4  Notes to the consolidated balance sheet

4.1  Investment real estate

  

Residential real estate

 

Commercial real estate

 

Investment real estate
under construction

 

Total investment real estate

2018

 

2017

 

2018

 

2017

 

2018

 

2017

 

2018

 

2017

 

559.2

 

558.4

 

3 048.9

 

2 671.4

 

27.2

 

54.2

 

3 635.3

 

3 284.0

 

0.0

 

0.0

 

112.0

 

329.0

 

0.0

 

0.0

 

112.0

 

329.0

 

4.9

 

0.6

 

7.3

 

16.5

 

18.3

 

29.4

 

30.5

 

46.5

 

0.0

 

0.0

 

0.0

 

0.0

 

0.2

 

0.4

 

0.2

 

0.4

 

0.0

 

0.0

 

0.0

 

0.0

 

0.0

 

0.0

 

0.0

 

0.0

 

0.0

 

0.2

 

0.1

 

0.1

 

0.0

 

0.0

 

0.1

 

0.3

 

39.2

 

0.0

 

–40.6

 

31.9

 

1.4

 

–56.8

 

0.0

 

–24.9

 

603.3

 

559.2

 

3 127.7

 

3 048.9

 

47.1

 

27.2

 

3 778.1

 

3 635.3

 

259.2

 

247.4

 

63.9

 

27.8

 

–1.8

 

15.3

 

321.3

 

290.5

 

49.0

 

17.5

 

76.1

 

48.8

 

15.2

 

5.4

 

140.3

 

71.6

 

–2.1

 

–5.5

 

–76.6

 

–44.4

 

–1.0

 

0.0

 

–79.7

 

–49.8

 

0.0

 

0.0

 

0.0

 

0.0

 

0.0

 

0.0

 

0.0

 

0.0

 

0.0

 

–0.2

 

–0.1

 

–0.1

 

0.0

 

0.0

 

–0.1

 

–0.3

 

1.4

 

0.0

 

0.0

 

31.8

 

–1.4

 

–22.5

 

0.0

 

9.3

 

307.5

 

259.2

 

63.3

 

63.9

 

11.0

 

–1.8

 

381.8

 

321.3

 

818.4

 

805.8

 

3 112.8

 

2 699.2

 

25.4

 

69.5

 

3 956.6

 

3 574.5

 

910.8

 

818.4

 

3 191.0

 

3 112.8

 

58.1

 

25.4

 

4 159.9

 

3 956.6

812.0

89.2%

 

768.8

 

2 704.7

84.8%

 

2 387.4

 

0.0

0.0%

 

0.0

 

3 516.7

84.5%

 

3 156.2
79.8%

The purchase refers to the commercial property at Freiburgstrasse 130 in Bern, acquired as at 10 December 2018. It will be reported in the income statement with effect from the 2019 financial year.

The value-enhancing investments relate to the yield-producing properties Limmataustrasse 2–8/Limmatstrasse 9–11/Engstringermatte, Schlieren ZH (CHF 4.8 million), Schiffbaustrasse 2, Zurich (CHF 2.2 million), Grüngasse 27–31/Badenerstrasse 119–133, Zurich (CHF 1.9 million), Vulkanstrasse 106, Zurich (CHF 1.7 million), and 13 other properties (CHF 1.6 million).

The reclassifications relate to two properties on the Grünhof site in Zurich (CHF 33.9 million), Hardstrasse 301 on the Escher-Wyss site in Zurich (CHF 6.7 million) and Fangletenstrasse 4–18 in Bülach ZH (CHF 39.2 million), which has been part of the residential properties since 1 October 2018.

