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Exhibit 99.1

NexPoint Credit Strategies Fund

            , 2014

Dear NHF Shareholder:

We are pleased to inform you that the board of trustees of NexPoint Credit Strategies Fund (“NHF”) has approved a plan to separate its business into two separate and independent publicly traded companies:

NHF will accomplish the separation by first effecting a series of restructuring transactions followed by a distribution of all of the outstanding shares of NXRT common stock to NHF shareholders on a pro rata basis (the “Spin-Off”). At the time of the Spin-Off, NXRT, which is currently a subsidiary of NHF, will directly or indirectly hold all or a majority interest in all of the multifamily properties that NHF, through its subsidiary Freedom REIT, LLC, holds interests in prior to the Spin-Off. NXRT intends to elect to be taxed, and qualify, as a real estate investment trust for U.S. federal income tax purposes commencing with its first taxable year of operations as a separate public company.

You will receive              share of NXRT common stock for every              shares of beneficial interest in NHF (“common shares”) that you held at the close of business on             , 2014. You will receive cash in lieu of any fractional shares of NXRT common stock which you would have received after application of the above ratio. Following the Spin-Off, you will own shares in both NHF and NXRT. The number of NHF common shares you own will not change as a result of the Spin-Off. NXRT will apply to list its common stock on the New York Stock Exchange (“NYSE”) under the symbol “NXRT.” NHF common shares will continue to be listed and traded on NYSE under the symbol “NHF.”

Your vote is not required to effect the Spin-Off. You do not need to make any payment, surrender or exchange your common shares of NHF or take any other action to receive your shares of NXRT common stock. Prior to the Spin-Off, NHF will separately seek your vote to approve the terms of an Advisory Agreement to be entered into between NXRT and NexPoint Real Estate Advisors, L.P. Upon completion of the Spin-Off and approval of the Advisory Agreement, NXRT will be externally managed by NexPoint Real Estate Advisors, L.P., which will conduct substantially all of NXRT’s operations and provide asset management for NXRT’s real estate investments.

The enclosed information statement, which is being made available to all NHF shareholders, describes the Spin-Off in detail and contains important information about NXRT and its business. We urge you to read the information statement carefully and in its entirety.

We want to thank you for your continued support for NHF, and we look forward to your support for NXRT in the future.

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NexPoint Residential Trust, Inc.

            , 2014

Dear Future Stockholder of NexPoint Residential Trust, Inc.:

It is our pleasure to welcome you as a stockholder of our company, NexPoint Residential Trust, Inc., a Maryland corporation (“NXRT”). Following the distribution of all of the outstanding shares of NXRT common stock by NexPoint Credit Strategies Fund (“NHF”) to its shareholders on a pro rata basis and the application by NXRT to list its shares on the NYSE, NXRT will be a newly listed, publicly traded company that will directly or indirectly acquire, own, operate and selectively develop multifamily real property.

Our initial portfolio of multifamily properties will consist of all or a majority interest in the multifamily properties that NHF, through its subsidiary Freedom REIT, LLC, holds interests in prior to the Spin-Off. We plan to grow our multifamily portfolio after the Spin-Off by continuing to acquire multifamily properties with a value-add component primarily in the Southeastern United States and Texas.

We invite you to learn more about NXRT and its business by reviewing the enclosed information statement. We urge you to read the information statement carefully and in its entirety. We are excited by our future prospects, and look forward to your support as a holder of our common stock.

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Information contained herein is subject to amendment or completion. A registration statement on Form 10 relating to these securities has been filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934.

Preliminary and Subject to Completion, dated September 29, 2014

INFORMATION STATEMENT

NexPoint Residential Trust, Inc.

Common Stock

(Par Value $0.01 Per Share)

This information statement is being furnished to you as a shareholder of NexPoint Credit Strategies Fund (“NHF”) in connection with the pro rata distribution (the “Spin-Off”) to NHF shareholders of all of the outstanding shares of common stock of NexPoint Residential Trust, Inc. (“we,” the “Company,” “NexPoint Residential Trust” or “NXRT”), a Maryland corporation, which is currently a subsidiary of NHF and, at the time of the Spin-Off, will directly or indirectly hold all or a majority interest in all of the multifamily properties that NHF, through its subsidiary Freedom REIT, LLC, holds interests in prior to the Spin-Off.

To implement the Spin-Off, NHF (and its affiliates) and the Company will effect a series of restructuring transactions following which NHF will distribute all outstanding shares of NXRT common stock to the holders of shares of beneficial interest in NHF (“common shares”). Each of you, as a holder of NHF common shares, will receive              share of common stock of NXRT for every              common shares of NHF that you held at the close of business on              , 2014 (the “record date”). You will receive cash in lieu of any fractional shares of NXRT common stock which you would have received after application of the above ratio. Following the Spin-Off, you will own shares in both NHF and NXRT. Following the Spin-Off and the application by NXRT to list its shares on the New York Stock Exchange (the “NYSE”), NXRT will be a separate public company listed on the NYSE under the symbol “NXRT.” The number of NHF common shares you own will not change as a result of the Spin-Off.

All of the outstanding shares of the common stock of NXRT are currently owned by NHF. Accordingly, there currently is no public trading market for the common stock of NXRT. We will apply to list NexPoint Residential Trust common stock on the NYSE. Although there is no current trading market for NXRT common stock, we expect that “when issued” trading of such shares will commence on the NYSE two business days prior to the record date set by the board of trustees of NHF (the “NHF Board”) for the distribution of the shares of common stock of NXRT and “regular way” trading of such shares will commence on the NYSE on the first trading day following the completion of the Spin-Off.

We are Not Asking You for a Proxy and You are Requested Not to Send Us a Proxy. Your vote is not required to effect the Spin-Off. You do not need to make any payment, surrender or exchange your common shares of NHF or take any other action to receive your shares of NXRT common stock. See “The Spin-Off—Conditions to the Spin-Off” for the conditions to the Spin-Off.

Prior to the Spin-Off, NHF will separately seek your vote to approve the terms of an Advisory Agreement to be entered into between NXRT and NexPoint Real Estate Advisors, L.P. Upon the completion of the Spin-Off and the approval of the Advisory Agreement, we will be externally managed and advised by NexPoint Real Estate Advisors, L.P., our Advisor, which will conduct substantially all of our operations and provide asset management for our real estate investments. Our Advisor is an affiliate of NexPoint Advisors, L.P. and Highland Capital Management, L.P.

NXRT will pay the out-of-pocket costs of the Spin-Off. See “The Spin-Off—Spin-Off Expenses.”

NXRT intends to operate in a manner that will allow it to qualify, and to elect to be taxed, as a real estate investment trust (“REIT”) for U.S. federal income tax purposes commencing with its tax year ending December 31, 2014. To assist NXRT in complying with certain U.S. federal income tax requirements applicable to REITs, among other purposes, NXRT’s charter contains certain restrictions relating to the ownership and transfer of its stock, including an ownership limit of 6.2% of NXRT’s outstanding common stock. See “Description of Capital Stock—Restrictions on Ownership and Transfer” for a detailed description of the ownership and transfer restrictions applicable to NXRT’s common stock.

We are an “emerging growth company” under the federal securities laws and will be subject to reduced public company reporting requirements.

In reviewing this information statement, you should carefully consider the matters described under the caption “ Risk Factors ” beginning on page 24 of this information statement.

Neither the Securities and Exchange Commission (the “SEC”) nor any state securities commission has approved or disapproved these securities or determined if this information statement is truthful or complete. Any representation to the contrary is a criminal offense.

This information statement does not constitute an offer to sell or the solicitation of an offer to buy any securities.

NHF first mailed this information statement to its shareholders on or about                     , 2014.

The date of this information statement is                     , 2014.

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Risk Factors

You should carefully consider the following risks and other information in this information statement in evaluating us and our common stock. Any of the following risks, as well as additional risks and uncertainties not currently known to us or that we currently deem immaterial, could materially and adversely affect our business, financial condition or results of operations, and could, in turn, impact the trading price of our common stock.

Risks Related to Our Business and Industry

Unfavorable market and economic conditions in the United States and globally and in the specific markets or submarkets where our properties are located could adversely affect occupancy levels, rental rates, rent collections, operating expenses, and the overall market value of our assets, including our joint ventures, and impair our ability to sell, recapitalize or refinance our assets.

