The Bauer Palazzo, located in the heart of the city’s web of canals and due to be managed by Rosewood Hotels, has attracted “high demand” from potential investors, according to a report by the insolvency administrators of Signa’s luxury unit seen by Bloomberg News. The building was under renovation, but work stopped in 2023 as its owner ran out of cash and fell into bankruptcy.
The hotel is one of the trophy assets that Signa, the property empire founded by Austrian tycoon Rene Benko, will be counting on to realize its restructuring plan. It exemplifies the appeal of certain properties within the group, which include famous names like Selfridges in London and the Chrysler Building in New York.
Still, the portfolio also includes assets that might struggle to secure buyer interest in what is a testing time for the global real estate market.
The complex, debt-laden business, which Benko built up over two decades, collapsed under the pressure of higher interest rates, rising costs and falling valuations.
Now the plan is to manage, stabilize and gradually sell assets as part of the restructuring, which aims to recover at least 30%. That is, if creditors grant their support. A court hearing is scheduled in Vienna on Monday for Signa Prime and its sister unit for development.
But the numbers look tight. According to estimates cited by the Signa Prime administrators, if the restructuring goes ahead, creditors could get back between 23% and 32% over two years. And that assumes a 20% premium on current property values as the real estate market recovers.
For now, the indicative offers received for Bauer Palazzo are in line with those assumptions.
Meanwhile, the administrators have negotiated a standstill for the debt tied to the hotel, located close to St. Mark’s Square in Venice. Around the time Signa Prime acquired the Bauer Palazzo in 2020, it also got a €135 million ($147 million) loan from Raiffeisenlandesbank Niederösterreich-Wien due in 2025, according to corporate filings seen by Bloomberg. The bank declined to comment.
Asset Sales
If creditors don’t agree to the restructuring plan, the alternative for Signa Prime is a liquidation, a scenario under which the administrators estimate a 9% recovery for the billions of euros in debt owed by the unit.
Other enviable assets are also set to hit the block soon. Signa Prime, along with joint-venture partner Central Group, is set to start marketing some properties in Switzerland that are part of the Globus retail chain, according to the report.
Meanwhile, Signa Prime is seeking to liquidate its stake in the Selfridges properties, which include the flagship store on London’s Oxford Street as well as a site in Manchester. It also owns the properties with Central Group, while Saudi Arabia’s Public Investment Fund has an indirect 10% interest in the stores, according to company filings.
Any sales will be closely watched for clues to the broader market. The low number of deals during the property slump has impeded price discovery and meant there’s a lack of clarity on valuations.
And while Signa has its jewels, not every asset is going to be an easy sell.
Complicating the challenge is the fact that many projects in Germany — including the partially-completed Elbtower skyscraper in Hamburg — have already fallen into provisional insolvency proceedings. Signa Prime’s administrators need resources to restructure the assets and bring most of them out of creditor protection by mid-April to avoid them sinking into full insolvency.
For that, a short-term inflow of “substantial funds” will be required, the administrator said.
By Giulia Morpurgo and Libby Cherry
