Frankfurt, Dusseldorf According to company circles, the Signa Group of real estate investor René Benko, which is behind the Galeria department store group, has secured fresh equity. The existing investors have put a total of around 400 million euros in fresh capital into Signa Holding, said several people familiar with the transaction. The group is suffering from the slump in the real estate market.
The money is said to have flowed from Benko himself, but also from Fressnapf founder Torsten Toeller, the Austrian contractor Hans Peter Haselsteiner and the Brazilian entrepreneurial family Koranyi-Arduini, according to the circles. Signa, Benko and the other owners did not respond to requests for comment.
In recent years, Benko has built up a real estate empire using a lot of borrowed capital, which includes the Golden Quarter in Vienna, the Upper West in Berlin and the Chrysler Building in New York, but also spectacular projects such as the Elbtower in Hamburg.
The real estate group holds houses with a value of around 28 billion euros (gross asset value). In addition, projects worth 25 billion euros are planned.
In the current market environment, however, Signa is under pressure from several sides. With real estate prices falling, the valuations at which the company has properties on its books are falling. Rental income is also declining in many places. At the same time, financing costs have risen significantly in view of the rise in interest rates.
The capital increase now gives Benko and his holding company some breathing room financially. On the market, it is seen as a sign that important investors continue to believe in the business model.
Banks take a close look at developments at Signa
According to information from industry circles, Benko commissioned the real estate service provider JLL months ago to find additional financiers who would provide outside capital. It is about so-called mezzanine capital, a mixture of debt and equity without voting rights. Completion has not yet been reported. JLL declined to comment.
The banks are looking closely at the development at Signa, after all there is a lot of money at stake for them too. From their point of view, the capital increase is basically a step in the right direction – just like the sale of real estate, according to financial circles. Whether these are sufficient for Signa to get through the currently difficult phase can hardly be judged from the outside.
The Austrian Benko was long considered a child prodigy who amazed the industry with sensational deals and built up a large real estate portfolio. But in the end the picture cracked. The billionaire was acquitted of corruption charges in a trial in Vienna earlier this year. However, many banks are reserved, at least since the ECB banking supervisor asked about their commitments at Signa, according to financial circles.
In the spring, the ECB wanted to know from the institutions, among other things, how high their credit risks are with Benko and how the loans are secured. That should not have made it easier for Signa to get follow-up financing.
At the same time, the commercial real estate market collapsed drastically. According to the real estate specialists Cushman & Wakefield, the transaction volume in the seven largest German metropolises fell by 65 percent in the first half of the year compared to the same period last year to 9.8 billion euros. It was the weakest half-year since 2012, the experts said.
Signa has sold shares in numerous properties
And the downtrend continues. Ulrich Höller, head of the developer and asset manager ABG Real Estate Group, assumes a price correction of between 20 and 35 percent compared to the peak values for commercial real estate. It will only bottom out in twelve to 18 months.
Signa has reacted and has been reorganizing the portfolio for some time. The holding company recently sold, among other things, the 40 remaining properties of the furniture chain Kika/Leiner to the company Supernova owned by the German investor Frank Albert. According to Signa, the money was used to repay a bank loan.
The operational business of Kika/Leiner was taken over by a group led by Managing Director Hermann Wieser. However, the furniture retailer had to file for bankruptcy just a few days later. Now 23 locations are to be closed and around 1,900 jobs cut.
In May, Signa also sold a commercial building on Kärntner Strasse in Vienna where Apple is renting. The company also divested itself of real estate in Germany: the Mynd office tower under construction in Berlin has belonged entirely to Commerz Real since mid-June. A share of the Kaufhof property on Berlin’s Alexanderplatz also went to the Commerzbank subsidiary.
The negative development of the commercial real estate market also burdens Benkos Holding.
(Photo: IMAGO/SKATA)
Commerz Real had already taken over 25 percent of Hamburg’s major Elbtower project last year. Benko recently sold half of the Berlin luxury department store KaDeWe to his Thai business partner Central Group. That was the largest single deal on the commercial real estate market in Germany in the first half of the year.
>> Read here: Galeria owner Benko dominates the commercial real estate market in Germany with large deals
Other properties are said to be for sale. According to brokers who do not wish to be named, Signa in Munich is looking for buyers for the former Kaut-Bullinger building on Rosenstrasse and for the Kaufhof building on Rotkreuzplatz. Benko bought the Kaut-Bullinger house three years ago for allegedly 80 million euros. The intention was to keep the property “in the long term”, Signa explained at the time.
The two properties in Munich are said to cost around 100 million euros each. However, given the mood of crisis in the market, it could be difficult to find buyers at the prices Signa wants.
Signa gave financial commitments of over 200 million euros to Galeria
At the same time, the trading business weighs on the company: Signa had to support Signa Sports United, which has lost around 80 percent of its value since its IPO via the Spac deal in 2021 and posted a negative operating result (Ebitda) of 97 million euros in the first half of the year. Signa granted the online sports retailer a loan of 150 million euros “to protect the liquidity position”, as it was said.
Signa has sold shares in the property to a Commerzbank subsidiary.
(Photo: Reuters)
Signa also gave financial commitments of EUR 200 million to its subsidiary Galeria, which has just completed the second insolvency procedure in a row. Signa did not want to say whether it was equity or a loan. On the other hand, Galeria also received government loans amounting to 680 million euros, which largely do not have to be repaid due to the insolvency.
>> Read here: Exclusive interview: New Galeria boss plans to be in the black operationally for next year
Statements by the logistics billionaire Klaus-Michael Kühne, who holds a ten percent stake in Signa Prime Selection – the subsidiary with the group’s top properties, caused additional unrest in the market. This important partner said in February in an interview with “Manager Magazin” with regard to Benko’s business: “It is currently somewhat volatile, we are monitoring the issue.”
Benko was relieved when he was able to announce to his shareholders a few weeks ago that Kühne was investing in the Beam office building in Berlin together with Signa. This deal is said to be worth 350 million euros to Kühne – this is also a signal to the market.
Transparency note: Like Signa Holding, the Handelsblatt Media Group is involved in the digital education platform Ada from Galeria owner René Benko.
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