The nationalization of Icelandic banks, Landsbanki and Glitnir, and the subsequent delivery of their balance sheets could affect certain U.K. CMBS transactions, according to a Barclays Capital research note published today, .

The placing into administration of the U.K. operations of Kaupthing, another Icelandic bank, has already caused significant problems in the last few days. Kaupthing called in loans to Robert Tchenguiz, triggering a sale of his equity interests in pub company Mitchell & Butlers and supermarket Sainsburys

Barclays analysts also expect Icelandic investor, Baugur, to feel this knock-on effect. Baugur owns retail shop House of Fraser, which has 65 department stores in the U.K. as well as a number of other retail fashion chains. 

“Baugur could be forced to sell its interest in these chains as a result of financial problems related to its corporate bank funding,”  Barclays analysts wrote. “If this happens, it could affect the chain's short-term ability to operate as there would be uncertainty about the strategic intentions of the new owners.”
The CMBS transactions with exposure to Baugur-owned retailers, based on Bloomberg data are: House of Fraser in Opera Lakeside, Opera MetroCentre and Eclipse 2006-4; Karen Millen in the Opera MetroCentre and Epic Culzean deals ; Coast in the DECO 15 - Pan Europe 6 deals;  Oasis in the  Opera Lakeside and DECO 12 - UK 4 deals; Principles in the Opera Lakeside, DECO 12 - UK 4, and Windermere XI deals;  Warehouse in the  Opera Lakeside, DECO 12 - UK 4 and Prominent 2 deals; and Jane Norman in the Opera Lakeside, DECO 12 - UK 4 and Windermere XI deals.
However, Barclays noted that, in most cases, the exposure of each tenant to transactions was small except in the case of some deals, such as Opera Lakeside, where there was some concentration risk as centers have tenant exposure to both the House of Fraser as well as a number of other Baugur-owned chains.

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