How do you assess Allreal’s business development last year?

Marc Frei: Allreal was very successful last year. Earnings from the Development & Realisation segment were significantly up and the financial expense was down. Although rental income fell year on year, this was expected because of the portfolio changes that were planned. However, the effect was partly offset by an improved performance in the Development & Realisation segment. At CHF 122.1 million excluding revaluation gains, net operating profit was on a par with the previous year’s level.

What changes in the portfolio were influenced by the fall in rental income?

MF: The portfolio was added to over the course of the financial year with two new residential properties in Geneva and the completion of the total renovation of Forum West in Bern. However, the sale of a property in Bülach and the start of the new-build project on the Baarermatte site near Zug resulted in disposals. In addition, we sold two properties in the 2024 financial year: one in Basel and one in Petit-Lancy. On balance, rental income was therefore down temporarily as a result.

How do you expect rental income to perform going forward?

MF: Rental income will rise again this year. For one thing, income will be generated by the commercial property on Freiburgstrasse in Bern for a full period again and also by the two newly built residential properties in Geneva. For another, the recently announced acquisition of a large commercial property will give rental income an additional boost on balance, even though we have sold smaller and older residential properties. This also strengthens the share of office buildings in our portfolio in the Lake Geneva region.

The external expert revalued the portfolio upwards. What were the reasons?

MF: This latest positive value adjustment can be attributed to successful lease extensions and new signings, an adjustment of market rents in some cases and the favourable development of the discount rate. It is interesting that the commercial properties in the City of Zurich and residential properties in the Zurich region in particular were revalued upwards. This reflects the high quality of our portfolio. Over the year, revaluations of office properties almost drew level with those of residential properties in the first half of the year.

The Development & Realisation segment made a major contribution to the positive operating result. Will this trend continue?

MF: The increased contribution to earnings from the segment is sustainable. As well as higher contributions from the Realisation division, the segment benefited in particular from the considerably higher contribution to earnings from the sale of condominiums. This amounted to around CHF 21.1 million – almost double that of the previous year. The main drivers were the sales at Spiserstrasse in Zurich Albisrieden, as well as our projects on Avenue de l’Amandolier and Avenue du Curé-Baud in Geneva. Two new projects entered the marketing phase in the first half of the year: Panorama Eggen and Strubenacher Living. This year, the Baarermatte, Avenue de Riant-Parc and Avenue Louis-Casaï projects will join those already in the marketing phase. All this will ensure that the Group continues to generate relevant earnings from sales in the years to come.

The construction volume also developed positively after declining in recent years. Has a corner been turned?

MF: We believe it has. The volume of projects completed increased by 13.9% to CHF 282.6 million. The fact that we still provided construction services for third parties in Western Switzerland in the previous year makes this even more impressive. Of the total volume of projects completed, over 40% related to own projects intended either for our portfolio or to sell. We also gained several large orders from third parties last year, for example the Heuwaage high-rise building in Basel and Brüttiseller Tor project on the outskirts of Zurich. With an order backlog of around CHF 837 million, we have a good level of capacity utilisation for the next two-and-a-half years.

“The increased contribution to earnings from the Development & Realisation segment is sustainable.”

Allreal was also successful in refinancing in the last financial year, issuing two bonds. Are lower financing costs to be expected in 2026?

MF: Benefiting from a good market environment, we issued one green bond in April and another in October on favourable terms. This contributed to a fall in the average interest rate to 1.13% and reduced our financial expense in the reporting year. For the next year, however, we expect a slight rise in financing costs, as liabilities with an extremely low rate of interest will have to be refinanced. We are sticking to our financing strategy. We will continue to opt for a breakdown of approximately 50% secured and 50% unsecured loans. This allows us to select the most attractive solution, depending on the market situation.

Allreal can therefore look back on a successful year. What are the prospects for the year ahead?

MF: For the financial year 2026, we expect a higher net operating profit and stable balance sheet figures. In the Real Estate segment, rental income will increase again. In addition, the sale of investment properties can be expected to make a substantial contribution to earnings in the first half of the year. The vacancy rate will fall again over the course of the year. In the Development & Realisation segment, we expect a slight rise in income from the sale of condominiums, a slightly higher construction volume and stable operating expenses. As I just mentioned, though, financing costs will increase slightly.

Allreal’s share price performed well last year. Are you satisfied?

MF: I am pleased that the share price has performed well. However, we primarily focus on what we are able to influence directly, which is the operating performance. We firmly believe that a good operating performance will also be reflected in the performance of the share price in the long term.