European commercial property giant Signa 'running out of cash'
Signa, which is an owner of New York's Chrysler Building as well as scores of high-profile projects and department stores across Germany, Austria and Switzerland, is controlled by Austrian magnate Rene Benko.
Austrian commercial property group Signa could see more of its units file for insolvency as soon as this week as the property empire is running out of cash, people with direct knowledge of the matter have said.
The group, controlled by an Austrian magnate but whose business is anchored in Germany, held talks with Elliott Investment Management to try to raise funds, according to one of the sources. Signa, which is an owner of New York's Chrysler Building as well as scores of high-profile projects and department stores across Germany, Austria and Switzerland, is controlled by Austrian magnate Rene Benko.
Construction has already halted at six Signa sites in Germany, including one of the country's tallest buildings, encompassing plans for nearly 200,000 square metres in space.
Its difficulties make the group the biggest potential casualty of a European commercial property market crash, triggered by the steepest rise in borrowing costs in the euro's 25-year history.
Signa Real Estate Management last week filed for insolvency in a local court in Berlin. That signaled a worsening of conditions for the group, which, according to another person with knowledge of the matter was seeking to secure fresh financing to see it through until year end.
The group, which values its assets at €27bn is made up of numerous subsidiaries.
It has borrowed heavily from banks, including Switzerland's Julius Baer, which disclosed that it had an exposure of more than €620m. Others too have lent, including Austria's Raiffeisen Bank International.
Earlier this month, one of its executives, Hannes Moesenbacher, identified a large exposure to a client of €755m. Regional state-backed banks in two of Germany's most affluent states, Bavaria and Hesse, have also lent the group several hundreds of millions of euros.
It had been making steady progress this year on the planned 64-storey Elbtower skyscraper in Hamburg, until it stopped paying the builder, who halted work.
Germany, Europe's largest economy, is in the middle of a property crisis after a sharp rise in interest rates and building costs forced some developers into insolvency and put deals and construction on hold.
