OREANDA-NEWS. HIAG Immobilien continued on its successful course during the first business year after the initial public offering. The Group increased property income to CHF 51.2 million (31 December 2014: CHF 48.7 million) and net income to CHF 59.5 million in 2015 (31 December 2014: CHF 50.4). Thanks to the continuing positive development of its business, at the Annual General Meeting on 19 April 2016, the Board of Directors of HIAG Immobilien Holding AG will be proposing a dividend of CHF 3.50 per share, amounting to a 6% increase (2014: CHF 3.30). The dividends are to be paid out in the form of a tax-free capital repayment for private individuals with their residence in Switzerland.

2015 annual results

Operating income prior to revaluation increased by CHF 3.8 million or 7.6% to CHF 54.1 million (31 December 2014: CHF 50.2 million). Net income rose 18.0% to CHF 59.5 million, and reflected an attractive return on equity of 8.8%. Year-on-year collected property income increased by 5.2% to CHF 51.2 million (2014 business year: CHF 48.7 million) and annualised property income also grew by 3.2% to CHF 51.4 million (31 December 2014: CHF 49.8 million). The increase on a comparative basis (like for like) was 3.0%. Earnings per share were CHF 7.4 (31 December 2014: CHF 6.8) or CHF 4.3 without revaluation of properties excluding revaluation of promotion (31 December 2014: CHF 4.1).

Revaluation effects were higher than the previous year at CHF 31.5 million (31 December 2014: CHF 28.7 million). The average weighted discount rate decreased by 11 basis points to 4.66% in the yielding portfolio, or by 28 basis points to 4.35% in the overall portfolio, which accounts for about one third of the total revaluation effects of the business year. The real estate portfolio had been expanded to CHF 1.22 billion as at 31 December 2015, and included 115 properties as at the reporting date.

Successful refinancing by issuing a fixed-rate bond and a rock-solid balance sheet

The financing structure was diversified in the middle of the business year with the issuing of a fixed-rate bond amounting to CHF 100 million with a coupon of 1.0% and a maturity of 6 years. The average interest rate could thus be secured at about 1.0% (2014 business year: 1.0%). The average term for external financing increased at the same time from 1.7 years as at 31 December 2014 to 2.1 years as at 31 December 2015. The equity ratio as at the reporting date was unchanged at 54.4% (31 December 2014: 54.4%) or 59.2% (31 December 2014: 58.9%) on the EPRA (European Public Real Estate Association) basis. As at 31 December 2015, the loan to value ratio (LTV) was 36.8% (31 December 2014: 37.0%).

Reduction in vacancy rate

The vacancy rate decreased during the year under review and was 16.0% at the end of 2015 (31 December 2014: 18.0%). The reduction corresponded to about 60 basis points in the yielding portfolio to 11.1% (like for like 10.0%). HIAG Immobilien signed contracts with well-known new tenants during the reporting period. Among others, Tesla Motors opened its Store and Service Centre for Central Switzerland in Cham, Zug. Dunkin’ Donuts provides baked goods to its subsidiaries throughout Switzerland from the Spinnerei Aathal site. In addition, the canton of Neuch?tel concentrated its administrative activities at the HIAG Immobilien site in the capital of the canton. The net return in the yielding portfolio held steady at an attractive percentage rate of 5.4%.

Further strengthening of the redevelopment portfolio

In 2015, the redevelopment portfolio was expanded further with the acquisition of the Swissmetal site in Dornach in the canton of Solothurn and the realignment of the site in Meyrin in the canton of Geneva. As at the reporting date, four projects were under construction: In Meyrin, approximately 8'000 m2 of office space are being built for the EMEA headquarters of Hewlett Packard Enterprise and HP Inc. In Bremgarten, Aargau, approximately 4'900 m2 of new industrial space and approximately 2'500 m2 of office space are being built for Jeld-Wen, the worldwide leader in the door market. In Windisch, HIAG Immobilien is pressing forward with the Feinspinnerei Project with 29 condominium apartments on the Reuss river, and in Baar, Zug, The Cloud project with 99 condominium units will soon be completed. A total of 53 condominium units were sold here during the 2015 business year. In the overall portfolio sales of condominium projects including reservations as at 31 December 2015, as expected, were 98% at Stegb?nt and 88% at Spinnerei III, both of which are in Windisch, 48% at The Cloud, and 10% at Feinspinnerei. As at the reporting date, the redevelopment portfolio included about 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 about CHF 83 million should be tackled in the next three years.

HIAG Immobilien key figures

in CHF million (excluding key figures for shares)

31.12.2015

31.12.2014

Property income

51.2

48.7

Annualised property income

51.4

49.8

Revaluation of properties (net)

31.5

28.7

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

65.0

59.3

Net income

59.5

48.9

Net income prior to the non-recurring effects of the IPO in 2014

59.5

50.4

Cash and cash equivalents

52.4

62.1

Real estate inventory

1'224.0

1'151.1

Shareholders' equity

708.7

675.6

Equity ratio

54.4%

54.4%

LTV ratio

36.8%

37.0%

Balance sheet total

1'303.1

1'242.6

Cash flow from operating activities incl. sale of promotion

44.6

46.4

Vacancy rate in %

16.0%

18.0%

Earnings per share (EPS)

7.4

6.8

Earnings per share without revaluation

3.5

2.8

Earnings per share without revaluation including revaluation of promotion

4.3

4.1

Number of shares used to calculate earnings per share (in shares)

8'000‘000

7'362‘500

Payout per share (1)

3.50

3.30

Payout ratio in % (2)

80.75%

79.90%

Cash return in % (3)

3.85%

3.95%

NAV per outstanding share before deferred taxes

96.5

91.5

NAV per outstanding share after deferred taxes

88.6

84.5

Number of shares used to calculate NAV per share (in shares)

8'000‘000

8'000‘000

(1) Proposal at the Annual General Meeting on 19 April 2016 for the 2015 business year: Payout from reserves from capital contributions

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

(3) Payout per share with regard to the share price at the end of the period

Dividend proposal

The Board of Directors will propose to the Annual General Meeting as of 19 April 2016 a dividend of CHF 3.50 per share for the 2015 business year. The dividends are to be paid out in the form of a tax-free capital repayment from reserves from capital contributions for private individuals with their residence in Switzerland. In terms of corporate profits without revaluation including revaluation of promotion, this amount corresponds to a payout ratio of 80.75%. The cash yield with regard to the share price at the end of the period was 3.85%.

Market environment and future prospects

The 2015 business year was marked by the decision of the Swiss National Bank (SNB) in January 2015 to discontinuing the CHF/EUR floor. This decision led to massive upheaval in the equity markets and the slide of short-term interest rates into the negative range. There was also no sign of a quick and sustainable recovery of the situation in the interest rate market in the second half of the year, with demand for real estate investments remaining strong. This had significant effects on transaction prices primarily in residential real estate, and thus on the evaluations of independent real estate appraisers. HIAG Immobilien expects this situation to continue in 2016 and is therefore focusing on organic growth in the portfolio for the current business year, with the goal of further increasing property income.

2015 Annual Report

HIAG Immobilien's 2015 Annual Report is available online at www.annualreport.hiag.com and the presentation slides are available at www.hiag.com.