Unfavorable market conditions in the areas in which we operate and unfavorable economic conditions in the United States and globally may significantly affect our occupancy levels, our rental rates, rent collections, operating expenses, the market value of our properties and our ability to strategically acquire, dispose, recapitalize or refinance our multifamily properties on economically favorable terms or at all. Our ability to lease our properties at favorable rates is adversely affected by increases in supply of multifamily communities in our markets and is dependent upon overall economic conditions, which are adversely affected by, among other things, job losses and unemployment levels, recession, personal debt levels, a downturn in the housing market, stock market volatility and uncertainty about the future. Some of our major expenses, including mortgage payments and real estate taxes, generally do not decline when related rents decline. We expect that any declines in our occupancy levels, rental revenues and/or the values of our multifamily properties would cause us to have less cash available to pay our indebtedness, fund necessary capital expenditures and to make distributions to our stockholders, which could negatively affect our financial condition and the market value of our securities. Factors that may affect our occupancy levels, our rental revenues, our NOI and/or the value of our properties include the following, among others:

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We are subject to risks inherent in ownership of real estate.

Real estate cash flows and values are affected by a number of factors, including competition from other available properties and the ability to provide adequate property maintenance and insurance and to control operating costs. Real estate cash flows and values are also affected by such factors as government regulations (including zoning, usage and tax laws) limitations on rent and rent increases, interest rate levels, the availability of financing, property tax rates, utility expenses, potential liability under environmental and other laws and changes in environmental and other laws.

Real estate investments are relatively illiquid and may limit our flexibility.

Equity real estate investments are relatively illiquid, which may tend to limit our ability to react promptly to changes in economic or other market conditions. Our ability to dispose of assets in the future will depend on prevailing economic and market conditions. Our inability to sell our properties on favorable terms or at all could have a material adverse effect on our sources of working capital and our ability to satisfy our debt obligations. In addition, real estate can at times be difficult to sell quickly at prices we find acceptable. These potential difficulties in selling real estate in our markets may limit our ability to change or reduce the number of multifamily properties in the Portfolio promptly in response to changes in economic or other conditions.

Competition could limit our ability to acquire attractive investment opportunities, which could adversely affect our profitability and impede our growth.

We compete with numerous real estate companies and other owners of real estate in seeking multifamily properties for acquisition and pursuing buyers for dispositions. We expect that other real estate investors, including insurance companies, private equity funds, sovereign wealth funds, pension funds, other REITs and other well-capitalized investors, will compete with us to acquire existing properties and to develop new properties, and many of these investors will have greater sources of capital to acquire properties. This competition could increase prices for properties of the type we would likely pursue and adversely affect our profitability and impede our growth.

Competition and any increased affordability of residential homes could limit our ability to lease our apartments or increase or maintain rents.

Our multifamily properties compete with other housing alternatives to attract residents, including other rental apartments, condominiums and single-family homes that are available for rent, as well as new and existing condominiums and single-family homes for sale. All of our multifamily properties are located in developed areas that include other multifamily properties and/or condominiums. The number of competitive multifamily properties and/or condominiums in a particular area, and any increased affordability of owner occupied single and multifamily homes caused by declining housing prices, mortgage interest rates and government programs to promote home ownership, could have a material adverse effect on our ability to lease our apartments and the rents we are able to obtain. In addition, single-family homes and other residential properties provide housing alternatives to residents and potential residents of our multifamily properties.

The low residential mortgage rates may result in potential renters purchasing residences rather than leasing them, and as a result, cause a decline in occupancy rates.

The low residential mortgage interest rates currently available and government sponsored programs to promote home ownership, has resulted in a record high level on the National Association of Realtor’s Housing Affordability Index, an index used to measure whether or not a typical family could qualify for a mortgage loan on a typical home. The foregoing factors may encourage potential renters to purchase residences rather than lease them, thereby causing a decline in the occupancy rates of our properties.

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Acquisitions may not yield anticipated results, which could negatively affect our financial condition and results of operations.

We intend to actively acquire multifamily properties for rental operations as market conditions, including access to the debt and equity markets, dictate. We may also acquire multifamily properties that are unoccupied or in the early stages of lease-up. We may be unable to lease-up these multifamily properties on schedule, resulting in decreases in expected rental revenues and/or lower yields as the result of lower occupancy and rental rates as well as higher than expected concessions. We may underestimate the costs necessary to bring an acquired property up to standards established for its intended market position or to complete a development project. We may be unable to integrate the existing operations of newly acquired multifamily properties and over time such communities may not perform as well as existing communities or as we initially anticipated in terms of occupancy and/or rental rates. Additionally, we expect that other major real estate investors with significant capital will compete with us for attractive investment opportunities or may also develop properties in markets where we focus our development efforts. This competition may increase acquisition costs for multifamily properties. We may not be in a position or have the opportunity in the future to make suitable property acquisitions on favorable terms.

Our strategy for acquiring value-enhancement multifamily properties involves greater risks than more conservative investment strategies.

Our primary strategy is a value-add strategy. Therefore, for a majority of the Portfolio, we intend to execute a “value-enhancement” strategy whereby we will acquire under-managed assets in high-demand neighborhoods, invest additional capital, and reposition the properties to increase both average rental rates and resale value. Our strategy for acquiring value-enhancement multifamily properties involves greater risks than more conservative investment strategies. The risks related to these value-enhancement investments include risks related to delays in the repositioning or improvement process, higher than expected capital improvement costs, the additional capital needed to execute our value-add program, including possible borrowings or raising additional equity necessary to fund such costs, and ultimately that the repositioning process may not result in the higher rents and occupancy rates anticipated. In addition, our value-enhancement properties may not produce revenue while undergoing capital improvements. Furthermore, we may also be unable to complete the improvements of these properties and may be forced to hold or sell these properties at a loss. For these and other reasons, we cannot assure you that we will realize growth in the value of our value-enhancement multifamily properties, and as a result, our ability to make distributions to our stockholders could be adversely affected.

The lack of experience of our Advisor and property manager in operating under the constraints imposed on us as a REIT may hinder the achievement of our investment objectives.

Our ability to achieve our investment objective will depend on our ability to manage our business and to grow our business. This will depend, in turn, on our Advisor’s ability to identify, invest in and monitor properties that meet our investment criteria. The achievement of our investment objectives on a cost-effective basis will depend upon our Advisor’s execution of our investment process, its ability to provide competent, attentive and efficient services to us and our access to debt and/or equity financing on acceptable terms. Our Advisor will have substantial responsibilities under the Advisory Agreement. The personnel of our Advisor are engaged in other business activities; which could distract them and divert their time and attention such that they can no longer dedicate a significant portion of their time to our businesses or otherwise slow our rate of investment. Any failure to manage our business and our future growth effectively could have a material adverse effect on our business, financial condition, results of operations and cash flows.

The Code imposes numerous constraints on the operations of REITs that do not apply to other investment vehicles managed by Highland Capital Management and its affiliates. Our qualification as a REIT will depend upon our ability to meet requirements regarding our organization and ownership, distributions of our income, the nature and diversification of our income and assets and other tests imposed by the Code. Any failure to so comply could cause us to fail to satisfy the requirements associated with REIT status. Our Advisor and property

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manager have only limited experience operating under these constraints, which may hinder our ability to take advantage of attractive investment opportunities and to achieve our investment objective. As a result, we cannot assure you that our Advisor or property manager will be able to operate our business under these constraints. If we fail to qualify as a REIT for any taxable year after electing REIT status, we will be subject to federal income tax on our taxable income at corporate rates. In addition, we would generally be disqualified from treatment as a REIT for the four taxable years following the year of losing our REIT status. Losing our REIT status would reduce our net earnings available for investment or distribution to stockholders because of the additional tax liability. In addition, distributions to stockholders would no longer qualify for the dividends-paid deduction, and we would no longer be required to make distributions. If this occurs, we might be required to borrow funds or liquidate some investments in order to pay the applicable tax. For a discussion of the REIT qualification tests and other considerations relating to our election to be taxed as REIT, see “U.S. Federal Income Tax Considerations.”

We depend upon key personnel of Highland Capital Management, our Advisor and its affiliates and our property manager.

Upon the completion of the Spin-Off and the approval of the Advisory Agreement, we will be an externally managed REIT and therefore we do not have any internal management capacity or employees. We will also depend on BH for our property management and construction services. We will depend to a significant degree on the diligence, skill and network of business contacts of the management team and other key personnel of our Advisor and of our property manager to achieve our investment objectives including Messrs. Dondero, Mitts, McGraner, Goetz and Ellington, all of whom may be difficult to replace. We expect that our Advisor will evaluate, negotiate, structure, close and monitor our investments in accordance with the terms of the Advisory Agreement.

