Successful 2017 Business Year for HIAG

Media Release

Basel, 19 March 2018 – HIAG's activities were very successful in the 2017 business year. Property income rose again and the portfolio was expanded. In addition, recently signed long-term rental contracts and successful redevelopments had a significant positive impact on revaluation effects. HIAG Data also successfully developed and further expanded its infrastructure offering in the 2017 business year.Thanks to the good result and an after-tax return of 7.9%, the Board of Directors will propose increasing dividends by 5.6% compared to the previous year at the HIAG Immobilien Holding AG Annual General Meeting on 19 April 2018. The planned payout of CHF 3.80 per share (2016: CHF 3.60) is to be made in the form of a tax-free capital repayment for private individuals with their residence in Switzerland.

Earnings increased

Collected property income rose by 6.5% to CHF 55.8 million compared to the previous year (CHF 52.4 million). Annualised property income was 3.5% above that of the previous year at CHF 56.1 million (2016: CHF 54.2 million). The increase on a like-for-like basis (prior to the purchase of the site in Meyrin and non-recurring effects) was 4.7% compared to the previous year. Due to new long-term rental contracts and successful redevelopments, at CHF 33.3 million, revaluations made a substantial contribution to the good 2017 result (2016: CHF 20.0 million). The sale of paper machine 9 in Biberist for CHF 7.1 million also had positive effect on the result and more than compensated for the negative income contribution of CHF 4.3 million of HIAG Data, which is still under development. During the 2017 business year, HIAG increased net income by 23.9% to CHF 57.5 million (2016: CHF 46.4 million) and earnings per share (EPS) to CHF 7.15 (2016: 5.80). Earnings on an EPRA (European Public Real Estate Association) basis increased by 7.6% to CHF 33.1 million (2016: CHF 30.5 million).

Solid balance sheet footings

With the successful placement of a third bond for CHF 150 million with a five-year term and a coupon of 0.8%, HIAG further strengthened its financing structure and extended the weighted average term for external financing from 3.1 to 3.6 years. The average interest rate for financial liabilities remained low at 1.0% (31 December 2016: 1.1%). The loan-to-value ratio (LTV ratio) was 37.6% as at the reporting date of 31 December 2017 (31 December 2016: 36.2%). HIAG also has a strong equity ratio of 54.4% (31 December 2016: 54.7%) or 59.7% (31 December 2016: 59.8%) on an EPRA basis.

Average lease term extended

HIAG signed several long-term rental contracts during the 2017 business year. These contracts include the building rights agreement with Stadler Rail AG at the St. Margrethen site for a period until at least 2081, the 20-year contract extension with Brugg Rohrsysteme in Kleindöttingen and the long-term rental contracts with Media Markt, Dachser and Baoshida. The average lease term was thus extended from 5.2 to 7.9 years. The rental contracts in Lorzenpark in Cham were particularly satisfying: the vacancy rate in the existing building dropped from 32.7% to 12.0% and the property could be successfully repositioned by the planned development of 300 apartments and the On Your Marks (OYM) centre of excellence for top athletes and research. In all, the vacancy rate during the 2017 business year decreased to 14.3% (31 December 2016: 15.3%) or to 14.4% on a comparable basis.

Real estate portfolio expanded

As at the reporting date, the total real estate portfolio was composed of 111 properties evaluated at CHF 1.28 billion. Net return was 4.3%, as in the previous year. With the acquisition of the “Uhlmann-Eyraud” site in Meyrin, the long-term redevelopment pipeline was expanded by an attractive and very well connected location. Following the acquisition of the Sulser Logistik AG site during the first quarter of 2018 with a surface area of approximately 28'000 m², HIAG is now represented with two sites in Brunegg. A long-term rental contract was signed with Sulser Logistik within the framework of a sale-and-lease-back transaction. In addition, there is a development agreement for a land reserve of around 5'500 m² to expand the logistics surface area and the existing high-bay warehouse. The first phase of redevelopment is expected to begin in 2018. Both newly acquired sites will be managed under the yielding portfolio until redevelopment is foreseeable.

