Unitholders are reminded to vote their
proxy prior to the proxy voting deadline of 10:00 a.m. (Toronto time) on February 19, 2025
DALLAS and TORONTO, Feb. 14,
2025 /CNW/ -- NexPoint Hospitality Trust
("NHT" or the "REIT") (TSX-V: NHT.U) wishes to remind
its unitholders ("Unitholders") of the upcoming annual and
special meeting (the "Meeting") to be held virtually on
Friday, February 21, 2025. The
Meeting has been called for Unitholders to consider and, if deemed
advisable, among other items, (i) to pass an ordinary
resolution approving certain amendments to the convertible
promissory notes issued by the REIT between September 2019 and May
2021 (the "COVID Loans"); (ii) to pass an ordinary
resolution approving certain amendments to the convertible
promissory notes issued by CDOR Option Sub, LLC on October 30, 2020 and December 22, 2020 (the "CDOR Loans"); and
(iii) to pass a special resolution approving the previously
announced merger transaction with NexPoint Diversified Real Estate
Trust ("NXDT"), which approves (a) the reorganization of the
REIT in accordance with certain proposed amendments to the REIT's
declaration of trust, pursuant to which each unitholder will elect
to receive, for each unit, either thirty-six
cents cash (the "Cash Consideration") or one (1)
common share of NexPoint Hospitality Trust, Inc., which will
subsequently be converted into the right to receive a number of
common shares of NexPoint Diversified Real Estate Trust ("NXDT
Common Shares") and, immediately thereafter the dissolution and
liquidation of the REIT (the "Share Consideration", and
together with the Cash Consideration, the "Reorganization
Consideration"); and (b) the merger of the REIT's subsidiary
entities with and into entities owned or controlled, directly or
indirectly, by NexPoint Diversified Real Estate Trust (the
"Transaction").
Details of the Meeting
The Meeting will be held in a virtual-only format, which will be
conducted via live webcast over the internet on Friday, February 21, 2025 at 10:00 a.m. (Toronto time) at
https://virtual-meetings.tsxtrust.com/1736. Unitholders of record
at the close of business on December 30,
2024 (the "Record Date") will be entitled to vote at
the Meeting.
NHT's notice of meeting, management information circular (the
"Circular") and accompanying form of proxy and letter of
transmittal in respect to the Meeting (collectively the "Meeting
Materials") were mailed on January 31,
2025 to Unitholders of record as of the Record Date and are
available on the REIT's profile on SEDAR+ at www.sedarplus.ca. If
you have not received your Meeting Materials and you are a
non-registered Unitholder, you should contact your broker. If you
have not received your Meeting Materials and you are a registered
Unitholder, please contact TSX Trust Company by e-mail at
shareholderinquiries@tmx.com. The Meeting Materials outline in
detail how to participate in the Meeting.
Additional Details Regarding the Excluded Votes
The votes in respect to the 875,846 Units held by the directors
and senior officers of NXDT to be excluded for the purposes of
minority approval requirements pursuant to the Multilateral
Instrument 61-101 – Protection of Minority Security Holders in
Special Transactions, are more specifically held by
Matthew McGraner, the Executive VP
and Chief Investment Officer of NXDT.
Additional Details Regarding the COVID Loans and the CDOR
Loans
As described under the heading "Approval of Amendments to COVID
Loans" in the Circular, the COVID Loans consists of twelve (12)
loans the REIT received from entities controlled or managed by
James Dondero between September 2019 and June
2021, in the aggregate amount of $15,624,41.00. The proceeds from the COVID Loans
were principally used to fund the REIT's operating expenses,
interest and principal payments on outstanding indebtedness during
the COVID-19 pandemic to allow the REIT to continue as a going
concern.
As described under the heading "Approval of Amendments to CDOR
Loans" in the Circular, the CDOR Loans consists of two (2)
convertible promissory notes on October 23,
2020 and December 30, 2020,
issued by CDOR Option Sub LLC, a subsidiary of the REIT, in the
aggregate amount of $4,750,000.
In December 2023, the TSXV
reviewed all outstanding convertible loans of the REIT, and
determined that the COVID Loans and the CDOR Loans were the only
convertible loans that required amendments (the
"Amendments"). If the Amendments to the COVID Loans are
implemented, only the principal amount of each of the COVID Loans
will be convertible into Class B Units for five-year terms ending
between February 2, 2026 and
June 8, 2026, with the term of the
COVID Loans remaining as 20 years from their date of issuance.
