HIAGAeschenplatz 74052 BaselT +41 61 606 55 00
HIAGLöwenstrasse 518001 ZürichT +41 44 404 10 30
HIAGRue François-Bonivard 101201 GenèveT +41 22 304 10 30
Investor RelationsMarco FeusiCEOT +41 61 606 55 00
Laurent SpindlerCFOT +41 61 606 55 00
Press RelationsMarco FeusiCEOT +41 61 606 55 00www.hiag.com
23 April 2020Annual General Meeting
31 August 2020Publication half-year results 2020
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PublisherHIAG Immobilien Holding AG
Concept and designschneiterpartner AG, Zürich
Technical realizationOPTEN AG, Zürich
The Annual Report is published in German and English.Should there be any linguistic discrepancies, the German version shall prevail.
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© 2020 HIAG Immobilien Holding AG
What is HIAG’s ambition for the business year 2020?
Felix Grisard: HIAG’s most important asset is our large land bank with great sites in the German-speaking and French-speaking parts of Switzerland. HIAG intends to successfully realise this potential in the coming years. That is our core competency.
Laurent Spindler: Projects are constantly moving forward, and in some cases even accelerating, through our pipeline. FG: We are focusing on our strengths. The development of the land bank is becoming more professionalised. And we have not ruled out further acquisitions.
At the end of 2019, HIAG announced that IT infrastructure no longer required after HIAG Data’s multi-cloud project had ended would be operated and marketed in the future with the Ticino-based Tarchini Group and the Zug-based IT infrastructure specialist Beelastic. What exactly does that mean?
FG: By selling the network infrastructure, the operating business has been outsourced and HIAG can focus on its core business again.
LS: Operating obligations with regard to customers are being transferred to Beelastic along with the network infrastructure. With the Tarchini Group bringing its Ticino data centre into the partnership, we can now concentrate on monetising the remaining assets of the HIAG Data division, such as software, hardware and licenses, as part of a rental or usage model.
What will happen to the subsidiary HIAG Data?
FG: We have divested HIAG Data’s largest cost blocks. Now we need to exploit the earnings potential from the use of the remaining assets.
LS: HIAG Data is expected to generate income from the use of software, hardware and licenses. There will be no further operational business.
Let’s move on to the real estate business: Despite dealing with demanding management tasks in 2019, you managed to acquire further sites and push forward with core business development, including acquisitions in Geneva and Zurich. Overall, HIAG increased the value of its real estate investments from CHF 1.488 billion to CHF 1.572 billion. What’s next?
FG: We continued to grow with attractive acquisitions in the real estate sector during the 2019 business year and we will maintain this course in the 2020 business year.
Marco Feusi: HIAG is involved in multiple real estate projects. For example, we are pushing forward with the dismantling of the Rohner site and have already taken the first steps to redevelop the site with its prominent location near the Pratteln railway station. In Goldach, we have started expanding the production infrastructure for the listed company Amcor. In Niederhasli, the new administrative building for Doka Switzerland has been completed. At our Meyrin site, we are building the new headquarters of LEM, a Swiss electrical component manufacturer with operations throughout the world. In Kleindöttingen, a pipe system hall is being built for BRUGG Pipesystems. In Frauenfeld, the third expansion phase at the Walzmühle site has begun, and in Cham Nord the building permit application is pending.
Is HIAG planning further acquisitions or concentrating primarily on the development of the land bank?
MF: Our express goal is to extend the pipeline over successive generations in areas where HIAG sees long-term development potential. These areas include agglomerations around large cities, for example. At the same time, we want to make targeted acquisitions to further optimise the quality of the portfolio. This also includes the purchase of small sites where there is potential for densification.
HIAG is soundly financed. The weighted average term for external financing remained stable at 2.7 years and HIAG is able to benefit from an attractive 0.9% interest rate for financial liabilities. So why did the LTV ratio rise from 43.4% to over 50%?
LS: The change in the LTV ratio is due primarily to investments in HIAG Data and value adjustments following the changes at the Pratteln site, which we already disclosed when the half year results were published. HIAG is solidly financed, and we are working to decrease the LTV ratio again to less than 50%.
MF: On one hand, HIAG’s unique selling point is its considerable land bank. But HIAG also has a robust yielding portfolio, which generates current income. The combination of both these aspects provides advantages in terms of financing.
How does HIAG raise funds to carry out developments?
LS: As a company listed on the SIX Swiss Exchange, HIAG has various financing options at its disposal. In recent years, we have repeatedly and successfully issued bonds with attractive conditions. We also use some traditional bank financing to implement our projects.
