Pacific Oak Strategic Opportunity REIT: Investigation update

Pacific Oak Strategic Opportunity REIT: Complaints and Lawsuits

Have you suffered investment losses in Pacific Oak Strategic Opportunity REIT?  

Pacific Oak Strategic Opportunity REIT (formerly KBS Strategic Opportunity REIT II), is a non-traded Real Estate Investment Trust (REIT), focused on “dislocation, lack of liquidity, and government intervention” that exists in the commercial real estate markets by acquiring “opportunistic investments” in discounted debt and distressed equity assets.  

Pacific Oak REIT, Inc. Borrows From its Advisor

March 7th, 2025: Pacific Oak Strategic Opportunity REIT reported that its operating partnership had entered into a loan agreement for $8.0 million from Pacific Oak Capital Advisors, LLC.  The loan matures in May 2025, and bears interest at a 12.0% annual rate. Pacific Oak has reported that it continues to focus on dispositions of certain office and residential assets and refinancing out existing debts. The REIT has previously extended out certain loans and refinanced certain debts into a consolidated loan that reportedly matures in 2026.

Decline in NAV

According to reports in April 2025, the NAV per share is currently $5.72  per share. The company reported an estimated value per share of the company’s common stock of $8.03, as of Sept. 30, 2023.

In December 2022, the estimated NAV was $10.50 per share, as of Sept. 30, 2022, indicating a decline of 23.5%. According to Lodas Markets, a secondary market for non-traded investments, Pacific Oak’s shares are currently listed to sell at $2.50 per share.

The reason for the decline in value, according to the company, is a significant loss of appraised value in the company’s real estate properties, which accounted for $1.86 of the $2.47 per share loss.    

Pacific Oak Strategic Opportunity REIT – Suspends Redemptions

The REIT reportedly suspended its share redemption program in July 2024.

The Risks of Investing in Non-Traded REITs

Office REITs have taken a hit due to the changing landscape of remote work. With more people working from home, the demand for office space has shifted. Companies are adopting flexible work arrangements, which might mean they need less office space or could opt to downsize their current office footprint. Reduced demand for office space can lead to higher vacancy rates in office properties, potentially impacting the rental income generated by office REITs. If these REITs have a significant investment in office properties, they could experience declining rental income and property values. 

As an investor, you should know that non-traded REITs often rely on borrowing to finance property acquisitions and improvements. When interest rates rise, borrowing costs increase, potentially squeezing the REIT’s profitability and its ability to distribute dividends to investors. This situation might make the investment less appealing, especially in a rising interest rate environment. 

Additionally, keep in mind the issue of liquidity. Non-traded REITs typically have less liquidity compared to publicly traded REITs. If you invest in non-traded REITs, you might find it challenging to sell your shares quickly, and you could face restrictions on when and how you can exit your investment. In uncertain market conditions or when the investment outlook is less favorable, this lack of liquidity can become a risk, as you may not be able to access your capital easily. 

Lastly, consider the issue of valuation uncertainty. Non-traded REITs are known for their opaque valuation practices.  As an investor, it can be challenging to assess the true value of your investment, particularly during turbulent times. 

Broker Due Diligence

Broker dealers are required to inform clients of the risks associated with investment recommendations and to ensure that those recommendations are suitable for the investor in light of the investor’s age, risk tolerance, net worth, and investment experience. Firms that fail to do so may be held responsible for any losses.   

Free Consultation with Securities Attorneys

If you have suffered losses investing in Pacific Oak Strategic Opportunity REIT, please contact The White Law Group at 888-637-5510 for a free consultation.   

The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Seattle, Washington. Our firm represents investors in FINRA claims in all 50 states.