Munich-based luxury retailer Oberpollinger is set to be sold because it is paying “absolute levels” of rent. And this happens at the expense of profit from sales. Oberpollinger, part of the KaDeWe Group, was involved in the bankruptcy of Signa Group of the Austrian René Benko.

Both Signa Prime Selection, which owns the property, and the KaDeWe Group store chain, which also includes Berlin’s Kaufhaus des Westens (KaDeWe) and Hamburg’s Alsterhaus, filed for bankruptcy in February. This despite the fact that the three luxury department stores had the highest sales in their history in the 2022/23 financial year: almost €728 million. Compared to 2018/19, the growth is almost 24%.

KaDeWe Group cited “extremely high rents” as the main reason for the bankruptcy. Compared to the 2018/2019 financial year, they increased by almost 37%. This makes “profitable and sustainable economic activity almost impossible,” the group says.

“He squeezed his shops with rent”

“It has long been known that real estate major René Benko squeezed his stores with excessive rents,” reports Munich’s Abenzaitung.

The publication learned that the luxury department store Oberpollinger had to pay more than two million euros in rent per month.

After analyzing the company’s annual financial statements, it was found that Oberpollinger paid rent for the 2021 financial year in the amount of 25.902 million euros, which is almost 2.16 million euros per month. And lease agreements are indexed, so they increase from year to year.

According to economic newspaper Handelsblatt, the rent for all three luxury department stores (Oberpollinger, KaDeWe and Alsterhaus) was 81 million euros in 2023. Because they indexed the leases, payments will increase tremendously by 2045, to over 112 million. euro.

With Oberpollinger’s estimated annual turnover of 130 million euros, the rent share is 20% – and therefore “absolutely on the brink of pain,” real estate expert Johannes Berentzen told Handelsblatt.

Lenders want to see the money

In this way, Signa constantly increased the value of real estate on Neuhauser Strasse. Fixed assets have a value of EUR 320.5 million. This means that the value of real estate has increased by 127 million euros over the years.

Signa’s creditors want to see money, so Signa’s assets will be sold off in large quantities. There are already properties worth several million euros on the Austrian market. Elbtower will be available in Germany soon.

According to the British real estate news service React News, preparations for the sale of the building leased to the Oberpollinger department store in Munich have been underway for some time. Several brokers would be invited to bid on the property and a price of €450 million is circulating in the market. So far, it is not entirely certain whether the property will go on the market.

The bankruptcy administrator responsible for Signa Prime, Norbert Abel, declined to comment when asked by the Abendzeitung. “Procedures are not public. The aim is to achieve the best possible and legally secure solution for creditors,” his spokesman said.

The sale of the property is considered difficult, as it is unclear what will happen next with the KaDeWe Group. Attempts to review the rent are currently ongoing. The luxury retailer is feeling pressure from Signa’s owner. When the group had to declare insolvency in 2024, it was explained that a stable and profitable business would be almost impossible due to high rents.

About KaDeWe

Kaufhaus des Westens (KaDeWe) is a luxury department store in Berlin that was founded by Adolf Jandorff and designed by architect Emil Schaudt. It was opened on March 27, 1907 at Wittenbergplatz in the Schöneberg district and is considered the most famous department store in Germany.

Kaufhaus des Westens has been expanded and rebuilt several times throughout its history. The parent company changed seven times. Since 2015, it has been part of the Central Group.

KaDeWe is currently one of the largest department stores in Europe with 60,000 square meters of retail space. The deli department has been a major attraction since the late 1920s. After an unprecedented expansion in 1978, it became the second largest department store grocery department in the world. As of 2020, KaDeWe also has an online store. In early 2024, following a series of previous bankruptcies by its parent company, Signa, the company filed for its own insolvency.