However, one COVID Loan in the amount of $400,000 with a conversion term that expired on
September 9, 2024, will not be
amended or affected by the Amendments. If the Amendments to the
CDOR Loans are implemented, the conversion right under the CDOR
Loans will be removed entirely. The three other convertible loans,
with substantially similar terms to the COVID Loans, that the REIT
currently has outstanding from entities controlled or managed by
James Dondero, will not be affected
by the Amendments.
Background to the Transaction
Further to the background provided in the Circular under the
heading "Background to the Transaction", the special committee of
the REIT (the "Special Committee") was established on
September 15, 2024 to consider the
viability of the potential merger transaction with NXDT. Although
discussions of a possible transaction had commenced in April of
2024, the Special Committee was formed following receipt of the
draft term sheet by NXDT on September 5,
2024 in respect to the Transaction and once it was
determined by the Independent Trustees that there was a reasonable
likelihood of the Transaction proceeding. All discussions with the
board of trustees of the REIT regarding the Transaction prior to
the formation of the Special Committee were conducted by the
Independent Trustees.
For the reasons set out in the Circular under the heading
"Reasons for the Recommendations of the Special Committee", the
Special Committee determined the Transaction was fair to
Unitholders. The proposed price of US$0.36 per unit of the REIT ("Unit") was
initially set forth in the term sheet for the Transaction. The
price was arrived at based on (1) the price per Unit paid under a
previous acquisition by NXDT of 2,176,257 Units at a price of
US$0.36 per Unit on April 19, 2024, and (2) an assessment of the
value of Units based on historical valuation analysis conducted in
connection with the preparation of the REIT's and NXDT's financial
statements. Such valuation is available to view on SEDAR+ at
sedarplus.ca. The Special Committee ultimately decided to recommend
the Cash Consideration based on the factors described in the
Circular under the heading "Approval of Transaction Resolution". In
particular, based on the work conducted by Doane Grant Thornton
LLP, the Special Committee determined that US$0.36 was fair, from a financial point of view,
to Unitholders. The Special Committee also ultimately decided, with
the assistance of its legal and financial advisors, to recommend
the Share Consideration on the basis that Unitholders who receive
NXDT Common Shares will have the opportunity to participate in any
increase in value of NHT's assets and the NXDT Common Shares were
expected to have much greater liquidity due to higher trading
volumes.
Details Regarding the Share Consideration
To the extent that every Unitholder elects to receive Share
Consideration (other than NXDT and its subsidiaries whose Units
will be cancelled in connection with the terms of the merger
agreement entered into in relation to the Transaction) and assuming
an NXDT share price of US$5.33, an
aggregate of 918,890 NXDT Common Shares would be issuable to such
Unitholders under the Transaction. This represents approximately
2.2% of the issued and outstanding common shares in the capital of
NXDT.
About NexPoint Hospitality Trust
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.
Additional Information and Where to Find It
In connection Transaction, NXDT has filed with the Securities
and Exchange Commission (the "SEC") a registration statement on
Form S-4 (the "Registration Statement") containing the
Circular. The Registration Statement and Circular each contain
important information about the NXDT, NHT, the Transaction and
related matters. UNITHOLDERS OF NHT ARE URGED TO READ THE
REGISTRATION STATEMENT AND CIRCULAR AND OTHER DOCUMENTS THAT ARE
FILED OR WILL BE FILED WITH THE SEC AS WELL AS ANY AMENDMENTS OR
SUPPLEMENTS TO THESE DOCUMENTS CAREFULLY AND IN THEIR ENTIRETY WHEN
THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION ABOUT NXDT, NHT, THE TRANSACTION, AND RELATED MATTERS.
Investors and security holders will be able to obtain the
documentation filed with the SEC free of charge at the SEC's
website, http://www.sec.gov. Investors and security holders may
also obtain these documents, free of charge from NXDT at
https://nxdt.nexpoint.com or by emailing ir@nexpoint.com.
Forward Looking Information
This news release includes forward-looking information within
the meaning of applicable Canadian securities laws and within the
meaning of the Private Securities Litigation Reform Act of 1995
that are based on management's current expectations, assumptions
and beliefs. 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 the approval of the amendments to the COVID
Loans and the CDOR Loans, the approval of the special resolution
authorizing the Transaction, and the details regarding the
aggregate amount of NXDT Common Shares issuable pursuant to the
Transaction. 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.
Neither TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in policies of the TSX Venture
Exchange) accepts responsibility for the adequacy or accuracy of
this release.
Contact:
Investor Relations
IR@nexpoint.com
Media Inquiries
Comms@nexpoint.com
Jesse Blair III
Executive Vice President, Head of Lodging
(833) 697–7523
SOURCE NexPoint Hospitality Trust
