Photo by William Wachter on Unsplash
Austrian Court Orders Signa Holding To Sell Chrysler Building Stake
December 20, 2023
The financially troubled co-owner of the Chrysler Building, Signa Holding, has been mandated by an Austrian court to sell its stake in the famed skyscraper. The decision comes a month after Signa declared insolvency, which is comparable to declaring bankruptcy in the U.S. The sale, along with other court-ordered moves such as terminating the company’s private jet lease, is seen as a vital step in saving the real estate giant founded by Rene Benko.
This ground lease increased dramatically from just $7.75 million in 2018 to $31.5 million this year, with an expected hike to $41 million by 2028. The current market value of Signa’s stake in the majestic 77-story edifice, four years after it partnered with Aby Rosen’s RFR Holding for a joint purchase worth approximately $150 million, is uncertain. According to someone familiar with the matter, Signa currently owns a 50% stake in the Chrysler Building.
As part of Signa’s rescue strategy, the privately owned Austrian real estate firm has been forced to cancel its rental contracts at Harrach and Ferstl, its headquarters located in Vienna’s city palaces, according to The Wall Street Journal. Signa’s workforce was dramatically reduced from 42 to just eight employees, marking an enormous 81% decrease, as reported by the outlet.
Simultaneously, Signa is contending with significant bank borrowings, including a reported $684 million exposure from Switzerland’s Julius Baer bank. More debts were attributed to Austrian banks like Raiffeisen Landesbank Niederoesterreich-Wien, Raiffeisen Landesbank Oberoesterreich, Erste Group, and Raiffeisen Bank International.
Although the Chrysler Building maintains its iconic status, the occupancy rate has recently struggled to exceed 80%. The WSJ noted that, like many landlords, the building’s owners “are coping with one of the worst office markets since World War II as more people split work time between home and the office. New York’s office market has been especially hard hit. Office leasing activity in Midtown Manhattan this year totaled 10.1 million square feet as of the end of November, down 26% from the same time last year, according to CBRE Group.”
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