Distressed Pacific Oak REIT Delays Liquidation Approval, Focuses on Debt Proceedings
Pacific Oak Strategic Opportunity REIT Inc., a publicly registered non-traded real estate investment trust formerly known as KBS Strategic Opportunity REIT Inc., has announced a series of measures to preserve limited cash as its primary subsidiary faces insolvency proceedings in Israel.
Additionally, the company’s board of directors has decided not to seek stockholder approval for a formal plan of liquidation at this time, delaying its previously stated course of action, and opting instead to focus on the court-led debt proceedings in the Middle East.
The board revealed it has dissolved the audit committee and will cease filing standard annual and quarterly reports with the U.S. Securities and Exchange Commission.
The REIT’s financial future is currently tied to a proposed debt arrangement for its indirect wholly owned subsidiary, Pacific Oak SOR (BVI) Holdings Ltd., or BVI. The BVI issued Series B and Series D bonds that are currently under the supervision of a court-appointed trustee in Israel.
Following an application by the trustee in December 2025, the Tel Aviv–Jaffa District Court issued an order in February to convene a meeting of creditors to approve a formal debt arrangement. A specific date for this meeting has not yet been determined.
The board determined that the costs of traditional SEC reporting now outweigh the benefits, citing several critical factors. It has said it has limited cash on hand and is entirely dependent on the BVI for future funding, which is currently “extremely uncertain.” All assets held through the BVI are expected to be disposed of in an orderly manner under the Israeli debt arrangement. The board also noted that trading in the REIT’s securities has become extremely limited.
The REIT will still file current reports on Form 8-K, which will include the BVI’s financial statements prepared under international financial reporting standards, or IFRS.
In a move reflecting the depth of the company’s financial constraints, the board has also decided not to provide an updated estimated net asset value per share. They cited ongoing uncertainties regarding the future value of the shares and the need to prioritize expense reduction. As part of this cost-cutting mandate, all current independent directors have agreed to waive both their accrued and future director fees.
The company remains current on its reporting obligations for now but warned that future funding from the BVI is not anticipated to be sufficient to support a return to standard public filings.
Pacific Oak Strategic Opportunity REIT closed its initial public offering on Nov. 20, 2012. On Oct. 1, 2020, Pacific Oak Strategic Opportunity REIT II shareholders approved the merger into Pacific Oak Strategic Opportunity REIT.
Following a period of significant financial distress, the REIT expressed “substantial doubt” about its ability to continue as a going concern, according to financials for the quarter ended June 30, 2025.
After reviewing the availability of strategic alternatives, the company’s special committee, comprised of all independent directors and first assembled in October 2025, unanimously recommended the move toward liquidation in January 2026, marking a pivotal shift in the REIT’s strategic direction. As part of the wind-down process, Pacific Oak overhauled its management and advisory framework and terminated its advisory agreement with Pacific Oak Capital Advisors LLC.
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