The way Pastor E. Dewey Smith sees it, his congregation’s move later this month into a bigger church home is a “blessing of the recession.”
“It will give us an opportunity to expand our ministry,” said Smith, pastor of Greater Travelers Rest Baptist Church in south DeKalb. “The present property is 53,000 square feet; the new one is 300,000 square feet.”
Greater Travelers Rest, which had to hold three meetings on Sundays to accommodate its congregation, recently purchased the Cathedral at Chapel Hill — just 5 miles away — and will hold its first service there Aug. 30. The sprawling church campus was put on the market last year for $24.5 million after its membership dwindled. The new owners paid $17.6 million. “The recession put us in a much better position to purchase the property and do it quickly,” Smith said.
Like other commercial real estate, churches aren’t immune from the downturn in the economy. Property values are down, giving is down and some churches are finding it difficult to pay their mortgages. Or obtain loans for income-producing expansions, such as day care centers, experts say.
“Lots of projects are on hold, which means they [churches] are not generating enough money,” said Michele Battle, partner and real estate attorney with Smith, Gambrell & Russell. “I work with lenders. Most find it distasteful to close on places of worship. I’ve seen some interesting modifications in loans ... a lot of refinancing and restructuring.”
Recently, sellers have been using more creative financing to help buyers purchase churches, said Dan Simpson, managing broker at America’s Network Realty Group in Dunwoody. While the company’s focus is church real estate, it also repairs and renovates churches, Simpson said.
“There’s more owner-financed, creative financing than we have churches getting mortgages,” he said. “Those loans are difficult to come by.”
Church groups sell because they outgrow the facility or are downsizing, experts say. The main buyers are other churches, said Matt Messier and Nick McKinney, principals in CNL Specialty Real Estate, a division of Orlando-based CNL Commercial Real Estate. CNL brokered the sale of Cathedral at Chapel Hill and will market the Greater Travelers Rest property.
“One of the things that is a little bit different than a few years ago is more properties are on the market because of bank pressure and foreclosures,” said Messier. “Churches are not immune to that issue. We will probably see more foreclosures over next two or three quarters, and then more of a growth trend.”
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