HIAG half-year result impacted by extraordinary events

Media Release

•  Loss of CHF 43.4 million due to Rohner AG Pratteln bankruptcy and HIAG Data

•  Focus on real estate development core business

•  Property income increased by 7.7% to CHF 30.4 million

•  Real estate portfolio further expanded to CHF 1.51 billion

•  Comfortable WALT of 9.5 years

•  Proposed dividend waiver for the 2019 financial year

Basel, 2 September 2019 – HIAG reported a loss of CHF 43.4 million in the first half of 2019 (H1 2018: profit of CHF 33.3 million). The negative half-year result was marked by several extraordinary events. On the one hand, the development of a multicloud platform, which has since been discontinued, burdened the result with CHF 22.4 million. In addition, the bankruptcy of HIAG's third-largest tenant to date, the chemical company Rohner AG Pratteln, led to consequential costs of around CHF 45 million for write-downs and provisions, including the dismantling of the production infrastructure and the rehabilitation of the Pratteln site. In contrast to these challenging events, property development developed positively in the first half of 2019. Rental income rose by 7.7% to CHF 30.4 million and the portfolio has a comfortable average remaining rental period of 9.5 years. In view of the major challenges of recent months, the Board of Directors has already decided today to propose to the Annual General Meeting on 23 April 2020 that no dividend be paid.

First-half results negatively impacted by Rohner bankruptcy and HIAG Data

Revaluation effects were negative at CHF -26.6 million (H1 2018: CHF 26.7 million), mainly due to the bankruptcy of Rohner AG Pratteln. The weighted average discount rate for the entire portfolio decreased slightly at the end of the first six months to 4.12% as of 30 June 2019 (31 December 2018: 4.15%). Despite discussions with various interested parties, HIAG now assumes that it will have to bear the costs of the deconstruction and rehabilitation of the site to a chemical-free state itself. The 2019 half-year result therefore includes around CHF 45 million for revaluation losses and provisions, CHF 21 million alone for the dismantling of the production infrastructure in Pratteln. In addition, the negative earnings contribution from HIAG Data impacted the half-year result by CHF 22.4 million.

Solid development in the real estate core business

In the first six months of the 2019 financial year, HIAG increased collected property income by 7.7% year-on-year to CHF 30.4 million (H1 2018: CHF 28.2 million). As a result of the bankruptcy of Rohner AG Pratteln, the annualised property income of CHF 60.0 million is 1.4% below the comparable figure at the end of 2018 (31.12.2018: CHF 60.9 million) despite the successful completion of various development projects. The vacancy rate remained stable at 14.4% as of 30 June 2019 (31 December 2018: 14.3%). HIAG also has a comfortable average remaining lease term (WALT) of 9.5 years (31.12.2018: 9.7 years). At the end of June 2019, the total portfolio consisted of 115 properties with a valuation of around CHF 1.51 billion (31.12.2018: CHF 1.49 billion).

After distributing a dividend of CHF 31.2 million (CHF 3.90 per share entitled to dividend), HIAG Immobilien Holding AG still had an equity ratio on an EPRA basis of 47.8% (31.12.2018: 54.2%) on 30 June 2019. Following the successful placement of a CHF 150 million fixed-rate bond with a coupon of 0.875% and a term of 5 years, the weighted average term of debt increased significantly from 2.8 to 3.1 years. The average interest rate for financial liabilities remains low at 0.91% (H1 2018: 0.92%). The Loan To Value Ratio (LTV) was 48.8% (31.12.2018: 43.4%).

Successful completion of real estate projects and further successes in redevelopment projects

In Neuchâtel, Migros and Denner opened new stores in May in the commercial centre Les Cadolles, followed in June by another long-term tenant in the form of a pharmacy. The first two projects on the Walzmühle site in Frauenfeld were completed during the reporting period. Most office and commercial tenants, including the Swiss mail-order pharmacy "Zur Rose" and the bakery Stähli, have already moved in. The open day at the Walzmühle, at which the eight loft houses and nine loft apartments were presented to the public at the end of August, met with a great response. Some units have already been reserved or rented.

