DALLAS and
TORONTO, Nov. 25,
2024 /PRNewswire/ -- NexPoint Hospitality Trust
("NHT" or the "REIT"1), (TSX-V: NHT.U) and
NexPoint Diversified Real Estate Trust (NYSE: NXDT) ("NXDT")
today announced the execution of a definitive agreement (the
"Merger Agreement") on November 22,
2024, pursuant to which the REIT will be dissolved and
its subsidiary entities merged with and into entities owned or
controlled, directly or indirectly, by NXDT (the
"Transaction"). Pursuant to the Transaction, each REIT
unitholder (the "Unitholders") will receive, for each trust
unit of the REIT (a "Unit"), either US$0.36 cash per Unit or common shares of NXDT
(the "NXDT Common Shares") equal to the quotient of
US$0.36 divided by the volume
weighted average price of the NXDT Common Shares quoted on the New
York Stock Exchange for the ten (10) trading days prior to closing
of the Transaction. Subject to the satisfaction of all conditions
precedent, the Transaction is expected to be completed in the first
quarter of 2025. Upon closing of the Transaction, the REIT's Units
will be delisted from the TSX Venture Exchange (the "TSXV").
Raymond James Limited has entered into a voting and support
agreement pursuant to which it has agreed to support and vote the
Units it owns (beneficially or otherwise) or over which it
exercises control or direction over, including on behalf of
accounts over which it has discretionary authority, in favour of
the Transaction.
Transaction Highlights
- The proposed price of US$0.36 per
Unit represents a premium of approximately 2300% to the 30-day
volume weighted average price per Unit on the TSXV ended
November 22, 2024 of US$0.015;
- Unitholders who elect to receive cash for their Units will
immediately realize a fair value for their investment and the
payment in cash provides certainty of value for their Units;
- Unitholders who receive NXDT Common Shares will have the
opportunity to participate in any increase in value of the REIT's
assets and the increase in value of the current assets of NXDT and
are expected to have greater liquidity due to higher trading
volumes in the NXDT Common Shares;
- The Transaction represents the best prospect for
maximizing Unitholder value over the short to medium term
given current and expected macroeconomic conditions in North America and their potential impact on
the REIT;
- The REIT's board of trustees (the "Board"), with
James Dondero declaring his interest
in the Transaction and abstaining, have approved the Transaction
and recommend that Unitholders vote in favour of the Transaction;
and
- Doane Grant Thornton LLP ("Doane
Grant Thornton"), the Special Committee's financial
advisor, has provided a fairness opinion to the Special Committee
that based upon and subject to the assumptions and limitations
described in their opinion, the consideration to be received by
Unitholders pursuant to the Transaction is fair, from a financial
point of view, to such Unitholders.
Transaction Details
The Transaction is a "business combination" under
Multilateral Instrument 61-101 – Protection of Minority Security
Holders in Special Transactions ("MI 61-101") as NXDT
and its related entities, including entities controlled by
James Dondero, own or exercise
control or direction over approximately 82.86% of the outstanding
Units of the REIT. Accordingly, the Transaction will be subject to
the approval of at least (i) two-thirds (66 2/3%) of the votes cast
by Unitholders present in person or represented by proxy at a
special meeting of Unitholders (the "Meeting") and (ii) the
majority of Unitholders present in person or represented by proxy
at the Meeting, excluding the votes of NXDT and James Dondero and affiliated entities, and any
other Unitholders whose votes are required to be excluded for the
purposes of "minority approval" under MI 61-101. Further details
regarding the applicable voting requirements will be contained in a
management information circular (the "Circular") to be filed
and mailed to Unitholders in connection with the Meeting to
consider the approval of the Transaction. The Transaction is
subject to other customary conditions, however, is not subject to a
financing condition.
The Merger Agreement provides for, among other
things, customary representations and warranties and
non-solicitation covenants from the REIT, including "fiduciary out"
provisions that allow the REIT to accept a superior proposal in
certain circumstances and a five (5) business day "right to match
period" in favour of NXDT. The Merger Agreement also provides for
the payment of a termination fee of US$370,000 by the REIT or NXDT if the Transaction
is terminated in certain specified circumstances.
