurich Wiedikon: Total comprising two high-rise residential buildings, with refurbishment and extension of an off
Slide 45: High share of third-party projects in volume completed
P&D division – Realisation High share of third-party projects in the volume of projects completed as a percentage of the volume of projects completed Projects for third parties/own Breakdown of the volume of projects projects completed Third party projects 77.2% New construction 60.3% Own proj
Slide 46: Agenda
2020 Financial Year Agenda • Overview • 2020 Annual Results • Real Estate division • Projects & Development division • Assessment and Summary - Strategy - Outlook 24.02.2021 Allreal Group – 2020 Financial Year 46
Slide 47: Successful strategy review process
Assessment and Summary - Strategy Successful strategy review process • In the 2020 financial year, the Board of Directors and Group Management conducted an intensive and comprehensive strategy review process and concluded that the business model is coherent and promising for the future • Four strate
Slide 48: Successful strategy review process
Assessment and Summary - Strategy Successful strategy review process • Publication of an ambitious, but feasible sustainability strategy in the first half of 2021 that will include all ESG areas • The vision is already clear: the share of fossil energies in total energy consumption shall be halved b
Slide 49: Successful strategy review process
Assessment and Summary - Strategy Successful strategy review process «Allreal covers the entire property value chain, from development and realisation to long-term property investment including portfolio management, building management and property management. In all that it does, Allreal strives to
Slide 50: Assessment real estate market
Assessment and Summary - Outlook Assessment real estate market • Demand for investment properties, condominiums and single-family homes remains high • Price gouging on land and developments • Rental apartments in urban locations and the agglomeration remain in demand • In the leasing of office space
Slide 51: Assessment real estate market
Assessment and Summary - Outlook Assessment real estate market • Renegotiation of existing leases may lead to falls in income in the short term, but improve the cashflow profile in the long term • Payment defaults and bankruptcies are to be expected. The credit assessment process is gaining in impor
Slide 52: Assessment general contractor market
Assessment and Summary - Outlook Assessment general contractor market • Corona crisis leads to a noticeable reluctance among institutional investors to initiate new construction projects • Price and margin pressures remain high • Financially strong and well-organised market participants have quickly
Slide 53: Assessment general contractor market
Assessment and Summary - Outlook Assessment general contractor market • The importance (and profit potential) of own projects and specialisation is increasing • Potential differentiation through quality, technological innovations, cooperative processes (BIM) and sustainability • General contractors
Slide 54: Outlook: 2021 Financial Year
Assessment and Summary - Outlook 2021 Financial Year • The future is still looking bright for the Swiss real estate and construction market • In the 2021 financial year, increased returns on property within the Real Estate division and better results within the Projects & Development division can be
Slide 55: Allreal builds value
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Slide 56: Appendix and index
2020 Financial Year Appendix and index • Key figures (Slide 57-58) • Financing (Slide 59) • Real estate division (Slide 60-63) • Projects & Development division (Slide 64-67) 24.02.2021 Allreal Group – 2020 Financial Year 56
Slide 57: 2020 Financial Year – Key figures
2020 Financial Year – Key figures Gratifying result in 2020 financial year 2020/ 2019/ Change (in CHF) 31.12.2020 31.12.2019 EPS excl. revaluation effect 7.84 8.94* -12.3% EPS incl. revaluation effect 10.52 15.30* -31.3% NAV per share as at the cut-off date 151.75 139.55* +8.7% Share price at year-e
Slide 58: 2020 Financial Year – Key figures
2020 Financial Year – Key figures Gratifying result in 2020 financial year 2020 2019 2018 2017 Return on equity (%) – excl. revaluation effect 6.2 7.2* 5.9 5.9 – incl. revaluation effect 7.0 10.6* 7.3 6.0 Net return portfolio (%) – Total 4.1 4.3 4.4 4.3 – Residential real estate 2.8 3.1 3.3 3.4 – Co
Slide 59: Financing: Debt financing structure
2020 Financial Year – Financing Debt financing structure Financing structure 2020 2019 2018 2017 Capital market (bond issues) 55.9% 57.7% 52.1% 49.9% Fixed-rate mortgages – banks 12.7% 15.2% 14.9% 8.5% Fixed-rate mortgages – pension funds / 13.4% 14.6% 14.1% 12.6% insurance companies Bank loans at v
Slide 60: High-quality portfolio growth over the last years
2020 Financial Year – Real Estate division High-quality portfolio growth of over 25% in the last five years 4.4 4.2* 4.1 3.9 3.5 3.5 3.5 (CHF billion/million) 2.5 2.5 2.6 77% as at 31/12. 2.4 (rounded) (excl. investment real estate under construction) 3232* 3399 3113 3226 2756 2699 2817 2085 2078 20
Slide 61: High-quality portfolio, with a focus on the Zurich metropolitan area
2020 Financial Year – Real Estate division High-quality portfolio, with a focus on the metropolitan area of Zurich Regional distribution of 1.7 1.4 2.2 1.9 yield-producing proper- 0.7 0.7 4.3 4.3 0.9 0.9 5.3 5.1 5.6 5.2 ties as a percentage of 5.6 5.3 8.1 8.0 4.8 4.4 the market value as at 60.1 28.5
Slide 62: Leases in the period under review
2020 Financial Year - Real Estate division Leases in the period under review In 2020, Allreal successfully concluded new rental agreements representing more than 17,400 m2 of space in total. New or extended agreements representing significant earnings: 3,523 m2 Commercial building, Baarermatte, 5 ye
Slide 63: Share of yield-producing properties managed by Allreal
2020 Financial Year - Real Estate division Share of yield-producing properties managed by Allreal 2020 2019 Managed by Allreal Third party Allreal Third party Residential properties in the 34.7% 65.3% 34.6% 65.4% metropolitan area of Zurich* Residential properties in the 65.0% 35.0% 65.2% 34.8% rest
Slide 64: P&D division: Overview
2020 Financial Year – P&D division Overview 2020 2019 2018 2017 Earnings from P&D (CHF million) 46.6 66.3 52.6 66.7 Share of third-party business in earnings 76.8 55.4 77.0 71.0 from P&D (%) Gross margin third-party projects (%) 12.0 13.3 13.0 13.1 Net profit from P&D (CHF million) 7.8 20.0* 9.0 15.
Slide 65: Breakdown of earnings from the Projects & Development division
2020 Financial Year – P&D division Breakdown of earnings from the Projects & Development division Earnings from the 2020 2019 Projects & Development - 4% 1% division (%; rounded) - 5% 5% Earnings from placements 8% 28% Fees for third parties 15% 44% 34% Capitalised company- produced assets Gains on
Slide 66: Breakdown of earnings from the Projects & Development division
2020 Financial Year – P&D division Breakdown of earnings from the Projects & Development division (CHF) 2020 2019 Change Third-party business 33.7 35.8 -5.9% (earnings from placements, and fees) Gains on sales 3.7 22.9 -83.8% Capitalised company-produced assets 7.1 6.7 +6.0% Other income 2.1 0.9 ---
Slide 67: Gross margin – third-party projects
2020 Financial Year – P&D division Gross margin – third-party projects Indicators confirm strategy to limit third-party projects to third parties with calculable risks and whose profit expectations remain intact: 2020 2019 2017 2017 Completed project volume – third parties 280.4 270.0 290.3 343.3 (C