We will also depend upon the senior professionals of our Advisor and our property manager to maintain relationships with sources of potential investments, and we intend to rely upon these relationships to provide us with potential investment opportunities. We cannot assure you that these individuals will continue to provide indirect investment advice to us. If these individuals, including the members of the management team of our Advisor, do not maintain their existing relationships with our Advisor, maintain existing relationships or develop new relationships with other sources of investment opportunities, we may not be able to grow our investment portfolio. In addition, individuals with whom the senior professionals of our Advisor and our property manager have relationships are not obligated to provide us with investment opportunities. Therefore, we can offer no assurance that such relationships will generate investment opportunities for us.

The Advisor will rely on Highland, a registered investment advisor under common control with the Advisor to provide investment research and operational support to the Advisor, including services in connection with research, due diligence of actual or potential investments, the execution of investment transactions approved by the Advisor and certain back office services and administrative services. If Highland does not provide such services to the Advisor, there can be no assurances that the Advisor would be able to find a substitute service provider with the same experience or on the same terms as Highland.

We may not replicate the historical results achieved by other entities managed or sponsored by affiliates of our Advisor, members of our Advisor’s management team or by Highland Capital Management or its affiliates.

Our primary focus in making investments generally differs from that of existing investment funds, accounts or other investment vehicles that are or have been managed by affiliates of our Advisor, members of our Advisor’s management team or sponsored by Highland Capital Management or its affiliates. In addition, the previously sponsored investment programs by Highland Capital Management were significantly different from us in terms of targeted assets, regulatory structure and limitations, investment strategy and objectives and investment personnel. Past performance is not a guarantee of future results, and there can be no assurance that we will achieve comparable results of those Highland Capital Management affiliates. In addition, investors in our common stock are not acquiring an interest in any such investment funds, accounts or other investment vehicles

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that are or have been managed by members of our Advisor’s management team or sponsored by Highland Capital Management or its affiliates. We also cannot assure you that we will replicate the historical results achieved by members of the management team, and we caution you that our investment returns could be substantially lower than the returns achieved by them in prior periods. Additionally, all or a portion of the prior results may have been achieved in particular market conditions which may never be repeated.

Under certain circumstances, our Advisor can resign on 180 days’ notice from its role as advisor, and we may not be able to find a suitable replacement within that time, resulting in a disruption in our operations that could adversely affect our financial condition, business, and results of operations and cash flows.

The Advisory Agreement gives our Advisor the right, upon the occurrence of certain events including our material breach of the Advisory Agreement, a change in control of our company or the expiration of the initial term or renewal term of the Advisory Agreement, to resign after giving not less than 180 days’ written notice, whether we have found a replacement or not. If our Advisor resigns as our Advisor we may not be able to find a new advisor or hire internal management with similar expertise and ability to provide the same or equivalent services on acceptable terms within 180 days, or at all. If we are unable to do so quickly, our operations are likely to experience a disruption, our financial condition, business and results of operations as well as our ability to pay distributions are likely to be adversely affected. In addition, the coordination of our internal management and investment activities is likely to suffer if we are unable to identify and reach an agreement with a single institution or group of executives having the expertise possessed by our Advisor and its affiliates. Even if we are able to retain comparable management, the integration of such management and its lack of familiarity with our investment objective may result in additional costs and time delays that may adversely affect our business, financial condition, results of operations and cash flows.

Termination or non-renewal of our Advisory Agreement, even for poor performance, could be difficult and costly, including as a result of termination fees, and may cause us to be unable to execute our business plan.

Termination or non-renewal of our Advisory Agreement without cause, even for poor performance, could be difficult and costly. Our Advisory Agreement provides that we may terminate the Advisory Agreement only for cause upon the affirmative vote of our independent directors or by the holders of a majority of our outstanding shares of common stock or upon a change of control of the Advisor if a majority of our independent directors determine that such a change of control of our Advisor is materially detrimental to us. If we terminate the agreement without cause, or if the Advisor terminates the agreement because of a material breach of the agreement by us or as a result of a change of control of our company or if we do not renew the Advisory Agreement, we must pay our Advisor a termination fee, which is payable in cash, shares of our common stock or any combination thereof at the election of our Advisor. The termination fee, if any, will be equal to four times the sum of (i) the average annual base management fee and (ii) the average annual incentive fee, in each case earned by the Advisor during the eight full calendar quarters (or part thereof that the Advisory Agreement is in effect) immediately preceding the termination date. These provisions may substantially restrict our ability to terminate the Advisory Agreement without cause and would cause us to incur substantial costs in connection with such a termination. Furthermore, if our Advisory Agreement is terminated and we are unable to identify a suitable replacement to manage us, our ability to execute our business plan could be adversely affected.

We may change our targeted investments without stockholder consent.

We expect our portfolio of investments in commercial real estate to consist primarily of multifamily properties. Though this is our current target portfolio, we may make adjustments to our target portfolio based on real estate market conditions and investment opportunities, and we may change our targeted investments and investment guidelines at any time without the consent of our stockholders. Any such change could result in our making investments that are different from, and possibly riskier than, the investments described in this information statement. These policies may change over time. A change in our targeted investments or investment

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guidelines, which may occur without your consent, may increase our exposure to interest rate risk, default risk and real estate market fluctuations, all of which could adversely affect the value of our common stock and our ability to make distributions to you.

We will pay substantial fees and expenses to our Advisor and its affiliates and to our property manager, which payments increase the risk that you will not earn a profit on your investment.

Pursuant to the Advisory Agreement, we will pay significant fees to our Advisor and its affiliates during our operational stage. Those fees include management fees, incentive fees and obligations to reimburse our Advisor and its affiliates for expenses they incur in connection with their providing services to us, including certain personnel services. Additionally, the amount of any incentive fee paid to our Advisor may be increased or decreased, if the Advisor agrees and if a majority of our independent directors determines in the exercise of reasonable discretion that the calculated incentive fee is not equitable based upon facts and circumstances that may include, without limitation, dividend payments, market conditions, managerial performance or other factors.

Additionally, NXRT expects to adopt a long term incentive plan that NXRT may use to grant awards to employees of the Advisor. NXRT plans to get stockholder approval of the long term incentive plan at its first annual meeting. The incentive fee calculation adds this compensation expense back to net income when determining the amount of incentive fee to pay the Advisor which makes it more likely that the Advisor will receive an incentive fee.

Additionally, pursuant to the agreements we have entered into with BH, including management agreements and joint venture agreements, we will pay significant fees to BH. These fees include property management fees, construction management and other customary property manager fees and a share of the distributions from substantially all of our joint ventures. For additional information on these fees and the fees paid to our Advisor, see “Advisor and Property Manager Compensation.”

If we internalize our management functions, the percentage of our outstanding common stock owned by our other stockholders could be reduced, and we could incur other significant costs associated with being self-managed.

In the future, the NXRT Board may consider internalizing the functions performed for us by our Advisor by, among other methods, acquiring our Advisor’s assets. The method by which we could internalize these functions could take many forms. There is no assurance that internalizing our management functions will be beneficial to us and our stockholders. The termination of the Advisory Agreement in connection with internalizing management would obligate us to pay the Advisor a substantial termination fee. An acquisition of our Advisor could also result in dilution of your interests as a stockholder and could reduce earnings per share and funds from operation per share. Additionally, we may not realize the perceived benefits or we may not be able to properly integrate a new staff of managers and employees or we may not be able to effectively replicate the services provided previously by our Advisor, property manager or their affiliates. Internalization transactions, including without limitation, transactions involving the acquisition of affiliated advisors or property managers have also, in some cases, been the subject of litigation. Even if these claims are without merit, we could be forced to spend significant amounts of money defending claims which would reduce the amount of funds available for us to invest in properties or other investments and to pay distributions. All of these factors could have a material adverse effect on our results of operations, financial condition and ability to pay distributions.

There are significant potential conflicts of interest that could affect our investment returns.

As a result of our arrangements with Highland Capital Management and our Advisor, there may be times when Highland Capital Management, our Advisor or such persons have interests that differ from those of our stockholders, giving rise to a conflict of interest.

