Government sells buildings, leases them back, falls behind on rent

The Greek government has fallen behind on rent payments for buildings, housing ministries and other services, that it sold to private investors and then went on to rent them. It should be noted that, as part of the privatization deal, the state had also agreed to foot the bill for maintenance costs of the buildings.

According to tvxs.gr news website (link in Greek), the total amount of rent the government owes is €600 million for 28 buildings, and installments were supposed to begin in May to the tune of €30 million annually over a period spanning 20 years.

The government had sold the 28 buildings for €261,31 million –  roughly  €960 per square metre – through its Privatisation fund (HRADF), but the amount was deposited directly into an escrow account set up by the country’s international lenders at the Bank of Greece to service the country’s debt.   

Syriza lawmaker Nadia Valavani has raised the issue in parliament, demanding from Finance Minister Gikas Hardouvelis to explain how the government will find the money to pay, given that no amount has been earmarked for this purpose in the current state budget and neither the medium-term budget of 2014-2018.

Valavani says the amount is ‘significantly higher’ as the government has also undertaken the maintenance costs of the buildings. The owners of the building are only burdened “by heavy maintenance costs which could arise, for instance, from damages due to earthquakes”, she told tvxs.gr.

Hardouvelis, reportedly, did not appear in parliament to receive and answer the question submitted by Valavani, who accused him of following in the footsteps of his predecessor Yannis Stournaras who ‘never answered questions in parliament’.

The privatisation fund was set up in 2011 by the troika of Greece’s lenders – the European Commission, the International Monetary Fund and the European Central Bank – to manage the sale to private investors of the country's state assets, including the development of the site occupied by Athens’ former international airport,  the sale of numerous properties in Greece and abroad which currently house public services and embassies and state-owned hotels.