One of Berlin's prominent tourist attractions, the KaDeWe department store, has filed for bankruptcy.
The operator of the world-famous department store has filed for insolvency, as it becomes the latest victim of the crisis enveloping one of its parent companies, Signa.
KaDeWe, which stands for Kaufhaus Des Westens, opened on Berlin's Wittenberg Platz in 1907, and rapidly became one of the city's main tourist attractions, rivalling the Brandenburg Gate.
The KaDeWe Group also operates the Oberpollinger department store in Munich and the Alsterhaus in Hamburg.
Signa added the KaDeWe Group to its burgeoning real estate portfolio ten years ago, but a real estate crisis in Europe has seen Austria-based Signa recently file for insolvency itself.
KaDeWe is 49.9 per cent owned by Signa, while the remaining 50.1 per cent is held by the Central Group of Thailand.
Central Group, which also partnered up with Signa to buy Swiss retailer Globus in 2020 and Selfridges department stores in the UK the following year, said KaDeWe’s insolvency would not affect its other assets.
“Central Group remains committed to providing full support to KaDeWe and its other European luxury stores,” it said.
KaDeWe said the rents in Berlin, Munich and Hamburg were "exorbitantly high", making it "almost impossible to operate profitably in the long term".
Although the KaDeWe Group stores have performed well in recent years, since the pandemic rents have increased 37 per cent. The rents were payable to a unit of Signa.
"There is no question that the group can have a strong future with normal rents," KaDeWe chief executive Michael Peterseim said.
The three stores are not expected to close their doors and analysts said the insolvency move could enable the group to get out of expensive rental agreements.
The head of the Berlin-Brandenburg Trade Association, Nils Busch-Petersen told German radio that "KaDeWe is doing great" and "the insolvency means an effort to get out of contractual relationships that are toxic".
Signa itself has been at the forefront of the crisis in European real estate and has been trying to sell some of its assets, including the Chrysler building in New York.
Meanwhile, it has lost control of the famed British department store Selfridges to Central Group, and its other department store chain in Germany, Galeria Karstadt Kaufhof, has also filed for bankruptcy.