(ANSA-AFP) - VIENNA, 19 NOV - The Austrian property group
that co-owns New York's iconic Chrysler building has warned of
an imminent "restructuring" that has cast a spotlight on several
precarious projects -- and the wealthy tycoon behind the
company. Rene Benko, one of Austria's richest people, with a net
worth of $6 billion according to Forbes, has grown his Signa
group into a real estate giant since founding it in 2000. But as
the sector is hit by higher borrowing costs and surging material
prices, a growing number of developers are filing for
bankruptcy. Several Signa projects, including the construction
of a landmark high-rise in Germany, have ground to a halt,
making investors jittery about their money.
Confirming its troubles, Signa announced last week that Benko
was stepping down from its advisory board as the group prepares
a "plan for essential restructuring steps" by the end of
November. "Signa symbolises the real estate boom of recent
years, in which cheap money was readily distributed for every
project, no matter how daring," the Austrian daily Die Presse
wrote in an editorial this month. "A perfect environment for
Benko, who took out dizzying amounts of loans without shame.
Sustainability didn't play a role," it said.
- 'Never so boring to get rich' -
Born in 1977 to a middle-class family in Innsbruck, Benko worked
with a friend restoring attics as a teenager before dropping out
of school and founding Signa. Among its first purchases was a
department store in Innsbruck, which Benko transformed into a
modern shopping centre. Since then, Benko has added the Chrysler
building and the Berlin shopping gallery KaDeWe to the company's
portfolio, while branching out into media and other sectors. At
one point, the company reportedly tried to attract investors
with slogans like "It was never so boring to get rich". "When
you have success, you become interesting. And if you give the
impression that you have remained a man of your words, you build
trust and expand your circle of friends," Benko told Die Presse
in 2008. With offices in Austria, Germany, Italy, Luxembourg and
Switzerland, Signa has holdings worth 27 billion euros ($29
billion) and projects worth 25 billion euros in development,
according to its website. But Signa looks to be in trouble.
Thailand's Central Group said this month that it had taken
control of the historic British department store Selfridges,
which Signa used to own. And Signa-led work on the prestigious
Elbtower in the heart of Hamburg -- expected to be one of
Germany's tallest buildings -- was halted at the end of last
month. Karen Pein, the Hamburg senator in charge of urban
development, has threatened to demolish the half-built tower if
the group is not able to continue work on schedule. The future
of another Signa project, the renovation of the Alte Akademie in
Munich, a former Jesuit college to be transformed into an office
and residential complex, is also uncertain. Fitch, the credit
rating agency, has already downgraded the Signa Development
subsidiary after it said it was "facing challenges including
with respect to its liquidity position". And the online
e-commerce unit Signa Sports United has initiated insolvency
proceedings for several of its entities and has decided to drop
its stock listing on the New York Stock Exchange to reduce
costs. Signa did not respond to AFP requests for comment.
- Past controversies -
Signa's undertakings have drawn criticism in the past. The
leading German department store chain Galeria Karstadt Kaufhof,
which Signa purchased in 2019, filed for bankruptcy in 2020 amid
the coronavirus pandemic, and the chain decided to close 52
stores at the start of the year. In 2020, Benko testified before
an Austrian parliamentary committee probing wide-ranging
corruption allegations after the so-called Ibizagate scandal
shook the country's politics. He was asked about his links to
several high-ranking conservative and far-right political
figures, though Benko has not been charged in connection with
the case. The scandal erupted in 2019 when a video showed
Austria's former far-right leader offering public contracts to a
woman posing as a Russian oligarch's niece in exchange for
campaign help. In a separate matter, Benko received in 2012 a
12-month suspended jail sentence over an Italian tax case, after
a court found him guilty of bribing Croatia's former prime
minister Ivo Sanader with 150,000 euros to intervene with the
Italian tax authorities. fcz-jza/js/sn SELFRIDGES
/ (ANSA-AFP).
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