NexPoint
Credit Strategies Fund (NYSE: NHF) announced today a plan to
separate its business into two separate and independent publicly traded
companies:
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NexPoint Credit Strategies Fund (“NHF”), which will continue to
operate as a non-diversified, closed-end investment company; and
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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.nexpointadvisors.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.
Copyright Business Wire 2014