Executive Summary

Q4 2019 was characterized by outsized gains driven by equity income from unconsolidated JVs and positive fair value adjustments, producing estimated Q4 net income of $59.35M derived from reported FY2019 and 9M19 figures (FY2019: $67.16M; 9M19: $7.81M). This reflects strong asset monetization and JV performance momentum in the quarter .
Strategic actions: sold 125 John Carpenter for $99.6M (repaying $53.2M related mortgage), acquired Reven Housing REIT (PORT) adding 993 single-family rental homes and issued $15.0M of PORT preferred stock; these moves diversified the portfolio and recycled capital .
Subsequent to year-end, the company issued ~$74.1M Series B debentures in Israel, announced a merger agreement with Pacific Oak Strategic Opportunity REIT II (share exchange ratio 0.9643), and entered FX collars to hedge ILS exposures; management flagged COVID-19 macro risks .
No Q4 2019 earnings call transcript or formal guidance available; Wall Street consensus estimates via S&P Global were unavailable, limiting beat/miss assessment .

What Went Well and What Went Wrong

What Went Well

Capital recycling and portfolio optimization: Disposed 125 John Carpenter at $99.6M and repaid $53.2M debt; management executed during a transition period to new advisor Pacific Oak Capital Advisors .
Single-family rental entry and financing: Acquired Reven (PORT), assumed $61.9M mortgages at ~4.7% fixed rates, and issued $15.0M of PORT preferreds with a 6% coupon, broadening income streams .
Strong Q4 earnings drivers: FY equity in income of unconsolidated JVs was $31.21M and fair value adjustments were $22.14M; most of the uplift occurred in Q4, enabling a large operating profit for the year ($84.65M) .

Quote: “Attached as Exhibit 99.1… preliminary financial data as of December 31, 2019 with respect to Pacific Oak SOR (BVI) Holdings, Ltd.” (context for one-off disclosure supporting strategic actions) .

What Went Wrong

FX and financing headwinds: FY2019 foreign currency transaction adjustments were a loss of $(12.50)M, and finance expenses were $(28.85)M, constraining cash generation .
Transaction costs tied to PORT acquisition hit earnings: $4.46M in Q4 transaction costs related to Reven/PORT .
Minor loss on disposition: 125 John Carpenter sale recorded a $0.8M loss within fair value adjustments .

Financial Results

Note: Q4 2019 figures are derived as FY2019 minus 9M19 from reported documents. All amounts $USD.

Metric	Q2 2019 (3 mo)	Q3 2019 (3 mo)	Q4 2019 (derived)
Total Revenues and Other Income ($MM)	$21.19	$22.81	$22.55 (FY $86.52 − 9M $63.97 )
Operating Profit ($MM)	$4.35	$8.61	$69.76 (FY $84.65 − 9M $14.89 )
Finance Income/(Loss) from FV Assets ($MM)	$4.64	$6.14	$2.76 (FY $26.48 − 9M $23.72 )
Finance Expenses ($MM)	$(7.25)	$(7.36)	$(7.07) (FY $(28.85) − 9M $(21.78) )
Fair Value Adj of Investment Properties, net ($MM)	$(3.40)	$(0.02)	$31.62 (FY $22.14 − 9M $(9.48) )
Equity in Income of Unconsolidated JVs ($MM)	$(0.12)	$0.63	$29.93 (FY $31.21 − 9M $1.28 )
Net Income ($MM)	$(0.19)	$2.52	$59.35 (FY $67.16 − 9M $7.81 )
Net Income Margin %	−0.9% (−$0.19/$21.19)	11.1% ($2.52/$22.81)	263.3% ($59.35/$22.55)

Revenue composition:

Revenue Component ($MM)	Q2 2019 (3 mo)	Q3 2019 (3 mo)	Q4 2019 (derived)
Rental Income	$17.57	$19.11	$19.46 (FY $72.28 − 9M $52.83 )
Tenant Reimbursements	$2.74	$2.96	$2.46 (FY $10.79 − 9M $8.33 )
Interest Income from Debt Investments	$0.00 (quarterly)	$0.51	$0.00 (FY $0.37 − 9M $0.37 )
Other Operating Income	$0.89	$0.74	$0.63 (FY $3.08 − 9M $2.45 )

Selected expenses and items:

Item ($MM)	Q2 2019 (3 mo)	Q3 2019 (3 mo)	Q4 2019 (derived)
Operating, Maintenance, Mgmt Fees	$(6.96)	$(8.30)	$(8.23) (FY $(29.85) − 9M $(21.61) )
Real Estate Taxes & Insurance	$(3.30)	$(3.28)	$(3.08) (FY $(12.63) − 9M $(9.56) )
Transaction Costs	$0.00	$0.00	$(4.46) (FY $(4.46) − 9M $0)
Foreign Currency Transaction Adjustments	$(2.47)	$(5.34)	$(1.86) (FY $(12.50) − 9M $(10.63) )

Balance sheet and leverage:

Metric ($MM)	Jun 30, 2019	Sep 30, 2019	Dec 31, 2019
Total Assets	$1,387.40	$1,383.16	$1,470.58
Owner’s Net Equity	$663.92	$667.07	$726.85
Non-controlling Interests	$19.20	$16.60	$16.09
Total Equity	$683.12	$683.67	$742.95
Notes & Bonds Payable, net (current + LT)	$442.18 (81.82+360.36)	$442.50 (81.73+360.78)	$451.74 (81.77+369.97)
Debentures, net (current + LT)	$213.77 (54.35+159.41)	$220.04 (55.82+164.22)	$221.92 (56.19+165.73)
Total Debt (Notes/Bonds + Debentures, net)	$655.95	$662.54	$673.66

Segment breakdown: Not disclosed beyond revenue components above.

