Encouraging First Six Months for HIAG Immobilien

Media Release

Basel, 5 September 2016 - Looking back, the first six months of 2016 have been encouraging for HIAG Immobilien. Collected property income was up 3.8% to CHF 26.1 million compared to the same period last year (S1 2015: CHF 25.1 million) and earnings per share (prior to value adjustments and taking into account the value effects from promotion projects) rose by 23.4% to CHF 1.95 (30 June 2015: CHF 1.58). At the end of the first six months of 2016, HIAG Immobilien is on course for the intended dividend goal of 4.0% of NAV. In the second half of the year, HIAG Immobilien will expand its business activity to include HIAG Data, an IT infrastructure platform for IT service providers built on the HIAG site network that will set new standards in the Swiss market in terms of speed, reliability, security and scalability.

On target after the first six months

In the first six months of the 2016 business year, HIAG Immobilien increased collected property income by 3.8% to CHF 26.1 million compared to the first six months of the previous year (S1 2015: CHF 25.1 million) and annualised property income by 0.2% to CHF 51.5 million  (31 December 2015: CHF 51.4 million). At CHF 26.7 million (30 June 2015: CHF 26.2 million), operating income prior to revaluation surpassed that of the previous year by 1.8%. Net income amounted to CHF 21.6 million (CHF 24.2 million) and earnings on an EPRA (European Public Real Estate Association) basis rose by 13.7% to CHF 14.5 million compared to the previous year. Growth in earnings per share (prior to value adjustments and taking into account the value effects from promotion projects) was considerable, increasing by 23.4% to CHF 1.95 (30 June 2015: CHF 1.58). Revaluation amounted to CHF 7.4 million in the first six months of 2016 (30 June 2015: 15.2 million). The average weighted discount rate for the overall portfolio decreased slightly to 4.34% compared to the end of the last six months of the 2015 (31 December 2015: 4.44%). As two objects without strategic significance were sold in the first half of 2016, the overall portfolio was composed of 113 properties as at the end of June and was valued at CHF 1.2 billion as at the reporting date. With an after-tax return of 3.2%, HIAG Immobilien laid a solid foundation in the first six months and is on its target course for the intended dividend payout of 4.0% of NAV.

Optimised financing structure

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. This injection of funds will primarily be used to repay bank financing and enables an extension of the weighted term by about 50% to 3.1 years with a consistently low average interest rate of 1.03% for financial liabilities. On 30 June 2016, the loan-to-value ratio (LTV) was 37.0% (31 December 2015: 36.8%). Following the payout of CHF 28 million in dividends (CHF 3.50 per share entitled to dividends), the equity ratio was slightly above that of the end of the 2015 business year at 54.6% (31 December 2015: 54.4%) or 59.5% (31 December 2015: 59.2%) on an EPRA basis.

Stable vacancy rate, successful project sales and new long-term rental contracts

At 15.9%, the vacancy rate in the overall portfolio decreased marginally in the first half of the year (31 December 2015: 16.0%). However, we managed to replace non-prolonged temporary rental contracts from the previous year with long-term rental contracts. The net return in the inventory portfolio rose by one percentage point to 5.5% (31 December 2015: 5.4%). In the first six months of 2016, the sales phase was largely completed at the Kunzareal site in Windisch, Aargau with 100% of project Stegbünt and 96% of Project Spinnerei III sold. The high quality positioning of the 29-condominium Project Feinspinnerei, 44% of which has already been sold, underscores the attractiveness of the site on the Reuss river, close to nature. 76% of the 99 condominium apartments at the project The Cloud in Baar, Zug have now been sold. Starting from the second half of 2016, a significant return on investment can be expected from this project. Long-term rental contracts were signed again with our long-standing partners Coop and Doka Schweiz. The rental contracts with Coop at the Aathal site in Zurich and with Doka Schweiz in Niederhasli, Zurich have been contingently signed and are linked to legally valid building permits. As the municipality of Niederhasli is currently examining the possibility of adding floors to a commercial zone to create a denser residential area, the time frame for the project for Doka Schweiz has yet to be determined.

