HIAG in the 2022 financial year: Successful site development

Ad hoc announcement pursuant to Art. 53 LR

Media information

Media information (PDF)
Presentation (PDF)
Key figures (PDF)
Annual Report 2022 (PDF)
Sustainability Report (PDF)

• Net income increased to CHF 99.4 million (+11.4%) or CHF 38.3 million (+3.5%) before revaluations and deferred taxes
• Increase in property income to CHF 67.7 million (+7.2%) as well as in annualised property income to CHF 72.3 million (+14.6%)
• Vacancy rate in the overall portfolio reduced by 4.3 percentage points to 6.4%.
• Progress in site development as a key driver of revaluation gains totalling CHF 64.3 million (+6.2%)
• CO2 reduction path defined as part of ESG targets
• Proposal to increase dividend by CHF 0.20 to CHF 2.90 per share

Basel, 13 March 2023 - In the 2022 financial year, HIAG achieved its best result since its IPO in 2014. With substantial progress in development projects, site development made a significant contribution to the further increase in revaluation gains. Remarkable improvements were also made at all levels in portfolio and asset management. Property income was further increased and once again the vacancy rate was significantly reduced.

Strong company performance
All three business segments contributed to the strong company performance in the 2022 financial year. Property income increased by 7.2% to CHF 67.7 million (2021: CHF 63.1 million), and annualised property income rose to CHF 72.3 million (2021: CHF 63.1 million). EBITDA was CHF 115.7 million (2021: CHF 115.6 million) and CHF 51.4 million (2021: CHF 55.1 million) before revaluation effects. Net income increased by 11.4% to CHF 99.4 million (2021: CHF 89.3 million) or CHF 38.3 million (2021: CHF 37.0 million) before revaluation effects and related deferred taxes. This resulted in earnings per share of CHF 9.85 (2021: CHF 10.39) or CHF 3.80 (2021: CHF 4.31) before revaluations and deferred taxes. The return on equity corresponded to 10.4% (31.12.2021: 11.1%). Revaluation gains increased again and amounted to CHF 64.3 million (2021: 60.5 million). The weighted average unexpired lease term (WAULT) remained stable at 8.1 years as of 1 January 2023 (1.1.2022: 8.2 years).

Successful site development enables significant revaluation gains
In the 2022 financial year, HIAG achieved several milestones in major projects. The investment potential in the development pipeline, which is well-filled with 58 projects, amounted to CHF 3.1 billion at the end of 2022 (2021: CHF 3.0 billion). The associated annual rental potential corresponds to CHF 150 million. The potential sales proceeds from promotion projects and the sale of partial properties amount to CHF 940 million. After revaluation gains were realised in the yielding portfolio in the first half of the reporting year, site development in particular made a decisive contribution of 73 percent to the positive value development in the second half of 2022 financial year. The milestones that HIAG achieved in the year under review include the project progress on the "Campus Reichhold" in Hausen and Lupfig (AG), where the design plan gained legal force and a development agreement was signed with the technology company Oerlikon for a first building field with a floor space of 14,500 m². The first stage of the large-scale "CHAMA" project in Cham (ZG) with around 140 rental flats and condominiums as well as flexibly usable office, service and commercial space is also progressing according to plan. Currently, 52 condominiums and 62 rental flats are being marketed. By the end of the reporting period, the sale of 12 condominiums had been notarised, resulting in a contribution to earnings of CHF 4.6 million (2021: CHF 0) before taxes.

Vacancy rate significantly reduced
The collected property income increased by 7.2% to CHF 67.7 million (2021: CHF 63.1 million) and the annualised property income rose by 14.6% to CHF 72.3 million (1.1.2022: CHF 63.1 million) as of 1 January 2023, mainly driven by new lettings (CHF 3.1 million) and project completions (CHF 5.3 million) as well as index adjustments (CHF 0.9 million). With its successful letting activities and the completion of fully let construction projects, HIAG once again reduced the vacancy rate in the reporting year. As of 1 January 2023, it amounted to 6.4% (1.1.2022: 10.7%) in the overall portfolio and 5.6% (1.1.2023: 9.6%) in the yielding portfolio. In the medium term, HIAG intends to approximately double the share of residential use in the portfolio with the existing projects "CHAMA", the "kessel haus" in Windisch and the high-rise residential building in Zurich-Altstetten. Milestones included the handover of the new global headquarters of the Swiss electrical components manufacturer LEM on the campus "The HIVE" in Meyrin (GE) and the opening of the landmark furniture store of the well-known retailer XXXLutz in Dietikon (ZH).

Consistent optimisation of the portfolio
As part of the divestment programme for non-strategic properties, HIAG sold six properties in the 2022 financial year with gross proceeds (before taxes) of approximately CHF 16 million, corresponding to an average increase of 45% over the estimated fair value. The purchase of two residential properties with 27 flats in Niederwil (AG) and 25 flats in Zurich Altstetten strengthens the quality of the real estate portfolio and offers potential for tax optimisation. A preliminary purchase agreement was concluded with a well-known Swiss company for the site in Meyrin Grand-Puits (GE), which, if implemented, will enable to recognise the intended development success earlier than anticipated. In Wetzikon (ZH), the "Schönau-Areal" was rounded off with a small plot of land.