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Our Directors and management team serve or may serve as officers, directors or principals of entities that operate in the same or a related line of business as we do, or of investment funds managed by our Advisor or its affiliates. Similarly, our Advisor or its affiliates may have other clients with similar, different or competing investment objectives. In serving in these multiple capacities, they may have obligations to other clients or investors in those entities, the fulfillment of which may not be in the best interests of us or our stockholders. For example, the management team of our Advisor have, and will continue to have, management responsibilities for other investment funds, accounts or other investment vehicles managed or sponsored by our Advisor and its affiliates. Our investment objective may overlap with the investment objectives of such affiliated investment funds, accounts or other investment vehicles. As a result, those individuals may face conflicts in the allocation of investment opportunities among us and other investment funds or accounts advised by or affiliated with our Advisor. Our Advisor will seek to allocate investment opportunities among eligible accounts in a manner consistent with its allocation policy. However, we can offer no assurance that such opportunities will be allocated to us fairly or equitably in the short-term or over time. See “Policies With Respect to Certain Activities—Conflicts of Interest.”

Our Advisor, Sponsor and their officers and employees face competing demands relating to their time, and this may cause our operating results to suffer.

Our Advisor, our Sponsor and their officers and employees and their respective affiliates are key personnel, general partners, sponsors, managers, owners and advisors of other real estate investment programs, including Highland Capital Management-sponsored investment products, some of which have investment objectives and legal and financial obligations similar to ours and may have other business interests as well. Because these persons have competing demands on their time and resources, they may have conflicts of interest in allocating their time between our business and these other activities. If this occurs, the returns on our investments may suffer.

Our Advisor faces conflicts of interest relating to the fee structure under our Advisory Agreement, which could result in actions that are not necessarily in the long-term best interests of our stockholders.

Under our Advisory Agreement, our Advisor or its affiliates will be entitled to fees that are structured in a manner intended to provide incentives to our Advisor to perform in our best interests and in the best interests of our stockholders. However, because our Advisor is entitled to receive substantial compensation regardless of performance, our Advisor’s interests are not wholly aligned with those of our stockholders. In that regard, our Advisor could be motivated to recommend riskier or more speculative investments that would entitle our Advisor to the highest fees. For example, because management fees payable to our Advisor are based on gross real estate assets under management, including assets purchased using debt, our advisor may have an incentive to incur a high level of leverage or to acquire properties on less than favorable terms in order to increase the total amount of assets under management. In addition, our Advisor’s ability to receive fees and reimbursements depends on our continued investment in real properties. Therefore, the interest of our Advisor and its affiliates in receiving fees may conflict with the interest of our stockholders in earning income on their investment in our common stock.

You will have limited control over changes in our policies and operations, which increases the uncertainty and risks you face as a stockholder.

The NXRT Board determines our major policies, including our policies regarding financing, growth, debt capitalization, REIT qualification and distributions. The NXRT Board may amend or revise these and other policies without your vote. The NXRT Board’s broad discretion in setting policies and your inability to exert control over those policies increases the uncertainty and risks you face as a stockholder.

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We depend on information systems, and systems failures could significantly disrupt our business, which may, in turn, negatively affect our ability to pay dividends to our stockholders.

Our business depends on the communications and information systems of Highland Capital Management, to which we have access through our Advisor. In addition, certain of these systems are provided to Highland Capital Management by third-party service providers. Any failure or interruption of such systems, including as a result of the termination of an agreement with any such third-party service provider, could cause delays or other problems in our activities. This, in turn, could have a material adverse effect on our operating results and negatively affect our ability to pay dividends to our stockholders.

We are subject to losses that are either uninsurable, not economically insurable or that are in excess of our insurance coverage.

There are certain types of losses (including, but not limited to, losses arising from environmental conditions, earthquakes and hurricanes, acts of war or certain kinds of terrorist attacks) that are not insured, in full or in part, because they are either uninsurable or the cost of insurance makes it, in our belief, economically impractical to maintain such coverage. We carry commercial general liability insurance, property insurance and terrorism insurance with respect to our communities with limits and on terms we consider commercially reasonable. If an uninsured loss or liability were to occur, whether because of a lack of insurance coverage or a loss in excess of insured limits, we could lose our capital invested in a community, as well as the anticipated future revenues from such community. We would also continue to be obligated to repay any mortgage indebtedness or other obligations related to the community. If an uninsured liability to a third party were to occur, we would incur the cost of defense and settlement with, or court ordered damages to, that third party. A significant uninsured property or liability loss could materially and adversely affect our business and our financial condition and results of operations.

We may be subject to contingent or unknown liabilities related to properties or business that we have acquired or may acquire for which we may have limited or no recourse against the sellers.

The properties or businesses that we have acquired or may acquire, may be subject to unknown or contingent liabilities for which we have limited or no recourse against the sellers. Unknown liabilities might include liabilities for, among other things, cleanup or remediation of undisclosed environmental conditions, liabilities under the Employee Retirement Income Security Act of 1974, as amended, or ERISA, claims of residents, vendors or other persons dealing with the entities prior to the acquisition of such property, tax liabilities, and accrued but unpaid liabilities whether incurred in the ordinary course of business or otherwise. Because many liabilities, including tax liabilities, may not be identified within the applicable contractual indemnification period, we may have no recourse against any of the owners from whom we acquire such properties for these liabilities. The existence of such liabilities could significantly adversely affect the value of the property subject to such liability. As a result, if a liability were asserted against us based on ownership of any of such properties, then we might have to pay substantial sums to settle it, which could adversely affect our cash flows.

We may face high costs associated with the investigation or remediation of environmental contamination, including asbestos, lead-based paint, chemical vapor, subsurface contamination and mold growth.

We are subject to various federal, state and local environmental and public health laws, regulations and ordinances.

Under various federal, state and local environmental and public health laws, regulations and ordinances, we may be required, regardless of knowledge or responsibility, to investigate and remediate the effects of hazardous or toxic substances or petroleum product releases at our properties (including in some cases natural substances such as methane and radon gas) and may be held liable under these laws or common law to a governmental entity

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or to third parties for property, personal injury or natural resources damages and for investigation and remediation costs incurred as a result of the contamination. These damages and costs may be substantial and may exceed any insurance coverage we have for such events. The presence of such substances, or the failure to properly remediate the contamination, may adversely affect our ability to borrow against, sell or rent the affected property. In addition, some environmental laws create or allow a government agency to impose a lien on the contaminated site in favor of the government for damages and costs it incurs as a result of the contamination.

The development, construction and operation of our communities are subject to regulations and permitting under various federal, state and local laws, regulations and ordinances, which regulate matters including wetlands protection, storm water runoff and wastewater discharge. Noncompliance with such laws and regulations may subject us to fines and penalties. We can provide no assurance that we will not incur any material liabilities as a result of noncompliance with these laws.

We face risks relating to asbestos.

Certain federal, state and local laws, regulations and ordinances govern the removal, encapsulation or disturbance of asbestos containing materials, or ACMs, when such materials are in poor condition or in the event of renovation or demolition of a building. These laws and the common law may impose liability for release of ACMs and may allow third parties to seek recovery from owners or operators of real properties for personal injury associated with exposure to ACMs. ACMs may have been used in the construction of a number of the communities that we acquired and may have been used in the construction of communities we acquire in the future. We will implement an operations and maintenance program at each of the communities at which we discover ACMs. We can provide no assurance that we will not incur any material liabilities as a result of the presence of ACMs at our communities.

We face risks relating to lead-based paint.

Some of our communities may have lead-based paint and we may have to implement an operations and maintenance program at some of our communities. Communities that we acquire in the future may also have lead-based paint. We can provide no assurance that we will not incur any material liabilities as a result of the presence of lead-based paint at our communities.

We face risks relating to chemical vapors and subsurface contamination.

We are also aware that environmental agencies and third parties have, in the case of certain communities with on-site or nearby contamination, asserted claims for remediation, property damage or personal injury based on the alleged actual or potential intrusion into buildings of chemical vapors ( e.g. radon) or volatile organic compounds from soils or groundwater underlying or in the vicinity of those buildings or on nearby properties. We can provide no assurance that we will not incur any material liabilities as a result of vapor intrusion at our communities.

We face risks relating to mold growth.

