Allreal Holding Ag · SIX:ALLN
Allreal — H1 2019 Earnings Presentation
50 slides from Allreal's earnings presentation, Aug 27, 2019
Slide 1: Allreal Group: First half-year 2019
Allreal Group: First half-year 2019 Tuesday, 27. August 2019 Convincing 2019 Half-year Results
Slide 2: Agenda
2019 Half-year Report Agenda • Overview • 2018 Half-year results • Real Estate division • Projects & Development division • Evaluation and outlook 27.08.2019 Allreal Group – First half-year 2019 2
Slide 3: Overview: Convincing 2019 half-year results (Group)
Overview Convincing 2019 half-year results Group • Operating net profit of CHF 63.8 million at 4.1% above that of the previous year • Distinctive upward revaluation resulted in 21.1% growth of net profit including revaluation gains of CHF 85.1 million • Increased earnings forecast for 2019 financial
Slide 4: Overview: Real Estate
Overview Convincing 2019 half-year results Real Estate • Moderate increase in rental income of 4.8% to CHF 102.6 million, the first time above CHF 100 million • Vacancy rate again decreased slightly by 10 base points to record-low 1.9% • Expected higher real estate expenses of CHF 11.4 million due t
Slide 5: Overview: Projects & Development
Overview Convincing 2019 half-year results Projects & Development • Income generated from general contracting grew by 3.3% to CHF 28.1 million, characterised by higher profits from construction activity • Gross margin on third-party projects at high 14.0% • Moderate increase in project volume expect
Slide 6: Overview: Finance
Overview Convincing 2019 half-year results Finance • Investment activity resulted in an increase in financial liability of CHF 50 million to a total of CHF 2,122 million • Average interest rate of 1.27% on fixed-interest financial liabilities at average duration of fixed-interest period of 46 months
Slide 7: Agenda
2019 Half-year Report Agenda • Overview • 2018 Half-year results – Group – Share • Real Estate division • Projects & Development division • Evaluation and outlook 27.08.2019 Allreal Group – First half-year 2019 7
Slide 8: 2019 Half-year Report – Group: Net profit
2019 Half-year Report – Group Convincing 2019 half-year results 173.6 161.0 129.2 112.2 113.3 115.6 85.1 69.8 66.0 70.3 61.4 59.3 61.3 63.8 in CHF million 2016 2017 2018 1. HJ 2019 2016 2017 2018 1. HJ 2019 Net profit Net profit incl. revaluation effect excl. revaluation effect 27.08.2019 Allreal Gr
Slide 9: 2019 Half-year Report – Group: Key results
2019 Half-year Report – Group Convincing 2019 half-year results In CHF million 1st HJ 2019 1st HJ 2018 Change or 30.06.2019 or 31.12.2018 Operating result 63.8 61.3 +4.1% Operating EBIT 92.1 92.0 +0.1% Net rental income 102.6 97.9 +4.8% Earnings from real estate 91.2 89.0 +2.5% Earnings from P&D 28.
Slide 10: 2019 Half-year Report – Group: ROE and yields
2019 Half-year Report – Group Convincing 2019 half-year results 1st HJ 2019 2018 2017 2016 ROE in %1 – excl. revaluation gains 6.6 5.9 5.9 5.9 – incl. revaluation gains1 7.7 7.3 6.0 8.5 Net yield Portfolio in % – Total 4.5 4.4 4.3 4.4 – Residential properties 3.3 3.3 3.5 3.9 – Commercial properties
Slide 11: 2019 Half-year Report – Group: Balance sheet ratios
2019 Half-year Report – Group Convincing 2019 half-year results Limit 30.06.19 31.12.18 31.12.17 31.12.16 Equity ratio > 35% 47.1% 48.1% 49.3% 52.3% Net Gearing < 150% 94.3% 91.5% 87.2% 75.7% Interest coverage coefficient > 2.0 6.8 6.1 6.0 4.8 Ø Interest on interest-bearing debt 1.27% 1.48% 1.53% 1.
