My intense week of learning

In June I was in Newport, Rhode Island, on the campus of Salve Regina University, to complete the second part of the Historic Real Estate Finance class put on by the National Development Council, with support from the 1772 Foundation and the National Trust for Historic Preservation (you can see pretty pictures of the Newport homes here and here).
The first class was intense. We spent the week learning developer math (calculating debt service, net operating income, market caps, and debt coverage ratios), cranking out pro forma sheets for actual projects, and plugging incentives such as the rehabilitation tax credits into project problems. What we learned early on as a class is that development, especially when it comes to historic buildings, carries a great deal of risk. While one project that goes right means positive cash flow to a developer, a project that goes wrong can put a developer under.
We also learned that revenues post-rehabilitation rarely match expenses going in pre-rehabilitation; hence, the need for incentives to help close the financing gap.
The first class was intense. The second class was brain damage, as the instructors mixed the math and story problems with a generous helping of New Markets Tax Credits learning (although, to the instructors’ credit, I left this class truly understanding, for the first time, how NMTCs work and why they can be so powerful to make projects go) *and* case studies that took problem solving to new heights of depth and complexity. (Here’s Dartmoor. I had an especially good time with the Dartmoor case study, as we tried to translate subjective qualities of the players into objective dollars and cents outputs.)
Going through these two classes, I have a new-found appreciation for the tough job of being a developer of historic properties, no matter how big or small the project, and just how big a risk people take sometimes to preserve the heritage that makes all of our lives richer for having it. Thank you to the National Development Council, the 1772 Foundation, and the National Trust for Historic Preservation, for making such a valuable learning experience accessible, challenging, and thoroughly enjoyable!