Company: NXDT
Filing Date: 2025-03-31
Form Type: 10-K
Source: 0001356115-25-000003
Chunk: 594

Company: NEXPOINT DIVERSIFIED REAL ESTATE TRUST
Filing Date: 2025-03-31
Form: 10-K
Item: Item 8
Chunk 594
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 OP, the guarantor of certain obligations under a borrowing arrangement for a $39.3 million loan (the “PC & B Loan”), was not in compliance with loan covenants contained in the loan documents for the PC & B Loan related to minimum net worth and minimum liquid assets. While the lender under the PC & B Loan has not indicated that it will accelerate the PC & B Loan, the lender has the ability under the loan documents to do so if the conditions remain uncured after the giving of notice and expiration of a cure period. There can be no assurance that the lender under the PC & B Loan will waive such covenant beaches, and discussions regarding such a waiver are ongoing. The PC & B Loan is secured by mortgages on our Hyatt Place Park City (“Park City”) and Bradenton Hampton Inn & Suites (“Bradenton”) properties. Should the lender under the PC & B Loan exercise its remedies under the relevant loan documents, up to and including the acceleration of the full amount of the PC & B Loan, it may have a material adverse impact on our financial condition, liquidity and results of operations. If we are unable to pay the amount due upon acceleration, the lender under the PC & B Loan may elect to foreclose on the Park City and Bradenton properties to satisfy the indebtedness. In addition, the mortgage debt secured by Cityplace had a maturity date of March 8, 2025. We are currently engaged in discussions with the lender of the Cityplace debt regarding the extension of the maturity date. There can be no assurance that the lender will grant such an extension or that it will not demand payment of the outstanding balance, which was $139.9 million as of December 31, 2024. While the lender has not indicated that it will exercise any of its remedies, the lender has the ability to do so and may elect to foreclose on Cityplace. From time to time, we may also be in default of certain covenants contained in our credit agreements. We may also be subject to cross-default and acceleration rights in our other debt arrangements. Further, this could also make it difficult for us to satisfy the distribution requirements necessary to maintain our qualification as a REIT for U.S. federal income tax purposes.

Inability to access funding could have a material adverse effect on our results of operations, financial condition and business. 

Our ability to fund our loans and investments may be impacted by our ability to secure bank credit facilities (including term loans and revolving facilities), warehouse facilities and structured financing arrangements