Company: NXDT
Filing Date: 2025-01-21
Form Type: 424B3
Source: 0001437749-25-001494
Chunk: 39

Company: NEXPOINT DIVERSIFIED REAL ESTATE TRUST
Filing Date: 2025-01-21
Form: 424B3
Chunk 39
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 B Units or Units will be issuable upon conversion of the COVID Loans.

The Board, having undertaken a thorough review of, and having: (i) considered the terms of the Amendments to the COVID Loans; (ii) considered the need to comply with the requirements of the TSXV in order to maintain a listing for the Units, and (iii) consulted with its legal advisors, concluded that the Amendments are in the best interests of the REIT and agreed to pursue the approval of the Amendments. The REIT has obtained the requisite approval from the entities that provided the COVID Loans to implement the Amendments. However, as the Amendments constitute a “related party transaction” under MI 61-101, the REIT must receive “minority approval” of the Amendments under MI 61-101, as more particularly described below. If the Amendments are not approved at the Meeting, the REIT will engage with the TSXV to seek alternative solutions to the satisfy the TSXV listing requirements; however, there can be no assurance that a satisfactory solution will be found, and if a solution is not found, the TSXV may halt trading in the Units, suspend trading in the Units and/or initiate a delisting review of the REIT’s Units as, absent the Amendments, the REIT would not be in compliance with TSXV listing requirements.

The REIT is a reporting issuer in certain of the provinces of Canada and, accordingly, is subject to applicable securities laws of such provinces, including MI 61-101. MI 61-101 is intended to regulate certain transactions which raise the potential for conflicts of interest, including related party transactions, to ensure that all securityholders of an issuer are treated in a manner that is fair and that is perceived to be fair.

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The Amendments constitute a “related party transaction” within the meaning of MI 61-101, as the Amendments have the effect of amending the terms of the COVID Loans, which are securities of the REIT beneficially owned or over which control is exercised by Mr. Dondero (a “related party” of the REIT because of the fact that Mr. Dondero beneficially owns or controls Units of the REIT that carry more than 10% of the voting rights attached to all of the REIT’s issued and outstanding Units). The Amendments are not subject to the formal valuation requirements of Section 5.4 of MI 61-101, as the Specified Markets Exemption is available