Company: NXDT
Filing Date: 2025-01-21
Form Type: 424B3
Source: 0001437749-25-001494
Chunk: 37

Company: NEXPOINT DIVERSIFIED REAL ESTATE TRUST
Filing Date: 2025-01-21
Form: 424B3
Chunk 37
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 from the formal valuation requirements if its securities are not listed on the Toronto Stock Exchange, the Aequitas NEO Exchange Inc., the New York Stock Exchange, the American Stock Exchange, the NASDAQ Stock Market, or a stock exchange outside of Canada and the United States other than the Alternative Investment market of the London Stock Exchange or the PLUS markets operated by PLUS Markets Group plc.

At the time the COVID Loans were issued, the REIT relied upon the exemption under Section 5.7(1)(a) of MI 61-101. In addition, the REIT had available, and relied upon, the exemption in Section 5.7(1)(e) of MI 61-101 (the “Financial Hardship Exemption”) to exempt the REIT from the Minority Approval Requirement. The Financial Hardship Exemption was available to the REIT based on the following criteria:

| (i) | The REIT was in serious financial difficulty. |

As a hospitality REIT that owned 11 hotel properties across the United States at the beginning of the COVID‑19 pandemic, the global response to the COVID-19 pandemic had a devastating impact on the REIT’s operations. In April 2020, occupancy declined from an average of 75.1% across the REIT’s portfolio to a low of 12.5%. In May 2020, a going concern note was included in the REIT’s annual financial statements, highlighting the REIT’s serious financial difficulties and possible risk of bankruptcy.

| (ii) | The COVID Loans were designed to improve the financial position of the REIT. |

As a result of the COVID-19 pandemic, the REIT experienced material decreases in revenues, results of operations and cash flows. The impact to the global economy caused by the response to the COVID-19 pandemic also negatively impacted the REIT’s ability to obtain new financing. The COVID Loans were advanced, in most cases, in critical moments to principally fund the REIT’s ongoing operating expenses and to satisfy interest and principal payments due on third party debt. Without the COVID Loans, the REIT would likely not have been able to continue its operations as a going concern.

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| (iii) | The COVID Loans were not subject to court approval under bankruptcy or insolvency law. |

At the time of the COVID Loans, the REIT was not subject to court oversight or approval under any bankruptcy or insolvency laws.

| (iv) | The REIT had two independent trustees