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The Signa group’s flagship German development, a 245 metre-high tower in Hamburg championed by Chancellor Olaf Scholz, has gone bankrupt.
The city of Hamburg said on Friday that the company responsible for the “Elbtower” had informed it that it had been unable to secure rescue funding and could not meet its liabilities.
The project, owned by Signa Prime — one of the three main holding companies at the centre of the collapsed Signa group’s luxury property empire — had a gross development value of €1.4bn, documents seen by the Financial Times show.
Signa Prime’s shareholders and creditors are likely to get a fraction of that if anything, highlighting the extent to which the group’s complex, debt-fuelled business model ultimately hinged on over-optimistic valuations and a buoyant commercial property market to support them.
The city of Hamburg said it was considering exercising an option granted to it under the terms of the development to buy the property back at less than the value it had sold it to Signa for — €122mn.
“The city of Hamburg can now assert its right of repurchase, which is secured by the purchase agreement, as well as the assumption of all planning and construction contracts,” said city development senator Karen Pein.
The city is also speaking with private investors, who may still wish to step in to assume Signa’s responsibilities. Among them is logistics billionaire Klaus-Michael Kühne, already a prominent Signa investor.
The Elbtower, which is less than half-complete and sits on a prominent-inner city site on the Elbe river, was feted by Scholz during his tenure as mayor of Hamburg.
Scholz called the project, which was due to be completed in 2025, “a signal of Hamburg’s ambition”.
The chancellor has declined to comment on whether he had met Signa’s swashbuckling founder, Austrian billionaire René Benko, who has gone to ground since Signa’s collapse in the final weeks of 2023.
Shareholders and creditors who once flocked to Benko are still struggling to understand what claim on Signa’s assets they might have — a task complicated by the bewildering network of more than 1,000 corporate entities set up by the Austrian.
None of the group’s accounts are consolidated and the three principal Innsbruck-based holding companies at the centre of the group all have different administrators.
Work on the Elbtower halted more than three months ago when Signa abruptly stopped making wage payments to the tower’s construction company.
