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, 2022

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 11, 2022, there were 104,041,817 outstanding shares of common stock of Pacific Oak Strategic Opportunity REIT, Inc.

PACIFIC OAK STRATEGIC OPPORTUNITY REIT, INC.

FORM 10-Q

September 30, 2022

INDEX 

PART I.	FINANCIAL INFORMATION		2
	Item 1.	Financial Statements	2
		Consolidated Balance Sheets as of September 30, 2022 (unaudited) and December 31, 2021	2
		Consolidated Statements of Operations (unaudited) for the Three and Nine Months Ended September 30, 2022 and 2021	3
		Consolidated Statements of Equity (unaudited) for the Three and Nine Months Ended September 30, 2022 and 2021	4
		Consolidated Statements of Cash Flows (unaudited) for the Nine Months Ended September 30, 2022 and 2021	6
		Condensed Notes to Consolidated Financial Statements as of September 30, 2022 (unaudited)	7
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	40
	Item 4.	Controls and Procedures	42
PART II.	OTHER INFORMATION		43
	Item 1.	Legal Proceedings	43
	Item 1A.	Risk Factors	43
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	43
	Item 3.	Defaults upon Senior Securities	44
	Item 4.	Mine Safety Disclosures	44
	Item 5.	Other Information	44
	Item 6.	Exhibits	45
SIGNATURES			46

1

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

PACIFIC OAK STRATEGIC OPPORTUNITY REIT, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share amounts)

	September 30, 2022		December 31, 2021
	(unaudited)
Assets
Real estate held for investment, net	$	1,234,197	$	1,118,550
Real estate held for sale, net	—		96,249
Real estate equity securities	63,784		112,096
Total real estate and real estate-related investments, net	1,297,981		1,326,895
Cash and cash equivalents	85,368		84,172
Restricted cash	57,325		21,259
Investments in unconsolidated entities	72,838		88,256
Rents and other receivables, net	21,140		21,795
Above-market leases, net	2,364		2,642
Due from affiliate	13		7,039
Prepaid expenses and other assets	21,902		18,108
Goodwill	5,436		13,534
Assets related to real estate held for sale, net	—		919
Total assets	$	1,564,367	$	1,584,619
Liabilities, mezzanine equity and equity
Notes and bonds payable related to real estate held for investment, net	$	1,042,860	$	935,073
Note payable related to real estate held for sale, net	—		63,876
Notes and bonds payable, net	1,042,860		998,949
Accounts payable and accrued liabilities	27,236		23,852
Due to affiliates	3,252		1,903
Below-market leases, net	2,986		4,080
Other liabilities	52,431		42,851
Redeemable common stock payable	1,567		684
Restricted stock payable	508		508
Dividends payable	—		11,016
Liabilities related to real estate held for sale, net	—		662
Total liabilities	1,130,840		1,084,505
Commitments and contingencies
Mezzanine equity
Noncontrolling cumulative convertible redeemable preferred stock	15,233		15,233
Redeemable noncontrolling interest	—		2,822
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, 104,076,881 and 94,141,251 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively	1,041		941
Additional paid-in capital	909,533		818,440
Cumulative distributions and net loss	(494,998)		(347,691)
Total Pacific Oak Strategic Opportunity REIT, Inc. stockholders’ equity	415,576		471,690
Noncontrolling interests	2,718		10,369
Total equity	418,294		482,059
Total liabilities, mezzanine equity and equity	$	1,564,367	$	1,584,619

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 per share amounts)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Revenues:
Rental income	$	31,445	$	29,504	$	89,806	$	94,812
Hotel revenues	9,182		12,153		27,952		24,578
Other operating income	830		923		2,559		3,118
Dividend income from real estate equity securities	2,148		3,189		5,354		6,693
Total revenues	43,605		45,769		125,671		129,201
Expenses:
Operating, maintenance, and management	12,342		10,668		32,560		31,444
Real estate taxes and insurance	5,650		5,262		15,753		15,949
Hotel expenses	5,377		6,483		17,485		15,715
Asset management fees to affiliate	3,630		3,422		9,945		10,802
General and administrative expenses	2,504		2,365		8,486		7,120
Foreign currency transaction (gain) loss, net	(6,001)		2,271		(37,100)		(568)
Depreciation and amortization	12,717		13,895		39,379		45,969
Interest expense	12,976		10,092		33,319		30,713
Impairment charges on real estate	11,942		10,971		11,942		10,971
Impairment charges on goodwill	8,098		2,808		8,098		2,808
Total expenses	69,235		68,237		139,867		170,923
Other (loss) income:
Equity in loss of unconsolidated entities	(3,376)		(569)		(6,130)		(144)
Casualty-related gain	—		27		—		27
Other interest income	61		55		155		148
(Loss) gain on real estate equity securities	(20,722)		(2,614)		(48,312)		12,939
Change in subordinated performance fee due upon termination to affiliate	—		(1,545)		—		(1,745)
(Loss) gain on sale of real estate	(75)		216		3,273		31,385
Gain on extinguishment of debt	—		1,352		2,367		1,365
Gain from consolidation of previously unconsolidated entity	18,742		—		18,742		—
Total other (loss) income, net	(5,370)		(3,078)		(29,905)		43,975
Net (loss) income	(31,000)		(25,546)		(44,101)		2,253
Net loss attributable to noncontrolling interests	881		1,188		844		1,949
Net loss attributable to redeemable noncontrolling interest	—		33		81		113
Preferred stock dividends	(373)		(191)		(1,091)		(644)
Net (loss) income attributable to common stockholders	$	(30,492)	$	(24,516)	$	(44,267)	$	3,671
Net (loss) income per common share, basic and diluted	$	(0.29)	$	(0.25)	$	(0.43)	$	0.04
Weighted-average number of common shares outstanding, basic and diluted	104,180,800		97,659,731		103,351,040		97,879,983

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, 2022 and 2021

(unaudited)

(in thousands, except share amounts)

	Common Stock			Additional Paid-in Capital		Cumulative Distributions and Net Loss		Total Stockholders' Equity		Noncontrolling Interests		Total Equity
	Shares	Amounts
Balance, June 30, 2022	104,319,092	$	1,043	$	914,463	$	(464,506)	$	451,000	$	10,373	$	461,373
Net loss	—	—		—		(30,492)		(30,492)		(881)		(31,373)
Transfers to redeemable common stock payable, net	—	—		(188)		—		(188)		—		(188)
Redemptions of common stock	(243,135)	(2)		(2,311)		—		(2,313)		—		(2,313)
Stock distribution issued	924	—		—		—		—		—		—
Acquisition of noncontrolling interest	—	—		—		—		—		1,125		1,125
Noncontrolling interests distributions	—	—		(2,431)		—		(2,431)		(8,199)		(10,630)
Noncontrolling interest contribution	—	—		—		—		—		300		300
Balance, September 30, 2022	104,076,881	$	1,041	$	909,533	$	(494,998)	$	415,576	$	2,718	$	418,294
	Common Stock			Additional Paid-in Capital		Cumulative Distributions and Net 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	—	—		—		(24,516)		(24,516)		(1,188)		(25,704)
Transfers to redeemable common stock payable, net	—	—		(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

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, 2022 and 2021

(unaudited)

(in thousands, except share amounts)

	Common Stock			Additional Paid-in Capital		Cumulative Distributions and Net Loss		Total Stockholders' Equity		Noncontrolling Interests		Total Equity
	Shares	Amounts
Balance, December 31, 2021	94,141,251	$	941	$	818,440	$	(347,691)	$	471,690	$	10,369	$	482,059
Net loss	—	—		—		(44,267)		(44,267)		(844)		(45,111)
Transfers to redeemable common stock payable, net	—	—		(883)		—		(883)		—		(883)
Redemptions of common stock	(485,471)	(4)		(4,583)		—		(4,587)		—		(4,587)
Adjustment to value of redeemable noncontrolling interest	—	—		—		(3,946)		(3,946)		—		(3,946)
Stock distribution issued	10,421,101	104		98,990		(99,094)		—		—		—
Acquisition of noncontrolling interest	—	—		—		—		—		1,125		1,125
Noncontrolling interests distributions	—	—		(2,431)		—		(2,431)		(8,232)		(10,663)
Noncontrolling interest contribution	—	—		—		—		—		300		300
Balance, September 30, 2022	104,076,881	$	1,041	$	909,533	$	(494,998)	$	415,576	$	2,718	$	418,294
	Common Stock			Additional Paid-in Capital		Cumulative Distributions and Net 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 payable, net	—	—		(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

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,
	2022		2021
Cash Flows from Operating Activities:
Net (loss) income	$	(44,101)	$	2,253
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Change in subordinated performance fee due upon termination to affiliate	—		1,745
Impairment charges on real estate	11,942		10,971
Impairment charges on goodwill	8,098		2,808
Equity in loss of unconsolidated entities	6,130		144
Depreciation and amortization	39,379		45,969
Loss (gain) on real estate equity securities	48,312		(12,939)
Loss (gain) on sale of real estate	(3,273)		(31,385)
Gain from consolidation of previously unconsolidated entity	(18,742)		—
Unrealized (gain) loss on interest rate caps	(1,103)		17
Deferred rent	(1,966)		(1,529)
Gain on extinguishment of debt	(2,367)		(1,365)
Amortization of above- and below-market leases, net	(762)		(1,015)
Amortization of deferred financing costs and discount on bonds and notes payable	5,953		4,376
Foreign currency transaction gain, net	(37,100)		(568)
Changes in assets and liabilities:
Rents and other receivables	2,403		(1,898)
Prepaid expenses and other assets	(3,010)		(4,371)
Accounts payable and accrued liabilities	(955)		(984)
Due to affiliates	1,201		(726)
Other liabilities	(1,379)		(190)
Net cash provided by operating activities	8,660		11,313
Cash Flows from Investing Activities:
Acquisitions of real estate	(6,689)		(4,107)
Improvements to real estate	(16,515)		(12,923)
Proceeds from sales of real estate, net	97,933		194,528
Cash and restricted cash received upon consolidation of previously unconsolidated entity	1,834		—
Contributions to unconsolidated entities	(23,887)		(4,769)
Distributions of capital from unconsolidated entities	569		—
Purchase of interest rate cap	(566)		(18)
Proceeds from the sale of real estate equity securities	—		14,439
Advance to affiliate	(1,201)		—
Proceeds from advances due from affiliates	8,227		—
Escrow deposits for future real estate sales	17,000		—
Proceeds for future development obligations	—		6,203
Funding for development obligations	(6,407)		—
Net cash provided by investing activities	70,298		193,353
Cash Flows from Financing Activities:
Proceeds from notes and bonds payable	191,667		157,246
Principal payments on notes and bonds payable	(190,515)		(233,964)
Payments of deferred financing costs	(4,686)		(2,745)
Payments to redeem common stock	(4,587)		(29,552)
Payment to redeem restricted stock	—		(5,656)
Payment of prepaid other offering costs	—		(164)
Payment to redeem noncontrolling interests	(6,687)		—
Distributions paid	(11,016)		—
Preferred dividends paid	(1,091)		(644)
Noncontrolling interests distributions	(10,663)		—
Noncontrolling interest contribution	300		183
Other financing proceeds	—		2,367
Net cash used in financing activities	(37,278)		(112,929)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(4,418)		182
Net increase in cash, cash equivalents and restricted cash	37,262		91,919
Cash, cash equivalents and restricted cash, beginning of period	105,431		74,319
Cash, cash equivalents and restricted cash, end of period	$	142,693	$	166,238

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, 2022

(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.

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, 2021. 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, 2021 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, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022.

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.

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, 2022

(unaudited)

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 5, the Company has $383.0 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 pay downs 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. See Note 5 for further details.

Reclassifications

Certain prior period amounts have been reclassified to conform to the current period presentation. In that regard, the Company reclassified held for sale activity related to dispositions in its consolidated balance sheets as of December 31, 2021.

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 escrow deposits for future real estate sales and lender impound reserve accounts on the Company’s borrowings for security deposits, property taxes, insurance, debt service obligations and capital improvements and replacements.

Segments

The Company operates in three reportable business segments: opportunistic real estate and real estate-related investments, residential homes, and hotel, which is how the Company’s management manages the business. In general, the Company intends to hold its investments in opportunistic real estate and real estate-related assets for capital appreciation. Traditional performance metrics of opportunistic real estate and 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 real estate-related assets as similar investments and aggregated them into one reportable business segment. The Company owns residential homes in 18 markets which are all aggregated into one reportable business segment due to the homes being stabilized, having high occupancy rates and have similar economic characteristics. Additionally, as of September 30, 2022, the Company owns one hotel which is aggregated into one reportable business segment due to the nature of the hotel business with short-term stays. See Note 10 for further details.

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, 2022

(unaudited)

Per Share Data

The Company determines basic earnings per share and basic earnings per unit based on the weighted average number of shares of common stock or units, as applicable, outstanding during the period and the Company considers any participating securities, including unvested restricted stock, for purposes of applying the two-class method. The Company determines diluted earnings per share and diluted earnings per unit based on the weighted average number of shares of common stock or units, as applicable, outstanding combined with the incremental weighted average number of shares or units, as applicable, that would have been outstanding assuming all potentially dilutive securities were converted into shares of common stock or units, as applicable, at the earliest date possible. The noncontrolling Series A convertible redeemable preferred shares of Pacific Oak Residential Trust, Inc. (“PORT”) were not included as the shares are contingent on PORT being public.

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 Adopted Accounting Pronouncements

Reference Rate Reform — In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (ASC Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional relief to all entities, subject to meeting certain criteria, that have contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. Additionally, in January 2021, the FASB issued ASU No. 2021-01, Reference Rate Reform (ASC Topic 848), which clarifies that certain optional expedients and exceptions in ASC 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition. The Company adopted ASC Topic 848 on September 30, 2022 and the related prospective optional expedients for its variable rate debt and related derivatives is not expected to have a material impact to the Company.

There have been no other recent accounting pronouncements, changes in accounting pronouncements or recently adopted accounting guidance during the nine months ended September 30, 2022 that are of significance or potential significance to the Company.

3. REAL ESTATE HELD FOR INVESTMENT

As of September 30, 2022, the Company owned eight office properties, one office portfolio consisting of two office buildings and 14 acres of undeveloped land, encompassing, in the aggregate, approximately 3.2 million rentable square feet. As of September 30, 2022, these properties were 70% occupied. As of September 30, 2022, the Company owned one residential home portfolio consisting of 2,458 residential homes and encompassing approximately 3.5 million rental square feet. In addition, the Company owned two apartment properties, containing 609 units and encompassing approximately 0.5 million rentable square feet, which were 96% and 95% occupied, respectively, as of September 30, 2022. As of September 30, 2022, the Company also owned one hotel property with 196 rooms and three investments in undeveloped land with approximately 800 developable acres and one office/retail development property. The following table summarizes the Company’s real estate held for investment as of September 30, 2022 and December 31, 2021, respectively (in thousands):

	September 30, 2022		December 31, 2021
Land	$	275,715	$	245,200
Buildings and improvements	1,062,342		954,851
Tenant origination and absorption costs	30,785		43,375
Total real estate, cost	1,368,842		1,243,426
Accumulated depreciation and amortization	(134,645)		(124,876)
Total real estate held for investment, net	$	1,234,197	$	1,118,550

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, 2022

(unaudited)

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, 2022, the leases, excluding options to extend, apartment leases and residential homes, which have terms that are generally one year or less, had remaining terms of up to 12.9 years with a weighted-average remaining term of 3.7 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 as of September 30, 2022 and December 31, 2021, respectively.

During the three and nine months ended September 30, 2022, the Company recognized deferred rent from tenants of $0.5 million and $2.0 million, respectively, net of lease incentive amortization. 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. As of September 30, 2022 and December 31, 2021, the cumulative deferred rent receivable balance, including unamortized lease incentive receivables, was $17.8 million and $16.3 million, respectively, and is included in rents and other receivables on the accompanying consolidated balance sheets. The cumulative deferred rent balance included $3.0 million and $3.3 million of unamortized lease incentives as of September 30, 2022 and December 31, 2021, respectively.

As of September 30, 2022, the future minimum rental income from the Company’s properties, excluding apartment leases and residential homes, under non-cancelable operating leases was as follows (in thousands):

October 1, 2022 through December 31, 2022	$	15,105
2023	59,457
2024	54,145
2025	43,184
2026	30,074
Thereafter	72,929
	$	274,894

As of September 30, 2022, 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
Public Administration	14	$	7,762	12.6	%
Professional, Scientific, and Technical Services	38	7,346		11.9	%
Computer Systems Design and Related Services	30	7,037		11.4	%
		$	22,145	35.9	%

_____________________

(1) Annualized base rent represents annualized contractual base rental income as of September 30, 2022, 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.

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, 2022

(unaudited)

Geographic Concentration Risk

As of September 30, 2022, the Company’s real estate investments in California and Georgia represented 21.9% and 10.3%, respectively, 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 and Georgia 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.

Hotel Revenues

The following table provides detailed information regarding the Company’s hotel revenues for its two hotel properties (the Springmaid Beach Resort was sold on September 1, 2022) during the three and nine months ended September 30, 2022 (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Hotel revenues:
Room	$	7,223	$	9,396	$	21,423	$	18,508
Food, beverage and convention services	217		1,452		807		2,830
Campground	984		280		3,379		792
Other	757		1,025		2,343		2,448
Hotel revenues	$	9,181	$	12,153	$	27,952	$	24,578

Contract Liabilities

The following table summarizes the Company’s contract liabilities, which are comprised of hotel advanced deposits and deferred proceeds from historical and future land sales 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, 2022 and December 31, 2021 (in thousands):

	September 30, 2022		December 31, 2021
Contract liability	$	23,115	$	7,313
Revenue recognized in the period from:
Amounts included in contract liability at the beginning of the period	$	449	$	159

Recent Real Estate Sales

On January 24, 2022, the Company, through an indirect wholly owned subsidiary, sold two office buildings related to the Richardson Portfolio and containing 141,950 rentable square feet in Richardson, Texas (“Greenway Buildings”) to a purchaser unaffiliated with the Company or the Advisor (as defined in Note 7), for $11.0 million, before closing costs and credits. The carrying value of the Greenway Buildings as of the disposition date was $5.6 million, which was net of $3.2 million of accumulated depreciation and amortization. In connection with the sale of the Greenway Buildings, the Company repaid $9.1 million of the outstanding principal balance due under the mortgage loan secured by the Greenway Buildings. The Company recognized a gain on sale of $3.6 million related to the disposition of the Greenway Buildings, net of closing costs and adjustments. As a result of the sale of the Greenway Buildings, certain assets and liabilities were reclassified to held for sale on the consolidated balance sheets as of December 31, 2021.

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, 2022

(unaudited)

On September 1, 2022, the Company, through an indirect wholly owned subsidiary, sold the Springmaid Beach Resort to a purchaser unaffiliated with the Company or the Advisor for $91.0 million, before closing costs and credits. The carrying value of the Springmaid Beach Resort as of the disposition date was $87.2 million, which was net of $3.4 million of accumulated depreciation and amortization and $2.5 million of impairment charges. In connection with the sale of the Springmaid Beach Resort, the Company repaid $52.0 million of the outstanding principal balance due under the mortgage loan secured by the Springmaid Beach Resort and $1.3 million of the proceeds were held for contingent repairs related to the property. As a result of the sale of the Springmaid Beach Resort, certain assets and liabilities were reclassified to held for sale on the consolidated balance sheets as of December 31, 2021.

Park Highlands Land Purchase and Sale Contracts

The Company enters into land purchase and sale contracts to dispose of Park Highlands developed and undeveloped land. Under these contracts, the Company will receive a stated deposit from the buyer, held in escrow, in consideration for the right, but not the obligation, to purchase the land at a future point in time with predetermined terms. After a contractually specified date, the deposits are not refundable even in the event the contract terminates, at which point the Company records restricted cash and other liabilities on the consolidated balance sheets.

On November 11, 2021, the Company, through an indirect wholly owned subsidiary, entered into a purchase and sale agreement, as amended, to sell 234 developable acres of undeveloped land located in North Las Vegas, Nevada, (“Park Highlands”) for gross sales proceeds of approximately $121.4 million, before closing costs and credits. The due diligence period expired on February 23, 2022 and the buyer’s deposit of $13.5 million is no longer refundable and is recognized as restricted cash on the consolidated balance sheets. This deposit is held in an escrow account and will become available once the sale is completed. Actions are required by the Company to complete the planned sale.

On March 10, 2022, the Company, through an indirect wholly owned subsidiary, entered into a purchase and sale agreement, as amended, to sell 77 developable acres of Park Highlands for gross sales proceeds of approximately $52.9 million, before closing costs and credits. The due diligence period expired on May 31, 2022 and the buyer’s deposit of $3.5 million is no longer refundable and is recognized as restricted cash on the consolidated balance sheets. This deposit is held in an escrow account and will become available once the sale is completed. Actions are required by the Company to complete the planned sale.

On June 22, 2022, the Company, through an indirect wholly owned subsidiary, entered into a purchase and sale agreement, to sell 67 developable acres of Park Highlands for gross sales proceeds of approximately $55.0 million, before closing costs and credits. The due diligence period expired on October 20, 2022, after which the buyer’s deposit of $3.0 million is no longer be refundable and is recognized as restricted cash on the consolidated balance sheets. This deposit is held in an escrow account and will become available once the sale is completed. Actions are required by the Company to complete the planned sale.

Impairment of Real Estate

During the three and nine months ended September 30, 2022, the Company recorded impairment charges on real estate in the aggregate of $11.9 million, to write down the carrying value of 210 West 31st Street by $4.4 million, a development property located in New York, New York (“210 West 31st Street”) and Oakland City Center by $5.0 million, an office property located in Oakland, California, to their estimated fair value due to a change in the projected hold period and related decrease in projected cash flows. Additionally, the Company determined that based on the amended sale price of the Springmaid Beach Resort, the book value was not recoverable and the Company wrote down the carrying value of Springmaid Beach Resort by $2.5 million.

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 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.

