OREANDA-NEWS. In the first half of 2017, HIAG was able to increase collected property income by 5.0% to CHF 27.4 million compared to the previous year (30.06.2016: CHF 26.1 million) and earnings per share by 12.2% to CHF 3.03 (30.06.2016: CHF 2.70). Non-recurring income of CHF 6.5 million was recorded from the sale of production machinery in Biberist. HIAG Data was able to successfully launch additional products in the first half of the year and forged ahead building the business as planned.

HIAG stays the course

In the first six months of the 2017 business year, HIAG increased collected property income compared to the first semester of the previous year by 5.0% to CHF 27.4 million (30.06.2016: CHF 26.1 million) and annualised property income also grew by 0.7% to CHF 54.6 million (31.12.2016: CHF 54.2 million). Like for like – adjusted for the impact of the acquisition of Village 52 SA in Yverdon in September 2016 – the increase in collected property income was 2.1% compared to the previous year. At CHF 24.4 million (30.06.2016: CHF 21.6 million), net income exceeded the reference value from the previous year by 12.7%. The sale of production machinery in Biberist contributed non-recurring income of CHF 6.5 million to this increase. In the first half of 2017, revaluation effects amounted to CHF 10.8 million (30.06.2016: 7.4 million). The average weighted discount rate for the overall portfolio decreased slightly towards the end of the semester to 4.42% (31.12.2016: 4.44%). At the end of June, the overall portfolio was composed of 113 properties and was valued at CHF 1.25 billion (31.12.2016: 1.24 billion) as at the reporting date.

Solid financing structure

HIAG Immobilien Holding AG successfully issued its third fixed-rate bond at the end of May 2017. The CHF 150 million bond had a coupon of 0.80% and a maturity of five years. The cash inflow made it possible to repay bank loans and to extend the weighted maturity from 3.1 years to 4.0 years. At the same time, the average interest rate for financial liabilities dropped to 0.96% (30.06.2016: 1.03%). As at 30 June 2017, the loan to value ratio (LTV ratio) was 36.8% (31.12.2016: 36.2%). After the pay-out of CHF 28.9 million in dividends (CHF 3.60 per share entitled to receive dividends), HIAG Immobilien Holding AG still disposed of a strong equity ratio of 53.5% (31.12.2016: 54.7%) or 58.8% (31.12.2016: 59.8%) on an EPRA basis.

Successful leasing activities

In the first half of 2017, the vacancy rate in the overall portfolio decreased to 15.1% (31.12.2016: 15.3%) thanks to new leases in F?llinsdorf, Cham and Biberist. The net return on the yielding portfolio was 5.4% (31.12.2016: 5.5%). Furthermore, important rental contracts with Media Markt and Baoshida among others were renegotiated and extended. The weighted average lease term (WALT) rose accordingly to 5.5 years (31.12.2016: 5.2 years).

Redevelopment progress in Biberist, Cham and Meyrin and an attractive addition to the portfolio

The new office building in Meyrin was handed over to Hewlett Packard Enterprise and HP Inc. in June 2017. The project exceeded expectations thanks to the handover only 18 months after the building permit was granted, while costs remained below budget, and Hewlett Packard employees expressed their full approval. The ten-year rental contract with the anchor tenant Hewlett Packard Enterprise at “The Hive” site in Meyrin for areas within the existing building, which dates back to 1968, is equally gratifying, as it seamlessly continues the development of the site as an IT cluster. Due to the successful apartment sales in “The Cloud” project in Baar (sale level of 89%) and in “Feinspinnerei” in Windisch (sale level of 59%), the residential portion including mixed use properties has dropped to 20.3%. With the ground breakings which took place in the summer at the “Walzm?hle” site in Frauenfeld and within the “On Your Marks” project in Cham, developments were initiated at these sites in which about 340 rental units will be built, further increasing the proportion of apartments in the portfolio to approximately one third. Following the sale of “paper machine 9”, approximately 28‘000 m? of additional usable area will be freed up in Biberist by mid-2018, which can be made available for a new use in the medium term.

