HIAG delivers record result in fiscal year 2018

Media Release

•  Net income increased by 5.9%

•  Collected property income was up 4.3%

•  Annualised property income increased by 8.6%

•  Average lease term extended to 9.7 years

•  Real estate portfolio expanded to CHF 1.49 billion

•  Dividend per outstanding share increased to CHF 3.90

Basel, 18 March 2019 – In fiscal year 2018, HIAG achieved a new record result of CHF 60.9 million (previous year: CHF 57.5 million). The annualised property income was significantly increased. The average lease term rose again and the redevelopment pipeline was expanded with strategic acquisitions. HIAG Data has focused its offering and in December 2018 set an important milestone with the letter of intent to launch a Secure Swiss Cloud Service together with the Swiss financial market infrastructure provider SIX. Based on the positive development and the good result with an after-tax return of 8.0%, the Board of Directors will propose to the Annual General Meeting of HIAG Immobilien Holding AG on 11 April 2019 a dividend of CHF 3.90 per share (previous year: CHF 3.80), which is 2.6% higher than the previous year.

Earnings increased again

HIAG increased collected property income by 4.3% year-on-year to CHF 58.2 million (previous year: CHF 55.8 million). On a like-for-like basis (before acquisitions), the increase was 0.7%. Annualised property income rose by 8.6% to CHF 60.9 million (previous year: CHF 56.1 million). With a total of CHF 76.4 million (previous year: CHF 33.3 million), revaluations substantially contributed to HIAG's solid result in fiscal year 2018. The significantly higher contribution from revaluations is mainly due to new, long-term contracts, strategic acquisitions and successful redevelopments. The sale of the last paper machines at the Papieri site in Biberist also made a positive contribution of CHF 4.1 million to the earnings. The focusing of HIAG Data's business model in fiscal year 2018 led to an extension of the investment phase and to a value adjustment of CHF 16.5 million on investments at HIAG Data. Despite a negative earnings contribution from HIAG Data of CHF 39.1 million (previous year: CHF 4.3 million), HIAG achieved another record result in fiscal year 2018 with an increase of 5.9% to CHF 60.9 million (previous year: CHF 57.5 million). Earnings per share increased by 6.3% to CHF 7.60 (previous year: CHF 7.15). EPRA Earnings (European Public Real Estate Association) amounted to CHF 34.2 million (previous year: CHF 37.4 million).

Financing structure remains solid

In the 2018 fiscal year, HIAG strengthened its financing structure with the successful issue of a fourth fixed-rate bond in the amount of CHF 125 million with a coupon of 1.0% and a maturity of 4 years. The average interest rate for financial liabilities remains low at 0.9% (31.12.2017: 1.0%). The loan-to-value ratio (LTV) amounted to 43.4% (31.12.2017: 37.0%) as at the reporting date of 31 December 2018. The weighted average term to maturity of the liabilities decreased to 2.8 years (31.12.2017: 3.6 years). With shareholders' equity (NAV) of CHF 784.9 million (31.12.2017: 760.5 million), HIAG still has a sound equity ratio of 49.1% (31.12.2017: 54.4%) and 54.2% (31.12.2017: 59.7%) on EPRA basis.

Average lease term significantly increased

In 2018, the weighted average lease term again rose sharply from 7.9 to 9.7 years. This was due, among other things, to the long-term construction rights lease with Stadler Rail in St. Margrethen, the sale-and-lease-back transactions with long-term triple-net leases in Brunegg, Goldach and Pratteln and the reletting of the former recruitment centre in Windisch to the FARO foundation with a term of 25 years. In Cham, the vacancy rate in the existing building was significantly reduced to 10.2% (at the time of the IPO: 66.8%). In the second half of the fiscal year, vacancy continued to decline as compared to the first half, in particular due to successful lettings of older vacancies: The vacancy rate including redevelopment properties was 14.3% in 2018, as in the previous year.

Real estate portfolio and redevelopment pipeline expanded

At the end of 2018, the overall real estate portfolio consisted of 114 properties with a valuation of CHF 1.49 billion. The EPRA net yield was 3.8% (31.12.2017: 4.1%). With the sale-and-lease-back acquisitions in Brunegg, Goldach and Pratteln, the medium-term and long-term redevelopment pipeline has been expanded by three attractive, very well developed locations. With CHF 5.9 million per year over a contract period of 15 years each, they strengthen the annualised property income over the long term. All have medium- and long-term development potential. In Brunegg, planning for an extension of the high-bay warehouse with the existing tenant is already well advanced. In Goldach, the construction of a new facility on the 63,000 m² site is underway. It is already rented for 15 years after completion. And in Pratteln it is becoming evident that the industrial use of the area is in its final cycle and the current industrial area around the railway station is likely to be transformed into a central area with around 50,000 m² of office and residential space in the long term.