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, 2022

(unaudited)

PORT II Consolidation

On July 1, 2022, the Company became the primary beneficiary of Pacific Oak Residential Trust II, Inc. (“PORT II”), a related party and consolidated PORT II into the Company's financial statements. As of July 1, 2022, PORT II had 588 residential homes. Refer to Note 8 for additional details on PORT II and the consolidation. The following table summarizes the components of the PORT II and the gain recognized by the Company (in thousands):

PORT II's assets and liabilities, based upon fair values as determined by the Company, as follows:
Assets:
Real estate held for investment, net	$	135,096
Cash and cash equivalents	1,473
Restricted cash	361
Prepaid expenses and other assets	639
Total Assets	137,569
Liabilities:
Notes payable, net	(82,646)
Accounts payable and accrued liabilities	(804)
Due to affiliates	(147)
Other liabilities	(1,499)
Total Liabilities	(85,096)
Noncontrolling interest	(1,125)
Elimination of the Company’s investment in PORT II	(32,606)
Gain from consolidation of previously unconsolidated entity	$	18,742

4. REAL ESTATE EQUITY SECURITIES

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, 2022 and 2021 (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Net (loss) gain recognized during the period on real estate equity securities	$	(20,722)	$	(2,614)	$	(48,312)	$	12,939
Less net gain recognized during the period on real estate equity securities sold during the period	—		—		—		(225)
Unrealized (loss) gain recognized during the reporting period on real estate equity securities held at the end of the period	$	(20,722)	$	(2,614)	$	(48,312)	$	12,714

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, 2022

(unaudited)

5. NOTES AND BONDS PAYABLE

As of September 30, 2022 and December 31, 2021, 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, 2022		Book Value as of December 31, 2021		Contractual Interest Rate as of September 30, 2022	Effective Interest Rate at September 30, 2022 (1)	Payment Type (2)	Maturity Date (3)
Richardson Portfolio Mortgage Loan	$	18,944	$	28,470	LIBOR + 2.50%	5.64%	Principal & Interest	11/1/2022 (4)
Park Centre Mortgage Loan	26,104		26,185		BSBY + 1.75%	4.88%	Principal & Interest	06/27/2023
1180 Raymond Mortgage Loan (5)	31,070		31,070		BSBY + 2.25%	5.38%	Interest Only	12/01/2023
Pacific Oak SOR (BVI) Holdings, Ltd. Series B Debentures (6)	326,523		271,978		3.93%	3.93%	(6)	01/31/2026
Crown Pointe Mortgage Loan	53,758		52,315		SOFR + 2.30%	4.77%	Interest Only	04/01/2025
The Marq Mortgage Loan	60,998		61,874		BSBY + 1.55%	4.68%	Principal & Interest	06/06/2023
Eight & Nine Corporate Centre Mortgage Loan	48,095		48,545		BSBY + 1.60%	4.73%	Principal & Interest	06/08/2023
Georgia 400 Center Mortgage Loan	44,129		61,154		LIBOR + 1.55%	4.69%	Interest Only	05/22/2023
PORT Mortgage Loan 1	51,303		51,302		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 MetLife Loans	153,703		60,000		3.90%	3.90%	Interest Only	04/10/2026
Springmaid Beach Resort Mortgage Loan	(7)		55,491		(7)	(7)	(7)	(7)
Q&C Hotel Mortgage Loan	24,815		25,000		LIBOR + 2.50% (8)	5.64%	Principal & Interest	12/23/2022
Lincoln Court Mortgage Loan (5)	35,314		34,623		SOFR + 3.25%	5.72%	Interest Only	08/07/2025
Lofts at NoHo Commons Mortgage Loan	71,536		74,536		SOFR + 2.18% (9)	4.65%	Interest Only	09/09/2023
210 West 31st Street Mortgage Loan (5)	3,000		8,850		BSBY + 3.00%	6.13%	Principal & Interest	12/16/2022
Oakland City Center Mortgage Loan (5)	89,250		96,075		BSBY + 3.00%	6.13%	Principal & Interest	09/01/2023
Madison Square Mortgage Loan	17,671		17,500		4.63%	4.63%	Interest Only	10/07/2024
Total Notes and Bonds Payable principal outstanding	1,066,736		1,015,491
Discount on Notes and Bonds Payable, net (10)	(13,376)		(8,146)
Deferred financing costs, net	(10,500)		(8,396)
Total Notes and Bonds Payable, net	$	1,042,860	$	998,949

_____________________

(1) Contractual interest rate represents the interest rate in effect under the loan as of September 30, 2022. Effective interest rate is calculated as the actual interest rate in effect as of September 30, 2022 (consisting of the contractual interest rate and contractual floor rates), using interest rate indices at September 30, 2022, where applicable.

(2) Represents the payment type required under the loan as of September 30, 2022. 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, 2022; subject to certain conditions, the maturity dates of certain loans may be extended beyond the date shown.

(4) Subsequent to September 30, 2022, the Company extended the Richardson Portfolio Mortgage Loan to October 10, 2022.

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, 2022

(unaudited)

(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, 2022, the guaranteed amount in the aggregate was $41.9 million.

(6) See “Israeli Bond Financings” below.

(7) The Springmaid Beach Resort Mortgage Loan was paid off in conjunction with the sale of the Springmaid Beach Resort. See Note 3 for further details.

(8) The interest rate is variable at the higher of one-month LIBOR + 2.5% or 4.5%.

(9) The variable rate is at the higher of one-month SOFR or 1.75%, plus 2.18%.

(10) 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, 2022, the Company incurred $13.0 million and $33.3 million, respectively, of interest expense. Included in interest expense for the three and nine months ended September 30, 2022 was $1.0 million and $2.6 million, respectively, of amortization of deferred financing costs. Included in interest expense for the three and nine months ended September 30, 2022 was $1.1 million and $3.4 million, respectively, of amortization on discount on notes and bonds payable, net. Additionally, during the three and nine months ended September 30, 2022, the Company capitalized $0.7 million and $1.7 million, respectively, of interest related to its investments in undeveloped land.

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.

As of September 30, 2022 and December 31, 2021, the Company’s interest payable was $5.2 million and $6.6 million, respectively.

The following is a schedule of maturities, including principal amortization payments, for all notes and bonds payable outstanding as of September 30, 2022 (in thousands):

October 1, 2022 through December 31, 2022	$	49,443
2023	368,500
2024	126,512
2025	249,216
2026	273,065
Thereafter	—
	$	1,066,736

As of November 14, 2022, the Company had a total of $383.0 million of debt obligations scheduled to mature over the next 12 months. The Company has extension options with respect to $185.4 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 the Company 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 B Debentures. 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.

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, 2022

(unaudited)

The Company’s notes payable contain financial debt covenants, including minimum equity requirements and liquidity ratios. As of September 30, 2022, the Company was in compliance with all of these debt covenants with the exception that the Oakland City Center Mortgage Loan and Georgia 400 Center Mortgage Loan were not in compliance with the debt service coverage requirement. As a result of such non-compliance, the Company is required to provide a cash sweep for the Georgia 400 Center Mortgage Loan. Additionally, the Company may be required to partially pay down the Oakland City Center Mortgage Loan if the non-compliance continues through September 2023.

Israeli Bond Financings

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 November 1, 2021, Pacific Oak SOR BVI 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). On November 8, 2021, Pacific Oak SOR BVI also issued Series B Debentures in the amount of 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 ($16.7 million as of November 8, 2021).

Additionally, on May 2, 2022, Pacific Oak SOR BVI issued Series B Debentures in the amount of 320.4 million Israeli new Shekels par value through a private offering. The private offering Series B Debentures were issued at a 4.0% discount, resulting in a total consideration of 307.6 million Israeli new Shekels ($95.3 million as of May 2, 2022). The additional Series B Debentures have an equal level of security, pari passu, amongst themselves and between them and the initial Series B Debentures, without any right of precedence or preference between any of them.

The deed of trust that governs the Series B Debentures contain various financial covenants. As of September 30, 2022, the Company was in compliance with all of these financial debt covenants.

6. FAIR VALUE DISCLOSURES

The following were the face values, carrying amounts and fair values of the Company’s financial instruments as of September 30, 2022 and December 31, 2021, which carrying amounts do not approximate the fair values (in thousands):

	September 30, 2022						December 31, 2021
	Face Value		Carrying Amount		Fair Value		Face Value		Carrying Amount		Fair Value
Financial liabilities (Level 3):
Notes and bond payable	$	740,213	$	732,676	$	720,286	$	743,513	$	740,176	$	740,347
Financial liabilities (Level 1):
Pacific Oak SOR (BVI) Holdings, Ltd. Series B Debentures	$	326,523	$	310,184	$	306,099	$	271,978	$	258,773	$	274,697

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.

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, 2022

(unaudited)

As of September 30, 2022, 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	$	63,784	$	63,784	$	—	$	—
Asset derivative - interest rate caps	$	1,971	$	—	$	1,971	$	—
Nonrecurring Basis:
Impaired real estate	$	220,360	$	—	$	—	$	220,360
Impaired goodwill	$	5,436	$	—	$	—	$	5,436

As of September 30, 2022, 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, 2022. Oakland City Center 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 6.50% and a terminal cap rate of 5.75%. Additionally, the Springmaid Beach Resort was measured at it’s estimated fair value based on the contractual sale price. During the three and nine months ended September 30, 2022, the Company recorded impairment charges on real estate in the aggregate of $11.9 million, to write down the carrying value of 210 West 31st Street, Oakland City Center, and the Springmaid Beach Resort. The fair value of the Company's real estate were measured using significant other observable inputs (Level 2) and significant unobservable inputs (Level 3) for the three and nine months ended September 30, 2022, which included contractual sale price, discounted cash flows, terminal capitalization rates, and discount rates.

As of September 30, 2022, the Company determined that based on the sale of the Springmaid Beach Resort and a decline in projected cash flows for Oakland City Center, it was more likely than not that the fair value of the reporting units that included Oakland City Center and Springmaid Beach Resort were less than book value. The resulting real estate impairment charge on Oakland City Center and the sale of Springmaid Beach Resort, resulted in the fair value of the reporting units to be below fair value and the entirety of the goodwill associated to the reporting units to be written off. During the three and nine months ended September 30, 2022, the Company recorded goodwill impairment charges of $8.1 million in the consolidated statement of operations.

The following table summarizes the goodwill impairment activity during nine months ended September 30, 2022 (in thousands):

	Gross Goodwill		Accumulated Impairment		Net Goodwill
Balance, December 31, 2021	$	16,342	$	(2,808)	$	13,534
Impairment charges on goodwill	—		(8,098)		(8,098)
Balance, September 30, 2022	$	16,342	$	(10,906)	$	5,436

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, 2022

(unaudited)

As of December 31, 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	$	112,096	$	112,096	$	—	$	—
Asset derivative - interest rate caps	$	8	$	—	$	8	$	—
Nonrecurring Basis:
Impaired real estate (1)	$	97,600	$	—	$	—	$	97,600
Impaired goodwill (1)	$	13,534	$	—	$	—	$	13,534

_____________________

(1) The fair value of these assets were assessed as of September 30, 2021.

7. RELATED PARTY TRANSACTIONS

Pacific Oak Capital Advisors, LLC

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 Pacific Oak Capital Advisors, LLC (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 an advisory agreement (the “Advisory Agreement”). The Advisory Agreement is currently effective through November 1, 2023; 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.

Pacific Oak Residential Advisors, LLC

Effective September 1, 2022, the Company entered into an advisory agreement with Pacific Oak Residential Advisors, LLC (“PORA”) (the “PORT Advisory Agreement”) pursuant to which PORA will act as a product specialist with respect to the Company’s residential homes portfolio, held through a wholly owned subsidiary. The PORT Advisory Agreement has an initial two-year term and may be renewed for additional one-year terms. Pursuant to the PORT Advisory Agreement, the Company will pay PORA: (1) an acquisition fee equal to 1.0% of the cost of each asset which consists of the price paid for the asset plus any amounts funded or budgeted at the time of acquisition for capital expenditures; and (2) a quarterly asset management fee equal to 0.25% (1.0% annually) on the aggregate value of the Company’s residential homes portfolio assets, as determined in accordance with the Company’s valuation guidelines, as of the end of each quarter. In the case of investments made through a joint venture, the acquisition fee will be based on the Company’s proportionate share of the joint venture. For substantial assistance in connection with the sale of properties or other investments related to the Company’s residential homes portfolio, the Company also pays PORA or its affiliates 1.0% of the contract sales price with a limit to not exceed commission paid to unaffiliated third parties.

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, 2022

(unaudited)

In connection with the PORT Advisory Agreement, the Company amended and restated its advisory agreement with the Advisor, also effective September 1, 2022 (the “Amended Company Advisory Agreement”). Under the Amended Company Advisory Agreement, the Company will no longer pay acquisition fees, asset management fees or disposition fees to the Advisor with respect to the Company’s residential homes portfolio. The Company’s residential homes portfolio will still be considered when computing any potential incentive fees due to the Advisor under the Amended Company Advisory Agreement.

DMH Realty, LLC

Effective September 1, 2022, the Company entered into a property management agreement with DMH Realty, LLC (“DMH Realty”), an affiliate of PORA and the Advisor (the “PORT Property Management Agreement”) for the Company’s residential homes portfolio. The PORT Property Management Agreement has an initial two-year term and may be renewed for additional one-year terms. Pursuant to the PORT Property Management Agreement, the Company will pay DMH Realty a property management fee equal to the following: (a) 8% of Collected Rental Revenues, as defined below, up to $50.0 million per annum; (b) 7% of Collected Rental Revenues in excess of $50.0 million per annum, but less than or equal to $75.0 million per annum; and (c) 6% of Collected Rental Revenues in excess of $75.0 million per annum, “Collected Rental Revenues” means the amount of rental revenue actually collected for each property per the terms of the lease pertaining to each property (including lease breakage fees) or pursuant to any early termination buyouts, but excluding other income items, fees or revenue collected by DMH Realty, including but not limited to: application fees, insufficient funds fees, late fees, move-in fees, pet fees, and security deposits (except to the extent applied to rent per the terms of the lease pertaining to any property).

Pacific Oak Capital Markets, LLC

On September 9, 2022, the Company, through PORT, commenced a private offering of up to $500 million of common stock in a primary offering and up to $50 million of common stock under its distribution reinvestment plan (the “Private Offering”). PORT engaged Pacific Oak Capital Markets, LLC (“POCM”), an affiliate of the Advisor, PORA and DHM Realty, to be the dealer manager for the Private Offering, pursuant to a dealer manager agreement effective as of September 9, 2022 (the “PORT Dealer Manager Agreement”). Pursuant to the PORT Dealer Manager Agreement, with respect to Class A shares, PORT will generally pay POCM: (1) selling commissions equal to up to 6.0% of the net asset value (“NAV”) of each share sold in the primary offering, which POCM may reallow in part or in full to participating broker-dealers; (2) a dealer manager fee equal to up to 1.5% of the NAV of each share sold in the primary offering, which POCM may reallow in part or in full to participating broker-dealers; and (3) a placement agent fee equal to up to 1.5% of the NAV of each share sold in the primary offering. With respect to Class T shares, PORT will generally pay POCM: (1) selling commissions equal to up to 3.0% of the NAV of each share sold in the primary offering, which POCM may reallow in part or in full to participating broker-dealers; (2) a dealer manager fee equal to up to 0.75% of the NAV of each share sold in the primary offering, which POCM may reallow in part or in full to participating broker-dealers; and (3) a placement agent fee equal to up to 0.75% of the NAV of each share sold in the primary offering. PORT will not pay any selling commissions, dealer manager or placement agent fees in connection with the sale of shares under the distribution reinvestment plan. The Advisor is the sponsor for the Private Offering and as the sponsor, they will incur reimbursable organization and offering costs on behalf of PORT. PORT will incur an organization and offering expense fee equal to 0.5% of the NAV of each share sold in the Private Offering to help fund the reimbursement to the sponsor.

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, 2022

(unaudited)

Pursuant to the terms of the related party agreements, summarized below are the related-party costs incurred by the Company for the three and nine months ended September 30, 2022 and 2021, respectively, and any related amounts payable as of September 30, 2022 and December 31, 2021 (in thousands):

	Incurred								Payable as of
	Three Months Ended September 30,				Nine Months Ended September 30,				September 30, 2022		December 31, 2021
Expensed	2022		2021		2022		2021
Asset management fees	$	3,630	$	3,422	$	9,945	$	10,802	$	3,252	$	1,903
Property management fees	294		119		552		362		—		—
Disposition fees (1)	637		692		744		1,196		—		—
Change in subordinated performance fee due upon termination to affiliate (2)	—		1,545		—		1,745		(2)		(2)
Capitalized
Acquisition fees on real estate (3)	67		—		67		20		—		—
Acquisition fee on investment in unconsolidated entities	—		—		—		45		—		—
	$	4,628	$	5,778	$	11,308	$	14,170	$	3,252	$	1,903

_____________________

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

(2) Change in estimate of fees payable to the Company’s previous advisor, KBS Capital Advisors LLC (“KBS Capital Advisors) due to the termination of the former advisory agreement with KBS Capital Advisors.

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

PORT OP LP Share Redemption

On June 24, 2022, the Company’s board of directors authorized and approved the redemption of the 510,816 Special Common Units of PORT OP LP, a consolidated subsidiary of the Company (“PORT OP”), representing approximately 3.20% interest, held by BPT Holdings, LLC (“BPT Holdings”), a subsidiary of the Advisor, for a price of $13.09 per unit. In July 2022, the Company redeemed the special common units of PORT OP for $6.7 million. Following the redemption, the Company owned 100% of PORT OP.

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, 2022

(unaudited)

Pacific Oak Opportunity Zone Fund I

As of September 30, 2022, the Company’s investment balance in the Pacific Oak Opportunity Zone Fund I, LLC (“Pacific Oak Opportunity Zone Fund I”) is $26.3 million, which is 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 incurred (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, 2022, the Company recorded $0.3 million and $0.4 million, respectively, of waived asset management fees recorded as equity in income of unconsolidated entities. During the three and nine months ended September 30, 2021, the Company recorded $0.2 million and $0.3 million, respectively, of waived asset management fees recorded as equity in income of unconsolidated entities.

8. INVESTMENT IN UNCONSOLIDATED ENTITIES

As of September 30, 2022 and December 31, 2021, the Company’s investments in unconsolidated entities were composed of the following (dollars in thousands):

	Number of Properties as of September 30, 2022			Investment Balance at
Joint Venture		Location	Ownership %	September 30, 2022		December 31, 2021
110 William Joint Venture	1	New York, New York	60.0%	$	—	$	—
353 Sacramento Joint Venture	1	San Francisco, California	55.0%	46,572		49,916
Pacific Oak Opportunity Zone Fund I	3	Various	46.0%	26,266		27,215
PORT II OP LP	(1)	(1)	(1)	(1)		11,125
				$	72,838	$	88,256

_____________________

(1) On July 1, 2022, the Company, through PORT OP, made a tender offer to purchase 76,735 shares of PORT II common stock held by unrelated parties for a price of $14.66 per share. As a result, the Company determined that it became the primary beneficiary of PORT II, which resulted in the consolidation of PORT II into the Company’s consolidated financial statements. On July 29, 2022, the Company consummated the transactions with the unrelated parties and owned 100% of PORT II. See Note 3 for the assessment of the fair value of the assets and liabilities of PORT II. There are no liquidity arrangements or agreements to fund capital or purchase assets that could require the Company to provide financial support to PORT II. The Company and the aforementioned unrelated parties did not guarantee any debt in connection with the transaction.

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, 2022

(unaudited)

9. 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,
	2022		2021
Supplemental Disclosure of Cash Flow Information:
Interest paid, net of capitalized interest of $1,703 and $1,579 for the nine months ended September 30, 2022 and 2021, respectively	$	29,839	$	29,220
Supplemental Disclosure of Significant Noncash Transactions:
Assets acquired in the consolidation of previously unconsolidated entity	137,569		—
Liabilities assumed in the consolidation of previously unconsolidated entity	85,096		—
Accrued improvements to real estate	6,389		1,721
Redeemable common stock payable	1,567		3,385
Distributions paid to common stockholders through common stock issuances	99,094		—
Accrued preferred dividends	225		225
PPP notes forgiveness	2,367		1,500

10. REPORTING SEGMENTS

The Company recognizes three reporting segments for the three and nine months ended September 30, 2022 and 2021: strategic opportunistic properties, residential 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. On July 1, 2022, the Company made a prospective name change to the “Single-Family Homes” segment to “Residential Homes” to reflect the Company’s acquisition of PORT II multifamily homes, see Note 3 for further details on the acquisition. On September 1, 2022, the Company made a prospective name change to the “Hotels” segment to “Hotel” to reflect the September 1, 2022 disposition of the Springmaid Beach Resort, see Note 3 for further details on the disposition. The selected financial information for reporting segments for the three and nine months ended September 30, 2022 and 2021 are as follows (in thousands):

	Three Months Ended September 30, 2022
	Strategic Opportunistic Properties		Residential Homes		Hotel		Total
Total revenues	$	25,847	$	8,576	$	9,182	$	43,605
Total expenses	(46,453)		(10,726)		(12,056)		(69,235)
Total other (loss) income	(24,052)		18,671		11		(5,370)
Net (loss) income	$	(44,658)	$	16,521	$	(2,863)	$	(31,000)
	Nine Months Ended September 30, 2022
	Strategic Opportunistic Properties		Residential Homes		Hotel		Total
Total revenues	$	77,599	$	20,120	$	27,952	$	125,671
Total expenses	(87,232)		(23,735)		(28,900)		(139,867)
Total other (loss) income	(50,436)		18,149		2,382		(29,905)
Net (loss) income	$	(60,069)	$	14,534	$	1,434	$	(44,101)

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, 2022

(unaudited)

	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

Total assets and goodwill related to the reporting segments as of September 30, 2022 and December 31, 2021 are as follows (in thousands):

	September 30, 2022
	Strategic Opportunistic Properties		Residential Homes		Hotel		Total
Total assets	$	1,174,855	$	337,513	$	51,999	$	1,564,367
Goodwill (1)	4,220		—		1,216		5,436
	December 31, 2021
	Strategic Opportunistic Properties		Single-Family Homes		Hotels		Total
Total assets	$	1,223,122	$	211,050	$	150,447	$	1,584,619
Goodwill (1)	9,489		—		4,045		13,534

_____________________

(1) During the three and nine months ended September 30, 2022, the Company recorded impairment charges on goodwill of $5.5 million and $2.6 million related to the Strategic Opportunistic Properties and Hotel segments, respectively. 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.

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, 2022

(unaudited)

11. PORT MEZZANINE EQUITY

The following is a reconciliation of PORT’s noncontrolling cumulative convertible redeemable preferred stock for the nine months ended September 30, 2022 and 2021 (dollars in thousands):

	Series A Preferred Stock			Series B Preferred Stock
	Shares	Amounts		Shares	Amounts
Balance, December 31, 2021	15,000	$	15,134	125	$	99
Dividends Available Upon Redemption	—	1,045		—	8
Dividends Paid	—	(1,045)		—	(8)
Balance, September 30, 2022	15,000	$	15,134	125	$	99

	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	—	453		—	—
Dividends Paid	—	(453)		—	—
Balance, September 30, 2021	15,000	$	15,134	125	$	99

On July 1, 2020, the Company acquired, through its subsidiaries, Battery Point Trust Inc. (“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. 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 Special Common 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, 2022 and 2021 (in thousands):

December 31, 2021	$	2,822
Net loss attributable to redeemable noncontrolling interest	(81)
Adjustment to value of redeemable noncontrolling interest (1)	3,946
Payment to redeem noncontrolling interest	(6,687)
September 30, 2022	$	—
December 31, 2020	$	2,968
Net loss attributable to redeemable noncontrolling interest	(113)
September 30, 2021	$	2,855

_____________________

(1) On June 24, 2022, the Company’s board of directors approved the redemption of the 510,816 PORT OP Special Common Units held by BPT Holdings for a price of $13.09 per unit.and recorded at its fair value. The Company redeemed the noncontrolling interest in PORT OP in July 2022.

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, 2022

(unaudited)

12. COMMITMENTS AND CONTINGENCIES

Lease Obligations

As of September 30, 2022, the Company’s lease and rights to a leasehold interest with respect to 210 West 31st Street, 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)	$	7,281
Lease obligation (included in other liabilities)	9,424
Remaining lease term	91.3 years
Discount rate	4.8		%
The components of lease expense were as follows:
Interest on lease obligation for the three months ended September 30, 2022	112
Interest on lease obligation for the nine months ended September 30, 2022	334

_____________________

(1) During the three and nine months ended September 30, 2022, the Company wrote down its right-of-use asset and recorded an impairment charge of $0.8 million on 210 West 31st Street.