Successful site redevelopment

“The Hive” site with the new office building for Hewlett Packard Enterprise (HPE) and HP Inc. is a landmark in Meyrin. The construction made full use of the technical possibilities, enabling delivery of the building before the planned deadline and under budgeted costs. In Bremgarten, the second expansion phase was handed over to the long-term tenant Jeld-Wen. In Dietikon, at the beginning of 2018 a rental contract for a substitute building with a usable area of approximately 9'000 m² as well as existing areas scheduled for modernisation covering about 11'000 m² was signed with an internationally renowned company. The 15-year contract will only begin after the departure of the current tenants and after the completion of the building phase, which will not be before 2021. All of the current building projects are being developed as planned: In Frauenfeld, 39 residential units and 2'300 m² of office space are being created in three phases. In Meyrin, the transformation of approximately 9'000 m² of the existing building is already taking place. And in Wetzikon, the complete refurbishment of an apartment building for nine parties is well advanced. As at the reporting date, the redevelopment portfolio was composed of roughly 50 projects with about 603‘000 m² of usable area and an expected investment volume of about CHF 1.7 billion for these projects. Nine of these redevelopment projects, with a usable area of around 33‘200 m² and an investment volume of about CHF 139 million, are expected to be tackled in the next three years. In 2018, four new projects will enter the building phase: Two long-term leases were signed at the Neuchâtel site with Migros and the Italian restaurant chain “Luigia”, which is popular in western Switzerland. Following the scrapping of the planning zone in Niederhasli, new development can be carried out for Doka Schweiz, and Doka will be secured as a tenant for another 15 years. In addition, the new development of the central area around the Niederhasli train station will free up medium-term potential for more than 300 apartments. In Wetzikon, a construction site for 16 rental units has been launched and in Biberist the construction of a data center started, after buyers were found for the paper machines 6 and 8. In addition to the existing premises for test environments and further development, the building is slated to become a data centre for HIAG Data in Biberist.

Next-generation cloud infrastructure

During the 2017 business year, HIAG Data successfully expanded its cloud infrastructure and strengthened its partnership with Microsoft and Hewlett Packard Enterprise (HPE). HIAG Data's offering enables the integration of public cloud solutions, private cloud solutions and individual hyper-scalable cloud infrastructures via a highly secure dedicated network that does not require a detour through the public internet. In the first quarter of 2018, the “Network Centric Multicloud 4.0” was presented at a launch event to cloud system providers and system integrators alongside partners and customers. At this event, HIAG Data and Helmedica presented the first electronic patient file to meet all national and international requirements regarding patient data safety. Following its health and media sector offerings, HIAG Data will now launch specific solutions for other sectors.

Dividend proposal

At the HIAG Immobilien Holding AG Annual General Meeting on 19 April 2018, the Board of Directors will propose a dividend for the 2017 business year of CHF 3.80 per outstanding share, which corresponds to a return on the share price of 3.14% as at the end of 2017. The payout is to be made in the form of a tax-free capital repayment from reserves from capital contributions for private individuals with their residence in Switzerland.

Future prospects

As companies are initiating long-term effective investments and the general trend indicators for the next months hold out the prospect of positive economic development, HIAG is also expecting a good 2018 business year and aiming for a further increase in property income. Following the launch of "Network Centric Multicloud 4.0", HIAG Data aims to make a relevant revenue contribution for the 2018 business year and a positive annualised segment result before depreciation thanks to the partner-on-boarding process starting in April.

Selected HIAG key figures

⁽¹⁾ Proposal to the 4th Annual General Assembly on 19 April 2018: Payout from reserves from capital contributions.

⁽²⁾ Payout per share with regard to earnings without revaluation including revaluation of promotion. The payout ratio calculated based on earnings without non-cash tax expenditures was 108.7% as at 31 December 2017.

⁽³⁾ Payout per share with regard to the share price at the end of the period.

2017 Annual Report

HIAG's 2017 Annual Report is available online at www.annualreport.hiag.com and the presentation slides are available at www.hiag.com.

Press conference

Martin Durchschlag, CEO, and Laurent Spindler, CFO will be presenting the results of the 2017 business year during a press conference on Monday, 19 March 2017 at 9 am. The presentation will take place in the conference area of the “Au Premier” restaurant in the main train station of Zurich (Bernina room).

The press conference can be followed live via the following link:
https://78449.choruscall.com/dataconf/productusers/hiag/mediaframe/22787/indexr.html

After the press conference, a recording of the presentation will be available via the following link:
https://78449.choruscall.com/dataconf/productusers/hiag/mediaframe/22787/indexr.html

Annual General Meeting

The fourth Annual General Meeting of HIAG Immobilien Holding AG will take place on Thursday, 19 April 2018 at 10 am (doors open at 9:00 am) in the “Kunzwerk” of the Kunzareal site in Windisch. The invitation will be sent by mail to voting shareholders and published in the Swiss Official Gazette of Commerce (SHAB) as well as at www.hiag.com.

Agenda

Contact

HIAG Immobilien Holding AG

Aeschenplatz 7

4052 Basel

T +41 61 606 55 00

investor.relations@hiag.com

www.hiag.com