The financing requires aggressive property sales while the REIT cuts costs through restructured month-to-month service agreements.

May 15, 2026

Pacific Oak Strategic Opportunity REIT disclosed on May 14, 2026, that indirect subsidiaries of the company entered into a major loan agreement and that the REIT amended compensation arrangements with its chief executive and its outside accounting manager. The disclosures continue a series of corporate adjustments at the financially constrained, non-traded REIT, which earlier this year scaled back its public reporting and dismissed its independent auditor Pacific Oak Strategic Opportunity REIT Drops Traditional Reporting, Fires Auditor Amid Cash Crisis.

$216 Million Rental-Backed Loan

On May 8, 2026, four borrower entities along with Pacific Oak Residential Trust closed on a loan of up to $216 million from KM PORT US Financing US LP, PORT 2026-04 Lender, and other co-lenders. The full amount was funded at closing and is secured by a portfolio of single-family rental properties owned by the borrowers, all indirect wholly owned subsidiaries of the REIT.

Proceeds were used to:

• Repay all prior financing on the properties
• Fund a $10 million interest reserve
• Establish reserves for taxes, insurance, HOA dues, and maintenance
• Pay an origination fee of 1.50%
• Deliver a $4 million distribution to Pacific Oak Residential Trust at closing, with another distribution of up to $4 million scheduled six months later

Loan Terms

The loan carries a floating interest rate of one-month SOFR plus 4.75%, with a floor of 7.75%. Payments are interest-only, with the principal due at maturity on August 8, 2027. Two six-month extension options could push the final maturity to August 2028, each requiring a 0.75% extension fee. Voluntary full prepayment is subject to a minimum interest obligation of $18.2 million, and repayment in full triggers an exit fee of 1.25%.

Operational Covenants

The agreement imposes significant operational requirements:

• Property sales: At least 150 properties must be sold within six months of closing, and at least 100 properties in each subsequent three-month period. Failure constitutes a default.
• Vacancy limit: No more than 500 properties may be vacant at any given time.
• Financial covenants: A loan-to-value ceiling of 65% based on automated valuation models updated quarterly, plus a debt yield maintenance test.

Pacific Oak SOR Equity Holdings X provided a recourse carve-out guaranty covering customary events such as fraud and voluntary bankruptcy, and each borrower’s sole member provided a full payment guaranty.

Executive Compensation Adjustments

Separately, on May 12, 2026, the REIT amended its agreement with Brian Ragsdale, who continues as President, Chief Executive Officer, and Chief Financial Officer. Instead of $60,000 in total compensation tied to a quarterly report, Ragsdale will receive $5,000 per month retroactive to January 2026, with a $15,000 catch-up payment. The agreement runs through July 2026 and then converts to a month-to-month arrangement.

Revised Accounting Services Agreement

The REIT also restated its agreement with R2 Advisors, which provides corporate accounting, reporting, and governance support, including Chief Accounting Officer services. R2’s monthly fee was reduced from $15,000 to $10,000, with out-of-scope work continuing at $575 per hour, on a month-to-month basis.