As of September 30, 2022, the Company had a leasehold interest expiring in 2114. Future minimum lease payments owed by the Company under the finance lease as of September 30, 2022 are as follows (in thousands):

July 1, 2021 through December 31, 2021	$	90
2022	360
2023	360
2024	393
2025	396
Thereafter	52,167
Total expected minimum lease obligations	53,766
Less: Amount representing interest (1)	(44,342)
Present value of net minimum lease payments (2)	$	9,424

_____________________

(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.

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.

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, 2022

(unaudited)

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, 2022. 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.

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.

13. SUBSEQUENT EVENTS

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

Dividends on and accretion to redemption value of Series A Redeemable Preferred Stock

On October 25, 2022, the Company received notice by the holders of PORT’s Series A noncontrolling cumulative convertible redeemable preferred stock to redeem their outstanding redeemable preferred stock. If outstanding on November 4, 2022, the Series A redeemable preferred stock must be redeemed by the Company within 120 days after November 4, 2022. The Company authorized and approved the redemption of all 15,000 outstanding Series A Preferred Shares, at a price of (i) $1,120 per Series A Preferred Share, plus (ii) all accrued but unpaid dividends, through the redemption date.

26

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 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.

•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.

27

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, 2021, 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. Pacific Oak Capital Advisors, LLC (“Pacific Oak Capital Advisors”) is our advisor and 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.

As of September 30, 2022, we consolidated eight office properties, one office portfolio consisting of two office buildings and 14 acres of undeveloped land, two apartment properties, one hotel property, one residential home portfolio consisting of 2,458 residential homes, three investments in undeveloped land with approximately 800 developable acres, one office/retail development property and owned three investments in unconsolidated entities and three investments in real estate equity securities.

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.

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. 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. 

28

PART I. FINANCIAL INFORMATION (CONTINUED)

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

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, 2022, 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.

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 collectability of rent and operating recoveries from our tenants and how well we manage our expenditures. As of September 30, 2022, our office properties were collectively 70% occupied, our residential home portfolio was 96% occupied and our apartment properties were 95% occupied.

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, 2022 and 2021:

		Percentage Occupied for the Nine Months Ended September 30,		Average Daily Rate for the Nine Months Ended September 30,		Average Revenue per Available Room for the Nine Months Ended September 30,
Property	Number of Rooms	2022	2021	2022	2021	2022	2021
Springmaid Beach Resort (1)	453	61.4%	58.4%	$226.60	$218.28	$139.05	$127.49
Q&C Hotel	196	59.3%	42.3%	$192.73	$121.24	$114.30	$51.24

_____________________

(1) The Springmaid Beach Resort was sold on September 1, 2022.

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, 2022, we had three investments in real estate equity securities outstanding with a total carrying value of $63.8 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, 2022 did not exceed the charter-imposed limitation.

For the nine months ended September 30, 2022, our cash needs for capital expenditures, redemptions of common stock and debt servicing were met with proceeds from dispositions of real estate, proceeds from debt financing 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, 2022, we had outstanding debt obligations in the aggregate principal amount of $1.1 billion, with a weighted-average remaining term of 2.3 years. As of September 30, 2022, we had a total of $386.9 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.

29

PART I. FINANCIAL INFORMATION (CONTINUED)

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

Cash Flows from Operating Activities

As of September 30, 2022, we consolidated eight office properties, one office portfolio consisting of two office buildings and 14 acres of undeveloped land, two apartment properties, one hotel properties, one residential home portfolio consisting of 2,458 residential homes, three investments in undeveloped land with approximately 800 developable acres, one office/retail development property and owned three investments in unconsolidated entities and three investments in real estate equity securities. During the nine months ended September 30, 2022, net cash provided by operating activities was $8.7 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 $70.3 million for the nine months ended September 30, 2022 and primarily consisted of the following:

•Proceeds from sales of real estate, net of $97.9 million;

•Contributions to unconsolidated entities of $23.9 million;

•Earnest money received of $17.0 million related to the pending sale of Park Highlands land;

•Improvements to real estate of $16.5 million;

•Proceeds from advances due from affiliates of $8.2 million;

•Acquisitions of real estate of $6.7 million; and

•Funding of $6.4 million for development obligations related to Park Highlands land.

Cash Flows from Financing Activities

Net cash used in financing activities was $37.3 million for the nine months ended September 30, 2022 and primarily consisted of the following:

•$11.0 million of cash distributions paid;

•$10.7 million of distributions paid to noncontrolling interests;

•$4.6 million of cash used for redemptions of common stock; and

•$3.5 million of net cash used for principal payments on notes payable of $190.5 million and payments of deferred financing costs of $4.7 million and partially offset by proceeds from notes payable of $191.7 million.

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, 2022, our borrowings and other liabilities were both approximately 70% of the cost (before depreciation and other noncash reserves) and the book value (before depreciation) of our tangible assets.

30

PART I. FINANCIAL INFORMATION (CONTINUED)

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

On February 16, 2020, Pacific Oak Strategic Opportunity BVI issued 254.1 million Israeli new Shekels (approximately $74.1 million as of February 16, 2020) of 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 November 1, 2021, Pacific Oak Strategic Opportunity BVI 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). On November 8, 2021, Pacific Oak Strategic Opportunity BVI also issued Series B Debentures in the amount of 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 ($16.7 million as of November 8, 2021).

Additionally, on May 2, 2022, Pacific Oak Strategic Opportunity BVI also issued Series B Debentures in the amount of 320.4 million Israeli new Shekels par value through a private offering. The private offering Series B Debentures were issued at a 4.0% discount resulting in a total consideration of 307.6 million Israeli new Shekels ($95.3 million as of May 2, 2022). All 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.

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).

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, 2022 (in thousands):

			Payments Due During the Years Ending December 31,
Contractual Obligations	Total		Remainder of 2022		2023-2024		2025-2026		Thereafter
Outstanding debt obligations (1)	$	1,066,736	$	49,441	$	495,012	$	522,283	$	—
Interest payments on outstanding debt obligations (2)	85,083		12,459		55,469		17,155		—
Finance lease obligation	53,766		90		720		789		52,167

_____________________

(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, 2022.

31

PART I. FINANCIAL INFORMATION (CONTINUED)

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

Results of Operations

Overview

As of September 30, 2022, we consolidated eight office properties, one office portfolio consisting of two office buildings and 14 acres of undeveloped land, two apartment properties, one hotel property, one residential home portfolio consisting of 2,458 residential homes, three investments in undeveloped land with approximately 800 developable acres, one office/retail development property and owned three investments in unconsolidated entities 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, one office/retail development property, and owned four investments in unconsolidated entities and three investments in real estate equity securities. Our results of operations for the three and nine months ended September 30, 2022 may not be indicative of those in future periods due to acquisition and disposition activities. Additionally, the occupancy in our properties, excluding our residential home portfolio, has not been stabilized. As of September 30, 2022, our office properties were collectively 70% occupied, our residential home portfolio was 96% occupied and our apartment properties were 95% 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.

32

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, 2022 versus the three months ended September 30, 2021

The following table provides summary information about our results of operations for the three months ended September 30, 2022 and 2021 (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)
	2022		2021
Rental income	$	31,445	$	29,504	$	1,941	7	%	$	1,511	$	430
Hotel revenues	9,182		12,153		(2,971)		(24)	%	(2,892)		(79)
Other operating income	830		923		(93)		(10)	%	(89)		(4)
Dividend income from real estate equity securities	2,148		3,189		(1,041)		(33)	%	—		(1,041)
Operating, maintenance, and management	12,342		10,668		1,674		16	%	858		816
Real estate taxes and insurance	5,650		5,262		388		7	%	365		23
Hotel expenses	5,377		6,483		(1,106)		(17)	%	(1,249)		(1,106)
Asset management fees to affiliate	3,630		3,422		208		6	%	210		(2)
General and administrative expenses	2,504		2,365		139		6	%	n/a		n/a
Foreign currency transaction (gain) loss, net	(6,001)		2,271		(8,272)		(364)	%	n/a		n/a
Depreciation and amortization	12,717		13,895		(1,178)		(8)	%	436		(1,614)
Interest expense	12,976		10,092		2,884		29	%	161		2,723
Impairment charges on real estate	11,942		10,971		971		9	%	n/a		n/a
Impairment charges on goodwill	8,098		2,808		5,290		188	%	n/a		n/a
Equity in loss of unconsolidated entities	(3,376)		(569)		(2,807)		493	%	—		(2,807)
Casualty-related gain	—		27		(27)		(100)	%	n/a		n/a
Other interest income	61		55		6		11	%	n/a		n/a
Loss on real estate equity securities	(20,722)		(2,614)		(18,108)		693	%	—		(18,108)
Change in subordinated performance fee due upon termination to affiliate	—		(1,545)		1,545		(100)	%	n/a		n/a
(Loss) gain on sale of real estate	(75)		216		(291)		(135)	%	(291)		—
Gain on extinguishment of debt	—		1,352		(1,352)		100	%	n/a		n/a
Gain from consolidation of previously unconsolidated entity	18,742		—		18,742		100	%	18,742		—

_____________________

(1) Represents the dollar amount increase (decrease) for the three months ended September 30, 2022 compared to the three months ended September 30, 2021 related to real estate and real estate-related investments acquired or disposed on or after October 1, 2021.

(2) Represents the dollar amount increase (decrease) for the three months ended September 30, 2022 compared to the three months ended September 30, 2021 with respect to real estate and real estate-related investments owned by us during the entirety of both periods presented.

Rental income increased from $29.5 million for the three months ended September 30, 2021 to $31.4 million for the three months ended September 30, 2022, primarily as a result of the PORT II consolidation, which attributed to a $3.0 million increase and partially offset by the disposition of City Tower on July 27, 2021, which attributed to a $1.1 million decrease. There were no significant changes to the occupancy rate and annualized base rent per square foot of our office properties 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.

Hotel revenues decreased from $12.2 million for the three months ended September 30, 2021 to $9.2 million for the three months ended September 30, 2022, primarily as a result of the disposition of the Springmaid Beach Resort on September 1, 2022, and partially offset by the increase in occupancy for the Q&C Hotel.

Property operating costs increased from $10.7 million for the three months ended September 30, 2021 to $12.3 million for the three months ended September 30, 2022, primarily as a result of the PORT II consolidation, which attributed to a $1.5 million increase and partially offset by a $0.3 million decrease due to the disposition of City Tower. Real estate taxes and insurance slightly increased between the two periods. We expect property operating costs and real estate taxes and insurance to increase in future periods to the extent we acquire additional properties, increase occupancy of our real estate assets and due to general inflation, but to decrease to the extent we dispose of properties.

33

PART I. FINANCIAL INFORMATION (CONTINUED)

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

Hotel expenses decreased from $6.5 million for the three months ended September 30, 2021 to $5.4 million for the three months ended September 30, 2022, primarily due to the disposition of the Springmaid Beach Resort, which resulted in a decrease of $0.7 million. We expect hotel expenses to vary in future periods based on occupancy rates.

Asset management fees slightly increased from $3.4 million for the three months ended September 30, 2021 to $3.6 million for the three months ended September 30, 2022, primarily as a result of the PORT II consolidation, which attributed to a $0.4 million increase and partially offset by the disposition of City Tower, which attributed to a $0.2 million decrease. 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.

We recognized a $6.0 million foreign currency transaction gain, net for the three months ended September 30, 2022 and $2.3 million of foreign currency transaction loss, net, for the three months ended September 30, 2021, 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.

Depreciation and amortization decreased from $13.9 million for the three months ended September 30, 2021 to $12.7 million for the three months ended September 30, 2022, primarily as a result of the disposition of the Springmaid Beach Resort, which attributed to $0.5 million decrease, intangibles that were fully amortized in 2021, which attributed to a $1.0 million decrease, and partially offset by the PORT II consolidation, which attributed to a $1.0 million increase. We expect depreciation and amortization to increase in future periods 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 $10.1 million for the three months ended September 30, 2021 to $13.0 million for the three months ended September 30, 2022, primarily due to increasing benchmark rates affecting our variable rate debt, increase in notes payable balance of $86.5 million related to the PORT II consolidation, and partially offset by a decrease in the notes payable balance of $53.1 million related to the disposition of the Springmaid Beach Resort.

During the three months ended September 30, 2022, we recognized impairment charges of $4.4 million, $5.0 million and $2.5 million on 210 West 31st Street, Oakland City Center and the Springmaid Beach Resort, respectively. 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.

During the three months ended September 30, 2022, we recognized impairment charges on goodwill of $5.5 million and $2.6 million on Oakland City Center and the Springmaid Beach Resort, respectively. 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.

Equity in loss of unconsolidated entities increased from $0.6 million for the three months ended September 30, 2021 to $3.4 million for the three months ended September 30, 2022, primarily as a result of losses related to the 110 William Joint Venture of $1.7 million and the Pacific Oak Opportunity Zone Fund I of $0.9 million for the three months ended September 30, 2022.

Loss on real estate equity securities increased from $2.6 million for the three months ended September 30, 2021 to $20.7 million for the three months ended September 30, 2022. 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, 2022, we consolidated PORT II and recognized a gain from consolidation of previously unconsolidated entity of $18.7 million.

34

PART I. FINANCIAL INFORMATION (CONTINUED)

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

Comparison of the nine months ended September 30, 2022 versus the nine months ended September 30, 2021

The following table provides summary information about our results of operations for the nine months ended September 30, 2022 and 2021 (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)
	2022		2021
Rental income	$	89,806	$	94,812	$	(5,006)	(5)	%	$	(6,133)	$	1,127
Hotel revenues	27,952		24,578		3,374		14	%	(314)		3,688
Other operating income	2,559		3,118		(559)		(18)	%	(614)		55
Dividend income from real estate equity securities	5,354		6,693		(1,339)		(20)	%	—		(1,339)
Operating, maintenance, and management	32,560		31,444		1,116		4	%	(1,012)		2,128
Real estate taxes and insurance	15,753		15,949		(196)		(1)	%	(306)		110
Hotel expenses	17,485		15,715		1,770		11	%	(16)		1,786
Asset management fees to affiliate	9,945		10,802		(857)		(8)	%	(481)		(376)
General and administrative expenses	8,486		7,120		1,366		19	%	n/a		n/a
Foreign currency transaction gain, net	(37,100)		(568)		(36,532)		6,432	%	n/a		n/a
Depreciation and amortization	39,379		45,969		(6,590)		(14)	%	(2,521)		(4,069)
Interest expense	33,319		30,713		2,606		8	%	(1,301)		3,907
Impairment charges on real estate	11,942		10,971		971		9	%	n/a		n/a
Impairment charges on goodwill	8,098		2,808		5,290		188	%	n/a		n/a
Equity in loss of unconsolidated entities	(6,130)		(144)		(5,986)		4,157	%	—		(5,986)
Casualty-related gain	—		27		(27)		(100)	%	n/a		n/a
Other interest income	155		148		7		5	%	n/a		n/a
(Loss) gain on real estate equity securities	(48,312)		12,939		(61,251)		(473)	%	225		(61,476)
Change in subordinated performance fee due upon termination to affiliate	—		(1,745)		1,745		(100)	%	n/a		n/a
(Loss) gain on sale of real estate	3,273		31,385		(28,112)		(90)	%	(28,112)		—
Gain on extinguishment of debt	2,367		1,365		1,002		73	%	n/a		n/a
Gain from consolidation of previously unconsolidated entity	18,742		—		18,742		100	%	18,742		—

_____________________

(1) Represents the dollar amount increase (decrease) for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021 related to real estate and real estate-related investments acquired or disposed on or after October 1, 2021.

(2) Represents the dollar amount increase (decrease) for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021 with respect to real estate and real estate-related investments owned by us during the entirety of both periods presented.

Rental income decreased from $94.8 million for the nine months ended September 30, 2021 to $89.8 million for the nine months ended September 30, 2022, primarily due to the disposition of City Tower, which attributed to a $8.7 million decrease and partially offset with the PORT II consolidation, which attributed to a $3.6 million increase. There were no significant changes to the occupancy rate and annualized base rent per square foot of our office properties 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.

Hotel revenues increased from $24.6 million for the nine months ended September 30, 2021 to $28.0 million for the nine months ended September 30, 2022, primarily as a result of the increase in occupancy from 58.4%% to 61.4% and average daily rate from $127.49 to $139.05 for the Springmaid Beach Resort as well as the increase in occupancy from 42.3% to 59.3% and average daily rate from $51.24 to $114.30 for the Q&C Hotel. The increase was partially offset by the Springmaid Beach Resort disposition, which attributed to a $0.4 million decrease.

35

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 $31.4 million for the nine months ended September 30, 2021 to $32.6 million for the nine months ended September 30, 2022, primarily due to increase in legal and marketing fees related to various properties and the consolidation of PORT II, which attributed to an increase of $1.7 million and was partially offset by the disposition of City Tower, which attributed to a $2.0 million decrease. Real estate taxes and insurance slightly decreased between the two periods. We expect property operating costs and real estate taxes and insurance to increase in future periods to the extent we acquire additional properties, increase occupancy of our real estate assets and due to general inflation, but to decrease to the extent we dispose of properties.

Hotel expenses increased from $15.7 million for the nine months ended September 30, 2021 to $17.5 million for the nine months ended September 30, 2022, primarily as a result of the increase in occupancy from 58.4%% to 61.4% for the Springmaid Beach Resort as well as the increase in occupancy from 42.3% to 59.3% for the Q&C Hotel. We expect hotel expenses to vary in future periods based on occupancy rates.

Asset management fees decreased from $10.8 million for the nine months ended September 30, 2021 to $9.9 million for the nine months ended September 30, 2022, primarily as a result of the disposition of City Tower, which attributed to a $0.8 million decrease and partially offset by the PORT II consolidation, which attributed to an increase of $0.4 million. 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 $7.1 million for the nine months ended September 30, 2021 to $8.5 million for the nine months ended September 30, 2022, 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 $37.1 million foreign currency transaction gain, net, for the nine months ended September 30, 2022, 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.

Depreciation and amortization decreased from $46.0 million for the nine months ended September 30, 2021 to $39.4 million for the nine months ended September 30, 2022, primarily as a result of the disposition of City Tower, which attributed to $2.4 million decrease and intangibles that were fully amortized in 2021, which attributed to a $3.4 million decrease. We expect depreciation and amortization to increase in future periods as a result of 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 $30.7 million for the nine months ended September 30, 2021 to $33.3 million for the nine months ended September 30, 2022, primarily due to increasing benchmark rates affecting our variable rate debt, increase in notes payable balance of $86.5 million related to the PORT II consolidation, and partially offset by a decrease in the notes payable balance of $53.1 million related to the disposition of the Springmaid Beach Resort.

During the nine months ended September 30, 2022, we recognized impairment charges of $4.4 million, $5.0 million and $2.5 million on 210 West 31st Street, Oakland City Center and the Springmaid Beach Resort, respectively. 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.

During the nine months ended September 30, 2022, we recognized impairment charges on goodwill of $5.5 million and $2.6 million on Oakland City Center and the Springmaid Beach Resort, respectively. 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.

Equity in loss of unconsolidated entities increase from $0.1 million for the nine months ended September 30, 2021 to $6.1 million for the nine months ended September 30, 2022, primarily related to losses with the: 353 Sacramento Joint Venture of $3.3 million loss, primarily as a result of the allowance for credit losses, the 110 William Joint Venture of $1.7 million and the Pacific Oak Opportunity Zone Fund I of $0.4 million .

Gain on real estate equity securities decreased from $12.9 million for the nine months ended September 30, 2021 to a $48.3 million loss for the nine months ended September 30, 2022. 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.

36

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 sold approximately 193 developable acres of Park Highlands undeveloped land that resulted in a gain on sale of $31.1 million. During the nine months ended September 30, 2022, we sold two office buildings related to the Richardson Portfolio and the Springmaid Beach Resort and recognized an aggregate gain on sale of $3.3 million.

During the nine months ended September 30, 2022, we consolidated PORT II and recognized a gain from consolidation of previously unconsolidated entity of $18.7 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. 

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.

37

PART I. FINANCIAL INFORMATION (CONTINUED)

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

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;

•Amortization of premium or discount on bond and notes payable. These are adjustments to interest expense as required by GAAP to recognize bond and notes payable discount and premiums on a straight-line basis over the life of the respective bond or notes payable. We have excluded these adjustments in our calculation of MFFO to appropriately reflect the current economic impact of our bond and notes payable and related interest expense;

•Loss or gain on extinguishment of debt. A loss or gain on extinguishment of debt, which includes prepayment fees related to the extinguishment of debt, represents the difference between the carrying value of any consideration transferred to the lender in return for the extinguishment of a debt and the net carrying value of the debt at the time of settlement. We have excluded the loss or gain from extinguishment of debt in our calculation of MFFO because these losses or gains do not impact the current operating performance of our investments and do not provide an indication of future operating performance;

•Unrealized gain or loss from interest rate caps. These adjustments include unrealized gains from mark-to-market adjustments on interest rate caps. The change in fair value of interest rate caps not designated as a hedge are non-cash adjustments recognized directly in earnings and are included in interest expense. We have excluded these adjustments in our calculation of MFFO to more appropriately reflect the economic impact of our interest rate cap agreements;

•Gain from consolidation of previously unconsolidated entity. The gain is recognized as part of a consolidation process of a previously unconsolidated entity, where we became the primary beneficiary. We exclude them from MFFO to more appropriately present the ongoing operating performance of our real estate investments on a comparative basis; and

•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.

38

PART I. FINANCIAL INFORMATION (CONTINUED)

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

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. We believe excluding this item appropriately presents the ongoing operating performance of our real estate investments on a comparative basis.

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, 2022 and 2021 (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,
	2022		2021			2022		2021
Net (loss) income attributable to common stockholders	$	(30,492)	$	(24,516)		$	(44,267)	$	3,671
Depreciation of real estate assets	8,882		8,569			25,544		26,689
Amortization of lease-related costs	3,835		5,326			13,835		19,279
Loss (gain) on sale of real estate (1)	2,621		(216)			(727)		(31,385)
Impairment charges on real estate	11,942		10,971			11,942		10,971
Loss (gain) on real estate equity securities	20,722		2.614			48,312		(12,939)
Adjustments for noncontrolling interests - consolidated entities (2)	(1,724)		(400)			(2,308)		(1,238)
Adjustments for investments in unconsolidated entities (3)	(4,716)		(25)			(1,783)		747
FFO attributable to common stockholders	11,070		(288)			50,548		15,795
Straight-line rent and amortization of above- and below-market leases	(791)		(711)		0	(2,729)		(2,544)
Amortization of premium/discount on bond and notes payable, net	1,117		461			3,372		1,906
Gain on extinguishment of debt	—		(1.352)			(2,367)		(1.365)
Unrealized (gain) loss on interest rate caps	(834)		1			(1,103)		17
Gain from consolidation of previously unconsolidated entity	(18,742)		—			(18,742)		—
Mark-to-market foreign currency transaction (gain) loss, net	(6,001)		2,271			(37,100)		(568)
Adjustments for noncontrolling interests - consolidated entities (2)	(21)		(24)			(100)		(122)
Adjustments for investments in unconsolidated entities (3)	98		15			2,999		1,662
MFFO attributable to common stockholders	(14,104)		1,724			(5,222)		16,145
Other capitalized operating expenses (4)	(801)		(597)			(2,012)		(1,926)
Casualty-related gain	—		(27)			—		(27)
Change in subordinated performance fee due upon termination to affiliate	—		1,545			—		1,745
Adjusted MFFO attributable to common stockholders	(14,905)		2,645			(7,234)		15,937

_____________________

(1) Reflects an adjustment to eliminate gains or losses on sales 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.

