Company: NXDT
Filing Date: 2025-01-21
Form Type: 424B3
Source: 0001437749-25-001494
Chunk: 148

Company: NEXPOINT DIVERSIFIED REAL ESTATE TRUST
Filing Date: 2025-01-21
Form: 424B3
Chunk 148
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 an exemption from backup withholding and the procedures for obtaining such an exemption.

Consequences of the Transaction to Non-U.S. Holders not Participating in a Redemption

Qualification of the Restructuring as an F Reorg

The Restructuring is expected to be treated as an F Reorg. However, there is no assurance that the IRS or any court will agree with this position. Non-U.S. Holders should be aware that the completion of the Transaction is not conditioned on the receipt of an opinion of counsel that the Restructuring (or any other aspect of the Transaction) qualifies as tax-free transactions. Neither the REIT, New NHT nor NXDT has requested or will request a ruling from the IRS with respect to any aspect of the U.S. federal income tax treatment of the Transaction.

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If the Restructuring qualifies as an F Reorg, the treatment of the Restructuring with respect to a Non-U.S. Holder exchanging Units for New NHT Shares generally is expected to correspond to the treatment of the Restructuring with respect to U.S. Holders exchanging Units for New NHT Shares therein (assuming the Restructuring qualifies as an F Reorg).

If the Restructuring does not qualify as an F Reorg, the Restructuring generally will be treated as a taxable sale or exchange of Units by Non-U.S. Holders in exchange for New NHT Shares. In such case, gain realized by a Non-U.S. Holder thereupon generally will not be subject to U.S. federal income tax unless such Units constitute United States real property interests, or USRPIs, or as otherwise described below. In general, stock of a domestic corporation that constitutes a “United States real property holding corporation,” or USRPHC, will constitute a USRPI. Units will not, however, constitute USRPIs so long as the REIT is a “domestically controlled qualified investment entity.” A “domestically controlled qualified investment entity” includes a real estate investment trust in which at all times during a five-year testing period less than 50% in value of its stock is held directly or indirectly by non-United States persons, subject to certain rules. The REIT believes, but cannot guarantee, that it will be a “domestically controlled qualified investment entity.”

Even if the REIT does not qualify as a “domestically controlled qualified investment entity” at the time a Non-U.S. Holder exchanges its