High real estate devaluations pushed the results of Signa Prime Selection AG, owned by Tyrolean investor René Benko, into the red last year. The company recorded a net loss of over one billion euros. This is evident from the 2022 annual accounts, which have not yet been published and are available to the APA.
That Signaaccording to the The German ‘Handelsblatt’, the ‘main real estate company of the owner of Galeria’, attributed the valuations in a statement ‘exclusively’ to macroeconomic conditions. The revaluations would also be better compared to the overall market “due to the excellent quality” of Signa Prime’s portfolio, a Signa spokesperson told the APA when asked about figures and further information from the annual report. He also referred to the hidden reserves that would arise from the evaluation of long-term interest rate hedging. Taking this into account, the company would have achieved an adjusted profit of 90 million euros in the 2022 financial year.
Capital increase of 750 million euros
The German Handelsblatt had already reported at the end of July about the loss of value of the portfolio and the result following a presentation by Signa for its banks, which the spokesperson also pointed out to the APA. Discussions include a capital increase of 750 million euros, which, according to information in the annual accounts, was subsequently decided at an extraordinary general meeting.
As the accountant states in his report on the audit of the annual accounts, the increase had a “stabilizing” effect on equity. This fell from 5.57 billion euros in 2021 to approximately 5.42 billion euros the year before. Signa did not comment on the capital increase at APA.
Bonuses for senior managers have increased dramatically
According to the documents, management did not want to propose a distribution for 2022. However, bonuses for managers in key positions have been increased. These increased to more than 19.1 million euros in 2021, after approximately 1.6 million euros the year before. The company spokesperson also did not comment on this.
Regarding further business developments, the spokesperson noted that the real estate division Signa (Signa Real Estate) had sold around a dozen properties in recent months, with a total volume of around two billion euros in Germany, Austria and Switzerland. Each individual transaction was significantly higher than the last bank rating.
“Overall, the profit from these sales was over 50 percent, based on the historical total capital costs of these projects,” the spokesperson explained. The total debt of the Signa Real Estate companies is currently less than 50 percent (loan to value). Signa Prime’s annual accounts show a loan-to-value ratio of 46.9 percent for 2022.
The real estate market is currently in turmoil
The real estate market has been in turmoil lately due to increased interest rates and high construction prices. This also has consequences for companies in the industry. The value of many properties on the books of real estate companies is currently falling. However, these are pure book losses as long as the company does not sell the properties.
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.
