Successful 2016 Business Year for HIAG

Media Release

Basel, 20 March 2017 - HIAG continued on a successful course during the 2016 business year. Collected property income increased to CHF 52.4 million (2015 business year: CHF 51.2 million) and earnings before taxes and revaluation to CHF 30.7 million (CHF 28.3 million). During the reporting year, HIAG Data's infrastructure platform was successfully launched with well-known anchor clients in the finance and healthcare fields. It was disclosed for the first time as the independent business unit “Infrastructure as a Service” (IaaS) in 2016. Thanks to the successful development of its business, at the general assembly on 20 April 2017, the Board of Directors of HIAG Immobilien Holding AG will be proposing a dividend of CHF 3.60 per share, i.e. about 3% higher than 2016 (2016: CHF 3.50). The dividends are to be paid out again in the form of a tax-free capital repayment for private individuals with their residence in Switzerland.

Rental income increased again

HIAG reported another increase in collected rental income in the 2016 business year. Property income rose by 2.4% to CHF 52.4 million (CHF 51.2 million) and annualised property income increased by 5.4% to 54.2 million. This corresponds to a 2.5% increase on a like-for-like basis prior to the acquisition of the site in Yverdon-les-Bains. Earnings (EBT) per share prior to revaluation grew by 8.1% to CHF 3.84 (CHF 3.54). At CHF 20.0 million, revaluation effects were about CHF 11.5 million lower than the previous year, with an unchanged discount rate of 4.44% (31 December 2015: CHF 31.5 million). Earnings on the EPRA (European Public Real Estate Association) basis increased by 8.0% compared to the previous year to CHF 30.5 million.

Financing structure optimised

At the end of May 2016, HIAG Immobilien Holding AG successfully issued a fixed-rate bond for CHF 115 million with a coupon of 1.00% and a maturity of 7 years. Due to the cash inflow, the weighted term could be extended by 1.9 years to 3.1 years with a consistently low average interest rate for financial liabilities of 1.1% (previously 1.0%). As at 31 December 2016, the loan to value ratio (LTV) was 36.2% (31 December 2015: 36.8%). As in the previous year, HIAG continues to have a solid equity ratio of 54.7% (31 December 2015: 54.4%), or 59.8% (31 December 2015: 59.2%) on an EPRA basis.

Higher quality of the portfolio structure 

Following the acquisition of the site in Yverdon-les-Bains, the yielding portfolio included usable area of about 350'000 m². The vacancy rate in the overall portfolio decreased further and was 15.3% as at the reporting date (16.0%), or 15.2% on a comparable basis. The increase in the weighted remaining rental term to 5.2 years due to new developments and contract extensions was also very positive. This can be explained by new developments and contract extensions for an annualised property income of about CHF 4.0 million. The net return of the inventory portfolio rose to an attractive 5.52% (31 December 2015: 5.45%). As at the reporting date, the overall portfolio was composed of 112 properties that were valued at CHF 1.24 billion.

Successful site redevelopment

The project at the Biberist site reached another important milestone. After the framework building permit entered into force, the high-bay warehouse was recommissioned and the tenant has begun the lease agreement as agreed in the 2017 business year with annualised rental income of about CHF 1.0 million. In addition, the first two expansion phases for HIAG Data were also authorised in Biberist. The first step will be up and running in the first half of 2017, and the new data centre in the Walzenhalle with 2 MW of capacity should be ready for use by mid-2018. With the first hall and the new office building in Bremgarten, the first renovation phase of the headquarters for the building supplier Jeld-Wen has been largely completed. In Meyrin, the creation of the EMEA headquarters of HP Inc. and Hewlett Packard Enterprise is moving forward with no delays. The delivery of the new building, with a usable area of approximately 8‘300 m², is planned for the third quarter of 2017. Since the building permits became legally valid during the reporting year for the Walzmühle building and the central building in Frauenfeld, the construction of 21 apartments and 1‘800 m² of office and retail space is expected to begin there in the 2017 business year. At the Camembert site in Geneva's Lancy district, an attractive temporary use for the centrally-located site adjacent to the Stade de Genève was found last spring with the opening of the Club Village du Soir.

