10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________________________________________________

 FORM 10-Q

______________________________________________________

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to             

Commission file number 000-54382

______________________________________________________

PACIFIC OAK STRATEGIC OPPORTUNITY REIT, INC.

(Exact Name of Registrant as Specified in Its Charter)

______________________________________________________

Maryland		26-3842535
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)
11766 Wilshire Blvd., Suite 1670
Los Angeles,	California	90025
(Address of Principal Executive Offices)		(Zip Code)

(424) 208-8100

(Registrant’s Telephone Number, Including Area Code)

______________________________________________________________________

Securities registered pursuant to Section 12(b) for the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
None	N/A	N/A

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated Filer	☐	Accelerated Filer	☐
Non-Accelerated Filer	☒	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐ No  ☒

As of November 10, 2021, there were 93,896,447 outstanding shares of common stock of Pacific Oak Strategic Opportunity REIT, Inc.

PACIFIC OAK STRATEGIC OPPORTUNITY REIT, INC.

FORM 10-Q

September 30, 2021

INDEX 

PART I.	FINANCIAL INFORMATION		2
	Item 1.	Financial Statements	2
		Consolidated Balance Sheets as of September 30, 2021 (unaudited) and December 31, 2020	2
		Consolidated Statements of Operations (unaudited) for the Three and Nine Months Ended September 30, 2021 and 2020	3
		Consolidated Statements of Equity (unaudited) for the Three and Nine Months Ended September 30, 2021 and 2020	4
		Consolidated Statements of Cash Flows (unaudited) for the Nine Months Ended September 30, 2021 and 2020	6
		Condensed Notes to Consolidated Financial Statements as of September 30, 2021 (unaudited)	7
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	40
	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	55
	Item 4.	Controls and Procedures	56
PART II.	OTHER INFORMATION		57
	Item 1.	Legal Proceedings	57
	Item 1A.	Risk Factors	57
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	57
	Item 3.	Defaults upon Senior Securities	59
	Item 4.	Mine Safety Disclosures	59
	Item 5.	Other Information	59
	Item 6.	Exhibits	60
SIGNATURES			61

1

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

PACIFIC OAK STRATEGIC OPPORTUNITY REIT, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts)

	September 30, 2021		December 31, 2020
	(unaudited)
Assets
Real estate held for investment, net	$	1,219,531	$	1,272,784
Real estate held for sale, net	—		140,239
Real estate equity securities	96,403		97,903
Total real estate and real estate-related investments, net	1,315,934		1,510,926
Cash and cash equivalents	138,037		60,335
Restricted cash	28,201		13,984
Investments in unconsolidated entities	83,854		79,666
Rents and other receivables, net	24,730		22,212
Above-market leases, net	2,735		3,157
Prepaid expenses and other assets	22,103		19,363
Goodwill	13,534		16,342
Assets related to real estate held for sale, net	—		5,680
Total assets	$	1,629,128	$	1,731,665
Liabilities, mezzanine equity and equity
Notes and bonds payable, net
Notes and bonds payable related to real estate held for investment, net	$	1,023,778	$	1,004,971
Note payable related to real estate held for sale, net	—		94,097
Notes and bonds payable, net	1,023,778		1,099,068
Accounts payable and accrued liabilities	22,054		24,169
Due to affiliate	2,152		2,842
Below-market leases, net	4,436		5,797
Other liabilities	43,994		34,734
Redeemable common stock payable	3,385		864
Restricted stock payable	574		14,600
Liabilities related to real estate held for sale, net	—		669
Total liabilities	1,100,373		1,182,743
Commitments and contingencies (Note 15)
Mezzanine equity
Restricted stock	—		11,009
Noncontrolling cumulative convertible redeemable preferred stock	15,233		15,233
Redeemable noncontrolling interest	2,855		2,968
Equity
Pacific Oak Strategic Opportunity REIT, Inc. stockholders’ equity
Preferred stock, $.01 par value; 10,000,000 shares authorized, no shares issued and outstanding	—		—
Common stock, $.01 par value; 1,000,000,000 shares authorized, 94,264,402 and 98,054,582 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively	942		979
Additional paid-in capital	820,382		831,295
Cumulative distributions and net income	(322,049)		(325,720)
Total Pacific Oak Strategic Opportunity REIT, Inc. stockholders’ equity	499,275		506,554
Noncontrolling interests	11,392		13,158
Total equity	510,667		519,712
Total liabilities, mezzanine equity and equity	$	1,629,128	$	1,731,665

See accompanying condensed notes to consolidated financial statements.

2

PART I. FINANCIAL INFORMATION (CONTINUED)

Item 1. Financial Statements (continued)

PACIFIC OAK STRATEGIC OPPORTUNITY REIT, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

(in thousands, except share and per share amounts)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Revenues:
Rental income	$	29,504	$	23,871	$	94,812	$	67,808
Hotel revenues	12,153		—		24,578		—
Other operating income	923		888		3,118		2,722
Dividend income from real estate equity securities	3,189		2,986		6,693		5,339
Total revenues	45,769		27,745		129,201		75,869
Expenses:
Operating, maintenance, and management costs	10,668		7,888		31,444		22,258
Real estate taxes and insurance	5,262		3,791		15,949		10,570
Hotel expenses	6,483		—		15,715		—
Asset management fees to affiliate	3,422		2,426		10,802		6,867
General and administrative expenses	2,365		1,960		7,120		6,302
Foreign currency transaction loss (gain), net	2,271		445		(568)		(12,338)
Depreciation and amortization	13,895		9,470		45,969		27,417
Interest expense	10,092		6,274		30,713		19,055
Impairment charges on real estate	10,971		—		10,971		—
Impairment charges on goodwill	2,808		—		2,808		—
Total expenses	68,237		32,254		170,923		80,131
Other income (loss):
Gain from remeasurement of prior equity interest	—		2,009		—		2,009
Equity in (loss) income of unconsolidated entities	(569)		519		(144)		1,564
Casualty-related gain	27		—		27		51
Other interest income	55		19		148		297
(Loss) gain on real estate equity securities	(2,614)		(6,527)		12,939		(21,620)
Change in subordinated performance fee due upon termination to affiliate	(1,545)		1,121		(1,745)		814
Gain on sale of real estate	216		—		31,385		—
Gain on extinguishment of debt	1,352		—		1,365		—
Total other (loss) income, net	(3,078)		(2,859)		43,975		(16,885)
Net (loss) income	(25,546)		(7,368)		2,253		(21,147)
Net loss attributable to noncontrolling interests	1,188		43		1,949		115
Net loss attributable to redeemable noncontrolling interest	33		23		113		23
Preferred stock dividends	(191)		(191)		(644)		(788)
Net (loss) income attributable to common stockholders	$	(24,516)	$	(7,493)	$	3,671	$	(21,797)
Net (loss) income per common share, basic and diluted	$	(0.25)	$	(0.11)	$	0.04	$	(0.32)
Weighted-average number of common shares outstanding, basic and diluted	97,659,731		69,225,212		97,879,983		68,179,046

See accompanying condensed notes to consolidated financial statements.

3

PART I. FINANCIAL INFORMATION (CONTINUED)

Item 1. Financial Statements (continued)

PACIFIC OAK STRATEGIC OPPORTUNITY REIT, INC.

CONSOLIDATED STATEMENTS OF EQUITY

For the Three Months Ended September 30, 2021 and 2020

(unaudited)

(dollars in thousands)

	Common Stock			Additional Paid-in Capital		Cumulative Distributions and Net Income (Loss)		Total Stockholders' Equity		Noncontrolling Interests		Total Equity
	Shares	Amounts
Balance, June 30, 2021	97,906,268	$	979	$	829,294	$	(297,533)	$	532,740	$	12,560	$	545,300
Net (loss) income	—	—		—		(24,516)		(24,516)		(1,188)		(25,704)
Transfers to redeemable common stock	—	—		(1,955)		—		(1,955)		—		(1,955)
Redemptions of common stock	(3,641,866)	(37)		(28,080)		—		(28,117)		—		(28,117)
Change in classification of restricted stock	—	—		21,123		—		21,123		—		21,123
Noncontrolling interest contribution	—	—		—		—		—		20		20
Balance, September 30, 2021	94,264,402	$	942	$	820,382	$	(322,049)	$	499,275	$	11,392	$	510,667
	Common Stock			Additional Paid-in Capital		Cumulative Distributions and Net Income (Loss)		Total Stockholders' Equity		Noncontrolling Interests		Total Equity
	Shares	Amounts
Balance, June 30, 2020	69,225,617	$	693	$	553,129	$	(292,096)	$	261,726	$	795	$	262,521
Net loss	—	—		—		(7,493)		(7,493)		(43)		(7,536)
Transfers from redeemable common stock	—	—		6		—		6		—		6
Redemptions of common stock	(601)	—		(6)		—		(6)		—		(6)
Distribution of noncontrolling interest	—	—		—		—		—		(28)		(28)
Balance, September 30, 2020	69,225,016	$	693	$	553,129	$	(299,589)	$	254,233	$	724	$	254,957

See accompanying condensed notes to consolidated financial statements.

4

PART I. FINANCIAL INFORMATION (CONTINUED)

Item 1. Financial Statements (continued)

PACIFIC OAK STRATEGIC OPPORTUNITY REIT, INC.

CONSOLIDATED STATEMENTS OF EQUITY

For the Nine Months Ended September 30, 2021 and 2020

(unaudited)

(dollars in thousands)

	Common Stock			Additional Paid-in Capital		Cumulative Distributions and Net Income (Loss)		Total Stockholders' Equity		Noncontrolling Interests		Total Equity
	Shares	Amounts
Balance, December 31, 2020	98,054,582	$	979	$	831,295	$	(325,720)	$	506,554	$	13,158	$	519,712
Net income (loss)	—	—		—		3,671		3,671		(1,949)		1,722
Transfers to redeemable common stock	—	—		(2,521)		—		(2,521)		—		(2,521)
Redemptions of common stock	(3,790,180)	(37)		(29,515)		—		(29,552)		—		(29,552)
Change in classification of restricted stock	—	—		21,123		—		21,123		—		21,123
Noncontrolling interests contributions	—	—		—		—		—		183		183
Balance, September 30, 2021	94,264,402	$	942	$	820,382	$	(322,049)	$	499,275	$	11,392	$	510,667
	Common Stock			Additional Paid-in Capital		Cumulative Distributions and Net Income (Loss)		Total Stockholders' Equity		Noncontrolling Interests		Total Equity
	Shares	Amounts
Balance, December 31, 2019	65,866,765	$	659	$	553,170	$	(277,196)	$	276,633	$	755	$	277,388
Net loss	—	—		—		(21,797)		(21,797)		(115)		(21,912)
Issuance of common stock	24,645	—		262		—		262		—		262
Transfers from redeemable common stock	—	—		567		—		567		—		567
Redemptions of common stock	(78,131)	—		(830)		—		(830)		—		(830)
Distributions declared	—	—		—		(596)		(596)		—		(596)
Other offering costs	—	—		(6)		—		(6)		—		(6)
Issuance of restricted stock	3,411,737	34		(34)		—		—		—		—
Noncontrolling interests contributions	—	—		—		—		—		112		112
Distribution to noncontrolling interest	—	—		—		—		—		(28)		(28)
Balance, September 30, 2020	69,225,016	$	693	$	553,129	$	(299,589)	$	254,233	$	724	$	254,957

See accompanying condensed notes to consolidated financial statements.

5

PART I. FINANCIAL INFORMATION (CONTINUED)

Item 1. Financial Statements (continued)

PACIFIC OAK STRATEGIC OPPORTUNITY REIT, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

(in thousands)

	Nine Months Ended September 30,
	2021		2020
Cash Flows from Operating Activities:
Net income (loss)	$	2,253	$	(21,147)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Change in subordinated performance fee due upon termination to affiliate	1,745		(814)
Impairment charges on real estate	10,971		—
Impairment charges on goodwill	2,808		—
Gain from remeasurement of prior equity interest	—		(2,009)
Equity in loss (income) of unconsolidated entities	144		(1,151)
Depreciation and amortization	45,969		27,417
(Gain) loss on real estate equity securities	(12,939)		21,620
Gain on sale of real estate	(31,385)		—
Unrealized loss on interest rate caps	17		10
Deferred rent	(1,529)		(2,559)
Gain on extinguishment of debt	(1,365)		—
Amortization of above- and below-market leases, net	(1,015)		(435)
Amortization of deferred financing costs	2,470		2,481
Amortization of discount on bond and notes payable	1,906		14
Foreign currency transaction gain, net	(568)		(12,338)
Changes in assets and liabilities:
Rents and other receivables	(1,898)		(566)
Prepaid expenses and other assets	(4,371)		(2,286)
Accounts payable and accrued liabilities	(984)		(3,471)
Due to affiliates	(726)		182
Other liabilities	(190)		(142)
Net cash provided by operating activities	11,313		4,806
Cash Flows from Investing Activities:
Acquisitions of real estate, net of cash acquired	(4,107)		(19,034)
Improvements to real estate	(12,923)		(15,946)
Proceeds from sales of real estate, net	194,528		—
Contributions to unconsolidated entities	(4,769)		(1,708)
Distributions of capital from unconsolidated entities	—		1,225
Purchase of interest rate cap	(18)		(6)
Investment in real estate equity securities	—		(35,510)
Proceeds from the sale of real estate equity securities	14,439		10,964
Proceeds for future development obligations	6,203		—
Proceeds from disposition of foreign currency collars	—		14,125
Net cash provided by (used in) investing activities	193,353		(45,890)
Cash Flows from Financing Activities:
Proceeds from notes and bonds payable	157,246		104,143
Principal payments on notes and bonds payable	(233,964)		(57,611)
Payments of deferred financing costs	(2,745)		(2,438)
Payments to redeem common stock	(29,552)		(830)
Payment to redeem restricted stock	(5,656)		—
Payment of prepaid other offering costs	(164)		(606)
Distributions paid	—		(334)
Preferred dividends paid	(644)		(563)
Noncontrolling interests contributions	183		112
Distributions to noncontrolling interests	—		(28)
Other financing proceeds	2,367		—
Net cash (used in) provided by financing activities	(112,929)		41,845
Effect of exchange rate changes on cash, cash equivalents and restricted cash	182		83
Net increase in cash, cash equivalents and restricted cash	91,919		844
Cash, cash equivalents and restricted cash, beginning of period	74,319		88,494
Cash, cash equivalents and restricted cash, end of period	$	166,238	$	89,338

See accompanying condensed notes to consolidated financial statements.

6

PART I. FINANCIAL INFORMATION (CONTINUED)

Item 1. Financial Statements (continued)

PACIFIC OAK STRATEGIC OPPORTUNITY REIT, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2021

(unaudited)

1.ORGANIZATION

Pacific Oak Strategic Opportunity REIT, Inc. (the “Company”) was formed on October 8, 2008 as a Maryland corporation and elected to be taxed as a real estate investment trust (“REIT”) beginning with the taxable year ended December 31, 2010. The Company conducts its business primarily through Pacific Oak SOR (BVI) Holdings, Ltd. (“Pacific Oak SOR BVI”), a private company limited by shares according to the British Virgin Islands Business Companies Act, 2004, which was incorporated on December 18, 2015 and is authorized to issue a maximum of 50,000 common shares with no par value. Upon incorporation, Pacific Oak SOR BVI issued one certificate containing 10,000 common shares with no par value to Pacific Oak Strategic Opportunity Limited Partnership (the “Operating Partnership”), a Delaware limited partnership formed on December 10, 2008. The Company is the sole general partner of, and owns a 0.1% partnership interest in, the Operating Partnership. Pacific Oak Strategic Opportunity Holdings LLC (“REIT Holdings”), a Delaware limited liability company formed on December 9, 2008, owns the remaining 99.9% interest in the Operating Partnership and is its sole limited partner. The Company is the sole member and manager of REIT Holdings.

Subject to certain restrictions and limitations, the business of the Company is externally managed by Pacific Oak Advisors, LLC (the “Advisor”), an affiliate of the Company, pursuant to an advisory agreement (the “Advisory Agreement”) which is currently effective through November 1, 2022; however the Company or the Advisor may terminate the Advisory Agreement without cause or penalty upon providing 60 days’ written notice. The Advisor conducts the Company’s operations and manages its portfolio of real estate and other real estate-related investments.

On January 8, 2009, the Company filed a registration statement on Form S-11 with the SEC to offer a minimum of 250,000 shares and a maximum of 140,000,000 shares of common stock for sale to the public (the “Offering”), of which 100,000,000 shares were registered in a primary offering and 40,000,000 shares were registered to be sold under the Company’s dividend reinvestment plan. The SEC declared the Company’s registration statement effective on November 20, 2009. The Company ceased offering shares of common stock in its primary offering on November 14, 2012 and continues to offer shares under its dividend reinvestment plan.

The Company sold 56,584,976 shares of common stock in its primary offering for gross offering proceeds of $561.7 million. As of September 30, 2021, the Company had sold 6,851,969 shares of common stock under its dividend reinvestment plan for gross offering proceeds of $76.5 million. Also, as of September 30, 2021, the Company had redeemed 27,247,458 shares for $317.3 million. As of September 30, 2021, the Company had issued 25,976,746 shares of common stock in connection with special dividends. Additionally, on December 29, 2011 and October 23, 2012, the Company issued 220,994 shares and 55,249 shares of common stock, respectively, for $2.0 million and $0.5 million, respectively, in private transactions exempt from the registration requirements pursuant to Section 4(2) of the Securities Act of 1933. On March 27, 2020, the Company issued 3,411,737 restricted shares of its common stock (the “Restricted Stock”) to its former external advisor, KBS Capital Advisors LLC (“KBS Capital Advisors”) pursuant to a Restricted Stock Agreement, dated as of March 27, 2020 (the “Restricted Stock Agreement”). On September 1, 2021, the Company repurchased 584,267 shares of the Restricted Stock for $5.7 million and 2,254,289 shares of Restricted Stock were transferred to GKP Holding LLC (“GKP”), a company owned by Keith D. Hall and Peter McMillan III. See Note 10 for further details.

On March 2, 2016, Pacific Oak SOR BVI filed a final prospectus with the Israel Securities Authority for a proposed offering of up to 1,000,000,000 Israeli new Shekels of Series A debentures (the “Series A Debentures”) at an annual interest rate not to exceed 4.25%. On March 1, 2016, Pacific Oak SOR BVI commenced the institutional tender of the Series A Debentures and accepted application for 842.5 million Israeli new Shekels. On March 7, 2016, Pacific Oak SOR BVI commenced the public tender of the Series A Debentures and accepted 127.7 million Israeli new Shekels. In the aggregate, Pacific Oak SOR BVI accepted 970.2 million Israeli new Shekels (approximately $249.2 million as of March 8, 2016) in both the institutional and public tenders at an annual interest rate of 4.25%. Pacific Oak SOR BVI issued the Series A Debentures on March 8, 2016.

7

PART I. FINANCIAL INFORMATION (CONTINUED)

Item 1.     Financial Statements (continued)

PACIFIC OAK STRATEGIC OPPORTUNITY REIT, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

September 30, 2021

(unaudited)

In connection with the above-referenced offering, on March 8, 2016, the Operating Partnership assigned to Pacific Oak SOR BVI all of its interests in the subsidiaries through which the Company indirectly owns all of its real estate and real estate-related investments. The Operating Partnership owns all of the issued and outstanding equity of Pacific Oak SOR BVI. As a result of these transactions, the Company now holds all of its real estate and real estate-related investments indirectly through Pacific Oak SOR BVI.

On February 16, 2020, Pacific Oak SOR BVI issued 254.1 million Israeli new Shekels (approximately $74.1 million as of February 16, 2020) of Series B debentures (the “Series B Debentures”) to Israeli investors pursuant to a public offering registered with the Israel Securities Authority. The Series B Debentures bears interest at the rate of 3.93% per year. The Series B Debentures have principal installment payments equal to 33.33% of the face amount of the Series B Debentures on January 31st of each year from 2024 to 2026.

On January 22, 2020, the Company filed a registration statement on Form S-11 with the SEC to offer up to $1 billion in additional shares of its common stock. This new registration statement contemplates a proposed conversion of the Company to a perpetual-life net asset value or “NAV” REIT that offers and sells shares of its common stock continuously through a number of distribution channels in ongoing public offerings, and seeks to provide increased liquidity to current and future stockholders through an expansion of the Company’s current share redemption program. On December 18, 2020, the Company filed Amendment No. 1 to the registration statement on Form S-11 with the SEC.

On February 19, 2020, the Company, Pacific Oak SOR II, LLC, an indirect subsidiary of the Company’s (“Merger Sub”), and Pacific Oak Strategic Opportunity REIT II, Inc. (“POSOR II”) entered into an Agreement and Plan of Merger (the “Merger Agreement”). On October 5, 2020, pursuant to the Merger Agreement, POSOR II merged with and into Merger Sub, with Merger Sub surviving as an indirect subsidiary of the Company’s (the “Merger”). At such time, in accordance with the applicable provisions of the Maryland General Corporation Law and the Maryland Limited Liability Company Act, the separate existence of POSOR II ceased. At the effective time of the Merger, each issued and outstanding share of POSOR II’s common stock (or a fraction thereof), $0.01 par value per share, converted into 0.9643 shares of the Company’s common stock, $0.01 par value per share, or 28,973,905 shares of the Company’s common stock. The combined company after the Merger retained the name “Pacific Oak Strategic Opportunity REIT, Inc.” The Merger was intended to qualify as a “reorganization” under, and within the meaning of, Section 368(a) of the Internal Revenue Code of 1986, as amended. As a result of the Merger, the Company acquired two hotel properties, three office properties, one apartment building, one consolidated joint venture to develop one office/retail property, two real estate equity securities and two investments in unconsolidated entities. Additionally, the Company assumed $331.8 million of loans related to the acquired properties.

On March 4, 2021, Pacific Oak SOR BVI issued additional Series A Debentures in the amount of 250.0 million Israeli new Shekels par value through a private placement. The additional Series A Debentures were issued at a 1.9% discount resulting in total consideration of 245.3 million Israeli new Shekels ($74.2 million as of March 4, 2021). The additional Series A Debentures have an equal level of security, pari passu, amongst themselves and between them and the initial Series A Debentures, which were initially issued, without any right of precedence or preference between any of them.

As of September 30, 2021, the Company consolidated eight office properties, one office portfolio consisting of four office buildings and 14 acres of undeveloped land, two apartment properties, two hotel properties, one residential home portfolio consisting of 1,806 single-family homes, three investments in undeveloped land with approximately 800 developable acres, and owned four investments in unconsolidated entities and three investments in real estate equity securities. Additionally, as of September 30, 2021, the Company had entered into a consolidated joint venture to develop one office/retail property.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

There have been no significant changes to the Company’s accounting policies since it filed its audited financial statements in its Annual Report on Form 10-K for the year ended December 31, 2020. For further information about the Company’s accounting policies, refer to the Company’s consolidated financial statements and notes thereto for the year ended December 31, 2020 included in the Company’s Annual Report on Form 10-K filed with the SEC.

8

PART I. FINANCIAL INFORMATION (CONTINUED)

Item 1.     Financial Statements (continued)

PACIFIC OAK STRATEGIC OPPORTUNITY REIT, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

September 30, 2021

(unaudited)

Principles of Consolidation and Basis of Presentation

The accompanying unaudited consolidated financial statements and condensed notes thereto have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information as contained within the FASB Accounting Standards Codification (“ASC”) and the rules and regulations of the SEC, including the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, the unaudited consolidated financial statements do not include all of the information and footnotes required by GAAP for audited financial statements. In the opinion of management, the financial statements for the unaudited interim periods presented include all adjustments, which are of a normal and recurring nature, necessary for a fair and consistent presentation of the results for such periods. Operating results for the three and nine months ended September 30, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021.

The consolidated financial statements include the accounts of the Company, REIT Holdings, the Operating Partnership, Pacific Oak SOR BVI and their direct and indirect wholly owned subsidiaries, joint ventures in which the Company has a controlling interest and VIEs in which the Company is the primary beneficiary. All significant intercompany balances and transactions are eliminated in consolidation.

Liquidity

The Company generally finances its real estate investments using notes payable that are typically structured as non-recourse secured mortgages with maturities of approximately three to five years, with short term extension options available upon the Company meeting certain debt covenants. Each reporting period management evaluates the Company’s ability to continue as a going concern by evaluating conditions and events, including assessing the liquidity needs to satisfy upcoming debt obligations and the ability to satisfy debt covenant requirements. Through the normal course of operations and as further discussed in Note 7, the Company has $518.0 million of debt obligations coming due over the next 12-month period. In order to satisfy obligations as they mature, management will evaluate its options and may seek to utilize extension options available in the respective loan agreements, may make partial loan paydowns to meet debt covenant requirements, may seek to refinance certain debt instruments, may sell real estate equity securities to convert to cash to make principal payments, may market one or more properties for sale or may negotiate a turnover of one or more secured properties back to the related mortgage lender and remit payment for any associated loan guarantee. Historically, the Company has successfully refinanced debt instruments or utilized extension options in order to satisfy debt obligations as they come due and has not negotiated a turnover of a secured property back to a lender, though the Company may utilize such option if necessary. Based upon these plans, management believes it will have sufficient liquidity to satisfy its obligations as they come due and to continue as a going concern. There can be no assurance as to the certainty or timing of any of management’s plans. Refer to Note 7 for further discussion.

Use of Estimates

The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could materially differ from those estimates.

Restricted Cash

Restricted cash is comprised of lender impound reserve accounts on the Company’s borrowings for security deposits, property taxes, insurance, debt service obligations and capital improvements and replacements.

9

PART I. FINANCIAL INFORMATION (CONTINUED)

Item 1.     Financial Statements (continued)

PACIFIC OAK STRATEGIC OPPORTUNITY REIT, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

September 30, 2021

(unaudited)

Redeemable Common Stock

The Company limits the dollar value of shares that may be redeemed under the share redemption program. During the nine months ended September 30, 2021, the Company had redeemed $29.6 million of common stock under the share redemption program. The Company processed all redemption requests received in good order and eligible for redemption through the September 2021 redemption date, except for 13,913,664 shares totaling $128.0 million due to the limitations under the share redemption program. The Company recorded $3.4 million and $0.9 million of redeemable common stock payable on the Company’s balance sheet as of September 30, 2021 and December 31, 2020, respectively, related to unfulfilled redemption requests received in good order under the share redemption program. Based on the twelfth amended and restated share redemption program, the Company has $3.2 million available for redemptions in the remainder of 2021, including shares that are redeemed in connection with a stockholders’ death, “qualifying disability” or “determination of incompetence,” subject to the limitations under the share redemption program.

Reclassifications

Certain amounts in the Company’s prior period consolidated financial statements have been reclassified to conform to the current period presentation. These reclassifications have not changed the results of operations of the prior period. During the nine months ended September 30, 2021, the Company sold one office property. As a result, certain assets and liabilities were reclassified as held for sale on the consolidated balance sheets for the prior period.

Segments

The Company operates in three reportable business segments: opportunistic real estate and real estate-related investments, single-family homes, and hotels, which is how the Company's management manages the business. In general, the Company intends to hold its investments in opportunistic real estate and other real estate-related assets for capital appreciation. Traditional performance metrics of opportunistic real estate and other real estate-related assets may not be meaningful as these investments are generally non-stabilized and do not provide a consistent stream of interest income or rental revenue. These investments exhibit similar long-term financial performance and have similar economic characteristics. These investments typically involve a higher degree of risk and do not provide a constant stream of ongoing cash flows. As a result, the Company’s management views opportunistic real estate and other real estate-related assets as similar investments and aggregated into one reportable business segment. The Company owns single-family homes in 17 markets and are all aggregated into one reportable business segment due to the homes being stabilized, having high occupancy rates and have similar economic characteristics. Additionally, the Company owns two hotels and are aggregated into one reportable business segment due to the nature of the hotel business with short-term stays.

Per Share Data

The Company applies the two-class method when computing its earnings per share. Net income per share for each class of stock is calculated by assuming all of the Company’s net income (loss) is distributed to each class of stock based on their contractual rights.

Unvested restricted stock that contains non-forfeitable rights to distributions (whether paid or unpaid) are considered participating securities and are included in the computation of earnings per share.

Basic earnings (loss) per share of common stock is calculated by dividing net income (loss) attributable to common stockholders by the weighted-average number of shares of common stock issued and outstanding during such period. Diluted earnings (loss) per share of common stock is computed based on the weighted-average number of shares of common stock outstanding during each period, plus potential common shares considered outstanding during the period, as long as the inclusion of such awards is not anti-dilutive. Potential common shares consist of unvested restricted stock, using the more dilutive of either the two-class method or the treasury stock method.

10

PART I. FINANCIAL INFORMATION (CONTINUED)

Item 1.     Financial Statements (continued)

PACIFIC OAK STRATEGIC OPPORTUNITY REIT, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

September 30, 2021

(unaudited)

The noncontrolling Pacific Oak Residential Trust, Inc. (“PORT”) Series A convertible redeemable preferred shares are not included as the preferred shares are convertible contingent on the common stock of PORT being publicly traded. If PORT common stock becomes publicly traded, the per-share earnings of PORT will be included in the Company’s EPS computations based on the consolidated holdings of PORT.

The Company’s unvested Restricted Stock have been included in the calculation of basic and diluted earnings per share for both of the three and nine months ended September 30, 2021 and 2020, as the restriction is not contingent on any conditions except the passage of time.

There were no distributions declared for both of the three and nine months ended September 30, 2021 and 2020, with the exception of distributions declared per share of $0.0086 during the three months ended March 31, 2020.

Square Footage, Occupancy and Other Measures

Any references to square footage, occupancy or annualized base rent are unaudited and outside the scope of the Company’s independent registered public accounting firm’s review of the Company’s financial statements in accordance with the standards of the United States Public Company Accounting Oversight Board.

Recently Issued Accounting Standards Updates

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848) (“ASU No. 2020-04”) contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASU No. 2020-04 is optional and may be elected over time as reference rate reform activities occur. During the nine months ended September 30, 2021, the Company elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. For the period from January 1, 2020 (the earliest date the Company may elect to apply ASU No. 2020-04) through September 30, 2021, the Company did not have any contract modifications that meet the criteria described above, specifically contract modifications that have been modified from LIBOR to an alternative reference rate. The Company’s loan agreements, derivative instruments, and certain lease agreements use LIBOR as the current reference rate. For eligible contract modifications, the Company expects to adopt the temporary optional expedients described in ASU No. 2020-04. The optional expedients for hedging relationships described in ASU No. 2020-04 are not expected to have an impact to the Company, as the Company has elected to not designate its derivative instruments as a hedge.

11

PART I. FINANCIAL INFORMATION (CONTINUED)

Item 1.     Financial Statements (continued)

PACIFIC OAK STRATEGIC OPPORTUNITY REIT, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

September 30, 2021

(unaudited)

3. REAL ESTATE HELD FOR INVESTMENT

As of September 30, 2021, the Company owned eight office properties, one office portfolio consisting of four office buildings and 14 acres of undeveloped land, encompassing, in the aggregate, approximately 3.3 million rentable square feet. As of September 30, 2021, these properties were 73% occupied. In addition, the Company owned one residential home portfolio consisting of 1,806 single-family homes and encompassing approximately 2.5 million rental square feet and two apartment properties, containing 609 units and encompassing approximately 0.5 million rentable square feet, which was 94% and 96% occupied, respectively as of September 30, 2021. As of September 30, 2021, the Company also owned two hotel properties with an aggregate of 649 rooms and three investments in undeveloped land with approximately 800 developable acres. Additionally, as of September 30, 2021, the Company had entered into a consolidated joint venture to develop one office/retail property. The following table summarizes the Company’s real estate held for investment as of September 30, 2021 and December 31, 2020, respectively (in thousands):

	September 30, 2021		December 31, 2020
Land	$	275,419	$	288,514
Buildings and improvements	1,018,850		1,019,329
Tenant origination and absorption costs	44,527		50,881
Total real estate, cost	1,338,796		1,358,724
Accumulated depreciation and amortization	(119,265)		(85,940)
Total real estate, net	$	1,219,531	$	1,272,784

Operating Leases

Certain of the Company’s real estate properties are leased to tenants under operating leases for which the terms and expirations vary. As of September 30, 2021, the leases, excluding options to extend and apartment leases and single-family homes, which have terms that are generally one year or less, had remaining terms of up to 15.5 years with a weighted-average remaining term of 4.5 years. Some of the leases have provisions to extend the lease agreements, options for early termination after paying a specified penalty and other terms and conditions as negotiated. The Company retains substantially all of the risks and benefits of ownership of the real estate assets leased to tenants. Generally, upon the execution of a lease, the Company requires a security deposit from tenants in the form of a cash deposit and/or a letter of credit. The amount required as a security deposit varies depending upon the terms of the respective leases and the creditworthiness of the tenant, but generally are not significant amounts. Therefore, exposure to credit risk exists to the extent that a receivable from a tenant exceeds the amount of its security deposit. Security deposits received in cash and assumed in real estate acquisitions related to tenant leases are included in other liabilities in the accompanying consolidated balance sheets totaled $6.0 million and $5.7 million as of September 30, 2021 and December 31, 2020, respectively.

During the three and nine months ended September 30, 2021, the Company recognized deferred rent from tenants of $0.4 million and $1.5 million, respectively, net of lease incentive amortization. During the three and nine months ended September 30, 2020, the Company recognized deferred rent from tenants of $0.9 million and $2.6 million, respectively, net of lease incentive amortization. As of September 30, 2021 and December 31, 2020, the cumulative deferred rent receivable balance, including unamortized lease incentive receivables, were $15.7 million and $15.5 million, respectively and is included in rents and other receivables on the accompanying consolidated balance sheets. The cumulative deferred rent balance included $3.1 million and $4.2 million of unamortized lease incentives as of September 30, 2021 and December 31, 2020, respectively.

12

PART I. FINANCIAL INFORMATION (CONTINUED)

Item 1.     Financial Statements (continued)

PACIFIC OAK STRATEGIC OPPORTUNITY REIT, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

September 30, 2021

(unaudited)

As of September 30, 2021, the future minimum rental income from the Company’s properties, excluding apartment leases and single-family homes, under non-cancelable operating leases was as follows (in thousands):

October 1, 2021 through December 31, 2021	$	16,095
2022	61,448
2023	53,140
2024	45,750
2025	35,726
Thereafter	86,512
	$	298,671

As of September 30, 2021, the Company’s commercial real estate properties were leased to approximately 300 tenants over a diverse range of industries and geographic areas. The Company’s highest tenant industry concentrations (greater than 10% of annualized base rent) were as follows:

Industry	Number of Tenants	Annualized Base Rent (1) (in thousands)		Percentage of Annualized Base Rent
Computer Systems Design	30	$	7,080	10.9	%
Professional, Scientific, and Technical Services	42	7,078		10.9	%
Public Administration	11	6,959		10.7	%
Insurance Carriers and Related Activities	16	6,801		10.5	%
Health Care and Social Assistance	25	6,799		10.5	%
		$	34,717	53.5	%

_____________________

(1) Annualized base rent represents annualized contractual base rental income as of September 30, 2021, adjusted to straight-line any contractual tenant concessions (including free rent), rent increases and rent decreases from the lease’s inception through the balance of the lease term.

No other tenant industries accounted for more than 10% of annualized base rent. No material tenant credit issues have been identified at this time. During the three and nine months ended September 30, 2021, the Company recorded adjustments to rental income of $0.8 million and $2.5 million, respectively, for lease payments, including apartments and single-family homes that were deemed not probable of collection. During the three and nine months ended September 30, 2020, the Company recorded adjustments to rental income of $0.4 million and $1.1 million, respectively, for lease payments that were deemed not probable of collection.

13

PART I. FINANCIAL INFORMATION (CONTINUED)

Item 1.     Financial Statements (continued)

PACIFIC OAK STRATEGIC OPPORTUNITY REIT, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

September 30, 2021

(unaudited)

Hotel Properties

The following table provides detailed information regarding the Company’s hotel revenues and expenses for its two hotel properties during the three and nine months ended September 30, 2021 (in thousands):

	Three Months Ended September 30, 2021		Nine Months Ended September 30, 2021
Hotel revenues:
Room	$	9,396	$	18,508
Food, beverage and convention services	1,452		2,830
Campground	280		792
Other	1,025		2,448
Hotel revenues	$	12,153	$	24,578
Hotel expenses:
Room	$	1,681	$	3,992
Food, beverage and convention services	946		2,063
General and administrative	752		1,955
Sales and marketing	1,018		2,230
Repairs and maintenance	557		1,551
Utilities	333		824
Property taxes and insurance	566		1,600
Other	630		1,500
Hotel expenses	$	6,483	$	15,715

Contract Liabilities

The following table summarizes the Company’s contract liabilities, which are comprised of hotel advanced deposits and deferred proceeds received from the buyers of the Park Highlands land sales (discussed below) and another developer for the value of land that was contributed to a master association that is consolidated by the Company, which are included in other liabilities in the accompanying consolidated balance sheets, as of September 30, 2021 and December 31, 2020 (in thousands):

	September 30, 2021		December 31, 2020
Contract liability	$	6,551	$	3,369
Revenue recognized in the period from:
Amounts included in contract liability at the beginning of the period	$	142	$	—

Geographic Concentration Risk

As of September 30, 2021, the Company’s real estate investments in California represented 21.9% of the Company’s total assets. As a result, the geographic concentration of the Company’s portfolio makes it particularly susceptible to adverse economic developments in the California real estate markets. Any adverse economic or real estate developments in these markets, such as business layoffs or downsizing, industry slowdowns, relocations of businesses, changing demographics and other factors, or any decrease in demand for office space resulting from the local business climate, could adversely affect the Company’s operating results and its ability to make distributions to stockholders.

14

PART I. FINANCIAL INFORMATION (CONTINUED)

Item 1.     Financial Statements (continued)

PACIFIC OAK STRATEGIC OPPORTUNITY REIT, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

September 30, 2021

(unaudited)

Impairment of Real Estate

During the three and nine months ended September 30, 2021, the Company recorded impairment charges on real estate in the aggregate of $11.0 million, to write down the carrying value of 210 West 31st Street by $6.6 million, a development property located in New York, New York and Lincoln Court by $4.4 million, an office property located in Campbell, California, to their estimated fair value due to a change in the projected hold period and related decrease in projected cash flows.

Recent Real Estate Land Sale

On June 3, 2021, the Company sold approximately 193 developable acres of Park Highlands undeveloped land for an aggregate sales price, net of closing credits, of $50.4 million, excluding closing costs. The purchaser is not affiliated with the Company or the Advisor. The Company recognized a gain on sale of $31.1 million related to the land sale, which is net of deferred profit of $2.6 million related to proceeds received from the purchaser for the value of land that was contributed to a master association which is consolidated by the Company.

Recent Real Estate Sale

On July 27, 2021, the Company, through an indirect wholly owned subsidiary, sold an office building containing 435,177 rentable square feet located on approximately 4.92 acres of land in Orange, California (“City Tower”) to a purchaser unaffiliated with the Company or the Advisor, for $150.5 million, before closing costs and credits. The carrying value of City Tower as of the disposition date was $145.1 million, which was net of $20.5 million of accumulated depreciation and amortization. In connection with the sale of City Tower, the Company repaid $98.1 million of the outstanding principal balance due under the mortgage loan secured by City Tower. The Company recognized a gain on sale of $0.1 million related to the disposition of City Tower.

Recent Real Estate Asset Acquisitions

On March 17, 2021, the Company, through a wholly owned subsidiary of PORT OP, LP (“PORT OP”), acquired a single-family home portfolio consisting of 21 homes in Chicago, Illinois for $2.1 million.

On April 6, 2021, the Company, through a wholly owned subsidiary of PORT OP, acquired a single-family home portfolio consisting of 23 homes in multiple states for $2.0 million. The portfolio was purchased from DayMark Master Trust, an entity affiliated with the Advisor.

4. TENANT ORIGINATION AND ABSORPTION COSTS, ABOVE-MARKET LEASE ASSETS AND BELOW-MARKET LEASE LIABILITIES

As of September 30, 2021 and December 31, 2020, the Company’s tenant origination and absorption costs, above-market lease assets and below-market lease liabilities (excluding fully amortized assets and liabilities and accumulated amortization) were as follows (in thousands):

	Tenant Origination and Absorption Costs				Above-Market Lease Assets				Below-Market Lease Liabilities
	September 30, 2021		December 31, 2020		September 30, 2021		December 31, 2020		September 30, 2021		December 31, 2020
Cost	$	44,527	$	50,881	$	4,138	$	4,159	$	(6,718)	$	(7,679)
Accumulated Amortization	(19,107)		(13,491)		(1,403)		(1,002)		2,282		1,882
Net Amount	$	25,420	$	37,390	$	2,735	$	3,157	$	(4,436)	$	(5,797)

15

PART I. FINANCIAL INFORMATION (CONTINUED)

Item 1.     Financial Statements (continued)

PACIFIC OAK STRATEGIC OPPORTUNITY REIT, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

September 30, 2021

(unaudited)

Increases (decreases) in net income as a result of amortization of the Company’s tenant origination and absorption costs, above-market lease assets and below-market lease liabilities for the three and nine months ended September 30, 2021 and 2020 were as follows (in thousands):

	Tenant Origination and Absorption Costs				Above-Market Lease Assets				Below-Market Lease Liabilities
	For the Three Months Ended September 30,				For the Three Months Ended September 30,				For the Three Months Ended September 30,
	2021		2020		2021		2020		2021		2020
Amortization	$	(3,253)	$	(1,625)	$	(94)	$	(74)	$	388	$	194

	Tenant Origination and Absorption Costs				Above-Market Lease Assets				Below-Market Lease Liabilities
	For the Nine Months Ended September 30,				For the Nine Months Ended September 30,				For the Nine Months Ended September 30,
	2021		2020		2021		2020		2021		2020
Amortization	$	(12,397)	$	(4,965)	$	(421)	$	(241)	$	1,436	$	676

As of September 30, 2021 and December 31, 2020, the Company had recorded a housing subsidy intangible asset, net of amortization, which is included in prepaid expenses and other assets in the accompanying consolidated balance sheets, of $1.9 million and $2.0 million, respectively. As of September 30, 2021, the housing subsidy intangible asset has a remaining amortization period of 27.1 years. During the three and nine months ended September 30, 2021, the Company recorded amortization expense of $18,000 and $54,000, respectively, related to the housing subsidy intangible asset.

Additionally, as of September 30, 2021 and December 31, 2020, the Company had recorded tax abatement intangible assets, net of amortization, which are included in prepaid expenses and other assets in the accompanying balance sheets, of $0.8 million and $1.6 million, respectively. During the three and nine months ended September 30, 2021, the Company recorded amortization expense of $0.2 million and $0.8 million, respectively, related to tax abatement intangible assets. During the three and nine months ended September 30, 2020, the Company recorded amortization expense of $0.1 million and $0.5 million, respectively, related to tax abatement intangible assets. As of September 30, 2021, the tax abatement intangible assets had a remaining amortization period of 1.6 years.

5. REAL ESTATE EQUITY SECURITIES

As of September 30, 2021, the Company owned three investments in real estate equity securities. The following table sets forth the number of shares owned by the Company and the related carrying value of the shares as of September 30, 2021 and December 31, 2020 (dollars in thousands):

	September 30, 2021			December 31, 2020
Real Estate Equity Security	Number of Shares Owned	Total Carrying Value		Number of Shares Owned	Total Carrying Value
Keppel Pacific Oak US REIT	64,165,352	$	50,370	64,165,352	$	44,274
Franklin Street Properties Corp.	6,915,089	32,086		6,915,089	30,219
Plymouth Industrial REIT, Inc.	613,085	13,947		1,560,660	23,410
	71,693,526	$	96,403	72,641,101	$	97,903

16

PART I. FINANCIAL INFORMATION (CONTINUED)

Item 1.     Financial Statements (continued)

PACIFIC OAK STRATEGIC OPPORTUNITY REIT, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

September 30, 2021

(unaudited)

The following summarizes the portion of gain and loss for the period related to real estate equity securities held during the three and nine months ended September 30, 2021 and 2020 (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Net (loss) gain recognized during the period on real estate equity securities	$	(2,614)	$	(6,527)	$	12,939	$	(21,620)
Less net gain recognized during the period on real estate equity securities sold during the period	—		—		(225)		(711)
Unrealized (loss) gain recognized during the reporting period on real estate equity securities held at the end of the period	$	(2,614)	$	(6,527)	$	12,714	$	(22,331)

During the three and nine months ended September 30, 2021, the Company recognized $3.2 million and $6.7 million, respectively, of dividend income from real estate equity securities. During the three and nine months ended September 30, 2020, the Company recognized $2.8 million and $4.4 million, respectively, of dividend income from real estate equity securities.

6. REAL ESTATE HELD FOR SALE

During the nine months ended September 30, 2021, the Company disposed of one office property. There were no material dispositions during the year ended December 31, 2020.

On July 27, 2021, the Company, through an indirect wholly owned subsidiary, sold an office building containing 435,177 rentable square feet located on approximately 4.92 acres of land in Orange, California (“City Tower”) to a purchaser unaffiliated with the Company or the Advisor, for $150.5 million, before closing costs and credits. The carrying value of City Tower as of the disposition date was $145.1 million, which was net of $20.5 million of accumulated depreciation and amortization. In connection with the sale of City Tower, the Company repaid $98.1 million of the outstanding principal balance due under the mortgage loan secured by City Tower. The Company recognized a gain on sale of $0.1 million related to disposition of City Tower.

The following summary presents the major components of assets and liabilities related to real estate held for sale as of September 30, 2021 and December 31, 2020 (in thousands):

	September 30, 2021		December 31, 2020
Assets related to real estate held for sale
Real estate, cost	$	—	$	158,711
Accumulated depreciation and amortization	—		(18,472)
Real estate, net	—		140,239
Other assets	—		5,680
Total assets related to real estate held for sale	$	—	$	145,919
Liabilities related to real estate held for sale
Note payable, net	—		94,097
Other liabilities	—		669
Total liabilities related to real estate held for sale	$	—	$	94,766

17

PART I. FINANCIAL INFORMATION (CONTINUED)

Item 1.     Financial Statements (continued)

PACIFIC OAK STRATEGIC OPPORTUNITY REIT, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

September 30, 2021

(unaudited)

The operations and gain on sale of City Tower is included in continuing operations on the accompanying statements of operations. The following table summarizes certain revenue and expenses related to these properties for the three and nine months ended September 30, 2021 and 2020 (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Revenues
Rental income	$	1,085	$	3,318	$	8,660	$	9,998
Other operating income	51		265		520		792
Total revenues	$	1,136	$	3,583	$	9,180	$	10,790
Expenses
Operating, maintenance, and management	$	363	$	1,004	$	2,096	$	2,855
Real estate taxes and insurance	95		389		979		1,258
Asset management fees to affiliate	194		305		807		907
Depreciation and amortization	14		1,769		2,436		5,342
Interest expense	152		518		1,146		1,953
Total expenses	$	818	$	3,985	$	7,464	$	12,315

18

PART I. FINANCIAL INFORMATION (CONTINUED)

Item 1.     Financial Statements (continued)

PACIFIC OAK STRATEGIC OPPORTUNITY REIT, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

September 30, 2021

(unaudited)

7. NOTES AND BONDS PAYABLE

As of September 30, 2021 and December 31, 2020, the Company’s notes and bonds payable, including notes payable related to real estate held for sale, consisted of the following (dollars in thousands):

	Book Value as of September 30, 2021		Book Value as of December 31, 2020		Contractual Interest Rate as of September 30, 2021	Effective Interest Rate at September 30, 2021 (1)	Payment Type (2)	Maturity Date (3)
Richardson Portfolio Mortgage Loan	$	28,685	$	35,832	One-Month LIBOR + 2.50%	2.58%	Principal & Interest	11/01/2021 (4)
Park Centre Mortgage Loan	26,185		26,185		One-Month LIBOR + 1.75%	1.83%	Interest Only	06/27/2022
1180 Raymond Mortgage Loan (5)	29,548		29,848		One-Month LIBOR + 2.50% (6)	3.50%	Principal & Interest	12/01/2021
1180 Raymond Bond Payable	5,705		5,870		6.50%	6.50%	Principal & Interest	09/01/2036
Pacific Oak SOR (BVI) Holdings, Ltd. Series A Debentures (7)	197,901		181,198		4.25%	4.25%	(7)	03/01/2023
Pacific Oak SOR (BVI) Holdings, Ltd. Series B Debentures (7)	78,794		79,078		3.93%	3.93%	(7)	01/31/2026
Crown Pointe Mortgage Loan (5)	52,508		53,072		One-Month LIBOR + 2.60%	2.70%	Principal & Interest	02/13/2022
City Tower Mortgage Loan	—		94,167		(8)	(8)	(8)	(8)
The Marq Mortgage Loan	62,066		62,257		One-Month LIBOR + 1.55%	1.63%	Interest Only	06/06/2022
Eight & Nine Corporate Centre Mortgage Loan	48,695		47,066		One-Month LIBOR + 1.60%	1.68%	Principal & Interest	06/08/2022
Georgia 400 Center Mortgage Loan	61,154		59,690		One-Month LIBOR + 1.55%	1.63%	Interest Only	05/22/2023
PORT Mortgage Loan 1	51,302		51,362		4.74%	4.74%	Interest Only	10/01/2025
PORT Mortgage Loan 2	10,523		10,523		4.72%	4.72%	Interest Only	03/01/2026
PORT Mortgage Loan 3 (9)	—		12,000		(9)	(8)	(8)	(8)
Battery Point Trust Mortgage Loan (9)	—		38,608		(8)	(8)	(8)	(8)
MetLife Loan (9)	60,000		—		3.90%	3.90%	Interest Only	04/10/2026
Springmaid Beach Resort Mortgage Loan	55,839		57,015		One-month LIBOR + 2.25% (10)	5.75%	Principal & Interest	08/12/2022
Q&C Hotel Mortgage Loan	25,000		25,000		One-month LIBOR + 2.50% (11)	4.50%	Principal & Interest	12/23/2022
Lincoln Court Mortgage Loan (5)	34,723		34,416		One-month LIBOR + 1.75%	1.83%	Principal & Interest	12/01/2021
Lofts at NoHo Commons Mortgage Loan	74,536		74,536		One-month LIBOR + 2.18% (12)	3.93%	Interest Only	09/09/2022
210 West 31st Street Mortgage Loan (5)	10,275		15,050		One-month LIBOR + 3.00%	3.08%	Principal & Interest	06/16/2022
Oakland City Center Mortgage Loan	96,404		96,782		One-month LIBOR + 1.75%	1.83%	Principal & Interest	09/01/2022
Madison Square Mortgage Loan (13)	20,891		16,822		One-month LIBOR + 4.05%	5.05%	Interest Only	10/09/2021
Total Notes and Bonds Payable principal outstanding	1,030,734		1,106,377
Discount on Notes and Bonds Payable, net (14)	(2,249)		(2,851)
Deferred financing costs, net	(4,707)		(4,458)
Total Notes and Bonds Payable, net	$	1,023,778	$	1,099,068

_____________________

19

PART I. FINANCIAL INFORMATION (CONTINUED)

Item 1.     Financial Statements (continued)

PACIFIC OAK STRATEGIC OPPORTUNITY REIT, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

September 30, 2021

(unaudited)

(1) Contractual interest rate represents the interest rate in effect under the loan as of September 30, 2021. Effective interest rate is calculated as the actual interest rate in effect as of September 30, 2021 (consisting of the contractual interest rate and contractual floor rates), using interest rate indices at September 30, 2021, where applicable.

(2) Represents the payment type required under the loan as of September 30, 2021. Certain future monthly payments due under this loan also include amortizing principal payments. For more information of the Company’s contractual obligations under its notes and bonds payable, see five-year maturity table below.

(3) Represents the initial maturity date or the maturity date as extended as of September 30, 2021; subject to certain conditions, the maturity dates of certain loans may be extended beyond the date shown.

(4) Subsequent to September 30, 2021, the Company extended the maturity of the Richardson Portfolio Mortgage Loan to November 1, 2022.

(5) The Company’s notes and bond’s payable are generally non-recourse. These mortgage loans have guarantees over certain balances whereby the Company would be required to make guaranteed payments in the event that the Company turned the property over to the lender. The guarantees are typically 25% of the outstanding loan balance. As of September 30, 2021, the guaranteed amount in the aggregate was $39.5 million.

(6) This mortgage loan has a LIBOR floor of 1%.

(7) See “ – Israeli Bond Financings” below.

(8) On July 27, 2021, in connection with the disposition of City Tower, the Company repaid the $98.1 million outstanding principal balance due under the City Tower Mortgage Loan.

(9) On April 6, 2021, the Company refinanced the PORT Mortgage Loan 3 and the Battery Point Trust Mortgage Loan with a mortgage loan from MetLife for borrowings up to $60.0 million.

(10) The interest rate is variable at the higher of one-month LIBOR + 2.25% or 5.77%.

(11) The interest rate is variable at the higher of one-month LIBOR + 2.5% or 4.5%. Principal payments will commence on January 1, 2022.

(12) The LIBOR rate is variable at the higher of one-month LIBOR or 1.75%.

(13) On October 7, 2021, the Company refinanced the Madison Square Mortgage Loan with a mortgage loan from an unaffiliated lender for borrowings up to $27.0 million. The new loan matures on October 7, 2024 and has a fixed interest rate of 4.625%. See Note 17, “Subsequent Events” for a further discussion.

(14) Represents the unamortized premium/discount on notes and bonds payable due to the above- and below-market interest rates when the debt was assumed. The discount/premium is amortized over the remaining life of the notes and bonds payable.

During the three and nine months ended September 30, 2021, the Company incurred $10.1 million and $30.7 million, respectively, of interest expense. Included in interest expense for the three and nine months ended September 30, 2021 was $0.8 million and $2.5 million, respectively, of amortization of deferred financing costs. Included in interest expense for the three and nine months ended September 30, 2021 was $0.5 million and $1.9 million, respectively, of amortization on discount on notes and bonds payable, net. Additionally, during the three and nine months ended September 30, 2021, the Company capitalized $0.5 million and $1.6 million, respectively of interest related to its investments in undeveloped land.

During the three and nine months ended September 30, 2020, the Company incurred $6.3 million and $19.1 million, respectively, of interest expense. Included in interest expense for the three and nine months ended September 30, 2020 was $0.8 million and $2.5 million, respectively, of amortization of deferred financing costs. Included in interest expense for the three and nine months ended September 30, 2020 was $64,000 and $14,000, respectively, of amortization of discount on notes and bonds payable, net. Additionally, during the three and nine months ended September 30, 2020, the Company capitalized $0.7 million and $2.4 million, respectively of interest related to its investments in undeveloped land.

As of September 30, 2021 and December 31, 2020, the Company’s interest payable was $3.3 million and $6.2 million, respectively.

The following is a schedule of maturities, including principal amortization payments, for all notes and bonds payable outstanding as of September 30, 2021 (in thousands):

October 1, 2021 through December 31, 2021	$	116,538
2022	548,061
2023	160,359
2024	26,535
2025	77,858
Thereafter	101,383
	$	1,030,734

20

PART I. FINANCIAL INFORMATION (CONTINUED)

Item 1.     Financial Statements (continued)

PACIFIC OAK STRATEGIC OPPORTUNITY REIT, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

September 30, 2021

(unaudited)

As of November 12, 2021, the Company had a total of $518.0 million of debt obligations scheduled to mature over the next 12 months. The Company has extension options with respect to $239.8 million of the debt obligations outstanding that are scheduled to mature over the next 12 months; however, the Company cannot exercise these options if not then in compliance with certain financial covenants in the loans without making a cash payment and there is no assurance that we will be able to meet these requirements. All of the Company’s debt obligations are generally non-recourse, subject to certain limited guaranty payments, as outlined in the table above, except for the Company’s Series A Debentures and Series B Debentures. Subsequent to September 30, 2021, the Company issued additional Series B Debentures, with the intent of using the proceeds and available cash on hand to payoff the outstanding Series A Debentures. See Note 17, “Subsequent Events” for a further discussion on the Series B Debentures issuance. The Company plans to utilize available extension options or refinance the notes payable. The Company may also choose to market the properties for sale or may negotiate a turnover of the secured properties back to the related mortgage lender.

The Company’s notes payable contain financial debt covenants, including minimum equity requirements and liquidity ratios. As of September 30, 2021, the Company was in compliance with all of these debt covenants except that the Madison Square Mortgage Loan was not in compliance with the debt yield requirement. Such non-compliance does not constitute an event of default under the loan agreement. As a result of such non-compliance, the Company is required to maintain an interest shortfall reserve and provide cash sweeps. Additionally, the Company was not compliance with the debt service coverage requirement for the Richardson Portfolio Mortgage Loan and Georgia 400 Center Mortgage Loan. As a result of such non-compliance, the Company is required to partially paydown the loan in the case of the Richardson Portfolio Mortgage Loan and provide a cash sweep in the case of the Georgia 400 Center Mortgage Loan.

Israeli Bond Financings

On March 2, 2016, Pacific Oak SOR BVI, a wholly owned subsidiary of the Company, filed a final prospectus with the Israel Securities Authority for a proposed offering of up to 1,000,000,000 Israeli new Shekels of the Series A Debentures at an annual interest rate not to exceed 4.25%. On March 1, 2016, Pacific Oak SOR BVI commenced the institutional tender of the Series A Debentures and accepted application for 842.5 million Israeli new Shekels. On March 7, 2016, Pacific Oak SOR BVI commenced the public tender of the Series A Debentures and accepted 127.7 million Israeli new Shekels.  In the aggregate, Pacific Oak SOR BVI accepted 970.2 million Israeli new Shekels (approximately $249.2 million as of March 8, 2016) in both the institutional and public tenders at an annual interest rate of 4.25%.  Pacific Oak SOR BVI issued the Debentures on March 8, 2016. The terms of the Series A Debentures require five equal annual installment principal payments on March 1st of each year from 2019 to 2023.

On February 16, 2020, Pacific Oak SOR BVI issued 254.1 million Israeli new Shekels (approximately $74.1 million as of February 16, 2020) of Series B Debentures to Israeli investors pursuant to a public offering registered with the Israel Securities Authority. The Series B Debentures will bear interest at the rate of 3.93% per year. The Series B Debentures have principal installment payments equal to 33.33% of the face amount of the Series B Debentures on January 31st of each year from 2024 to 2026.

On March 4, 2021, Pacific Oak SOR BVI issued additional Series A Debentures in the amount of 250.0 million Israeli new Shekels par value through a private placement. The additional Series A Debentures were issued at a 1.9% discount resulting in total consideration of 245.3 million Israeli new Shekels ($74.2 million as of March 4, 2021). The additional Series A Debentures have an equal level of security, pari passu, amongst themselves and between them and the initial Series A Debentures, which were initially issued, without any right of precedence or preference between any of them.

The deeds of trust that govern the Series A Debentures and Series B Debentures contain various financial covenants. As of September 30, 2021, the Company was in compliance with all of these financial debt covenants.

Subsequent to September 30, 2021, the Company issued additional Series B Debentures. See Note 17, “Subsequent Events” for a further discussion on the Series B Debentures issuance.

21

PART I. FINANCIAL INFORMATION (CONTINUED)

Item 1.     Financial Statements (continued)

PACIFIC OAK STRATEGIC OPPORTUNITY REIT, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

September 30, 2021

(unaudited)

8. DERIVATIVE INSTRUMENTS

The Company enters into derivative instruments for risk management purposes to hedge its exposure to cash flow variability caused by changing interest rates and foreign currency exchange rate movements. The primary goal of the Company’s risk management practices related to interest rate risk is to prevent changes in interest rates from adversely impacting the Company’s ability to achieve its investment return objectives. The Company does not enter into derivatives for speculative purposes.

The Company enters into foreign currency collars to mitigate its exposure to foreign currency exchange rate movements on its bonds payable outstanding denominated in Israeli new Shekels. A foreign currency collar consists of a purchased call option to buy and a sold put option to sell Israeli new Shekels. A foreign currency collar guarantees that the exchange rate of the currency will not fluctuate beyond the range of the options’ strike prices.

The following table summarizes the notional amount and other information related to the Company’s foreign currency collars as of September 30, 2021 and December 31, 2020. The notional amount is an indication of the extent of the Company’s involvement in each instrument at that time, but does not represent exposure to credit, interest rate or market risks (currency in thousands):

	September 30, 2021		December 31, 2020		Strike Price	Trade Date	Maturity Date
Derivative Instruments	Number of Instruments	Notional Amount	Number of Instruments	Notional Amount
Derivative instruments not designated as hedging instruments
Foreign currency collar	1	194,045 ILS	—	—	3.16 - 3.29 ILS - USD	06/14/2021	11/22/2021

The Company enters into interest rate caps to mitigate its exposure to rising interest rates on its variable rate notes payable. The values of interest rate caps are primarily impacted by interest rates, market expectations about interest rates, and the remaining life of the instrument. In general, increases in interest rates, or anticipated increases in interest rates, will increase the value of interest rate caps. As the remaining life of an interest rate cap decreases, the value of the instrument will generally decrease towards zero.

