Letter to shareholders

Dear shareholders

The Swiss real estate market has done well over the last 12 months. Along with persistently strong demand for housing and modern commercial premises in well-connected locations, the multiple reductions in interest rates by the Swiss National Bank particularly helped sentiment.

Allreal can look back on a successful year for the business. Thanks to a stable operating performance, slightly higher rental income, stronger earnings from Development & Realisation and a sharp rise in the value of the portfolio we achieved a considerably higher net profit than in the previous year. We reached key milestones in our development projects and hit the sustainability targets we had set – in fact, as far as our fossil fuel footprint is concerned, we exceeded them significantly.

A secure investment thanks to a high-quality portfolio

Allreal owns high-quality residential and commercial properties in sites with excellent connections in the urban centres of Switzerland. By continuously modernising our investment properties and actively managing the portfolio we ensure stable rental income with low vacancies and high-grade tenants. The performance of the portfolio was correspondingly positive, increasing in value by CHF 121.3 million over the year.

We again worked hard on the quality of our properties last year. Handing over the commercial building at Bellerivestrasse 36 to tenants after an extensive renovation was a particular highlight in the first half of the year, which for the first time again was profitable for a full year. In-house teams were in charge of the development and realisation of the total renewal project. The building was fully let from the start and is certified to LEED Platinum standard, so it demonstrably meets the highest sustainability requirements. It rejoined the portfolio at a substantially higher value.

The property on Freiburgstrasse in Bern is currently undergoing total renovation. The main tenant will be transport company BLS, who will be moving into their new head office next year. Another own development under construction right now is a residential building on Renggerstrasse in Zurich Wollishofen. The 21 rental apartments will be handed over to tenants in 2026, from which point they will again be generating income for the portfolio. The switch from individual tenants to flexible ground plans for multiple occupants was completed at Vulkanstrasse in Zurich Altstetten and on Richtiring at Wallisellen train station. The buildings are now almost fully let again and well set for the future. Further renewal work took place, among other locations, at the Dreieck site in Winterthur and the Escher-Wyss site in Zurich West; several properties in the portfolio underwent energy-efficient refurbishments and additional photovoltaic systems were rolled out. 

We are constantly optimising the composition of our portfolio by means of active management. Two commercial properties on Missionstrasse in Basel that did not fit with our strategy were sold. We also notarised the sale of another building in Petit-Lancy, but transfer of ownership did not take place until the new financial year. All transactions were conducted over book value.

Creating additional value through development and realisation

Development projects are planned to capture the potential at several properties in the portfolio. Key milestones were reached in the year under review. We have a legally enforceable simple development plan for the Baarermatte on the edge of Zug covering a large mixed-use complex close to the centre with plenty of green space. The project sets new standards for the circular economy, making minimal use of fossil fuel resources.

We held competitions and commissioned studies for our properties on Sonnentalstrasse in Dübendorf and Schaffhauserstrasse in Kloten; these will now form the basis for proceeding. On Badenerstrasse in Zurich, we are developing a new residential project in the heart of the city for our own portfolio. The project meets the highest social and ecological criteria. 

“Allreal owns attractive development reserves with major potential to uplift value over the long term.”

Allreal owns attractive development reserves with major potential to uplift value over the long term. With the purchase of the former Rieter site (now known as the Vitus site) in the centre of the City of Winterthur, we have secured around 75,000 m² of space in an urban location in the Canton of Zurich. Working closely with the City of Winterthur and other stakeholders, over the next few years we will be driving ahead the long-term planning and development for a technology and education site providing high-quality living and working space. A large-scale development is also set to take place in Chavannes-près-Renens, in a central location in the Lausanne conurbation, over the next decade. Other land reserves are held in dynamic development areas in Geneva, Confignon and Nyon. 

As well as making good use of the potential in its own portfolio, Allreal also develops condominiums and projects for third parties. The projects on Spiserstrasse in Zurich and on Avenue de l’Amandolier and Avenue du Curé-Baud in Geneva are under construction and on schedule. In Eggen in the City of Lucerne and on Strubenacher in Zumikon, legally enforceable construction permits have been issued. We will commence construction and marketing in the coming year. In Sünikon near Dielsdorf, a planning application has been submitted for a residential development and we anticipate a positive decision in the new year. The project at Inzlingerstrasse in Riehen has been delayed by objections. Our projects for third parties have likewise reached milestones – for example, we submitted the planning application for the Köschenrüti project in Zurich Seebach. Given the high level of demand and the fact that mortgage rates have now fallen again, we expect all properties for sale to make an attractive contribution to earnings and assume that all units will be sold before completion.

We also realised complex construction projects for third parties during the year. The Rieter Campus in Winterthur, the Genolier Innovation Hub on Lake Geneva and three further lots at the Höfe project in Adliswil were successfully completed on budget and to the entire satisfaction of the clients. Allreal is currently also engaged in attractive renewal projects at present in central Zurich: Haus zum Falken near Stadelhofen train station and large renovations in Postrasse and Zeughausstrasse. The order backlog has grown as a results of new wins.

We took the decision at the start of last year to stop accepting third-party construction orders in French-speaking Switzerland. We gradually completed the exit over the course of the year and finished with a positive financial result. We will continue to carry out third-party realisation orders for selected clients in German-speaking Switzerland in future. We see the attainment of strong in-house realisation skills as a strategic advantage for the future. For instance, it allows construction costs to be optimised in the early stages of development. Our own portfolio is always built with the lifecycle costs for a property in mind. Combining own and third-party business is a way of optimising capacity utilisation and ensuring long-term competitiveness.

Strategic outlook

As an owner, developer and realiser, Allreal is well placed to benefit from opportunities and further growth in the real estate market. Over the coming years we will continue to invest in high-quality properties. Along with our expertise in development and realisation, we offer our clients an integrated value chain throughout the entire lifecycle of a property under one roof.

“As an owner, developer and realiser, Allreal is well placed to benefit from opportunities and further growth in the real estate market.”

Also, our sustainability ambitions remain a focus. The targets set for the last strategy period were mostly met and energy consumption in the portfolio was again considerably reduced over the reporting period. In addition to the goal to halve the use of non-renewable energy by 2030 and reach net zero by 2050, the new 2025–28 strategy cycle mainly focuses on circulatory capacity, biodiversity and water management. For full information on our efforts in this regard, please see the sustainability report.

The Board of Directors is proposing to the annual general meeting to be held on 25 April 2025 an unchanged distribution of CHF 7.00 per share. Half of this comes from tax-privileged reserves from contribution of capital. This enables Allreal to fulfil its commitment to combining a very high-quality portfolio as a secure investment with an attractive return and corresponding distribution.

Change to the Board of Directors and acknowledgments

Olivier Steimer will not be standing for re-election at the forthcoming 26^th annual general meeting. We offer him our warmest thanks for the great commitment he has demonstrated over many years. With his strategic vision, in-depth expertise and extensive experience, he has made valuable contributions to Allreal's successful development.

The Board of Directors will propose Sandra Berberat Kecerski to the annual general meeting for election as a new member. She is an independent entrepreneur who sits on several supervisory bodies, including the Board of Directors of Zürcher Kantonalbank. She trained as an auditor and spent time at Deloitte and UBS, later working in the financial control department of the City of Winterthur.

The excellent performance seen last year is above all a testament to our committed and motivated managers and employees. We would like to thank them most sincerely for the work they put in and the dedication they showed.

On behalf of the Board of Directors and Group Management, we would also like to express our thanks to you for the trust you have placed in us and look forward to counting you among our shareholders in future.