Allreal: Rising profits
In the first half of 2016, Allreal generated a net profit, including revaluation effects, of CHF 69.8 million, which is around four percent more than in the previous year.
According to Allreal, the result was driven by the good performance of the Real Estate business segment, profits from the sale of development properties and a good result in third-party business in the General Contracting business segment.
The valuation of investment properties resulted in a positive change in value of CHF 10.3 million, which is roughly in line with the previous year's level. Adjusted for the valuation effects, the operating result was slightly above the previous year's figure at 61.4 million.
Declining vacancy rates
The vacancy rate fell by 1.4 percentage points to 6.2 percent of target rental income. Allreal expects vacancy to decline further in the second half of the year, partly because a lease was signed after the balance sheet date for the Boulevard Lilienthal 2-8 office building in Opfikon (ZH) with 13,400 sqm of usable space, which is thus fully let.
At CHF 77 million, the operating result excluding revaluation achieved by the Real Estate Business Area in the first half of 2016 was 12.8 percent below the result for the same period of the previous year, which, however, was characterized by extraordinary gains on sales. This business unit accounted for 70.8 percent of the Group's operating result.
One acquisition, four sales
In the first half of 2016, Allreal purchased one investment property and sold four properties in return. The addition is a residential and commercial building from own development and realization on Schiffbaustrasse in Zurich West. According to the company, the profit generated on the sale of four commercial properties amounted to CHF 5.6 million and was six percent above the aggregate carrying value of the four properties.
As of June 30, 2016, the investment property portfolio comprised 20 residential and 39 commercial properties with a market value of CHF 3.42 billion.
At CHF 24.4 million, income from general contracting - the development and execution of projects for third parties - was on a par with the previous year, with a stable gross margin of 11.3 percent. The gains from the sale of development properties in the first half of 2016 and lower operating expenses led to a significantly higher operating result (EBIT) of CHF 24.3 million for the General Contracting business unit than in the previous year.
Projects with a volume of around 260 million
The project volume handled by the Realisation division in the first half of 2016 amounted to CHF 260.2 million. The decline of 14 percent compared with the same period of the previous year reflects the "consistent focus on the realization of projects with calculable risks and good profit prospects," writes Allreal. The share of project volume handled for third parties was CHF 215.5 million, that of development projects for sale to third parties CHF 17.8 million and that of own projects for the company's own portfolio CHF 26.9 million.
The General Contracting business unit accounted for 29.2 percent of the Group's operating profit in the first half of 2016.
For the second half of the year, Allreal expects business to remain stable and the operating result for the financial year as a whole to be on a par with the previous year. The company intends to step up project development in the future, in addition to further reducing the vacancy rate. (ah)
