• Outstanding company results
• Constantly expanding stable-income portfolio
• Projects & Development division with substantial contribution to profit
• Well-hedged financing permits further growth
• Positive assessment of business development
• Board of directors proposes tax-exempt dividend payment

Allreal looks back on an exceptionally successful financial year. The company reports the highest result since its foundation for 2010 with a rise in net profit excluding revaluation gains of 27.7% to CHF 106.1 million. The main contribution toward the outstanding result was made especially by cyclical gains from completed projects in the Projects & Development division. In addition, rental income from investment real estate continued to grow.

Net profit including revaluation gains amounted to CHF 116.4 million. The distinct growth over the previous year reflects the combination of very good operating results with a moderate revaluation gain in the portfolio of investment real estate.

Total sales also grew significantly, namely by 20.9% to CHF 674.2 million, due on the one hand to higher rental income in the Real Estate division and on the other to a higher volume of completed projects in the Projects & Development division.

On the balance sheet date, the Allreal share closed at CHF 136.20, or 10.7% above the comparable value the previous year. The price hike plus dividend plus subscription rights from the capital increase resulted in an overall performance of a respectable 17.1%. The Allreal share therefore closed clearly above the total market.

In the first half of 2010, Allreal successfully implemented a capital increase with subscription rights amounting to approximately CHF 225 million. The additional means will allow advantageous financing of Allreal’s ongoing projects and a continuation of the company’s course of expansion.

Continuation of shareholder-friendly payout policy
At the annual meeting of shareholders in 2011 and based on the outstanding results and the positive expectations of the future business development of the two divisions, the Board of Directors will propose paying a profit distribution of CHF 5.50 per share, corresponding to a shareholder-friendly cash yield on the year-end share price of 4.0%. In the interest of its shareholders, Allreal is one of the first listed companies to take advantage of the corporate tax reform that became effective on 1 January 2011. As a result, the profit distribution will be paid out without the deduction of withholding tax and, for the first time, tax free for private shareholders.

Stable results for the Real Estate division
The portfolio of income-producing properties continued to grow in the year under review. The additions include three office buildings and a combined commercial and residential building. A total of seven older residential and commercial buildings in leasehold has been sold at a profit. The optimised portfolio on the cut-off date amounted to 65 income-producing properties, of which 46 commercial and 19 residential buildings.

The valuation of the income-producing real estate and investment real estate under construction in total resulted in a moderate valuation gain of CHF 13.5 million before tax corresponding to 0.5% of the market value of the complete portfolio of investment real estate. Additions and departures as well as the upward valuation of the total portfolio resulted in an increase gain of CHF 100.2 million to CHF 2.62 billion. The share of income-producing real estate was 2.37 billion and that of investment real estate under construction CHF 246 million.

Due to the portfolio expansion and low revenue loss, rental income grew as expected by 4.7% to CHF 139.1 million.

The vacancy rate during the period under review increased slightly to 4.8% of the target rental income. Real estate expenses of 14.9% of the net rental income in 2010 remained at approximately the same level as the previous year.

Despite a slightly higher vacancy rate and higher real estate expenses, net yield achieved from renting income-producing buildings amounted to a very gratifying 5.1%.

Projects & Development division: strong competitiveness and high earnings power
In 2010, completed project volume grew by 19.5% over 2009 to CHF 587 million. As expected, commencement of construction of numerous own projects with practically unchanged staff capacity resulted in a lower share of thirdparty projects, which on the balance sheet date amounted to 59.3%.

The Projects & Development division realised earnings of CHF 108.2 million from its business activity during the year under review, and for the first time in excess of CHF 100 million. Cyclical profits from completed projects, especially, as well as considerable revenue resulting from awarding of contracts to sub-contractors as well as the continuing successful sale of residential property from own development and realisation have contributed to this outstanding result.

As a result of nearly stable costs, the operating result grew by 77.8% to a respectable CHF 59.2 million.

Order backlog compared to the previous year rose by CHF 300 million to CHF 2.0 billion, thus securing utilisation of available capacity for clearly more than two years.

Sound financing permits continuation of growth course
On 31 December 2010, the average interest rate on interest-bearing debt amounted to a low 2.59% with an average duration of comfortable 46 months. Thanks to the successfully implemented capital increase in 2010, the equity ratio temporarily grew to 48.7%.

As a result of the financial means obtained within the parameters of the capital increase and the sound refinancing of existing liabilities, Allreal enjoys considerable investment scope which will also be used to finance own projects under construction and planned own projects.

Optimistic assessment of future business activity
Assuming stable economic conditions, Allreal’s Board of Directors and Group Management expect the company to continue developing successfully. Thanks to yet another outstanding result and a well functioning business model, Allreal is suitably equipped to meet the challenges of 2011 with confidence. Moreover, the good preconditions will permit continuation of the chosen growth path.

The positive assessment of future business activity is based mainly on Allreal’s sound financing, the expected growth of the real estate portfolio and of rental income, the high order backlog of the Projects & Development division and the positive evaluation of the potential inherent in Allreal’s own projects.

Despite a lower number of project completions, Allreal expects operating income for the 2011 financial year to be only slightly below the previous year’s record result.

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 and support.