Slide 12: 2019 Half-year Report – Group: Debt maturities
2019 Half-year Report – Group Convincing 2019 half-year results 2.0% CHF 500 million 1.5% CHF 400 million CHF 300 million 1.0% CHF 200 million 0.5% Bonds Fixed advances and mortgages Interest rate of out- 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 standing financial debt Total financial
Slide 13: 2019 Half-year Report – Group: Financing structure
2019 Half-year Report – Group Convincing 2019 half-year results Financing structure 2019 2018 2017 2016 Capital market 45.0% 52.1% 49.9% 40.3% Fixed-rate mortgages banks 14.4% 14.9% 8.5% 10.4% Fixed-rate mortgages pension 13.8% 14.1% 12.6% 6.9% funds/insurances companies Bank loans with short-term 2
Slide 14: 2019 Half-year Report – Group: Financial liabilities
2019 Half-year Report – Group Convincing 2019 half-year results • Financial liability grew by CHF 50 million to CHF 2,122 million • Repayment on 2 April 2019 of 1.25% bond 2014–2019 amounting to CHF 125 million • Significantly lower average interest rate on financial liability of 1.27%, of which 42
Slide 15: 2019 Half-year Report – Group: Share data
2019 Half-year Report – Group Convincing 2019 half-year results 1st HY 2019/ 1st HY 2018/ Change in CHF 30.06.2019 31.12.2018 EPS incl. revaluation effect 5.36 4.42 +21.3% EPS excl. revaluation effect 4.02 3.86 +4.1% NAV per share on cut-off date 138.95 139.65 –0.5% Share price on cut-off date 168.0
Slide 16: Agenda
2019 Half-year Report Agenda • Overview • 2019 Half-year results • Real Estate division - Overview - Portfolio - Result • Projects & Development division • Evaluation and outlook 27.08.2019 Allreal Group – First half-year 2019 16
Slide 17: Real Estate division: Overview
Real Estate division Overview • Portfolio of investment real estate at total market value of CHF 4,237.5 million • Real estate result increased by 2.5% to CHF 91.2 million • Further decrease of vacancy rate to 1.9% • Consistently high net yield of 4.5% • Average residual duration of fixed-term comme
Slide 18: Further portfolio growth expected for coming years
Real Estate division – Portfolio Further portfolio growth expected for coming years 4.1 4.2 3.9 3.5 3.5 3.5 2.5 2.5 2.6 2.4 2.2 in CHF billion/million (rounded) (yield-producing properties without Investment real estate under construction) 3191 3240 2699 3113 2817 2756 2085 2078 2099 911 924 1811 20
Slide 19: Two units real estate under construction (Hardstrasse 301)
Real Estate division – Portfolio Two units real estate under construction Hardstrasse 301, Zurich-West: Six-storey office building with effective rentable area of 5800 m2 at the Escher-Wyss industrial area. Owner, development and realisation: Allreal; investment volume: about CHF 37 million; beginni
Slide 20: Two units real estate under construction (Grünhof-Areal)
Real Estate division – Portfolio Two units real estate under construction Grünhof-Areal, Zurich Aussersihl: New construction comprising 80 rental apartments and replacement new construction with 8 rental apartments and trade space in Zurich Wiedikon. Total useful space: 8022 m2; Develop- ment, Reali
Slide 21: Stable utilisation and tenant mix
Real Estate division – Portfolio Stable utilisation and tenant mix Yield-producing properties Commercial properties in % of rental earnings in Office/services 61% Canton of Zurich 15% 1st half-year 2019 Residential 20% Generali Switzerland 7% (rounded off) Trade/Warehouse 8% Allianz Suis
Slide 22: Opposing effects influence vacancy rate
Real Estate division – Portfolio Opposing effects influence vacancy rate in % 3.8 (cumulated from gross target income) 2.9 2.0 2.0 1.9 2.1 2.0 1.8 as at 30.06.2018 1.5 as at 31.12.2018 as at 30.06.2019 Yield-producing properties Residential properties Commercial properties 27.08.2019 Allreal Group –
Slide 23: Real Estate division – Result: Overview
Real Estate division – Result Overview • Break-down of increase in rental income of CHF 4.7 million to CHF 102.6 million (in CHF million): • Portfolio expansion in previous year +4.8 • of which residential properties: CHF 0.6 million • of which commercial properties: CHF 4.2 million • Decrease in va
Slide 24: Real Estate division – Result: Expenses and refurbishments
Real Estate division – Result Overview • Real estate expenses of CHF 11.4 million represent 11.1% of rental income; the expenses are rising owing to several refurbishment projects • In financial 2019, three large refurbishment projects, especially, will burden the real estate accounts: – Renovation
