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
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
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,
"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."