Cites UDF IV Board and Management Entrenchment, Lack of Transparency, Shareholder Value Erosion and Breach of Shareholder Trust
Says NexPoint Expertise is Valuable Contribution to the Board
DALLAS, Dec. 6, 2024 /PRNewswire/ -- NexPoint Real Estate Opportunities, LLC (together with its affiliates "NexPoint") today announced that Egan-Jones, an independent proxy advisory firm, has recommended that United Development Funding IV ("UDF IV" or the "Company") shareholders vote for long overdue change to the UDF IV Board of Trustees. Specifically, Egan-Jones recommends that UDF IV shareholders vote "FOR" all NexPoint nominees, Paul S. Broaddus, Edward N. Constantino, John A. Good and Julie Silcock, and "WITHHOLD" on UDF IV's incumbent trustees, Lawrence S. Jones, Phillip K. Marshall, Steven J. Finkle and J. Heath Malone.
In its recommendation for ALL NexPoint nominees, Egan-Jones concluded:
"The absence of an annual shareholders' meeting for eight years in a row evidently suggests the management's actions to disenfranchise shareholder rights. Despite the investigations and engagement of regulatory bodies, the Company has shown lack of accountability and compliance. Moreover, the lack of proper oversight by the incumbent trustees brings into serious question the integrity and independence of the board."
"[T]he lack of transparency and inadequate disclosure controls have concealed the Company's true condition. The board has a fundamental responsibility to act as a liaison between management and shareholders. Despite shareholders' calls for greater transparency...the board has failed in its fiduciary duty to effectively safeguard and represent shareholders' interests."
"While the proposed merger may appear to offer liquidity to shareholders, we believe it reflects a reactionary response by the Company… Our concerns include the lack of transparency regarding the due diligence process and the potential shopping of companies during the merger decision."
"Post the conviction era, we believe the board should have refreshed its composition to enhance the Company's reputation. It is concerning that four trustees...who all served on the Board during the fraud investigations, sanctions and the subsequent conviction of the former UDF IV executives remained in office…failed to restore the Company's reputation and address the erosion of shareholder value."
"Even if this is not a contested meeting, we would advise the shareholders to withhold votes from the incumbent trustees."
"[T]o restore shareholder trust and confidence, we believe that UDF IV urgently needs a refreshed board to strengthen its strategy and address the erosion of company value caused by mismanagement, excessive capital spending, and poor loan portfolio allocation and management."
"We are confident that the expertise in REIT, M&A, and legal matters brought by the NexPoint nominees will make a valuable contribution to the board."
NexPoint's Nominees Will Serve Shareholders' Interests
NexPoint urges shareholders to vote for much needed change at UDF IV by supporting its nominees: Paul S. Broaddus, Edward N. Constantino, John A. Good, and Julie Silcock, and rejecting UDF IV's current Board, which has overseen criminal and fraudulent behavior and eroded shareholder value.
Shareholders are encouraged to vote using NexPoint's GREENproxy materials to bring accountability and maximize value at UDF IV.
NexPoint Real Estate Opportunities, LLC is a wholly owned subsidiary of NexPoint Diversified Real Estate Trust, Inc. (NYSE: NXDT), an affiliate of NexPoint Advisors, L.P.
NexPoint Advisors, L.P. is an SEC-registered adviser on the NexPoint alternative investment platform. It serves as the adviser to a suite of funds and investment vehicles, including a closed-end fund, interval fund, business development company, and various real estate vehicles. For more information visit www.nexpoint.com
IMPORTANT INFORMATION
NexPoint Real Estate Opportunities, LLC ("NexPoint") intends to deliver a proxy statement with respect to its solicitation of proxies for nominees to be elected to the United Development Funding IV ("UDF IV") Board of Trustees at the Annual Meeting of Shareholders of UDF IV. The date for the Annual Meeting has not yet been set and NexPoint is not soliciting proxies at this time. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE NEXPOINT PROXY STATEMENT (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS THERETO) WHEN AVAILABLE IN ITS ENTIRETY BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION ABOUT ANY SOLICITATION. Copies of the documents will be made available free of charge from NexPoint by accessing the website www.udfaccountability.com.
NexPoint, its affiliates, their directors and executive officers and other members of management and employees may be participants (collectively "Participants") in the solicitation of proxies by NexPoint. Information about NexPoint's nominees to the UDF IV Board of Trustees and information regarding the direct or indirect interests in UDF IV, by security holdings or otherwise, of NexPoint, the other Participants and NexPoint's nominees will be available in the proxy statement. NexPoint's disclosure of any security holdings will be based on information made available to NexPoint by such Participants and nominees. UDF IV is no longer subject to the reporting requirements of the Securities Exchange Act of 1934, as amended. Consequently, NexPoint's knowledge of significant security holders of UDF IV and as to UDF IV itself is limited.
NexPoint has neither sought nor obtained consent from any third party to use previously published information in this press release, including any quotes used in this press release.
CONTACT INFORMATION
UDF IV Investor Contacts
Chuck Garske / Jeremy Provost / Theo Caminiti (Okapi Partners):
