California State Teachers’ Retirement System, among the largest pension plans in the country, secured a $70M refinance of a roughly 337K SF office building in Brentwood.

The 24-story property at 11755 Wilshire Blvd was 63% leased as of this month, according to The Real Deal, which first reported the news. The average rent at the building was about $60 per SF annually, higher than the submarket's third-quarter average of $56 per SF.

Wells Fargo Bank provided the senior mortgage. $51.5M of the financing will be bundled into a commercial mortgage-backed securities deal, TRD reported. The CMBS pool is set to close next month and will total approximately $519M.

CalSTRS has owned the building since 1996. The loan was used to pay off previous debt from Northwestern Mutual. Public records show a 10-year loan of $72.8M issued in July 2023 by Northwestern Mutual for the property. The new Wells Fargo mortgage expires in 2029.

CalSTRS also kicked in $960K toward playing off its loan and toward reserves for tenant improvements, TRD reported.

Wells Fargo issued the loan at a 43% loan-to-value ratio, TRD reported, noting that lenders in general in the current environment are writing loans at a lower LTV and requiring owners to put in more money upfront.

In 2019, the National Association of Realtors reported that about 70% of loans had loan-to-value ratios of 75% or 80%, according to TRD.

In the spring of 2023, CalSTRS was bracing for a write-down of its $52B real estate portfolio.

Its Chief Investment Officer Christopher Ailman told the Financial Times that CalSTRS is a long-term investor and didn't want to sell properties when the market was down.

“If you have long-term leases and solid debt financing, you’ll just hold,” he said. “Your office portfolio has fluctuated in value before. You’ll continue to get income.”