Proposed Transaction Demonstrates NexPoint's Ongoing Impact at UDF IV
If Elected, NexPoint Nominees Would Review and Pursue Transaction to Maximize Shareholder Value
DALLAS, Dec. 3, 2024 /PRNewswire/ -- NexPoint Real Estate Opportunities, LLC (together with its affiliates "NexPoint") today commented on the proposed transaction between United Development Funding IV ("UDF IV" or the "Company"), a real estate investment trust, and Ready Capital Corporation ("Ready Capital"), a multi-strategy real estate finance company:
"NexPoint is pleased that our multi-year advocacy and litigation continues to benefit UDF IV shareholders by bringing forward a potential transaction that could deliver much-needed liquidity. While we evaluate this proposal further, shareholders should note upfront that the potential $5.89 per share capped value offered under the acquisition is significantly below the $9.47 per share book value that UDF IV provided in its latest financials.
Over 40% of that potential value is comprised of $75 million in contingent cash distributions, which would represent a continued return of capital rather than meaningful value creation. Even so, the merger agreement does not guarantee this distribution; it merely allows UDF IV to make distributions 'up to' that amount. Given the latest financials and other cash obligations outlined in the agreement, the feasibility and likelihood of achieving the full distribution appears questionable.
Though the proposed transaction shows that our efforts are making an impact, we remain concerned about the lack of accountability and transparency at UDF IV under the current Board, which includes Trustees who presided over years of fraud, disclosure violations, poor performance, and persistent illiquidity. Notably, our concerns are reinforced by the intentional withholding of the material terms set forth in the Disclosure Schedules to the merger agreement, without which shareholders cannot accurately evaluate the proposed merger.
If elected, NexPoint's nominees would thoroughly review the proposed terms of the transaction and pursue the best possible outcome for shareholders. We therefore continue to urge UDF IV shareholders to support NexPoint's nominees at the upcoming annual meeting."
NexPoint's ongoing efforts to drive accountability at UDF IV have already led to a court order compelling the Company to hold an annual meeting and fair election of all independent Trustees for the first time in over eight years. These efforts now continue to benefit shareholders by spurring this potential acquisition.
The Company has announced the court-ordered annual meeting will take place on December 10, 2024, which will be the last opportunity for shareholders to vote in the critical Board election. NexPoint urges shareholders to vote for its nominees: Paul S. Broaddus, Edward N. Constantino, John A. Good, and Julie Silcock, and reject UDF IV's current Board, which has overseen criminal and fraudulent behavior and significant losses in shareholder value and liquidity.
If elected, NexPoint's nominees are dedicated to working on behalf of all shareholders to drive accountability and maximize value at UDF IV, including by reviewing and pursuing transactions that align with shareholders' interests.
Shareholders are encouraged to vote FOR NexPoint's nominees using the GREEN proxy materials.
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.
CONTACT INFORMATION
UDF IV Investor Contacts
Chuck Garske / Jeremy Provost / Theo Caminiti (Okapi Partners):
