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Rene Benko’s Signa files for insolvency
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Rene Benko’s Signa forced to sell stake in Chrysler Building
Co-owner RFR Holding has expressed interest in the past
A crisis is creeping up on the Chrysler Building.
An Austrian court is forcing a sale of Signa Holding’s stake in the landmark Midtown Manhattan property, the Wall Street Journal reported. The mandate for Rene Benko’s firm comes after it filed for insolvency last month.
Benko’s company is believed to hold a 50-percent stake in the 77-story office tower. Benko and Aby Rosen’s RFR Holding purchased the iconic property in 2019 for roughly $150 million, a discount from expectations attributed to the pricey ground lease.
When Signa declared insolvency several weeks ago, a spokesperson for RFR said the company would be happy to increase its stake in the Chrysler Building should Benko need to reduce its exposure.
The commercial property market — particularly for office buildings — is suffering through challenging times due to high interest rates and the work-from-home movement, creating questions of what Signa’s stake could be worth.
The Chrysler Building’s ownership is complicated, divided between the building and the land at 405 Lexington Avenue. Cooper Union owns the land, for which RFR and Signa are paying an annual rent of $32.5 million to lease. The rent is scheduled to increase to $41 million in five years, according to Cooper Union’s financial documents.
The building’s ownership has been looking to renegotiate the terms of the ground lease since acquiring the property, as the combined cost of the rent and what the building owes in property taxes (Cooper Union is tax exempt) is expected to hit $67 million by the end of the decade.
RFR and Signa have also explored repositioning the Chrysler Building, planning to add windows and redevelop the retail portion of the space after clearing out some of the smaller retail operators in the arcade. Plans to convert part of the property into a hotel have been scrapped due to costs.
Since Signa filed for insolvency, dozens of creditors have submitted claims to the tune of more than $1.2 billion. The company’s workforce has been reduced to single digits and assets, including a private jet, are being offloaded.
— Holden Walter-Warner
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