4.2  Development real estate

Development
reserves

Buildings under
construction

Completed real estate

Development real estate

2018

2017

2018

2017

2018

2017

2018

2017

78.3

101.6

29.9

8.3

8.3

55.8

116.5

165.7

75.0

5.3

0.0

0.0

0.0

0.0

75.0

5.3

2.2

9.1

21.4

13.0

0.0

–2.2

23.6

19.9

1.0

0.5

4.1

0.0

0.4

11.3

5.5

11.8

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

–20.3

–29.7

–44.0

0.0

–8.7

–56.7

–73.0

–86.4

0.0

–8.4

0.0

8.6

0.0

0.0

0.0

0.2

136.2

78.3

11.4

29.9

0.0

8.3

147.6

116.5

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

The disposal of development reserves relates to the property on Grindelstrasse Bassersdorf ZH (CHF 20.3 million), disposals of buildings under construction relate to the projects Solistrasse Bülach ZH (CHF 27.1 million) and Kirschblütenweg Basel (CHF 16.9 million), and disposals of completed real estate relate to the Guggach project in Zurich (CHF 8.7 million). Due to the changeover to IFRS 15, disposals of buildings under construction and completed real estate in an amount of CHF 17.8 million were recognised directly through equity.

As at 31 December 2018, the portfolio of development properties comprised the following:

Acquisition/
project start

Site area
in m2

Register of
suspected
contaminated
sites

Book value
in CHF
million

Estimated
investment
volume
CHF million1

Project status

Expected
completion

2013

46 419

no

36.92

175.0

in planning

open

2018

8 386

no

33.92

70.0

in planning

open

1987

30 278

yes

16.02

100.0

in planning

open

2016

11 582

no

21.02

55.0

in planning

open

2017

3 806

no

5.92

17.0

in planning

open

2018

2 195

no

22.52

47.0

in planning

open

136.2

464.0

2011

18 586

yes

11.4

55.0

in progress

2019

11.4

55.0

0.0

0.0

147.6

519.0

1 Land and building costs

2 Book value includes acquisition costs for the land 100% owned by Allreal and accrued project costs of third parties

Solistrasse, Bülach ZH

Five new-build apartment buildings with a total of 73 condominiums and 78 underground parking spaces to Minergie-Eco standard with lettable floor space (100% residential) of 8,150 square metres. It is being built by the Projects & Development division and is scheduled for completion in 2019. As at 31 December 2018, contracts of sale had been notarised for 56 out of 73 residential units and 5 had been reserved, 0 of which with transfer of ownership.

Guggach, Zurich

Four new-build apartment buildings with a total of 197 condominiums and 219 underground parking spaces to Minergie standard with lettable floor space (100% residential) of 25,919 square metres. The project was built by the Projects & Development division and completed in 2016. As at 31 December 2018, 197 out of 197 residential units had been sold, 196 of which with transfer of ownership.

The book value (CHF 2.5 million) of the residential unit still pending transfer of ownership was reclassified as contract assets.

4.3  Other property, plant and equipment

2018

 

2017

 

6.1

 

5.9

 

0.2

 

0.2

 

–0.1

 

0.0

 

6.2

 

6.1

   
 

5.0

 

4.8

 

0.1

 

0.2

 

0.0

 

0.0

 

5.1

 

5.0

1.1

 

1.1

 

0.0

 

0.0

Other property, plant and equipment comprises IT equipment (CHF 0.2 million) and works of art (CHF 0.9 million).

4.4  Financial assets

31.12.2018

 

31.12.2017

 

125.3

 

133.2

 

10.6

 

9.9

135.9

 

143.1

In the Real Estate division, Allreal provided tenants with prefinancing of costs for interior fit-outs of business and commercial premises which will be repaid in full by the tenants over the term of their leases on an annuity basis. Final maturities for repayment of the prefinanced tenant fit-outs run until 2034, with interest rates at 1.00 to 5.55% per annum, depending on the individual contractual arrangements. Totalling CHF 109.5 million (31.12.2017: CHF 116.1 million), the largest individual positions for tenant fit-outs on the Toni site, Zurich, and on Zürcherstrasse, Winterthur, are with the Canton of Zurich as counterparty.

As at the balance sheet cut-off date, the prefinanced tenant fit-outs break down as follows:

2018

 

2017

 

135.5

 

139.1

 

2.6

 

5.3

 

–11.2

 

–8.9

 

126.9

 

135.5

 

2.3

 

2.3

 

0.0

 

0.0

 

–0.7

 

0.0

 

1.6

 

2.3

 

125.3

 

133.2

On the balance sheet cut-off date, pension plan assets (IAS 19) stood at CHF 10.6 million (2017: assets of CHF 9.9 million).