39

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, 2022. Our net loss attributable to common stockholders for the nine months ended September 30, 2022 was $44.3 million and our cash flows provided by operations were $8.7 million. Our cumulative distributions paid and net income attributable to common stockholders from inception through September 30, 2022 were $495.0 million. We have funded our cumulative distributions paid, which includes net cash distributions and distributions reinvested by stockholders, with prior period cash flow from operating activities in excess of distributions paid and with cash from gains realized from the disposition of properties. 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, real estate equity 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, 2021 filed with the SEC.

Recently Adopted Accounting Pronouncements

Reference Rate Reform — In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (ASC Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional relief to all entities, subject to meeting certain criteria, that have contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. Additionally, in January 2021, the FASB issued ASU No. 2021-01, Reference Rate Reform (ASC Topic 848), which clarifies that certain optional expedients and exceptions in ASC 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition. We adopted ASC Topic 848 on September 30, 2022 and the related prospective optional expedients for its variable rate debt and related derivatives is not expected to have a material impact us.

There have been no other recent accounting pronouncements, changes in accounting pronouncements or recently adopted accounting guidance during the nine months ended September 30, 2022 that are of significance or potential significance to us.

Subsequent Events

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

Dividends on and accretion to redemption value of Series A Redeemable Preferred Stock

On October 25, 2022, we received notice by the holders of PORT’s Series A noncontrolling cumulative convertible redeemable preferred stock to redeem their outstanding redeemable preferred stock. If outstanding on November 4, 2022, the Series A redeemable preferred stock must be redeemed by us within 120 days after November 4, 2022. We authorized and approved the redemption of all 15,000 outstanding Series A Preferred Shares, at a price of (i) $1,120 per Series A Preferred Share, plus (ii) all accrued but unpaid dividends, through the redemption date.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Foreign Currency Risk

Certain transactions, assets, and liabilities are exposed to foreign currency risk. We monitor our foreign currency exposures to maximize the economic effectiveness of our foreign currency positions, including hedges. Principal currency exposure is Israeli New Shekel.

40

PART I. FINANCIAL INFORMATION (CONTINUED)

Item 3. Quantitative and Qualitative Disclosures about Market Risk

We are exposed to the effects of foreign currency changes in Israel with respect to the 3.93% Series B Debentures issued to investors in Israel. 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, 2022, we held 129.9 million Israeli new Shekels and 24.6 million Israeli new Shekels in cash and restricted cash, respectively. In addition, as of September 30, 2022, we had bonds outstanding and the related interest payable in the amounts of 1.2 billion Israeli new Shekels and 7.6 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, 2022, if foreign currency exchange rates were to increase or decrease by 10%, our net income would increase or decrease by approximately $25.9 million and $31.7 million, respectively, for the same period.

Interest Rate Risk

Generally, the composition of our investments is such that declining interest rates will increase our net income, while rising interest rates will decrease our net income. Recently, interest rates have remained at relatively low levels on a historical basis and the Federal Reserve maintained the federal funds target range at 0.0% to 0.25% for much of 2021. However, in March 2022, the Federal Reserve approved a 0.25% rate increase and approved four additional 0.75% rate increases in 2022. The Federal Reserve has indicated that it foresees further increases and has maintained a stance of monetary policy that is sufficiently restrictive to to return inflation to 2%.

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 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, 2022, the fair value of our Pacific Oak SOR BVI Series B Debentures was $306.1 million and the outstanding principal balance was $326.5 million. As of September 30, 2022, excluding the Pacific Oak SOR BVI Series B Debentures, the fair value of our fixed rate debt was $216.6 million and the outstanding principal balance of our fixed rate debt was $233.2 million. The fair value estimate of our Pacific Oak SOR BVI Series B Debentures were calculated using the quoted bond price as of September 30, 2022 on the Tel Aviv Stock Exchange of 94.40 Israeli new Shekels. 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, 2022. 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, 2022, we had entered into three separate interest rate caps with an aggregate notional of $181.0 million which effectively limits our exposure to increases in one-month LIBOR and SOFR above certain thresholds. Based on interest rates as of September 30, 2022, 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 $4.0 million and $4.8 million, respectively.

41

PART I. FINANCIAL INFORMATION (CONTINUED)

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

The weighted-average interest rates of our fixed rate debt and variable rate debt as of September 30, 2022 were 4.10 and 5.2%, respectively. The interest rate and weighted-average interest rate represent the actual interest rate in effect as of September 30, 2022 (consisting of the contractual interest rate and the effect of contractual floor rates, if applicable), using interest rate indices as of September 30, 2022 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, 2022, we owned real estate equity securities with a book value of $63.8 million. Based solely on the prices of real estate equity securities as of September 30, 2022, if prices were to increase or decrease by 10%, our net income would increase or decrease by approximately $6.4 million.

Item 4.     Controls and Procedures

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.

42

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, 2021 and Part II, Item 1A of our Quarterly Report on Form 10-Q for the six months ended June 30, 2022, 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 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.

43

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, on March 10, 2022 and July 22, 2022, our board of directors made available a total of $3.0 million and $2.5 million, respectively for redemptions in connection with a stockholder's death, “qualifying disability”, or “determination of incompetence” and that will carry forward until depleted. As of September 30, 2022, $1.6 million remained available.

During the nine months ended September 30, 2022, 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 2022	—	$	—	(2)
February 2022	42,430	$	9.51	(2)
March 2022	22,735	$	9.51	(2)
April 2022	75,875	$	9.51	(2)
May 2022	62,376	$	9.51	(2)
June 2022	38,920	$	9.51	(2)
July 2022	178,951	$	9.51	(2)
August 2022	41,124	$	9.51	(2)
September 2022	23,060	$	9.51	(2)
Total	485,471

_____________________

(1) On January 26, 2022, our board of directors approved an estimated value per share of our common stock of $9.51. The change in the redemption price became effective for the January 2022 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 2022.

(2) We limit the dollar value of shares that may be redeemed under the program as described above. During the nine months ended September 2022, we redeemed $4.6 million of common stock under the program, which represented all redemption requests received in good order and eligible for redemption through the September 2022 redemption date, except for the $134.0 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 had $1.6 million available for redemptions in the remainder of 2022 as of September 2022, all of which are in connection with a stockholders’ death, “qualifying disability” or “determination of incompetence,” subject to the limitations described above.

Item 3. Defaults upon Senior Securities

None.

Item 4. Mine Safety Disclosures

None.

44

PART II. OTHER INFORMATION (CONTINUED)

Item 5. Other Information

On November 14, 2022, we renewed the advisory agreement with the Advisor. The renewed advisory agreement is effective through November 1, 2023. The terms of the renewed advisory agreement are consistent with those of the advisory agreement that was previously in effect.

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
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	Advisory Agreement, by and between the Company and Pacific Oak Capital Advisors, LLC, dated November 1, 2022
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).

45

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 14, 2022	By:	/S/ KEITH D. HALL
			Keith D. Hall
			Chief Executive Officer and Director
			(principal executive officer)
Date:	November 14, 2022	By:	/S/ MICHAEL A. BENDER
			Michael A. Bender
			Chief Financial Officer
			(principal financial officer)

46

EX-10.1

Exhibit 10.1

ADVISORY AGREEMENT

between

PACIFIC OAK STRATEGIC OPPORTUNITY REIT, INC.

and

PACIFIC OAK CAPITAL ADVISORS, LLC

November 1, 2022

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	13
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	14
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	17
8.05 Subordinated Incentive Fee	17
8.06 Changes to Fee Structure	18
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	21
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

i

EAST\197313553.2

13.02 Termination by Either Party	21
13.03 Payments on Termination and Survival of Certain Rights and Obligations	22
ARTICLE 14 - ASSIGNMENT	22
ARTICLE 15 - INDEMNIFICATION AND LIMITATION OF LIABILITY	23
15.01 Indemnification	23
15.02 Limitation on Indemnification	23
15.03 Limitation on Payment of Expenses	23
ARTICLE 16 - MISCELLANEOUS	24
16.01 Notices	24
16.02 Modification	24
16.03 Severability	24
16.04 Construction	24
16.05 Entire Agreement	24
16.06 Waiver	25
16.07 Gender	25
16.08 Titles Not to Affect Interpretation	25
16.09 Counterparts	25
ARTICLE 17 – PORT PROVISIONS	25
17.01 Management of PORT Operations and Assets	25

ii

EAST\197313553.2

ADVISORY AGREEMENT

This Advisory Agreement, entered into on November __, 2022 and effective as of November 1, 2022 (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;

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.

“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

1

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.

“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.

2

“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.

“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.

3

“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.

“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

4

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.

“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.

“PORA” means Pacific Oak Residential Advisors, LLC, a Delaware limited liability company.

“PORT” means Pacific Oak Residential Trust, Inc., a Maryland corporation.

“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

5

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.

“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

6

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.

“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.

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“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.

“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

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leases, service contracts and other agreements for Properties, Loans and other Permitted Investments;

(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;

(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,

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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;

(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;

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(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;

(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).

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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.

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

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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.

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), excluding investments in PORT or made through PORT. 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

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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, excluding investments in PORT or made through PORT. 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.

(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, excluding investments in PORT or made through PORT, 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

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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 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

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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 (a) the approval of the Conflicts Committee or (b) the approval of Stockholders holding a majority of the 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;

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(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;

(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

17

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.

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

18

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, 2022 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.

(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:

19

(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 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:

20

(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 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.

11766 Wilshire Blvd., Suite 1670

Los Angeles, CA 90025

To the Advisor:

Pacific Oak Capital Advisors, LLC

11766 Wilshire Blvd., Suite 1670

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

21

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.

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 PROVISIONS

17.01 Management of PORT Operations and Assets. Notwithstanding anything to the contrary in this Agreement, the Advisor will not be responsible for managing the operations or assets of PORT. PORA, an affiliate of the Advisor, will manage the operations and assets of PORT pursuant to the advisory agreement under which PORT 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, its operations and its assets.

[The remainder of this page is intentionally left blank.

Signature page follows.]

22

    IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective as of the date and year first above written.

PACIFIC OAK STRATEGIC OPPORTUNITY REIT, INC.

   By: _______________________________

         Keith D. Hall, Chief Executive Officer

PACIFIC OAK CAPITAL ADVISORS, LLC

By:  Pacific Oak Holding Group, LLC, sole Member

By: __________________________

                       Peter McMillan III, Member

By:__ ___________________

                       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 14, 2022	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 14, 2022	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, 2022, 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 14, 2022	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, 2022, 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 14, 2022	By:	/s/ Michael A. Bender
			Michael A. Bender
			Chief Financial Officer
			(principal financial officer)

XML

Cover Page - shares	9 Months Ended
	Sep. 30, 2022	Nov. 11, 2022
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2022
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		104,041,817
Entity Central Index Key	0001452936
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q3
Amendment Flag	false

XML

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Assets
Real estate held for investment, net	$ 1,234,197	$ 1,118,550
Real estate held for sale, net	0	96,249
Real estate equity securities	63,784	112,096
Total real estate and real estate-related investments, net	1,297,981	1,326,895
Cash and cash equivalents	85,368	84,172
Restricted cash	57,325	21,259
Investments in unconsolidated entities	72,838	88,256
Rents and other receivables, net	21,140	21,795
Above-market leases, net	2,364	2,642
Due from affiliate	13	7,039
Prepaid expenses and other assets	21,902	18,108
Goodwill	5,436	13,534
Assets related to real estate held for sale, net	0	919
Total assets	1,564,367	1,584,619
Liabilities, mezzanine equity and equity
Notes and bonds payable related to real estate held for investment, net	1,042,860	935,073
Note payable related to real estate held for sale, net	0	63,876
Notes and bonds payable, net	1,042,860	998,949
Accounts payable and accrued liabilities	27,236	23,852
Due to affiliates	3,252	1,903
Below-market leases, net	2,986	4,080
Other liabilities	52,431	42,851
Redeemable common stock payable	1,567	684
Restricted stock payable	508	508
Dividends payable	0	11,016
Liabilities related to real estate held for sale, net	0	662
Total liabilities	1,130,840	1,084,505
Commitments and contingencies
Mezzanine equity
Noncontrolling cumulative convertible redeemable preferred stock	15,233	15,233
Redeemable noncontrolling interest	0	2,822
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, 104,076,881 and 94,141,251 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively	1,041	941
Additional paid-in capital	909,533	818,440
Cumulative distributions and net loss	(494,998)	(347,691)
Total Pacific Oak Strategic Opportunity REIT, Inc. stockholders’ equity	415,576	471,690
Noncontrolling interests	2,718	10,369
Total equity	418,294	482,059
Total liabilities, mezzanine equity and equity	$ 1,564,367	$ 1,584,619

XML

CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Sep. 30, 2022	Dec. 31, 2021
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)	104,076,881	94,141,251
Common stock, shares outstanding (in shares)	104,076,881	94,141,251

XML

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Revenues:
Rental income	$ 31,445	$ 29,504	$ 89,806	$ 94,812
Dividend income from real estate equity securities	2,148	3,189	5,354	6,693
Total revenues	43,605	45,769	125,671	129,201
Expenses:
Operating, maintenance, and management	12,342	10,668	32,560	31,444
Real estate taxes and insurance	5,650	5,262	15,753	15,949
Hotel expenses	5,377	6,483	17,485	15,715
Asset management fees to affiliate	3,630	3,422	9,945	10,802
General and administrative expenses	2,504	2,365	8,486	7,120
Foreign currency transaction (gain) loss, net	(6,001)	2,271	(37,100)	(568)
Depreciation and amortization	12,717	13,895	39,379	45,969
Interest expense	12,976	10,092	33,319	30,713
Impairment charges on real estate	11,942	10,971	11,942	10,971
Impairment charges on goodwill	8,098	2,808	8,098	2,808
Total expenses	69,235	68,237	139,867	170,923
Other (loss) income:
Equity in loss of unconsolidated entities	(3,376)	(569)	(6,130)	(144)
Casualty-related gain	0	27	0	27
Other interest income	61	55	155	148
(Loss) gain on real estate equity securities	(20,722)	(2,614)	(48,312)	12,939
Change in subordinated performance fee due upon termination to affiliate	0	(1,545)	0	(1,745)
(Loss) gain on sale of real estate	(75)	216	3,273	31,385
Gain on extinguishment of debt	0	1,352	2,367	1,365
Gain from consolidation of previously unconsolidated entity	18,742	0	18,742	0
Total other (loss) income, net	(5,370)	(3,078)	(29,905)	43,975
Net (loss) income	(31,000)	(25,546)	(44,101)	2,253
Net loss attributable to noncontrolling interests	881	1,188	844	1,949
Net loss attributable to redeemable noncontrolling interest	0	33	81	113
Preferred stock dividends	(373)	(191)	(1,091)	(644)
Net (loss) income attributable to common stockholders	$ (30,492)	$ (24,516)	$ (44,267)	$ 3,671
Net (loss) income per common share, basic (in dollars per share)	$ (0.29)	$ (0.25)	$ (0.43)	$ 0.04
Net (loss) income per common share, diluted (in dollars per share)	$ (0.29)	$ (0.25)	$ (0.43)	$ 0.04
Weighted-average number of common shares outstanding, basic (in shares)	104,180,800	97,659,731	103,351,040	97,879,983
Weighted-average number of common shares outstanding, diluted (in shares)	104,180,800	97,659,731	103,351,040	97,879,983
Hotel revenues
Revenues:
Revenue from contract with customer	$ 9,182	$ 12,153	$ 27,952	$ 24,578
Other operating income
Revenues:
Revenue from contract with customer	$ 830	$ 923	$ 2,559	$ 3,118

XML

CONSOLIDATED STATEMENTS OF EQUITY - USD ($) $ in Thousands	Total	Total Stockholders' Equity	Common Stock	Additional Paid-in Capital	Cumulative Distributions and Net Loss	Noncontrolling Interests
Balance (in shares) at Dec. 31, 2020			98,054,582,000
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	1,722	3,671			3,671	(1,949)
Transfers to redeemable common stock payable, net	(2,521)	(2,521)		(2,521)
Redemptions of common stock (in shares)			(3,790,180,000)
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					183
Balance (in shares) at Sep. 30, 2021			94,264,402,000
Balance at Sep. 30, 2021	510,667	499,275	$ 942	820,382	(322,049)	11,392
Balance (in shares) at Jun. 30, 2021			97,906,268,000
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	(25,704)	(24,516)			(24,516)	(1,188)
Transfers to redeemable common stock payable, net	(1,955)	(1,955)		(1,955)
Redemptions of common stock (in shares)			(3,641,866,000)
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					20
Balance (in shares) at Sep. 30, 2021			94,264,402,000
Balance at Sep. 30, 2021	$ 510,667	499,275	$ 942	820,382	(322,049)	11,392
Balance (in shares) at Dec. 31, 2021	94,141,251		94,141,251
Balance at Dec. 31, 2021	$ 482,059	471,690	$ 941	818,440	(347,691)	10,369
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(45,111)	(44,267)				(844)
Transfers to redeemable common stock payable, net	(883)	(883)		(883)
Redemptions of common stock (in shares)			(485,471)
Redemptions of common stock	(4,587)	(4,587)	$ (4)	(4,583)
Adjustment to value of redeemable noncontrolling interest	(3,946)	(3,946)			(3,946)
Stock distribution issued (in shares)			10,421,101
Stock distribution issued	0	0	$ 104	98,990	(99,094)
Acquisition of noncontrolling interest	1,125					1,125
Noncontrolling interests distributions	(10,663)	(2,431)		(2,431)		(8,232)
Noncontrolling interest contribution	$ 300					300
Balance (in shares) at Sep. 30, 2022	104,076,881		104,076,881
Balance at Sep. 30, 2022	$ 418,294	415,576	$ 1,041	909,533	(494,998)	2,718
Balance (in shares) at Jun. 30, 2022			104,319,092
Balance at Jun. 30, 2022	461,373	451,000	$ 1,043	914,463	(464,506)	10,373
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(31,373)	(30,492)				(881)
Transfers to redeemable common stock payable, net	(188)	(188)		(188)
Redemptions of common stock (in shares)			(243,135)
Redemptions of common stock	(2,313)	(2,313)	$ (2)	(2,311)
Stock distribution issued (in shares)			924
Stock distribution issued	0	0		0	0
Acquisition of noncontrolling interest	1,125					1,125
Noncontrolling interests distributions	(10,630)	(2,431)		(2,431)		(8,199)
Noncontrolling interest contribution	$ 300					300
Balance (in shares) at Sep. 30, 2022	104,076,881		104,076,881
Balance at Sep. 30, 2022	$ 418,294	$ 415,576	$ 1,041	$ 909,533	$ (494,998)	$ 2,718

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CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021	Dec. 31, 2021
Cash Flows from Operating Activities:
Net (loss) income	$ (31,000)	$ (25,546)	$ (44,101)	$ 2,253
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Change in subordinated performance fee due upon termination to affiliate	0	1,545	0	1,745
Impairment charges on real estate	11,942	10,971	11,942	10,971
Impairment charges on goodwill	8,098	2,808	8,098	2,808
Equity in loss of unconsolidated entities			6,130	144
Depreciation and amortization	12,717	13,895	39,379	45,969
Loss (gain) on real estate equity securities	20,722	2,614	48,312	(12,939)
Loss (gain) on sale of real estate	75	(216)	(3,273)	(31,385)
Gain from consolidation of previously unconsolidated entity	(18,742)	0	(18,742)	0
Unrealized (gain) loss on interest rate caps			(1,103)	17
Deferred rent			(1,966)	(1,529)
Gain on extinguishment of debt	0	(1,352)	(2,367)	(1,365)
Amortization of above- and below-market leases, net			(762)	(1,015)
Amortization of deferred financing costs and discount on bonds and notes payable			5,953	4,376
Foreign currency transaction gain, net	(6,001)	2,271	(37,100)	(568)
Changes in assets and liabilities:
Rents and other receivables			2,403	(1,898)
Prepaid expenses and other assets			(3,010)	(4,371)
Accounts payable and accrued liabilities			(955)	(984)
Due to affiliates			1,201	(726)
Other liabilities			(1,379)	(190)
Net cash provided by operating activities			8,660	11,313
Cash Flows from Investing Activities:
Acquisitions of real estate			(6,689)	(4,107)
Improvements to real estate			(16,515)	(12,923)
Proceeds from sales of real estate, net			97,933	194,528
Cash and restricted cash received upon consolidation of previously unconsolidated entity			1,834	0
Contributions to unconsolidated entities			(23,887)	(4,769)
Distributions of capital from unconsolidated entities			569	0
Purchase of interest rate cap			(566)	(18)
Proceeds from the sale of real estate equity securities			0	14,439
Advance to affiliate			(1,201)	0
Proceeds from advances due from affiliates			8,227	0
Escrow deposits for future real estate sales			17,000	0
Proceeds for future development obligations			0	6,203
Funding for development obligations			(6,407)	0
Net cash provided by investing activities			70,298	193,353
Cash Flows from Financing Activities:
Proceeds from notes and bonds payable			191,667	157,246
Principal payments on notes and bonds payable			(190,515)	(233,964)
Payments of deferred financing costs			(4,686)	(2,745)
Payments to redeem common stock			(4,587)	(29,552)
Payment to redeem restricted stock			0	(5,656)
Payment of prepaid other offering costs			0	(164)
Payment to redeem noncontrolling interests			(6,687)	0
Distributions paid			(11,016)	0
Preferred dividends paid			(1,091)	(644)
Noncontrolling interests distributions			(10,663)	0
Noncontrolling interest contribution			300	183
Other financing proceeds			0	2,367
Net cash used in financing activities			(37,278)	(112,929)
Effect of exchange rate changes on cash, cash equivalents and restricted cash			(4,418)	182
Net increase in cash, cash equivalents and restricted cash			37,262	91,919
Cash, cash equivalents and restricted cash, beginning of period			105,431	74,319	$ 74,319
Cash, cash equivalents and restricted cash, end of period	$ 142,693	$ 166,238	$ 142,693	$ 166,238	$ 105,431

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ORGANIZATION	9 Months Ended
	Sep. 30, 2022
Organization, Consolidation and Presentation of Financial Statements [Abstract]
ORGANIZATION	ORGANIZATIONPacific 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.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Sep. 30, 2022

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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, 2021. 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, 2021 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, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022.

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 5, the Company has $383.0 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 pay downs 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. See Note 5 for further details.

Reclassifications

Certain prior period amounts have been reclassified to conform to the current period presentation. In that regard, the Company reclassified held for sale activity related to dispositions in its consolidated balance sheets as of December 31, 2021.

