Addresses NexPoint’s Latest Attempts to Undermine the Trust at the Expense of UDF IV Shareholders
No Shareholder Action Required at this Time
Visit UDFforShareholders.com to Learn More about the Trust’s Commitment to Value Creation
IRVING, Texas, June 24, 2024 (GLOBE NEWSWIRE) -- United Development Funding IV (“UDF IV” or the “Trust”) today issued a letter to shareholders in response to notice that NexPoint Real Estate Opportunities LLC and its affiliates (collectively, “NexPoint”) have submitted nominations for a controlling slate of dissident trustee nominees for election ahead of the Company’s 2024 Annual Meeting of Shareholders.
The letter to shareholders and other important information regarding the Trust’s commitment to value creation can be found at UDFforShareholders.com.
The full text of the letter to shareholders follows:
Dear UDF IV Shareholder,
Your United Development Funding IV (“UDF IV” or the “Trust”) Board of Trustees and management team have acted, and continue to act, to protect and promote the interests of the Trust’s shareholders. Over the last several years we have navigated extraordinary challenges and will continue to focus on safeguarding the Trust’s assets and maximizing shareholder value while building on the Trust’s long history of cash distributions.
Despite our work to drive long-term value for shareholders, NexPoint Real Estate Opportunities, LLC and its affiliates (collectively, “NexPoint”), which have a track record of acting against the interests of UDF IV shareholders, submitted nominations for a controlling slate of dissident trustees for election at the 2024 Annual Meeting of Shareholders later this year.
NexPoint’s attempt to elect trustees to the UDF IV Board is simply the latest step in its ongoing, self-interested campaign, which is grounded in misinformation and, we believe, aimed at derailing the continued operations of the Trust in an attempt to extract value from the Trust at the expense of all other shareholders. While the Trust’s Board and management team are focused on protecting and enhancing shareholder value, it has become overwhelmingly clear to us that NexPoint has no interest in advancing these objectives. The Board of Trustees believes that NexPoint taking control of the Trust would present serious risks for UDF IV shareholders and the value of your investment in the Trust.
For the last 5+ years, NexPoint has attempted to take over management of the Trust, causing significant disruption to the Trust’s operations and coming at the expense of shareholders’ hard-earned dollars:
- NexPoint has launched numerous frivolous lawsuits against the Trust – including a defamation suit – forcing the Trust to waste resources that could otherwise be used for the benefit of shareholders.
- In 2020, NexPoint launched a hostile tender offer, which it extended 13 times, to purchase Trust shares at the bargain basement price of $1.10 per share, or approximately a 90% discount to the Trust’s book value per share at the time.
Beyond their nefarious actions against the Trust, NexPoint’s principals – including its founder, James Dondero – have engaged in a litany of actions that create considerable cause for concern regarding their integrity, character and willingness to do right by the investors they claim to represent. According to public filings, Dondero and his affiliates have been found by a variety of courts, arbitration panels, and administrative tribunals to have breached their fiduciary duties to investors, and engaged in intentional fraudulent transfers, willful misconduct and self-dealing.
Over the next several months, you will likely continue to receive materials from NexPoint with fictitious claims regarding the Trust as well as our Board and management team. We expect that NexPoint will continue to twist the facts and rehash old events in an attempt to fearmonger and deceive you into supporting their misguided and malicious campaign. These desperate tactics are not new. NexPoint’s false rhetoric is intended to distract from the actions we’ve taken to position the Trust to drive long-term value for the benefit of all shareholders.
Despite NexPoint’s persistent attempts to undermine the Trust, the UDF IV Board and management team have safeguarded the value of our portfolio and continued to drive shareholder returns:
- The Board has declared cash distributions of approximately $38 million, or approximately $1.24 per share, to shareholders since reinstating distributions in the third quarter of 2019 – far more than the $1.10 per share NexPoint offered to pay shareholders for their Trust shares. Cash distributions declared since inception total approximately $186 million, equating to approximately $6.06 per share.
- The Trust has continued to actively and professionally manage its portfolio, including originating 9 new loans since 2020 for a total commitment of over $70 million. Importantly, 8 of these new loans funded new phases of projects for which the Trust has existing loans in its portfolio. These new loans are expected to accelerate the performance of such existing project loans. To date, one of these 9 loans has already been paid in full, and another loan is expected to be repaid in full within the next 30 days.
- The Trust engaged an independent accounting firm that audited the Trust’s 2022 financial statements and is currently auditing the Trust’s 2023 financial statements, which are expected to be made available to Trust shareholders in the third quarter of 2024.
The UDF IV Board is committed to a high standard of corporate governance and takes its fiduciary duties to shareholders extremely seriously. Despite NexPoint’s track record of acting against the interests of shareholders, the Board will thoroughly evaluate NexPoint’s trustee nominees as we would any other Board candidate.
UDF IV will be mailing proxy materials to shareholders in due course, which will include the WHITE proxy card and additional details regarding the Board of Trustees’ recommendation of nominees for election to the Board at the 2024 Annual Meeting of Shareholders. Please discard any other color proxy card sent to you.
These proxy materials and other important information related to the 2024 Annual Meeting of Shareholders will be made available to shareholders at UDFforShareholders.com.
We thank you for your investment and continued support of UDF IV.
Sincerely,
The UDF IV Board of Trustees
UDF IV shareholders are not required to take any action at this time.
About United Development Funding IV
United Development Funding IV is a Maryland real estate investment trust. UDF IV was formed primarily to generate current interest income by investing in secured loans and producing profits from investments in residential real estate. Additional information about UDF IV can be found on its website at www.udfiv.com. UDF IV may disseminate important information regarding its operations, including financial information, through social media platforms such as Twitter, Facebook and LinkedIn.
Forward-Looking Statements
This release contains forward-looking statements relating to, among other things, the performance of loans in the Trust’s portfolio and the Trust’s plans regarding the 2024 Annual Meeting of Shareholders. These forward-looking statements are based on management’s current expectations and are not guarantees of future performance or future events. Such forward-looking statements generally can be identified by our use of forward-looking terminology such as “may,” “will,” “expect,” “intend,” “anticipate,” “estimate,” “believe,” or other similar words. Readers should be aware that there are various factors, many of which are beyond UDF IV’s control, which could cause actual results to differ materially from any forward-looking statements made in this release. Accordingly, readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this release. Forward-looking statements in this document speak only as of the date of this release, and UDF IV undertakes no obligation to update any such statements that may become untrue because of subsequent events.
Investor Contact:
Investor Relations
1-800-859-9338
investorrelations@umth.com
Media Contact:
Mahmoud Siddig / Lucas Pers
Joele Frank, Wilkinson Brimmer Katcher
(212) 895-8668
