Management report (Management report)

Management report

The Swiss real estate market did well over the reporting year. The main drivers were falling interest rates and ongoing population growth. Commercial premises in well-connected locations saw robust demand. The demand for residential properties is undiminished. In the Realisation division, building costs are no longer rising. The strong market momentum is facing increasing regulation, however, especially in the major cities.

Allreal benefited from the positive environment, with its net profit increasing to CHF 219.3 million (2024: CHF 211.4 million). As expected, rental income fell year on year owing to planned portfolio changes and various one-off effects in the previous year. However, this was almost completely offset by higher earnings from the Development & Realisation segment and a lower financial expense. Net profit excluding the rise in the value of the portfolio amounted to CHF 122.1 million (2024: CHF 122.7 million).

Allreal's portfolio consists of high-quality properties at key interchange points in the metropolitan regions of Zurich and Geneva. The balanced investment mix covering office, education, industry and residential use ensures reliable dividends and contributes to the high value retention of the portfolio. We realign properties that are not optimally positioned on the market or sell them if there is no potential for development.

In Geneva, we sold several older residential properties to private investors after the balance sheet date. And in Basel, we sold a mixed-use property in Steinenvor-stadt at the end of the reporting year. We used the funds released to purchase a modern, practically fully let office building on Rue du Grand-Pré in Geneva. It began generating income when ownership was transferred in February 2026. This will strengthen the office share in the Lake Geneva region and bring the mix of uses into line with the overall portfolio. On balance, these portfolio adjustments will result in higher rental income.

The total renovation of the Forum West office building at Europaplatz on Freiburgstrasse in Bern was finished during the reporting year. In addition to the BLS headquarters, a further education institution has now signed a long-term lease for the building.

In Baar, in the Canton of Zug, we began work on the replacement building at Baarermatte. The office building, which was built in the 1980s, is being replaced by a mixed-use complex that will meet the highest sustainability standards. The office building from the complex will be added to Allreal's own portfolio and the apartments sold as condominiums. Marketing will start in the first half of 2026.

In total, we signed new leases for more than 52,000 m2 in the reporting year, maintaining the existing price level. The valuation by Wüest Partner's external real estate valuers at the end of the year confirms the high quality of the portfolio. It underwent a positive revaluation of CHF 125.0 million

Our integrated business model combines our expertise as an owner of real estate with our skills in development and realisation. As well as optimally exploiting the potential in our own portfolio, we develop and build projects for sale as condominiums and to third parties.

In the 2025 financial year, we completed our projects at Spiserstrasse in the City of Zurich and Avenue de l'Amandolier in Geneva on schedule. Both projects contributed to the significant increase in income from sales Development. The Panorama Eggen in Lucerne and Strubenacher Living in Zumikon projects have now entered the marketing and realisation phase. We are happy with the current occupancy rate and therefore optimistic that all units will be sold by the time construction work is completed. We also anticipate the sale of condominiums to contribute to earnings accordingly over the next few years.

Significant milestones were reached in various development projects during the reporting period. For example, we successfully held competitions for several plots of land, including on Sonnentalstrasse next to Stettbach station in Dübendorf and on Zürcherstrasse in Schlieren. We will be comprehensively renovating our property on Josefstrasse in the City of Zurich. The legally enforceable construction permit has already been obtained and construction is scheduled to start at the beginning of next year. In Winterthur, we developed a masterplan for the Vitus site together with the city's governing body. This sets the development priorities and forms the basis of the work to come.

Given the high demand, acquiring new plots of land is challenging. Nevertheless, we managed to acquire two neighbouring plots in Zumikon in the reporting year. We extended this site at the beginning of January 2026 with an additional purchase. Over the next few years, we will realise a new residential development on the site spanning a total of around 8100 m2.

In Zurich Seebach, we developed the Köschenrüti garden town residential development, with around 300 apartments, for one customer as a full-service provider. The legally enforceable construction permit has already been obtained. Allreal will realise the project as total contractor. Furthermore, we signed a contract of sale with the owners for 93 apartments that will be completed by 2030 as part of the new-build project on the northern site and serve as another example of how we constantly modernise our residential portfolio.

The volume of projects completed in the Realisation division increased to CHF 282.6 million. Various construction projects for third-party clients were successfully completed in the reporting year, including Santiago Calatrava's Haus zum Falken by Stadelhofen railway station and the major project Höfe Adliswil. All current construction projects are progressing on schedule.

