UDF IV Shareholders Should Not Be Misled by the Company's Latest Attempts to Distract from the Current Board's Failures

Rhea-AI Summary

NexPoint cautions United Development Funding IV (UDF IV) shareholders against being misled by the company's recent attempts to distract from the current Board's failures. UDF IV issued a letter to shareholders raising concerns about NexPoint's leadership, which NexPoint claims contains false statements and rehashes previous attacks. NexPoint argues that UDF IV is trying to divert attention from the Board's mismanagement, which has resulted in significant value and liquidity loss.

NexPoint highlights that UDF IV's current Board of Trustees oversaw years of fraud by former executives, who were convicted and are serving prison sentences. The Board also authorized using shareholder funds to defend these executives legally. NexPoint, with $14.5 billion in real estate assets under management, is nominating four independent Trustee candidates to replace the current Board, aiming to enforce loan agreements, pursue defaulting borrowers, manage expenses, and maximize asset value for shareholders.

Positive

• NexPoint has $14.5 billion in real estate assets under management across various asset classes
• NexPoint is one of the largest shareholders, aligning its interests with other shareholders
• NexPoint is nominating four independent Trustee candidates with relevant experience to replace the current Board

Negative

• UDF IV's current Board of Trustees presided over years of fraud committed by former executives
• The Board authorized using tens of millions of shareholder funds to pay for legal defense of convicted former executives
• UDF IV has failed to develop or execute a plan to turn around operations, enhance shareholder value, and create liquidity
• UDF IV's cash distributions are 100% return of capital, further eroding value

NexPoint Cautions Shareholders Not to Let UDF IV's Attacks Divert from Real Issues

DALLAS, Oct. 11, 2024 /PRNewswire/ -- United Development Funding IV ("UDF IV" or the "Company") recently issued a letter to shareholders "raising concerns about the integrity of NexPoint leadership." The letter, which rehashes themes used in previous attacks and include several false claims about NexPoint, are the latest attempt by UDF IV to distract shareholders from both the failures of the current Board of Trustees and the severe mismanagement of the Company that has resulted in a massive loss of value and liquidity. (NexPoint's responses to UDF IV's previous attempts to mislead shareholders can be found here.)

The Company has failed to develop, communicate, or execute a plan to turn around operations, enhance shareholder value, and create liquidity. Despite having had at least six years since the Company's 2018 settlement with the SEC, during which this Board of Trustees and the management team have had exclusive control, the Company has yet to articulate any viable proposal to recover value for shareholders, beyond touting a "long history of cash distributions" that are 100% return of capital and thus only further eroding value.

Shareholders should not be fooled by the Company's misleading claims about NexPoint and should equip themselves with the facts about the current Board and NexPoint's intentions:

Facts about UDF IV's current Board of Trustees:

• Members of the current Board of Trustees presided over years of fraud committed by former UDF IV executives against shareholders.
• Those former executives were convicted on numerous counts of fraud and are serving combined prison sentences of 20+ years, and their convictions were upheld by the U.S. Fifth Circuit Court of Appeals and the U.S. Supreme Court.
• The current Board of Trustees authorized the use of tens of millions of dollars of shareholder funds to pay for the legal defense of the former executives and have made no attempt to recoup those funds on behalf of shareholders—even after the conclusive U.S. Supreme Court decision.

Facts about NexPoint's intentions:

• NexPoint has over $14.5 billion in real estate assets under management (as of June 30, 2024) across numerous asset classes in both public¹ and private REITs and private funds with a proven track record over the past 15 years of producing positive investment returns.
• As one of the largest shareholders, NexPoint is completely aligned with fellow shareholders.
• NexPoint is nominating four Trustee candidates to replace the current Board. The candidates would serve as Independent Trustees with fiduciary duties to represent the interests of ALL shareholders—not just NexPoint's.
• The nominees are independent and have relevant experience and track records of acting for the benefit of shareholders and creating corporate value.
• If elected, the nominees would cause UDF IV to aggressively enforce its loan agreements, pursue remedies against defaulting borrowers, manage its expenses, and realize the fullest value possible for its assets.

NexPoint urges shareholders to vote using the GREEN proxy card FOR its nominees: Paul S. Broaddus, Edward N. Constantino, John A. Good, and Julie Silcock. Voting information and additional shareholder resources can be found at www.udfaccountability.com.

About NexPoint

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.

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CONTACT INFORMATION 

Investor Contacts
Okapi Partners: info@okapipartners.com
NexPoint: ir@nexpoint.com

Media Contacts
Paul Caminiti/Pamela Greene (Reevemark): nexpointteam@reevemark.com

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1 Among the other public REITs advised by NexPoint and its affiliates are NexPoint Residential Trust, Inc. (NYSE:NXDT) and NexPoint Real Estate Finance, Inc. (NYSE: NREF).

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SOURCE NexPoint Advisors, L.P.

FAQ

What is NexPoint's response to UDF IV's recent letter to shareholders?

NexPoint claims that UDF IV's letter contains false statements and is an attempt to distract shareholders from the current Board's failures and mismanagement, which have resulted in significant value and liquidity loss for NREF.

How much real estate assets does NexPoint have under management as of June 30, 2024?

NexPoint has over $14.5 billion in real estate assets under management across various asset classes in both public and private REITs and private funds.

What are NexPoint's intentions regarding UDF IV's Board of Trustees?

NexPoint is nominating four independent Trustee candidates to replace the current Board of UDF IV (NREF). These nominees would serve as Independent Trustees with fiduciary duties to represent the interests of all shareholders.

What actions would NexPoint's nominees take if elected to UDF IV's Board?

If elected, NexPoint's nominees would cause UDF IV (NREF) to aggressively enforce its loan agreements, pursue remedies against defaulting borrowers, manage expenses, and realize the fullest value possible for its assets.