FAQ

When can I vote?
  • You can vote, and are encouraged to vote, today on the WHITE proxy card “FOR” the re-election of the four independent Trustees - Steven J. Finkle, Lawrence S. Jones, J. Heath Malone and Phillip K. Marshall– who oversee our efforts to protect the value of your investment.
  • To cast your vote, please follow the instructions on your WHITE proxy card.
  • If you have any questions or require any assistance with voting your shares, please call the Trust’s proxy solicitor, Innisfree M&A Incorporated, at +1 (877) 750-9496 in the U.S. and Canada or +1 (412) 232-3561.
How do I vote?
  • You can vote your shares by following the instructions on the WHITE proxy card.
  • If you have any questions or require any assistance with voting your shares, please call the Trust’s proxy solicitor, Innisfree M&A Incorporated, at +1 (877) 750-9496 in the U.S. and Canada or +1 (412) 232-3561.
  • Additional information is also available at UDFforShareholders.com.
When is the deadline to vote?
  • Shareholders must submit their votes by the 2024 Annual Meeting, which will be held on December 10, 2024, at 10:00 AM CST in a virtual-only format.
  • UDF IV shareholders as of the close of business on November 12, 2024, the record date, are entitled to vote their shares at the Annual Meeting or to submit a proxy before the Annual Meeting.
  • We urge you to vote your shares on the WHITE proxy card "FOR" the UDF IV Board Nominees today in order to ensure your vote is counted.
What should I do if I’ve already voted on the green proxy card?
  • Only your latest dated proxy counts, and a vote on the green proxy card to “WITHHOLD” on the NexPoint nominees could revoke your votes “FOR” the UDF IV nominees on the WHITE proxy card.
  • Please simply discard any green proxy card sent to you by NexPoint and vote every UDF IV WHITE proxy card you receive as you may hold your shares in multiple accounts.
  • If you have previously voted on a green proxy card for any reason, including a “WITHHOLD” vote, please vote again on your WHITE proxy card to ensure your vote for the UDF IV Board trustees is counted.
Why should I vote for UDF's trustee nominees?
  • You should vote for your Board’s trustee nominees because they have acted, and continue to act, to safeguard the Trust’s assets and protect the value of your investment.
  • Over the last several years, we have navigated extraordinary challenges.
  • During this time, under the oversight of the Board, the Trust’s management team and external advisor have implemented strategies that are driving improved loan repayments, enhancing our financial profile and enabling us to continue our track record of returning capital to shareholders.
  • In fact, since inception, UDF IV has paid cash distributions to its shareholders totaling approximately $189.7 million – or approximately $6.19 per share – including approximately $8 million in 2023 and approximately $8 million in the first three quarters of 2024.
  • Despite our work to protect your investment, NexPoint Real Estate Opportunities, LLC, an indirect subsidiary of NexPoint Diversified Real Estate Trust (NXDT), and its affiliates (collectively, “NexPoint”) continue to pursue a self-interested campaign at the expense of all UDF IV shareholders.
  • We urge you to vote on the WHITE proxy card "FOR" the Board’s nominees to prevent NexPoint from extracting the value of our portfolio for their own benefit.
Who are the UDF IV Board's Nominees? What are their qualifications?
  • The Board’s nominees up for reelection are Steven J. Finkle, Lawrence S. Jones, J. Heath Malone and Phillip K. Marshall – each of whom is highly qualified and engaged with a track record of acting decisively to protect the value of your investment.
  • Mr. Finkle has an extensive understanding of the financial and brokerage markets given his decades of experience in leadership and advisory roles in the insurance industry. He currently serves as President of National Brokerage Associates (NBA), a full-service insurance brokerage he founded in 1995. Mr. Finkle holds Series 7, 24 and 63 securities licenses and has served on advisory committees of multiple insurance carriers.
  • Mr. Jones serves as chairman of the UDF IV Board of Trustees and has extensive real estate industry and audit experience and strong leadership skills. Over the course of his career, Mr. Jones served as a managing director of Encore Enterprises Inc., - Equity Funds, a senior audit partner at PricewaterhouseCoopers LLP, and executive vice president and treasurer of Wyndham International. He has also served as an independent director on the boards of CIM Real Estate Finance Trust and Moody National REIT I.
