NexPoint Reminds UDF IV Shareholders That Actions Speak Louder Than Words and Urges Them to Vote for New Board Representatives

Rhea-AI Summary

NexPoint Real Estate Opportunities has issued a critical mailing to shareholders of United Development Funding IV (UDF IV) ahead of the Annual Meeting of Shareholders. The mailing highlights serious concerns about the current Board's actions, including failing to hold annual meetings for eight years, avoiding financial transparency, and using shareholder funds to pay for former executives' legal issues. NexPoint criticizes the Board for allowing the loan portfolio to become 98% concentrated with a single borrower and permitting over $100 million in loan extensions. The company urges shareholders to vote for NexPoint's nominees using their GREEN proxy materials to implement necessary changes and maximize shareholder value.

Positive

• None.

Negative

• No annual meetings held for 8 years
• No financial statements issued for 8 years
• Shareholder funds used to pay former executives' SEC-ordered disgorgement
• Shareholder funds used for former executives' criminal defense
• 98% loan portfolio concentration with single borrower
• Over $100M in loans extended without justification
• Continued payment of management fees to advisor despite fraud concerns

Insights

Corporate Governance Expert

This proxy battle highlights severe corporate governance failures at UDF IV. The current board's actions represent significant red flags, including the 8-year absence of annual meetings and financial statements, unauthorized use of shareholder funds for legal expenses and questionable loan management practices. The $100 million in extended loans with a 98% concentration to a single borrower indicates extremely poor risk management. The board's attempts to entrench themselves by changing bylaws and resisting shareholder meetings demonstrate a clear disregard for shareholder rights. These governance issues have likely contributed to significant value destruction and increased risk for investors. NexPoint's push for board representation could potentially improve oversight and transparency, though the deep-rooted issues may take considerable time to address.

REIT Financial Analyst

The financial implications of UDF IV's management decisions are deeply concerning. The concentration of 98% of unaffiliated debt with a single borrower creates extraordinary risk exposure. The extension of $100+ million in loans while continuing to pay management fees to imprisoned executives demonstrates severe mismanagement of shareholder capital. The lack of financial statements for 8 years makes proper valuation impossible and likely violates securities regulations. These factors suggest significant asset quality issues and potential hidden liabilities that could materially impact shareholder value. The proxy contest represents a critical juncture for investors to potentially recover value through improved management and transparency.

Vote for NexPoint Nominees to Protect Shareholders' Interests and Maximize Value

DALLAS, Nov. 21, 2024 /PRNewswire/ -- NexPoint Real Estate Opportunities, LLC (together with its affiliates "NexPoint") announced today that it has sent a mailing to fellow shareholders of United Development Funding IV ("UDF IV" or the "Company"), a real estate investment trust, ahead of the Company's upcoming Annual Meeting of Shareholders.

• Shareholders can review the full mailing here.

UDF IV continues to provide a misleading account of the actions of UDF IV's current Trustees that ignores their role in extensive misdeeds that have damaged shareholders. At the same time, UDF IV continues to mischaracterize NexPoint and its nominees.

The UDF IV Board's egregious actions speak for themselves. The mailing considers how some of the current Trustees' actions to date have impacted shareholders.

For example, the current Board:

• Allowed UDF IV to go eight years without an annual meeting;
• Changed the Company bylaws to avoid standing for reelection;
• Allowed UDF IV to go eight years without issuing any financial statements;
• Actively fought NexPoint's efforts to force an annual meeting, election of all independent trustees, and any level of financial transparency;
• Approved use of shareholder funds to pay former executives' SEC-ordered disgorgement;
• Approved use of shareholder funds to pay for former executives' criminal defense;
• Has taken no action against the Company's advisor for defrauding UDF IV shareholders, which continues to enrich former executives while they serve prison sentences;
• Permitted UDF IV's loan portfolio to become dangerously concentrated around a single borrower, representing 98% of the Company's unaffiliated debt; and
• Inexplicably, and without any justification, allowed over $100 million in loans to be extended, permitting the advisor to drain tens of millions of dollars in management fees for years to come.

Shareholders finally have the chance to replace the current Trustees by voting FOR NexPoint's nominees. Voting information can be found here.

Shareholders are encouraged to vote FOR NexPoint's nominees TODAY using NexPoint's GREEN proxy materials to enact long overdue change and elect Trustees who will work for all shareholders to maximize value at UDF IV.

NexPoint encourages shareholders to visit udfaccountability.com and complete the contact form to receive ongoing updates about the Company and the upcoming Annual Meeting.

Shareholders can also contact NexPoint via email 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

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

Voting Assistance
Email: info@okapipartners.com
Phone: (212) 297-0720

General Inquiries
Email: udfinvestors@nexpoint.com

Media Relations
Email: nexpointteam@reevemark.com

Investor Relations
Email: ir@nexpoint.com

View original content to download multimedia:https://www.prnewswire.com/news-releases/nexpoint-reminds-udf-iv-shareholders-that-actions-speak-louder-than-words-and-urges-them-to-vote-for-new-board-representatives-302313657.html

SOURCE NexPoint Advisors, L.P.

FAQ

What are the main issues NexPoint identified with UDF IV's current Board?

NexPoint identified several issues including no annual meetings or financial statements for 8 years, use of shareholder funds for executives' legal issues, 98% loan concentration with one borrower, and unjustified loan extensions exceeding $100 million.

How can UDF IV shareholders vote for NexPoint's nominees?

Shareholders can vote FOR NexPoint's nominees using the GREEN proxy materials. They can visit udfaccountability.com or contact udfinvestors@nexpoint.com for more information.

What percentage of UDF IV's unaffiliated debt is concentrated with a single borrower?

According to NexPoint, 98% of UDF IV's unaffiliated debt is concentrated with a single borrower.