Allreal Holding Ag · SIX:ALLN
Allreal — FY2021 Earnings Presentation
75 slides from Allreal's earnings presentation, Mar 8, 2022
Slide 1: Allreal Group: Analysts' and media conference
Allreal Group: Analysts’ and media conference Tuesday, 8 March 2022 Allreal pleased to report increase in profits in financial year 2021, putting it on course for growth Roger Herzog CEO Thomas Wapp CFO
Slide 2: Agenda
2021 financial year Agenda • Overview • 2021 full-year results • Real Estate division • Projects & Development division • Assessment and summary 08.03.2022 Allreal Group – financial year 2021 2
Slide 3: Agenda
2021 financial year Agenda • Overview • 2021 full-year results • Real Estate division • Projects & Development division • Assessment and summary 08.03.2022 Allreal Group – financial year 2021 3
Slide 4: Allreal on course for growth
Overview Allreal on course for growth Group 133.3 182.6 • Net profit increases by 9.2% and is again 6.9% 9.2% affected by revaluation gains • Net operating profit increases by 6.9% • This was a result of higher rental 167.2 124.7 income and profit from the sale of development real estate 2020 2021 2
Slide 5: Allreal on course for growth
Overview Allreal on course for growth Group • With the expansion of its business activities in Western Switzerland, the value of Allreal’s real estate portfolio rises to more than CHF 5.1 billion • Very attractive portfolio of development projects in the cantons of Geneva and Vaud with an investment
Slide 6: Allreal on course for growth
Overview Allreal on course for growth Rental income Western Group Switzerland 15.9 • Annual target rental income from the portfolio 15.6 acquired rises to more than CHF 15 million, 13.6 supporting Allreal’s efforts to achieve a distribution yield for its shareholders aimed at dividend growth 2022 20
Slide 7: Allreal on course for growth
Overview Allreal on course for growth 7.00 Group • Proposal by the Board of Directors to increase the profit distribution by CHF 0.25 to CHF 7.00 per share corresponds to 6.75 6.75 an attractive cash yield of 3.5% • Distribution as dividend (CHF 3.50) and as repayment of 6.50 reserves from contribut
Slide 8: Allreal on course for growth
Overview Allreal on course for growth Real Estate 204.4 2.0% • Rental income went up by 2.0% to CHF 204.4 million in the financial year 2021 • At 1.6%, the cumulative vacancy rate was remained at a very low level 200.4 • Waived rent payments in connection with the coronavirus crisis were no longer s
Slide 9: Allreal on course for growth
Overview Allreal on course for growth 5105.7 Real Estate • The reduction in the discount and capitalisation rates by 20 basis points was crucial for the increase in value of CHF 64.3 12.8% million. • The net yield amounted to 4.0%, which is high compared with 4525.3 others in the market • The expans
Slide 10: Allreal on course for growth
Overview Allreal on course for growth 53.4 Projects & Development 14.6% • At CHF 53.4 million, earnings from Allreal’s Projects & Develop- ment division were considerably higher than in the previous year • Earnings from sales Development of CHF 21.0 million 46.6 significantly affected the result • T
Slide 11: Allreal on course for growth
Overview Allreal on course for growth Projects & Development 20.9 • At CHF 343.2 million, the volume of projects completed 97.2% stabilised at the level of previous years • In the Realisation department, business remained challenging owing to the impact of the coronavirus crisis and lower margins 10
Slide 12: Agenda
2021 financial year Agenda • Overview • 2021 full-year results – Group – Share • Real Estate division • Projects & Development division • Assessment and summary 08.03.2022 Allreal Group – financial year 2021 12
Slide 13: Gratifying financial year 2021
2021 full-year results – Group Gratifying financial year 2021 CHF million 2021 2020 Change Net operating profit 133.3 124.7 +6.9% Operating EBIT 182.3 170.1 +7.2% Net rental income 204.4 200.4 +2.0% Real estate earnings 176.6 172.5 +2.4% Earnings from P&D division 53.4 46.6 +14.6% Completed project
Slide 14: Gratifying financial year 2021
