Billionaire Benko Seeks Bond Sale to Boost European Business

(Bloomberg) -- The billionaire owner of New York’s Chrysler Building is drafting plans to revive his European property business with a bond issue, as the pandemic has weighed on retailers that make up most of its tenants.

Signa Prime Selection AG, majority owned by Austrian businessman Rene Benko, is talking to several banks about selling at least 300 million euros ($365 million) of debt, according to people familiar with the matter.

Discussions are at an early stage and may fail, the deal size could change or the money could be raised through other parts of the group such as its Signa Development Selection AG, they said, asking not to be identified discussing private information.

The company declined to comment on the plans to raise capital.

Signa Prime, the real-estate division of Benko’s business empire, manages a 13 billion-euro portfolio spread across Germany, Austria and Italy’s German-speaking South Tyrol region. But many of the portfolio’s biggest assets -- such as Vienna’s Park Hyatt and Berlin’s KaDeWe luxury store -- are hotels and retailers in sectors left floundering by Covid-19.

Iconic Brand

Its second biggest tenant is another Benko company -- iconic German department store Galeria Karstadt Kaufhof, which is owned separately by his Signa Holding GmbH group. Galeria already sought court protection from its creditors during the pandemic, and is now trying to secure a government bailout loan.

In September, Galeria agreed to close dozens of stores and cut thousands of jobs while the parent company injected fresh equity as part of a court procedure to ensure the department store chain’s survival.

Signa Prime’s latest plan under discussion with banks is to issue debt to shore up its own finances, according to the people. The new bonds could be backed by real estate assets that are ringfenced from other creditors, they said.

The company, which is 45%-owned by outside investors including Madison International Realty, the Peugeot family and a number of German insurers, had a net debt position of 8.3 billion euros at the end of 2019, according to filings.

(Adds detail on potential alternative deal structure in third paragraph.)