Company: NXDT
Filing Date: 2025-01-21
Form Type: 424B3
Source: 0001437749-25-001494
Chunk: 123

Company: NEXPOINT DIVERSIFIED REAL ESTATE TRUST
Filing Date: 2025-01-21
Form: 424B3
Chunk 123
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 or preventing a change in control of NXDT, including an extraordinary transaction (such as a merger, tender offer or sale of all or substantially all of NXDT’s assets) that might provide a premium price to holders of NXDT’s shares.

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Restrictions on Ownership and Transfer

In order for NXDT to qualify as a real estate investment trust under the Code, NXDT’s shares of beneficial interest must be owned by 100 or more persons during at least 335 days of a taxable year of 12 months (other than the first year for which an election to qualify as a real estate investment trust has been made) or during a proportionate part of a shorter taxable year. Also, not more than 50% of the value of the outstanding shares of NXDT’s shares of beneficial interest may be owned, directly or indirectly, or constructively, by five or fewer individuals (as defined in the Code to include certain entities such as private foundations) at any time during the last half of a taxable year (other than the first year for which an election to be a real estate investment trust has been made). Attribution rules in the Code determine if any individual or entity actually or constructively owns NXDT’s shares for purposes of this ownership limitation. To qualify as a real estate investment trust, we must satisfy certain other requirements as well.

To help insure that we meet these tests, among other purposes, the NXDT Declaration contains restrictions on the acquisition, ownership and transfer of shares of beneficial interest. The relevant sections of the NXDT Declaration provide that, subject to the exceptions described below, no person or entity may own, or be deemed to own, beneficially or by virtue of the applicable constructive ownership provisions of the Code, more than 9.8%, in value or in number of shares, whichever is more restrictive, of the outstanding common shares (the “common share ownership limit”), or 9.8%, in value or in number of shares, whichever is more restrictive, of the aggregate of the outstanding shares of beneficial interest of any class or series (the “aggregate share ownership limit”). We refer to the common share ownership limit and the aggregate share ownership limit collectively as the “ownership limits.”

The constructive ownership rules under the Code are complex and may cause NXDT’s shares of beneficial interest owned beneficially or constructively by a group of related individuals and/or entities to be owned beneficially or constructively by one individual or entity. As a result, the acquisition of less than 9