René Benko is one of the most dazzling investors in the real estate industry. Taxpayers have already saved his department store group with a total of 680 million euros. It wasn't enough. Galeria Kaufhof is once again on the brink of collapse. Employees want clear messages.
At Galeria Kaufhof it's time to start again. The future of the last large German department store group, which was formed in 2019 from Kaufhof and Karstadt, is once again on the point. At the beginning of the week, the group had to seek rescue again in a protective shield procedure. It is the second time - and the third time in less than two years - that the company has asked for state aid.
This time they were denied him - or only offered with a high financial contribution. Group owner René Benko has refused. Insolvency in the protective shield procedure means that a company manages the insolvency itself and tries to restructure itself.
Galeria Kaufhof has been 100 percent owned by the Tyrolean real estate investor’s Signa Holding since September 2019. Benko had probably figured out a good chance that the federal government would grant him another second helping this time. He is said to have had a further 250 million euros in mind as a sum. However, this time he didn't get away with it. The risk of throwing good money after bad was apparently too great for the government. Benko was thus denied access to the state coffers - without a substantial personal contribution.
The reason is obvious: Benko has already tanked 680 million euros from taxpayers' money in recent years - evil tongues would say, sunk. In addition, more than two billion euros in debt have been forgiven. All of this could not prevent more and more group branches from being closed and employees being laid off in droves. The bloodletting continued anyway.
This time, too, severe cuts threaten. As insolvency administrator Arndt Geiwitz told WDR, only a hard core of the 131 department stores currently remaining should remain. The hopes of the 17,400 employees and their families are now resting, among other things, on an investor who has signaled willingness to take over 47 endangered Galeria branches, primarily in medium-sized cities. The managing director of the online retailer Buero.de, Markus Schön, still believes in the department store concept, as he told ntv.de. It could be the salvation for houses in cities like Bad Homburg, Fulda, Goslar and Wismar with a total of 6000 jobs.
Benko was never concerned with running a department store, but only with real estate, Left Party leader Martin Schirdewan said this week. "The public sector must not reward billionaire Benko's real estate speculation with further aid." Instead, the state should reclaim the millions already paid out.
The question is who is to blame for this "death by installments", as the Frankfurt economist Volker Brühl calls it in an interview with ntv.de? Is it the crises - first the pandemic with the lockdowns, followed by inflation and customers' reluctance to buy? Or has the department store business model simply become obsolete, as many say, and owner Benko actually failed to come up with new ideas that could have secured the future of the department store chain?
There is no easy answer. But the fact is: the department store empire is no better positioned today than it was when Kaufhof and Karstadt were merged. The many hundreds of millions of euros obviously did not bring the results that had been hoped for. Trust in Benko as an entrepreneur has suffered. A successful restructuring would have to look different "Ownership obliges", quoted the "Süddeutsche Zeitung" Stefanie Nutzberger, Verdi board member this week. "The question is: Can we take Mr. Benko and his ideas about the department store of the future seriously, or was that just a fuss about the purchase of the company and the existing real estate in recent years?"
Benko's latest call for a financial injection from the state is also perceived as brazen because the billionaire real estate investor could raise the necessary funds himself. Galeria Kaufhof has bled dry financially. According to the Federal Gazette, the department store giant accumulated a loss of a good 620 million euros last year. On the other hand, the Benkos real estate transactions of the Signa Group recently brought hefty profits.
According to the balance sheet, the holding company has equity of 4.6 billion euros. In the event of operating losses, high reserves would therefore be available, writes Business Insider. "In view of Signa's high equity ratio, the question arises as to whether there is a need for state aid," the site quoted accounting expert Carola Rinker as saying.
Investor Carsten Maschmeyer sharply criticized the owner of the ailing department store group in the ntv.de interview. For him "it was about grabbing the fillet pieces like the Berlin KaDeWe or selling them on at high prices," said Maschmeyer. Galeria Karstadt Kaufhof "received state aid of almost 700 million euros in an irresponsible way." In contrast to Lufthansa, the group has not yet repaid them.
The alarm bells are ringing at the Verdi union. Has Benko really contributed enough to the survival of the last large German department store group and its employees? And what happens when the taxpayer stops feeding Benko's empire? Anger and disappointment among the employees are great, said Verdi boss Frank Werneke on Tuesday. You would have "invested millions of euros in Galeria Karstadt Kaufhof for years" by waiving your salary, criticized Verdi board member Nutzberger. "The employees have clear expectations. Firstly, additional money must now go into the company. There are clear expectations of the owner." Colleagues in the 131 department stores wondered where the owner was in this "existentially extremely threatening situation for 17,400 people and their families"?
How to proceed is open. Requests from ntv for a statement have so far been unsuccessful. René Benko "didn't keep his promises to invest extensively in the houses," criticized Verdi. The question is: "Where is René Benko now? In any case, he does not face the employees." By Friday, Verdi had no further information either, as the union ntv.de confirmed.
One can only speculate about the reasons why Benko avoids the public. It could have to do with his legal problems in Austria. A search took place in his Signa holding company in mid-October. Authorities suspect him of having offered a top Treasury official a job at Signa in order to influence a tax audit. In addition, Benko is accused of bribery for alleged donations from real estate entrepreneurs. The trial begins in November in Vienna. As reported by "Der Spiegel", among others, the German financial supervisory authority (BaFin) is now also targeting the controversial investor's business.
The billionaire's reputation has suffered in recent years. Some ask: How bold can an entrepreneur be? The Others: Is this man just a flinger who's fooling everyone? So far, however, this has apparently not damaged his self-confidence. According to the "Süddeutsche Zeitung", just two days after the searches in his Vienna offices, there was a tour for investors through Berlin projects, in which Benko was connected via video call. Benko boasted the words: "I have never lost a single cent on a single investment," the newspaper quoted an unnamed participant as saying. "He's a really good seller," commented the investor.
But it's not just about the image. Benko's business model also raises questions today. In the low-interest phase, money was cheap for real estate entrepreneurs like Benko. However, Corona has put pressure on rents in the industry. At the same time, interest rates on loans are rising. Signa should also feel this. According to "Handelsblatt", Signa Holding's profit in 2020 was 800 million euros. According to Busness Insider, the holding company is said to have “only” generated an annual surplus of over 570 million euros in 2021. So the crisis is leaving its mark. Observers warn: Benko and his business could still turn out to be a cluster risk for the lending banks.
