HIAG Immobilien Stock

Good morning. Welcome to the HIAG Immobilien Holding AG Half Year Results 2026 Telephone Conference and Live Webcast. My name is Sandra, your Chorus Call operator. [Operator Instructions] It is forbidden to record the conference for publication.

And now over to you, Marco Feusi , CEO. You have the floor.

[Interpreted] Thank you very much, Sandra, for organizing this and giving the introduction. Good morning, ladies and gentlemen. I would like to warmly welcome you to the presentation of the half year results 2026 of HIAG Immobilien Holding AG. My name is Marco Feusi. I'm joined by our CFO, Stefan Hilber. We are delighted to see so many of you here today.

Stefan and I will be guiding you through the key developments of the first half of the year today. As usual, we will be available to answer your questions at the end. HIAG can look back on a very successful half year. We were able to build on our equity of 2025 and once again, achieved a very strong result in the first half of 2026.

Our refined strategy is proving effective. We are performing very well operationally. Net profit loss significantly compared with the same period of last year to CHF 85 million. Even excluding revaluation effects that resulted very encouraging reaching, just under CHF 37 million. Key drivers were the strong promotional business successful sales is part of our capital recycling strategy and good progress in our project development in the [ letting ] business expected.

The rental income fell by 3.3% in the first half of the year due to various property sales Like-for-like rental income, however, increased by 3.8%, and the vacancy rate fell once again to a very low 2.8%. This demonstrates that our portfolio is of high quality that our project developments can be successfully positioned in the market and that our asset management in-house property management are operating very successfully. We have achieved key milestones in our project pipeline.

I would particularly like to highlight the successful completion of the Alto project in Zurich-Altstetten in March and the fact that it was fully [ led shortly ] afterwards. While the development programs are also progressing according to plan and from the basis for future growth overall, with this half of the year, the success of our strategic direction. We continue to have a robust balance sheet and attractive project pipeline and high-quality portfolio.

We are, therefore, looking forward with confidence to the second half of the year and are convinced that we will once again be able to achieve a very good result for the full year [ 2026 ]. For detailed explanation of the financial figures, I will now hand over to Stefan.

[Interpreted] Thank you very much, Marco. Good morning, ladies and gentlemen. As you heard, we are able to build on its record year of 2025 and once again achieved a very strong result in the first half of 2026. Operating income more than doubled to just over CHF 159 million A key reason for this are the revaluation effect and income from condominium ownership project in Cham. Accordingly, the associated direct expenses for the condominium projects have also risen. Operating and administrative expenses therefore rose from around CHF 20 million to CHF 52 million. Bottom line was an EBIT of just under CHF 106 million. This represents an increase of around 93%. Despite the higher volume of financing, finance costs rose only slightly due to the favorable interest rates.

Tax expenses, on the other hand, reflects a base effect. In the previous year, we were still able to utilize tax costs carryforward. These have now been absorbed and which is why we expect to return to normal tax rate from 2026 onwards. Net profit has rose about 90% to CHF 85 million. It is particularly encouraging that net profit, excluding revaluation gains also went up a significant namely by 80%, around CHF 37 million. These figures resulted in return on equity of 13.3% or 6.0%, excluding regulation effects.

In the following slides, I will go into more detail into the key income and expense items. This reconciliation of changes in rental income stores, which had this increases reduced rental income in the first half year. As expected disposal had the greatest negative impact. This resulted in a reduction of rental income of CHF 2.7 million net new lettings and project completion together with contribution of around CHF 2 million, but we were not yet able to fully offset the impact of the divestment in the first half of the year. Rental income revised by [ 3.3% ] to CHF 38 million from an operational perspective.

However, the picture is different on a like-for-like basis, i.e., excluding transaction tax rental income rose [indiscernible] [ 0.8% ]. The complete [indiscernible] residential tower in Zurich have significant business income which are nearing completion, will begin to contribute to early primarily in the second half of the year. We therefore continue to expect a slight increase in rental income for the full year compared with the previous year.

The vacancy rate across the entire portfolio [indiscernible] once again at 2.8% has reached a new low. Excluding the spaces still make and in the new commercial development [indiscernible], the rate would be below 2% is underlined the strength in performance across the rest of the portfolio. The higher property values led slight reduction in the gross yield for the existing properties from 5.3% to 5.1%.

However, thanks to low property expense at the next year remains stable at 4.2%.

Average remaining term of the fixed-term tenancy agreement weighted average lease terms remains a solid 6.3 years from the 15 last tenant was as high as 6.8%. The proportion of open-ended leases has risen from 19% and 37%. The main reason for this is the completion of the 149 rental flats in Alto [indiscernible] 60% of the open-ended leases related to flats. Of the less lease is due to expire in 2026, 56% measured rental volume are of a strategic nature due to the mix pages of the development of the remaining leases over 80% have already been renewed. Overall, the rental maturity profile, therefore, remains comfortable.