2021 full-year results – Group Gratifying financial year 2021 Limit 31.12.21 31.12.20 31.12.19 31.12.18 Equity ratio >35% 44.1% 48.4% 49.6% 48.1% Net gearing <150% 103.7% 88.6% 83.5% 91.5% Interest coverage ratio >2.0 12.9 11.0 11.1 6.1 Ø Interest rate interest-bearing borrowings 0.61% 0.71% 0.83% 1
Slide 15: First-time consolidation of the business activities in Western Switzerland
2021 full-year results – Group First-time consolidation of the business activities in Western Switzerland Opening balance in Western Switzerland as at 15 October 2021 Assets Liabilities • Purchase price for the (CHF million) companies of CHF 404 million 216 and acquisition of financial Investment re
Slide 16: Stable financing situation
2021 full-year results – Group Stable financing situation CHF 800 Mio. 2.50% CHF 700 Mio. 50 672 2.00% CHF 600 Mio. Bonds CHF 500 Mio. Fixed advances 1.50% and mortgages CHF 400 Mio. Interest rate on 175 outstanding financial 1.00% CHF 300 Mio. debt 150 250 CHF 200 Mio. 193 148 200 0.50% 124 159 CHF
Slide 17: Stable financing situation
2021 full-year results – Group Stable financing situation • In 2021, Allreal issued a 0.6% bond 100% issue of CHF 250 million maturing in 80% 66% 2030 60% 58% • This means that the company had 40% 52% 56% 49% refinanced 49.4% of financial 20% liabilities through the capital market by the cut-off dat
Slide 18: Agenda
2021 financial year Agenda • Overview • 2021 full-year results – Group – Share • Real Estate division • Projects & Development division • Assessment and summary 08.03.2022 Allreal Group – financial year 2021 18
Slide 19: Volatile share price with overall performance of 2.6%
2021 full-year results – Share Volatile share price with overall performance of 2.6% 08.03.2022 Allreal Group – financial year 2021 19
Slide 20: Increase in capital of 650,000 new registered shares
2021 full-year results – Share Increase in capital of 650,000 new registered shares with a broadening of the shareholder base Largest shareholders 20.5% 20.7% Credit Suisse Funds AG 9.6% Olivier Plan 6.5% UBS Fund Management AG 3.5% 4.9% 16 592 821 Peter Spuhler 3.4% shares > 497 784 shares 8.2% Bla
Slide 21: Proposal to increase profit distribution to CHF 7.00 per share
2021 full-year results – Share Proposal to increase profit distribution to CHF 7.00 per share 8.94 94.6 94.1 8.34 90.7 7.84 85.9 7.28 Operating EPS incl. 6.75 6.75 7.001 distribution (CHF) 6.50 Distribution (CHF) 2018 2019 2020 2021 2018 2019 2020 2021 Net profit per share (excl. Payout ratio (%) re
Slide 22: Agenda
2021 financial year Agenda • Overview • 2021 full-year results • Real Estate division – Portfolio – Earnings • Projects & Development division • Assessment and summary 08.03.2022 Allreal Group – financial year 2021 22
Slide 23: Real Estate division – Portfolio Overview
Real Estate division – Portfolio Overview • Expansion of the portfolio and positive change in the value lead to the market value of investment real estate going up by 12.8% to more than CHF 5.1 billion • Increases in value amounting to CHF 64.3 million as a result of a strong rental situation and on
Slide 24: Expansion of yield-producing properties with a focus on residential and Geneva
Real Estate division – Portfolio Expansion of yield-producing properties with a focus on residential and the canton of Geneva Chemin de la Verseuse 3, Efringerstrasse 15, Basel Rue de Bernex 315-327, Avenue Industrielle 18, Aïre GE Bernex GE Carouge GE Rue Daniel-Gevril 10, Carouge GE Rue de Zurich
Slide 25: Expansion of yield-producing properties with a focus on residential and Geneva
Real Estate division – Portfolio Expansion of yield-producing properties with a focus on residential and the canton of Geneva Rue Jean-Jaquet 3, Geneva Rue Gustave-Muller-Brun 3, Rue du Grand-Pré 57, Geneva Rue de Vermont 32-40, Geneva Geneva Route de Frontenex 51, Geneva Chemin des Semailles 19, Ch
Slide 26: Expansion of yield-producing properties with a focus on residential and Geneva
Real Estate division – Portfolio Expansion of yield-producing properties with a focus on residential and the canton of Geneva Chemin de la Traille 21, Chemin de la Traille 25, Chemin de la Traille 35, Onex GE Onex GE Onex GE Route de Loëx 51, Chemin de Joinville 32-34, Onex GE Meyrin GE 08.03.2022 A
Slide 27: Strengthening of the portfolio as a result of in-house projects
Real Estate division – Portfolio Strengthening of the portfolio as a result of in-house projects Increase through reclassification as residential real estate: Grünhof site, Zürich Aussersihl New-build in the inner courtyard with 80 high-end rental apartments and an underground garage with 82 parking
Slide 28: Further expansion of the portfolio as a result of in-house projects
Real Estate division – Portfolio Further expansion of the portfolio as a result of in-house projects Bellerivestrasse 36, Zurich Riesbach: Comprehensive modernisation of a six-storey commercial building from Allreal’s own portfolio in accordance with the plans of C.F. Møller Architects; LEED Platinu
Slide 29: Further expansion of the portfolio as a result of in-house projects
Real Estate division – Portfolio Further expansion of the portfolio as a result of in-house projects Avenue du Cimetière 22, Petit-Lancy GE: Construction of a new apartment building with 17 rental apartments. The amount of space available for rent totals 1,067 m2. The project is being executed by Al
Slide 30: Increasing residential share in the mix of uses
Real Estate division – Portfolio Increasing residential share in the mix of uses CHF 204.4 CHF 160.3 as a percentage of rental income (rounded) million million Mix of uses for yield-producing Commercial real estate tenants properties ◼ Office/Service 55% ◼ Canton of Zurich 15% ◼ Residential 25% ◼ Ge
Slide 31: Favourable maturity profile and significant increase in remaining term of leases
Real Estate division – Portfolio Favourable maturity profile and significant increase in the remaining term of leases 22 22 as a percentage of target 15 15 15 14 rental income for 12 commercial real estate 10 10 9 (rounded) 7 8 6 5 5 5 5 4 2 2 2 0 Unlimited term 2028 2029 2030 2031ff 2022 2023 2024
Slide 32: Geographical distribution of the residential units
Real Estate division – Portfolio Geographical distribution of the residential units 2,426 656 979 557 234 Total number of rental City of Zurich Rest of canton of Zurich Western Switzerland Other regions apartments 1000 250 450 250 100 908 235 405 900 90 400 209 800 200 189 350 200 80 176 308 700 664
Slide 33: Very low vacancy rate testament to the high quality of the portfolio
Real Estate division – Portfolio Very low vacancy rate testament to the high quality and robustness of the portfolio 3.3 as a percentage 2.2 (cumulative from gross 2.0 target yield) 1.6 1.7 1.4 1.6 as at 31.12.2019 1.3 1.1 as at 31.12.2020 as at 31.12.2021 Yield-producing properties Residential real
Slide 34: Agenda
2021 financial year Agenda • Overview • 2021 full-year results • Real Estate division – Portfolio – Earnings • Projects & Development division • Assessment and summary 08.03.2022 Allreal Group – financial year 2021 34
Slide 35: Real Estate division – Earnings Overview
Real Estate division – Earnings Overview • Healthy net yields of 4.3% for commercial real estate and 3.0% for residential real estate • Rents (like-for-like) down 0.6% for commercial real estate and down 0.2% for residential real estate • Only 2% of leases for commercial real estate are up for renew
Slide 36: Overview – Increase in market value
Real Estate division – Earnings Overview – Increase in market value • 12.8% increase in the value of the portfolio to more than CHF 5.1 billion +64.3 +486.4 +10.6 +19.1 +580.4 (CHF million) Total investment real estate under construction yield-producing Investments: Investments: properties yield-pro
Slide 37: Overview – Rental income increasing
Real Estate division – Earnings Overview – Rental income increasing • The increase in rental income of CHF 4.0 million to CHF 204.4 million breaks down as follows: (CHF million) Reduction in losses of earnings Portfolio disposals in 2021 Portfolio additions in 2021 Increase in vacancies (reclassific
Slide 38: Overview – Positive revaluation
Real Estate division – Earnings Overview – Positive revaluation • The average discount rates decreased by 20 basis points to 3.64% +50.9 +6.3 +7.1 +64.3 (CHF million) 10.9 3.2 City of Zurich 23.2 76.0 Rest of canton of Zurich 42.4 27.6 1.1 Western Switzerland 6.0 -12.3 -19.7 Other regions -3.1 -17.7
Slide 39: Overview – Stable real estate expenses
Real Estate division – Earnings Overview – Stable real estate expenses 18.2 15.8 14.9 15.0 Long-term average 15% 13.8 13.9 13.3 13.3 13.7 13.6 13.6 11.6 Real estate expenses for yield-producing properties as a percentage of rental income 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 08
Slide 40: Agenda
2021 financial year Agenda • Overview • 2021 full-year results • Real Estate division • Projects & Development division – Business activities – Earnings • Assessment and summary 08.03.2022 Allreal Group – financial year 2021 40
Slide 41: Projects & Development division Overview
Projects & Development division Overview 820 • Earnings from Allreal’s Projects & Development division went up 741 by 14.6% to CHF 53.4 million 694 657 • The company benefited strongly from positive one-off effects resulting from the sale of development real estate in Dielsdorf ZH and Rümlang ZH • T
Slide 42: Projects & Development division Overview
Projects & Development division Overview • The impact of the coronavirus crisis could be seen in the Realisation department in the form of inefficiencies in the construction process and supply shortages • These circumstances had a noticeable effect on margins. The gross margin in third-party busines
Slide 43: Record number of development projects CHF > 1.9 billion
P&D division – Development Record number of development projects 200 212 ◼ Investment properties in German-speaking CHF > 1.9 835 Switzerland ◼ Condominiums in German-speaking Switzerland billion ◼ Investment properties in Western Switzerland 424 ◼ Condominiums in Western Switzerland ◼ Third-party p
Slide 44: Development of profitable long-term projects for own portfolio and retail
P&D division – Development Development of profitable long-term projects for Allreal’s own portfolio and retail Avenue de la Gare 84, Chavannes-près-Renens VD; plot size: Chemin des Grands-Champs, Route de Base, Chemin des 33,111 m2; up to 500 residential units; construction not due to Charrotons, Co
Slide 45: Development of profitable long-term projects for own portfolio and for sale
P&D division – Development Development of profitable long-term projects for its own portfolio and for sale Spiserstrasse, Zurich Albisrieden: Residential complex with 63 Renggerstrasse, Zurich Wollishofen: A new residential property condominiums; construction scheduled to start at the end of with 21
Slide 46: Projects completed and handed over in financial year 2021
P&D division – Realisation Projects completed and handed over to the owner in the financial year 2021 Bellariarain, Zurich Wollishofen: Nine five-floor apartment Badenerstrasse 170-172, Zurich Wiedikon: Total refurbishment buildings comprising 180 rental apartments in total; building and extension o
Slide 47: Projects completed and handed over in financial year 2021
P&D division – Realisation Projects completed and handed over to the owner in the financial year 2021 Chemin de Semailles 19A and 19B, Lancy GE: Completion of an Chemin de Joinville 30, Meyrin GE: Realisation of a residential apartment building consisting of 30 apartments for Allreal’s property with
Slide 48: Over 100 new and conversion projects under construction
P&D division – Realisation In the financial year 2021, over 100 new and conversion projects were under construction Dietlimoos, Adliswil ZH: Site development for a private owner with Letzi Turm, Zurich Altstetten: New construction comprising two a total of 325 apartments and some 9,000 m2 of space r
Slide 49: Over 100 new and conversion projects under construction
P&D division – Realisation In the financial year 2021, over 100 new and conversion projects were under construction Rieter Campus, Klosterstrasse, Winterthur ZH: Allreal, as the total contractor, is realising a new headquarters with a customer Letzigraben, Zurich Albisrieden: Allreal is realising a
Slide 50: Agenda
2021 financial year Agenda • Overview • 2021 full-year results • Real Estate division • Projects & Development division – Business activities – Earnings • Assessment and summary 08.03.2022 Allreal Group – financial year 2021 50