As of September 30, 2021, the Company had entered into four interest rate caps, which were not designated as a hedging instruments. The following table summarizes the notional amounts and other information related to the Company’s derivative instruments as of September 30, 2021. The notional amount is an indication of the extent of the Company’s involvement in the instrument at that time, but does not represent exposure to credit, interest rate or market risks (dollars in thousands):

Derivative Instrument	Effective Date	Maturity Date	Notional Value		Reference Rate
Interest rate cap	10/15/2020	10/15/2021	$	26,200	One-month LIBOR at 3.00%
Interest rate cap	02/12/2021	02/14/2022	$	47,715	One-month LIBOR at 3.00%
Interest rate cap	09/15/2021	09/15/2022	$	75,950	One-month LIBOR at 3.50%
Interest rate cap	06/21/2019	05/22/2023	$	51,252	One-month LIBOR at 4.00%

22

PART I. FINANCIAL INFORMATION (CONTINUED)

Item 1.     Financial Statements (continued)

PACIFIC OAK STRATEGIC OPPORTUNITY REIT, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

September 30, 2021

(unaudited)

The following table sets forth the fair value of the Company’s derivative instruments as well as their classification on the consolidated balance sheets as of September 30, 2021 and December 31, 2020 (dollars in thousands):

		September 30, 2021			December 31, 2020
Derivative Instruments	Balance Sheet Location	Number of Instruments	Fair Value		Number of Instruments	Fair Value
Derivative instruments not designated as hedging instruments
Interest rate caps	Prepaid expenses and other assets	4	$	2	7	$	1
Foreign currency collar	Other liabilities	1	$	(44)	—	$	—

The change in fair value of foreign currency collars that are not designated as cash flow hedges are recorded as foreign currency transaction gains or losses in the accompanying consolidated statements of operations. During the three months ended September 30, 2021, the Company recognized a $0.3 million gain related to the foreign currency collar, which is shown combined with $2.6 million of foreign currency transaction loss in the accompanying consolidated statements of operations as foreign currency transaction loss. During the nine months ended September 30, 2021, the Company recognized a $44,000 loss related to the foreign currency collar, which is shown combined with $0.6 million of foreign currency transaction gain in the accompanying consolidated statements of operations as foreign currency transaction gain, net.

During the three months ended September 30, 2020, the Company recognized a $2.2 million gain related to the foreign currency collars, which is shown combined with $2.6 million of foreign currency transaction loss in the accompanying consolidated statements of operations as foreign currency transaction loss, net. During the nine months ended September 30, 2020, the Company recognized a $14.3 million gain related to the foreign currency collars, which is shown combined with $2.0 million of foreign currency transaction loss in the accompanying consolidated statements of operations as foreign currency transaction gain, net. On July 29, 2020, the Company terminated the foreign currency collars and as a result received $14.1 million.

9. FAIR VALUE DISCLOSURES

The following were the face values, carrying amounts and fair values of the Company’s financial instruments as of September 30, 2021 and December 31, 2020, which carrying amounts do not approximate the fair values (in thousands):

	September 30, 2021						December 31, 2020
	Face Value		Carrying Amount		Fair Value		Face Value		Carrying Amount		Fair Value
Financial liabilities (Level 3):
Notes and bond payable	$	754,039	$	751,064	$	752,417	$	846,101	$	842,112	$	846,608
Financial liabilities (Level 1):
Pacific Oak SOR (BVI) Holdings, Ltd. Series A Debentures	$	197,901	$	195,428	$	197,437	$	181,198	$	179,786	$	178,450
Pacific Oak SOR (BVI) Holdings, Ltd. Series B Debentures	$	78,794	$	77,286	$	76,899	$	79,078	$	77,170	$	69,433

Disclosure of the fair value of financial instruments is based on pertinent information available to the Company as of the period end and requires a significant amount of judgment. This has made the estimation of fair values difficult and, therefore, both the actual results and the Company’s estimate of value at a future date could be materially different.

23

PART I. FINANCIAL INFORMATION (CONTINUED)

Item 1.     Financial Statements (continued)

PACIFIC OAK STRATEGIC OPPORTUNITY REIT, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

September 30, 2021

(unaudited)

As of September 30, 2021, the Company measured the following assets at fair value (in thousands):

			Fair Value Measurements Using
	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Recurring Basis:
Real estate equity securities	$	96,403	$	96,403	$	—	$	—
Asset derivative - interest rate caps	$	2	$	—	$	2	$	—
Liability derivative - foreign currency collar	$	(44)	$	—	$	(44)	$	—

As of December 31, 2020, the Company measured the following assets and liabilities at fair value (in thousands):

			Fair Value Measurements Using
	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Recurring Basis:
Real estate equity securities	$	96,403	$	96,403	$	—	$	—
Asset derivative - interest rate caps	$	2	$	—	$	2	$	—

As of September 30, 2021, the Company measured the following assets at fair value on a nonrecurring basis (in thousands):

			Fair Value Measurements Using
	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Nonrecurring Basis:
Impaired real estate	$	97,600	$	—	$	—	$	97,600
Impaired goodwill	$	13,534	$	—	$	—	$	13,534

As of September 30, 2021, two of the Company’s real estate properties were measured at their estimated fair value. 210 West 31st Street was based on a sales comparison approach as of September 30, 2021. Lincoln Court was based on an income approach with the significant unobservable inputs used in measuring the estimated fair value of this property include a discount rate of 7.75% and a terminal cap rate of 6.75%. During the three and nine months ended September 30, 2021, the Company recorded impairment charges on real estate in the aggregate of $11.0 million, to write down the carrying value of 210 West 31st Street and Lincoln Court.

The Company recorded goodwill in connection with the Merger with Pacific Oak Strategic Opportunity REIT II, Inc. ("POSOR II"). Due to a decline in projected cash flows for real estate held in certain reporting units, the Company determined that the carrying value of certain reporting units exceeded the estimated fair value and recognized impairment charges of $2.8 million. The fair value of the Company's reporting units were measured using significant unobservable inputs (Level 3) for the three and nine months ended September 30, 2021, which included discounted cash flows, terminal capitalization rates and discount rates.

24

PART I. FINANCIAL INFORMATION (CONTINUED)

Item 1.     Financial Statements (continued)

PACIFIC OAK STRATEGIC OPPORTUNITY REIT, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

September 30, 2021

(unaudited)

Balance as of December 31, 2020	$	16,342
Impairment loss	(2,808)
Balance as of September 30, 2021	$	13,534

10. RELATED PARTY TRANSACTIONS

As described further below, the Company has entered into agreements with certain affiliates pursuant to which they provide services to the Company. Keith D. Hall and Peter McMillan III control and indirectly own Pacific Oak Holding Group, LLC (“Pacific Oak Holding”), the Company’s sponsor since November 1, 2019. Pacific Oak Holding is the sole owner of the Advisor, the Company’s advisor since November 1, 2019. Messrs. Hall and McMillan are also two of the Company’s executive officers and directors.

Subject to certain restrictions and limitations, the business of the Company is externally managed by the Advisor pursuant to the Advisory Agreement. The Advisory Agreement is currently effective through November 1, 2022; however the Company or the Advisor may terminate the Advisory Agreement without cause or penalty upon providing 60 days’ written notice. The Advisor conducts the Company’s operations and manages its portfolio of real estate and other real estate-related investments.

In addition, along with Charles J. Schreiber, Jr., Keith D. Hall and Peter McMillan III control and indirectly own KBS Holdings LLC (“KBS Holdings”), the Company’s sponsor prior to November 1, 2019. KBS Holdings is the sole owner of KBS Capital Advisors, LLC (“KBS Capital Advisors”), the Company’s advisor prior to November 1, 2019, and KBS Capital Markets Group LLC, the entity that acted as the dealer manager of the Company’s now-terminated primary initial public offering.

From the Company’s inception through October 31, 2019, KBS Capital Advisors provided day-to-day management of the Company’s business. The advisory agreement with KBS Capital Advisors terminated on October 31, 2019. On March 27, 2020, the Company issued 3,411,737 shares of Restricted Stock to KBS Capital Advisors pursuant to the Restricted Stock Agreement. Refer to paragraph below for further discussion.

Pursuant to the terms of these agreements, summarized below are the related-party costs incurred by the Company for the three and nine months ended September 30, 2021 and 2020, respectively, and any related amounts payable as of September 30, 2021 and December 31, 2020 (in thousands):

	Incurred								Payable as of
	Three Months Ended September 30,				Nine Months Ended September 30,				September 30, 2021		December 31, 2020
Expensed	2021		2020		2021		2020
Asset management fees	$	3,422	$	2,426	$	10,802	$	6,867	$	2,132	$	2,837
Property management fees (1)	119		114		362		114		—		—
Reimbursable operating expenses (2)	—		56		—		148		—		—
Disposition fees (3)	692		—		1,196		—		—		—
Change in subordinated performance fee due upon termination to affiliate (4)	1,545		(1,121)		1,745		(814)		(3)		(3)
Capitalized
Acquisition fees on real estate equity securities	—		—		—		122		—		5
Acquisition fees on real estate (5)	—		—		20		171		20		—
Acquisition fee on investment in unconsolidated entities	—		—		45		—		—		—
	$	5,778	$	1,475	$	14,170	$	6,608	$	2,152	$	2,842

_____________________

(1) Property management fees are for single-family homes under PORT and paid to DayMark. These fees are included in the line item “Operating, maintenance, and management cost” in the consolidated statement of operations.

25

PART I. FINANCIAL INFORMATION (CONTINUED)

Item 1.     Financial Statements (continued)

PACIFIC OAK STRATEGIC OPPORTUNITY REIT, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

September 30, 2021

(unaudited)

(2) The Advisor may seek reimbursement for certain employee costs under the Advisory Agreement. The Company will not reimburse for employee costs in connection with services for which the Advisor earns acquisition, origination or disposition fees (other than reimbursement of travel and communication expenses) or for the salaries or benefits the Advisor or its affiliates may pay to the Company’s executive officers. In addition to the amounts above, the Company reimburses the Advisor for certain of the Company’s direct costs incurred from third parties that were initially paid by the Advisor on behalf of the Company.

(3) Disposition fees with respect to real estate sold are included in the gain on sale of real estate in the accompanying consolidated statements of operations.

(4) Change in the fair value of the Restricted Stock related to the termination of the former advisory agreement with KBS Capital Advisors. See “Subordinated Performance Fee Due Upon Termination to KBS Capital Advisors”, below, for more details.

(5) Acquisition fees associated with asset acquisitions are capitalized, while costs associated with business combinations expensed as incurred.

Pacific Oak Opportunity Zone Fund I

As of September 30, 2021, the Company owned 124 Class A Units in the Pacific Oak Opportunity Zone Fund I, LLC (“Pacific Oak Opportunity Zone Fund I”), which are included in investments in unconsolidated entities on the consolidated balance sheets. The Advisor is entitled to certain fees in connection with the fund. Pacific Oak Opportunity Zone Fund I will pay an acquisition fee equal to 1.5% of the purchase price of each asset (including any debt incurred or assumed and significant capital improvement costs budgeted as of the date of acquisition) with a purchase price less than or equal to $25.0 million plus 1.0% of the purchase price in excess of $25.0 million; a quarterly asset management fee equal to 0.25% of the total purchase price of all assets (including any debt incurred or assumed and significant capital improvement costs budgeted as of the date of acquisition) as of the end of the applicable quarter; and a financing fee equal to 0.5% of the original principal amount of any indebtedness they incur (reduced by any financing fee previously paid with respect to indebtedness being refinanced). In the case of investments made through joint ventures, the fees above will be determined based on the Company’s proportionate share of the investment. The Advisor is also entitled to certain distributions paid by the Pacific Oak Opportunity Zone Fund I after the Class A Members have received their preferred return. These fees and distributions have been waived for the Company’s investment. In addition, side letter agreements between the Advisor and Pacific Oak Opportunity Zone Fund I were executed on February 28, 2020 and stipulate that any asset management fees allocable to the Company and waived by Pacific Oak Capital Advisors for Pacific Oak Opportunity Zone Fund I will distributed to the Company. During the three and nine months ended September 30, 2021, the Company recorded $0.2 million and $0.5 million, respectively, of waived asset management fees recorded as equity in income of unconsolidated entities, of which $0.7 million was a receivable as of September 30, 2021.

PORT II

As of September 30, 2021, the Company has contributed $5.5 million in PORT II OP, LLC (“PORT II OP”), a wholly owned subsidiary of Pacific Oak Residential Trust II, Inc. ("PORT II"). On August 31, 2020, PORT II entered into an advisory agreement (as subsequently amended and restated on October 9, 2020, “PORT II Advisory Agreement”) with Pacific Oak Residential Advisors, LLC (“PORA”), an affiliate of the Advisor. Pursuant to the PORT II Advisory Agreement, PORT II has engaged PORA to act as its external advisor with respect to PORT II’s operations and assets. Because the Company has separately engaged the Advisor to manage its operations and assets, including its interests in PORT II, on November 12, 2020, the Company and the Advisor agreed to amend their advisory agreement to provide that PORT II’s operations and assets will be managed by PORA and not by the Advisor. In addition, the amendment provides that the Advisor will rebate or offset its fees under its advisory agreement with the Company to the extent of the Company’s indirect economic interest in fees paid by PORT II to PORA (which will be based on the Company’s indirect ownership of PORT II OP, which is the operating partnership of PORT II and the entity ultimately responsible for PORT II’s administrative expenses).

On August 31, 2020, PORT II entered into a property management agreement with DMH Realty, LLC (“DMH”), an affiliate of the Advisor and PORA. Pursuant to the property management agreement, PORT II will pay to DMH a base fee equal to the following: (a) for all rent collections up to $50 million per year, 8%; (b) for all rent collections in excess of $50 million per year, but less than or equal to $75 million per year, 7%; and (c) for all rent collections in excess of $75 million per year, 6%. PORT II will also pay DMH market-based leasing fees that will depend on the type of tenant, shared fees equal to 100% of any application fees collected and 50% of any insufficient funds fees, late fees and certain other fees collected. DMH may also perform additional services at rates that would be payable to unrelated parties.

26

PART I. FINANCIAL INFORMATION (CONTINUED)

Item 1.     Financial Statements (continued)

PACIFIC OAK STRATEGIC OPPORTUNITY REIT, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

September 30, 2021

(unaudited)

PORT II is a Maryland corporation formed and sponsored by the Advisor to acquire, own and operate single-family homes as rental properties as well as to acquire and own other interests, including mortgages on or securities related to single-family homes.

Subordinated Performance Fee Due Upon Termination to KBS Capital Advisors

The Company and KBS Capital Advisors agreed to terminate their advisory agreement effective October 31, 2019. In connection with that agreement, the Company agreed to pay KBS Capital Advisors a subordinated performance fee due upon termination in the form of Restricted Stock, to be paid to KBS Capital Advisors upon the filing of its Annual Report on Form 10-K for the year ended December 31, 2019. At that time, GKP Holding LLC, a Delaware limited liability company (“GKP”), was a manager of KBS Capital Advisors and of KBS Holdings LLC (“KBS Holdings”), which wholly owns KBS Capital Advisors. At that time, GKP owned 1/3 of KBS Holdings. Keith D. Hall, the Company’s Chief Executive Officer and a director, and Peter McMillan III, the Company’s President and Chairman of the Board, are the managers of GKP and each own 50% of GKP. The number of shares of Restricted Stock to be awarded was set at 3,411,737 shares and was issued on March 27, 2020. This termination payout value to KBS Capital Advisors (the “KBS Termination Fee Value”) was determined based on the Company’s performance from inception through September 30, 2018. In other words, it was based on the Company’s participation fee potential liability to KBS Capital Advisors calculated with respect to the November 12, 2018 estimated value per share. As a result, when the Company hired the Advisor as the Company’s new advisor on November 1, 2019, the Company agreed to a participation fee that was based on the Company’s performance from September 30, 2018.

On September 1, 2021, GKP ceased to be a manager of KBS Capital Advisors and KBS Holdings and ceased to own an interest in KBS Holdings. Also on September 1, 2021, GKP and KBS Capital Advisors entered into Amendment No. 1 (the “Amendment”) to the Restricted Stock Agreement and the Unvested Share Transfer Agreement (the “Unvested Share Agreement”). Pursuant to the Amendment, on September 1, 2021, the Company repurchased 584,267 of the shares of Restricted Stock from KBS Capital Advisors for consideration of $5,655,705 in cash, or $9.68 per share. Pursuant to the terms of the Amendment and the Unvested Share Agreement, on September 1, 2021, KBS Capital Advisors transferred 2,254,289 of the shares of Restricted Stock to GKP (the “GKP Restricted Shares”). KBS Capital Advisors transferred the GKP Restricted Shares as partial consideration for and to effectuate the conclusion of the acquisition of GKP’s 1/3 ownership interest in KBS Holdings by its other owners. On September 1, 2021, upon the transfer of GKP’s 1/3 ownership interest in KBS Holdings, GKP ceased to be a manager of KBS Capital Advisors and KBS Holdings and ceased to have an ownership interest in KBS Holdings. Under the Amendment, the GKP Restricted Shares are nonvested and forfeitable until the earliest of: (i) July 1, 2026 or (ii) immediately before and contingent upon the occurrence of a Change in Control (as defined in the Restricted Stock Agreement) of the Company. Notwithstanding the foregoing, and at the option of either Keith Hall’s estate or Peter McMillan’s estate, in the event of the death of either Keith Hall or Peter McMillan, such event can trigger the vesting of that number of GKP Restricted Shares corresponding to 100% of the deceased party’s proportional economic interest in GKP Restricted Shares. In addition, unvested GKP Restricted Shares will be forfeited in certain instances if GKP fails to comply with certain requirements set forth in the Amendment, which forfeiture may be waived by the Company’s Conflict Committee in certain cases. Non-vested GKP Restricted Shares are not eligible for redemption by the Company under any circumstances unless approved by the Company’s board of directors.

27

PART I. FINANCIAL INFORMATION (CONTINUED)

Item 1.     Financial Statements (continued)

PACIFIC OAK STRATEGIC OPPORTUNITY REIT, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

September 30, 2021

(unaudited)

After the vesting of the GKP Restricted Shares, and only upon receiving a request from GKP and the consent of the Company’s Conflicts Committee, within 60 days from the request, the Company will redeem 50% of the vested GKP Restricted Shares, with the amount of the cash payment per share determined based on the then most recent board-approved net asset value per share (which must not be more than six months old). Any vested GKP Restricted Shares that are not required to be redeemed in accordance with the preceding sentence are referred to herein as the “Retained Vested GKP Shares.” The Retained Vested GKP Shares are not eligible for redemption under the Company’s share redemption program unless the Company has satisfied all outstanding redemption requests from other stockholders, provided that this restriction may be waived in certain situations, such as upon a change of control of the Company, as determined by the Conflicts Committee of the Board. The Amendment also provides that an additional 59,714 Restricted Shares held by KBS Capital Advisors and 513,467 Restricted Shares that were transferred to affiliates of KBS Capital Advisors under the Amendment were immediately vested and fully released from all restrictions and requirements of the Restricted Stock Agreement (the “KBS Vested Shares”), provided that the KBS Vested Shares are not eligible for redemption under the Company’s share redemption program unless the Company has satisfied all outstanding redemption requests from other stockholders, provided further that (i) this restriction may be waived in certain situations, such as upon a change of control of the Company, as determined by the Conflicts Committee and (ii) notwithstanding the foregoing, within 60 days after November 1, 2024, the Company will be required to redeem any remaining outstanding KBS Vested Shares, separate and outside of any general stockholder share redemption program, at the then most recent board-approved net asset value per share (which must not be more than six months old).

11. INVESTMENT IN UNCONSOLIDATED ENTITIES

As of September 30, 2021 and December 31, 2020, the Company’s investments in unconsolidated entities were composed of the following (dollars in thousands):

	Number of Properties as of September 30, 2021			Investment Balance at
Joint Venture		Location	Ownership %	September 30, 2021		December 31, 2020
110 William Joint Venture	1	New York, New York	60.0%	$	—	—
353 Sacramento Joint Venture	1	San Francisco, California	55.0%	50,769		49,665
Pacific Oak Opportunity Zone Fund I	3	Various	N/A	27,638		24,996
PORT II OP LP	117	Various	89.7%	5,447		5,005
				$	83,854	$	79,666

Investment in 110 William Joint Venture

On December 23, 2013, the Company, through an indirect wholly owned subsidiary, entered into an agreement with SREF III 110 William JV, LLC (the “110 William JV Partner”) to form a joint venture (the “110 William Joint Venture”). On May 2, 2014, the 110 William Joint Venture acquired an office property containing 928,157 rentable square feet located on approximately 0.8 acres of land in New York, New York (“110 William Street”). Each of the Company and the 110 William JV Partner hold a 60% and 40% ownership interest in the 110 William Joint Venture, respectively.

The Company exercises significant influence over the operations, financial policies and decision making with respect to the 110 William Joint Venture but significant decisions require approval from both members. Accordingly, the Company has accounted for its investment in the 110 William Joint Venture under the equity method of accounting. Income, losses, contributions and distributions are generally allocated based on the members’ respective equity interests.

28

PART I. FINANCIAL INFORMATION (CONTINUED)

Item 1.     Financial Statements (continued)

PACIFIC OAK STRATEGIC OPPORTUNITY REIT, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

September 30, 2021

(unaudited)

As of September 30, 2021 and December 31, 2020, the book value of the Company’s investment in the 110 William Joint Venture was $0. During the three months ended March 31, 2019, the Company suspended the equity method of accounting and the Company will not record the Company's share of losses and will not record the Company's share of any subsequent income for the 110 William Joint Venture until the Company’s share of net income exceeds the gain recorded and the Company’s share of the net losses not recognized during the period the equity method was suspended. During both of the three and nine months ended September 30, 2021 and September 30, 2020, the Company did not record equity in income from the 110 William Joint venture.

Summarized financial information for the 110 William Joint Venture follows (in thousands):

	September 30, 2021		December 31, 2020
Assets:
Real estate assets, net of accumulated depreciation and amortization	$	232,201	$	246,166
Other assets	34,200		44,004
Total assets	$	266,401	$	290,170
Liabilities and equity:
Notes payable, net	$	318,280	$	316,421
Other liabilities	3,003		5,532
Partners’ deficit	(54,882)		(31,783)
Total liabilities and equity	$	266,401	$	290,170

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Revenues	$	5,729	$	10,005	$	18,721	$	26,604
Expenses:
Operating, maintenance, and management	2,359		2,096		6,212		5,994
Real estate taxes and insurance	1,698		1,935		5,588		5,580
Depreciation and amortization	2,962		3,139		19,071		8,721
Interest expense	3,548		4,125		10,986		12,093
Total expenses	10,567		11,295		41,857		32,388
Total other income	11		12		35		50
Net loss	$	(4,827)	$	(1,278)	$	(23,101)	$	(5,734)
Company’s share of net loss (1)	$	(2,896)	$	(767)	$	(13,861)	$	(3,440)

_____________________

(1) The Company suspended the equity method of accounting and did not record the Company's share of losses for both of the three and nine months ended September 30, 2021 and 2020.

Investment in 353 Sacramento Joint Venture

On July 6, 2017, the Company, through an indirect wholly owned subsidiary, entered into an agreement with the Migdal Members to form a joint venture (the “353 Sacramento Joint Venture”). On July 6, 2017, the Company sold a 45% equity interest in an entity that owns an office building containing 284,751 rentable square feet located on approximately 0.35 acres of land in San Francisco, California (“353 Sacramento”) to the Migdal Members. The sale resulted in 353 Sacramento being owned by the 353 Sacramento Joint Venture, in which the Company indirectly owns 55% of the equity interests and the Migdal Members indirectly own 45% in the aggregate of the equity interests. During the nine months ended September 30, 2021, the Company contributed an additional $1.1 million into the 353 Sacramento Joint Venture.

29

PART I. FINANCIAL INFORMATION (CONTINUED)

Item 1.     Financial Statements (continued)

PACIFIC OAK STRATEGIC OPPORTUNITY REIT, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

September 30, 2021

(unaudited)

The Company exercises significant influence over the operations, financial policies and decision making with respect to the 353 Sacramento Joint Venture but significant decisions require approval from both members. Accordingly, the Company has accounted for its investment in the 353 Sacramento Joint Venture under the equity method of accounting. Income, losses, contributions and distributions are generally allocated based on the members’ respective equity interests.

Summarized financial information for the 353 Sacramento Joint Venture follows (in thousands):

	September 30, 2021		December 31, 2020
Assets:
Real estate assets, net of accumulated depreciation and amortization	$	178,874	$	182,318
Other assets	27,539		19,810
Total assets	$	206,413	$	202,128
Liabilities and equity:
Notes payable, net	$	110,000	$	109,783
Other liabilities	6,335		7,639
Partners’ capital	90,078		84,706
Total liabilities and equity	$	206,413	$	202,128

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Revenues	$	3,373	$	5,520	$	13,252	$	15,771
Expenses:
Operating, maintenance, and management	862		932		2,490		2,450
Real estate taxes and insurance	848		755		2,768		2,235
Depreciation and amortization	1,850		1,894		5,574		5,135
Interest expense	960		948		2,700		3,290
Total expenses	4,520		4,529		13,532		13,110
Net income	$	(1,147)	$	991	(280)		$	2,661
Company’s equity in (loss) income of unconsolidated joint venture	$	(592)	$	583	$	(40)	$	1,576

Investment in Pacific Oak Opportunity Zone Fund I

During the year ended December 31, 2019, the Company acquired 91 Class A Units for $20.6 million in Pacific Oak Opportunity Zone Fund I. Additionally, with the POSOR II Merger, the Company acquired an additional 13 Class A Units with a fair value of $3.0 million and also acquired 7 Class A Units for $1.5 million during the year ended December 31, 2020. During the nine months ended September 30, 2021, the Company acquired additional 13 Class A Units for $3.1 million.

As of September 30, 2021, the book value of the Company’s investment in Pacific Oak Opportunity Zone Fund I was $27.6 million, which includes $0.2 million of acquisition fees. As of September 30, 2021, Pacific Oak Opportunity Zone Fund I consolidated three joint ventures with real estate under development. As of September 30, 2021, the Company has concluded that Pacific Oak Opportunity Zone Fund I qualifies as a Variable Interest Entity (“VIE”) because there is insufficient equity at risk to finance the entity’s activities and the entity is structured with non-substantive voting rights. The Company concluded it is not the primary beneficiary of this VIE since it does not have the power to direct the activities that most significantly impact the entity’s economic performance and will account for its investment under the equity method of accounting.

30

PART I. FINANCIAL INFORMATION (CONTINUED)

Item 1.     Financial Statements (continued)

PACIFIC OAK STRATEGIC OPPORTUNITY REIT, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

September 30, 2021

(unaudited)

During the three and nine months ended September 30, 2021, the Company recognized $0.1 million and $0.5 million, respectively, of losses related to this investment. The Company’s maximum exposure to loss as a result of its involvement with this VIE is limited to the carrying value of the investment in Pacific Oak Opportunity Zone Fund I which totaled $27.6 million as of September 30, 2021.

PORT II

PORT II is a Maryland corporation formed and sponsored by the Advisor to acquire, own and operate single-family homes as rental properties as well as to acquire and own other interests, including mortgages on or securities related to single-family homes. As of September 30, 2021, the Company owns 600 shares of common stock of PORT II, of which the Company exercises significant influence over the operations, financial policies and decision making with respect to PORT II, but does not control. In addition, as of September 30, 2021, the Company had contributed $5.5 million in capital to PORT II OP, of which the Company owns 89.7%. The remaining ownership percentage is owned by PORT II. As of September 30, 2021, the Company has concluded that PORT II OP qualifies as a VIE because there is insufficient equity at risk to finance the entity’s activities and the entity is structured with non-substantive voting rights. The Company concluded it is not the primary beneficiary of this VIE since it does not have the power to direct the activities that most significantly impact the entity’s economic performance and will account for its investment under the equity method of accounting. During the three and nine months ended September 30, 2021, the Company recognized $47,000 and $0.1 million of losses related to this investment, respectively.

12. SUPPLEMENTAL CASH FLOW AND SIGNIFICANT NONCASH TRANSACTION DISCLOSURES

Supplemental cash flow and significant noncash transaction disclosures were as follows (in thousands):

	Nine Months Ended September 30,
	2021		2020
Supplemental Disclosure of Cash Flow Information:
Interest paid, net of capitalized interest of $1,579 and $2,368 for the nine months ended September 30, 2021 and 2020, respectively	$	29,220	$	18,945
Supplemental Disclosure of Significant Noncash Transactions:
Accrued improvements to real estate	1,721		2,393
Redeemable common stock payable	3,385		262
Distributions paid to common stockholders through common stock issuances pursuant to the dividend reinvestment plan	—		262
Accrued preferred dividends	225		226
PPP notes forgiveness	1,500		—
Assets and liabilities assumed in connection with Battery Point acquisition:
Real estate	—		56,148
Notes payable	—		36,003
Other assets	—		21
Other liabilities	—		355
Redeemable non-controlling interest	—		3,024
Series A-3 preferred units payable	—		16,000

31

PART I. FINANCIAL INFORMATION (CONTINUED)

Item 1.     Financial Statements (continued)

PACIFIC OAK STRATEGIC OPPORTUNITY REIT, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

September 30, 2021

(unaudited)

13. REPORTING SEGMENTS

The Company recognizes three reporting segments for the three and nine months ended September 30, 2021 and consists of strategic opportunistic properties, single-family homes and hotels. All corporate related costs are included in the strategic opportunistic properties segment to align with how financial information is presented to the chief operating decision maker. The Company recognized two reporting segments for the three and nine months ended September 30, 2020. The selected financial information for reporting segments for the three and nine months ended September 30, 2021 and 2020 are as follows (in thousands):

	Three Months Ended September 30, 2021
	Strategic Opportunistic Properties		Single-Family Homes		Hotels		Total
Total revenues	$	28,050	$	5,566	$	12,153	$	45,769
Total expenses	(52,891)		(6,398)		(8,948)		(68,237)
Total other (loss) income	(4,435)		81		1,276		(3,078)
Net (loss) income	$	(29,276)	$	(751)	$	4,481	$	(25,546)
	Nine Months Ended September 30, 2021
	Strategic Opportunistic Properties		Single-Family Homes		Hotels		Total
Total revenues	$	88,187	$	16,436	$	24,578	$	129,201
Total expenses	(128,418)		(19,581)		(22,924)		(170,923)
Total other income	42,527		159		1,289		43,975
Net income (loss)	$	2,296	$	(2,986)	$	2,943	$	2,253

	Three Months Ended September 30, 2020
	Strategic Opportunistic Properties		Single-Family Homes		Hotels		Total
Total revenues	$	22,548	$	5,197	$	—	$	27,745
Total expenses	(26,285)		(5,969)		—		(32,254)
Total other (loss) income	(2,863)		4		—		(2,859)
Net loss	$	(6,600)	$	(768)	$	—	$	(7,368)
	Nine Months Ended September 30, 2020
	Strategic Opportunistic Properties		Single-Family Homes		Hotels		Total
Total revenues	$	64,752	$	11,117	$	—	$	75,869
Total expenses	(66,928)		(13,203)		—		(80,131)
Total other (loss) income	(16,939)		54		—		(16,885)
Net loss	$	(19,115)	$	(2,032)	$	—	$	(21,147)

32

PART I. FINANCIAL INFORMATION (CONTINUED)

Item 1.     Financial Statements (continued)

PACIFIC OAK STRATEGIC OPPORTUNITY REIT, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

September 30, 2021

(unaudited)

Total assets and goodwill related to the reporting segments as of September 30, 2021 and December 31, 2020 are as follows (in thousands):

	September 30, 2021
	Strategic Opportunistic Properties		Single-Family Homes		Hotels		Total
Total assets	$	1,274,093	$	202,349	$	152,686	$	1,629,128
Goodwill (1)	9,489		—		4,045		13,534

	December 31, 2020
	Strategic Opportunistic Properties		Single-Family Homes		Hotels		Total
Total assets	$	1,404,509	$	182,486	$	144,670	$	1,731,665
Goodwill	12,297		—		4,045		16,342

_____________________

(1) During the three and nine months ended September 30, 2021, the Company recorded impairment charges on goodwill of $2.8 million related to the Strategic Opportunistic Properties segment.

14. PORT MEZZANINE EQUITY

The Company has authorized and issued preferred stock from a subsidiary. The Company has elected to use the measurement method described under ASC 480-10-S99-3A, paragraph 15(b), resulting in the common and preferred stock being classified in mezzanine equity and measured based on the estimated future redemption value as of September 30, 2021.

On November 6, 2019, PORT issued 15,000 shares out of its available 25,000,000 shares of Series A Cumulative Convertible Redeemable Preferred Stock for gross proceeds of $1,000 per share resulting in net proceeds of $15.0 million before issuance costs. The shares provide for an annual dividend of 6% payable quarterly, which increases to 12% if all shares are not redeemed by the Company immediately following the redemption date. However, the 12% dividend rate does not apply until the aggregate number of shares selected for redemption do not constitute 10% or more of all outstanding shares. The shares may be redeemed by the holders beginning on November 4, 2021 for $1,000 per share plus all accrued but unpaid dividends through the redemption date, or after November 4, 2022 for $1,120 per share plus all accrued but unpaid dividends through the redemption date. In addition, after November 4, 2020, the shares are redeemable at the Company’s option, at any time or from time to time, at a redemption price of $1,120 per share plus unpaid accrued dividends. Additionally, if the common shares of PORT are publicly traded, the holder may elect to convert its preferred shares into PORT common shares based on a value of the preferred shares of $1,120 per share plus unpaid accrued dividends, and a conversion price of the common shares as stated in the agreement.

On November 22, 2019, PORT issued 125 shares of its Series B Cumulative Redeemable Preferred Stock for gross proceeds of $1,000 per share resulting in net proceeds of $0.1 million after issuance costs. The shares provide for an annual dividend of 12.5% payable semiannually. The shares may be redeemed by the holders for $1,050 per share until December 31, 2021 and for $1,000 per share thereafter.

33

PART I. FINANCIAL INFORMATION (CONTINUED)

Item 1.     Financial Statements (continued)

PACIFIC OAK STRATEGIC OPPORTUNITY REIT, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

September 30, 2021

(unaudited)

The following is a reconciliation of PORT’s noncontrolling cumulative convertible redeemable preferred stock for the nine months ended September 30, 2021 and 2020 (dollars in thousands):

	Series A Preferred Stock			Series B Preferred Stock
	Shares	Amounts		Shares	Amounts
Balance, December 31, 2020	15,000	15,134		125	$	99
Dividends Available Upon Redemption	—	636		—	8
Dividends Paid	—	(636)		—	(8)
Balance, September 30, 2021	15,000	$	15,134	125	$	99

	Series A Preferred Stock			Series B Preferred Stock
	Shares	Amounts		Shares	Amounts
Balance, December 31, 2019	15,000	$	14,909	125	$	99
Dividends Available Upon Redemption	—	781		—	7
Dividends Paid	—	(556)		—	(7)
Balance, September 30, 2020	15,000	$	15,134	125	$	99

On July 1, 2020, the Company acquired, through its subsidiaries, Battery Point Trust Inc., a Maryland corporation (“Battery Point”). Battery Point is a real estate investment trust that owned, at the time of acquisition, 559 single-family rental homes throughout the Midwestern and Southeastern United States. All of these assets are held by the Company through its subsidiary, PORT OP.

The Company acquired Battery Point by acquiring all the 1,000,000 outstanding shares of Battery Point common stock from BPT Holdings, LLC (“BPT Holdings”), a partially owned subsidiary of the Advisor. The Advisor is the Company’s external advisor and is owned and controlled by Keith D. Hall, the Company’s Chief Executive Officer and a director, and Peter M. McMillan, the Company’s President and Chairman of the Board. In exchange, BPT Holdings received 510,816 common equity units in PORT OP, approximately 4.5% of the outstanding common equity units, as of July 1, 2020. The value of the interests exchanged was estimated by the participants at approximately $3.0 million. The common equity units issued to BPT Holdings are redeemable after one year at the request of BPT Holdings for all or a portion of the common equity units at a redemption price equal to and in the form of cash based on the unit price of PORT OP. The following table summarizes the redeemable non-controlling interest activity related to the PORT OP equity units held by BPT Holdings for the nine months ended September 30, 2021 (in thousands):

December 31, 2020	$	2,968
Net loss attributable to redeemable noncontrolling interest	(113)
September 30, 2021	$	2,855

15. RESTRICTED STOCK

On March 27, 2020, the Company issued 3,411,737 restricted shares to KBS Capital Advisors in connection with the subordinated performance fee due upon termination (the “Restricted Stock”), which were expected to vest on November 1, 2021. These shares are subject to non-compete provisions, which are treated as clawback contingent features and will be accounted for if and when the Restricted Stock is required to be returned.

34

PART I. FINANCIAL INFORMATION (CONTINUED)

Item 1.     Financial Statements (continued)

PACIFIC OAK STRATEGIC OPPORTUNITY REIT, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

September 30, 2021

(unaudited)

On September 1, 2021, the Company, KBS Capital Advisors, and GKP entered into amendment no. 1 to the Restricted Stock Agreement (the "Amendment"). Pursuant to the Amendment, 1,157,448 shares of Restricted Stock ("Released Shares") were immediately vested and fully released from all restrictions and requirements of the Restricted Stock Agreement. Of the Released Shares, the Company repurchased 584,267 shares from KBS Capital Advisors for consideration of $5,655,705 in cash, or $9.68 per share. After a one year period, 513,467 of the Released Shares are eligible for redemption under the Company's share redemption program. Within a 60 day period following November 1, 2024, 59,714 of the Released Shares are to be redeemed by the Company, though prior to this date, the shares are eligible for redemption under the Company's share redemption program if all outstanding redemption requests from other stockholders have been satisfied.

Additionally, KBS Capital Advisors transferred 2,254,289 shares of Restricted Stock to GKP ("GKP Restricted Shares"). The GKP Restricted Shares vest on the earlier of the following: (i) July 1, 2026 or (ii) a change of control. Upon vesting, 50% of the GKP Restricted Shares are eligible for redemption based on the most recent board approved NAV per share, but requires approval of the Company's conflicts committee of the board of directors. The remaining 50% of the GKP Restricted Shares are eligible for redemption under the Company's share redemption program if all outstanding redemption requests from other stockholders have been satisfied.

The 59,714 of the Released Shares are classified as a liability instrument, accounted for as restricted stock payable on the accompanying consolidated balance sheets, and are recorded at the fair value of the shares at each reporting period until settled. The remaining Released Shares and GKP Restricted Shares are classified as an equity instrument and recorded in additional paid-in-capital on the accompanying balance sheet.

For the three and nine months ended September 30, 2021, the Company recorded $1.5 million subordinated performance fee due upon termination to affiliate expense to record the Restricted Stock at fair value. The fair value of the Restricted Stock was estimated based on the Company's NAV, adjusted for a lack of marketability discount. As of September 1, 2021, the Company measured the Restricted Stock at its fair value of $9.61 per share.

16. COMMITMENTS AND CONTINGENCIES

The Company owns two hotels, Springmaid Beach Resort and Q&C Hotel. The operation for both hotels are externally managed by third-party hotel operators, in which the Company have contractual obligations under the management agreements.

Management Agreement

Springmaid Beach Resort

The consolidated joint venture entity through which the Company leases the operations for Springmaid Beach Resort has entered into a management agreement with Doubletree Management LLC, an independent third-party hotel operator (the “Operator”) pursuant to which the Operator will manage and operate the Springmaid Beach Resort. The hotel was branded a DoubleTree by Hilton in September 2016 (the “Brand Commencement Date”).

The management agreement expires on December 31 of the 20th full year following the Brand Commencement Date. Upon mutual agreement, the parties may extend the term of the agreement for two successive periods of five years each. If an event of default occurs and continues beyond any applicable notice and cure periods set forth in the management agreement, the non-defaulting party generally has, among other remedies, the option of terminating the management agreement upon written notice to the defaulting party with no termination fee payable to Doubletree. In addition, the Company has the right to terminate the management agreement without the payment of a termination fee if Doubletree fails to achieve certain criteria relating to the performance of the hotel for any two consecutive years following the Brand Commencement Date. Under certain circumstances following a casualty or condemnation event, either party may terminate the management agreement provided Doubletree receives a termination fee an amount equal to two years of the base fee. The Company is permitted to terminate the management agreement upon a sale, lease or other transfer of the Springmaid Beach Resort any time so long as the buyer is approved for, and enters into a DoubleTree by Hilton franchise agreement for the balance of the agreement’s term. Finally, the Company is restricted in its ability to assign the management agreement upon a sale, lease or other transfer the Springmaid Beach Resort unless the transferee is approved by Doubletree to assume the management agreement.

35

PART I. FINANCIAL INFORMATION (CONTINUED)

Item 1.     Financial Statements (continued)

PACIFIC OAK STRATEGIC OPPORTUNITY REIT, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

September 30, 2021

(unaudited)

Pursuant to the management agreement the Operator receives the following fees:

•a base fee, which is a percentage of total operating revenue that starts at 2.5% and increases to 2.75% in the second year following the Brand Commencement Date and further increases in the third year following the Brand Commencement Date and thereafter to 3.0%;

•a campground area management fee, which is 2% of any campground revenue;

•an incentive fee, which is 15% of operating cash flow (after deduction for capital renewals reserve and the joint venture owner’s priority, which is 12% of the joint venture owner’s total investment);

•an additional services fee in the amount reasonably determined by the Operator from time to time; and

•a brand services fee in the amount of 4% of total rooms revenue, and an other brand services fee in an amount determined by the Operator from time to time.

The management agreement contains specific standards for the operation and maintenance of the hotel, which allows the Operator to maintain uniformity in the system created by the Operator’s franchise. Such standards generally regulate the appearance of the hotel, quality and type of goods and services offered, signage and protection of trademarks. Compliance with the management agreement will require the Company to make significant expenditures for capital improvements.     

During the three and nine months ended September 30, 2021, the Company incurred $0.3 million and $0.6 million, respectively, of fees related to the management agreement, which are included in hotel expenses on the accompanying consolidated statements of operations.

Q&C Hotel

A wholly owned subsidiary of the joint venture through which the Company leases the operations of the Q&C Hotel (“Q&C Hotel Operations”) has entered into a management agreement with Encore Hospitality, LLC (“Encore Hospitality”), an affiliate of the joint venture partner, pursuant to which Encore Hospitality will manage and operate the Q&C Hotel. The management agreement expires on December 17, 2035. Subject to certain conditions, Encore Hospitality may extend the term of the agreement for a period of five years. Pursuant to the management agreement Encore Hospitality will receive a base fee, which is 4.0% of gross revenue (as defined in the management agreement). During both of the three and nine months ended September 30, 2021, the Company incurred $0.1 million of fees related to the management agreement, which are included in hotel expenses on the accompanying consolidated statements of operations.

Q&C Hotel Operations has also entered into a franchise agreement with Marriott International (“Marriott”) pursuant to which Marriott has granted Q&C Hotel Operations a limited, non-exclusive license to establish and operate the Q&C Hotel using certain of Marriott’s proprietary marks and systems and the hotel was branded as a Marriott Autograph Collection hotel on May 25, 2016. The franchise agreement will expire on May 25, 2041. Pursuant to the franchise agreement, Q&C Hotel Operations pays Marriott a monthly franchise fee equal to a percent of gross room sales on a sliding scale that is initially 2% and increases to 5% on May 25, 2019 and a monthly marketing fund contribution fee equal to 1.5% of the Q&C Hotel’s gross room sales. In addition, the franchise agreement requires the maintenance of a reserve account to fund all renovations at the hotel based on a percentage of gross revenues which starts at 2% of gross revenues and increases to 5% of gross revenues on May 25, 2019. Q&C Hotel Operations is also responsible for the payment of certain other fees, charges and costs as set forth in the agreement. During the three and nine months ended September 30, 2021, the Company incurred $0.1 million and $0.3 million, respectively, of fees related to the Marriott franchise agreement, which are included in hotel expenses on the accompanying consolidated statement of operations.

In addition, in connection with the execution of the franchise agreement, SOR US Properties II is providing an unconditional guarantee that all Q&C Hotel Operations’ obligations under the franchise agreement will be punctually paid and performed. Finally, certain transfers of the Q&C Hotel or an ownership interest therein are subject to a notice and consent requirement, and the franchise agreement further provides Marriott with a right of first refusal with respect to a sale of the hotel to a competitor of Marriott.

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PART I. FINANCIAL INFORMATION (CONTINUED)

Item 1.     Financial Statements (continued)

PACIFIC OAK STRATEGIC OPPORTUNITY REIT, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

September 30, 2021

(unaudited)

Lease Obligations

As of September 30, 2021, the Company’s lease and rights to a leasehold interest with respect to 210 West 31st Street, an office/retail building in New York, NY, which was accounted for as a finance lease, are included in the consolidated balance sheet as follows:

Right-of-use asset (included in real estate held for investment, net) (1)	$	8,074
Lease obligation (included in other liabilities)	9,339
Remaining lease term	92.5
Discount rate	4.8		%
The components of lease expense were as follows:
Interest on lease obligation for the nine months ended September 30, 2021	441

_____________________

(1) During the three and nine months ended September 30, 2021, the Company wrote down its right-of-use asset and recorded an impairment charge of $1.2 million on 210 West 31st Street.

As of September 30, 2021, the Company had a leasehold interest expiring on 2114. Future minimum lease payments owed by the Company under the finance lease as of September 30, 2021 are as follows (in thousands):

October 1, 2021 through December 31, 2021	$	90
2022	360
2023	360
2024	360
2025	393
Thereafter	52,563
Total expected minimum lease obligations	54,126
Less: Amount representing interest (1)	(44,787)
Present value of net minimum lease payments (2)	$	9,339

_____________________

(1) Interest includes the amount necessary to reduce the total expected minimum lease obligations to present value calculated at the Company’s incremental borrowing rate at acquisition.

(2) The present value of net minimum lease payments are presented in other liabilities in the accompanying consolidated balance sheets.

Paycheck Protection Program

On February 10, 2021 and March 13, 2021, the Company, through wholly owned subsidiaries of joint ventures, entered into Paycheck Protection Program Promissory (“PPP”) notes for the Q&C Hotel and Springmaid Beach Resort and received funding of $0.6 million and $1.8 million, respectively. The PPP notes are supplementing payroll costs for the third-party managers of the joint ventures. In accordance with the requirements of the CARES Act, at least 60% of the proceeds used to date have been used to pay eligible payroll costs. Under the requirements of the CARES Act, the loan may be fully forgiven if (i) proceeds are used to pay eligible payroll costs, rent, mortgage interest and utilities and (ii) full-time employee headcount and salaries are either maintained during the applicable twenty-four-week period after loan origination. Any forgiveness of the loan will be subject to approval by the U.S. Small Business Administration (the “SBA”) and will require the Company to apply for such treatment in the future. While the Company may apply for forgiveness of the PPP notes in accordance with the requirements and limitations under the CARES Act and the SBA regulations and requirements, no assurance can be given that any portion of the PPP notes will be forgiven. On July 6, 2021, the SBA approved the Company’s application for forgiveness of the Springmaid Beach Resort PPP note of $1.3 million. As of September 30, 2021 and December 31, 2020, the PPP notes balance was $2.4 million and $1.5 million and recorded in other liabilities in the accompanying consolidated balance sheets, respectively.

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PART I. FINANCIAL INFORMATION (CONTINUED)

Item 1.     Financial Statements (continued)

PACIFIC OAK STRATEGIC OPPORTUNITY REIT, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

September 30, 2021

(unaudited)

Economic Dependency

The Company is dependent on the Advisor for certain services that are essential to the Company, including the identification, evaluation, negotiation, origination, acquisition and disposition of investments; management of the daily operations of the Company’s investment portfolio; and other general and administrative responsibilities. In the event that the Advisor is unable to provide these services, the Company will be required to obtain such services from other sources.

Environmental

As an owner of real estate, the Company is subject to various environmental laws of federal, state and local governments. Although there can be no assurance, the Company is not aware of any environmental liability that could have a material adverse effect on its financial condition or results of operations as of September 30, 2021. However, changes in applicable environmental laws and regulations, the uses and conditions of properties in the vicinity of the Company’s properties, the activities of its tenants and other environmental conditions of which the Company is unaware with respect to the properties could result in future environmental liabilities.

COVID-19

During the first quarter of 2020 and subsequent periods, efforts to slow the spread of the COVID-19 virus have had a significant impact on the U.S. economy. The Company continues to follow the policies described in Note 2 to the Consolidated Financial Statements contained in our 2020 Annual Report on Form 10-K, including those related to impairments of real estate assets and investments in unconsolidated affiliates and collectability assessments on operating lease receivables. While our current analyses did not result in any material adjustments to amounts as of and during the nine months ended September 30, 2021, circumstances related to the COVID-19 pandemic may result in recording impairments, lease modifications and changes to collectability assessments in future periods.

Legal Matters

From time to time, the Company is a party to legal proceedings that arise in the ordinary course of its business. Management is not aware of any legal proceedings of which the outcome is probable or reasonably possible to have a material adverse effect on the Company’s results of operations or financial condition, which would require accrual or disclosure of the contingency and the possible range of loss. Additionally, the Company has not recorded any loss contingencies related to legal proceedings in which the potential loss is deemed to be remote.

17. SUBSEQUENT EVENTS

The Company evaluates subsequent events up until the date the consolidated financial statements are issued.

Richardson Acquisition

On November 22, 2011, the Company, through an indirect wholly owned subsidiary, and JP-Richardson, LLC, an affiliate of JP Realty Partners, LTD., entered into an agreement to form a joint venture (the “Richardson Joint Venture”), and on November 23, 2011, the Richardson Joint Venture acquired a portfolio of office buildings and undeveloped land in Richardson, Texas (the “Richardson Portfolio”).

On October 18, 2021, the Company purchased the 10% minority interest in the Richardson Joint Venture, for $4.0 million from JP-Richardson, LLC. As of the date of purchase, the Richardson Portfolio consisted of four office buildings and 14 acres of undeveloped land. Subsequent to the purchase, the Company owned 100% of the Richardson Joint Venture.

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PART I. FINANCIAL INFORMATION (CONTINUED)

Item 1.     Financial Statements (continued)

PACIFIC OAK STRATEGIC OPPORTUNITY REIT, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

September 30, 2021

(unaudited)

Bond Offerings

Subsequent to September 30, 2021, the Company issued additional Series B Debentures in the amount of 536.4 million Israeli new Shekels par value through a public offering. The public offering Series B Debentures were issued at a 2.6% discount resulting in a total consideration of 522.4 million Israeli new Shekels ($166.8 million as of November 1, 2021). Additionally, the Company also issued 53.6 million Israeli new Shekels par value through a private offering. The private offering Series B Debentures were issued at a 3.1% discount resulting in a total consideration of 52.0 million Israeli new Shekels ($16.6 million as of November 1, 2021). The additional Series B Debentures have an equal level of security, pari passu, amongst themselves and between them and the initial Series B Debentures, which were initially issued, without any right of precedence or preference between any of them. The Series B Debentures were issued with the intent of using the proceeds and available cash on hand to payoff the outstanding Series A Debentures.

Notes Payable Refinancing

On October 7, 2021, the Company refinanced the Madison Square Mortgage Loan with a mortgage loan from an unaffiliated lender (the “Refinancing”) for borrowings up to $27.0 million. At closing, $17.5 million of the loan was funded and the remaining $9.5 million was available for future disbursements, subject to certain terms and conditions contained in the loan documents. The Refinancing is interest only with a fixed interest rate of 4.625% and has a maturity date of October 7, 2024. In connection with the execution of the Refinancing, Pacific Oak SOR Properties, LLC, a wholly owned subsidiary, is providing an unconditional guarantee and will be held liable, as a primary obligor for our obligations under the Refinancing.

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PART I. FINANCIAL INFORMATION (CONTINUED)

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read in conjunction with the accompanying financial statements of Pacific Oak Strategic Opportunity REIT, Inc. and the notes thereto. As used herein, the terms “we,” “our” and “us” refer to Pacific Oak Strategic Opportunity REIT, Inc., a Maryland corporation, and, as required by context, Pacific Oak Strategic Opportunity Limited Partnership, a Delaware limited partnership, which we refer to as the “Operating Partnership,” and to their subsidiaries.

Forward-Looking Statements

Certain statements included in this Quarterly Report on Form 10-Q are forward-looking statements. Those statements include statements regarding the intent, belief or current expectations of Pacific Oak Strategic Opportunity REIT, Inc. and members of our management team, as well as the assumptions on which such statements are based, and generally are identified by the use of words such as “may,” “will,” “seeks,” “anticipates,” “believes,” “estimates,” “expects,” “plans,” “intends,” “should” or similar expressions. Actual results may differ materially from those contemplated by such forward-looking statements. Further, forward-looking statements speak only as of the date they are made, and we undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time, unless required by law.

The following are some of the risks and uncertainties, although not all of the risks and uncertainties, that could cause our actual results to differ materially from those presented in our forward-looking statements:

•We depend on our advisor to conduct our operations and eventually dispose of our investments.

•Because our new advisor, Pacific Oak Capital Advisors, LLC was recently formed, it could face challenges with employee hiring and retention, information technology, vendor relationships, and funding; if Pacific Oak Capital Advisors faces challenges in performing its obligations to us, it could negatively impact our ability to achieve our investment objectives.

•We depend on tenants for our revenue and, accordingly, our revenue is dependent upon the success and economic viability of our tenants. Revenues from our property investments could decrease due to a reduction in tenants (caused by factors including, but not limited to, tenant defaults, tenant insolvency, early termination of tenant leases and non-renewal of existing tenant leases) and/or lower rental rates, limiting our ability to pay distributions to our stockholders.

•We face potential business disruptions due to the recent global outbreak of COVID-19 (Coronavirus). The virus has significantly disrupted economic markets and impacted commercial activity worldwide, including the US, and the prolonged economic impact is uncertain. Our tenants and potential tenants of the properties we own could be adversely affected by the disruption to business caused by the virus.

•Our opportunistic investment strategy involves a higher risk of loss than would a strategy of investing in some other types of real estate and real estate-related investments.

•We have paid distributions from financings and in the future we may not pay distributions solely from our cash flow from operations or gains from asset sales. To the extent that we pay distributions from sources other than our cash flow from operations or gains from asset sales, we will have less funds available for investment in loans, properties and other assets, the overall return to our stockholders may be reduced and subsequent investors may experience dilution.

•All of our executive officers and some of our directors and other key real estate and debt finance professionals are also officers, directors, managers, key professionals and/or holders of a direct or indirect controlling interest in our advisor, our dealer manager and other Pacific Oak-affiliated entities. As a result, they face conflicts of interest, including significant conflicts created by our advisor’s compensation arrangements with us and other Pacific Oak-advised programs and investors and conflicts in allocating time among us and these other programs and investors. These conflicts could result in unanticipated actions. Fees paid to our advisor in connection with transactions involving the origination, acquisition and management of our investments are based on the cost of the investment, not on the quality of the investment or services rendered to us. This arrangement could influence our advisor to recommend riskier transactions to us.

•We pay substantial fees to and expenses of our advisor and its affiliates. These payments increase the risk that our stockholders will not earn a profit on their investment in us and increase our stockholders’ risk of loss.

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PART I. FINANCIAL INFORMATION (CONTINUED)

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued)

•We cannot predict with any certainty how much, if any, of our dividend reinvestment plan proceeds will be available for general corporate purposes, including, but not limited to, the redemption of shares under our share redemption program, future funding obligations under any real estate loans receivable we acquire, the funding of capital expenditures on our real estate investments or the repayment of debt. If such funds are not available from the dividend reinvestment plan offering, then we may have to use a greater proportion of our cash flow from operations to meet these cash requirements, which would reduce cash available for distributions and could limit our ability to redeem shares under our share redemption program.

•We have focused, and may continue to focus, our investments in non-performing real estate and real estate-related loans, real estate-related loans secured by non-stabilized assets and real estate-related securities, which involve more risk than investments in performing real estate and real estate-related assets

All forward-looking statements should be read in light of the risks identified in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2020, as filed with the Securities and Exchange Commission (the “SEC”).

Overview

We were formed on October 8, 2008 as a Maryland corporation, elected to be taxed as a real estate investment trust (“REIT”) beginning with the taxable year ended December 31, 2010 and intend to operate in such manner. KBS Capital Advisors LLC (“KBS Capital Advisors”) was our advisor from inception through October 31, 2019. On October 31, 2019, KBS Capital Advisors ceased to serve as our advisor or have any advisory responsibility to us immediately following the filing of our Quarterly Report on Form 10-Q for the period ending September 30, 2019 with the SEC, which was filed on November 8, 2019. On November 1, 2019, we entered into a new advisory agreement with Pacific Oak Capital Advisors, LLC (“Pacific Oak Capital Advisors”), which has since been renewed and is currently effective through November 1, 2022; however, we or Pacific Oak Capital Advisors may terminate the advisory agreement without cause or penalty upon providing 60 days’ written notice.

As our advisor, Pacific Oak Capital Advisors manages our day-to-day operations and our portfolio of investments. Pacific Oak Capital Advisors also has the authority to make all of the decisions regarding our investments, subject to the limitations in our charter and the direction and oversight of our board of directors. Pacific Oak Capital Advisors also provides asset-management, marketing, investor-relations and other administrative services on our behalf. We have sought to invest in and manage a diverse portfolio of real estate-related loans, opportunistic real estate, real estate-related debt securities and other real estate-related investments. We conduct our business primarily through our operating partnership, of which we are the sole general partner.

On January 8, 2009, we filed a registration statement on Form S-11 with the SEC to offer a minimum of 250,000 shares and a maximum of 140,000,000 shares of common stock for sale to the public, of which 100,000,000 shares were registered in our primary offering and 40,000,000 shares were registered under our dividend reinvestment plan. We ceased offering shares of common stock in our primary offering on November 14, 2012. We sold 56,584,976 shares of common stock in the primary offering for gross offering proceeds of $561.7 million. We continue to offer shares of common stock under the dividend reinvestment plan. As of September 30, 2021, we had sold 6,851,969 shares of common stock under the dividend reinvestment plan for gross offering proceeds of $76.5 million. Also as of September 30, 2021, we had redeemed 27,247,458 of the shares sold in our offering for $317.3 million. As of September 30, 2021, we had issued 25,976,746 shares of common stock in connection with special dividends. Additionally, on December 29, 2011 and October 23, 2012, we issued 220,994 shares and 55,249 shares of common stock, respectively, for $2.0 million and $0.5 million, respectively, in private transactions exempt from the registration requirements pursuant to Section 4(2) of the Securities Act of 1933, as amended.

On March 2, 2016, Pacific Oak SOR (BVI) Holdings, Ltd. (“Pacific Oak SOR BVI”), our wholly owned subsidiary, filed a final prospectus with the Israel Securities Authority for a proposed offering of up to 1,000,000,000 Israeli new Shekels of Series A debentures (the “Series A Debentures”) at an annual interest rate not to exceed 4.25%. On March 1, 2016, Pacific Oak SOR BVI commenced the institutional tender of the Series A Debentures and accepted application for 842.5 million Israeli new Shekels. On March 7, 2016, Pacific Oak SOR BVI commenced the public tender of the Series A Debentures and accepted 127.7 million Israeli new Shekels.  In the aggregate, Pacific Oak SOR BVI accepted 970.2 million Israeli new Shekels (approximately $249.2 million as of March 8, 2016) in both the institutional and public tenders at an annual interest rate of 4.25%.  Pacific Oak SOR BVI issued the Series A Debentures on March 8, 2016. The terms of the Series A Debentures require five equal principal installment payments annually on March 1st of each year from 2019 to 2023.

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PART I. FINANCIAL INFORMATION (CONTINUED)

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued)

On January 22, 2020, we filed a registration statement on Form S-11 with the SEC to offer up to $1 billion in additional shares of our common stock. This new registration statement contemplates a proposed conversion of our company to a perpetual-life net asset value or “NAV” REIT that offers and sells shares of our common stock continuously through a number of distribution channels in ongoing public offerings, and seeks to provide increased liquidity to current and future stockholders through an expansion of our current share redemption program.

On February 16, 2020, Pacific Oak SOR BVI issued 254.1 million Israeli new Shekels (approximately $74.1 million as of February 16, 2020) of Series B debentures (the “Series B Debentures”) to Israeli investors pursuant to a public offering registered with the Israel Securities Authority. The Series B Debentures will bear interest at the rate of 3.93% per year. The Series B Debentures have principal installment payments equal to 33.33% of the face amount of the Series B Debentures on January 31st of each year from 2024 to 2026.

On February 19, 2020, we, Pacific Oak SOR II, LLC, an indirect subsidiary of ours (“Merger Sub”), and Pacific Oak Strategic Opportunity REIT II, Inc. (“POSOR II”) entered into an Agreement and Plan of Merger (the “Merger Agreement”).

On October 5, 2020, pursuant to the Merger Agreement, POSOR II merged with and into Merger Sub, with Merger Sub surviving as an indirect subsidiary of ours (the “Merger”). At such time, in accordance with the applicable provisions of the Maryland General Corporation Law (the “MGCL”) and the Maryland Limited Liability Company Act, the separate existence of POSOR II ceased. At the effective time of the Merger, each issued and outstanding share of POSOR II’s common stock (or a fraction thereof), $0.01 par value per share, converted into 0.9643 shares of the Company’s common stock, $0.01 par value per share, or 28,973,906 shares of our common stock. The combined company after the Merger retains the name “Pacific Oak Strategic Opportunity REIT, Inc.” The Merger was intended to qualify as a “reorganization” under, and within the meaning of, Section 368(a) of the Internal Revenue Code of 1986, as amended. As a result of the Merger, we acquired two hotel properties, three office properties, one apartment building, one consolidated joint venture to develop one office/retail property, two real estate equity securities and two investments in unconsolidated entities. Additionally, we assumed $331.8 million of loans related to the acquired properties.

On March 4, 2021, we issued debentures (series A) in the amount of 250.0 million Israeli new Shekels par value through a private placement. The debentures were issued at a 1.9% discount resulting in total consideration of 245.3 million Israeli new Shekels ($74.2 million as of March 4, 2021). The additional debentures shall have an equal level of security, pari passu, amongst themselves and between them and the Series A Debentures, which were initially issued, without any right of precedence or preference between any of them.

