THE CHALLENGE
The church’s congregation membership had seen a slow but steady decline over the previous years. The main building had significant deferred maintenance and the church did not have the financial resources to make necessary repairs. The church struggled to fund operations and felt it best if it merged with another nearby congregation. The church wanted to leverage the capital in its real estate and repurpose into another cause in-line with the church’s mission, while also providing additional funding to the church it intended to merge with.

THE STRATEGY & OUTCOME
Our team was hired, and we valued the property 1) as existing buildings, 2) as land, with its current, low-density zoning and 3) as a future development site assuming denser zoning allowing for an attached/multifamily building. The existing zoning of single-family residential with a minimum lot size of 9,000 SF only allowed for 18 single family homes. It was determined that the highest value would be derived from the existing building. 12 months after providing the church with our initial opinion of value, the church listed the property for sale, preferring to sell to a user who was also providing for others in the community. As such, we sought out other religious organizations, non-profits and community groups. 15 months after listing the property for sale, the property was put under contract with a charter school whose mission is to educate children with level 1 and 2 autism, dyslexia and ADHD. The church took comfort knowing the property would continue to be used in service to others. Because the building was going to be preserved, we avoided a costly relocation of a cellular tower located within the church’s steeple. The buyer required additional time to close to secure its education charter, and financing. To protect the church’s interests, we negotiated several buyer deposits to be released to the church in exchange for the added time. 7 months after signing the sales contract, the sale transaction closed and our client merged with another congregation, using the proceeds from the property sale to strengthen the newly combined congregation’s foundation and further its mission.

POST ASSIGNMENT COMMENTARY
Due to many circumstances out of its control, the church decided to wind down the congregation and merge with another church. As part of that process, they decided to sell its property and while they came to that decision over a 12-month period, because of the property’s large size and deferred maintenance, it took us nearly two years for the property to sell. Fortunately, the church was able to stay solvent long enough for it to receive the sale proceeds and repurpose them in a way that was best for them.