  • Mr. Marshall has extensive financial and accounting experience as well as valuable M&A and business development expertise. Mr. Marshall served as the CFO of RCI Hospitality Holdings for more than a decade, during which he was involved in the successful acquisitions of more than 25 businesses. Prior to RCI, he served as CFO of publicly held CDT Systems and as an audit partner at several independent CPA firms.
  • Mr. Malone has deep financial and accounting expertise and a proven track record of raising capital through public and private markets. He currently serves as CFO of Azzurro Living, LLC and Codarus, LLC, which operate in the home furnishings industry. Mr. Malone has also served in various leadership roles at other home furnishings companies, including as CFO of Sunset West, Co-Founder and CFO of James Martin Vanities, LLC, and Co-Founder and CFO of Max Industries, LTD.
Why shouldn’t I support NexPoint?
  • We believe that NexPoint is pursuing a self-interested campaign to extract the value of the Trust’s portfolio for its own benefit and to the detriment of all other shareholders, including you.
  • NexPoint has attempted to take over management of the Trust for the past five years, causing significant disruption to our operations and undermining shareholders’ interests.
    • This includes launching numerous frivolous lawsuits against the Trust and launching a hostile tender offer, which it extended 13 times, to purchase Trust shares at the bargain basement price of $1.10 per share, or approximately a 90% discount to the Trust’s book value per share at the time.
  • All of NexPoint’s nominees are connected to companies that have poor track records of stock price performance and/or overseeing shareholder capital.
  • Moreover, NexPoint has a poor track record of managing its own fund.
    • A subsidiary of NexPoint Advisors is the advisor to NexPoint Diversified Real Estate Trust (NXDT), the NexPoint fund that owns UDF IV shares. NXDT’s share price has declined by 60% over the past two years, as of November 21, 2024, as compared to the S&P 500 benchmark index which increased 49.8% during the same time period.
    • Per NXDT’s Q2 2024 Investor Presentation, as of June 30, 2024, NXDT was trading at a 70% discount to its Net Asset Value (NAV).
    • According to its own financial reports, NXDT has lost over $246M since July 2022.
    • Since September 2023, NXDT has resorted to paying its common shareholders a quarterly distribution payable 80% in stock and only 20% in cash.
  • Despite this performance, the management team has been richly rewarded…
    • Since NXDT shareholders approved a long-term incentive plan on January 23, 2023, the Company granted 1,637,269 Restricted Stock Unites to its trustees and officers and other employees of the Advisor (603,482 Restricted Stock Units in 2023 and 1,033,787 Restricted Stock Units in the first six months of 2024).
  • Additionally, affiliates of James Dondero, NexPoint’s founder, have engaged in willful misconduct and breached their fiduciary duty, and Mr. Dondero and his affiliates are alleged to have engaged in fraudulent transfer of assets and self-dealing.
    • UBS Securities (“UBS”) filed a lawsuit in New York State Supreme Court against James Dondero, and several of his current or previous affiliates, claiming he schemed to prevent UBS from collecting $1.3 billion in judgments UBS obtained against entities managed indirectly by Highland Capital Management, L.P. See UBS Securities LLC v. Dondero, New York State Supreme Court, New York County.
    • The SEC issued an Order finding that Highland Capital Management LP, a now bankrupt investment firm co-founded by Dondero, willfully violated Section 206(3) of the Advisers Act. See Investment Advisers Act of 1940 Release No. 3939, Sept, 25, 2014.
    • A JAMS arbitration panel found that ACIS Capital Management GP, LLC breached its fiduciary duty while James Dondero was an officer.  See Terry v. Highland Capital et al, JAMS Arbitration No. 1310022713.
Who should I contact with questions?
  • If you have any questions or require any assistance with voting your shares, please call the Trust’s proxy solicitor, Innisfree M&A Incorporated, at +1 (877) 750-9496 in the U.S. and Canada or +1 (412) 232-3561.
  • Additional information is also available at UDFforShareholders.com.
Where can shareholders submit questions for the Annual Meeting?
  • Shareholders may submit questions pertaining to the purpose of the Annual Meeting by emailing their questions to UDFIVRegister@Proxy-Agent.com prior to 10:59 p.m. Central Time (11:59 p.m. Eastern Time) on December 6, 2024.
  • Additional information regarding the submission of questions is included in the Rules of Conduct and Procedures for the Annual Meeting materials which can be found on the “Proxy Materials” section of this website.

