NOTES AND BONDS PAYABLE

12 Months Ended

Dec. 31, 2020

As of December 31, 2020 and December 31, 2019, the Company’s notes and bonds payable, consisted of the following (dollars in thousands):


	Book Value as of December 31, 2020		Book Value as of December 31, 2019		Contractual Interest Rate as of December 31, 2020 (1)	Interest Rate at December 31, 2020 (1)	Payment Type (3)	Maturity Date (2)
Richardson Portfolio Mortgage Loan	$	35,832	$	36,000	One-Month LIBOR + 2.50%	2.64%	Interest Only	11/01/2021
Park Centre Mortgage Loan	26,185		21,970		One-Month LIBOR + 1.75%	1.89%	Interest Only	06/27/2022
1180 Raymond Mortgage Loan (4)	29,848		30,250		One-Month LIBOR + 2.50% (5)	3.50%	Principal & Interest	12/01/2021
1180 Raymond Bond Payable	5,870		6,080		6.50%	6.50%	Principal & Interest	09/01/2036
Pacific Oak SOR (BVI) Holdings, Ltd. Series A Debentures (6)	181,198		224,746		4.25%	4.25%	(6)	03/01/2023
Pacific Oak SOR (BVI) Holdings, Ltd. Series B Debentures (6)	79,078		—		3.93%	3.93%	(6)	01/31/2026
Crown Pointe Mortgage Loan (4)(7)	53,072		51,171		One-Month LIBOR + 2.60%	2.74%	Interest Only	02/13/2021 (7)
City Tower Mortgage Loan (4)	94,167		89,000		One-Month LIBOR + 1.55%	1.69%	Interest Only	03/05/2021 (8)
The Marq Mortgage Loan	62,257		53,408		One-Month LIBOR + 1.55%	1.69%	Interest Only	06/06/2021
Eight & Nine Corporate Centre Mortgage Loan	47,066		43,880		One-Month LIBOR + 1.60%	1.74%	Interest Only	06/08/2021
Georgia 400 Center Mortgage Loan	59,690		59,690		One-Month LIBOR + 1.55%	1.69%	Interest Only	05/22/2023
PORT Mortgage Loan 1	51,362		51,362		4.74%	4.74%	Interest Only	10/01/2025
PORT Mortgage Loan 2	10,523		10,523		4.72%	4.72%	Interest Only	03/01/2026
PORT Mortgage Loan 3	12,000		—		6.50%	6.50%	Interest Only	03/31/2021
Battery Point Trust Mortgage Loan	38,608		—		One-Month LIBOR + 2.50% (5)	3.50%	Interest Only	03/20/2022
Springmaid Beach Resort Mortgage Loan (9)	57,015		—		One-month LIBOR + 2.25% (9)	5.75%	Principal & Interest	08/10/2022
Q&C Hotel Mortgage Loan	25,000		—		One-month LIBOR + 2.50% (10)	4.50%	Principal & Interest (9)	12/23/2022
Lincoln Court Mortgage Loan (4)	34,416		—		One-month LIBOR + 1.75%	1.89%	Principal & Interest	06/01/2021
Lofts at NoHo Commons Mortgage Loan (11)	74,536		—		One-month LIBOR + 2.18% (11)	3.93%	Interest Only	09/09/2021
210 West 31st Street Mortgage Loan (4)	15,050		—		One-month LIBOR + 3.00%	3.14%	Interest Only	06/16/2021
Oakland City Center Mortgage Loan (12)	96,782		—		One-month LIBOR + 1.75%	1.89%	Principal & Interest	09/01/2022
Madison Square Mortgage Loan (13)	16,822		—		One-month LIBOR + 4.05% (13)	5.05%	Interest Only	10/09/2021
Total Notes and Bonds Payable principal outstanding	1,106,377		678,080
Net (Discount) / Premium on Notes and Bonds Payable (14)	(2,851)		783
Deferred financing costs, net	(4,458)		(5,200)
Total Notes and Bonds Payable, net	$	1,099,068	$	673,663

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(1) Contractual interest rate represents the interest rate in effect under the loan as of December 31, 2020. The interest rate is calculated as the actual interest rate in effect as of December 31, 2020 (consisting of the contractual interest rate and contractual floor rates), using interest rate indices at December 31, 2020, where applicable.

(2) Represents the initial maturity date or the maturity date as extended as of December 31, 2020; subject to certain conditions, the maturity dates of certain loans may be extended beyond the date shown.

(3) Represents the payment type required under the loan as of December 31, 2020. Certain future monthly payments due under this loan also include amortizing principal payments. For more information of the Company’s contractual obligations under its notes and bonds payable, see five-year maturity table below.

(4) The Company’s notes and bond’s payable are generally non-recourse. These mortgage loans have guarantees over certain balances whereby the Company would be required to make guaranteed payments in the event that the Company turned the property over to the lender. The guarantees are typically 25% of the outstanding loan balance. As of December 31, 2020, the guaranteed amount in the aggregate was $67.9 million.

(5) These mortgage loans have a LIBOR floor of 1%.

(6) See “Israeli Bond Financing” below.

(7) Subsequent to December 31, 2020, the Company extended the maturity of the Crown Pointe Mortgage Loan to February 13, 2022.

(8) Subsequent to December 31, 2020, the Company initiated but has not completed the extension of City Tower Mortgage Loan to March 5, 2022.

