Signa-Retail Company Lamarr Declares Bankruptcy

PeopleOther ♦ Published: February 4, 2024; 16:18 ♦ (Vindobona)

The highly anticipated Lamarr Kaufhaus project on Mariahilfer Straße in Vienna, set to include a flagship department store and hotel, has filed for bankruptcy. This development comes as a significant blow, as the project, originally slated for completion in 2025, has faced financial turmoil. The insolvency was confirmed by the Creditors' Protection Association KSV 1870 on Friday.

The project company behind the planned Lamarr department store on Vienna's Mariahilfer Strasse has filed for bankruptcy proceedings with the Vienna Commercial Court. / Picture: © Wikimedia Commons / Gugerell / CC0

The company behind the project, known as Mariahilfer Straße 10–18 Immobilien GmbH, was responsible for the development and construction of this ambitious undertaking by the Signa Group, as reported by ORF. Signa Prime holds a 50% stake in the company through Prime Capital Invest GmbH, while the remaining half is owned by Thai partners of Signa through Skyred Holding 9 in Luxembourg.

The Lamarr Kaufhaus, named after the Viennese Hollywood icon Hedy Lamarr, was intended to be a grand retail establishment that would house the German KaDeWe Group, another asset shared by Signa and the Thai Central Group. However, KaDeWe Group had already filed for insolvency, although its German department stores are expected to continue operations.

The Lamarr project was situated on the site of the former Leiner furniture store, which Signa Group acquired before taking over the entire furniture retail chain. The acquisition during the era of Chancellor Sebastian Kurz (ÖVP) was marked by turbulence and controversies. The property was heavily encumbered with a lien of €390 million in favor of Bank Austria (€295 million) and RLB Oberösterreich (€95 million).

Obscure corporate structure

The corporate structure surrounding this project is intricate, as "DerStandard" reported, with the Mariahilfer Straße 10–18 Betriebs Holding GmbH, another subsidiary, holding no substantial value. This entity is owned by Signa Holding, which, like its subsidiaries Signa Prime and Development, has already declared insolvency.

Notably, the Signa Prime shareholder list includes the Hong Kong Monetary Authority and South Korea's National Pension Service as previously undisclosed shareholders, holding positions through the fund manager Madison International Realty. These stakes are believed to represent less than a tenth of their managed assets.

Issues for the Lamarr Kaufhaus project had been looming, as documents retrieved by FM4 from the auction of Signa Holding's office equipment suggested. Among these documents was a development assessment for the Lamarr project, which outlined the impact of rising interest rates on financing costs. The costs had surged from €29.68 million in 2022 to €51.10 million in a September 2023 projection and further to €66.87 million in a "Version Sep25."

Email correspondence also indicated discussions on the right wording for "claiming compensation" due to an extended construction period not agreed upon in the contract. The reasons behind not destroying such sensitive documents before auction remain unknown.

The Alpenländische Kreditorenverband (AKV) stated, "Whether a continuation of the business and debt relief is intended cannot be assessed at this time." The company had been actively seeking the necessary financing for the project's completion in recent weeks but had not been successful in attracting potential investors. Consequently, the bankruptcy procedure had to be initiated.

Spar, a major retail conglomerate, has expressed interest in the property. Hans Reisch, CEO of Spar, commented, "We had already made efforts to acquire the Hedy Lamarr – previously Leiner – on Mariahilfer Straße before it was sold to René Benko, but we were not successful. It would still be an asset we are interested in, but nothing concrete is in place."

Questionable other properties

Regarding the sale of the Meinl-Haus on Graben 19 by Signa Prime Selection AG, it was reported by "DerStandard" that the property was brokered by the wife of a high-ranking company executive. The woman acted as an intermediary in the sale of the property for €80 million to the Viennese Medical Chamber and reportedly received around one million euros in commission. Half of this amount was paid by the Signa Group, and the other half by the Viennese Medical Chamber. The husband of the external broker heads the Graben 19 Immobilien GmbH, which is part of the Signa company structure, and he signed the purchase agreement with Signa Prime's CEO Manuel Pirolt in December. Two weeks after the Meinl-Haus sale, Signa Prime filed for insolvency.

The future of the Lamarr Kaufhaus project now hangs in the balance, with creditors and investors anxiously awaiting the outcome of the bankruptcy proceedings. The bankruptcy of Signa Prime Selection, the flagship of the Signa Group, has cast a long shadow over the completion of this ambitious project, leaving its fate uncertain.