State rent arrears hurt property owners

State rent arrears hurt property owners

A central Johannesburg building occupied by government entities might be closed down by its owner because of failure to pay rent, Rick Curry, the managing director of property management company Curry Group, said yesterday.

The old JSE building in central Joburg.

Statistics SA and the SAPS have leases on offices in the Stock Exchange Building, off Diagonal Street. Curry said Stats SA owed R1.74 million for rent and had not paid since September 26 last year, and the SAPS owed R1.8 million, with the last payment being on November 10 last year. The owner of the building is Hostprops 85.

Government office accommodation is leased by the Department of Public Works on behalf of client departments.

Lebo Lebiya, who works at the leasing section at the department's regional office in Johannesburg, said yesterday that the department was facing challenges when it came to leases as these had been moved from the regional offices to the national office in Pretoria.

"Top management are taking time to respond in terms of giving us a mandate. It is a national issue and is beyond our control. Decisions are coming from above our level, causing serious problems," he said.
The Department of Public Works is technically under administration by the National Treasury. This is because of several bunglings on leases, including the controversial R1.6 billion police headquarters under former public works ministers Jeff Doidge and Gwen Mahlangu-nkabinde.

In a statement on November 8 last year, the department said that Public Works Minister Thulas Nxesi had a briefing with top management and described how in a short space of time after his appointment he had come to regard the whole area of lease contract management as potentially liable to controversy.

In response, Nxesi had, with immediate effect, instructed the acting director-general, Mandla Mabuza, to withdraw all procurement delegations in the department with regard to the signing and approval of all leases, as well as procurement of certain items.

The statement said an operational task team made up of property management experts would in the interim advise both the department and Nxesi regarding such requests and ensuring there were no backlogs and that service delivery routine was not compromised.

"The minister's action, among others, has been prompted by the public outcry around procurement of office accommodation and other moveable assets for client departments, and this was confirmed by the outcomes of investigations instituted by the government in acknowledgements of certain doubts and misgivings so publicly expressed," it said.

Curry said the statement by Lebiya that the department was facing challenges was unbelievable. He said the Curry Group had issued summonses against the department, which now had 10 days within which to respond.

Curry said: "We are pursuing vigorously the court action. The landlord might give us authority to close the building down. The department ignores our e-mails."

Estienne de Klerk, the executive director of listed Growthpoint, said his company did not have a huge exposure to government leases. However, he added: "Public Works is known to be a difficult client but we are resolving the issues."

Business Report


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