This slide shows the development of a hotel portfolio value over recent years. And on the right, the changes in the first half of 2026. Investments in our projects and existing property is totaling around CHF 70 million, together with positive revaluation have more than offset the disposals arising from the sale of Dominion Ownership and Investment properties or portfolio of value. That rose to about CHF 2.1 billion.

This slide also clearly illustrates how our capital recycling strategy work. We sell properties at a profit that is well above book value and reinvest the perceived in our project pipeline, which in turn leads to further increases in value. In this way, we create additional value while maintaining a sound balance on the balance sheet.

Here, you can see the revaluation effects in a multiyear comparison. It is noteworthy that the development portfolio will deliver a positive contribution to value even in 2023 in an environment of sharply rising interest rates and contract to higher interest rate at that time, led to write it down in the existing portfolio.

In the first half of 2026, the developed business was also the key driver overall. This resulted in revaluation of CHF 53.4 million or 2.6%. Of this, just under CHF 40 million was attributable to the development portfolio, which has appreciated by a net 4.9%. The existing property portfolio increased by around CHF 14 million or 1.1% with the residential sector once again making a significant proportion.

This trend shows that our own project performance makes a substantial and recurring contribution to value creation. The average real discount rate used in external valuations fell by 9 basis points to 3.16%. This trend is in line with the market trends, the lower interest rates and strong investor demand are leading to falling yield requirements for property investments.

Demand for the owner-occupied flats in the second phase of [indiscernible] income remains very high. As reporting date 95% of the flats have been authorized combined with construction process of [indiscernible] this resulted in a contribution to earnings of CHF 20.3 million in the first half of the year. The comparison with the previous year is characterized by a one-off effect.

Due to [indiscernible] the relevant authorities, [indiscernible] could be registered at the time and consequently no profit have recognized. For the upcoming condominium ownership project for which we are currently awaiting planning commission, marketing has not yet [indiscernible]. However, this means that we're really able to book corresponding income from property development in the future. Excluding direct cost for the condominium ownership profit income.

Operating expenses fell by around 24% year-on-year to just CHF 115 million. The previous year's figure was amongst other things, impacted by the extraordinary renovational [indiscernible] of an industrial building [indiscernible]. In the current half year profit expenses stood at a very low level accounting for 9.1% property income. As various maintenance works are planned for the second half of the year, we expect to see a certain catch-up effect here. For the year as a whole, we anticipate a ratio that is more in line with previous years. The transfer of the metal recycling business to the Thommen Group, which was completed in mid-2025 also had a positive impact. Other costs, in particular staff costs and in line with the previous year and our expectations.

Despite continuing growth, our capital structure remains very good. The equity ratio stands at 6.5%, while the net LTV is 39.2%, well below our self-imposed limit of a maximum of 25%. This gives us sufficient financial flexibility to implement or account pipeline and capitalize on additional growth opportunities and remaining focused on our conservative balance sheet targets. The of volume financing increased by CHF 50 million to CHF 830 million in the first half year, we primarily combine 2 financial instruments for our financing, The syndicated credit facility mainly covers short-term liquidity requirements. We use bonds to lock in interest rates over the longer term and ensure a balanced maturity profit, too.

At the beginning of the year, we had successfully placed a green bond with CHF 100 million maturing in 2033 and carrying a coupon of 1.4%. This extended the average [indiscernible] fixed period from 2.2 [indiscernible] or its current interest rates, we are able to refinance at very attractive terms in the short and the long term average interest rate paid remained constant at around 1.7% during the reporting period.

Yes, it's sustainable initiative [ in a ]one of Switzerland's leading property companies. We are focusing on 3 areas, but we can make a tangible impact through our portfolio.

Firstly, reduction of greenhouse gas emissions. Secondly, tenant satisfaction and thirdly, expansion of our own renewable energy generation. And then expect you can see how we are translating these priorities into concrete measures.

In Several properties, we are replacing all the gas heating systems with lower carbon alternatives such as district retired [indiscernible], the conversions will take [indiscernible] between 2026 and 2027. In addition, we're investing in energy official building in the future with the aim to meet it energy, we limit on for construction missions, although compliance with limit is an ambitious target.

We're also seeing a positive trend in tenant satisfaction. This confirms that we are on the right track and that we maintain close path with our tenants apply through our in-house property and management. We have also made progress in expanding renewable energy. With a few -- with a new [indiscernible] system, the total [indiscernible] capacity has increased to [ 9. ] megawatt peak of this 8.1 megawatt peak is operated by our joint venture, [indiscernible].

I will now hand back to Marco who provide you with further insights into our project developments.