Sustainability remains a key issue for us. In launching the new 2025-2028 strategy cycle, we also turned our operational focus towards the issues of biodiversity, circulatory capacity and efficiency measures. With the measurement values achieved in 2025, we are on track to halve the use of non-renewable energy by 2030 and reach net zero across our portfolio by 2050. We had our portfolio rated

by GRESB during the reporting year and immediately achieved a four-star rating with 86 points out of 100 - the second-highest possible. We also did very well in Development, receiving 94 points out of 100.

The Board of Directors is proposing to the annual general meeting to be held on 17 April 2026 a stable distribution of CHF 7.00 per share. Half of this comes from tax-privileged reserves from contribution of capital for private Swiss investors.

In line with the step-by-step renewal of the Board of Directors, Chair Ralph-Thomas Honegger and member Peter Spuhler will not be standing for re-election at the next annual general meeting.

The Board of Directors will propose Philipp Gmür as the new Chair. He has been a member since 2019. A Doctor of Law and a lawyer, Philipp Gmür is an experienced executive and holds several mandates in boards of directors and boards of trustees. He previously had various senior roles at Helvetia Group, most recently Group CEO from 2016 to 2023.

The Board of Directors will propose Beat Fellmann and Martin Frischknecht to the annual general meeting for election as new members. Beat Fellmann, born in 1964, has a Master's degree in Business Administration from the University of St. Gallen and is a certified public accountant. He sits on several supervisory bodies and was CFO of the listed companies Implenia and Valora for many years. Martin Frischknecht, born in 1968, has a Doctorate in economics from the University of St. Gallen and a Master's degree in Finance from London Business School. He is a member of various boards of directors and worked for Credit Suisse for over 20 years, most recently as Managing Director and member of the Management Committee of Investment Banking Switzerland.

The success we enjoyed in 2025 is, above all, testament to our committed employees. We would like to thank them most sincerely for the work they put in and the dedication they show every day.

On behalf of the Board of Directors and Group Management, we would also like to express our thanks to you - our valued shareholders - for the trust and faith you have placed in us.

Ralph-Thomas Honegger Stephan Widrig

Chair of the Board of Directors CEO

Allreal achieved a higher net profit of CHF 219.3 million in 2025 (2024: CHF 211.4 million). The valuation of the portfolio was again slightly higher compared with the previous year, while the operating performance was the same as the previous year's level.

Excluding the revaluation effect, net operating profit amounted to CHF 122.1 million compared with CHF 122.7 million in the previous year. The projected fall in rental income was partially offset by the increased contribution to earnings from the Development & Realisation segment and a lower financial expense.

In the last financial year, rental income in the Real Estate segment fell to CHF 204.0 million (2024: CHF 221.3 million). This temporary decline can primarily be attributed to changes in the portfolio, as well as various one-off effects in the previous year. In the 2024 financial year, we sold the properties on Mis-sionsstrasse in Basel and Chemin du Gué in Petit-Lancy. Also in the first half of 2025, we sold a property on Marterlochstrasse in Bülach and started the new-build project on the Baarermatte site near Zug. It was not possible to offset the loss of this rental income, even with the return to the portfolio of a modernised office building in Bern and two newly built residential properties in Geneva. Rental income is expected to rise again in the coming years.

The cumulative vacancy rate increased compared with the end of the year to 3.4% (2024: 1.6%). This increase had already become apparent in the first half of the year. The main drivers are the spaces that are still free on Freiburgstrasse in Bern, in an office building at Geneva Airport and vacated space on the Richti site in Wal-lisellen. Despite the increase, the vacancy rate remains low.

The weighted remaining term of fixed-term commercial leases at 31 December 2025 was 5.0 years. The proportion of leases expiring within the next two years is low, amounting to 17%.

Direct expenses for rented investment properties came to CHF 23.8 million, significantly below the previous year's level (2024: CHF 27.2 million). The expense ratio was 11.7%.

