Company: NXDT
Filing Date: 2025-06-12
Form Type: S-4
Source: 0001437749-25-020201
Chunk: 71

Company: NEXPOINT DIVERSIFIED REAL ESTATE TRUST
Filing Date: 2025-06-12
Form: S-4
Chunk 71
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 generated by the nonqualifying assets, and (iii) disclosing certain information to the IRS.

Annual Distribution Requirements. New NXDT, in order to qualify as a REIT, is required to distribute dividends, other than capital gain dividends, to New NXDT’s shareholders in an amount at least equal to (1) the sum of (a) 90% of New NXDT’s “real estate investment trust taxable income,” computed without regard to the dividends paid deduction and New NXDT’s net capital gain, and (b) 90% of New NXDT’s net after-tax income, if any, from foreclosure property minus (2) the sum of certain items of noncash income (including original issue discount on any loans) over 5% of our real estate investment trust taxable income, computed without regard to the dividends paid deduction and excluding our net capital gain.

In addition, if New NXDT acquires an asset from a C corporation in a carryover basis transaction and disposes of such asset within ten years of acquiring the asset, New NXDT may be required to distribute at least 90% of the after-tax built-in gain, if any, recognized on the disposition of the asset.

These distributions must be paid in the taxable year to which the distributions relate, or in the following taxable year if either (1) such distributions are declared before New NXDT timely files its tax return for the year to which the distributions relate and are paid on or before the first regular dividend payment in the 12-month period after such declaration, provided New NXDT elects to do so in such U.S. federal income tax return for the year or (2) such distributions are declared in October, November or December of the taxable year, payable to shareholders of record on a specified day in any such month, and actually paid before the end of January of the following year. The distributions under clause (1) are taxable to the holders of our shares in the taxable year in which paid, and the distributions in clause (2) are treated as paid on December 31 of the prior taxable year. In both instances, these distributions relate to our prior taxable year for purposes of the 90% distribution requirement to the extent of our earnings and profits for such prior taxable year.

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To the extent that New NXDT distributes at least 90%, but less than 100%, of New NXDT’s REIT taxable income, as adjusted, New NXDT will have to pay tax on the undistributed amounts