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

scheduled to amortise over its term, if the Libra Whole Loan is prepaid or repaid in whole or in part, the terms
of the Swap Transactions provide that there may be a partial termination of the Swap Transaction to cause the
notional balance thereof to be reduced by the amount of such prepayment or repayment (allocated on a pro rata
basis). See “The Libra Loan and Properties”.
Therefore, in the event the notional amount of the then current Swap Transaction is greater than the
principal amount of the Libra Whole Loan, the Borrower may incur costs in terminating that portion of the
swap. As a result, amounts available for payments on the Libra Loan may be reduced.
There are certain circumstances in which the Swap Transactions may be terminated, such as a downgrade in
the rating of the Swap Provider. For a detailed discussion of these termination events, see “Description of the
Swap Transactions” herein.
Noteholders may suffer a loss if a Swap Transaction terminates and the Borrower, as a result of such
termination, does not receive sufficient funds to make all payments then due on the Libra Whole Loan or the
Borrower does not have sufficient cash flow from the Properties to pay interest on the Libra Whole Loan.
In addition, if a Swap Transaction (or part thereof) terminates early, depending on the changes in LIBOR,
then the Borrower may be obliged to make a Swap Termination Payment to the Swap Provider, which could
reduce amounts available to the Borrower to pay the Libra Loan.
The Issuer will, on or before the Closing Date, enter into the Basis Swap Transaction in connection with the
Libra Loan to hedge the risk existing by virtue of the difference between the rate of interest payable by the
Borrower under the Libra Loan and the rate of interest payable in respect of the Notes. Pursuant to the Basis
Swap Transaction, the Issuer will receive on a quarterly basis, a floating rate of interest based on LIBOR
calculated as at the reset date used in respect of payments due under the Notes in exchange for a floating rate of
interest based on LIBOR calculated on the reset date used in respect of payments under the Libra Loan. The
obligations of the Issuer to the Swap Provider under the Basis Swap Transaction (including any obligations to
pay Swap Termination Payments) rank in priority to the obligations of the Issuer under the Notes.
If the Libra Loan is prepaid in an amount that would cause the notional balance of the related Basis Swap
Transaction to be more than 5 per cent. in excess of the principal balance of the Libra Loan, the terms of the
Basis Swap Agreement provide that there will be a partial termination of such Basis Swap Transaction to cause
the notional balance thereof to equal the outstanding principal balance of the Libra Loan. Therefore, in the
event the notional amount of the Basis Swap Transaction is greater than the principal amount of the Libra Loan,
the Issuer will be required to pay interest accrued on such excess notional amount at the rate set out in the Basis
Swap Agreement (without corresponding Libra Loan interest collections).
In the event the notional amount of the Basis Swap Transaction is less than the principal amount of the
Libra Loan and the Issuer does not enter into hedging arrangements with respect to such excess, the Issuer will
be exposed to interest rate risk. As a result, amounts available for distribution on the Notes may be reduced.
Noteholders may suffer a loss if the Basis Swap Transaction terminates and the Issuer as a result of such
termination, does not receive sufficient funds to make all payments then due on the Notes. Unless a
replacement swap is entered into following such default, the Issuer may have insufficient funds to make
payments under the Notes.
There can be no assurance that upon a termination of the Basis Swap Transaction, the Issuer will have
sufficient funds available to make a Swap Termination Payment, nor can there be any assurance that the Issuer
will be able to enter into a replacement hedging transaction, or if one is entered into, that the credit rating of the
replacement swap provider will be sufficiently high to prevent a downgrade of the then current ratings of the
Notes by the Rating Agencies.
For a more detailed description of the Swap Agreement, the Basis Swap Agreement, the Swap Transactions
and the Basis Swap Transaction, see “The Libra Loan and Properties” and “Description of the Swap
Transactions” below.
Mortgagee in Possession Liability: A Security Agent or the Note Trustee (if the Note Trustee has taken
enforcement action against the Issuer) may be deemed to be a mortgagee or heritable creditor in possession if
the Security Agent or the Note Trustee physically enters into possession of a Property or performs an act of
control or influence which may amount to possession, such as submitting a demand direct to the Libra Tenants
requiring them to pay rents to the relevant Security Agent or the Note Trustee. The enforcement procedures
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