By
Bloomberg
Published
June 28, 2024
Billionaire Bernard Arnault has joined the race to buy a historic Venice hotel, one of the trophy assets put on the market in the messy aftermath of the implosion of René Benko's Signa Group.
The Hotel Bauer, located on the Grand Canal, was one of the jewels in the crown of the Austrian tycoon's real estate empire. Despite its prime location and a history dating back to 1880, the sale process has been caught up in the complex entanglements of Signa's creditors.
King Street Capital Management is handling the sales process, according to people familiar with the matter. Documents show funds managed by the credit hedge fund took control of shares in a Signa company that owns the Bauer Hotel in May.
The asset has attracted bids of more than 275 million euros ($294 million), said the people, who asked not to be identified because the information is private. The process is competitive and includes real estate firms and other investors, meaning there is no guarantee that Arnault, the founder of LVMH Moët Hennessy Louis Vuitton SE, will get the nod, several people said.
King Street tasked real estate investment bank Eastdil Secured with finding a buyer for the five-star hotel, the people said. Deliberations are ongoing and there is no certainty they will result in a deal, according to the people. King Street declined to comment, as did a representative for Arnault.
Signa Prime Selection AG, the unit that owns the site, had agreed in April to sell three Italian properties, including the Bauer Hotel, to the Schoeller Group, run by a family of German industrialists of the same name. But a fund managed by King Street exercised the right to take control of the asset after the deal was announced.
The investment required to reopen the 110-room hotel poses another complication for potential buyers. The venue has been closed for a major renovation since 2022 and work stopped last year when Signa ran out of liquidity.
It is not clear what role the Schoeller Group is playing in the ongoing bidding. Signa Prime administrators have been negotiating with Schoeller for months over claims related to a €200 million loan they provided to the unit in the months before it filed for bankruptcy. Signa Prime said it had reached an impasse on debt with the group this month.
A representative for Schoeller declined to immediately respond to Bloomberg's questions.
LMVH owns a number of high-end hotels and properties in the luxury hospitality sector, including the Cipriani Hotel in Venice. It is unclear whether the offer will be made through LVMH or Agache, one of Arnault's holdings, one of the people said.
