After Signa Holding, the most important real estate divisions in the empire of the Austrian René Benko are now collapsing. This has consequences for top properties in downtown Munich.
After Signa Holding, the mother of the Benko empire, slipped into insolvency proceedings at the end of November, the bad news did not stop. Now the most important real estate subsidiaries, Signa Prime and Signa Development, are being hit – with as yet unforeseeable consequences. The nested corporate structure with hundreds of companies and investments makes it difficult to assess what damage the earthquake will leave in the Austrian’s empire. But it is now clear at the latest: they will be massive. The question that remains: What can still be repaired? The situation is alarming because the real estate units and thus the most important parts of the holding company are now insolvent. Signa Prime alone has assets worth 20.4 billion euros. On Thursday, the AG applied for self-administration restructuring proceedings at the Vienna Commercial Court, as the company announced. Development Selection AG will follow this step on Friday.
The next Benko bankruptcies: It involves assets of 20.4 billion euros
Signa Prime bundles the fillet properties in top locations and is therefore considered the heart of the Benko empire. Development AG invests in projects outside of premium locations such as the “Up” office complex in Berlin, but also has an impressive collection of houses. “Despite considerable efforts in recent weeks, the necessary liquidity for an out-of-court restructuring could not be sufficiently secured,” says the Signa announcement. It is important to find long-term solutions, said Erhard Grossnigg, CEO of the Signa subsidiaries. Given the quality of the properties, Signa is optimistic.
After all, the KaDeWe in Berlin, the Elbtower in Hamburg and the Oberpollinger in Munich are all about houses in top locations. The state capital has painfully felt what that means: vacancies, standstills and deserted construction sites have characterized the cityscape for months. For example at the main train station, where work on the historic Hertie department store has stopped. At the abandoned Karstadt concrete block on Schützenstrasse or the traditional Kaut-Bullinger House. Just like at the Old Academy, nothing happens there anymore. Building ruins in the middle of the pedestrian zone!
Mayor Dieter Reiter after Benko bankruptcy: “Extremely bitter”
Mayor Dieter Reiter (SPD) called the bankruptcy news “extremely bitter.” “We could never have imagined that we as a city could have a problem with the Old Academy,” he said recently. “A premium property in the heart of our city that is now threatened with vacancy makes your heart bleed.” Especially since the town hall’s hands are tied: The property was owned by the Free State until 2013 – until the then and current Finance Minister Prime Minister Markus Söder (CSU) left the academy to Signa. Price: 230 million euros. The property belongs to the now insolvent Prime Selection, and Alte Akademie Immobilien GmbH was founded to handle the transaction. What will happen next with the top property has been discussed throughout the city since construction stopped at the end of November. There are calls for the Free State to bring about an early end to the 65-year leasehold building contract.
The former city planning officer Christian Thalgott suggested that financially strong families, such as the Schörghubers or the Inselkammers, could take over the showcase project. Are there perhaps even conversations in the background? The Free State does not want to comment on this when asked. The Ministry of Construction only makes it clear: “The insolvency proceedings of Signa Prime Selection AG have no impact on the leasehold contract of the Alte Akademie, which is concluded with a project company.” This is not insolvent. And: “Should the contractual partner of the Free State declare bankruptcy, the state government will protect all of the Free State’s corresponding rights to which it is entitled, taking into account the principle of economic efficiency.”
Benko’s bankruptcy hits Munich – what happens now to Oberpollinger?
A step that is probably only a matter of time. Because further bankruptcies are to be expected. The administrator of Signa Holding explained this at the creditors’ meeting in Vienna last week: “An exploitation plan has been set in motion for the accelerated sale of investments and assets.” The holding company is supposed to hand over perhaps its most prestigious stake: the one in the Chrysler Building in New York . Signa also has to rely on financially strong business partners at the Munich luxury department store Oberpollinger: 51 percent of the business is owned by a Thai family business, the Central Group of billionaire Tos Chirathivat. Industry experts assume that he will take over the minority stake in Signa. That would be a good sign for the future of the house. However, the forecasts for Galeria Karstadt Kaufhof (GKK) with its 92 branches are bleak.
The responsible company is Signa Retail Selection AG, based in Switzerland, which has already applied for creditor protection in order to wind up its business in an orderly manner, which means a sale of GKK. Prime, which is now insolvent, is concerned with properties worth 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. The loss was one billion euros. After strong growth in the low interest rate phase, the company network created by Benko over 30 years, like the entire real estate industry, is struggling with higher construction costs, energy prices and interest rates. In addition, stationary retail is under pressure. The situation at Signa has recently deteriorated rapidly: the holding’s red numbers were still just under two billion euros at the end of 2022. Nine months later, the mountain of debt has grown to five billion euros.
Benko jets off to Barcelona to shop
The result: Little by little, more and more daughters follow their mother into bankruptcy. The Benko success story began in Innsbruck in 1995 with the luxury conversion of attics. The collapse of his empire affects his partners more than the 46-year-old himself. In 2019, his name appeared for the first time on the Forbes list of the richest people in the world. Estimated assets: 4.6 billion euros. Money that should be secured thanks to the “Benko Family Private Foundation”. While the 13,800 Galeria employees fear for their future and the vacancies blight the cities more and more every day, the Austrian still seems to feel quite comfortable. He went shopping in Barcelona shortly before Christmas – by private jet, of course.
You can find more news in our brand new tz app, now in an improved design with more personalization functions. Directly for download, Here you will find more information. Are you an enthusiastic user of WhatsApp? There too, tz.de/muenchen will now keep you up to date via a new Whatsapp channel. Here we go straight to the canal.