The collapse of Austrian property group Signa is expected to send ripples across the European commercial real estate (CRE) market, a ratings agency has warned.
Signa, which owns a stake in stake in KaDeWe, Germany’s most famous department store, and the Chrysler Building in New York, filed for insolvency on 29 November, having struggled with a soaring debt pile amid rising interest rates.
Swiss wealth manager Julius Baer announced late last month that it was reviewing its private debt business due to its exposure to Signa.
Julius Baer’s chief executive Philipp Rickenbacher said that Signa represented the single largest exposure in the wealth manager’s €628m (£538m) private loan book.
DBRS Morningstar said that news of the insolvency “comes at already-challenging times for the CRE market, which is under pressure from higher borrowing costs and shifts in demand fundamentals, especially in the office and retail sectors.”
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“Although DBRS Morningstar does not see any direct exposure to Signa (either as a sponsor or tenant) in its European commercial mortgage-backed securities surveillance portfolio, we expect Signa’s default to affect the wider CRE market given the scale and diversity of its operations,” the firm added.
“The group’s assets amounted to €27bn with an additional €25bn in projects under development, according to the company’s website.”