Pacific Oak Strategic Opportunity REIT, Inc.

Item 1A. Risk Factors

In addition to the risk factors discussed below, please see the risk factors in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2024 and Part II, Item 1A of our Quarterly Report on Form 10-Q for the periods ended March 31, 2025,  and June 30, 2025, each as filed with the SEC.

We have subsThe Stantial indebtedness maturing overdstill arrangement related to the 12-month pSeriod ending June 30, 2026. Considering the current real estes Bonds could adversely affect our operations, liquidity, strate lendigic flexibility, and the timing environof repayment, ths. There is raises substantial doubt as to ourno assurance that we will be abilityle to continue as a going concern fsuccessfully negotiate or at least one year from the datesatisfy the terms under the financial statements are issued. If standstill, and even if we do, we are unable to repay, refinance or extend maturmay still be adversely affected.

We are party to a negotiation agreement with the bondholders trustee dated August 26, 2025, that imposes operating debt, the lenders and reporting guidelines and, in certain cases, requires prior bondholders may declare events of default and seek to foreclose on  approval to take specified actions. As long as the underlying collateral. There is no assurance that we will be ableStandstill remains in effect, until the earlier of 20 days after Pacific Oak SOR BVI elects to satisfy, refterminance te it or extendthe date the maturing debt, and even if we do, we may still be adversebondholders resolve to accelerate any Series Bonds, our ability to respond quickly affected if substantial principto market conditions, manage working capital paydowns are required.

As of June 30, 2025, we had debt obligaoutside agreed parameters, or pursue strategic transactions in the aggregate principal amount of $874.7 millmay be constrained. Compliance with the Standstill may require addition, with a weighted-aal time and expense, diverage remaining term of 1.3 years. As of June 30, 2025, we had $554.2 million of debt obligations scheduledt management attention, and delay or prevent actions we otherwise would take. If approvals are withheld or delayed, or if the Standstill terminates due to mature over acceleration of the pSeriod from July 1, 2025 through June 30, 2026, of which $71.8 millies Bonds, our operations, liquidity, and financial condition had available extension options if we complycould be adversely affected. We have evaluated the Standstill and, at this time, cannot predict with certain debt covenants that may include onety the timing or outcome of any required approvals or a combthe potential effects of termination of the following ratios:r acceleration.

If our advisor debt-to-value,termines to no longer debt yield, minimum equity requiremfer certain balances due to them, or an events and debt service coverage. In order to satisfy oblig that accelerates repayment occurs, our ability to fund our operations as they mature, we may: (i) utilize extension options (if available) in may be adversely affected.

From time to time, our advisor may agree to defer all or a portion of the respective loan agreeasset managements, (ii) make partial loan repayments to meet debt covenant requirements, (iii) seek  or other fees and compensation due to it, pay general administrative expenses, enter into refinance or restructure certain debta related party loan or otherwise supplement financing in order to instruments, (iv) sell real estate prcrease the amount of cash available to fund our operties or equity securities to convert to cash toations.

As of September 30, 2025, our advisor had deferred approximately $13.9 million of its asset make principal payments, or (v) may negotiate a turnovernagement fees and as of September 30, 2025 our advisor had extended an outstanding loan balance of one or moreapproximately $10.0 million with certain secured properties backity. If our advisor chooses to the related mortgage lender andno longer defer such fees, or an event that accelerates loan remit payment for any associated loan guarantee. There can be no assuraoccurs, our ability to fund our operations may be adversely affected.

Recent non-compliances as to the certainty or t with debt covenants could liming of managements plans,t or require us to liquidate as certain elements ofsets on terms we managements plans are outside oy not find attractive.

The terms of our control,urrent including our abilitydebtedness are subject to sell assets or successfully refinance orfinancial and operational covenants. These include, but are not limited to restructure certain ofquiring us to maintain debt ratings on our dIsraeli bonds, debt obligservice coverage, leverage rations. If we are unables, and minimum net worth requirements. In addition to meet loanbeing out of compliance tests and/or repay, refiwith certain property-level mortgages covenance or extend maturing mortgage loans, tts, as of September 30, 2025, we were also out of compliance in regards to the lenders or bondholders may declare eSeries Bonds as a result of a recent downgrade by SP Global Ratings Maalot Ltd. The downgrade constitutes an events of default and willas a result, the bondholders have the right to sell or disposedeclare the Series Bonds of the collateral and/or enforce 975.3 million Israeli new shekels ($295.0 million as of September 30, 2025) immediately due and collect the collateral securpayable.

Although we are engaged in Standstill arrangement and ongoing the loans, which would negatively affect our resultnegotiations with the bondholders to restructure the terms of operationthe Series Bonds, financial condition, cash flows, asset valuathere can be no assurance that such negotiations and ability to continue as a going concern.

Continuedwill be successful.

In addition, our non-compliance with the minimum equity bcovenants of the Series Bonds covenants and furnstituted a cross default under ther bond rating downgrades may cause WhiteHawk loan, under which we owe $80.0 million. Under the Series B and Series D bonds to becometerms of the WhiteHawk loan, the lender could declare the obligations under that loan to be immediately due and payable.

As of June 30, 2025, we had Series B and S, refuse to make any extensions of credit, suspend any other financial

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PART II. OTHER INFORMATION (CONTINUED)

Iteries D bonds outstanding of $289.2 millionm 1A. Risk Factors (continued)

accommodations to the borrower and also as of June 30, 2025, weguarantor under the loan, and/or expect to be out of compliance foercise any other available remedies under the following financial covenants floan agreement, the loan documents, or the Serapplicable law. Such remedies B and Series D bonds: may include lenders foreclosure of the consolidllated equity capital covenant andral securing the WhiteHawk loan, which include the net adjusted financial debt ratio to the nPark Highlands land, the Richardson land, and the 210 West 31st Street CAP, as defined under the deed of trusts for the quarters ended June 30, 2025 leasehold estate.

If some or all of our debt is accelerated and becomes immediately due and September 30, 2025. If we are out of complipayable, we may be unable repay or refinance for two consecutive quarters, the Series B and Series D bonds may become due and payathe debt and we may be required to liquidate assets on terms we may not find attractive, which could limit operational flexibility and reduce the amount available. Additionally, the bonds hav for shareholders.

We are experienced recent downgrades in the bond ratings. In July osed to uncertainty from a class-action lawsuit filed in Israeli courts.

On September 10, 2025, SP Global Ratings Maalot announcan Israeli investor filed an update to the r petition for certificating for on of a class action in the Series BTel Aviv District Court, Israel against Pacific Oak SOR BVI and Series D bonds from to ilA to ilBBB. Further rcertain members of its board of directors, alleging that disclosures relating downgrades would constitute a covenant violato Pacific Oak SOR BVI were misleading and caused investor harm. The petition, if the Series B and Series D bonds drops lower than an ilBBB rating. This violat states an individual claim amount in excess of 2.5 million Israeli new shekels ($0.8 million may also cause the Series B as of September 30, 2025) and Sericites D bonds to become due and payable. We may seek to obtain waivers for non-compliance of these covenantthe petitioners expert model estimating potential class-wide damages of approximately 124.6145.2 million Israeli new shekels ($37.6-43.9 million as or negotiate with bondholders for more favorable terms. We may be unsuccessful in bondholders negotiations and it would severely impact our liquidity positionf September 30, 2025). The matter is at a preliminary stage; the court has not ruled on class certification or on the merits.