Transaction-related FAQs

What will UDF IV shareholders receive in the Ready Capital transaction?
  • The transaction will provide significant upfront value and liquidity to our shareholders as well as ownership in a scaled, diversified NYSE-listed company with upside potential.
  • UDF IV shareholders may receive a total value of up to $5.89 per share, through a combination of:
    • Up to $2.44 per share of pre-closing cash distributions from the Trust’s own cash from its balance sheet valued at up to $75 million;
    • 0.416 shares of Ready Capital common stock per UDF IV share as part of the merger consideration paid when the transaction closes; this stock consideration has an implied value of $94 million, or $3.07 per share based on Ready Capital’s closing share price on November 29, 2024; and
    • Contingent Value Rights (“CVRs”) to be issued by Ready Capital when the transaction closes that UDF IV management estimates will generate payments of up to $12 million or $0.38 per share over time (paid in additional shares of Ready Capital common stock).
  • Importantly, the total consideration of up to $5.89 per share is more than 5x the bargain basement price of $1.10 per share that NexPoint offered UDF IV shareholders in its attempt to take control of UDF IV only a few years ago.
What are the benefits of this transaction for UDF IV shareholders? Why is this good for me?
  • The transaction will provide shareholders with immediate value and potential long-term upside.
    • Meaningful Upfront Cash Distribution. The transaction will facilitate significant cash distributions to UDF IV shareholders, estimated to be up to $2.44 per share between now and closing of the transaction.
    • Provides Liquid Stock Consideration and Upside Potential. As owners of Ready Capital common shares, UDF IV shareholders would own a NYSE-listed stock with a current 10-day average daily volume of 1.41 million shares and a current dividend yield of 13.6%
    • Future CVR Potential. Provides opportunity for UDF IV shareholders to receive contingent consideration and aligns incentives to generate further value from selected assets in the UDF IV portfolio.
    • Enhanced Platform; Diversification; Expertise. Enables UDF IV investors to benefit from ownership in a company with an efficient, scalable operating platform, a diversified business model, exposure to an existing broad pool of real estate debt investments, and access to the extensive expertise and resources of Ready Capital’s external manager, Waterfall Asset Management, an SEC registered investment adviser.
Will this transaction happen if UDF IV Trustees are not re-elected?
  • We believe this transaction would be at serious risk if UDF IV’s Trustee nominees are not re-elected given NexPoint’s track record of acting in a manner that we believe is adverse to shareholder interests, both at UDF IV and at NexPoint-managed funds.
  • NexPoint has been waging a campaign for more than five years to take over management of the Trust. We believe their campaign is aimed at extracting the value of the Trust’s portfolio for its own benefit and to the detriment of all other shareholders.
  • Your UDF IV trustees have continued to act to protect and promote the interests of the Trust’s shareholders, including by approving the Ready Capital transaction.
  • We believe re-electing the UDF IV trustee nominees who have protected, and are protecting, your interests is imperative to help ensure the Trust is able to complete the Ready Capital transaction and deliver the compelling benefits it will create for shareholders.
How can I help support this transaction?
  • For now, the best thing you can do to support this transaction is to vote “FOR” ONLY the Board’s four nominees – Lawrence S. Jones, Phillip K. Marshall, Steven J. Finkle, and J. Heath Malone – on the WHITE proxy card ahead of the 2024 Annual Meeting scheduled for December 10, 2024 (the “Annual Meeting”). Remember, only your last vote will count. Do not respond to or take action on any green card you receive from NexPoint. If you have previously voted on a green proxy card for any reason, including a “WITHHOLD” vote, please vote again on your WHITE proxy card to ensure your vote for the UDF IV Board trustees is counted.
  • Looking ahead, the transaction is subject to the approval of UDF IV shareholders, among other customary closing conditions.
  • A special meeting for UDF IV shareholders to vote specifically on this transaction will be announced in the coming weeks. Once the special meeting date is set, we will ask for your support to approve this transaction. The Ready Capital transaction is expected to close in the first half of 2025, subject to the approval of UDF IV shareholders and other customary closing conditions.
Will there be a lockup period on the RC shares, or will they be freely tradeable if I choose to sell?
  • The shares of Ready Capital common stock issued to UDF IV shareholders will not be subject to a lockup and will be transferable if you elect to sell.
How soon do shareholders expect to see the proceeds from the transaction after the deal is shareholder approved?
  • Closing is expected to occur in the first half of 2025 shortly after the transaction is approved by UDF IV shareholders and the other conditions to closing are satisfied.  After closing, UDF IV shareholders will receive a letter of transmittal from the Exchange Agent. You will need to return a duly completed and validly executed letter of transmittal to the Exchange Agent, and such other customary documents as may be required by the Exchange Agent, in order to receive your pro rata share of the Ready Capital common stock and CVRs in connection with the Merger (the "Merger Consideration").
Will the cash and RC stock be paid to shareholders at the same time, or will the separate components be paid at different times?
  • The special dividend to be declared and paid by UDF IV in connection with the Merger will be declared prior to the closing.  As a result, UDF IV shareholders are expected to receive the special dividend before they receive the Merger Consideration.
Will the CVRs be transferrable if I sell my RC stock position, or will I retain the CVRs and the potential future payout even if I sell my shares?
  • The CVRs you receive generally will not be transferrable, except for certain permitted transfers set forth in the CVR Agreement.  Permitted transfers include, among others, a transfer of CVRs  (a) by will or intestacy upon the death of the holder; (b) (to an inter vivos or testamentary trust in which the CVRs are to be passed to beneficiaries upon the death of the settlor or (c) pursuant to a court order.

