HIAG looks back on a successful first half of 2018

Media Release

HIAG looks back on a successful first half of 2018

• Property income grew by 3.1% to CHF 28.2 million

• Net income rose by 36.6% to CHF 33.3 million

• Still strong EPRA-equity ratio of 57.0%

• Real estate portfolio expanded to CHF 1.35 billion

• Comfortable average lease term of 7.0 years

• HIAG Data extended its offerings

Basel, 3 September 2018 - In the first half of 2018, HIAG was able to increase collected property income by 3.1% to CHF 28.2 million compared to the previous year (H1 2017: CHF 27.4 million) and net income of the period by 36.6% to CHF 33.3 million (H1 2017: CHF 24.4 million). Earnings per share rose to CHF 4.14 (H1 17: CHF 3.03). The Sale and Leaseback Transaction of the Sulser Logistik AG site in Brunegg (March 2018) and of Rohner AG Pratteln (RohnerChem site) in Pratteln (August 2018) will with approximately CHF 3.7 million positively impact the annualised property income. Based on successful contract signings and redevelopment projects, the revaluation result with CHF 26.7 million was considerably higher than the previous year (H1 2017: CHF 10.8 million). During the first half of 2018, HIAG Data, which is still in a development phase, was able to conclude 14 contracts with well-known partners and expand its offer to the finance sector.

Significant increase of first-half net profit

In the first six months of the 2018 business year, HIAG increased collected property income compared to the first semester of the previous year by 3.1% to CHF 28.2 million (H1 2017: CHF 27.4 million) and annualised property income also grew by 1.1% to CHF 56.8 million (31.12.2017: CHF 56.1 million). At CHF 33.3 million (H1 2017: CHF 24.4 million), net income considerably exceeded the reference value from the previous year by 36.6%. The sale of production machineries in Biberist contributed non-recurring income of CHF 4.0 million (H1 2017: CHF 6.8 million). HIAG Data is still in an investment phase and generated as expected a segment net loss of CHF -7.7 million (H1 2017: CHF -1.7 million) The average weighted discount rate for the overall portfolio decreased slightly towards the end of the semester to 4.31% (31.12.2017: 4.40%). At the end of June 2018, the overall portfolio was composed of 114 properties and was valued at CHF 1.35 billion (31.12.2017: 1.28 billion) as at thereporting date.

Solid financing structure

After the pay-out of CHF 30.5 million in dividends (CHF 3.80 per share entitled to receive dividends), HIAG Immobilien Holding AG still disposed of a strong equity ratio on an EPRA basis of 57.0% (31.12.2017: 59.7%). With 0.92% (H1 2017: 0.96%) the average interest rate for financial liabilities remains low. As at 30 June 2018, the loan to value ratio (LTV ratio) was 42.0% (31.12.2017: 37.6%).

Positive development of the portfolio

Mainly explained by the ABB departure in Klingnau, the vacancy rate in the overall portfolio increased to 16.1% in the first half of 2018 (31.12.2017: 14.3%). The weighted average lease term (WALT) remained comfortable with 7.0 years (31.12.2017: 7.9 years).

At the Dietikon site, after LIPO moves out in September 2020 and following the signing of a long-term rental contract with XXXLutz, the part of the site oriented towards the motorway will be comprehensively redeveloped. At the same time, in view of the already signed long-term agreements with Media Markt, the site environment will be redesigned and the site will be positioned for another cycle of high-value use. Stadler Rail's groundbreaking in St. Margrethen marked the start of the redevelopment of about 50'000 m² of building space. Stadler Rail took on the St. Margrethen site with construction rights until at least 2081. The sale of the last two paper machines was concluded in the first half of 2018. In the last two years, net earnings of approximately CHF 12 million could be obtained from the sale of the machines. Due to the high-availability data link, an EA Sports FIFA 2019 launch event will be taking place in the fourth quarter 2018, and the Biberist site will be positioned as a Switzerland-wide eSports hub. In Meyrin, in addition to HPE, Regus has become another anchor tenant in the existing building, which is currently being renovated from the ground up. Furthermore, a restaurant and training pavilion are being built in the centre of the site for the internationally successful restaurant concept Luigia. This development will be the centrepiece of the HIAG site and form a link to the CERN campus, which is located at walking distance. At the beginning of the second half of the year 2018, a 25-year rental contract with the Faro Foundation related to the transformation of the former Swiss army recruitment centre into a hostel could be signed.

