Allreal Holding Ag · SIX:ALLN
Allreal — FY2022 Earnings Presentation
68 slides from Allreal's earnings presentation, Mar 1, 2023
Slide 1: Allreal Group: Analysts' and media conference
Allreal Group: Analysts’ and media conference Wednesday, 1 March 2023 Allreal achieved a record operating profit in the 2022 financial year Roger Herzog CEO Thomas Wapp CFO
Slide 2: Agenda
2022 financial year Agenda • Overview • Annual results for 2022 • Real Estate division • Projects & Development division • Analysis and summary 1 March 2023 Allreal Group – 2022 financial year 2
Slide 3: Agenda
2022 financial year Agenda • Overview • Annual results for 2022 • Real Estate division • Projects & Development division • Analysis and summary 1 March 2023 Allreal Group – 2022 financial year 3
Slide 4: Excellent annual results for Allreal
Overview Excellent annual results for Allreal CHF million Group 182.6 154.7 • The net operating profit increased by 7.2% to a 142.9 133.3 –15.3% new record total of CHF 142.9 million +7.2% • The improvement in operating profit was due to the expansion in western Switzerland, stable vacancy rates and
Slide 5: Excellent annual results for Allreal
Overview Excellent annual results for Allreal 6.75 6.75 7.00 7.00 Group (3.5%) (4.7%) (3.5%) (3.3%) • Board of Directors proposal for an unchanged distribution of CHF 7.00 per share • Distribution as a dividend (CHF 3.50 per share) and as repayment of reserves from contribution of capital (CHF 3.50
Slide 6: Excellent annual results for Allreal
Overview Excellent annual results for Allreal CHF million Real Estate 214.2 204.4 • Rental income increased by 4.8% to CHF 214.2 million +4.8% in the 2022 financial year • The cumulative vacancy rate stayed at the low figure of 1.6% • Yield-producing properties in western Switzerland contributed to
Slide 7: Excellent annual results for Allreal
Overview Excellent annual results for Allreal CHF million Real Estate 5105.7 5097.2 –0.2% • Despite an increase of around 40 basis points on average in discount and capitalisation rates, the portfolio still recorded modest revaluation gains of CHF 16.5 million • The market value of the whole portfol
Slide 8: Excellent annual results for Allreal
Overview Excellent annual results for Allreal CHF million Projects & Development 54.6 53.4 +2.2% • Within the Projects & Development division, Allreal generated a profit of CHF 54.6 million, up on the previous year • At 11.0%, the gross margin in third-party business was up on the previous year desp
Slide 9: First steps taken on the pathway to carbon neutrality
Overview The first steps have been taken and the pathway to achieve carbon neutrality has been outlined Sustainability • Initial projects focused on the broad-based expansion of photovoltaic systems have been completed. Net investments amount to CHF 7.5 million in total up to 2024 • By the end of 20
Slide 10: Pathway to carbon neutrality – fossil share halved by 2030
Overview Pathway to carbon neutrality – the share of fossil fuels will be halved to just over 30% by 2030 100% 95% 90% 85% 80% [%] 75% 70% 60% of fossilEnergieträger 65% 49% fuels [%] 60% 55% 50% 45% Share fossiler 40% 32% 35% 30% 24% Anteil 25% 20% 16% 15% 8% 10% 0% 5% 0% 2040 2043 2020 2021 2022 2
Slide 11: Agenda
2022 financial year Agenda • Overview • Annual results for 2022 – Group – Share • Real Estate division • Projects & Development division • Analysis and summary 1 March 2023 Allreal Group – 2022 financial year 11
Slide 12: Excellent financial year with a record operating profit
2022 annual results – Group Excellent financial year with a record operating profit CHF million 2022 2021 Change Net operating profit 142.9 133.3 +7.2% Operating EBIT 184.2 182.3 +1.0% Net rental income 214.2 204.4 +4.8% Real estate earnings 187.1 176.6 +5.9% Earnings from Projects & Development 54.