As of September 30, 2021, we consolidated eight office properties, one office portfolio consisting of four office buildings and 14 acres of undeveloped land, two apartment properties, two hotel properties, one residential home portfolio consisting of 1,806 single-family homes, three investments in undeveloped land with approximately 800 developable acres, and owned four investments in unconsolidated entities and three investments in real estate equity securities. Additionally, as of September 30, 2021, the Company had entered into a consolidated joint venture to develop one office/retail property.

Market Outlook – Real Estate and Real Estate Finance Markets

Volatility in global financial markets and changing political environments can cause fluctuations  in the performance of the U.S. commercial real estate markets.  Possible future declines in rental rates, slower or potentially negative net absorption of leased space and expectations of future rental concessions, including free rent to renew tenants early, to retain tenants who are up for renewal or to attract new tenants, may result in decreases in cash flows from investment properties. To the extent there are increases in the cost of financing due to higher interest rates, this may cause difficulty in refinancing debt obligations at terms as favorable as the terms of existing indebtedness. Further, increases in interest rates would increase the amount of our debt payments on our variable rate debt to the extent the interest rates on such debt are not limited by interest rate caps. Market conditions can change quickly, potentially negatively impacting the value of real estate investments. Management continuously reviews our investment and debt financing strategies to optimize our portfolio and the cost of our debt exposure.

During the first quarter of 2020 and subsequent periods, efforts to slow the spread of the COVID-19 virus have had a significant impact on the U.S. economy. While our current analyses did not result in any material adjustments to amounts as of and during the nine months ended September 30, 2021, circumstances related to the COVID-19 pandemic may result in recording impairments, lease modifications and changes to collectability assessments in future periods. The extent to which COVID-19 impacts our business, operations and financial results will depend on numerous evolving factors, many of which are not within management’s control, and that we are unable to predict at this time, including but not limited to: the duration and scope of the pandemic; the pandemic’s impact on current and future economic activity; and the actions of governments, businesses and individuals in response to the COVID-19 pandemic.

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PART I. FINANCIAL INFORMATION (CONTINUED)

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued)

Liquidity and Capital Resources

Our principal demand for funds during the short and long-term is and will be for the acquisition of real estate and real estate-related investments, payment of operating expenses, capital expenditures and general and administrative expenses, payments under debt obligations, redemptions and purchases of our common stock and payments of distributions to stockholders. While we expect to have sufficient liquidity to meet our obligations for the foreseeable future, the COVID-19 pandemic and associated responses could adversely impact our future cash flows and financial condition. To date, we have had six primary sources of capital for meeting our cash requirements:

•Proceeds from the primary portion of our initial public offering; 

•Proceeds from our dividend reinvestment plan;

•Proceeds from our public bond offering in Israel;

•Debt financing;

•Proceeds from the sale of real estate and the repayment of real estate-related investments; and

•Cash flow generated by our real estate and real estate-related investments. 

We sold 56,584,976 shares of common stock in the primary portion of our initial public offering for gross offering proceeds of $561.7 million. We ceased offering shares in the primary portion of our initial public offering on November 14, 2012. We continue to offer shares of common stock under the dividend reinvestment plan. As of September 30, 2021, we had sold 6,851,969 shares of common stock under the dividend reinvestment plan for gross offering proceeds of $76.5 million. To date, we have invested all of the net proceeds from our initial public offering in real estate and real estate-related investments. We intend to use our cash on hand, proceeds from asset sales, proceeds from debt financing, cash flow generated by our real estate operations and real estate-related investments and proceeds from our dividend reinvestment plan as our primary sources of immediate and long-term liquidity.

On February 10, 2021 and March 13, 2021, we, through our wholly owned subsidiaries of joint ventures, entered into Paycheck Protection Program Promissory (“PPP”) notes for the Q&C Hotel and Springmaid Beach Resort and received funding of $0.6 million and $1.8 million, respectively. The PPP notes are supplementing payroll costs for the third-party managers of the joint ventures. In accordance with the requirements of the CARES Act, at least 60% of the proceeds used to date have been used to pay eligible payroll costs. Under the requirements of the CARES Act, the loan may be fully forgiven if (i) proceeds are used to pay eligible payroll costs, rent, mortgage interest and utilities and (ii) full-time employee headcount and salaries are either maintained during the applicable twenty-four-week period after loan origination. Any forgiveness of the loan will be subject to approval by the U.S. Small Business Administration (the “SBA”) and will require the Company to apply for such treatment in the future. While we may apply for forgiveness of the PPP notes in accordance with the requirements and limitations under the CARES Act and the SBA regulations and requirements, no assurance can be given that any portion of the PPP notes will be forgiven. On July 6, 2021, the SBA approved our application for forgiveness of the Springmaid Beach Resort PPP note of $1.3 million. As of September 30, 2021 and December 31, 2020, the PPP notes balance was $2.4 million and $1.5 million and recorded in other liabilities in the accompanying consolidated balance sheets, respectively.

Our investments in real estate generate cash flow in the form of rental revenues and tenant reimbursements, which are reduced by operating expenditures and corporate general and administrative expenses.  Cash flow from operations from our real estate investments is primarily dependent upon the occupancy levels of our properties, the net effective rental rates on our leases, the collectibility of rent and operating recoveries from our tenants and how well we manage our expenditures. As of September 30, 2021, our office properties were collectively 73% occupied, our residential home portfolio was 94% occupied and our apartment properties were 96% occupied. As of October 2021, we collected 95.1% of total charged rent for the month of September 2021.

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PART I. FINANCIAL INFORMATION (CONTINUED)

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued)

Our investments in hotel properties generate cash flow in the form of room, food, beverage and convention services, campground and other revenues, which are reduced by hotel expenses, capital expenditures, debt service payments, the payment of asset management fees and corporate general and administrative expenses. Cash flow from operations from our hotel properties are primarily dependent upon the occupancy levels of our hotels, the average daily rates and how well we manage our expenditures. The following table provides summary information regarding our hotel properties for the nine months ended September 30, 2021:

Property	Number of Rooms	Percentage Occupied for the Nine Months Ended September 30, 2021	Average Daily Rate for the Nine Months Ended September 30, 2021	Average Revenue per Available Room for the Nine Months Ended September 30, 2021
Springmaid Beach Resort	453	58.4%	$218.28	$127.49
Q&C Hotel	196	42.3%	$121.24	$51.24

Investments in real estate equity securities generate cash flow in the form of dividend income, which is reduced by asset management fees. As of September 30, 2021, we had three investments in real estate equity securities outstanding with a total carrying value of $96.4 million.

Under our charter, we are required to limit our total operating expenses to the greater of 2% of our average invested assets or 25% of our net income for the four most recently completed fiscal quarters, as these terms are defined in our charter, unless the conflicts committee has determined that such excess expenses were justified based on unusual and non-recurring factors. Operating expenses for the four fiscal quarters ended September 30, 2021 did not exceed the charter-imposed limitation.

For the nine months ended September 30, 2021, our cash needs for capital expenditures, redemptions of common stock and debt servicing were met with proceeds from dispositions of real estate, real estate equity securities and undeveloped land, proceeds from debt financing, proceeds from our dividend reinvestment plan and cash on hand. Operating cash needs during the same period were met through cash flow generated by our real estate and real estate-related investments and cash on hand. As of September 30, 2021, we had outstanding debt obligations in the aggregate principal amount of $1.0 billion, with a weighted-average remaining term of 1.5 years. As of September 30, 2021, we had a total of $640.0 million of debt obligations scheduled to mature within 12 months of that date. We plan to exercise our extension options available under our loan agreements or pay down or refinance the related notes payable prior to their maturity dates.

We have elected to be taxed as a REIT and intend to operate as a REIT. To maintain our qualification as a REIT, we are required to make aggregate annual distributions to our stockholders of at least 90% of our REIT taxable income (computed without regard to the dividends paid deduction and excluding net capital gain). Our board of directors may authorize distributions in excess of those required for us to maintain REIT status depending on our financial condition and such other factors as our board of directors deems relevant. We have not established a minimum distribution level.

Cash Flows from Operating Activities

As of September 30, 2021, we consolidated eight office properties, one office portfolio consisting of four office buildings and 14 acres of undeveloped land, two apartment properties, two hotel properties, one residential home portfolio consisting of 1,806 single-family homes, three investments in undeveloped land with approximately 800 developable acres, and owned four investments in unconsolidated entities and three investments in real estate equity securities. Additionally, as of September 30, 2021, the Company had entered into a consolidated joint venture to develop one office/retail property. During the nine months ended September 30, 2021, net cash provided by operating activities was $11.3 million. We expect that our cash flows from operating activities will increase in future periods as a result of leasing additional space that is currently unoccupied and anticipated future acquisitions of real estate and real estate-related investments. However, our cash flows from operating activities may decrease to the extent that we dispose of additional assets.

Cash Flows from Investing Activities

Net cash provided by investing activities was $193.4 million for the nine months ended September 30, 2021 and primarily consisted of the following:

•Proceeds from the sale of real estate of $194.5 million;

•Proceeds from the sale of real estate equity securities of $14.4 million;

•Improvements to real estate of $12.9 million;

•Proceeds for future development obligations of $6.2 million;

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PART I. FINANCIAL INFORMATION (CONTINUED)

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued)

•Contribution of capital to unconsolidated entities of $4.8 million; and

•Acquisition of real estate of $4.1 million.

Cash Flows from Financing Activities

Net cash used in financing activities was $112.9 million for the nine months ended September 30, 2021 and consisted primarily of the following:

•$79.5 million of net cash used in debt and other financings as a result of principal payments on notes and bonds payable of $234.0 million, payments of deferred financing costs of $2.7 million and partially offset by proceeds from notes payable of $157.2 million;

•$29.6 million of cash used for redemptions of common stock;

•$5.7 million of cash used for redemption of restricted stock;

•$2.4 million of cash provided by PPP Notes; and

•$0.6 million of cash used for preferred dividends.

In order to execute our investment strategy, we utilize secured debt and we may, to the extent available, utilize unsecured debt, to finance a portion of our investment portfolio. Management remains vigilant in monitoring the risks inherent with the use of debt in our portfolio and is taking actions to ensure that these risks, including refinancing and interest risks, are properly balanced with the benefit of using leverage. There is no limitation on the amount we may borrow for any single investment. Our charter limits our total liabilities such that our total liabilities may not exceed 75% of the cost of our tangible assets; however, we may exceed that limit if a majority of the conflicts committee approves each borrowing in excess of our charter limitation and we disclose such borrowing to our common stockholders in our next quarterly report with an explanation from the conflicts committee of the justification for the excess borrowing. As of September 30, 2021, our borrowings and other liabilities were both approximately 65% of the cost (before depreciation and other noncash reserves) and the book value (before depreciation) of our tangible assets.

In March 2016, we, through a wholly-owned subsidiary, issued 970.2 million Israeli new Shekels (approximately $249.2 million as of March 8, 2016) in 4.25% bonds to investors in Israel pursuant to a public offering registered in Israel. The Series A Debentures have a seven year term, with principal payable in five equal annual installments from 2019 to 2023.

February 16, 2020, Pacific Oak SOR BVI issued 254.1 million Israeli new Shekels (approximately $74.1 million as of February 16, 2020) of Series B Debentures to Israeli investors pursuant to a public offering registered with the Israel Securities Authority. The Series B Debentures will bear interest at the rate of 3.93% per year. The Series B Debentures have principal installment payments equal to 33.33% of the face amount of the Series B Debentures on January 31st of each year from 2024 to 2026.

On March 4, 2021, we issued additional Series A Debentures in the amount of 250.0 million Israeli new Shekels par value through a private placement. The additional Series A Debentures were issued at a 1.9% discount resulting in total consideration of 245.3 million Israeli new Shekels ($74.2 million as of March 4, 2021). The additional Series A Debentures have an equal level of security, pari passu, amongst themselves and between them and the initial Series A Debentures, which were initially issued, without any right of precedence or preference between any of them.

In addition to making investments in accordance with our investment objectives, we use or have used our capital resources to make certain payments to our advisor and our dealer manager. During our offering stage, these payments included payments to our dealer manager for selling commissions and dealer manager fees related to sales in our primary offering and payments to our dealer manager and our advisor for reimbursement of certain organization and other offering expenses related both to the primary offering and the dividend reinvestment plan. During our acquisition and development stage, we expect to continue to make payments to our advisor in connection with the selection and origination or purchase of investments, the management of our assets and costs incurred by our advisor in providing services to us as well as for any dispositions of assets (including the discounted payoff of non-performing loans).

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PART I. FINANCIAL INFORMATION (CONTINUED)

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued)

Among the fees payable to our advisor is an asset management fee. With respect to investments in loans and any investments other than real property, the asset management fee is a monthly fee calculated, each month, as one-twelfth of 0.75% of the lesser of (i) the amount actually paid or allocated to acquire or fund the loan or other investment, inclusive of fees and expenses related thereto and the amount of any debt associated with or used to acquire or fund such investment and (ii) the outstanding principal amount of such loan or other investment, plus the fees and expenses related to the acquisition or funding of such investment, as of the time of calculation. With respect to investments in real property, the asset management fee is a monthly fee equal to one-twelfth of 0.75% of the sum of the amount paid or allocated to acquire the investment, plus the cost of any subsequent development, construction or improvements to the property, and inclusive of fees and expenses related thereto and the amount of any debt associated with or used to acquire such investment. In the case of investments made through joint ventures, the asset management fee will be determined based on our proportionate share of the underlying investment, inclusive of our proportionate share of any fees and expenses related thereto.

Contractual Commitments and Contingencies

The following is a summary of our contractual obligations as of September 30, 2021 (in thousands):

			Payments Due During the Years Ending December 31,
Contractual Obligations	Total		Remainder of 2021		2022-2023		2024-2025		Thereafter
Outstanding debt obligations (1)	$	1,030,734	$	116,538	$	708,421	$	104,393	$	101,382
Interest payments on outstanding debt obligations (2)	58,720		9,112		33,077		13,920		2,611
Finance lease obligation	54,126		90		720		753		52,563

_____________________

(1) Amounts include principal payments only.

(2) Projected interest payments are based on the outstanding principal amounts, maturity dates, foreign currency rates and interest rates in effect at September 30, 2021. We incurred interest expense of $29.9 million, excluding amortization of deferred financing costs of $2.4 million and including interest capitalized of $1.6 million, for the nine months ended September 30, 2021.

Results of Operations

Overview

As of September 30, 2020, we consolidated six office properties, one office portfolio consisting of four office buildings and 14 acres of undeveloped land, one apartment property and three investments in undeveloped land with approximately 1,000 developable acres, one residential home portfolio consisting of 1,769 single-family homes and owned six investments in unconsolidated joint ventures and three investments in real estate equity securities. As of September 30, 2021, we consolidated eight office properties, one office portfolio consisting of four office buildings and 14 acres of undeveloped land, two apartment properties, two hotel properties, one residential home portfolio consisting of 1,806 single-family homes, three investments in undeveloped land with approximately 800 developable acres, and owned four investments in unconsolidated entities and three investments in real estate equity securities. Additionally, as of September 30, 2021, the Company had entered into a consolidated joint venture to develop one office/retail property. Our results of operations for the three and nine months ended September 30, 2021 may not be indicative of those in future periods due to acquisition and disposition activities and COVID-19 related impacts. Additionally, the occupancy in our properties, excluding our residential home portfolio, has not been stabilized. As of September 30, 2021, our office properties were collectively 73% occupied, our residential home portfolio was 94% occupied and our apartment properties were 96% occupied. However, due to the amount of near-term lease expirations, we do not put significant emphasis on quarterly changes in occupancy (positive or negative) in the short run. Our underwriting and valuations are generally more sensitive to “terminal values” that may be realized upon the disposition of the assets in the portfolio and less sensitive to ongoing cash flows generated by the portfolio in the years leading up to an eventual sale. There are no guarantees that occupancies of our assets will increase, or that we will recognize a gain on the sale of our assets. In general, we expect that our income and expenses related to our portfolio will increase in future periods as a result of leasing additional space and acquiring additional assets but decrease due to disposition activity.

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PART I. FINANCIAL INFORMATION (CONTINUED)

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued)

Comparison of the three months ended September 30, 2021 versus the three months ended September 30, 2020

The following table provides summary information about our results of operations for the three months ended September 30, 2021 and 2020 (dollar amounts in thousands):

	Three Months Ended September 30,				Increase (Decrease)		Percentage Change		$ Change Due to Acquisitions/ Dispositions (1)		$ Change Due to  Investments Held Throughout Both Periods (2)
	2021		2020
Rental income	$	29,504	$	23,871	$	5,633	24	%	$	5,730	$	(97)
Hotel revenues	12,153		—		12,153		100	%	12,153		—
Other operating income	923		888		35		4	%	(39)		74
Dividend income from real estate equity securities	3,189		2,986		203		7	%	203		—
Operating, maintenance, and management costs	10,668		7,888		2,780		35	%	2,228		552
Real estate taxes and insurance	5,262		3,791		1,471		39	%	1,270		201
Hotel expenses	6,483		—		6,483		100	%	6,483		—
Asset management fees to affiliate	3,422		2,426		996		41	%	932		45
General and administrative expenses	2,365		1,960		405		21	%	n/a		n/a
Foreign currency transaction loss, net	2,271		445		1,826		410	%	n/a		n/a
Depreciation and amortization	13,895		9,470		4,425		47	%	4,284		141
Interest expense	10,092		6,274		3,818		61	%	2,146		1,672
Impairment charges on real estate	10,971		—		10,971		100	%	10,971		—
Impairment charges on goodwill	2,808		—		2,808		100	%	2,808		—
Gain from remeasurement of prior equity interest	—		2,009		(2,009)		(100)	%	n/a		n/a
Equity in (loss) income of unconsolidated entities	(569)		519		(1,088)		(210)	%	—		(1,088)
Casualty-related gain	27		—		27		100	%	n/a		n/a
Other interest income	55		19		36		189	%	n/a		n/a
Loss on real estate equity securities	(2,614)		(6,527)		3,913		(60)	%	n/a		n/a
Change in subordinated performance fee due upon termination to affiliate	(1,545)		1,121		(2,666)		(238)	%	n/a		n/a
Gain on sale of real estate	216		—		216		100	%	216		—
Gain on extinguishment of debt	1,352		—		1,352		100	%	n/a		n/a

_____________________

(1) Represents the dollar amount increase (decrease) for the three months ended September 30, 2021 compared to the three months ended September 30, 2020 related to real estate and real estate-related investments acquired or disposed on or after July 1, 2020.

(2) Represents the dollar amount increase (decrease) for the three months ended September 30, 2021 compared to the three months ended September 30, 2020 with respect to real estate and real estate-related investments owned by us during the entirety of both periods presented.

Rental income increased from $23.9 million for the three months ended September 30, 2020 to $29.5 million for the three months ended September 30, 2021, primarily as a result of properties acquired subsequent to September 30, 2020 and partially offset by overall decrease in rental and occupancy rates for properties held throughout both periods. The occupancy of our office properties, held throughout both periods decreased from 79% as of September 30, 2020 to 76% as of September 30, 2021. Annualized base rent per square foot decreased from $23.07 as of September 30, 2020 to $22.83 as of September 30, 2021 related to properties (excluding apartments and single-family homes) held throughout both periods. We expect rental income to increase in future periods as a result of leasing additional space and to the extent we acquire additional properties, but to decrease to the extent we dispose of properties.

Other operating income remained consistent at $0.9 million for both of the three months ended September 30, 2021 and 2020. We expect other operating income to increase in future periods as a result of leasing additional space, increases in parking income as we stabilize properties and to the extent we acquire additional properties, but to decrease to the extent we dispose of properties.

Dividend income from real estate equity securities increased from $3.0 million for the three months ended September 30, 2020 to $3.2 million for the three months ended September 30, 2021, primarily as a result of the dispositions and acquisitions of real estate equity securities subsequent to September 30, 2020. We expect dividend income from real estate equity securities to vary in future periods as a result of the timing of dividends declared and investment activity.

47

PART I. FINANCIAL INFORMATION (CONTINUED)

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued)

Property operating costs increased from $7.9 million for the three months ended September 30, 2020 to $10.7 million for the three months ended September 30, 2021 and real estate taxes and insurance increased from $3.8 million for the three months ended September 30, 2020 to $5.3 million for the three months ended September 30, 2021, primarily as a result of properties acquired subsequent to September 30, 2020. We expect property operating costs and real estate taxes and insurance to increase in future periods to the extent we acquire additional properties, increasing occupancy of our real estate assets and general inflation, but to decrease to the extent we dispose of properties.

Asset management fees increased from $2.4 million for the three months ended September 30, 2020 to $3.4 million for the three months ended September 30, 2021, primarily as a result of properties acquired subsequent to September 30, 2020. We expect asset management fees to increase in future periods to the extent we acquire additional properties, but to decrease to the extent we dispose of properties.

General and administrative expenses increased from $2.0 million for the three months ended September 30, 2020 to $2.4 million for the three months ended September 30, 2021, primarily due to increased accounting and advisory expenses. We expect general and administrative expenses to fluctuate in future periods based on investment and disposition activity as well as costs incurred to evaluate strategic transactions.

We recognized a $2.3 million foreign currency transaction loss, net for the three months ended September 30, 2021 and $0.4 million of foreign currency transaction loss, net, for the three months ended September 30, 2020, related to the debentures in Israel. These debentures are denominated in Israeli new Shekels and we expect to recognize foreign transaction gains and losses based on changes in foreign currency exchange rates, but expect our exposure to be limited to the extent that we have entered into foreign currency options and foreign currency collars. As of September 30, 2021, we had entered into one foreign currency collar to hedge against a change in the exchange rate of the Israeli new Shekel versus the U.S. Dollar. The foreign currency collar expire in November 2021 and has an aggregate Israeli new Shekels notional amount of 194.0 million. During the three months ended September 30, 2021, we recognized a $0.3 million gain related to the foreign currency collar and a $2.6 million foreign currency transaction loss. During the three months ended September 30, 2020, we recognized a $2.2 million gain related to the foreign currency collars and a $2.6 million foreign currency transaction loss in the accompanying consolidated statements of operations as foreign currency transaction loss, net.

Depreciation and amortization increased from $9.5 million for the three months ended September 30, 2020 to $13.9 million for the three months ended September 30, 2021, primarily as a result of properties acquired subsequent to September 30, 2020 and capital expenditures. We expect depreciation and amortization to increase in future periods as a result of owning the property acquired during 2020 for an entire period and to the extent we acquire additional properties, but to decrease as a result of amortization of tenant origination costs related to lease expirations and disposition of properties.

Interest expense increased from $6.3 million for the three months ended September 30, 2020 to $10.1 million for the three months ended September 30, 2021, primarily as a result of the increased borrowings related to properties acquired subsequent to September 30, 2020, additional Series A Debentures issued on March 4, 2021 of 250.0 million Israeli new Shekels (approximately $74.2 million as of March 4, 2021) and partially offset by March 31, 2020 and 2021 Series A Debentures principal installment payments of 194.0 million Israeli new Shekels (approximately $56.6 million as of March 1, 2020 and $58.9 million as of March 1, 2021). Excluded from interest expense was $0.5 million and $0.7 million of interest capitalized to our investments in undeveloped land and an unconsolidated entity during the three months ended September 30, 2021 and 2020, respectively. Our interest expense in future periods will vary based on interest rate fluctuations, the amount of interest capitalized and our level of future borrowings, which will depend on the availability and cost of debt financing and the opportunity to acquire real estate and real estate-related investments meeting our investment objectives and will decrease to the extent we dispose of properties and paydown debt, including annual principal installment payments on the Series A and Series B Debentures.

During the three months ended September 30, 2021, we recognized impairment charges of $6.6 million on 210 West 31st Street and $4.4 million on Lincoln Court. No impairment charges were recorded in 2020.

During the three months ended September 30, 2021, we recognized impairment charges on goodwill of $1.6 million on Lincoln Court and $1.2 million on 210 West 31st Street. No impairment charges on goodwill were recorded in 2020.

During the three months ended September 30, 2020, we recognized a $2.0 million gain from remeasurement of prior equity interest due to our acquisition of Battery Point.

Equity in income of unconsolidated entities decreased from $0.5 million for the three months ended September 30, 2020 to a $0.6 million loss for the three months ended September 30, 2021, primarily as a result of bad debt expense for the 353 Sacramento joint venture for the three months ended September 30, 2021.

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PART I. FINANCIAL INFORMATION (CONTINUED)

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued)

Loss on real estate equity securities decreased from $6.5 million for the three months ended September 30, 2020 to $2.6 million for the three months ended September 30, 2021. We expect gains and losses on real estate equity securities to fluctuate in future periods as a result of changes in share prices of our investments in real estate equity securities.

During the three months ended September 30, 2021, we recognized a gain on extinguishment of debt of $1.4 million and this is primarily due to the SBA approving our application for forgiveness of the Springmaid Beach Resort PPP note of $1.3 million.

Comparison of the nine months ended September 30, 2021 versus the nine months ended September 30, 2020

The following table provides summary information about our results of operations for the nine months ended September 30, 2021 and 2020 (dollar amounts in thousands):

	Nine Months Ended September 30,				Increase (Decrease)		Percentage Change		$ Change Due to Acquisitions/ Dispositions (1)		$ Change Due to  Investments Held Throughout Both Periods (2)
	2021		2020
Rental income	$	94,812	$	67,808	$	27,004	40	%	$	24,329	$	2,675
Hotel revenues	24,578		—		24,578		100	%	24,578		—
Other operating income	3,118		2,722		396		15	%	755		(359)
Dividend income from real estate equity securities	6,693		5,339		1,354		25	%	1,354		—
Operating, maintenance, and management costs	31,444		22,258		9,186		41	%	7,996		1,190
Real estate taxes and insurance	15,949		10,570		5,379		51	%	4,587		792
Hotel expenses	15,715		—		15,715		100	%	15,715		—
Asset management fees to affiliate	10,802		6,867		3,935		57	%	3,480		455
General and administrative expenses	7,120		6,302		818		13	%	n/a		n/a
Foreign currency transaction gain, net	(568)		(12,338)		11,770		(95)	%	n/a		n/a
Depreciation and amortization	45,969		27,417		18,552		68	%	17,209		1,343
Interest expense	30,713		19,055		11,658		61	%	9,629		2,029
Impairment charges on real estate	10,971		—		10,971		100	%	10,971		—
Impairment charges on goodwill	2,808		—		2,808		100	%	2,808		—
Gain from remeasurement of prior equity interest	—		2,009		(2,009)		100	%	n/a		n/a
Equity in (loss) income of unconsolidated entities	(144)		1,564		(1,708)		(109)	%	—		(1,708)
Casualty-related gain	27		51		(24)		(47)	%	n/a		n/a
Other interest income	148		297		(149)		(50)	%	n/a		n/a
Gain (loss) on real estate equity securities	12,939		(21,620)		34,559		(160)	%	n/a		n/a
Change in subordinated performance fee due upon termination to affiliate	(1,745)		814		(2,559)		(314)	%	n/a		n/a
Gain on sale of real estate	31,385		—		31,385		100	%	31,385		—
Gain on extinguishment of debt	1,365		—		1,365		100	%	1,365		—

_____________________

(1) Represents the dollar amount increase (decrease) for the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020 related to real estate and real estate-related investments acquired or disposed on or after January 1, 2020.

(2) Represents the dollar amount increase (decrease) for the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020 with respect to real estate and real estate-related investments owned by us during the entirety of both periods presented.

Rental income increased from $67.8 million for the nine months ended September 30, 2020 to $94.8 million for the nine months ended September 30, 2021, primarily as a result of properties acquired subsequent to September 30, 2020 and partially offset by overall decrease in rental and occupancy rates for properties held throughout both periods. The occupancy of our office properties, held throughout both periods decreased from 79% as of September 30, 2020 to 76% as of September 30, 2021. Annualized base rent per square foot decreased from $23.07 as of September 30, 2020 to $22.83 as of September 30, 2021 related to properties (excluding apartments and single-family homes) held throughout both periods. We expect rental income to increase in future periods as a result of leasing additional space and to the extent we acquire additional properties, but to decrease to the extent we dispose of properties.

49

PART I. FINANCIAL INFORMATION (CONTINUED)

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued)

Other operating income increased from $2.7 million for the nine months ended September 30, 2020 to $3.1 million for the nine months ended September 30, 2021, primarily due to properties acquired subsequent to September 30, 2020. We expect other operating income to increase in future periods as a result of leasing additional space, increases in parking income as we stabilize properties and to the extent we acquire additional properties, but to decrease to the extent we dispose of properties.

Dividend income from real estate equity securities increased from $5.3 million for the nine months ended September 30, 2020 to $6.7 million for the nine months ended September 30, 2021, primarily as a result of the dispositions and acquisitions of real estate equity securities subsequent to September 30, 2020. We expect dividend income from real estate equity securities to vary in future periods as a result of the timing of dividends declared and investment activity.

Property operating costs increased from $22.3 million for the nine months ended September 30, 2020 to $31.4 million for the nine months ended September 30, 2021 and real estate taxes and insurance increased from $10.6 million for the nine months ended September 30, 2020 to $15.9 million for the nine months ended September 30, 2021, primarily as a result of properties acquired subsequent to September 30, 2020. We expect property operating costs and real estate taxes and insurance to increase in future periods to the extent we acquire additional properties, increasing occupancy of our real estate assets and general inflation, but to decrease to the extent we dispose of properties.

Asset management fees increased from $6.9 million for the nine months ended September 30, 2020 to $10.8 million for the nine months ended September 30, 2021, primarily as a result of properties acquired subsequent to September 30, 2020. We expect asset management fees to increase in future periods to the extent we acquire additional properties, but to decrease to the extent we dispose of properties.

General and administrative expenses increased from $6.3 million for the nine months ended September 30, 2020 to $7.1 million for the nine months ended September 30, 2021, primarily due to increased accounting and advisory expenses. We expect general and administrative expenses to fluctuate in future periods based on investment and disposition activity as well as costs incurred to evaluate strategic transactions.

We recognized a $0.6 million foreign currency transaction gain, net for the nine months ended September 30, 2021 and $12.3 million foreign currency transaction gain, net, for the nine months ended September 30, 2020, related to the debentures in Israel. These debentures are denominated in Israeli new Shekels and we expect to recognize foreign transaction gains and losses based on changes in foreign currency exchange rates, but expect our exposure to be limited to the extent that we have entered into foreign currency options and foreign currency collars. As of September 30, 2021, we had entered into one foreign currency collar to hedge against a change in the exchange rate of the Israeli new Shekel versus the U.S. Dollar. The foreign currency collar expire in November 2021 and has an aggregate Israeli new Shekels notional amount of 194.0 million. During the nine months ended September 30, 2021, we recognized a $0.6 million gain related to the foreign currency collar and a $44,000 foreign currency transaction loss. During the nine months ended September 30, 2020, we recognized a $14.3 million gain related to the foreign currency collars and a $2.0 million foreign currency transaction loss.

Depreciation and amortization increased from $27.4 million for the nine months ended September 30, 2020 to $46.0 million for the nine months ended September 30, 2021, primarily as a result of properties acquired in 2020 and capital expenditures. We expect depreciation and amortization to increase in future periods as a result of owning the property acquired during 2020 for an entire period and to the extent we acquire additional properties, but to decrease as a result of amortization of tenant origination costs related to lease expirations and disposition of properties.

Interest expense increased from $19.1 million for the nine months ended September 30, 2020 to $30.7 million for the nine months ended September 30, 2021, primarily as a result of the increased borrowings related to properties acquired subsequent to September 30, 2020, additional Series A Debentures issued on March 4, 2021 of 250.0 million Israeli new Shekels (approximately $74.2 million as of March 4, 2021) and partially offset by the March 31, 2020 and 2021 Series A Debentures principal installment payments of 194.0 million Israeli new Shekels (approximately $56.6 million as of March 1, 2020 and $58.9 million as of March 1, 2021). Excluded from interest expense was $1.6 million and $2.4 million of interest capitalized to our investments in undeveloped land and an unconsolidated entity during the nine months ended September 30, 2021 and 2020, respectively. Our interest expense in future periods will vary based on interest rate fluctuations, the amount of interest capitalized and our level of future borrowings, which will depend on the availability and cost of debt financing and the opportunity to acquire real estate and real estate-related investments meeting our investment objectives and will decrease to the extent we dispose of properties and paydown debt, including annual principal installment payments on the Series A and Series B Debentures.

During the nine months ended September 30, 2021, we recognized impairment charges of $6.6 million on 210 West 31st Street and $4.4 million on Lincoln Court. No impairment charges were recorded in 2020.

50

PART I. FINANCIAL INFORMATION (CONTINUED)

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued)

During the nine months ended September 30, 2021, we recognized impairment charges on goodwill of $1.6 million on Lincoln Court and $1.2 million on 210 West 31st Street. No impairment charges on goodwill were recorded in 2020.

Equity in income of unconsolidated entities decreased from income of $1.6 million for the nine months ended September 30, 2020 to a $0.1 million loss for the nine months ended September 30, 2021, primarily as a result of bad debt expense for the 353 Sacramento joint venture for the nine months ended September 30, 2021.

Loss on real estate equity securities was $21.6 million for the nine months ended September 30, 2020, which was made up of a $22.3 million unrealized loss on real estate securities held at September 30, 2020 and a $0.7 million realized loss on real estate securities sold during the nine months ended September 30, 2020. Gain on real estate equity securities was $12.9 million for the nine months ended September 30, 2021, which was made up of a $9.9 million unrealized gain on real estate securities held at September 30, 2021 and a $3.0 million realized gain on real estate securities sold during the nine months ended September 30, 2021. We expect gains and losses on real estate equity securities to fluctuate in future periods as a result of changes in share prices of our investments in real estate equity securities.

During the nine months ended September 30, 2021, we sold approximately 193 developable acres of Park Highlands undeveloped land that resulted in a gain on sale of $31.1 million. There were no material dispositions during the nine months ended September 30, 2020.

During the nine months ended September 30, 2021, we recognized a gain on extinguishment of debt of $1.4 million and this is primarily due to the SBA approving our application for forgiveness of the Springmaid Beach Resort PPP note of $1.3 million.

Funds from Operations, Modified Funds from Operations and Adjusted Modified Funds from Operations

We believe that funds from operations (“FFO”) is a beneficial indicator of the performance of an equity REIT. We compute FFO in accordance with the current National Association of Real Estate Investment Trusts (“NAREIT”) definition. FFO represents net income, excluding gains and losses from sales of real estate assets (which can vary among owners of identical assets in similar conditions based on historical cost accounting and useful-life estimates), impairment losses on real estate assets, depreciation and amortization of real estate assets, and adjustments for unconsolidated partnerships and joint ventures. In addition, we elected the option to exclude mark-to-market changes in value recognized on equity securities in the calculation of FFO. We believe FFO facilitates comparisons of operating performance between periods and among other REITs. However, our computation of FFO may not be comparable to other REITs that do not define FFO in accordance with the NAREIT definition or that interpret the current NAREIT definition differently than we do. Our management believes that historical cost accounting for real estate assets in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”) implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values have historically risen or fallen with market conditions, many industry investors and analysts have considered the presentation of operating results for real estate companies that use historical cost accounting to be insufficient by themselves. As a result, we believe that the use of FFO, together with the required GAAP presentations, provides a more complete understanding of our performance relative to our competitors and provides a more informed and appropriate basis on which to make decisions involving operating, financing, and investing activities.

Changes in accounting rules have resulted in a substantial increase in the number of non-operating and non-cash items included in the calculation of FFO. As a result, our management also uses modified funds from operations (“MFFO”) as an indicator of our ongoing performance as well as our dividend sustainability. MFFO excludes from FFO: acquisition fees and expenses (to the extent that such fees and expenses have been recorded as operating expenses); adjustments related to contingent purchase price obligations; amounts relating to straight-line rents and amortization of above- and below-market intangible lease assets and liabilities; accretion of discounts and amortization of premiums on debt investments; amortization of closing costs relating to debt investments; impairments of real estate-related investments; mark-to-market adjustments included in net income; and gains or losses included in net income for the extinguishment or sale of debt or hedges. We compute MFFO in accordance with the definition of MFFO included in the practice guideline issued by the Institute for Portfolio Alternatives (“IPA”) in November 2010 as interpreted by management. Our computation of MFFO may not be comparable to other REITs that do not compute MFFO in accordance with the current IPA definition or that interpret the current IPA definition differently than we do.

In addition, our management uses an adjusted MFFO (“Adjusted MFFO”) as an indicator of our ongoing performance, as well as our dividend sustainability. Adjusted MFFO provides adjustments to reduce MFFO related to operating expenses that are capitalized with respect to certain of our investments in undeveloped land. 

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PART I. FINANCIAL INFORMATION (CONTINUED)

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued)

We believe that MFFO and Adjusted MFFO are helpful as measures of ongoing operating performance because they exclude costs that management considers more reflective of investing activities and other non-operating items included in FFO. Management believes that excluding acquisition costs, prior to our early adoption of ASU No. 2017-01 on January 1, 2017, from MFFO and Adjusted MFFO provides investors with supplemental performance information that is consistent with management’s analysis of the operating performance of the portfolio over time, including periods after our acquisition stage. MFFO and Adjusted MFFO also exclude non-cash items such as straight-line rental revenue. Additionally, we believe that MFFO and Adjusted MFFO provide investors with supplemental performance information that is consistent with the performance indicators and analysis used by management, in addition to net income and cash flows from operating activities as defined by GAAP, to evaluate the sustainability of our operating performance. MFFO provides comparability in evaluating the operating performance of our portfolio with other non-traded REITs which typically have limited lives with short and defined acquisition periods and targeted exit strategies. MFFO, or an equivalent measure, is routinely reported by non-traded REITs, and we believe often used by analysts and investors for comparison purposes.

FFO, MFFO and Adjusted MFFO are non-GAAP financial measures and do not represent net income as defined by GAAP. Net income as defined by GAAP is the most relevant measure in determining our operating performance because FFO, MFFO and Adjusted MFFO include adjustments that investors may deem subjective, such as adding back expenses such as depreciation and amortization and the other items described above. Accordingly, FFO, MFFO and Adjusted MFFO should not be considered as alternatives to net income as an indicator of our current and historical operating performance. In addition, FFO, MFFO and Adjusted MFFO do not represent cash flows from operating activities determined in accordance with GAAP and should not be considered an indication of our liquidity. We believe FFO, MFFO and Adjusted MFFO, in addition to net income and cash flows from operating activities as defined by GAAP, are meaningful supplemental performance measures.

Although MFFO includes other adjustments, the exclusion of straight-line rent, the amortization of above- and below-market leases, mark to market foreign currency transaction adjustments and extinguishment of debt are the most significant adjustments for the periods presented.  We have excluded these items based on the following economic considerations:

•Adjustments for straight-line rent.  These are adjustments to rental revenue as required by GAAP to recognize contractual lease payments on a straight-line basis over the life of the respective lease.  We have excluded these adjustments in our calculation of MFFO to more appropriately reflect the current economic impact of our in-place leases, while also providing investors with a useful supplemental metric that addresses core operating performance by removing rent we expect to receive in a future period or rent that was received in a prior period;

•Amortization of above- and below-market leases.  Similar to depreciation and amortization of real estate assets and lease related costs that are excluded from FFO, GAAP implicitly assumes that the value of intangible lease assets and liabilities diminishes predictably over time and requires that these charges be recognized currently in revenue.  Since market lease rates in the aggregate have historically risen or fallen with local market conditions, management believes that by excluding these charges, MFFO provides useful supplemental information on the realized economics of the real estate;

•Mark-to-market foreign currency transaction adjustments. The U.S. Dollar is our functional currency. Transactions denominated in currency other than our functional currency are recorded upon initial recognition at the exchange rate on the date of the transaction. After initial recognition, monetary assets and liabilities denominated in foreign currency are remeasured at each reporting date into the foreign currency at the exchange rate on that date. In addition, we have entered into foreign currency collars and foreign currency options that results in a foreign currency transaction adjustment. These amounts can increase or reduce net income. We exclude them from MFFO to more appropriately present the ongoing operating performance of our real estate investments on a comparative basis; and

Adjusted MFFO includes adjustments to reduce MFFO related to real estate taxes, property insurance and financing costs which are capitalized with respect to certain of our investments in undeveloped land.  We have included adjustments for the costs incurred necessary to bring these investments to their intended use, as these costs are recurring operating costs that are capitalized in accordance with GAAP and not reflected in our net (loss) income, FFO and MFFO. In addition, adjusted MFFO includes an adjustment for casualty loss and fair value change of restricted stock payable. We believe excluding these items appropriately presents the ongoing operating performance of our real estate investments on a comparative basis.

52

PART I. FINANCIAL INFORMATION (CONTINUED)

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued)

Our calculation of FFO, which we believe is consistent with the calculation of FFO as defined by NAREIT, is presented in the following table, along with our calculations of MFFO and Adjusted MFFO, for the three and nine months ended September 30, 2021 and 2020 (in thousands). No conclusions or comparisons should be made from the presentation of these periods.

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2021		2020		2021		2020
Net income (loss) attributable to common stockholders	$	(24,516)	$	(7,493)	$	3,671	$	(21,797)
Depreciation of real estate assets	8,569		6,233		26,689		17,601
Amortization of lease-related costs	5,326		3,237		19,279		9,816
Gain on sale of real estate (1)	(216)		—		(31,385)		—
Impairment charges on real estate	10,971		—		10,971		—
Impairment charges on goodwill	2,808		—		2,808		—
Loss (gain) on real estate equity securities	2,614		6,527		(12,939)		21,620
Gain on extinguishment of debt	(1,352)		—		(1,365)		—
Adjustments for noncontrolling interests - consolidated entities (2)	(400)		(141)		(1,238)		(286)
Adjustments for investments in unconsolidated entities (3)	(25)		2,158		747		4,618
FFO attributable to common stockholders	3,779		10,521		17,238		31,572
Straight-line rent and amortization of above- and below-market leases	(711)		(1,021)		(2,544)		(2,994)
Amortization of net premium/discount on bond and notes payable	461		64		1,906		14
Unrealized loss on interest rate caps	1		31		17		10
Mark-to-market foreign currency transaction loss (gain), net	2,271		445		(568)		(12,338)
Gain from remeasurement of prior equity interest	—		(2,009)		—		(2,009)
Adjustments for noncontrolling interests - consolidated entities (2)	(24)		(2)		(122)		9
Adjustments for investments in unconsolidated entities (3)	15		(892)		1,662		(3,044)
MFFO attributable to common stockholders	5,792		7,137		17,589		11,220
Other capitalized operating expenses (4)	(597)		(828)		(1,926)		(2,704)
Casualty-related gain	(27)		—		(27)		(51)
Change in subordinated performance fee due upon termination to affiliate	1,545		(1,121)		1,745		(814)
Adjusted MFFO attributable to common stockholders	$	6,713	$	5,188	$	17,381	$	7,651

_____________________

(1) Reflects an adjustment to eliminate gain on sale of real estate.

(2) Reflects adjustments to eliminate the noncontrolling interest holders’ share of the adjustments to convert our net (loss) income attributable to common stockholders to FFO, MFFO and Adjusted MFFO.

(3) Reflects adjustments to add back our noncontrolling interest share of the adjustments to convert our net (loss) income attributable to common stockholders to FFO, MFFO and Adjusted MFFO for our equity investments in unconsolidated joint ventures.

(4) Reflects real estate taxes, property insurance and financing costs that are capitalized with respect to certain of our investments in undeveloped land and unconsolidated entity.  During the periods in which we are incurring costs necessary to bring these investments to their intended use, certain normal recurring operating costs are capitalized in accordance with GAAP and not reflected in our net (loss) income, FFO and MFFO.

FFO, MFFO and Adjusted MFFO may also be used to fund all or a portion of certain capitalizable items that are excluded from FFO, MFFO and Adjusted MFFO, such as tenant improvements, building improvements and deferred leasing costs. We expect FFO, MFFO and Adjusted MFFO to improve in future periods to the extent that we continue to lease up vacant space and acquire additional assets. We expect FFO, MFFO and Adjusted MFFO to decrease as a result of dispositions.

53

PART I. FINANCIAL INFORMATION (CONTINUED)

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued)

Distributions

There were no distributions declared for the nine months ended September 30, 2021. Our net income attributable to common stockholders for the nine months ended September 30, 2021 was $3.7 million and our cash flows provided by operations were $11.3 million. Our cumulative distributions paid and net income attributable to common stockholders from inception through September 30, 2021 were $195.4 million and $126.1 million, respectively. We have funded our cumulative distributions paid, which includes net cash distributions and distributions reinvested by stockholders, with proceeds from debt financing of $18.7 million, proceeds from the dispositions of property of $83.4 million and cash provided by operations of $93.3 million. To the extent that we pay distributions from sources other than our cash flow from operations or gains from asset sales, we will have fewer funds available for investment in real estate-related loans, opportunistic real estate, real estate-related debt securities and other real estate-related investments, the overall return to our stockholders may be reduced and subsequent investors may experience dilution.

Critical Accounting Policies

Our consolidated interim financial statements have been prepared in accordance with GAAP and in conjunction with the rules and regulations of the SEC. The preparation of our financial statements requires significant management judgments and assumptions, require estimates about matters that are inherently uncertain and because they are important for understanding and evaluating our reported financial results. These judgments will affect the reported amounts of assets and liabilities and our disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. With different estimates or assumptions, materially different amounts could be reported in our financial statements. Additionally, other companies may utilize different estimates that may impact the comparability of our results of operations to those of companies in similar businesses. A discussion of the accounting policies that management considers critical in that they involve significant management judgments, assumptions and estimates is included in our Annual Report on Form 10-K for the year ended December 31, 2020 filed with the SEC. There have been no significant changes to our policies during 2021.

Subsequent Events

We evaluate subsequent events up until the date the consolidated financial statements are issued.

Richardson Acquisition

On November 22, 2011, we, through an indirect wholly owned subsidiary, and JP-Richardson, LLC, an affiliate of JP Realty Partners, LTD., entered into an agreement to form a joint venture (the “Richardson Joint Venture”), and on November 23, 2011, the Richardson Joint Venture acquired a portfolio of office buildings and undeveloped land in Richardson, Texas (the “Richardson Portfolio”).

On October 18, 2021, we purchased the 10% minority interest in the Richardson Joint Venture, for $4.0 million from JP-Richardson, LLC. As of the date of purchase, the Richardson Portfolio consisted of four office buildings and 14 acres of undeveloped land. Subsequent to the purchase, we owned 100% of the Richardson Joint Venture.

Bond Offerings

Subsequent to September 30, 2021, we issued additional Series B Debentures in the amount of 536.4 million Israeli new Shekels par value through a public offering. The public offering Series B Debentures were issued at a 2.6% discount resulting in a total consideration of 522.4 million Israeli new Shekels ($166.8 million as of November 1, 2021). Additionally, we also issued 53.6 million Israeli new Shekels par value through a private offering. The private offering Series B Debentures were issued at a 3.1% discount resulting in a total consideration of 52.0 million Israeli new Shekels ($16.6 million as of November 1, 2021). The additional Series B Debentures have an equal level of security, pari passu, amongst themselves and between them and the initial Series B Debentures, which were initially issued, without any right of precedence or preference between any of them. The Series B Debentures were issued with the intent of using the proceeds and available cash on hand to payoff the outstanding Series A Debentures.

54

PART I. FINANCIAL INFORMATION (CONTINUED)

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued)

Notes Payable Refinancing

On October 7, 2021, the Company refinanced the Madison Square Mortgage Loan with a mortgage loan from an unaffiliated lender (the “Refinancing”) for borrowings up to $27.0 million. At closing, $17.5 million of the loan was funded and the remaining $9.5 million was available for future disbursements, subject to certain terms and conditions contained in the loan documents. The Refinancing is interest only with a fixed interest rate of 4.625% and has a maturity date of October 7, 2024. In connection with the execution of the Refinancing, Pacific Oak SOR Properties, LLC, a wholly owned subsidiary, is providing an unconditional guarantee and will be held liable, as a primary obligor for our obligations under the Refinancing.

Item 3.     Quantitative and Qualitative Disclosures about Market Risk

We are exposed to the effects of interest rate changes as a result of borrowings used to maintain liquidity, fund distributions and to fund the refinancing of our real estate investment portfolio and operations. We may also be exposed to the effects of changes in interest rates as a result of the acquisition and origination of mortgage, mezzanine, bridge and other loans and the acquisition of real estate securities. We are also exposed to the effects of foreign currency changes in Israel with respect to the 4.25% and 3.93% bonds issued to investors in Israel in March 2016 and February 2020, respectively. Our profitability and the value of our investment portfolio may be adversely affected during any period as a result of interest rate changes and foreign currency changes. Our interest rate risk management objectives are to limit the impact of interest rate changes on earnings, prepayment penalties and cash flows and to lower overall borrowing costs. We may manage interest rate risk by maintaining a ratio of fixed rate, long-term debt such that floating rate exposure is kept at an acceptable level. In addition, we may utilize a variety of financial instruments, including interest rate caps, floors, and swap agreements, in order to limit the effects of changes in interest rates on our operations. In order to limit the effects of changes in foreign currency on our operations, we may utilize a variety of foreign currency hedging strategies such as cross currency swaps, forward contracts, puts or calls. When we use these types of derivatives to hedge the risk of interest-earning assets or interest-bearing liabilities, we may be subject to certain risks, including the risk that losses on a hedge position will reduce the funds available for payments to holders of our common stock and the risk that the losses may exceed the amount we invested in the instruments. Additionally, certain of these strategies may cause us to fund a margin account periodically to offset changes in foreign currency rates which may also reduce the funds available for payments to holders of our common stock.

As of September 30, 2021, we had entered into one foreign currency collar to hedge against a change in the exchange rate of the Israeli new Shekel versus the U.S. Dollar. The foreign currency collar expire in November 2021 and has Israeli new Shekels notional amounts of 194.0 million. The 194.0 million Israeli new Shekels foreign currency collar consists of a purchased call option to buy Israeli new Shekels at 3.16 and a sold put option to sell the Israeli new Shekels at 3.29. The foreign currency collar is intended to permit us to exchange, on the settlement date of the collar, 194.0 million Israeli new Shekels for an amount ranging from $59.0 million to $61.4 million.

As of September 30, 2021, we held 114.6 million Israeli new Shekels and 21.3 million Israeli new Shekels in cash and restricted cash, respectively. In addition, as of September 30, 2021, we had bonds outstanding and the related interest payable in the amounts of 892.1 million Israeli new Shekels and 3.9 million Israeli new Shekels, respectively. Foreign currency exchange rate risk is the possibility that our financial results could be better or worse than planned because of changes in foreign currency exchange rates. Based solely on the remeasurement for the nine months ended September 30, 2021, if foreign currency exchange rates were to increase or decrease by 10%, our net income would increase or decrease by approximately $21.4 million and $26.2 million, respectively, for the same period. The foreign currency transaction income or loss as a result of the change in foreign currency exchange rates does not take into account any gains or losses on our foreign currency collar as a result of such change, which would reduce our foreign currency exposure.

55

PART I. FINANCIAL INFORMATION (CONTINUED)

Item 3.     Quantitative and Qualitative Disclosures about Market Risk (continued)

We borrow funds at a combination of fixed and variable rates. Interest rate fluctuations will generally not affect our future earnings or cash flows on our fixed rate debt unless such instruments mature or are otherwise terminated. However, interest rate changes will affect the fair value of our fixed rate instruments. As of September 30, 2021, the fair value of our Pacific Oak SOR (BVI) Holdings, Ltd. Series A and Series B Debentures was $197.4 million and $76.9 million, respectively, and the outstanding principal balance was $197.9 million and $78.8 million, respectively. As of September 30, 2021, excluding the Pacific Oak SOR (BVI) Holdings, Ltd. Series A and Series B Debentures, the fair value of our fixed rate debt was $132.3 million and the outstanding principal balance of our fixed rate debt was $127.5 million. The fair value estimate of our Pacific Oak SOR (BVI) Holdings, Ltd. Series A and Series B Debentures were calculated using the quoted bond price as of September 30, 2021 on the Tel Aviv Stock Exchange of 100.12 and 98.25 Israeli new Shekels, respectively. The fair value estimate of our fixed rate debt was calculated using a discounted cash flow analysis utilizing rates we would expect to pay for debt of a similar type and remaining maturity if the loans were originated as of September 30, 2021. As we expect to hold our fixed rate instruments to maturity and the amounts due under such instruments would be limited to the outstanding principal balance and any accrued and unpaid interest, we do not expect that fluctuations in interest rates, and the resulting changes in fair value of our fixed rate instruments, would have a significant impact on our operations.

Conversely, movements in interest rates on variable rate debt would change our future earnings and cash flows, but would not significantly affect the fair value of those instruments. However, changes in required risk premiums would result in changes in the fair value of floating rate instruments. As of September 30, 2021, we had entered into four separate interest rate caps with an aggregate notional of $201.1 million which effectively limits our exposure to increases in one-month LIBOR above certain thresholds. Based on interest rates as of September 30, 2021, if interest rates were 100 basis points higher or lower during the 12 months ending September 30, 2022, interest expense on our variable rate debt would increase or decrease by $4.2 million and $0.3 million, respectively.

The weighted-average interest rates of our fixed rate debt and variable rate debt as of September 30, 2021 were 4.2% and 2.8%, respectively. The interest rate and weighted-average interest rate represent the actual interest rate in effect as of September 30, 2021 (consisting of the contractual interest rate and the effect of contractual floor rates, if applicable), using interest rate indices as of September 30, 2021 where applicable.

We are exposed to financial market risk with respect to our real estate equity securities. Financial market risk is the risk that we will incur economic losses due to adverse changes in our real estate equity security prices. Our exposure to changes in real estate equity security prices is a result of our investment in these types of securities. Market prices are subject to fluctuation and, therefore, the amount realized in the subsequent sale of an investment may significantly differ from the reported market value. Fluctuation in the market prices of a real estate equity security may result from any number of factors, including perceived changes in the underlying fundamental characteristics of the issuer, the relative price of alternative investments, interest rates, default rates and general market conditions. In addition, amounts realized in the sale of a particular security may be affected by the relative quantity of the real estate equity security being sold. We do not currently engage in derivative or other hedging transactions to manage our real estate equity security price risk. As of September 30, 2021, we owned real estate equity securities with a book value of $96.4 million. Based solely on the prices of real estate equity securities as of September 30, 2021, if prices were to increase or decrease by 10%, our net income would increase or decrease by approximately $9.6 million.

Disclosure Controls and Procedures

As of the end of the period covered by this report, management, including our principal executive officer and principal financial officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures. Based upon, and as of the date of, the evaluation, our principal executive officer and principal financial officer concluded that the disclosure controls and procedures were effective as of the end of the period covered by this report to ensure that information required to be disclosed in the reports we file and submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported as and when required. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports we file and submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and our principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

56

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

None.

Item 1A. Risk Factors

There have been no material changes from the risk factors previously disclosed in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2020 and Part II, Item 1A of our Quarterly Report on Form 10-Q for the six months ended June 30, 2021, each as filed with the SEC.

Item 2 Unregistered Sales of Equity Securities and Use of Proceeds

a)During the period covered by this Form 10-Q, we did not sell any equity securities that were not registered under the Securities Act of 1933, as amended.

b)Not applicable.

c)We have adopted a share redemption program that may enable stockholders to sell their shares to us in limited circumstances.

Pursuant to the share redemption program there are several limitations on our ability to redeem shares:

•Unless the shares are being redeemed in connection with a stockholder’s death, “qualifying disability” or “determination of incompetence” (each as defined under the share redemption program), we may not redeem shares until the stockholder has held the shares for one year.

•During any calendar year, we may redeem no more than 5% of the weighted-average number of shares outstanding during the prior calendar year.

•We have no obligation to redeem shares if the redemption would violate the restrictions on distributions under Maryland law, which prohibits distributions that would cause a corporation to fail to meet statutory tests of solvency.

•During any calendar year, we may redeem only the number of shares that we can purchase with the amount of net proceeds from the sale of shares under the our dividend reinvestment plan during the prior calendar year; provided, however, that this limit may be increased or decreased by us upon ten business days’ notice to our stockholders. To the extent that we redeem less than the number of shares that we can purchase in any calendar year with the amount of net proceeds from the sale of shares under our dividend reinvestment plan during the prior calendar year plus any additional funds approved by us, such excess capacity to redeem shares during any calendar year shall be added to our capacity to otherwise redeem shares during the subsequent calendar year. Furthermore, during any calendar year, once we have received requests for redemptions, whether in connection with a stockholder’s death, “qualifying disability or “determination of incompetence”, or otherwise, that if honored, and when combined with all prior redemptions made during the calendar year, would result in the amount of remaining funds available for the redemption of additional shares in such calendar year being $1.0 million or less, the last $1.0 million of available funds shall be reserved exclusively for shares being redeemed in connection with a stockholder’s death, “qualifying disability or “determination of incompetence.” To the extent that, in the last month of any calendar year, the amount of redemption requests in connection with a stockholder’s death, “qualifying disability or “determination of incompetence” is less than the amount of available funds reserved for such redemptions in accordance with the previous sentence, any excess funds may be used to redeem shares not in connection with a stockholder’s death, “qualifying disability or “determination of incompetence” during such month.

57

PART II. OTHER INFORMATION (CONTINUED)

Item 2 Unregistered Sales of Equity Securities and Use of Proceeds (Continued)

•We may not redeem more than $3.0 million of shares in a given quarter (excluding shares redeemed in connection with a stockholder’s death, “qualifying disability” or “determination of incompetence”). To the extent that, in a given fiscal quarter, we redeem less than the sum of (a) $3.0 million of shares (excluding shares redeemed in connection with a stockholder’s death, “qualifying disability” or “determination of incompetence”) and (b) any excess capacity carried over to such fiscal quarter from a prior fiscal quarter as described below, any remaining excess capacity to redeem shares in such fiscal quarter will be added to our capacity to otherwise redeem shares (excluding shares redeemed in connection with a stockholder’s death, “qualifying disability” or “determination of incompetence”) during succeeding fiscal quarter. We may increase or decrease this limit upon ten business days’ notice to stockholders.

We may amend, suspend or terminate the program upon ten business days’ notice to our stockholders. We may provide notice to our stockholders by including such information in a Current Report on Form 8-K or in our annual or quarterly reports, all publicly filed with the SEC, or by a separate mailing to our stockholders.

•Separate from the funding described in the first bullet above, in December 2020, our board of directors has made available a total of $2.0 million for redemptions in connection with a stockholder's death, “qualifying disability”, or “determination of incompetence” and that will carry forward until depleted. Additionally, on April 12, 2021, our board of directors made available an additional $2.0 million for redemptions in connection with a stockholder's death, “qualifying disability”, or “determination of incompetence” that will carry forward until depleted.

•On August 5, 2021 our board of directors approved Amendment 1 (the “Amendment”) to the Twelfth Amended and Restated Share Redemption Program (the “SRP”). The Amendment was effective as of August 20, 2021 and provides, that, pursuant to Section 4(b) of the SRP, an additional $30 million in funding was authorized for redemptions (excluding those submitted in connection with a stockholder’s death, qualifying disability or determination of incompetence). The Amendment also provided that the funding limitations set forth in Section 4(d) of the SRP shall not apply for the remainder of 2021. Finally, the Amendment provides that, for the avoidance of doubt, for purposes of Section 4(a) of the SRP, our stockholders who received their shares in connection with the POSOR II Merger shall be deemed to have held such shares in us for over a year. The Amendment will was effective for the September 2021 redemption date, which was September 30, 2021.

•On October 26, 2021, the board of directors approved the temporary suspension of processing redemptions under the share redemption program. The temporary suspension will be in effect for October and November 2021 redemptions and will resume at the end of December 2021. This will impact redemption requests made in connection with a stockholder’s death, disability or determination of incompetence, but has no impact on ordinary redemption requests, which are typically made only at quarter end.

During the nine months ended September 30, 2021, we fulfilled redemption requests eligible for redemption under our share redemption program and received in good order and funded redemptions under our share redemption program with the net proceeds from our dividend reinvestment plan and cash on hand. We redeemed shares pursuant to our share redemption program as follows:

Month	Total Number of Shares Redeemed	Average Price Paid Per Share (1)		Approximate Dollar Value of Shares Available That May Yet Be Redeemed Under the Program
January 2021	24,076	$	9.68	(2)
February 2021	3,138	$	9.68	(2)
March 2021	60,929	$	9.68	(2)
April 2021	16,532	$	9.68	(2)
May 2021	19,645	$	9.68	(2)
June 2021	23,994	$	9.68	(2)
July 2021	37,086	$	9.68	(2)
August 2021	12,691	$	9.68	(2)
September 2021	3,007,822	$	9.22	(2)
Total	3,205,913

_____________________

58

PART II. OTHER INFORMATION (CONTINUED)

Item 2 Unregistered Sales of Equity Securities and Use of Proceeds (Continued)

(1) On December 4, 2020, our board of directors approved an estimated value per share of our common stock of $9.68. The change in the redemption price became effective for the December 2020 redemption date and is effective until the estimated value per share is updated. We expect to update our estimated value per share no later than December 2021.

(2) We limit the dollar value of shares that may be redeemed under the program as described above. During the nine months ended September 30, 2021, we redeemed $29.6 million of common stock under the program, which represented all redemption requests received in good order and eligible for redemption through the September 2021 redemption date, except for the $128.0 million of shares in connection with redemption requests not made upon a stockholder’s death, “qualifying disability” or “determination of incompetence,” which redemption requests will be fulfilled subject to the limitations described above. Based on the Twelfth SRP, we have $3.2 million available for redemptions in the remainder of 2021.

Item 3. Defaults upon Senior Securities

None.

Item 4. Mine Safety Disclosures

None.

Item 5. Other Information

On November 11, 2021, we renewed the advisory agreement with the Advisor. The renewed advisory agreement is effective through November 1, 2022. The terms of the renewed advisory agreement are consistent with those of the advisory agreement that was previously in effect.

