Creditors close in on owners of Chrysler Building, Selfridges and Karlstadt

These are dark days indeed for the man who would become a retail magnate.

An empire that spans Europe and the United States and holds stakes in some of the world’s most iconic buildings and retail groups has declared bankruptcy.

In doing so, many Teutonic financiers were greatly exposed to the real estate empire of versatile Austrian entrepreneur René Benko, and the future of some retailers was in jeopardy.

Benco’s Cigna Holding, co-owner of a huge empire including luxury department stores Selfridges and KaDeWe, Germany’s Karlstadt Retail Group and New York’s Chrysler Building, has declared itself bankrupt.

The outlook is bleak for Benco and Cigna, stymied by the end of low interest rates and declining demand for office space, as well as complex business structures that appear to have deterred investors from bailing them out.

Cigna needed to find up to $652 million to meet short-term liquidity requirements, and although sovereign wealth funds and private equity giants were approached, cobwebs in Cigna’s conglomerate structure hampered negotiations. It seems so.

The situation leaves the future of one of the world’s most prestigious properties in doubt, and many investors could potentially lose large sums of money.

Mr. Benko, who started converting lofts in Innsbruck as a high school dropout, has enlisted some of Europe’s wealthiest investors to back his office, residential and hotel developments across Europe and to buy his assets, including Germany’s largest department store chain. I started to persuade.

Signa achieved growth despite economic conditions

Cigna continued to launch new projects despite global economic uncertainty, and even when interest rates were at rock bottom, the group’s overall rental income was barely keeping up with interest costs, so it was in search of more cash. It continued to rely on attracting investors.

This fall, the company withdrew plans to inject additional capital into its struggling German online sports retail business, warning wary investors that it was facing liquidity problems.

Signa is divided into multiple units, often with different investors. But ultimately, the heart of the business is Mr. Benko, whose private trust owns more than half of the parent company, Cigna Holding, and who holds a majority stake in most of the group’s companies.

Some properties are easier to offload than others. For example, Cigna Holding partnered with Thai conglomerate Central Group to acquire luxury department stores across Europe, including Selfridges, and the Thai group could easily opt for full ownership of those assets.

Similarly, the company co-owns New York’s Chrysler Building with Abby Rosen’s Rfr Holding, which could have a number of interested investors moving around.

Questions about the German retail industry

Further suspicions surround the Galleria Karlstadt Kaufhof department store, which is located in many of Germany’s city centres. As of 2020, only 91 of the company’s 170 branches remained, and this spring Galleria proposed a bankruptcy plan to shore up its remaining subsidiaries.

That plan could now be in jeopardy as the remaining funds evaporate. The bankruptcy plan requires parent company Cigna to contribute $218 million to reorganize Galleria, but most of that money has not yet been made available.

Union representatives are hopeful that a retailer will be interested in acquiring the department store, and believe that they are far more preferable to a retailer than a real estate investor, and for the time being, especially during the busy season. It is understood that the company expects to operate as usual over the Christmas period.

They will join major investors in worrying about Cigna’s future and the ultimate resolution of its complex web of businesses.

according to bloombergItaly’s UniCredit SpA, primarily through its Austrian banking division, has loaned approximately $655 million to Benco’s Cigna group of companies.

Raiffeisen Bank International has an exposure of just over $750 million, while Swiss asset manager Julius Baer Group has a $692 million loan to Cigna. bloomberg the study.