Millions on fishy rental deal

2014-12-09 00:00

PIETERMARITZBURG’S most expensive state-leased building costs the taxpayer nearly R1,5 million a month at over R500 per square metre.

The lease is part of a rental legacy that has been steeped in controversy.

Capital Towers was formerly named Trizon Towers, which was at the centre of an unresolved corruption investigation into public spending.

When the Capital Towers lease expires in 2016, the Health Department would have channelled over R175 million into the multi-storey building, which was once a hotel but now houses department staff.

A Witness investigation revealed that official department records reflect the price per square metre of Capital Towers office space is about R530, while the market value for the grade and location of the structure is R100 per square metre.

This rate soars above that of office space across the province, with premium space in Umhlanga Ridge ceilinged at R160 per square metre.

According to official documents supplied by the department during a parliamentary reply, the lease for Capital Towers was signed in 2006 for a hired area of 2 479 square metres — costing R1 464 616,24 every month.

This building makes up 20% of the department’s total monthly rental bill — dwarfing the individual costs of the other 50 sites on its tab.

Delta Fund Property, the owners of the building, rejected claims that the rental was overpriced.

They said the hired space amounted to 13 484 square metres, placing their current rental price within industry norms at R108 per square metre.

The 10 000-square metre rental floor space discrepancy between the owner and department’s figures remains unexplained almost a week after questions were posed to the department.

This comes after it was reported that the provincial government spends nearly R280 million per month on renting office space for public servants.

The grey slate-clad building made headlines in 2012 when political parties cried foul over the fact that the department was locked into a 10-year lease.

The iron-clad agreement had been signed by then health head Busi Nyembezi, who still has corruption charges pertaining to the department’s awarding of tenders pending.

Now almost three years later, the outcome of a publicly announced investigation into her conduct remains unknown.

Health MEC Sibongiseni Dhlomo purportedly refused to set foot in the building, which was described as a blight on the department’s good work.

Delta Fund Property is understood to have acquired the building long after the controversial lease was signed.

In response to questions posed by The Witness, it said the multi-storey building has floor space of 13 484 square metres, which would put the price per square metre within industry norms.

Spokesperson Morné Reinders rubbished any insinuation that the monthly rental amount had been inflated.

“Delta strongly refutes any suggestion that the rental is overpriced.

“As a JSE-listed fund, I’m sure you appreciate the company is ever cognisant of its responsibilities towards its funders, investors and good corporate governance in general,” he said.

Spokespeople for the Health and Public Works departments did not respond to questions on the matter.

• jeff.wicks@witness.co.za

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