DALLAS, June 19, 2020 /PRNewswire/ -- NexPoint Strategic
Opportunities Fund (NYSE:NHF) ("NHF" or the "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.
Proxy Statement
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 (NYSE:NHF) ("NHF") 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.
While NexPoint is committed to the REIT conversion, it is
still contingent upon an affirmative shareholder vote, regulatory
approval, and the ability to reconfigure NHF's portfolio to attain
REIT status and deregister as an investment company. The conversion
process could take approximately 24 months; and there can be no
assurance that conversion of NHF to REIT status will improve its
performance or reduce the discount to NAV.
In addition, these actions may adversely affect the Fund's
financial condition, yield on investment, results of operations,
cash flow, per share trading price of our common shares and ability
to satisfy debt service obligations, if any, and to make cash
distributions to shareholders. Whether the Fund remains a
registered investment company or converts to a REIT, its common
shares, like an investment in any other public company, are subject
to investment risk, including the possible loss of investment. For
a discussion of certain other risks relating to the proposed
conversion to a REIT, see "Implementation of the Business Change
Proposal and Related Risks" in the proxy statement.
Shares of closed-end investment companies frequently trade at
a discount to net asset value. The price of the Fund's shares is
determined by a number of factors, several of which are beyond the
control of the Fund. Therefore, the Fund cannot predict whether its
shares will trade at, below or above net asset value. Past
performance does not guarantee future results.
No assurance can be given that the Fund will achieve its
investment objectives.
Closed-End Fund Risk. The Fund is a closed-end
investment company designed primarily for long-term investors and
not as a trading vehicle. No assurance can be given that a
shareholder will be able to sell his or her shares on the NYSE when
he or she chooses to do so, and no assurance can be given as to the
price at which any such sale may be effected.
Credit Risk. Investments rated below investment grade
are commonly referred to as high-yield, high risk or "junk debt."
They are regarded as predominantly speculative with respect to the
issuing company's continuing ability to meet principal and/or
interest payments. Non-payment of scheduled interest and/or
principal would result in a reduction of income to the Fund, a
reduction in the value of the asset experiencing non-payment and a
potential decrease in NAV of the Fund.
Interest Rate Risk. Interest rate risk is the risk that
debt securities, and the Fund's net assets, may decline in value
because of changes in interest rates. Generally, fixed rate debt
securities will decrease in value when interest rates rise and
increase in value when interest rates decline.
Leverage Risk. The Fund uses leverage through borrowings
from notes and a credit facility, and may also use leverage through
the issuances of preferred shares. The use of leverage magnifies
both the favorable and unfavorable effects of price movements in
the investments made by the Fund. Insofar as the Fund employs
leverage in its investment operations, the Fund will be subject to
substantial risks of loss.
Industry Concentration Risk. The Fund must invest at
least 25% of the value of its total assets at the time of purchase
in securities of issuers conducting their principal business
activities in the real estate industry. The Fund may be subject to
greater market fluctuations than a fund that does not concentrate
its investments in a particular industry. Financial, economic,
business, and other developments affecting issuers in the real
estate industry will have a greater effect on the Fund, and if
securities of the real estate industry fall out of favor, the Fund
could underperform, or its NAV may be more volatile than, funds
that have greater industry diversification.
Real Estate Risk. Real estate investments are subject to
various risk factors. Generally, real estate investments could be
adversely affected by a recession or general economic downturn
where the properties are located. The full extent of the impact and
effects of the recent outbreak of COVID-19 on the future financial
performance of the Fund, and specifically, on its investments and
tenants to properties held by its REIT subsidiaries, are uncertain
at this time. The outbreak could have a continued adverse impact on
economic and market conditions and trigger a period of global
economic slowdown.
Illiquidity of Investments Risk. The investments made by
the Fund may be illiquid, and consequently the Fund may not be able
to sell such investments at prices that reflect the Investment
Adviser's assessment of their value or the amount originally paid
for such investments by the Fund.
Media Contact
Lucy Bannon
mediarelations@nexpointadvisors.com
1-972-419-6272
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SOURCE NexPoint Advisors, L.P.