59

PART II. OTHER INFORMATION (CONTINUED)

Item 6. Exhibits

Ex.	Description
3.1	Second Articles of Amendment and Restatement, incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K filed February 4, 2010
3.2	Articles of Amendment, incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K filed November 1, 2019
3.3	Articles of Amendment, incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed December 23, 2019
3.4	Third Amended and Restated Bylaws, incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed November 1, 2019
3.5	Amendment No.1 to Third Amended and Restated Bylaws, incorporate by reference to Exhibit 3.1 to the Company’s Current Report on 8-K filed July 10, 2020
4.1	Statement regarding restrictions on transferability of shares of common stock (to appear on stock certificate or to be sent upon request and without charge to stockholders issued shares without certificates), incorporated by reference to Exhibit 4.2 to Pre-Effective Amendment No. 1 to the Company’s Registration Statement on Form S-11, Commission File No. 333-156633 filed February 25, 2009
4.2	Fifth Amended and Restated Dividend Reinvestment Plan, incorporated by reference to Exhibit 4.2 to the Company’s Quarterly Report on Form 10-Q filed May 14, 2015
10.1	Amendment No. 1 to Restricted Stock Agreement, dated as of September 1, 2021
10.2	Advisory Agreement, by and between the Company and Pacific Oak Capital Advisors, LLC, dated November 1, 2021
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002
99.1	Twelfth Amended and Restated Share Redemption Program, incorporated by reference to Exhibit 99.5 to the Company's Current Report on Form 8-K filed December 4, 2020
99.2	Amendment No. 1 to the Twelfth Amended and Restated Share Redemption Program, incorporated by reference to Exhibit 99.1 to the Company's Current Report on Form 8-K filed August 6, 2021
101.INS	Inline XBRL Instance Document
101.SCH	Inline XBRL Taxonomy Extension Schema
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase
104	Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).

60

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		PACIFIC OAK STRATEGIC OPPORTUNITY REIT, INC.
Date:	November 12, 2021	By:	/S/ KEITH D. HALL
			Keith D. Hall
			Chief Executive Officer and Director
			(principal executive officer)
Date:	November 12, 2021	By:	/S/ MICHAEL A. BENDER
			Michael A. Bender
			Chief Financial Officer
			(principal financial officer)

61

EX-10.1

Exhibit 10.1

PACIFIC OAK STRATEGIC OPPORTUNITY REIT, INC.

AMENDMENT NO. 1 TO RESTRICTED STOCK AGREEMENT

FOR

KBS CAPITAL ADVISORS LLC

THIS AMENDMENT NO. 1 TO RESTRICTED STOCK AGREEMENT (this “Amendment”), dated and effective as of September 1, 2021, is made by and among Pacific Oak Strategic Opportunity REIT, Inc. (the “Company”), KBS Capital Advisors LLC (the “Recipient”), and GKP Holding LLC, a Delaware limited liability company (“GKP”).

W I T N E S S E T H

WHEREAS, the Company and the Recipient have previously entered into that certain Restricted Stock Agreement, dated as of March 27, 2020 (the “Agreement”);

WHEREAS, the Company and the Recipient desire to amend the Agreement as set forth herein;

WHEREAS, GKP desires to become a party to this Amendment, as set forth herein; and

WHEREAS, capitalized terms used but not defined herein shall have the meanings given to such terms in the Agreement.

NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements contained herein, the parties hereto agree as follows:

1.Vesting and Release of Certain Shares of Restricted Stock. The parties hereby agree that 1,157,448 of the Shares of Restricted Stock awarded to Recipient pursuant to the Agreement shall, subject to restrictions and requirements under the Company’s charter and any applicable securities laws, be immediately vested, transferable and fully released from all restrictions and requirements under the Agreement, but shall be subject to any applicable restrictions under this Amendment including but not limited to those under Section 4 and Section 10. Such Shares are defined herein as the “Released Shares”.

2.Repurchase of Certain Shares of Restricted Stock. For consideration of $5,655,705 in cash, paid by the Company to the Recipient contemporaneously with the execution of this Agreement, Recipient does hereby sell, assign, transfer, convey, grant, bargain, set over, release and deliver 584,267 of the Released Shares of Restricted Stock awarded to Recipient pursuant to the Agreement back to the Company, its successors and assigns, to have and to hold forever, free and clear of any security interest, pledge, mortgage, lien (including environmental and tax liens), charge, encumbrance, adverse claim, preferential arrangement, or restriction of any kind, including, without limitation, any restriction on the use, voting, transfer, receipt of income or other exercise of any attributes of ownership. Such Shares are defined herein as the “Repurchased Shares”.

- 1 -    

3.Transfer of Certain Shares of Restricted Stock. The parties hereby agree that for good and valuable consideration, receipt of which is hereby acknowledged, the Recipient does hereby sell, assign, transfer, convey, grant, bargain, set over, release and deliver 2,254,289 of the Shares of Restricted Stock awarded to Recipient pursuant to the Agreement to GKP, its successors and assigns, to have and to hold forever, free and clear of any security interest, pledge, mortgage, lien (including environmental and tax liens), charge, encumbrance, adverse claim, preferential arrangement, or restriction of any kind, including, without limitation, any restriction on the use, voting, transfer, receipt of income or other exercise of any attributes of ownership, other than those restrictions set forth in the Company’s charter and specifically set forth herein. Such Shares are defined herein as the “GKP Restricted Shares”.

4.Remaining Shares. With respect to Released Shares not repurchased pursuant to Section 2 of this Amendment and other than the 513,467 Released Shares to be transferred to the Affiliated Transferees (as defined in Section 10(e)), such remaining Released Shares (the “Retained Vested Shares”) shall not be eligible for redemption under the Company’s share redemption program unless the Company has satisfied all outstanding redemption requests from other stockholders, provided that (a) this restriction may be waived in certain situations, such as upon a change of control of the Company, as determined by the Conflicts Committee of the Board and (b) notwithstanding the foregoing, within 60 days after November 1, 2024, the Company shall be required to redeem, and the holder will transfer to the Company, any remaining outstanding Retained Vested Shares, separate and outside of any general stockholder share redemption program, at the then most recent Board-approved net asset value per Share (which shall not be more than six months old). The number of Shares governed by this Section 4 is 59,714.

5.Restrictions on GKP Restricted Shares. The GKP Restricted Shares shall be subject to the terms, provisions and restrictions set forth in this Amendment.

6.Vesting of GKP Restricted Shares.

(a)General Vesting. All of the GKP Restricted Shares are nonvested and forfeitable as of the date of this Amendment. Subject to the terms of this Amendment, all of the GKP Restricted Shares shall vest on the earliest of the following: (i) July 1, 2026; or (ii) immediately before and contingent upon the occurrence of a Change in Control (as defined below). Notwithstanding the foregoing, and at the option of either Keith Hall’s estate or Peter McMillan’s estate, that in the event of the death of either Keith Hall or Peter McMillan, such event can trigger the vesting of that number of GKP Restricted Shares corresponding to 100% of the deceased party’s proportional economic interest in GKP Restricted Shares.

(b)Acceleration of Vesting at Company Discretion. Notwithstanding any other term or provision of this Agreement, the Board shall be authorized, in its sole discretion, to accelerate the vesting of any GKP Restricted Shares under this Amendment, at such times and upon such terms and conditions as the Board shall deem advisable.

(c)Certain Definitions. For purposes of this Amendment, the following terms shall have the meanings indicated:

- 2 -

(i)“Non-Vested GKP Restricted Shares” means any portion of the GKP Restricted Shares subject to this Amendment that has not become vested pursuant to this Section 6.

(ii)“Vested GKP Restricted Shares” means any portion of the GKP Restricted Shares subject to this Amendment that is and has become vested pursuant to this Section 6.

7.Delivery of GKP Restricted Shares.

(a)Issuance of Stock Certificates and Legends. One or more stock certificates evidencing the GKP Restricted Shares shall be issued in the name of GKP but shall be held and retained by the records administrator of the Company until the date (the “GKPApplicable Date”) on which the GKP Restricted Shares (or a portion thereof) become Vested GKP Restricted Shares. All such stock certificates shall bear the following legend, along with such other legends that the Company shall deem necessary and appropriate:

THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO SUBSTANTIAL VESTING, TRANSFER AND OTHER RESTRICTIONS AS SET FORTH IN THE RESTRICTED STOCK AGREEMENT BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF THE SHARES, A COPY OF WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF THE ISSUER. SUCH RESTRICTIONS ARE BINDING ON TRANSFEREES OF THESE SHARES, AND INCLUDE VESTING CONDITIONS WHICH MAY RESULT IN THE COMPLETE FORFEITURE OF THE SHARES.

(b)Stock Powers. GKP shall deposit with the Company stock powers or other instruments of transfer or assignment, duly endorsed in blank with signature(s) guaranteed, corresponding to each certificate representing GKP Restricted Shares (or if GKP Restricted Shares are issued without certificates, corresponding to all the GKP Restricted Shares registered in the name of GKP) until such GKP Restricted Shares become Vested GKP Restricted Shares. If GKP shall fail to provide the Company with any such stock power or other instrument of transfer or assignment, the Recipient hereby irrevocably appoints the Secretary of the Company as his attorney-in-fact, with full power of appointment and substitution, to execute and deliver any such power or other instrument which may be necessary to effectuate the transfer of the GKP Restricted Shares (or assignment of distributions thereon) on the books and records of the Company.

(c)Delivery of Stock Certificates. On or after each GKP Applicable Date, upon written request to the Company by GKP, the Company shall promptly cause a new certificate or certificates to be issued for and with respect to all GKP Restricted Shares that become Vested GKP Restricted Shares on that GKP Applicable Date, which certificate(s) shall be delivered to GKP as soon as administratively practicable after the date of receipt by the Company of GKP’s written request. The new certificate or certificates shall continue to bear those legends and endorsements that the Company shall deem necessary or appropriate (including those relating to restrictions on transferability and/or obligations and restrictions under any applicable securities

- 3 -    

laws). If the GKP Restricted Shares are issued without certificates, then on or after each GKP Applicable Date, upon written request to the Company by GKP, the Company shall promptly take such action as shall be necessary or appropriate to reflect on the Company’s books and records (and on the books and records of the transfer agent for the Company’s Shares), that those GKP Restricted Shares that vest on that GKP Applicable Date are Vested GKP Restricted Shares.

(d)Issuance Without Certificates. If the Company is authorized to issue GKP Restricted Shares without certificates, then the Company may, in the discretion of the Company’s management, issue GKP Restricted Shares pursuant to this Amendment without certificates.

8.Forfeiture of Shares. Notwithstanding any other provision of this Amendment to the contrary, any Non-Vested GKP Restricted Shares will be immediately forfeited under the following circumstances described below:

(a)Failure to Honor Non-Compete and Liquidity Agreement.  All Non-Vested GKP Restricted Shares shall be forfeited immediately if GKP or any of its Affiliates fail to honor and observe either provision of the following provisions (the “Non-Compete and Liquidity Agreement”).  Notwithstanding the foregoing, to the extent that only one of either Mr. McMillan or Mr. Hall violates any of the non-compete provisions, only that number of Non-Vested GKP Restricted Shares corresponding to the violating party’s proportional economic interest in Non-Vested GKP Restricted Shares shall be forfeited. GKP agrees to the following arrangement with respect to the Company in connection with the receipt of the GKP Restricted Shares:

1. After the date of this Amendment, GKP and its affiliates will not form a competing entity in commercial real estate investment management to the Company, which has a similar focus on opportunistic commercial real estate investments, without Conflicts Committee approval.  This includes in the non-traded REIT space, public REITs, or separate account management for institutional accounts including, but not limited to domestic pension funds (public or corporate), international pension funds (public or corporate), sovereign wealth funds, family offices, or any other institutional investor. The Company recognizes the existence of Pacific Oak (where “Pacific Oak” is defined as Pacific Oak Capital Advisors LLC and its affiliates other than the Company and its subsidiaries) investment programs either currently in place or in process including, but not limited to Battery Point, DayMark, PORT II or other single-family rental focused entities, the SmartStop Self Storage Joint Venture, Pacific Oak Holdings, and KORE Pacific Advisors. It is further recognized that to be considered a competing entity, the Company must have capital to invest at the time.

2. Pacific Oak will enable the Company to provide meaningful liquidity to its shareholders within five years from the date of this Amendment, defined as successfully converting to an NAV REIT with an expanded share redemption plan, or a public listing, or reopening the share redemption plan for ordinary redemptions, announcing and beginning a liquidation plan for the Company, or a similarly significant liquidity event to any of the foregoing liquidity events.

- 4 -

(b)Failure to Vote. Until November 1, 2021, all of GKP’s Non-Vested Shares shall be forfeited immediately, at the Conflict Committee’s discretion, in any of the following circumstances:

•If GKP attends or returns a proxy to be present at a meeting of Company stockholders, but fails to either: (1) abstain on any matters that the Board determines that GKP cannot vote on pursuant to the Company’s charter or otherwise should abstain and provides GKP with 5 business days’ prior written notice of such determination or (2) with respect to all other matters, vote all GKP Restricted Shares in accordance with the recommendations of the Board.

•If GKP fails to attend or return a proxy to be present at a meeting of Company stockholders if such meeting has been adjourned at least once in order to obtain additional stockholder attendance or votes and GKP has been given 5 business days’ prior written notice of such fact.

(c)Nomination of Directors. Until November 1, 2021, all Non-Vested GKP Restricted Shares shall be forfeited immediately if GKP makes any stockholder nominations of directors to the Board, unless the Conflicts Committee of the Board has provided its prior written consent to such nomination(s).

(d)Compliance with Law. If necessary to satisfy any law, regulation, rule or administrative decision with respect to the Company’s ongoing operations, including any ongoing offering of Common Stock, the Company shall have authority to cause the forfeiture of any Non-Vested GKP Restricted Shares and replace any such forfeited Non-Vested GKP Restricted Shares with a form of compensation that is, as close as reasonably practicable as determined in the Board’s discretion, economically equivalent as of the date of such replacement or modification.

(e)Transfer of Interests in GKP. GKP represents and warrants that Peter McMillan and Keith Hall each own 50% ownership interests in GKP and are the only managers of GKP. All of Vested GKP Restricted Shares and/or Non-Vested GKP Restricted Shares may be forfeited immediately, at the Conflict Committee’s discretion, upon any transfer of ownership interests in GKP without the Company’s prior consent. Transfers for Estate Planning or community property settlement are not subject to this provision and are therefore approved as of the date of this agreement.

9.Enforcement.

(a)GKP acknowledges and agrees that its obligations set forth in Section 8(a) are independent covenants and agreements and can be enforced by the Company separate and apart from this Amendment, and are a condition precedent to this Amendment. Therefore, in addition to any other provision or remedy set forth in this Amendment, the Company shall be entitled to all remedies at law and equity resulting from breach of the obligations of set forth in Section 8(a) and such remedies shall be cumulative with all provisions of this Amendment.

- 5 -    

(b)GKP acknowledges and agrees that the injury that would be suffered by the Company or its Affiliates as a result of violation of Section 8(a) would be irreparable and that an award of monetary damages to the Company or its Affiliates for such a breach would be an inadequate remedy. Consequently, the forfeiture of Non-Vested GKP Restricted Shares is fair and reasonable under the circumstances.

(c)If any provision of Section 8(a) is held to be unreasonable, arbitrary, or against public policy, such covenant and corresponding forfeiture will be considered to be divisible, including with respect to scope, time, geographic area and number of Non-Vested GKP Restricted Shares to be forfeited, and such lesser scope, time, geographic area or number of Non-Vested GKP Restricted Shares, or all of them, as a court of competent jurisdiction may determine to be reasonable, not arbitrary, and not against public policy, will be effective, binding, and enforceable against GKP to the maximum extent permitted by applicable law.

10.Rights with Respect to Restricted Stock.

(a)General. Except as otherwise provided in this Amendment, GKP, successors and assigns shall have, with respect to all of the GKP Restricted Shares, whether Vested GKP Restricted Shares or Non-Vested GKP Restricted Shares, all of the rights of a holder of Shares of common stock of the Company, including without limitation (i) the right to vote such GKP Restricted Shares, (ii) the right to receive dividends, if any, as may be declared on the GKP Restricted Shares from time to time, and (iii) the rights available to all holders of Shares upon any merger, consolidation, reorganization, liquidation or dissolution, stock splitup, stock dividend or recapitalization undertaken by the Company; provided, however, that all of such rights shall be subject to the terms, provisions, conditions and restrictions set forth in this Amendment (including without limitation conditions under which all such rights shall be forfeited). Any cash dividends (or dividends paid in the form of property other than Shares) paid with respect to any GKP Restricted Shares shall be paid at the same time as those dividends are paid by the Company to other holders of Shares (reduced by any applicable federal, state, local or foreign withholding taxes thereon). Any Shares issued to GKP as a dividend with respect to GKP Restricted Shares shall have the same status and transfer restrictions and bear the same legend as the GKP Restricted Shares, and shall be held by the Company if the GKP Restricted Shares Stock that such dividend is attributed to are being so held, unless otherwise determined by the Board.

(b)Adjustments to Shares. If at any time there shall be any increase or decrease in the number of issued and outstanding Shares of the Company through the declaration of a stock dividend or through any recapitalization resulting in a stock split-up, combination or exchange of such Shares, then and in that event, the Board shall make any adjustments it deems fair and appropriate, in view of such change, in the number of GKP Restricted Shares then subject to this Amendment. If any such adjustment shall result in a fractional Share, such fraction shall be disregarded.

(c)No Restrictions on Certain Transactions. Notwithstanding any term or provision of this Amendment to the contrary, the existence of this Amendment, or of any outstanding GKP Restricted Shares awarded hereunder, shall not affect in any manner the right, power or authority

- 6 -

of the Company to make, authorize or consummate: (i) any or all adjustments, recapitalizations, reorganizations or other changes in the Company's capital structure or its business; (ii) any merger, consolidation or similar transaction by or of the Company; (iii) any offer, issue or sale by the Company of any capital stock of the Company, including any equity or debt securities, or preferred or preference stock that would rank prior to or on parity with the GKP Restricted Shares and/or that would include, have or possess other rights, benefits and/or preferences superior to those that the GKP Restricted Shares includes, has or possesses, or any warrants, options or rights with respect to any of the foregoing; (iv) the dissolution or liquidation of the Company; (v) any sale, transfer or assignment of all or any part of the stock, assets or business of the Company; (vi) any dividend or other distribution of cash, Shares or other property by the Company; or (vii) any other corporate transaction, act or proceeding (whether of a similar character or otherwise).

(d)Share Redemption Program. Non-Vested GKP Restricted Shares shall not be eligible for redemption by the Company under any circumstances unless approved by the Board. After the vesting of the GKP Restricted Shares, and only upon receiving a request from GKP and the consent of the Conflicts Committee, within 60 days of the request the Company will redeem, and GKP will transfer to the Company, 50% of such Vested GKP Restricted Shares, with the amount of the cash payment per Share determined based on the then most recent Board-approved net asset value of the Shares (which shall not be more than six months old). Any Vested GKP Restricted Shares that are not required to be redeemed in accordance with the preceding sentence are referred to herein as the “Retained Vested GKP Restricted Shares.” Retained Vested GKP Restricted Shares shall not be eligible for redemption under the Company’s share redemption program (the “SRP”) unless the Company has satisfied all outstanding redemption requests from other stockholders, provided that this restriction may be waived in certain situations, such as upon a change of control of the Company, as determined by the Conflicts Committee of the Board.

(e)Share Transfer Restrictions.The Released Shares received by the parties to this Amendment (or transferred to Recipient’s or its affiliates’ current or former employees, or certain designated employees of Pacific Oak, as described below (collectively, “Affiliated Transferees”)) shall be subject to the transfer restrictions described herein. Subject to Section 4 hereof with respect the Retained Vested Shares, such shares shall be eligible for redemption under the Company’s SRP or tendering in third-party tender offers.  However, the Released Shares have not been registered under federal or state securities laws and may not be offered or sold, except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of such laws.  For 12 months from the date of this Amendment, transfers of Released Shares outside of the SRP or third-party tender offers will only be permitted on a case-by-case basis if approved by the Company and such transfers must comply with applicable laws.  The foregoing transfer restrictions shall not apply to transfers from Recipient to Affiliated Transferees if Recipient has received advice from its counsel that such transfers comply with all federal or state securities laws.  Any attempt to transfer securities without compliance with this paragraph shall be voidable at the option of the Company.

11.Transferability.

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(a)Except for Estate Planning or community property division or unless otherwise determined by the Board, the GKP Restricted Shares are not transferable unless and until they become Vested GKP Restricted Shares in accordance with this Amendment. The terms of this Amendment shall be binding upon the successors and assigns of GKP. Any attempt to effect a Transfer (as defined below) of any GKP Restricted Shares prior to the date on which the GKP Restricted Shares become Vested GKP Restricted Shares shall be void ab initio. For purposes of this Amendment, “Transfer” shall mean any sale, transfer, encumbrance, gift, donation, assignment, pledge, hypothecation, or other disposition, whether similar or dissimilar to those previously enumerated, whether voluntary or involuntary, and including, but not limited to, any disposition by operation of law, by court order, by judicial process, or by foreclosure, levy or attachment.

(b)Unless otherwise consented to in writing by the Company, in its sole discretion, this Amendment (and GKP’s rights hereunder) may not be assigned, and the obligations of GKP hereunder may not be delegated, in whole or in part. The rights and obligations created hereunder shall be binding on GKP and its heirs and legal representatives and on the successors and assigns of the Company.

12.Responsibilities for Tax Consequences. The tax consequences to GKP and the Recipient (including without limitation federal, state, local and foreign income tax consequences) with respect to the GKP Restricted Shares (including without limitation the grant, vesting and/or forfeiture thereof) and this Amendment are the sole responsibility of GKP and the Recipient, respectively.

13.Amendment. This Amendment may be amended only with the written consent of the Company, the Recipient and GKP, except that amendments to Sections 1-4 do not require the consent of GKP and amendments to Sections 5-11 do not require the consent of the Recipient.

14.Complete Agreement. This Amendment (together with the Agreement and those agreements and documents expressly referred to herein, for the purposes referred to herein) embody the complete and entire agreement and understanding between the parties with respect to the subject matter hereof, and supersede any and all prior promises, assurances, commitments, agreements, undertakings or representations, whether oral, written, electronic or otherwise, and whether express or implied, which may relate to the subject matter hereof in any way. No promises, assurances, commitments, agreements, undertakings or representations, whether oral, written, electronic or otherwise, and whether express or implied, with respect to the subject matter hereof, have been made by any party which are not set forth expressly in the Agreement or this Amendment.

15.Miscellaneous.

(a)Severability. If any term or provision of this Amendment is or becomes or is deemed to be invalid, illegal or unenforceable in any jurisdiction or under any applicable law, rule or regulation, then such provision shall be construed or deemed amended to conform to applicable law (or if such provision cannot be so construed or deemed amended without materially altering the purpose or intent of this Agreement and the transfer of GKP Restricted

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Shares hereunder, such provision shall be stricken as to such jurisdiction and the remainder of this Agreement and the award hereunder shall remain in full force and effect).

(b)Law Governing. This Amendment shall be governed by and construed and enforced in accordance with the internal laws of the State of Maryland (without reference to the conflict of laws rules or principles thereof).

(c)Interpretation.GKP accepts the GKP Restricted Shares subject to all of the terms, provisions and restrictions of this Agreement. The undersigned GKP hereby accepts as binding, conclusive and final all decisions or interpretations of the Company upon any questions arising under this Agreement.

(d)Headings. Section, paragraph and other headings and captions are provided solely as a convenience to facilitate reference. Such headings and captions shall not be deemed in any way material or relevant to the construction, meaning or interpretation of this Amendment or any term or provision hereof.

(e)Notices.. Any notice under this Amendment shall be in writing and shall be deemed to have been duly given when delivered by hand or by overnight mail or other overnight delivery service to the addresses set forth herein:

To the Company or the Board:

Pacific Oak Strategic Opportunity REIT, Inc.

11766 Wilshire Blvd., Suite 1670

Los Angeles, California 90025

To the Recipient:

KBS Capital Advisors LLC

800 Newport Center Drive, Suite 700

Newport Beach, California 92660

To GKP:

GKP Holding LLC

11766 Wilshire Blvd., Suite 1670

Los Angeles, California 90025

Either party may at any time give notice in writing to the other party of a change in its address for the purposes of this Section 15(e).

- 9 -    

(f)Non-Waiver of Breach. The waiver by any party hereto of the other party's prompt and complete performance, or breach or violation, of any term or provision of this Amendment shall be effected solely in a writing signed by such party, and shall not operate nor be construed as a waiver of any subsequent breach or violation, and the waiver by any party hereto to exercise any right or remedy which he or it may possess shall not operate nor be construed as the waiver of such right or remedy by such party, or as a bar to the exercise of such right or remedy by such party, upon the occurrence of any subsequent breach or violation.

(g)Counterparts. This Amendment may be executed in multiple separate counterparts, each of which shall be an original, and all of which together shall constitute one and the same agreement.

(h)Arbitration. To the extent that a dispute arises between the parties under this Amendment, the parties agree to attempt to settle such dispute through non-binding mediation to be held for a maximum of one day administered by the Judicial Arbiter Group ("JAG"), before a mutually agreed representative of JAG, in accordance with its commercial mediation rules then in effect. If such dispute cannot be resolved through mediation, it shall be resolved by binding arbitration before a panel of three arbitrators of JAG (selected by the JAG mediator) under the commercial arbitration rules then in effect. Each party shall bear its own legal, accounting and other similar fees incurred in connection with such arbitration; provided that (a) the losing party shall bear the costs of such arbitration and (b) the arbitrators shall award legal fees to the prevailing party in such dispute. Such arbitration and determination shall be final and binding on the parties and judgment may be entered upon such determination in any court having jurisdiction thereof (and such judgment enforced, if necessary, through judicial proceedings). It is understood and agreed that the arbitrators shall be specifically empowered to designate and award any remedy available at law or in equity, including specific performance. The parties agree that any such mediation or arbitration shall be conducted in Los Angeles, California.

(i)Termination of this Agreement. Upon vesting of all Non-Vested GKP Restricted Shares, this Amendment shall terminate, except any provisions under Section 10(d).

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IN WITNESS WHEREOF, the parties hereto, intending to be legally bound, have executed this Amendment as of the date first written above.

PACIFIC OAK STRATEGIC OPPORTUNITY REIT, INC.

By:/s/ Keith D. Hall                    

         Keith D. Hall, Chief Executive Officer

KBS CAPITAL ADVISORS LLC

By:    PBren Investments, L.P., a Manager

    By:    PBren Investments, LLC, as general

        partner

        By:    PBCS Management, LLC,

            a Manager

        By:/s/ Charles J. Schreiber, Jr.    

            Charles J. Schreiber, Jr., Manager

By:    Schreiber Real Estate Investments, L.P.,

    a Manager

By:    Schreiber Investments, LLC, as general

        partner

        By:    PBCS Management, LLC,

            a Manager

        By:/s/ Charles J. Schreiber, Jr.    

            Charles J. Schreiber, Jr., Manager

GKP HOLDING LLC

By:/s/ Peter McMillan                    

    Peter McMillan, Manager

By:/s/ Keith Hall                    

    Keith Hall, Manager

- 11 -    

EX-10.2

Exhibit 10.2

ADVISORY AGREEMENT

between

PACIFIC OAK STRATEGIC OPPORTUNITY REIT, INC.

and

PACIFIC OAK CAPITAL ADVISORS, LLC

November 1, 2021

TABLE OF CONTENTS

Page

ARTICLE 1 - DEFINITIONS	1
ARTICLE 2 - APPOINTMENT	9
ARTICLE 3 - DUTIES OF THE ADVISOR	9
3.01 Organizational and Offering Services	9
3.02 Acquisition Services	9
3.03 Asset Management Services	10
3.04 Stockholder Services	12
3.05 Other Services	13
ARTICLE 4 - AUTHORITY OF ADVISOR	13
4.01 General	13
4.02 Powers of the Advisor	13
4.03 Approval by the Board	13
4.04 Modification or Revocation of Authority of Advisor	13
ARTICLE 5 - BANK ACCOUNTS	14
ARTICLE 6 – RECORDS AND FINANCIAL STATEMENTS	14
ARTICLE 7 - LIMITATION ON ACTIVITIES	14
ARTICLE 8 - FEES	15
8.01 Acquisition Fees	15
8.02 Asset Management Fees	15
8.03 Disposition Fees	16
8.04 Subordinated Share of Cash Flows	16
8.05 Subordinated Incentive Fee	17
8.06 Changes to Fee Structure	17
ARTICLE 9 - EXPENSES	18
9.01 General	18
9.02 Timing of and Limitations on Reimbursements	19
ARTICLE 10 – VOTING AGREEMENT	20
ARTICLE 11 - RELATIONSHIP OF ADVISOR AND COMPANY; OTHER ACTIVITIES OF THE ADVISOR	20
11.01 Relationship	20
11.02 Time Commitment	20
11.03 Investment Opportunities and Allocation	21
ARTICLE 12 - THE PACIFIC OAK NAME	21
ARTICLE 13 - TERM AND TERMINATION OF THE AGREEMENT	21
13.01 Term	21
13.02 Termination by Either Party	21
13.03 Payments on Termination and Survival of Certain Rights and Obligations	21
ARTICLE 14 - ASSIGNMENT	22

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ARTICLE 15 - INDEMNIFICATION AND LIMITATION OF LIABILITY	22
15.01 Indemnification	22
15.02 Limitation on Indemnification	23
15.03 Limitation on Payment of Expenses	23
ARTICLE 16 - MISCELLANEOUS	23
16.01 Notices	23
16.02 Modification	24
16.03 Severability	24
16.04 Construction	24
16.05 Entire Agreement	24
16.06 Waiver	24
16.07 Gender	25
16.08 Titles Not to Affect Interpretation	25
16.09 Counterparts	25
ARTICLE 17 – PORT II PROVISIONS	25
17.01 Management of PORT II Operations and Assets	25
17.02 Rebate or Offset of Fees	25

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ADVISORY AGREEMENT

This Advisory Agreement, entered into on November 11, 2021 and effective as of November 1, 2021 (the “Agreement”), is between Pacific Oak Strategic Opportunity REIT, Inc., a Maryland corporation (the “Company”), and Pacific Oak Capital Advisors, LLC, a Delaware limited liability company (the “Advisor”).

W I T N E S S E T H

WHEREAS, the Company desires to avail itself of the knowledge, experience, sources of information, advice, assistance and certain facilities available to the Advisor and to have the Advisor undertake the duties and responsibilities hereinafter set forth, on behalf of, and subject to the supervision of, the board of directors of the Company (the “Board”), all as provided herein; and

WHEREAS, the Advisor is willing to undertake to render such services, subject to the supervision of the Board, on the terms and conditions hereinafter set forth.

NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements contained herein, the parties hereto agree as follows:

ARTICLE 1

DEFINITIONS

The following defined terms used in this Agreement shall have the meanings specified below:

“Acquisition Expenses” means any and all expenses, excluding the fee payable to the Advisor pursuant to Section 8.01, incurred by the Company, the Advisor or any Affiliate of either in connection with the selection, acquisition or development of any property, loan or other potential investment, whether or not acquired or originated, as applicable, including, without limitation, legal fees and expenses, travel and communications expenses, costs of appraisals, nonrefundable option payments on properties or other investments not acquired, accounting fees and expenses, title insurance premiums and miscellaneous expenses related to the selection, acquisition or development of any property, loan or other potential investment.

“Acquisition Fees” means the fee payable to the Advisor pursuant to Section 8.01 plus all other fees and commissions, excluding Acquisition Expenses, paid by any Person to any Person in connection with making or investing in any Property, Loan or other Permitted Investment or the purchase, development or construction of any Property by the Company. Included in the computation of such fees or commissions shall be any real estate commission, selection fee, Development Fee, Construction Fee, nonrecurring management fee, loan fees or points or any fee of a similar nature, however designated. Excluded shall be Development Fees and Construction Fees paid to Persons not Affiliated with the Advisor in connection with the actual development and construction of a Property.

“Advisor” means (i) Pacific Oak Capital Advisors, LLC, a Delaware limited liability company, or (ii) any successor advisor to the Company.

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“Affiliate” or “Affiliated” An Affiliate of another Person includes any of the following: (i) any Person directly or indirectly controlling, controlled by, or under common control with such other Person; (ii) any Person directly or indirectly owning, controlling, or holding with the power to vote 10% or more of the outstanding voting securities of such other Person; (iii) any legal entity for which such Person acts as an executive officer, director, trustee, or general partner; (iv) any Person 10% or more of whose outstanding voting securities are directly or indirectly owned, controlled, or held, with power to vote, by such other Person; and (v) any executive officer, director, trustee, or general partner of such other Person. An entity shall not be deemed to control or be under common control with an Advisor-sponsored program unless (i) the entity owns 10% or more of the voting equity interests of such program or (ii) a majority of the board of directors (or equivalent governing body) of such program is composed of Affiliates of the entity.

“Appraised Value” means the value according to an appraisal made by an Independent Appraiser.

“Asset Management Fee” shall have the meaning set forth in Section 8.02.

“Average Invested Assets” means, for a specified period, the average of the aggregate book value of the assets of the Company invested, directly or indirectly, in Properties, Loans and other Permitted Investments secured by real estate before reserves for depreciation or bad debts or other similar non-cash reserves, computed by taking the average of such values at the end of each month during such period.

“Board” means the board of directors of the Company, as of any particular time.

“Bylaws” means the bylaws of the Company, as amended from time to time.

“Cash from Financings” means the net cash proceeds realized by the Company from the financing of Properties, Loans or other Permitted Investments or from the refinancing of any Company indebtedness (after deduction of all expenses incurred in connection therewith).

“Cash from Sales and Settlements” means the net cash proceeds realized by the Company (i) from the sale, exchange or other disposition of any of its assets or any portion thereof after deduction of all expenses incurred in connection therewith and (ii) from the prepayment, maturity, workout or other settlement of any Loan or Permitted Investment or portion thereof after deduction of all expenses incurred in connection therewith. In the case of a transaction described in clause (i) (C) of the definition of “Sale” and (i)(B) of the definition of “Settlement,” Cash from Sales and Settlements means the proceeds of any such transaction actually distributed to the Company from the Joint Venture or partnership. Cash from Sales and Settlements shall not include Cash from Financings.

“Cash from Sales, Settlements and Financings” means the total sum of Cash from Sales and Settlements and Cash from Financings.

“Charter” means the articles of incorporation of the Company, as amended from time to time.

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“Code” means the Internal Revenue Code of 1986, as amended from time to time, or any successor statute thereto. Reference to any provision of the Code shall mean such provision as in effect from time to time, as the same may be amended, and any successor provision thereto, as interpreted by any applicable regulations as in effect from time to time.

“Company” means Pacific Oak Strategic Opportunity REIT, Inc., a corporation organized under the laws of the State of Maryland.

“Competitive Real Estate Commission” means a real estate or brokerage commission for the purchase or sale of property that is reasonable, customary, and competitive in light of the size, type, and location of the property.

“Conflicts Committee” shall have the meaning set forth in the Company’s Charter.

“Construction Fee” means a fee or other remuneration for acting as general contractor and/or construction manager to construct improvements, supervise and coordinate projects or to provide major repairs or rehabilitation on a Property.

“Contract Sales Price” means the total consideration received by the Company for the sale of a Property, Loan or other Permitted Investment.

“Cost of Loans and other Permitted Investments” means the sum of the cost of all Loans and Permitted Investments held, directly or indirectly, by the Company, calculated each month on an ongoing basis, and calculated as follows for each investment: the lesser of (i) the amount actually paid or allocated to acquire or fund the Loan or Permitted Investment (inclusive of fees and expenses related thereto and the amount of any debt associated with or used to acquire or fund such investment) and (ii) the outstanding principal amount of such Loan or Permitted Investment (plus the fees and expenses related to the acquisition or funding of such investment), as of the time of calculation. With respect to any Loan or Permitted Investment held by the Company through a Joint Venture or partnership of which it is, directly or indirectly, a partner, such amount shall be the Company’s proportionate share thereof.

“Cost of Real Estate Investments” means the sum of (i) with respect to Properties wholly owned, directly or indirectly, by the Company, the amount actually paid or allocated to the purchase, development, construction or improvement of Properties, inclusive of fees and expenses related thereto, plus the amount of any outstanding debt attributable to such Properties and (ii) in the case of Properties owned by any Joint Venture or partnership in which the Company or the Partnership is, directly or indirectly, a partner, the portion of the amount actually paid or allocated to the purchase, development, construction or improvement of Properties, inclusive of fees and expenses related thereto, plus the amount of any outstanding debt associated with such Properties that is attributable to the Company’s investment in the Joint Venture or partnership.

“Dealer Manager” means (i) Pacific Oak Capital Markets Group, LLC, a Delaware limited liability company, or (ii) any successor dealer manager to the Company.

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“Development Fee” means a fee for the packaging of a Property, including negotiating and approving plans, and undertaking to assist in obtaining zoning and necessary variances and necessary financing for the Property, either initially or at a later date.

“Director” means a member of the board of directors of the Company.

“Disposition Fee” shall have the meaning set forth in Section 8.03.

“Distributions” means any distributions of money or other property by the Company to owners of Shares, including distributions that may constitute a return of capital for federal income tax purposes.

“GAAP” means accounting principles generally accepted in the United States.

“Gross Proceeds” means the aggregate purchase price of all Shares sold for the account of the Company through an Offering, without deduction for Organization and Offering Expenses.

“KBS Advisory Agreement” means the advisory agreement between the Company and its prior advisor, KBS Capital Advisors LLC, dated October 7, 2019, which agreement terminated on October 31, 2019.

“Independent Appraiser” means a person or entity with no material current or prior business or personal relationship with the Advisor or the Directors, who is engaged to a substantial extent in the business of rendering opinions regarding the value of assets of the type held by the Company, and who is a qualified appraiser of real estate as determined by the Board. Membership in a nationally recognized appraisal society such as the American Institute of Real Estate Appraisers (M.A.I.) or the Society of Real Estate Appraisers (S.R.E.A.) shall be conclusive evidence of such qualification.

“Invested Capital” means the amount calculated by multiplying the total number of Shares purchased by Stockholders since Company inception by the issue price, reduced by any amounts paid by the Company to repurchase Shares since Company inception. For purposes of this definition, all Shares issued to stockholders of Pacific Oak Strategic Opportunity REIT II, Inc. (“SOR II”), in connection with the merger (the “Merger”) of SOR II with Pacific Oak SOR II, LLC (“Merger Sub”) pursuant to that certain Agreement and Plan of Merger among the Company, Merger Sub and SOR II, dated as of February 19, 2020, shall be deemed to have been purchased by Stockholders at the effective time of the Merger and at a price of $10.63 per Share.

“Joint Venture” means any joint venture, limited liability company or other Affiliate of the Company that owns, in whole or in part, on behalf of the Company any Properties, Loans or other Permitted Investments.

“Listed” or “Listing” shall have the meaning set forth in the Company’s Charter.

“Loans” means mortgage loans and other types of debt financing investments made by the Company or the Partnership, either directly or indirectly, including through ownership interests in a Joint Venture or partnership, including, without limitation, mezzanine loans, B-notes, bridge loans, convertible mortgages, wraparound mortgage loans, construction mortgage loans, loans on leasehold interests, and participations in such loans.

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“Market Value” shall have the meaning set forth in Section 8.05.

“Merger” shall have the meaning set forth in the definition of “Invested Capital.”

“NASAA Guidelines” means the NASAA Statement of Policy Regarding Real Estate Investment Trusts as in effect on the date hereof.

“Net Income” means, for any period, the total revenues applicable to such period, less the total expenses applicable to such period excluding additions to reserves for depreciation, bad debts or other similar non-cash reserves; provided, however, Net Income for purposes of calculating total allowable Operating Expenses (as defined herein) shall exclude the gain from the sale of the Company’s assets.

“Offering” means any offering of Shares that is registered with the SEC, excluding Shares offered under any employee benefit plan.

“Operating Cash Flow” means Operating Revenue Cash Flows minus the sum of (i) Operating Expenses, (ii) all principal and interest payments on indebtedness and other sums paid to lenders, (iii) the expenses of raising capital such as Organization and Offering Expenses, legal, audit, accounting, underwriting, brokerage, listing, registration, and other fees, printing and other such expenses and tax incurred in connection with the issuance, distribution, transfer, registration and Listing of the Shares, (iv) taxes, (v) incentive fees paid in compliance with Section IV.F. of the NASAA Guidelines and (vi) Acquisition Fees, Acquisition Expenses, real estate commissions on the resale of real property, and other expenses connected with the acquisition, disposition, and ownership of real estate interests, loans or other property (other than commissions on the sale of assets other than real property), such as the costs of foreclosure, insurance premiums, legal services, maintenance, repair and improvement of property.

“Operating Expenses” means all costs and expenses incurred by the Company, as determined under GAAP, that in any way are related to the operation of the Company or to Company business, including fees paid to the Advisor, but excluding (i) the expenses of raising capital such as Organization and Offering Expenses, legal, audit, accounting, underwriting, brokerage, listing, registration, and other fees, printing and other such expenses and tax incurred in connection with the issuance, distribution, transfer, registration and Listing of the Shares, (ii) interest payments, (iii) taxes, (iv) non-cash expenditures such as depreciation, amortization and bad loan reserves, (v) incentive fees paid in compliance with Section IV.F. of the NASAA Guidelines and (vi) Acquisition Fees, Acquisition Expenses, real estate commissions on the resale of real property, and other expenses connected with the acquisition, disposition, and ownership of real estate interests, loans or other property (other than commissions on the sale of assets other than real property), such as the costs of foreclosure, insurance premiums, legal services, maintenance, repair and improvement of property.

“Operating Revenue Cash Flows” means the Company’s cash flow from ownership and/or operation of (i) Properties, (ii) Loans, (iii) Permitted Investments, (iv) short-term investments, and (v) interests in Properties, Loans and Permitted Investments owned by any Joint Venture or any partnership in which the Company or the Partnership is, directly or indirectly, a partner.

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“Organization and Offering Expenses” means all expenses incurred by or on behalf of the Company in connection with or preparing the Company for registration of and subsequently offering and distributing its Shares to the public, whether incurred before or after the date of this Agreement, which may include but are not limited to, total underwriting and brokerage discounts and commissions (including fees of the underwriters’ attorneys); any expense allowance granted by the Company to the underwriter or any reimbursement of expenses of the underwriter by the Company; expenses for printing, engraving and mailing; compensation of employees while engaged in sales activity; charges of transfer agents, registrars, trustees, escrow holders, depositaries and experts; and expenses of qualification of the sale of the securities under Federal and State laws, including taxes and fees, accountants’ and attorneys’ fees.

“Partnership” means Pacific Oak Strategic Opportunity Limited Partnership, a Delaware limited partnership formed to own and operate Properties, Loans and other Permitted Investments on behalf of the Company.

“Permitted Investments” means all investments (other than Properties and Loans) in which the Company may acquire an interest, either directly or indirectly, including through ownership interests in a Joint Venture or partnership, pursuant to its Charter, Bylaws and the investment objectives and policies adopted by the Board from time to time, other than short-term investments acquired for purposes of cash management.

“Person” means an individual, corporation, partnership, estate, trust (including a trust qualified under Section 401(a) or 501(c) (17) of the Code), a portion of a trust permanently set aside for or to be used exclusively for the purposes described in Section 642(c) of the Code, association, private foundation within the meaning of Section 509(a) of the Code, joint stock company or other entity, or any government or any agency or political subdivision thereof, and also includes a group as that term is used for purposes of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended.

“Prior Advisor Performance Fee Value” means the value of the Subordinated Share of Cash Flows (as defined in the KBS Advisory Agreement) based on a hypothetical liquidation of the Company’s assets and liabilities at their then-current estimated values used in the 2018 NAV (as defined in the KBS Advisory Agreement) calculation, less any potential amounts to be paid as closing costs and fees related to the disposition of real property, all as determined and used in calculating the number of RSUs (as defined in the KBS Advisory Agreement) to be issued to KBS Capital Advisors LLC in connection with the termination of the KBS Advisory Agreement.

“Property” means any real property or properties transferred or conveyed to the Company or the Partnership, either directly or indirectly, including through ownership interests in a Joint Venture or partnership.

“Property Manager” means an entity that has been retained to perform and carry out at one or more of the Properties property-management services, excluding persons, entities or independent contractors retained or hired to perform facility management or other services or tasks at a particular Property, the costs for which are passed through to and ultimately paid by the tenant at such Property.

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“REIT” means a “real estate investment trust” under Sections 856 through 860 of the Code.

“Sale” means any transaction or series of transactions whereby: (A) the Company or the Partnership sells, grants, transfers, conveys, or relinquishes its ownership of any Property, Loan or other Permitted Investment or portion thereof, including the transfer of any Property that is the subject of a ground lease, including any event with respect to any Property, Loan or other Permitted Investment that gives rise to a significant amount of insurance proceeds or condemnation awards, and including the issuance by one of the Company’s subsidiaries of any asset-backed securities or collateralized debt obligations as part of a securitization transaction; (B) the Company or the Partnership sells, grants, transfers, conveys, or relinquishes its ownership of all or substantially all of the interest of the Company or the Partnership in any Joint Venture or any partnership in which it is a partner; or (C) any Joint Venture or any partnership in which the Company or the Partnership is a partner, sells, grants, transfers, conveys, or relinquishes its ownership of any Property, Loan or other Permitted Investment or portion thereof, including any event with respect to any Property, Loan or other Permitted Investment that gives rise to insurance claims or condemnation awards, and including the issuance by such Joint Venture or any partnership or one of its subsidiaries of any asset-backed securities or collateralized debt obligations as part of a securitization transaction.

“SEC” means the United States Securities and Exchange Commission.

“Settlement” means the prepayment, maturity, workout or other settlement of any Loan or other Permitted Investment or portion thereof owned, directly or indirectly, by (A) the Company or the Partnership or (B) any Joint Venture or any partnership in which the Company or the Partnership is, directly or indirectly, a partner.

“Shares” means shares of common stock of the Company, par value $.01 per share.

“Stockholders” means the registered holders of the Shares.

“Stockholders’ 7% Return” means, as of any date, an aggregate amount equal to a 7% cumulative, non-compounded, annual return on Invested Capital (calculated like simple interest on a daily basis based on a three hundred sixty-five day year) since Company inception. For purposes of calculating the Stockholders’ 7% Return, Invested Capital shall be determined for each day during the period for which the Stockholders’ 7% Return is being calculated (i.e. although the calculation is performed since Company inception, it will take into account the specific dates that Shares were purchased by Stockholders or repurchased by the Company) and shall be calculated net of (1) Distributions of Operating Cash Flow since Company inception to the extent such Distributions of Operating Cash Flow provide a cumulative, non-compounded, annual return in excess of 7% since Company inception, as such amounts are computed on a daily basis based on a three hundred sixty-five day year and (2) Distributions of Cash from Sales, Settlements and Financings since Company inception, except to the extent such Distributions would be required to supplement Distributions of Operating Cash Flow in order to achieve a cumulative, non-compounded, annual return of 7% since Company inception, as such amounts are computed on a daily basis based on a three hundred sixty-five day year.

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“Subordinated Incentive Fee” means the fee payable to the Advisor under certain circumstances if the Shares are Listed, as calculated in Section 8.05.

“Subordinated Incentive Fee Threshold” has the meaning set forth in Section 8.05.

“Subordinated Performance Fee Due Upon Termination” means a fee payable in the form of an interest bearing promissory note (the “Performance Fee Note”) in a principal amount equal to the amount, if any, by which (I) (1) 15% of the amount, if any, by which (a) the Appraised Value of the Company’s Properties at the Termination Date, less amounts of all indebtedness secured by the Company’s Properties, plus the fair market value of all other Loans, Permitted Investments and other assets of the Company at the Termination Date, less amounts of indebtedness related to such Loans and Permitted Investments, less any other secured or unsecured indebtedness or known liabilities at the Termination Date, plus total Distributions (excluding any stock dividend) from Company inception through the Termination Date exceeds (b) the sum of Invested Capital plus total Distributions required to be made to the stockholders in order to pay the Stockholders’ 7% Return from Company inception through the Termination Date less (2) any prior payment to the Advisor of a Subordinated Share of Cash Flows (the amount calculated under (b) is the “Termination Fee Threshold”) exceeds (II) the Prior Advisor Performance Fee. Interest on the Performance Fee Note will accrue beginning on the Termination Date at a rate deemed fair and reasonable by the Conflicts Committee. The Company shall repay the Performance Fee Note at such time as the Company completes the first Sale or Settlement after the Termination Date using Cash from Sales and Settlements. If the Cash from Sales and Settlements from the first Sale or Settlement after the Termination Date is insufficient to pay the Performance Fee Note in full, including accrued interest, then the Performance Fee Note shall be paid in part from the Cash from Sales and Settlements from the first Sale or Settlement, and in part from the Cash from Sales and Settlements from each successive Sale or Settlement until the Performance Fee Note is repaid in full, with interest. If the Performance Fee Note has not been paid in full within five years from the Termination Date, then the Advisor, its successors or assigns, may elect to convert the balance of the fee, including accrued but unpaid interest, into Shares at a price per Share equal to the average closing price of the Shares over the ten trading days immediately preceding the date of such election if the Shares are Listed at such time. If the Shares are not Listed at such time, the Advisor, its successors or assigns, may elect to convert the balance of the fee, including accrued but unpaid interest, into Shares at a price per Share equal to the fair market value for the Shares as determined by the Board based upon the Appraised Value of Company’s Properties on the date of election plus the fair market value of all other Loans and Permitted Investments of the Company on the date of election.

“Subordinated Share of Cash Flows” has the meaning set forth in Section 8.04.

“Subordinated Share of Cash Flows Threshold” has the meaning set forth in Section 8.04.

“Termination Date” means the date of termination of the Agreement determined in accordance with Article 13 hereof.

“Termination Fee Threshold” has the meaning set forth in the definition of Subordinated Performance Fee Due Upon Termination.

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“2%/25% Guidelines” means the requirement pursuant to the NASAA Guidelines that, in any period of four consecutive fiscal quarters, total Operating Expenses not exceed the greater of 2% of the Company’s Average Invested Assets during such 12-month period or 25% of the Company’s Net Income over the same 12-month period.

ARTICLE 2

APPOINTMENT

The Company hereby appoints the Advisor to serve as its advisor and asset manager on the terms and conditions set forth in this Agreement, and the Advisor hereby accepts such appointment.

ARTICLE 3

DUTIES OF THE ADVISOR

The Advisor is responsible for managing, operating, directing and supervising the operations and administration of the Company and its assets. The Advisor undertakes to use its best efforts to present to the Company potential investment opportunities, to make investment decisions on behalf of the Company subject to the limitations in the Company’s Charter, the direction and oversight of the Board and Section 4.03 hereof, and to provide the Company with a continuing and suitable investment program consistent with the investment objectives and policies of the Company as determined and adopted from time to time by the Board. Subject to the limitations set forth in this Agreement, including Article 4 hereof, and the continuing and exclusive authority of the Board over the management of the Company, the Advisor shall, either directly or by engaging an Affiliate or third party, perform the following duties:

3.01 Organizational and Offering Services. The Advisor shall perform all services related to the organization of the Company or any Offering or private sale of the Company’s securities, other than services that (i) are to be performed by the Dealer Manager, (ii) the Company elects to perform directly or (iii) would require the Advisor to register as a broker-dealer with the SEC or any state.

3.02 Acquisition Services.

(i) Serve as the Company’s investment and financial advisor and provide relevant market research and economic and statistical data in connection with the Company’s assets and investment objectives and policies;

(ii) Subject to Section 4 hereof and the investment objectives and policies of the Company: (a) locate, analyze and select potential investments; (b) structure and negotiate the terms and conditions of transactions pursuant to which investments in Properties, Loans and other Permitted Investments will be made; (c) acquire, originate and dispose of Properties, Loans and other Permitted Investments on behalf of the Company; (d) arrange for financing and refinancing and make other changes in the asset or capital structure of investments in Properties, Loans and other Permitted Investments; and (e) enter into leases, service contracts and other agreements for Properties, Loans and other Permitted Investments;

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(iii) Perform due diligence on prospective investments and create due diligence reports summarizing the results of such work;

(iv) With respect to prospective investments presented to the Board, prepare reports regarding such prospective investments that include recommendations and supporting documentation necessary for the Directors to evaluate the proposed investments;

(v) Obtain reports (which may be prepared by the Advisor or its Affiliates), where appropriate, concerning the value of contemplated investments of the Company;

(vi) Deliver to or maintain on behalf of the Company copies of all appraisals obtained in connection with the Company’s investments; and

(vii) Negotiate and execute approved investments and other transactions, including prepayments, maturities, workouts and other settlements of Loans and other Permitted Investments.

3.03 Asset Management Services.

(i) Real Estate and Related Services:

(a) Investigate, select and, on behalf of the Company, engage and conduct business with (including enter contracts with) such Persons as the Advisor deems necessary to the proper performance of its obligations as set forth in this Agreement, including but not limited to consultants, accountants, lenders, technical advisors, attorneys, brokers, underwriters, corporate fiduciaries, escrow agents, depositaries, custodians, agents for collection, insurers, insurance agents, developers, construction companies, Property Managers and any and all Persons acting in any other capacity deemed by the Advisor necessary or desirable for the performance of any of the foregoing services;

(b) Negotiate and service the Company’s debt facilities and other financings;

(c) Monitor applicable markets and obtain reports (which may be prepared by the Advisor or its Affiliates) where appropriate, concerning the value of investments of the Company;

(d) Monitor and evaluate the performance of each asset of the Company and the Company’s overall portfolio of assets, provide daily management services to the Company and perform and supervise the various management and operational functions related to the Company’s investments;

(e) Formulate and oversee the implementation of strategies for the administration, promotion, management, operation, maintenance, improvement, financing and refinancing, marketing, leasing and disposition of Properties, Loans and other Permitted Investments on an overall portfolio basis;

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(f) Consult with the Company’s officers and the Board and assist the Board in the formulation and implementation of the Company’s financial policies, and, as necessary with respect to investment and borrowing opportunities presented to the Board, furnish the Board with advice and recommendations with respect to the making of investments consistent with the investment objectives and policies of the Company and in connection with any borrowings proposed to be undertaken by the Company;

(g) Oversee the performance by the Property Managers of their duties, including collection and proper deposits of rental payments and payment of Property expenses and maintenance;

(h) Conduct periodic on-site property visits to some or all (as the Advisor deems reasonably necessary) of the Properties to inspect the physical condition of the Properties and to evaluate the performance of the Property Managers;

(i) Review, analyze and comment upon the operating budgets, capital budgets and leasing plans prepared and submitted by each Property Manager and aggregate these property budgets into the Company’s overall budget;

(j) Coordinate and manage relationships between the Company and any Joint Venture partners; and

(k) Consult with the Company’s officers and the Board and provide assistance with the evaluation and approval of potential asset disposition, sale and refinancing opportunities that are presented to the Board.

(ii) Accounting and Other Administrative Services:

(a) Provide the day-to-day management of the Company and perform and supervise the various administrative functions reasonably necessary for the management of the Company;

(b) From time to time, or at any time reasonably requested by the Board, make reports to the Board on the Advisor’s performance of services to the Company under this Agreement;

(c) Make reports to the Conflicts Committee each quarter of the investments that have been made by other programs sponsored by the Advisor or any of its Affiliates as well as any investments that have been made by the Advisor or any of its Affiliates directly;

(d) Provide or arrange for any administrative services and items, legal and other services, office space, office furnishings, personnel and other overhead items necessary and incidental to the Company’s business and operations;

(e) Provide financial and operational planning services;

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(f) Maintain accounting and other record-keeping functions at the Company and investment levels, including information concerning the activities of the Company as shall be required to prepare and to file all periodic financial reports, tax returns and any other information required to be filed with the SEC, the Internal Revenue Service and any other regulatory agency;

(g) Maintain and preserve all appropriate books and records of the Company;

(h) Provide tax and compliance services and coordinate with appropriate third parties, including the Company’s independent auditors and other consultants, on related tax matters;

(i) Provide the Company with all necessary cash management services;

(j) Manage and coordinate with the transfer agent the dividend process and payments to Stockholders;

(k) Consult with the Company’s officers and the Board and assist the Board in evaluating and obtaining adequate insurance coverage based upon risk management determinations;

(l) Provide the Company’s officers and the Board with timely updates related to the overall regulatory environment affecting the Company, as well as managing compliance with such matters, including but not limited to compliance with the Sarbanes-Oxley Act of 2002;

(m) Consult with the Company’s officers and the Board relating to the corporate governance structure and appropriate policies and procedures related thereto;

(n) Perform all reporting, record keeping, internal controls and similar matters in a manner to allow the Company to comply with applicable law, including federal and state securities laws and the Sarbanes-Oxley Act of 2002;

(o) Notify the Board of all proposed material transactions before they are completed; and

(p) Do all things necessary to assure its ability to render the services described in this Agreement.

3.04 Stockholder Services.

(i) Manage services for and communications with Stockholders, including answering phone calls, preparing and sending written and electronic reports and other communications;

(ii) Oversee the performance of the transfer agent and registrar;

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(iii) Establish technology infrastructure to assist in providing Stockholder support and service; and

(iv) Consistent with Section 3.01, the Advisor shall perform the various subscription processing services reasonably necessary for the admission of new Stockholders.

3.05 Other Services. Except as provided in Article 7, the Advisor shall perform any other services reasonably requested by the Company (acting through the Conflicts Committee).

ARTICLE 4

AUTHORITY OF ADVISOR

4.01 General. All rights and powers to manage and control the day-to-day business and affairs of the Company shall be vested in the Advisor. The Advisor shall have the power to delegate all or any part of its rights and powers to manage and control the business and affairs of the Company to such officers, employees, Affiliates, agents and representatives of the Advisor or the Company as it may deem appropriate. Any authority delegated by the Advisor to any other Person shall be subject to the limitations on the rights and powers of the Advisor specifically set forth in this Agreement or the Charter.

4.02 Powers of the Advisor. Subject to the express limitations set forth in this Agreement and the continuing and exclusive authority of the Board over the management of the Company, the power to direct the management, operation and policies of the Company, including making, financing and disposing of investments, shall be vested in the Advisor, which shall have the power by itself and shall be authorized and empowered on behalf and in the name of the Company to carry out any and all of the objectives and purposes of the Company and to perform all acts and enter into and perform all contracts and other undertakings that it may in its sole discretion deem necessary, advisable or incidental thereto to perform its obligations under this Agreement.

4.03 Approval by the Board. Notwithstanding the foregoing, the Advisor may not take any action on behalf of the Company without the prior approval of the Board or duly authorized committees thereof if the Charter or Maryland General Corporation Law require the prior approval of the Board. If the Board or a committee of the Board must approve a proposed investment, financing or disposition or chooses to do so, the Advisor will deliver to the Board or committee, as applicable, all documents required by it to evaluate such investment, financing or disposition.

4.04 Modification or Revocation of Authority of Advisor. The Board may, at any time upon the giving of notice to the Advisor, modify or revoke the authority or approvals set forth in Article 3 and this Article 4 hereof; provided, however, that such modification or revocation shall be effective upon receipt by the Advisor and shall not be applicable to investment transactions to which the Advisor has committed the Company prior to the date of receipt by the Advisor of such notification.

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ARTICLE 5

BANK ACCOUNTS

The Advisor may establish and maintain one or more bank accounts in its own name for the account of the Company or in the name of the Company and may collect and deposit into any such account or accounts, and disburse from any such account or accounts, any money on behalf of the Company, under such terms and conditions as the Board may approve, provided that no funds shall be commingled with the funds of the Advisor. The Advisor shall from time to time render appropriate accountings of such collections and payments to the Board and the independent auditors of the Company.

ARTICLE 6

RECORDS AND FINANCIAL STATEMENTS

The Advisor, in the conduct of its responsibilities to the Company, shall maintain adequate and separate books and records for the Company’s operations in accordance with GAAP, which shall be supported by sufficient documentation to ascertain that such books and records are properly and accurately recorded. Such books and records shall be the property of the Company and shall be available for inspection by the Board and by counsel, auditors and other authorized agents of the Company, at any time or from time to time during normal business hours. Such books and records shall include all information necessary to calculate and audit the fees or reimbursements paid under this Agreement. The Advisor shall utilize procedures to attempt to ensure such control over accounting and financial transactions as is reasonably required to protect the Company’s assets from theft, error or fraudulent activity. All financial statements that the Advisor delivers to the Company shall be prepared on an accrual basis in accordance with GAAP, except for special financial reports that by their nature require a deviation from GAAP. The Advisor shall liaise with the Company’s officers and independent auditors and shall provide such officers and auditors with the reports and other information that the Company so requests.

ARTICLE 7

LIMITATION ON ACTIVITIES

Notwithstanding any provision in this Agreement to the contrary, the Advisor shall not take any action that, in its sole judgment made in good faith, would (i) adversely affect the ability of the Company to qualify or continue to qualify as a REIT under the Code, (ii) subject the Company to regulation under the Investment Company Act of 1940, as amended, (iii) violate any law, rule, regulation or statement of policy of any governmental body or agency having jurisdiction over the Company, its Shares or its other securities, (iv) require the Advisor to register as a broker-dealer with the SEC or any state, or (v) violate the Charter or Bylaws. In the event an action that would violate (i) through (v) of the preceding sentence but such action has been ordered by the Board, the Advisor shall notify the Board of the Advisor’s judgment of the potential impact of such action and shall refrain from taking such action until it receives further clarification or instructions from the Board. In such event, the Advisor shall have no liability for acting in accordance with the specific instructions of the Board so given.

