For the man who would be retail king, these are dark days indeed.

An empire that stretches across Europe and the U.S., with shares in some of the world’s most iconic buildings and retail groups, has declared itself insolvent.

In doing so, it has left a number of Teutonic lenders heavily exposed to colorful Austrian entrepreneur Rene Benko’s real estate empireand the future of some retailers in doubt.

Benko’s Signa Holding, the part-owner of luxury department stores Selfridges and KaDeWe, Germany’s Karstadt retail group, and New York’s Chrysler building, among a huge empire, has declared its own insolvency.

Caught out by the end of cheap interest rates and declining demand for office space, plus a complex business structure that appears to have put investors off bailing it out, the prospects for Benko and Signa look bleak.

Signa had needed to find up to $652 million to fulfill short-term liquidity requirements and although sovereign wealth funds and private equity giants were approached, the spiderweb of Signa’s conglomerate structure apparently hampered talks.

The situation leaves the future of some of the world’s primest property in doubt and a number of investors potentially heavily out of pocket.

Benko – a high school dropout who began with Innsbruck loft conversions – came to talk some of Europe’s wealthiest investors into backing his office, residential and hotel developments across Europe and acquiring assets including Germany’s biggest department-store chain.

Signa Grew Despite Economy
Signa kept launching new projects despite global economic instability, and even when rates were rock bottom, rental income across the group were only just keeping pace with interest costs, leaving it reliant on tapping investors for more cash.

This Fall, the company alerted wary investors that it was facing liquidity problems when it backed out of plans to inject more capital into a troubled German online sports retail business.

Signa is split into multiple units, often with different sets of investors. Ultimately, however, the business centers around Benko and his private trust owns more than half of parent Signa Holding, while he has majority stakes in most of the group’s companies.

Some properties will be easier tto offload than others. For example, Signa Holding partnered with Thai conglomerate Central Group to buy luxury department stores across Europe, including Selfridges, and the Thai group could easily opt for full ownership of those assets.

Likewise, it co-owns the Chrysler Building in New York with Aby Rosen’s Rfr Holding and there are likely to be many interested investors circling.

German Retail Doubts
More doubt surrounds the Galeria Karstadt Kaufhof department stores, which are located in many of Germany’s city centers. Of the 170 branches owned by the company in 2020, only 91 remain, and this spring Galeria presented an insolvency plan to shore up its remaining subsidiaries.

That plan could now be at risk as any remaining financing evaporates. The insolvency plan obliged parent company Signa to contribute $218 million to Galeria's rehabilitation, but a large portion of that money has yet to change hands.

Union representatives hope a retailer interested in buying up the department stores will emerge and are understood to consider a retailer far preferable to a property investor and expect business to carry on a usual in the immediate future, especially the busy Christmas season.

They will join the main investors in fretting over Signa’s future and the ultimate resolution of its complex web of businesses.

According to Bloomberg, Italy's UniCredit SpA has lent about $655 million to companies that are part of Benko’s Signa group of companies, mainly through its Bank Austria unit.

Raiffeisen Bank International has a little over $750 million in exposure and Swiss wealth manager Julius Baer Group has $692 million in loans to Signa according to Bloomberg research.

Creditors Close In On Chrysler Building, Selfridges And Karstadt Owner

Signa Holding, an Austrian real estate empire owned by Rene Benko, has declared insolvency, leaving its creditors, including sovereign wealth funds and private equity giants, in a precarious position. Signa Holding, which owns Selfridges, Karstadt, and the Chrysler Building, is facing liquidity issues due to the end of low-interest rates and declining demand for office space. The company's complex business structure has hindered efforts to secure funding, potentially leaving its assets, including the Chrysler Building, in doubt.