As at the reporting date, HIAG’s redevelopment portfolio was composed of roughly 50 projects, which comprise approximately 625‘000 m? of usable area and represent an expected investment volume of about CHF 1.8 billion. 14 of these redevelopment projects with a usable area of about 78‘000 m? and an investment volume of approximately CHF 260 million should be tackled in the next three years. After the reporting date, on 31 July 2017 HIAG expanded the portfolio with the Uhlmann-Eyraud site, which is close to the existing site in Meyrin and in the immediate vicinity of the Meyrin train station. The Meyrin train station will be developed in the coming years as part of the completion of the “L?man Express”, and will create at the site in a time frame of about ten years new development potential.

Cloud infrastructure meets considerable client need

In the first half of 2017, HIAG Data commenced operation of a Switzerland-wide fibre optic network as planned. Via the client Smart Linth Region, the Glarner Kantonalbank has been able to significantly accelerate access to its core applications since May 2017. Successful Proofs of Concept (PoCs) for branch solutions in the health and media sectors have been established for potential national and international clients. On this basis, the partnership with Microsoft and Noser has been deepened and completed with joint marketing efforts. In cooperation with Microsoft and Noser, HIAG Data will soon be able to offer its cloud infrastructure in the media sector to German radio and television stations. In Biberist, the second step of the data centre extension is currently being carried out, and the launch of a portal is planned for the end of 2017. This portal will allow for automated accessibility to the cloud infrastructure and integration of branch-specific solutions.

Future prospects

In the second half of 2017, HIAG expects some course changes related to anchor users and redevelopment steps. In particular, the Management Board is confident that with the Faro Foundation (www.stiftung-faro.ch), it has found a subsequent user for the recruiting centre at the site in Windisch. The Faro Foundation plans to use the entire complex for long term assisted living after the recruiting centre moves out in April 2018. In addition, negotiations are already under way with tenants for the rental agreement that will be terminated with Athleticum starting at the end of August 2018. HIAG sees this development as confirmation that sustainable site redevelopment succeeds in achieving qualities that also allow for successful sales of user-specific objects.

The market reactions show that HIAG Data’s infrastructure offering is particularly attractive for service providers who accompany their customers on their way to the enterprise cloud. In addition to the potential that HIAG has recognised for the sale of its sites, HIAG continues to work with its partners on the development and sale of possible applications of the HIAG Data infrastructure offering.

Key figures

in CHF million (excluding key figures for shares)

S1 2017

S1 2016

Property income

27.4

26.1

Revaluation of properties (net)

10.8

7.4

Earnings before interest, taxes, depreciation and amortisation (EBITDA)

32.8

24.0

Earnings before taxes (EBT) before revaluation of properties

18.7

14.2

Net income for the period

24.4

21.6

Earnings per share (EPS)

3.03

2.70

Earnings per share without revaluation

1.69

1.78

Earnings per share without revaluation including revaluation of promotion

1.50

1.95
     

in CHF million (excluding key figures for shares and indications in %)

30.06.2017

31.12.2016

Annualised property income

54.6

54.2

Cash and cash equivalents

66.3

62.8

Real estate properties

1'248.3

1'242.3

Shareholders' equity

724.7

729.1

Equity ratio in %

53.5%

54.7%

LTV ratio in %

36.8%

36.2%

Balance sheet total

1'354.4

1'334.1

Vacancy rate in %

15.1%

15.3%

NAV per outstanding share before deferred taxes

99.0

99.2

NAV per outstanding share after deferred taxes

90.2

90.7

2017 Half-Year Report

HIAG’s 2017 half-year report and presentation are available at www.hiag.com.

Invitation to the live webcast with conference call

Martin Durchschlag (CEO) and Laurent Spindler (CFO) will present the 2017 half-year report and answer your questions as part of a live webcast with a conference call in German:

Date: 4 September 2017
Time: 10:00 am (CET)
Live webcast: https://78449.choruscall.com/dataconf/productusers/hiag/mediaframe/20756/indexl.html

Dial-in numbers:

+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.