Allreal: Significant decline in earnings in the first half of 2023

Allreal Holding reports a "solid result" for the first half of 2023: Net profit excluding revaluation effect amounted to CHF 66.7 million after CHF 81.8 million in the previous year. The company attributes the decline to higher net financial expenses and lower income from the sale of development properties. Allreal also benefited from a one-off tax effect in the first half of 2022. Including the revaluation effect, net profit amounted to CHF 44.3 million - compared to CHF 82.7 million in the first half of 2022.

Real Estate business division keeps earnings almost stable

In the Real Estate business division, the bottom line was a net profit excluding revaluation effects of CHF 69.4 million, compared to CHF 70.6 million in the previous year.

Allreal was able to increase rental income slightly to CHF 108.5 million (previous year: CHF 106.8 million), in particular due to the linking of commercial rents to the national consumer price index. The cumulative vacancy rate amounted to 1.7% (previous year: 1.5%). The net yield remained stable at 4.0% (previous year: 3.9%). Direct expenses for investment properties amounted to CHF 10.5 million. Allreal expects a slight increase in the second half of the year, as various projects will be implemented.

The revaluation of the investment properties as at June 30, 2023 resulted in a devaluation of CHF -26.1 million. While there was a positive revaluation for the renovated and fully let commercial property at Bellerivestrasse 36 and for two residential properties in Zurich, the property on Freiburgstrasse in Bern and several residential properties in western Switzerland were devalued higher, Allreal reported. On the reporting date, the total value of the investment property portfolio amounted to CHF 5.09 billion (previous year: CHF 5.10 billion).

General contracting slightly in the red

In the Projects & Development division, Allreal posted a net loss of CHF -0.3 million in the first half of the year, compared with a profit of CHF 11.9 million in the same period of the previous year. At CHF 17.6 million, income from Projects & Development was significantly lower than in the previous year (CHF 34.9 million). The reason for this was that sales of development properties amounting to CHF 15.6 million were made in the previous year. The sale of apartments in the Spiserstrasse project in Zurich Albisrieden began in the first half of this year. Based on the expected notarizations in the second half of 2023, further sales successes are foreseeable over the course of the year, writes Allreal.

The Realization division generated a gross margin for third-party projects of 9.9% (previous year: 11.2%). The completed project volume fell from CHF 155.5 million to CHF 143.0 million. Slightly more than 80% was attributable to third-party projects.

For the year as a whole, Allreal expects slightly higher rental income in the Real Estate division and a positive profit contribution from Projects & Development, although this will be significantly lower than in the previous year. The Group's net profit excluding revaluation is expected to be slightly above CHF 120 million. (ah)