Slide 51: High share of third-party projects in volume of projects completed
P&D division – Earnings High share of third-party projects in the volume of projects completed Share of the volume of projects completed in CHF 343.2 CHF 343.2 2021 (%) million million Projects for third parties/in-house Breakdown of the volume of projects projects completed ◼ Projects for third par
Slide 52: Earnings of P&D division driven by gains on sales
P&D division – Earnings Earnings of P&D division driven by gains on sales - 4% - 5% 5% 3% Earnings from the 8% Projects & Development 36% division (%; rounded) Fees from third-party business 15% 44% 2020 2021 Earnings from placements 39% Capitalised company-produced assets Gains on sales 15% 32% 12%
Slide 53: Agenda
2021 financial year Agenda • Overview • 2021 full-year results • Real Estate division • Projects & Development division • Assessment and summary 08.03.2022 Allreal Group – financial year 2021 53
Slide 54: Assessment of the real estate market
Assessment and summary Assessment of the real estate market • Demand for yield-producing property in central locations, as well as for condominiums and houses, is undiminished • In the core cities, demand for rental apartments remains very high, which is resulting in low vacancy rates • Hybrid worki
Slide 55: Outlook for the Real Estate division
Assessment and summary Outlook for the Real Estate division • Very attractive portfolio of development projects with a focus on the Zurich and Geneva business centres and a potential investment volume of around CHF 1.9 billion • Annual target rental income from the portfolio acquired in Western Swit
Slide 56: Assessment of the market in which the Projects & Development division operates
Assessment and summary Assessment of the market in which the Projects & Development division operates • Market participants still demand a high degree of flexibility in their financial and capacity planning, which puts even more pressure on margins that are already low • Institutional owners have us
Slide 57: Outlook for the Projects & Development division
Assessment and summary Outlook for the Projects & Development division 66.3 • Significant growth potential in Western Switzerland through in- 53.4 house projects executed by the general contractor Roof are 52.6 46.6 helping to stabilise earnings • A number of in-house projects will be ready for cons
Slide 58: 2021 financial year
Assessment and summary 2021 financial year • The future is still looking bright for the Swiss real estate and construction market • Increased returns on property for the Real Estate division and stabilisation in the Projects & Development division can be expected in the financial year 2022 • Allreal
Slide 59: Allreal schafft Werte
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Slide 60: Note 1 – Sustainability
2021 financial year Note 1 – Sustainability • Environment (E): Focus areas and targets (FN 61) • Social (S): Focus areas and targets (FN 62) • Governance (G): Focus areas and targets (FN 63) 08.03.2022 Allreal Group – financial year 2021 60
Slide 61: Ambitious ESG targets – carbon reduction targets being developed
2021 financial year – Sustainability Ambitious ESG targets – carbon reduction targets being developed Environment − Conduct a full consumption inventory and develop property strategies by the end of 2022 − Halve the use of fossil fuels by 2030 Carbon neutrality by 2050 at the latest − Offset some ca
Slide 62: Ambitious ESG targets – genuine equal opportunities
2021 financial year – Sustainability Ambitious ESG targets – genuine equal opportunities Social − Compile and communicate on all areas covered by Allreal as it stands: Achieved in 2021 Workplace health and safety all round − Create criteria for decisions on semi-retirement: Achieved in 2021 − Create
Slide 63: Ambitious ESG targets – remuneration system geared to the long term
2021 financial year – Sustainability Ambitious ESG targets – remuneration system geared to the long term Governance − The sustainability management team will be operational by the middle of 2022 Swiftly putting together a team of specialists in each of the ESG areas is a priority Carbon neutrality b
