HIAG Immobilien Holding AG
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All three business divisions contributed to HIAG’s strong company performance during the year under review. In site development, important milestones were reached, and the development pipeline was further strengthened. Portfolio and asset management expanded the revenue base with lucrative new and follow-up leases and solvent tenants. Income from transactions and commercial space marketing, which was considerably above the multi-year average, made a significant contribution to the record earnings of business year 2021.
In the context of the successful performance in business year 2021, the Board of Directors will propose a payout of CHF 2.70 per outstanding share at the General Meeting on 28 April 2022, half from capital contribution reserves (without withholding tax deduction) and half as an ordinary dividend.
During the reporting year, the well-stocked development pipeline was further strengthened thanks to acquisitions and the launch of new projects in the portfolio. The pipeline currently includes more than 60 projects with an investment potential of nearly CHF 2.98 billion and a potential usable area of approximately 810,000 m², as well as a possible 3,200 apartments. The potential annual rental income is about CHF 167 million and expected profit from promotional properties amounts to approx. CHF 580 million (planned/estimated over the next 15 years).
HIAG reached important milestones in several projects. In Niederhasli, the development of a sub-site was completed with the handover of the new office building to Doka Schweiz, thus clearing the way for sustainable development of the site in cooperation with the municipality and SBB Immobilien. About 300 apartments, business premises and restaurants along with large green spaces and meeting areas are to be built near Niederhasli railway station.
In Cham, now that the building permit has been granted, HIAG can take on the first stage of the large-scale CHAMA project. Project construction, including approximately 140 apartments and condominiums along with flexible-use office, service and retail space, is planned to start in spring 2022. Preparations for the second stage with another 140 apartments are also progressing according to plan.
At HIAG’s Pratteln site, the master plan for this location close to the railway station has been completed and the quarter planning process has begun. HIAG is planning a mixed-used, high-density central quarter with up to 400 apartments, commercial and office space for about 500 employees, in addition to public garden and leisure areas. At “The Hive” technology campus in Meyrin, a training and restaurant pavilion for the international catering company Luigia was handed over, and the electrical component manufacturer LEM took on the new building for its global headquarters in early 2022.
Further milestones include the construction of a new specialist furniture store for XXXLutz in Dietikon, which is progressing according to plan.
And at the HIAG site in the up-and-coming Zurich Altstetten quarter, the conditions for the construction of a high-rise apartment building with a commercial section were created in close cooperation with the city.
In Biberist, HIAG obtained the building permit for the dismantling of various buildings and halls at the “Papieri” site. Space has thus been created for commercial and industrial tenants. A milestone was reached with the planned establishment of the high-tech start-up Librec. HIAG will implement a new tailor-made building for the first Swiss recycling centre for electric vehicle batteries.
At the Reichhold campus in Hausen/Lupfig, after a long planning period, the preparatory work for the first high-rise project began and the foundations were laid for further development and construction in accordance with the design plan.
Thanks to mostly in-house management and the successful marketing of the yielding portfolio, the Portfolio and Asset Management division made an important contribution to HIAG’s very good operating result in business year 2021. The vacancy rate in the yielding portfolio was again considerably reduced.
Demand for high quality logistics and commercial space continued to grow during the reporting period, and HIAG was able to successfully negotiate follow-on leases at several sites, sometimes with significant increases in rental income.
In Aathal and Dietikon, retail space was leased again at a good rental level. The commercial site in Kleindöttingen is almost fully leased and options for densification with replacement constructions are currently being reviewed. The residential properties at the sites in Klingnau and Windisch are fully leased. In the Wydeneck multi-generational project in Dornach, interim use was further expanded; the development is actively supported by our own team and a dedicated, local site promoter.
Transactions and commercial space marketing achieved above average profit during the reporting year. One of the successes in 2021 was a complex share deal for the purchase of a fully leased logistics property in Buchs (AG), in which the solvent tenant in the European clothing industry now ranks among HIAG's “top three tenants”. The long-term double net lease has a positive impact on HIAG’s cash flow and dividend potential. Another highlight of the reporting year was the acquisition of four retail properties in Winterthur, Solothurn and Reinach (BL). The seller BR Bauhandel remains a long-term tenant at all sites with its Richner and Baubedarf brands after the sale-and-leaseback transaction. This asset deal considerably strengthens the development pipeline and supports a sustainable increase in rental income and property value.
The current divestment programme is progressing very well and is expected to be completed by the end of 2022. With the sale of non-strategic properties in Aigle, Basel, Biberist, Bremgarten, Windisch and the Zurich Oberland valued at CHF 62.4 million (fair value), a large portion of the planned volume was sold at a substantial profit during the reporting year.
The seamless, 10-year follow-on lease of a logistics property in Brunegg signed with a solvent tenant and the multi-year preliminary lease for a planned residential and care centre in Ermatingen were among the highlights in commercial space marketing.
HIAG also plans to acquire suitable properties in the future, particularly land for residential use that allows rapid construction and marketing of condominiums and will continue to sell non-strategic properties as part of its “capital recycling strategy”.
The Board of Directors of HIAG Immobilien Holding AG also approved the sustainability strategy as part of Strategy 2025. HIAG positions itself as a reliable and conscientious business partner, creating economic, environmental and social added value based on its business philosophy of revitalisation of former industrial sites and the long life and investment cycles of its properties. HIAG is publishing a sustainability report in accordance with the internationally recognised GRI Standards for the first time as part of its Annual Report 2021.
The sustainability projects include development of a plan to reduce greenhouse gas emissions, the establishment of guidelines for resource-efficient construction, participation in the GRESB 2022 assessment and the expansion of solar power generation at our sites. Our aim is to achieve the highest possible degree of solar coverage and maximum use of suitable roofs. In addition to the "Code of Conduct for Employees", a "Code of Conduct for Business Partners" was also created.
The sustainability targets have also been integrated into HIAG’s compensation system. Sustainability criteria were used in 2021 to determine the variable compensation of the CEO. In 2022, this approach will be refined and taken into account when determining the CFO’s variable remuneration.
In 2021, the Swiss economy rebounded surprisingly quickly from the shock of the pandemic. In addition, thanks to rapid and targeted government compensation benefits, the high value of the Swiss real estate market was maintained even during the crisis. Over the past year, residential investment properties in particular, along with first-class commercial properties, have become the focus of investors’ interest. Demand also rose for retail and logistics properties, which recorded an extraordinary surge in demand. The net initial yields in these real estate segments continued to decrease accordingly. On the other hand, investor demand for office properties in peripheral locations has cooled off significantly and the leasing of retail properties in the non-food sector is still challenging.
As a result of rising inflation rates and key interest rate increases by central banks, the capital inflow into the Swiss real estate markets could become weaker and the cost of capital for real estate assets rise, despite a stable economic outlook, a low unemployment rate and robust employment and population growth. In addition, the geopolitical situation has been uncertain recently with high volatility on the stock exchanges. HIAG assumes that this uncertainty will continue to drive investors towards real estate since it promises stable income, at least in the long term.
Unless there is a clear worsening of the general economic conditions, HIAG expects business year 2022 to be a good one overall. The management forecasts a stable long-term income situation and continuous revenue streams from all business divisions based on our proven business model. The newly completed, fully leased construction projects and expected rental successes should further increase rental income. Similarly, revaluation gains are also expected again due to significant progress in major development projects. In addition, the first advance payments from the first stage of the "CHAMA" project and further divestments of non-strategic real estate should make a positive contribution to the result.
Dr. Felix GrisardPresident of the Board of Directors