Key divisions of Austria's property giant Signa file for insolvency
The two most important property divisions of real estate giant Signa -- whose vast portfolio includes New York's iconic Chrysler building -- are filing for insolvency, the company announced Thursday.
The filings mark the latest troubling developments at Signa, exacerbating the spectacular downfall of self-made Austrian tycoon Rene Benko.
Benko -- one of Austria's richest men -- founded Signa in 2000 and grew it into a property and retail conglomerate. But as the sector is hit by higher borrowing costs and rising building material prices, a growing number of developers are filing for bankruptcy.
The Signa Prime Selection division -- which includes properties such as the Berlin shopping gallery KaDeWe -- on Thursday initiated self-administrated insolvency proceedings at Vienna's commercial court, the company said.
A second subsidiary, Signa Development Selection, will also file Friday to restructure under self-administration, it said.
BACKGROUND: Austria property giant Signa to file for insolvency
Credit rating agency Fitch had already downgraded the Signa Development unit earlier this year.
"It is well known that external factors have had a negative impact on business development in the real estate sector in recent months," the statement said. "Despite considerable efforts in recent weeks, the necessary liquidity for an out-of-court restructuring could not be secured to a sufficient extent, so that SIGNA Prime Selection AG has applied for restructuring proceedings with self-administration," it added.
At the end of November, Signa's holding company filed for insolvency after Benko announced he was handing over the chairmanship of the company's advisory board to a German restructuring expert.
According to the company's website, the assets of Signa Prime Selection are valued at €20.4 billion. Prime Development owns assets worth €4.6 billion, the website states.
Several Signa projects, including the construction of a landmark high-rise in the German city of Hamburg, have ground to a halt. Recently, Signa has been looking at selling its partial ownership of the
Chrysler building.
READ ALSO: Can foreigners buy property in Austria?
The leading German department store chain Galeria Karstadt Kaufhof, which Signa purchased in 2019, filed for bankruptcy in 2020 amid the coronavirus pandemic, and the chain decided to close 52 stores at the start of the year.
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The filings mark the latest troubling developments at Signa, exacerbating the spectacular downfall of self-made Austrian tycoon Rene Benko.
Benko -- one of Austria's richest men -- founded Signa in 2000 and grew it into a property and retail conglomerate. But as the sector is hit by higher borrowing costs and rising building material prices, a growing number of developers are filing for bankruptcy.
The Signa Prime Selection division -- which includes properties such as the Berlin shopping gallery KaDeWe -- on Thursday initiated self-administrated insolvency proceedings at Vienna's commercial court, the company said.
A second subsidiary, Signa Development Selection, will also file Friday to restructure under self-administration, it said.
BACKGROUND: Austria property giant Signa to file for insolvency
Credit rating agency Fitch had already downgraded the Signa Development unit earlier this year.
"It is well known that external factors have had a negative impact on business development in the real estate sector in recent months," the statement said. "Despite considerable efforts in recent weeks, the necessary liquidity for an out-of-court restructuring could not be secured to a sufficient extent, so that SIGNA Prime Selection AG has applied for restructuring proceedings with self-administration," it added.
At the end of November, Signa's holding company filed for insolvency after Benko announced he was handing over the chairmanship of the company's advisory board to a German restructuring expert.
According to the company's website, the assets of Signa Prime Selection are valued at €20.4 billion. Prime Development owns assets worth €4.6 billion, the website states.
Several Signa projects, including the construction of a landmark high-rise in the German city of Hamburg, have ground to a halt. Recently, Signa has been looking at selling its partial ownership of the
Chrysler building.
READ ALSO: Can foreigners buy property in Austria?
The leading German department store chain Galeria Karstadt Kaufhof, which Signa purchased in 2019, filed for bankruptcy in 2020 amid the coronavirus pandemic, and the chain decided to close 52 stores at the start of the year.
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