History

The idea of launching a real estate fund originated, among other places, at the fireplace of one of the founders, Hans Jenny. In 1954, the trustee met in his house with real estate entrepreneur Bruno Stefanini, with whom Jenny had been connected both professionally and personally for several years, and with Hermann Wild from Handelsbank. The three initiators wanted to seize the opportunities that the increasingly attractive real estate market offered to investors.

At that time, a real estate fund was not a novelty in the Swiss investment universe, but it certainly had rarity value. There were only two known funds of this type, Swissimmobil of Schweizerische Kreditanstalt and SIMA of Schweizerische Bankgesellschaft. Therefore, the initiators saw opportunities in the new establishment of such an investment vehicle for the sale of certificates and for the procurement of profitable real estate. With careful selection of properties and economical administration, certificate holders should be able to obtain a relatively high return that considerably exceeded the mortgage interest rate.

In September 1954, the initiators agreed to establish AG für Fundsverwaltung (AGFO, now Immofonds Asset Management AG). The purpose of AGFO was to organize and administer a collective investment in real estate. Certificates were to be issued that granted the holder co-ownership of the assets. Handelsbank as trustee handled the money transactions for AGFO. The issuance of subscription certificates for certificates was targeted for Januaryy 1955.

In negotiations with Handelsbank, the initiators, who now included construction entrepreneur Albert Lück with his Bau AG, had to navigate several obstacles, which delayed the plan. Meanwhile, competitors had also entered the market with new establishments (La Foncière and AGEMIT).

In June 1955, the time had come. AG für Fundsverwaltung was founded in Zug for the issuance of IMMOFONDS. It had fully paid-up capital of 3 million francs. Shareholders were Handelsbank, Bau AG, and Messrs. Stefanini/Jenny, each with one third. The first meeting minutes of the Real Estate Investment Trust Committee dates from June 10, 1955. The prospectus for the fund was scheduled for July 1955. By mid-September, 48 subscribers had subscribed to certificates totaling 1.14 million francs. These were mainly customers of Handelsbank from Switzerland and abroad, plus various cantonal banks. Business operations commenced on October 1, 1955.

By the end of the year, AG für Fundsverwaltung had collected 1.5 million francs. The portfolio with properties in Kilchberg (Stockenstrasse), Winterthur (Lindbergstrasse), and Zurich (Hinterbergstrasse, Susenbergstrasse, picture) was valued at 3.7 million francs. In the first months, numerous acquisition properties were examined. At a meeting in November 1955 alone, 13 properties were summarily reviewed. Properties in Basel (Haltingerstrasse) and in Opfikon (Glattbrugg, Rohrstrasse, Schueppwiesenstrasse) were added to the portfolio.

The new investment vehicle was in demand. After the first full fiscal year ended in mid-1957, the certificate volume reached almost 3.8 million francs. The purchase of properties proved more difficult. Initially, prices were high, especially land had become more expensive, then the global situation dampened market sentiment. However, by mid-1957, IMMOFONDS managed to expand the portfolio to eight properties with over 300 apartments and a value of 12.6 million francs.

Five years after its founding, IMMOFONDS had issued almost 25,000 certificates, nearly doubling its inventory within a year. The portfolio value of 1,165 apartments stood at 44 million francs in mid-1960. Certificate demand put pressure on fund management to provide new properties. Between 1960 and 1965, its own construction activity was developed on a contract basis. At times, construction projects worth almost 50 million francs were underway. As a result, the balance sheet value of properties with nearly 3,500 apartments rose to 167 million francs at the end of the tenth fiscal year on June 30, 1965. Certificate volume stood at 106 million francs. After two increases, AGFO's share capital now amounted to 1 million francs. Banca del Gottardo had joined as an additional shareholder.

The liquidity issue was far from resolved for IMMOFONDS when a completely different issue arose. A law named after then Federal Councilor Kurt Furgler (Lex Furgler, later Lex Koller) stipulated that foreign capital was only partially allowed in real estate funds and companies, but a majority in the investment vehicle had to be in Swiss hands. AGFO major shareholder Handelsbank had been taken over by British financial group NatWest and therefore had to sell part of its share package in 1976. Zug Cantonal Bank joined and acquired 11% of AGFO shares, while Handelsbank N.W.'s share was reduced to 29%.

New ideas were needed to prevent a possible further stagnation phase. In August 1979, the AGFO Board of Directors commissioned Handelsbank N.W. to examine a stock exchange listing of IMMOFONDS. Discussion of the listing in the Board of Directors dragged on for several months. The supporting bank representatives argued for improved visibility of the fund, which would appeal to new buyer groups who were only allowed to invest in listed vehicles. They also saw an image gain in the listing, as only funds of proven quality made it to the stock exchange. Skeptical voices pointed to additional costs and, above all, to the fact that the price of certificates would be externally regulated by the market.

