Pacific Oak Strategic Opportunity REIT Issues “Going Concern” Warning

Investors in Pacific Oak Strategic Opportunity REIT (“Pacific Oak”), a publicly registered, non-traded real estate investment trust ( formerly known as KBS Strategic Opportunity REIT Inc.) may have FINRA arbitration claims, if their investment was recommended by a financial advisor who lacked a reasonable basis for the recommendation, or if the nature of the investment was misrepresented by the stockbroker or advisor.

Pacific Oak has expressed “substantial doubt” about its ability to continue as a going concern, according to its latest quarterly report on Form 10-Q filed with the U.S. Securities and Exchange Commission (“SEC”) for the quarter ended June 30, 2025.   Pacific Oak faces multiple challenges including debt maturities and a difficult commercial real estate market.  

 Pacific Oak closed its initial public offering in 2012, and was designed to capitalize on the “dislocation, lack of liquidity, and government intervention” that exists in commercial real estate markets, according to its website.  In 2020, Pacific Oak Strategic Opportunity REIT II shareholders approved a merger into Pacific Oak.

Pacific Oak’s real estate portfolio’s value was written down in the aggregate by $52 million during the second quarter as a direct result of “declines in market conditions and projected cash flows.”  The REIT’s portfolio remains highly concentrated in California and Tennessee, which the company noted makes it “particularly susceptible to adverse economic developments” in those region’s real estate markets. As of the end of the quarter, California and Tennessee properties accounted for 11.2% or $113.3 million; and 10.1% or $102.5 million of the company’s total assets, respectively.  As of June 30, 2025,  the company’s portfolio reportedly consisted of eight office complexes (64% occupied), a residential home portfolio of 2,078 homes (92% occupied), one apartment property (90% occupied), a hotel, and several undeveloped land and development properties. The company also confirmed it was compliant with all debt covenants as of its previous report on Dec. 31, 2024.

Earlier this year, Michael A. Bender resigned from his positions as Pacific Oak’s vice president, chief financial officer, treasurer, and secretary of the company effective, April 17, 2025.  In March 2025, the online publication AltsWire reported that Pacific Oak REIT had borrowed $8 million from its advisor. The loan was increased by $2 million on June 26, 2025.

 Non-traded REITs like Pacific Oak are generally illiquid investments.  Unlike traditional stocks and mutual funds, non-traded REITs do not trade on a national securities exchange.  Many uninitiated investors in non-traded REITs have come to learn too late that their ability to exit their investment position is limited.  Typically, investors in non-traded REITs can only exit their investment through redemption directly with the sponsor on a limited basis, and often at a disadvantageous price, or through sales in a limited secondary market.   As of April 2025, Pacific Oak’s net asset value or “NAV” per share was reported at $5.72, down from $8.03 in September 2023 and $10.50 in September 2022. This NAV reflects a 23.5% decline from 2022 to 2023 and a further slide into 2025. In online secondary market platform trading, shares have reportedly been traded as low as $2.50 per share.

Investors who wish to discuss a possible claim concerning Pacific Oak or another alternative investment may contact a securities arbitration lawyer at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or via email at newcases@investorlawyers.net for a no-cost, confidential consultation.  Attorneys at the firm are admitted in New York, Wisconsin and various federal courts around the country, and handle cases nationwide (in cooperation with attorneys located in those states if required by applicable rules). 

This article is intended as ATTORNEY ADVERTISING and is not an official announcement.