THE CHALLENGE
This small Church based in the city was feeling the pressure from a gentrifying neighborhood. Many congregation members were getting priced out of the neighborhood and eventually stopped attending church services because of the long commute. As church membership declined, so too did the church’s ability to fund operations and maintain the building. The small building was still an appropriate size, and the church felt that it could thrive if it had more cash to make a few operational adjustments to attract new members.

THE STRATEGY & OUTCOME
The property consisted of a traditional but small church building and a small parking lot across the street. Our team was hired, and we valued both properties 1) as an existing building with excess parking, and 2) as land, with its current, 5-story-density zoning as a future development site.

The church determined the parking lot was not necessary anymore. We determined the excess land already had the best possible zoning to maximize value and would be attractive to developers for an apartment building. The parking lot could be sold and monetized to recapitalize the church’s operations. The church moved quickly and listed the property for sale 2 months later.

4 weeks later, a sales contract was signed with one of our preferred developers. The sales transaction closed 3 months after going under contract. Since the developer wouldn’t start construction right away, we were able to negotiate a lease-back of the parking lot for free until construction started. We then helped secure an inexpensive lease at another nearby parking lot.

POST ASSIGNMENT COMMENTARY
This church recognized their challenges and acted quickly, making strategic decisions to leverage the assets they did have, and converted that equity into usable capital. Since closing, the church has reinvested in itself and has seen its congregation size increase.