Mold growth may occur when excessive moisture accumulates in buildings or on building materials, particularly if the moisture problem remains undiscovered or is not addressed over a period of time. Although the occurrence of mold at multifamily and other structures, and the need to remediate such mold, is not a new phenomenon, there has been increased awareness in recent years that certain molds may in some instances lead to adverse health effects, including allergic or other reactions. To help limit mold growth, we educate residents about the importance of adequate ventilation and include a lease requirement that they notify us when they see mold or excessive moisture. We have established procedures for promptly addressing and remediating mold or excessive moisture when we become aware of its presence regardless of whether we or the resident believe a health risk is present. However, we can provide no assurance that mold or excessive moisture will be detected and remediated in a timely manner. If a significant mold problem arises at one of our communities, we could be

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required to undertake a costly remediation program to contain or remove the mold from the affected community and could be exposed to other liabilities that may exceed any applicable insurance coverage.

Our environmental assessments may not identify all potential environmental liabilities and our remediation actions may be insufficient.

Properties being considered for potential acquisition by us are subjected to at least a Phase I or similar environmental assessment prior to closing, which generally does not involve invasive techniques such as soil or ground water sampling. A Phase II assessment is conducted if recommended in the Phase I report. These assessments, together with subsurface assessments conducted on some properties, have not revealed, and we are not otherwise aware of, any environmental conditions that we believe would have a material adverse effect on our business, assets, financial condition or results of operations. However, such environmental assessments may not identify all potential environmental liabilities. Moreover, we may in the future discover adverse environmental conditions at our communities, including at communities we acquire in the future, which may have a material adverse effect on our business, assets, financial condition or results of operations. In connection with our ownership, operation and selective development of communities, from time to time we undertake substantial remedial action in response to the presence of subsurface or other contaminants, including contaminants in soil, groundwater and soil vapor beneath or affecting our buildings. In some cases, an indemnity exists upon which we may be able to rely if environmental liability arises from the contamination, or if remediation costs exceed estimates. We can provide no assurance, however, that all necessary remediation actions have been or will be undertaken at our communities or that we will be indemnified, in full or at all, in the event that environmental liability arises.

Compliance with various laws and regulations, including accessibility, building and health and safety laws and regulations, may be costly, may adversely affect our operations or expose us to liability.

In addition to compliance with environmental regulations, we must comply with various laws and regulations such as accessibility, building, zoning, landlord/tenant and health and safety laws and regulations, including but not limited to the ADA and the FHA. Some of those laws and regulations may conflict with one another or be subject to limited judicial or regulatory interpretations. Under those laws and regulations, we may be liable for, among other things, the costs of bringing our properties into compliance with the statutory and regulatory requirements. Noncompliance with certain of these laws and regulations may result in liability without regard to fault and the imposition of fines and could give rise to actions brought against us by governmental entities and/or third parties who claim to be or have been damaged as a consequence of an apartment not being in compliance with the subject laws and regulations. As part of our due diligence procedures in connection with the acquisition of a property, we typically conduct an investigation of the property’s compliance with known laws and regulatory requirements with which we must comply once we acquire a property, including a review of compliance with the ADA and local zoning regulations. Our investigations and these assessments may not have revealed, and may not with respect to future acquisitions reveal, all potential noncompliance issues or related liabilities and we can provide no assurance that our development properties have been, or that our future development projects will be, designed and built in accordance with all applicable legal requirements.

Our multifamily properties are concentrated in certain geographic markets, which makes us more susceptible to adverse developments in those markets.

Our most significant geographic investment concentrations are primarily in the Southeastern United States and Texas. We are, therefore, subject to increased exposure from economic and other competitive factors specific to markets within these geographic areas. To the extent general economic conditions worsen in one or more of these markets, or if any of these areas experience a natural disaster, the value of the Portfolio and our market rental rates could be adversely affected. As a result, our results of operations, cash flow, cash available for distribution, including cash available to pay distributions to our stockholders, and our ability to satisfy our debt obligations could be materially adversely affected.

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We may obtain only limited warranties when we acquire property and may only have limited recourse if our due diligence did not identify any issues that may subject us to unknown liabilities or lower the value of our property, which could adversely affect our financial condition and ability to make distributions to you.

The seller of a property often sells the property in its “as is” condition on a “where is” basis and “with all faults,” without any warranties of merchantability or fitness for a particular use or purpose. In addition, purchase agreements may contain only limited warranties, representations and indemnifications that will only survive for a limited period after the closing. Additionally, we will be acquiring all or a majority interest in the properties in the Portfolio on an “as is” condition on a “where is” basis and with “all faults” from Freedom REIT. The acquisition of, or purchase of, properties with limited warranties increases the risk that we may lose some or all of our invested capital in the property, lose rental income from that property or may be subject to unknown liabilities with respect to such properties.

Short-term apartment leases expose us to the effects of declining market rent, which could adversely impact our ability to make cash distributions to our stockholders.

We expect that substantially all of our apartment leases will be for a term of one year or less. Because these leases generally permit the residents to leave at the end of the lease term without penalty, our rental revenues may be impacted by declines in market rents more quickly than if our leases were for longer terms.

We are subject to risks involved in real estate activity through joint ventures.

With the exception of Miramar, all of the properties in the Portfolio are owned through joint ventures with BH. We may continue to acquire properties in joint ventures with BH or other persons or entities when we believe circumstances warrant the use of such structures. In all of our joint ventures with BH, BH serves as the managing member subject to certain control and approval rights over major decisions including, but not limited to, sales and refinancings of the properties. We do have the ability to sell our joint venture interest without BH’s consent and can drag along BH in any sale. For additional information on our joint ventures, see “Business and Properties—Joint Venture Investments.”

Joint venture investments involve risks, including: the possibility that our partners might refuse to make capital contributions when due; that we may be responsible to our partner for indemnifiable losses; that our partner might at any time have business or economic goals which are inconsistent with ours; and that our partner may be in a position to take action or withhold consent contrary to our recommendations, instructions or requests. In some instances, joint venture partners may have competing interests in our markets that could create conflicts of interest. Further, our joint venture partners may fail to meet their obligations to the joint venture as a result of financial distress or otherwise, and we may be forced to make contributions to maintain the value of the property. To the extent our partners do not meet their obligations to us or our joint ventures or they take action inconsistent with the interests of the joint venture, we may be adversely affected.

We may be required to make decisions jointly with the other investors who have interests in the relevant. We might not have the same interests as the other investors in relation to these decisions or transactions. Accordingly, we might not be able to favorably resolve any of these issues, or we might have to provide financial or other inducements to the other investors to obtain a favorable resolution.

In addition, various restrictive provisions and third-party rights, including consent rights to certain transactions, apply to sales or transfers of interests in our properties owned in joint ventures. Consequently, decisions to buy or sell interests in a property or properties relating to our joint ventures may be subject to the prior consent of other investors. These restrictive provisions and third-party rights may preclude us from achieving full value of these properties because of our inability to obtain the necessary consents to sell or transfer these interests.

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We may compete with other entities affiliated with our Sponsor and Property Manager for tenants.

Neither our Sponsor and its affiliates nor BH and its affiliates are prohibited from engaging, directly or indirectly, in any other business or from possessing interests in any other business ventures, including ventures involved in the acquisition, development, ownership, management, leasing or sale of real estate, including properties in the vicinity of the properties in the Portfolio. Our Sponsor and/or its affiliates and BH and its affiliates may own and/or manage properties in the same geographical areas in which we currently own and expect to acquire real estate assets. Therefore, our properties may compete for tenants with other properties owned and/or managed by our Sponsor and its affiliates and BH and its affiliates. Our Sponsor and BH may face conflicts of interest when evaluating tenant opportunities for our properties and other properties owned and/or managed by our Sponsor and its affiliates and BH and its affiliates, and these conflicts of interest may have a negative impact on our ability to attract and retain tenants.

Potential reforms or changes to Fannie Mae and Freddie Mac could adversely affect our business.

At the time of the Spin-Off, we expect to have approximately $137.9 million and $336.5 million of outstanding consolidated indebtedness under our Fannie Mae and Freddie Mac facilities, respectively. We rely on national and regional institutions, including Fannie Mae and Freddie Mac, to provide financing for our acquisitions and permanent financing on our newly developed properties. Currently, there is significant uncertainty regarding the futures of Fannie Mae and Freddie Mac. Should Fannie Mae and Freddie Mac have their mandates changed or reduced, be disbanded or reorganized by the government, privatized or otherwise discontinue providing liquidity to our sector, it could significantly reduce our access to debt capital and/or increase borrowing costs and could significantly reduce our sales of assets and/or the values realized upon sale.

We are an “emerging growth company” under the federal securities laws and will be subject to reduced public company reporting requirements.

