Austrian real estate owner's problems worry investors.

VENA: The Austrian real estate group that co-owns the iconic Chrysler building in New York City has warned of an imminent "restructuring" that has drawn attention to several dangerous projects and the wealthy merchant behind the company. René Benko, one of Austria's richest men, with a net worth estimated at $6 billion by Forbes, has turned his Signa Group into a real estate giant since its founding in 2000.

But as the sector has faced rising lending costs and rising material prices, more real estate developers are filing for bankruptcy. Several Signa projects, including a high-rise building in Germany, have been put on hold, making investors nervous about their money. Confirming its troubles, Signa announced last week that Benko was stepping down from its board as the group prepares a "plan for the necessary restructuring steps" by the end of November.

"A perfect environment for Benko, who took out dizzying amounts of loans without shame. Sustainability didn't play a role, "

Die Presse wrote in its editorial this month.

Benco began his real estate career in 2000 after founding Signa. Early in his business career, he converted destructible attics into retail spaces before leaving school. Initially, one of Signa's first purchases was a department store in Innsbruck, which Benko turned into a modern shopping center.

Benco later added the Chrysler building and the KaDeWe shopping gallery in Berlin to the company's portfolio, as well as expanding into media and other sectors.

But Signa is in trouble. Thailand's Central group announced this month that they have gained control of the historic British department store Selfridges, formerly owned by Signa.

The future of another Signa project, the redevelopment of the Alte Akademie in Munich, a former Jesuit college to be turned into an office and residential complex, is also uncertain. Credit Rating Agency Fitch has already downgraded the credit rating of the Signa Development unit after the company said it was "facing challenges with its liquidity." In addition, the online arm of Signa Sports United has initiated bankruptcy proceedings for several of its affiliates and decided not to list its shares on the New York Stock Exchange to cut costs.

Signa did not respond to AFP's requests for comment. Signa Enterprises has been criticized in the past. Germany's main department store chain Galeria Karstadt Kaufhof, which Signa acquired in 2019, declared bankruptcy in 2020 during the coronavirus pandemic, and earlier this year the chain decided to close 52 stores.

In 2020, Benko testified before an Austrian parliamentary committee investigating wide-ranging allegations of corruption following the disclosure of the so-called Ibizagate scandal that rocked Austrian politics. He has been asked about his ties to several high-profile conservative and extremist political figures, but no charges have been filed against Benko in the case. The scandal erupted in 2019 when a video showed the former leader of a far-right party offering public contracts to a woman posing as the niece of a Russian oligarch in exchange for help with his election campaign.

In another case, Benko received a 12-month suspended sentence in 2012 in an Italian tax case after a court found him guilty of bribery for handing 150,000 euros to former Croatian Prime Minister Ivo Sanader to interfere with Italian tax authorities.