General
November 3, 2023
3 minutes read

Austria’s René Benko Cedes Control Of Property Empire

René Benko, an Austrian real estate tycoon, has ceded control of the company he founded two decades ago. He has…

René Benko, an Austrian real estate tycoon, has ceded control of the company he founded two decades ago. He has been ousted from Signa Holding, Austria’s largest privately-held real estate company, amid a cash crunch under a heavy debt burden.

Benko ceded control of Signa to a restructuring expert, as first reported by the Austrian newspaper Kronen Zeitung. The company is reportedly discussing with major shareholders about an emergency loan to keep it afloat as it restructures its operations.

Signa says it owns a leveraged portfolio of real estate assets worth €27bn.

Benko founded Signa in 2000 and grew it into one of Austria’s leading real estate developers. The company built its business around luxe real estate in city centers, particularly retail locations. Signa expanded majorly with debt issued in the era of low interest rates. However, central banks have tightened fiscal stimulus and raised interest rates, making debt more expensive in the private markets.

Benko’s leveraged empire is struggling amid the era of high interest rates and a global slowdown in the commercial property market. Last year, Signa’s headquarters was raided by the Austrian police as part of a bribery probe, contributing to its woes although Benko was later cleared of the charges. This February, Deutsche Bank dropped Signa as a client, citing financial and reputational risks.

Benko handed control to Arndt Geiwitz, a prominent German restructuring and insolvency expert. In 2020, Geiwitz was hired to restructure German flag air carrier Lufthansa after the COVID-19 pandemic decimated its business. Lufthansa secured billions of euros of loans from the German government to avoid bankruptcy and paid back in full ahead of time.

Signa is banking on Geiwitz’s leadership to secure an emergency loan to keep it afloat and restructure its operations for future recovery.

The signs of Signa’s struggles have been around for a while. This October, Signa Sports United, the NYSE-listed online retail sports subsidiary, filed for bankruptcy after a private lender terminated a €150mn loan facility.

Galeria Kaufhof, Germany’s largest department store chain owned by Signa, filed for bankruptcy last year after taking €680mn in loans from the German government.