Torrance refi is office debt's selective clearing trade

Greater Los Angeles office vacancy stood at 25.3 percent after the second quarter, so the latest office loan in the market is best read for where it did not go. Related Companies and Cruzan secured a $64.7 million refinancing of the Torrance, their eight-story, 301,000-square-foot Class A building at 21250 Hawthorne Boulevard in the South Bay, with Waterfall Asset Management and Delaware Life providing the debt. Yardi Matrix pegs the property at 93 percent occupied, with a tenant roster that includes Morgan Stanley, All Nippon Airways, Compass California and Unio Health Partners.

Commercial Observer reports the financing, which Newmark's Jordan Roeschlaub, Nick Scribani and Chris Lozinak arranged; Related and Cruzan acquired the 1988-vintage tower from Stream Realty Partners for $106.8 million in 2017. The new loan runs about 9 percent larger than the $59.2 million refinancing they secured in 2022, and at roughly $215 a square foot in proceeds it refinances an asset that has held its occupancy through the cycle.

The deal is a further test of the pattern this publication has tracked: office debt returns only after the trade has priced. Los Angeles remains deeply bifurcated, with the 25.3 percent overall vacancy nearly unchanged from year-end 2025 while trophy properties ran 13.5 percent vacant, according to Newmark research. The Torrance's vacancy, roughly 7 percent, sits at or below that trophy reading, and the South Bay has also benefited from the aerospace and defense demand that supports office and industrial leasing there, according to the Commercial Observer report — a demand driver an underwriter can point to.

The refinancing wall is turning into a filter, and capital exists for buildings with intact rent rolls and a submarket story. No one is paying these lenders to take conversion risk when the income is already in place and the refi simply resets the debt against that income. The loan size proves the discipline: $64.7 million is exactly the kind of ticket a manager of Waterfall's scale, which reports about $22 billion in regulatory AUM, can afford to be choosy with, and there is no reason for such a lender to chase a 25 percent vacancy market when a 93 percent occupied asset in a defense-driven South Bay submarket is available.

Owners without those attributes should expect the next conversation with their lender to look different. The office debt being written now is being justified asset by asset, even as the metro vacancy number still reads 25.3 percent.