Real estate units of Benko’s Signa Group insolvent
Published: Thursday, Dec 28th 2023, 11:30
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Billionaire René Benko's real estate and retail empire is in dire straits. After the Signa holding company, the core companies of his real estate empire are now also insolvent.
The most important units of the Signa retail and real estate group led by Austrian investor René Benko are seeking insolvency proceedings. Signa Prime Selection AG applied for debtor-in-possession restructuring proceedings at the Commercial Court of Vienna on Thursday, the company announced. This step will be followed by Signa Development Selection AG on Friday, it said. "The aim is the orderly continuation of business operations within the framework of self-administration and the sustainable restructuring of the company."
KaDeWe and Elbtower belong to Signa Prime
Signa Prime owns commercial real estate in prime locations, including the Elbtower in Hamburg, the KaDeWe in Berlin and department store properties of the Galeria Karstadt Kaufhof chain. Signa Prime builds and lets real estate. Other companies are responsible for the retail business of the department stores.
According to the company website, Signa Prime owns properties worth a total of 20.4 billion euros. According to the annual report for 2022, Signa Prime had liabilities of almost 10.8 billion euros at the end of the previous year. Signa Prime posted a loss of around one billion euros in the previous year after the value of its investment properties, particularly in Germany, was devalued by around the same amount. The company's four board members were nevertheless awarded bonuses totaling 19 million euros.
"Despite considerable efforts in recent weeks, the necessary liquidity for an out-of-court restructuring could not be secured to a sufficient extent", the press release continues. It is important to find long-term solutions, said Erhard Grossnigg, CEO of Signa Prime Selection AG, adding that the quality of the prime portfolio is excellent and the development prospects of the development projects, which are located in the top locations of German-speaking cities, are very good.
Insolvency applications foreshadowed
Signa Development had already raised the prospect of filing for insolvency last week, citing its liquidity situation. Signa Development ended the previous year with a loss of around 316 million euros and management board bonuses totaling 9 million euros. Signa Development specializes in the development of urban development projects in the residential and commercial segment. The current balance sheet total is stated on the website as 4.6 billion euros.
After strong growth during the low-interest phase, the network of companies created by Benko is struggling with higher construction costs, energy prices and interest rates, as is the entire real estate sector. In addition, bricks-and-mortar retail is under economic pressure.
Other Signa companies already insolvent
The online sporting goods division had already filed for insolvency in October. In recent weeks, Signa Holding and a number of smaller sub-companies announced their insolvency. Signa Retail Selection AG, based in Switzerland, has announced that it will wind up the company in an orderly manner. Signa Retail also owns the department store group Galeria Karstadt Kaufhof, which is therefore likely to be put up for sale.
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