The Merger Agreement will be available on the
SEDAR+ website at www.sedarplus.ca within ten (10) days following
the date of this press release.
Board of Trustees Recommendation and Fairness
Opinion
The Board, with James
Dondero declaring his interest in the Transaction and
abstaining, after consultation with its financial and legal
advisors, and on the recommendation of the Special Committee
composed solely of independent trustees, has resolved to approve
the Transaction and recommends that Unitholders vote in favour of
the Transaction.
Doane Grant
Thornton has provided a fairness opinion to the Special
Committee that, based upon and subject to the assumptions and
limitations described in their opinion, the consideration to be
received by Unitholders pursuant to the Transaction is fair, from a
financial point of view, to such holders.
Advisors
Goodmans LLP and BakerHostetler LLP are acting as
legal counsel to the REIT and its subsidiaries. Winston &
Strawn LLP is acting as legal counsel to NXDT and its subsidiaries.
Doane Grant Thornton is acting as
financial advisor to the Special Committee and has provided a
fairness opinion. Goodmans is acting as legal counsel to the
Special Committee.
NXDT Early Warning Disclosure
Prior to the Transaction, James Dondero, together with the persons and
entities which are directly or indirectly controlled or deemed to
be controlled by him including NXDT, beneficially owned or
exercised control or direction over, 24,164,700 Units, representing
an approximate 82.33% ownership interest in the REIT (81.75%,
assuming conversion of all outstanding Class B units of the REIT's
operating partnership, NHT Operating Partnership, LLC ("Class B
OP Units")).
Assuming closing of the Transaction, James Dondero, together with the persons and
entities which are directly or indirectly controlled or deemed to
be controlled by him including NXDT, will beneficially own or
exercise control or direction over, all of the outstanding Units
and Class B OP Units.
About NHT
NexPoint Hospitality Trust is a publicly traded
real estate investment trust, with its Units listed on the TSX
Venture Exchange under the ticker NHT.U. NHT is focused on
acquiring, owning and operating well-located real estate assets
including, but not limited to, investments in life science and
semiconductor manufacturing properties, but mainly focusing on
hospitality properties in the United
States that offer a high current yield and in many cases are
underperforming assets with the potential to increase in value
through investments in capital improvements, a market-based
recovery, brand repositioning, revenue enhancements, operational
improvements, expense inefficiencies, and exploiting excess land or
underutilized space. NHT owns 7 branded properties sponsored by
Marriott, Hilton and Hyatt, located across the U.S. NHT is
externally advised by NexPoint Real Estate Advisors VI, L.P.
About NXDT
NexPoint Diversified Real Estate Trust (NYSE:
NXDT) is an externally advised, publicly traded, diversified REIT
focused on the acquisition, development, and management of
opportunistic and value-add investments throughout the United States across multiple sectors
where NexPoint and its affiliates have operational expertise. NXDT
is externally advised by NexPoint Real Estate Advisors X, L.P. For
more information, please visit nxdt.nexpoint.com.
