Following Years of Governance Failures, Court Orders UDF IV to Hold Trustees Election in 2024

Rhea-AI Summary

NexPoint Real Estate Opportunities, plans to nominate four independent trustees for the Board of Trustees of United Development Funding IV following a court order requiring an election in 2024. The move aims to address governance failures and misconduct within UDF IV, including the lack of annual meetings for eight years and misuse of shareholder investments. NexPoint seeks to enhance shareholder value, increase transparency, and realign the Board with shareholder interests.

Positive

• NexPoint's nomination of four independent trustees is a positive step towards addressing governance failures at UDF IV.
• The court order requiring an election in 2024 reflects the urgent need for a restructured Board of Trustees that serves shareholders' interests.
• NexPoint's efforts to rectify harm caused to UDF IV shareholders, including highlighting mistreatment associated with Fair Fund settlement payments, demonstrate a commitment to enhancing shareholder value and transparency.

Negative

• None.

NexPoint to Nominate Four Highly Qualified and Independent Trustees

DALLAS, April 22, 2024 /PRNewswire/ -- NexPoint Real Estate Opportunities, LLC ("NexPoint") today announced its intent to nominate a slate of four independent trustees for election to the Board of Trustees of United Development Funding IV ("UDF IV" or the "Company"), a real estate investment trust in which NexPoint is a significant shareholder. This follows an order from the Circuit Court for Baltimore City (the "Court") requiring UDF IV to hold an Annual Meeting on or before December 31, 2024, during which four of the five trustees must stand for election. 

"NexPoint is pleased that the Court ruled that shareholders have a right to elect all independent trustees of UDF IV in 2024. This Court order follows UDF IV's persistent misconduct and governance abuses – which have continued even after the Company's executives were convicted and incarcerated for securities fraud – including failing to hold an Annual Meeting for eight years. In fact, three independent directors have not stood for election since June 2015 and one independent director has never stood for election.  We look forward to officially nominating four trustee candidates, with the goal of realigning the Board with shareholder interests, increasing transparency and seeking opportunities for enhancement of shareholder value and, ultimately, liquidity."

NexPoint believes the Court's ruling is a decisive reproach of UDF IV's governance practices and reflects the urgent need for a completely restructured Board of Trustees that truly serves shareholders. The Court noted that the Company's governance structure, under which trustees are held in staggered classes and subject to rotating elections "combined with UDF IV not holding annual meetings for several years, resulted in no opportunities for [NexPoint] or any other stockholders to nominate challengers to the incumbent trustees."

NexPoint's efforts to rectify the harm caused to UDF IV shareholders continue to make an impact. Earlier this year, amid litigation initiated by NexPoint, UDF IV removed indefensible bylaw restrictions limiting the shareholders' ability to nominate Board candidates. Additionally, in February, NexPoint highlighted further shareholder mistreatment associated with the distribution of Fair Fund settlement payments to certain UDF IV shareholders.  Unbeknownst to the shareholders, UDF IV used shareholder investments to fund $6,809,282 of the Fair Fund, contrary to the final judgment against former UDF IV officers Hollis Greenlaw, Benjamin Wissink, and Cara Obert and current Chairman of UDF IV's advisor, Todd Etter, which required them individually to disgorge those funds as ill-gotten gains for the benefit of shareholders.

UDF IV shareholders seeking further details on NexPoint's reform efforts can contact us at UDFinvestors@NexPoint.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

Media Contacts

Lucy Bannon
Chief Communications Officer
lbannon@nexpoint.com

Paul Caminiti/Jacqueline Zuhse  
Reevemark
NexPointTeam@reevemark.com 

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SOURCE NexPoint

FAQ

What is NexPoint's plan regarding the Board of Trustees of UDF IV?

NexPoint plans to nominate four independent trustees for the Board of Trustees of United Development Funding IV.

Why is the court ordering UDF IV to hold an Annual Meeting in 2024?

The court order reflects the need to address governance failures and misconduct within UDF IV, including the lack of annual meetings for eight years.

What is the goal of NexPoint in nominating four trustee candidates?

NexPoint aims to realign the Board of Trustees with shareholder interests, increase transparency, and seek opportunities for enhancement of shareholder value and liquidity.

What impact have NexPoint's efforts had on UDF IV shareholders?

NexPoint's efforts have highlighted mistreatment associated with Fair Fund settlement payments and aim to rectify harm caused to UDF IV shareholders.

How can UDF IV shareholders seeking further details on NexPoint's reform efforts contact NexPoint?

UDF IV shareholders can contact NexPoint at UDFinvestors@NexPoint.com for further details on reform efforts.