Whoops, there goes the European CMBS neighbourhood.
Yet another of Credit Suisse’s Titan conduits is in a bit of trouble. This time it’s Titan Europe 2006-3, a CMBS deal worth €944m, and pooling properties in France, Germany, the Netherlands, Belgium and Luxembourg. The diversity of the properties covered — there are Parisian office buildings and a Berlin theatre — meant the deal generated quite a lot of interest when it was first priced in 2006, with Triple A notes over five times covered at the initial pricing talk.
Now, however, it’s not looking so hot. To wit, this Sept. 1 statement on the Irish Stock Exchange:
We refer to the loan made pursuant to a Facility Agreement dated 25 January 2006 between Luscombe Investments Ltd and Lavenbrook Investments Ltd. (together referred to as the ‘Borrowers’) and Credit Suisse International in its capacity as Original Lender and Security Agent and Titan Series Luxembourg S.à.r.l. as Luxco (Luxembourg Issuer) for the ‘Monnet Portfolio Loan.’ The loan is being serviced by Hatfield Philips International Limited (the ‘Servicer’).
This letter advises that the Borrowers were notified on 18 August 2009 that an Event of Default has remained outstanding since the fourth quarter of 2008. Clause 19.1 of the Facility Agreement (Debt Service Cover) states each Borrower must ensure that Debt Service Cover is, at all times, at least 1.00 per cent (including any rental guarantee income). The Borrower was further notified on 27 August 2009 they have 10 business days to cure or remedy such event before further action may be undertaken.
The Monnet loan is one of five on Titan Europe’s servicer watch list. Borrowers on the loan now have until circa September 6 to remedy the event of default before the rather ominous-sounding “further action” is taken.
If not, perhaps Titan Europe 2006-3 can re-remic themselves into Olympian Europe.
Related links:
Property bank-loan defaults at 6-year high – Reuters
The commercial real estate time lag – FT Alphaville