The country’s leading news program on Thursday night focused on the turbulence in real estate juggler René Benko, addressing the question, “Is the company in a liquidity crunch?”
“ZiB-2” moderator Martin Thür already summed up the problems when moderating the contribution: “He was considered a practically invincible high-flyer in the real estate sector, but the extensive business network of the concrete magnate René Benko has burst. Especially the journey to stationary retail in Germany is not going as hoped. The Galeria department store chain must undergo a robust reorganization process and apply for a protective shield procedure for the second time. However, the economic crisis could also jeopardize a number of the group’s real estate projects. The news magazine ‘Der Spiegel’ is already wondering whether the Benko bubble will burst.”
Received a lot of money from the state
In the ORF report itself, a German trade unionist made it clear: “Mr. Benko received a lot of money from the state, ie tax money. This should save the department store. It needs to be invested in. But here Mr. Benko apparently only cares about financial interests, about his own interests, but not about the interests of the department store (…)” With regard to these allegations, Signa said: Signa has “so far secured the preservation of Galeria Karstadt Kaufhof and many hundreds of millions of euros invested (…) Without these contributions, the renovation of Galeria would not have been possible.”
“…what an honorable businessman would not do”
However, according to ORF, Benko is currently facing completely different challenges: Rising interest rates, rising construction costs and inflation would pose new challenges for his real estate empire. And: “Experts find the practiced business model of value appreciation questionable.”
Professor Gerrit Heinemann of the University of Applied Sciences of Niederrhein explains in the report “ZiB-2”: “Anyone who owns real estate and has this real estate value on the balance sheet normally depreciates real estate. They are depreciated, which means: The values of the real estate is getting less and less.On the other hand, if you allow value gains, which can also fluctuate, to rise on the balance sheet through revaluations, that’s something a respectable businessman probably wouldn’t do.”
The question of fire sales
According to “Spiegel”, Benko’s group is urgently looking for buyers for more than a dozen properties. The “ZiB 2” asked on Thursday: “Is the group in a liquidity crisis?”
Heinemann, who is considered one of the leading trading experts in the German-speaking world, told ORF: “I think so. ‘Der Spiegel’ doesn’t just write something. Then there will also be a lack of liquidity at some point and emergency sales of real estate will have to take place.
Source: Krone
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
