Signa raises further €1.2bn, plans Berlin store investment of €3.5bn

Austria’s privately-held retail and real estate company Signa Group raised €1.2bn in fresh equity during the month, with the proceeds targeted for pending acquisitions and developments (particularly in Berlin), and boosting its liquidity reserves to over €1bn.

Signa Holding GmbH, led by Austrian Wunderkind René Benko, first raised €700m from its existing shareholders, and followed that up when its largest subsidiary and flagship real estate company, Signa Prime Selection AG, raised a further €500m in a capital increase, which was fully subscribed.

In a release, the company said: “The proceeds from the capital increases will be used for future acquisitions and bolstering the Signa Group’s liquidity reserves. After closing of the Kaufhof transaction, the entire group has access to liquidity reserves of more than 1 billion euros for future growth. The Group’s total gross asset value in real estate by the end of the year 2019 exceeds 20 billion euros, which positions Signa as one of the biggest real estate owners in Europe.”

Apart from Signa Holding, key strategic shareholders in Signa Prime include the German endowment RAG Stiftung, the two German insurance companies R+V and LVM (Landwirtschaftlicher Versicherungsverein Münster), the listed investment company of the Peugeot family FFP Group, Madison International Realty, Longbow Finance as well as various successful European entrepreneurs and their family offices.

After merging HBC Europe and Signa’s Karstadt Warenhaus GmbH at the end of last year, Signa completely took over the German department store chain Galeria Karstadt Kaufhof for €1bn in June of this year.

Speaking recently to the Berliner Morgenpost newspaper, and at a Heuer Dialog conference on Berlin real estate attended by REFIRE, the boss of Signa Deutschland, Timo Herzberg, said the company had earmarked €3.5bn for investment in the German capital over the next few years. Its biggest projects will be the rebuilding of the Karstadt department store at Hermannplatz in Neukölln, the upgrading of the Karstadt property on Kurfürstendamm including new towers, and the construction of further tower buildings at the Karstadt property on Alexanderplatz.

Herzberg stressed the importance of the department store business to Signa, including flagship store KaDeWe, and how all the Berlin stores would be kept operative in the middle of extensive reconstruction.

Further big Berlin projects include the re-building of the old Kaufhof store at Ostbahnhof for ecommerce retailer Zalando, as well as the tower building “Stream” at the Mercedes-Benz Arena, also for Zalando, and a project development on Schönhauser Allee. 

Of particular sensitivity is the planned new Karstadt store on Hermannplatz (at its opening 90 years ago the biggest department store in continental Europe), which has fallen foul of local planners and politicians, with planning permission for Signa’s new design initially refused, on the grounds of its “unsuitability, in respect of the social situation of local residents and in particular their income levels.”

Herzberg told his audience that Signa was nonetheless in productive talks with local regulators to find solutions that would be “acceptable to all parties, particularly citizens’ interests.”