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Branch of Galeria Karstadt in Hamburg: Uncertainty on all sides

Photo: Marcus Brandt / dpa

Only gradually will the effects of the insolvency filing of the Signa Holding of the Austrian real estate investor René Benko become apparent. The German Association of Cities has now called for the involvement of the cities. "Should the insolvency of Signa Holding have an impact on Galeria Karstadt Kaufhof locations, the affected cities must be actively involved in the discussions between creditors and owners, shareholders and insolvency administrators," said the chief executive of the Association of Cities, Helmut Dedy, to the newspapers of the Funke Group.

In addition, Dedy called for ways for cities to secure buildings affected by bankruptcies. "In the future, insolvency law should be changed in such a way that cities potentially have access to central real estate in the event of insolvency. To achieve this, however, the ownership structures must also be transparent," said Dedy.

On Wednesday, Signa Holding filed for restructuring proceedings under debtor-in-possession administration. The exact consequences for other subsidiaries, including the department store group Galeria Karstadt Kaufhof, are unclear.

Signa's Swiss subsidiary Signa Retail Selection AG announced that it would conduct business in an orderly manner. The Galeria department store division is subordinate to it, which is therefore likely to be up for sale. The operational business of the department stores will not be affected by the creditor protection proceedings, according to a statement from Signa Retail Selection AG, from which the »Handelsblatt« quoted. A Galeria spokesman did not comment on a possible sale of the department store chain.

Dedy, a representative of the Association of Cities, said that it was not yet clear whether the insolvency would have an impact on the Galeria locations: "Nevertheless, the trembling is now beginning again among the employees and in the cities. The branches in central locations in particular have a key function for our city centres.«

Retail expert sees Galeria in acute danger

The trade expert from the Niederrhein University of Applied Sciences, Gerrit Heinemann, warned that with the insolvency of Signa Holding, the Galeria stores were also in acute danger. The subsidies promised by Signa to save the houses should no longer flow in full, Heinemann told the »Rheinische Post«: »This means that Galeria's last hope is dwindling. After the Christmas season, we will see whether Galeria survives."

On the other hand, the head of Berlin's shopping temple KaDeWe is relaxed. "We are very securely positioned," said Michael Peterseim, Managing Director of the KaDeWe Group, to the Tagesspiegel. The group's difficulties would have no consequences for the luxury department store in Tauentzienstraße. "They won't have any effect on us. We can clearly rule that out." Signa is only a minority shareholder and is not responsible for strategic and operational issues.

"It is often overlooked that we have a clear main shareholder. It's called Central Group and it's behind us," Peterseim said. The Thai retail group recently assured that it would do everything in its power in the luxury goods segment in Europe to support KaDeWe and the other stores. In addition to the Berlin location, the KaDeWe Group also owns two department stores in Hamburg and Munich.

Peterseim told the »Berliner Morgenpost« and the »Berliner Zeitung« that the group would close this year with a turnover of about 800 million euros. The figures show that we are on the right track. The number of customer visits is back to about the high pre-Corona level.

Signa has a stake in numerous properties in prime locations in Berlin. The complexly nested group of companies is also involved in a number of construction projects that are reportedly currently at a standstill. In Berlin, these include the two Karstadt locations in Neukölln and Wedding and a high-rise project on Ku'damm.

In Austria, too, the effects of Signa's insolvency are being closely monitored. It remains to be seen what will happen to the core real estate companies Signa Prime and Signa Development. The Signa Group is one of the most important players in the European real estate market. This is under pressure due to high interest rates and construction costs combined with falling real estate prices.

Despite the insolvency of the holding company, the Austrian real estate group S Immo does not expect any major upheavals for the sector. "Investors in the Austrian real estate market are so heterogeneous that I don't see any danger of distress sales of larger portfolios," S-Immo board member Herwig Teufelsdorfer told Reuters news agency. "Of course, there will be a shift in ownership, but at least in the Prime market, I see stable demand and I'm not worried about price distortions."