Thank you, Stefan. I now move to the site development and give you an update on our key projects. First of all, all our projects are progressing according to plan. And I mean, within our cost and schedule targets. A particular milestone was the completion of the Alto in Zurich-Altstetten. Just a few weeks after completion, all 149 flats and all commercial spaces have been met. This confirms the high feel of our site development in well-connected locations.

The ongoing project in Cham also make [indiscernible] are also progressing well. We anticipate further investments of around CHF 80 million for these projects unless we expect additional rental income of around CHF 10.5 million added to this are the sales proceeds from the owner of the pipes of at least CHF 154 million. From today's perspective, the outstanding development profit from this short-term project spend around CHF 50 million. We expect the medium-term projects to be completed by the end of 2028 and during 2029.

For the [indiscernible] site invention, we have received planning decisions from the city for the first phase pricing, same rental on a flight, legally binding plan in commissions, I expected issued in the coming months.

So that we can soon start the construction. Immediately, we also expect a new permission for the faith base of development comprising around 197 approximately 2000 square meter of commercial space to be granted shortly enable us to commence construction work next spring. For the property on Kelchweg in Zurich-Altstetten. A pending application has been submitted for 29 owner occupied state. We expect the [indiscernible] decision by the end of the year. Construction is currently scheduled to start in mid-2027.

These medium-term projects involve a planned open investment volume of around CHF 198 million. Annual rental income amounts to about CHF 5.2 million. We are targeting receipts of CHF 200 million from the sale of that ownership unit. We anticipate the development gains of around CHF 50 million to CHF 60 million from this project. On the Chama site, when we do work and landscaping are currently underway or [indiscernible] common block in phase 2. The first owner occupied said have already been handed over to the buyer. The rental flats will follow in November. Demand is very strong. All 67 rental sets were fully let months before occupancy. Of the 73 owner-occupied plants, only 3 units are currently still available. This marketing success highlights the high demand for housing in attractive locations and confirms our development strategy. On the Reichhold campus in Hausen/Lupfig, the buildings for Oerlikon are currently in the outfitting phase and over to the tenant that's scheduled through the end of the year.

At the same time, the infrastructure works for the GTR data center project to CT with plan in coming months.[indiscernible] The modern production offices and data center users. Under renovation and conversation of listed issue building the historic materials has been underway since the end of 2025.

With this project, we are implementing the final phase of the long-term site development, its are being created. And now with additional studio and commercial spaces, structural work is currently underway. The spaces are due to be available to future residents in summer 2027.

In Meyrin, we have signed a lease agreement with not see Switzerland for more than 30 years for new Hive6 Building. The building is tended to be used as a data spend with a capacity of 12 megawatts consumption began in March 2020, following the work to secure the exationpit. Earthworks are currently underway at over 1 billion share is scheduled for the end of 2027. Project is another important milestone in the development of our site in Meyrin.

Now over to our Transactions business. We were also able to successfully implement our capital recycling strategy in the first half of the year. We saw further property that no longer align with our strategy, taking advantage of strong market demand. Specifically, through development site in St. Maurice and Aesch, as well as smart properties were sold, which resulted in sales proceeds of CHF 20 million and the gross profit on sales of around CHF 6 million. The sales prices were again significantly higher than the book values at 39%.

The last 4.5 years, we have thought over 30 properties generating sales proceed of almost CHF 300 million and thereby achieving a gross profit of around CHF 54 million. the sales prices were on average around 22% above the most recent valuations provided by the external valuer. This in terms of the strong performance of our transaction business not the same time create additional financial flexibility for HIAG's continued profitable growth.

As usual, I'm pleased to invite you with a brief overview of how sentiment in the Swiss property market. The Swiss economy is very looking in the general stable manner but with moderate grade despite your lytic uncertainties, the low interest rate, population loans and the limited supply of land continue to underpin the property market.

In our palette we continue to reserve good to very good demand. The residential market remains is strong. We are also seeing solid letting activity for commercial and logistics space, particularly in well connected locations and in buildings, offering flexible use.

In the transaction market, we continue to expect intense competition due to high investor demand. And consequently, stable prices that are likely to rise even further. So we do this means with a disciplined focused on commodity and consistently pursue our strategy. Given the outlook for the full financial year 2026, we can fully internment and targets communicated in March. We're able to slightly improve our guidance on vacancy rates and development sales for 2026 as a whole, we continue to anticipate a slight increase in rental income compared with the previous year from next year onwards, we expect rental income to rise significantly in from as the completion of several development projects delinquency rate should remain low at around 3%.

