NexPoint Hospitality Trust Announces Settlement Agreement with Condor Hospitality Trust, Inc. and Receipt of Notice of Default from Lender

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
[email protected]

Chief Financial Officer
Brian Mitts
972-419-2556
[email protected]

Media Inquiries
[email protected]

¹ In this release, "we," "us," "our," and "NHT" each refer to NexPoint Hospitality Trust.

SOURCE NexPoint Hospitality Trust