Sens. Elizabeth Warren and Edward J. Markey are warning that what happened with the private equity buyout of Haverhill and Methuen’s Holy Family Hospital real estate could happen with federal buildings.
Escalating and unaffordable rents played a role in the bankruptcy of the local hospitals and could confront the government if the Trump administration succeeds in selling nine federal buildings in the state, including the John F. Kennedy Federal and the Thomas P. O’Neill Jr. Buildings, two of the largest federal buildings in New England.
“Massachusetts is very familiar with how these real estate schemes benefit private interests at the public’s expense. Cerberus Capital Management, a private equity firm run by now-deputy Secretary for the Department of Defense Stephen Feinberg, and Steward Health Care executives worked hand-in-glove to sell Massachusetts hospital property to Medical Properties Trust, a real estate investment trust. While Steward and Cerberus made quick profits from the sale, the hospitals were then saddled with unsustainable rent obligations and sunk into bankruptcy,” Warren and Markey wrote in a letter to U.S. General Services Administration Acting Administrator Stephen Ehikian.
They said the two properties, to be deemed “non-core assets,” or properties designated for sale or disposal, are home to thousands of employees and more than a dozen government tenants, including the Department of Veterans Affairs, Social Security Administration, Boston Passport Agency, U.S. Small Business Administration, National Labor Relations Board and the senators’ Boston offices.
Warren and Markey asked Ehikian if his agency is considering sale-leaseback arrangements for these properties and, if so, how will it guarantee that building maintenance is improved and rental costs do not escalate over time?
The lawmakers noted the agency and, what they described as, “the so-called Department of Government Efficiency,” recently terminated 17 leases in Massachusetts including the Internal Revenue Service, Food and Drug Administration, Small Business Administration and Occupational Safety and Health Administration office in Andover.