In recent years, HIAG has experienced strong demand for its sites. How did demand evolve in 2019 and what do you expect for 2020?
MF: We have a long-term WAULT of nine years and strong demand from the industrial sector. With companies such as BRUGG Pipesystems in Kleindöttingen and Amcor in Goldach, our tenants are international companies that are leaders in their respective fields, which helps generate additional demand. There is also great potential for our sites in the secondary production sector, as seen with Doka Switzerland in Niederhasli.
FG: Companies with a high degree of digitalisation or automation will increasingly demand sites in Switzerland. Proximity to universities and access to highly qualified employees leads to more and more of these companies establishing or expanding their activities in Switzerland.
MF: Demand is also increasing in what were formerly peripheral areas. Companies are drawn to these areas because there is space at a reasonable price and because they have the manpower needed for production operations in the secondary sector. HIAG is well positioned here, as we can offer the necessary multifunctional areas or buildings. We have also observed a certain revival of demand in the retail sector at attractive locations such as our Dietikon property. This shows once again that if the offer is exciting, tenants can be found, even when the dynamics of the sector are in decline.
FG: HIAG is creating new centres where different high-tech companies are able to find locations, complement each other and successfully develop into the fourth sector.
The vacancy rate in your portfolio has increased to 16.2%. Is this change a normal part of business or can this be ascribed to specific influencing factors?
LS: The change in the vacancy rate is within the normal range. The increase of the vacancy rate of the yielding portfolio in the business year 2019 is due primarily due to the fact that we completed projects that were not yet fully let at the beginning of construction; for example, “The Hive 1” in Meyrin, or our site in Neuchâtel. This is a part of our development strategy, which aims to secure anchor tenants first to subsequently increase the attractiveness of the site for further leasing. These tenants included Hewlett Packard Enterprise and HP Inc. in Meyrin and Migros and Denner in Neuchâtel.
MF: At HIAG, projects are reclassified to the inventory portfolio on completion and thus at the beginning of the usage period; i.e. at a point in time when they are generally not yet fully leased.We will continue to check vacancies in the portfolio to make sure the potential is being realised. Portfolio management and property management activities are being strengthened. For example, we have already hired additional asset managers and expanded our commercial marketing team.
Let’s talk about the sites. Developments in the portfolio are making good progress. Are there any advances that you would like to emphasise in particular?
FG: The long-term nature of redevelopments in our own portfolio and the long-term retention of redeveloped sites in the property portfolio represent the core of our business model and HIAG’s distinguishing feature.Most of the ideas that we implement at the sites come from our team. If you have over 40 sites in the portfolio as HIAG does, then you can draw on a wealth of experience and offer the added value that sets HIAG apart.
LS: We acquired the Goldach site in 2018. The prerequisite was a development agreement with the lease-back tenant Amcor, which required an expansion of the production infrastructure. We started implementing this expansion in December 2019. This went hand in hand with the prolongation of the tenancy.We acquired the Meyrin site in 2013, and the first expansion took place two years later. We have completed two projects there so far. With the restaurant and training pavilion for the Swiss restaurant group “Luigia” and the construction of the new headquarters of the international electronic component manufacturer LEM, two additional projects are also being carried out. At the same time, we are testing an innovation lab and a container hotel on the roof of “The Hive 1”. The Meyrin site is very dynamic, and we are placing great emphasis on project interfaces and opportunities for collaboration with the neighbouring CERN.
MF: Our latest addition, the former FCA Switzerland site in Zurich Altstetten, is another result of our acquisition activities in recent years. The seller was convinced that HIAG was the right developer for the 7,807 m2 high-density area in high rise zone II. The site has been seamlessly converted for temporary use for the next three and a half years. Afterwards, attractive residential and commercial areas will be built and leased here. A preliminary contract with a retailer has already been signed for commercial floorspace.
FG: The Zurich-Altstetten site follows the typical HIAG model: after the purchase, an intermediate use is found and then the site is redeveloped step by step.
In Lancy, with the acquisition from Jaeger et Bosshard SA, you purchased another piece of land with construction rights and now dispose of 13,362 m2 in the strategically appealing “Porte Sud” area near the Stade de Genève. What are your plans for this redevelopment area?
MF: The purchase is the result of a long-term acquisition strategy. The acquired site was the last piece of the puzzle in this highly attractive area of the Praille-Acacias-Vernets master plan in close proximity to the Lancy-Bachet railway station, which has now been connected with the Léman Express. As in Zurich-West, high rise developments are possible in this area, which will be a central aspect of further development.
