Pacific Oak Strategic Opportunity REIT Reports $19.8 Million Net Loss, Improved from Previous Year

Pacific Oak Strategic Opportunity REIT, Inc. reported a net loss of $19.8 million for the three months ended March 31, 2025, a significant improvement compared to a net loss of $77.0 million during the same period in 2024. The company's total revenues decreased to $32.1 million from $35.0 million year-over-year, primarily driven by a decline in rental income, which fell to $28.2 million from $31.2 million. This decrease in rental income was attributed to the sale of 99 residential homes and one apartment property, which collectively reduced rental income by approximately $2.6 million. Despite the overall revenue decline, hotel revenues increased slightly to $2.9 million from $2.8 million.

In terms of expenses, total expenses for the first quarter of 2025 were reported at $44.6 million, down from $89.5 million in the prior year. This reduction was largely due to the absence of impairment charges on real estate and related intangibles, which had amounted to $39.3 million in the previous year. Operating, maintenance, and management expenses rose to $12.0 million, reflecting increased asset management fees as a result of changes in affiliate relationships. Interest expense also decreased slightly to $16.1 million, down from $16.8 million, due to a reduction in the weighted-average variable interest rate.

As of March 31, 2025, the company’s total assets were valued at $1.08 billion, a decrease from $1.12 billion at the end of 2024. The decline in assets was primarily due to a reduction in cash and cash equivalents, which fell to $23.0 million from $56.0 million. The company’s liabilities also decreased to $941.4 million from $969.2 million, with notes and bonds payable related to real estate held for investment decreasing to $835.8 million from $864.1 million. Stockholders’ equity decreased to $139.1 million from $158.9 million, reflecting the net loss attributable to common stockholders.

Operationally, the company reported occupancy rates of 66% for its office complexes, 93% for its residential home portfolio, and 91% for its apartment property. The company continues to face challenges related to its debt obligations, with $355.3 million of debt scheduled to mature between April 1, 2025, and March 31, 2026. The company is currently in technical default on several loans but has entered into a forbearance agreement for the Crown Pointe Mortgage Loan, allowing it to defer certain payments until September 30, 2025. Looking ahead, Pacific Oak Strategic Opportunity REIT, Inc. aims to improve its liquidity and operational performance through leasing additional space and potential acquisitions, while also managing its debt obligations and market risks.