Company: NXDT
Filing Date: 2025-01-21
Form Type: 424B3
Source: 0001437749-25-001494
Chunk: 271

Company: NEXPOINT DIVERSIFIED REAL ESTATE TRUST
Filing Date: 2025-01-21
Form: 424B3
Chunk 271
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, luxury, and select service). We then deducted growth capital expenditures that are in excess of the replacement reserves required to achieve sustainable NOI from the capitalized value of the Hotels in arriving at fair market value. |

| 9.04 | Based on the above, Doane Grant Thornton adopted weighted average capitalization rates in the range of 6.79% to 7.29% for the hotels which is within the range of comparable capitalization rates. Industry capitalization from compiled public data rates ranged from 6.30% to 10.50%. |

Discounted cash flow

| 9.05 | Doane Grant Thornton performed a DCF analysis using the five-year NOI projections from FY24F7 to FY28F prepared by Management, inclusive of capital expenditures expected in FY25F. Doane Grant Thornton performed an independent review of the assumptions underlying the forecast and accepted Management’s assumptions. |

| 9.06 | The table below summarizes Management’s forecast for the hotels on a combined basis over the Forecast Period. |

| 9.07 | In performing the DCF approach, Doane Grant Thornton discounted the projected net operating income over the forecast period at a rate of return that reflects the risk of achieving the same. Doane Grant Thornton then estimated the terminal value by applying a terminal year capitalization rate to the terminal period net operating income. The sum of the present value of the net operating income for the forecast period plus the present value of the terminal value represents the enterprise value of each of the hotels owned by NHT. |

| 9.08 | The discount rates and terminal capitalization rates were determined based on our understanding of each of the hotels, research of publicly available discount and terminal capitalization rate reports and discussions with Management. Publicly available reports bifurcate discount and terminal capitalization rates by tier, state, and/or type. |

| 9.09 | Based on the analysis above, Doane Grant Thornton adopted weighted average discount rates of 9.58% to 10.58% and weighted terminal capitalization rates of 8.08% to 9.08% for the hotels which is within the range of comparable discount rates and terminal capitalization rates. Industry discount rates from compiled public data ranged from 7.00% to 12.00%. Industry terminal capitalization rates from compiled public data ranged from 6.0% to 10.5%. |

FY24F comprises historical financial information for nine months ended September 30, 2024 and forecast financial information