Successful site redevelopment

The transformation of the Walzmühle site in Frauenfeld, where 39 residential units and 2,300 m² of office space are being built in three phases, has mainly been completed. The toppingout ceremony was celebrated in February 2019. Most of the office space has already been let. The first leases for the apartments were signed nine months before completion. The local supply is guaranteed with the move in of the café "Werk 3" from the Frauenfeld bakery and pastry shop Stähli with over 50 seats and a pick-up counter. At the Papieri site in Biberist, after the sale of the last paper machine, the path is open for the step-by-step redevelopment of the building areas. In addition, HIAG Data will provide the infrastructure for business models of the fourth industrial revolution. At the end of 2018, the redevelopment portfolio comprised around 50 projects with a total of 639,000 m² of usable space and an expected investment volume for these projects of CHF 1.8 billion. Over the next three years, seven development projects with a useable space of around 40,000 m² and an investment volume of around CHF 93 million are to be launched. In fiscal year 2019, the transformation of the existing 9,000 m² building in Meyrin will be completed. And on the Neuchâtel site, Migros will open new sales areas in the second quarter of fiscal year 2019.

Strategic focusing of HIAG Data

HIAG Data was launched by HIAG in order to establish the real estate portfolio as a prime location with regard to the criterion "digital development". This strategy is already bearing fruit on the sites in Meyrin, Biberist and Diesbach and is to be extended step by step to cover the entire portfolio. At the same time, HIAG Data will benefit from opportunities that go far beyond its real estate strategy. The use of cloud solutions and thus transaction-based software enables attractive new business models that are independent of specific industries. In December 2018, the Swiss financial market infrastructure provider SIX and HIAG Data announced that they intended to jointly develop and distribute Secure Swiss Cloud Services in order to create the basis for companies with very high demands on data security, data independence and data availability to cope with this change more quickly. SIX and HIAG Data are thereby creating the basis for a cloud-based ecosystem for the Swiss financial market. In order not to limit the growth potential of HIAG Data by the real estate strategy, HIAG intends to pave the way for further investments in HIAG Data's business model for third-party investors independently of HIAG.

Dividend proposal

For fiscal year 2018 the Board of Directors will propose to shareholders at the Annual General Meeting on 11 April 2019 to pay a dividend of CHF 3.90 per outstanding share. This corresponds to a return of 3.35% based on the share price at the end of fiscal year 2018. The distribution is to be made on the one hand from the retained earnings and on the other hand in the form of capital repayment of CHF 1.73 from reserves from capital contributions, which ist tax-free for private individuals with their residence in Switzerland.

Outlook

Switzerland is in an excellent situation to position itself in the dynamic development of new business models as a just as attractive environment as Silicon Valley has been in the last twenty years, but with Swiss DNA of its own. HIAG wants to be at the forefront of this development and to contribute to it with its real estate portfolio. With the current initiatives in Meyrin, Biberist and Diesbach and the establishment of HIAG Data, HIAG has created an excellent platform for this. Due to recent acquisitions and the completion of development projects, HIAG aims to further increase its property income in 2019. In addition, the announced partnership between SIX and HIAG Data is to be specified over the next few months.

Selected HIAG key figures

⁽¹⁾ Proposal to the Annual General Meeting on 11 April 2019 for the financial year 2018: distribution out of reserves from capital contributions and out of retained earnings.

 ⁽²⁾ Dividends per share compared to earnings per share without revaluation of properties and without contribution HIAG Data. The calculation of the payout ratio has been changed in 2018 and the calculation 2017 has been restated. The payout ratio calculated based on the net profit without non-cash tax items amounts to 101.9% as per 31 December 2018.

⁽³⁾ Dividends per share compared to share price at the end of the period.

Annual Report 2018

HIAG's 2018 Annual Report is available online at www.annualreport.hiag.com and the presentation slides are available at www.hiag.com.

Media conference

On Monday, 18 March 2019, 9.00 a.m. Martin Durchschlag, CEO, and Laurent Spindler, CFO, will discuss the fiscal year 2018 at a media conference. The presentation will take place in the conference area of Restaurant Au Premier at Zurich Main Station (Bernina room).

The media conference can be followed live via the following link:
https://78449.choruscall.com/dataconf/productusers/hiag/mediaframe/28764/indexl.html

A recording of the media conference is available at the following link:
https://78449.choruscall.com/dataconf/productusers/hiag/mediaframe/28764/indexl.html

Annual General Meeting

The Annual General Meeting of HIAG Immobilien Holding AG will take place on Thursday, 11 April 2019, 10:00 a.m. (doors open at 9:00 a.m.) in the P9 Hall on the Papieri site in Biberist. The invitation will be sent to shareholders entitled to vote by postal mail and will be published in the Swiss Official Gazette of Commerce (SOGC) and on www.hiag.com.

Financial calendar

Contacts

HIAG Immobilien Holding AG

Aeschenplatz 7

4052 Basel

T +41 61 606 55 00

investor.relations@hiag.com

www.hiag.com