Slide 13: Excellent financial year with a record operating profit
2022 annual results – Group Excellent financial year with a record operating profit Limit 31.12.22 31.12.21 31.12.20 31.12.19 Equity ratio >35% 45.6% 44.1% 48.4% 49.6% Net gearing <150% 99.9% 103.7% 88.6% 83.5% Interest coverage ratio >2.0 11.5 12.9 11.0 11.1 Loan to value (LTV) 47.3% 49.2% 45.9% 44
Slide 14: Pleasing improvement to the financing situation
2022 annual results – Group Pleasing improvement to the financing situation • As at 31 December 2022, the loan to value (LTV*) had dropped to 47.3%, down 1.9 percentage points compared to the previous year • The entire proceeds from the sale of two yield-producing properties – around CHF 60 million
Slide 15: Pleasing improvement to the financing situation
2022 annual results – Group Pleasing improvement to the financing situation Investment and development real estate Pledged Actually encumbered Available for securing other creditors/bonds • Looking at investment and development real estate, around CHF 3.7 billion (66%) is pledged 5515.4 4234.0 but w
Slide 16: Pleasing improvement to the financing situation
2022 annual results – Group Pleasing improvement to the financing situation • Group equity rose to CHF 2.60 billion, corresponding to a net asset value per 100% share of CHF 179.75 before deferred taxes 90% 80% 66% • At the end of December 2022, the average 70% 60% interest rate for liabilities was
Slide 17: Agenda
2022 financial year Agenda • Overview • Annual results for 2022 – Group – Share • Real Estate division • Projects & Development division • Analysis and summary 1 March 2023 Allreal Group – 2022 financial year 17
Slide 18: Disappointing price development with a high level of volatility
2022 annual results – Share Disappointing price development with a high level of volatility Share price (indexed) January 2022 to December 2022 1 March 2023 Allreal Group – 2022 financial year 18
Slide 19: Stable profit distribution of CHF 7.00 per share proposed
2022 annual results – Share Stable profit distribution of CHF 7.00 per share proposed Operating EPS incl. 8.94 94.1 8.65 90.7 distribution (CHF) 8.34 85.9 86.9 7.84 Distribution (CHF) 6.75 6.75 7.00 7.001 2019 2020 2021 2022 2019 2020 2021 2022 Net profit per share (excl. Payout ratio (%) revaluatio
Slide 20: Agenda
2022 financial year Agenda • Overview • Annual results for 2022 • Real Estate division – Portfolio – Results • Projects & Development division • Analysis and summary 1 March 2023 Allreal Group – 2022 financial year 20
Slide 21: Real Estate division – Portfolio Overview
Real Estate division – Portfolio Overview • A healthy net return of 3.8% and a consistently low vacancy rate of just 1.6% • Revaluation gains of CHF 16.5 million despite increased discount and capitalisation rates • Only around 18% of leases due to expire and be up for renewal within the next two ye
Slide 22: Sale of two residential properties in Basel
Real Estate division – Portfolio Sale of two residential properties in Basel Disposal through sale: Achilles-Bischoff-Strasse 2–10, Basel Residential property built in 1969 and acquired by Allreal in 2006. All 104 apartments were rented out when the property was sold. The property was no longer meet
Slide 23: Further expansion through in-house projects in German-speaking Switzerland
Real Estate division – Portfolio Further expansion through in-house projects in German-speaking Switzerland Bellerivestrasse 36, Zurich Riesbach Extensive modernisation of a six-floor office building from Allreal’s own portfolio in accordance with plans drawn up by architecture firm C.F. Møller Arch
Slide 24: Further expansion through in-house projects in western Switzerland
Real Estate division – Portfolio Further expansion through in-house projects in western Switzerland Avenue du Cimetière 22, Petit-Lancy GE: Construction of a new apartment building with 17 rental apartments. The total floor space amounts to 1446 m2. The project is being executed by the Projects & De
Slide 25: Residential use accounting for around a quarter
Real Estate division – Portfolio Residential use accounting for around a quarter As a percentage of rental income in 2022 (rounded) CHF 214.2 million CHF 161.2 million Mix of uses for yield-producing Commercial real estate tenants properties Office and services 56% Canton of Zurich 15% Residen
Slide 26: Steady improvement in the maturity profile of leases
Real Estate division – Portfolio Steady improvement in the maturity profile of leases As a percentage of target rental 22 income for commercial real estate (rounded) 18 16 15 14 11 10 10 10 9 8 8 7 7 6 6 5 5 5 4 2 2029 Unlimited term 2030 2031 2023 2024 2025 2026 2027 2028 2032 ff. As at 31 December
