Company: NXDT
Filing Date: 2025-04-23
Form Type: S-4/A
Source: 0001437749-25-012810
Chunk: 156

Company: NEXPOINT DIVERSIFIED REAL ESTATE TRUST
Filing Date: 2025-04-23
Form: S-4/A
Chunk 156
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 NXDT does not become subject to this excise tax; however, we cannot assure you that we will be successful in avoiding this excise tax.

Income Tests. In order to maintain New NXDT’s qualification as a REIT, New NXDT annually must satisfy two gross income requirements.

| ● | First, New NXDT must derive at least 75% of its gross income for each taxable year, excluding gross income from prohibited transactions, directly or indirectly from investments relating to real property or mortgages on real property, including interest income derived from mortgage loans secured by real property or interests in real property (including certain types of CMBS), “rents from real property,” distributions received from other REITs, income derived from REMICs, in proportion to the real estate mortgages held by the REMIC, and gains from the sale of real estate assets, as well as specified income from temporary investments. |

| ● | Second, at least 95% of New NXDT’s gross income for each taxable year, excluding gross income from prohibited transactions and certain hedging transactions, must be derived from real property investments as described in the preceding bullet point, dividends, interest and gain from the sale or disposition of stock or securities, or from any combination of these types of sources, which need not have any relation to real property. |

New NXDT may earn “interest” income to satisfy the tests above, but the term “interest” generally does not include any amount received or accrued, directly or indirectly, if the determination of that amount depends in whole or in part on the income or profits of any person. However, an amount received or accrued generally will not be excluded from the term “interest” solely because the amount of the interest is based on a fixed percentage of percentages of receipts or sales.

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Rents that New NXDT receives will qualify as rents from real property in satisfying the gross income requirements for a New NXDT described above only if the rents satisfy several conditions.

| ● | First, the amount of rent must not be based in whole or in part on the income or profits of any person. However, an amount received or accrued generally will not be excluded from rents from real property solely because the rent is based on a fixed percentage or percentages of receipts or sales. |

| ● | Second, the Code provides that rents received from a tenant will not qualify as rents from real property in satisfying the gross income tests if New NXDT, directly or under the applicable attribution rules, owns a