UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

__________________

FORM 8-K

__________________

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): ~~October 31~~December 17, 2019

PACIFIC OAK STRATEGIC OPPORTUNITY REIT II, INC.

(Exact ~~name~~Name of ~~registrant~~Registrant ~~specified~~as Specified in ~~its~~Its ~~charter~~Charter)

______________________________________________________

Maryland	000-55424	46-2822978
(State or other jurisdiction ofincorporation or organization)	(Commission File Number)	(IRS EmployerIdentification No.)
(State or Other Jurisdiction ofIncorporation or Organization)	(Commission FileNumber)	I.R.S. EmployerIdentification No.

11150 Santa Monica Blvd., Suite 400

Los Angeles, California 90025

(Address of principal executive offices)

Registrant'’s telephone number, including area code: (424) 208-8100

~~KBS~~Not ~~Strategic Opportunity REIT II, Inc.~~Applicable

800 Newport Center Drive, Suite 700

Newport Beach, California 92660

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
None	N/A	N/A

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company x

If an emerging growth company, indicate by check ~~mark~~ if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. x

ITEM 1 7.01 ~~ENTRY~~REGULATION ~~INTO~~FD ~~A MATERIAL DEFINITIVE AGREEMENT~~DISCLOSURE

~~Advisory~~Information ~~Agreement~~for the stockholders of Pacific Oak Strategic Opportunity REIT II, Inc. (the “Company”) regarding its estimated net asset value per share and other distribution information is attached as Exhibit 99.2 to this Current Report on Form 8-K.

OnThe ~~November~~information 1,in ~~2019,~~this ~~Pacific~~Item ~~Oak~~7.01 ~~Strategic~~of ~~Opportunity~~Form ~~REIT~~8-K ~~II,~~and ~~Inc~~the attached Exhibit 99.2 (are furnished to the ~~“Company,”~~Securities ~~“we,”~~and ~~“our,”~~Exchange Commission (“usSEC”), ~~entered~~and ~~into~~shall anot ~~new~~be ~~advisory~~deemed ~~agreement~~to ~~(the~~be “~~Advisory Agreement~~filed”) with athe ~~new~~SEC ~~external~~for ~~advisor,~~any ~~Pacific Oak Capital Advisors~~purpose, ~~LLC~~including (for the ~~“Advisor”). The~~purposes ~~Advisor~~of isSection ~~part~~18 of athe ~~group~~Securities ofExchange ~~companies~~Act ~~formed~~of 1934, ~~owned~~as ~~and~~amended ~~managed~~(the by“Exchange ~~Keith D. Hall~~Act”), ~~the~~or ~~Company’s~~otherwise ~~Chief~~subject ~~Executive~~to ~~Officer~~the ~~and~~liabilities ~~one~~ of ~~its~~that ~~directors,~~section and ~~Peter~~shall ~~McMillan~~not ~~III,~~be ~~the~~deemed ~~Company’s~~to ~~Chairman~~be ofincorporated ~~the~~by ~~Board~~reference ~~and~~into ~~President~~any ~~and~~filing ~~one~~under ofthe ~~its~~Securities ~~directors. The~~Act ~~terms~~ of ~~the~~1933, ~~Advisory~~as ~~Agreement~~amended, ~~are~~or ~~identical~~the toExchange ~~the~~Act ~~terms~~regardless of ~~the~~any ~~advisory~~general ~~agreement~~incorporation ~~previously~~language in ~~effect~~such ~~with KBS Capital Advisors LLC~~filing.

~~Under~~ITEM the terms of the Advisory Agreement, the Advisor must use its best efforts to present to the Company investment opportunities that provide a continuing and suitable investment program for the Company consistent with its investment policies and objectives as adopted by the board of directors of the Company (the “Board”)8.01 ~~Pursuant~~OTHER to the Advisory Agreement, the Advisor will manage our day-to-day operations, retain the loan servicers for the Company’s loan investments and the property managers for the real estate investments (both subject to the authority of the Board and officers) and perform other duties, including, but not limited to, the following:EVENTS

•Estimated ~~finding,~~Net ~~presenting~~Asset ~~and~~Value ~~recommending~~Per ~~investment opportunities to the Company consistent with investment policies and objectives of the Company;~~Share

•On December 17, ~~making~~2019, ~~investment~~the ~~decisions~~board ~~for~~of directors of the Company approved an estimated net asset value (“NAV”) per share of the Company’s common stock of $10.25 based on the estimated value of the Company’s assets less the estimated value of the Company’s liabilities, ~~subject~~or NAV, divided by the number of shares outstanding, all as of September 30, 2019, with the exception of the following adjustments: (i) the Company’s consolidated investments in real estate properties were valued as of October 31, 2019; (ii) an adjustment to reduce cash for the ~~limitations~~amount of capital expenditures incurred in October 2019; (iii) an adjustment for disposition costs and fees incurred in connection with the ~~charter~~disposition of 2200 Paseo Verde (collectively the “Adjustments”). Other than the Adjustments, there have been no material changes between September 30, 2019 and the ~~direction~~date of this filing that would impact the overall estimated NAV per share. The Company is providing this estimated NAV per share to assist broker-dealers that participated in the Company’s initial public offering in meeting their customer account statement reporting obligations under National Association of Securities Dealers Conduct Rule 2340 as required by the Financial Industry Regulatory Authority (“FINRA”). This valuation was performed in accordance with the provisions of and ~~oversight~~also to comply with Practice Guideline 2013–01, Valuations of Publicly Registered, Non-Listed REITs, issued by the ~~Board;~~Institute for Portfolio Alternatives (formerly known as the Investment Program Association) (“IPA”) in April 2013 (the “IPA Valuation Guidelines”).

•The ~~structuring~~Company’s conflicts committee, composed solely of all of the ~~terms~~Company’s independent directors, is responsible for the oversight of the valuation process used to determine the estimated NAV per share of the Company’s common stock, including the review and ~~conditions~~approval of ~~our~~the valuation and appraisal processes and methodologies used to determine the Company’s estimated NAV per share, the consistency of the valuation and appraisal methodologies with real estate industry standards and practices and the reasonableness of the assumptions used in the valuations and appraisals. The estimated NAV per share was based upon the recommendation and valuation prepared by Pacific Oak Capital Advisors, LLC (the “Advisor”), the Company’s external advisor. The Advisor’s valuation of the Company’s consolidated investments in real estate properties was based on (i) appraisals of all but one property (“Appraised Properties”) performed by the independent third-party real estate valuation firm Duff & Phelps, ~~sales~~LLC (“Duff & Phelps”) and ~~joint~~(ii) ~~ventures;~~the contractual sale price less estimated selling credits for an office property located in Henderson, Nevada (2200 Paseo Verde) which was sold on December 4, 2019. Duff & Phelps prepared appraisal reports, summarizing key inputs and assumptions for each of the Appraised Properties. The Advisor performed valuations of the Company’s cash, restricted cash, investment in real estate equity securities, investment in an unconsolidated entity, other assets, mortgage debt and other liabilities. The methodologies and assumptions used to determine the estimated value of the Company’s assets and the estimated value of the Company’s liabilities are described further below.