Slide 27: Agenda
2022 financial year Agenda • Overview • Annual results for 2022 • Real Estate division – Portfolio – Results • Projects & Development division • Analysis and summary 1 March 2023 Allreal Group – 2022 financial year 27
Slide 28: Real Estate division – Results Overview
Real Estate division – Results Overview • Rents (like-for-like) up 0.3% (residential real estate) and down 0.3% (commercial real estate) • In 2023, 7% of leases for commercial properties will be due for renewal, with 85% of them due to the property at Freiburgstrasse 130 in Berne being re-let • The
Slide 29: Revaluation gains
Real Estate division – Results Revaluation gains Residential Commercial Investment real Total revaluation CHF million real estate real estate estate under gains construction +20.7 –7.7 +3.5 +16.5 7.9 13.8 City of Zurich 28.0 Rest of Canton of Zurich 12.7 12.4 0.6 2.9 –4.4 –5.9 Western Switzerland –1
Slide 30: Factors influencing revaluations
Real Estate division – Results Factors influencing revaluations CHF million Graph depicting the portfolio of yield- producing properties without +390 properties that were sold in the period under review –304 –52 Real estate expenditure and investment (ESG) 4917 4883 capitalisation rates income (inde
Slide 31: Agenda
2022 financial year Agenda • Overview • Annual results for 2022 • Real Estate division • Projects & Development division – Operating activities – Results • Analysis and summary 1 March 2023 Allreal Group – 2022 financial year 31
Slide 32: Projects & Development division Overview
Projects & Development division Overview • The order backlog secured as at the cut-off date amounting to CHF 611 million ensures capacity utilisation for around two years • The potential investment volume of in-house projects is in excess of CHF 2.0 billion • Earnings from the Projects & Development
Slide 33: Sizeable income from the sale of development real estate
P&D division – Development Sizeable income from the sale of development real estate Bäuler, Rümlang ZH: Sale of development reserve Sale price: CHF 18.8 million Profit: CHF 13.1 million Florenstrasse, Winterthur ZH: Sale of residential real estate Total sale price: CHF 14.5 million Profit: CHF 2.9 m
Slide 34: Extensive investment pipeline ensures future growth
P&D division – Development Extensive investment pipeline ensures future growth CHF million Investment properties in German-speaking 138 Switzerland 20.8% 22.3% Condominiums in German-speaking Switzerland Investment properties in western Switzerland Condominiums in western Switzerland 511 CHF
Slide 35: Investment of around CHF 800 million into own portfolio by 2030
P&D division – Development Investment of around CHF 800 million into own portfolio by 2030 Realisation 2023 2024 2025 2026 CHF million Av. de l’Amandolier, Geneva Rue Edouard-Rod, Geneva Av. de Joli-Mont/Av. Louis-Casaï/Av. de Rian-Parc, Geneva Av. de la Gare, Chavannes-près-Renens VD Badenerstr., Z
Slide 36: Investment of around CHF 800 million into own portfolio by 2030
P&D division – Development Investment of around CHF 800 million into own portfolio by 2030 Realisation 2027 2028 2029 2030 CHF million Ch. du Dr J-L Prevost/Ch. des Buissons/Ch. Mestrezat, Geneva Pré des Dames, Veyrier GE Route des Tattes d’Oie, Nyon VD Rte de Base/Ch. des Charrotons/Ch. des Grands-
Slide 37: Investment of around CHF 200 million into development properties for sale
P&D division – Development Investment of around CHF 200 million into development properties for sale by 2030 Realisation 2023 2024 2025 2026 CHF million Spiserstr., Zurich Curé-Baud, Grand-Lancy GE Inzlingerstr., Riehen BS Av. de Joli-Mont/Av. Louis-Casaï/Av. de Rian-Parc, Geneva Av. de la Gare, Cha
Slide 38: Investment of around CHF 200 million into development properties for sale
P&D division – Development Investment of around CHF 200 million into development properties for sale by 2030 2027 2028 2029 2030 Rte de Base/Ch. des Charrotons/Ch. des Grands-Champs, Confignon GE Ch. Mestrezat, Geneva Route des Tattes d’Oie, Nyon VD Realisation CHF million CAPEX* 15 10 5 5 The sched
Slide 39: Extensive investment pipeline ensures future growth
P&D division – Development Extensive investment pipeline ensures future growth • A healthy investment pipeline will guarantee organic growth and utilise much of the capacity within the Realisation Department • The high volume of in-house projects will lead to a further reduction in third- party busi
Slide 40: Development of profitable long-term projects
P&D division – Development Development of profitable long-term projects for Allreal’s own portfolio or retail Plot, Veyrier Nord GE: Extension of the existing plot with a total land area of 15,441 m2 with two additional plots for the realisation of residential real estate Construction due to start:
Slide 41: Over 120 new and conversion projects under construction
P&D division – Realisation In the 2022 financial year, over 120 new and conversion projects were under construction Dietlimoos, Adliswil ZH: Site development for a private owner with a total of 325 apartments and around 9000 m2 of space reserved for trade and services Construction sum: > CHF 200 mil
Slide 42: Over 120 new and conversion projects under construction
P&D division – Realisation In the 2022 financial year, over 120 new and conversion projects were under construction Rieter-Campus, Klosterstrasse, Winterthur ZH: As the total contractor, Allreal is creating the new Rieter head office where a customer centre, product and technology development and ad
Slide 43: Agenda
2022 financial year Agenda • Overview • Annual results for 2022 • Real Estate division • Projects & Development division • Analysis and summary 1 March 2023 Allreal Group – 2022 financial year 43
Slide 44: Market forecast for the Real Estate division
Analysis and summary Market forecast for the Real Estate division • On the transaction market, potential buyers of investment properties are being increasingly cautious. With this in mind, major price rises are unlikely. Real estate therefore remains an attractive investment option • Demand for attr
Slide 45: Outlook for the Real Estate division
Analysis and summary Outlook for the Real Estate division • Allreal’s historically low vacancy rate will increase slightly compared to the previous year but will remain low • Higher rental income as a result of indexing commercial rents and a rising reference interest rate from the second half of 20
Slide 46: Market forecast for the Projects & Development division
Analysis and summary Market forecast for the Projects & Development division • The impact of geopolitical tensions is still being felt – above all in the form of delivery delays and rising material costs. Additionally the labour market is also extremely tight • With higher financing costs and tighte
Slide 47: Outlook for the Projects & Development division
Analysis and summary Outlook for the Projects & Development division • Allreal has a handle on its own construction activities, which it can steer as required • The share of in-house projects is set to increase in the future, which will reduce the dependence on the third-party market • Owing to the
Slide 48: Outlook for the Group
Analysis and summary Outlook for the Group • Appreciably higher net financial expense and the absence of positive one-off tax effects mean an impact on net operating profit can be anticipated • All things considered, Allreal is expecting net operating profit for the 2023 financial year to be down on
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Slide 50: Appendix – Additional information
2022 financial year Appendix – Additional information • Key financial figures (FN 51–54) • Financing (FN 55–56) • Real Estate (FN 57–63) • Projects & Development (FN 64–68) 1 March 2023 Allreal Group – 2022 financial year 50
Slide 51: Record operating profit
2022 financial year – Key financial figures Record operating profit CHF million 243.2 –15.3% +7.2% 182.6 167.2 154.7 142.0 142.9 124.7 133.3 2019 2020 2021 2022 2019 2020 2021 2022 1 March 2023 Allreal Group – 2022 financial year 51
Slide 52: Record operating profit
2022 financial year – Key financial figures Record operating profit 2022/ 2021/ Change (CHF) 31.12.22 31.12.21 EPS excl. revaluation effect 8.65 8.34 +3.7% EPS incl. revaluation effect 9.36 11.43 –18.1% NAV per share as at the cut-off date 157.20 154.85 +1.5% Share price as at the cut-off date 150.4
Slide 53: Record operating profit
2022 financial year – Key financial figures Record operating profit 2022 2021 2020 2019 Return on equity (%) – incl. revaluation effect 6.0 7.3 7.0 10.6 – excl. revaluation effect 6.7 6.5 6.2 7.2 Net return portfolio (%) – Total 3.8 4.0 4.1 4.3 – Residential real estate 2.6 3.0 2.8 3.1 – Commercial
Slide 54: Record operating profit
2022 financial year – Key financial figures Record operating profit Financing structure 2022 2021 2020 2019 Capital market (bond issues) 50.9% 49.4% 55.9% 57.7% Fixed-rate mortgages – banks 13.1% 17.2% 12.7% 15.2% Fixed-rate mortgages – insurance 7.9% 10.7% 13.4% 14.6% companies/pension funds Bank l
Slide 55: Reduction in current liabilities highlights stable financing situation
2022 financial year – Financing Reduction in current liabilities highlights stable financing situation 2.50% CHF 1'000 Mio. Total financial liabilities 174 as at 31 December 2022: 2.00% CHF 2.61 billion CHF 800 Mio. (CHF –116.2 million) 794 1.50% CHF 600 Mio. 1.00% CHF 400 Mio. Bonds 175 Fixed advan
