Company: NXDT
Filing Date: 2025-06-12
Form Type: S-4
Source: 0001437749-25-020201
Chunk: 85

Company: NEXPOINT DIVERSIFIED REAL ESTATE TRUST
Filing Date: 2025-06-12
Form: S-4
Chunk 85
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% (by value) of the equity interests in New NXDT. |

Tax-exempt pension, profit-sharing and stock bonus funds described in the first bullet point above are referred to below as “qualified trusts.” New NXDT will be treated as a “pension-held REIT” if:

| ● | New NXDT would not have qualified as a REIT but for the fact that the Code provides that stock owned by qualified trusts will be treated, for purposes of the “not closely held” requirement under Section 856(h)(3) of the Code, as owned by the beneficiaries of the trust (rather than by the trust itself); and |

| ● | either (a) at least one qualified trust holds more than 25% by value of the outstanding capital stock of New NXDT or (b) one or more qualified trusts, each of which owns more than 10% by value of the outstanding capital stock of New NXDT, hold in the aggregate more than 50% by value of the outstanding capital stock of New NXDT. |

If New NXDT is treated as a “pension-held REIT,” the percentage of any New NXDT dividend treated as unrelated business taxable income to a qualifying trust is equal to the ratio of (a) the gross income of New NXDT from unrelated trades or businesses, determined as though New NXDT were a qualified trust, less direct expenses related to this gross income, to (b) the total gross income of New NXDT, less direct expenses related to the total gross income. Ade minimis exception applies where this percentage is less than 5% for any year. New NXDT does not expect to be classified as a “pension-held REIT.”

The rules described above under the heading “U.S. Stockholders” concerning the inclusion of New NXDT’s designated undistributed net capital gains in the income of New NXDT’s stockholders will apply to tax-exempt entities. Thus, tax-exempt entities will be allowed a credit or refund of the tax deemed paid by these entities in respect of the includible gains.

Medicare Tax. A U.S. stockholder that is an individual or estate, or a trust that does not fall into a special class of trusts that is exempt from such tax, is subject to a 3.8% tax on the lesser of (1) the United States holder’s “net investment income” (or “undistributed net investment income” in the case of an estate or trust) for the relevant taxable year and (2