Hiag: Net profit before revaluation increases by 86 percent in the first half of the year

In the first half of 2023, Hiag Immobilien Holding generated real estate income of CHF 35.3 million, which is CHF 8.7% more than in the previous year (H1 2022: CHF 32.4 million). A reduction in vacancy by 1 percentage point to 5.4% and the start of the rental agreement with the XXXLutz furniture store in Dietikon in the second half of 2022, which will generate annual rental income of CHF 3.3 million, contributed to this growth.

Index adjustments (CHF 0.6 million) and rental income from two properties acquired in the previous year (CHF 0.5 million in total) also had a positive impact, as Hiag announced when presenting its half-year results. By contrast, annualized property income fell by 3% to CHF 70.1 million as at 1 July, as three properties that were no longer in line with the strategy were sold. Despite the more challenging market environment, Hiag reports that the transaction proceeds were significantly higher than the book value of the properties.

Revaluation depresses EBIT and net profit

The operating result (EBIT) before revaluation amounted to CHF 41.6 million, which is more than twice as much as in the previous year. Including revaluation, however, EBIT fell from CHF 62.0 million to CHF 34.5 million.

Net profit before revaluation effects also increased significantly, jumping from CHF 14.8 million in the first half of 2022 to CHF 27.4 million. However, taking revaluation effects into account, there was a decline from CHF 56.1 million to CHF 22.1 million.

The return on equity in the reporting period amounted to kEUR 4.31 (31.12.2022: kEUR 10.41). The weighted average remaining lease term (WAULT) decreased to 7.7 years as at July 1, 2023 (January 1, 2023: 8.1 years).

The revaluation shows a mixed picture: Hiag's existing properties were devalued by CHF 14.8 million (-1.3%), following an appreciation of CHF 19.1 million in the previous year. In the development portfolio, Hiag recorded a valuation gain of CHF 7.8 million (+1.1%). In the previous year, the development portfolio was revalued by CHF 22.6 million.

Syndicated loan replaces mortgages

Hiag also announces that it has signed a CHF 500 million syndicated loan facility with a term of five years and a focus on sustainability. The syndicated loan replaces a large part of the existing mortgages. A maximum of 10 % of the financing will still be secured by mortgages. Around a quarter of the syndicated credit line is currently utilized.

Project developments make progress

Hiag reports the following interim status for the development projects:

• The building permit for an 80-meter-high residential and commercial building in Zurich-Altstetten with 149 apartments as well as retail, service and restaurant space is legally binding. Construction is due to start in the third quarter.
• A recycling center for high-performance batteries from electromobility is already under construction on the Papieri site in Biberist (SO). A long-term rental agreement was concluded with the company Librec. The new building is due to be completed and handed over this year.
• In August, the groundbreaking ceremony for the Chassis" project in Winterthur (ZH)a commercial building with 10,500 square meters of usable space. The building is expected to be completed in early 2025.
• On the Kunzareal in Windisch (AG) construction of the "Kessel Haus" timber hybrid building is progressing. By spring 2024, 24 rental apartments and around 300 square meters of office and studio space will be built.
• At Columbus" project on the Chama site in Cham (ZG) The marketing of the condominium units: By the end of July, 27 of the 52 apartments had been notarized or reserved. Hiag thus realized a profit contribution from promotions of CHF 5.3 million (H1 2022: CHF 0.8 million). The rental units on the Chama site were also in high demand: Hiag announced that all apartments outside of the housing promotion scheme had already been let seven months before occupancy in spring 2024.

The planned, open investment volume of the projects under construction or about to start construction is CHF 180 million. Hiag puts the expected rental income from these projects at CHF 13 million, while the sale of condominium units is expected to generate proceeds of CHF 70 million.

Hiag's medium-term development pipeline has an investment volume of CHF 430 million and comprises 130,000 square meters of usable space. Hiag expects potential annual rental income of over CHF 21 million and proceeds from the sale of promotional units of CHF 160 million. In the long term, there is further investment potential in the development portfolio of CHF 2.5 billion with potential rental income of between CHF 100 million and CHF 120 million and expected sales proceeds from promotional projects of CHF 650 million to CHF 700 million. (ah)