Considerable development progress in Biberist, Cham and Meyrin

Since the framework building permit has become legally valid for Project Papieri in Biberist, Solothurn, the high-bay warehouse can now be refurbished and the rental contract signed last year with an annualised property income of approximately CHF 1.0 million can take effect starting from the end of 2016. The construction of approx. 8'000 m² of office space for the EMEA headquarters of Hewlett Packard Enterprise and HP Inc. is proceeding as planned in Meyrin, Geneva, and the handover of the buildings is expected to take place in the third quarter of 2017. Now that a valuable anchor user for the quarter has been found at the Cham Nord site in Zug with the operator of a private education and training centre for elite athletes, the construction of about 200 apartments can now be tackled. The building permit for the project is targeted for 2017. Building permits for the Walzmühle site and the central building in Frauenfeld, Thurgau have already been issued. In Bremgarten, Aargau, where about 4'900 m² of new industrial space and 2'500 m² of office space are being built at the Swiss headquarters of Jeld-Wen, the worldwide leader in the door market, the first phase of development has been completed and the first hall handed over. The handover of the new office building is planned for October 2016. As at the reporting date, the HIAG Immobilien redevelopment portfolio was composed of roughly 50 projects, which comprise approximately 679‘000 m² of usable area and represent an expected investment volume of about CHF 1.9 billion. Nine of these development projects with a usable area of about 37‘000 m² and an investment volume of approximately CHF 83 million should be tackled in the next three years.

HIAG Group launches HIAG Data

Similarly to the provision of residential and commercial space at its sites, the HIAG Group's recent creation of HIAG Data aims to make a physical platform available to IT service providers throughout Switzerland in order to provide them with the best “location” to implement their cloud-based business models using the network of HIAG sites. HIAG Data is a fully owned subsidiary of HIAG Immobilien Holding AG that provides an intelligent IT infrastructure platform. This platform is composed of a carrier-independent fibre optic cable network throughout Switzerland, the anchor sites of Biberist, Menziken and Lugano in addition to IT infrastructure that allows for flexible scaling of computing and storage capacities based on open source technology and Microsoft Azure. The innovative IT infrastructure platform of HIAG Data will set new standards in Switzerland in terms of speed, reliability, security and scalability. HIAG's Executive Board believes that HIAG Data will considerably contribute to the consolidated result starting from the 2017 business year.

Future prospects

Due to the record-low interest rate environment, the demand for real estate investments remains high, especially from institutional investors. This has significant effects on transaction prices primarily in residential real estate, and thus on the evaluations of independent real estate appraisers. HIAG Immobilien expects that this situation will continue into the second half of 2016 and is keeping its focus on organic growth in the portfolio and a continuous increase in property income. Furthermore, opportunities arising from the currently attractive sales environment are also being pursued for non-strategic objects. Projects that allow for long-term portfolio development are also being examined routinely as part of the implementation of our strategy.

Key figures

2016 semi-annual report

HIAG Immobilien's report and presentation on the first six months of 2016 are available at www.hiag.com.

Invitation to the live webcast with conference call

Martin Durchschlag (CEO) and Laurent Spindler (CFO) will present the semi-annual report and answer questions during a live webcast with a conference call in German:

Date: 5 September 2016
Time: 10:00 am (MEZ)
Live webcast: http://78449.choruscall.com/dataconf/productusers/hiag/mediaframe/15487/indexl.html

Dial-in number: 

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

+44 (0)203 059 58 62 (UK)

+1 (1)631 570 5613 (USA)

Advance registration is not required. 

Webcast replay

The replay of the webcast will be available after the presentation via the following link:
http://78449.choruscall.com/dataconf/productusers/hiag/mediaframe/15487/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