•The ~~acquiring~~Advisor ~~investments~~used onthe ~~our~~appraised ~~behalf~~values of the Appraised Properties and in ~~compliance~~the case of 2200 Paseo Verde, the contractual sales price less estimated selling credits, together with ~~our~~its ~~investment~~estimated ~~objectives~~value of each of the Company’s other assets and ~~policies;~~liabilities to calculate and recommend an estimated NAV per share of the Company’s common stock. Based on (i) the conflicts committee’s receipt and review of the Advisor’s valuation report, including the Advisor’s summary of the appraisal reports prepared by Duff & Phelps and the Advisor’s estimated value of each of the Company’s other assets and the Company’s liabilities, (ii) the conflicts committee’s review of the reasonableness of the Company’s estimated NAV per share resulting from the Advisor’s valuation process, and (iii) other factors considered by the conflicts committee and the conflicts committee’s own extensive knowledge of the Company’s assets and liabilities, the conflicts committee concluded that the estimated NAV per share proposed by the Advisor was reasonable and recommended to the Company’s board of directors that it adopt $10.25 as the estimated NAV per share of the Company’s common stock. The board of directors unanimously agreed to accept the recommendation of the conflicts committee and approved $10.25 as the estimated NAV per share of the Company’s common stock, which determination is ultimately and solely the responsibility of the board of directors.

• sourcing and structuring loan originations;

• arranging for financing and refinancing of investments;

• entering into service contracts for loans;

• supervising and evaluating each loan servicer’s and property manager’s performance;

• reviewing and analyzing the operating and capital budgets of properties securing the loan investments and properties acquired;

• entering into leases and service contracts for real properties;

• assisting the Company in obtaining insurance;

• generating an annual budget for the Company;

• reviewing and analyzing financial information for each asset and the overall portfolio;

• formulating and overseeing the implementation of strategies for the administration, promotion, management, operation, maintenance, improvement, financing and refinancing, marketing, servicing, leasing and disposition of our investments;

• performing investor-relations services;

• maintaining accounting and other records for the Company and assisting the Company in filing all reports required to be filed with the SEC, the Internal Revenue Service and other regulatory agencies;

• engaging and supervising the performance of agents of the Company, including the registrar and transfer agent; and

• performing any other services reasonably requested by the Company.

The Advisory Agreement has a one-year term but may be renewed for an unlimited number of successive one year periods upon the mutual consent of the Advisor and the Company. Additionally, the Advisor may terminate the Advisory Agreement without penalty upon 90 days’ written notice and we may terminate the Advisory Agreement without cause or penalty upon 30 days’ written notice and, in such event, the Advisor must cooperate with the Company and our directors in making an orderly transition of the advisory function.

The Advisor and its affiliates engage in other business ventures, and, as a result, they do not dedicate their resources exclusively to our business. However, pursuant to the Advisory Agreement, the Advisor must devote sufficient resources to our business to discharge its obligations to the Company. The Advisor may assign the Advisory Agreement to an affiliate upon our approval. We may assign or transfer the Advisory Agreement to a successor entity.

The following describes the fees and expense reimbursements due to the Advisor under the Advisory Agreement.

~~Acquisition and Origination Fees.~~ The ~~Advisor~~table ~~will~~below ~~receive~~sets ~~acquisition~~forth ~~and~~the ~~origination~~calculation ~~fees equal to 2.6%~~ of the ~~cost~~Company’s ofestimated ~~investments~~NAV ~~acquired~~per orshare ~~originated~~as byof ~~the~~December 17, ~~Company~~2019, oras ~~the~~well ~~amount~~as tothe becalculation ~~funded~~of by the Company’s toestimated ~~acquire~~NAV orper ~~originate~~share ~~loans,~~as ~~including~~of ~~acquisition~~December 6, ~~and~~2018. ~~origination~~Duff ~~expenses~~& ~~and~~Phelps ~~any~~is ~~debt~~not ~~attributable~~responsible tofor ~~such investments plus significant capital expenditures related to~~ the ~~development,~~determination ~~construction or improvement~~ of the ~~investment~~estimated ~~budgeted~~NAV asper ofshare ~~the~~as ~~date~~ of ~~acquisition. In addition to acquisition and origination fees~~December 17, we2019 ~~reimburse~~or ~~the Advisor for customary acquisition and origination expenses~~December 6, ~~whether or not we ultimately acquire the asset~~2018.

Asset Management Fees. For asset management services, the Advisor will receive a monthly fee equal to the lesser of one-twelfth of (i) 1.0% of the cost of the investments of the Company and (ii) 2.0% of the sum of the cost of the investments of the Company, less any debt secured by or attributable to the investments. The cost of the real property investments is calculated as the amount paid or allocated to acquire the real property, including the cost of any subsequent development, construction or improvements to the property and including fees and expenses related thereto (but excluding acquisition fees paid or payable to the Advisor). The cost of the loans and any investments other than real property is calculated as the lesser of (x) the amount actually paid or allocated to acquire or fund the loan or other investment, including fees and expenses related thereto (but excluding acquisition fees paid or payable to the Advisor), and (y) the outstanding principal amount of such loan or other investment, including fees and expenses related to the acquisition or funding of such investment (but excluding acquisition fees paid or payable to the Advisor), as of the time of calculation. In the case of investments made through joint ventures, the asset management fee is determined based on our proportionate share of the underlying investment.



	December 17, 2019 Estimated NAV per Share			December 6, 2018 Estimated NAV per Share ⁽¹⁾			Change in Estimated NAV per Share
Real estate properties ⁽²⁾	$	21.76		$	20.54		$	1.22
Real estate equity securities ⁽³⁾	0.33			0.23			0.10
Investment in unconsolidated entity	0.02			0.17			(0.15		)
Cash	0.95			0.90			0.05
Other assets	0.35			0.42			(0.07		)
Mortgage debt ⁽⁴⁾	(11.65		)	(11.02		)	(0.63		)
Other liabilities	(0.42		)	(0.41		)	(0.01		)
Non-controlling interests	(1.09		)	(1.18		)	0.09
Estimated NAV per share	$	10.25		$	9.65		$	0.60
Estimated enterprise value premium	None assumed			None assumed			None assumed
Total estimated NAV per share	$	10.25		$	9.65		$	0.60

Other Operating Expenses. Under the Advisory Agreement the Advisor and its affiliates have the right to seek reimbursement from the Company for all costs and expenses they incur in connection with their provision of services to the Company, including the Company’s allocable share of the Advisor’s overhead, such as rent, employee costs, utilities, accounting software and cybersecurity costs. The Advisor may seek reimbursement for employee costs under the Advisory Agreement. At this time, the Advisor only expects to seek reimbursement for the Company’s allocable portion of the salaries, benefits and overhead of internal audit department personnel providing services to the Company. In the future, if the Advisor seeks reimbursement for additional employee costs, such costs may include the Company’s proportionate share of the salaries of persons involved in the preparation of documents to meet SEC reporting requirements. The Company does not reimburse the Advisor or its affiliates for employee costs in connection with services for which the Advisor earns acquisition or origination fees or disposition fees (other than reimbursement of travel and communication expenses) or for the salaries and benefits the Advisor or its affiliates may pay to the executive officers of the Company. _____________________

