Pacific Oak Strategic Opportunity REIT: Investor Lawsuits

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

Pacific Oak Strategic Opportunity REIT Inc., a publicly registered non-traded REIT formerly known as KBS Strategic Opportunity REIT II, is now moving toward a formal liquidation plan following significant financial distress, mounting debt obligations, and ongoing negotiations with Israeli bondholders.

In January 2026, a special committee of independent directors unanimously recommended liquidation, marking a dramatic shift after months of strategic alternatives review. As part of the wind-down, the company terminated its advisory agreement with Pacific Oak Capital Advisors LLC, replaced top executives, and engaged new asset management firms.

If you suffered losses in Pacific Oak Strategic Opportunity REIT, The White Law Group is investigating potential securities claims involving brokerage firms that may have improperly recommended this non-traded REIT to investors.

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 REIT designed to capitalize on dislocation, lack of liquidity, and government intervention in the commercial real estate market 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 a merger into Pacific Oak Strategic Opportunity REIT.

Pacific Oak Strategic Opportunity REIT – Ongoing Financial Challenges

“Going Concern” Warning

In August 2025, the company disclosed “substantial doubt” about its ability to continue as a going concern. As of the most recent filings, Pacific Oak reported $512.8 million in debt obligations due within the next year, including the Israeli bonds that could be accelerated if financial covenants are breached.

Rising Impairment Charges

Pacific Oak recorded $52 million in impairment charges in Q2 2025 due to declining market conditions and reduced projected cash flows—more than double the $21 million reported as of Q2 2024.

Strategic Asset Sales & Liquidity Measures

• 17 residential properties sold in Q2 2025

• A strategic property reclassified as “held for sale”

• Georgia 400 Center (office property) sold in July 2025 for $39.1 million, with proceeds used to repay $39.5 million in related mortgage debt

Borrowing & New Credit Agreements

• Pacific Oak borrowed $8 million from its advisor in March 2025, later increased to $10 million

• In July 2025, the REIT closed on an $80 million loan with Whitehawk Capital Partners LP, secured by land and development assets; proceeds were used to pay off outstanding Israeli Series C bonds

Decline in NAV & Secondary Market Pricing

• NAV per share (April 2025): $5.72

• Down from $8.03 (Sept. 2023) and $10.50 (Sept. 2022)

• Shares listed on Lodas Markets for as low as $1.70 per share

Suspension of Redemptions

Redemptions were suspended in July 2024, severely limiting liquidity for investors.

Strategic Alternatives Review – November 2025 Update

Pacific Oak Strategic Opportunity REIT Inc. has initiated a formal review of strategic alternatives after acknowledging a “difficult financial situation.” In October 2025, the board formed a special committee of independent directors to evaluate all available options, and in November, the committee engaged Robert A. Stanger & Company Inc. as its financial adviser.

This review follows increasing financial pressure tied to significant upcoming debt maturities, impairment charges, and persistent challenges in the commercial real estate market. The REIT has also warned about its ability to continue as a “going concern,” making restructuring, asset sales, or recapitalization likely considerations.

Pacific Oak, through its subsidiary Pacific Oak SOR (BVI) Holdings Ltd., also has outstanding Israeli bonds and is currently engaged in negotiations with bondholders. A breach of financial covenants could accelerate repayment of this debt. In August 2025, the REIT entered into a standstill agreement with the bond trustee to avoid immediate default while negotiations continue.

Earlier in 2025, former CFO and EVP resigned from the company.

Pacific Oak Capital Markets Ceases Operations

Pacific Oak Capital Markets LLC, the managing broker-dealer for the REIT, ceased operations on June 30, 2025. The firm previously wholesaled several alternative investment products, including:

• 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

Key risks include:

• Illiquidity and suspended redemptions

• High upfront commissions for brokers

• Valuation challenges and steep secondary-market discounts

• CRE market volatility, especially in the office sector

• Rising interest rates and high leverage

Broker Due Diligence Obligations

Broker-dealers must ensure investments like Pacific Oak are suitable for each investor. If your broker failed to perform adequate due diligence, or if the risks were misrepresented, you may be able to pursue a FINRA arbitration claim.

Recovery Options for Investors

If you invested in Pacific Oak Strategic Opportunity REIT and suffered losses, The White Law Group may be able to help you recover your investment through FINRA arbitration.

Call The White Law Group at (888) 637-5510 for a free consultation.
Our attorneys have offices in Chicago and Seattle and represent investors nationwide.

FAQs

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

Pacific Oak Strategic Opportunity REIT has faced severe financial pressure due to significant near-term debt maturities, declining commercial real estate valuations, impairment charges, and liquidity constraints. The company previously disclosed “substantial doubt” about its ability to continue as a going concern.

In January 2026, after months of reviewing strategic alternatives, a special committee of independent directors unanimously recommended that the REIT pursue a plan of liquidation. The company is also negotiating with Israeli bondholders regarding debt restructuring and short-term funding while attempting to maintain operations during the wind-down process.

2. Is Pacific Oak Strategic Opportunity REIT being liquidated?

Yes — the company is advancing a formal liquidation plan, subject to final board and shareholder approval. As part of this process:

• The advisory agreement with Pacific Oak Capital Advisors LLC was terminated (effective January 31, 2026).

• New asset management agreements were put in place with Westdale Asset Management Ltd. and R2 Advisors LLC.

• Senior leadership was replaced, with Brian Ragsdale appointed as president, CEO, and CFO.

• Former executives, including the chairman and CEO, were removed.

The liquidation plan is intended to wind down operations, sell remaining assets, and address outstanding debt obligations. However, liquidation does not guarantee that investors will recover their full investment, particularly given the REIT’s leverage and distressed asset valuations.

3. Can I sell my Pacific Oak REIT shares?

Liquidity remains extremely limited. The redemption program was suspended in July 2024, leaving investors unable to redeem shares directly with the company. Secondary market platforms have listed shares at steep discounts to prior net asset value (NAV) estimates.

With the REIT now pursuing liquidation, any potential investor recovery will likely depend on:

• The proceeds realized from asset sales

• The outcome of debt negotiations with bondholders

• The priority of creditor claims

Investors should not assume they will recover their full principal investment.