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 escrow deposits for future real estate sales and lender impound reserve accounts on the Company’s borrowings for security deposits, property taxes, insurance, debt service obligations and capital improvements and replacements.

Segments

The Company operates in three reportable business segments: opportunistic real estate and real estate-related investments, residential homes, and hotel, which is how the Company’s management manages the business. In general, the Company intends to hold its investments in opportunistic real estate and real estate-related assets for capital appreciation. Traditional performance metrics of opportunistic real estate and 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 real estate-related assets as similar investments and aggregated them into one reportable business segment. The Company owns residential homes in 18 markets which are all aggregated into one reportable business segment due to the homes being stabilized, having high occupancy rates and have similar economic characteristics. Additionally, as of September 30, 2022, the Company owns one hotel which is aggregated into one reportable business segment due to the nature of the hotel business with short-term stays. See Note 10 for further details.

Per Share Data

The Company determines basic earnings per share and basic earnings per unit based on the weighted average number of shares of common stock or units, as applicable, outstanding during the period and the Company considers any participating securities, including unvested restricted stock, for purposes of applying the two-class method. The Company determines diluted earnings per share and diluted earnings per unit based on the weighted average number of shares of common stock or units, as applicable, outstanding combined with the incremental weighted average number of shares or units, as applicable, that would have been outstanding assuming all potentially dilutive securities were converted into shares of common stock or units, as applicable, at the earliest date possible. The noncontrolling Series A convertible redeemable preferred shares of Pacific Oak Residential Trust, Inc. (“PORT”) were not included as the shares are contingent on PORT being public.

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 Adopted Accounting Pronouncements

Reference Rate Reform — In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (ASC Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional relief to all entities, subject to meeting certain criteria, that have contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. Additionally, in January 2021, the FASB issued ASU No. 2021-01, Reference Rate Reform (ASC Topic 848), which clarifies that certain optional expedients and exceptions in ASC 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition. The Company adopted ASC Topic 848 on September 30, 2022 and the related prospective optional expedients for its variable rate debt and related derivatives is not expected to have a material impact to the Company.

There have been no other recent accounting pronouncements, changes in accounting pronouncements or recently adopted accounting guidance during the nine months ended September 30, 2022 that are of significance or potential significance to the Company.

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REAL ESTATE HELD FOR INVESTMENT

9 Months Ended

Sep. 30, 2022

Real Estate [Abstract]

REAL ESTATE HELD FOR INVESTMENT

REAL ESTATE HELD FOR INVESTMENTAs of September 30, 2022, the Company owned eight office properties, one office portfolio consisting of two office buildings and 14 acres of undeveloped land, encompassing, in the aggregate, approximately 3.2 million rentable square feet. As of September 30, 2022, these properties were 70% occupied. As of September 30, 2022, the Company owned one residential home portfolio consisting of 2,458 residential homes and encompassing approximately 3.5 million rental square feet. In addition, the Company owned two apartment properties, containing 609 units and encompassing approximately 0.5 million rentable square feet, which were 96% and 95% occupied, respectively, as of September 30, 2022. As of September 30, 2022, the Company also owned one hotel property with 196 rooms and three investments in undeveloped land with approximately 800 developable acres and one office/retail development property. The following table summarizes the Company’s real estate held for investment as of September 30, 2022 and December 31, 2021, respectively (in thousands):

	September 30, 2022		December 31, 2021
Land	$	275,715	$	245,200
Buildings and improvements	1,062,342		954,851
Tenant origination and absorption costs	30,785		43,375
Total real estate, cost	1,368,842		1,243,426
Accumulated depreciation and amortization	(134,645)		(124,876)
Total real estate held for investment, net	$	1,234,197	$	1,118,550

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, 2022, the leases, excluding options to extend, apartment leases and residential homes, which have terms that are generally one year or less, had remaining terms of up to 12.9 years with a weighted-average remaining term of 3.7 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 as of September 30, 2022 and December 31, 2021, respectively.

During the three and nine months ended September 30, 2022, the Company recognized deferred rent from tenants of $0.5 million and $2.0 million, respectively, net of lease incentive amortization. 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. As of September 30, 2022 and December 31, 2021, the cumulative deferred rent receivable balance, including unamortized lease incentive receivables, was $17.8 million and $16.3 million, respectively, and is included in rents and other receivables on the accompanying consolidated balance sheets. The cumulative deferred rent balance included $3.0 million and $3.3 million of unamortized lease incentives as of September 30, 2022 and December 31, 2021, respectively.

As of September 30, 2022, the future minimum rental income from the Company’s properties, excluding apartment leases and residential homes, under non-cancelable operating leases was as follows (in thousands):

October 1, 2022 through December 31, 2022	$	15,105
2023	59,457
2024	54,145
2025	43,184
2026	30,074
Thereafter	72,929
	$	274,894

As of September 30, 2022, 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
Public Administration	14	$	7,762	12.6	%
Professional, Scientific, and Technical Services	38	7,346		11.9	%
Computer Systems Design and Related Services	30	7,037		11.4	%
		$	22,145	35.9	%

_____________________

(1) Annualized base rent represents annualized contractual base rental income as of September 30, 2022, 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.

Geographic Concentration Risk

As of September 30, 2022, the Company’s real estate investments in California and Georgia represented 21.9% and 10.3%, respectively, 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 and Georgia 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.

Hotel Revenues

The following table provides detailed information regarding the Company’s hotel revenues for its two hotel properties (the Springmaid Beach Resort was sold on September 1, 2022) during the three and nine months ended September 30, 2022 (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Hotel revenues:
Room	$	7,223	$	9,396	$	21,423	$	18,508
Food, beverage and convention services	217		1,452		807		2,830
Campground	984		280		3,379		792
Other	757		1,025		2,343		2,448
Hotel revenues	$	9,181	$	12,153	$	27,952	$	24,578

Contract Liabilities

The following table summarizes the Company’s contract liabilities, which are comprised of hotel advanced deposits and deferred proceeds from historical and future land sales 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, 2022 and December 31, 2021 (in thousands):

	September 30, 2022		December 31, 2021
Contract liability	$	23,115	$	7,313
Revenue recognized in the period from:
Amounts included in contract liability at the beginning of the period	$	449	$	159

Recent Real Estate Sales

On January 24, 2022, the Company, through an indirect wholly owned subsidiary, sold two office buildings related to the Richardson Portfolio and containing 141,950 rentable square feet in Richardson, Texas (“Greenway Buildings”) to a purchaser unaffiliated with the Company or the Advisor (as defined in Note 7), for $11.0 million, before closing costs and credits. The carrying value of the Greenway Buildings as of the disposition date was $5.6 million, which was net of $3.2 million of accumulated depreciation and amortization. In connection with the sale of the Greenway Buildings, the Company repaid $9.1 million of the outstanding principal balance due under the mortgage loan secured by the Greenway Buildings. The Company recognized a gain on sale of $3.6 million related to the disposition of the Greenway Buildings, net of closing costs and adjustments. As a result of the sale of the Greenway Buildings, certain assets and liabilities were reclassified to held for sale on the consolidated balance sheets as of December 31, 2021.

On September 1, 2022, the Company, through an indirect wholly owned subsidiary, sold the Springmaid Beach Resort to a purchaser unaffiliated with the Company or the Advisor for $91.0 million, before closing costs and credits. The carrying value of the Springmaid Beach Resort as of the disposition date was $87.2 million, which was net of $3.4 million of accumulated depreciation and amortization and $2.5 million of impairment charges. In connection with the sale of the Springmaid Beach Resort, the Company repaid $52.0 million of the outstanding principal balance due under the mortgage loan secured by the Springmaid Beach Resort and $1.3 million of the proceeds were held for contingent repairs related to the property. As a result of the sale of the Springmaid Beach Resort, certain assets and liabilities were reclassified to held for sale on the consolidated balance sheets as of December 31, 2021.

Park Highlands Land Purchase and Sale Contracts

The Company enters into land purchase and sale contracts to dispose of Park Highlands developed and undeveloped land. Under these contracts, the Company will receive a stated deposit from the buyer, held in escrow, in consideration for the right, but not the obligation, to purchase the land at a future point in time with predetermined terms. After a contractually specified date, the deposits are not refundable even in the event the contract terminates, at which point the Company records restricted cash and other liabilities on the consolidated balance sheets.

On November 11, 2021, the Company, through an indirect wholly owned subsidiary, entered into a purchase and sale agreement, as amended, to sell 234 developable acres of undeveloped land located in North Las Vegas, Nevada, (“Park Highlands”) for gross sales proceeds of approximately $121.4 million, before closing costs and credits. The due diligence period expired on February 23, 2022 and the buyer’s deposit of $13.5 million is no longer refundable and is recognized as restricted cash on the consolidated balance sheets. This deposit is held in an escrow account and will become available once the sale is completed. Actions are required by the Company to complete the planned sale.

On March 10, 2022, the Company, through an indirect wholly owned subsidiary, entered into a purchase and sale agreement, as amended, to sell 77 developable acres of Park Highlands for gross sales proceeds of approximately $52.9 million, before closing costs and credits. The due diligence period expired on May 31, 2022 and the buyer’s deposit of $3.5 million is no longer refundable and is recognized as restricted cash on the consolidated balance sheets. This deposit is held in an escrow account and will become available once the sale is completed. Actions are required by the Company to complete the planned sale.

On June 22, 2022, the Company, through an indirect wholly owned subsidiary, entered into a purchase and sale agreement, to sell 67 developable acres of Park Highlands for gross sales proceeds of approximately $55.0 million, before closing costs and credits. The due diligence period expired on October 20, 2022, after which the buyer’s deposit of $3.0 million is no longer be refundable and is recognized as restricted cash on the consolidated balance sheets. This deposit is held in an escrow account and will become available once the sale is completed. Actions are required by the Company to complete the planned sale.

Impairment of Real Estate

During the three and nine months ended September 30, 2022, the Company recorded impairment charges on real estate in the aggregate of $11.9 million, to write down the carrying value of 210 West 31st Street by $4.4 million, a development property located in New York, New York (“210 West 31st Street”) and Oakland City Center by $5.0 million, an office property located in Oakland, California, to their estimated fair value due to a change in the projected hold period and related decrease in projected cash flows. Additionally, the Company determined that based on the amended sale price of the Springmaid Beach Resort, the book value was not recoverable and the Company wrote down the carrying value of Springmaid Beach Resort by $2.5 million.

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 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.

PORT II Consolidation

On July 1, 2022, the Company became the primary beneficiary of Pacific Oak Residential Trust II, Inc. (“PORT II”), a related party and consolidated PORT II into the Company's financial statements. As of July 1, 2022, PORT II had 588 residential homes. Refer to Note 8 for additional details on PORT II and the consolidation. The following table summarizes the components of the PORT II and the gain recognized by the Company (in thousands):

PORT II's assets and liabilities, based upon fair values as determined by the Company, as follows:
Assets:
Real estate held for investment, net	$	135,096
Cash and cash equivalents	1,473
Restricted cash	361
Prepaid expenses and other assets	639
Total Assets	137,569
Liabilities:
Notes payable, net	(82,646)
Accounts payable and accrued liabilities	(804)
Due to affiliates	(147)
Other liabilities	(1,499)
Total Liabilities	(85,096)
Noncontrolling interest	(1,125)
Elimination of the Company’s investment in PORT II	(32,606)
Gain from consolidation of previously unconsolidated entity	$	18,742

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REAL ESTATE EQUITY SECURITIES

9 Months Ended

Sep. 30, 2022

Investments, Debt and Equity Securities [Abstract]

REAL ESTATE EQUITY SECURITIES

REAL ESTATE EQUITY SECURITIESThe 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, 2022 and 2021 (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Net (loss) gain recognized during the period on real estate equity securities	$	(20,722)	$	(2,614)	$	(48,312)	$	12,939
Less net gain recognized during the period on real estate equity securities sold during the period	—		—		—		(225)
Unrealized (loss) gain recognized during the reporting period on real estate equity securities held at the end of the period	$	(20,722)	$	(2,614)	$	(48,312)	$	12,714

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NOTES AND BONDS PAYABLE

9 Months Ended

Sep. 30, 2022

Notes and Bonds Payable [Abstract]

NOTES AND BONDS PAYABLE

NOTES AND BONDS PAYABLE

As of September 30, 2022 and December 31, 2021, 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, 2022		Book Value as of December 31, 2021		Contractual Interest Rate as of September 30, 2022	Effective Interest Rate at September 30, 2022 (1)	Payment Type (2)	Maturity Date (3)
Richardson Portfolio Mortgage Loan	$	18,944	$	28,470	LIBOR + 2.50%	5.64%	Principal & Interest	11/1/2022 (4)
Park Centre Mortgage Loan	26,104		26,185		BSBY + 1.75%	4.88%	Principal & Interest	06/27/2023
1180 Raymond Mortgage Loan (5)	31,070		31,070		BSBY + 2.25%	5.38%	Interest Only	12/01/2023
Pacific Oak SOR (BVI) Holdings, Ltd. Series B Debentures (6)	326,523		271,978		3.93%	3.93%	(6)	01/31/2026
Crown Pointe Mortgage Loan	53,758		52,315		SOFR + 2.30%	4.77%	Interest Only	04/01/2025
The Marq Mortgage Loan	60,998		61,874		BSBY + 1.55%	4.68%	Principal & Interest	06/06/2023
Eight & Nine Corporate Centre Mortgage Loan	48,095		48,545		BSBY + 1.60%	4.73%	Principal & Interest	06/08/2023
Georgia 400 Center Mortgage Loan	44,129		61,154		LIBOR + 1.55%	4.69%	Interest Only	05/22/2023
PORT Mortgage Loan 1	51,303		51,302		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 MetLife Loans	153,703		60,000		3.90%	3.90%	Interest Only	04/10/2026
Springmaid Beach Resort Mortgage Loan	(7)		55,491		(7)	(7)	(7)	(7)
Q&C Hotel Mortgage Loan	24,815		25,000		LIBOR + 2.50% (8)	5.64%	Principal & Interest	12/23/2022
Lincoln Court Mortgage Loan (5)	35,314		34,623		SOFR + 3.25%	5.72%	Interest Only	08/07/2025
Lofts at NoHo Commons Mortgage Loan	71,536		74,536		SOFR + 2.18% (9)	4.65%	Interest Only	09/09/2023
210 West 31st Street Mortgage Loan (5)	3,000		8,850		BSBY + 3.00%	6.13%	Principal & Interest	12/16/2022
Oakland City Center Mortgage Loan (5)	89,250		96,075		BSBY + 3.00%	6.13%	Principal & Interest	09/01/2023
Madison Square Mortgage Loan	17,671		17,500		4.63%	4.63%	Interest Only	10/07/2024
Total Notes and Bonds Payable principal outstanding	1,066,736		1,015,491
Discount on Notes and Bonds Payable, net (10)	(13,376)		(8,146)
Deferred financing costs, net	(10,500)		(8,396)
Total Notes and Bonds Payable, net	$	1,042,860	$	998,949

_____________________

(1) Contractual interest rate represents the interest rate in effect under the loan as of September 30, 2022. Effective interest rate is calculated as the actual interest rate in effect as of September 30, 2022 (consisting of the contractual interest rate and contractual floor rates), using interest rate indices at September 30, 2022, where applicable.

(2) Represents the payment type required under the loan as of September 30, 2022. 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, 2022; subject to certain conditions, the maturity dates of certain loans may be extended beyond the date shown.

(4) Subsequent to September 30, 2022, the Company extended the Richardson Portfolio Mortgage Loan to October 10, 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, 2022, the guaranteed amount in the aggregate was $41.9 million.

(6) See “Israeli Bond Financings” below.

(7) The Springmaid Beach Resort Mortgage Loan was paid off in conjunction with the sale of the Springmaid Beach Resort. See Note 3 for further details.

(8) The interest rate is variable at the higher of one-month LIBOR + 2.5% or 4.5%.

(9) The variable rate is at the higher of one-month SOFR or 1.75%, plus 2.18%.

(10) 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, 2022, the Company incurred $13.0 million and $33.3 million, respectively, of interest expense. Included in interest expense for the three and nine months ended September 30, 2022 was $1.0 million and $2.6 million, respectively, of amortization of deferred financing costs. Included in interest expense for the three and nine months ended September 30, 2022 was $1.1 million and $3.4 million, respectively, of amortization on discount on notes and bonds payable, net. Additionally, during the three and nine months ended September 30, 2022, the Company capitalized $0.7 million and $1.7 million, respectively, of interest related to its investments in undeveloped land.

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.

As of September 30, 2022 and December 31, 2021, the Company’s interest payable was $5.2 million and $6.6 million, respectively.

The following is a schedule of maturities, including principal amortization payments, for all notes and bonds payable outstanding as of September 30, 2022 (in thousands):

October 1, 2022 through December 31, 2022	$	49,443
2023	368,500
2024	126,512
2025	249,216
2026	273,065
Thereafter	—
	$	1,066,736

As of November 14, 2022, the Company had a total of $383.0 million of debt obligations scheduled to mature over the next 12 months. The Company has extension options with respect to $185.4 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 the Company 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 B Debentures. 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, 2022, the Company was in compliance with all of these debt covenants with the exception that the Oakland City Center Mortgage Loan and Georgia 400 Center Mortgage Loan were not in compliance with the debt service coverage requirement. As a result of such non-compliance, the Company is required to provide a cash sweep for the Georgia 400 Center Mortgage Loan. Additionally, the Company may be required to partially pay down the Oakland City Center Mortgage Loan if the non-compliance continues through September 2023.

Israeli Bond Financings

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 November 1, 2021, Pacific Oak SOR BVI 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). On November 8, 2021, Pacific Oak SOR BVI also issued Series B Debentures in the amount of 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 ($16.7 million as of November 8, 2021).

Additionally, on May 2, 2022, Pacific Oak SOR BVI issued Series B Debentures in the amount of 320.4 million Israeli new Shekels par value through a private offering. The private offering Series B Debentures were issued at a 4.0% discount, resulting in a total consideration of 307.6 million Israeli new Shekels ($95.3 million as of May 2, 2022). The additional Series B Debentures have an equal level of security, pari passu, amongst themselves and between them and the initial Series B Debentures, without any right of precedence or preference between any of them.

The deed of trust that governs the Series B Debentures contain various financial covenants. As of September 30, 2022, the Company was in compliance with all of these financial debt covenants.

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FAIR VALUE DISCLOSURES

9 Months Ended

Sep. 30, 2022

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, 2022 and December 31, 2021, which carrying amounts do not approximate the fair values (in thousands):

	September 30, 2022						December 31, 2021
	Face Value		Carrying Amount		Fair Value		Face Value		Carrying Amount		Fair Value
Financial liabilities (Level 3):
Notes and bond payable	$	740,213	$	732,676	$	720,286	$	743,513	$	740,176	$	740,347
Financial liabilities (Level 1):
Pacific Oak SOR (BVI) Holdings, Ltd. Series B Debentures	$	326,523	$	310,184	$	306,099	$	271,978	$	258,773	$	274,697

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, 2022, 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	$	63,784	$	63,784	$	—	$	—
Asset derivative - interest rate caps	$	1,971	$	—	$	1,971	$	—
Nonrecurring Basis:
Impaired real estate	$	220,360	$	—	$	—	$	220,360
Impaired goodwill	$	5,436	$	—	$	—	$	5,436

As of September 30, 2022, 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, 2022. Oakland City Center 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 6.50% and a terminal cap rate of 5.75%. Additionally, the Springmaid Beach Resort was measured at it’s estimated fair value based on the contractual sale price. During the three and nine months ended September 30, 2022, the Company recorded impairment charges on real estate in the aggregate of $11.9 million, to write down the carrying value of 210 West 31st Street, Oakland City Center, and the Springmaid Beach Resort. The fair value of the Company's real estate were measured using significant other observable inputs (Level 2) and significant unobservable inputs (Level 3) for the three and nine months ended September 30, 2022, which included contractual sale price, discounted cash flows, terminal capitalization rates, and discount rates.

As of September 30, 2022, the Company determined that based on the sale of the Springmaid Beach Resort and a decline in projected cash flows for Oakland City Center, it was more likely than not that the fair value of the reporting units that included Oakland City Center and Springmaid Beach Resort were less than book value. The resulting real estate impairment charge on Oakland City Center and the sale of Springmaid Beach Resort, resulted in the fair value of the reporting units to be below fair value and the entirety of the goodwill associated to the reporting units to be written off. During the three and nine months ended September 30, 2022, the Company recorded goodwill impairment charges of $8.1 million in the consolidated statement of operations.

The following table summarizes the goodwill impairment activity during nine months ended September 30, 2022 (in thousands):

	Gross Goodwill		Accumulated Impairment		Net Goodwill
Balance, December 31, 2021	$	16,342	$	(2,808)	$	13,534
Impairment charges on goodwill	—		(8,098)		(8,098)
Balance, September 30, 2022	$	16,342	$	(10,906)	$	5,436

As of December 31, 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	$	112,096	$	112,096	$	—	$	—
Asset derivative - interest rate caps	$	8	$	—	$	8	$	—
Nonrecurring Basis:
Impaired real estate (1)	$	97,600	$	—	$	—	$	97,600
Impaired goodwill (1)	$	13,534	$	—	$	—	$	13,534

_____________________

(1) The fair value of these assets were assessed as of September 30, 2021.

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RELATED PARTY TRANSACTIONS

9 Months Ended

Sep. 30, 2022

Related Party Transactions [Abstract]

RELATED PARTY TRANSACTIONS

RELATED PARTY TRANSACTIONS

Pacific Oak Capital Advisors, LLC

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 Pacific Oak Capital Advisors, LLC (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 an advisory agreement (the “Advisory Agreement”). The Advisory Agreement is currently effective through November 1, 2023; 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.

Pacific Oak Residential Advisors, LLC

Effective September 1, 2022, the Company entered into an advisory agreement with Pacific Oak Residential Advisors, LLC (“PORA”) (the “PORT Advisory Agreement”) pursuant to which PORA will act as a product specialist with respect to the Company’s residential homes portfolio, held through a wholly owned subsidiary. The PORT Advisory Agreement has an initial two-year term and may be renewed for additional one-year terms. Pursuant to the PORT Advisory Agreement, the Company will pay PORA: (1) an acquisition fee equal to 1.0% of the cost of each asset which consists of the price paid for the asset plus any amounts funded or budgeted at the time of acquisition for capital expenditures; and (2) a quarterly asset management fee equal to 0.25% (1.0% annually) on the aggregate value of the Company’s residential homes portfolio assets, as determined in accordance with the Company’s valuation guidelines, as of the end of each quarter. In the case of investments made through a joint venture, the acquisition fee will be based on the Company’s proportionate share of the joint venture. For substantial assistance in connection with the sale of properties or other investments related to the Company’s residential homes portfolio, the Company also pays PORA or its affiliates 1.0% of the contract sales price with a limit to not exceed commission paid to unaffiliated third parties.

In connection with the PORT Advisory Agreement, the Company amended and restated its advisory agreement with the Advisor, also effective September 1, 2022 (the “Amended Company Advisory Agreement”). Under the Amended Company Advisory Agreement, the Company will no longer pay acquisition fees, asset management fees or disposition fees to the Advisor with respect to the Company’s residential homes portfolio. The Company’s residential homes portfolio will still be considered when computing any potential incentive fees due to the Advisor under the Amended Company Advisory Agreement.

