Billionaire René Benko built his real estate group with the help of low interest rates and financially strong investors. Recently the negative reports have increased. Now a renovator is taking the helm.
As a 17-year-old, René Benko was already earning good money by converting attics in his hometown of Innsbruck. This was later followed by a fairytale rise to become a real estate tycoon, becoming super-rich with skyscrapers, shopping centers and other buildings in prime locations.
The US magazine Forbes estimates the now 46-year-old’s fortune at 5.6 billion euros. In times of extremely low interest rates, his business was doing well. Now his Signa Group, which was founded around 20 years ago, is struggling. On Wednesday, Benko gave up his power to the German reorganizer Arndt Geiwitz, also under pressure from his fellow shareholders.
As the company announced, Benko is stepping down as chairman of the advisory board of Signa Holding. Geiwitz will also take over the chairmanship of the shareholders’ committee and will be responsible for the restructuring of the real estate and trading holding company. “In the current situation, this is the best solution for the company, its partners, investors and employees,” said Benko, according to the statement. It is now important to restore trust. Signa’s real estate portfolio remains unique. Everyone involved is called upon to support Signa now.
The Elbtower in Hamburg
Geiwitz said the company needed peace and order. It is important to find long-term solutions. “It is therefore both responsible and necessary to initiate comprehensive consolidation for the company now.” The quality of the real estate portfolio and that of the planned projects, especially in Germany, are very good.
Signa is building the 245 meter high Elbtower in Hamburg. The group also includes the department store group Galeria Karstadt Kaufhof, which has already gone through two insolvency proceedings. The most recent trial was conducted under Geiwitz’s leadership.
Higher interest rates, higher costs
Since the start of the war in Ukraine, the real estate industry has struggled with increased construction and energy costs as well as higher interest rates. Because of the increased interest rates, Signa Prime Selection suffered a devaluation of 1.17 billion euros last year. Real estate in Germany was particularly affected by this, as can be seen from the luxury real estate holding company’s consolidated financial statements.
Signa has hired additional external consultants to intensively review all business areas and develop a holistic concept for the group, it said.
According to the Austrian partner Hans Peter Haselsteiner, Benko’s co-owners of the holding had asked the billionaire to give up power over the company network after problems accumulated in various divisions and in various projects. The Signa sporting goods division filed for bankruptcy in October. The construction of the Elbtower was interrupted.
The 46-year-old Benko had also built up his group of companies with the help of financially strong investors. The co-owners of the Signa Holding have so far included the foundation of the Austrian building contractor family Haselsteiner (Strabag) and Ernst Tanner, the chairman of the board of the Swiss chocolate manufacturer Lindt & Sprüngli. Logistics entrepreneur Klaus-Michael Kühne, among others, is involved in Signa Prime Selection.
In Austria, the Signa Group recently sold the operating business of the Kika/Leiner furniture group. The retailer filed for bankruptcy shortly afterwards.