CalSTRS Lands $70M Refi for West L.A. Office
By Nick Trombola January 29, 2024 12:08 pm
reprints
The general Los Angeles office market may be in some serious distress, but every now and then the light shines through.
The California State Teachers’ Retirement System (CalSTRS) has secured a $70 million refinancing loan, provided by Wells Fargo Bank, for its office building at 11755 Wilshire Boulevard on L.A.’s Westside, according to reporting by The Real Deal, which cited property records.
The majority of the loan, $51.5 million, will be packaged into a commercial mortgage-backed securities pool, which is expected to close next month, per TRD. CalSTRS used the loan to close out debt from Northwestern Mutual. CalSTRS also reportedly used $960,000 of its own funds to help pay off the debt and provide funding reserves for tenant improvements.
Neither CalSTRS nor Wells Fargo immediately responded to requests for comment.
CalSTRS’s property was 63 percent leased as of January, with average rents of roughly $60 per square foot per year, according to TRD. Kinetic Content is the largest tenant, and although its lease ends in 2026, it can opt for a five-year renewal.
Back in June, LaSalle Investment Management, which manages the property on CalSTRS’s behalf, sued one its law firm tenants, Braunstein & Braunstein, claiming that it owed $920,000 in back rent and interest. The firm had leased space at the building since 2013, but had doubled that space via an amended lease in 2018, according to TRD at the time.
Bright spots for L.A.’s office market are few and far between these days, and a wave of loan maturities is likely to make things worse before they get better. More than $13.6 billion in CMBS debt tied to L.A. office space is set to mature by 2030, with over 64 percent of that reaching maturity next year, according to an October market analysis by Avison Young. Office vacancy rates were 26.4 percent in West L.A., 21.9 percent downtown, and 21.7 percent in Mid-Wilshire in October, according to that analysis.
Nick Trombola can be reached at NTrombola@commercialobserver.com.
