Pacific Oak Strategic Opportunity REIT: Investor Lawsuits

Pacific Oak Strategic Opportunity REIT – Complaints, Lawsuits & Investor Claims

Have you suffered investment losses in Pacific Oak Strategic Opportunity REIT? If so, you may have recovery options.

What is Pacific Oak Strategic Opportunity REIT?

Pacific Oak Strategic Opportunity REIT, Inc. (formerly KBS Strategic Opportunity REIT II) is a publicly registered non-traded real estate investment trust (REIT). The REIT was designed to capitalize on dislocation, lack of liquidity, and government intervention in commercial real estate markets by acquiring opportunistic investments in discounted debt and distressed equity assets.

The REIT closed its initial public offering on November 20, 2012. In October 2020, shareholders of Pacific Oak Strategic Opportunity REIT II approved the merger into Pacific Oak Strategic Opportunity REIT.

Pacific Oak Strategic Opportunity REIT – Ongoing Financial Challenges

“Going Concern” Warning

In August 2025, Pacific Oak Strategic Opportunity REIT disclosed in its latest financials that there is “substantial doubt” about its ability to continue as a going concern. The company reported $512.8 million in debt obligations due within the next year, including Israeli bonds that may become immediately payable if the company falls out of compliance with financial covenants for two consecutive quarters.

Rising Impairment Charges

In Q2 2025, the REIT reported $52 million in impairment charges on its real estate portfolio, citing “declines in market conditions and projected cash flows.” This compares to $21 million in impairment charges in Q2 2024, signaling a worsening outlook.

Liquidity Measures

• 17 residential homes sold in Q2 2025.
• A “strategic opportunistic” property reclassified as “held for sale.”
• Georgia 400 Center, an office property, sold in July 2025 for $39.1 million, with proceeds applied to repay $39.5 million in mortgage debt.

Borrowing & New Credit Agreements

In March 2025, Pacific Oak borrowed $8 million from its advisor, Pacific Oak Capital Advisors, LLC. The loan was later increased by $2 million in June. In July 2025, the REIT entered into an $80 million loan agreement with Whitehawk Capital Partners LP, secured by undeveloped land and development properties. Proceeds were used to pay off outstanding Israeli Series C bonds.

Decline in NAV and Secondary Market Pricing

As of April 2025, the REIT’s NAV per share was reported at $5.72, down from $8.03 in September 2023 and $10.50 in September 2022. This reflects a 23.5% decline from 2022 to 2023 and a further slide into 2025. On the secondary market platform Lodas Markets, shares have been offered as low as $2.50 per share.

Suspension of Redemptions

In July 2024, Pacific Oak suspended its share redemption program, further limiting liquidity options for investors.

Pacific Oak Capital Markets Ceases Operations

Adding to investor concerns, Pacific Oak Capital Markets LLC—the managing broker-dealer for Pacific Oak products—ceased operations effective June 30, 2025. The firm was responsible for wholesaling real estate-based alternative investments such as:

• Pacific Oak Strategic Opportunity REIT
• SmartStop Self Storage REIT (NYSE: SMA)
• Strategic Storage Growth Trust III
• Strategic Storage Trust VI
• Blue Door Property I DST

Risks of Investing in Non-Traded REITs

Investors in non-traded REITs like Pacific Oak Strategic Opportunity REIT face several risks:

• Illiquidity: Shares cannot be easily sold and redemption programs may be suspended.
• High commissions: Brokers often earn 7–10% upfront fees, creating conflicts of interest.
• Valuation concerns: NAV is often updated infrequently, while secondary market prices are usually far below stated NAV.
• Market exposure: Office REITs, in particular, have struggled due to rising vacancies tied to remote and hybrid work trends.
• Rising interest rates: Higher borrowing costs reduce profitability for leveraged non-traded REITs.

Broker Due Diligence Obligations

Broker-dealers recommending non-traded REITs must ensure the investments are suitable for their clients, considering age, risk tolerance, investment objectives, and financial situation. Failure to disclose risks or perform adequate due diligence may make the firm liable for losses through FINRA arbitration claims.

Recovery Options for Investors

If you invested and have experienced significant losses or illiquidity, you may have legal options to recover your losses. The securities attorneys at The White Law Group represent investors in claims against brokerage firms for improper recommendations of non-traded REITs.

 Call The White Law Group at (888) 637-5510 for a free consultation.

Our attorneys have offices in Chicago, Illinois and Seattle, Washington, and we represent investors nationwide.

Visit our website: The White Law Group

FAQs

1. Why is Pacific Oak Strategic Opportunity REIT in financial trouble?

The REIT faces liquidity issues due to $512.8 million in near-term debt maturities, declining property values, and challenges in the commercial real estate sector, particularly offices.

2. Can I sell my Pacific Oak REIT shares?

Shares of Pacific Oak are illiquid. The company suspended redemptions in July 2024, and secondary markets like Lodas have listed shares at steep discounts (as low as $2.50).

3. What can I do if I lost money in Pacific Oak Strategic Opportunity REIT?

You may be able to recover your losses through a FINRA arbitration claim against the brokerage firm that recommended the investment if it was unsuitable for your portfolio.