• Higher operating profit at virtually constant sales
• Portfolio with outstanding net yield of 5.2%
• Project & Development division exhibits convincing earnings power
• Continuation of growth course thanks to solid financing
• Optimistic outlook for 2010 financial year

Allreal reports an outstanding operating result of CHF 83.1 million for the 2009 financial year, the consequence of clearly higher rental income and contributions by the particularly successful Projects & Development division. At 6.0% above the previous year’s record result and in a difficult market environment, the 2009 operating result underscores the company’s outstanding productivity. The higher valuation of investment real estate resulted in a net profit including valuation gains of CHF 88.6 million. Total sales reported by the two divisions, Real Estate and Projects & Development, amounted to CHF 557.8 million, marginally below the previous year’s result.

Allreal’s shares performed very well on the stock exchange. On 31 December 2009, the share price closed at CHF 123.00 or 14.9% above the comparable value the previous year. The price hike plus dividend resulted in an overall performance of 19.6%, representing a mark up of the company’s net asset value (NAV) of 9.2%. Market capitalisation on the balance sheet date amounted to CHF 1 394.8 million.

Continuation of dividend policy thanks to positive business development
At the annual general meeting of shareholders in 2010 and based on the gratifying results and the positive expectations of future business development, the Board of Directors will propose paying a dividend of CHF 5.00 per share, corresponding to a respectable 4.1% cash yield on the year-end stock price.

Outstanding yield characterises the Real Estate division
Several properties changed ownership in the 2009 financial year within the parameters of continuous optimisation of the income producing real estate portfolio. The additions include an office building in Basel and the acquisition of land in Zurich-Affoltern where Allreal is the leaseholder of a residential building. A total of four commercial buildings, including one in leasehold, has been sold at a considerable profit. The portfolio of the income-producing properties as of 31 December 2009 comprised 47 commercial and 23 residential buildings.

Due to changed accounting standards (IAS 40), properties under construction which upon completion are to be included in the income producing portfolio are valued at market value and shown in the group balance sheet as investment property under construction. The buildings affected by the new regulation are the Toni-Areal in Zurich-West, MITTIM residential and commercial complex in Wallisellen, Lancy-Square office building in Geneva-Lancy, and Turboprüfstand C on the Escher-Wyss industrial site in Zurich-West.

The valuation of investment real estate (income-producing real estate and investment real estate under construction) resulted in a marginally higher valuation before tax of CHF 6.5 million, or 0.3% of the market value of all investment real estate.

The additions and departures registered in the period under review plus the valuation of investment real estate resulted in a value increase of the total portfolio by CHF 208.9 million to a total of CHF 2 519.1 million. Of this amount, CHF 2 207.1 million accounts for income-producing properties and CHF 312.0 million for four investment properties under construction.

Rental income in the year under review grew by a gratifying 7.7% to CHF 132.9 million. The continued portfolio expansion by means of acquisitions and in-house projects and a further decrease in the loss of revenue as a result of vacancies represented the chief contributors to this development.

The cumulative vacancy rate in residential and commercial buildings in 2009 amounted to a low 3.7% of the target rental income, a rate that is again substantially lower than that of the previous year.

Real estate expenses of 14.8% of the entire rental income in 2009 were marginally higher than the previous year. The increase is due to several value-maintaining and income-securing refurbishment and redevelopment activities. Despite the increase, the net yield achieved from renting incomeproducing buildings amounted to a very gratifying 5.2%.

Projects & Development division exceeds high expectations
The completed project volume of CHF 491.2 million (including expenses for investment properties under construction) was only slightly below the previous year’s level. The share of own projects increased when compared to the previous year to 40.4%. Due to large-scale initiated and planned projects, this trend is likely to be underscored even further in the years to come.

The Projects & Development division realised a profit of CHF 82.2 million from its business activity during the year under review. This outstanding result is all the more pleasing as it was achieved with completed own projects in a period characterised by a considerable decline in cyclical profits. Lower promotional gains were offset by lower production costs in construction.

As a result of higher personnel expenses, the operating result of CHF 33.3 million declined marginally by 3.5% when compared to the previous year.

With effect 31 December 2009, the Projects & Development division has a secured order backlog of CHF 1.7 billion, corresponding to a utilisation of available capacity for more than two years.

Sound financing allows for further growth
On the balance sheet date, the average interest rate on interest-bearing debt of about CHF 1.52 billion continued at a low 2.56% with an average remaining life of 36 months. Thanks to the successful placement of a convertible bond of more than CHF 200 million during the second half-year of 2009, repayment of the financial means obtained through a convertible bond in 2006 has been secured. As a result, the company is soundly and favourably financed.

The equity ratio on the balance sheet date declined to 41.5% as a consequence of the acquisition of numerous buildings and properties and the financing of several own projects.

Good preconditions for continuing on the road to success

The outstanding result for the 2009 financial year presents a sound foundation for continued successful business activity in the future based on the tried and tested combination of a stable-income real estate portfolio with the activity of a general contractor. This optimistic assessment is based on the growth of the real estate portfolio, anticipated rental income from own projects and the record-high order backlog in the Projects & Development division.

Overall, Allreal expects business activity in the 2010 financial year to remain stable and the operating result when compared to the year under review to improve even further.

The Board of Directors and Group Management wish to take this opportunity to thank all staff members for their contribution to the outstanding financial result and our shareholders for their trust.