Slide 64: Note 2 – Additional information
2021 financial year Note 2 – Additional information • Key figures (FN 65-67) • Financing (FN 68) • Real Estate (FN 69-72) • Projects & Development (FN 73-75) 08.03.2022 Allreal Group – financial year 2021 64
Slide 65: Key figures – Gratifying financial year 2021
2021 financial year – Key figures Gratifying financial year 2021 243.2 9.2% (CHF million) 182.6 161.0 167.2 6.9% 142.0 115.6 124.7 133.3 2018 2019 2020 2021 2018 2019 2020 2021 Net profit incl. revaluation effect Net profit excl. revaluation effect 08.03.2022 Allreal Group – financial year 2021 65
Slide 66: Key figures – Gratifying financial year 2021
2021 financial year – Key figures Gratifying financial year 2021 2021/ 2020/ Change (CHF) 31.12.21 31.12.20 EPS excl. revaluation effect 8.34 7.84 +6.4% EPS incl. revaluation effect 11.43 10.52 +8.7% NAV per share as at the cut-off date 154.85 151.75 +2.0% Share price at year-end 202.00 203.50 -0.7%
Slide 67: Key figures – Gratifying financial year 2021
2021 financial year – Key figures Gratifying financial year 2021 2021 2020 2019 2018 Return on equity (%) – excl. revaluation effect 6.5 6.2 7.2 5.9 – incl. revaluation effect 7.3 7.0 10.6 7.3 Net return portfolio (%) – Total 4.0 4.1 4.3 4.4 – Residential real estate 3.0 2.8 3.1 3.3 – Commercial rea
Slide 68: Financing – Debt financing structure
2021 financial year – Financing Debt financing structure Financing structure 2021 2020 2019 2018 Capital market (bond issues) 49.4% 55.9% 57.7% 52.1% Fixed-rate mortgages – banks 17.2% 12.7% 15.2% 14.9% Fixed-rate mortgages – insurance 10.7% 13.4% 14.6% 14.1% companies/pension funds Bank loans at va
Slide 69: High-quality portfolio growth of around 45% in the last 7 years
2021 financial year – Real Estate division High-quality portfolio growth of around 45% in the last 7 years 5.0 4.3 4.2 4.1 3.9 CHF billion/million as at 3.5 3.5 3.5 31.12. (rounded) 67% (excl. investment real estate 2.6 2.5 2.5 under construction) 3308 1657 3226 3232 3399 2756 2699 3113 2817 Commerc
Slide 70: High-quality portfolio, with a focus on Zurich and Geneva
2021 financial year – Real Estate division High-quality portfolio, with a focus on Zurich and Geneva Regional distribution of 1.4 1.1 1.9 1.6 yield-producing properties 0.7 0.6 4.3 0.9 0.9 5.1 5.2 7.1 13.4 8.0 as a percentage of the 5.3 4.4 4.7 26.1 market value as at 31.12 4.9 5.4 29.3 29.7 36.3 Ci
Slide 71: Share of yield-producing properties that Allreal manages
2021 financial year – Real Estate division Share of yield-producing properties that Allreal manages 2021 2020 Managed by Allreal Third party Allreal Third party Residential real estate in the 28.7% 71.3% 34.7% 65.3% metropolitan area of Zurich* Residential real estate in the 16.4% 83.6% 65.0% 35.0%
Slide 72: Leases broken down by sector
2021 financial year – Real Estate division Leases broken down by sector 2020 2021 Leases broken down by sector Leases broken down by sector ◼ Banks/Insurance 22% ◼ Banks/Insurance 21% ◼ Service/Consultation 23% ◼ Service/Consultation 26% ◼ Public sector 21% ◼ Public sector 22% ◼ Trade and commerce 1
Slide 73: P&D division – Overview
2021 financial year – P&D division Overview 2021 2020 2019 2018 Earnings from P&D division (CHF million) 53.4 46.6 66.3 52.6 Share of third-party business in earnings 49.1 76.8 55.4 77.0 from P&D (%) Gross margin third-party projects (%) 9.1 12.0 13.3 13.0 Net profit from P&D division (CHF million)
Slide 74: Breakdown of earnings from the Projects & Development division
2021 financial year – P&D division Breakdown of earnings from the Projects & Development division (CHF) 2021 2020 Change Third-party business 24.5 33.7 -27.3% (earnings from placements, and fees) Gains on sales 21.0 3.7 --- Capitalised company-produced assets 6.2 7.1 -12.7% Other income 1.7 2.1 -19.
Slide 75: Gross margin – third-party projects
2021 financial year – P&D division Gross margin – third-party projects 2021 2020 2019 2018 Completed project volume – third parties 269.6 280.4 270.0 290.3 (CHF million) Earnings from realisation P&D (CHF million) 24.5 33.7 035.8 37.8 Gross margin – third-party projects (%) 9.1 12.0 13.3 013.0 08.03