European property company Signa today said that two key divisions are filing for insolvency, a significant development in the unravelling of founder Rene Benko's real estate empire.
Signa Prime Selection filed for self-administrated restructuring in a Vienna court today, and Signa Development Selection will file tomorrow, Signa said.
The announcements are the latest twist in the saga for Signa, the biggest casualty so far in Europe's real-estate crisis.
"It is well known that external factors have had a negative impact on business development in the real estate sector in recent months," Signa said.
The holding company of Signa - a group of some 1,000 companies, with high-profile projects and department stores across Germany, Austria and Switzerland - filed for insolvency last month with around €5 billion in debt.
Other divisions have followed suit, but Prime Selection is Signa's largest real estate division with 54 properties valued at €19.3 billion and debts of €4.5 billion, according to the AKV creditor protection association.
Holdings include the Park Hyatt in Vienna, the KaDeWe department store in Berlin, and the Elbtower in Hamburg, where construction has been halted.
Signa is also shareholder in the parent group of Brown Thomas Arnotts alongside Central Group.
Signa Development, with new projects in the works in Vienna, Berlin, and Wolfsburg, Germany, has a balance sheet of €4.6 billion, according to Signa's website.
For years, the property sector in Germany and elsewhere in Europe boomed as interest rates were low and demand strong.
But a sharp rise in rates and costs has put an end to the run , tipping developers into insolvency as bank financing dries up and deals freeze.
In a further grim sign for the property sector in Europe's largest economy, residential property prices in Germany continued their fall, dropping 10.2% in the third quarter from a year earlier, recent data showed.
