Barclays Capital reported that Hatfield Philips posted an interim notice today regarding the fact that ILVA, the Danish furniture retailer, is in administration and is likely to close its three U.K. shops.

One of these stores, located in Gateshead, forms part of the collateral backing the Titan 07-3X CMBS transaction. The loan secured by this store makes up 5.1% of the original loan pool. Hans Vrensen, a director and head of securitization research at Barclays, said in a report today that this could directly hit the current ratings for the£4.2 million ($8.3 million) Standard & Poor's 'B' rated class G bonds in the deal.

"This is especially the case for this transaction, as it does not have a standard liquidity facility, like most other European CMBS deals, but rather servicer advancing," Vrensen said. "Hatfield Philips is the servicer, which will need to decide whether or not to advance if the borrower defaults on the loan."

However, Vrensen added that the good location and demand for a large location should facilitate the search to find a new tenant for the space. Also, the 20-year lease agreement to ILVA's UK subsidiary is fully guaranteed by the Danish parent company for the remainder of 18 years. However, the company was sold in the summer 2007 to Icelandic company Lagerinn and it is unclear whether the original parent company lease guarantee remains in place despite the sale of the U.K. subsidiary.

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