Finance  ·  Distress

Signa Holding Selling Its 50% Stake In Chrysler Building

Amid insolvency proceedings in Europe, the Austria-based developer is scrambling for cash, and so the NYC landmark is on the market once again

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An American icon is back on the market. Or rather, half an icon is.

Signa Holding, an Austrian property conglomerate mired in bankruptcy proceedings, is putting its 50 percent stake in New York City’s Chrysler Building up for sale. The news was first reported on Tuesday by The Financial Times, which cited an announcement from Christof Stapf, a Vienesse administrator tasked with winding down Signa’s vast commercial enterprise. 

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Signa currently holds joint ownership of the renowned, 1.2 million-square-foot Art Deco office tower with RFR Holding, a Manhattan-based real estate firm owned by Aby Rosen and Michael Fuchs

In a headline-making transaction, Signa and RFR purchased the Chrysler Building in April 2019 for $151 million from Tishman Speyer and the Abu Dhabi Investment Council, which had previously bought a 90 percent stake in the property in 2008 for $800 million, just prior to the onset of the Global Financial Crisis. The trade to Signa and RFR raised eyebrows due to the low sale price, which was due to complications from its expensive ground lease “taking the economics out of the deal,” sources explained at the time.  

Darcy Stacom, the CBRE (CBRE) broker behind the 2019 sale, later told Commercial Observer that the $150 million price for Chrysler was actually better than she initially expected because buyers were wary of the onerous ground lease.

The deal served as the U.S. property market debut for Signa, which was once Austria’s largest privately owned real estate corporation, carrying a portfolio valued at $30 billion.  

But the situation turned sour for the Austrian firm within only a few years after the blockbuster purchase.

Last month, René Benko, Signa’s 46-year-old founder, announced that his firm was insolvent and had begun a process in Austria that mirrors U.S. bankruptcy. 

Signa owes its creditors at least €5 billion, or about $5.5 billion in U.S. dollars, though JPMorgan estimates that Signa Group, the parent company of Signa Holding, owes up to €13 billion, or $14.27 billion, according to The FT

Sitting at 405 Lexington Avenue — adjacent to Grand Central Terminal and directly off the activity of 42nd Street — the Chrysler Building’s glittering stainless steel, ziggurat setbacks, and unique combination of chromium and nickel have made it an enduring part of the New York City skyline since its spires and gargoyles were completed in May 1930. 

At 77 stories, it was the tallest building in the world for a brief period of 11 months, until its fellow Art Deco competitor on 34th Street, The Empire State Building, topped off its 102-story antenna the following spring. 

Together, the two landmarks have dominated the Midtown skyline for nearly a century, though only one of the classic structures has weathered the ravages of time and the shifting nature of New York City economic development in a healthy manner. 

The Chrysler Building has fallen on hard times lately. 

The building’s occupancy reportedly hovers around 80 percent, according to an earlier report from CBRE, while the expensive ground lease owned by Cooper Union severely depressed the last purchase price of the property, causing the building’s value to fall $650 million in only 11 years. Ground lease rents had jumped from $7.8 million annually in 2008 to $32.5 million in 2019. Those annual rents on the ground lease are expected to hit $41 million in 2028 and reach as high as $55 million before its 2049 expiration. 

While Signa is now weighed down by floating-rate debt and under financial pressure by European regulators, RFR is not tied to its joint venture partners’ balance sheet problems. 

RFR operates the Chrysler Building and has indicated in previously reported stories that it would like to increase its ownership stake in the famous tower.  

“We wish Signa well in their endeavor to resolve the company’s issues,” said an RFR spokeswoman, as quoted by The Wall Street Journal on Nov. 29, adding that the firm would be happy to increase its stake in the Chrysler Building. 

RFR did not respond to a request for comment. 

Brian Pascus can be reached at bpascus@commercialobserver.com