- NexPoint Credit Strategies Fund (“NHF”), which will continue to operate as a non-diversified, closed-end investment company; and
- NexPoint Residential Trust, Inc. (“NXRT”), which will acquire, own, operate and selectively develop multifamily real property.
NHF plans to effect the separation through a spin-off in which it will distribute all of the outstanding shares of NXRT common stock to NHF’s shareholders on a pro rata basis. At the time of the spin-off, NXRT, which is currently a wholly owned subsidiary of NHF, will hold all or a majority interest in all of the multifamily properties that NHF holds interests in through its subsidiary Freedom REIT, LLC prior to the spin-off.
NXRT intends to qualify and elect to be taxed as a real estate investment trust, or REIT, for U.S. federal income tax purposes, commencing with its first taxable year of operations as a separate public company. NXRT intends to file an application to list its shares on the New York Stock Exchange under the ticker symbol “NXRT.”
NXRT will be externally managed by NexPoint Real Estate Advisors, L.P., an affiliate of NexPoint Advisors, the advisor for NHF, and Highland Capital Management, L.P., a leading global alternative asset manager and an SEC-registered investment advisor which, together with its affiliates, has approximately $19 billion in assets under management as of June 30, 2014. NexPoint Real Estate Advisors, L.P. will conduct substantially all of NXRT’s operations and manage NXRT’s real estate investments. The members of the management team of NexPoint Real Estate Advisors, L.P. are expected to be James Dondero, Scott Ellington, Brian Mitts, Matt McGraner, and Matthew Goetz. The management team has significant experience across real estate investing, private lending, and private equity.
“We believe the spin-off of NXRT from NHF allows us to continue developing and optimizing our real estate portfolio as a standalone product,” said Brian Mitts, Chief Operating Officer of NexPoint Advisors.
NXRT has filed a registration statement on Form 10 relating to the spin-off with the Securities and Exchange Commission. The spin-off is subject to customary conditions, including effectiveness of the registration statement filed with the Securities and Exchange Commission, execution of inter-company agreements and final approval by NHF’s board of trustees. NHF anticipates that the spin-off will be completed in the fourth quarter of 2014, but there can be no assurances regarding the final terms and structure of the spin-off or that it will be completed. In addition, NHF management affirmed that NHF does not intend to “stand still” or otherwise abate its acquisition program during the pendency of the transaction, and references to the property counts, capitalization or financial condition of either NHF or NXRT and similar statements may change as a result of acquisitions, expenditures or other changes made prior to the effective date of the spin-off.
“Our experienced and dedicated real estate team continues to see attractive investments in multifamily properties in Texas and the Southeastern United States. This spin-off offers a more flexible and efficient platform to invest in these opportunities,” said Matt McGraner, Managing Director of Real Estate at Highland Capital Management.
Ladenburg Thalmann Financial Services, Inc. will be serving as financial advisor to NHF in connection with the spin-off. Jones Day is serving as legal advisor to NXRT. Dechert LLP is serving as legal advisor to NHF.
About NexPoint Credit Strategies Fund
NexPoint Credit Strategies Fund is a closed-end fund managed by NexPoint Advisors, L.P. NHF’s investment objectives are to provide both current income and capital appreciation. NHF is invested primarily in below investment grade debt and equity securities and has the ability to hedge risk. The manager attempts to exceed the return of the Dow Jones Credit Suisse Hedge Fund Index in a transparent, registered fund format with monthly dividends. An investment in NHF is not appropriate for all investors. No assurance can be given that NHF will achieve its investment objectives.
Shares of closed-end investment companies frequently trade at a discount to net asset value. The price of NHF’s shares is determined by a number of factors, several of which are beyond the control of NHF. Therefore, NHF cannot predict whether its shares will trade at, below or above net asset value. Past performance does not guarantee future results. More information about NexPoint Credit Strategies Fund is available at www.nexpointfunds.com.
For more information: (877) 665-1287
About Highland Capital Management, L.P.
Highland Capital Management, L.P. is an SEC-registered investment adviser which, together with its affiliates has approximately $19 billion of assets under management. Founded in 1993 by Jim Dondero and Mark Okada, Highland is one of the largest and most experienced global alternative credit managers. Highland specializes in credit strategies, such as credit hedge funds, long only funds and separate accounts, distressed and special situation private equity, and collateralized loan obligations (CLOs). Highland also offers alternative investments, including emerging markets, long/short equities, and natural resources. Highland’s diversified client base includes public pension plans, foundations, endowments, corporations, financial institutions, fund of funds, governments, and high net-worth individuals. Highland is headquartered in Dallas, Texas and maintains offices in New York, Sao Paolo, Singapore, and Seoul. More information about Highland Capital Management is available at www.highlandcapital.com.
Cautionary Notice Regarding Forward-Looking Statements:
This press release contains forward-looking statements that are based on management’s current expectations, assumptions and beliefs about its business, financial performance, operating results, the industry in which it operates and other future events. Forward-looking statements can often be identified by words such as “anticipates,” “expects,” “intends,” “plans,” “predicts,” “believes,” “seeks,” “estimates,” “may,” “will,” “should,” “would,” “could,” “potential,” “continue,” “ongoing,” similar expressions, and variations or negatives of these words. These forward-looking statements include, but are not limited to, statements regarding the anticipated timing, structure, benefits and tax treatment of the proposed separation of NHF’s multifamily real estate assets and its other investments, and future financing plans, growth prospects and operating and financial performance. They are not guarantees of future results and are subject to risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed in any forward-looking statement.
Risks and uncertainties related to the proposed spin-off include: NHF’s and NXRT’s ability to obtain all necessary consents and approvals and satisfy all conditions to the spin-off; the ability to expand the real estate business following the spin-off; and the potential diversion of management’s attention from traditional business concerns. Other risks and uncertainties relate to NXRT’s business, its industry and its common shares and include: investment risk; changes in interest rates; risks associated with investing in high multifamily properties; risks associated with NXRT’s use of leverage; and market risks generally. Readers should not place undue reliance on any forward-looking statements and are encouraged to review NXRT’s Form 10 registration statement, including its preliminary information statement, filed with the Securities and Exchange Commission on September 29, 2014, for a more complete discussion of the risks and other factors that could affect NXRT’s business, prospects and any forward-looking statements. Except as required by the federal securities laws, NXRT does not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changing circumstances or any other reason after the date of this press release.