The valuation by Wüest Partner's external expert resulted in an upward revaluation of the portfolio before taxes of CHF 125.0 million (2024: CHF 121.3 million). This latest positive value adjustment of the portfolio can be attributed to successful lease extensions and new signings, an adjustment of market rents in some cases and the favourable development of the discount rate. The applicable capitalisation rates fell slightly. Specifically, Wüest Partner revalued commercial properties in the City of Zurich and residential properties in the Zurich region upwards. This meant that, over the year, revaluations of office properties drew level with those of residential properties in the first half of the year. At the reporting date, the portfolio comprised a total of 78 properties, consisting of 38 residential and 38 commercial properties, as well as 2 properties under construction. The commercial properties in Bülach and Basel that were disposed of in the reporting year were sold at 9% above book value, resulting in income from sale of investment properties of CHF 2.6 million. The market value of the portfolio at the reporting date was

around CHF 5.27 billion, above the level at the end of last year (31.12.2024: CHF 5.19 billion).

Ultimately, the Real Estate segment generated net operating profit of CHF 113.8 million (2024: CHF 123.0 million).

Income from business activities in the Development & Realisation segment increased to CHF 52.9 million compared with CHF 42.8 million in the previous year. The segment benefited in particular from the considerably higher contribution to earnings from the sale of condominiums. This rose to CHF 21.1 million (2024: CHF 11.2 million).

The main driver was the project on Spiserstrasse in Zurich Albisrieden. Also contributing to the higher income from sales were our projects on Avenue de l'Aman-dolier in Geneva and Avenue du Curé-Baud in Petit-Lancy. The Panorama Eggen in Lucerne and Strubenacher Living in Zumikon properties, which went on sale in the first half of the year, will ensure that the Group continues to generate relevant successful sales in the years to come. The Baarermatte, Avenue de Riant-Parc and Avenue Louis-Casaï projects will join those already in the marketing phase in the new year.

In terms of the volume of projects completed in the Realisation division, it can be assumed that a corner has been turned. The construction volume rose in the last financial year to CHF 282.6 million (2024: CHF 248.1 million). At the same time, it should be noted that construction services were still being provided for third parties in Western Switzerland in the previous year. The share of own projects increased to over 40%, up from around a third in the previous year. Income from Realisation remained stable at CHF 17.3 million (2024: CHF 17.6 million). Thanks to the increase in the share of own projects, capitalised own development rose to CHF 10.9 million (2024: CHF 10.0 million).

Operating expenses declined slightly by 2.6% year on year to CHF 41.5 million (2024: CHF 42.6 million), while operating profit was CHF 19.5 million (2024: CHF 7.4 million). Net profit in the Development & Realisation segment improved significantly, amounting to CHF 10.7 million (2024: CHF 3.0 million).

The order backlog increased to CHF 837 million compared with the previous year, corresponding to a good level of capacity utilisation in the Realisation division for around 30 months.

We benefited from the positive sentiment in the capital markets in the reporting period, issuing two bonds. In April, we issued a green bond for CHF 125 million, with a coupon of 1.375%, and in October, a second green bond for CHF 110 million, with a coupon of 1.04%.The proceeds of the bond issues are being spent on sustainable projects. We defined the relevant investment categories in our Green Bond Framework of 2022. Our green bond report 2025 provides detailed information on how these funds were deployed.

The interest rate on debt decreased over the course of the year with an associated positive impact on financing costs. Financial liabilities on the reporting date fell by CHF 24.7 million from the previous year to CHF 2675.0 million (31.12.2024: CHF 2699.7 million). Of these, 53.8% were bonds, 32.5% fixed-rate mortgages and 13.7% fixed advances.

The average interest rate of financial liabilities as at 31 December 2025 fell to 1.13% (31.12.2024: 1.25%). The average fixed-rate period was 39 months (31.12.2024: 40 months). The loan to value (LTV) decreased by 170 basis points to 45.8% as at the reporting date (31.12.2024: 47.5%).

Group equity increased to CHF 2.75 billion. Earnings per share excluding the revaluation effect were CHF 7.39. The equity ratio at 31 December 2025 was 45.8%, net gearing was 97.2% and the interest coverage ratio was 6.0 (31.12.2024: 44.9% /

102.1% / 5.5).

For the financial year 2026, Allreal expects a higher net operating profit and stable balance sheet figures. In the Real Estate segment, rental income will increase again. In addition, the sale of investment properties can be expected to make a substantial contribution to earnings in the first half of the year. The vacancy rate will fall again over the course of the year. In the Development & Realisation segment, Allreal expects a slight rise in income from the sale of condominiums, a slightly higher construction volume and stable operating expenses. However, financing costs will increase slightly, as it is likely that liabilities with a very favourable rate of interest will have to be refinanced at a higher rate.

