Pacific Oak REIT Seeks Bond Restructuring
Standstill agreement halts major transactions as company negotiates new bond terms with Israeli investors.
August 29, 2025
Pacific Oak hits pause on major financial activity
Pacific Oak Strategic Opportunity REIT, Inc. has entered into a standstill agreement with bondholders, pausing major financial activity as it works through a potential restructuring of key debt terms.
On August 26, Pacific Oak and its affiliated entities—including Pacific Oak SOR (BVI) Holdings and external advisor Pacific Oak Capital Advisors—signed an agreement designed to open the door to bond restructuring talks. The agreement was made with Reznik Paz Nevo Trusts Ltd., trustee for the holders of Series B and D bonds issued by the BVI entity.
The goal: create space for direct negotiations between the company and bondholders to adjust the terms of the bonds. This includes potential changes to:
- Financial covenants
- Interest rates
- Maturity dates
- Collateral backing
In exchange, the company has agreed to pause a range of activities and provide additional transparency throughout the interim period.
What happens during the interim period?
During this window, which lasts until either termination by the company or a bondholder decision to accelerate repayment, Pacific Oak’s BVI Group must keep the trustee informed of any material developments—especially anything that could impact agreements or trigger legal risk. The trustee also gains visibility into potential financing or asset sales.
At the same time, the BVI Group has committed not to move forward with any transactions above $250,000, issue new debt, amend key contracts, sell assets, or make distributions unless approved by bondholders. Restrictions also apply to actions involving the Advisor, and to any transfer of ownership stakes by Pacific Oak or its key executives.
Additional restrictions include:
- No initiation or support of insolvency proceedings involving BVI-controlled entities
- No acquisition of additional BVI-issued bonds
- No transfer of ownership interests in the BVI Group or affiliated entities
A violation of any of these terms would breach the underlying bond agreements.
Next steps
This standstill arrangement puts a temporary freeze on Pacific Oak’s flexibility, but it also gives the company a chance to reach a negotiated outcome with its creditors. While the future of the bonds remains uncertain, this step signals a shift toward resolution—and gives bondholders a clearer seat at the table.
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