Additional Information about the Proposed Transaction

UDF IV expects to call a special meeting of its shareholders to approve the proposed transaction and to distribute a proxy statement and other documents to its shareholders in connection with the special meeting.  Ready Capital expects to file with the SEC a registration statement on Form S-4, containing a prospectus and the UDF IV proxy statement, and other documents with respect to the proposed transaction. The Ready Capital prospectus and the UDF IV proxy statement will contain important information about the proposed transaction and related matters.  SHAREHOLDERS OF UDF IV  ARE URGED TO READ THE REGISTRATION STATEMENT, THE PROSPECTUS AND THE UDF IV PROXY STATEMENT (INCLUDING ALL AMENDMENTS AND SUPPLEMENTS TO EACH OF THEM) AND OTHER RELEVANT DOCUMENTS FILED BY READY CAPITAL WITH THE SEC AND MADE AVAILABLE BY UDF IV CAREFULLY IF AND WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT READY CAPITAL, UDF IV AND THE PROPOSED MERGER. UDF IV shareholders may obtain free copies of the registration statement, the prospectus and other relevant documents filed by Ready Capital with the SEC (if and when they become available) through the website maintained by the SEC at www.sec.gov. Copies of the documents filed by Ready Capital with the SEC are also available free of charge on Ready Capital's website at www.readycapital.com.  UDF IV shareholders may obtain free copies of the proxy statement and other relevant documents made available by UDF IV free of charge on www.udfonline.com.

Forward-Looking Statements

These FAQs contain statements that constitute forward-looking statements relating to, among other things, the timing of the closing, and the benefits, of the Ready Capital transaction, the estimated amount of the special dividend to be paid to UDF IV’s shareholders, the estimated consideration expected to be paid under the CVRs and the potential future of UDF IV under NexPoint’s control. These forward-looking statements are based on management’s current expectations and are not guarantees of future performance or future events. Such forward-looking statements generally can be identified by our use of forward-looking terminology such as “may,” “will,” “expect,” “intend,” “anticipate,” “estimate,” “believe,” or other similar words, and are based on current expectations and beliefs of UDF IV. Readers should be aware that there are various factors, many of which are beyond UDF IV’s control, which could cause actual results to differ materially from any forward-looking statements made in these FAQs, including, among others, the results of the trustee elections at the Annual Meeting, the risk that the Ready Capital transaction will not be consummated within the expected time period or at all; the occurrence of any event, change or other circumstances that could give rise to the termination of the transaction agreement; the inability to obtain UDF IV shareholder approval of the transaction or the failure to satisfy the other conditions to completion of the transaction; risks that will affect the amount of the special dividend to UDF IV shareholders; risks that will affect the amount of payments under the CVRs, if any, including, among others, the performance of specified UDF IV loans; and the outcome of any legal proceedings relating to the transaction;. Accordingly, readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of these FAQs. UDF IV undertakes no obligation to update its forward-looking statements, whether as a result of new information, future events or otherwise.