Pipeline expanded further

The pipeline was expanded with attractive medium-term projects. Coop and Doka Schweiz AG signed long-term rental contracts with HIAG. The rental contracts with Coop for the Aathal site and with Doka Schweiz AG for the Niederhasli site have been contingently signed and are linked to legally valid building permits. In Niederhasli, the municipal council is also examining the upgrade of the site surrounding the train station, which would allow for dense residential use in the central area over a large part of the site. At the Cham Nord site, an attractive anchor tenant was gained with the construction of the private education and training building for elite athletes “On Your Marks”. The goal for obtaining the building permit is 2017. About 300 apartments could then be built within the same time frame. Sales of the promotion projects The Cloud in Baar and Feinspinnerei in Windisch are going according to plan. As at the reporting date, 83% of The Cloud and 52% of Project Feinspinnerei had been sold. In 2016 alone, CHF 46.8 million in net cash was generated at the two sites in Baar and Windisch with 60 apartments sold, and funds were freed up for future investments. As at the reporting date, the development portfolio contained 50 projects with approximately 639‘000 m² of usable area. The expected investment volume is about CHF 1.8 billion. Nine of these development projects with a usable area of about 77‘000 m² and an investment volume of approximately CHF 246.5 million should be tackled in the next three years.

From site infrastructure to digital infrastructure

Within the first six months following its launch, HIAG Data has managed to create important partnerships and gain new anchor clients. The fully scalable virtualisation, which until now was only operational on Open Cloud, will be extended to AZURE Cloud in the first six months of 2017 in association with Microsoft. With the private, efficient, high-bandwidth fibre optic network, HIAG Data will provide the fastest connection to the public AZURE Cloud in Switzerland and propose the most efficient AZURE offering in Switzerland with Swiss Cloud. The range of services will include an attractive offering in the data storage field and a billing module. HIAG Data will make its infrastructure offering available to cloud-based service providers and will not be entering the end-user market itself. In order to avoid bottlenecks in the development of its own areas and to remain flexible for the further development of its services, HIAG has entered into a partnership with the pan-European colocation provider InterXion. Today, HIAG Data counts Safe Swiss Cloud, Noser Engineering, itnetX, SBB and Glarner Kantonalbank among its anchor clients and partners, and it intends to present other joint projects at the official launch of the Digital Economic Forum in May 2017.

HIAG key figures

⁽¹⁾Proposal at the ordinary General Assembly on 20 April 2017 for the 2016 business year: Payout from reserves from capital contributions 

⁽²⁾Payout per share with regard to earnings without revaluation including revaluation of promotion

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

Dividend proposal

The Board of Directors will be requesting a dividend payout of CHF 3.60 per share at the General Assembly on 20 April 2017 for the 2016 business year. The payout will be made in the form of a tax-free capital repayment from reserves from capital contributions for private individuals with their residence in Switzerland. In terms of corporate profits without revaluation including revaluation of promotion, this payout corresponds to a payout ratio of 100%. The return on the share price was 3.44% as at the end of 2016.

Outlook

The high stock of land reserves in the portfolio allows HIAG to buy analytically and very selectively. This helps stabilise and protect the future earning capacity of the portfolio. With the planned completion of several building projects, HIAG aims to further increase property income in the 2017 business year. The existing promotion projects will also contribute additional funds to finance the pipeline in 2017. In addition, a significant revenue contribution is expected for the first time from the HIAG Data segment.

2016 Annual Report

HIAG's 2016 Annual Report is available online at www.annualreport.hiag.com and the presentation is available at www.hiag.com.

Press conference

Martin Durchschlag, CEO, and Laurent Spindler, CFO, will present the results of the 2016 business year at a press conference on Monday, 20 March 2017 at 9 am (CET) in the auditorium of the SIX Swiss Exchange (1st floor), Selnaustrasse 30 in Zurich.

The presentation can be followed online via the following link:
http://78449.choruscall.com/dataconf/productusers/hiag/mediaframe/18336/indexl.html 

After the presentation, a recording of the presentation will be available via the following link:
http://78449.choruscall.com/dataconf/productusers/hiag/mediaframe/18336/indexl.html 

Ordinary General Assembly

The Ordinary General Assembly of HIAG Immobilien Holding AG will take place on 20 April 2017 at 10 am (doors open at 09:00) in the "Zentralbau" at the Walzmühle site in Frauenfeld. 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