Dallas, Monday - NexPoint Diversified Real Estate Trust (NYSE:NXDT) has entered into an amendment to its Advisory Agreement with NexPoint Real Estate Advisors X, L.P., modifying the fee structure payable to the Adviser. The amendment, effective today, alters the monthly fees, now allowing for half of the advisory fee to be paid in the Company's common shares, with the rest in cash. The amendment also stipulates that common shares issued to the Adviser will not exceed 5% of the Company's outstanding shares or voting power, with a maximum of 6,000,000 common shares issued, unless shareholder approval is obtained for a higher amount.
The new arrangement is detailed in the Advisory Agreement Amendment filed with the Securities and Exchange Commission (SEC). The move is seen as a strategic adjustment to the payment structure between NexPoint Diversified Real Estate Trust and its Adviser, potentially aligning the interests of the Adviser with those of the Company's shareholders by partially compensating in equity.
The Advisory Agreement Amendment is available for review in the Exhibit 10.1 of the Current Report on Form 8-K submitted to the SEC. This filing provides further information on the conditions and limitations of the amended agreement.
As per the filing, the issuance of common shares as part of the advisory fee is subject to the aforementioned cap unless a higher issuance is sanctioned by the Company's shareholders. The detailed terms of the amendment can be referenced in the actual exhibit filed with the SEC.
The Company, based in Dallas, Texas, operates within the real estate investment trust (REIT) industry and is managed by NexPoint Real Estate Advisors X, L.P. The trust's common and preferred shares are traded on the New York Stock Exchange under the symbols NXDT and NXDT-PA, respectively. This news is based on a press release statement.
InvestingPro Insights
As NexPoint Diversified Real Estate Trust (NYSE:NXDT) adjusts its fee structure with its Adviser, stakeholders may look at the broader financial health and performance metrics of the company. With a market capitalization of approximately $246.63 million, NXDT's strategy to partially pay advisory fees with common shares could be a move to preserve cash, especially considering the company's recent performance. According to the latest data, NXDT has a negative P/E ratio of -1.89, indicating investor concerns about profitability. Additionally, the revenue for the last twelve months as of Q1 2024 was $59.84 million, reflecting a significant contraction of 44.93%.
Despite these challenging figures, NXDT maintains a robust gross profit margin of 79.03% for the same period, which suggests that while revenue has declined, the company has managed to keep its cost of goods sold in check. This could be a positive sign for investors looking for efficiency in operations. Moreover, the dividend yield stands at 9.65%, highlighting NXDT's commitment to returning value to shareholders, a commitment that is further evidenced by its history of maintaining dividend payments for 18 consecutive years.
Investors considering NXDT should note that the company has not been profitable over the last twelve months and that its short-term obligations exceed liquid assets. However, an "InvestingPro Tip" points out that NXDT has experienced a strong return over the last month, with a 27.98% increase in price total return, which could signal a potential turnaround or investor optimism. For a comprehensive understanding of NXDT's financial health and for additional "InvestingPro Tips," interested parties can visit https://www.investing.com/pro/NXDT. Moreover, users can take advantage of the exclusive offer using the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription. There are a total of 7 additional "InvestingPro Tips" available that could provide further insights into NXDT's prospects.
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