<p>[Northfield</a> schools next chapter: Christian college](<a href=“http://www.boston.com/news/local/massachusetts/articles/2010/01/04/relief_dismay_follow_sale_of_northfield_campus/]Northfield”>http://www.boston.com/news/local/massachusetts/articles/2010/01/04/relief_dismay_follow_sale_of_northfield_campus/)</p>
<p>Interesting. It looks like it will be both a christian college and great books college [Northfield</a> Campus | Northfield Mount Hermon](<a href=“http://www.nmhschool.org/northfield]Northfield”>http://www.nmhschool.org/northfield)</p>
<p>A few years ago, someone on this board insisted that NMH’s endowment was over-stated because the value of this property was placed in its endowment. I’m not an accountant, but it always seemed to me that the physical plant could not be part of the endowment. This person stated that it could be because it was no longer the physical plant of the school, but an asset. I’m interested in seeing if the endowment takes a $20mil hit. At least their income should be improved without the maintenance.</p>
<p>Timber is a very valuable asset and should be part of any large endowment. The 1600 acres just happens to be in their (former) backyard. Very conservatively, I would value the land at about $7.0M. In reviewing their portfolio, this is consistent with their current book value. In reality, you should be able to get at least 2X that from another endowment or even the state (in better times).</p>
<p>From the NMH site:</p>
<p>What pieces of property are excluded from the sale?
Excluded are the Birthplace, Round Top, and Homestead; the golf course and pool, the timberlands, 28 faculty residences, and the East Northfield Water Company. NMH is retaining 90 percent of its land holdings in Northfield.</p>
<p>What other details can you share about property retained by NMH?
In addition to the Moody legacy and other properties mentioned above, the school is retaining over 1,600 acres of timberland (see map), which we consider to be part of the school’s endowment—an important asset that will appreciate over time. With oversight by the trustees, the school has a sustainable long-range plan to manage these assets appropriately.</p>
<p>Looking back, it appears that NMH has sold an additional 5,000 acres of timberland over the last 25 years with a significant return.</p>
<p>Never knew NMH was this huge. The deal was crazy - $100,000 vs. 2 million? They could’ve donated it to this Christianity college if they wanted to make a point. Just saying.</p>
<p>It appears they essentially did “donate” the campus. The terms are a $5M investment in real property improvements, NMH continues access to the auditorium, and the legacy and heritage of the school is maintained (albeit a much more conservative one).</p>
<p>It appears NMH said if we give this to you at least pay the transaction costs. In addition, the $1.3M NMH spent in annual maintenace translates into $2,000 per student per year or $32.5M in endowment income ($1.3M/4%).</p>
<p>I can’t tell how much of the campus value, if any, was included in the endowment, but I seriously doubt it was $20M for just the campus. The school ended up retaining more than half of the property value. Even if it were $20M, the net effect would a $12.5M endowment improvement where the school would generate an extra $500K in annual income it no longer needed to spend on maintenance. I suspect the real number will be closer to $1M in additional annual income.</p>