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ARTICLE 8

FEES

8.01 Acquisition Fees. As compensation for the investigation, selection, sourcing and acquisition or origination (by purchase, investment or exchange) of Properties, Loans and other Permitted Investments, the Company shall pay an Acquisition Fee to the Advisor for each such investment (whether an acquisition or origination). With respect to the acquisition or origination of a Property, Loan or other Permitted Investment to be wholly owned, directly or indirectly, by the Company, the Acquisition Fee payable to the Advisor shall equal 1.0% of the sum of the amount actually paid or allocated to fund the acquisition, origination, development, construction or improvement of the Property, Loan or other Permitted Investment, inclusive of the Acquisition Expenses associated with such Property, Loan or other Permitted Investment and the amount of any debt associated with, or used to fund the investment in, such Property, Loan or other Permitted Investment. With respect to the acquisition or origination of a Property, Loan or other Permitted Investment through any Joint Venture or any partnership in which the Company or the Partnership is, directly or indirectly, a partner, the Acquisition Fee payable to the Advisor shall equal 1.0% of the portion of the amount actually paid or allocated to fund the acquisition, origination, development, construction or improvement of the Property, Loan or other Permitted Investment, inclusive of the Acquisition Expenses associated with such Property, Loan or other Permitted Investment, plus the amount of any debt associated with, or used to fund the investment in, such Property, Loan or other Permitted Investment that is attributable to the Company’s investment in such Joint Venture or partnership. Notwithstanding anything herein to the contrary, the payment of Acquisition Fees by the Company shall be subject to the limitations on Acquisition Fees contained in (and defined in) the Company’s Charter, and no Acquisition Fee shall be paid in connection with the Merger. The Advisor shall submit an invoice to the Company following the closing or closings of each acquisition or origination, accompanied by a computation of the Acquisition Fee. Generally, the Acquisition Fee payable to the Advisor shall be paid at the closing of the transaction upon receipt of the invoice by the Company. However, the Acquisition Fee may or may not be taken, in whole or in part, as to any year in the sole discretion of the Advisor. All or any portion of the Acquisition Fees not taken as to any fiscal year shall be deferred without interest and may be paid in such other fiscal year as the Advisor shall determine.

8.02 Asset Management Fees.

(i) Except as provided in Section 8.02(ii) hereof, the Company shall pay the Advisor as compensation for the services described in Section 3.03 hereof a monthly fee (the “Asset Management Fee”) in an amount equal to one-twelfth of 0.75% of the sum of the Cost of Real Estate Investments and the Cost of Loans and other Permitted Investments. The Advisor shall submit a monthly invoice to the Company, accompanied by a computation of the Asset Management Fee for the applicable period. Generally, the Asset Management Fee payable to the Advisor shall be paid on the last day of such month, or the first business day following the last day of such month. However, the Asset Management Fee may or may not be taken, in whole or in part, as to any year in the sole discretion of the Advisor. All or any portion of the Asset Management Fees not taken as to any fiscal year shall be deferred without interest and may be paid in such other fiscal year as the Advisor shall determine.

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(ii) Notwithstanding anything contained in Section 8.02(i) to the contrary, a Property, Loan or other Permitted Investment that has suffered an impairment in value, reduction in cash flow or other negative circumstances may either be excluded from the calculation of the Cost of Real Estate Investments or the Cost of Loans and other Permitted Investments or included in such calculation at a reduced value that is recommended by the Advisor and the Company’s management and then approved by a majority of the Company’s independent directors, and the resulting change in the Asset Management Fee with respect to such an investment will be applicable upon the earlier to occur of the date on which (i) such investment is sold, (ii) such investment is surrendered to a Person other than the Company, its direct or indirect wholly owned subsidiary or a Joint Venture or partnership in which the Company has an interest, (iii) the Advisor determines that it will no longer pursue collection or other remedies related to such investment, or (iv) the Advisor recommends a revised fee arrangement with respect to such investment.

8.03 Disposition Fees. If the Advisor or any of its Affiliates provide a substantial amount of services (as determined by the Conflicts Committee) in connection with a Sale, the Advisor or such Affiliate shall receive a fee at the closing (the “Disposition Fee”) equal to 1% of the Contract Sales Price; provided, however, that if in connection with such Sale commissions are paid to third parties other than the Advisor or its Affiliates, the fee paid to the Advisor or any of its Affiliates may not exceed the commissions paid to such unaffiliated third parties; and provided further that no Disposition Fee shall be payable to the Advisor for any Sale if such Sale involves the Company selling all or substantially all of its assets in one or more transactions designed to effectuate a business combination transaction (as opposed to a Company liquidation, in which case the Disposition Fee would be payable if the Advisor or an Affiliate provides a substantial amount of services as provided above). The payment of any Disposition Fees by the Company shall be subject to the limitations contained in the Company’s Charter. Any Disposition Fee payable under this Section 8.03 may be paid in addition to commissions paid to non-Affiliates, provided that the total commissions (including such Disposition Fee) paid to all Persons by the Company for each Sale shall not exceed an amount equal to the lesser of (i) 6% of the aggregate Contract Sales Price of each Property, Loan or other Permitted Investment or (ii) the Competitive Real Estate Commission for each Property, Loan or other Permitted Investment. The Advisor shall submit an invoice to the Company following the closing or closings of each disposition, accompanied by a computation of the Disposition Fee. Generally, the Disposition Fee payable to the Advisor shall be paid at the closing of the transaction upon receipt of the invoice by the Company. However, the Disposition Fee may or may not be taken, in whole or in part, as to any year in the sole discretion of the Advisor. All or any portion of the Disposition Fees not taken as to any fiscal year shall be deferred without interest and may be paid in such other fiscal year as the Advisor shall determine.

8.04 Subordinated Share of Cash Flows. The Subordinated Share of Cash Flows shall be payable to the Advisor in an amount equal to the amount, if any, by which (I) 15% of Operating Cash Flow and Cash from Sales, Settlements and Financings remaining after the Stockholders have received Distributions of Operating Cash Flow and of Cash from Sales, Settlements and Financings since Company inception such that the owners of all outstanding Shares have received Distributions since Company inception in an aggregate amount equal to the sum of the

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Stockholders’ 7% Return and Invested Capital, exceeds (II) the Prior Advisor Performance Fee Value.

When determining whether the above threshold (the “Subordinated Share of Cash Flows Threshold”) has been met:

(A)    Any stock dividend since Company inception shall not be included as a Distribution; and

(B)    Distributions since Company inception paid on Shares redeemed by the Company (and thus no longer included in the determination of Invested Capital), shall not be included as a Distribution.

Following Listing, no Subordinated Share of Cash Flows will be paid to the Advisor.

If the Subordinated Share of Cash Flows is payable to the Advisor, the Advisor shall submit a monthly invoice to the Company, accompanied by a computation of the total amount of the Subordinated Share of Cash Flows for the applicable period. Generally, the Subordinated Share of Cash Flows payable to the Advisor shall be paid on the last day of such month, or the first business day following the last day of such month. However, the Subordinated Share of Cash Flows may or may not be taken, in whole or in part, as to any year in the sole discretion of the Advisor. All or any portion of the Subordinated Share of Cash Flows not taken as to any fiscal year shall be deferred without interest and may be paid in such other fiscal year as the Advisor shall determine.

8.05 Subordinated Incentive Fee. Upon Listing, the Advisor shall be entitled to the Subordinated Incentive Fee in an amount equal to the amount, if any, by which (I) 15% of the amount by which (i) the market value of the outstanding Shares of the Company, measured by taking the average closing price or the average of the bid and asked price, as the case may be, over a period of 30 days during which the Shares are traded, with such period beginning 180 days after Listing (the “Market Value”), plus the total of all Distributions paid to Stockholders (excluding any stock dividends) from Company inception until the date that Market Value is determined, exceeds (ii) the sum of (A) 100% of Invested Capital and (B) the total Distributions required to be paid to the Stockholders in order to pay the Stockholders’ 7% Return from Company inception through the date Market Value is determined (the sum of (A) and (B) is the “Subordinated Incentive Fee Threshold”) exceeds (II) the Prior Advisor Performance Fee Value. The Company shall have the option to pay such fee in the form of cash, Shares, a promissory note or any combination of the foregoing. The Subordinated Incentive Fee will be reduced by the amount of any prior payment to the Advisor of a Subordinated Share of Cash Flows. In the event the Subordinated Incentive Fee is paid to the Advisor following Listing, no other performance fee will be paid to the Advisor. In addition, the Subordinated Incentive Fee may or may not be taken, in whole or in part, as to any year in the sole discretion of the Advisor. All or any portion of the Subordinated Incentive Fee not taken as to any fiscal year shall be deferred without interest and may be paid in such other fiscal year as the Advisor shall determine.

8.06 Changes to Fee Structure. The Advisor and the Company shall not agree to reduce the Subordinated Share of Cash Flows Threshold, the Subordinated Incentive Fee Threshold or the Termination Fee Threshold without the approval of Stockholders holding a majority of the

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Shares. In the event of Listing, the Company and the Advisor shall negotiate in good faith to establish a fee structure appropriate for a perpetual-life entity.

ARTICLE 9

EXPENSES

9.01 General. In addition to the compensation paid to the Advisor pursuant to Article 8 hereof, the Company shall pay directly or reimburse the Advisor for all of the expenses paid or incurred by the Advisor or its Affiliates on behalf of the Company or in connection with the services provided to the Company pursuant to this Agreement, including, but not limited to:

(i) All Organization and Offering Expenses; provided, however, that the Company shall not reimburse the Advisor to the extent such reimbursement would cause the total amount spent by the Company on Organization and Offering Expenses to exceed 15% of the Gross Proceeds raised as of the date of the reimbursement and provided further that within 60 days after the end of the month in which an Offering terminates, the Advisor shall reimburse the Company to the extent the Company incurred Organization and Offering Expenses exceeding 15% of the Gross Proceeds raised in the completed Offering; the Company shall not reimburse the Advisor for any Organization and Offering Expenses that are not fair and commercially reasonable to the Company, and the Advisor shall reimburse the Company for any Organization and Offering Expenses that are not fair and commercially reasonable to the Company;

(ii) Acquisition Fees and Acquisition Expenses incurred in connection with the selection and acquisition of Properties, Loans and other Permitted Investments, including such expenses incurred related to assets pursued or considered but not ultimately acquired by the Company, provided that, notwithstanding anything herein to the contrary, the payment of Acquisition Fees and Acquisition Expenses by the Company shall be subject to the limitations contained in the Company’s Charter;

(iii) The actual out-of-pocket cost of goods and services used by the Company and obtained from entities not Affiliated with the Advisor;

(iv) Interest and other costs for borrowed money, including discounts, points and other similar fees;

(v) Taxes and assessments on income or Properties, taxes as an expense of doing business and any other taxes otherwise imposed on the Company and its business, assets or income;

(vi) Out-of-pocket costs associated with insurance required in connection with the business of the Company or by its officers and Directors;

(vii) Expenses of managing, improving, developing, operating and selling Properties, Loans and other Permitted Investments owned, directly or indirectly, by the Company, as well as expenses of other transactions relating to such Properties, Loans and other Permitted Investments, including but not limited to prepayments, maturities, workouts and other settlements of Loans and other Permitted Investments;

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(viii) All out-of-pocket expenses in connection with payments to the Board and meetings of the Board and Stockholders;

(ix) Personnel and related employment costs incurred by the Advisor or its Affiliates in performing the services described in Article 3 hereof, including but not limited to reasonable salaries and wages, benefits and overhead of all employees directly involved in the performance of such services, provided that, other than reimbursement of travel and communications expenses, no reimbursement shall be made for compensation of such employees of the Advisor or its Affiliates to the extent that such employees perform services for which the Advisor receives Acquisition Fees or Disposition Fees;

(x) Out-of-pocket expenses of providing services for and maintaining communications with Stockholders, including the cost of preparation, printing, and mailing annual reports and other Stockholder reports, proxy statements and other reports required by governmental entities;

(xi) Audit, accounting and legal fees, and other fees for professional services relating to the operations of the Company and all such fees incurred at the request, or on behalf of, the Board, the Conflicts Committee or any other committee of the Board;

(xii) Out-of-pocket costs for the Company to comply with all applicable laws, regulations and ordinances;

(xiii) Expenses connected with payments of Distributions made or caused to be made by the Company to the Stockholders;

(xiv) Expenses of organizing, redomesticating, merging, liquidating or dissolving the Company or of amending the Charter or the Bylaws; and

(xv) All other out-of-pocket costs incurred by the Advisor in performing its duties hereunder.

9.02 Timing of and Additional Limitations on Reimbursements.

(i) Expenses incurred by the Advisor on behalf of the Company and reimbursable pursuant to this Article 9 shall be reimbursed no less than monthly to the Advisor. The Advisor shall prepare a statement documenting the expenses of the Company during each quarter and shall deliver such statement to the Company within 45 days after the end of each quarter.

(ii) The Company shall not reimburse the Advisor at the end of any fiscal quarter for Operating Expenses that in the four consecutive fiscal quarters then ended (the “Expense Year”) exceed (the “Excess Amount”) the greater of 2% of Average Invested Assets or 25% of Net Income (the “2%/25% Guidelines”) for such year unless the Conflicts Committee determines that such excess was justified, based on unusual and nonrecurring factors that the Conflicts Committee deems sufficient. If the Conflicts Committee does not approve such excess as being so justified, any Excess Amount paid to the Advisor during a fiscal quarter shall be repaid to the Company. If the Conflicts

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Committee determines such excess was justified, then, within 60 days after the end of any fiscal quarter of the Company for which total reimbursed Operating Expenses for the Expense Year exceed the 2%/25% Guidelines, the Advisor, at the direction of the Conflicts Committee, shall cause such fact to be disclosed to the Stockholders in writing (or the Company shall disclose such fact to the Stockholders in the next quarterly report of the Company or by filing a Current Report on Form 8-K with the SEC within 60 days of such quarter end), together with an explanation of the factors the Conflicts Committee considered in determining that such excess expenses were justified. The Company will ensure that such determination will be reflected in the minutes of the meetings of the Board. All figures used in the foregoing computation shall be determined in accordance with GAAP applied on a consistent basis.

ARTICLE 10

VOTING AGREEMENT

The Advisor agrees that, with respect to any Shares now or hereinafter owned by it, the Advisor will not vote or consent on matters submitted to the stockholders of the Company regarding (i) the removal of the Advisor or any Affiliate of the Advisor, (ii) any transaction between the Company and the Advisor or any of its Affiliates, (iii) the election of directors of the Company or (iv) the approval or termination of any contract with the Advisor or any Affiliate of the Advisor. This voting restriction shall survive until such time that the Advisor is both no longer serving as such and is no longer an Affiliate of the Company.

ARTICLE 11

RELATIONSHIP OF ADVISOR AND COMPANY;

OTHER ACTIVITIES OF THE ADVISOR

11.01 Relationship. The Company and the Advisor are not partners or joint venturers with each other, and nothing in this Agreement shall be construed to make them such partners or joint venturers. Nothing herein contained shall prevent the Advisor from engaging in other activities, including, without limitation, the rendering of advice to other Persons (including other REITs) and the management of other programs advised, sponsored or organized by the Advisor or its Affiliates. Nor shall this Agreement limit or restrict the right of any manager, director, officer, employee or equityholder of the Advisor or its Affiliates to engage in any other business or to render services of any kind to any other Person. The Advisor may, with respect to any investment in which the Company is a participant, also render advice and service to each and every other participant therein. The Advisor shall promptly disclose to the Board the existence of any condition or circumstance, existing or anticipated, of which it has knowledge, that creates or could create a conflict of interest between the Advisor’s obligations to the Company and its obligations to or its interest in any other Person.

11.02 Time Commitment. The Advisor shall, and shall cause its Affiliates and their respective employees, officers and agents to, devote to the Company such time as shall be reasonably necessary to conduct the business and affairs of the Company in an appropriate manner consistent with the terms of this Agreement. The Company acknowledges that the Advisor and its Affiliates and their respective employees, officers and agents may also engage in activities unrelated to the Company and may provide services to Persons other than the Company or any of its Affiliates.

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11.03 Investment Opportunities and Allocation. The Advisor shall be required to use commercially reasonable efforts to present a continuing and suitable investment program to the Company that is consistent with the investment policies and objectives of the Company, but neither the Advisor nor any Affiliate of the Advisor shall be obligated generally to present any particular investment opportunity to the Company even if the opportunity is of character that, if presented to the Company, could be taken by the Company.

ARTICLE 12

THE PACIFIC OAK NAME

The Advisor and its Affiliates have a proprietary interest in the name “Pacific Oak.” The Advisor hereby grants to the Company a non-transferable, non-assignable, non-exclusive royalty-free right and license to use the name “Pacific Oak” during the term of this Agreement. Accordingly, and in recognition of this right, if at any time the Company ceases to retain the Advisor or one of its Affiliates to perform advisory services for the Company, the Company will, promptly after receipt of written request from the Advisor, cease to conduct business under or use the name “Pacific Oak” or any derivative thereof and the Company shall change its name and the names of any of its subsidiaries to a name that does not contain the name “Pacific Oak” or any other word or words that might, in the reasonable discretion of the Advisor, be susceptible of indication of some form of relationship between the Company and the Advisor or any its Affiliates. At such time, the Company will also make any changes to any trademarks, servicemarks or other marks necessary to remove any references to the word “Pacific Oak.” Consistent with the foregoing, it is specifically recognized that the Advisor or one or more of its Affiliates has in the past and may in the future organize, sponsor or otherwise permit to exist other investment vehicles (including vehicles for investment in real estate) and financial and service organizations having “Pacific Oak” as a part of their name, all without the need for any consent (and without the right to object thereto) by the Company.

ARTICLE 13

TERM AND TERMINATION OF THE AGREEMENT

13.01 Term. This Agreement shall have an initial term of one year from November 1, 2021 and may be renewed for an unlimited number of successive one-year terms upon mutual consent of the parties. The Company (acting through the Conflicts Committee) will evaluate the performance of the Advisor annually before renewing this Agreement, and each such renewal shall be for a term of no more than one year. Any such renewal must be approved by the Conflicts Committee.

13.02 Termination by Either Party. This Agreement may be terminated upon 60 days written notice without cause or penalty by either the Company (acting in sole discretion and authority of the Conflicts Committee) or the Advisor. The provisions of Articles 1, 10, 12, 13, 15 and 16 shall survive termination of this Agreement.

13.03 Payments on Termination and Survival of Certain Rights and Obligations. Payments to the Advisor pursuant to this Section 13.03 shall be subject to the 2%/25% Guidelines to the extent applicable.

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(i) After the Termination Date, the Advisor shall not be entitled to compensation for further services hereunder except it shall be entitled to receive from the Company within 30 days after the effective date of such termination (A) all unpaid reimbursements of expenses and all earned but unpaid fees payable to the Advisor prior to termination of this Agreement and (B) the Subordinated Performance Fee Due Upon Termination, provided that (1) no Subordinated Performance Fee Due Upon Termination will be due or paid if the Company has paid or is obligated to pay the Subordinated Incentive Fee (2) no Subordinated Performance Fee Due Upon Termination will be due or paid if this Agreement is terminated by the Company for cause.

(ii) The Advisor shall promptly upon termination:

(a) pay over to the Company all money collected pursuant to this Agreement, if any, after deducting any accrued compensation and reimbursement for its expenses to which it is then entitled;

(b) deliver to the Board a full accounting, including a statement showing all payments collected by it and a statement of all money held by it, covering the period following the date of the last accounting furnished to the Board;

(c) deliver to the Board all assets and documents of the Company then in the custody of the Advisor; and

(d) cooperate with the Company to provide an orderly transition of advisory functions.

ARTICLE 14

ASSIGNMENT

This Agreement may be assigned by the Advisor to an Affiliate with the consent of the Conflicts Committee. The Advisor may assign any rights to receive fees or other payments under this Agreement without obtaining the approval of the Board. This Agreement shall not be assigned by the Company without the consent of the Advisor, except in the case of an assignment by the Company to a corporation or other organization that is a successor to all of the assets, rights and obligations of the Company, in which case such successor organization shall be bound hereunder and by the terms of said assignment in the same manner as the Company is bound by this Agreement.

ARTICLE 15

INDEMNIFICATION AND LIMITATION OF LIABILITY

15.01 Indemnification. Except as prohibited by the restrictions provided in this Section 15.01, Section 15.02 and Section 15.03, the Company shall indemnify, defend and hold harmless the Advisor and its Affiliates, including their respective officers, directors, equity holders, partners and employees, from all liability, claims, damages or losses arising in the performance of their duties hereunder, and related expenses, including reasonable attorneys’ fees, to the extent such liability, claims, damages or losses and related expenses are not fully reimbursed by

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insurance. Any indemnification of the Advisor may be made only out of the net assets of the Company and not from Stockholders.

Notwithstanding the foregoing, the Company shall not indemnify the Advisor or its Affiliates for any loss, liability or expense arising from or out of an alleged violation of federal or state securities laws by such party unless one or more of the following conditions are met: (i) there has been a successful adjudication on the merits of each count involving alleged material securities law violations as to the particular indemnitee; (ii) such claims have been dismissed with prejudice on the merits by a court of competent jurisdiction as to the particular indemnitee; or (iii) a court of competent jurisdiction approves a settlement of the claims against a particular indemnitee and finds that indemnification of the settlement and the related costs should be made, and the court considering the request for indemnification has been advised of the position of the SEC and of the published position of any state securities regulatory authority in which securities of the Company were offered or sold as to indemnification for violations of securities laws.

15.02 Limitation on Indemnification. Notwithstanding the foregoing, the Company shall not provide for indemnification of the Advisor or its Affiliates for any liability or loss suffered by any of them, nor shall any of them be held harmless for any loss or liability suffered by the Company, unless all of the following conditions are met:

(i)    The Advisor or its Affiliates have determined, in good faith, that the course of conduct that caused the loss or liability was in the best interests of the Company.

(ii)    The Advisor or its Affiliates were acting on behalf of or performing services for the Company.

(iii)    Such liability or loss was not the result of negligence or misconduct by the Advisor or its Affiliates.

    15.03 Limitation on Payment of Expenses. The Company shall pay or reimburse reasonable legal expenses and other costs incurred by the Advisor or its Affiliates in advance of the final disposition of a proceeding only if (in addition to the procedures required by the Maryland General Corporation Law, as amended from time to time) all of the following are satisfied: (a) the proceeding relates to acts or omissions with respect to the performance of duties or services on behalf of the Company, (b) the legal proceeding was initiated by a third party who is not a stockholder or, if by a stockholder acting in his or her capacity as such, a court of competent jurisdiction approves such advancement and (c) the Advisor or its Affiliates undertake to repay the amount paid or reimbursed by the Company, together with the applicable legal rate of interest thereon, if it is ultimately determined that the particular indemnitee is not entitled to indemnification.

ARTICLE 16

MISCELLANEOUS

16.01 Notices. Any notice, report or other communication required or permitted to be given hereunder shall be in writing unless some other method of giving such notice, report or other communication is required by the Charter, the Bylaws or is accepted by the party to whom

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it is given, and shall be given by being delivered by hand or by overnight mail or other overnight delivery service to the addresses set forth herein:

To the Company or the Board:

Pacific Oak Strategic Opportunity REIT, Inc.

11150 Santa Monica Blvd

Los Angeles, CA 90025

To the Advisor:

Pacific Oak Capital Advisors, LLC

11150 Santa Monica Blvd

Los Angeles, CA 90025

Either party may at any time give notice in writing to the other party of a change in its address for the purposes of this Section 16.01.

16.02 Modification. This Agreement shall not be changed, modified, terminated or discharged, in whole or in part, except by an instrument in writing signed by both parties hereto, or their respective successors or permitted assigns, and any change or modification to this Agreement must be in accordance with Section 8.06 hereof, to the extent applicable.

16.03 Severability. The provisions of this Agreement are independent of and severable from each other, and no provision shall be affected or rendered invalid or unenforceable by virtue of the fact that for any reason any other or others of them may be invalid or unenforceable in whole or in part.

16.04 Construction. The provisions of this Agreement shall be construed and interpreted in accordance with the laws of the State of Delaware.

16.05 Entire Agreement. This Agreement contains the entire agreement and understanding between the parties hereto with respect to the subject matter hereof, and supersedes all prior and contemporaneous agreements, understandings, inducements and conditions, express or implied, oral or written, of any nature whatsoever with respect to the subject matter hereof. The express terms hereof control and supersede any course of performance and/or usage of the trade inconsistent with any of the terms hereof. This Agreement may not be modified or amended other than by an agreement in writing.

16.06 Waiver. Neither the failure nor any delay on the part of a party to exercise any right, remedy, power or privilege under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power or privilege preclude any other or further exercise of the same or of any other right, remedy, power or privilege, nor shall any waiver of any right, remedy, power or privilege with respect to any occurrence be construed as a waiver of such right, remedy, power or privilege with respect to any other occurrence. No waiver shall be effective unless it is in writing and is signed by the party asserted to have granted such waiver.

24

16.07 Gender. Words used herein regardless of the number and gender specifically used, shall be deemed and construed to include any other number, singular or plural, and any other gender, masculine, feminine or neuter, as the context requires.

16.08 Titles Not to Affect Interpretation. The titles of Articles and Sections contained in this Agreement are for convenience only, and they neither form a part of this Agreement nor are they to be used in the construction or interpretation hereof.

16.09 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original as against any party whose signature appears thereon, and all of which shall together constitute one and the same instrument. This Agreement shall become binding when one or more counterparts hereof, individually or taken together, shall bear the signatures of all of the parties reflected hereon as the signatories.

ARTICLE 17

PORT II PROVISIONS

17.01 Management of PORT II Operations and Assets . Notwithstanding anything to the contrary in this Agreement, the Advisor will not be responsible for managing the operations or assets of Pacific Oak Residential Trust II, Inc. (“PORT II”). Pacific Oak Residential Advisors, LLC (“PORA”), an affiliate of the Advisor, will manage the operations and assets of PORT II pursuant to the advisory agreement under which PORT II has hired PORA as its external advisor. All references to the power, authority, responsibility and duties of the Advisor with respect to the Company in this Agreement shall be deemed to exclude PORT II, its operations and its assets.

17.02 Rebate or Offset of Fees . The Advisor will rebate or offset its fees under this Agreement to the extent of the Company’s indirect economic interest in fees paid by PORT II to PORA (which will be based on the Company’s indirect ownership in PORT II OP LP, which is the operating partnership of PORT II and the entity ultimately responsible for PORT II’s administrative expenses).

[The remainder of this page is intentionally left blank.

Signature page follows.]

25

    IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of

the date and year first above written.

PACIFIC OAK STRATEGIC OPPORTUNITY REIT, INC.

   By: /s/ KEITH D. HALL            

         Keith D. Hall, Chief Executive Officer

PACIFIC OAK CAPITAL ADVISORS, LLC

By:  Pacific Oak Holding Group, LLC, sole Member

By: /s/ PETER MCMILLAN III    

                       Peter McMillan III, Member

By: /s/ KEITH D. HALL        

                       Keith D. Hall, Member

[Signature Page to Advisory Agreement of Pacific Oak Strategic Opportunity REIT, Inc.]

EX-31.1

Exhibit 31.1

Certification of Chief Executive Officer pursuant to

Section 302 of the Sarbanes-Oxley Act of 2002

I, Keith D. Hall, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Pacific Oak Strategic Opportunity REIT, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)     Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)     Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)     Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)     Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)     All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)     Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	November 12, 2021	By:	/s/ Keith D. Hall
			Keith D. Hall
			Chief Executive Officer and Director
			(principal executive officer)

EX-31.2

Exhibit 31.2

Certification of Chief Financial Officer pursuant to

Section 302 of the Sarbanes-Oxley Act of 2002

I, Michael A. Bender, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Pacific Oak Strategic Opportunity REIT, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)     Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)     Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)     Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)     Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)     All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)     Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	November 12, 2021	By:	/s/ Michael A. Bender
			Michael A. Bender
			Chief Financial Officer
			(principal financial officer)

EX-32.1

Exhibit 32.1

Certification pursuant to 18 U.S.C. Section 1350,

as Adopted pursuant to Section 906 of the

Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report on Form 10-Q of Pacific Oak Strategic Opportunity REIT, Inc. (the “Registrant”) for the quarter ended September 30, 2021, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, Keith D. Hall, Chief Executive Officer and Director of the Registrant, hereby certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge and belief:

1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

Date:	November 12, 2021	By:	/s/ Keith D. Hall
			Keith D. Hall
			Chief Executive Officer and Director
			(principal executive officer)

EX-32.2

Exhibit 32.2

Certification pursuant to 18 U.S.C. Section 1350,

as Adopted pursuant to Section 906 of the

Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report on Form 10-Q of Pacific Oak Strategic Opportunity REIT, Inc. (the “Registrant”) for the quarter ended September 30, 2021, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, Michael A. Bender, the Chief Financial Officer of the Registrant, hereby certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge and belief:

1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

Date:	November 12, 2021	By:	/s/ Michael A. Bender
			Michael A. Bender
			Chief Financial Officer
			(principal financial officer)

XML

Cover Page - shares	9 Months Ended
	Sep. 30, 2021	Nov. 10, 2021
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2021
Document Transition Report	false
Entity File Number	000-54382
Entity Registrant Name	PACIFIC OAK STRATEGIC OPPORTUNITY REIT, INC.
Entity Incorporation, State or Country Code	MD
Entity Tax Identification Number	26-3842535
Entity Address, Address Line One	11766 Wilshire Blvd., Suite 1670
Entity Address, City or Town	Los Angeles,
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	90025
City Area Code	424
Local Phone Number	208-8100
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		93,896,447
Entity Central Index Key	0001452936
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q3
Amendment Flag	false

XML

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Assets
Real estate held for investment, net	$ 1,219,531	$ 1,272,784
Real estate held for sale, net	0	140,239
Real estate equity securities	96,403	97,903
Total real estate and real estate-related investments, net	1,315,934	1,510,926
Cash and cash equivalents	138,037	60,335
Restricted cash	28,201	13,984
Investments in unconsolidated entities	83,854	79,666
Rents and other receivables, net	24,730	22,212
Above-market leases, net	2,735	3,157
Prepaid expenses and other assets	22,103	19,363
Goodwill	13,534	16,342
Assets related to real estate held for sale, net	0	5,680
Total assets	1,629,128	1,731,665
Notes and bonds payable, net
Notes and bonds payable related to real estate held for investment, net	1,023,778	1,004,971
Note payable related to real estate held for sale, net	0	94,097
Notes and bonds payable, net	1,023,778	1,099,068
Accounts payable and accrued liabilities	22,054	24,169
Due to affiliate	2,152	2,842
Below-market leases, net	4,436	5,797
Other liabilities	43,994	34,734
Redeemable common stock payable	3,385	864
Restricted stock payable	574	14,600
Liabilities related to real estate held for sale, net	0	669
Total liabilities	1,100,373	1,182,743
Commitments and contingencies (Note 15)
Mezzanine equity
Restricted stock	0	11,009
Noncontrolling cumulative convertible redeemable preferred stock	15,233	15,233
Redeemable noncontrolling interest	2,855	2,968
Equity
Preferred stock, $.01 par value; 10,000,000 shares authorized, no shares issued and outstanding	0	0
Common stock, $.01 par value; 1,000,000,000 shares authorized, 94,264,402 and 98,054,582 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively	942	979
Additional paid-in capital	820,382	831,295
Cumulative distributions and net income	(322,049)	(325,720)
Total Pacific Oak Strategic Opportunity REIT, Inc. stockholders’ equity	499,275	506,554
Noncontrolling interests	11,392	13,158
Total equity	510,667	519,712
Total liabilities, mezzanine equity and equity	$ 1,629,128	$ 1,731,665

XML

CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Sep. 30, 2021	Dec. 31, 2020
Statement of Financial Position [Abstract]
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized (in shares)	10,000,000	10,000,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	1,000,000,000	1,000,000,000
Common stock, shares issued (in shares)	94,264,402	98,054,582
Common stock, shares outstanding (in shares)	94,264,402	98,054,582

XML

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Revenues:
Rental income	$ 29,504	$ 23,871	$ 94,812	$ 67,808
Dividend income from real estate equity securities	3,189	2,986	6,693	5,339
Total revenues	45,769	27,745	129,201	75,869
Expenses:
Operating, maintenance, and management costs	10,668	7,888	31,444	22,258
Real estate taxes and insurance	5,262	3,791	15,949	10,570
Hotel expenses	6,483	0	15,715	0
Asset management fees to affiliate	3,422	2,426	10,802	6,867
General and administrative expenses	2,365	1,960	7,120	6,302
Foreign currency transaction loss (gain), net	2,271	445	(568)	(12,338)
Depreciation and amortization	13,895	9,470	45,969	27,417
Interest expense	10,092	6,274	30,713	19,055
Impairment charges on real estate	10,971	0	10,971	0
Impairment charges on goodwill	2,808	0	2,808	0
Total expenses	68,237	32,254	170,923	80,131
Other income (loss):
Gain from remeasurement of prior equity interest	0	2,009	0	2,009
Equity in (loss) income of unconsolidated entities	(569)	519	(144)	1,564
Casualty-related gain	27	0	27	51
Other interest income	55	19	148	297
(Loss) gain on real estate equity securities	(2,614)	(6,527)	12,939	(21,620)
Change in subordinated performance fee due upon termination to affiliate	(1,545)	1,121	(1,745)	814
Gain on sale of real estate	216	0	31,385	0
Gain on extinguishment of debt	1,352	0	1,365	0
Total other (loss) income, net	(3,078)	(2,859)	43,975	(16,885)
Net (loss) income	(25,546)	(7,368)	2,253	(21,147)
Net loss attributable to noncontrolling interests	1,188	43	1,949	115
Net loss attributable to redeemable noncontrolling interest	33	23	113	23
Preferred stock dividends	(191)	(191)	(644)	(788)
Net (loss) income attributable to common stockholders	$ (24,516)	$ (7,493)	$ 3,671	$ (21,797)
Net (loss) income per common share, basic (in dollars per share)	$ (0.25)	$ (0.11)	$ 0.04	$ (0.32)
Net (loss) income per common share, diluted (in dollars per share)	$ (0.25)	$ (0.11)	$ 0.04	$ (0.32)
Weighted-average number of common shares outstanding, basic (in shares)	97,659,731	69,225,212	97,879,983	68,179,046
Weighted-average number of common shares outstanding, diluted (in shares)	97,659,731	69,225,212	97,879,983	68,179,046
Hotel
Revenues:
Other operating income	$ 12,153	$ 0	$ 24,578	$ 0
Other operating income
Revenues:
Other operating income	$ 923	$ 888	$ 3,118	$ 2,722

XML

CONSOLIDATED STATEMENTS OF EQUITY - USD ($) $ in Thousands	Total	Total Stockholders' Equity	Common Stock	Additional Paid-in Capital	Cumulative Distributions and Net Income (Loss)	Noncontrolling Interests
Balance (in shares) at Dec. 31, 2019			65,866,765
Balance at Dec. 31, 2019	$ 277,388	$ 276,633	$ 659	$ 553,170	$ (277,196)	$ 755
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net (loss) income	(21,912)	(21,797)			(21,797)	(115)
Issuance of common stock (in shares)			24,645
Issuance of common stock	262	262		262
Transfers to redeemable common stock	567	567		567
Redemptions of common stock (in shares)			(78,131)
Redemptions of common stock	(830)	(830)		(830)
Distributions declared	(596)	(596)			(596)
Other offering costs	(6)	(6)		(6)
Issuance of restricted stock (in shares)			3,411,737
Issuance of restricted stock	0	0	$ 34	(34)
Noncontrolling interest contribution	112	0				112
Distribution of noncontrolling interest	(28)	0				(28)
Balance (in shares) at Sep. 30, 2020			69,225,016
Balance at Sep. 30, 2020	254,957	254,233	$ 693	553,129	(299,589)	724
Balance (in shares) at Jun. 30, 2020			69,225,617
Balance at Jun. 30, 2020	262,521	261,726	$ 693	553,129	(292,096)	795
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net (loss) income	(7,536)	(7,493)			(7,493)	(43)
Transfers to redeemable common stock	6	6		6
Redemptions of common stock (in shares)			(601)
Redemptions of common stock	(6)	(6)		(6)
Distribution of noncontrolling interest	(28)	0				(28)
Balance (in shares) at Sep. 30, 2020			69,225,016
Balance at Sep. 30, 2020	$ 254,957	254,233	$ 693	553,129	(299,589)	724
Balance (in shares) at Dec. 31, 2020	98,054,582		98,054,582
Balance at Dec. 31, 2020	$ 519,712	506,554	$ 979	831,295	(325,720)	13,158
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net (loss) income	1,722	3,671			3,671	(1,949)
Transfers to redeemable common stock	(2,521)	(2,521)		(2,521)
Redemptions of common stock (in shares)			(3,790,180)
Redemptions of common stock	(29,552)	(29,552)	$ (37)	(29,515)
Change in classification of restricted stock	21,123	21,123		21,123
Noncontrolling interest contribution	$ 183	0				183
Balance (in shares) at Sep. 30, 2021	94,264,402		94,264,402
Balance at Sep. 30, 2021	$ 510,667	499,275	$ 942	820,382	(322,049)	11,392
Balance (in shares) at Jun. 30, 2021			97,906,268
Balance at Jun. 30, 2021	545,300	532,740	$ 979	829,294	(297,533)	12,560
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net (loss) income	(25,704)	(24,516)			(24,516)	(1,188)
Transfers to redeemable common stock	(1,955)	(1,955)		(1,955)
Redemptions of common stock (in shares)			(3,641,866)
Redemptions of common stock	(28,117)	(28,117)	$ (37)	(28,080)
Change in classification of restricted stock	21,123	21,123		21,123
Noncontrolling interest contribution	$ 20	0				20
Balance (in shares) at Sep. 30, 2021	94,264,402		94,264,402
Balance at Sep. 30, 2021	$ 510,667	$ 499,275	$ 942	$ 820,382	$ (322,049)	$ 11,392

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020	Dec. 31, 2020
Cash Flows from Operating Activities:
Net income (loss)	$ (25,546)	$ (7,368)	$ 2,253	$ (21,147)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Change in subordinated performance fee due upon termination to affiliate	1,545	(1,121)	1,745	(814)
Impairment charges on real estate	10,971	0	10,971	0
Impairment charges on goodwill	2,808	0	2,808	0
Gain from remeasurement of prior equity interest			0	(2,009)
Equity in loss (income) of unconsolidated entities			144	(1,151)
Depreciation and amortization	13,895	9,470	45,969	27,417
(Gain) loss on real estate equity securities	2,614	6,527	(12,939)	21,620
Gain on sale of real estate	(216)	0	(31,385)	0
Unrealized loss on interest rate caps			17	10
Deferred rent			(1,529)	(2,559)
Gain on extinguishment of debt	(1,352)	0	(1,365)	0
Amortization of above- and below-market leases, net			(1,015)	(435)
Amortization of deferred financing costs	800	800	2,470	2,481
Amortization of discount on bond and notes payable	500	64	1,906	14
Foreign currency transaction gain, net	2,271	445	(568)	(12,338)
Changes in assets and liabilities:
Rents and other receivables			(1,898)	(566)
Prepaid expenses and other assets			(4,371)	(2,286)
Accounts payable and accrued liabilities			(984)	(3,471)
Due to affiliates			(726)	182
Other liabilities			(190)	(142)
Net cash provided by operating activities			11,313	4,806
Cash Flows from Investing Activities:
Acquisitions of real estate, net of cash acquired			(4,107)	(19,034)
Improvements to real estate			(12,923)	(15,946)
Proceeds from sales of real estate, net			194,528	0
Contributions to unconsolidated entities			(4,769)	(1,708)
Distributions of capital from unconsolidated entities			0	1,225
Purchase of interest rate cap			(18)	(6)
Investment in real estate equity securities			0	(35,510)
Proceeds from the sale of real estate equity securities			14,439	10,964
Proceeds for future development obligations			6,203	0
Proceeds from disposition of foreign currency collars			0	14,125
Net cash provided by (used in) investing activities			193,353	(45,890)
Cash Flows from Financing Activities:
Proceeds from notes and bonds payable			157,246	104,143
Principal payments on notes and bonds payable			(233,964)	(57,611)
Payments of deferred financing costs			(2,745)	(2,438)
Payments to redeem common stock			(29,552)	(830)
Payment to redeem restricted stock			(5,656)	0
Payment of prepaid other offering costs			(164)	(606)
Distributions paid			0	(334)
Preferred dividends paid			(644)	(563)
Noncontrolling interests contributions			183	112
Distributions to noncontrolling interests			0	(28)
Other financing proceeds, net			2,367	0
Net cash (used in) provided by financing activities			(112,929)	41,845
Effect of exchange rate changes on cash, cash equivalents and restricted cash			182	83
Net increase in cash, cash equivalents and restricted cash			91,919	844
Cash, cash equivalents and restricted cash, beginning of period			74,319	88,494	$ 88,494
Cash, cash equivalents and restricted cash, end of period	$ 166,238	$ 89,338	$ 166,238	$ 89,338	$ 74,319

XML

ORGANIZATION

9 Months Ended

Sep. 30, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

ORGANIZATION

ORGANIZATION

Pacific Oak Strategic Opportunity REIT, Inc. (the “Company”) was formed on October 8, 2008 as a Maryland corporation and elected to be taxed as a real estate investment trust (“REIT”) beginning with the taxable year ended December 31, 2010. The Company conducts its business primarily through Pacific Oak SOR (BVI) Holdings, Ltd. (“Pacific Oak SOR BVI”), a private company limited by shares according to the British Virgin Islands Business Companies Act, 2004, which was incorporated on December 18, 2015 and is authorized to issue a maximum of 50,000 common shares with no par value. Upon incorporation, Pacific Oak SOR BVI issued one certificate containing 10,000 common shares with no par value to Pacific Oak Strategic Opportunity Limited Partnership (the “Operating Partnership”), a Delaware limited partnership formed on December 10, 2008. The Company is the sole general partner of, and owns a 0.1% partnership interest in, the Operating Partnership. Pacific Oak Strategic Opportunity Holdings LLC (“REIT Holdings”), a Delaware limited liability company formed on December 9, 2008, owns the remaining 99.9% interest in the Operating Partnership and is its sole limited partner. The Company is the sole member and manager of REIT Holdings.

Subject to certain restrictions and limitations, the business of the Company is externally managed by Pacific Oak Advisors, LLC (the “Advisor”), an affiliate of the Company, pursuant to an advisory agreement (the “Advisory Agreement”) which is currently effective through November 1, 2022; however the Company or the Advisor may terminate the Advisory Agreement without cause or penalty upon providing 60 days’ written notice. The Advisor conducts the Company’s operations and manages its portfolio of real estate and other real estate-related investments.

On January 8, 2009, the Company filed a registration statement on Form S-11 with the SEC to offer a minimum of 250,000 shares and a maximum of 140,000,000 shares of common stock for sale to the public (the “Offering”), of which 100,000,000 shares were registered in a primary offering and 40,000,000 shares were registered to be sold under the Company’s dividend reinvestment plan. The SEC declared the Company’s registration statement effective on November 20, 2009. The Company ceased offering shares of common stock in its primary offering on November 14, 2012 and continues to offer shares under its dividend reinvestment plan.

The Company sold 56,584,976 shares of common stock in its primary offering for gross offering proceeds of $561.7 million. As of September 30, 2021, the Company had sold 6,851,969 shares of common stock under its dividend reinvestment plan for gross offering proceeds of $76.5 million. Also, as of September 30, 2021, the Company had redeemed 27,247,458 shares for $317.3 million. As of September 30, 2021, the Company had issued 25,976,746 shares of common stock in connection with special dividends. Additionally, on December 29, 2011 and October 23, 2012, the Company issued 220,994 shares and 55,249 shares of common stock, respectively, for $2.0 million and $0.5 million, respectively, in private transactions exempt from the registration requirements pursuant to Section 4(2) of the Securities Act of 1933. On March 27, 2020, the Company issued 3,411,737 restricted shares of its common stock (the “Restricted Stock”) to its former external advisor, KBS Capital Advisors LLC (“KBS Capital Advisors”) pursuant to a Restricted Stock Agreement, dated as of March 27, 2020 (the “Restricted Stock Agreement”). On September 1, 2021, the Company repurchased 584,267 shares of the Restricted Stock for $5.7 million and 2,254,289 shares of Restricted Stock were transferred to GKP Holding LLC (“GKP”), a company owned by Keith D. Hall and Peter McMillan III. See Note 10 for further details.

On March 2, 2016, Pacific Oak SOR BVI filed a final prospectus with the Israel Securities Authority for a proposed offering of up to 1,000,000,000 Israeli new Shekels of Series A debentures (the “Series A Debentures”) at an annual interest rate not to exceed 4.25%. On March 1, 2016, Pacific Oak SOR BVI commenced the institutional tender of the Series A Debentures and accepted application for 842.5 million Israeli new Shekels. On March 7, 2016, Pacific Oak SOR BVI commenced the public tender of the Series A Debentures and accepted 127.7 million Israeli new Shekels. In the aggregate, Pacific Oak SOR BVI accepted 970.2 million Israeli new Shekels (approximately $249.2 million as of March 8, 2016) in both the institutional and public tenders at an annual interest rate of 4.25%. Pacific Oak SOR BVI issued the Series A Debentures on March 8, 2016.

In connection with the above-referenced offering, on March 8, 2016, the Operating Partnership assigned to Pacific Oak SOR BVI all of its interests in the subsidiaries through which the Company indirectly owns all of its real estate and real estate-related investments. The Operating Partnership owns all of the issued and outstanding equity of Pacific Oak SOR BVI. As a result of these transactions, the Company now holds all of its real estate and real estate-related investments indirectly through Pacific Oak SOR BVI.

On February 16, 2020, Pacific Oak SOR BVI issued 254.1 million Israeli new Shekels (approximately $74.1 million as of February 16, 2020) of Series B debentures (the “Series B Debentures”) to Israeli investors pursuant to a public offering registered with the Israel Securities Authority. The Series B Debentures bears interest at the rate of 3.93% per year. The Series B Debentures have principal installment payments equal to 33.33% of the face amount of the Series B Debentures on January 31st of each year from 2024 to 2026.

On January 22, 2020, the Company filed a registration statement on Form S-11 with the SEC to offer up to $1 billion in additional shares of its common stock. This new registration statement contemplates a proposed conversion of the Company to a perpetual-life net asset value or “NAV” REIT that offers and sells shares of its common stock continuously through a number of distribution channels in ongoing public offerings, and seeks to provide increased liquidity to current and future stockholders through an expansion of the Company’s current share redemption program. On December 18, 2020, the Company filed Amendment No. 1 to the registration statement on Form S-11 with the SEC.

On February 19, 2020, the Company, Pacific Oak SOR II, LLC, an indirect subsidiary of the Company’s (“Merger Sub”), and Pacific Oak Strategic Opportunity REIT II, Inc. (“POSOR II”) entered into an Agreement and Plan of Merger (the “Merger Agreement”). On October 5, 2020, pursuant to the Merger Agreement, POSOR II merged with and into Merger Sub, with Merger Sub surviving as an indirect subsidiary of the Company’s (the “Merger”). At such time, in accordance with the applicable provisions of the Maryland General Corporation Law and the Maryland Limited Liability Company Act, the separate existence of POSOR II ceased. At the effective time of the Merger, each issued and outstanding share of POSOR II’s common stock (or a fraction thereof), $0.01 par value per share, converted into 0.9643 shares of the Company’s common stock, $0.01 par value per share, or 28,973,905 shares of the Company’s common stock. The combined company after the Merger retained the name “Pacific Oak Strategic Opportunity REIT, Inc.” The Merger was intended to qualify as a “reorganization” under, and within the meaning of, Section 368(a) of the Internal Revenue Code of 1986, as amended. As a result of the Merger, the Company acquired two hotel properties, three office properties, one apartment building, one consolidated joint venture to develop one office/retail property, two real estate equity securities and two investments in unconsolidated entities. Additionally, the Company assumed $331.8 million of loans related to the acquired properties.

On March 4, 2021, Pacific Oak SOR BVI issued additional Series A Debentures in the amount of 250.0 million Israeli new Shekels par value through a private placement. The additional Series A Debentures were issued at a 1.9% discount resulting in total consideration of 245.3 million Israeli new Shekels ($74.2 million as of March 4, 2021). The additional Series A Debentures have an equal level of security, pari passu, amongst themselves and between them and the initial Series A Debentures, which were initially issued, without any right of precedence or preference between any of them.

As of September 30, 2021, the Company consolidated eight office properties, one office portfolio consisting of four office buildings and 14 acres of undeveloped land, two apartment properties, two hotel properties, one residential home portfolio consisting of 1,806 single-family homes, three investments in undeveloped land with approximately 800 developable acres, and owned four investments in unconsolidated entities and three investments in real estate equity securities. Additionally, as of September 30, 2021, the Company had entered into a consolidated joint venture to develop one office/retail property.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Sep. 30, 2021

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESThere have been no significant changes to the Company’s accounting policies since it filed its audited financial statements in its Annual Report on Form 10-K for the year ended December 31, 2020. For further information about the Company’s accounting policies, refer to the Company’s consolidated financial statements and notes thereto for the year ended December 31, 2020 included in the Company’s Annual Report on Form 10-K filed with the SEC.

Principles of Consolidation and Basis of Presentation

The accompanying unaudited consolidated financial statements and condensed notes thereto have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information as contained within the FASB Accounting Standards Codification (“ASC”) and the rules and regulations of the SEC, including the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, the unaudited consolidated financial statements do not include all of the information and footnotes required by GAAP for audited financial statements. In the opinion of management, the financial statements for the unaudited interim periods presented include all adjustments, which are of a normal and recurring nature, necessary for a fair and consistent presentation of the results for such periods. Operating results for the three and nine months ended September 30, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021.

The consolidated financial statements include the accounts of the Company, REIT Holdings, the Operating Partnership, Pacific Oak SOR BVI and their direct and indirect wholly owned subsidiaries, joint ventures in which the Company has a controlling interest and VIEs in which the Company is the primary beneficiary. All significant intercompany balances and transactions are eliminated in consolidation.

Liquidity

The Company generally finances its real estate investments using notes payable that are typically structured as non-recourse secured mortgages with maturities of approximately three to five years, with short term extension options available upon the Company meeting certain debt covenants. Each reporting period management evaluates the Company’s ability to continue as a going concern by evaluating conditions and events, including assessing the liquidity needs to satisfy upcoming debt obligations and the ability to satisfy debt covenant requirements. Through the normal course of operations and as further discussed in Note 7, the Company has $518.0 million of debt obligations coming due over the next 12-month period. In order to satisfy obligations as they mature, management will evaluate its options and may seek to utilize extension options available in the respective loan agreements, may make partial loan paydowns to meet debt covenant requirements, may seek to refinance certain debt instruments, may sell real estate equity securities to convert to cash to make principal payments, may market one or more properties for sale or may negotiate a turnover of one or more secured properties back to the related mortgage lender and remit payment for any associated loan guarantee. Historically, the Company has successfully refinanced debt instruments or utilized extension options in order to satisfy debt obligations as they come due and has not negotiated a turnover of a secured property back to a lender, though the Company may utilize such option if necessary. Based upon these plans, management believes it will have sufficient liquidity to satisfy its obligations as they come due and to continue as a going concern. There can be no assurance as to the certainty or timing of any of management’s plans. Refer to Note 7 for further discussion.

Use of Estimates

The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could materially differ from those estimates.

Restricted Cash

Restricted cash is comprised of lender impound reserve accounts on the Company’s borrowings for security deposits, property taxes, insurance, debt service obligations and capital improvements and replacements.

Redeemable Common Stock

The Company limits the dollar value of shares that may be redeemed under the share redemption program. During the nine months ended September 30, 2021, the Company had redeemed $29.6 million of common stock under the share redemption program. The Company processed all redemption requests received in good order and eligible for redemption through the September 2021 redemption date, except for 13,913,664 shares totaling $128.0 million due to the limitations under the share redemption program. The Company recorded $3.4 million and $0.9 million of redeemable common stock payable on the Company’s balance sheet as of September 30, 2021 and December 31, 2020, respectively, related to unfulfilled redemption requests received in good order under the share redemption program. Based on the twelfth amended and restated share redemption program, the Company has $3.2 million available for redemptions in the remainder of 2021, including shares that are redeemed in connection with a stockholders’ death, “qualifying disability” or “determination of incompetence,” subject to the limitations under the share redemption program.

Reclassifications

Certain amounts in the Company’s prior period consolidated financial statements have been reclassified to conform to the current period presentation. These reclassifications have not changed the results of operations of the prior period. During the nine months ended September 30, 2021, the Company sold one office property. As a result, certain assets and liabilities were reclassified as held for sale on the consolidated balance sheets for the prior period.

Segments

The Company operates in three reportable business segments: opportunistic real estate and real estate-related investments, single-family homes, and hotels, which is how the Company's management manages the business. In general, the Company intends to hold its investments in opportunistic real estate and other real estate-related assets for capital appreciation. Traditional performance metrics of opportunistic real estate and other real estate-related assets may not be meaningful as these investments are generally non-stabilized and do not provide a consistent stream of interest income or rental revenue. These investments exhibit similar long-term financial performance and have similar economic characteristics. These investments typically involve a higher degree of risk and do not provide a constant stream of ongoing cash flows. As a result, the Company’s management views opportunistic real estate and other real estate-related assets as similar investments and aggregated into one reportable business segment. The Company owns single-family homes in 17 markets and are all aggregated into one reportable business segment due to the homes being stabilized, having high occupancy rates and have similar economic characteristics. Additionally, the Company owns two hotels and are aggregated into one reportable business segment due to the nature of the hotel business with short-term stays.

Per Share Data

The Company applies the two-class method when computing its earnings per share. Net income per share for each class of stock is calculated by assuming all of the Company’s net income (loss) is distributed to each class of stock based on their contractual rights.

Unvested restricted stock that contains non-forfeitable rights to distributions (whether paid or unpaid) are considered participating securities and are included in the computation of earnings per share.

Basic earnings (loss) per share of common stock is calculated by dividing net income (loss) attributable to common stockholders by the weighted-average number of shares of common stock issued and outstanding during such period. Diluted earnings (loss) per share of common stock is computed based on the weighted-average number of shares of common stock outstanding during each period, plus potential common shares considered outstanding during the period, as long as the inclusion of such awards is not anti-dilutive. Potential common shares consist of unvested restricted stock, using the more dilutive of either the two-class method or the treasury stock method.

The noncontrolling Pacific Oak Residential Trust, Inc. (“PORT”) Series A convertible redeemable preferred shares are not included as the preferred shares are convertible contingent on the common stock of PORT being publicly traded. If PORT common stock becomes publicly traded, the per-share earnings of PORT will be included in the Company’s EPS computations based on the consolidated holdings of PORT.

The Company’s unvested Restricted Stock have been included in the calculation of basic and diluted earnings per share for both of the three and nine months ended September 30, 2021 and 2020, as the restriction is not contingent on any conditions except the passage of time.

There were no distributions declared for both of the three and nine months ended September 30, 2021 and 2020, with the exception of distributions declared per share of $0.0086 during the three months ended March 31, 2020.

Square Footage, Occupancy and Other Measures

Any references to square footage, occupancy or annualized base rent are unaudited and outside the scope of the Company’s independent registered public accounting firm’s review of the Company’s financial statements in accordance with the standards of the United States Public Company Accounting Oversight Board.

Recently Issued Accounting Standards Updates

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848) (“ASU No. 2020-04”) contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASU No. 2020-04 is optional and may be elected over time as reference rate reform activities occur. During the nine months ended September 30, 2021, the Company elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. For the period from January 1, 2020 (the earliest date the Company may elect to apply ASU No. 2020-04) through September 30, 2021, the Company did not have any contract modifications that meet the criteria described above, specifically contract modifications that have been modified from LIBOR to an alternative reference rate. The Company’s loan agreements, derivative instruments, and certain lease agreements use LIBOR as the current reference rate. For eligible contract modifications, the Company expects to adopt the temporary optional expedients described in ASU No. 2020-04. The optional expedients for hedging relationships described in ASU No. 2020-04 are not expected to have an impact to the Company, as the Company has elected to not designate its derivative instruments as a hedge.

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REAL ESTATE HELD FOR INVESTMENT

9 Months Ended

Sep. 30, 2021

Real Estate [Abstract]

REAL ESTATE HELD FOR INVESTMENT

REAL ESTATE HELD FOR INVESTMENT

As of September 30, 2021, the Company owned eight office properties, one office portfolio consisting of four office buildings and 14 acres of undeveloped land, encompassing, in the aggregate, approximately 3.3 million rentable square feet. As of September 30, 2021, these properties were 73% occupied. In addition, the Company owned one residential home portfolio consisting of 1,806 single-family homes and encompassing approximately 2.5 million rental square feet and two apartment properties, containing 609 units and encompassing approximately 0.5 million rentable square feet, which was 94% and 96% occupied, respectively as of September 30, 2021. As of September 30, 2021, the Company also owned two hotel properties with an aggregate of 649 rooms and three investments in undeveloped land with approximately 800 developable acres. Additionally, as of September 30, 2021, the Company had entered into a consolidated joint venture to develop one office/retail property. The following table summarizes the Company’s real estate held for investment as of September 30, 2021 and December 31, 2020, respectively (in thousands):

	September 30, 2021		December 31, 2020
Land	$	275,419	$	288,514
Buildings and improvements	1,018,850		1,019,329
Tenant origination and absorption costs	44,527		50,881
Total real estate, cost	1,338,796		1,358,724
Accumulated depreciation and amortization	(119,265)		(85,940)
Total real estate, net	$	1,219,531	$	1,272,784

Operating Leases

Certain of the Company’s real estate properties are leased to tenants under operating leases for which the terms and expirations vary. As of September 30, 2021, the leases, excluding options to extend and apartment leases and single-family homes, which have terms that are generally one year or less, had remaining terms of up to 15.5 years with a weighted-average remaining term of 4.5 years. Some of the leases have provisions to extend the lease agreements, options for early termination after paying a specified penalty and other terms and conditions as negotiated. The Company retains substantially all of the risks and benefits of ownership of the real estate assets leased to tenants. Generally, upon the execution of a lease, the Company requires a security deposit from tenants in the form of a cash deposit and/or a letter of credit. The amount required as a security deposit varies depending upon the terms of the respective leases and the creditworthiness of the tenant, but generally are not significant amounts. Therefore, exposure to credit risk exists to the extent that a receivable from a tenant exceeds the amount of its security deposit. Security deposits received in cash and assumed in real estate acquisitions related to tenant leases are included in other liabilities in the accompanying consolidated balance sheets totaled $6.0 million and $5.7 million as of September 30, 2021 and December 31, 2020, respectively.

During the three and nine months ended September 30, 2021, the Company recognized deferred rent from tenants of $0.4 million and $1.5 million, respectively, net of lease incentive amortization. During the three and nine months ended September 30, 2020, the Company recognized deferred rent from tenants of $0.9 million and $2.6 million, respectively, net of lease incentive amortization. As of September 30, 2021 and December 31, 2020, the cumulative deferred rent receivable balance, including unamortized lease incentive receivables, were $15.7 million and $15.5 million, respectively and is included in rents and other receivables on the accompanying consolidated balance sheets. The cumulative deferred rent balance included $3.1 million and $4.2 million of unamortized lease incentives as of September 30, 2021 and December 31, 2020, respectively.

As of September 30, 2021, the future minimum rental income from the Company’s properties, excluding apartment leases and single-family homes, under non-cancelable operating leases was as follows (in thousands):

October 1, 2021 through December 31, 2021	$	16,095
2022	61,448
2023	53,140
2024	45,750
2025	35,726
Thereafter	86,512
	$	298,671

As of September 30, 2021, the Company’s commercial real estate properties were leased to approximately 300 tenants over a diverse range of industries and geographic areas. The Company’s highest tenant industry concentrations (greater than 10% of annualized base rent) were as follows:

Industry	Number of Tenants	Annualized Base Rent (1) (in thousands)		Percentage of Annualized Base Rent
Computer Systems Design	30	$	7,080	10.9	%
Professional, Scientific, and Technical Services	42	7,078		10.9	%
Public Administration	11	6,959		10.7	%
Insurance Carriers and Related Activities	16	6,801		10.5	%
Health Care and Social Assistance	25	6,799		10.5	%
		$	34,717	53.5	%

_____________________

(1) Annualized base rent represents annualized contractual base rental income as of September 30, 2021, adjusted to straight-line any contractual tenant concessions (including free rent), rent increases and rent decreases from the lease’s inception through the balance of the lease term.

No other tenant industries accounted for more than 10% of annualized base rent. No material tenant credit issues have been identified at this time. During the three and nine months ended September 30, 2021, the Company recorded adjustments to rental income of $0.8 million and $2.5 million, respectively, for lease payments, including apartments and single-family homes that were deemed not probable of collection. During the three and nine months ended September 30, 2020, the Company recorded adjustments to rental income of $0.4 million and $1.1 million, respectively, for lease payments that were deemed not probable of collection.