~~Disposition~~(1) ~~Fees. For~~The ~~substantial~~December 6, ~~assistance~~2018 inestimated ~~connection~~value ~~with~~per ~~the~~share ~~sale~~was ofbased ~~investments,~~upon ~~we will pay~~ the ~~Advisor~~recommendation orand ~~its~~valuation ~~affiliates a percentage~~ of the ~~contract~~Company’s ~~sales~~former ~~price~~external ~~of each loan~~advisor, ~~debt-related~~KBS ~~security,~~Capital ~~real~~Advisors ~~property~~LLC ~~or other investment sold~~ (~~including~~"KBS ~~CMBS,~~Capital ~~RMBS~~Advisors"). orThe ~~CDOs~~Company ~~issued~~engaged byDuff a& ~~subsidiary~~Phelps ofto ~~ours~~provide asappraisals ~~part~~ of athe ~~securitization~~Company’s ~~transaction)~~consolidated asinvestments ain ~~disposition~~real ~~fee.~~properties ~~For~~and ~~dispositions~~KBS ~~with~~Capital aAdvisors ~~contract~~performed ~~sales~~valuations ~~price~~of ~~less~~the ~~than~~Company’s orcash, ~~equal~~restricted ~~to $50 million~~cash, ~~the~~investment ~~disposition~~in ~~fee~~an ~~will~~unconsolidated ~~equal~~entity, ~~1.5%~~other ofassets, ~~the~~mortgage ~~contract~~debt ~~sales~~and ~~price~~other liabilities. For ~~dispositions~~more ~~with~~information arelating ~~contract~~to ~~sales~~the ~~price~~December 6, ~~greater~~2018 ~~than~~estimated ~~$50~~NAV ~~million,~~per ~~the~~share ~~disposition~~and ~~fee~~the ~~will~~assumptions ~~equal~~and ~~the~~methodologies ~~sum~~used ofby ~~$750,000~~Duff ~~(which~~& ~~amount~~Phelps isand ~~1.5%~~KBS ofCapital ~~$50 million)~~Advisors, ~~plus~~see ~~1.0% of~~ the ~~amount~~Company’s ofCurrent ~~the~~Report ~~contract~~on ~~sales~~Form ~~price~~8-K infiled ~~excess~~with ofthe ~~$50~~SEC ~~million. The disposition fee is determined~~ on aDecember ~~per-transaction~~11, ~~basis and is not cumulative~~2018.

~~If,~~(2) inThe ~~connection~~increase ~~with~~in ~~such disposition, commissions are paid to third parties unaffiliated with~~ the ~~Advisor,~~estimated ~~the~~value ~~fee~~of ~~paid~~real toestate ~~the~~properties ~~Advisor~~was ~~and~~due ~~its affiliates may not exceed the commissions paid~~ to ~~such~~increases ~~unaffiliated~~in ~~third~~fair ~~parties,~~values ~~and~~of ~~provided further that~~ the ~~disposition~~Company’s ~~fees~~real ~~paid~~estate ~~to the Advisor, its affiliates and unaffiliated third parties may not exceed 6~~properties.0% ~~of the contract sales price.~~

~~Subordinated Participation in Net Cash Flows. After our common stockholders have received, together as a collective group, aggregate distributions~~ (~~regardless of the source used to fund such distributions and including distributions that may constitute a return of capital for federal income tax purposes~~3) ~~sufficient~~The toincrease ~~provide~~in ~~(i) a return of their gross investment amount, which is~~ the ~~amount~~estimated ~~calculated~~value ~~by multiplying the total number~~ of ~~shares~~real ~~purchased~~estate byequity ~~stockholders~~securities bywas ~~the~~due ~~issue~~to ~~price,~~acquisitions ~~reduced by the total number~~ of ~~shares~~real ~~repurchased~~estate byequity ussecurities ~~(excluding~~as ~~shares~~well ~~received~~ as aunrealized ~~stock~~gains ~~dividend which we subsequently repurchased) multiplied by the weighted average issue price of the shares sold in the primary offering, and (ii) a 7.0% per year cumulative, noncompounded return~~ on ~~such gross investment amount,~~ the ~~Advisor is entitled to receive 15% of our net cash flows, whether from continuing operations, net sales proceeds, net financing proceeds, or otherwise~~securities.

⁽⁴⁾ The increase in mortgage debt was primarily due to borrowings for future capital needs and to fund capital expenditures on real estate.

The increase in the Company’s estimated NAV per share from the previous estimate was primarily due to the items noted below, which reflect the significant contributors to the increase in the estimated NAV per share from $9.65 to $10.25. The changes are not equal to the change in values of each real each asset and liability group presented in the table above due to real estate property acquisitions, debt financings and other factors, which caused the value of certain asset or liability groups to change with no impact to the Company’s fair value of equity or the overall estimated NAV per share.



	Change in Estimated NAV per Share
December 6, 2018 estimated NAV per share (after stock distributions)	$	9.65
Changes to estimated NAV per share
Investments
Real estate	1.47
Investment in unconsolidated entity	0.02
Investment in equity securities	0.03
Capital expenditures on real estate	(0.61		)
Total change related to investments	0.91
Operating cash flow shortfall compared to distributions declared ⁽¹⁾	(0.14		)
Selling and financing costs ⁽²⁾	(0.11		)
Advisor disposition fees ⁽³⁾	(0.01		)
Notes payable	0.04
Other changes	0.01
Total change in estimated NAV per share	0.70
Stock distributions	(0.10		)
December 17, 2019 estimated NAV per share	$	10.25

_____________________

⁽¹⁾ Operating cash flow reflects modified funds from operations (“MFFO”) adjusted to (i) deduct certain capitalized interest expense related to a development project, (ii) add back the amortization of deferred financing costs and (iii) deduct income from business interruption insurance recoveries. The Company computes MFFO in accordance with the definition included in the practice guideline issued by IPA in November 2010.

⁽²⁾ Selling and financing costs include approximately, $0.7 million, or $0.02 per share, for the selling costs incurred subsequent to September 30, 2019 in connection with the 2200 Paseo Verde sale subsequent to September 30, 2019.

⁽³⁾ Advisor fees include approximately, $0.3 million, or $0.01 per share, for the disposition of 2200 Paseo Verde, subsequent to September 30, 2019.