How is the planning in Biberist coming along?
MF: In May 2019, the master plan for Biberist was submitted to the canton for preliminary review within the framework of the zoning plan revision. We expect a response from the canton in the coming months. The planning provides for the successive demolition of buildings. Pre-investments in infrastructure are currently being planned. In the future, industrial and commercial uses will continue to exist side by side at this enormous site, and mixed uses will be created after the zoning plan has been revised.
LS: Incidentally, long-term leases with logistics and commercial users are already in place. We were also able to gain a fitness centre as a tenant during the year under review. This lease reflects our strategy of opening up the site step by step and thus drawing in the public. We intend to continue this process in 2020.
FG: The goal is to create a regional magnet with various attractive offerings and uses. This has a stimulating effect on the entire site.
The bankruptcy of the tenant Rohner AG in Pratteln was a harsh blow for HIAG. How is the dismantling work coming along?
MF: We are already turning over a new leaf in Pratteln. The site enjoys a very attractive location at the hub of various suburban rail lines and has great economic potential. Our decision to rapidly launch redevelopment measures also reflects the goal of bringing our new offering to the market before any possible competitors in the region.HIAG has taken on the responsibility of dismantling the site and making it chemical-free. This is being done in close cooperation with the competent authorities and agencies.Planning will start with a variations process, and by the end of the third quarter of 2020, with the involvement of the canton and municipality, we will complete a quality-assured procedure aimed at working out a reference project by the middle of 2021. After that, the quarter plan is expected to be submitted by mid-2022. This is very ambitious, especially since our schedule will be influenced by various processes, partners and framework conditions.
LS: With this in mind, we immediately made provisions for the dismantling last year, according to the principle of transparency. We presented the most likely situation in the half-year report at the end of June 2019, which is now the basis for further development.
FG: This process is a result of our long-term orientation.
Climate neutrality and sustainability are very important in business processes today. HIAG repeatedly emphasises that site redevelopment is sustainable in and of itself. How so?
FG: We create destinations with a long-term orientation and remain the owner of the sites. That is fundamentally sustainable. That also includes optimal handling of the existing substance by using or redeveloping existing buildings whenever possible.
MF: Due to the use and conversion of the existing building substance, our business model is sustainable in and of itself, since we are making an important contribution to the circular economy. We also think in terms of generations and have a vested interest in making our developments successful and creating destinations with an identity, where companies and people can flourish. Of course, we also take into account technical possibilities for creating energy-efficient buildings as part of our site and redevelopment strategy.
You intend to review business processes and expand capacities in 2020. What can we expect?
FG: Process and structure optimisation is a continual process. With the change in CEOs, however, this process is accelerated.
MF: We will strengthen the organisation by providing extra staff. Competent employees help to ensure that their contribution can be leveraged across different levels of the HIAG value chain.By strengthening our management structure, we will also gain stability. HIAG sites will be treated as business units. Our asset managers and property managers and the site developers are very close to the sites and the users. Each employee therefore makes an individual contribution to HIAG’s overall result.
LS: This also allows us to generate cash flows as early as possible in our development processes. Successful temporary uses enable us to make advances in further development steps.
To conclude, a personal question for Marco Feusi. You took on your role as CEO of HIAG at the beginning of 2020: what inspires you at HIAG?
MF: What fascinates me about HIAG is its considerable land bank and corresponding development potential. It makes HIAG unique in the Swiss real estate business. There are no other private property owners in Switzerland with a comparable portfolio.Furthermore, the ownership is oriented to the longterm, and at HIAG it is possible to make entrepreneurial and very direct decisions. As HIAG is a listed company on the SIX Swiss Exchange, it also has access to the capital market if necessary. This combination is also a special feature.At HIAG, there is the courage to try new things. At the same time, HIAG meets the stringent compliance and risk management requirements of a listed company. All of this results in a special, success-oriented company DNA that allows HIAG to flourish.As a passionate real estate developer, trained architect and business expert, I am personally convinced that site redevelopment is the top discipline in the real estate world. For this reason, I consider myself lucky to be able to contribute to the further corporate development of HIAG’s processes and thereby make my contribution to the successful development of the company.I also appreciate that at HIAG I can work with a motivated team that has a wide range of job and skill profiles, which is hard to find. All of this comes with exciting individual tasks in which I can get involved and where I am always learning something new.
FG: What sets Marco Feusi apart is that he likes people. For me, this is a basic requirement for a successful business. HIAG has very good people who are enthusiastically shaping the future.
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