In the redevelopment portfolio great progress were made especially on the HIAG Technology Campus "The Hive" in Meyrin with the signing of the rental agreement with the listed electrical components manufacturer LEM and the granting of the building permit for the "Pavillon Luigia". The new building for the new LEM headquarters in Geneva for LEM includes around 7,000 m² with office space as well as two floors for the research and development unit and a production unit. Tenants Regus and Hewlett Packard Enterprise will move into their space in the "Hive 1" building during the second half of the year.

As at the reporting date, HIAG's redevelopment portfolio was composed of roughly 50 projects, which comprise approximately 643,000 m² of usable area and represent an expected investment volume of about CHF 1.9 billion. Seven projects are under construction and nine of these redevelopment projects with a usable area of about 60,000 m² and an investment volume of approximately CHF 170 million should be tackled in the next three years.

Strategic acquisition in Lancy completes development area in Geneva's Lancy district

With the acquisition of Jaeger et Bosshard SA, HIAG completes its 'Porte Sud' site in Geneva. In the course of the transaction, HIAG acquires the 4,457 m² property held by Jaeger et Bosshard SA under building right and holds a total area of 13,362 m² in the Lancy district of Geneva. Today, HIAG is the sole private owner of the 'Porte Sud' in the immediate vicinity of the Stade de Genève. This acquisition marks an important milestone in the development of the site, which is connected to the central station Geneva-Annemasse (F) railway line and the future Lancy Bachet railway station.

Outlook

Following the decision by HIAG and SIX not to continue the partnership for the operation of a secure cloud service for the Swiss financial market and the unsuccessful search for further project partners, the Board of Directors of HIAG Immobilien Holding AG decided in August 2019 to discontinue the development of the multicloud platform and to focus HIAG on the real estate business. HIAG Data will be restructured and geared towards the digital development of the HIAG sites, whereby some of the existing hardware and software will continue to be used. This should result in a maximum impairment of assets of CHF 42 million for the 2019 financial year as a whole. In addition, HIAG expects HIAG Data to incur operating costs of around CHF 10 million in the second half of 2019. In order to keep restructuring costs as low as possible, HIAG has launched an action plan. These include in particular the digital development of the Biberist site, the review of the sale of the network and the migration of existing customers to third-party service providers and, in some cases, the early termination of existing contracts.

The costs related to the bankruptcy of Rohner AG Pratteln, will also have a significant impact on the core business of real estate development. This applies in particular to rental income, revaluation of properties and real estate operating costs.

With a solid financing structure and an attractive real estate and development portfolio, HIAGbelieves it is well positioned to move into the future strengthened after the exceptionally challenging 2019 financial year. The appointment of real estate expert Marco Feusi as CEO and the election of real estate entrepreneur Balz Halter as a member of the Board of Directors further strengthened HIAG's management with two proven industry specialists.

In view of the major challenges of recent months, the Board of Directors has already decided today to propose to the Annual General Meeting on 23 April 2020 that no dividend be paid.

Selected HIAG key figures

2019 Half-Year Report

HIAG's 2018 Half-Year Report is available online at https://www.halfyearreport.hiag.com/ and the presentation slides are available at https://www.hiag.com/en/investors/.

Invitation to the live webcast with conference call

Dr. Felix Grisard (President of the Board of Directors and CEO ad interim) and Laurent Spindler (CFO) will present the 2019 Half-Year Report and answer your questions as part of a live webcast with a conference call in German:

Date: 2 September 2019

Time: 10.00 a.m. (CET)

Live webcast:

https://78449.choruscall.com/dataconf/productusers/hiag/mediaframe/30184/indexl.html

Dial-in numbers:

+41 (0)58 310 50 00 (Europe)

+44 (0)207 107 06 13 (UK)

+1 (1)631 570 56 13 (USA)

Advance registration is not required.

Webcast replay

The replay of the webcast can be found under the following link:

https://78449.choruscall.com/dataconf/productusers/hiag/mediaframe/30184/indexl.html

Agenda

Contact

HIAG Immobilien Holding AG

Aeschenplatz 7

4052 Basel

T +41 61 606 55 00

investor.relations@hiag.com

www.hiag.com