How Benko, real estate tycoon and owner of the Chrysler Building, lost control of his empire.

René Benko, one of Europe’s richest real estate tycoons, resigned on Wednesday from the presidency of Signa Holding, the real estate empire he founded, in the context of an investor revolt and a negative outlook for the sector.

The Austrian entrepreneur, owner of the Chrysler Building in New York and the British department store Selfridges, has been a major figure in the European real estate industry for more than twenty years.

Signa’s problems have been symptomatic of the effects of rising interest rates on companies that have borrowed heavily to expand. The company did not respond to requests for comment.

These are the main characters and events of this saga:

HOW DID THIS ALL START?

Born in 1977 in Innsbruck, René Benko dropped out of school and started by converting attics into rooms.

In 2000, he founded Immofina, which became Signa, benefiting from the investment of Karl Kovarik, heir to the Austrian service center.

In 2003, Mr. Benko tried to attract investors to Signa by promising on his website: “Now you can make money doing any job” and: “It has never been boring to get rich.”

WHAT DID YOU SCARED TODAY?

The group is worth 27 billion euros ($28.8 billion) and 25 billion euros in development. Its real estate division operates in Austria, Germany, Italy, Luxembourg and Switzerland.

Among the most important purchases was the headquarters of Deutsche Boerse, a German stock exchange company, in 2010, which he has since sold.

In 2011, Signa bought the famous KaDeWe department store in Berlin as part of a retail chain for 1.1 billion euros.

The group of Mr. Benko also owns Kaufhof and Karstadt, German retailers that have struggled with the rise of online shoppers.

WHAT IS THE BACKGROUND?

For years, the real estate sector in Germany and other parts of Europe has been booming due to low interest rates and high demand.

Today, rapidly rising interest rates and construction costs have halted this growth, pushing real estate developers into bankruptcy as bank financing dries up, operations are frozen and prices fall.

The upheaval comes against the backdrop of the biggest real estate crisis in decades in Germany, Signa’s most important market, where within a week sports retailer Signa filed for bankruptcy and high-rise construction was halted.

WHAT ARE THE SIGNS OF DIFFICULTY IN SIGNA?

Construction of one of Germany’s tallest buildings in Hamburg was halted after Signa stopped paying its builder, Reuters reported last week.

A few days earlier, Signa Sports United and several subsidiaries filed for bankruptcy.

WHAT DO KIMA AGENTS SAY?

This week, Fitch downgraded one of Signa’s divisions, Signa Development, to junk status.

“Other Signa Group entities have terminated projects and are facing financial difficulties due to changes in the environment of interest rates, bank financing and “valuation,” Fitch said.

“Unpaid suppliers and bank lenders of Signa’s third-party entities could contaminate and disrupt Signa Development’s projects and financing,” the agency added.

The price of Signa Development’s 2026 bond has fallen over the past two weeks.

WHO ARE THE MAJOR INVESTORS IN SIGNA?

Benko will remain the main shareholder.

Hans Peter Haselsteiner, founder of Austrian construction company Strabag, is a key shareholder, according to the statement, as is German pet dealer Torsten Toeller, according to his family office.

Ernst Tanner, chairman of the Swiss chocolate company Lindt & Spruengli, is a major investor, but did not immediately respond to an inquiry about the current state of his shares.

WHO ARE THE OTHER DONORS?

A 76-page internal filing seen by Reuters lists nearly 40 lenders and insurance companies as “investors and financial partners.” It has no date but has data from 2019.

They include Allianz, insurance company Munich Re Ergo, BNP Paribas, Austrian banks including the RBI, and some German savings banks. Allianz and Ergo declined to comment, the RBI said its commercial real estate loans were “very well secured”, while others did not respond.

In Germany, Deutsche Bank was co-manager of Signa’s 2021 bond offering, and Commerzbank’s real estate division last year became a co-investor in Signa’s space in Hamburg. Deutsche Bank declined to comment and Commerz Real said its investment was limited.

German regulator BaFin and the European Central Bank (ECB) have asked banks to explain in detail how they communicate with Signa, a person familiar with the matter said, confirming media reports.

The ECB did not comment on Signa and referred to a letter from chief executive Andrea Enria to a German parliament on Tuesday about “concerns” about real estate loans.

WHO IS THE NEW PRESIDENT?

Arndt Geiwitz, a restructuring expert known for his role in the bankruptcy cases of the Galeria Kaufhof-Karstadt department store and the Schlecker pharmacy chain.

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