Marc Frei

CFO

About Allreal Sustainability report

Corporate governance report Compensation report Financial report

Statutory Financial Statements of Allreal Holding AG Additional information

in urban centres

Text

Allreal owns commercial and residential properties at key interchange points, focusing on the business centres of Zurich and Geneva. The portfolio has grown steadily in recent years, both as a result of targeted acquisitions and organically thanks to the addition of modern, sustainable properties from Allreal's own site and project developments.

More tenants at Forum West on Freiburgstrasse in Bern

In the first half of the year, we finished the comprehensive renovation of the commercial property Forum West on Freiburgstrasse in Bern. In addition to BLS moving in as the anchor tenant, we also gained another new tenant in the ECAP Foundation. As a provider of adult education, ECAP is also helping to breathe new life into the property.

White Plaza practically fully let

Our office complex White Plaza on Viaduktstrasse in Basel is almost fully let again. We signed a long-term lease with a fitness group covering an area of nearly 2,000 m². We also successfully re-let space previously used as a data centre, as well as free warehouse space covering a total of 960 m². This secures long-term rental income from the office building centrally located by Basel SBB railway station.

Good demand for spaces in Zurich Altstetten Allreal owns several high-quality office buildings in the immediate vicinity of Zurich Altstetten station. During the reporting period, we extended a major lease on Herostrasse for another ten years. We also reached significant agreements for the building on Vulkanstrasse.

To the overview of our portfolio:

allreal.ch/en/real-estate/portfolio

Own projects for the portfolio or to sell

Several of our own development projects entered the marketing and realisation phase in the 2025 financial year. The Panorama Eggen project in Lucerne will see the development of a five-storey apartment building comprising 73 condominiums. By the end

of the year, 30 units had already been notarised. In Zumikon, we are realising the Strubenacher Living project with 19 sustainable terraced houses in an attractive location. With an occupancy rate of 7 units notarised so far, this project is also on track.

Garstenstadt Köschenrüti - from development to ownership

In Zurich Seebach, we developed the Köschenrüti garden town project with 300 rental apartments. The legally enforceable construction permit was issued at the end of the year. We were appointed as total contractor for the whole project in the first half of the year. Construction is scheduled to start in 2026. Furthermore, we signed a contract of

sale for the northern part of the site in December 2025, which will mean 93 modern apartments being added to our residential portfolio in the City of Zurich from 2030.

Flagship sustainability project moves into the construction phase

In Baar, demolition of the former office building at Baarermatte got underway. Development of a mixed-use site with 104 condominiums, 6 studios and more than 6,000 m² of office and commercial space on the edge of Zug will start

in 2026.

The new-build project is setting high standards when it comes to the circular economy and minimal resource consumption. Parts from the previous building are being removed during the demolition for reuse. The new buildings will be made of timber and not have a basement. Moreover, the project is promoting biodiversity thanks to the "sponge city" principle.

To the overview of development projects:

allreal.ch/en/development/project-development

Realisation of own development projects

At Spiserstrasse in Zurich Albisrieden, we handed over all 63 apartments to the new tenants. We also successfully completed the projects on Avenue

de l'Amandolier and Rue Edouard-Rod in Geneva in the second half of 2025. At the time of completion, all apartments had been sold at all properties. In addition to the condominiums sold, we also added more than 30 new rental apartments to the portfolio from the projects in Geneva. Moreover, a residential property on Renggerstrasse in Zurich Wollishofen

is nearing completion. It will remain under the ownership of Allreal.

Successful conclusion of third-party projects

Haus zum Falken, by Stadelhofen railway station, has been built in accordance with the plans of architect Santiago Calatrava for office use. It is an iconic urban space that is attracting a lot of attention.

The challenges in realising the project were huge: digging an excavation pit of up to 12 metres deep between tram and railway lines and installing a construction site in a very tight, urban space. Allreal successfully concluded other third-party projects during the reporting year, such as the major project Höfe Adliswil, the conversion project on Zeughaus-strasse and the Friedbühl school in Oberhofen.

Overview of current projects:

allreal.ch/en/realisation/current-projects

Comprehensive update on the portfolio and projects: