NexPoint Critiques United Development Funding IV's Annual Meeting Cancellation

NexPoint's Concerns Over UDF IV Annual Meeting Cancellation

NexPoint Real Estate Opportunities, LLC has publicly voiced its concerns regarding the United Development Funding IV (UDF IV) decision to cancel its Annual Meeting of Shareholders due to a lack of quorum. This cancellation is viewed as a significant governance failure and raises serious questions about the company’s commitment to its shareholders.

The statement from NexPoint highlights that the decision to not reconvene the meeting reflects a troubling lack of engagement with investors. UDF IV's leadership has indicated that they may believe that the pending acquisition by Ready Capital will finalize before the next scheduled meeting. This approach suggests a strategy to circumvent the pressures of a contested election for trustees—a move that has not been seen in nearly a decade.

NexPoint is calling for UDF IV to reconvene its Annual Meeting in accordance with its bylaws within 120 days after the record date. However, they emphasize that this should only occur after full disclosure on significant matters, particularly the proposed transaction with Ready Capital. Key documents, including recent financial statements and full details of the merger, need to be made available to shareholders to ensure they can adequately assess the implications of the merger.

Additionally, NexPoint rejects the last-minute nature of UDF IV's merger announcement, which came at a time when proper shareholder evaluation was necessary. They maintain that full transparency is crucial, reiterating that they would support the acquisition under the right conditions.

The proxy advisory firm Glass Lewis has also echoed NexPoint’s concerns, particularly regarding UDF IV’s lack of essential disclosures and the timing of the acquisition proposal. They note the bizarre timing of the merger announcement, which happened just two weeks prior to the Trust’s first substantive director election in nearly ten years. This has further fueled doubts about the management's commitment to upholding high governance standards and adequately addressing shareholder feedback.

NexPoint argues that the vote at the cancelled Annual Meeting likely reflected a dead heat, indicating considerable discontent among shareholders with UDF IV's current leadership. They believe that the company has manipulated the meeting’s purpose to sway voter turnout in favor of their agenda prior to the election.

Despite a court order requiring the meeting to take place, UDF IV has shown reluctance to engage through proper communication channels, notably by failing to obtain a non-objecting beneficial owners (NOBO) list, which could have facilitated better communication with a significant portion of shareholders. Instead, they appear to have allocated resources towards legal battles and public relations firms while ignoring essential shareholder outreach efforts.

NexPoint underscores the importance of accountability and access to information for UDF IV’s shareholders. They are calling on these investors to demand the reconvening of their Annual Meeting, along with a thorough disclosure of the merger specifics and meaningful engagement with all shareholders.

In conclusion, NexPoint emphasizes that shareholders deserve the opportunity to make informed decisions about their trustees and the proposed merger. They are advocating for transparency and improved governance practices as key priorities moving forward.

About NexPoint

NexPoint Real Estate Opportunities, LLC is part of the NexPoint Diversified Real Estate Trust, Inc. (NYSE:NXDT). They operate as advisers on various investment platforms and are committed to delivering value through transparent practices and shareholder engagement.

For further details on NexPoint and its initiatives, visit www.nexpoint.com.