Hotel Properties

The following table provides detailed information regarding the Company’s hotel revenues and expenses for its two hotel properties during the three and nine months ended September 30, 2021 (in thousands):

	Three Months Ended September 30, 2021		Nine Months Ended September 30, 2021
Hotel revenues:
Room	$	9,396	$	18,508
Food, beverage and convention services	1,452		2,830
Campground	280		792
Other	1,025		2,448
Hotel revenues	$	12,153	$	24,578
Hotel expenses:
Room	$	1,681	$	3,992
Food, beverage and convention services	946		2,063
General and administrative	752		1,955
Sales and marketing	1,018		2,230
Repairs and maintenance	557		1,551
Utilities	333		824
Property taxes and insurance	566		1,600
Other	630		1,500
Hotel expenses	$	6,483	$	15,715

Contract Liabilities

The following table summarizes the Company’s contract liabilities, which are comprised of hotel advanced deposits and deferred proceeds received from the buyers of the Park Highlands land sales (discussed below) and another developer for the value of land that was contributed to a master association that is consolidated by the Company, which are included in other liabilities in the accompanying consolidated balance sheets, as of September 30, 2021 and December 31, 2020 (in thousands):

	September 30, 2021		December 31, 2020
Contract liability	$	6,551	$	3,369
Revenue recognized in the period from:
Amounts included in contract liability at the beginning of the period	$	142	$	—

Geographic Concentration Risk

As of September 30, 2021, the Company’s real estate investments in California represented 21.9% of the Company’s total assets. As a result, the geographic concentration of the Company’s portfolio makes it particularly susceptible to adverse economic developments in the California real estate markets. Any adverse economic or real estate developments in these markets, such as business layoffs or downsizing, industry slowdowns, relocations of businesses, changing demographics and other factors, or any decrease in demand for office space resulting from the local business climate, could adversely affect the Company’s operating results and its ability to make distributions to stockholders.

Impairment of Real Estate

During the three and nine months ended September 30, 2021, the Company recorded impairment charges on real estate in the aggregate of $11.0 million, to write down the carrying value of 210 West 31st Street by $6.6 million, a development property located in New York, New York and Lincoln Court by $4.4 million, an office property located in Campbell, California, to their estimated fair value due to a change in the projected hold period and related decrease in projected cash flows.

Recent Real Estate Land Sale

On June 3, 2021, the Company sold approximately 193 developable acres of Park Highlands undeveloped land for an aggregate sales price, net of closing credits, of $50.4 million, excluding closing costs. The purchaser is not affiliated with the Company or the Advisor. The Company recognized a gain on sale of $31.1 million related to the land sale, which is net of deferred profit of $2.6 million related to proceeds received from the purchaser for the value of land that was contributed to a master association which is consolidated by the Company.

Recent Real Estate Sale

On July 27, 2021, the Company, through an indirect wholly owned subsidiary, sold an office building containing 435,177 rentable square feet located on approximately 4.92 acres of land in Orange, California (“City Tower”) to a purchaser unaffiliated with the Company or the Advisor, for $150.5 million, before closing costs and credits. The carrying value of City Tower as of the disposition date was $145.1 million, which was net of $20.5 million of accumulated depreciation and amortization. In connection with the sale of City Tower, the Company repaid $98.1 million of the outstanding principal balance due under the mortgage loan secured by City Tower. The Company recognized a gain on sale of $0.1 million related to the disposition of City Tower.

Recent Real Estate Asset Acquisitions

On March 17, 2021, the Company, through a wholly owned subsidiary of PORT OP, LP (“PORT OP”), acquired a single-family home portfolio consisting of 21 homes in Chicago, Illinois for $2.1 million.

On April 6, 2021, the Company, through a wholly owned subsidiary of PORT OP, acquired a single-family home portfolio consisting of 23 homes in multiple states for $2.0 million. The portfolio was purchased from DayMark Master Trust, an entity affiliated with the Advisor.

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TENANT ORIGINATION AND ABSORPTION COSTS, ABOVE-MARKET LEASE ASSETS AND BELOW-MARKET LEASE LIABILITIES

9 Months Ended

Sep. 30, 2021

Tenant Origination and Absorption Costs, Above-Market Lease Assets and Below-Market Lease Liabilities [Abstract]

TENANT ORIGINATION AND ABSORPTION COSTS, ABOVE-MARKET LEASE ASSETS AND BELOW-MARKET LEASE LIABILITIES

TENANT ORIGINATION AND ABSORPTION COSTS, ABOVE-MARKET LEASE ASSETS AND BELOW-MARKET LEASE LIABILITIESAs of September 30, 2021 and December 31, 2020, the Company’s tenant origination and absorption costs, above-market lease assets and below-market lease liabilities (excluding fully amortized assets and liabilities and accumulated amortization) were as follows (in thousands):

	Tenant Origination and Absorption Costs				Above-Market Lease Assets				Below-Market Lease Liabilities
	September 30, 2021		December 31, 2020		September 30, 2021		December 31, 2020		September 30, 2021		December 31, 2020
Cost	$	44,527	$	50,881	$	4,138	$	4,159	$	(6,718)	$	(7,679)
Accumulated Amortization	(19,107)		(13,491)		(1,403)		(1,002)		2,282		1,882
Net Amount	$	25,420	$	37,390	$	2,735	$	3,157	$	(4,436)	$	(5,797)

Increases (decreases) in net income as a result of amortization of the Company’s tenant origination and absorption costs, above-market lease assets and below-market lease liabilities for the three and nine months ended September 30, 2021 and 2020 were as follows (in thousands):

	Tenant Origination and Absorption Costs				Above-Market Lease Assets				Below-Market Lease Liabilities
	For the Three Months Ended September 30,				For the Three Months Ended September 30,				For the Three Months Ended September 30,
	2021		2020		2021		2020		2021		2020
Amortization	$	(3,253)	$	(1,625)	$	(94)	$	(74)	$	388	$	194

	Tenant Origination and Absorption Costs				Above-Market Lease Assets				Below-Market Lease Liabilities
	For the Nine Months Ended September 30,				For the Nine Months Ended September 30,				For the Nine Months Ended September 30,
	2021		2020		2021		2020		2021		2020
Amortization	$	(12,397)	$	(4,965)	$	(421)	$	(241)	$	1,436	$	676

As of September 30, 2021 and December 31, 2020, the Company had recorded a housing subsidy intangible asset, net of amortization, which is included in prepaid expenses and other assets in the accompanying consolidated balance sheets, of $1.9 million and $2.0 million, respectively. As of September 30, 2021, the housing subsidy intangible asset has a remaining amortization period of 27.1 years. During the three and nine months ended September 30, 2021, the Company recorded amortization expense of $18,000 and $54,000, respectively, related to the housing subsidy intangible asset.

Additionally, as of September 30, 2021 and December 31, 2020, the Company had recorded tax abatement intangible assets, net of amortization, which are included in prepaid expenses and other assets in the accompanying balance sheets, of $0.8 million and $1.6 million, respectively. During the three and nine months ended September 30, 2021, the Company recorded amortization expense of $0.2 million and $0.8 million, respectively, related to tax abatement intangible assets. During the three and nine months ended September 30, 2020, the Company recorded amortization expense of $0.1 million and $0.5 million, respectively, related to tax abatement intangible assets. As of September 30, 2021, the tax abatement intangible assets had a remaining amortization period of 1.6 years.

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REAL ESTATE EQUITY SECURITIES

9 Months Ended

Sep. 30, 2021

Investments, Debt and Equity Securities [Abstract]

REAL ESTATE EQUITY SECURITIES

REAL ESTATE EQUITY SECURITIESAs of September 30, 2021, the Company owned three investments in real estate equity securities. The following table sets forth the number of shares owned by the Company and the related carrying value of the shares as of September 30, 2021 and December 31, 2020 (dollars in thousands):

	September 30, 2021			December 31, 2020
Real Estate Equity Security	Number of Shares Owned	Total Carrying Value		Number of Shares Owned	Total Carrying Value
Keppel Pacific Oak US REIT	64,165,352	$	50,370	64,165,352	$	44,274
Franklin Street Properties Corp.	6,915,089	32,086		6,915,089	30,219
Plymouth Industrial REIT, Inc.	613,085	13,947		1,560,660	23,410
	71,693,526	$	96,403	72,641,101	$	97,903

The following summarizes the portion of gain and loss for the period related to real estate equity securities held during the three and nine months ended September 30, 2021 and 2020 (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Net (loss) gain recognized during the period on real estate equity securities	$	(2,614)	$	(6,527)	$	12,939	$	(21,620)
Less net gain recognized during the period on real estate equity securities sold during the period	—		—		(225)		(711)
Unrealized (loss) gain recognized during the reporting period on real estate equity securities held at the end of the period	$	(2,614)	$	(6,527)	$	12,714	$	(22,331)

During the three and nine months ended September 30, 2021, the Company recognized $3.2 million and $6.7 million, respectively, of dividend income from real estate equity securities. During the three and nine months ended September 30, 2020, the Company recognized $2.8 million and $4.4 million, respectively, of dividend income from real estate equity securities.

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REAL ESTATE HELD FOR SALE

9 Months Ended

Sep. 30, 2021

Discontinued Operations and Disposal Groups [Abstract]

REAL ESTATE HELD FOR SALE

REAL ESTATE HELD FOR SALE

During the nine months ended September 30, 2021, the Company disposed of one office property. There were no material dispositions during the year ended December 31, 2020.

On July 27, 2021, the Company, through an indirect wholly owned subsidiary, sold an office building containing 435,177 rentable square feet located on approximately 4.92 acres of land in Orange, California (“City Tower”) to a purchaser unaffiliated with the Company or the Advisor, for $150.5 million, before closing costs and credits. The carrying value of City Tower as of the disposition date was $145.1 million, which was net of $20.5 million of accumulated depreciation and amortization. In connection with the sale of City Tower, the Company repaid $98.1 million of the outstanding principal balance due under the mortgage loan secured by City Tower. The Company recognized a gain on sale of $0.1 million related to disposition of City Tower.

The following summary presents the major components of assets and liabilities related to real estate held for sale as of September 30, 2021 and December 31, 2020 (in thousands):

	September 30, 2021		December 31, 2020
Assets related to real estate held for sale
Real estate, cost	$	—	$	158,711
Accumulated depreciation and amortization	—		(18,472)
Real estate, net	—		140,239
Other assets	—		5,680
Total assets related to real estate held for sale	$	—	$	145,919
Liabilities related to real estate held for sale
Note payable, net	—		94,097
Other liabilities	—		669
Total liabilities related to real estate held for sale	$	—	$	94,766

The operations and gain on sale of City Tower is included in continuing operations on the accompanying statements of operations. The following table summarizes certain revenue and expenses related to these properties for the three and nine months ended September 30, 2021 and 2020 (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Revenues
Rental income	$	1,085	$	3,318	$	8,660	$	9,998
Other operating income	51		265		520		792
Total revenues	$	1,136	$	3,583	$	9,180	$	10,790
Expenses
Operating, maintenance, and management	$	363	$	1,004	$	2,096	$	2,855
Real estate taxes and insurance	95		389		979		1,258
Asset management fees to affiliate	194		305		807		907
Depreciation and amortization	14		1,769		2,436		5,342
Interest expense	152		518		1,146		1,953
Total expenses	$	818	$	3,985	$	7,464	$	12,315

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NOTES AND BONDS PAYABLE

9 Months Ended

Sep. 30, 2021

Notes and Bonds Payable [Abstract]

NOTES AND BONDS PAYABLE

NOTES AND BONDS PAYABLE

As of September 30, 2021 and December 31, 2020, the Company’s notes and bonds payable, including notes payable related to real estate held for sale, consisted of the following (dollars in thousands):

	Book Value as of September 30, 2021		Book Value as of December 31, 2020		Contractual Interest Rate as of September 30, 2021	Effective Interest Rate at September 30, 2021 (1)	Payment Type (2)	Maturity Date (3)
Richardson Portfolio Mortgage Loan	$	28,685	$	35,832	One-Month LIBOR + 2.50%	2.58%	Principal & Interest	11/01/2021 (4)
Park Centre Mortgage Loan	26,185		26,185		One-Month LIBOR + 1.75%	1.83%	Interest Only	06/27/2022
1180 Raymond Mortgage Loan (5)	29,548		29,848		One-Month LIBOR + 2.50% (6)	3.50%	Principal & Interest	12/01/2021
1180 Raymond Bond Payable	5,705		5,870		6.50%	6.50%	Principal & Interest	09/01/2036
Pacific Oak SOR (BVI) Holdings, Ltd. Series A Debentures (7)	197,901		181,198		4.25%	4.25%	(7)	03/01/2023
Pacific Oak SOR (BVI) Holdings, Ltd. Series B Debentures (7)	78,794		79,078		3.93%	3.93%	(7)	01/31/2026
Crown Pointe Mortgage Loan (5)	52,508		53,072		One-Month LIBOR + 2.60%	2.70%	Principal & Interest	02/13/2022
City Tower Mortgage Loan	—		94,167		(8)	(8)	(8)	(8)
The Marq Mortgage Loan	62,066		62,257		One-Month LIBOR + 1.55%	1.63%	Interest Only	06/06/2022
Eight & Nine Corporate Centre Mortgage Loan	48,695		47,066		One-Month LIBOR + 1.60%	1.68%	Principal & Interest	06/08/2022
Georgia 400 Center Mortgage Loan	61,154		59,690		One-Month LIBOR + 1.55%	1.63%	Interest Only	05/22/2023
PORT Mortgage Loan 1	51,302		51,362		4.74%	4.74%	Interest Only	10/01/2025
PORT Mortgage Loan 2	10,523		10,523		4.72%	4.72%	Interest Only	03/01/2026
PORT Mortgage Loan 3 (9)	—		12,000		(9)	(8)	(8)	(8)
Battery Point Trust Mortgage Loan (9)	—		38,608		(8)	(8)	(8)	(8)
MetLife Loan (9)	60,000		—		3.90%	3.90%	Interest Only	04/10/2026
Springmaid Beach Resort Mortgage Loan	55,839		57,015		One-month LIBOR + 2.25% (10)	5.75%	Principal & Interest	08/12/2022
Q&C Hotel Mortgage Loan	25,000		25,000		One-month LIBOR + 2.50% (11)	4.50%	Principal & Interest	12/23/2022
Lincoln Court Mortgage Loan (5)	34,723		34,416		One-month LIBOR + 1.75%	1.83%	Principal & Interest	12/01/2021
Lofts at NoHo Commons Mortgage Loan	74,536		74,536		One-month LIBOR + 2.18% (12)	3.93%	Interest Only	09/09/2022
210 West 31st Street Mortgage Loan (5)	10,275		15,050		One-month LIBOR + 3.00%	3.08%	Principal & Interest	06/16/2022
Oakland City Center Mortgage Loan	96,404		96,782		One-month LIBOR + 1.75%	1.83%	Principal & Interest	09/01/2022
Madison Square Mortgage Loan (13)	20,891		16,822		One-month LIBOR + 4.05%	5.05%	Interest Only	10/09/2021
Total Notes and Bonds Payable principal outstanding	1,030,734		1,106,377
Discount on Notes and Bonds Payable, net (14)	(2,249)		(2,851)
Deferred financing costs, net	(4,707)		(4,458)
Total Notes and Bonds Payable, net	$	1,023,778	$	1,099,068

_____________________

(1) Contractual interest rate represents the interest rate in effect under the loan as of September 30, 2021. Effective interest rate is calculated as the actual interest rate in effect as of September 30, 2021 (consisting of the contractual interest rate and contractual floor rates), using interest rate indices at September 30, 2021, where applicable.

(2) Represents the payment type required under the loan as of September 30, 2021. Certain future monthly payments due under this loan also include amortizing principal payments. For more information of the Company’s contractual obligations under its notes and bonds payable, see five-year maturity table below.

(3) Represents the initial maturity date or the maturity date as extended as of September 30, 2021; subject to certain conditions, the maturity dates of certain loans may be extended beyond the date shown.

(4) Subsequent to September 30, 2021, the Company extended the maturity of the Richardson Portfolio Mortgage Loan to November 1, 2022.

(5) The Company’s notes and bond’s payable are generally non-recourse. These mortgage loans have guarantees over certain balances whereby the Company would be required to make guaranteed payments in the event that the Company turned the property over to the lender. The guarantees are typically 25% of the outstanding loan balance. As of September 30, 2021, the guaranteed amount in the aggregate was $39.5 million.

(6) This mortgage loan has a LIBOR floor of 1%.

(7) See “ – Israeli Bond Financings” below.

(8) On July 27, 2021, in connection with the disposition of City Tower, the Company repaid the $98.1 million outstanding principal balance due under the City Tower Mortgage Loan.

(9) On April 6, 2021, the Company refinanced the PORT Mortgage Loan 3 and the Battery Point Trust Mortgage Loan with a mortgage loan from MetLife for borrowings up to $60.0 million.

(10) The interest rate is variable at the higher of one-month LIBOR + 2.25% or 5.77%.

(11) The interest rate is variable at the higher of one-month LIBOR + 2.5% or 4.5%. Principal payments will commence on January 1, 2022.

(12) The LIBOR rate is variable at the higher of one-month LIBOR or 1.75%.

(13) On October 7, 2021, the Company refinanced the Madison Square Mortgage Loan with a mortgage loan from an unaffiliated lender for borrowings up to $27.0 million. The new loan matures on October 7, 2024 and has a fixed interest rate of 4.625%. See Note 17, “Subsequent Events” for a further discussion.

(14) Represents the unamortized premium/discount on notes and bonds payable due to the above- and below-market interest rates when the debt was assumed. The discount/premium is amortized over the remaining life of the notes and bonds payable.

During the three and nine months ended September 30, 2021, the Company incurred $10.1 million and $30.7 million, respectively, of interest expense. Included in interest expense for the three and nine months ended September 30, 2021 was $0.8 million and $2.5 million, respectively, of amortization of deferred financing costs. Included in interest expense for the three and nine months ended September 30, 2021 was $0.5 million and $1.9 million, respectively, of amortization on discount on notes and bonds payable, net. Additionally, during the three and nine months ended September 30, 2021, the Company capitalized $0.5 million and $1.6 million, respectively of interest related to its investments in undeveloped land.

During the three and nine months ended September 30, 2020, the Company incurred $6.3 million and $19.1 million, respectively, of interest expense. Included in interest expense for the three and nine months ended September 30, 2020 was $0.8 million and $2.5 million, respectively, of amortization of deferred financing costs. Included in interest expense for the three and nine months ended September 30, 2020 was $64,000 and $14,000, respectively, of amortization of discount on notes and bonds payable, net. Additionally, during the three and nine months ended September 30, 2020, the Company capitalized $0.7 million and $2.4 million, respectively of interest related to its investments in undeveloped land.

As of September 30, 2021 and December 31, 2020, the Company’s interest payable was $3.3 million and $6.2 million, respectively.

The following is a schedule of maturities, including principal amortization payments, for all notes and bonds payable outstanding as of September 30, 2021 (in thousands):

October 1, 2021 through December 31, 2021	$	116,538
2022	548,061
2023	160,359
2024	26,535
2025	77,858
Thereafter	101,383
	$	1,030,734

As of November 12, 2021, the Company had a total of $518.0 million of debt obligations scheduled to mature over the next 12 months. The Company has extension options with respect to $239.8 million of the debt obligations outstanding that are scheduled to mature over the next 12 months; however, the Company cannot exercise these options if not then in compliance with certain financial covenants in the loans without making a cash payment and there is no assurance that we will be able to meet these requirements. All of the Company’s debt obligations are generally non-recourse, subject to certain limited guaranty payments, as outlined in the table above, except for the Company’s Series A Debentures and Series B Debentures. Subsequent to September 30, 2021, the Company issued additional Series B Debentures, with the intent of using the proceeds and available cash on hand to payoff the outstanding Series A Debentures. See Note 17, “Subsequent Events” for a further discussion on the Series B Debentures issuance. The Company plans to utilize available extension options or refinance the notes payable. The Company may also choose to market the properties for sale or may negotiate a turnover of the secured properties back to the related mortgage lender.

The Company’s notes payable contain financial debt covenants, including minimum equity requirements and liquidity ratios. As of September 30, 2021, the Company was in compliance with all of these debt covenants except that the Madison Square Mortgage Loan was not in compliance with the debt yield requirement. Such non-compliance does not constitute an event of default under the loan agreement. As a result of such non-compliance, the Company is required to maintain an interest shortfall reserve and provide cash sweeps. Additionally, the Company was not compliance with the debt service coverage requirement for the Richardson Portfolio Mortgage Loan and Georgia 400 Center Mortgage Loan. As a result of such non-compliance, the Company is required to partially paydown the loan in the case of the Richardson Portfolio Mortgage Loan and provide a cash sweep in the case of the Georgia 400 Center Mortgage Loan.

Israeli Bond Financings

On March 2, 2016, Pacific Oak SOR BVI, a wholly owned subsidiary of the Company, filed a final prospectus with the Israel Securities Authority for a proposed offering of up to 1,000,000,000 Israeli new Shekels of the Series A Debentures at an annual interest rate not to exceed 4.25%. On March 1, 2016, Pacific Oak SOR BVI commenced the institutional tender of the Series A Debentures and accepted application for 842.5 million Israeli new Shekels. On March 7, 2016, Pacific Oak SOR BVI commenced the public tender of the Series A Debentures and accepted 127.7 million Israeli new Shekels.  In the aggregate, Pacific Oak SOR BVI accepted 970.2 million Israeli new Shekels (approximately $249.2 million as of March 8, 2016) in both the institutional and public tenders at an annual interest rate of 4.25%.  Pacific Oak SOR BVI issued the Debentures on March 8, 2016. The terms of the Series A Debentures require five equal annual installment principal payments on March 1st of each year from 2019 to 2023.

On February 16, 2020, Pacific Oak SOR BVI issued 254.1 million Israeli new Shekels (approximately $74.1 million as of February 16, 2020) of Series B Debentures to Israeli investors pursuant to a public offering registered with the Israel Securities Authority. The Series B Debentures will bear interest at the rate of 3.93% per year. The Series B Debentures have principal installment payments equal to 33.33% of the face amount of the Series B Debentures on January 31st of each year from 2024 to 2026.

On March 4, 2021, Pacific Oak SOR BVI issued additional Series A Debentures in the amount of 250.0 million Israeli new Shekels par value through a private placement. The additional Series A Debentures were issued at a 1.9% discount resulting in total consideration of 245.3 million Israeli new Shekels ($74.2 million as of March 4, 2021). The additional Series A Debentures have an equal level of security, pari passu, amongst themselves and between them and the initial Series A Debentures, which were initially issued, without any right of precedence or preference between any of them.

The deeds of trust that govern the Series A Debentures and Series B Debentures contain various financial covenants. As of September 30, 2021, the Company was in compliance with all of these financial debt covenants.

Subsequent to September 30, 2021, the Company issued additional Series B Debentures. See Note 17, “Subsequent Events” for a further discussion on the Series B Debentures issuance.

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DERIVATIVE INSTRUMENTS

9 Months Ended

Sep. 30, 2021

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVE INSTRUMENTS

DERIVATIVE INSTRUMENTS

The Company enters into derivative instruments for risk management purposes to hedge its exposure to cash flow variability caused by changing interest rates and foreign currency exchange rate movements. The primary goal of the Company’s risk management practices related to interest rate risk is to prevent changes in interest rates from adversely impacting the Company’s ability to achieve its investment return objectives. The Company does not enter into derivatives for speculative purposes.

The Company enters into foreign currency collars to mitigate its exposure to foreign currency exchange rate movements on its bonds payable outstanding denominated in Israeli new Shekels. A foreign currency collar consists of a purchased call option to buy and a sold put option to sell Israeli new Shekels. A foreign currency collar guarantees that the exchange rate of the currency will not fluctuate beyond the range of the options’ strike prices.

The following table summarizes the notional amount and other information related to the Company’s foreign currency collars as of September 30, 2021 and December 31, 2020. The notional amount is an indication of the extent of the Company’s involvement in each instrument at that time, but does not represent exposure to credit, interest rate or market risks (currency in thousands):

	September 30, 2021		December 31, 2020		Strike Price	Trade Date	Maturity Date
Derivative Instruments	Number of Instruments	Notional Amount	Number of Instruments	Notional Amount
Derivative instruments not designated as hedging instruments
Foreign currency collar	1	194,045 ILS	—	—	3.16 - 3.29 ILS - USD	06/14/2021	11/22/2021

The Company enters into interest rate caps to mitigate its exposure to rising interest rates on its variable rate notes payable. The values of interest rate caps are primarily impacted by interest rates, market expectations about interest rates, and the remaining life of the instrument. In general, increases in interest rates, or anticipated increases in interest rates, will increase the value of interest rate caps. As the remaining life of an interest rate cap decreases, the value of the instrument will generally decrease towards zero.

As of September 30, 2021, the Company had entered into four interest rate caps, which were not designated as a hedging instruments. The following table summarizes the notional amounts and other information related to the Company’s derivative instruments as of September 30, 2021. The notional amount is an indication of the extent of the Company’s involvement in the instrument at that time, but does not represent exposure to credit, interest rate or market risks (dollars in thousands):

Derivative Instrument	Effective Date	Maturity Date	Notional Value		Reference Rate
Interest rate cap	10/15/2020	10/15/2021	$	26,200	One-month LIBOR at 3.00%
Interest rate cap	02/12/2021	02/14/2022	$	47,715	One-month LIBOR at 3.00%
Interest rate cap	09/15/2021	09/15/2022	$	75,950	One-month LIBOR at 3.50%
Interest rate cap	06/21/2019	05/22/2023	$	51,252	One-month LIBOR at 4.00%

The following table sets forth the fair value of the Company’s derivative instruments as well as their classification on the consolidated balance sheets as of September 30, 2021 and December 31, 2020 (dollars in thousands):

		September 30, 2021			December 31, 2020
Derivative Instruments	Balance Sheet Location	Number of Instruments	Fair Value		Number of Instruments	Fair Value
Derivative instruments not designated as hedging instruments
Interest rate caps	Prepaid expenses and other assets	4	$	2	7	$	1
Foreign currency collar	Other liabilities	1	$	(44)	—	$	—

The change in fair value of foreign currency collars that are not designated as cash flow hedges are recorded as foreign currency transaction gains or losses in the accompanying consolidated statements of operations. During the three months ended September 30, 2021, the Company recognized a $0.3 million gain related to the foreign currency collar, which is shown combined with $2.6 million of foreign currency transaction loss in the accompanying consolidated statements of operations as foreign currency transaction loss. During the nine months ended September 30, 2021, the Company recognized a $44,000 loss related to the foreign currency collar, which is shown combined with $0.6 million of foreign currency transaction gain in the accompanying consolidated statements of operations as foreign currency transaction gain, net.

During the three months ended September 30, 2020, the Company recognized a $2.2 million gain related to the foreign currency collars, which is shown combined with $2.6 million of foreign currency transaction loss in the accompanying consolidated statements of operations as foreign currency transaction loss, net. During the nine months ended September 30, 2020, the Company recognized a $14.3 million gain related to the foreign currency collars, which is shown combined with $2.0 million of foreign currency transaction loss in the accompanying consolidated statements of operations as foreign currency transaction gain, net. On July 29, 2020, the Company terminated the foreign currency collars and as a result received $14.1 million.

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FAIR VALUE DISCLOSURES

9 Months Ended

Sep. 30, 2021

Fair Value Disclosures [Abstract]

FAIR VALUE DISCLOSURES

FAIR VALUE DISCLOSURES

The following were the face values, carrying amounts and fair values of the Company’s financial instruments as of September 30, 2021 and December 31, 2020, which carrying amounts do not approximate the fair values (in thousands):

	September 30, 2021						December 31, 2020
	Face Value		Carrying Amount		Fair Value		Face Value		Carrying Amount		Fair Value
Financial liabilities (Level 3):
Notes and bond payable	$	754,039	$	751,064	$	752,417	$	846,101	$	842,112	$	846,608
Financial liabilities (Level 1):
Pacific Oak SOR (BVI) Holdings, Ltd. Series A Debentures	$	197,901	$	195,428	$	197,437	$	181,198	$	179,786	$	178,450
Pacific Oak SOR (BVI) Holdings, Ltd. Series B Debentures	$	78,794	$	77,286	$	76,899	$	79,078	$	77,170	$	69,433

Disclosure of the fair value of financial instruments is based on pertinent information available to the Company as of the period end and requires a significant amount of judgment. This has made the estimation of fair values difficult and, therefore, both the actual results and the Company’s estimate of value at a future date could be materially different.

As of September 30, 2021, the Company measured the following assets at fair value (in thousands):

			Fair Value Measurements Using
	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Recurring Basis:
Real estate equity securities	$	96,403	$	96,403	$	—	$	—
Asset derivative - interest rate caps	$	2	$	—	$	2	$	—
Liability derivative - foreign currency collar	$	(44)	$	—	$	(44)	$	—

As of December 31, 2020, the Company measured the following assets and liabilities at fair value (in thousands):

			Fair Value Measurements Using
	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Recurring Basis:
Real estate equity securities	$	96,403	$	96,403	$	—	$	—
Asset derivative - interest rate caps	$	2	$	—	$	2	$	—

As of September 30, 2021, the Company measured the following assets at fair value on a nonrecurring basis (in thousands):

			Fair Value Measurements Using
	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Nonrecurring Basis:
Impaired real estate	$	97,600	$	—	$	—	$	97,600
Impaired goodwill	$	13,534	$	—	$	—	$	13,534

As of September 30, 2021, two of the Company’s real estate properties were measured at their estimated fair value. 210 West 31st Street was based on a sales comparison approach as of September 30, 2021. Lincoln Court was based on an income approach with the significant unobservable inputs used in measuring the estimated fair value of this property include a discount rate of 7.75% and a terminal cap rate of 6.75%. During the three and nine months ended September 30, 2021, the Company recorded impairment charges on real estate in the aggregate of $11.0 million, to write down the carrying value of 210 West 31st Street and Lincoln Court.

The Company recorded goodwill in connection with the Merger with Pacific Oak Strategic Opportunity REIT II, Inc. ("POSOR II"). Due to a decline in projected cash flows for real estate held in certain reporting units, the Company determined that the carrying value of certain reporting units exceeded the estimated fair value and recognized impairment charges of $2.8 million. The fair value of the Company's reporting units were measured using significant unobservable inputs (Level 3) for the three and nine months ended September 30, 2021, which included discounted cash flows, terminal capitalization rates and discount rates.

Balance as of December 31, 2020	$	16,342
Impairment loss	(2,808)
Balance as of September 30, 2021	$	13,534

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RELATED PARTY TRANSACTIONS

9 Months Ended

Sep. 30, 2021

Related Party Transactions [Abstract]

RELATED PARTY TRANSACTIONS

RELATED PARTY TRANSACTIONS

As described further below, the Company has entered into agreements with certain affiliates pursuant to which they provide services to the Company. Keith D. Hall and Peter McMillan III control and indirectly own Pacific Oak Holding Group, LLC (“Pacific Oak Holding”), the Company’s sponsor since November 1, 2019. Pacific Oak Holding is the sole owner of the Advisor, the Company’s advisor since November 1, 2019. Messrs. Hall and McMillan are also two of the Company’s executive officers and directors.

Subject to certain restrictions and limitations, the business of the Company is externally managed by the Advisor pursuant to the Advisory Agreement. The Advisory Agreement is currently effective through November 1, 2022; however the Company or the Advisor may terminate the Advisory Agreement without cause or penalty upon providing 60 days’ written notice. The Advisor conducts the Company’s operations and manages its portfolio of real estate and other real estate-related investments.

In addition, along with Charles J. Schreiber, Jr., Keith D. Hall and Peter McMillan III control and indirectly own KBS Holdings LLC (“KBS Holdings”), the Company’s sponsor prior to November 1, 2019. KBS Holdings is the sole owner of KBS Capital Advisors, LLC (“KBS Capital Advisors”), the Company’s advisor prior to November 1, 2019, and KBS Capital Markets Group LLC, the entity that acted as the dealer manager of the Company’s now-terminated primary initial public offering.

From the Company’s inception through October 31, 2019, KBS Capital Advisors provided day-to-day management of the Company’s business. The advisory agreement with KBS Capital Advisors terminated on October 31, 2019. On March 27, 2020, the Company issued 3,411,737 shares of Restricted Stock to KBS Capital Advisors pursuant to the Restricted Stock Agreement. Refer to paragraph below for further discussion.

Pursuant to the terms of these agreements, summarized below are the related-party costs incurred by the Company for the three and nine months ended September 30, 2021 and 2020, respectively, and any related amounts payable as of September 30, 2021 and December 31, 2020 (in thousands):

	Incurred								Payable as of
	Three Months Ended September 30,				Nine Months Ended September 30,				September 30, 2021		December 31, 2020
Expensed	2021		2020		2021		2020
Asset management fees	$	3,422	$	2,426	$	10,802	$	6,867	$	2,132	$	2,837
Property management fees (1)	119		114		362		114		—		—
Reimbursable operating expenses (2)	—		56		—		148		—		—
Disposition fees (3)	692		—		1,196		—		—		—
Change in subordinated performance fee due upon termination to affiliate (4)	1,545		(1,121)		1,745		(814)		(3)		(3)
Capitalized
Acquisition fees on real estate equity securities	—		—		—		122		—		5
Acquisition fees on real estate (5)	—		—		20		171		20		—
Acquisition fee on investment in unconsolidated entities	—		—		45		—		—		—
	$	5,778	$	1,475	$	14,170	$	6,608	$	2,152	$	2,842

_____________________

(1) Property management fees are for single-family homes under PORT and paid to DayMark. These fees are included in the line item “Operating, maintenance, and management cost” in the consolidated statement of operations.

(2) The Advisor may seek reimbursement for certain employee costs under the Advisory Agreement. The Company will not reimburse for employee costs in connection with services for which the Advisor earns acquisition, origination or disposition fees (other than reimbursement of travel and communication expenses) or for the salaries or benefits the Advisor or its affiliates may pay to the Company’s executive officers. In addition to the amounts above, the Company reimburses the Advisor for certain of the Company’s direct costs incurred from third parties that were initially paid by the Advisor on behalf of the Company.

(3) Disposition fees with respect to real estate sold are included in the gain on sale of real estate in the accompanying consolidated statements of operations.

(4) Change in the fair value of the Restricted Stock related to the termination of the former advisory agreement with KBS Capital Advisors. See “Subordinated Performance Fee Due Upon Termination to KBS Capital Advisors”, below, for more details.

(5) Acquisition fees associated with asset acquisitions are capitalized, while costs associated with business combinations expensed as incurred.

Pacific Oak Opportunity Zone Fund I

As of September 30, 2021, the Company owned 124 Class A Units in the Pacific Oak Opportunity Zone Fund I, LLC (“Pacific Oak Opportunity Zone Fund I”), which are included in investments in unconsolidated entities on the consolidated balance sheets. The Advisor is entitled to certain fees in connection with the fund. Pacific Oak Opportunity Zone Fund I will pay an acquisition fee equal to 1.5% of the purchase price of each asset (including any debt incurred or assumed and significant capital improvement costs budgeted as of the date of acquisition) with a purchase price less than or equal to $25.0 million plus 1.0% of the purchase price in excess of $25.0 million; a quarterly asset management fee equal to 0.25% of the total purchase price of all assets (including any debt incurred or assumed and significant capital improvement costs budgeted as of the date of acquisition) as of the end of the applicable quarter; and a financing fee equal to 0.5% of the original principal amount of any indebtedness they incur (reduced by any financing fee previously paid with respect to indebtedness being refinanced). In the case of investments made through joint ventures, the fees above will be determined based on the Company’s proportionate share of the investment. The Advisor is also entitled to certain distributions paid by the Pacific Oak Opportunity Zone Fund I after the Class A Members have received their preferred return. These fees and distributions have been waived for the Company’s investment. In addition, side letter agreements between the Advisor and Pacific Oak Opportunity Zone Fund I were executed on February 28, 2020 and stipulate that any asset management fees allocable to the Company and waived by Pacific Oak Capital Advisors for Pacific Oak Opportunity Zone Fund I will distributed to the Company. During the three and nine months ended September 30, 2021, the Company recorded $0.2 million and $0.5 million, respectively, of waived asset management fees recorded as equity in income of unconsolidated entities, of which $0.7 million was a receivable as of September 30, 2021.

PORT II

As of September 30, 2021, the Company has contributed $5.5 million in PORT II OP, LLC (“PORT II OP”), a wholly owned subsidiary of Pacific Oak Residential Trust II, Inc. ("PORT II"). On August 31, 2020, PORT II entered into an advisory agreement (as subsequently amended and restated on October 9, 2020, “PORT II Advisory Agreement”) with Pacific Oak Residential Advisors, LLC (“PORA”), an affiliate of the Advisor. Pursuant to the PORT II Advisory Agreement, PORT II has engaged PORA to act as its external advisor with respect to PORT II’s operations and assets. Because the Company has separately engaged the Advisor to manage its operations and assets, including its interests in PORT II, on November 12, 2020, the Company and the Advisor agreed to amend their advisory agreement to provide that PORT II’s operations and assets will be managed by PORA and not by the Advisor. In addition, the amendment provides that the Advisor will rebate or offset its fees under its advisory agreement with the Company to the extent of the Company’s indirect economic interest in fees paid by PORT II to PORA (which will be based on the Company’s indirect ownership of PORT II OP, which is the operating partnership of PORT II and the entity ultimately responsible for PORT II’s administrative expenses).

On August 31, 2020, PORT II entered into a property management agreement with DMH Realty, LLC (“DMH”), an affiliate of the Advisor and PORA. Pursuant to the property management agreement, PORT II will pay to DMH a base fee equal to the following: (a) for all rent collections up to $50 million per year, 8%; (b) for all rent collections in excess of $50 million per year, but less than or equal to $75 million per year, 7%; and (c) for all rent collections in excess of $75 million per year, 6%. PORT II will also pay DMH market-based leasing fees that will depend on the type of tenant, shared fees equal to 100% of any application fees collected and 50% of any insufficient funds fees, late fees and certain other fees collected. DMH may also perform additional services at rates that would be payable to unrelated parties.

PORT II is a Maryland corporation formed and sponsored by the Advisor to acquire, own and operate single-family homes as rental properties as well as to acquire and own other interests, including mortgages on or securities related to single-family homes.

Subordinated Performance Fee Due Upon Termination to KBS Capital Advisors

The Company and KBS Capital Advisors agreed to terminate their advisory agreement effective October 31, 2019. In connection with that agreement, the Company agreed to pay KBS Capital Advisors a subordinated performance fee due upon termination in the form of Restricted Stock, to be paid to KBS Capital Advisors upon the filing of its Annual Report on Form 10-K for the year ended December 31, 2019. At that time, GKP Holding LLC, a Delaware limited liability company (“GKP”), was a manager of KBS Capital Advisors and of KBS Holdings LLC (“KBS Holdings”), which wholly owns KBS Capital Advisors. At that time, GKP owned 1/3 of KBS Holdings. Keith D. Hall, the Company’s Chief Executive Officer and a director, and Peter McMillan III, the Company’s President and Chairman of the Board, are the managers of GKP and each own 50% of GKP. The number of shares of Restricted Stock to be awarded was set at 3,411,737 shares and was issued on March 27, 2020. This termination payout value to KBS Capital Advisors (the “KBS Termination Fee Value”) was determined based on the Company’s performance from inception through September 30, 2018. In other words, it was based on the Company’s participation fee potential liability to KBS Capital Advisors calculated with respect to the November 12, 2018 estimated value per share. As a result, when the Company hired the Advisor as the Company’s new advisor on November 1, 2019, the Company agreed to a participation fee that was based on the Company’s performance from September 30, 2018.

On September 1, 2021, GKP ceased to be a manager of KBS Capital Advisors and KBS Holdings and ceased to own an interest in KBS Holdings. Also on September 1, 2021, GKP and KBS Capital Advisors entered into Amendment No. 1 (the “Amendment”) to the Restricted Stock Agreement and the Unvested Share Transfer Agreement (the “Unvested Share Agreement”). Pursuant to the Amendment, on September 1, 2021, the Company repurchased 584,267 of the shares of Restricted Stock from KBS Capital Advisors for consideration of $5,655,705 in cash, or $9.68 per share. Pursuant to the terms of the Amendment and the Unvested Share Agreement, on September 1, 2021, KBS Capital Advisors transferred 2,254,289 of the shares of Restricted Stock to GKP (the “GKP Restricted Shares”). KBS Capital Advisors transferred the GKP Restricted Shares as partial consideration for and to effectuate the conclusion of the acquisition of GKP’s 1/3 ownership interest in KBS Holdings by its other owners. On September 1, 2021, upon the transfer of GKP’s 1/3 ownership interest in KBS Holdings, GKP ceased to be a manager of KBS Capital Advisors and KBS Holdings and ceased to have an ownership interest in KBS Holdings. Under the Amendment, the GKP Restricted Shares are nonvested and forfeitable until the earliest of: (i) July 1, 2026 or (ii) immediately before and contingent upon the occurrence of a Change in Control (as defined in the Restricted Stock Agreement) of the Company. Notwithstanding the foregoing, and at the option of either Keith Hall’s estate or Peter McMillan’s estate, in the event of the death of either Keith Hall or Peter McMillan, such event can trigger the vesting of that number of GKP Restricted Shares corresponding to 100% of the deceased party’s proportional economic interest in GKP Restricted Shares. In addition, unvested GKP Restricted Shares will be forfeited in certain instances if GKP fails to comply with certain requirements set forth in the Amendment, which forfeiture may be waived by the Company’s Conflict Committee in certain cases. Non-vested GKP Restricted Shares are not eligible for redemption by the Company under any circumstances unless approved by the Company’s board of directors.

After the vesting of the GKP Restricted Shares, and only upon receiving a request from GKP and the consent of the Company’s Conflicts Committee, within 60 days from the request, the Company will redeem 50% of the vested GKP Restricted Shares, with the amount of the cash payment per share determined based on the then most recent board-approved net asset value per share (which must not be more than six months old). Any vested GKP Restricted Shares that are not required to be redeemed in accordance with the preceding sentence are referred to herein as the “Retained Vested GKP Shares.” The Retained Vested GKP Shares are not eligible for redemption under the Company’s share redemption program unless the Company has satisfied all outstanding redemption requests from other stockholders, provided that this restriction may be waived in certain situations, such as upon a change of control of the Company, as determined by the Conflicts Committee of the Board. The Amendment also provides that an additional 59,714 Restricted Shares held by KBS Capital Advisors and 513,467 Restricted Shares that were transferred to affiliates of KBS Capital Advisors under the Amendment were immediately vested and fully released from all restrictions and requirements of the Restricted Stock Agreement (the “KBS Vested Shares”), provided that the KBS Vested Shares are not eligible for redemption under the Company’s share redemption program unless the Company has satisfied all outstanding redemption requests from other stockholders, provided further that (i) this restriction may be waived in certain situations, such as upon a change of control of the Company, as determined by the Conflicts Committee and (ii) notwithstanding the foregoing, within 60 days after November 1, 2024, the Company will be required to redeem any remaining outstanding KBS Vested Shares, separate and outside of any general stockholder share redemption program, at the then most recent board-approved net asset value per share (which must not be more than six months old).

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INVESTMENT IN UNCONSOLIDATED ENTITIES

9 Months Ended

Sep. 30, 2021

Equity Method Investments and Joint Ventures [Abstract]

INVESTMENT IN UNCONSOLIDATED ENTITIES

INVESTMENT IN UNCONSOLIDATED ENTITIES

As of September 30, 2021 and December 31, 2020, the Company’s investments in unconsolidated entities were composed of the following (dollars in thousands):

	Number of Properties as of September 30, 2021			Investment Balance at
Joint Venture		Location	Ownership %	September 30, 2021		December 31, 2020
110 William Joint Venture	1	New York, New York	60.0%	$	—	—
353 Sacramento Joint Venture	1	San Francisco, California	55.0%	50,769		49,665
Pacific Oak Opportunity Zone Fund I	3	Various	N/A	27,638		24,996
PORT II OP LP	117	Various	89.7%	5,447		5,005
				$	83,854	$	79,666

Investment in 110 William Joint Venture

On December 23, 2013, the Company, through an indirect wholly owned subsidiary, entered into an agreement with SREF III 110 William JV, LLC (the “110 William JV Partner”) to form a joint venture (the “110 William Joint Venture”). On May 2, 2014, the 110 William Joint Venture acquired an office property containing 928,157 rentable square feet located on approximately 0.8 acres of land in New York, New York (“110 William Street”). Each of the Company and the 110 William JV Partner hold a 60% and 40% ownership interest in the 110 William Joint Venture, respectively.

The Company exercises significant influence over the operations, financial policies and decision making with respect to the 110 William Joint Venture but significant decisions require approval from both members. Accordingly, the Company has accounted for its investment in the 110 William Joint Venture under the equity method of accounting. Income, losses, contributions and distributions are generally allocated based on the members’ respective equity interests.

As of September 30, 2021 and December 31, 2020, the book value of the Company’s investment in the 110 William Joint Venture was $0. During the three months ended March 31, 2019, the Company suspended the equity method of accounting and the Company will not record the Company's share of losses and will not record the Company's share of any subsequent income for the 110 William Joint Venture until the Company’s share of net income exceeds the gain recorded and the Company’s share of the net losses not recognized during the period the equity method was suspended. During both of the three and nine months ended September 30, 2021 and September 30, 2020, the Company did not record equity in income from the 110 William Joint venture.

Summarized financial information for the 110 William Joint Venture follows (in thousands):

	September 30, 2021		December 31, 2020
Assets:
Real estate assets, net of accumulated depreciation and amortization	$	232,201	$	246,166
Other assets	34,200		44,004
Total assets	$	266,401	$	290,170
Liabilities and equity:
Notes payable, net	$	318,280	$	316,421
Other liabilities	3,003		5,532
Partners’ deficit	(54,882)		(31,783)
Total liabilities and equity	$	266,401	$	290,170

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Revenues	$	5,729	$	10,005	$	18,721	$	26,604
Expenses:
Operating, maintenance, and management	2,359		2,096		6,212		5,994
Real estate taxes and insurance	1,698		1,935		5,588		5,580
Depreciation and amortization	2,962		3,139		19,071		8,721
Interest expense	3,548		4,125		10,986		12,093
Total expenses	10,567		11,295		41,857		32,388
Total other income	11		12		35		50
Net loss	$	(4,827)	$	(1,278)	$	(23,101)	$	(5,734)
Company’s share of net loss (1)	$	(2,896)	$	(767)	$	(13,861)	$	(3,440)

_____________________

(1) The Company suspended the equity method of accounting and did not record the Company's share of losses for both of the three and nine months ended September 30, 2021 and 2020.

Investment in 353 Sacramento Joint Venture

On July 6, 2017, the Company, through an indirect wholly owned subsidiary, entered into an agreement with the Migdal Members to form a joint venture (the “353 Sacramento Joint Venture”). On July 6, 2017, the Company sold a 45% equity interest in an entity that owns an office building containing 284,751 rentable square feet located on approximately 0.35 acres of land in San Francisco, California (“353 Sacramento”) to the Migdal Members. The sale resulted in 353 Sacramento being owned by the 353 Sacramento Joint Venture, in which the Company indirectly owns 55% of the equity interests and the Migdal Members indirectly own 45% in the aggregate of the equity interests. During the nine months ended September 30, 2021, the Company contributed an additional $1.1 million into the 353 Sacramento Joint Venture.

The Company exercises significant influence over the operations, financial policies and decision making with respect to the 353 Sacramento Joint Venture but significant decisions require approval from both members. Accordingly, the Company has accounted for its investment in the 353 Sacramento Joint Venture under the equity method of accounting. Income, losses, contributions and distributions are generally allocated based on the members’ respective equity interests.

Summarized financial information for the 353 Sacramento Joint Venture follows (in thousands):

	September 30, 2021		December 31, 2020
Assets:
Real estate assets, net of accumulated depreciation and amortization	$	178,874	$	182,318
Other assets	27,539		19,810
Total assets	$	206,413	$	202,128
Liabilities and equity:
Notes payable, net	$	110,000	$	109,783
Other liabilities	6,335		7,639
Partners’ capital	90,078		84,706
Total liabilities and equity	$	206,413	$	202,128

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Revenues	$	3,373	$	5,520	$	13,252	$	15,771
Expenses:
Operating, maintenance, and management	862		932		2,490		2,450
Real estate taxes and insurance	848		755		2,768		2,235
Depreciation and amortization	1,850		1,894		5,574		5,135
Interest expense	960		948		2,700		3,290
Total expenses	4,520		4,529		13,532		13,110
Net income	$	(1,147)	$	991	(280)		$	2,661
Company’s equity in (loss) income of unconsolidated joint venture	$	(592)	$	583	$	(40)	$	1,576

Investment in Pacific Oak Opportunity Zone Fund I

During the year ended December 31, 2019, the Company acquired 91 Class A Units for $20.6 million in Pacific Oak Opportunity Zone Fund I. Additionally, with the POSOR II Merger, the Company acquired an additional 13 Class A Units with a fair value of $3.0 million and also acquired 7 Class A Units for $1.5 million during the year ended December 31, 2020. During the nine months ended September 30, 2021, the Company acquired additional 13 Class A Units for $3.1 million.

As of September 30, 2021, the book value of the Company’s investment in Pacific Oak Opportunity Zone Fund I was $27.6 million, which includes $0.2 million of acquisition fees. As of September 30, 2021, Pacific Oak Opportunity Zone Fund I consolidated three joint ventures with real estate under development. As of September 30, 2021, the Company has concluded that Pacific Oak Opportunity Zone Fund I qualifies as a Variable Interest Entity (“VIE”) because there is insufficient equity at risk to finance the entity’s activities and the entity is structured with non-substantive voting rights. The Company concluded it is not the primary beneficiary of this VIE since it does not have the power to direct the activities that most significantly impact the entity’s economic performance and will account for its investment under the equity method of accounting.

During the three and nine months ended September 30, 2021, the Company recognized $0.1 million and $0.5 million, respectively, of losses related to this investment. The Company’s maximum exposure to loss as a result of its involvement with this VIE is limited to the carrying value of the investment in Pacific Oak Opportunity Zone Fund I which totaled $27.6 million as of September 30, 2021.

PORT II

PORT II is a Maryland corporation formed and sponsored by the Advisor to acquire, own and operate single-family homes as rental properties as well as to acquire and own other interests, including mortgages on or securities related to single-family homes. As of September 30, 2021, the Company owns 600 shares of common stock of PORT II, of which the Company exercises significant influence over the operations, financial policies and decision making with respect to PORT II, but does not control. In addition, as of September 30, 2021, the Company had contributed $5.5 million in capital to PORT II OP, of which the Company owns 89.7%. The remaining ownership percentage is owned by PORT II. As of September 30, 2021, the Company has concluded that PORT II OP qualifies as a VIE because there is insufficient equity at risk to finance the entity’s activities and the entity is structured with non-substantive voting rights. The Company concluded it is not the primary beneficiary of this VIE since it does not have the power to direct the activities that most significantly impact the entity’s economic performance and will account for its investment under the equity method of accounting. During the three and nine months ended September 30, 2021, the Company recognized $47,000 and $0.1 million of losses related to this investment, respectively.

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SUPPLEMENTAL CASH FLOW AND SIGNIFICANT NONCASH TRANSACTION DISCLOSURES

9 Months Ended

Sep. 30, 2021

Supplemental Cash Flow and Significant Noncash Transaction Disclosures [Abstract]

SUPPLEMENTAL CASH FLOW AND SIGNIFICANT NONCASH TRANSACTION DISCLOSURES

SUPPLEMENTAL CASH FLOW AND SIGNIFICANT NONCASH TRANSACTION DISCLOSURESSupplemental cash flow and significant noncash transaction disclosures were as follows (in thousands):

	Nine Months Ended September 30,
	2021		2020
Supplemental Disclosure of Cash Flow Information:
Interest paid, net of capitalized interest of $1,579 and $2,368 for the nine months ended September 30, 2021 and 2020, respectively	$	29,220	$	18,945
Supplemental Disclosure of Significant Noncash Transactions:
Accrued improvements to real estate	1,721		2,393
Redeemable common stock payable	3,385		262
Distributions paid to common stockholders through common stock issuances pursuant to the dividend reinvestment plan	—		262
Accrued preferred dividends	225		226
PPP notes forgiveness	1,500		—
Assets and liabilities assumed in connection with Battery Point acquisition:
Real estate	—		56,148
Notes payable	—		36,003
Other assets	—		21
Other liabilities	—		355
Redeemable non-controlling interest	—		3,024
Series A-3 preferred units payable	—		16,000

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REPORTING SEGMENTS

9 Months Ended

Sep. 30, 2021

Segment Reporting [Abstract]

REPORTING SEGMENTS

REPORTING SEGMENTS

The Company recognizes three reporting segments for the three and nine months ended September 30, 2021 and consists of strategic opportunistic properties, single-family homes and hotels. All corporate related costs are included in the strategic opportunistic properties segment to align with how financial information is presented to the chief operating decision maker. The Company recognized two reporting segments for the three and nine months ended September 30, 2020. The selected financial information for reporting segments for the three and nine months ended September 30, 2021 and 2020 are as follows (in thousands):

	Three Months Ended September 30, 2021
	Strategic Opportunistic Properties		Single-Family Homes		Hotels		Total
Total revenues	$	28,050	$	5,566	$	12,153	$	45,769
Total expenses	(52,891)		(6,398)		(8,948)		(68,237)
Total other (loss) income	(4,435)		81		1,276		(3,078)
Net (loss) income	$	(29,276)	$	(751)	$	4,481	$	(25,546)
	Nine Months Ended September 30, 2021
	Strategic Opportunistic Properties		Single-Family Homes		Hotels		Total
Total revenues	$	88,187	$	16,436	$	24,578	$	129,201
Total expenses	(128,418)		(19,581)		(22,924)		(170,923)
Total other income	42,527		159		1,289		43,975
Net income (loss)	$	2,296	$	(2,986)	$	2,943	$	2,253

	Three Months Ended September 30, 2020
	Strategic Opportunistic Properties		Single-Family Homes		Hotels		Total
Total revenues	$	22,548	$	5,197	$	—	$	27,745
Total expenses	(26,285)		(5,969)		—		(32,254)
Total other (loss) income	(2,863)		4		—		(2,859)
Net loss	$	(6,600)	$	(768)	$	—	$	(7,368)
	Nine Months Ended September 30, 2020
	Strategic Opportunistic Properties		Single-Family Homes		Hotels		Total
Total revenues	$	64,752	$	11,117	$	—	$	75,869
Total expenses	(66,928)		(13,203)		—		(80,131)
Total other (loss) income	(16,939)		54		—		(16,885)
Net loss	$	(19,115)	$	(2,032)	$	—	$	(21,147)

Total assets and goodwill related to the reporting segments as of September 30, 2021 and December 31, 2020 are as follows (in thousands):

	September 30, 2021
	Strategic Opportunistic Properties		Single-Family Homes		Hotels		Total
Total assets	$	1,274,093	$	202,349	$	152,686	$	1,629,128
Goodwill (1)	9,489		—		4,045		13,534

	December 31, 2020
	Strategic Opportunistic Properties		Single-Family Homes		Hotels		Total
Total assets	$	1,404,509	$	182,486	$	144,670	$	1,731,665
Goodwill	12,297		—		4,045		16,342

_____________________

(1) During the three and nine months ended September 30, 2021, the Company recorded impairment charges on goodwill of $2.8 million related to the Strategic Opportunistic Properties segment.

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PORT MEZZANINE EQUITY

9 Months Ended

Sep. 30, 2021

Equity [Abstract]

PORT MEZZANINE EQUITY

PORT MEZZANINE EQUITY

The Company has authorized and issued preferred stock from a subsidiary. The Company has elected to use the measurement method described under ASC 480-10-S99-3A, paragraph 15(b), resulting in the common and preferred stock being classified in mezzanine equity and measured based on the estimated future redemption value as of September 30, 2021.

On November 6, 2019, PORT issued 15,000 shares out of its available 25,000,000 shares of Series A Cumulative Convertible Redeemable Preferred Stock for gross proceeds of $1,000 per share resulting in net proceeds of $15.0 million before issuance costs. The shares provide for an annual dividend of 6% payable quarterly, which increases to 12% if all shares are not redeemed by the Company immediately following the redemption date. However, the 12% dividend rate does not apply until the aggregate number of shares selected for redemption do not constitute 10% or more of all outstanding shares. The shares may be redeemed by the holders beginning on November 4, 2021 for $1,000 per share plus all accrued but unpaid dividends through the redemption date, or after November 4, 2022 for $1,120 per share plus all accrued but unpaid dividends through the redemption date. In addition, after November 4, 2020, the shares are redeemable at the Company’s option, at any time or from time to time, at a redemption price of $1,120 per share plus unpaid accrued dividends. Additionally, if the common shares of PORT are publicly traded, the holder may elect to convert its preferred shares into PORT common shares based on a value of the preferred shares of $1,120 per share plus unpaid accrued dividends, and a conversion price of the common shares as stated in the agreement.

On November 22, 2019, PORT issued 125 shares of its Series B Cumulative Redeemable Preferred Stock for gross proceeds of $1,000 per share resulting in net proceeds of $0.1 million after issuance costs. The shares provide for an annual dividend of 12.5% payable semiannually. The shares may be redeemed by the holders for $1,050 per share until December 31, 2021 and for $1,000 per share thereafter.

The following is a reconciliation of PORT’s noncontrolling cumulative convertible redeemable preferred stock for the nine months ended September 30, 2021 and 2020 (dollars in thousands):

	Series A Preferred Stock			Series B Preferred Stock
	Shares	Amounts		Shares	Amounts
Balance, December 31, 2020	15,000	15,134		125	$	99
Dividends Available Upon Redemption	—	636		—	8
Dividends Paid	—	(636)		—	(8)
Balance, September 30, 2021	15,000	$	15,134	125	$	99

	Series A Preferred Stock			Series B Preferred Stock
	Shares	Amounts		Shares	Amounts
Balance, December 31, 2019	15,000	$	14,909	125	$	99
Dividends Available Upon Redemption	—	781		—	7
Dividends Paid	—	(556)		—	(7)
Balance, September 30, 2020	15,000	$	15,134	125	$	99

On July 1, 2020, the Company acquired, through its subsidiaries, Battery Point Trust Inc., a Maryland corporation (“Battery Point”). Battery Point is a real estate investment trust that owned, at the time of acquisition, 559 single-family rental homes throughout the Midwestern and Southeastern United States. All of these assets are held by the Company through its subsidiary, PORT OP.

The Company acquired Battery Point by acquiring all the 1,000,000 outstanding shares of Battery Point common stock from BPT Holdings, LLC (“BPT Holdings”), a partially owned subsidiary of the Advisor. The Advisor is the Company’s external advisor and is owned and controlled by Keith D. Hall, the Company’s Chief Executive Officer and a director, and Peter M. McMillan, the Company’s President and Chairman of the Board. In exchange, BPT Holdings received 510,816 common equity units in PORT OP, approximately 4.5% of the outstanding common equity units, as of July 1, 2020. The value of the interests exchanged was estimated by the participants at approximately $3.0 million. The common equity units issued to BPT Holdings are redeemable after one year at the request of BPT Holdings for all or a portion of the common equity units at a redemption price equal to and in the form of cash based on the unit price of PORT OP. The following table summarizes the redeemable non-controlling interest activity related to the PORT OP equity units held by BPT Holdings for the nine months ended September 30, 2021 (in thousands):

December 31, 2020	$	2,968
Net loss attributable to redeemable noncontrolling interest	(113)
September 30, 2021	$	2,855

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RESTRICTED STOCK

9 Months Ended

Sep. 30, 2021

Share-based Payment Arrangement [Abstract]

SHARE-BASED COMPENSATION

RESTRICTED STOCKOn March 27, 2020, the Company issued 3,411,737 restricted shares to KBS Capital Advisors in connection with the subordinated performance fee due upon termination (the “Restricted Stock”), which were expected to vest on November 1, 2021. These shares are subject to non-compete provisions, which are treated as clawback contingent features and will be accounted for if and when the Restricted Stock is required to be returned.

On September 1, 2021, the Company, KBS Capital Advisors, and GKP entered into amendment no. 1 to the Restricted Stock Agreement (the "Amendment"). Pursuant to the Amendment, 1,157,448 shares of Restricted Stock ("Released Shares") were immediately vested and fully released from all restrictions and requirements of the Restricted Stock Agreement. Of the Released Shares, the Company repurchased 584,267 shares from KBS Capital Advisors for consideration of $5,655,705 in cash, or $9.68 per share. After a one year period, 513,467 of the Released Shares are eligible for redemption under the Company's share redemption program. Within a 60 day period following November 1, 2024, 59,714 of the Released Shares are to be redeemed by the Company, though prior to this date, the shares are eligible for redemption under the Company's share redemption program if all outstanding redemption requests from other stockholders have been satisfied.

Additionally, KBS Capital Advisors transferred 2,254,289 shares of Restricted Stock to GKP ("GKP Restricted Shares"). The GKP Restricted Shares vest on the earlier of the following: (i) July 1, 2026 or (ii) a change of control. Upon vesting, 50% of the GKP Restricted Shares are eligible for redemption based on the most recent board approved NAV per share, but requires approval of the Company's conflicts committee of the board of directors. The remaining 50% of the GKP Restricted Shares are eligible for redemption under the Company's share redemption program if all outstanding redemption requests from other stockholders have been satisfied.

The 59,714 of the Released Shares are classified as a liability instrument, accounted for as restricted stock payable on the accompanying consolidated balance sheets, and are recorded at the fair value of the shares at each reporting period until settled. The remaining Released Shares and GKP Restricted Shares are classified as an equity instrument and recorded in additional paid-in-capital on the accompanying balance sheet.

For the three and nine months ended September 30, 2021, the Company recorded $1.5 million subordinated performance fee due upon termination to affiliate expense to record the Restricted Stock at fair value. The fair value of the Restricted Stock was estimated based on the Company's NAV, adjusted for a lack of marketability discount. As of September 1, 2021, the Company measured the Restricted Stock at its fair value of $9.61 per share.

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COMMITMENTS AND CONTINGENCIES

9 Months Ended

Sep. 30, 2021

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

The Company owns two hotels, Springmaid Beach Resort and Q&C Hotel. The operation for both hotels are externally managed by third-party hotel operators, in which the Company have contractual obligations under the management agreements.

Management Agreement

Springmaid Beach Resort

The consolidated joint venture entity through which the Company leases the operations for Springmaid Beach Resort has entered into a management agreement with Doubletree Management LLC, an independent third-party hotel operator (the “Operator”) pursuant to which the Operator will manage and operate the Springmaid Beach Resort. The hotel was branded a DoubleTree by Hilton in September 2016 (the “Brand Commencement Date”).