~~The~~As ~~7.0%~~with ~~per~~any ~~year~~valuation ~~cumulative~~methodology, ~~noncompounded~~the ~~return~~methodologies onused ~~gross~~are ~~investment~~based ~~amount~~upon isa ~~calculated~~number onof aestimates ~~daily~~and ~~basis.~~assumptions Inthat ~~making~~may ~~this~~not ~~calculation,~~be ~~gross~~accurate ~~investment~~or ~~amount~~complete. isDifferent ~~determined~~parties ~~for~~using ~~each~~different ~~day~~assumptions ~~during~~and ~~the~~estimates ~~period~~could ~~for~~derive ~~which~~a ~~the~~different ~~7.0%~~estimated NAV per ~~year~~share ~~cumulative,~~of ~~noncompounded~~the ~~return~~Company’s iscommon ~~being calculated~~stock, ~~including~~and athis ~~daily~~difference ~~adjustment~~could tobe ~~reflect~~significant. ~~shares~~The ~~repurchased~~estimated byNAV usper ~~(excluding~~share ~~shares~~is ~~received~~not asaudited aand ~~stock~~does ~~dividend~~not ~~which~~represent wethe ~~subsequently~~fair ~~repurchased).~~value Inof ~~addition,~~the ~~gross~~Company’s ~~investment~~assets ~~amount~~less isthe ~~reduced~~fair byvalue of the ~~following:~~Company’s ~~(i)~~liabilities ~~distributions~~according ~~from~~to ~~net~~U.S. ~~sales~~generally ~~proceeds,~~accepted accounting principles (ii“GAAP”), ~~distributions~~nor ~~from~~does ~~net~~it ~~financing~~represent ~~proceeds,~~a ~~and~~liquidation ~~(iii)~~value ~~distributions~~of ~~paid~~the ~~from~~Company’s ~~cash~~assets ~~flow~~and ~~from~~liabilities ~~operations~~or inthe ~~excess~~price ofat awhich ~~cumulative,~~the ~~noncompounded,~~Company’s ~~annual~~shares ~~return~~ of ~~7.0%.~~common ~~Gross~~stock ~~investment~~would ~~amount~~trade ison ~~only~~a ~~reduced~~national assecurities ~~described~~exchange. ~~above;~~The itestimated isNAV ~~not~~per ~~reduced~~share ~~simply~~does ~~because~~not reflect a ~~distribution~~discount ~~constitutes~~for athe ~~return~~fact ofthat ~~capital~~the ~~for~~Company ~~federal~~is ~~income~~externally ~~tax~~managed, ~~purposes.~~nor ~~The~~does ~~7.0%~~it ~~per~~reflect ~~year~~a ~~cumulative,~~real ~~noncompounded~~estate ~~return~~portfolio ispremium/discount ~~not~~versus ~~based~~the onsum of the ~~return~~individual ~~provided~~property tovalues. ~~any~~The ~~individual~~estimated ~~stockholder~~NAV ~~but~~per ~~rather~~share isalso ~~based~~does onnot ~~total~~take ~~distributions~~into ~~paid~~account onestimated ~~all~~disposition ~~outstanding~~costs ~~shares~~and ~~relative~~fees tofor ~~total~~real ~~gross~~estate ~~investment~~properties ~~amount~~or ~~invested~~debt byprepayment ~~all~~penalties ~~stockholders.~~that ~~Accordingly,~~could itapply isupon ~~not~~the ~~necessary~~prepayment ~~for~~of ~~each~~certain of ~~our~~the ~~stockholders~~Company’s todebt ~~have~~obligations, ~~received~~the ~~any~~impact ~~minimum~~of ~~return~~restrictions inon ~~order~~the ~~for~~assumption ~~the~~of ~~Advisor~~debt toor ~~receive~~swap ~~the~~breakage ~~subordinated~~fees ~~incentive~~that ~~fee.~~may Inbe ~~fact,~~incurred ifupon the ~~Advisor~~termination isof ~~entitled~~certain of the Company’s swaps prior to ~~receive~~expiration. ~~the~~The ~~subordinated~~estimated ~~incentive~~NAV ~~fee,~~per ~~the~~share ~~returns~~does ofnot ~~our~~take ~~stockholders~~into ~~will~~consideration ~~differ,~~acquisition-related costs and ~~some~~financing ~~may~~costs berelated ~~less~~to ~~than~~future ~~a 7~~acquisitions.0% ~~per~~As ~~year~~of ~~cumulative~~September 30, ~~noncompounded~~2019, ~~return. This~~the ~~fee~~Company ishad ~~payable~~no ~~only~~potentially ~~while~~dilutive wesecurities ~~are~~outstanding ~~not~~that ~~listed~~would onimpact anthe ~~exchange~~estimated NAV per share of the Company’s common stock.

~~Subordinated~~The ~~Incentive~~Company’s ~~Fee. Upon~~estimated aNAV ~~merger~~per orshare ~~listing~~takes ofinto ~~our~~consideration ~~common~~any ~~stock~~potential onliability arelated ~~national~~to ~~securities~~a ~~exchange,~~subordinated weparticipation ~~will~~in ~~pay~~cash flows the Advisor anis ~~incentive~~entitled ~~fee.~~to ~~Upon~~upon ameeting ~~listing~~certain ~~this~~stockholder ~~fee~~return ~~will~~thresholds ~~equal~~in ~~15%~~accordance ofwith the ~~amount~~Company’s byadvisory ~~which~~agreement. ~~(i)~~For ~~the~~purposes ~~market value~~ of ~~our~~determining ~~outstanding stock plus~~ the ~~total~~estimated ofNAV ~~all~~per ~~distributions~~share, ~~paid by us to stockholders from inception until~~ the ~~date~~Advisor ~~market~~calculated ~~value is determined (regardless of~~ the ~~source~~potential ~~used~~liability related to ~~fund~~this ~~such~~incentive ~~distributions~~fee ~~and~~based ~~including~~on ~~distributions that may constitute~~ a ~~return~~hypothetical liquidation of ~~capital for federal income tax purposes and excluding any stock dividend) exceeds (ii)~~ the ~~sum of our stockholders~~Company’s ~~gross~~assets ~~investment~~and ~~amount,~~liabilities ~~which~~at istheir ~~the~~estimated ~~amount~~fair ~~calculated by multiplying the total number of shares purchased by stockholders by the issue price~~values, ~~reduced~~after byconsidering the ~~total~~impact ~~number~~ of ~~shares~~any ~~repurchased~~potential byclosing uscosts ~~(excluding~~and ~~shares~~fees ~~received~~related asto ~~a stock dividend which we subsequently repurchased) multiplied by~~ the ~~weighted~~disposition ~~average issue price~~ of ~~the~~real ~~shares~~estate ~~sold in the primary offering~~properties, and ~~the~~determined ~~amount~~that ofthere ~~cash~~would ~~flow~~be ~~necessary~~no toliability ~~generate~~related ato ~~7.0% per year cumulative, noncompounded return on our stockholders’ gross investment amount from our inception through~~ the ~~date~~subordinated ~~the~~participation ~~market~~in ~~value~~cash ~~is determined~~flows.

Upon a merger this fee will equal 15% of the amount by which (i) the merger consideration amount plus the total of all distributions paid or declared by us to stockholders from inception until the closing of the merger (regardless of the source used to fund such distributions and including distributions that may constitute a return of capital for federal income tax purposes and excluding any stock dividend) exceeds (ii) the sum of our stockholders’ gross investment amount, which is the amount calculated by multiplying the total number of shares purchased by stockholders by the issue price, reduced by the total number of shares repurchased by us (excluding shares received as a stock dividend which we subsequently repurchased) multiplied by the weighted average issue price of the shares sold in the primary offering, and the amount necessary to generate a 7.0% per year cumulative, noncompounded return on our stockholders’ gross investment amount from our inception through the closing of the merger.Methodology

~~Subordinated~~The ~~Performance~~Company’s ~~Fee~~goal ~~Due~~for ~~Upon Termination. Upon termination of~~ the ~~Advisory~~valuation ~~Agreement,~~was ~~the~~to ~~Advisor~~arrive ~~may~~at ~~be entitled to~~ a ~~termination~~reasonable ~~fee~~and ifsupportable ~~(based~~estimated ~~upon~~NAV anper ~~independent~~share, ~~appraised~~using ~~value~~a ofprocess ~~the~~that ~~portfolio)~~was ~~the~~designed ~~Advisor would have been entitled~~ to abe ~~subordinated participation~~ in ~~net~~compliance ~~cash~~with ~~flows had~~ the ~~portfolio~~IPA ~~been~~Valuation ~~liquidated~~Guidelines onand ~~the~~using ~~termination~~what ~~date. The termination fee would be payable in~~ the ~~form~~Company ofand ~~a non interest-bearing promissory note that becomes due only upon~~ the ~~sale~~Advisor ofdeemed ~~one~~to orbe ~~more~~appropriate ~~assets~~valuation ormethodologies ~~upon~~and ~~maturity or payoff of our debt investments~~assumptions. The ~~fee~~following is ~~payable~~a ~~solely~~summary ~~from~~of the ~~proceeds~~valuation ~~from the sale, maturity or payoff of an asset~~ and ~~future~~appraisal ~~asset sales~~methodologies, ~~maturities~~assumptions ~~or payoffs,~~ and ~~all~~estimates ~~of such proceeds must be~~ used to ~~repay~~value the ~~promissory~~Company’s ~~note~~assets until it is fully repaid. The amount of the termination fee would be 15% of the amount by which (i) the hypothetical liquidation proceeds as determined by an independent third-party plus distributions paid exceed (ii) the amount necessary to provide investors with a return of their net capital contributions and a 7.0% per year cumulative, noncompounded return from inception through the termination date; however, the agreement does not require that the investors actually have received such return prior to issuance of the promissory note or payments under it. liabilities:

~~The~~Real 7.0% per year cumulative, noncompounded return on gross investment amount is calculated on a daily basis. In making this calculation, gross investment amount is determined for each day during the period for which the 7.0% per year cumulative, noncompounded return is being calculated, including a daily adjustment to reflect shares repurchased by us (excluding shares received as a stock dividend which we subsequently repurchased). In addition, gross investment amount is reduced by the following: (i) distributions from net sales proceeds, (ii) distributions from net financing proceeds, and (iii) distributions paid from cash flow from operations in excess of a cumulative, noncompounded, annual return of 7.0%.Estate

~~Gross~~Independent ~~investment~~Valuation amount is only reduced as described above; it is not reduced simply because a distribution constitutes a return of capital for federal income tax purposes. The 7.0% per year cumulative, noncompounded return is not based on the return provided to any individual stockholder but rather is based on total distributions paid on all outstanding shares relative to total gross investment amount invested by all stockholders. Accordingly, it is not necessary for each of our stockholders to have received any minimum return in order for the Advisor to receive the subordinated incentive fee. In fact, if the Advisor is entitled to receive the subordinated incentive fee, the returns of our stockholders will differ, and some may be less than a 7.0% per year cumulative, noncompounded return.Firm

Duff & Phelps⁽¹⁾ was selected by the Advisor and approved by the Company’s conflicts committee and board of directors to appraise each of the Appraised Properties. Duff & Phelps is engaged in the business of appraising commercial real estate properties and is not affiliated with the Company or the Advisor. The compensation the Company paid to Duff & Phelps was based on the scope of work and not on the appraised values of the Appraised Properties. The appraisals were performed in accordance with the Code of Ethics and the Uniform Standards of Professional Appraisal Practice, or USPAP, the real estate appraisal industry standards created by The Appraisal Foundation, as well as the requirements of the state where each real property is located. Each appraisal was reviewed, approved and signed by an individual with the professional designation of MAI (Member of the Appraisal Institute). The use of the reports is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives.

Duff & Phelps collected all reasonably available material information that it deemed relevant in appraising the Appraised Properties. Duff & Phelps obtained property-level information from the Advisor, including (i) property historical and projected operating revenues and expenses; (ii) property lease agreements; and (iii) information regarding recent or planned capital expenditures. Duff & Phelps reviewed and relied in part on the property-level information provided by the Advisor and considered this information in light of its knowledge of each property’s specific market conditions.

_____________________

⁽¹⁾ Duff & Phelps is actively engaged in the business of appraising commercial real estate properties similar to those owned by the Company in connection with public securities offerings, private placements, business combinations and similar transactions. The Company engaged Duff & Phelps to prepare appraisal reports for each of the Appraised Properties and Duff & Phelps received fees upon the delivery of such reports. In addition, the Company has agreed to indemnify Duff & Phelps against certain liabilities arising out of this engagement. In the three years prior to the date of this filing, Duff & Phelps and its affiliates have provided a number of commercial real estate, appraisal, valuation and financial advisory services for the Company’s affiliates and have received fees in connection with such services. Duff & Phelps and its affiliates may from time to time in the future perform other commercial real estate, appraisal, valuation and financial advisory services for the Company and the Company’s affiliates in transactions related to the properties that are the subjects of the appraisals, so long as such other services do not adversely affect the independence of the applicable Duff & Phelps appraiser as certified in the applicable appraisal report.

~~ITEM~~In 5conducting its investigation and analyses, Duff & Phelps took into account customary and accepted financial and commercial procedures and considerations as it deemed relevant.02 ~~DEPARTURE~~Although OFDuff ~~DIRECTORS~~& ORPhelps ~~CERTAIN~~reviewed ~~OFFICERS;~~information ~~ELECTION~~supplied OFor ~~DIRECTORS;~~otherwise ~~APPOINTMENT~~made OFavailable ~~CERTAIN~~by ~~OFFICERS;~~the ~~COMPENSATORY~~Company ~~ARRANGEMENTS~~or OFthe ~~CERTAIN~~Advisor ~~OFFICERS~~for reasonableness, it assumed and relied upon the accuracy and completeness of all such information and of all information supplied or otherwise made available to it by any other party and did not independently verify any such information. With respect to operating or financial forecasts and other information and data provided to or otherwise reviewed by or discussed with Duff & Phelps, Duff & Phelps assumed that such forecasts and other information and data were reasonably prepared in good faith on bases reflecting the best currently available estimates and judgments of the Company’s management, board of directors and/or the Advisor. Duff & Phelps relied on the Company or the Advisor to advise it promptly if any information previously provided became inaccurate or was required to be updated during the period of its review.

~~Resignation~~In performing its analyses of ~~Officers~~the Appraised Properties, Duff & Phelps made numerous other assumptions as of various points in time with respect to industry performance, general business, economic and regulatory conditions and other matters, many of which are beyond its and the Company’s control, as well as certain factual matters. For example, unless specifically informed to the contrary, Duff & Phelps assumed that the Company had clear and marketable title to each of the Appraised Properties, that no title defects existed, that any improvements were made in accordance with law, that no hazardous materials were present or had been present previously, that no deed restrictions existed, and that no changes to zoning ordinances or regulations governing use, density or shape were pending or being considered. Furthermore, Duff & Phelps’ analyses, opinions and conclusions were necessarily based upon market, economic, financial and other circumstances and conditions existing as of or prior to the date of the appraisals, and any material change in such circumstances and conditions may affect Duff & Phelps’ analyses and conclusions. Duff & Phelps’ appraisal reports contain other assumptions, qualifications and limitations that qualify the analyses, opinions and conclusions set forth therein. Furthermore, the prices at which the Appraised Properties may actually be sold could differ from their appraised values.

OnAlthough ~~October~~Duff ~~31,~~& ~~2019~~Phelps considered any comments to its appraisal reports received from the Company or the Advisor, ~~Jeffrey~~the Kappraised values of the Appraised Properties were determined by Duff & Phelps. The ~~Waldvogel~~appraisal ~~notified~~reports for the ~~Board~~Appraised ofProperties ~~his~~are ~~resignation~~addressed assolely ~~Secretary~~to ~~and~~the ~~Treasurer~~Company to assist in the determination of the estimated NAV per share of the Company’s ~~effective~~common ~~immediately~~stock. The appraisal reports are not addressed to the public and ofmay ~~his~~not ~~resignation~~be asrelied ~~Chief~~upon ~~Financial~~by ~~Officer~~any other person to establish an estimated NAV per share of the Company’s ~~effective~~common ~~immediately~~stock ~~following~~and ~~the~~do ~~filing~~not constitute a recommendation to any person to purchase or sell any shares of the Company’s ~~Quarterly~~common ~~Report~~stock. onIn ~~Form 10~~preparing its appraisal reports, Duff & Phelps did not solicit third-Qparty indications of interest for the ~~period~~Appraised ~~ending~~Properties ~~September 30~~and did not, ~~2019~~and ~~(the~~was ~~“Third~~not ~~Quarter~~requested 10to, solicit third-~~Q”)~~party indications of interest for the Company’s common stock in connection with possible purchases thereof or the ~~Securities~~acquisition ~~and~~of ~~Exchange~~all ~~Commission~~or (any part of the ~~“SEC”)~~Company. ~~Also~~ onWhile ~~October~~Duff ~~31,~~& ~~2019,~~Phelps ~~Stacie~~is K.responsible ~~Yamane~~for ~~notified~~providing appraisals of the ~~Board~~Appraised ofProperties, ~~her~~Duff ~~resignation~~& asPhelps ~~Chief~~is ~~Accounting~~not ~~Officer~~responsible offor, ~~the~~did ~~Company~~not ~~immediately~~calculate, ~~following~~and did not participate in, the ~~filing~~determination of the ~~Third~~Company’s ~~Quarter~~estimated ~~10-Q~~NAV ~~with~~per ~~the SEC~~share.

