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

Changes in Medical Practice: The method of treatment of patients changes from time to time as medical
practice changes. Such changes may require the Libra Tenants to make changes currently not anticipated, which
they may or may not be able to implement. Inability to remain current with medical practice may impact the
Libra Tenants’ business and, in turn, the Borrower’s ability to meet obligations under the Libra Whole Loan,
and further in turn, may affect the payments on the Notes.
Staff: In common with all health providers, the Libra Tenants face challenges in recruiting and retaining
qualified staff, particularly nurses. This is being countered to some extent by government initiatives to increase
the number of nurses entering or re-entering the profession. However, there can be no assurance that with
increased competition for suitably qualified staff, the Libra Tenants will succeed in recruiting and retaining
staff. The healthcare sector in the United Kingdom currently reduces staffing costs to a certain extent by
employing staff from outside the United Kingdom. However, there can be no assurance current government
policies will not change, and that it will remain possible to make staffing cost savings by employing staff from
outside the United Kingdom.
Occupancy Levels: The supply of and demand for nursing and/or care home beds in the United Kingdom
have both been reduced by, in the case of demand, the so-called ‘Word War I effect’ (a decline in birth rate
during and after World War I resulting in a decrease in demand in the 1990s for care for the elderly) and, in the
case of supply, the imposition of regulatory standards which have resulted in certain beds being closed for noncompliance
with the National Minimum Standards or (in Scotland) National Care Standards. The United
Kingdom Government Actuarial Department predicts an increase in the population over 85 years of age over the
next 30 years. However, there can be no assurance that age-specific dependency rates will remain constant as
life expectancy rises. Instead, as life expectancy rises, the number of years without dependency could rise by
the same amount and therefore, the number of years with dependency would remain constant. Falling overall
demand may be matched by withdrawal of capacity, thus resulting in sustained occupancy levels. However,
there can be no assurance that current levels of occupancy will be sustained.
Limited Payment History: The Libra Whole Loan was originated within approximately five months of the
Closing Date. As such, the Libra Whole Loan does not have a long-standing payment history and there can be
no assurance that required payments will be made or, if made, will be made on a timely basis or continue to be
made.
Recent Acquisition of the Properties: The Borrower acquired an indirect ownership in the Properties at
various times prior to the origination of the Libra Whole Loan. Accordingly, the Borrower, its affiliates and its
subsidiaries have limited experience in operating the Borrower Group and/or the Properties and, therefore, there
is a risk that the net operating income and cash flow of the Properties may vary significantly from the
operations, net operating income and cash flow generated by the Properties under prior ownership and/or
management.
Underwriting: The underwriting criteria and procedures of the Loan Arranger were applied when the Libra
Whole Loan was originated. Accordingly, U/W Net Operating Income means cash flow based on rent rolls,
and/or property operating statements provided by the Borrower and its Affiliates, as adjusted, based on a
number of assumptions used by the Loan Arranger. No representation is made that any U/W Net Operating
Income figures and the figures derived therefrom, such as U/W ICR and U/W DSCR, set forth in this Offering
Circular as at the Cut-Off Date or any other date represent future net cash flows. Each investor should review
these assumptions and make its own determination of the appropriate assumptions to be used in determining net
operating income. In addition, U/W Net Operating Income reflects calculations and assumptions used by the
Loan Arranger and should not be used as a substitute for, and may vary (perhaps substantially) from, cash flow
as determined in accordance with generally accepted accounting principles as applied with respect to the
Borrower (“GAAP”) as a measure of the results of a Property’s operation or as a substitute for cash flows from
operating activities determined in accordance with GAAP as a measure of liquidity. For example, the U/W
DSCR and U/W ICR set forth in this Offering Circular for the Libra Loan and the Properties vary, and may vary
substantially, from the debt service coverage ratios and the interest cover ratios for the Libra Whole Loan and
the Properties as calculated pursuant to the definition of such ratios as set forth in the related Loan Documents.
No representation is made as to the appropriateness or reasonableness of the assumptions used in
determining U/W Net Operating Income.
There can be no assurance that as a result of the underwriting procedures of the Loan Arranger the Libra
Whole Loan may be more likely to default which in turn could result in losses for Noteholders.
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