1. Refinance. Why? What are the largest impediments to refinancing? Why would this be better than an outright sale?

2. List and describe the major catalysts of the housing crisis in California and the United States.

3. What is a ground lease? Why? What are the advantages and disadvantages of the three principal parties?

4. List and explain the costs associated with selling a property?

5. List and explain possible exit strategies and their relative advantages and disadvantages.

6. Relative cost of capital and ready access to equity is helpful. Why?

CALCULATIONS (50 POINTS)

After graduation, you put together a proposal and managed to purchase a building downtown for $5 million and financed the acquisition with a 70 LTV interest-only loan. Three years later, you sold the property for $6 million. Assume 70% of the property was attributed to structure and that the structure was depreciated over a 40-year period. Also, assume that capital gains are taxed at 15% and that accumulated depreciation is taxed at 25%. Also, assume a 3% sales cost for the building and a 50 basis-point prepayment penalty for the loan. What would be your net profits?