Chrysler Building Co-Owner Selling 50 percent Stake After Financial Woes in Europe

Signa Holding, the European real estate giant, is selling its 50 percent stake of the Chrysler Building, as it undergoes insolvency proceedings with debts that total to over 5 billion euros ($5.4 billion).

The development, first reported by the Financial Times, arrives three weeks after the company first declared insolvency in court in Vienna.

The company’s real estate holdings, which it values at 27 billion euros ($29.7 billion), spanned several countries across Europe: luxury department stores KaDeWe in Berlin and Selfridges in London; exclusive hotels in Venice and the Austrian Alps; and residential, retail, and office buildings in major European urban centers. It also co-owns New York’s iconic Chrysler Building.

Signa acquired a 50 percent stake of the building in 2019 in partnership with Aby Rosen’s Manhattan-based real estate firm, RFR Holding, which owns the other half. They paid around $150 million, according to The Real Deal. It was a considerably lower price than what its previous owners paid, due to the escalating ground rent — $32.5 million a year at the time of purchase, paid to the landlord The Cooper Union.

Rising interest rates, and construction costs have tipped Germany’s distressed property sector into crisis. Signa stopped paying the builder on one of its projects in Hamburg—the Elbtower, which was slated to be Germany’s third tallest building. According to a Reuters report, construction came to a standstill by early November, portending Signa’s impending downfall. A few days later, Signa shareholders ousted its founder, René Benko.

The company began insolvency proceedings in Austrian court later in the month. The Financial Times reports that its debts are estimated at close to $5 billion euros ($5.4 billion). The court ruled that Signa had to sell its stake in the Chrysler Building as part of its restructuring process, according to The Wall Street Journal.

When Signa plunged into turmoil last month, Signa’s Thai partner for its Selfridges acquisition, Central Group, took majority control of the upscale department stores. As for the Chrysler Building’s co-owner, RFR Holding? Sources told the New York Post that the firm had finally gained some headway on negotiations with The Cooper Union to restructure the ground lease. And then the crisis at Signa began.

Signa did not immediately respond to a request for comment.