~~Appointment~~The foregoing is a summary of ~~New~~the ~~Chief~~standard ~~Financial~~assumptions, ~~Officer~~qualifications and limitations that generally apply to Duff & Phelps’ appraisal reports. All of the Duff & Phelps appraisal reports, including the analyses, opinions and conclusions set forth in such reports, are qualified by the assumptions, qualifications and limitations set forth in the respective appraisal reports.

OnReal ~~October~~Estate 31, 2019, the Board appointed Michael A. Bender to serve as Executive Vice President, Treasurer, Secretary and Chief Financial Officer-Elect of the Company effective as of November 1, 2019, and as Chief Financial Officer effective immediately following the filing by the Company of the Third Quarter 10-Q with the SEC. As Chief Financial Officer, Mr. Bender will serve as principal financial officer and principal accounting officer for the Company. Mr. Bender was appointed to the same positions with respect to Pacific Oak Strategic Opportunity REIT, Inc. by its board of directors effective November 1, 2019.Valuation

~~Mr. Bender,~~As ~~age 60, has served as Chief Financial Officer~~ of ~~the~~October ~~Advisor since July 2019. Prior to joining the Advisor in 2019~~31, ~~Mr. Bender was self-employed as a private consultant primarily engaged in commercial real estate finance from January 2017 to July~~ 2019~~. From January 2016 to January 2017~~, ~~Mr. Bender served as Chief Financial Officer for Kamal Osman Janjoom Group LLC, a Dubai-based retail company focused in~~ the ~~Middle~~Company ~~East,~~owned ~~where~~two hehotel ~~was responsible for all aspects of accounting~~properties, ~~reporting,~~four ~~control,~~office ~~corporate finance and treasury. From October 2007 to January 2016~~properties, ~~Mr.~~one ~~Bender~~apartment ~~was~~building ~~Chief Financial Officer~~ and ~~Chief~~one ~~Accounting~~retail ~~Officer~~development ~~for Spirit Realty Capital, Inc., a NYSE-traded commercial~~ property ~~REIT~~. ~~During~~ ~~his eight years at Spirit Realty Capital, Mr. Bender was in charge of accounting, reporting, control, corporate finance and treasury.~~

~~Before~~The ~~joining~~Company ~~Spirit~~obtained ~~Realty~~appraisals ~~Capital~~for two hotel properties, ~~Inc.~~three inoffice ~~2007~~properties, Mrone apartment building and one retail development property. ~~Bender~~As ~~held~~of ~~positions~~October ~~including~~31, ~~Assistant~~2019, ~~Corporate~~the ~~Controller~~total ~~for~~appraised ~~Allied~~value ~~Waste~~of the consolidated real estate properties, ~~Inc.~~excluding 2200 Paseo Verde, ~~Vice~~as ~~President~~provided by Duff & Phelps using the appraisal methods described below was $638.2 million. The estimated value of ~~Global~~2200 ~~External~~Paseo ~~Reporting~~Verde, ~~for~~based ~~American~~on ~~Express~~the ~~Corporation~~sales price less selling credits, ~~Chief~~was ~~Financial~~$18.7 ~~Officer~~million. ~~for~~Based ~~FINOVA~~on ~~Realty~~the ~~Capital~~appraisal and ~~senior~~valuation ~~manager~~methodologies ~~for~~described ~~Deloitte~~above, &the ~~Touche~~total estimated value of the Company’s consolidated real estate properties was $656.9 million. The total cost basis of these properties as of October 31, ~~LLP~~2019 was $570.1 Mrmillion. ~~Bender~~This ~~earned~~amount aincludes ~~Bachelor~~the acquisition cost of ~~Science~~$492.5 ~~Degree~~million, $60.5 million in ~~Accounting~~capital expenditures, leasing commissions and aother ~~Master~~capitalized ofcosts ~~Business~~and ~~Administration~~$17.0 ~~from~~million ~~Arizona~~of ~~State~~acquisition ~~University~~fees and expenses. HeThe istotal aestimated ~~Certified~~value ~~Public~~of ~~Accountant~~the Company’s consolidated real estate properties, compared to the total purchase price (exclusive of acquisition fees and acquisition expenses) of the Company’s consolidated real estate properties plus subsequent capital expenditures, leasing commissions and other capitalized costs in the Company’s consolidated real estate properties through October 31, 2019, results in an overall increase in the value of the Appraised Properties of approximately 18.8%.

ITEM 5.03 AMENDMENTS TO ARTICLES OF INCORPORATION OR BYLAWS; CHANGE IN FISCAL YEAR.

Articles of Amendment (Name Change)

On November 1, 2019, Articles of Amendment changing our name from “KBS Strategic Opportunity REIT II, Inc.” to “Pacific Oak Strategic Opportunity REIT II, Inc.” were filed and accepted for record by the State Department of Assessment and Taxation of the State of Maryland, and thereby became effective as part of our charter. These Articles of Amendment have been filed as an exhibit to this Current Report on Form 8-K.

Third Amended and Restated Bylaws

Effective as of November 1, 2019, we amended our bylaws by adopting the Third Amended and Restated Bylaws. The only change in the Third Amended and Restated Bylaws is to reflect our new name. The Third Amended and Restated Bylaws have been filed as an exhibit to this Current Report on Form 8-K.

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS

(d)		Exhibits
Ex.		Description
3.1		Articles of Amendment
3.2		Third Amended and Restated Bylaws

Income-Generating Properties

As of October 31, 2019, the Appraised Properties were appraised by Duff & Phelps and consisted of two hotel properties, three office properties and one apartment building. Duff & Phelps appraised each of these income-generating properties using various methodologies including the direct capitalization approach, discounted cash flow analysis and sales comparison approach and relied primarily on 10-year discounted cash flow analyses for the final appraisal of the these properties. Duff & Phelps calculated the discounted cash flow value of each of these income-generating properties using property-level cash flow estimates, terminal capitalization rates and discount rates that fall within ranges it believes would be used by similar investors to value the properties, based on recent comparable market transactions adjusted for unique properties and market-specific factors.

The total appraised value of these income-generating properties using the appraisal methodologies described above was $591.0 million, compared to a total cost basis of $497.9 million. This amount includes the acquisition price of $431.2 million, $52.1 million in capital expenditures, leasing commissions and tenant improvements and $14.6 million of acquisition fees and expenses.