KPIs: No occupancy/NOI KPIs disclosed in the filings; cash from operations FY2019 $22.62M; cash and equivalents at year-end $68.38M .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue, EPS, Margins, OpEx, OI&E, Tax Rate	FY2019 / Q4 2019	Not provided	Not provided	Maintained (no formal guidance)
Debentures Issuance (Series B)	Post-FY2019 (Feb 2020)	N/A	ILS 254.1M (~$74.1M) at 3.93% coupon; amortizing 2024–2026	New financing
Merger (POSOR II into POSOR I)	Announced Feb 19, 2020	N/A	Exchange ratio 0.9643; combined co. retains “Pacific Oak Strategic Opportunity REIT, Inc.”	Strategic combination announced
FX Hedges	March 2020	N/A	ILS 418M and 380M collars; targeted USD ranges ~$112.2–$116.5M and ~$99.5–$102.7M	New hedging program
Dividends	FY2019	N/A	No dividend disclosed in 8-K; prior dividends to Owner in FY2018 shown in cash flow for subsidiary	No formal dividend guidance

Earnings Call Themes & Trends

No Q4 2019 earnings call transcript available. Themes inferred from filings:

Topic	Previous Mentions (Q2 2019)	Previous Mentions (Q3 2019)	Current Period (Q4 2019 / FY)	Trend
Capital Recycling (Asset Sales)	Investment properties held for sale $25.9M; continued capital recycling	No specific sales in 3Q disclosed; continued optimization	125 John Carpenter sold for $99.6M; $53.2M debt repaid	Accelerating monetization
Equity Income from JVs	Modest contribution; six-month JV income $0.65M	Nine-month JV income $1.28M	FY JV income $31.21M, majority Q4	Significant uplift in Q4
Fair Value Adjustments	Negative in Q2 (−$9.46M)	Near flat in Q3 (−$0.02M)	Positive in FY ($22.14M), Q4 driven	Turned positive in Q4
Foreign Currency & Hedging	FX loss (−$5.29M)	FX loss (−$10.63M YTD)	FX collars initiated Mar 2020; FY FX loss (−$12.50M)	Proactive hedging post FY
Portfolio Expansion (SFR)	N/A	N/A	Reven/PORT acquisition adds 993 homes; preferred issuance	Strategic diversification
Advisor Transition	KBS to Pacific Oak Capital Advisors transition noted	Name change to Pacific Oak SOR (BVI)	Operating under new advisor	Completed transition
Regulatory/Legal	N/A	N/A	Proposed merger with POSOR II	Consolidation strategy
Macro Risk (COVID-19)	N/A	N/A	COVID-19 risks highlighted	Heightened uncertainty

Management Commentary

Strategic actions: “On November 1, 2019, the Company sold 125 John Carpenter… The sale price… was $99.6 million… repaid the $53.2 million outstanding principal balance” .
Diversification: “On November 4, 2019… acquired Reven Housing REIT, Inc.… 993 single-family homes… total consideration of approximately $56.6 million… assumed a $51.4 million mortgage… and a $10.5 million mortgage… fixed interest rate of 4.74% and 4.72%” .
Financing and hedging: “On February 16, 2020, the Company issued 254.1 million Israeli new Shekels… Series B debentures… 3.93% per year… On March 16–17, 2020, the Company entered into foreign currency collars…” .
COVID-19 tone: “The recent global outbreak of COVID-19… has significantly disrupted economic markets… Customers… could be adversely affected… This could lead to similar negative impacts on our business” .

Q&A Highlights

No Q4 2019 earnings call transcript was found; therefore there are no Q&A highlights or clarifications to report .

Estimates Context

Wall Street consensus EPS and revenue estimates via S&P Global for Q4 2019/FY2019 were unavailable during retrieval, and coverage for this non-listed REIT appears limited. As such, beat/miss vs. consensus cannot be assessed .
Implication: Given large Q4 valuation and JV income items, even if estimates existed, non-operational drivers would likely have produced significant variances; investors should focus on recurring cash flows and asset sale cadence rather than EPS comparability .

Key Takeaways for Investors

Q4 strength was driven by non-operational items (fair value gains and JV income), propelling estimated Q4 net income to $59.35M; recurring revenue trends were stable (~$22–23M quarterly) .
Active capital recycling and SFR diversification (PORT acquisition) position the company for new income streams, though transaction costs and integration are near-term drags .
Leverage modestly increased by year-end (total debt ~$673.66M), offset by cash of $68.38M and higher equity base; financing flexibility enhanced by ILS debentures .
FX losses persisted in FY2019 and collars were initiated post year-end—monitor FX exposure and hedge effectiveness amid macro volatility .
The proposed merger with POSOR II may unlock scale advantages and simplify corporate structure; evaluate share exchange terms (0.9643) and combined portfolio synergies .
With no formal guidance and limited Street coverage, emphasize reported cash flows ($22.62M CFO in FY2019) and asset sale pipeline over EPS .
Near-term trading: narrative is supported by strategic actions and Q4 uplift, but COVID-19 impacts and FX dynamics are key uncertainties; medium-term thesis hinges on execution in SFR, successful merger completion, and continued asset monetization .

Footnote: Q4 2019 values are derived by subtracting reported 9M2019 amounts from FY2019 disclosures in company filings .

Pacific Oak Strategic Opportunity REIT, Inc. (PCOK)·Q4 2019 Earnings Summary