Titan Europe 2007-1 (NHP) Limited - Irish Stock Exchange

RISK FACTORS
Prospective investors in the Notes should consider, among other things, the following factors in
connection with the purchase of the Notes. The following summary of certain issues is not intended to be
exhaustive. Prospective investors in the Notes should also read the detailed information set out elsewhere
in this document.
Loan Related Risks
Commercial Mortgage Lending Generally: The Libra Loan is secured by, inter alia, mortgages or, in the
case of Scottish properties, standard securities (each, a “Mortgage”) over: (a) the freeholds and overriding
leases of 285 healthcare properties, which represent 96.5 per cent. of the Cut-Off Date Securitised Loan
Principal Balance based upon the aggregate Cut-Off Date Allocated Loan Amount; (b) the long leaseholds of
seven healthcare properties, which represent 2.6 per cent. of the Cut-Off Date Securitised Loan Principal
Balance based upon the aggregate Cut-Off Date Allocated Loan Amount; (c) the part freehold and part
leasehold of two healthcare properties, which represent 0.9 per cent. of the Cut-Off Date Securitised Loan
Principal Balance based upon the aggregate Cut-Off Date Allocated Loan Amount; and (d) the freeholds of
three staff accommodation properties, which represent less than 1.0 per cent. of the Cut-Off Date Securitised
Loan Principal Balance based upon the aggregate Cut-Off Date Allocated Loan Amount (collectively, the
“Properties”). In addition, the Libra Whole Loan is secured by: (a) charges over 241 overriding leases of
which an Obligor is an overriding tenant; (b) charges over accounts into which rental income is paid with
respect to the Properties; (c) a charge over the shares in all subsidiaries of each Obligor; (d) assignations of rents
(under Scots law) or assignments of rental income (under English or Northern Irish law), as applicable; and (e) a
floating charge over the assets and undertaking of each Obligor. Commercial mortgage lending is generally
viewed as exposing a lender to a greater risk of loss than residential mortgage lending since the repayment of
loans secured by income-producing properties is typically dependent upon the successful operation of the
related property. If the cash flow from the property is reduced (for example, if leases are not obtained or
renewed or if tenants default in their obligations under the leases), a borrower’s ability to repay a loan may be
impaired.
The volatility of property values and net operating income depends upon a number of factors, including (a)
the volatility of property and property-related revenue and (b) the relevant property’s “operating leverage”,
which generally refers to (i) the percentage of total property operating expenses in relation to property revenue,
(ii) the breakdown of property operating expenses between those that are fixed and those that vary with revenue
and (iii) the level of capital expenditures required to maintain the property and retain or replace tenants. Even
when the current net operating income is sufficient to cover debt service, there can be no assurance that this will
continue to be the case in the future.
The net operating income and value of the Properties may be adversely affected by a number of factors,
including, but not limited to, national, regional and local economic conditions (which may be adversely affected
by government healthcare and/or geriatric care policies and other factors); local property market conditions
(such as an oversupply of space, including market demand); convenience, condition, services and attractiveness
of the Properties; the proximity and availability of competing alternatives to the Properties; the willingness and
ability of the owners of the Properties to provide capable management and adequate maintenance; demographic
factors; retroactive changes to building or similar regulations; and increases in operating expenses (such as
staffing and energy costs). In addition, other factors may adversely affect the Properties’ value without
affecting their current net operating income, including: changes in governmental regulations; monetary and
fiscal policy and planning or tax laws; potential environmental legislation or liabilities or other legal liabilities;
the availability of refinancing; and changes in interest rate or yield levels.
The age, construction quality and design of a particular property may affect its occupancy level as well as
the fees that may be charged for individual property use over time. The effects of poor construction quality will
increase over time in the form of increased maintenance and capital improvements needed to maintain the
property and to attract residents. Even good construction will deteriorate over time if the property managers
and/or tenants do not schedule and perform adequate maintenance in a timely fashion. If, during the term of the
Libra Whole Loan competing properties of a similar type are built in the areas where the Properties are located
or similar properties in the vicinity of the Properties are substantially updated and refurbished, the value and net
operating income of the Properties could be reduced.
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