The US rating agency Fitch has downgraded Signa Development AG, one of four real estate investment companies Benko, to “high risk”, as the German “Handelsblatt” (Tuesday edition) reports.
Since the beginning of this week, it has only been enough for a credit rating of “CCC” (“substantial risks”). This means that “no failures are to be expected unless developments are favourable”. Previously, Signa Development was rated “B” (“highly speculative”), which meant that “if the situation worsens, defaults are likely.”
As justification for the downgrade, the rating agency cited the figures from the company’s interim report as of June 30, 2023. In it, Signa Development announced that it was “facing challenges, also with regard to its liquidity situation.”
The sister company Signa Prime Selection suffered a loss of billions in 2022 because properties under construction had to be devalued. Construction came to a halt on the Hamburg Elbtower and other projects. In addition, according to “Handelsblatt”, Signa canceled financial commitments for some of its internet stores in the Signa Retail investment division, which led, among other things, to an insolvency application at the subsidiary Tennis-Point.
Signa Development, which Fitch now classifies as high-risk with assets of around 3 billion euros, does not have the same scope of projects as Signa Prime Selection, which has around 20 billion euros. But “unpaid suppliers and bank financiers” could “mutually contaminate and disrupt” the Signa companies, warns the rating agency. She sees a “risk” that Signa Development has passed on its own financial resources to other parts of the Signa Group. This can be seen from the increase in “other financial receivables”, which increased by 215 million euros in the first half of 2023. These are referred to in the semi-annual report as interest-bearing “loans to indirect shareholders”.
According to a list from mid-July 2023, not only Benkos Signa Holding is involved in the Signa Development group, but also other prominent companies and entrepreneurs, according to the newspaper. Shareholders at this time included the private family foundation of the Austrian industrialist and ex-Strabag boss Hans Peter Haselsteiner, ex-Chancellor Alfred Gusenbauer, Union Investment, the RAG Foundation, Roland Berger and ex-Metro boss Erwin Conradi.
The rating agency also complains that the cash position deteriorated in the first half of 2023. According to Fitch, cash at the end of June amounted to 32 million euros – after 125 million euros at the turn of the year. In the first half of 2023, income was expected from a two-stage sale of the Berlin office property BEAM. The company also generated net proceeds from the sale of the Kika/Leiner furniture retail chain. As early as 2022, Signa Development received 151 million euros in liquidity through real estate sales – and suffered book losses of 33 million euros. In addition, 200 million euros were raised from the shareholders through a capital increase, according to Fitch.
According to the rating agency, larger maturities are due in 2024, the first of which is for 250 million euros for the refinancing of a project in Berlin. There will also be a bond for 300 million euros in mid-2026.
Hack attack on KaDeWe
The luxury department store KaDeWe in Berlin says it has been attacked by hackers. The Russian hacker group “Play” was responsible for the attack, the department store said on Tuesday night. The attack was repelled. The Berlin-based KaDeWe is owned 50.1 percent by the Signa Group around Rene Benko and 49.9 percent by the Thai Central Group. “Investigations into the scope of the attack are underway at full speed and with the support of the Cyber Crime Unit of the Berlin Police and forensic experts.” According to the statement, precautionary measures have been taken and the department store has been put into emergency offline operation. Purchasing by card payment is still possible both on site and online.
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