Signa’s bankruptcy puts many billions of euros at stake. In addition to Signa Holding’s shareholders, local banks are also threatened with major losses. According to industry experts, there is currently no fear of a fire in the real estate market.
Some banks may now become more cautious following unexpected write-offs on new loans, says analyst Simon Stippig of Warburg Research. “But I think it is unlikely that Signa’s bankruptcy will have major consequences for the entire real estate sector.” There have been many bankruptcies among real estate developers in recent months.
“Signa itself is not as systemically important as (the US investment bank) Lehman Brothers,” says real estate economist Andrew Burrell of Capital Economics. Lehman’s bankruptcy led to the global financial crisis in 2008. “But things look bad for the German construction sector. “Things are already not going well, and now a number of major projects are in jeopardy.” The bankruptcy puts further pressure on the European and especially the German commercial real estate sector.
Work has already come to a standstill on a handful of Signa’s major projects, such as the “Elbtower” in Hamburg. Signa has actually built an enviable property portfolio in prime locations, says Rick Smith of redeveloper Forbes Burton. ‘Potential buyers will monitor the situation closely.’ However, Smith thinks they will likely use Signa’s well-known distress to lower prices. But it’s not just Signa that’s struggling with rising interest rates; it is also unlikely that buyers will be willing to overpay.
Largest mountain of debt in red-white-red bankruptcy history
Back to the bankruptcy: Signa’s mountain of debt is enormous, as the creditor protection association AKV confirmed on Wednesday evening: according to this, 42 employees and 273 creditors have been affected. According to KSV1870, the total debts amount to 5.26 billion euros. According to the application, the debtor has assets with a book value of approximately 2.77 billion euros.
According to the AKV, this is the highest debt mountain in domestic insolvency history. It remains to be seen what will happen to the other Signa companies (about 390 in Austria alone). KSV credit protector Karl-Heinz Götze: “From the current perspective, it is impossible to seriously estimate whether other companies in the group will file for bankruptcy and whether a domino effect will occur.”
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.
