By Matthias Inverardi
FRANKFURT (Reuters) -Further subsidiaries of Austrian property group Signa are expected to file for insolvency as soon as this week, a person with direct knowledge of the matter said on Monday, amid a widening European property rout.
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.
Its difficulties make the group the biggest potential casualty of a property crash, triggered by the steepest rise in borrowing costs in the euro’s 25-year history, that has hit Germany and Sweden hardest.
Signa did not immediately respond to a request for comment.
The group, which values its assets at 27 billion euros ($29 billion), is made up of numerous subsidiaries.
It has borrowed heavily from banks, including Switzerland’s Julius Baer, which revealed that it had an exposure of more than 600 million Swiss francs ($677.58 million).
On Friday, Signa Real Estate Management filed for insolvency in a local court in Berlin, several people with knowledge of the matter said.
The filing 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.
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 meters in space.
It had been making steady progress this year on the planned 64-story 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.
($1 = 0.9168 euros)
($1 = 0.8855 Swiss francs)
($1 = 0.8855 Swiss francs)
(Reporting by Matthias Inverardi; writing by John O’Donnell; editing by Sabine Wollrab, Miranda Murray and Sharon Singleton)
