Company: NXDT
Filing Date: 2025-01-21
Form Type: 424B3
Source: 0001437749-25-001494
Chunk: 62

Company: NEXPOINT DIVERSIFIED REAL ESTATE TRUST
Filing Date: 2025-01-21
Form: 424B3
Chunk 62
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 reports, and (iii) discussions with Management. Doane Grant Thornton then deducted growth capital expenditures in excess of the replacement reserves required to achieve sustainable net operating income from the capitalized value of the hospitality assets in arriving at FMV.

Per the DCF approach, Doane Grant Thornton discounted the projected net operating income over the forecast period at a rate of return that reflected the risk of achieving the same. Doane Grant Thornton then estimated the terminal value by applying a terminal year capitalization rate to the terminal period net operating income. The sum of the present value of the net operating income for the forecast period plus the present value of the terminal value represented the enterprise value of each of the hospitality assets owned by the REIT.

In determining the value of each of the REIT’s properties, Doane Grant Thornton also took into consideration precedent hotel transactions that had occurred over the past three (3) years in Texas, Florida and Utah. Such transactions supported their valuation conclusions determined under the income capitalization and DCF approaches. To determine the FMV of the REIT’s investment in Life Sciences DST, Doane Grant Thornton employed a DCF approach.

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For the Class B Units, which Management advised were economically equivalent to the Units, Doane Grant Thornton determined the FMV to be $0.36 per Class B Unit. Similarly, Doane Grant Thornton valued the Deferred Units and NHT OP Profits Interest Units at $0.36 per unit. Doane Grant Thornton also assessed the Convertible Promissory Notes, noting that their assessment on the fairness of the Transaction was not impacted by the valuation of the Convertible Promissory Notes at fair value versus face value. While the Convertible Promissory Notes were recorded at fair value for financial reporting purposes, adjusting the notes to face value would result in a lower price per unit as the face value was in excess of fair value.

For other net assets, unless otherwise noted in the Fairness Opinion, Doane Grant Thornton assumed that the book value as of September 30, 2024, was equivalent to their FMV.

Comparable Company Analysis

Doane Grant Thornton reviewed the valuation metrics implied by analysis of comparable public companies. For each of the selected comparable companies, Doane Grant Thornton considered the price / FFO, price / AFFO, price / NBV, and price to NAV and derived minimum, medium, average and maximum metrics for each comparable company. Based on Doane Grant Thornton’s review, the price / LTM FFO