(Bloomberg) — Central Group has sharply reduced the rent it pays to Signa Prime Selection AG for two German department stores, people familiar with the matter say. The move highlights the extent to which Signa has relied on rental terms to drive up property prices — and how much those prices have changed since the Austrian conglomerate collapsed late last year.

The Thai investor, who wanted to take over several properties and retail units from Signa, is now paying a market rent for the Oberpollinger in Munich and the Alsterhaus in Hamburg, said three people who wished to remain anonymous, citing confidential discussions.

Central will pay an annual rent of around 15 million euros for Oberpollinger, about half the previous amount, said two of the people informed. The rent for the Alsterhaus was reduced to around 7 million euros.

The leases for the two buildings were signed in 2013, before Signa took over the properties, but over the years, payments have increased due to automatic price increases, said one of the people familiar with the property, pushing prices well above going rates.

A spokesman for Central Group declined to provide specific figures, but confirmed that “rents have been reduced to a sustainable level.”

The renegotiations were the result of bankruptcies related to retail stores and properties jointly owned by Signa and Central. Signa had previously separated the retail business from the underlying properties, allowing it to increase property values ​​through rent increases. Since Signa’s collapse, Central has taken full control of the retail business, known as KaDeWe Group after the iconic Berlin department store, while some properties still remain in the hands of Signa’s bankruptcy estate.

While the reduced rent payments could give the luxury department stores room for greater profitability, by forcing Signa Prime’s insolvency administrator to adjust valuations, they could also dent creditors’ hopes of getting their money back. The financial impact of the updated contracts has been factored into Signa Prime’s restructuring plans, the insolvency administrator said in a July 15 report to creditors.

A spokesman for Signa Prime’s insolvency administrator declined to comment, saying the insolvency was a private proceeding.

In addition to purchasing the property used by KaDeWe in Berlin, the Central Group has also acquired a majority stake in the operating company of the London department store Selfridges. The Saudi Public Investment Fund has offered to buy out Signa’s 40 percent share in the property, of which Central holds 50 percent.

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