Slide 25: Real Estate division – Result: Rents and vacancies
Real Estate division – Result Overview • Change in rents (like-for-like) of +0.6% (residential properties) and –0.1% (commercial properties) • The five largest vacancies represent about CHF 1.1 million, or 55% of entire vacancy expenses • Without portfolio growth in the previous year, the vacancy ra
Slide 26: Real-estate expenses still low compared to several years
Real Estate division – Result Real-estate expenses still low compared to several years 18.2 Normalised range 15.8 15–17% 14.8 14.9 15.0 13.9 13.3 13.8 13.3 13.7 11.6 11.1 Real estate expenses for yield-producing properties in % of rental income 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Slide 27: Positive results contribution from revaluation
Real Estate division – Result Positive results contribution from revaluation Residential Commercial Investment real estate Revaluation properties properties under construction +29.7 1st half-year 2019 +38.6 in CHF million +10.9 +12.9 +22.3 City of Zurich +2.5 +5.9 Remaining Canton ZH +10.4 Other reg
Slide 28: Agenda
2019 Half-year Report Agenda • Overview • 2019 Half-year results • Real Estate division • Projects & Development division - Overview - Business activity - Result • Evaluation and outlook 27.08.2019 Allreal Group – First half-year 2019 28
Slide 29: Projects & Development division: Overview
Projects & Development division Overview • Income generated by Projects & Development of CHF 28.1 million shown 3.3% above that of the previous year, confirming the division’s high competitive capacity • Project volume completed in the first half of 2019 amounted to CHF 178.9 million • Gross margin
Slide 30: Projects & Development division: Overview
Projects & Development division Overview • On the cut-off date, the Realisation department enjoyed secured order backlog of CHF 639 million, of which CHF 160 million was added in the period under review • The sale of development real estate in the first half of 2019 generated profit of CHF 3.4 milli
Slide 31: Project Development for third-parties and own portfolio
P & D division – Project Development Development of projects for third-parties and own portfolio of relevance to earnings Dietlimoos, Adliswil ZH: Site development for third parties Luzern Eggen: Winning project in project competition by comprising about 250 residential units plus commercial Caruso
Slide 32: Successful development of projects for third-parties and own portfolio
P & D division – Project Development Successful development of projects for third- parties and own portfolio Wohlfahrtsgebäude, Escher-Wyss-Areal, Zurich-West: Florenstrasse, Winterthur Seen: planning and realisation construction analysis and feasibility study to serve as of 8 apartment buildings co
Slide 33: Successful development of projects for third-parties and own portfolio
P & D division – Project Development Successful development of projects for third- parties and own portfolio Bellerviestrasse 36, Zurich Riesbach: Ongoing study Spiserstrasse, Zurich Albisrieden: implementation of a contract serving comprehensive refurbishment of the study competition in winter 2019
Slide 34: High profitability from realisation for third parties
P & D division – Realisation High profitability from realisation for third parties • Completed project volume grew by 7.8% to CHF 178 million • Further rise in completed project volume expected for second half-year • Of the project volume completed in the first half-year, third- party contracts acco
Slide 35: High profitability from realisation for third parties
P & D division – Realisation High profitability from realisation for third parties Key figures confirm the decision to focus on third-party projects with calculable risk, realistic contractual terms and sound profit potential: 1st HY 19 2018 2017 2016 Completed third-party project volume in CHF mill
Slide 36: Up to 90 projects currently being processed
P & D division – Realisation Up to 90 projects currently being processed Postareal, Baden AG: comprehensive renovation and Datacenter ZUR2, Glattbrugg ZH: three-storey data centre conversion of the commercial property near Baden rail- comprising 7,132 m2 useful space located in the Bäuler way statio
Slide 37: Up to 90 projects currently being processed