As at the reporting date, HIAG's redevelopment portfolio was composed of roughly 50 projects, which comprise approximately 603'000 m² of usable area and represent an expected investment volume of about CHF 1.8 billion. Four projects are under construction and nine of these redevelopment projects with a usable area of about 40'000 m² and an investment volume of approximately CHF 170 million should be tackled in the next three years. After the reporting date, on 28 August 2018 HIAG expanded the portfolio in the Basel area with the RohberChem site. With this sale and leaseback transaction for a rental period of at least 15 years, the weighted remaining rental term of the portfolio will increase further.

Successful development of HIAG Data

Thanks to the HIAG Data infrastructure, SWICA launched in the first half of the year, Health Navigator, the first application to meet all of the legal requirements of a medical device. The HIAG Data infrastructure has been further developed step by step since then so that it opens up the potential for growth with additional distinguishing features in new business areas, such as the financial sector. The integration of the HIAG Data range of services as an Edge Cloud functionality is also taking shape. HIAG Data has developed a Swiss-wide product jointly with Microsoft and UPC Business that will be presented to the public on 7 September during the Gennex conference in Dübendorf.

Outlook

The signing of contracts with Faro and the sale and leaseback transaction with Rohner AG Pratteln will positively impact key portfolio figures such as the weighted remaining lease term, vacancy rate and property income at the end of the year and also directly support the basis for solid dividend development. With the groundbreaking in Niederhasli for Doka Schweiz, which will take place after the scrapping of the planning zone in the second half of the year, as well as the development of about 370 apartments in Cham, which will start in 2019.

Selected HIAG key figures

in CHF million (excluding key figures for shares)	H1 2018	H1 2017
Property Income	28.2	27.4
Revaluation of properties	26.7	10.8
Earnings before interest, taxes, depreciation and amortisation (EBITDA)	43.3	32.8
Earnings before taxes (EBT) before revaluation of properties	9.7	18.7
Net income for the period	33.3	24.4
Earnings per share (EPS)	4.14	3.03
Earnings per share without revaluation	0.82	1.69
Earnings per share without revaluation including revaluation of promotion	0.86	1.50
in CHF million (excluding key figures for shares and indications in %)	30.06.2018	31.12.2017
Annualised property income	56.8	56.1
Cash and cash equivalents	32.0	38.9
Real estate properties	1'346.2	1'282.7
Shareholders' equity (NAV)	761.9	760.7
Equity ratio in %	51.8%	54.4%
LTV ratio in %	42.0%	37.6%
Balance sheet total	1'471.4	1'389.1
Vacancy rate in %	16.1%	14.3%
NAV per outstanding share before deferred taxes	104.3	103.7
NAV per outstanding share after deferred taxes	94.7	94.5

2018 Half-Year Report

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

Invitation to the live webcast with conference call

Martin Durchschlag (CEO) and Laurent Spindler (CFO) will present the 2018 Half-Year Report and answer your questions as part of a live webcast with a conference call in German:

Date: 3 September 2018
Time: 09:00 am (CET)
Live Webcast: https://78449.choruscall.com/dataconf/productusers/hiag/mediaframe/24350/indexr.html

Dial-in numbers:

[phone] (Europe)

[phone] (UK)

[phone] (USA)

Advance registration is not required.

Webcast replay

A replay of the webcast will be available after the presentation via the following link:

https://78449.choruscall.com/dataconf/productusers/hiag/mediaframe/24350/indexr.html

Agenda

Publication of the 2018 Annual Report	18 March 2019
Ordinary General Assembly 2019	11 April 2019
Publication of the 2019 Half-Year Report	2 September 2019

Contact

Martin Durchschlag Chief Executive Officer T [phone] [e-mail]

Laurent Spindler Chief Financial Officer T [phone] [e-mail]

HIAG Immobilien Holding AG

Aeschenplatz 7

4052 Basel

T [phone]

[e-mail]

www.hiag.com

2018 Half-Year Report (PDF)

Media Release (PDF)

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