A $14 Million Office Building, a Sale-Leaseback and an Immigrant Congregation

• The Ethiopian Evangelical Church in Toronto has bought a two-storey office building at 555 Ellesmere Road.
• The price was $14 million, or $369 per square foot.
• The seller, ABM College, keeps part of the building under a sale-leaseback.
• The congregation mainly serves Ethiopian- and Eritrean-born Christians.

An immigrant congregation in Toronto has become a commercial landlord as well as a property owner. CoStar reported that the Ethiopian Evangelical Church has bought an office building from ABM College.

The church, a Toronto-based congregation serving mainly Ethiopian- and Eritrean-born Christians, bought the two-storey office building at 555 Ellesmere Road for $14 million, or $369 per square foot.

The deal was structured as a sale-leaseback. ABM College, the seller, keeps occupying part of the building after the sale, which means the church starts out with a tenant paying rent. CoStar did not report brokers, quotes or plans for the building.

The purchase is a notable step for a congregation serving immigrants. Buying an income-producing building rather than a purpose-built church can help a congregation carry its mortgage and gives it room to grow into the space over time. A sale-leaseback can suit the seller too, since it releases the value of the building while allowing it to stay put.

Many Caribbean congregations abroad, in cities such as Toronto, London and New York, began in rented rooms before buying buildings of their own. The Ethiopian Evangelical Church deal shows one smart way to do it: buy a commercial building with a tenant already in place, so that rent helps pay for the property. Diaspora congregations, and diaspora investors who back them, should look closely at zoning, the length and terms of any leaseback and the cost of adapting the space for worship. They should also plan for the day the tenant leaves, since the rent that helps carry the mortgage will stop with it. The same thinking applies to congregations in Kingston, Montego Bay or Mandeville looking at commercial buildings. Done well, a building like this can become a lasting asset for the community.

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