The management agreement expires on December 31 of the 20th full year following the Brand Commencement Date. Upon mutual agreement, the parties may extend the term of the agreement for two successive periods of five years each. If an event of default occurs and continues beyond any applicable notice and cure periods set forth in the management agreement, the non-defaulting party generally has, among other remedies, the option of terminating the management agreement upon written notice to the defaulting party with no termination fee payable to Doubletree. In addition, the Company has the right to terminate the management agreement without the payment of a termination fee if Doubletree fails to achieve certain criteria relating to the performance of the hotel for any two consecutive years following the Brand Commencement Date. Under certain circumstances following a casualty or condemnation event, either party may terminate the management agreement provided Doubletree receives a termination fee an amount equal to two years of the base fee. The Company is permitted to terminate the management agreement upon a sale, lease or other transfer of the Springmaid Beach Resort any time so long as the buyer is approved for, and enters into a DoubleTree by Hilton franchise agreement for the balance of the agreement’s term. Finally, the Company is restricted in its ability to assign the management agreement upon a sale, lease or other transfer the Springmaid Beach Resort unless the transferee is approved by Doubletree to assume the management agreement.

Pursuant to the management agreement the Operator receives the following fees:

•a base fee, which is a percentage of total operating revenue that starts at 2.5% and increases to 2.75% in the second year following the Brand Commencement Date and further increases in the third year following the Brand Commencement Date and thereafter to 3.0%;

•a campground area management fee, which is 2% of any campground revenue;

•an incentive fee, which is 15% of operating cash flow (after deduction for capital renewals reserve and the joint venture owner’s priority, which is 12% of the joint venture owner’s total investment);

•an additional services fee in the amount reasonably determined by the Operator from time to time; and

•a brand services fee in the amount of 4% of total rooms revenue, and an other brand services fee in an amount determined by the Operator from time to time.

The management agreement contains specific standards for the operation and maintenance of the hotel, which allows the Operator to maintain uniformity in the system created by the Operator’s franchise. Such standards generally regulate the appearance of the hotel, quality and type of goods and services offered, signage and protection of trademarks. Compliance with the management agreement will require the Company to make significant expenditures for capital improvements.     

During the three and nine months ended September 30, 2021, the Company incurred $0.3 million and $0.6 million, respectively, of fees related to the management agreement, which are included in hotel expenses on the accompanying consolidated statements of operations.

Q&C Hotel

A wholly owned subsidiary of the joint venture through which the Company leases the operations of the Q&C Hotel (“Q&C Hotel Operations”) has entered into a management agreement with Encore Hospitality, LLC (“Encore Hospitality”), an affiliate of the joint venture partner, pursuant to which Encore Hospitality will manage and operate the Q&C Hotel. The management agreement expires on December 17, 2035. Subject to certain conditions, Encore Hospitality may extend the term of the agreement for a period of five years. Pursuant to the management agreement Encore Hospitality will receive a base fee, which is 4.0% of gross revenue (as defined in the management agreement). During both of the three and nine months ended September 30, 2021, the Company incurred $0.1 million of fees related to the management agreement, which are included in hotel expenses on the accompanying consolidated statements of operations.

Q&C Hotel Operations has also entered into a franchise agreement with Marriott International (“Marriott”) pursuant to which Marriott has granted Q&C Hotel Operations a limited, non-exclusive license to establish and operate the Q&C Hotel using certain of Marriott’s proprietary marks and systems and the hotel was branded as a Marriott Autograph Collection hotel on May 25, 2016. The franchise agreement will expire on May 25, 2041. Pursuant to the franchise agreement, Q&C Hotel Operations pays Marriott a monthly franchise fee equal to a percent of gross room sales on a sliding scale that is initially 2% and increases to 5% on May 25, 2019 and a monthly marketing fund contribution fee equal to 1.5% of the Q&C Hotel’s gross room sales. In addition, the franchise agreement requires the maintenance of a reserve account to fund all renovations at the hotel based on a percentage of gross revenues which starts at 2% of gross revenues and increases to 5% of gross revenues on May 25, 2019. Q&C Hotel Operations is also responsible for the payment of certain other fees, charges and costs as set forth in the agreement. During the three and nine months ended September 30, 2021, the Company incurred $0.1 million and $0.3 million, respectively, of fees related to the Marriott franchise agreement, which are included in hotel expenses on the accompanying consolidated statement of operations.

In addition, in connection with the execution of the franchise agreement, SOR US Properties II is providing an unconditional guarantee that all Q&C Hotel Operations’ obligations under the franchise agreement will be punctually paid and performed. Finally, certain transfers of the Q&C Hotel or an ownership interest therein are subject to a notice and consent requirement, and the franchise agreement further provides Marriott with a right of first refusal with respect to a sale of the hotel to a competitor of Marriott.

Lease Obligations

As of September 30, 2021, the Company’s lease and rights to a leasehold interest with respect to 210 West 31st Street, an office/retail building in New York, NY, which was accounted for as a finance lease, are included in the consolidated balance sheet as follows:

Right-of-use asset (included in real estate held for investment, net) (1)	$	8,074
Lease obligation (included in other liabilities)	9,339
Remaining lease term	92.5
Discount rate	4.8		%
The components of lease expense were as follows:
Interest on lease obligation for the nine months ended September 30, 2021	441

_____________________

(1) During the three and nine months ended September 30, 2021, the Company wrote down its right-of-use asset and recorded an impairment charge of $1.2 million on 210 West 31st Street.

As of September 30, 2021, the Company had a leasehold interest expiring on 2114. Future minimum lease payments owed by the Company under the finance lease as of September 30, 2021 are as follows (in thousands):

October 1, 2021 through December 31, 2021	$	90
2022	360
2023	360
2024	360
2025	393
Thereafter	52,563
Total expected minimum lease obligations	54,126
Less: Amount representing interest (1)	(44,787)
Present value of net minimum lease payments (2)	$	9,339

_____________________

(1) Interest includes the amount necessary to reduce the total expected minimum lease obligations to present value calculated at the Company’s incremental borrowing rate at acquisition.

(2) The present value of net minimum lease payments are presented in other liabilities in the accompanying consolidated balance sheets.

Paycheck Protection Program

On February 10, 2021 and March 13, 2021, the Company, through wholly owned subsidiaries of joint ventures, entered into Paycheck Protection Program Promissory (“PPP”) notes for the Q&C Hotel and Springmaid Beach Resort and received funding of $0.6 million and $1.8 million, respectively. The PPP notes are supplementing payroll costs for the third-party managers of the joint ventures. In accordance with the requirements of the CARES Act, at least 60% of the proceeds used to date have been used to pay eligible payroll costs. Under the requirements of the CARES Act, the loan may be fully forgiven if (i) proceeds are used to pay eligible payroll costs, rent, mortgage interest and utilities and (ii) full-time employee headcount and salaries are either maintained during the applicable twenty-four-week period after loan origination. Any forgiveness of the loan will be subject to approval by the U.S. Small Business Administration (the “SBA”) and will require the Company to apply for such treatment in the future. While the Company may apply for forgiveness of the PPP notes in accordance with the requirements and limitations under the CARES Act and the SBA regulations and requirements, no assurance can be given that any portion of the PPP notes will be forgiven. On July 6, 2021, the SBA approved the Company’s application for forgiveness of the Springmaid Beach Resort PPP note of $1.3 million. As of September 30, 2021 and December 31, 2020, the PPP notes balance was $2.4 million and $1.5 million and recorded in other liabilities in the accompanying consolidated balance sheets, respectively.

Economic Dependency

The Company is dependent on the Advisor for certain services that are essential to the Company, including the identification, evaluation, negotiation, origination, acquisition and disposition of investments; management of the daily operations of the Company’s investment portfolio; and other general and administrative responsibilities. In the event that the Advisor is unable to provide these services, the Company will be required to obtain such services from other sources.

Environmental

As an owner of real estate, the Company is subject to various environmental laws of federal, state and local governments. Although there can be no assurance, the Company is not aware of any environmental liability that could have a material adverse effect on its financial condition or results of operations as of September 30, 2021. However, changes in applicable environmental laws and regulations, the uses and conditions of properties in the vicinity of the Company’s properties, the activities of its tenants and other environmental conditions of which the Company is unaware with respect to the properties could result in future environmental liabilities.

COVID-19

During the first quarter of 2020 and subsequent periods, efforts to slow the spread of the COVID-19 virus have had a significant impact on the U.S. economy. The Company continues to follow the policies described in Note 2 to the Consolidated Financial Statements contained in our 2020 Annual Report on Form 10-K, including those related to impairments of real estate assets and investments in unconsolidated affiliates and collectability assessments on operating lease receivables. While our current analyses did not result in any material adjustments to amounts as of and during the nine months ended September 30, 2021, circumstances related to the COVID-19 pandemic may result in recording impairments, lease modifications and changes to collectability assessments in future periods.

Legal Matters

From time to time, the Company is a party to legal proceedings that arise in the ordinary course of its business. Management is not aware of any legal proceedings of which the outcome is probable or reasonably possible to have a material adverse effect on the Company’s results of operations or financial condition, which would require accrual or disclosure of the contingency and the possible range of loss. Additionally, the Company has not recorded any loss contingencies related to legal proceedings in which the potential loss is deemed to be remote.

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SUBSEQUENT EVENTS

9 Months Ended

Sep. 30, 2021

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS

The Company evaluates subsequent events up until the date the consolidated financial statements are issued.

Richardson Acquisition

On November 22, 2011, the Company, through an indirect wholly owned subsidiary, and JP-Richardson, LLC, an affiliate of JP Realty Partners, LTD., entered into an agreement to form a joint venture (the “Richardson Joint Venture”), and on November 23, 2011, the Richardson Joint Venture acquired a portfolio of office buildings and undeveloped land in Richardson, Texas (the “Richardson Portfolio”).

On October 18, 2021, the Company purchased the 10% minority interest in the Richardson Joint Venture, for $4.0 million from JP-Richardson, LLC. As of the date of purchase, the Richardson Portfolio consisted of four office buildings and 14 acres of undeveloped land. Subsequent to the purchase, the Company owned 100% of the Richardson Joint Venture.

Bond Offerings

Subsequent to September 30, 2021, the Company issued additional Series B Debentures in the amount of 536.4 million Israeli new Shekels par value through a public offering. The public offering Series B Debentures were issued at a 2.6% discount resulting in a total consideration of 522.4 million Israeli new Shekels ($166.8 million as of November 1, 2021). Additionally, the Company also issued 53.6 million Israeli new Shekels par value through a private offering. The private offering Series B Debentures were issued at a 3.1% discount resulting in a total consideration of 52.0 million Israeli new Shekels ($16.6 million as of November 1, 2021). The additional Series B Debentures have an equal level of security, pari passu, amongst themselves and between them and the initial Series B Debentures, which were initially issued, without any right of precedence or preference between any of them. The Series B Debentures were issued with the intent of using the proceeds and available cash on hand to payoff the outstanding Series A Debentures.

Notes Payable Refinancing

On October 7, 2021, the Company refinanced the Madison Square Mortgage Loan with a mortgage loan from an unaffiliated lender (the “Refinancing”) for borrowings up to $27.0 million. At closing, $17.5 million of the loan was funded and the remaining $9.5 million was available for future disbursements, subject to certain terms and conditions contained in the loan documents. The Refinancing is interest only with a fixed interest rate of 4.625% and has a maturity date of October 7, 2024. In connection with the execution of the Refinancing, Pacific Oak SOR Properties, LLC, a wholly owned subsidiary, is providing an unconditional guarantee and will be held liable, as a primary obligor for our obligations under the Refinancing.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

9 Months Ended

Sep. 30, 2021

Accounting Policies [Abstract]

Basis of Presentation

The accompanying unaudited consolidated financial statements and condensed notes thereto have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information as contained within the FASB Accounting Standards Codification (“ASC”) and the rules and regulations of the SEC, including the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, the unaudited consolidated financial statements do not include all of the information and footnotes required by GAAP for audited financial statements. In the opinion of management, the financial statements for the unaudited interim periods presented include all adjustments, which are of a normal and recurring nature, necessary for a fair and consistent presentation of the results for such periods. Operating results for the three and nine months ended September 30, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company, REIT Holdings, the Operating Partnership, Pacific Oak SOR BVI and their direct and indirect wholly owned subsidiaries, joint ventures in which the Company has a controlling interest and VIEs in which the Company is the primary beneficiary. All significant intercompany balances and transactions are eliminated in consolidation.

Liquidity

The Company generally finances its real estate investments using notes payable that are typically structured as non-recourse secured mortgages with maturities of approximately three to five years, with short term extension options available upon the Company meeting certain debt covenants. Each reporting period management evaluates the Company’s ability to continue as a going concern by evaluating conditions and events, including assessing the liquidity needs to satisfy upcoming debt obligations and the ability to satisfy debt covenant requirements. Through the normal course of operations and as further discussed in Note 7, the Company has $518.0 million of debt obligations coming due over the next 12-month period. In order to satisfy obligations as they mature, management will evaluate its options and may seek to utilize extension options available in the respective loan agreements, may make partial loan paydowns to meet debt covenant requirements, may seek to refinance certain debt instruments, may sell real estate equity securities to convert to cash to make principal payments, may market one or more properties for sale or may negotiate a turnover of one or more secured properties back to the related mortgage lender and remit payment for any associated loan guarantee. Historically, the Company has successfully refinanced debt instruments or utilized extension options in order to satisfy debt obligations as they come due and has not negotiated a turnover of a secured property back to a lender, though the Company may utilize such option if necessary. Based upon these plans, management believes it will have sufficient liquidity to satisfy its obligations as they come due and to continue as a going concern. There can be no assurance as to the certainty or timing of any of management’s plans. Refer to Note 7 for further discussion.

Use of Estimates

The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could materially differ from those estimates.

Restricted Cash

Restricted cash is comprised of lender impound reserve accounts on the Company’s borrowings for security deposits, property taxes, insurance, debt service obligations and capital improvements and replacements.

Redeemable Common Stock

The Company limits the dollar value of shares that may be redeemed under the share redemption program. During the nine months ended September 30, 2021, the Company had redeemed $29.6 million of common stock under the share redemption program. The Company processed all redemption requests received in good order and eligible for redemption through the September 2021 redemption date, except for 13,913,664 shares totaling $128.0 million due to the limitations under the share redemption program. The Company recorded $3.4 million and $0.9 million of redeemable common stock payable on the Company’s balance sheet as of September 30, 2021 and December 31, 2020, respectively, related to unfulfilled redemption requests received in good order under the share redemption program. Based on the twelfth amended and restated share redemption program, the Company has $3.2 million available for redemptions in the remainder of 2021, including shares that are redeemed in connection with a stockholders’ death, “qualifying disability” or “determination of incompetence,” subject to the limitations under the share redemption program.

Reclassifications

Certain amounts in the Company’s prior period consolidated financial statements have been reclassified to conform to the current period presentation. These reclassifications have not changed the results of operations of the prior period. During the nine months ended September 30, 2021, the Company sold one office property. As a result, certain assets and liabilities were reclassified as held for sale on the consolidated balance sheets for the prior period.

Segments

The Company operates in three reportable business segments: opportunistic real estate and real estate-related investments, single-family homes, and hotels, which is how the Company's management manages the business. In general, the Company intends to hold its investments in opportunistic real estate and other real estate-related assets for capital appreciation. Traditional performance metrics of opportunistic real estate and other real estate-related assets may not be meaningful as these investments are generally non-stabilized and do not provide a consistent stream of interest income or rental revenue. These investments exhibit similar long-term financial performance and have similar economic characteristics. These investments typically involve a higher degree of risk and do not provide a constant stream of ongoing cash flows. As a result, the Company’s management views opportunistic real estate and other real estate-related assets as similar investments and aggregated into one reportable business segment. The Company owns single-family homes in 17 markets and are all aggregated into one reportable business segment due to the homes being stabilized, having high occupancy rates and have similar economic characteristics. Additionally, the Company owns two hotels and are aggregated into one reportable business segment due to the nature of the hotel business with short-term stays.

Per Share Data

The Company applies the two-class method when computing its earnings per share. Net income per share for each class of stock is calculated by assuming all of the Company’s net income (loss) is distributed to each class of stock based on their contractual rights.

Unvested restricted stock that contains non-forfeitable rights to distributions (whether paid or unpaid) are considered participating securities and are included in the computation of earnings per share.

Basic earnings (loss) per share of common stock is calculated by dividing net income (loss) attributable to common stockholders by the weighted-average number of shares of common stock issued and outstanding during such period. Diluted earnings (loss) per share of common stock is computed based on the weighted-average number of shares of common stock outstanding during each period, plus potential common shares considered outstanding during the period, as long as the inclusion of such awards is not anti-dilutive. Potential common shares consist of unvested restricted stock, using the more dilutive of either the two-class method or the treasury stock method.

The noncontrolling Pacific Oak Residential Trust, Inc. (“PORT”) Series A convertible redeemable preferred shares are not included as the preferred shares are convertible contingent on the common stock of PORT being publicly traded. If PORT common stock becomes publicly traded, the per-share earnings of PORT will be included in the Company’s EPS computations based on the consolidated holdings of PORT.

The Company’s unvested Restricted Stock have been included in the calculation of basic and diluted earnings per share for both of the three and nine months ended September 30, 2021 and 2020, as the restriction is not contingent on any conditions except the passage of time.

Square Footage, Occupancy and Other Measures

Any references to square footage, occupancy or annualized base rent are unaudited and outside the scope of the Company’s independent registered public accounting firm’s review of the Company’s financial statements in accordance with the standards of the United States Public Company Accounting Oversight Board.

Recently Issued Accounting Standards Updates

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848) (“ASU No. 2020-04”) contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASU No. 2020-04 is optional and may be elected over time as reference rate reform activities occur. During the nine months ended September 30, 2021, the Company elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. For the period from January 1, 2020 (the earliest date the Company may elect to apply ASU No. 2020-04) through September 30, 2021, the Company did not have any contract modifications that meet the criteria described above, specifically contract modifications that have been modified from LIBOR to an alternative reference rate. The Company’s loan agreements, derivative instruments, and certain lease agreements use LIBOR as the current reference rate. For eligible contract modifications, the Company expects to adopt the temporary optional expedients described in ASU No. 2020-04. The optional expedients for hedging relationships described in ASU No. 2020-04 are not expected to have an impact to the Company, as the Company has elected to not designate its derivative instruments as a hedge.

Fair Value Measurement

Disclosure of the fair value of financial instruments is based on pertinent information available to the Company as of the period end and requires a significant amount of judgment. This has made the estimation of fair values difficult and, therefore, both the actual results and the Company’s estimate of value at a future date could be materially different.

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REAL ESTATE HELD FOR INVESTMENT (Tables)

9 Months Ended

Sep. 30, 2021

Real Estate [Abstract]

Schedule of Real Estate Investments

The following table summarizes the Company’s real estate held for investment as of September 30, 2021 and December 31, 2020, respectively (in thousands):

	September 30, 2021		December 31, 2020
Land	$	275,419	$	288,514
Buildings and improvements	1,018,850		1,019,329
Tenant origination and absorption costs	44,527		50,881
Total real estate, cost	1,338,796		1,358,724
Accumulated depreciation and amortization	(119,265)		(85,940)
Total real estate, net	$	1,219,531	$	1,272,784

Schedule of Future Minimum Rental Income for Company's Properties

As of September 30, 2021, the future minimum rental income from the Company’s properties, excluding apartment leases and single-family homes, under non-cancelable operating leases was as follows (in thousands):

October 1, 2021 through December 31, 2021	$	16,095
2022	61,448
2023	53,140
2024	45,750
2025	35,726
Thereafter	86,512
	$	298,671

Schedule of Real Estate by Industry

The Company’s highest tenant industry concentrations (greater than 10% of annualized base rent) were as follows:

Industry	Number of Tenants	Annualized Base Rent (1) (in thousands)		Percentage of Annualized Base Rent
Computer Systems Design	30	$	7,080	10.9	%
Professional, Scientific, and Technical Services	42	7,078		10.9	%
Public Administration	11	6,959		10.7	%
Insurance Carriers and Related Activities	16	6,801		10.5	%
Health Care and Social Assistance	25	6,799		10.5	%
		$	34,717	53.5	%

_____________________(1) Annualized base rent represents annualized contractual base rental income as of September 30, 2021, adjusted to straight-line any contractual tenant concessions (including free rent), rent increases and rent decreases from the lease’s inception through the balance of the lease term.

Schedule of Hotel Revenue and Expense

The following table provides detailed information regarding the Company’s hotel revenues and expenses for its two hotel properties during the three and nine months ended September 30, 2021 (in thousands):

	Three Months Ended September 30, 2021		Nine Months Ended September 30, 2021
Hotel revenues:
Room	$	9,396	$	18,508
Food, beverage and convention services	1,452		2,830
Campground	280		792
Other	1,025		2,448
Hotel revenues	$	12,153	$	24,578
Hotel expenses:
Room	$	1,681	$	3,992
Food, beverage and convention services	946		2,063
General and administrative	752		1,955
Sales and marketing	1,018		2,230
Repairs and maintenance	557		1,551
Utilities	333		824
Property taxes and insurance	566		1,600
Other	630		1,500
Hotel expenses	$	6,483	$	15,715

Schedule of Contract Liability

The following table summarizes the Company’s contract liabilities, which are comprised of hotel advanced deposits and deferred proceeds received from the buyers of the Park Highlands land sales (discussed below) and another developer for the value of land that was contributed to a master association that is consolidated by the Company, which are included in other liabilities in the accompanying consolidated balance sheets, as of September 30, 2021 and December 31, 2020 (in thousands):

	September 30, 2021		December 31, 2020
Contract liability	$	6,551	$	3,369
Revenue recognized in the period from:
Amounts included in contract liability at the beginning of the period	$	142	$	—

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TENANT ORIGINATION AND ABSORPTION COSTS, ABOVE-MARKET LEASE ASSETS AND BELOW-MARKET LEASE LIABILITIES (Tables)

9 Months Ended

Sep. 30, 2021

Tenant Origination and Absorption Costs, Above-Market Lease Assets and Below-Market Lease Liabilities [Abstract]

Tenant Origination and Absorption Costs, Above-Market Lease Assets and Below-Market Lease Liabilities

As of September 30, 2021 and December 31, 2020, the Company’s tenant origination and absorption costs, above-market lease assets and below-market lease liabilities (excluding fully amortized assets and liabilities and accumulated amortization) were as follows (in thousands):

	Tenant Origination and Absorption Costs				Above-Market Lease Assets				Below-Market Lease Liabilities
	September 30, 2021		December 31, 2020		September 30, 2021		December 31, 2020		September 30, 2021		December 31, 2020
Cost	$	44,527	$	50,881	$	4,138	$	4,159	$	(6,718)	$	(7,679)
Accumulated Amortization	(19,107)		(13,491)		(1,403)		(1,002)		2,282		1,882
Net Amount	$	25,420	$	37,390	$	2,735	$	3,157	$	(4,436)	$	(5,797)

Amortization of Tenant Origination and Absorption Costs, Above-Market Leases and Below-Market Lease Liabilities

Increases (decreases) in net income as a result of amortization of the Company’s tenant origination and absorption costs, above-market lease assets and below-market lease liabilities for the three and nine months ended September 30, 2021 and 2020 were as follows (in thousands):

	Tenant Origination and Absorption Costs				Above-Market Lease Assets				Below-Market Lease Liabilities
	For the Three Months Ended September 30,				For the Three Months Ended September 30,				For the Three Months Ended September 30,
	2021		2020		2021		2020		2021		2020
Amortization	$	(3,253)	$	(1,625)	$	(94)	$	(74)	$	388	$	194

	Tenant Origination and Absorption Costs				Above-Market Lease Assets				Below-Market Lease Liabilities
	For the Nine Months Ended September 30,				For the Nine Months Ended September 30,				For the Nine Months Ended September 30,
	2021		2020		2021		2020		2021		2020
Amortization	$	(12,397)	$	(4,965)	$	(421)	$	(241)	$	1,436	$	676

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REAL ESTATE EQUITY SECURITIES (Tables)

9 Months Ended

Sep. 30, 2021

Investments, Debt and Equity Securities [Abstract]

Schedule of Real Estate Equity Securities

The following table sets forth the number of shares owned by the Company and the related carrying value of the shares as of September 30, 2021 and December 31, 2020 (dollars in thousands):

	September 30, 2021			December 31, 2020
Real Estate Equity Security	Number of Shares Owned	Total Carrying Value		Number of Shares Owned	Total Carrying Value
Keppel Pacific Oak US REIT	64,165,352	$	50,370	64,165,352	$	44,274
Franklin Street Properties Corp.	6,915,089	32,086		6,915,089	30,219
Plymouth Industrial REIT, Inc.	613,085	13,947		1,560,660	23,410
	71,693,526	$	96,403	72,641,101	$	97,903

Gain (Loss) on Investments

The following summarizes the portion of gain and loss for the period related to real estate equity securities held during the three and nine months ended September 30, 2021 and 2020 (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Net (loss) gain recognized during the period on real estate equity securities	$	(2,614)	$	(6,527)	$	12,939	$	(21,620)
Less net gain recognized during the period on real estate equity securities sold during the period	—		—		(225)		(711)
Unrealized (loss) gain recognized during the reporting period on real estate equity securities held at the end of the period	$	(2,614)	$	(6,527)	$	12,714	$	(22,331)

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REAL ESTATE HELD FOR SALE (Tables)

9 Months Ended

Sep. 30, 2021

Discontinued Operations and Disposal Groups [Abstract]

Schedule of Assets and Liabilities of Real Estate Held-for-Sale

The following summary presents the major components of assets and liabilities related to real estate held for sale as of September 30, 2021 and December 31, 2020 (in thousands):

	September 30, 2021		December 31, 2020
Assets related to real estate held for sale
Real estate, cost	$	—	$	158,711
Accumulated depreciation and amortization	—		(18,472)
Real estate, net	—		140,239
Other assets	—		5,680
Total assets related to real estate held for sale	$	—	$	145,919
Liabilities related to real estate held for sale
Note payable, net	—		94,097
Other liabilities	—		669
Total liabilities related to real estate held for sale	$	—	$	94,766

Schedule of Revenue and Expenses of Real Estate Held-for-Sale

The following table summarizes certain revenue and expenses related to these properties for the three and nine months ended September 30, 2021 and 2020 (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Revenues
Rental income	$	1,085	$	3,318	$	8,660	$	9,998
Other operating income	51		265		520		792
Total revenues	$	1,136	$	3,583	$	9,180	$	10,790
Expenses
Operating, maintenance, and management	$	363	$	1,004	$	2,096	$	2,855
Real estate taxes and insurance	95		389		979		1,258
Asset management fees to affiliate	194		305		807		907
Depreciation and amortization	14		1,769		2,436		5,342
Interest expense	152		518		1,146		1,953
Total expenses	$	818	$	3,985	$	7,464	$	12,315

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NOTES AND BONDS PAYABLE (Tables)

9 Months Ended

Sep. 30, 2021

Notes and Bonds Payable [Abstract]

Schedule of Long-term Debt Instruments

As of September 30, 2021 and December 31, 2020, the Company’s notes and bonds payable, including notes payable related to real estate held for sale, consisted of the following (dollars in thousands):

	Book Value as of September 30, 2021		Book Value as of December 31, 2020		Contractual Interest Rate as of September 30, 2021	Effective Interest Rate at September 30, 2021 (1)	Payment Type (2)	Maturity Date (3)
Richardson Portfolio Mortgage Loan	$	28,685	$	35,832	One-Month LIBOR + 2.50%	2.58%	Principal & Interest	11/01/2021 (4)
Park Centre Mortgage Loan	26,185		26,185		One-Month LIBOR + 1.75%	1.83%	Interest Only	06/27/2022
1180 Raymond Mortgage Loan (5)	29,548		29,848		One-Month LIBOR + 2.50% (6)	3.50%	Principal & Interest	12/01/2021
1180 Raymond Bond Payable	5,705		5,870		6.50%	6.50%	Principal & Interest	09/01/2036
Pacific Oak SOR (BVI) Holdings, Ltd. Series A Debentures (7)	197,901		181,198		4.25%	4.25%	(7)	03/01/2023
Pacific Oak SOR (BVI) Holdings, Ltd. Series B Debentures (7)	78,794		79,078		3.93%	3.93%	(7)	01/31/2026
Crown Pointe Mortgage Loan (5)	52,508		53,072		One-Month LIBOR + 2.60%	2.70%	Principal & Interest	02/13/2022
City Tower Mortgage Loan	—		94,167		(8)	(8)	(8)	(8)
The Marq Mortgage Loan	62,066		62,257		One-Month LIBOR + 1.55%	1.63%	Interest Only	06/06/2022
Eight & Nine Corporate Centre Mortgage Loan	48,695		47,066		One-Month LIBOR + 1.60%	1.68%	Principal & Interest	06/08/2022
Georgia 400 Center Mortgage Loan	61,154		59,690		One-Month LIBOR + 1.55%	1.63%	Interest Only	05/22/2023
PORT Mortgage Loan 1	51,302		51,362		4.74%	4.74%	Interest Only	10/01/2025
PORT Mortgage Loan 2	10,523		10,523		4.72%	4.72%	Interest Only	03/01/2026
PORT Mortgage Loan 3 (9)	—		12,000		(9)	(8)	(8)	(8)
Battery Point Trust Mortgage Loan (9)	—		38,608		(8)	(8)	(8)	(8)
MetLife Loan (9)	60,000		—		3.90%	3.90%	Interest Only	04/10/2026
Springmaid Beach Resort Mortgage Loan	55,839		57,015		One-month LIBOR + 2.25% (10)	5.75%	Principal & Interest	08/12/2022
Q&C Hotel Mortgage Loan	25,000		25,000		One-month LIBOR + 2.50% (11)	4.50%	Principal & Interest	12/23/2022
Lincoln Court Mortgage Loan (5)	34,723		34,416		One-month LIBOR + 1.75%	1.83%	Principal & Interest	12/01/2021
Lofts at NoHo Commons Mortgage Loan	74,536		74,536		One-month LIBOR + 2.18% (12)	3.93%	Interest Only	09/09/2022
210 West 31st Street Mortgage Loan (5)	10,275		15,050		One-month LIBOR + 3.00%	3.08%	Principal & Interest	06/16/2022
Oakland City Center Mortgage Loan	96,404		96,782		One-month LIBOR + 1.75%	1.83%	Principal & Interest	09/01/2022
Madison Square Mortgage Loan (13)	20,891		16,822		One-month LIBOR + 4.05%	5.05%	Interest Only	10/09/2021
Total Notes and Bonds Payable principal outstanding	1,030,734		1,106,377
Discount on Notes and Bonds Payable, net (14)	(2,249)		(2,851)
Deferred financing costs, net	(4,707)		(4,458)
Total Notes and Bonds Payable, net	$	1,023,778	$	1,099,068

_____________________

(1) Contractual interest rate represents the interest rate in effect under the loan as of September 30, 2021. Effective interest rate is calculated as the actual interest rate in effect as of September 30, 2021 (consisting of the contractual interest rate and contractual floor rates), using interest rate indices at September 30, 2021, where applicable.

(2) Represents the payment type required under the loan as of September 30, 2021. Certain future monthly payments due under this loan also include amortizing principal payments. For more information of the Company’s contractual obligations under its notes and bonds payable, see five-year maturity table below.

(3) Represents the initial maturity date or the maturity date as extended as of September 30, 2021; subject to certain conditions, the maturity dates of certain loans may be extended beyond the date shown.

(4) Subsequent to September 30, 2021, the Company extended the maturity of the Richardson Portfolio Mortgage Loan to November 1, 2022.

(5) The Company’s notes and bond’s payable are generally non-recourse. These mortgage loans have guarantees over certain balances whereby the Company would be required to make guaranteed payments in the event that the Company turned the property over to the lender. The guarantees are typically 25% of the outstanding loan balance. As of September 30, 2021, the guaranteed amount in the aggregate was $39.5 million.

(6) This mortgage loan has a LIBOR floor of 1%.

(7) See “ – Israeli Bond Financings” below.

(8) On July 27, 2021, in connection with the disposition of City Tower, the Company repaid the $98.1 million outstanding principal balance due under the City Tower Mortgage Loan.

(9) On April 6, 2021, the Company refinanced the PORT Mortgage Loan 3 and the Battery Point Trust Mortgage Loan with a mortgage loan from MetLife for borrowings up to $60.0 million.

(10) The interest rate is variable at the higher of one-month LIBOR + 2.25% or 5.77%.

(11) The interest rate is variable at the higher of one-month LIBOR + 2.5% or 4.5%. Principal payments will commence on January 1, 2022.

(12) The LIBOR rate is variable at the higher of one-month LIBOR or 1.75%.

(13) On October 7, 2021, the Company refinanced the Madison Square Mortgage Loan with a mortgage loan from an unaffiliated lender for borrowings up to $27.0 million. The new loan matures on October 7, 2024 and has a fixed interest rate of 4.625%. See Note 17, “Subsequent Events” for a further discussion.

(14) Represents the unamortized premium/discount on notes and bonds payable due to the above- and below-market interest rates when the debt was assumed. The discount/premium is amortized over the remaining life of the notes and bonds payable.

Schedule of Maturities of Long-term Debt

The following is a schedule of maturities, including principal amortization payments, for all notes and bonds payable outstanding as of September 30, 2021 (in thousands):

October 1, 2021 through December 31, 2021	$	116,538
2022	548,061
2023	160,359
2024	26,535
2025	77,858
Thereafter	101,383
	$	1,030,734

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DERIVATIVE INSTRUMENTS (Tables)

9 Months Ended

Sep. 30, 2021

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Interest Rate Derivatives

The following table summarizes the notional amount and other information related to the Company’s foreign currency collars as of September 30, 2021 and December 31, 2020. The notional amount is an indication of the extent of the Company’s involvement in each instrument at that time, but does not represent exposure to credit, interest rate or market risks (currency in thousands):

	September 30, 2021		December 31, 2020		Strike Price	Trade Date	Maturity Date
Derivative Instruments	Number of Instruments	Notional Amount	Number of Instruments	Notional Amount
Derivative instruments not designated as hedging instruments
Foreign currency collar	1	194,045 ILS	—	—	3.16 - 3.29 ILS - USD	06/14/2021	11/22/2021

The following table summarizes the notional amounts and other information related to the Company’s derivative instruments as of September 30, 2021. The notional amount is an indication of the extent of the Company’s involvement in the instrument at that time, but does not represent exposure to credit, interest rate or market risks (dollars in thousands):

Derivative Instrument	Effective Date	Maturity Date	Notional Value		Reference Rate
Interest rate cap	10/15/2020	10/15/2021	$	26,200	One-month LIBOR at 3.00%
Interest rate cap	02/12/2021	02/14/2022	$	47,715	One-month LIBOR at 3.00%
Interest rate cap	09/15/2021	09/15/2022	$	75,950	One-month LIBOR at 3.50%
Interest rate cap	06/21/2019	05/22/2023	$	51,252	One-month LIBOR at 4.00%

Schedule of Derivative Instruments in Statement of Financial Position

The following table sets forth the fair value of the Company’s derivative instruments as well as their classification on the consolidated balance sheets as of September 30, 2021 and December 31, 2020 (dollars in thousands):

		September 30, 2021			December 31, 2020
Derivative Instruments	Balance Sheet Location	Number of Instruments	Fair Value		Number of Instruments	Fair Value
Derivative instruments not designated as hedging instruments
Interest rate caps	Prepaid expenses and other assets	4	$	2	7	$	1
Foreign currency collar	Other liabilities	1	$	(44)	—	$	—

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FAIR VALUE DISCLOSURES (Tables)

9 Months Ended

Sep. 30, 2021

Fair Value Disclosures [Abstract]

Schedule of Face Value, Carrying Amounts and Fair Value

The following were the face values, carrying amounts and fair values of the Company’s financial instruments as of September 30, 2021 and December 31, 2020, which carrying amounts do not approximate the fair values (in thousands):

	September 30, 2021						December 31, 2020
	Face Value		Carrying Amount		Fair Value		Face Value		Carrying Amount		Fair Value
Financial liabilities (Level 3):
Notes and bond payable	$	754,039	$	751,064	$	752,417	$	846,101	$	842,112	$	846,608
Financial liabilities (Level 1):
Pacific Oak SOR (BVI) Holdings, Ltd. Series A Debentures	$	197,901	$	195,428	$	197,437	$	181,198	$	179,786	$	178,450
Pacific Oak SOR (BVI) Holdings, Ltd. Series B Debentures	$	78,794	$	77,286	$	76,899	$	79,078	$	77,170	$	69,433

Fair Value, Assets Measured on Recurring Basis

As of September 30, 2021, the Company measured the following assets at fair value (in thousands):

			Fair Value Measurements Using
	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Recurring Basis:
Real estate equity securities	$	96,403	$	96,403	$	—	$	—
Asset derivative - interest rate caps	$	2	$	—	$	2	$	—
Liability derivative - foreign currency collar	$	(44)	$	—	$	(44)	$	—

As of December 31, 2020, the Company measured the following assets and liabilities at fair value (in thousands):

			Fair Value Measurements Using
	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Recurring Basis:
Real estate equity securities	$	96,403	$	96,403	$	—	$	—
Asset derivative - interest rate caps	$	2	$	—	$	2	$	—

As of September 30, 2021, the Company measured the following assets at fair value on a nonrecurring basis (in thousands):

			Fair Value Measurements Using
	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Nonrecurring Basis:
Impaired real estate	$	97,600	$	—	$	—	$	97,600
Impaired goodwill	$	13,534	$	—	$	—	$	13,534

Schedule of Goodwill

Balance as of December 31, 2020	$	16,342
Impairment loss	(2,808)
Balance as of September 30, 2021	$	13,534

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RELATED PARTY TRANSACTIONS (Tables)

9 Months Ended

Sep. 30, 2021

Related Party Transactions [Abstract]

Schedule of Related Party Costs

Pursuant to the terms of these agreements, summarized below are the related-party costs incurred by the Company for the three and nine months ended September 30, 2021 and 2020, respectively, and any related amounts payable as of September 30, 2021 and December 31, 2020 (in thousands):

	Incurred								Payable as of
	Three Months Ended September 30,				Nine Months Ended September 30,				September 30, 2021		December 31, 2020
Expensed	2021		2020		2021		2020
Asset management fees	$	3,422	$	2,426	$	10,802	$	6,867	$	2,132	$	2,837
Property management fees (1)	119		114		362		114		—		—
Reimbursable operating expenses (2)	—		56		—		148		—		—
Disposition fees (3)	692		—		1,196		—		—		—
Change in subordinated performance fee due upon termination to affiliate (4)	1,545		(1,121)		1,745		(814)		(3)		(3)
Capitalized
Acquisition fees on real estate equity securities	—		—		—		122		—		5
Acquisition fees on real estate (5)	—		—		20		171		20		—
Acquisition fee on investment in unconsolidated entities	—		—		45		—		—		—
	$	5,778	$	1,475	$	14,170	$	6,608	$	2,152	$	2,842

_____________________

(1) Property management fees are for single-family homes under PORT and paid to DayMark. These fees are included in the line item “Operating, maintenance, and management cost” in the consolidated statement of operations.

(2) The Advisor may seek reimbursement for certain employee costs under the Advisory Agreement. The Company will not reimburse for employee costs in connection with services for which the Advisor earns acquisition, origination or disposition fees (other than reimbursement of travel and communication expenses) or for the salaries or benefits the Advisor or its affiliates may pay to the Company’s executive officers. In addition to the amounts above, the Company reimburses the Advisor for certain of the Company’s direct costs incurred from third parties that were initially paid by the Advisor on behalf of the Company.

(3) Disposition fees with respect to real estate sold are included in the gain on sale of real estate in the accompanying consolidated statements of operations.

(4) Change in the fair value of the Restricted Stock related to the termination of the former advisory agreement with KBS Capital Advisors. See “Subordinated Performance Fee Due Upon Termination to KBS Capital Advisors”, below, for more details.

(5) Acquisition fees associated with asset acquisitions are capitalized, while costs associated with business combinations expensed as incurred.

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INVESTMENT IN UNCONSOLIDATED ENTITIES (Tables)

9 Months Ended

Sep. 30, 2021

Equity Method Investments and Joint Ventures [Abstract]

Schedule of Investments in Unconsolidated Joint Ventures

As of September 30, 2021 and December 31, 2020, the Company’s investments in unconsolidated entities were composed of the following (dollars in thousands):

	Number of Properties as of September 30, 2021			Investment Balance at
Joint Venture		Location	Ownership %	September 30, 2021		December 31, 2020
110 William Joint Venture	1	New York, New York	60.0%	$	—	—
353 Sacramento Joint Venture	1	San Francisco, California	55.0%	50,769		49,665
Pacific Oak Opportunity Zone Fund I	3	Various	N/A	27,638		24,996
PORT II OP LP	117	Various	89.7%	5,447		5,005
				$	83,854	$	79,666

Summarized financial information for the 110 William Joint Venture follows (in thousands):

	September 30, 2021		December 31, 2020
Assets:
Real estate assets, net of accumulated depreciation and amortization	$	232,201	$	246,166
Other assets	34,200		44,004
Total assets	$	266,401	$	290,170
Liabilities and equity:
Notes payable, net	$	318,280	$	316,421
Other liabilities	3,003		5,532
Partners’ deficit	(54,882)		(31,783)
Total liabilities and equity	$	266,401	$	290,170

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Revenues	$	5,729	$	10,005	$	18,721	$	26,604
Expenses:
Operating, maintenance, and management	2,359		2,096		6,212		5,994
Real estate taxes and insurance	1,698		1,935		5,588		5,580
Depreciation and amortization	2,962		3,139		19,071		8,721
Interest expense	3,548		4,125		10,986		12,093
Total expenses	10,567		11,295		41,857		32,388
Total other income	11		12		35		50
Net loss	$	(4,827)	$	(1,278)	$	(23,101)	$	(5,734)
Company’s share of net loss (1)	$	(2,896)	$	(767)	$	(13,861)	$	(3,440)

_____________________

(1) The Company suspended the equity method of accounting and did not record the Company's share of losses for both of the three and nine months ended September 30, 2021 and 2020.

Summarized financial information for the 353 Sacramento Joint Venture follows (in thousands):

	September 30, 2021		December 31, 2020
Assets:
Real estate assets, net of accumulated depreciation and amortization	$	178,874	$	182,318
Other assets	27,539		19,810
Total assets	$	206,413	$	202,128
Liabilities and equity:
Notes payable, net	$	110,000	$	109,783
Other liabilities	6,335		7,639
Partners’ capital	90,078		84,706
Total liabilities and equity	$	206,413	$	202,128

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Revenues	$	3,373	$	5,520	$	13,252	$	15,771
Expenses:
Operating, maintenance, and management	862		932		2,490		2,450
Real estate taxes and insurance	848		755		2,768		2,235
Depreciation and amortization	1,850		1,894		5,574		5,135
Interest expense	960		948		2,700		3,290
Total expenses	4,520		4,529		13,532		13,110
Net income	$	(1,147)	$	991	(280)		$	2,661
Company’s equity in (loss) income of unconsolidated joint venture	$	(592)	$	583	$	(40)	$	1,576

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SUPPLEMENTAL CASH FLOW AND SIGNIFICANT NONCASH TRANSACTION DISCLOSURES (Tables)

9 Months Ended

Sep. 30, 2021

Supplemental Cash Flow and Significant Noncash Transaction Disclosures [Abstract]

Schedule of Cash Flow, Supplemental Disclosures

Supplemental cash flow and significant noncash transaction disclosures were as follows (in thousands):

	Nine Months Ended September 30,
	2021		2020
Supplemental Disclosure of Cash Flow Information:
Interest paid, net of capitalized interest of $1,579 and $2,368 for the nine months ended September 30, 2021 and 2020, respectively	$	29,220	$	18,945
Supplemental Disclosure of Significant Noncash Transactions:
Accrued improvements to real estate	1,721		2,393
Redeemable common stock payable	3,385		262
Distributions paid to common stockholders through common stock issuances pursuant to the dividend reinvestment plan	—		262
Accrued preferred dividends	225		226
PPP notes forgiveness	1,500		—
Assets and liabilities assumed in connection with Battery Point acquisition:
Real estate	—		56,148
Notes payable	—		36,003
Other assets	—		21
Other liabilities	—		355
Redeemable non-controlling interest	—		3,024
Series A-3 preferred units payable	—		16,000

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REPORTING SEGMENTS (Tables)

9 Months Ended

Sep. 30, 2021

Segment Reporting [Abstract]

Schedule of Segment Reporting Information, by Segment

The selected financial information for reporting segments for the three and nine months ended September 30, 2021 and 2020 are as follows (in thousands):

	Three Months Ended September 30, 2021
	Strategic Opportunistic Properties		Single-Family Homes		Hotels		Total
Total revenues	$	28,050	$	5,566	$	12,153	$	45,769
Total expenses	(52,891)		(6,398)		(8,948)		(68,237)
Total other (loss) income	(4,435)		81		1,276		(3,078)
Net (loss) income	$	(29,276)	$	(751)	$	4,481	$	(25,546)
	Nine Months Ended September 30, 2021
	Strategic Opportunistic Properties		Single-Family Homes		Hotels		Total
Total revenues	$	88,187	$	16,436	$	24,578	$	129,201
Total expenses	(128,418)		(19,581)		(22,924)		(170,923)
Total other income	42,527		159		1,289		43,975
Net income (loss)	$	2,296	$	(2,986)	$	2,943	$	2,253

	Three Months Ended September 30, 2020
	Strategic Opportunistic Properties		Single-Family Homes		Hotels		Total
Total revenues	$	22,548	$	5,197	$	—	$	27,745
Total expenses	(26,285)		(5,969)		—		(32,254)
Total other (loss) income	(2,863)		4		—		(2,859)
Net loss	$	(6,600)	$	(768)	$	—	$	(7,368)
	Nine Months Ended September 30, 2020
	Strategic Opportunistic Properties		Single-Family Homes		Hotels		Total
Total revenues	$	64,752	$	11,117	$	—	$	75,869
Total expenses	(66,928)		(13,203)		—		(80,131)
Total other (loss) income	(16,939)		54		—		(16,885)
Net loss	$	(19,115)	$	(2,032)	$	—	$	(21,147)

Total assets and goodwill related to the reporting segments as of September 30, 2021 and December 31, 2020 are as follows (in thousands):

	September 30, 2021
	Strategic Opportunistic Properties		Single-Family Homes		Hotels		Total
Total assets	$	1,274,093	$	202,349	$	152,686	$	1,629,128
Goodwill (1)	9,489		—		4,045		13,534

	December 31, 2020
	Strategic Opportunistic Properties		Single-Family Homes		Hotels		Total
Total assets	$	1,404,509	$	182,486	$	144,670	$	1,731,665
Goodwill	12,297		—		4,045		16,342

_____________________

(1) During the three and nine months ended September 30, 2021, the Company recorded impairment charges on goodwill of $2.8 million related to the Strategic Opportunistic Properties segment.

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PORT MEZZANINE EQUITY (Tables)

9 Months Ended

Sep. 30, 2021

Equity [Abstract]

Schedule of Stock by Class

The following is a reconciliation of PORT’s noncontrolling cumulative convertible redeemable preferred stock for the nine months ended September 30, 2021 and 2020 (dollars in thousands):

	Series A Preferred Stock			Series B Preferred Stock
	Shares	Amounts		Shares	Amounts
Balance, December 31, 2020	15,000	15,134		125	$	99
Dividends Available Upon Redemption	—	636		—	8
Dividends Paid	—	(636)		—	(8)
Balance, September 30, 2021	15,000	$	15,134	125	$	99

	Series A Preferred Stock			Series B Preferred Stock
	Shares	Amounts		Shares	Amounts
Balance, December 31, 2019	15,000	$	14,909	125	$	99
Dividends Available Upon Redemption	—	781		—	7
Dividends Paid	—	(556)		—	(7)
Balance, September 30, 2020	15,000	$	15,134	125	$	99

Schedule of Redeemable Non-controlling Interest Activities

The following table summarizes the redeemable non-controlling interest activity related to the PORT OP equity units held by BPT Holdings for the nine months ended September 30, 2021 (in thousands):

December 31, 2020	$	2,968
Net loss attributable to redeemable noncontrolling interest	(113)
September 30, 2021	$	2,855

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COMMITMENTS AND CONTINGENCIES (Tables)

9 Months Ended

Sep. 30, 2021

Commitments and Contingencies Disclosure [Abstract]

Schedule of Lease Cost

As of September 30, 2021, the Company’s lease and rights to a leasehold interest with respect to 210 West 31st Street, an office/retail building in New York, NY, which was accounted for as a finance lease, are included in the consolidated balance sheet as follows:

Right-of-use asset (included in real estate held for investment, net) (1)	$	8,074
Lease obligation (included in other liabilities)	9,339
Remaining lease term	92.5
Discount rate	4.8		%
The components of lease expense were as follows:
Interest on lease obligation for the nine months ended September 30, 2021	441

_____________________

(1) During the three and nine months ended September 30, 2021, the Company wrote down its right-of-use asset and recorded an impairment charge of $1.2 million on 210 West 31st Street.

Schedule of Finance Lease, Liability, Fiscal Year Maturity

As of September 30, 2021, the Company had a leasehold interest expiring on 2114. Future minimum lease payments owed by the Company under the finance lease as of September 30, 2021 are as follows (in thousands):

October 1, 2021 through December 31, 2021	$	90
2022	360
2023	360
2024	360
2025	393
Thereafter	52,563
Total expected minimum lease obligations	54,126
Less: Amount representing interest (1)	(44,787)
Present value of net minimum lease payments (2)	$	9,339

_____________________

(1) Interest includes the amount necessary to reduce the total expected minimum lease obligations to present value calculated at the Company’s incremental borrowing rate at acquisition.

(2) The present value of net minimum lease payments are presented in other liabilities in the accompanying consolidated balance sheets.

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ORGANIZATION (Details)														3 Months Ended		9 Months Ended		36 Months Ended	142 Months Ended
	Sep. 01, 2021 USD ($) shares	Mar. 04, 2021 USD ($)	Mar. 04, 2021 ILS (₪)	Oct. 05, 2020 $ / shares shares	Mar. 27, 2020 shares	Feb. 16, 2020 USD ($)	Jan. 22, 2020 USD ($)	Nov. 01, 2019	Mar. 08, 2016 ILS (₪)	Mar. 08, 2016 USD ($)	Mar. 08, 2016 ILS (₪)	Mar. 07, 2016 ILS (₪)	Mar. 01, 2016 ILS (₪)	Sep. 30, 2021 USD ($) a property investment portfolio unit $ / shares shares	Sep. 30, 2020 USD ($) shares	Sep. 30, 2021 USD ($) a property investment portfolio unit $ / shares shares	Sep. 30, 2020 USD ($) shares	Nov. 14, 2012 USD ($) shares	Sep. 30, 2021 USD ($) a property investment portfolio unit $ / shares shares	Dec. 31, 2020 USD ($) $ / shares shares	Feb. 19, 2020 USD ($) property instrument investment	Feb. 16, 2020 ILS (₪)	Mar. 02, 2016 ILS (₪)	Dec. 18, 2015 shares	Oct. 23, 2012 USD ($) shares	Dec. 29, 2011 USD ($) shares	Jan. 08, 2009 shares
Organizational Structure [Line Items]
Common stock, shares authorized (in shares)														1,000,000,000		1,000,000,000			1,000,000,000	1,000,000,000
Common stock, shares issued (in shares)														94,264,402		94,264,402			94,264,402	98,054,582					55,249	220,994
Period of termination of advisory agreement without cause or penalty								60 days
Common stock, par value (in dollars per share) | $ / shares														$ 0.01		$ 0.01			$ 0.01	$ 0.01
Issuance of common stock | $																	$ 262,000	$ 561,700,000
Shares of common stock sold under dividend reinvestment plan, value | $																			$ 76,500,000
Redemptions of common stock | $														$ 28,117,000	$ 6,000	$ 29,552,000	830,000		317,300,000
Common stock, value, issued | $														$ 942,000		$ 942,000			$ 942,000	$ 979,000					$ 500,000	$ 2,000,000
Preferred stock, shares issued (in shares)														0		0			0	0
Number of investments in unconsolidated joint venture | investment														4		4			4
Number of investments in equity securities | investment														3		3			3
Preferred stock, par value (in dollars per share) | $ / shares				$ 0.01										$ 0.01		$ 0.01			$ 0.01	$ 0.01
Conversion of stock, shares issued (in shares)				28,973,905
Real estate loans acquired | $														$ 0	$ 56,148,000	$ 0	$ 56,148,000		$ 0
POSOR II
Organizational Structure [Line Items]
Number of investments in unconsolidated joint venture | instrument																					2
Number of investments in equity securities | investment																					2
Number of investments in consolidated joint venture | instrument																					1
Real estate loans acquired | $																					$ 331,800,000
Office Properties
Organizational Structure [Line Items]
Number of real estate properties consolidated | property														8		8			8
Number of real estate properties | property														8		8			8
Office Properties | POSOR II
Organizational Structure [Line Items]
Number of real estate properties consolidated | property																					3
Office Portfolio
Organizational Structure [Line Items]
Number of real estate properties consolidated | portfolio														1		1			1
Office Buildings, Portfolio
Organizational Structure [Line Items]
Number of real estate properties consolidated | property														4		4			4
Undeveloped Land, Portfolio
Organizational Structure [Line Items]
Real estate area of undeveloped land | a														14		14			14
Apartment Property
Organizational Structure [Line Items]
Number of real estate properties consolidated | property														2		2			2
Apartment Property | POSOR II
Organizational Structure [Line Items]
Number of real estate properties consolidated | property																					1
Undeveloped Land
Organizational Structure [Line Items]
Real estate area of undeveloped land | a														800		800			800
Number of investments in real estate | investment														3		3			3
Residential Home Portfolio
Organizational Structure [Line Items]
Number of real estate properties | portfolio														1		1			1
Number of units in real estate property | unit														1,806		1,806			1,806
Hotel
Organizational Structure [Line Items]
Number of real estate properties | property														2		2			2
Hotel | POSOR II
Organizational Structure [Line Items]
Number of real estate properties | property																					2
Office/ Retail Property
Organizational Structure [Line Items]
Number of real estate properties | property														1		1			1
Office/ Retail Property | POSOR II
Organizational Structure [Line Items]
Number of real estate properties | property																					1
Series A Debentures | Bonds Payable
Organizational Structure [Line Items]
Maximum borrowing capacity | ₪			₪ 250,000,000																				₪ 1,000,000,000
Contractual interest rate, percentage																							4.25%
Proceeds from issuance of debt		$ 74,200,000	₪ 245,300,000						₪ 970,200,000	$ 249,200,000	₪ 970,200,000	₪ 127,700,000	₪ 842,500,000
Contractual Interest Rate																							4.25%
Series B Debentures | Bonds Payable
Organizational Structure [Line Items]
Maximum borrowing capacity						$ 74,100,000																₪ 254,100,000
Contractual interest rate, percentage						3.93%																3.93%
Contractual Interest Rate						3.93%																3.93%
Principal of installment payments as percent of face amount						33.33%
Percent of discount at issuance			1.90%
Restricted Stock
Organizational Structure [Line Items]
Number of shares purchased (in shares)	584,267
Stock repurchased during period | $	$ 5,655,705
Special Dividends
Organizational Structure [Line Items]
Common stock, shares issued (in shares)														25,976,746		25,976,746			25,976,746
Maximum | Series A Debentures | Bonds Payable
Organizational Structure [Line Items]
Contractual interest rate, percentage																							4.25%
Contractual Interest Rate																							4.25%
Common Stock
Organizational Structure [Line Items]
Shares registered in primary offering (in shares)																											100,000,000
Shares registered for sale under dividend reinvestment plan (in shares)																											40,000,000
Issuance of common stock (in shares)																	24,645	56,584,976
Shares of common stock sold under dividend reinvestment plan, (in shares)																			6,851,969
Redemptions of common stock (in shares)														3,641,866	601	3,790,180	78,131		27,247,458
Redemptions of common stock | $														$ 37,000		$ 37,000
Common Stock | Minimum
Organizational Structure [Line Items]
Stock offering, shares authorized for issuance (in shares)																											250,000
Common Stock | Maximum
Organizational Structure [Line Items]
Stock offering, shares authorized for issuance (in shares)																											140,000,000
Stock offering, shares authorized for issuance | $							$ 1,000,000,000
POSOR II
Organizational Structure [Line Items]
Merger, common stock conversion ratio				96.43%
Preferred stock, par value (in dollars per share) | $ / shares				$ 0.01
KBS Capital Advisors LLC
Organizational Structure [Line Items]
Preferred stock, shares issued (in shares)					3,411,737
KBS Capital Advisors LLC | Restricted Stock
Organizational Structure [Line Items]
Issuance of common stock (in shares)					3,411,737
Operating Partnership
Organizational Structure [Line Items]
Partnership interest in Operating Partnership																0.10%
Partnership interest in the Operating Partnership and is its sole limited partner																99.90%
Pacific Oak Strategic Opportunity BVI
Organizational Structure [Line Items]
Common stock, shares authorized (in shares)																								50,000
Pacific Oak Strategic Opportunity BVI | Operating Partnership
Organizational Structure [Line Items]
Common stock, shares issued (in shares)																								10,000
GKP Holding LLC | Restricted Stock
Organizational Structure [Line Items]
Number of shares transferred (in shares)	2,254,289

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Redeemable Common Stock and Reclassification (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended		142 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Dec. 31, 2020
Summary of Significant Accounting Policies [Line Items]
Redemptions of common stock	$ 28,117	$ 6	$ 29,552	$ 830	$ 317,300
Number of shares non-redeemable due to limitation (in shares)			13,913,664
Other liabilities	43,994		$ 43,994		43,994	$ 34,734
Remaining authorized repurchase amount	3,200		3,200		3,200
Unfulfilled Redemption Request
Summary of Significant Accounting Policies [Line Items]
Other liabilities	3,400		3,400		$ 3,400	$ 900
Common Stock
Summary of Significant Accounting Policies [Line Items]
Redemptions of common stock	$ 37		37
Number of shares non-redeemable due to limitation			128,000
Common Stock | Share Redemption Program
Summary of Significant Accounting Policies [Line Items]
Redemptions of common stock			$ 29,600

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Additional Information (Details) $ / shares in Units, $ in Thousands	3 Months Ended			9 Months Ended
	Sep. 30, 2021 USD ($) property segment $ / shares	Sep. 30, 2020 $ / shares	Mar. 31, 2020 $ / shares	Sep. 30, 2021 USD ($) property	Sep. 30, 2021 USD ($) property segment	Sep. 30, 2021 USD ($) market property	Sep. 30, 2021 USD ($) property $ / shares	Sep. 30, 2020 $ / shares	Nov. 12, 2021 USD ($)
Segment Reporting Information [Line Items]
Distributions declared per common share (in dollars per share) | $ / shares	$ 0	$ 0	$ 0.0086				$ 0	$ 0
Debt obligations, next twelve months | $	$ 548,061			$ 548,061	$ 548,061	$ 548,061	$ 548,061
Number of reportable segments	3			3	3
Disposed of by Sale
Segment Reporting Information [Line Items]
Number of real estate properties disposed				0
Office Properties
Segment Reporting Information [Line Items]
Number of real estate properties	8			8	8	8	8
Office Properties | Disposed of by Sale
Segment Reporting Information [Line Items]
Number of real estate properties disposed				1
Hotel
Segment Reporting Information [Line Items]
Number of real estate properties	2			2	2	2	2
Subsequent Event
Segment Reporting Information [Line Items]
Debt obligations, next twelve months | $									$ 518,000
Mortgages | Minimum
Segment Reporting Information [Line Items]
Long-term debt, term	3 years			3 years	3 years	3 years	3 years
Mortgages | Maximum
Segment Reporting Information [Line Items]
Long-term debt, term	5 years			5 years	5 years	5 years	5 years
Single-Family Homes
Segment Reporting Information [Line Items]
Number of reportable segments | segment					1
Single family home markets | market						17
Hotels
Segment Reporting Information [Line Items]
Number of reportable segments | segment					1

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REAL ESTATE HELD FOR INVESTMENT - Additional Information (Details) ft² in Millions	Sep. 30, 2021 a ft² property portfolio investment unit room
Real Estate Properties [Line Items]
Percentage of portfolio occupied	73.00%
Office Properties
Real Estate Properties [Line Items]
Number of real estate properties	8
Number of real estate properties consolidated	8
Office Portfolio
Real Estate Properties [Line Items]
Number of real estate properties consolidated | portfolio	1
Office Buildings, Portfolio
Real Estate Properties [Line Items]
Number of real estate properties consolidated	4
Undeveloped Land, Portfolio
Real Estate Properties [Line Items]
Real estate area of undeveloped land | a	14
Rentable square feet | ft²	3.3
Residential Home Portfolio
Real Estate Properties [Line Items]
Number of real estate properties | portfolio	1
Rentable square feet | ft²	2.5
Percentage of portfolio occupied	94.00%
Number of units in real estate property | unit	1,806
Apartment Property
Real Estate Properties [Line Items]
Number of real estate properties consolidated	2
Apartment Building
Real Estate Properties [Line Items]
Rentable square feet | ft²	0.5
Percentage of portfolio occupied	96.00%
Number of units in real estate property | unit	609
Hotel
Real Estate Properties [Line Items]
Number of real estate properties	2
Number of rooms | room	649
Undeveloped Land
Real Estate Properties [Line Items]
Real estate area of undeveloped land | a	800
Number of investments in real estate | investment	3
Office/ Retail Property
Real Estate Properties [Line Items]
Number of real estate properties	1

