DALLAS, TX - NexPoint Credit Strategies Fund announced a plan to separate its business into two separate and independent publicly traded companies: 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.