THE CHALLENGE
The Church’s congregation membership had been dwindling over the previous years, putting strain on finances and its ability to pay for regular maintenance of the multi-building property and to fund ongoing church operations. The church needed new capital to fund church operations and property maintenance costs. The Church’s preference was to not sell the real estate.

THE STRATEGY & OUTCOME
Our team was hired, and we valued the property 1) as an existing building, 2) as land, with its current, low-density zoning and 3) as a future development site assuming denser zoning allowing for attached/multifamily construction. Over the next two years, the church became insolvent and was forced to transfer ownership to a parent organization within the church’s same denomination, for zero dollars. The new owner decided to list the property for sale and determined that it could not wait for a rezone, and its higher prospective sale price, so we listed the property for sale at the lowest of the three values. 18 months after listing the property for sale, the property was put under contract with a buyer with plans to develop the site into low density multifamily housing. The church would not be able to remain on site. Before closing could occur though, we first had to negotiate a costly relocation of a cellular tower located within the church’s steeple. 7 months after signing the sales contract, and a 6% price reduction, the sale transaction closed, with proceeds going to the new owner, not the original church congregation that owned the property for nearly 70 years.

POST ASSIGNMENT COMMENTARY
Our first opinion of value was 22 months before the church became insolvent and was forced to shut down. Had the church decided to capitalize on the value held within its real estate asset sooner, we could have secured a partner-buyer and provided a capital infusion for the church to fund ongoing operations. The developer buyer would have had the time to rezone the property into a denser project, resulting in a higher sales price for the church and potentially designed a project that would allow for the church to stay on site, in the existing sanctuary building or a new, smaller building.