And in the second half of the year, we will invest a further CHF 60 million in our ongoing construction contract. Progress on this project is likely to contribute to one end to notice of any consistencies is how many we can develop in quarters, we anticipate that 98% will have been sold by the end of the year, we expect this to contribute CHF 12 million to gross profit in the second half of the year. And now an actual business, we do not plan any further [indiscernible] the we are preparing further divestment is the same time, we are continuing to actively explore acquisition opportunities.

However, the high demand in the transaction market needs at only a few rupees meet our quality and requirements. We remain highly selective and [indiscernible]. In terms of sustainability, we are focusing on the areas outlined by Stefan.

Our aim remains to further improve we have already ended in all relevant areas of sustainability. As previously communicated our dividend for the [indiscernible] and for September, we will you opening in at the Capital Market Day. As part of our properties, we will showcase different sites and also was look frequent you annex project managers will guide you to the day and provide insights into our business assets.

We would be delighted if you could join us. You can simply register using the link you see by e-mail last Monday.

In summary, we expect good operating results for all business divisions for the second half of the year as well. We continue to anticipate a positive capital market and at following the results in 2025, we be able to use not outstanding results in 2026.

This concludes our presentation. We're looking forward to your question, you can submit them now via Chorus Call.

[Operator Instructions] Our first question is from [ Folger Wish ] from [ Reichold ].

I have 2 questions. First of all, the project Alto, you mentioned CHF 220 million and 24% more. So what are we talking about?

We have to have cost. We had to have cost we had CHF 24 million was further improvement. And the other costs are due to the market because the rental income was stable. As far we value the development subject according to yield and cost and as far as the development for just concerned that the risk has to be paid from a cash and then we also need an addition on these components probably a bit most very stringent because we were able to complete all these things successful.

I have another questions of the 44. CHF 102 million cash flow indirectly. At the end, only CHF 220 million. What has changed? And why do we have these changes? Are they just calculations of what are they?

Please, could you repeat the question? I didn't quite get it.

What does it have to do with the cash?

So cash flow, in terms of divestments, CHF 102 million are included, yes, and -- and in 2025, you said CHF 200 million. What has changed a part was implemented. We had sales in the first half year the other part went well? This is to say we had other projects which we postponed a bit, but those were investments percentage?

Okay, good. My last question, mortgages. You said CHF 70 million. Do you have an idea how this will go? Will you expect the mortgage? Or will you pay it off? Basically, we would like to finance ourselves in food that we know long need classical mortgages on our properties. We will pay the lot with a bond and also a syndicated credit. And when the time comes, we will decide what we will do. Thank you very much.

[Operator Instructions]. The next question comes from [ Felipe Heron ] of [ Flex KB ].

I have a couple of questions. exact point in time of handing over, I would be interested in that.

First of all, one question after the other please.

Occupancy will be end of October or November. That's at least what we plan. The spot in 2027, is that time of the existing portfolio? Or what is it that you mentioned? Extensions.

Sorry, the sound is very bad.

That's why I have to ask you again, I couldn't hear you properly.

Not a problem about 8%. We think that then it becomes due, and for 50%, we have current negotiations. Those 83% are of a strategic nature and about 5% net. The last question, possible sales or contract. You mentioned the figure for 2026? What is it? CHF 25 million book value You're saying you want to sell that CHF 25 million those assets proceeds, gross proceeds in the market. That brings special -- and we have sales above book value. We have CHF 27 billion and 30%.

We have what we said for the first second half year with me of 1 or 2 small projects. And we hope we have about 1 million residential income.

[Operator Instructions] Next question is from [indiscernible].

I would like to note the following, the tax that is normalized 15% is that about the figure that we can expect in the next couple of years or a bit more a bit less is the first question. My second question, it is that you only selectively reduced emissions due the market environment.

We actually went down from the original target values, especially the residual value in Switzerland, if you restate properties opposite with the thing, it can vary depending on what we say what we see revaluations that we see gross profit as it is. For your population, I would I think, 18% on average to be on the safe side.

18%. Acquisitions and settlement, there is a very high investor demand. And there's a lot of liquidity in the market. So I would assume at new acquisitions might be possible.

It shows the present investors cost prices. In last month it really rose. We have, of course, an existing portfolio residential and commercial. The price in fleet is due to the market environment to new measures. We don't to buy more residential properties. We have our own very exciting initial projects. And we think that the venues will rise because there is more population and there's a high liquidity in the market exit accounts for and demand and then we also have some revaluations that we can use.

Ladies and gentlemen, that was the last question. I pass the word back to Marco.

Thank you, Sandra. If there are no further questions, we would like to thank you very much for your time and your interest in HIAG. We go over to the one-to-one discussions over the next few days and wish you all the best. Take care and see you soon.

Ladies and gentlemen, the conference has ended. We would like to thank you for joining. Goodbye. [Statements in English on this transcript were spoken by an interpreter present on the live call.]