The following table summarizes the key assumptions that Duff & Phelps used in the discounted cash flow analyses to arrive at the appraised value of these income-generating properties:



	Range in Values	Weighted-Average Basis
Terminal capitalization rate	4.50% to 7.50%	5.99%
Discount rate	6.00% to 9.50%	7.11%
Net operating income compounded annual growth rate ⁽¹⁾	2.18% to 19.64%	5.28%

_____________________

⁽¹⁾ The net operating income compounded annual growth rates (“CAGRs”) reflect both the contractual and market rents and reimbursements (in cases where the contractual lease period is less than the valuation period of the property) net of expenses over the valuation period. The range of CAGRs shown is the constant annual rate at which the net operating income is projected to grow to reach the net operating income in the final year of the hold period for each of the properties.

While the Company believes that Duff & Phelps’ assumptions and inputs are reasonable, a change in these assumptions and inputs would significantly impact the appraised value of the income-generating properties and thus, the Company’s estimated NAV per share. The table below illustrates the impact on the Company’s estimated NAV per share; including an adjustment to non-controlling interest, if the terminal capitalization rates or discount rates Duff & Phelps used to appraise the income generating properties were adjusted by 25 basis points, assuming all other factors remain unchanged. Additionally, the table below illustrates the impact on the Company’s estimated NAV per share if these terminal capitalization rates or discount rates were adjusted by 5% in accordance with the IPA Valuation Guidelines, assuming all other factors remain unchanged:



	Increase (Decrease) on the Estimated NAV per Share due to
	Decrease of 25 basis points		Increase of 25 basis points			Decrease of 5%		Increase of 5%
Terminal capitalization rate	$	0.41	$	(0.40	)	$	0.48	$	(0.46	)
Discount Rate		0.28		(0.29	)		0.39		(0.40	)

Development Property

As of October 31, 2019, the Company had invested in a retail development project. Duff & Phelps considered various valuation methodologies including the cost approach, income capitalization approach and sales comparison approach and relied on a sales comparison approach for the final appraisal of this investment. Duff & Phelps gathered data on reasonably substitutable properties and adjusted for unique property and market-specific factors to arrive at a market value. The appraised value of the Company’s retail development project using the appraisal methodology described above was $47.2 million, compared to a total cost basis, including acquisition fees and expenses, capital expenditures and other capitalized costs through October 31, 2019 of $56.0 million.

Finally, a 1% increase in the appraised value of the Appraised Properties would result in an increase of $0.17 to the Company’s estimated NAV per share and a 1% decrease in the appraised value of the Appraised Properties would result in a decrease of $0.18 to the Company’s estimated NAV per share, assuming all other factors remain unchanged.

Real Estate Equity Securities

As of September 30, 2019, the Company owned an investment in real estate equity securities. The estimated value of the Company’s real estate equity securities is equal to the GAAP fair value disclosed in the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2019, which also equals the book value of the real estate equity securities in accordance with GAAP. As of September 30, 2019, the Company owned 1,160,591 shares of Franklin Street Properties Corp. The fair values of these real estate equity securities were based on quoted prices in an active market on a major stock exchange. As of September 30, 2019, the fair value and carrying value of the Company’s real estate equity securities was $9.8 million.

Investment in Unconsolidated Entity

As of September 30, 2019, the Company had originated a participating loan facility in an amount up to €2.6 million ($3.0 million as of September 30, 2019). As September 30, 2019, the Company had funded the participating loan facility €2.1 million ($2.4 million as of September 30, 2019). The proceeds were used to fund a 5% general partner interest in a joint venture acquiring a portfolio of light industrial properties located throughout France. Under the terms of the participating loan facility, the Company participates in the expected residual profits of the portfolio and the terms are structured in a manner such that the risks and rewards of the arrangement are similar to those associated with an investment in a real estate joint venture. Accordingly, the participating loan facility is accounted for under the equity method of accounting. The estimated value of the Company’s investment in this participating loan facility was estimated by the Advisor based on its estimate of the final distribution to be received by the Company in the next one to two quarters, pursuant to the terms of the participating loan facility. The fair value and carrying value of the Company’s investment in the participating loan facility is $0.5 million and $0.5 million, respectively.

Non-controlling Interest

The Company has an ownership interest in five consolidated joint ventures as of September 30, 2019. As the Company consolidates these joint ventures, the entire amount of the underlying assets and liabilities of each joint venture is reflected at fair value in the corresponding line items of the estimated NAV per share determination. Given this and the October 31, 2019 appraisal date for the real estate, the Company also must consider the fair value of any non-controlling interest liability as of October 31, 2019. In determining this fair value, the Company considered the various profit participation thresholds in each of the joint ventures that must be measured in determining the fair value of the Company’s non-controlling interest liability. The Company used the real estate appraisals provided by Duff & Phelps and calculated the amount that the joint venture partners would receive in a hypothetical liquidation of the underlying real estate properties (including all current assets and liabilities) at their current appraised values and the payoff of any related debt at its fair value, based on the profit participation thresholds contained in the joint venture agreements. The estimated payment to the joint venture partners was then reflected as the non-controlling interest liability in the Company’s determination of the Company’s estimated NAV per share.

Notes Payable

The estimated values of the Company’s notes payable are equal to the GAAP fair values disclosed in the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2019, but do not equal the book value of the loans in accordance with GAAP. The Advisor estimated the values of the Company’s notes payable using a discounted cash flow analysis. The discounted cash flow analysis was based on projected cash flow over the remaining loan terms, including extensions the Company expects to exercise, and management’s estimates of current market interest rates for instruments with similar characteristics, including remaining loan term, loan-to-value ratio and type of collateral.

As of September 30, 2019, the GAAP fair value and the carrying value of the Company’s notes payable were $351.8 million and $347.5 million, respectively. The weighted-average discount rate applied to the future estimated debt payments, was approximately 4.56%. The Company’s notes payable have a weighted-average remaining term of 1.9 years.

The table below illustrates the impact on the Company’s estimated NAV per share if the discount rates the Advisor used to value the Company’s notes payable were adjusted by 25 basis points, assuming all other factors remain unchanged. Additionally, the table below illustrates the impact on the Company’s estimated NAV per share if these discount rates were adjusted by 5% in accordance with the IPA Valuation Guidelines, assuming all other factors remain unchanged:



	Increase (Decrease) on the Estimated NAV per Share due to
	Decrease of 25 basis points			Increase of 25 basis points		Decrease of 5%			Increase of 5%
Discount rate	$	(0.04	)	$	0.04	$	(0.03	)	$	0.03

Other Assets and Liabilities

The carrying values of a majority of the Company’s other assets and liabilities are considered to equal their fair value due to their short maturities or liquid nature. Certain balances, such as straight-line rent receivables, lease intangible assets and liabilities, deferred financing costs, unamortized lease commissions and unamortized lease incentives, have been eliminated for the purpose of the valuation due to the fact that the value of those balances was already considered in the valuation of the related asset or liability. The Advisor has also excluded redeemable common stock as temporary equity does not represent a true liability to the Company and the shares that this amount represents are included in the Company’s total outstanding shares of common stock for purposes of determining the Company’s estimated NAV per share.

Limitations of Estimated NAV per Share

As mentioned above, the Company is providing this estimated NAV per share to assist broker dealers that participated in the Company’s initial public offering in meeting their customer account statement reporting obligations. This valuation was performed in accordance with the provisions of the IPA Valuation Guidelines. As with any valuation methodology, the methodologies used are based upon a number of estimates and assumptions that may not be accurate or complete. Different parties with different assumptions and estimates could derive a different estimated NAV per share of the Company’s common stock and this difference could be significant. The estimated NAV per share is not audited and does not represent the fair value of the Company’s assets less the fair value of the Company’s liabilities according to GAAP.

