Company: NXDT
Filing Date: 2025-04-23
Form Type: S-4/A
Source: 0001437749-25-012810
Chunk: 179

Company: NEXPOINT DIVERSIFIED REAL ESTATE TRUST
Filing Date: 2025-04-23
Form: S-4/A
Chunk 179
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 purposes so as to offset the income generated by the shares of New Stock. Prospective investors of the types described in the preceding sentence should consult such investors’ own tax advisors concerning these “set aside” and reserve requirements.

Notwithstanding the foregoing, however, a portion of the dividends paid by a “pension-held REIT” will be treated as unrelated business taxable income to any trust that

| ● | is described in certain provisions of the Code relating to qualified pension, profit-sharing and stock bonus plans; |

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| ● | is described in certain provisions of the Code relating to tax-exempt organizations; and |

| ● | holds more than 10% (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