Company: NXDT
Filing Date: 2025-01-21
Form Type: 424B3
Source: 0001437749-25-001494
Chunk: 102

Company: NEXPOINT DIVERSIFIED REAL ESTATE TRUST
Filing Date: 2025-01-21
Form: 424B3
Chunk 102
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 extent the Transaction is taxable, Taxes generally will be required to be paid by such Unitholders on any income and gains that result from receipt of the consideration in the Transaction. The Reorganization and the Mergers will be taxable transactions for Canadian federal income tax purposes. Unitholders are advised to consult with their own tax advisors to determine the tax consequences of the Transaction to them. See “Certain Canadian Federal Income Tax Considerations” and “Certain U.S. Federal Income Tax Considerations”.

New NHT Shares will not be a Qualified Investment for Registered Plans

The New NHT Shares will not be qualified investments under the Tax Act for trusts governed by a Registered Plan. Registered Plans and/or the holders, annuitants or subscribers thereof, as the case may be, will be subject to a penalty tax in respect of New NHT Shares held by such plans, and other negative tax consequences may result. Resident Holders that hold Units in a Registered Plan should consult with their own tax advisors regarding the Reorganization, including whether to elect for a Redemption with respect to their Units to avoid penalty taxes and other potential negative tax consequences resulting from a Registered Plan acquiring New NHT Shares.

Canadian Tax Risks related to distributions on NXDT Common Shares

The Canadian taxation of distributions on NXDT Common Shares to holders of such shares that are resident in Canada for purposes of the Tax Act may depend on the amount of NXDT’s income (including the taxable portion of net capital gains) that would be computed under Canadian tax principles in accordance with the Tax Act as if NXDT were subject to Canadian Taxation.

There is no assurance that the calculation of NXDT’s income for U.S. federal income tax purposes will be the same as its income would be calculated under Canadian tax principles in accordance with the Tax Act. It is not expected that NXDT will re-calculate its income under Canadian tax principles, nor will NXDT provide Resident Holders with any information regarding income that is paid or payable to the Resident Holders for Canadian tax purposes. Resident Holders are urged to consult their own tax advisors with respect to the tax consequences of distributions on their NXDT Common Shares, including the impact to the Resident Holder on the adjusted cost base of the NXDT Common Shares and the availability of a foreign tax credit or deduction for any foreign withholding tax paid with respect distributions on such NXDT Common Shares.

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In addition, unlike the REIT and other entities that are “mutual fund trusts” for purposes of the Tax Act