DALLAS and TORONTO, Oct. 15,
2020 /CNW/ -- NexPoint Hospitality Trust
("NHT"1) (TSX-V: NHT.U) announced today that it has
entered into a settlement agreement (the "Settlement Agreement")
with Condor Hospitality Trust, Inc. ("Condor") following Condor's
termination of the previously announced merger agreement (the
"Merger Agreement").
Following the termination of the Merger Agreement, Condor
claimed that it was entitled to receive a termination fee of
US$11,925,000. Pursuant to the
Settlement Agreement, NHT and its subsidiaries and
NexPoint Advisors L.P. ("NexPoint Advisors" and together with NHT
and its subsidiaries, the "NHT Parties") have agreed to make three
payments to Condor totaling US$7,000,000 (the "Settlement Amount"). The first
payment of US$2,250,000 is to be made
within two business days of the execution of the Settlement
Agreement (the "Initial Payment"), the second payment of
US$2,500,000 is to be made on or
before October 30, 2020 (the "Second
Payment") and the third payment of US$2,250,000 is to be made on or before
December 30, 2020 (the "Third
Payment" and together with the Initial Payment and the Second
Payment, the "Settlement Payments"). Upon timely completion of all
of the Settlement Payments, the NHT Parties' settlement liability
will be satisfied in full and the parties will be released from any
and all further claims or liabilities in connection with the Merger
Agreement. In the event that the Settlement Payments are not timely
made, in addition to the amounts owing under the Settlement
Payments, an amount of US$4,925,000,
together with an amount to cover Condor's fees and expenses related
to the collection and enforcement of the Settlement Payments, will
be owing to Condor. The NHT Parties have issued a promissory note
to Condor evidencing their obligations to make these
payments.
NHT has entered into an indemnification agreement with NexPoint
Real Estate Advisors VI, L.P. ("NREA") pursuant to which NREA or
funds advised by it or its affiliates have agreed to fully fund the
Settlement Payments (other than the Initial Payment, which shall be
paid out of funds held in escrow for the merger) and indemnify NHT
and its subsidiaries for any losses incurred in relation to the
Settlement Agreement. In exchange for funding the Settlement
Payments, a subsidiary of NHT has agreed to issue US$4,750,000 principal amount of promissory
notes to the entities funding the Settlement Payments (the
"Affiliate Notes").
Multilateral Instrument 61-101
The issuance of the
Affiliate Notes to the entities funding the Settlement Payments
will constitute a "related party transaction" under Multilateral
Instrument 61-101 - Protection of Minority Security Holders in
Special Transactions ("MI 61-101"). The issuance of the
Affiliate Notes was reviewed and considered by the independent
trustees of NHT with the assistance of legal counsel. The
issuance of the Affiliate Notes is not subject to the formal
valuation and minority approval requirements of MI 61-101 as the
fair market value of the transaction is not more than 25% of NHT's
market capitalization.
Receipt of Notice of Default
NHT also announced today
that the lender under NHT's existing loan on the Nashville Holiday
Inn Express property (the "HIX Loan") has delivered a formal notice
of default in connection with NHT's previously disclosed default
under the HIX Loan. The lender has elected not to pursue any
remedies in connection with the default but has reserved its rights
to pursue such remedies in the future. NHT is in discussions with
the lender in connection with the delivery of the notice of
default.
About NHT
NexPoint Hospitality Trust is a publicly
traded real estate investment trust, with its Units listed on the
TSX Venture Exchange under the ticker NHT.U. NHT is focused on
acquiring, owning and operating well-located hospitality properties
in the United States that offer a
high current yield and in many cases are underperforming assets
with the potential to increase in value through investments in
capital improvements, a market-based recovery, brand repositioning,
revenue enhancements, operational improvements, expense
inefficiencies, and exploiting excess land or underutilized space.
NHT owns 11 branded properties sponsored by Marriott, Hilton and
Intercontinental Hotels Group, located across the U.S. NHT is
externally advised by NexPoint Real Estate Advisors VI, L.P.
Forward-Looking Information
Certain statements in
this press release may constitute "forward-looking" information
that involves known and unknown risks, uncertainties and other
factors, and it may cause actual results, performance or
achievements or industry results, to be materially different from
any future results, performance or achievements or industry results
expressed or implied by such forward-looking information.
Forward-looking information is identified by the use of terms and
phrases such as "anticipate", "believe", "could", "estimate",
"expect", "intend", "may", "plan", "predict", "project", "will",
"would", and similar terms and phrases, including references to
assumptions.
Forward-looking information contained in this press release is
based on certain key expectations and assumptions made by NHT.
Although the forward-looking information contained in this press
release is based upon what the NHT's management believes to be
reasonable assumptions, NHT cannot assure investors that actual
results will be consistent with such information. Forward-looking
information reflects current expectations of management regarding
future events and operating performance as of the date of this
press release. Such information involves significant risks and
uncertainties, should not be read as guarantees of future
performance or results, and will not necessarily be accurate
indications of whether or not such results will be achieved. A
number of factors could cause actual results to differ materially
from the results discussed in the forward-looking information, and
a description of these factors can be found under "Risk Factors" in
NHT's final prospectus dated March 27,
2019, NHT's final short form base shelf prospectus dated
November 15, 2019 and Management's
Discussion and Analysis dated August 28,
2020, which are available on SEDAR (www.sedar.com).
The forward-looking information contained herein is expressly
qualified in its entirety by this cautionary statement.
Forward-looking information reflects management's current beliefs
and is based on information currently available to NHT. The
forward-looking information is made as of the date of this press
release and NHT assumes no obligation to update or revise such
information to reflect new events or circumstances, except as may
be required by applicable law.
Neither TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in policies of the TSX Venture
Exchange) accepts responsibility for the adequacy or accuracy of
this release.
Contact:
Jackie Graham
Investor Relations
972-419-6213
JGraham@nexpointadvisors.com
Chief Financial Officer
Brian Mitts
972-419-2556
BMitts@nexpointadvisors.com
Media Inquiries
MediaRelations@nexpointadvisors.com
1 In this release, "we," "us," "our," and "NHT"
each refer to NexPoint Hospitality Trust.
SOURCE NexPoint Hospitality Trust