NexPoint Strategic Opportunities Fund a closed-end fund managed by NexPoint Advisors, L.P. (the “Adviser”), today announced the filing of a preliminary proxy statement with the Securities and Exchange Commission (the “SEC”) in connection with its proposal to covert the Fund from a registered investment company to a real estate investment trust (“REIT”). A notice of a special meeting of shareholders (the “Special Meeting”) was included in the filing.
The proposal to change the Fund’s business from a registered investment company to a diversified REIT and to amend certain fundamental investment restrictions (the “Business Change Proposal”) aims to increase shareholder value.
At the Special Meeting, shareholders are being asked to vote upon the Business Change Proposal and, if approved, to approve the amendment and restatement of the Fund’s Agreement and Declaration of Trust (the “Amendment Proposal” and, together with the Business Change Proposal, the “Proposals”).
The Fund’s Board of Trustees (the “Board”), which includes members who are not interested persons of the Fund (the “Independent Trustees”), reviewed the Proposals at length, and believes they are in the best interest of shareholders.
Adoption of the Business Change Proposal is expected to provide the following benefits to NHF shareholders:
- Potential to provide investors with a superior risk adjusted return compared to equity, fixed income, and distressed debt markets through real estate investments over the next decade;
- Potential to reduce the Fund’s historic discount to net asset value (“NAV”), as REITs have, on average, traded more favorable relative to NAV than closed-end funds;
- Potential to provide greater liquidity for shareholders;
- Opportunity to take advantage of the current dislocation in the commercial real estate markets; and
- Potential to position the Fund’s assets to earn greater income for the Fund in an historically low interest rate environment.
Additionally, the Business Change Proposal would expand access to the Adviser’s and affiliates’ (together “NexPoint”) collective real estate capabilities. NexPoint has significant experience underwriting, originating, purchasing, and managing real estate investments. NexPoint manages three publicly traded sector-specific REITs with portfolios consisting of: Class B, value-add multifamily properties; single-family rental homes; hospitality assets; and mortgages.
As such, the Fund has access to a fully integrated, broad institutional real estate investment platform that, as of March 31, 2020, managed approximately $7.8 billion in gross real estate assets.
Given the Adviser’s significant real estate expertise and the potential for the Business Change Proposal to increase shareholder value, the Board, including the Independent Trustees, unanimously recommends that shareholders vote “FOR” the Proposals. Additional information on the potential benefits of the Business Change Proposal, as well as related risks, and the Adviser’s real estate capabilities is available in the preliminary proxy statement.
Business Change Proposal Implementation
If the Proposals are approved by shareholders, the Adviser will begin to transition its business and investments to those of a diversified REIT. At some point during this transition, the Fund will no longer qualify as an “investment company” and will apply to the SEC for an order under the Investment Company Act of 1940 declaring that it has ceased to be an investment company (the “Deregistration Order”). Pending the SEC’s issuance of the Deregistration Order, the Adviser intends to begin realigning the Fund’s portfolio consistent with its new business focus as a diversified REIT. The Adviser anticipates that the implementation period may last up to two years, in which case full implementation will not occur until approximately the middle of 2022, however the Adviser intends to transition its investment portfolio sufficient to qualify as a REIT for tax purposes by the first quarter of 2021.
This time period is an estimate and may vary depending upon the length of the deregistration process with the SEC, tax considerations and the pace at which the Adviser is able to transition certain of the Fund’s investments to tactically fund additional real estate investments.
A copy of the preliminary proxy statement is available free of charge on the SEC’s website at www.sec.gov. The preliminary proxy statement is not complete and is subject to review by the SEC staff and other changes. The Fund expects to file a definitive proxy statement which will then be available free of charge at www.nexpointgroup.com or at the SEC website, www.sec.gov. Shareholders should read the preliminary proxy statement and the definitive proxy statement, when it becomes available, carefully because they both contain or will contain important information. Shareholders should make no decision about the Proposals until reviewing the definitive proxy statement sent to them.
NHF and its trustees and officers, NexPoint and its affiliates’ respective members, trustees, directors, shareholders, officers and employees, Di Costa Partners LLC and other persons may be deemed to be participants in the solicitation of proxies with respect to the Proposals. Shareholders may obtain more detailed information regarding the direct and indirect interests of the foregoing persons by reading the preliminary proxy statement filed with the SEC, and the definitive proxy statement to be filed with the SEC, regarding the Proposals.
About the NexPoint Strategic Opportunities Fund (NHF)
The NexPoint Strategic Opportunities Fund is a closed-end fund managed by NexPoint Advisors, L.P. The fund invests primarily in below investment grade debt, equity securities, and real estate, and has the ability to hedge risk.
For more information visit www.nexpointadvisors.com/fund.
About NexPoint Advisors, L.P.
NexPoint Advisors, L.P. (“NexPoint Advisors”) is an SEC-registered adviser on the NexPoint alternative investment platform (“NexPoint”). NexPoint Advisors serves as the adviser to a suite of funds and investment vehicles, including a closed-end fund, interval fund, business development company (“BDC”), and various real estate vehicles.
For more information visit www.nexpointadvisors.com.