4.5  Intangible assets

2018

 

2017

 

0.4

 

0.2

 

0.1

 

0.2

 

0.0

 

0.0

 

0.5

 

0.4

 

0.1

 

0.0

 

0.2

 

0.1

 

0.0

 

0.0

 

0.3

 

0.1

0.2

 

0.3

4.6  Contract assets

31.12.2018

 

31.12.2017

 

21.4

 

0.0

 

26.9

 

0.0

48.3

 

0.0

4.7  Trade receivables

31.12.2018

 

31.12.2017

 

38.9

 

26.9

 

0.0

 

46.8

 

6.9

 

4.9

45.8

 

78.6

The CHF 6.9 million in receivables due to the Real Estate division include balances (not yet due) owed by property management companies.

The maturities structure for the non-value-adjusted receivables of the Projects & Development division was as follows as at 31 December:

2018

 

2017

 

17.7

 

14.1

 

17.1

 

4.6

 

1.9

 

0.0

 

2.2

 

8.2

 

0.0

 

0.0

38.9

 

26.9

The stated values are after deduction of prepayments made for each project which as at 31 December is under construction for third parties and has not yet been billed and paid.

2018

 

2017

 

382.8

 

452.1

 

38.6

 

44.6

 

22.4

 

24.3

 

443.8

 

521.0

 

–448.2

 

–494.9

 

26.1

26.9

 

46.8

31.5

 

20.7

4.8  Other receivables

31.12.2018

 

31.12.2017

 

0.8

 

0.2

 

0.4

 

0.6

 

0.2

 

0.1

 

0.4

 

0.4

 

0.5

 

0.6

2.3

 

1.9

4.9  Cash

Of the cash amounting to CHF 40.6 million (31.12.2017: CHF 38.1 million), CHF 11.7 million is freely disposable in the form of current account balances and CHF 28.6 million can only be used for certain third-party construction projects of the Projects & Development division.

4.10  Share capital

On 20 April 2018, the annual general meeting of Allreal Holding AG voted in favour of lowering the share capital by reducing the nominal value of each registered share from CHF 50.00 to CHF 1.00 and using the amount of the reduction to repay CHF 6.25 per registered share to shareholders and to allocate CHF 42.75 per registered share to the reserves from contribution of capital. Accordingly, as at the balance sheet cut-off date, the share capital of Allreal Holding AG comprised 15,942,821 registered shares with a nominal value of CHF 1.00 each. Each share carries one vote and confers entitlement to attend the general meeting if entered in the share register.

Shareholdings developed as follows:

Shares issued

 

Treasury shares

 

Outstanding shares

 

15 942 821

 

12 000

 

15 930 821

   

164 174

  
   

–146 144

  
   

–502

  
 

15 942 821

 

29 528

 

15 913 293

 

15 942 821

 

29 528

 

15 913 293

   

228 316

  
   

–199 596

  
   

–1 193

  
 

15 942 821

 

57 055

 

15 885 766

The average purchase price per treasury share stands at CHF 155.35 (31.12.2017: CHF 165.25).

The Board of Directors is authorised by the annual general meeting to increase the share capital – excluding the subscription rights of shareholders as applicable – until 20 April 2020 to acquire businesses, business units, participating interests or real estate through an exchange of shares, for financing or refinancing the acquisition of businesses, business units, participating interests or investment projects, or for the purpose of an international placement of shares worth up to CHF 1.0 million by issuing up to 1,000,000 registered shares each with a nominal value of CHF 1.00 (authorised capital).

For the purpose of issuing convertible bonds, warrant bonds or other financial instruments, the annual general meeting of 31 March 2006 created – excluding the subscription rights of shareholders – conditional capital of up to CHF 125.0 million through the issue of up to 2,500,000 registered shares with a par value of CHF 50 each. Bearers of the convertible and/or warrant bonds are entitled to subscribe to the new shares. This conditional capital decreased by CHF 0.2 million to CHF 124.8 million (as at 31 December 2018) following the conversion of convertible bonds into shares in previous years. The nominal value reduction to CHF 1.00 per share is also applicable to conditional capital, resulting in the latter amounting to CHF 2,495,763 as at 31 December 2018.