Accordingly, with respect to the Company’s estimated NAV per share, the Company can give no assurance that:


•	a stockholder would be able to resell his or her shares at the estimated NAV per share;


•	a stockholder would ultimately realize distributions per share equal to the estimated NAV per share upon liquidation of the Company’s assets and settlement of its liabilities or a sale of the company;


•	the Company’s shares of common stock would trade at the estimated NAV per share on a national securities exchange;


•	a third party would offer the estimated NAV per share in an arm’s-length transaction to purchase all or substantially all of the Company’s shares of common stock;


•	another independent third-party appraiser or third-party valuation firm would agree with the Company’s estimated NAV per share; or


•	the methodology used to determine the Company’s estimated NAV per share would be acceptable to FINRA for compliance with ERISA reporting requirements.

Further, the estimated NAV per share is based on the estimated value of the Company’s assets less the estimated value of the Company’s liabilities, divided by the number of shares outstanding, all as of September 30, 2019, after giving effect to the Adjustments. As of September 30, 2019, there were 17,934,013 and 12,255,327 shares of Class A and Class T common stock issued and outstanding, respectively. The value of the Company’s shares will fluctuate over time in response to developments related to the performance of individual assets in the Company’s portfolio, the management of those assets and in response to the real estate and finance markets. The estimated NAV per share does not reflect a discount for the fact that the Company is externally managed, nor does it reflect a real estate portfolio premium/discount versus the sum of the individual property values. The estimated NAV per share does not take into account estimated disposition costs and fees for real estate properties that are not held for sale or under contract for sale, debt prepayment penalties that could apply upon the prepayment of certain of the Company’s debt obligations or the impact of restrictions on the assumption of debt. The estimated NAV per share does consider any participation or incentive fees that would be due to the Advisor based on the aggregate net asset value of the Company which would be payable in a hypothetical liquidation of the Company as of the valuation date in accordance with the terms of the Company’s advisory agreement. The Company currently expects to utilize the Advisor and/or an independent valuation firm to update the estimated NAV per share no later than December 2020.

Dividend Reinvestment Plan

Pursuant to the Company’s dividend reinvestment plan, participants in the dividend reinvestment plan will acquire shares of the Company’s common stock at a price equal to the estimated NAV per share. As such, commencing on the next dividend reinvestment plan purchase date, which is January 2, 2020, participants will acquire shares of the Company’s Class A and Class T common stock pursuant to the Company’s dividend reinvestment plan at a price of $10.25 per share.

If a participant wishes to terminate participation in the Company’s dividend reinvestment plan effective for the January 2, 2020 purchase date, participants must notify the Company in writing of such decision, and the Company must receive the notice by the close of business on December 26, 2019.

Notice of termination should be sent by facsimile to (833) 258-6305 or by mail to:



Regular Mail Pacific Oak Strategic Opportunity REIT II, Inc. c/o DST Systems, Inc. PO Box 219183 Kansas City, MO 64121-9183	Overnight Address Pacific Oak Strategic Opportunity REIT II, Inc. c/o DST Systems, Inc. 430 W. 7th Street Kansas City, MO 64105-1407

Share Redemption Program

In accordance with the Company’s share redemption program, the redemption price for shares eligible for redemption will be calculated based upon the most recent estimated NAV per share. In accordance with the Company’s share redemption program, special redemptions are made at a price per share equal to the most recent estimated NAV per share as of the applicable redemption date. The price at which the Company will redeem all other shares eligible for redemption is as follows:


•	For those shares held by the redeeming stockholder for at least one year, 92.5% of the Company’s most recent estimated NAV per share as of the applicable redemption date;


•	For those shares held by the redeeming stockholder for at least two years, 95.0% of the Company’s most recent estimated NAV per share as of the applicable redemption date;


•	For those shares held by the redeeming stockholder for at least three years, 97.5% of the Company’s most recent estimated NAV per share as of the applicable redemption date; and


•	For those shares held by the redeeming stockholder for at least four years, 100% of the Company’s most recent estimated NAV per share as of the applicable redemption date.

The Company redeems shares on the last business day of each month. Effective for the December 31, 2019 redemption date, the redemption price for all stockholders will be calculated based on the estimated NAV per share. For a stockholder’s shares to be eligible for redemption in a given month or to withdraw a redemption request, the Company must receive a written notice from the stockholder or from an authorized representative of the stockholder in good order and on a form approved by the Company at least five business days before the redemption date, or by December 23, 2019 in the case of the December 31, 2019 redemption date.

Historical Estimated NAV per Share

The historical reported estimated NAV per share of the Company’s common stock approved by the Company’s board of directors is set forth below:



Estimated NAV per Share	Effective Date of Valuation	Filing with the Securities and Exchange Commission
$9.65	December 6, 2018	Current Report on Form 8-K, filed December 11, 2018
$9.05	June 6, 2017	Current Report on Form 8-K, filed June 7, 2017

Forward-Looking Statements

The foregoing includes forward-looking statements within the meaning of the Federal Private Securities Litigation Reform Act of 1995. The Company intends that such forward-looking statements be subject to the safe harbors created by Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements include statements regarding the intent, belief or current expectations of the Company and members of its management team, as well as the assumptions on which such statements are based, and generally are identified by the use of words such as “may,” “will,” “seeks,” “anticipates,” “believes,” “estimates,” “expects,” “plans,” “intends,” “should” or similar expressions. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date they are made. The Company undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time, unless required by law. Such statements are subject to known and unknown risks and uncertainties which could cause actual results to differ materially from those contemplated by such forward-looking statements. The Company makes no representation or warranty (express or implied) about the accuracy of any such forward-looking statements. These statements are based on a number of assumptions involving the judgment of management. The appraisal methodology for the Appraised Properties assumes the properties realize the projected net operating income and expected exit cap rates and that investors would be willing to invest in such properties at yields equal to the expected discount rates. Though the appraisals of the Appraised Properties, with respect to Duff & Phelps, and the valuation estimates used in calculating the estimated NAV per share, with respect to the Advisor and the Company, are the respective party’s best estimates as of September 30, 2019 or December 17, 2019, as applicable, the Company can give no assurance in this regard. Even small changes to these assumptions could result in significant differences in the appraised values of the Appraised Properties and the estimated NAV per share. These statements also depend on factors such as: future economic, competitive and market conditions; the Company’s ability to maintain occupancy levels and rental rates at its real estate properties; and other risks identified in Part I, Item IA of the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, and Part II, Item 1A of the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2019, each as filed with the SEC. Actual events may cause the value and returns on the Company’s investments to be less than that used for purposes of the Company’s estimated NAV per share.

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS



(d)		Exhibits

Ex.		Description

99.1		Consent of Duff & Phelps, LLC

99.2		Presentation to Stockholders

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	PACIFIC OAK STRATEGIC OPPORTUNITY REIT II, INC.
Dated: November 1, 2019	BY:	/s/ Jeffrey K. Waldvogel
Dated: December 19, 2019	BY:	/s/ Michael A. Bender
		Jeffrey K. Waldvogel
		Michael A. Bender
		Chief Financial Officer
		Chief Financial Officer, Treasurer and Secretary

Filing Compare · Pacific Oak Strategic Opportunity REIT II, Inc.