The decline of Signa founder René Benko’s empire is now also affecting the central building blocks of the real estate division.
Signa Prime Selection AG applied for self-administration restructuring proceedings on Thursday, a spokeswoman for the Vienna Commercial Court said. Signa Development Selection AG will follow this step on Friday, the company added. “The aim is the orderly continuation of operational business operations within the framework of self-management and the sustainable restructuring of the company.”
According to the Creditreform protection association, the claims of around 300 Signa Prime creditors are around 4.5 billion euros. This would be offset by usable assets of around 1.3 billion euros. Signa Prime and Signa Development together have 105 often large properties or development projects in their portfolio.
What the announced bankruptcy filing means for the Galeria Karstadt Kaufhof (GKK) department store chain initially remained unclear. The company did not want to comment on a media report on Thursday that GKK was already preparing for a third bankruptcy. This was previously reported by the news portal ‘Business Insider’, citing company circles. Accordingly, it is being investigated whether the chain still has enough resources and economic strength to go bankrupt.
A turning point for Benko’s group
After Signa Holding and other companies in the highly complex group filed for insolvency, the latest measure marks the most fundamental change to date. “It is the path from sunshine companies to restructuring,” as an insider says. Signa had grown enormously over many years – spurred on by the long phase of zero interest rates. Benko, who was born in Innsbruck, also ventured into the risky entry into stationary retail when he bought Karstadt around ten years ago.
“Despite considerable efforts in recent weeks, the necessary liquidity for an out-of-court restructuring could not be sufficiently secured,” the Signa press release continues. It is important to find long-term solutions, said Erhard Grossnigg, spokesman for the board of Signa Prime Selection AG. 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.
KaDeWe and Elbtower belong to Signa Prime
Signa Prime includes commercial properties in top locations, including the Elbtower in Hamburg, the KaDeWe in Berlin and department store properties from the Galeria Karstadt Kaufhof chain. Signa Prime builds and rents real estate. Other companies are responsible for the retail business of the department stores. Here too, according to informed sources, attempts are being made to continue business operations by negotiating appropriate rental prices.
According to informed sources, the further construction of the Elbtower in Hamburg, currently Signa’s most spectacular project, is well on track. It was said that negotiations were underway with an investor. From the city of Hamburg’s perspective, the bankruptcy filing initially has no acute consequences for the project. However, the city is monitoring the development closely, said a spokesman for the urban development authority of the dpa.
The Elbtower will be 245 meters high and will be the third tallest building in Germany, housing offices, shops, galleries and restaurants, among other things. Completion was previously planned for 2025, with total costs estimated at around 950 million euros.
There were signs of bankruptcy filings
Signa Development had already announced 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 board bonuses totaling 9 million euros.
After strong growth in the low interest rate phase, the company network created by Benko, like the entire real estate industry, is struggling with higher construction costs, energy prices and interest rates. In addition, stationary retail is under economic pressure.
Other Signa companies are already insolvent
The online sporting goods division had already filed for bankruptcy in October. Signa Holding and a number of smaller sub-companies then announced their insolvency. Signa Retail Selection AG, based in Switzerland, has announced that it will wind up the company in an orderly manner. The Galeria Karstadt Kaufhof department store group is also assigned to Signa Retail and is therefore likely to be up for sale.
Benko had become a self-made billionaire without a high school diploma. He began renovating attics in Innsbruck in 1977. In 2004, the then 26-year-old made headlines with the purchase of a department store in Innsbruck, which was then redesigned by the British star architect David Chipperfield and turned into a shopping center. Thanks to financially strong supporters, his group of companies grew quickly.
Benko had high goals. “Signa is intended to be a family-owned European industrial and investment holding company. “Similar to the family holdings of the Agnellis, Oetkers or Reimanns,” he told the Austrian magazine “Trend” in 2018. Like the Agnellis, Benko also invested in media, and like the Oetkers, he also invested in hotels. He also invested in the Galeria Karstadt Kaufhof department store group and in the online retail of sporting goods. But the Galeria Group has already gone through two restructuring procedures, the sports division filed for bankruptcy in October, and the media holdings are about to be sold. (dpa)
This article was updated at 4:40 p.m. on December 28, 2023.