Rene Benko accumulated the usual trappings on his way to becoming a billionaire: a private jet, a triple-deck superyacht and a 3,000-acre country estate.
Now, the €23 billion ($25 billion) Signa business empire underpinning the Austrian-born property magnate’s riches has collapsed following last-ditch attempts to raise emergency funding.
The value of Benko’s stakes in the conglomerate has fallen at least $2 billion this year amid surging borrowing costs and plunging asset prices, according to the Bloomberg Billionaires Index. Following his holding company’s insolvency filing Wednesday, those stakes are possibly worthless.
The firm, which owns pieces of iconic properties such as New York’s Chrysler Building, is a web of interlinked entities and indebtedness. That means what’s left of Benko’s personal net worth — once estimated at more than $4 billion — remains opaque, even as Signa’s downfall leaves its backers facing clear losses. Benko, 46, was ousted this month as chairman of Signa’s holding company by fellow shareholders, curbing his influence at the group that vaulted him into the world’s rich and powerful.
“Benko is turning out to be one of the first highly visible crises in the real estate sector,” said Leonhard Dobusch, a professor of organization at the University of Innsbruck, the Austrian city where Signa’s founder was born and where the company is headquartered. “It will definitely not be the last.”
A representative for Benko didn’t respond to a request for comment. Signa said in an emailed statement that it plans to manage its its own restructuring under court supervision.
Signa's collapse follows two decades of aggressive growth, fueled by rising property values and injections of cash from banks and investors.
At the end of last year, Benko controlled a stake worth about $1.3 billion in Signa Prime, the largest of the conglomerate’s units, according to Bloomberg’s wealth index. Its assets include Venice’s five-star Hotel Bauer and the historic Golden Quarter shopping district in Vienna.
His equity in Signa’s development business was worth at least $300 million at the start of this year, though that holding as well as the Signa Prime stake are assumed to be worthless in Bloomberg’s calculations after Wednesday’s filing.
Benko’s holding company, meanwhile, controlled the largest stake in Signa Sports, an owner of cycling retailer Wiggle and other athletic brands. The Berlin-based company merged in 2021 with a blank-check firm founded by Ron Burkle with an implied combined enterprise value of about $3.2 billion.
The holding was worth about $800 million at the start of this year, but it’s now similarly worthless after the e-commerce company filed for insolvency last month after Signa Holding pulled financing commitments.
As Signa crumbles, Benko’s high-flying lifestyle is also taking a hit.
He’s looking to sell artwork popular among collections of the world’s superrich, including paintings by Pablo Picasso and Jean-Michel Basquiat, while his 202-foot (61.8 meter) superyacht Roma was put on the market for €39 million but has since been delisted. For the past month or so, it’s been moored in Mallorca and is available to lease for as much as €345,000 per week during the winter.
Still, for now Benko’s clinging to some perks. Around the time a Signa unit in Germany filed for insolvency last week, a casually dressed Benko was spotted using his Bombardier Global Express jet to travel with his wife, Nathalie.
Benko’s wealth implosion illustrates the financial pressures facing many ultra-high-net-worth individuals who hold the bulk of their wealth through office, retail or other commercial properties.
Record-low interest rates in recent decades helped turbocharge fortunes across a sector that often relies on debt financing. But the pandemic and subsequent work-from-home boom, along with regulators’ actions to curb inflation, have left many property tycoons facing a grim financial outlook.
Higher interest rates are still pushing valuations lower, with a measure of property prices in October falling 19% from its March 2022 peak, according to the real estate analytics firm Green Street. Landlords including Brookfield Asset Management Ltd. and Blackstone Inc. have defaulted on property debt alongside other major real estate firms, leading to banks writing down loan values.
“Some of them will face an acute period of distress,” said Alex Foshay, head of Newmark’s International Capital Markets Group. Rising interest rates “had a very dramatic impact.”
Financial distress is already showing among the richest real estate billionaires, with the number making the list of the world’s 500 biggest fortunes slumping below 30 for the first time since at least 2017, according to Bloomberg’s wealth ranking.
During real estate’s recent boom years, few billionaires capitalized on the trend as much as Benko.
He hit his peak in the years leading up to the pandemic, turning up at the Mipim real estate fair in Cannes in a superyacht and crisscrossing the globe in his jet with Signa’s branding emblazoned on its tail.
He teamed up with New York property mogul Aby Rosen to buy the Chrysler Building in 2019 — one of several deals over the years for iconic properties, including Berlin’s KaDeWe and London’s Selfridges department stores.
Benko also acquired hospitality properties such as Vienna’s five-star Park Hyatt hotel, where he held private dinners with the likes of then-Chancellor Sebastian Kurz on the guest list.
During this period, rising real estate values underpinned his firm’s ability to raise money and pay dividends to investors including Austrian construction tycoon Hans Peter Haselsteiner, German transportation magnate Klaus-Michael Kuehne and France’s Peugeot family. But those paper gains regularly outstripped rental income in recent years, leaving Signa vulnerable during a downturn.
“Part of his story was buying real estate that will always be valuable because of its location,” Dobusch said. “Yet that doesn’t mean that it will always be profitable.”
The complexity surrounding Signa’s finances reflects Benko’s investments outside the holding company, limiting insights into how much he extracted from it over the years.
An Austrian entity named after his daughter, Laura, holds the artworks for sale, according to the German newspaper Der Spiegel, but doesn’t publish consolidated financials. Another entity named after Benko’s mother, Ingeborg, has been involved in financing Signa businesses and is based in Liechtenstein, which has stricter corporate privacy laws than many other European nations.
“There may be private transactions taking place away from the public eye that will only come to light later,” said Tolu Alamutu, a senior Bloomberg Intelligence credit analyst.
Some property billionaires, such as Zara founder Amancio Ortega, are seizing on the downturn to expand their holdings, while those who previously have shifted their fortunes into other areas are reaping the benefits.
For example, the sports investments of Stephen Ross and Stan Kroenke, which include the NFL’s Miami Dolphins and the Premier League’s Arsenal Football Club, are now larger than their real estate holdings, according to Bloomberg’s wealth index.
Benko has also diversified in recent years. He bought Austrian land and forests for about €30 million in 2020, though that will do little to protect his fortune from Signa’s insolvency.
“They thought the music would keep playing for a lot longer,” Alamutu said. “It didn’t.”