Fitch Ratings downgraded four classes of MSBAM 2016-C32, with negative outlooks, citing increased loss expectations. The largest increase in loss expectations is tied to 100 Hamilton, an office property in Palo Alto, CA, which previously served as Palantir's headquarters.
Palantir is currently occupying the property and paying rent through April 2027, four months after the loan's maturity. Fitch's 'Bsf' rating case loss of 22.8% for this property reflects a 9.25% cap rate and a 30% stress to the YE 2023 Net Operating Income due to above-market rent.
The increased probability of default is attributed to anticipated refinance challenges given the lease expiration around the time of loan maturity. This situation highlights potential financial exposure for Palantir related to its past real estate commitments.
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