On May 7, 1980, the AGFO Board of Directors decided to bring IMMOFONDS to the stock exchange in September 1980. The decision was made with five yes votes (including Board President Hans Jenny and his deputy Georges Hangartner), one no vote, and one abstention. The listing prospectus was issued in August 1980. The fund started its stock exchange life with net fund assets of 145 million francs. The portfolio then comprised 271 properties with 3,026 apartments and over 1,800 other rental properties (e.g., parking spaces). Target rental income stood at 16.6 million francs.

The boom became a bubble that burst in the early 1990s. Switzerland fell into a recession as the National Bank counteracted imported inflationary pressure with a restrictive monetary policy. The increased interest rate level posed refinancing problems for banks. Their need for write-downs and provisions was high and in the case of Spar- und Leihkasse Thun even led to bankruptcy in autumn 1991. Numerous real estate empires collapsed, all market participants groaned under the burden of mortgages that had to be financed at up to 7% and more. The inflation rate rose to unanticipated heights.

For IMMOFONDS, the situation came to a head in autumn 1990. Investors rapidly divested their papers in quick succession. The pool financed by AGFO shareholders could no longer absorb the returns. Fund management was forced to redeem certificates. To finance these extensive repurchases in tranches, those responsible took two measures. Some poorly performing properties were sold or at least placed on the sales list. However, this was not enough, so additional mortgages were taken out at the same time. 20 million francs each flowed into the coffers through both measures. In addition, major renovation projects were put on ice to reduce operational funding needs. 

On the stock exchange, IMMOFONDS papers found hardly any buyers in the "year of upheaval 1991/92", as AGFO Board member Bruno Stefanini called it. Other funds struggled with the same problems. They too suffered from redemption waves, and new issues were extremely rare. 

The drought period lasted another two years for IMMOFONDS. Operationally, respectable results were achieved each time, mainly thanks to rental income rising due to inflation and the renunciation of major renovation projects. However, the mortgage interest burden increased and profits declined. To keep investors engaged, an investor-friendly distribution policy was implemented. Nevertheless, further redemptions had to be launched, which again had to be financed from property sales. Only in autumn 1993 did the situation stabilize enough for a subscription rights issue to be successfully implemented. The stock price subsequently rose to a high of 3,470 francs. 

Institutionally, an upheaval was also emerging in the 1990s. From 1991 onwards, the AGFO and IMMOFONDS organization had to deal with the future role of depository bank Handelsbank N.W., which changed its name to Coutts & Co in March 1991. The issue of foreign control of IMMOFONDS also resurfaced. It was elegantly resolved with the transfer of Banca del Gottardo's AGFO shares to its pension vehicle Gestivalor-Gestione Fondi. 

In spring 1992, Coutts reduced its commitment by selling part of its AGFO shares to co-shareholders. In fiscal year 1994/95, Zug Cantonal Bank replaced Coutts as depository bank. The successor to the IMMOFONDS founding bank remained on board as a shareholder until the end of 1998. After that, Zug Cantonal Bank and Verit (Jenny family) each held 26.8 percent of AGFO shares, the Foundation for Art, Culture and History (Bruno Stefanini) held 23 1/3 percent, and Gestivalor-Gestione Fondi (Banca del Gottardo) held just over 23 percent.

On this basis, IMMOFONDS started into the second half of the 1990s. Operational performance was solid. Through new issues, the volume approached 116,000 certificates in circulation in spring 1998, approaching the previous high (120,000) for the first time. Shortly thereafter, a 1:10 split improved the tradability of the securities. To meet the requirements of the Federal Banking Commission for fund management, Verit established an office with 150 percent positions in the same year, shared by Erwin Häfelin as Managing Director and René Foschi as Secretary, as well as two other people.

In the same year, the AGFO Board of Directors faced the question of how to manage the renovation expenditure with investments of 90 million francs over the next four to five years. Neither the substance nor the earning power of IMMOFONDS should be impaired; on the contrary, it should be significantly strengthened. In the medium term, AGFO set itself the goal in "Strategy 200X" of advancing IMMOFONDS to the top 3 real estate investment funds. An increase in net fund assets (as of June 30, 2000: 400 million francs) by around two-thirds was seen as realistic. Regular issues and better use of debt financing potential were to help achieve this. An ambitious undertaking with which IMMOFONDS started into the new millennium. The declining interest of investors in indirect real estate investments and the loss of Banca del Gottardo as a shareholder - it was taken over by Rentenanstalt - made the task even more difficult.