We are an “emerging growth company,” as defined in the JOBS Act, and are eligible to take advantage of certain exemptions from, or reduced disclosure obligations relating to, various reporting requirements that are normally applicable to public companies.

We could remain an “emerging growth company” for up to five years, or until the earliest of (1) the last day of the first fiscal year in which we have total annual gross revenue of $1,000,000,000 or more, (2) December 31 of the fiscal year that we become a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act (which would occur if the market value of our common stock held by non-affiliates exceeds $700 million, measured as of the last business day of our most recently completed second fiscal quarter, and we have been publicly reporting for at least 12 months) or (3) the date on which we have issued more than $1,000,000,000 in non-convertible debt during the preceding three-year period. Under the JOBS Act, emerging growth companies are not required to (1) provide an auditor’s attestation report on management’s assessment of the effectiveness of internal control over financial reporting, pursuant to Section 404 of the Sarbanes-Oxley Act, (2) comply with new audit rules adopted by the PCAOB after April 5, 2012 (unless the SEC determines otherwise), (3) provide certain disclosures relating to executive compensation generally required for larger public companies or (4) hold stockholder advisory votes on executive compensation. We have not yet made a decision as to whether to take advantage of any or all of the JOBS Act exemptions that are applicable to us. If we do take advantage of any of these exemptions, we do not know if some investors will find our common stock less attractive as a result.

Additionally, the JOBS Act provides that an “emerging growth company” may take advantage of an extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies. This means an “emerging growth company” can delay adopting certain accounting standards until such standards are otherwise applicable to private companies. However, we are electing to “opt out” of such extended transition period and will therefore comply with new or revised accounting standards on the applicable dates on which the adoption of such standards is required for non-emerging growth

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companies. Section 107 of the JOBS Act provides that our decision to opt out of such extended transition period for compliance with new or revised accounting standards is irrevocable.

Although we are an Emerging Growth Company, the requirements of being a public company, including compliance with the reporting requirements of the Securities Exchange Act of 1934, as amended, and the requirements of the Sarbanes-Oxley Act of 2002, may strain our resources, increase our costs and distract management, and we may be unable to comply with these requirements in a timely or cost-effective manner.

As a public company with listed equity securities, we are required to comply with new laws, regulations and requirements, certain corporate governance provisions of the Sarbanes-Oxley Act of 2002, or Sarbanes-Oxley Act, related regulations of the SEC, including compliance with the reporting requirements of the Securities Exchange Act of 1934, as amended, or the Exchange Act, and the requirements of the NYSE, with which we were not required to comply as a private company. Complying with these statutes, regulations and requirements is expected to occupy a significant amount of time of the NXRT Board and management and is expected to significantly increase our costs and expenses. As a result of becoming a public company upon completion of the Spin-Off, we are required, or will be required in the future, to:

If our profitability is adversely affected because of these additional costs, it could have a negative effect on the trading price of our common stock.

Breaches of our data security could materially harm our business and reputation.

We collect and retain certain personal information provided by our tenants. While security measures to protect the confidentiality of this information are in place, we can provide no assurance that we will be able to prevent unauthorized access to this information. Any breach of our data security measures and/or loss of this information may result in legal liability and costs (including damages and penalties), as well as damage to our reputation, that could materially and adversely affect our business and financial performance.

Our business could be adversely impacted if there are deficiencies in our disclosure controls and procedures or internal control over financial reporting.

The design and effectiveness of our disclosure controls and procedures and internal control over financial reporting may not prevent all errors, misstatements or misrepresentations. While management will continue to review the effectiveness of our disclosure controls and procedures and internal control over financial reporting, there can be no guarantee that our internal control over financial reporting will be effective in accomplishing all control objectives all of the time. Deficiencies, including any material weakness, in our internal control over financial reporting which may occur in the future could result in misstatements of our results of operations, restatements of our financial statements, a decline in our stock price, or otherwise materially adversely affect our business, reputation, results of operations, financial condition or liquidity.

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We may incur mortgage indebtedness and other borrowings, which we have broad authority to incur, that may increase our business risks and decrease the value of your investment.

We expect that in most instances, we will acquire real properties by using either existing financing or borrowing new funds. In addition, we may incur mortgage debt and pledge all or some of our real properties as security for that debt to obtain funds to acquire additional real properties. We may borrow if we need funds to satisfy the REIT tax qualification requirement that we generally distribute annually to our stockholders at least 90% of our REIT taxable income (which does not equal net income as calculated in accordance with GAAP), determined without regard to the deduction for dividends paid and excluding net capital gain. We also may borrow if we otherwise deem it necessary or advisable to assure that we maintain our qualification as a REIT.

If there is a shortfall between the cash flow from a property and the cash flow needed to service mortgage debt on a property, then the amount available for distributions to stockholders may be reduced. In addition, incurring mortgage debt increases the risk of loss since defaults on indebtedness secured by a property may result in lenders initiating foreclosure actions. In that case, we could lose the property securing the loan that is in default, thus reducing the value of your investment. For U.S. federal income tax purposes, a foreclosure of any of our properties would be treated as a sale of the property for a purchase price equal to the outstanding balance of the debt secured by the mortgage. If the outstanding balance of the debt secured by the mortgage exceeds our tax basis in the property, we would recognize taxable income on foreclosure, but would not receive any cash proceeds. In such event, we may be unable to pay the amount of distributions required in order to maintain our REIT status. We may give full or partial guarantees to lenders of mortgage debt to the entities that own our properties. When we provide a guaranty on behalf of an entity that owns one of our properties, we will be responsible to the lender for satisfaction of the debt if it is not paid by such entity. If any mortgages contain cross-collateralization or cross-default provisions, a default on a single property could affect multiple properties. If any of our properties are foreclosed upon due to a default, our ability to pay cash distributions to our stockholders will be adversely affected which could result in our losing our REIT status and would result in a decrease in the value of your investment.

We may obtain a credit facility that may include a cross-default provision that provides that a payment default under any recourse obligation above a negotiated dollar amount or any non-recourse obligation above another negotiated dollar amount by us, NXRT OP, or any of our subsidiaries will constitute a default under the credit facility.

We have a substantial amount of indebtedness which may limit our financial and operating activities and may adversely affect our ability to incur additional debt to fund future needs.

At September 15, 2014, there was $321.5 million of indebtedness outstanding related to the Portfolio.

Payments of principal and interest on borrowings may leave us with insufficient cash resources to operate our properties, fully implement our capital expenditure, acquisition and development activities, or pay the dividends necessary to maintain our REIT qualification. Our level of debt and the limitations imposed on us by our debt agreements could have significant adverse consequences, including the following:

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If any one of these events were to occur, our financial condition, results of operations, cash flow and trading price of our common stock could be adversely affected. Furthermore, foreclosures could create taxable income without accompanying cash proceeds, which could hinder our ability to meet the REIT distribution requirements imposed by the Code.

We may be unable to refinance current or future indebtedness on favorable terms, if at all.

We may not be able to refinance existing debt on terms as favorable as the terms of existing indebtedness, or at all, including as a result of increases in interest rates or a decline in the value of the Portfolio or portions thereof. If principal payments due at maturity cannot be refinanced, extended or paid with proceeds of other capital transactions, such as new equity capital, our operating cash flow will not be sufficient in all years to repay all maturing debt. As a result, certain of our other debt may cross default, we may be forced to postpone capital expenditures necessary for the maintenance of our properties, we may have to dispose of one or more properties on terms that would otherwise be unacceptable to us or we may be forced to allow the mortgage holder to foreclose on a property. Foreclosure on mortgaged properties or an inability to refinance existing indebtedness would likely have a negative impact on our financial condition and results of operations and could adversely affect our ability to make distributions to our stockholders.

Our debt agreements include restrictive covenants which could limit our flexibility and our ability to make distributions.

The mortgages on our properties contain customary negative covenants that, among other things, limit our ability, without the prior consent of the lender, to further mortgage the property, to reduce or change insurance coverage or to engage in material asset sales, mergers, consolidations and acquisitions. In addition, any future revolving credit facility or other future debt may require us to maintain various financial ratios. Our property mortgages may require certain mandatory prepayments upon disposition of underlying collateral. Early repayment of certain mortgages are subject to prepayment penalties. Failure to comply with these covenants could cause a default under the agreements and result in a requirement to repay the indebtedness prior to its maturity, which could have an adverse effect on our cash flow and ability to make distributions to our stockholders. In addition, loan documents may limit our ability to replace a property’s property manager or terminate certain operating or lease agreements related to a property. These or other limitations would decrease our operating flexibility and our ability to achieve our operating objectives.