DMH Realty, LLC

Effective September 1, 2022, the Company entered into a property management agreement with DMH Realty, LLC (“DMH Realty”), an affiliate of PORA and the Advisor (the “PORT Property Management Agreement”) for the Company’s residential homes portfolio. The PORT Property Management Agreement has an initial two-year term and may be renewed for additional one-year terms. Pursuant to the PORT Property Management Agreement, the Company will pay DMH Realty a property management fee equal to the following: (a) 8% of Collected Rental Revenues, as defined below, up to $50.0 million per annum; (b) 7% of Collected Rental Revenues in excess of $50.0 million per annum, but less than or equal to $75.0 million per annum; and (c) 6% of Collected Rental Revenues in excess of $75.0 million per annum, “Collected Rental Revenues” means the amount of rental revenue actually collected for each property per the terms of the lease pertaining to each property (including lease breakage fees) or pursuant to any early termination buyouts, but excluding other income items, fees or revenue collected by DMH Realty, including but not limited to: application fees, insufficient funds fees, late fees, move-in fees, pet fees, and security deposits (except to the extent applied to rent per the terms of the lease pertaining to any property).

Pacific Oak Capital Markets, LLC

On September 9, 2022, the Company, through PORT, commenced a private offering of up to $500 million of common stock in a primary offering and up to $50 million of common stock under its distribution reinvestment plan (the “Private Offering”). PORT engaged Pacific Oak Capital Markets, LLC (“POCM”), an affiliate of the Advisor, PORA and DHM Realty, to be the dealer manager for the Private Offering, pursuant to a dealer manager agreement effective as of September 9, 2022 (the “PORT Dealer Manager Agreement”). Pursuant to the PORT Dealer Manager Agreement, with respect to Class A shares, PORT will generally pay POCM: (1) selling commissions equal to up to 6.0% of the net asset value (“NAV”) of each share sold in the primary offering, which POCM may reallow in part or in full to participating broker-dealers; (2) a dealer manager fee equal to up to 1.5% of the NAV of each share sold in the primary offering, which POCM may reallow in part or in full to participating broker-dealers; and (3) a placement agent fee equal to up to 1.5% of the NAV of each share sold in the primary offering. With respect to Class T shares, PORT will generally pay POCM: (1) selling commissions equal to up to 3.0% of the NAV of each share sold in the primary offering, which POCM may reallow in part or in full to participating broker-dealers; (2) a dealer manager fee equal to up to 0.75% of the NAV of each share sold in the primary offering, which POCM may reallow in part or in full to participating broker-dealers; and (3) a placement agent fee equal to up to 0.75% of the NAV of each share sold in the primary offering. PORT will not pay any selling commissions, dealer manager or placement agent fees in connection with the sale of shares under the distribution reinvestment plan. The Advisor is the sponsor for the Private Offering and as the sponsor, they will incur reimbursable organization and offering costs on behalf of PORT. PORT will incur an organization and offering expense fee equal to 0.5% of the NAV of each share sold in the Private Offering to help fund the reimbursement to the sponsor.

Pursuant to the terms of the related party agreements, summarized below are the related-party costs incurred by the Company for the three and nine months ended September 30, 2022 and 2021, respectively, and any related amounts payable as of September 30, 2022 and December 31, 2021 (in thousands):

	Incurred								Payable as of
	Three Months Ended September 30,				Nine Months Ended September 30,				September 30, 2022		December 31, 2021
Expensed	2022		2021		2022		2021
Asset management fees	$	3,630	$	3,422	$	9,945	$	10,802	$	3,252	$	1,903
Property management fees	294		119		552		362		—		—
Disposition fees (1)	637		692		744		1,196		—		—
Change in subordinated performance fee due upon termination to affiliate (2)	—		1,545		—		1,745		(2)		(2)
Capitalized
Acquisition fees on real estate (3)	67		—		67		20		—		—
Acquisition fee on investment in unconsolidated entities	—		—		—		45		—		—
	$	4,628	$	5,778	$	11,308	$	14,170	$	3,252	$	1,903

_____________________

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

(2) Change in estimate of fees payable to the Company’s previous advisor, KBS Capital Advisors LLC (“KBS Capital Advisors) due to the termination of the former advisory agreement with KBS Capital Advisors.

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

PORT OP LP Share Redemption

On June 24, 2022, the Company’s board of directors authorized and approved the redemption of the 510,816 Special Common Units of PORT OP LP, a consolidated subsidiary of the Company (“PORT OP”), representing approximately 3.20% interest, held by BPT Holdings, LLC (“BPT Holdings”), a subsidiary of the Advisor, for a price of $13.09 per unit. In July 2022, the Company redeemed the special common units of PORT OP for $6.7 million. Following the redemption, the Company owned 100% of PORT OP.

Pacific Oak Opportunity Zone Fund I

As of September 30, 2022, the Company’s investment balance in the Pacific Oak Opportunity Zone Fund I, LLC (“Pacific Oak Opportunity Zone Fund I”) is $26.3 million, which is 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 incurred (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, 2022, the Company recorded $0.3 million and $0.4 million, respectively, of waived asset management fees recorded as equity in income of unconsolidated entities. During the three and nine months ended September 30, 2021, the Company recorded $0.2 million and $0.3 million, respectively, of waived asset management fees recorded as equity in income of unconsolidated entities.

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INVESTMENT IN UNCONSOLIDATED ENTITIES

9 Months Ended

Sep. 30, 2022

Equity Method Investments and Joint Ventures [Abstract]

INVESTMENT IN UNCONSOLIDATED ENTITIES

INVESTMENT IN UNCONSOLIDATED ENTITIES

As of September 30, 2022 and December 31, 2021, the Company’s investments in unconsolidated entities were composed of the following (dollars in thousands):

	Number of Properties as of September 30, 2022			Investment Balance at
Joint Venture		Location	Ownership %	September 30, 2022		December 31, 2021
110 William Joint Venture	1	New York, New York	60.0%	$	—	$	—
353 Sacramento Joint Venture	1	San Francisco, California	55.0%	46,572		49,916
Pacific Oak Opportunity Zone Fund I	3	Various	46.0%	26,266		27,215
PORT II OP LP	(1)	(1)	(1)	(1)		11,125
				$	72,838	$	88,256

_____________________

(1) On July 1, 2022, the Company, through PORT OP, made a tender offer to purchase 76,735 shares of PORT II common stock held by unrelated parties for a price of $14.66 per share. As a result, the Company determined that it became the primary beneficiary of PORT II, which resulted in the consolidation of PORT II into the Company’s consolidated financial statements. On July 29, 2022, the Company consummated the transactions with the unrelated parties and owned 100% of PORT II. See Note 3 for the assessment of the fair value of the assets and liabilities of PORT II. There are no liquidity arrangements or agreements to fund capital or purchase assets that could require the Company to provide financial support to PORT II. The Company and the aforementioned unrelated parties did not guarantee any debt in connection with the transaction.

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SUPPLEMENTAL CASH FLOW AND SIGNIFICANT NONCASH TRANSACTION DISCLOSURES

9 Months Ended

Sep. 30, 2022

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,
	2022		2021
Supplemental Disclosure of Cash Flow Information:
Interest paid, net of capitalized interest of $1,703 and $1,579 for the nine months ended September 30, 2022 and 2021, respectively	$	29,839	$	29,220
Supplemental Disclosure of Significant Noncash Transactions:
Assets acquired in the consolidation of previously unconsolidated entity	137,569		—
Liabilities assumed in the consolidation of previously unconsolidated entity	85,096		—
Accrued improvements to real estate	6,389		1,721
Redeemable common stock payable	1,567		3,385
Distributions paid to common stockholders through common stock issuances	99,094		—
Accrued preferred dividends	225		225
PPP notes forgiveness	2,367		1,500

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REPORTING SEGMENTS

9 Months Ended

Sep. 30, 2022

Segment Reporting [Abstract]

REPORTING SEGMENTS

REPORTING SEGMENTSThe Company recognizes three reporting segments for the three and nine months ended September 30, 2022 and 2021: strategic opportunistic properties, residential 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. On July 1, 2022, the Company made a prospective name change to the “Single-Family Homes” segment to “Residential Homes” to reflect the Company’s acquisition of PORT II multifamily homes, see Note 3 for further details on the acquisition. On September 1, 2022, the Company made a prospective name change to the “Hotels” segment to “Hotel” to reflect the September 1, 2022 disposition of the Springmaid Beach Resort, see Note 3 for further details on the disposition. The selected financial information for reporting segments for the three and nine months ended September 30, 2022 and 2021 are as follows (in thousands):

	Three Months Ended September 30, 2022
	Strategic Opportunistic Properties		Residential Homes		Hotel		Total
Total revenues	$	25,847	$	8,576	$	9,182	$	43,605
Total expenses	(46,453)		(10,726)		(12,056)		(69,235)
Total other (loss) income	(24,052)		18,671		11		(5,370)
Net (loss) income	$	(44,658)	$	16,521	$	(2,863)	$	(31,000)
	Nine Months Ended September 30, 2022
	Strategic Opportunistic Properties		Residential Homes		Hotel		Total
Total revenues	$	77,599	$	20,120	$	27,952	$	125,671
Total expenses	(87,232)		(23,735)		(28,900)		(139,867)
Total other (loss) income	(50,436)		18,149		2,382		(29,905)
Net (loss) income	$	(60,069)	$	14,534	$	1,434	$	(44,101)

	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

Total assets and goodwill related to the reporting segments as of September 30, 2022 and December 31, 2021 are as follows (in thousands):

	September 30, 2022
	Strategic Opportunistic Properties		Residential Homes		Hotel		Total
Total assets	$	1,174,855	$	337,513	$	51,999	$	1,564,367
Goodwill (1)	4,220		—		1,216		5,436
	December 31, 2021
	Strategic Opportunistic Properties		Single-Family Homes		Hotels		Total
Total assets	$	1,223,122	$	211,050	$	150,447	$	1,584,619
Goodwill (1)	9,489		—		4,045		13,534

_____________________

(1) During the three and nine months ended September 30, 2022, the Company recorded impairment charges on goodwill of $5.5 million and $2.6 million related to the Strategic Opportunistic Properties and Hotel segments, respectively. 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, 2022

Equity [Abstract]

PORT MEZZANINE EQUITY

PORT MEZZANINE EQUITY

The following is a reconciliation of PORT’s noncontrolling cumulative convertible redeemable preferred stock for the nine months ended September 30, 2022 and 2021 (dollars in thousands):

	Series A Preferred Stock			Series B Preferred Stock
	Shares	Amounts		Shares	Amounts
Balance, December 31, 2021	15,000	$	15,134	125	$	99
Dividends Available Upon Redemption	—	1,045		—	8
Dividends Paid	—	(1,045)		—	(8)
Balance, September 30, 2022	15,000	$	15,134	125	$	99

	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	—	453		—	—
Dividends Paid	—	(453)		—	—
Balance, September 30, 2021	15,000	$	15,134	125	$	99

On July 1, 2020, the Company acquired, through its subsidiaries, Battery Point Trust Inc. (“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. 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 Special Common 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, 2022 and 2021 (in thousands):

December 31, 2021	$	2,822
Net loss attributable to redeemable noncontrolling interest	(81)
Adjustment to value of redeemable noncontrolling interest (1)	3,946
Payment to redeem noncontrolling interest	(6,687)
September 30, 2022	$	—
December 31, 2020	$	2,968
Net loss attributable to redeemable noncontrolling interest	(113)
September 30, 2021	$	2,855

_____________________

(1) On June 24, 2022, the Company’s board of directors approved the redemption of the 510,816 PORT OP Special Common Units held by BPT Holdings for a price of $13.09 per unit.and recorded at its fair value. The Company redeemed the noncontrolling interest in PORT OP in July 2022.

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COMMITMENTS AND CONTINGENCIES

9 Months Ended

Sep. 30, 2022

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

Lease Obligations

As of September 30, 2022, the Company’s lease and rights to a leasehold interest with respect to 210 West 31st Street, 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)	$	7,281
Lease obligation (included in other liabilities)	9,424
Remaining lease term	91.3 years
Discount rate	4.8		%
The components of lease expense were as follows:
Interest on lease obligation for the three months ended September 30, 2022	112
Interest on lease obligation for the nine months ended September 30, 2022	334

_____________________

(1) During the three and nine months ended September 30, 2022, the Company wrote down its right-of-use asset and recorded an impairment charge of $0.8 million on 210 West 31st Street.

As of September 30, 2022, the Company had a leasehold interest expiring in 2114. Future minimum lease payments owed by the Company under the finance lease as of September 30, 2022 are as follows (in thousands):

July 1, 2021 through December 31, 2021	$	90
2022	360
2023	360
2024	393
2025	396
Thereafter	52,167
Total expected minimum lease obligations	53,766
Less: Amount representing interest (1)	(44,342)
Present value of net minimum lease payments (2)	$	9,424

_____________________

(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.

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, 2022. 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.

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, 2022

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS

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

Dividends on and accretion to redemption value of Series A Redeemable Preferred Stock

On October 25, 2022, the Company received notice by the holders of PORT’s Series A noncontrolling cumulative convertible redeemable preferred stock to redeem their outstanding redeemable preferred stock. If outstanding on November 4, 2022, the Series A redeemable preferred stock must be redeemed by the Company within 120 days after November 4, 2022. The Company authorized and approved the redemption of all 15,000 outstanding Series A Preferred Shares, at a price of (i) $1,120 per Series A Preferred Share, plus (ii) all accrued but unpaid dividends, through the redemption date.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

9 Months Ended

Sep. 30, 2022

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, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022.

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.

Reclassifications

Certain prior period amounts have been reclassified to conform to the current period presentation. In that regard, the Company reclassified held for sale activity related to dispositions in its consolidated balance sheets as of December 31, 2021.

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 escrow deposits for future real estate sales and lender impound reserve accounts on the Company’s borrowings for security deposits, property taxes, insurance, debt service obligations and capital improvements and replacements.

Segments

The Company operates in three reportable business segments: opportunistic real estate and real estate-related investments, residential homes, and hotel, which is how the Company’s management manages the business. In general, the Company intends to hold its investments in opportunistic real estate and real estate-related assets for capital appreciation. Traditional performance metrics of opportunistic real estate and 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 real estate-related assets as similar investments and aggregated them into one reportable business segment. The Company owns residential homes in 18 markets which are all aggregated into one reportable business segment due to the homes being stabilized, having high occupancy rates and have similar economic characteristics. Additionally, as of September 30, 2022, the Company owns one hotel which is aggregated into one reportable business segment due to the nature of the hotel business with short-term stays. See Note 10 for further details.

Per Share Data

The Company determines basic earnings per share and basic earnings per unit based on the weighted average number of shares of common stock or units, as applicable, outstanding during the period and the Company considers any participating securities, including unvested restricted stock, for purposes of applying the two-class method. The Company determines diluted earnings per share and diluted earnings per unit based on the weighted average number of shares of common stock or units, as applicable, outstanding combined with the incremental weighted average number of shares or units, as applicable, that would have been outstanding assuming all potentially dilutive securities were converted into shares of common stock or units, as applicable, at the earliest date possible. The noncontrolling Series A convertible redeemable preferred shares of Pacific Oak Residential Trust, Inc. (“PORT”) were not included as the shares are contingent on PORT being public.

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 Adopted Accounting Guidance

Reference Rate Reform — In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (ASC Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional relief to all entities, subject to meeting certain criteria, that have contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. Additionally, in January 2021, the FASB issued ASU No. 2021-01, Reference Rate Reform (ASC Topic 848), which clarifies that certain optional expedients and exceptions in ASC 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition. The Company adopted ASC Topic 848 on September 30, 2022 and the related prospective optional expedients for its variable rate debt and related derivatives is not expected to have a material impact to the Company.

There have been no other recent accounting pronouncements, changes in accounting pronouncements or recently adopted accounting guidance during the nine months ended September 30, 2022 that are of significance or potential significance to the Company.

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, 2022

Real Estate [Abstract]

Schedule of Real Estate Investments

The following table summarizes the Company’s real estate held for investment as of September 30, 2022 and December 31, 2021, respectively (in thousands):

	September 30, 2022		December 31, 2021
Land	$	275,715	$	245,200
Buildings and improvements	1,062,342		954,851
Tenant origination and absorption costs	30,785		43,375
Total real estate, cost	1,368,842		1,243,426
Accumulated depreciation and amortization	(134,645)		(124,876)
Total real estate held for investment, net	$	1,234,197	$	1,118,550

Schedule of Future Minimum Rental Income for Company's Properties

As of September 30, 2022, the future minimum rental income from the Company’s properties, excluding apartment leases and residential homes, under non-cancelable operating leases was as follows (in thousands):

October 1, 2022 through December 31, 2022	$	15,105
2023	59,457
2024	54,145
2025	43,184
2026	30,074
Thereafter	72,929
	$	274,894

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
Public Administration	14	$	7,762	12.6	%
Professional, Scientific, and Technical Services	38	7,346		11.9	%
Computer Systems Design and Related Services	30	7,037		11.4	%
		$	22,145	35.9	%

_____________________(1) Annualized base rent represents annualized contractual base rental income as of September 30, 2022, 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

The following table provides detailed information regarding the Company’s hotel revenues for its two hotel properties (the Springmaid Beach Resort was sold on September 1, 2022) during the three and nine months ended September 30, 2022 (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Hotel revenues:
Room	$	7,223	$	9,396	$	21,423	$	18,508
Food, beverage and convention services	217		1,452		807		2,830
Campground	984		280		3,379		792
Other	757		1,025		2,343		2,448
Hotel revenues	$	9,181	$	12,153	$	27,952	$	24,578

Schedule of Contract Liability

The following table summarizes the Company’s contract liabilities, which are comprised of hotel advanced deposits and deferred proceeds from historical and future land sales 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, 2022 and December 31, 2021 (in thousands):

	September 30, 2022		December 31, 2021
Contract liability	$	23,115	$	7,313
Revenue recognized in the period from:
Amounts included in contract liability at the beginning of the period	$	449	$	159

Schedule of Components Of Primary Beneficiary

The following table summarizes the components of the PORT II and the gain recognized by the Company (in thousands):

PORT II's assets and liabilities, based upon fair values as determined by the Company, as follows:
Assets:
Real estate held for investment, net	$	135,096
Cash and cash equivalents	1,473
Restricted cash	361
Prepaid expenses and other assets	639
Total Assets	137,569
Liabilities:
Notes payable, net	(82,646)
Accounts payable and accrued liabilities	(804)
Due to affiliates	(147)
Other liabilities	(1,499)
Total Liabilities	(85,096)
Noncontrolling interest	(1,125)
Elimination of the Company’s investment in PORT II	(32,606)
Gain from consolidation of previously unconsolidated entity	$	18,742

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REAL ESTATE EQUITY SECURITIES (Tables)

9 Months Ended

Sep. 30, 2022

Investments, Debt and Equity Securities [Abstract]

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, 2022 and 2021 (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Net (loss) gain recognized during the period on real estate equity securities	$	(20,722)	$	(2,614)	$	(48,312)	$	12,939
Less net gain recognized during the period on real estate equity securities sold during the period	—		—		—		(225)
Unrealized (loss) gain recognized during the reporting period on real estate equity securities held at the end of the period	$	(20,722)	$	(2,614)	$	(48,312)	$	12,714

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NOTES AND BONDS PAYABLE (Tables)

9 Months Ended

Sep. 30, 2022

Notes and Bonds Payable [Abstract]

Schedule of Long-term Debt Instruments

As of September 30, 2022 and December 31, 2021, 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, 2022		Book Value as of December 31, 2021		Contractual Interest Rate as of September 30, 2022	Effective Interest Rate at September 30, 2022 (1)	Payment Type (2)	Maturity Date (3)
Richardson Portfolio Mortgage Loan	$	18,944	$	28,470	LIBOR + 2.50%	5.64%	Principal & Interest	11/1/2022 (4)
Park Centre Mortgage Loan	26,104		26,185		BSBY + 1.75%	4.88%	Principal & Interest	06/27/2023
1180 Raymond Mortgage Loan (5)	31,070		31,070		BSBY + 2.25%	5.38%	Interest Only	12/01/2023
Pacific Oak SOR (BVI) Holdings, Ltd. Series B Debentures (6)	326,523		271,978		3.93%	3.93%	(6)	01/31/2026
Crown Pointe Mortgage Loan	53,758		52,315		SOFR + 2.30%	4.77%	Interest Only	04/01/2025
The Marq Mortgage Loan	60,998		61,874		BSBY + 1.55%	4.68%	Principal & Interest	06/06/2023
Eight & Nine Corporate Centre Mortgage Loan	48,095		48,545		BSBY + 1.60%	4.73%	Principal & Interest	06/08/2023
Georgia 400 Center Mortgage Loan	44,129		61,154		LIBOR + 1.55%	4.69%	Interest Only	05/22/2023
PORT Mortgage Loan 1	51,303		51,302		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 MetLife Loans	153,703		60,000		3.90%	3.90%	Interest Only	04/10/2026
Springmaid Beach Resort Mortgage Loan	(7)		55,491		(7)	(7)	(7)	(7)
Q&C Hotel Mortgage Loan	24,815		25,000		LIBOR + 2.50% (8)	5.64%	Principal & Interest	12/23/2022
Lincoln Court Mortgage Loan (5)	35,314		34,623		SOFR + 3.25%	5.72%	Interest Only	08/07/2025
Lofts at NoHo Commons Mortgage Loan	71,536		74,536		SOFR + 2.18% (9)	4.65%	Interest Only	09/09/2023
210 West 31st Street Mortgage Loan (5)	3,000		8,850		BSBY + 3.00%	6.13%	Principal & Interest	12/16/2022
Oakland City Center Mortgage Loan (5)	89,250		96,075		BSBY + 3.00%	6.13%	Principal & Interest	09/01/2023
Madison Square Mortgage Loan	17,671		17,500		4.63%	4.63%	Interest Only	10/07/2024
Total Notes and Bonds Payable principal outstanding	1,066,736		1,015,491
Discount on Notes and Bonds Payable, net (10)	(13,376)		(8,146)
Deferred financing costs, net	(10,500)		(8,396)
Total Notes and Bonds Payable, net	$	1,042,860	$	998,949

_____________________

(1) Contractual interest rate represents the interest rate in effect under the loan as of September 30, 2022. Effective interest rate is calculated as the actual interest rate in effect as of September 30, 2022 (consisting of the contractual interest rate and contractual floor rates), using interest rate indices at September 30, 2022, where applicable.

(2) Represents the payment type required under the loan as of September 30, 2022. 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, 2022; subject to certain conditions, the maturity dates of certain loans may be extended beyond the date shown.

(4) Subsequent to September 30, 2022, the Company extended the Richardson Portfolio Mortgage Loan to October 10, 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, 2022, the guaranteed amount in the aggregate was $41.9 million.

(6) See “Israeli Bond Financings” below.

(7) The Springmaid Beach Resort Mortgage Loan was paid off in conjunction with the sale of the Springmaid Beach Resort. See Note 3 for further details.

(8) The interest rate is variable at the higher of one-month LIBOR + 2.5% or 4.5%.

