By Eric Kalis of GlobeSt.com

Thursday, March 26, 2009 -  Even as businesses and governments downsize and the real estate market swoons, some South Florida churches are growing and acquiring properties. The churches--some with mega-congregations, others with less than a 100 members--are taking advantage of the decline in real estate values to buy land and buildings for expansion.

"When people are in trouble they need God more than when they prosper," says Mani Maken, president of West Palm Beach-based the Maken Group. "After 9/11 happened, everyone got scared and churches were packed. That slowly faded away, but now people are losing jobs and don't know where they can go."

A need for bigger churches and more land has led in part to at least a half-dozen major South Florida acquisitions by religious groups in the last three months. Maken, who says he is contacted weekly by local church officials looking to buy properties, helped Signs of Life Christian Church acquire a 216,342-square-foot Miami-Dade warehouse on 19 acres for $14 million. The church, whose membership has grown from 6,000 to more than 7,000 people since late 2007, will relocate from its current home in Hollywood after converting the 33-year-old warehouse into a sanctuary.

Signs of Life will buy the property in two phases from developer Jose Boschetti, Maken explains. Boschetti, a condo converter who embarked on several projects in South Florida in recent years, still owns about 53 acres of vacant land surrounding the warehouse. The church agreed to pay $7.2 million for an additional nine acres at 600 NE 215th St. in unincorporated Miami-Dade County by the end of 2010. Church leaders did not return calls seeking comment.

The deal turned out to be a blessing for the prosperous church and a struggling developer who got caught up in the condo conversion crash. "The price became right for the seller, too, because he was in trouble," Maken reveals. "If the market was not a factor he would have developed the site."

Flush with cash from donations and the surging membership, Signs of Life obtained a $13 million mortgage from US Century Bank for the acquisition. The church's 1800 N State Road 7 facility in Hollywood was used as collateral for the loan, which had a 93% loan-to-value, according to Carlos Villanueva, a partner in the Miami law firm Villanueva Bajandas & Fitzgerald.

While lenders are shying away from just about any real estate deal in the current economy, Signs of Life has the assets and financial stability to qualify for a loan, says Villanueva, who spent a year negotiating the terms of the acquisition and financing for the church. "In today's market we are seeing these organizations come in and have good financial resources that a lot of buyers don't have," Villanueva explains. "By and large you will see this type of institution have a strong cash position, unlike other potential buyers. Lenders also have cross-marketing opportunities by having a large congregation to sell their services. It wouldn't surprise me to see a bank try to cross-sell checking accounts and savings deposits" to church congregants.

Even in good economic times, some lenders avoid financing deals with specialty borrowers such as religious organizations and other nonprofits groups. "Most banks shy away from churches," Maken says. "They either have not done it and are afraid, or because when a church is in default it is difficult for the banks to go after anybody."

In the Signs of Life loan, US Century Bank followed its standard lending criteria without focusing on the borrower's affiliation, says bank spokeswoman Ileana Portal. "What we look at is the loan," Portal explains. "We have a process in place to determine if the borrower has credit-worthy income, regardless of whether it is a religious or educational institution. If the loan is good for us and good for the customer" the bank will issue it.

From warehouses to former recreational buildings, religious groups have purchased diverse types of properties. Strong Tower Ministries of Fort Lauderdale, a non-denominational evangelical church, paid $1.7 million for a 30,524-square-foot ice skating rink at 3363 N Pine Island Road in Sunrise. A person who answered the ministry phone said the church plans to convert the building into a sanctuary. Strong Tower financed the deal with a $1.5 million mortgage from the seller, Arvin Grabill of Boca Raton. Strong Tower Ministries president Courtney Fraser did not return calls seeking comment.

In Hollywood, two religious groups were involved in what is basically a sale-leaseback of a church property. Hermon Seventh-Day Adventist Church in Hollywood in late December paid $950,000 for four properties at 6114 Fillmore St. The seller was Douglas Lovins, a pastor at Westside Christian Assembly. Westside provided financing for deal, which includes a church building shared by several congregations, a rental house and two vacant properties, says Kenol Aris, executive director of the Hermon Community Services Center. Westside will rent the church building on Sundays for five years at the same rate that Hermon, the former tenant, was paying, Aris says. Hermon, which has 80 members, plans to build offices and a banquet hall on the vacant parcels, Aris said.

"Our church has been operating since 2000 and we don't have a large attendance," Aris explains. "But by the grace of God we have such dedicated members that they turn to friends for help. Other Adventist churches help us any way they can."

Whether they have 80 members or 7,000-plus, religious groups are making acquisitions--and making expansion plans--despite the struggling real estate market. "Given the difficulties families are facing, clearly the general population is turning to a more spiritual-based life and seeking God," Villanueva says. "I don't think it is short-term. Countrywide, churches for years have been increasing memberships, especially non-denominational churches like the one we were involved with. That type of church has been growing by leaps and bounds."