Forward Looking Information
This news release includes forward-looking
information within the meaning of applicable Canadian securities
laws. In some cases, forward-looking information can be identified
by the use of words such as "may", "will", "should", "expect",
"intend", "plan", "anticipate", "believe", "estimate", "predict",
"potential", "continue", and by discussions of strategies that
involve risks and uncertainties, certain of which are beyond the
REIT's and NXDT's control. In this news release, forward-looking
information includes, among other things, statements relating to
expectations with respect to the timing and outcome of the
Transaction and the anticipated benefits of the Transaction to the
parties and their respective security holders. The forward-looking
information is based on certain key expectations and assumptions
made by each of the REIT and NXDT, including with respect to the
structure of the Transaction and all other statements that are not
historical facts. The timing and completion of the Transaction is
subject to customary closing conditions, termination rights and
other risks and uncertainties including, without limitation,
required regulatory and unitholder approvals. Although management
of each of the REIT and NXDT believes that the expectations
reflected in the forward-looking information are reasonable, there
can be no assurance that any transaction, including the
Transaction, will occur or that it will occur on the timetable or
on the terms and conditions contemplated in this news release. The
Transaction could be modified, restructured or terminated. Readers
are cautioned not to place undue reliance on forward-looking
information. Additional information on these and other factors that
could affect the REIT are included in reports on file with Canadian
securities regulatory authorities and may be accessed on the SEDAR+
website at www.sedarplus.ca. Additional factors that may affect
NXDT's business or financial results are described in the risk
factors included in NXDT's filings with the Securities and Exchange
Commission (the "SEC"), including its Annual Report on Form
10-K for the fiscal year ended December 31,
2023, and subsequent Quarterly Reports on Form 10-Q and
Current Reports on Form 8-K.
By its nature, such forward-looking information
necessarily involves known and unknown risks and uncertainties that
may cause actual results, performance, prospects and opportunities
in future periods of the REIT and NXDT to differ materially from
those expressed or implied by such forward-looking statements.
Furthermore, the forward-looking statements contained in this news
release are made as of the date of this news release and neither
the REIT, nor NXDT, nor any other person assumes responsibility for
the accuracy and completeness of any forward-looking information,
and no one has any obligation to update or revise any
forward-looking information, whether as a result of new
information, future events or such other factors which affect this
information, except as required by law.
No Offer or Solicitation
This press release is not intended to and does
not constitute an offer to sell or the solicitation of an offer to
subscribe for or an invitation to purchase or subscribe for any
securities or the solicitation of any vote in any jurisdiction
pursuant to the proposed transactions or otherwise, nor shall there
be any sale, issuance or transfer of securities in any jurisdiction
in contravention of applicable law. No offer of securities shall be
made except by means of a prospectus meeting the requirements of
the Securities Act of 1933, as amended. Subject to certain
exceptions to be approved by the relevant regulators or certain
facts to be ascertained, the public offer will not be made directly
or indirectly, in or into any jurisdiction where to do so would
constitute a violation of the laws of such jurisdiction, or by the
use of the mails or by means or instrumentality of interstate or
foreign commerce, or any facility of a national securities
exchange, of any such jurisdiction.
Additional Information and Where to Find
It
This press release is being made in respect of
the proposed transaction between NHT and NXDT. In connection with
the proposed transaction, NXDT will file with the SEC a
registration statement on Form S-4, which will include an
information circular and prospectus, to register the NXDT Common
Shares that will be issued to the Unitholders (the "Information
Circular and Registration Statement"), as well as other
relevant documents regarding the proposed transaction. INVESTORS
ARE URGED TO READ IN THEIR ENTIRETY THE INFORMATION CIRCULAR AND
REGISTRATION STATEMENT REGARDING THE TRANSACTION WHEN IT BECOMES
AVAILABLE AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, AS
WELL AS ANY AMENDMENT OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE
THEY WILL CONTAIN IMPORTANT INFORMATION.
A free copy of the Information Circular and
Registration Statement, as well as other filings containing
information about NXDT, may be obtained at the SEC's website
(https://www.sec.gov). You will be able to obtain these documents,
free of charge, from NXDT at https://nxdt.nexpoint.com or by
emailing IR@nexpoint.com.
Neither TSX Venture Exchange nor its Regulation
Services Provider accepts responsibility for the adequacy or
accuracy of this release.
Contact:
Matt McGraner
Chief Investment Officer
(972) 628-4100
Investor Relations
IR@nexpoint.com
Media Inquiries
MediaRelations@nexpoint.com
1398-4973-9792
__________________________________
1 In this release, "we," "us," "our,"
"NHT," and the "REIT," each refer to NexPoint Hospitality
Trust.
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SOURCE NexPoint Diversified Real Estate Trust