BRIDGING LOAN TO CONVERT WAREHOUSE TO A CHURCH

Most of us are familiar with church properties being converted to apartments, offices, restaurants and sports halls. A conversion from commercial to religious use is another matter…

The Scenario

The pastors of a south London church, which was currently renting premises as their place of worship, had found warehouse premises for sale in Croydon which could be suitable for conversion to a church and community centre.

The 9,231 sq ft warehouse space was valued at 830K.

Its future valuation, with planning permission for multi-use as a church and community centre, was estimated at £1.2M. With residential planning permission it would sell for upwards of £2M.

The church were able to put down £1.3M towards the purchase price. The vendor was willing to give a discount and sell for £1.87M if the church were able to move quickly. We were approached by one of the pastors to secure bridging finance.

The problem with finding a suitable lender for a church is the issue of “reputational risk”. If the lender should ever need to repossess the property it would not make a good headline in the local paper.

The Solution

We have worked with a number of churches in the past, and with the exception of those managing an estate of historic properties have found that most of them have strong financial support and a history of paying good rents.

We matched our church clients with one of the few specialist lenders willing to advance a bridging loan to a charity. A bridging loan of 540K would allow them to purchase the premises and apply for D1 non-residential institutional planning permission.

As soon as planning permission is granted they will be able to refinance with a commercial mortgage and their future will be secure.