Variable rate debt is subject to interest rate risk which could increase our interest expense, increase the cost to refinance and increase the cost of issuing new debt.

At September 15, 2014, approximately $310.8 million of the indebtedness outstanding related to the Portfolio is subject to instruments which bear interest at variable rates, and we may also borrow additional money at variable interest rates in the future. At September 15, 2014, interest rate hedge agreements cover approximately $304.8 million of the Portfolio’s indebtedness for the term of those agreements. Except to the extent we have arrangements in place that hedge against the risk of rising interest rates, increases in interest rates

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would increase our interest expense under these instruments and would increase the cost of refinancing these instruments and issuing new debt and would adversely affect cash flow and our ability to service our indebtedness and to make distributions to our stockholders, which could adversely affect the market price of our common stock.

Derivatives and hedging activity could adversely affect cash flow.

In the normal course of business, we use derivatives to manage our exposure to interest rate volatility on debt instruments, including hedging for future debt issuances. At other times we may utilize derivatives to increase our exposure to floating interest rates. However, these hedging arrangements may not have the desired beneficial impact. Hedging arrangements, which can include a number of counterparties, may expose us to additional risks, including failure of any of our counterparties to perform under these contracts, and may involve extensive costs, such as transaction fees or, if we terminate them, breakage costs. No strategy can completely insulate us from the risks associated with interest rate fluctuations.

If we are required to make payments under any “bad boy” carve out guarantees that we may provide in connection with certain mortgages and related loans, our business and financial results could be materially adversely affected.

With respect to the Existing Portfolio, BH has provided our lenders with standard carve out guarantees. In obtaining certain nonrecourse loans in the future, we may provide standard carve out guarantees. These guarantees are only applicable if and when the borrower directly, or indirectly through agreement with an affiliate, joint venture partner or other third party, voluntarily files a bankruptcy or similar liquidation or reorganization action or takes other actions that are fraudulent or improper (commonly referred to as “bad boy” guarantees). Although we believe that “bad boy” carve out guarantees are not guarantees of payment in the event of foreclosure or other actions of the foreclosing lender that are beyond the borrower’s control, some lenders in the real estate industry have recently sought to make claims for payment under such guarantees. In the event such a claim were made against us under a “bad boy” carve out guarantee, following foreclosure on mortgages or related loan, and such claim were successful, our business and financial results could be materially adversely affected.

Risks Related to Our Spin-Off

We may be unable to achieve some or all the benefits that we expect to achieve from the Spin-Off.

We believe that, as a public company independent from NHF, NXRT will have the ability to pursue transactions that NHF would otherwise be precluded from pursuing due to fundamental investment or regulatory constraints. However, we may not be able to achieve some or all of the benefits that we expect to achieve as a company independent from NHF in the time we expect, if at all.

The Separation and Distribution Agreement will not be the result of negotiations between unrelated third parties.

In connection with the Spin-Off, NHF and NXRT or their respective subsidiaries, as applicable, will enter into the Separation and Distribution Agreement. This agreement will have been negotiated in the context of the Spin-Off while we are still a subsidiary of NHF. Accordingly, during the period in which the terms of this agreement have been negotiated, we will not have had an independent board of directors or a management team independent of NHF. As a result, although this agreement is generally intended to reflect arm’s-length terms, the terms of this agreement may not reflect terms that would have resulted from arm’s-length negotiations between unaffiliated third parties. Accordingly, there can be no assurance that the terms of this agreement will be as favorable for NXRT as would have resulted from negotiations with one or more unrelated third parties. In addition to the Separation and Distribution Agreement, we will enter into an Advisory Agreement with our

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Sponsor. Prior to the Spin-Off, NHF will separately seek your vote to approve the terms of the Advisory Agreement. See “The Spin-Off–Conditions to the Spin-Off” and “Our Relationship With NHF Following the Spin-Off–Conditions to the Separation and Distribution.”

The historical and pro forma financial information included in this information statement may not be a reliable indicator of future results.

The financial statements included herein are (1) the historical balance sheet of NXRT, (2) the historical combined consolidated financial statements of the Freedom REIT Contribution Group, (3) the historical statements of revenue and certain expenses of each of (a) the Miramar Apartments, (b) the C1 (Texas) portfolio, (c) the Willowdale Crossing Apartments, (d) Edgewater at Sandy Springs, (e) the Nashville portfolio, (f) the Jacksonville/Tampa portfolio, (g) the Atlanta portfolio, and (h) the Sabal Palms at Lake Buena Vista and (4) the pro forma combined consolidated financial information of NXRT.

The historical financial statements and the pro forma financial information included herein may not reflect what the business, financial position or result of operations of NXRT will be in the future when it is a separate, publicly traded company. The pro forma financial information included in this information statement was prepared on the basis of assumptions derived from available information that we believed to be reasonable. However, these assumptions may change or may be incorrect, and actual results may differ, perhaps significantly. For additional information about the basis of presentation of the financial information included in this information statement, see “Capitalization,” “Selected Historical and Pro Forma Financial and Operating Data” and the financial statements.

The NHF Board has reserved the right, in its sole discretion, to amend, modify or abandon the Spin-Off and the related transactions at any time prior to the distribution date. In addition, the Spin-Off, the Advisory Agreement, and related transactions are subject to the satisfaction or waiver (by NHF’s Board in its sole discretion) of a number of conditions. NXRT and NHF cannot assure that any or all of these conditions will be met.

The NHF Board has reserved the right, in its sole discretion, to amend, modify or abandon the Spin-Off and the related transactions at any time prior to the distribution date. This means NHF may cancel or delay the planned distribution of common stock of NXRT if at any time the NHF Board determines that the distribution of such common stock is not in the best interests of NHF. If NHF’s Board determines to cancel the Spin-Off, shareholders of NHF will not receive any distribution of NXRT common stock and NHF will be under no obligation whatsoever to its shareholders to distribute such shares. In addition, the Spin-Off and related transactions are subject to the satisfaction or waiver (by NHF’s Board in its sole discretion) of a number of conditions, including shareholder approval of the Advisory Agreement. See “The Spin-Off—Conditions to the Spin-Off.” NXRT and NHF cannot assure that any or all of these conditions will be met. The fulfillment of the conditions to the Spin-Off will not create any obligation on NHF’s part to effect the Spin-Off (as defined in section “The Spin-Off—General”).

The Spin-Off could give rise to disputes or other unfavorable effects, which could have a material adverse effect on the business, financial position or results of operations of NXRT.

Disputes with third parties could arise out of the Spin-Off, and NXRT could experience unfavorable reactions to the Spin-Off from its lenders, ratings agencies, regulators or other interested parties. These disputes and reactions of third parties could have a material adverse effect on the business, financial position or results of operations of NXRT. In addition, following the Spin-Off, disputes between NHF and NXRT (and their subsidiaries) could arise in connection with the Separation and Distribution Agreement or other agreements.

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No vote of the NHF common shareholders is required to effect the Spin-Off.

Your vote is not required to effect the Spin-Off. Accordingly, if this transaction occurs and you do not want to receive shares of our common stock in the distribution, your only recourse will be to divest yourself of your NHF common shares prior to the record date for the distribution.

Prior to the Spin-Off, NHF will separately seek your vote to approve the terms of an Advisory Agreement to be entered into between NXRT and NexPoint Real Estate Advisors. See “The Spin-Off-Conditions to the Spin-Off.”

Potential indemnification liabilities of NXRT pursuant to the Separation and Distribution Agreement could materially adversely affect NXRT.

The Separation and Distribution Agreement between NXRT and NHF will provide for, among other things, the principal corporate transactions required to effect the separation, certain conditions to the Spin-Off and provisions governing the relationship between NXRT and NHF with respect to and resulting from the Spin-Off. For a description of the Separation and Distribution Agreement, see “Our Relationship With NHF Following the Spin-Off—The Separation and Distribution Agreement.”

Among other things, the Separation and Distribution Agreement will provide for indemnification obligations designed to make NXRT financially responsible for substantially all liabilities that may exist relating to or arising out of its business. If NXRT is required to indemnify NHF under the circumstances set forth in the Separation and Distribution Agreement, NXRT may be subject to substantial liabilities.