P & D division – Realisation Up to 90 projects currently being processed Bellariarain, Zürich Wollishofen: nine five-storey apart- Mühlacker, Gerlafingen SO: 4 apartment buildings ment buildings comprising a total of 172 rental units. comprising a total of 77 rental units plus service and Owner: Hel
Slide 38: Up to 90 projects currently being processed
P & D division – Realisation Up to 90 projects currently being processed Forchstrasse, Zollikerberg ZH: four-storey apartment Ankerstrasse, Zurich Aussersihl: six-storey residential building comprising 20 rental units with 2½ to 4½ rooms building with 36 rooms, two apartments, seminar rooms and a ba
Slide 39: Up to 90 projects currently being processed
P & D division – Realisation Up to 90 projects currently being processed Bubenbergplatz 3/Christoffelgasse 2+4, Bern: refurbish- Engimattstrasse, Zurich Enge: new replacement building ment and conversion of listed commercial building. for a four-storey apartment building comprising 34 rental Owner:
Slide 40: Up to 90 projects currently being processed
P & D division – Realisation Up to 90 projects currently being processed Badenerstrasse, Zürich Wiedikon: comprehensive re- Am Chatzenbach, Zurich Seebach: residential complex furbishment and extension of the 45’000 m2 office building with five apartment buildings comprising a total of 77 used by KP
Slide 41: Up to 90 projects currently being processed
P & D division – Realisation Up to 90 projects currently being processed Bülachguss, sector 1/2/5/6, Bülach ZH: ten apartment Solistrasse, Bülach ZH: five apartment buildings com- buildings comprising 343 rental units, conversion of in- prising a total of 73 freehold units. Project development dustr
Slide 42: Up to 90 projects currently being processed
P & D division – Realisation Up to 90 projects currently being processed School complex Steinmaur ZH: construction of a double Alter Züriweg, Zufikon near Bremgarten AG: realisation gymnasium hall plus conversion of a multi-purpose of 20 terraced apartments on land measuring 3,806 m2. building. Owne
Slide 43: Result influenced by lower sales profits
Projects & Development division – Result Result influenced by lower sales profits Earnings from Projects & 1st HY 2019 1st HY 2018 Development division in % (rounded) 2% 3% - 9% - 7% Earnings from construction 12% 23% 34% Architects’ and P&D fees 43% 12% Capitalised in-house activity Earnings from s
Slide 44: Agenda
2018 Half-year Report Agenda • Overview • 2017 Half-year results • Real Estate division • Projects & Development division • Evaluation and outlook 27.08.2019 Allreal Group – First half-year 2019 44
Slide 45: Raising of profit forecast for the 2019 financial year
Evaluation and outlook Raising of profit forecast for the 2019 financial year • Allreal now expects operating net profit for the 2019 financial year to be reported above that of the previous year of CHF 115.6 million • For both divisions, Allreal expects a significant increase in operating net profi
Slide 46: Evaluation and outlook: Real Estate
Evaluation and outlook Raising of profit forecast for the 2019 financial year Real Estate • Vacancy rate is expected to grow only slightly in the second half of 2019 • Vacancies are decreasing concerning first-time rentals in residential complex on Fangeletenstrasse 4-18 in Bülach ZH • No larger com
Slide 47: Evaluation and outlook: profit level
Evaluation and outlook Raising of profit forecast for the 2019 financial year • The previous year’s level of profit, which included income from the divestment of Hammer Retex AG, will be more than compensated for by higher real-estate earnings 27.08.2019 Allreal Group – First half-year 2019 47
Slide 48: Evaluation and outlook: Projects & Development
Evaluation and outlook Raising of profit forecast for the 2019 financial year Projects & Development • In the second half-year, acquisitions with new projects will augment Development real estate • Completed project volume will increase slightly • Gross margin concerning the realisation of projects
Slide 49: Confirmation of profit forecast for the 2019 financial year
Evaluation and outlook Confirmation of profit forecast for the 2019 financial year • Operating expenses in the Projects & Development division will be reported lower than for the previous year (CHF 48.1 million) • In its target markets, Allreal will continue to focus on projects with a high executio
Slide 50: Allreal builds value
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