Company: NXDT
Filing Date: 2025-04-11
Form Type: S-4
Source: 0001437749-25-011826
Chunk: 165

Company: NEXPOINT DIVERSIFIED REAL ESTATE TRUST
Filing Date: 2025-04-11
Form: S-4
Chunk 165
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DT will monitor the status of its assets for purposes of the various asset tests and will seek to manage our assets to comply at all times with such tests. There can be no assurance, however, that we will be successful in this effort. No independent appraisals will be obtained to support our conclusions as to the value of our total assets or the value of any particular security or securities. Moreover, values of some assets, including instruments issued in securitization transactions, may not be susceptible to a precise determination, and values are subject to change in the future. Furthermore, the proper classification of an instrument as debt or equity for U.S. federal income tax purposes may be uncertain in some circumstances, which could affect the application of the REIT asset requirements. Although New NXDT will seek to be prudent in estimating the value of its assets, there can be no assurances that the IRS might not disagree with these determinations and assert that a different value is applicable, in which case New NXDT might not satisfy the 75% and the other asset tests and would fail to qualify as a REIT. If New NXDT fails to satisfy the asset tests at the end of a calendar quarter, New NXDT will not lose its REIT qualification if:

| ● | New NXDT satisfied the asset tests at the end of the preceding calendar quarter; and |

| ● | the discrepancy between the value of our assets and the asset test requirements arose from changes in the market values of New NXDT’s assets and was not wholly or partially caused by the acquisition of one or more nonqualifying assets. |

Certain relief provisions may be available to New NXDT if it fails to satisfy the asset tests described above after a 30-day cure period. Under these provisions, New NXDT will be deemed to have met the 5% and 10% REIT asset tests if the value of New NXDT’s nonqualifying assets (i) does not exceed the lesser of (a) 1% of the total value of New NXDT’s assets at the end of the applicable quarter and (b) $10,000,000, and (ii) either the relevant tests are satisfied or New NXDT disposes of the nonqualifying assets within (a) six months after the last day of the quarter in which the failure to satisfy the asset tests is discovered or (b) the period of time prescribed by Treasury regulations to be issued. For violations due to reasonable cause and not willful neglect that are not described in the preceding sentence,