The administrators of the insolvent Signa Prime Selection AG are preparing to sell the Vienna Park Hyatt hotel and its adjacent luxury retail space, including Prada’s flagship store. This move is expected to attract significant interest from investors, particularly given the current state of the European real estate market.
Eastdil Secured LLC, a prominent real estate investment bank, has been appointed to manage the sale. Industry insiders estimate bids could reach between €350 million ($361 million) and €370 million. The 146-room Park Hyatt hotel is anticipated to account for approximately half of the final sale price, with the remaining value attributed to the high-end retail spaces situated next to Vienna’s “Golden Quarter,” another Signa asset.
These properties carry a debt burden of around €155 million, secured by the German pension fund Bayerische Versorgungskammer. This figure contrasts sharply with Signa’s own 2022 valuation of €422 million presented to investors.
The sale is strategically timed to coincide with the MIPIM property conference in Cannes in March, a major event for international real estate investors. This follows a series of recent asset sales by Signa, including the Upper West tower in Berlin and a Viennese palace housing Austria’s Constitutional Court.
The dismantling of Rene Benko’s Signa empire is occurring amidst a challenging European real estate environment grappling with elevated interest rates. The rising cost of borrowing has depressed valuations, making sellers hesitant to list properties and potentially realize losses. This environment makes the sale of the Park Hyatt and its associated retail space a notable exception.
The hotel sector has proven relatively resilient in this climate. Long-term management agreements, common in the industry, provide a buffer against inflation by allowing room rates to adapt quickly to rising costs. This flexibility contrasts with the fixed rents typical of long-term office or retail leases.
The Vienna Park Hyatt operates under a long-term management agreement with Hyatt Hotels Corp., offering some of the city’s most luxurious accommodations. Its premium offerings include the 820 square meter Royal Penthouse Suite, priced at $13,200 per night. This continued operation under the Hyatt brand provides potential buyers with a stable income stream and established management expertise.
Signa founder Rene Benko is currently in pre-trial detention facing fraud allegations, which he denies. Meanwhile, Signa Prime’s administrators are pursuing multiple avenues to recover funds for creditors. These efforts include property sales, as well as seeking damages and repayments from former managers and business partners. However, the company’s intricate debt structure presents significant challenges to these recovery efforts. The upcoming sale of the Vienna Park Hyatt and luxury retail properties represents a crucial step in this complex process.
