HIAG Immobilien Increases Operative Income

Media Release

Basel, 16 March 2015 - HIAG Immobilien achieved a positive net income of 50.4 million in the 2014 business year, in line with expectations. Taking into account the non-recurring effect from the IPO of a total of CHF 1.5 million, net income amounted to CHF 48.9 million. The high reference value from the previous year, CHF 77.9 million, was shaped by special evaluation effects (re-zoning and building permit). Bearing in mind the good 2014 business year and development in project sales that went according to plan, the Board of Directors will propose the payout of a dividend of CHF 3.30 per share at the General Assembly on 21 April 2015. The dividends are paid out in the form of a tax-free capital repayment for private individuals with residence in Switzerland.

2014 Result

The property income increased by 11.8% to CHF 48.7 million (2013 business year:  CHF 43.5 million). Annualised property income rose by 6.9% to CHF 49.8 million compared to the previous year (CHF 46.6 million). The like for like increase was 4.1%. Earnings per share were CHF 6.84 (31 December 2013: CHF 11.85), or CHF 4.13 (31 December 2013: CHF 6.53) without revaluation including revaluation of promotion.

At CHF 28.7 million, revaluation effects were, as expected, less than the previous year, which was shaped by special revaluation effects (re-zoning and building permit) in Baar. Operating income decreased accordingly to CHF 78.9 million. Without revaluation effects, operating income rose by 10.1%.

The property portfolio was evaluated at CHF 1.15 billion as at 31 December 2014, and included 115 properties as at the reporting date.

Solid equity base

The equity ratio was considerably reinforced by the listing of HIAG Immobilien shares on the Swiss stock exchange (SIX Swiss Exchange) on 16 May 2014, and amounted to 54.4% as at 31 December 2014 (31 December 2013: 45.3%) or 58.9% (31 December 2013: 53.7%) on the EPRA (European Public Real Estate Association) basis. The proceeds from the IPO amounting to a total of CHF 122.6 million were also used to pay back CHF 30 million in bridge financing and to push forward with transaction processes in Cham and Dornach (completion in January 2015). As at 31 December 2014, the loan-to-value ratio (LTV ratio) was 37.0% (31 December 2013: 45.8%) and the duration of financial liabilities was 2.1 years (31 December 2013: 1.3 years). The average interest rate for financial liabilities was 1.03% in the 2014 business year (2013 business year: 1.11%).

Reduction in vacancy rate

The vacancy rate decreased slightly during the period under review to 18.0% (31 December 2013: 18.5%). While vacancies in the redevelopment portfolio and in properties being repositioned were reduced, the vacancy rate in the yielding portfolio increased to 11.7%, as the completed Leuchtturm project and Spinnerkönig were transferred from the redevelopment portfolio to the yielding portfolio prior to full occupancy. In addition, three tenants in Kleindöttingen will be reducing their surface areas during the 2015 business year. The decrease amounts to CHF 0.7 million per year. Nevertheless, the net return in the yielding portfolio could be maintained at an attractive 5.4%.

Further strengthening of the redevelopment portfolio

In Cham, the site on the Lorze river gained significant room for redevelopment following the purchase of an area of 26‘231 m². The increase in redevelopment potential by 200 apartment units and approximately 25‘000 m² of office and commercial space also supports the letting of the yielding properties in Cham. During the 2014 business year, the main focus of construction activities was at the Baar and Windisch sites. In Windisch, a lively residential quarter has been developed with the very advanced Spinnerei III and Spinnerkönig projects. The completion of the project in Baar is also on schedule with the authentication of the first apartments at the end of November 2014. 13 reservations could be transformed into sales 18 months before delivery. In Neuchâtel, important parts of the site were rented to the canton without interruption after rental contracts with the prior owners ran out. The first steps of site redevelopment were taken in Meyrin with the signing of a long-term rental contract with Hewlett Packard. As at the reporting date, the redevelopment portfolio included a total of 51 projects, which comprise approximately 653‘000 m² of usable area and represent an investment volume of about CHF 1.8 billion. 13 of these development projects with a usable area of about 75‘000 m² and an investment volume of approximately CHF 175 million should be tackled in the next three years.

Key figures

⁽¹⁾ 10% Treasury shares

⁽²⁾ Proposal at the Ordinary General Assembly on 21 April 2015 for the 2014 business year: Payout from reserves from capital contributions 

⁽³⁾ Payout per share with regard to earnings without revaluation including revaluation of promotion

⁽⁴⁾ 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 payout of CHF 3.30 per share at the General Assembly on 21 April 2015 for the 2014 business year. The dividends are paid out in the form of a tax-free capital repayment from reserves from capital contributions for private individuals with their residence in Switzerland. Related to the earnings without revaluation including revaluation of promotion, this amount corresponds to a payout ratio of 79.9%. The cash yield with regard to the share price at the end of the period was 3.95%.

Events after the Balance Sheet date

As announced on 8 October 2014, HIAG Immobilien concluded an agreement with Weidenmetall AG, in liquidation with voluntary assignment (WAM), for the purchase of the approx. 130'000 m² site of Swissmetal. The property transfer took place after the fulfilment of the contractually designated conditions of execution.

Market environment and future prospects

2014 was marked by many regulatory interventions, which tended to have a depressing effect on the real estate market. Not least, continually high building activity led to the first cooling-off tendencies in the sub-segments of office and retail space, while demand for condominiums held steady due to the continually attractive interest rate environment.

The scrapping of the euro cap on 15 January 2015 had no direct effects on the HIAG Immobilien yielding portfolio. However, the Management assumes that the currency development could influence long-term investment decisions of export-oriented companies with high added value in Switzerland in the coming year. 

With this in mind, the redevelopment potential will become more important in the existing portfolio. The low interest rate environment and resulting flexibility in schedules make it possible to maximise value creation potential in site redevelopment.

For the 2015 business year, HIAG Immobilien is aiming for an 5% increase in operating income (without revaluation and without acquisitions) and an 4% increase in property income without acquisitions.

2014 Annual Report

HIAG Immobilien's 2014 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 present the results of the 2014 business year at HIAG Immobilien's press conference on the 2014 financial statements on Monday, 16 March 2015 at 10 am (CET) in the auditorium of the SIX Swiss Exchange (1st floor), Selnaustrasse 30, Zurich.

The presentation can be followed online via the following link:
http://services.choruscall.com/dataconf/productusers/hiag/mediaframe/10527/indexr.html 

After the presentation, a recording of the presentation will be available via the following link:

http://services.choruscall.com/dataconf/productusers/hiag/mediaframe/10527/indexr.html

Ordinary General Assembly on 21 April 2015

The Ordinary General Assembly of HIAG Immobilien Holding AG will take place on 21 April 2015 at 10 am (doors open at 9:30 am) in Windisch (AG). The invitation will be sent in due time 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