Pacific Oak Strategic Opportunity REIT Inc., a publicly registered non-traded real estate investment trust, has completed its previously announced merger with Pacific Oak Strategic Opportunity REIT II Inc. in a stock-for-stock transaction, creating a combined company with more than $2 billion in gross real estate and real estate-related assets.
The combined company has retained the name Pacific Oak Strategic Opportunity REIT, and the merger is expected to qualify as a tax-free reorganization.
“We appreciate the trust and confidence of our stockholders and thank them for their support and votes in favor of the merger,” said Keith D. Hall, chief executive officer and a director of Pacific Oak Strategic Opportunity REIT. “We believe the merger creates a stronger and more robust company, and provides significant benefits to stockholders, including improved access to capital markets and reduced operating costs.”
Under the terms of the merger, in exchange for each share of common stock owned, Pacific Oak Strategic Opportunity REIT II stockholders received 0.9643 shares of the combined company’s common stock.
Pacific Oak Strategic Opportunity REIT stockholders own approximately 69 percent of the combined company, while former Pacific Oak Strategic Opportunity REIT II stockholders own approximately 31 percent, on a fully diluted basis.
Management believes the merger delivers “enhanced value to all stockholders” and allows each company’s stockholders to participate in a larger, stronger and more diversified combined company.
According to the company, stockholder benefits are expected to include portfolio diversification, a balance sheet with increased equity and liquidity, the elimination of duplicative overhead costs, and a more streamlined and efficient business structure.
The company also noted that the size, scale and financials of the combined company “may improve access to capital markets and reduce the cost of capital, which may be used to support strategic investments to drive growth opportunities.”
Pacific Oak Strategic Opportunity REIT launched its initial public offering in November 2009 and raised approximately $638 million in investor equity from the offering and its distribution reimbursement plan, as of the second quarter 2020.
Pacific Oak Strategic Opportunity REIT II launched in August 2014, and through a private placement offering and a subsequent initial public offering, raised a total of $242.8 million in investor equity as of the second quarter of 2020, including distribution reinvestment shares. The REIT closed its primary offering in September 2018.
Pacific Oak Strategic Opportunity REIT invests in opportunistic real estate and other real estate-related investments. The company manages a $2 billion portfolio comprised of nine office properties, one office portfolio consisting of four office buildings and 14 acres of undeveloped land, two hotel properties, two apartment properties, one residential home portfolio consisting of 1,760 single-family rental homes, three investments in undeveloped land with approximately 1,000 developable acres, an investment in an office/retail property redevelopment, six investments in unconsolidated entities and three investments in real estate equity securities as of October 5, 2020.