(9) As of December 31, 2020, $57.8 million had been disbursed to the Company and up to $9.6 million was available for future disbursements, subject to certain terms and conditions contained in the loan documents. The interest rate is variable at the higher of one-month LIBOR + 2.25% or 5.75%.

(10) The interest rate is variable at the higher of one-month LIBOR + 2.5% or 4.5%. Principal payments will commence on January 1, 2022.

(11) As of December 31, 2020 $74.5 million had been disbursed to the Company and up to $1.4 million is available for future disbursements to be used for tenant improvements and leasing commissions, subject to certain terms and conditions contained in the loan documents. The LIBOR rate is variable at the higher of one-month LIBOR or 1.75%.

(12) As of December 31, 2020, $97.1 million had been disbursed to the Company and up to $6.3 million is available for future disbursements to be used for tenant improvements and leasing commissions, subject to certain terms and conditions contained in the loan documents. Beginning October 1, 2020, monthly payments included principal and interest with principal payments of $110,000 or, in the event the Company repays any principal of the loan amount, with principal payments calculated using an amortization schedule of 30 years and an annual interest rate of 6.0%, subject to certain terms and conditions contained in the loan documents.

(13) As of December 31, 2020, $23.8 million had been disbursed to the Company and up to $8.8 million is available for future disbursements to be used for tenant improvements and leasing expenses, subject to certain terms and conditions contained in the loan documents. The Madison Square Mortgage Loan bears interest at a floating rate of 405 basis points over one-month LIBOR, but at no point shall the interest rate be less than 5.05%.

(14) Represents the unamortized premium/discount on notes and bonds payable due to the above- and below-market interest rates when the debt was assumed. The discount/premium is amortized over the remaining life of the notes and bonds payable.

During the years ended December 31, 2020, 2019 and 2018, the Company incurred $29.1 million, $28.8 million and $31.1 million of interest expense, respectively. Included in interest expense for the years ended December 31, 2020, 2019 and 2018, was $3.3 million, $3.6 million and $3.6 million of amortization of deferred financing costs, respectively and $0.6 million, $0.1 million and $0.1 million of amortization of the debt discount / premium for the years ended December 31, 2020, 2019 and 2018, respectively. Additionally, during the years ended December 31, 2020, 2019 and 2018, the Company capitalized $2.9 million, $2.7 million and $2.6 million of interest, respectively, to its investments in undeveloped land.

As of December 31, 2020 and 2019, the Company’s interest payable was $6.2 million and $4.8 million, respectively.

The following is a schedule of maturities, including principal amortization payments, for all notes and bonds payable outstanding as of December 31, 2020 (in thousands):


2021	$	538,050
2022	301,864
2023	120,344
2024	26,629
2025	78,011
Thereafter	41,479
	$	1,106,377

As of March 26, 2020, the Company had a total of $614.2 million of debt obligations scheduled to mature over the next 12 months. The Company have extension options with respect to $383.3 million of the debt obligations outstanding that are scheduled to mature over the next 12 months; however, the Company cannot exercise these options if not then in compliance with certain financial covenants in the loans without making a cash payment and there is no assurance that we will be able to meet these requirements. All of the Company’s debt obligations are generally non-recourse, subject to certain limited guaranty payments, as outlined in the table above, except for the Company’s Series A Debentures and Series B Debentures. The Company plans to utilize available extension options or refinance the notes payable. The Company may also choose to market the properties for sale or may negotiate a turnover of the secured properties back to the related mortgage lender.

The Company’s notes and bonds payable contain various financial debt covenants, including minimum equity requirements and liquidity ratios. As of December 31, 2020, the Company was in compliance with all of these debt covenants.

Israeli Bond Financings

On March 2, 2016, Pacific Oak Strategic Opportunity BVI, a wholly owned subsidiary of the Company, filed a final prospectus with the Israel Securities Authority for a proposed offering of up to 1,000,000,000 Israeli new Shekels of Series A Debentures at an annual interest rate not to exceed 4.25%. On March 1, 2016, Pacific Oak Strategic Opportunity BVI commenced the institutional tender of the Series A Debentures and accepted application for 842.5 million Israeli new Shekels. On March 7, 2016, Pacific Oak Strategic Opportunity BVI commenced the public tender of the Series A Debentures and accepted 127.7 million Israeli new Shekels. In the aggregate, Pacific Oak Strategic Opportunity BVI accepted 970.2 million Israeli new Shekels (approximately $249.2 million as of March 8, 2016) in both the institutional and public tenders at an annual interest rate of 4.25%. Pacific Oak Strategic Opportunity BVI issued the Series A Debentures on March 8, 2016. The terms of the Series A Debentures require five equal annual installment principal payments on March 1st of each year from 2019 to 2023. On March 1, 2019, the Company paid the first principal installment payment of 194.0 million Israeli new Shekels (approximately $53.6 million as of March 1, 2019).

On February 16, 2020, Pacific Oak Strategic Opportunity BVI issued 254.1 million Israeli new Shekels (approximately $74.1 million as of February 16, 2020) of Series B Debentures to Israeli investors pursuant to a public offering registered with the Israel Securities Authority. The Series B Debentures will bear interest at the rate of 3.93% per year. The Series B Debentures have principal installment payments equal to 33.33% of the face amount of the Series B Debentures on January 31st of each year from 2024 to 2026.

The deeds of trust that govern the terms of the Series A Debentures and Series B Debentures contain various financial covenants. As of December 31, 2020, the Company was in compliance with all of these financial debt covenants.