Capital and Regional has defaulted on €158m of debt used to fund its German Portfolio, 4, which is jointly owned with AREA Property partners.

In an announcement made today, the company said that the default was caused by “the failure to meet the required loan to value test to extend the loan into the second year of its extension period.”

As a result of the default notice, the loan, which is part of the Talisman 6 commercial mortgage backed securitisation, will now be put into special servicing, and a solution to the default sought.

The total debt figure of €158m, includes €18m junior debt which is owned with a joint venture partner. Capital and Regional said that any adjustment arising from this default will not have “any material effect on the company’s half year numbers.”

The rest of the German joint venture is covenant compliant with lower gearing, and that it’s assets wit longer leases, let to food retailers retain strong covenants.