Further, Allreal Holding AG has conditional capital of CHF 200,000 (200,000 registered shares at a nominal value of CHF 1.00 each) at its disposal for the purpose of issuing options to the members of the Board of Directors and management.

The Board of Directors will propose to the Allreal Holding AG annual general meeting of 12 April 2019 a distribution of CHF 6.50 per share, corresponding to a total amount of CHF 103.6 million.

In 2018, CHF 99.3 million was distributed in the form of a nominal value reduction to shareholders (CHF 6.25 per share).

4.11  Borrowings

Maturity of liabilities at nominal values

< 1 year

 

1–3 years

 

3-5 years

 

> 5 years

 

Total

558.0

 

306.0

 

359.3

 

689.7

 

1 913.0

 

29.2

 

16.0

 

18.8

 

36.0

 

100.0

 

25.1

 

14.5

 

17.4

 

43.0

 

100.0

The financial debt of Allreal Group consists of bank loans secured by mortgage (fixed advances and fixed-rate mortgages) and bond issues. The bank loans in the form of fixed advances are extended on a rolling basis.

Bond issues with a total par value of CHF 1,080 million and a book value of CHF 1,079.6 million are recognised under borrowings. During the period under review, CHF 0.3 million was spent on the amortisation of the issuing costs.

4.12  Provisions

The provisions for construction guarantees cover existing risks arising from completed projects of the Projects & Development division. The other provisions comprise possible outflows of funds arising from pending litigation.

Short-term provisions

Construction guarantees

 

Other

 

Total

2018

 

2017

 

2018

 

2017

 

2018

 

2017

 

4.1

 

4.2

 

0.9

 

1.6

 

5.0

 

5.8

 

0.9

 

4.5

 

0.0

 

0.0

 

0.9

 

4.5

 

–3.5

 

–4.4

 

0.0

 

–0.7

 

–3.5

 

–5.1

 

–0.5

 

–0.2

 

0.0

 

0.0

 

–0.5

 

–0.2

1.0

 

4.1

 

0.9

 

0.9

 

1.9

 

5.0

Long-term provisions

Construction guarantees

 

Other

 

Total

2018

 

2017

 

2018

 

2017

 

2018

 

2017

 

1.5

 

1.8

 

0.5

 

13.4

 

2.0

 

15.2

 

0.0

 

0.0

 

0.0

 

0.0

 

0.0

 

0.0

 

0.0

 

0.0

 

0.0

 

0.0

 

0.0

 

0.0

 

0.0

 

–0.3

 

0.0

 

–12.9

 

0.0

 

–13.2

1.5

 

1.5

 

0.5

 

0.5

 

2.0

 

2.0

4.13  Contract liabilities

31.12.2018

 

31.12.2017

 

31.5

 

0.0

31.5

 

0.0

4.14  Prepayments for development real estate

31.12.2018

 

31.12.2017

 

 

2.7

 

0.0

 

1.1

 

0.2

 

1.2

0.2

 

5.0

4.15  Trade payables

31.12.2018

 

31.12.2017

 

22.3

 

33.5

 

0.0

 

20.7

 

0.7

 

0.0

23.0

 

54.2

4.16  Other current liabilities

31.12.2018

 

31.12.2017

 

0.9

 

0.4

 

1.3

 

1.5

 

12.7

 

15.1

14.9

 

17.0

As at the balance sheet date, all holiday entitlement not yet utilised by employees is evaluated on the basis of individual rates of pay and is recognised as an accrual in the consolidated financial statements. As at 31.12.2018, this accrual amounted to CHF 1.3 million (31.12.2017: CHF 1.5 million).

Accrued expenses and prepaid income essentially comprise accrued interest expenses arising from financial liabilities, real estate expenses or operating expenses not yet settled and remuneration not yet paid to the Board of Directors and Group Management.