Company: NXDT
Filing Date: 2025-01-21
Form Type: 424B3
Source: 0001437749-25-001494
Chunk: 49

Company: NEXPOINT DIVERSIFIED REAL ESTATE TRUST
Filing Date: 2025-01-21
Form: 424B3
Chunk 49
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the “Loans”). The 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. In certain situations, the proceeds from the Loans were used to fund acquisitions designed to improve the financial condition of the REIT. Without the Loans, the REIT would likely not have been able to continue its operations as a going concern.

Following the COVID-19 pandemic, Management determined it was prudent to focus on acquiring, repositioning and selling assets of the REIT at their highest value. In March 2022, the REIT launched a marketing process to sell the DoubleTree portfolio as these properties had outperformed versus expectations during the COVID-19 pandemic. By the end of 2022, the REIT had sold the DoubleTree properties of Vancouver, Beaverton and Bend for a combined purchase price of $67.5 million, which the REIT used to retire the outstanding debt on the DoubleTree portfolio.

In late 2022, the Board, Management and their advisors engaged in preliminary discussions with respect to a broadening in the strategy of the REIT from an entity exclusively focused on the ownership and operation of properties in the hospitality industry to an entity with a broader investment focus that will initially target real estate investments in the specialty manufacturing, Current Good Manufacturing Practice and life sciences manufacturing industry (the “cGMP Industry”). Throughout 2023, the Board and Management engaged in discussions in respect of a possible transition in the strategy of the REIT. In March and November 2023, the Board met with financial advisors in the hospitality sector and cGMP Industry (the “Financial Advisors”), to assist in their assessment of potential transition in the REIT’s strategy. The Financial Advisors highlighted the rapid growth in the cGMP Industry over the last several years, which had resulted in a healthy development pipeline, outsized rent growth, historically low vacancies and record levels of investment.

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The Financial Advisors also discussed the current state of the hotel industry in the United States, noting that in their view, valuations were relatively strong and may present an opportunity for the REIT to monetize its hospitality assets at favourable prices. Accordingly, the REIT determined it was prudent to sell select assets, including the DoubleTree Olympia property on June 29, 2023 and the Holiday Inn Express Nashville Property on December 13, 2023 for a combined purchase price of approximately $129 million