(9) The variable rate is at the higher of one-month SOFR or 1.75%, plus 2.18%.

(10) 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, 2022 (in thousands):

October 1, 2022 through December 31, 2022	$	49,443
2023	368,500
2024	126,512
2025	249,216
2026	273,065
Thereafter	—
	$	1,066,736

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FAIR VALUE DISCLOSURES (Tables)

9 Months Ended

Sep. 30, 2022

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, 2022 and December 31, 2021, which carrying amounts do not approximate the fair values (in thousands):

	September 30, 2022						December 31, 2021
	Face Value		Carrying Amount		Fair Value		Face Value		Carrying Amount		Fair Value
Financial liabilities (Level 3):
Notes and bond payable	$	740,213	$	732,676	$	720,286	$	743,513	$	740,176	$	740,347
Financial liabilities (Level 1):
Pacific Oak SOR (BVI) Holdings, Ltd. Series B Debentures	$	326,523	$	310,184	$	306,099	$	271,978	$	258,773	$	274,697

Fair Value, Assets Measured on Recurring and Nonrecurring Basis

As of September 30, 2022, 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	$	63,784	$	63,784	$	—	$	—
Asset derivative - interest rate caps	$	1,971	$	—	$	1,971	$	—
Nonrecurring Basis:
Impaired real estate	$	220,360	$	—	$	—	$	220,360
Impaired goodwill	$	5,436	$	—	$	—	$	5,436

As of December 31, 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	$	112,096	$	112,096	$	—	$	—
Asset derivative - interest rate caps	$	8	$	—	$	8	$	—
Nonrecurring Basis:
Impaired real estate (1)	$	97,600	$	—	$	—	$	97,600
Impaired goodwill (1)	$	13,534	$	—	$	—	$	13,534

_____________________

(1) The fair value of these assets were assessed as of September 30, 2021.

Schedule of Goodwill

The following table summarizes the goodwill impairment activity during nine months ended September 30, 2022 (in thousands):

	Gross Goodwill		Accumulated Impairment		Net Goodwill
Balance, December 31, 2021	$	16,342	$	(2,808)	$	13,534
Impairment charges on goodwill	—		(8,098)		(8,098)
Balance, September 30, 2022	$	16,342	$	(10,906)	$	5,436

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RELATED PARTY TRANSACTIONS (Tables)

9 Months Ended

Sep. 30, 2022

Related Party Transactions [Abstract]

Schedule of Related Party Costs

Pursuant to the terms of the related party agreements, summarized below are the related-party costs incurred by the Company for the three and nine months ended September 30, 2022 and 2021, respectively, and any related amounts payable as of September 30, 2022 and December 31, 2021 (in thousands):

	Incurred								Payable as of
	Three Months Ended September 30,				Nine Months Ended September 30,				September 30, 2022		December 31, 2021
Expensed	2022		2021		2022		2021
Asset management fees	$	3,630	$	3,422	$	9,945	$	10,802	$	3,252	$	1,903
Property management fees	294		119		552		362		—		—
Disposition fees (1)	637		692		744		1,196		—		—
Change in subordinated performance fee due upon termination to affiliate (2)	—		1,545		—		1,745		(2)		(2)
Capitalized
Acquisition fees on real estate (3)	67		—		67		20		—		—
Acquisition fee on investment in unconsolidated entities	—		—		—		45		—		—
	$	4,628	$	5,778	$	11,308	$	14,170	$	3,252	$	1,903

_____________________

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

(2) Change in estimate of fees payable to the Company’s previous advisor, KBS Capital Advisors LLC (“KBS Capital Advisors) due to the termination of the former advisory agreement with KBS Capital Advisors.

(3) 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, 2022

Equity Method Investments and Joint Ventures [Abstract]

Schedule of Investments in Unconsolidated Joint Ventures

As of September 30, 2022 and December 31, 2021, the Company’s investments in unconsolidated entities were composed of the following (dollars in thousands):

	Number of Properties as of September 30, 2022			Investment Balance at
Joint Venture		Location	Ownership %	September 30, 2022		December 31, 2021
110 William Joint Venture	1	New York, New York	60.0%	$	—	$	—
353 Sacramento Joint Venture	1	San Francisco, California	55.0%	46,572		49,916
Pacific Oak Opportunity Zone Fund I	3	Various	46.0%	26,266		27,215
PORT II OP LP	(1)	(1)	(1)	(1)		11,125
				$	72,838	$	88,256

_____________________

(1) On July 1, 2022, the Company, through PORT OP, made a tender offer to purchase 76,735 shares of PORT II common stock held by unrelated parties for a price of $14.66 per share. As a result, the Company determined that it became the primary beneficiary of PORT II, which resulted in the consolidation of PORT II into the Company’s consolidated financial statements. On July 29, 2022, the Company consummated the transactions with the unrelated parties and owned 100% of PORT II. See Note 3 for the assessment of the fair value of the assets and liabilities of PORT II. There are no liquidity arrangements or agreements to fund capital or purchase assets that could require the Company to provide financial support to PORT II. The Company and the aforementioned unrelated parties did not guarantee any debt in connection with the transaction.

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SUPPLEMENTAL CASH FLOW AND SIGNIFICANT NONCASH TRANSACTION DISCLOSURES (Tables)

9 Months Ended

Sep. 30, 2022

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,
	2022		2021
Supplemental Disclosure of Cash Flow Information:
Interest paid, net of capitalized interest of $1,703 and $1,579 for the nine months ended September 30, 2022 and 2021, respectively	$	29,839	$	29,220
Supplemental Disclosure of Significant Noncash Transactions:
Assets acquired in the consolidation of previously unconsolidated entity	137,569		—
Liabilities assumed in the consolidation of previously unconsolidated entity	85,096		—
Accrued improvements to real estate	6,389		1,721
Redeemable common stock payable	1,567		3,385
Distributions paid to common stockholders through common stock issuances	99,094		—
Accrued preferred dividends	225		225
PPP notes forgiveness	2,367		1,500

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REPORTING SEGMENTS (Tables)

9 Months Ended

Sep. 30, 2022

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, 2022 and 2021 are as follows (in thousands):

	Three Months Ended September 30, 2022
	Strategic Opportunistic Properties		Residential Homes		Hotel		Total
Total revenues	$	25,847	$	8,576	$	9,182	$	43,605
Total expenses	(46,453)		(10,726)		(12,056)		(69,235)
Total other (loss) income	(24,052)		18,671		11		(5,370)
Net (loss) income	$	(44,658)	$	16,521	$	(2,863)	$	(31,000)
	Nine Months Ended September 30, 2022
	Strategic Opportunistic Properties		Residential Homes		Hotel		Total
Total revenues	$	77,599	$	20,120	$	27,952	$	125,671
Total expenses	(87,232)		(23,735)		(28,900)		(139,867)
Total other (loss) income	(50,436)		18,149		2,382		(29,905)
Net (loss) income	$	(60,069)	$	14,534	$	1,434	$	(44,101)

	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

Total assets and goodwill related to the reporting segments as of September 30, 2022 and December 31, 2021 are as follows (in thousands):

	September 30, 2022
	Strategic Opportunistic Properties		Residential Homes		Hotel		Total
Total assets	$	1,174,855	$	337,513	$	51,999	$	1,564,367
Goodwill (1)	4,220		—		1,216		5,436
	December 31, 2021
	Strategic Opportunistic Properties		Single-Family Homes		Hotels		Total
Total assets	$	1,223,122	$	211,050	$	150,447	$	1,584,619
Goodwill (1)	9,489		—		4,045		13,534

_____________________

(1) During the three and nine months ended September 30, 2022, the Company recorded impairment charges on goodwill of $5.5 million and $2.6 million related to the Strategic Opportunistic Properties and Hotel segments, respectively. 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, 2022

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, 2022 and 2021 (dollars in thousands):

	Series A Preferred Stock			Series B Preferred Stock
	Shares	Amounts		Shares	Amounts
Balance, December 31, 2021	15,000	$	15,134	125	$	99
Dividends Available Upon Redemption	—	1,045		—	8
Dividends Paid	—	(1,045)		—	(8)
Balance, September 30, 2022	15,000	$	15,134	125	$	99

	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	—	453		—	—
Dividends Paid	—	(453)		—	—
Balance, September 30, 2021	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, 2022 and 2021 (in thousands):

December 31, 2021	$	2,822
Net loss attributable to redeemable noncontrolling interest	(81)
Adjustment to value of redeemable noncontrolling interest (1)	3,946
Payment to redeem noncontrolling interest	(6,687)
September 30, 2022	$	—
December 31, 2020	$	2,968
Net loss attributable to redeemable noncontrolling interest	(113)
September 30, 2021	$	2,855

_____________________

(1) On June 24, 2022, the Company’s board of directors approved the redemption of the 510,816 PORT OP Special Common Units held by BPT Holdings for a price of $13.09 per unit.and recorded at its fair value. The Company redeemed the noncontrolling interest in PORT OP in July 2022.

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COMMITMENTS AND CONTINGENCIES (Tables)

9 Months Ended

Sep. 30, 2022

Commitments and Contingencies Disclosure [Abstract]

Schedule of Lease Cost

As of September 30, 2022, the Company’s lease and rights to a leasehold interest with respect to 210 West 31st Street, 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)	$	7,281
Lease obligation (included in other liabilities)	9,424
Remaining lease term	91.3 years
Discount rate	4.8		%
The components of lease expense were as follows:
Interest on lease obligation for the three months ended September 30, 2022	112
Interest on lease obligation for the nine months ended September 30, 2022	334

_____________________

(1) During the three and nine months ended September 30, 2022, the Company wrote down its right-of-use asset and recorded an impairment charge of $0.8 million on 210 West 31st Street.

Schedule of Finance Lease, Liability, Fiscal Year Maturity

As of September 30, 2022, the Company had a leasehold interest expiring in 2114. Future minimum lease payments owed by the Company under the finance lease as of September 30, 2022 are as follows (in thousands):

July 1, 2021 through December 31, 2021	$	90
2022	360
2023	360
2024	393
2025	396
Thereafter	52,167
Total expected minimum lease obligations	53,766
Less: Amount representing interest (1)	(44,342)
Present value of net minimum lease payments (2)	$	9,424

_____________________

(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) - shares	9 Months Ended
	Sep. 30, 2022	Dec. 31, 2021	Dec. 18, 2015
Organizational Structure [Line Items]
Common stock, shares authorized (in shares)	1,000,000,000	1,000,000,000
Common stock, shares issued (in shares)	104,076,881	94,141,251
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

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022 USD ($) property segment	Sep. 30, 2021 segment	Sep. 30, 2022 USD ($) property	Sep. 30, 2022 USD ($) property segment	Sep. 30, 2022 USD ($) property market	Sep. 30, 2021 segment	Sep. 01, 2022 property
Segment Reporting Information [Line Items]
Debt obligations, next twelve months | $	$ 368,500		$ 368,500	$ 368,500	$ 368,500
Number of reportable segments	3	3	3	3		3
Hotel revenues
Segment Reporting Information [Line Items]
Number of real estate properties | property	1		1	1	1		2
Mortgages | Minimum
Segment Reporting Information [Line Items]
Long-term debt, term	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
Single-Family Homes
Segment Reporting Information [Line Items]
Number of reportable segments				1
Single family home markets | market					18
Hotels
Segment Reporting Information [Line Items]
Number of reportable segments				1

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REAL ESTATE HELD FOR INVESTMENT - Additional Information (Details) ft² in Millions	Sep. 30, 2022 ft² a property unit room portfolio	Sep. 01, 2022 property
Real Estate Properties [Line Items]
Percentage of portfolio occupied	70.00%
Office Properties
Real Estate Properties [Line Items]
Number of real estate properties	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	2
Undeveloped Land, Portfolio
Real Estate Properties [Line Items]
Real estate area of undeveloped land | a	14
Rentable square feet | ft²	3.2
Residential Home Portfolio
Real Estate Properties [Line Items]
Number of real estate properties | portfolio	1
Rentable square feet | ft²	3.5
Percentage of portfolio occupied	96.00%
Number of units in real estate property | unit	2,458
Apartment Building
Real Estate Properties [Line Items]
Number of real estate properties consolidated	2
Rentable square feet | ft²	0.5
Percentage of portfolio occupied	95.00%
Number of units in real estate property | unit	609
Hotel revenues
Real Estate Properties [Line Items]
Number of real estate properties	1	2
Number of Rooms | room	196
Undeveloped Land
Real Estate Properties [Line Items]
Real estate area of undeveloped land | a	800
Number of investments in real estate	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, 2022	Dec. 31, 2021
Real Estate Properties [Line Items]
Total real estate, cost	$ 1,368,842	$ 1,243,426
Accumulated depreciation and amortization	(134,645)	(124,876)
Total real estate held for investment, net	1,234,197	1,118,550
Land
Real Estate Properties [Line Items]
Total real estate, cost	275,715	245,200
Buildings and improvements
Real Estate Properties [Line Items]
Total real estate, cost	1,062,342	954,851
Tenant origination and absorption costs
Real Estate Properties [Line Items]
Total real estate, cost	$ 30,785	$ 43,375

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REAL ESTATE HELD FOR INVESTMENT - Operating Leases, Additional Information (Details) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2022 USD ($) tenant	Sep. 30, 2021 USD ($)	Sep. 30, 2022 USD ($) tenant	Sep. 30, 2021 USD ($)	Dec. 31, 2021 USD ($)
Operating Leased Assets [Line Items]
Security deposit liability	$ 6.0		$ 6.0		$ 6.0
Recognition of deferred revenue, net of discontinued operations	0.5	$ 1.5	2.0	$ 0.4
Deferred rent receivables	17.8		17.8		16.3
Incentive to lessee	$ 3.0		$ 3.0		$ 3.3
Number of Tenants | tenant	300		300
Maximum
Operating Leased Assets [Line Items]
Operating lease, term	12 years 10 months 24 days		12 years 10 months 24 days
Weighted Average
Operating Leased Assets [Line Items]
Operating lease, term	3 years 8 months 12 days		3 years 8 months 12 days
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, 2022 USD ($)
Real Estate [Abstract]
October 1, 2022 through December 31, 2022	$ 15,105
2023	59,457
2024	54,145
2025	43,184
2026	30,074
Thereafter	72,929
Future minimum rental income	$ 274,894

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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, 2022 USD ($) tenant
Concentration Risk [Line Items]
Number of Tenants | tenant	300
Annualized Base Rent | $	$ 22,145
Public Administration
Concentration Risk [Line Items]
Number of Tenants | tenant	14
Annualized Base Rent | $	$ 7,762
Public Administration | Industry | Revenue Benchmark
Concentration Risk [Line Items]
Percentage of Annualized Base Rent	12.60%
Professional, Scientific, and Technical Services
Concentration Risk [Line Items]
Number of Tenants | tenant	38
Annualized Base Rent | $	$ 7,346
Professional, Scientific, and Technical Services | Industry | Revenue Benchmark
Concentration Risk [Line Items]
Percentage of Annualized Base Rent	11.90%
Computer Systems Design and Related Services
Concentration Risk [Line Items]
Number of Tenants | tenant	30
Annualized Base Rent | $	$ 7,037
Computer Systems Design and Related Services | Industry | Revenue Benchmark
Concentration Risk [Line Items]
Percentage of Annualized Base Rent	11.40%
Industry | Industry | Revenue Benchmark
Concentration Risk [Line Items]
Percentage of Annualized Base Rent	35.90%

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REAL ESTATE HELD FOR INVESTMENT - Geographic Concentration Risk (Details) - Assets, Total - Geographic Concentration Risk	9 Months Ended
	Sep. 30, 2022
California
Concentration Risk [Line Items]
Concentration risk, percentage	21.90%
Georgia
Concentration Risk [Line Items]
Concentration risk, percentage	10.30%

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REAL ESTATE HELD FOR INVESTMENT - Hotel Revenue (Details) - Hotel revenues - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Revenues:
Revenue from contract with customer	$ 9,181	$ 12,153	$ 27,952	$ 24,578
Room
Revenues:
Revenue from contract with customer	7,223	9,396	21,423	18,508
Food, beverage and convention services
Revenues:
Revenue from contract with customer	217	1,452	807	2,830
Campground
Revenues:
Revenue from contract with customer	984	280	3,379	792
Other
Revenues:
Revenue from contract with customer	$ 757	$ 1,025	$ 2,343	$ 2,448

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REAL ESTATE HELD FOR INVESTMENT - Contract Liabilities (Details) - USD ($) $ in Thousands	9 Months Ended		12 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Dec. 31, 2021
Product Liability Contingency [Line Items]
Amounts included in contract liability at the beginning of the period	$ 1,966	$ 1,529
Other liabilities
Product Liability Contingency [Line Items]
Contract liability	23,115		$ 7,313
Amounts included in contract liability at the beginning of the period	$ 449		$ 159

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REAL ESTATE HELD FOR INVESTMENT - Recent Real Estate Sale (Details) $ in Thousands			3 Months Ended		9 Months Ended
	Sep. 01, 2022 USD ($)	Jan. 24, 2022 USD ($) ft² property	Sep. 30, 2022 USD ($)	Sep. 30, 2021 USD ($)	Sep. 30, 2022 USD ($)	Sep. 30, 2021 USD ($)	Dec. 31, 2021 USD ($)
Real Estate Properties [Line Items]
Real estate held for sale, net			$ 0		$ 0		$ 96,249
Accumulated depreciation and amortization			134,645		134,645		$ 124,876
Gain on sale of real estate			$ (75)	$ 216	$ 3,273	$ 31,385
Greenway Buildings Mortgage Loan
Real Estate Properties [Line Items]
Extinguishment of debt		$ 9,100
Greenway Buildings | Office Properties
Real Estate Properties [Line Items]
Real estate held for sale, net		5,600
Accumulated depreciation and amortization		$ 3,200
Greenway Buildings | Disposed of by Sale | Office Properties
Real Estate Properties [Line Items]
Number of real estate properties disposed | property		2
Net rentable area (in sq feet) | ft²		141,950
Sale price		$ 11,000
Gain on sale of real estate		$ 3,600
Springmaid Beach Resort | Hotel revenues
Real Estate Properties [Line Items]
Real estate held for sale, net	$ 87,200
Impairment charges	2,500
Springmaid Beach Resort | Disposed of by Sale | Hotel revenues
Real Estate Properties [Line Items]
Sale price	91,000
Accumulated depreciation and amortization	3,400
Extinguishment of debt	52,000
Held for contingent repairs	$ 1,300

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REAL ESTATE HELD FOR INVESTMENT - Park Highland Purchase and Sale Contracts (Details) - Park Highlands - Disposed of by Sale $ in Millions	Jun. 22, 2022 USD ($) a	May 31, 2022 USD ($)	Feb. 23, 2022 USD ($)	Mar. 10, 2022 USD ($) a	Nov. 11, 2021 USD ($) a
Real Estate Properties [Line Items]
Area of land (in acres) | a	67			77
Sale price	$ 55.0			$ 52.9
Deposits on real estate sales	$ 3.0	$ 3.5
Undeveloped Land
Real Estate Properties [Line Items]
Area of land (in acres) | a					234
Sale price					$ 121.4
Deposits on real estate sales			$ 13.5

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REAL ESTATE HELD FOR INVESTMENT - Impairment of Real Estate (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Impairment charges on real estate	$ 11,942	$ 10,971	$ 11,942	$ 10,971
210 West 31st Street
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Impairment charges on real estate	4,400	6,600	4,400	6,600
Oakland City Center
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Impairment charges on real estate	$ 5,000		5,000
Springmaid Beach Resort
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Impairment charges on real estate			$ 2,500
Lincoln Court
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Impairment charges on real estate		$ 4,400		$ 4,400

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REAL ESTATE HELD FOR INVESTMENT - Components Of Primary Beneficiary (Details) $ in Thousands	Jul. 01, 2022 USD ($) property	Sep. 30, 2022 USD ($)	Dec. 31, 2021 USD ($)
Assets
Real estate held for investment, net		$ 1,234,197	$ 1,118,550
Cash and cash equivalents		85,368	84,172
Restricted cash		57,325	21,259
Prepaid expenses and other assets		21,902	18,108
Total assets		1,564,367	1,584,619
Liabilities, mezzanine equity and equity
Accounts payable and accrued liabilities		(27,236)	(23,852)
Other liabilities		(52,431)	(42,851)
Total Liabilities		(1,130,840)	(1,084,505)
Noncontrolling interests		$ (2,718)	$ (10,369)
Variable Interest Entity, Primary Beneficiary
Assets
Real estate held for investment, net	$ 135,096
Cash and cash equivalents	1,473
Restricted cash	361
Prepaid expenses and other assets	639
Total assets	137,569
Liabilities, mezzanine equity and equity
Notes payable, net	(82,646)
Accounts payable and accrued liabilities	(804)
Due to affiliates	(147)
Other liabilities	(1,499)
Total Liabilities	(85,096)
Noncontrolling interests	(1,125)
Elimination of the Company’s investment in PORT II	(32,606)
Gain from consolidation of previously unconsolidated entity	$ 18,742
PORT II OP LP | Single-Family Homes
Real Estate [Line Items]
Number of units in real estate property | property	588

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REAL ESTATE EQUITY SECURITIES (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Investments, Debt and Equity Securities [Abstract]
Net (loss) gain recognized during the period on real estate equity securities	$ (20,722)	$ (2,614)	$ (48,312)	$ 12,939
Less net gain recognized during the period on real estate equity securities sold during the period	0	0	0	(225)
Unrealized (loss) gain recognized during the reporting period on real estate equity securities held at the end of the period	$ (20,722)	$ (2,614)	$ (48,312)	$ 12,714

