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Repurposing Real Estate

April 28, 2023 by Brian Dolehide

Over our past 25 years of working with faith-based properties, AD Advisors (AD) has seen beautiful, iconic buildings disappear because a Dioceses or Religious Institute no longer had a use for the building.

Before you consider going down the path of selling or deconstructing your building, consider having a highest and best-use study done to see what options might be available for your property. AD uses an eight-step process when we look at this study. These steps include:

1. Historical Usage
2. Capital Expenditures
3. Financial
4. Environmental
5. Height Restrictions
6. FAR (Floor Area Ratio)
7. Municipality
8. Market & Competitive

Each area should be studied and evaluated to ensure that you look at the property today, tomorrow, and in the future. You may discover a better outcome that could provide the following:

• Ongoing support of your mission.
• Protection of your legacy and land.

We do not have time to cover each area in detail, but we will touch on each section in the graphic to the right.

Historical Usage: Historical use and impact assessment looks at how to enhance your property's future use and value. During the highest and best-use planning process, you look at the positive historical stewardship of the property and residents and the intended future care of its residents. In addition, historical data provides answers to the following:
• Original acquisition and use throughout history
• Property alterations, enhancements, and occupancy totals
• Building re-use over the years
• Stages of building growth and deconstruction

Capital Expenditures: Analyzing historical, present, and future capital expenditures provide a glimpse into the need for the highest and best-use decision-making. Capital expenditures help drive some of the final decisions when it comes to evaluating the highest and best use and examines:
• The intended use
• Financial feasibility
• Is net present value (NPV) greater than zero?

Financial Analysis: Understanding the economic feasibility of the property will help determine short and long-term financial viability. Some of the documents included in evaluating financial feasibility include:
• Budgets
• Profit and Loss
• Operating expenses

Environmental impact: Knowing what your environment entails will identify liabilities and obligations associated with your property. Areas to study:
• Soil or groundwater contamination
• Contamination that migrates to the property from surrounding properties
• Presence of hazardous building materials
• Ensuring compliance with environmental regulations
• Review of public records
• Climate risk
• Carbon emissions
• Energy consumption
• Water usage, waste, and pollution

Height Restrictions: Height restrictions assesses the reasonably probable and legal use of improved property, physical possibilities, and financial feasibility allowable by the municipality that reviews:
• Height limitations permissible by law, zoning, and other land use regulations
• Building height - the physical condition of the soil and foundations for maximum use possible
• Height limitations based on materials, i.e., wood frame, cement, and steel, dictate the actual height
• Life safety conditions, i.e., stairs, elevator, wood versus concrete, etc.
• Financial feasibility
• Maximizing height to optimize the intended use of the potential land

FAR (Floor Area Ratio): FAR is needed to calculate what "bulk" can be built on the designated area by using a formula. The floor area ratio affects the volume, shape, and spacing of buildings on the land, providing information that includes:
• Total buildable area in terms of square feet
• Floor area of each story of the building
• Gross floor area of the building

Municipality, Zoning, and Utilities: Each intended highest and best use is explored for the viability of municipal, engineering, life safety, neighborhood, and approval process. This area covers multiple steps used to examine the highest and best use. Examples of a few of the steps covered:
• Proposed plan Permissibility
• Community planners' opinion
• Zoning ordinance and district impacts
• Neighborhood associations and strategy
• Pre-application for materials
• Rezoning application materials
• Staff-level strategy
• Zoning variances required
• Conditional use permits required
• Utility permits process
• Necessary county or state road approvals
• Landscape requirements
• Land subdivision, PD, or PUD required

Market Study and Competitive Landscape: Exploring the viable market sectors and competitive landscape for today and in the future provides valuable information for options. Outcomes determine if the highest and best use is:
• Legally permissible
• Physically possible
• Financially feasible
• Most Profitable

We have outlined a detailed study. However, when looking at property, AD always considers the highest and best use of properties through a study like the one discussed above or a short, high-level evaluation.

If you want to learn more about how AD approaches the highest and best-use studies, please get in touch with us at, or call 630-606-9000.

About AD Advisors: The AD team has over 25 years’ experience working with Catholic real estate, senior housing and/or non-profits. AD is passionate about preserving the mission, legacy, and heritage of the clients we work with. We are proud to be a participating member of CCFM.

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