Solid financing structure
As of 31 December 2022, the NAV increased by 7.3 percent to CHF 105.2 per share (31.12.2021: CHF 98.1 per share). The equity ratio corresponded to 53.1 percent (31.12.2021: 52.0%). Total assets increased to CHF 2.00 billion as of 31 December 2022 (31.12.2021: CHF 1.90 billion). The value of the real estate portfolio increased to CHF 1.93 billion (31.12.2021: CHF 1.78 billion), mainly due to investments and revaluation gains as well as strategic transactions. Loan-to-value ratio gross (LTV) decreased to 42.6% as at the reporting date (31.12.2021: 44.5%). LTV ratio net increased slightly to 40.9% (31.12.2021: 39.6%), mainly because of the decrease in cash and cash equivalents due to the distribution of a dividend of CHF 27.2 million and investments of CHF 52.6 million. As of 31 December 2022, financial liabilities consisted of listed bonds (CHF 575 million) and bank loans secured by mortgages (CHF 245 million). The average interest rate for financial liabilities increased to 1.0% (31.12.2021: 0.8%). The average remaining term of financial liabilities was extended to 2.8 years (31.12.2021: 2.5 years).

Focused implementation of the sustainability strategy
In the reporting period, HIAG published a sustainability report based on the GRI standards for the first time and successfully participated in the "GRESB Real Estate Assessment 2022". Furthermore, HIAG launched a clearly defined reduction path for greenhouse gas emissions in the existing portfolio with the goal of achieving net zero by 2050, and developed the "Sustainable Building Manifesto", which outlines the central cornerstones of HIAG's understanding of sustainability for new buildings and overall refurbishments.

Proposals to the Annual General Meeting
In the light of the Company's strong performance in the 2022 financial year, the Board of Directors proposes to to the Annual General Meeting on 27 April 2023 to increase the dividend by CHF 0.20 to CHF 2.90 (2022: CHF 2.70) per outstanding share, the main part as a distribution from reserves from capital contributions. Furthermore, the Board of Directors proposes to the General Meeting to appoint Micha Blattmann, attorney at law and capital market expert, to the Board of Directors. Subject to approval by the shareholders, Micha Blattmann will succeed Christian Wiesendanger, who has decided not to stand for re-election for personal reasons. The Board of Directors and the management would like to thank Christian Wiesendanger for his work, in particular his commitment as interim Head of Finance from October 2022 until the end of February 2023.

Micha Blattmann is an experienced international capital market expert with many years of experience as an attorney at law. He is a founding partner of Vicenda Group AG, a financial boutique specialised in private debt. In addition to his work as a board member of international asset management and real estate companies, he also held various positions in the investment banks of Merrill Lynch and UBS. Previously, he worked as an attorney at law at Bär & Karrer and Andersen Legal. He holds a degree in law from the University of Zurich (lic. iur.) and a Master of Laws (LL.M.) from the University of California, Los Angeles (UCLA School of Law).

Outlook
Assuming a stable development of the Swiss economy as well as a continued resilient real estate market, HIAG currently expects a good 2023 financial year overall despite higher financing costs. Management expects a slight increase in income thanks to existing long-term rental agreements that are linked to Inflation as well as further successful lettings. Continued progress on large development projects should again lead to revaluation gains and have a stabilising effect on portfolio value if discount rates rise. Furthermore, HIAG will achieve positive earnings contributions from the sale of condominiums on the "CHAMA" site as well as from selected properties as part of the continuous capital recycling, which support the financing of the development projects.

Conference call and live webcast
On Monday, 13 March 2023 at 09:00 a.m., Marco Feusi, CEO, and Stefan Hilber, CFO, will explain the 2022 annual results and answer questions during a conference call with audio webcast.

Conference call
+41 58 310 50 00 (Switzerland/Europe) / +44 207 107 06 13 (UK)
Other international numbers are listed here: Dial-in list

Links: Audio webcast / Replay

About HIAG
HIAG is a leading real estate company listed on the SIX Swiss Exchange with a real estate portfolio with a total value of CHF 1.93 billion. Based on the total area of the real estate portfolio of 2.5 million m², HIAG has an outstanding development pipeline of approximately 742,000 m² with currently 58 projects and an expected investment volume of CHF 3.1 billion. The portfolio comprises 44 sites with well-developed office, commercial and logistics properties as well as selected residential properties in future-oriented growth regions of German- and French-speaking Switzerland. Through its property management activities, HIAG generates stable property income and creates long-term value enhancement potential through active portfolio management and the development of attractive destinations.

Disclaimer
This media information contains forward-looking statements such as projections, forecasts, and estimates. Such forward-looking statements are subject to certain risks and uncertainties which may cause actual results, performance, or events to differ materially from those anticipated in this media information. The forward-looking statements contained in this media information are based on the views and assumptions of HIAG Immobilien Holding AG as of this date and HIAG Immobilien Holding AG does not assume any obligation to update or revise this media information.