Slide 56: Stable shareholder base
2022 financial year – Financing Stable shareholder base Largest shareholders > 497 784 shares Credit Suisse Funds AG >10% 20.8% 22.3% 22.3% 100 001 - 497 784 shares Plan Olivier 6.5% 10 001 - 100 000 shares Spuhler Peter 3.5% 1001 - 10 000 shares 1 bis 1000 shares BlackRock Inc. >3% 5.0% 16 592 821
Slide 57: High-quality portfolio growth
2022 financial year – Real Estate division High-quality portfolio growth 5.0 4.9 CHF billion/million as at 4.3 4.2 31 December (rounded) 4.1 3.9 (excl. investment real estate 3.5 3.5 3.5 under construction) 67% 2.5 2.6 3308 3301 1647 1616 3226 3232 3399 2756 2699 3113 Commercial 2817 2078 2099 720 8
Slide 58: High-quality portfolio with a focus on Zurich and Geneva
2022 financial year – Real Estate division High-quality portfolio with a focus on Zurich and Geneva 1.7 Regional distribution of 6.6 5.3 5.4 7.2 7.1 27.0 yield-producing properties 13.4 13.6 26.1 7.1 7.1 as a percentage of the 29.6 29.7 market value as at 31 32.8 33.2 December 39.0 40.6 Other region
Slide 59: Geographical distribution of residential units
2022 financial year – Real Estate division Geographical distribution of residential units 2276 655 979 555 87 Total number of rental City of Zurich Rest of Canton of Zurich Western Switzerland Other regions apartments 1000 250 234 450 250 100 866 404 900 400 208 90 800 200 188 350 200 80 177 310 700
Slide 60: Very low vacancy rate reflects high quality of the portfolio
2022 financial year – Real Estate division Very low vacancy rate reflects the high quality and robustness of the portfolio As a percentage (cumulative from gross target yield) 1.8 1.7 1.6 1.6 1.6 1.4 1.3 1.1 1.0 As at 31 December 2020 As at 31 December 2021 As at 31 December 2022 Yield-producing pro
Slide 61: Increasing rental income
2022 financial year – Real Estate division Increasing rental income CHF million • The CHF 9.8 million increase in rental income to CHF 214.2 million was broken down as follows: –0.2 –0.8 –0.2 –0.4 12 months for the first time) +11.4 (contributed to earnings for +9.8 Portfolio disposals in 2022 Portf
Slide 62: Stable real estate expenses
2022 financial year – Real Estate division Stable real estate expenses 18.2 15.8 15.0 Real estate expenses for 13.3 13.8 13.3 13.7 13.6 13.9 13.6 yield-producing properties 12.8 as a percentage of rental 11.6 income 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 1 March 2023 Allreal Gro
Slide 63: Leases broken down by sector
2022 financial year – Real Estate division Leases broken down by sector 2022 2021 Banks/Insurance companies 22% Banks/Insurance companies 21% Service/Consultation 23% Service/Consultation 26% Public sector 21% Public sector 22% Trade and commerce 18% Trade and commerce 18% Informat
Slide 64: Increasing share of in-house projects in the completed project volume
2022 financial year – P&D division Increasing share of in-house projects in the completed project volume Share of completed project volume in 2022 Projects for third parties/in-house (%) projects Projects for third parties 77.6% Projects for Allreal’s own portfolio 17.1% CHF 319.6 In-house pro
Slide 65: Overview of results
2022 financial year – P&D division Overview of results 2022 2021 2020 2019 Volume of projects completed – third parties 247.9 269.6 280.4 270.0 (CHF million) Earnings from P&D (CHF million) 54.6 53.4 46.6 66.3 Share of third-party business in earnings 49.8 49.1 76.8 55.4 from P&D (%) Earnings from r
Slide 66: Composition of earnings from Projects & Development division
2022 financial year – P&D division Composition of earnings from Projects & Development division CHF million 2022 2021 Change Third-party business 27.2 24.5 +11.0% (earnings from placements and fees) Gains on sales 17.2 21.0 –18.1% Capitalised company-produced assets 8.7 6.2 +40.3% Other income 1.5 1
Slide 67: Gains on sales boosting earnings in the Projects & Development division
2022 financial year – P&D division Gains on sales boosting earnings in the Projects & Development division –3% Earnings from the P&D division (%; rounded) 3% 3% –5% 36% Fees from third-party business 32% 2022 45% 2021 Earnings from placements Capitalised company-produced assets 39% Gains on sales 15
Slide 68: Steady share of in-house projects in the order backlog
2022 financial year – P&D division Steady share of in-house projects in the order backlog 2022 2021 CHF 611 million CHF 694 million Projects for third parties 75.7% Projects for third parties 72.6% Projects for Allreal’s own portfolio 13.0% Projects for Allreal’s own portfolio 21.9% In-hou