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REAL ESTATE HELD FOR INVESTMENT - Schedule of Real Estate Investments (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Real Estate Properties [Line Items]
Total real estate, cost	$ 1,338,796	$ 1,358,724
Accumulated depreciation and amortization	(119,265)	(85,940)
Total real estate, net	1,219,531	1,272,784
Land
Real Estate Properties [Line Items]
Total real estate, cost	275,419	288,514
Buildings and improvements
Real Estate Properties [Line Items]
Total real estate, cost	1,018,850	1,019,329
Tenant origination and absorption costs
Real Estate Properties [Line Items]
Total real estate, cost	$ 44,527	$ 50,881

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REAL ESTATE HELD FOR INVESTMENT - Operating Leases, Additional Information (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021 USD ($) tenant	Sep. 30, 2020 USD ($)	Sep. 30, 2021 USD ($) tenant	Sep. 30, 2020 USD ($)	Dec. 31, 2020 USD ($)
Operating Leased Assets [Line Items]
Recognition of deferred revenue, net of discontinued operations	$ 400	$ 900	$ 1,500	$ 2,600
Deferred rent receivables	15,700		15,700		$ 15,500
Incentive to lessee	$ 3,100		$ 3,100		4,200
Number of tenants | tenant	300		300
Adjustments to rental income	$ 800	$ 400	$ 2,500	$ 1,100
Other liabilities
Operating Leased Assets [Line Items]
Security deposit liability	$ 6,000		$ 6,000		$ 5,700
Maximum
Operating Leased Assets [Line Items]
Operating lease, term	15 years 6 months		15 years 6 months
Weighted Average
Operating Leased Assets [Line Items]
Operating lease, term	4 years 6 months		4 years 6 months
Apartment Building
Operating Leased Assets [Line Items]
Operating lease, term	1 year		1 year

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REAL ESTATE HELD FOR INVESTMENT - Future Minimum Rental Income (Details) $ in Thousands	Sep. 30, 2021 USD ($)
Real Estate [Abstract]
October 1, 2021 through December 31, 2021	$ 16,095
2022	61,448
2023	53,140
2024	45,750
2025	35,726
Thereafter	86,512
Future minimum rental income	$ 298,671

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REAL ESTATE HELD FOR INVESTMENT - Highest Tenant Industry Concentrations - Greater than 10% of Annual Base Rent (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2021 USD ($) tenant
Concentration Risk [Line Items]
Number of tenants | tenant	300
Annualized Base Rent | $	$ 34,717
Industry | Industry | Revenue Benchmark
Concentration Risk [Line Items]
Percentage of Annualized Base Rent	53.50%
Computer Systems Design
Concentration Risk [Line Items]
Number of tenants | tenant	30
Annualized Base Rent | $	$ 7,080
Computer Systems Design | Industry | Revenue Benchmark
Concentration Risk [Line Items]
Percentage of Annualized Base Rent	10.90%
Professional, Scientific, and Technical Services
Concentration Risk [Line Items]
Number of tenants | tenant	42
Annualized Base Rent | $	$ 7,078
Professional, Scientific, and Technical Services | Industry | Revenue Benchmark
Concentration Risk [Line Items]
Percentage of Annualized Base Rent	10.90%
Public Administration
Concentration Risk [Line Items]
Number of tenants | tenant	11
Annualized Base Rent | $	$ 6,959
Public Administration | Industry | Revenue Benchmark
Concentration Risk [Line Items]
Percentage of Annualized Base Rent	10.70%
Insurance Carriers and Related Activities
Concentration Risk [Line Items]
Number of tenants | tenant	16
Annualized Base Rent | $	$ 6,801
Insurance Carriers and Related Activities | Industry | Revenue Benchmark
Concentration Risk [Line Items]
Percentage of Annualized Base Rent	10.50%
Health Care and Social Assistance
Concentration Risk [Line Items]
Number of tenants | tenant	25
Annualized Base Rent | $	$ 6,799
Health Care and Social Assistance | Industry | Revenue Benchmark
Concentration Risk [Line Items]
Percentage of Annualized Base Rent	10.50%

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REAL ESTATE HELD FOR INVESTMENT - Hotel Revenue and Expenses (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Hotel expenses:
General and administrative	$ 2,365	$ 1,960	$ 7,120	$ 6,302
Hotel
Revenues:
Other operating income	12,153		24,578
Hotel expenses:
Expenses	6,483		15,715
General and administrative	752		1,955
Sales and marketing	1,018		2,230
Repairs and maintenance	557		1,551
Property taxes and insurance	566		1,600
Hotel | Room
Revenues:
Other operating income	9,396		18,508
Hotel expenses:
Expenses	1,681		3,992
Hotel | Food, beverage and convention services
Revenues:
Other operating income	1,452		2,830
Hotel expenses:
Expenses	946		2,063
Hotel | Campground
Revenues:
Other operating income	280		792
Hotel | Utilities
Hotel expenses:
Expenses	333		824
Hotel | Other
Revenues:
Other operating income	1,025		2,448
Hotel expenses:
Expenses	$ 630		$ 1,500

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REAL ESTATE HELD FOR INVESTMENT - Contract Liabilities (Details) - USD ($) $ in Thousands	9 Months Ended		12 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Dec. 31, 2020
Product Liability Contingency [Line Items]
Amounts included in contract liability at the beginning of the period	$ 1,529	$ 2,559
Other liabilities
Product Liability Contingency [Line Items]
Contract liability	6,551		$ 3,369
Amounts included in contract liability at the beginning of the period	$ 142		$ 0

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REAL ESTATE HELD FOR INVESTMENT - Geographic Concentration Risk (Details)	9 Months Ended
	Sep. 30, 2021
Assets, Total | Geographic Concentration Risk | California
Concentration Risk [Line Items]
Concentration risk, percentage	21.90%

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REAL ESTATE HELD FOR INVESTMENT - Impairment (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Real Estate Properties [Line Items]
Impairment charges on real estate	$ 10,971	$ 0	$ 10,971	$ 0
210 West 31st
Real Estate Properties [Line Items]
Impairment charges on real estate	6,600		6,600
Lincoln Court
Real Estate Properties [Line Items]
Impairment charges on real estate	$ 4,400		$ 4,400

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REAL ESTATE HELD FOR INVESTMENT - Recent Real Estate Land Sale (Details) $ in Thousands		3 Months Ended		9 Months Ended
	Jun. 03, 2021 USD ($) a	Sep. 30, 2021 USD ($) a	Sep. 30, 2020 USD ($)	Sep. 30, 2021 USD ($) a	Sep. 30, 2020 USD ($)
Real Estate Properties [Line Items]
Gain on sale of real estate		$ 216	$ 0	$ 31,385	$ 0
Undeveloped Land
Real Estate Properties [Line Items]
Real estate area of undeveloped land | a		800		800
Park Highlands | Undeveloped Land | Disposed of by Sale
Real Estate Properties [Line Items]
Real estate area of undeveloped land | a	193
Sale price	$ 50,400
Gain on sale of real estate	31,100
Deferred profit	$ 2,600

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REAL ESTATE HELD FOR INVESTMENT - Recent Real Estate Sale (Details) $ in Thousands		3 Months Ended		9 Months Ended
	Jul. 27, 2021 USD ($) ft²	Sep. 30, 2021 USD ($)	Sep. 30, 2020 USD ($)	Sep. 30, 2021 USD ($)	Sep. 30, 2020 USD ($)	Dec. 31, 2020 USD ($)
Real Estate Properties [Line Items]
Real estate held for sale, net		$ 0		$ 0		$ 140,239
Accumulated depreciation and amortization		119,265		119,265		$ 85,940
Gain on sale of real estate		216	$ 0	31,385	$ 0
City Tower Mortgage Loan
Real Estate Properties [Line Items]
Extinguishment of debt	$ 98,100
Office Properties | City Tower
Real Estate Properties [Line Items]
Real estate held for sale, net		145,100		145,100
Accumulated depreciation and amortization		$ 20,500		$ 20,500
City Tower | Office Properties | Disposed of by Sale
Real Estate Properties [Line Items]
Net rentable area (in sq feet) | ft²	435,177
Area of land (in acres) | ft²	4.92
Consideration	$ 150,500
Accumulated depreciation and amortization	20,500
Gain on sale of real estate	$ 100

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REAL ESTATE HELD FOR INVESTMENT - Recent Real Estate Acquisitions (Details) - Single-family Home - Single Family Home Portfolio $ in Millions	Apr. 06, 2021 USD ($) property	Mar. 17, 2021 USD ($) property
Business Acquisition [Line Items]
Number of real estate properties acquired | property	23	21
Purchase price | $	$ 2.0	$ 2.1

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TENANT ORIGINATION AND ABSORPTION COSTS, ABOVE-MARKET LEASE ASSETS AND BELOW-MARKET LEASE LIABILITIES - Cost and Amortization (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020	Dec. 31, 2020
Tenant Origination and Absorption Costs, Above-Market Lease Assets and Below-Market Lease Liabilities [Abstract]
Tenant Origination And Absorption Costs, Cost	$ 44,527		$ 44,527		$ 50,881
Tenant Origination and Absorption Costs, Accumulated Amortization	(19,107)		(19,107)		(13,491)
Tenant Origination and Absorption Costs, Net Amount	25,420		25,420		37,390
Tenant Origination and Absorption Costs, Amortization	(3,253)	$ (1,625)	(12,397)	$ (4,965)
Above-Market Lease Assets, Cost	4,138		4,138		4,159
Above-Market Lease Assets, Accumulated Amortization	(1,403)		(1,403)		(1,002)
Above-Market Lease Assets, Net Amount	2,735		2,735		3,157
Above-Market Lease Assets, Amortization	(94)	(74)	(421)	(241)
Below-Market Lease Liabilities, Cost	(6,718)		(6,718)		(7,679)
Below-Market Lease Liabilities, Accumulated Amortization	2,282		2,282		1,882
Below-Market Lease Liabilities, Net Amount	(4,436)		(4,436)		$ (5,797)
Below-Market Lease Liabilities, Amortization	$ 388	$ 194	$ 1,436	$ 676

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TENANT ORIGINATION AND ABSORPTION COSTS, ABOVE-MARKET LEASE ASSETS AND BELOW-MARKET LEASE LIABILITIES - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020	Dec. 31, 2020
Tenant Origination and Absorption Costs, Above-Market Lease Assets and Below-Market Lease Liabilities [Abstract]
Housing subsidy intangible asset	$ 1,900		$ 1,900		$ 2,000
Tax abatement asset	800		800		$ 1,600
Tenant Origination and Absorption Costs, Above-Market Lease Assets and Below-Market Lease Liabilities [Line Items]
Depreciation and amortization	13,895	$ 9,470	$ 45,969	$ 27,417
Housing Subsidy Intangible Asset
Tenant Origination and Absorption Costs, Above-Market Lease Assets and Below-Market Lease Liabilities [Line Items]
Remaining amortization period			27 years 1 month 6 days
Depreciation and amortization	18		$ 54
Property Tax Abatement Intangible Asset
Tenant Origination and Absorption Costs, Above-Market Lease Assets and Below-Market Lease Liabilities [Line Items]
Remaining amortization period			1 year 7 months 6 days
Depreciation and amortization	$ 200	$ 100	$ 800	$ 500

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REAL ESTATE EQUITY SECURITIES - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Debt Securities, Available-for-sale [Line Items]
Purchase price			$ 14,439	$ 10,964
Dividend income from real estate equity securities	$ 3,200	$ 2,800	$ 6,700	$ 4,400

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REAL ESTATE EQUITY SECURITIES - Shares Owned (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Debt Securities, Available-for-sale [Line Items]
Number of Shares Owned (in shares)	71,693,526	72,641,101
Total Carrying Value	$ 96,403	$ 97,903
Kepple Pacific Oak US REIT
Debt Securities, Available-for-sale [Line Items]
Number of Shares Owned (in shares)	64,165,352	64,165,352
Total Carrying Value	$ 50,370	$ 44,274
Franklin Street Properties Corp.
Debt Securities, Available-for-sale [Line Items]
Number of Shares Owned (in shares)	6,915,089	6,915,089
Total Carrying Value	$ 32,086	$ 30,219
Plymouth Industrial REIT, Inc.
Debt Securities, Available-for-sale [Line Items]
Number of Shares Owned (in shares)	613,085	1,560,660
Total Carrying Value	$ 13,947	$ 23,410

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REAL ESTATE EQUITY SECURITIES - Portion of Gain and Loss (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Investments, Debt and Equity Securities [Abstract]
Net (loss) gain recognized during the period on real estate equity securities	$ (2,614)	$ (6,527)	$ 12,939	$ (21,620)
Less net gain recognized during the period on real estate equity securities sold during the period	0	0	(225)	(711)
Unrealized (loss) gain recognized during the reporting period on real estate equity securities held at the end of the period	$ (2,614)	$ (6,527)	$ 12,714	$ (22,331)

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REAL ESTATE HELD FOR SALE - Additional Information (Details) $ in Thousands		9 Months Ended
	Jul. 27, 2021 USD ($) ft²	Sep. 30, 2021 USD ($) property	Dec. 31, 2020 USD ($)
Real Estate Properties [Line Items]
Real estate held for investment, net		$ 1,219,531	$ 1,272,784
Accumulated depreciation and amortization		$ 119,265	$ 85,940
City Tower Mortgage Loan
Real Estate Properties [Line Items]
Extinguishment of debt	$ 98,100
Disposed of by Sale
Real Estate Properties [Line Items]
Number of real estate properties disposed | property		0
Office Properties | Disposed of by Sale
Real Estate Properties [Line Items]
Number of real estate properties disposed | property		1
Office Properties | Disposed of by Sale | City Tower
Real Estate Properties [Line Items]
Net rentable area (in sq feet) | ft²	435,177
Area of land (in acres) | ft²	4.92
Consideration	$ 150,500
Real estate held for investment, net	145,100
Accumulated depreciation and amortization	20,500
Gain on disposition	$ 100

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REAL ESTATE HELD FOR SALE - Assets and Liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Assets related to real estate held for sale
Real estate, cost	$ 0	$ 158,711
Accumulated depreciation and amortization	0	(18,472)
Real estate, net	0	140,239
Other assets	0	5,680
Total assets related to real estate held for sale	0	145,919
Liabilities related to real estate held for sale
Note payable, net	0	94,097
Other liabilities	0	669
Total liabilities related to real estate held for sale	$ 0	$ 94,766

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REAL ESTATE HELD FOR SALE - Schedule of Certain Revenue and Expenses (Details) - Disposed of by Sale - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Revenues
Rental income	$ 1,085	$ 3,318	$ 8,660	$ 9,998
Other operating income	51	265	520	792
Total revenues	1,136	3,583	9,180	10,790
Expenses
Operating, maintenance, and management	363	1,004	2,096	2,855
Real estate taxes and insurance	95	389	979	1,258
Asset management fees to affiliate	194	305	807	907
Depreciation and amortization	14	1,769	2,436	5,342
Interest expense	152	518	1,146	1,953
Total expenses	$ 818	$ 3,985	$ 7,464	$ 12,315

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NOTES AND BONDS PAYABLE - Schedule of Long-term Debt Instruments (Details) - USD ($)		9 Months Ended
	Jul. 27, 2021	Sep. 30, 2021	Oct. 07, 2021	Apr. 06, 2021	Dec. 31, 2020
Debt Instrument [Line Items]
Total Notes and Bonds Payable principal outstanding		$ 1,030,734,000			$ 1,106,377,000
Discount on Notes and Bonds Payable, net		(2,249,000)			(2,851,000)
Deferred financing costs, net		(4,707,000)			(4,458,000)
Notes and bonds payable, net		1,023,778,000			1,099,068,000
City Tower Mortgage Loan
Debt Instrument [Line Items]
Extinguishment of debt	$ 98,100,000
Mortgages | Richardson Portfolio Mortgage Loan
Debt Instrument [Line Items]
Notes payable, net		$ 28,685,000			35,832,000
Interest rate, effective percentage		2.58%
Mortgages | Richardson Portfolio Mortgage Loan | One-month LIBOR
Debt Instrument [Line Items]
Basis spread on variable rate		2.50%
Mortgages | Park Centre Mortgage Loan
Debt Instrument [Line Items]
Notes payable, net		$ 26,185,000			26,185,000
Interest rate, effective percentage		1.83%
Mortgages | Park Centre Mortgage Loan | One-month LIBOR
Debt Instrument [Line Items]
Basis spread on variable rate		1.75%
Mortgages | 1180 Raymond Mortgage Loan
Debt Instrument [Line Items]
Notes payable, net		$ 29,548,000			29,848,000
Interest rate, effective percentage		3.50%
Mortgages | 1180 Raymond Mortgage Loan | One-month LIBOR
Debt Instrument [Line Items]
Basis spread on variable rate		2.50%
Mortgages | 1180 Raymond Bond
Debt Instrument [Line Items]
Bonds payable		$ 5,705,000			5,870,000
Contractual interest rate, percentage		6.50%
Interest rate, effective percentage		6.50%
Mortgages | Pacific Oak SOR (BVI) Holdings, Ltd. Series A Debentures
Debt Instrument [Line Items]
Notes payable, net		$ 197,901,000			181,198,000
Contractual interest rate, percentage		4.25%
Interest rate, effective percentage		4.25%
Mortgages | Pacific Oak SOR (BVI) Holdings, Ltd. Series B Debentures
Debt Instrument [Line Items]
Notes payable, net		$ 78,794,000			79,078,000
Contractual interest rate, percentage		3.93%
Interest rate, effective percentage		3.93%
Mortgages | Crown Pointe Mortgage Loan
Debt Instrument [Line Items]
Notes payable, net		$ 52,508,000			53,072,000
Interest rate, effective percentage		2.70%
Guarantees as percent of outstanding loan balance		25.00%
Amount under guarantees		$ 39,500,000
Mortgages | Crown Pointe Mortgage Loan | One-month LIBOR
Debt Instrument [Line Items]
Basis spread on variable rate		2.60%
Mortgages | City Tower Mortgage Loan
Debt Instrument [Line Items]
Notes payable, net		$ 0			94,167,000
Extinguishment of debt	$ 98,100,000
Mortgages | Marquette Plaza Mortgage Loan
Debt Instrument [Line Items]
Notes payable, net		$ 62,066,000			62,257,000
Interest rate, effective percentage		1.63%
Mortgages | Marquette Plaza Mortgage Loan | One-month LIBOR
Debt Instrument [Line Items]
Basis spread on variable rate		1.55%
Mortgages | Eight & Nine Corporate Centre Mortgage Loan
Debt Instrument [Line Items]
Notes payable, net		$ 48,695,000			47,066,000
Interest rate, effective percentage		1.68%
Mortgages | Eight & Nine Corporate Centre Mortgage Loan | One-month LIBOR
Debt Instrument [Line Items]
Basis spread on variable rate		1.60%
Mortgages | Georgia 400 Center Mortgage Loan
Debt Instrument [Line Items]
Notes payable, net		$ 61,154,000			59,690,000
Interest rate, effective percentage		1.63%
Mortgages | Georgia 400 Center Mortgage Loan | One-month LIBOR
Debt Instrument [Line Items]
Basis spread on variable rate		1.55%
Mortgages | PORT Mortgage Loan 1
Debt Instrument [Line Items]
Notes payable, net		$ 51,302,000			51,362,000
Contractual interest rate, percentage		4.74%
Interest rate, effective percentage		4.74%
Mortgages | PORT Mortgage Loan 2
Debt Instrument [Line Items]
Notes payable, net		$ 10,523,000			10,523,000
Contractual interest rate, percentage		4.72%
Interest rate, effective percentage		4.72%
Mortgages | PORT Mortgage Loan 3
Debt Instrument [Line Items]
Notes payable, net		$ 0			12,000,000
Mortgages | Battery Point Trust Mortgage Loan
Debt Instrument [Line Items]
Notes payable, net		$ 0			38,608,000
Mortgages | Battery Point Trust Mortgage Loan | One-month LIBOR | Minimum
Debt Instrument [Line Items]
Basis spread on variable rate		1.00%
Mortgages | MetLife Loan
Debt Instrument [Line Items]
Notes payable, net		$ 60,000,000			0
Contractual interest rate, percentage		3.90%
Interest rate, effective percentage		3.90%
Face amount				$ 60,000,000
Mortgages | Springmaid Beach Resort Mortgage Loan
Debt Instrument [Line Items]
Notes payable, net		$ 55,839,000			57,015,000
Contractual interest rate, percentage		5.77%
Interest rate, effective percentage		5.75%
Mortgages | Springmaid Beach Resort Mortgage Loan | One-month LIBOR
Debt Instrument [Line Items]
Basis spread on variable rate		2.25%
Mortgages | Q and C Hotel Mortgage Loan
Debt Instrument [Line Items]
Notes payable, net		$ 25,000,000			25,000,000
Interest rate, effective percentage		4.50%
Mortgages | Q and C Hotel Mortgage Loan | One-month LIBOR
Debt Instrument [Line Items]
Basis spread on variable rate		2.50%
Mortgages | Lincoln Court Mortgage Loan
Debt Instrument [Line Items]
Notes payable, net		$ 34,723,000			34,416,000
Interest rate, effective percentage		1.83%
Mortgages | Lincoln Court Mortgage Loan | One-month LIBOR
Debt Instrument [Line Items]
Basis spread on variable rate		1.75%
Mortgages | Lofts at NoHo Commons Mortgage Loan
Debt Instrument [Line Items]
Notes payable, net		$ 74,536,000			74,536,000
Interest rate, effective percentage		3.93%
Mortgages | Lofts at NoHo Commons Mortgage Loan | One-month LIBOR
Debt Instrument [Line Items]
Basis spread on variable rate		2.18%
Mortgages | 210 West 31st Street Mortgage Loan
Debt Instrument [Line Items]
Notes payable, net		$ 10,275,000			15,050,000
Interest rate, effective percentage		3.08%
Mortgages | 210 West 31st Street Mortgage Loan | One-month LIBOR
Debt Instrument [Line Items]
Basis spread on variable rate		3.00%
Mortgages | Oakland City Center Mortgage Loan
Debt Instrument [Line Items]
Notes payable, net		$ 96,404,000			96,782,000
Interest rate, effective percentage		1.83%
Mortgages | Oakland City Center Mortgage Loan | One-month LIBOR
Debt Instrument [Line Items]
Basis spread on variable rate		1.75%
Mortgages | Madison Square Mortgage Loan
Debt Instrument [Line Items]
Notes payable, net		$ 20,891,000			$ 16,822,000
Interest rate, effective percentage		5.05%
Mortgages | Madison Square Mortgage Loan | Subsequent Event
Debt Instrument [Line Items]
Contractual interest rate, percentage			4.625%
Face amount			$ 27,000,000
Mortgages | Madison Square Mortgage Loan | One-month LIBOR
Debt Instrument [Line Items]
Basis spread on variable rate		4.05%

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NOTES AND BONDS PAYABLE - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020	Nov. 12, 2021	May 07, 2021	Dec. 31, 2020
Debt Instrument [Line Items]
Interest expense	$ 10,092	$ 6,274	$ 30,713	$ 19,055
Amortization of deferred financing costs	800	800	2,470	2,481
Amortization of discount on bond and notes payable	500	64	1,906	14
Interest capitalized			1,579	2,368
Interest payable	3,300		3,300				$ 6,200
Debt obligations, next twelve months	548,061		548,061
Extension options of debt obligations outstanding that are scheduled to mature over the next 12 months						$ 239,800
Subsequent Event
Debt Instrument [Line Items]
Debt obligations, next twelve months					$ 518,000
Undeveloped Land
Debt Instrument [Line Items]
Interest capitalized	$ 500	$ 700	$ 1,600	$ 2,400

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NOTES AND BONDS PAYABLE - Schedule of Maturities of Long-term Debt (Details) $ in Thousands	Sep. 30, 2021 USD ($)
Notes and Bonds Payable [Abstract]
October 1, 2021 through December 31, 2021	$ 116,538
2022	548,061
2023	160,359
2024	26,535
2025	77,858
Thereafter	101,383
Notes and bond payable outstanding	$ 1,030,734

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NOTES AND BONDS PAYABLE - Israeli Bond Financing (Details) - Bonds Payable $ in Millions	Mar. 04, 2021 ILS (₪)	Mar. 04, 2021 USD ($)	Feb. 16, 2020 ILS (₪)	Mar. 08, 2016 ILS (₪)	Mar. 08, 2016 ILS (₪)	Mar. 08, 2016 USD ($)	Mar. 07, 2016 ILS (₪)	Mar. 02, 2016 ILS (₪)	Mar. 01, 2016 ILS (₪)	Feb. 16, 2020 USD ($)
Series A Debentures
Debt Instrument [Line Items]
Maximum borrowing capacity	₪ 250,000,000							₪ 1,000,000,000
Interest rate during period					4.25%	4.25%
Proceeds from issuance of debt	₪ 245,300,000	$ 74.2		₪ 970,200,000	₪ 970,200,000	$ 249.2	₪ 127,700,000		₪ 842,500,000
Contractual interest rate, percentage								4.25%
Series A Debentures | Maximum
Debt Instrument [Line Items]
Interest rate during period								4.25%
Contractual interest rate, percentage								4.25%
Series B Debentures
Debt Instrument [Line Items]
Maximum borrowing capacity			₪ 254,100,000							$ 74.1
Contractual interest rate, percentage			3.93%							3.93%
Principal of installment payments as percent of face amount			33.33%
Percent of discount at issuance	1.90%

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DERIVATIVE INSTRUMENTS (Details)		3 Months Ended		9 Months Ended
	Jul. 29, 2020 USD ($)	Sep. 30, 2021 USD ($) instrument	Sep. 30, 2020 USD ($)	Sep. 30, 2021 USD ($) instrument	Sep. 30, 2020 USD ($)	Dec. 31, 2020 USD ($) instrument
Derivative [Line Items]
Gain on terminated derivatives	$ 14,100,000
Foreign currency collar
Derivative [Line Items]
Gain (loss) recognized on derivatives		$ 300,000	$ 2,200,000	$ (44,000,000)	$ 14,300,000
Foreign currency transaction gain (loss)		(2,600,000)	$ (2,600,000)	600,000	$ (2,000,000)
Interest Rate Cap 1
Derivative [Line Items]
Notional Amount		$ 26,200,000		$ 26,200,000
Interest Rate Cap 1 | One-month LIBOR
Derivative [Line Items]
Reference Rate		3.00%		3.00%
Interest Rate Cap 2
Derivative [Line Items]
Notional Amount		$ 47,715,000		$ 47,715,000
Interest Rate Cap 2 | One-month LIBOR
Derivative [Line Items]
Reference Rate		3.00%		3.00%
Interest Rate Cap 3
Derivative [Line Items]
Notional Amount		$ 75,950,000		$ 75,950,000
Interest Rate Cap 3 | One-month LIBOR
Derivative [Line Items]
Reference Rate		3.50%		3.50%
Interest Rate Cap 4
Derivative [Line Items]
Notional Amount		$ 51,252,000		$ 51,252,000
Interest Rate Cap 4 | One-month LIBOR
Derivative [Line Items]
Reference Rate		4.00%		4.00%
Not Designated as Hedging Instrument | Foreign currency collar
Derivative [Line Items]
Number of Instruments | instrument		1		1		0
Notional Amount		$ 194,045		$ 194,045		$ 0
Not Designated as Hedging Instrument | Foreign currency collar | Other liabilities
Derivative [Line Items]
Number of Instruments | instrument		1		1		0
Derivative Liability, Fair Value		$ (44,000)		$ (44,000)		$ 0
Not Designated as Hedging Instrument | Foreign currency collar | Minimum
Derivative [Line Items]
Exchange rate cap		3.16		3.16
Not Designated as Hedging Instrument | Foreign currency collar | Maximum
Derivative [Line Items]
Exchange rate cap		3.29		3.29
Not Designated as Hedging Instrument | Interest rate caps
Derivative [Line Items]
Number of Instruments | instrument		4		4
Not Designated as Hedging Instrument | Interest rate caps | Prepaid expenses and other assets
Derivative [Line Items]
Number of Instruments | instrument		4		4		7
Derivative Asset, Fair Value		$ 2,000		$ 2,000		$ 1,000

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FAIR VALUE DISCLOSURES - Schedule of Face Value, Carrying Amounts and Fair Value (Details) - USD ($)	Sep. 30, 2021	Dec. 31, 2020
Level 3
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Notes and bond payable, Face Value	$ 754,039,000	$ 846,101,000
Series A Debentures | Pacific Oak SOR (BVI) Holdings, Ltd. Series A Debentures | Level 1
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Notes and bond payable, Face Value	197,901,000	181,198,000
Series B Debentures | Pacific Oak SOR (BVI) Holdings, Ltd. Series B Debentures | Level 1
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Notes and bond payable, Face Value	78,794,000	79,078,000
Carrying Amount | Level 3
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Notes and bond payable, Value	751,064,000	842,112,000
Carrying Amount | Series A Debentures | Pacific Oak SOR (BVI) Holdings, Ltd. Series A Debentures | Level 1
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Notes and bond payable, Value	195,428,000	179,786,000
Carrying Amount | Series B Debentures | Pacific Oak SOR (BVI) Holdings, Ltd. Series B Debentures | Level 1
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Notes and bond payable, Value	77,286,000	77,170,000
Fair Value | Level 3
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Notes and bond payable, Value	752,417,000	846,608,000
Fair Value | Series A Debentures | Pacific Oak SOR (BVI) Holdings, Ltd. Series A Debentures | Level 1
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Notes and bond payable, Value	197,437,000	178,450,000
Fair Value | Series B Debentures | Pacific Oak SOR (BVI) Holdings, Ltd. Series B Debentures | Level 1
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Notes and bond payable, Value	$ 76,899,000	$ 69,433,000

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FAIR VALUE DISCLOSURES - Schedule of Assets and Liabilities at Fair Value (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020	Dec. 31, 2020
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired real estate	$ 10,971	$ 0	$ 10,971	$ 0
Impaired goodwill	2,808	$ 0	2,808	$ 0
Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired goodwill			2,808
Recurring Basis
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Real estate equity securities	96,403		96,403		$ 96,403
Asset derivative					2
Recurring Basis | Interest rate caps
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Asset derivative	2		2
Recurring Basis | Foreign currency collar
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Liability derivative	(44)		(44)
Recurring Basis | Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Real estate equity securities	96,403		96,403		96,403
Asset derivative					0
Recurring Basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | Interest rate caps
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Asset derivative	0		0
Recurring Basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | Foreign currency collar
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Liability derivative	0		0
Recurring Basis | Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Real estate equity securities	0		0		0
Asset derivative					2
Recurring Basis | Significant Other Observable Inputs (Level 2) | Interest rate caps
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Asset derivative	2		2
Recurring Basis | Significant Other Observable Inputs (Level 2) | Foreign currency collar
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Liability derivative	(44)		(44)
Recurring Basis | Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Real estate equity securities	0		0		0
Asset derivative					$ 0
Recurring Basis | Significant Unobservable Inputs (Level 3) | Interest rate caps
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Asset derivative	0		0
Recurring Basis | Significant Unobservable Inputs (Level 3) | Foreign currency collar
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Liability derivative	$ 0		0
Nonrecurring Basis
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired real estate			97,600
Impaired goodwill			13,534
Nonrecurring Basis | Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired real estate			0
Impaired goodwill			0
Nonrecurring Basis | Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired real estate			0
Impaired goodwill			0
Nonrecurring Basis | Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired real estate			97,600
Impaired goodwill			$ 13,534

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FAIR VALUE DISCLOSURES - Additional Information (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021 USD ($) property	Sep. 30, 2020 USD ($)	Sep. 30, 2021 USD ($) property	Sep. 30, 2020 USD ($)
Fair Value Disclosures [Abstract]
Number of real estate investment property with write down carrying value | property	2		2
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Impairment charges on real estate	$ 10,971	$ 0	$ 10,971	$ 0
Impairment charges on goodwill	2,808	$ 0	2,808	$ 0
POSOR II
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Impairment charges on goodwill			2,800
Lincoln Court
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Impairment charges on real estate	4,400		4,400
210 West 31st
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Impairment charges on real estate	$ 6,600		$ 6,600
Discount Rate | Lincoln Court
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Real estate properties, measurement input	7.75%		7.75%
Terminal Cap Rate | Lincoln Court
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Real estate properties, measurement input	6.75%		6.75%

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FAIR VALUE DISCLOSURES - Goodwill (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Beginning balance			$ 16,342
Impairment loss	$ (2,808)	$ 0	(2,808)	$ 0
Ending balance	13,534		13,534
Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Beginning balance			16,342
Impairment loss			(2,808)
Ending balance	$ 13,534		13,534
Nonrecurring Basis
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impairment loss			(13,534)
Nonrecurring Basis | Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impairment loss			$ (13,534)

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RELATED PARTY TRANSACTIONS - Additional Information (Details) - shares	Nov. 01, 2019	Sep. 30, 2021	Dec. 31, 2020	Mar. 27, 2020
Related Party Transactions [Abstract]
Period of termination of advisory agreement without cause or penalty	60 days
Related Party Transaction [Line Items]
Preferred stock, shares issued (in shares)		0	0
KBS Capital Advisors LLC
Related Party Transaction [Line Items]
Preferred stock, shares issued (in shares)				3,411,737

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RELATED PARTY TRANSACTIONS - Costs (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020	Dec. 31, 2020
Related Party Transaction [Line Items]
Payable as of	$ 2,152		$ 2,152		$ 2,842
Pacific Oak Capital Advisors LLC
Related Party Transaction [Line Items]
Capitalized	5,778	$ 1,475	14,170	$ 6,608
Payable as of	2,152		2,152		2,842
Pacific Oak Capital Advisors LLC | Asset management fees
Related Party Transaction [Line Items]
Expensed	3,422	2,426	10,802	6,867
Payable as of	2,132		2,132		2,837
Pacific Oak Capital Advisors LLC | Property management fee
Related Party Transaction [Line Items]
Expensed	119	114	362	114
Payable as of	0		0		0
Pacific Oak Capital Advisors LLC | Reimbursable operating expenses
Related Party Transaction [Line Items]
Expensed	0	56	0	148
Payable as of	0		0		0
Pacific Oak Capital Advisors LLC | Disposition fees
Related Party Transaction [Line Items]
Expensed	692	0	1,196	0
Payable as of	0		0		0
Pacific Oak Capital Advisors LLC | Subordinated performance fee due upon termination to affiliate
Related Party Transaction [Line Items]
Capitalized	1,545	(1,121)	1,745	(814)
Pacific Oak Capital Advisors LLC | Acquisition fees on real estate equity securities
Related Party Transaction [Line Items]
Capitalized	0	0	0	122
Payable as of	0		0		5
Pacific Oak Capital Advisors LLC | Acquisition fees on real estate
Related Party Transaction [Line Items]
Capitalized	0	0	20	171
Payable as of	20		20		0
Pacific Oak Capital Advisors LLC | Acquisition fee on investment in unconsolidated entities
Related Party Transaction [Line Items]
Capitalized	0	$ 0	45	$ 0
Payable as of	$ 0		$ 0		$ 0

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RELATED PARTY TRANSACTIONS - Investment in Pacific Oak Opportunity Zone Fund I (Details) - Pacific Oak Opportunity Zone Fund I $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2021 USD ($) unit	Sep. 30, 2021 USD ($) unit	Dec. 31, 2020 USD ($) unit	Dec. 31, 2019 USD ($) unit	Sep. 30, 2019 unit
Schedule of Equity Method Investments [Line Items]
Number of units in real estate property | unit	124	124	7	91	13
Investments				$ 27,600
Investments, fair value			$ 1,500
Acquisition fee, percent of purchase price fee		1.50%
Investment, purchase price, benchmark		$ 25,000
Acquisition fee of purchase price fee in excess of benchmark purchase price		1.00%
Asset management fee, percent	0.25%	0.25%
Financing fee as percent of original principal amount of any indebtedness	0.50%	0.50%
Waived asset management fees	$ 200	$ 500
Asset management fees receivable	$ 700	$ 700
POSOR II Merger
Schedule of Equity Method Investments [Line Items]
Number of units in real estate property | unit			13
Investments, fair value			$ 3,000

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RELATED PARTY TRANSACTIONS - PORT II (Details) - USD ($) $ in Thousands		9 Months Ended	12 Months Ended
	Aug. 31, 2020	Sep. 30, 2021	Dec. 31, 2019
PORT II OP LP
Schedule of Equity Method Investments [Line Items]
Payments to acquire investments		$ 5,500
Insufficient fund fees, percent	50.00%
Application fee collected, percent	100.00%
Ownership %		89.70%
PORT II OP LP | Tier 1
Schedule of Equity Method Investments [Line Items]
Base fee, percent of rent collections per year	8.00%
PORT II OP LP | Tier 1 | Maximum
Schedule of Equity Method Investments [Line Items]
Base fee, benchmark of rent collections per year	$ 50,000
PORT II OP LP | Tier 2
Schedule of Equity Method Investments [Line Items]
Base fee, percent of rent collections per year	7.00%
PORT II OP LP | Tier 2 | Maximum
Schedule of Equity Method Investments [Line Items]
Base fee, benchmark of rent collections per year	$ 75,000
PORT II OP LP | Tier 2 | Minimum
Schedule of Equity Method Investments [Line Items]
Base fee, benchmark of rent collections per year	$ 50,000
PORT II OP LP | Tier 3
Schedule of Equity Method Investments [Line Items]
Base fee, percent of rent collections per year	6.00%
PORT II OP LP | Tier 3 | Minimum
Schedule of Equity Method Investments [Line Items]
Base fee, benchmark of rent collections per year	$ 75,000
PORT II OP LP | PORT II OP LP
Schedule of Equity Method Investments [Line Items]
Payments to acquire investments		$ 5,500
Pacific Oak Opportunity Zone Fund I
Schedule of Equity Method Investments [Line Items]
Payments to acquire investments		$ 3,100	$ 20,600
Financing fee as percent of original principal amount of any indebtedness		0.50%

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RELATED PARTY TRANSACTIONS - Subordinated Performance Fee Due Upon Termination to KBS Capital Advisors (Details) - USD ($)	Sep. 01, 2021	Mar. 27, 2020	Dec. 31, 2019
Restricted Stock
Related Party Transaction [Line Items]
Issuance of restricted stock (in shares)		3,411,737
Number of shares purchased (in shares)	584,267
Stock repurchased during period	$ 5,655,705
Stock repurchased during period, price per share (in dollars per share)	$ 9.68
GKP Holding LLC | Restricted Stock
Related Party Transaction [Line Items]
Number of shares transferred (in shares)	2,254,289
Percent of decrease in ownership interest due to death	100.00%
Period of notice for redemption	60 days
Percent of redemption	50.00%
GKP Holding LLC | Restricted Stock | After November 1, 2024
Related Party Transaction [Line Items]
Period of notice for redemption	60 days
GKP Holding LLC | Chief Executive Officer
Related Party Transaction [Line Items]
Percent of ownership			50.00%
GKP Holding LLC | Board of Directors Chairman
Related Party Transaction [Line Items]
Percent of ownership			50.00%
KBS Capital Advisors LLC | GKP Holding LLC | Restricted Stock
Related Party Transaction [Line Items]
Stock repurchased during period, additional shares (in shares)	59,714
KBS Holdings | GKP Holding LLC
Related Party Transaction [Line Items]
Percent of ownership			33.33%
Percent of ownership acquired	33.33%
Percent of ownership transferred	33.33%
Affiliates of KBS Capital Advisors | GKP Holding LLC | Restricted Stock
Related Party Transaction [Line Items]
Stock repurchased during period, additional shares (in shares)	513,467

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INVESTMENT IN UNCONSOLIDATED ENTITIES - Investments in Unconsolidated Joint Ventures (Details) $ in Thousands	Sep. 30, 2021 USD ($) property	Dec. 31, 2020 USD ($)
Schedule of Equity Method Investments [Line Items]
Investment Balance	$ 83,854	$ 79,666
110 William Joint Venture
Schedule of Equity Method Investments [Line Items]
Ownership %	60.00%
Investment Balance	$ 0	0
Number of real estate properties | property	1
353 Sacramento Joint Venture
Schedule of Equity Method Investments [Line Items]
Ownership %	55.00%
Investment Balance	$ 50,769	49,665
Number of real estate properties | property	1
Pacific Oak Opportunity Zone Fund I
Schedule of Equity Method Investments [Line Items]
Investment Balance	$ 27,638	24,996
Number of real estate properties | property	3
Pacific Oak Residential Trust II, Inc.
Schedule of Equity Method Investments [Line Items]
Ownership %	89.70%
Investment Balance	$ 5,447	$ 5,005
Number of real estate properties | property	117

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INVESTMENT IN UNCONSOLIDATED ENTITIES - Investments - Additional Information (Details)	3 Months Ended		9 Months Ended
	Sep. 30, 2021 USD ($) unit	Sep. 30, 2020 USD ($)	Sep. 30, 2021 USD ($) unit	Sep. 30, 2020 USD ($)	Dec. 31, 2020 USD ($) unit	Dec. 31, 2019 USD ($) unit	Sep. 30, 2019 unit	May 02, 2014 ft²
Schedule of Equity Method Investments [Line Items]
Investments in unconsolidated entities	$ 83,854,000		$ 83,854,000		$ 79,666,000
Equity in income of unconsolidated joint venture			(144,000)	$ 1,151,000
Equity in (loss) income of unconsolidated entities	(569,000)	$ 519,000	(144,000)	1,564,000
110 William JV Partner
Schedule of Equity Method Investments [Line Items]
Income from unconsolidated joint venture	$ 0	$ 0	$ 0	$ 0
110 William Joint Venture
Schedule of Equity Method Investments [Line Items]
Ownership percentage	60.00%		60.00%
Rentable square feet | ft²								928,157
Area of land (in acres) | ft²								0.8
Investments in unconsolidated entities	$ 0		$ 0		0
110 William Joint Venture | 110 William JV Partner
Schedule of Equity Method Investments [Line Items]
Ownership percentage								60.00%
110 William Joint Venture | 110 William JV Partner | 110 William Joint Venture
Schedule of Equity Method Investments [Line Items]
Noncontrolling interest								40.00%
Pacific Oak Opportunity Zone Fund I
Schedule of Equity Method Investments [Line Items]
Investments in unconsolidated entities	$ 27,638,000		$ 27,638,000		$ 24,996,000
Investments						$ 27,600,000
Number of units in real estate property | unit	124		124		7	91	13
Acquisition related costs			$ 200,000

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INVESTMENT IN UNCONSOLIDATED ENTITIES - Summarized Financial Information (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020	Dec. 31, 2020
Balance Sheet Related Disclosures [Abstract]
Real estate assets, net of accumulated depreciation and amortization	$ 1,219,531		$ 1,219,531		$ 1,272,784
Total assets	1,629,128		1,629,128		1,731,665
Other liabilities	43,994		43,994		34,734
Total liabilities, mezzanine equity and equity	1,629,128		1,629,128		1,731,665
Income Statement [Abstract]
Revenues	45,769	$ 27,745	129,201	$ 75,869
Real estate taxes and insurance	5,262	3,791	15,949	10,570
Depreciation and amortization	13,895	9,470	45,969	27,417
Interest expense	10,092	6,274	30,713	19,055
Total expenses	68,237	32,254	170,923	80,131
Net (loss) income attributable to common stockholders	(24,516)	(7,493)	3,671	(21,797)
Equity in (loss) income of unconsolidated entities	(569)	519	(144)	1,564
110 William Joint Venture
Balance Sheet Related Disclosures [Abstract]
Real estate assets, net of accumulated depreciation and amortization	232,201		232,201		246,166
Other assets	34,200		34,200		44,004
Total assets	266,401		266,401		290,170
Notes payable, net	318,280		318,280		316,421
Other liabilities	3,003		3,003		5,532
Partners’ deficit	(54,882)		(54,882)		(31,783)
Total liabilities, mezzanine equity and equity	266,401		266,401		290,170
Income Statement [Abstract]
Revenues	5,729	10,005	18,721	26,604
Real estate taxes and insurance	1,698	1,935	5,588	5,580
Depreciation and amortization	2,962	3,139	19,071	8,721
Interest expense	3,548	4,125	10,986	12,093
Total expenses	10,567	11,295	41,857	32,388
Total other income	11	12	35	50
Net (loss) income attributable to common stockholders	(4,827)	(1,278)	(23,101)	(5,734)
Company’s share of net loss	(2,896)	(767)	(13,861)	(3,440)
110 William Joint Venture | Operating, maintenance, and management costs
Income Statement [Abstract]
Expenses	2,359	2,096	6,212	5,994
353 Sacramento Joint Venture
Balance Sheet Related Disclosures [Abstract]
Real estate assets, net of accumulated depreciation and amortization	178,874		178,874		182,318
Other assets	27,539		27,539		19,810
Total assets	206,413		206,413		202,128
Notes payable, net	110,000		110,000		109,783
Other liabilities	6,335		6,335		7,639
Partners’ deficit	90,078		90,078		84,706
Total liabilities, mezzanine equity and equity	206,413		206,413		$ 202,128
Income Statement [Abstract]
Revenues	3,373	5,520	13,252	15,771
Real estate taxes and insurance	848	755	2,768	2,235
Depreciation and amortization	1,850	1,894	5,574	5,135
Interest expense	960	948	2,700	3,290
Total expenses	4,520	4,529	13,532	13,110
Net (loss) income attributable to common stockholders	(1,147)	991	(280)	2,661
Equity in (loss) income of unconsolidated entities	(592)	583	(40)	1,576
353 Sacramento Joint Venture | Operating, maintenance, and management costs
Income Statement [Abstract]
Expenses	$ 862	$ 932	$ 2,490	$ 2,450

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INVESTMENT IN UNCONSOLIDATED ENTITIES - Investment in 353 Sacramento Joint Venture (Details) $ in Millions	9 Months Ended
	Sep. 30, 2021 USD ($)	Jul. 06, 2017 a ft²
Migdal Members
Schedule of Equity Method Investments [Line Items]
Ownership percentage		45.00%
Joint Venture
Schedule of Equity Method Investments [Line Items]
Ownership percentage		55.00%
353 Sacramento Joint Venture
Schedule of Equity Method Investments [Line Items]
Ownership percentage	55.00%
353 Sacramento Joint Venture | Office Properties | Joint Venture
Schedule of Equity Method Investments [Line Items]
Payments to acquire investments | $	$ 1.1
353 Sacramento Joint Venture | Office Properties | Disposed of by Sale
Schedule of Equity Method Investments [Line Items]
Ownership percentage		45.00%
Net rentable area (in sq feet) | ft²		284,751
Area of land (in acres) | a		0.35

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INVESTMENT IN UNCONSOLIDATED ENTITIES - Investment in Pacific Oak Opportunity Zone Fund I (Details) $ in Thousands	3 Months Ended	9 Months Ended	12 Months Ended
	Sep. 30, 2021 USD ($) unit property	Sep. 30, 2021 USD ($) unit property	Dec. 31, 2019 USD ($) unit	Dec. 31, 2020 USD ($) unit	Sep. 30, 2019 unit
Schedule of Equity Method Investments [Line Items]
Investments in unconsolidated entities	$ 83,854	$ 83,854		$ 79,666
Pacific Oak Opportunity Zone Fund I
Schedule of Equity Method Investments [Line Items]
Number of units in real estate property | unit	124	124	91	7	13
Payments to acquire investments		$ 3,100	$ 20,600
Investments, fair value				$ 1,500
Investments			$ 27,600
Acquisition related costs		200
Investments in unconsolidated entities	$ 27,638	$ 27,638		$ 24,996
Number of joint ventures with real estate under development | property	3	3
Gain (loss) on investments	$ (100)	$ (500)
Pacific Oak Opportunity Zone Fund I | POSOR II Merger
Schedule of Equity Method Investments [Line Items]
Number of units in real estate property | unit				13
Investments, fair value				$ 3,000

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INVESTMENT IN UNCONSOLIDATED ENTITIES - PORT II (Details) - PORT II OP LP $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2021 USD ($) shares	Sep. 30, 2021 USD ($) shares
Schedule of Equity Method Investments [Line Items]
Investment acquired (in shares) | shares	600	600
Payments to acquire investments		$ 5,500
Ownership %		89.70%
Gain (loss) on investments	$ (47)	$ (100)

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SUPPLEMENTAL CASH FLOW AND SIGNIFICANT NONCASH TRANSACTION DISCLOSURES (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020
Supplemental Disclosure of Cash Flow Information:
Interest paid, net of capitalized interest of $1,579 and $2,368 for the nine months ended September 30, 2021 and 2020, respectively	$ 29,220	$ 18,945
Interest capitalized	1,579	2,368
Supplemental Disclosure of Significant Noncash Transactions:
Accrued improvements to real estate	1,721	2,393
Redeemable common stock payable	3,385	262
Distributions paid to common stockholders through common stock issuances pursuant to the dividend reinvestment plan	0	262
Accrued preferred dividends	225	226
PPP notes forgiveness	1,500	0
Assets and liabilities assumed in connection with Battery Point acquisition:
Real estate	0	56,148
Notes payable	0	36,003
Other assets	0	21
Other liabilities	0	355
Redeemable non-controlling interest	0	3,024
Series A-3 preferred units payable	$ 0	$ 16,000

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REPORTING SEGMENTS (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021 USD ($) segment	Sep. 30, 2020 USD ($)	Sep. 30, 2021 USD ($)	Sep. 30, 2021 USD ($) property	Sep. 30, 2021 USD ($) segment	Sep. 30, 2020 USD ($)	Dec. 31, 2020 USD ($)
Segment Reporting [Abstract]
Number of reportable segments	3			3	3
Income Statement [Abstract]
Revenues	$ 45,769	$ 27,745	$ 129,201			$ 75,869
Total expenses	(68,237)	(32,254)	(170,923)			(80,131)
Total other (loss) income	(3,078)	(2,859)	43,975			(16,885)
Net loss	(25,546)	(7,368)	2,253			(21,147)
Assets and Liabilities held for Sale
Assets	1,629,128		1,629,128	$ 1,629,128	$ 1,629,128		$ 1,731,665
Goodwill	13,534		13,534	13,534	13,534		16,342
Impairment charges on real estate	10,971	0	10,971			0
Strategic Opportunistic Properties
Income Statement [Abstract]
Revenues	28,050	22,548	88,187			64,752
Total expenses	(52,891)	(26,285)	(128,418)			(66,928)
Total other (loss) income	(4,435)	(2,863)	42,527			(16,939)
Net loss	(29,276)	(6,600)	2,296			(19,115)
Assets and Liabilities held for Sale
Assets	1,274,093		1,274,093	1,274,093	1,274,093		1,404,509
Goodwill	9,489		9,489	9,489	$ 9,489		12,297
Impairment charges on real estate	2,800		2,800
Single-Family Homes
Segment Reporting [Abstract]
Number of reportable segments | segment					1
Income Statement [Abstract]
Revenues	5,566	5,197	16,436			11,117
Total expenses	(6,398)	(5,969)	(19,581)			(13,203)
Total other (loss) income	81	4	159			54
Net loss	(751)	(768)	(2,986)			(2,032)
Assets and Liabilities held for Sale
Assets	202,349		202,349	202,349	$ 202,349		182,486
Goodwill	0		0	0	$ 0		0
Hotels
Segment Reporting [Abstract]
Number of reportable segments | segment					1
Income Statement [Abstract]
Revenues	12,153	0	24,578			0
Total expenses	(8,948)	0	(22,924)			0
Total other (loss) income	1,276	0	1,289			0
Net loss	4,481	$ 0	2,943			$ 0
Assets and Liabilities held for Sale
Assets	152,686		152,686	152,686	$ 152,686		144,670
Goodwill	$ 4,045		$ 4,045	$ 4,045	$ 4,045		$ 4,045

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PORT MEZZANINE EQUITY - Additional Information (Details) $ / shares in Units, $ in Thousands				9 Months Ended	36 Months Ended
	Jul. 01, 2020 USD ($) property shares	Nov. 22, 2019 USD ($) $ / shares shares	Nov. 06, 2019 USD ($) $ / shares shares	Sep. 30, 2020 USD ($)	Nov. 14, 2012 USD ($)	Dec. 31, 2022 $ / shares	Nov. 04, 2022 $ / shares	Dec. 31, 2021 $ / shares	Nov. 04, 2021 $ / shares	Sep. 30, 2021 shares	Dec. 31, 2020 shares	Nov. 04, 2020 $ / shares
Class of Stock [Line Items]
Preferred stock, shares authorized (in shares) | shares										10,000,000	10,000,000
Issuance of common stock | $				$ 262	$ 561,700
Battery Point
Class of Stock [Line Items]
Shares acquired during period (in shares) | shares	1,000,000
Single-family Home | Battery Point
Class of Stock [Line Items]
Number of homes | property	559
BPT Holdings, LLC | PORT OP LP | Battery Point
Class of Stock [Line Items]
Common equity units received in transaction (in units) | shares	510,816
Percent of outstanding common equity units received in transaction	4.50%
Common equity units received in transaction | $	$ 3,000
Redemption period	1 year
Preferred Class A | Pacific Oak Residential Trust, Inc.
Class of Stock [Line Items]
Issuance of common stock (in shares) | shares			15,000
Preferred stock, shares authorized (in shares) | shares			25,000,000
Issuance of common stock (in dollars per share) | $ / shares			$ 1,000
Issuance of common stock | $			$ 15,000
Dividend rate, percentage			6.00%
Percent of outstanding shares as benchmark for redemption			10.00%
Preferred stock, redemption price (in dollars per share) | $ / shares												$ 1,120
Conversion price of preferred stock into common stock (in dollars per share) | $ / shares			$ 1,120
Preferred Class A | Pacific Oak Residential Trust, Inc. | Forecast
Class of Stock [Line Items]
Issuance of common stock (in dollars per share) | $ / shares							$ 1,120		$ 1,000
Preferred Class A | Pacific Oak Residential Trust, Inc. | If All Shares are Not Redeemed
Class of Stock [Line Items]
Dividend rate, percentage			12.00%
Preferred Class B | Pacific Oak Residential Trust, Inc.
Class of Stock [Line Items]
Issuance of common stock (in shares) | shares		125
Issuance of common stock (in dollars per share) | $ / shares		$ 1,000
Issuance of common stock | $		$ 100
Dividend rate, percentage		12.50%
Preferred Class B | Pacific Oak Residential Trust, Inc. | Forecast
Class of Stock [Line Items]
Issuance of common stock (in dollars per share) | $ / shares						$ 1,000		$ 1,050

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PORT MEZZANINE EQUITY - Reconciliation (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Dec. 31, 2020	Dec. 31, 2019
Amounts
Balance	$ 519,712	$ 277,388
Balance	$ 510,667	254,957
Common stock, shares outstanding (in shares)	94,264,402		98,054,582
Preferred Stock | Preferred Class A
Amounts
Balance	$ 15,134	14,909
Dividends Available Upon Redemption	636	781
Dividends Paid	(636)	(556)
Balance	$ 15,134	$ 15,134
Common stock, shares outstanding (in shares)	15,000	15,000	15,000	15,000
Preferred Stock | Preferred Class B
Amounts
Balance	$ 99	$ 99
Dividends Available Upon Redemption	8	7
Dividends Paid	(8)	(7)
Balance	$ 99	$ 99
Common stock, shares outstanding (in shares)	125	125	125	125

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PORT MEZZANINE EQUITY - Redeemable Non-controlling Interest Activities (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2021 USD ($)
Redeemable Noncontrolling Interest, Equity, Common, Carrying Amount [Roll Forward]
Beginning balance	$ 2,968
Ending balance	2,855
PORT OP LP | Battery Point | BPT Holdings, LLC
Redeemable Noncontrolling Interest, Equity, Common, Carrying Amount [Roll Forward]
Beginning balance	2,968
Net loss attributable to redeemable noncontrolling interest	(113)
Ending balance	$ 2,855

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RESTRICTED STOCK (Details) - USD ($)			3 Months Ended		9 Months Ended
	Sep. 01, 2021	Mar. 27, 2020	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Change in subordinated performance fee due upon termination to affiliate			$ 1,545,000	$ (1,121,000)	$ 1,745,000	$ (814,000)
Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares vested (in shares)	1,157,448
Number of shares purchased (in shares)	584,267
Stock repurchased during period	$ 5,655,705
Stock repurchased during period, price per share (in dollars per share)	$ 9.68
Change in subordinated performance fee due upon termination to affiliate			$ 1,500,000		$ 1,500,000
Fair value (in dollars per share)			$ 9.61		$ 9.61
Restricted Stock | After a One Year Period
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares available for redemption (in shares)	513,467
Restricted Stock | Within a 60 Day Period
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares available for redemption (in shares)	59,714
Restricted Stock | KBS Capital Advisors LLC
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Issuance of common stock (in shares)		3,411,737
Restricted Stock | GKP Holding LLC
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percent of shares available for redemption upon vesting	50.00%
Percent of shares available for redemption upon outstanding redemption requests	50.00%
Restricted Stock | GKP Holding LLC | KBS Capital Advisors LLC
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares transferred (in shares)	2,254,289

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COMMITMENTS AND CONTINGENCIES - Additional Information (Details) $ in Millions	3 Months Ended	9 Months Ended
	Sep. 30, 2021 USD ($) property	Sep. 30, 2021 USD ($) property
Loss Contingencies [Line Items]
Remaining lease term	92 years 6 months	92 years 6 months
Encore Hospitality, LLC | Q and C Hotel
Loss Contingencies [Line Items]
Term agreement, extension period		5 years
Base fee as percentage of gross revenue		4.00%
Management agreement, fees accrued	$ 0.1	$ 0.1
Marriott International | Q and C Hotel
Loss Contingencies [Line Items]
Brand services fee as percent of total room revenue		2.00%
Fees incurred to management agreement	0.1	$ 0.3
Brand services fee as percent of total room revenue, after three years		5.00%
Monthly marketing fund contribution fees as percent of gross room sales		1.50%
Doubletree Management LLC | Springmaid Beach Resort
Loss Contingencies [Line Items]
Base fee as percentage of total operating revenue in year one		2.50%
Base fee as percentage of total operating revenue in year two		2.75%
Base fee as percentage of total operating revenue, thereafter		3.00%
Management fee as percent of any campground revenue		2.00%
Incentive fee as percent of operating cash flow		15.00%
Percent of total investments		12.00%
Brand services fee as percent of total room revenue		4.00%
Fees incurred to management agreement	$ 0.3	$ 0.6
Hotel
Loss Contingencies [Line Items]
Number of real estate properties | property	2	2

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COMMITMENTS AND CONTINGENCIES - Lease Cost (Details) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2021 USD ($)	Sep. 30, 2021 USD ($)
Commitments and Contingencies Disclosure [Abstract]
Right-of-use asset (included in real estate held for investment, net)	$ 8,074	$ 8,074
Lease obligation (included in other liabilities)	$ 9,339	$ 9,339
Remaining lease term	92 years 6 months	92 years 6 months
Discount rate	4.80%	4.80%
Interest on lease obligation for the nine months ended September 30, 2021		$ 441
210 West 31st
Real Estate Properties [Line Items]
Right-of-use asset impairment	$ 1,200	$ 1,200

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COMMITMENTS AND CONTINGENCIES - Future Minimum Lease Payments (Details) $ in Thousands	Sep. 30, 2021 USD ($)
Commitments and Contingencies Disclosure [Abstract]
October 1, 2021 through December 31, 2021	$ 90
2022	360
2023	360
2024	360
2025	393
Thereafter	52,563
Total expected minimum lease obligations	54,126
Less: Amount representing interest	(44,787)
Present value of net minimum lease payments	$ 9,339

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COMMITMENTS AND CONTINGENCIES - Paycheck Protection Program (Details) - USD ($) $ in Millions	Mar. 13, 2021	Feb. 10, 2021	Sep. 30, 2021	Jul. 06, 2021	Dec. 31, 2020
Other liabilities
Real Estate [Line Items]
PPP balance			$ 2.4		$ 1.5
Springmaid Beach Resort
Real Estate [Line Items]
PPP note, amount approved for forgiveness				$ 1.3
Hotel | Q and C Hotel
Real Estate [Line Items]
Funding received		$ 0.6
Hotel | Springmaid Beach Resort
Real Estate [Line Items]
Funding received	$ 1.8

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SUBSEQUENT EVENTS - Acquisition (Details) - Subsequent Event - Richardson Portfolio $ in Millions	Oct. 18, 2021 USD ($) ft²
Subsequent Event [Line Items]
Interests acquired	10.00%
Payments to acquire interest | $	$ 4.0
Area of land (in acres) | ft²	14
Ownership percentage	100.00%

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SUBSEQUENT EVENTS - Bond Offering (Details) - Series B Debentures - Bonds Payable $ in Millions	1 Months Ended
	Nov. 01, 2021 ILS (₪)	Nov. 01, 2021 USD ($)	Mar. 04, 2021	Feb. 16, 2020 ILS (₪)	Feb. 16, 2020 USD ($)
Subsequent Event [Line Items]
Maximum borrowing capacity				₪ 254,100,000	$ 74.1
Percent of discount at issuance			1.90%
Subsequent Event | Public Offering
Subsequent Event [Line Items]
Maximum borrowing capacity	₪ 536,400,000
Percent of discount at issuance	2.60%
Proceeds from issuance of debt	₪ 522,400,000	$ 166.8
Subsequent Event | Private Offering
Subsequent Event [Line Items]
Maximum borrowing capacity	₪ 53,600,000
Percent of discount at issuance	3.10%
Proceeds from issuance of debt	₪ 52,000,000	$ 16.6

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SUBSEQUENT EVENTS - Refinancing (Details) - Subsequent Event - Madison Square Mortgage Loan - Mortgages	Oct. 07, 2021 USD ($)
Subsequent Event [Line Items]
Face amount	$ 27,000,000
Long-term debt	17,500,000
Unused borrowing capacity, amount	$ 9,500,000
Contractual Interest Rate	4.625%