Pacific Oak REIT Hires Stanger Amid Financial Woes, Bond Talks
Pacific Oak Strategic Opportunity REIT Inc., a publicly registered non-traded real estate investment trust formerly known as KBS Strategic Opportunity REIT Inc., has initiated a formal review of strategic alternatives after acknowledging a “difficult financial situation” and related activities.
Last month, the company’s board formed a special committee of independent directors to explore all available strategic options, and this week, the committee engaged investment banking firm Robert A. Stanger & Company Inc. as its financial adviser to assist with the process.
The decision to seek strategic alternatives comes as the non-traded REIT faces increasing financial pressure. The company specifically cited several compounding factors driving the review. The company specifically noted its precarious financial health, which has been challenged by significant debt maturities and a difficult commercial real estate market, leading to recent warnings about its ability to continue as a “going concern.”
Additionally, Pacific Oak, through its subsidiary Pacific Oak SOR (BVI) Holdings Ltd., issued bonds in the Israeli capital markets. The REIT said it continues to be engaged in ongoing negotiations with the bondholders and that a breach of financial covenants could accelerate the maturity of this significant debt.
The formation of the special committee followed a standstill agreement entered into in August 2025 with the trustee for the bondholders, an action typically taken to prevent immediate default or legal action while the parties negotiate a restructuring plan.
The engagement of Stanger signals a formal step toward evaluating options that could include a restructuring, a sale of the company or its assets, or other recapitalization efforts.
Previously reported by AltsWire, the company reported $512.8 million in debt obligations that are coming due within the next year, which includes the Israeli bonds.
The REIT also recorded impairment charges on its real estate portfolio in the aggregate of $52 million during the second quarter. This was a direct result of “declines in market conditions and projected cash flows.” This figure was a sharp increase from the $21 million in impairment charges reported at the end of Q2 2024.
Earlier this year, AltsWire reported that Michael A. Bender had resigned from his positions of executive vice president, chief financial officer, treasurer, and secretary of the company effective, April 17. Bender had been appointed chief financial officer of the commercial real estate-focused alternative investments programs sponsor, Pacific Oak LLC, in July 2019.
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. This REIT was designed to capitalize on the dislocation, lack of liquidity, and government intervention that exists in the commercial real estate markets by acquiring a diverse portfolio of opportunistic investments in discounted debt and distressed equity assets.
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