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NOTES AND BONDS PAYABLE - Schedule of Long-term Debt Instruments (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2022	Dec. 31, 2021	Sep. 30, 2021
Debt Instrument [Line Items]
Total Notes and Bonds Payable principal outstanding	$ 1,066,736	$ 1,015,491
Discount on Notes and Bonds Payable, net	(13,376)	(8,146)
Deferred financing costs, net	(10,500)	(8,396)
Notes and bonds payable, net	$ 1,042,860	998,949
Oakland City Center Mortgage Loan
Debt Instrument [Line Items]
Interest rate, effective percentage	2.18%
Mortgages | Richardson Portfolio Mortgage Loan
Debt Instrument [Line Items]
Notes payable, net	$ 18,944	28,470
Interest rate, effective percentage	5.64%
Mortgages | Richardson Portfolio Mortgage Loan | One-month LIBOR
Debt Instrument [Line Items]
Contractual interest rate, percentage	2.50%
Mortgages | Park Centre Mortgage Loan
Debt Instrument [Line Items]
Notes payable, net	$ 26,104	26,185
Interest rate, effective percentage	4.88%
Mortgages | Park Centre Mortgage Loan | One-month LIBOR
Debt Instrument [Line Items]
Contractual interest rate, percentage	1.75%
Mortgages | 1180 Raymond Mortgage Loan
Debt Instrument [Line Items]
Notes payable, net	$ 31,070	31,070
Interest rate, effective percentage	5.38%
Mortgages | 1180 Raymond Mortgage Loan | One-month LIBOR
Debt Instrument [Line Items]
Contractual interest rate, percentage			2.25%
Mortgages | Crown Pointe Mortgage Loan
Debt Instrument [Line Items]
Notes payable, net	$ 53,758	52,315
Interest rate, effective percentage	4.77%
Guarantees as percent of outstanding loan balance	25.00%
Amount under guarantees	$ 41,900
Mortgages | Crown Pointe Mortgage Loan | One-month LIBOR
Debt Instrument [Line Items]
Contractual interest rate, percentage			2.30%
Mortgages | Marquette Plaza Mortgage Loan
Debt Instrument [Line Items]
Notes payable, net	$ 60,998	61,874
Interest rate, effective percentage	4.68%
Mortgages | Marquette Plaza Mortgage Loan | One-month LIBOR
Debt Instrument [Line Items]
Contractual interest rate, percentage	1.55%
Mortgages | Eight & Nine Corporate Centre Mortgage Loan
Debt Instrument [Line Items]
Notes payable, net	$ 48,095	48,545
Interest rate, effective percentage	4.73%
Mortgages | Eight & Nine Corporate Centre Mortgage Loan | One-month LIBOR
Debt Instrument [Line Items]
Contractual interest rate, percentage	1.60%
Mortgages | Georgia 400 Center Mortgage Loan
Debt Instrument [Line Items]
Notes payable, net	$ 44,129	61,154
Interest rate, effective percentage	4.69%
Mortgages | Georgia 400 Center Mortgage Loan | One-month LIBOR
Debt Instrument [Line Items]
Contractual interest rate, percentage	1.55%
Mortgages | PORT Mortgage Loan 1
Debt Instrument [Line Items]
Notes payable, net	$ 51,303	51,302
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	10,523
Contractual interest rate, percentage	4.72%
Interest rate, effective percentage	4.72%
Mortgages | MetLife Loan
Debt Instrument [Line Items]
Notes payable, net	$ 153,703	60,000
Contractual interest rate, percentage	3.90%
Interest rate, effective percentage	3.90%
Mortgages | Springmaid Beach Resort Mortgage Loan
Debt Instrument [Line Items]
Notes payable, net		55,491
Mortgages | Q and C Hotel Mortgage Loan
Debt Instrument [Line Items]
Notes payable, net	$ 24,815	25,000
Interest rate, effective percentage	5.64%
Mortgages | Q and C Hotel Mortgage Loan | Minimum
Debt Instrument [Line Items]
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%
Contractual interest rate, percentage	2.50%
Mortgages | Lincoln Court Mortgage Loan
Debt Instrument [Line Items]
Notes payable, net	$ 35,314	34,623
Interest rate, effective percentage	5.72%
Mortgages | Lincoln Court Mortgage Loan | One-month LIBOR
Debt Instrument [Line Items]
Contractual interest rate, percentage	3.25%
Mortgages | Lofts at NoHo Commons Mortgage Loan
Debt Instrument [Line Items]
Notes payable, net	$ 71,536	74,536
Interest rate, effective percentage	4.65%
Mortgages | Lofts at NoHo Commons Mortgage Loan | One-month LIBOR
Debt Instrument [Line Items]
Contractual interest rate, percentage	2.18%
Mortgages | 210 West 31st Street Mortgage Loan
Debt Instrument [Line Items]
Notes payable, net	$ 3,000	8,850
Interest rate, effective percentage	6.13%
Mortgages | 210 West 31st Street Mortgage Loan | One-month LIBOR
Debt Instrument [Line Items]
Contractual interest rate, percentage	3.00%
Mortgages | Oakland City Center Mortgage Loan
Debt Instrument [Line Items]
Notes payable, net	$ 89,250	96,075
Interest rate, effective percentage	6.13%
Mortgages | Oakland City Center Mortgage Loan | One-month LIBOR
Debt Instrument [Line Items]
Basis spread on variable rate	1.75%
Contractual interest rate, percentage	3.00%
Mortgages | Madison Square Mortgage Loan
Debt Instrument [Line Items]
Notes payable, net	$ 17,671	17,500
Contractual interest rate, percentage	4.63%
Interest rate, effective percentage	4.63%
Bonds Payable | Pacific Oak SOR (BVI) Holdings, Ltd. Series B Debentures
Debt Instrument [Line Items]
Notes payable, net	$ 326,523	$ 271,978
Contractual interest rate, percentage	3.93%
Interest rate, effective percentage	3.93%

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NOTES AND BONDS PAYABLE - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021	Nov. 14, 2022	Dec. 31, 2021
Debt Instrument [Line Items]
Interest expense	$ 12,976	$ 10,092	$ 33,319	$ 30,713
Amortization of Debt Issuance Costs	1,000	800	2,600	2,500
Amortization of discount on bond and notes payable	1,100	1,900	3,400	500
Interest capitalized		$ 500	1,703	$ 1,579
Interest payable	5,200		5,200			$ 6,600
Debt obligations, next twelve months	368,500		368,500
Subsequent Event
Debt Instrument [Line Items]
Debt obligations, next twelve months					$ 383,000
Extension options of debt obligations outstanding that are scheduled to mature over the next 12 months					$ 185,400
Undeveloped Land
Debt Instrument [Line Items]
Interest capitalized	$ 700		$ 1,700

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NOTES AND BONDS PAYABLE - Schedule of Maturities of Long-term Debt (Details) $ in Thousands	Sep. 30, 2022 USD ($)
Notes and Bonds Payable [Abstract]
October 1, 2022 through December 31, 2022	$ 49,443
2023	368,500
2024	126,512
2025	249,216
2026	273,065
Thereafter	0
Notes and bond payable outstanding	$ 1,066,736

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NOTES AND BONDS PAYABLE - Israeli Bond Financing (Details) - Bonds Payable - Series B Debentures ₪ in Millions, $ in Millions	May 02, 2022 ILS (₪)	May 02, 2022 USD ($)	Nov. 01, 2021 ILS (₪)	Nov. 01, 2021 USD ($)	Feb. 16, 2020 ILS (₪)	Feb. 16, 2020 USD ($)
Debt Instrument [Line Items]
Maximum borrowing capacity					₪ 254.1	$ 74.1
Contractual Interest Rate					3.93%	3.93%
Principal of installment payments as percent of face amount					33.33%
Public Offering
Debt Instrument [Line Items]
Maximum borrowing capacity			₪ 536.4
Debt Instrument, Percent of Discount at Issuance			2.60%
Proceeds from issuance of debt			₪ 522.4	$ 166.8
Private Offering
Debt Instrument [Line Items]
Maximum borrowing capacity	₪ 320.4		₪ 53.6
Debt Instrument, Percent of Discount at Issuance	4.00%		3.10%
Proceeds from issuance of debt	₪ 307.6	$ 95.3	₪ 52.0	$ 16.7

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FAIR VALUE DISCLOSURES - Schedule of Face Value, Carrying Amounts and Fair Value (Details) - USD ($)	Sep. 30, 2022	Dec. 31, 2021
Level 3
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Notes and bond payable, Face Value	$ 740,213,000	$ 743,513,000
Level 3 | Carrying Amount
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Notes and bond payable, Value	732,676,000	740,176,000
Level 3 | Fair Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Notes and bond payable, Value	720,286,000	740,347,000
Level 1 | Series B Debentures | Pacific Oak SOR (BVI) Holdings, Ltd. Series B Debentures
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Notes and bond payable, Face Value	326,523,000	271,978,000
Level 1 | Carrying Amount | Series B Debentures | Pacific Oak SOR (BVI) Holdings, Ltd. Series B Debentures
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Notes and bond payable, Value	310,184,000	258,773,000
Level 1 | Fair Value | Series B Debentures | Pacific Oak SOR (BVI) Holdings, Ltd. Series B Debentures
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Notes and bond payable, Value	$ 306,099,000	$ 274,697,000

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FAIR VALUE DISCLOSURES - Schedule of Assets and Liabilities at Fair Value (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022 USD ($) property	Sep. 30, 2021 USD ($)	Sep. 30, 2022 USD ($) property	Sep. 30, 2021 USD ($)	Dec. 31, 2021 USD ($)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impairment charges on real estate	$ 11,942	$ 10,971	$ 11,942	$ 10,971
Impairment charges on goodwill	$ 8,098	$ 2,808	$ 8,098	2,808
Number of real estate properties measured at fair value | property	2		2
Goodwill	$ 5,436		$ 5,436		$ 13,534
Lincoln Court | Measurement Input, Discount Rate
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Real estate properties, measurement input	6.50%		6.50%
Lincoln Court | Measurement Input Terminal Cap Rate Member
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Real estate properties, measurement input	5.75%		5.75%
Recurring Basis
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Real estate equity securities	$ 63,784		$ 63,784		112,096
Asset derivative	1,971		1,971		8
Impairment charges on real estate			220,360	97,600
Impairment charges on goodwill			5,436	13,534
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	63,784		63,784		112,096
Asset derivative	0		0		0
Impairment charges on real estate			0	0
Impairment charges on goodwill			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	1,971		1,971		8
Impairment charges on real estate			0	0
Impairment charges on goodwill			0	0
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		0		$ 0
Impairment charges on real estate			220,360	97,600
Impairment charges on goodwill			$ 5,436	$ 13,534

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FAIR VALUE DISCLOSURES - Schedule of Goodwill (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021	Dec. 31, 2021
Goodwill [Roll Forward]
Gross Goodwill	$ 16,342		$ 16,342		$ 16,342
Accumulated Impairment	(10,906)		(10,906)		(2,808)
Impairment charges on goodwill	8,098	$ 2,808	8,098	$ 2,808
Net Goodwill	$ 5,436		$ 5,436		$ 13,534

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RELATED PARTY TRANSACTIONS - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands				1 Months Ended	3 Months Ended		9 Months Ended
	Sep. 01, 2022	Jun. 24, 2022	Nov. 01, 2019	Jul. 31, 2022	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Related Party Transaction [Line Items]
Period of termination of advisory agreement without cause or penalty			60 days
Redemptions of common stock					$ 2,313	$ 28,117	$ 4,587	$ 29,552
Tier 1 | DMH Realty, LLC
Related Party Transaction [Line Items]
Base fee, percent of rent collections per year	8.00%
Tier 1 | Maximum | DMH Realty, LLC
Related Party Transaction [Line Items]
Base fee, benchmark of rent collections per year	$ 50,000
Tier 2 | DMH Realty, LLC
Related Party Transaction [Line Items]
Base fee, percent of rent collections per year	7.00%
Tier 2 | Maximum | DMH Realty, LLC
Related Party Transaction [Line Items]
Base fee, benchmark of rent collections per year	$ 75,000
Tier 2 | Minimum | DMH Realty, LLC
Related Party Transaction [Line Items]
Base fee, benchmark of rent collections per year	$ 50,000
Tier 3 | DMH Realty, LLC
Related Party Transaction [Line Items]
Base fee, percent of rent collections per year	6.00%
Tier 3 | Minimum | DMH Realty, LLC
Related Party Transaction [Line Items]
Base fee, benchmark of rent collections per year	$ 75,000
Pacific Oak Residential Advisors, LLC
Related Party Transaction [Line Items]
Management agrement term							2 years
Extension term							1 year
Acquisition fee, percent of purchase price fee	1.00%
Asset management fee, percent	0.25%
Asset management fee per annum, percent	1.00%
Selling commissions fees Paid percent of sales price	0.010
DMH Realty, LLC
Related Party Transaction [Line Items]
Management agrement term							2 years
Extension term							1 year
Pacific Oak Capital Markets
Related Party Transaction [Line Items]
Sale of stock, consideration received on transaction							$ 500,000
Offering expense fee percent					0.50%		0.50%
Pacific Oak Capital Markets | Common Class A
Related Party Transaction [Line Items]
Selling commissions fee , percent					6.00%		6.00%
Dealer manager fee, percent					1.50%		1.50%
Placement agent fee, percent					1.50%		1.50%
Pacific Oak Capital Markets | Common Class T
Related Party Transaction [Line Items]
Selling commissions fee , percent					3.00%		3.00%
Dealer manager fee, percent					0.75%		0.75%
Placement agent fee, percent					0.75%		0.75%
Pacific Oak Capital Markets | Private Offering
Related Party Transaction [Line Items]
Sale of stock, consideration received on transaction							$ 50,000
PORT OP LP | BPT Holdings, LLC
Related Party Transaction [Line Items]
Common equity units received in transaction (in units)		510,816
Share price (in dollars per share)		$ 13.09
Redemptions of common stock				$ 6,700
PORT OP LP | BPT Holdings, LLC | PORT OP
Related Party Transaction [Line Items]
Ownership interest		3.20%
Ownership percentage				100.00%

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RELATED PARTY TRANSACTIONS - Costs (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021	Dec. 31, 2021
Related Party Transaction [Line Items]
Payable as of	$ 3,252		$ 3,252		$ 1,903
Pacific Oak Capital Advisors LLC
Related Party Transaction [Line Items]
Capitalized	4,628	$ 5,778	11,308	$ 14,170
Payable as of	3,252		3,252		1,903
Pacific Oak Capital Advisors LLC | Asset management fees
Related Party Transaction [Line Items]
Expensed	3,630	3,422	9,945	10,802
Payable as of	3,252		3,252		1,903
Pacific Oak Capital Advisors LLC | Property management fee
Related Party Transaction [Line Items]
Expensed	294	119	552	362
Payable as of	0		0		0
Pacific Oak Capital Advisors LLC | Disposition fees
Related Party Transaction [Line Items]
Expensed	637	692	744	1,196
Payable as of	0		0		0
Pacific Oak Capital Advisors LLC | Change in subordinated performance fee due upon termination to affiliate
Related Party Transaction [Line Items]
Expensed	0	1,545	0	1,745
Pacific Oak Capital Advisors LLC | Acquisition fees on real estate
Related Party Transaction [Line Items]
Capitalized	67	0	67	20
Payable as of	0		0		0
Pacific Oak Capital Advisors LLC | Acquisition fee on investment in unconsolidated entities
Related Party Transaction [Line Items]
Capitalized	0	$ 0	0	$ 45
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 - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Schedule of Equity Method Investments [Line Items]
Investments, fair value	$ 26.3		$ 26.3
Acquisition fee, percent of purchase price fee			1.50%
Investment, purchase price, benchmark			$ 25.0
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	$ 0.3	$ 0.2	$ 0.4	$ 0.3

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INVESTMENT IN UNCONSOLIDATED ENTITIES - Investments in Unconsolidated Joint Ventures (Details) $ / shares in Units, $ in Thousands		9 Months Ended
	Jul. 01, 2022 $ / shares shares	Sep. 30, 2022 USD ($) property	Jul. 29, 2022	Dec. 31, 2021 USD ($)
Schedule of Equity Method Investments [Line Items]
Investment Balance		$ 72,838		$ 88,256
PORT II OP LP
Schedule of Equity Method Investments [Line Items]
Number of shares purchased (in shares) | shares	76,735
Stock repurchased during period (in dollars per share) | $ / shares	$ 14.66
PORT II OP LP | PORT II OP LP
Schedule of Equity Method Investments [Line Items]
Ownership percentage			100.00%
110 William Joint Venture
Schedule of Equity Method Investments [Line Items]
Number of real estate properties | property		1
Ownership %		60.00%
Investment Balance		$ 0		0
353 Sacramento Joint Venture
Schedule of Equity Method Investments [Line Items]
Number of real estate properties | property		1
Ownership %		55.00%
Investment Balance		$ 46,572		49,916
Pacific Oak Opportunity Zone Fund I
Schedule of Equity Method Investments [Line Items]
Number of real estate properties | property		3
Investment Balance		$ 26,266		27,215
Ownership %		46.00%
PORT II OP LP
Schedule of Equity Method Investments [Line Items]
Investment Balance				$ 11,125

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SUPPLEMENTAL CASH FLOW AND SIGNIFICANT NONCASH TRANSACTION DISCLOSURES (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021	Dec. 31, 2021
Supplemental Disclosure of Cash Flow Information:
Interest paid, net of capitalized interest of $1,703 and $1,579 for the nine months ended September 30, 2022 and 2021, respectively		$ 29,839	$ 29,220
Interest capitalized	$ 500	1,703	1,579
Supplemental Disclosure of Significant Noncash Transactions:
Accrued improvements to real estate		6,389	1,721
Redeemable common stock payable	$ 3,385	1,567	3,385	$ 684
Distributions paid to common stockholders through common stock issuances		99,094	0
Accrued preferred dividends		225	225
PPP notes forgiveness		2,367	1,500
PORT II
Supplemental Disclosure of Significant Noncash Transactions:
Assets acquired in the consolidation of previously unconsolidated entity		137,569	0
Liabilities assumed in the consolidation of previously unconsolidated entity		$ 85,096	$ 0

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REPORTING SEGMENTS (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022 USD ($) segment	Sep. 30, 2021 USD ($) segment	Sep. 30, 2022 USD ($)	Sep. 30, 2022 USD ($) property	Sep. 30, 2022 USD ($) segment	Sep. 30, 2021 USD ($) segment	Dec. 31, 2021 USD ($)
Segment Reporting [Abstract]
Number of reportable segments	3	3		3	3	3
Income Statement [Abstract]
Total revenues	$ 43,605	$ 45,769	$ 125,671			$ 129,201
Total expenses	(69,235)	(68,237)	(139,867)			(170,923)
Total other (loss) income	(5,370)	(3,078)	(29,905)			43,975
Net (loss) income	(31,000)	(25,546)	(44,101)			2,253
Assets and Liabilities held for Sale
Total assets	1,564,367		1,564,367	$ 1,564,367	$ 1,564,367		$ 1,584,619
Goodwill	5,436		5,436	5,436	5,436		13,534
Goodwill							13,534
Impairment charges on goodwill	8,098	2,808	8,098			2,808
Strategic Opportunistic Properties
Income Statement [Abstract]
Total revenues	25,847	28,050	77,599			88,187
Total expenses	(46,453)	(52,891)	(87,232)			(128,418)
Total other (loss) income	(24,052)	(4,435)	(50,436)			42,527
Net (loss) income	(44,658)	(29,276)	(60,069)			2,296
Assets and Liabilities held for Sale
Total assets	1,174,855		1,174,855	1,174,855	1,174,855		1,223,122
Goodwill	4,220		4,220	4,220	4,220
Goodwill							9,489
Impairment charges on goodwill	5,500		5,500
Residential Homes
Income Statement [Abstract]
Total revenues	8,576	5,566	20,120			16,436
Total expenses	(10,726)	(6,398)	(23,735)			(19,581)
Total other (loss) income	18,671	81	18,149			159
Net (loss) income	16,521	(751)	14,534			(2,986)
Assets and Liabilities held for Sale
Total assets	337,513		337,513	337,513	337,513		211,050
Goodwill	0		0	0	$ 0
Goodwill							0
Hotels
Segment Reporting [Abstract]
Number of reportable segments | segment					1
Income Statement [Abstract]
Total revenues	9,182	12,153	27,952			24,578
Total expenses	(12,056)	(8,948)	(28,900)			(22,924)
Total other (loss) income	11	1,276	2,382			1,289
Net (loss) income	(2,863)	$ 4,481	1,434			$ 2,943
Assets and Liabilities held for Sale
Total assets	51,999		51,999	51,999	$ 51,999		150,447
Goodwill	1,216		1,216	$ 1,216	$ 1,216
Goodwill							$ 4,045
Impairment charges on goodwill	$ 2,600		$ 2,600

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PORT MEZZANINE EQUITY (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest [Roll Forward]
Balance (in shares)	94,141,251
Balance	$ 482,059	$ 519,712
Balance (in shares)	104,076,881
Balance	$ 418,294	$ 510,667
Preferred Stock | Preferred Class A
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest [Roll Forward]
Balance (in shares)	15,000	15,000
Balance	$ 15,134	$ 15,134
Dividends Available Upon Redemption	1,045	453
Dividends Paid	$ (1,045)	$ (453)
Balance (in shares)	15,000	15,000
Balance	$ 15,134	$ 15,134
Preferred Stock | Preferred Class B
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest [Roll Forward]
Balance (in shares)	125	125
Balance	$ 99	$ 99
Dividends Available Upon Redemption	8	0
Dividends Paid	$ (8)	$ 0
Balance (in shares)	125	125
Balance	$ 99	$ 99

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PORT MEZZANINE EQUITY - Additional Information (Details) $ in Millions	Jul. 01, 2020 USD ($) portfolio shares
Battery Point
Class of Stock [Line Items]
Shares acquired during period (in shares)	1,000,000
BPT Holdings, LLC | PORT OP LP | Battery Point
Class of Stock [Line Items]
Common equity units received in transaction (in units)	510,816
Percent of outstanding common equity units received in transaction	4.50%
Common equity units received in transaction | $	$ 3.0
Single-family Home | Battery Point
Class of Stock [Line Items]
Number of real estate properties | portfolio	559

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PORT MEZZANINE EQUITY - Redeemable Non-controlling Interest Activities (Details) - USD ($) $ / shares in Units, $ in Thousands	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Jun. 24, 2022	Jul. 01, 2020
Redeemable Noncontrolling Interest, Equity, Common, Carrying Amount [Roll Forward]
Beginning balance	$ 2,822
Payment to redeem noncontrolling interests	(6,687)	$ 0
Ending balance	0
PORT OP LP | Battery Point | BPT Holdings, LLC
Redeemable Noncontrolling Interest, Equity, Common, Carrying Amount [Roll Forward]
Beginning balance	2,822	2,968
Net loss attributable to redeemable noncontrolling interest	(81)	(113)
Adjustment to value of redeemable noncontrolling interest	3,946
Payment to redeem noncontrolling interests	(6,687)
Ending balance	$ 0	$ 2,855
Common equity units received in transaction (in units)				510,816
PORT OP LP | BPT Holdings, LLC
Redeemable Noncontrolling Interest, Equity, Common, Carrying Amount [Roll Forward]
Common equity units received in transaction (in units)			510,816
Share price (in dollars per share)			$ 13.09

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COMMITMENTS AND CONTINGENCIES - Lease Cost (Details) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2022 USD ($)	Sep. 30, 2022 USD ($)
Commitments and Contingencies Disclosure [Abstract]
Right-of-use asset (included in real estate held for investment, net)	$ 7,281	$ 7,281
Lease obligation (included in other liabilities)	$ 9,424	$ 9,424
Remaining lease term	91 years 3 months 18 days	91 years 3 months 18 days
Discount rate	4.80%	4.80%
Interest on lease obligation for the period ended June 30, 2022	$ 112	$ 334
210 West 31st Street
Real Estate [Line Items]
Right-of-use asset, amortization	$ 800	$ 800

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COMMITMENTS AND CONTINGENCIES - Future Minimum Lease Payments (Details) $ in Thousands	Sep. 30, 2022 USD ($)
Commitments and Contingencies Disclosure [Abstract]
July 1, 2021 through December 31, 2021	$ 90
2022	360
2023	360
2024	393
2025	396
Thereafter	52,167
Total expected minimum lease obligations	53,766
Less: Amount representing interest	(44,342)
Present value of net minimum lease payments	$ 9,424

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SUBSEQUENT EVENTS (Details) - Subsequent Event - Preferred Class A	Oct. 25, 2022 $ / shares shares
Subsequent Event [Line Items]
Preferred stock, redemption price (in dollars per share) | $ / shares	$ 1,120
Preferred Stock
Subsequent Event [Line Items]
Redemption period	120 days
Redemptions of common stock (in shares) | shares	15,000