Additionally, under the Advisory Agreement, our Advisor will not assume any responsibility to us other than to render the services called for under that agreement, and it will not be responsible for any action of the NXRT Board in following or declining to follow our Advisor’s advice or recommendations. In addition, we have agreed to indemnify our Advisor and each of its officers, directors, members, managers and employees from and against any claims or liabilities, including reasonable legal fees and other expenses reasonably incurred, arising out of or in connection with our business and operations or any action taken or omitted on our behalf pursuant to authority granted by the Advisory Agreement, except where attributable to gross negligence, willful misconduct, bad faith or reckless disregard of such person’s duties under the Advisory Agreement. These protections may lead our Advisor to act in a riskier manner when acting on our behalf than it would when acting for its own account.

In connection with our separation from NHF, NHF will indemnify us for certain liabilities. However, there can be no assurance that these indemnities will be sufficient to insure us against the full amount of such liabilities, or that NHF’s ability to satisfy its indemnification obligation will not be impaired in the future.

Pursuant to the Separation and Distribution Agreement, NHF will agree to indemnify us for certain liabilities, including certain tax liabilities. However, third parties could seek to hold us responsible for any of the liabilities that NHF will agree to retain, and there can be no assurance that NHF will be able to fully satisfy its indemnification obligations. Moreover, even if we ultimately succeed in recovering from NHF any amounts for which we are held liable, we may be temporarily required to bear these losses while seeking recovery from NHF.

A court could deem the distribution to be a fraudulent conveyance and void the transaction or impose substantial liabilities upon us.

A court could deem the distribution of NXRT shares of common stock or certain internal restructuring transactions undertaken by NHF in connection with the Spin-Off, to be a fraudulent conveyance or transfer. Fraudulent conveyances or transfers are defined to include transfers made or obligations incurred with the actual intent to hinder, delay or defraud current or future creditors or transfers made or obligations incurred for less than reasonably equivalent value when the debtor was insolvent, or that rendered the debtor insolvent, inadequately

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capitalized or unable to pay its debts as they become due. In such circumstances, a court could void the transactions or impose substantial liabilities upon us, which could adversely affect our financial condition and our results of operations. Among other things, the court could require our stockholders to return to NHF some or all of the shares of our common stock issued in the distribution, or require us to fund liabilities of other companies involved in the restructuring transactions for the benefit of creditors. Whether a transaction is a fraudulent conveyance or transfer will vary depending upon the jurisdiction whose law is being applied.

Risks Related to Our Corporate Structure

We intend to elect to be treated as a REIT. Our failure to qualify as a REIT for federal income tax purposes would reduce the amount of income we have available for distribution and limit our ability to make distributions to our stockholders.

Our qualification as a REIT will depend upon our ability to meet requirements regarding our organization and ownership, distributions of our income, the nature and diversification of our income and assets and other tests imposed by the Code. The REIT qualification requirements are extremely complex and interpretation of the U.S. federal income tax laws governing qualification as a REIT is limited. For a discussion of the REIT qualification tests and other considerations relating to our election to be taxed as REIT, see “U.S. Federal Income Tax Considerations.” Furthermore, future legislative, judicial or administrative changes to the federal income tax laws could be applied retroactively, which could result in our disqualification as a REIT.

If we were to fail to qualify as a REIT for any taxable year after electing REIT status, we would be subject to federal income tax on our taxable income at regular corporate rates, and dividends paid to our stockholders would not be deductible by us in computing our taxable income. Any resulting corporate tax liability could be substantial and would reduce the amount of cash available for distribution to our stockholders, which in turn could have an adverse impact on the value of shares of our common stock. Unless we were entitled to relief under certain Code provisions, we also would be disqualified from taxation as a REIT and would not be allowed to re-elect REIT status for the four taxable years following the year in which we failed to qualify as a REIT.

The rule against re-electing REIT status following a loss of such status would also apply to us if Freedom REIT fails to qualify as a REIT, and we are treated as a successor to Freedom REIT for U.S. federal income tax purposes. Although NHF and Freedom REIT have represented to us that they have no knowledge of any fact or circumstance that would cause us to fail to qualify as a REIT and Freedom REIT has covenanted to us to use its reasonable best efforts to maintain its REIT status for each of Freedom REIT’s taxable years ending on or before December 31, 2014 (unless Freedom REIT obtains an opinion from a nationally recognized tax counsel or a private letter ruling from the Internal Revenue Service, or the IRS, to the effect that Freedom REIT’s failure to maintain its REIT status will not cause us to fail to qualify as a REIT under the successor REIT rule referred to above) and we will receive an opinion pursuant to the Separation and Distribution Agreement regarding Freedom REIT’s REIT status, no assurance can be given that such representation and covenant would prevent us from failing to qualify as a REIT. Although, in the event of a breach, we may be able to seek damages from NHF and Freedom REIT, there can be no assurance that such damages, if any, would appropriately compensate us.

Even if we qualify as a REIT for federal income tax purposes, we may be subject to other tax liabilities that reduce our cash flow and our ability to make distributions to you.

Even if we qualify as a REIT for federal income tax purposes, we may be subject to some federal, state and local taxes on our income or property. For example, net income from a “prohibited transaction” will be subject to a 100% tax. We may not be able to make sufficient distributions to avoid excise taxes applicable to REITs. We may also decide to retain income we earn from the sale or other disposition of our real estate assets and pay income tax directly on such income. We may also be subject to state and local taxes on our income or property, either directly or at the level of the companies through which we indirectly own our assets. In addition, our taxable REIT subsidiaries (“TRSs”) or any TRS we form will be subject to federal income tax and applicable state and local taxes on their net income. Any federal or state taxes we pay will reduce our cash available for distribution to you.

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To qualify as a REIT we must meet annual distribution requirements, which may force us to forgo otherwise attractive opportunities or borrow funds during unfavorable market conditions. This could delay or hinder our ability to meet our investment objectives and reduce your overall return.

In order to qualify as a REIT, we must distribute annually to our stockholders at least 90% of our REIT taxable income (which does not equal net income as calculated in accordance with GAAP), determined without regard to the deduction for dividends paid and excluding net capital gain. We will be subject to U.S. federal income tax on our undistributed REIT taxable income and net capital gain and to a 4% nondeductible excise tax on any amount by which distributions we pay with respect to any calendar year are less than the sum of (a) 85% of our ordinary income, (b) 95% of our capital gain net income and (c) 100% of our undistributed income from prior years. These requirements could cause us to distribute amounts that otherwise would be spent on investments in real estate assets and it is possible that we might be required to borrow funds, possibly at unfavorable rates, or sell assets to fund these distributions. It is possible that we might not always be able to make distributions sufficient to meet the annual distribution requirements and to avoid U.S. federal income and excise taxes on our earnings while we qualify as a REIT.

Complying with REIT requirements may force us to liquidate otherwise attractive investments.

To qualify as a REIT, we must ensure that at the end of each calendar quarter, at least 75% of the value of our assets consists of cash, cash items, government securities and qualified REIT real estate assets, including certain mortgage loans and mortgage-backed securities. The remainder of our investment in securities (other than government securities and qualified real estate assets) generally cannot include more than 10% of the outstanding voting securities of any one issuer or more than 10% of the total value of the outstanding securities of any one issuer. In addition, in general, no more than 5% of the value of our assets (other than government securities and qualified real estate assets) can consist of the securities of any one issuer, and no more than 25% of the value of our total assets can be represented by securities of one or more taxable REIT subsidiaries. See “U.S. Federal Income Tax Considerations—Requirements for Qualification—General.” If we fail to comply with these requirements at the end of any calendar quarter, we must correct the failure within 30 days after the end of the calendar quarter or qualify for certain statutory relief provisions to avoid losing our REIT qualification and suffering adverse tax consequences. As a result, we may be required to liquidate otherwise attractive investments from the Portfolio. These actions could have the effect of reducing our income and amounts available for distribution to our stockholders.

If our operating partnership failed to qualify as a partnership or is not otherwise disregarded for U.S. federal income tax purposes, we would cease to qualify as a REIT.

If the IRS were to successfully challenge the status of our operating partnership as a partnership or disregarded entity for such purposes, it would be taxable as a corporation. In such event, this would reduce the amount of distributions that the operating partnership could make to us. This also would result in our failing to qualify as a REIT, and becoming subject to a corporate level tax on our income. This would substantially reduce our cash available to pay distributions and the yield on your investment. In addition, if any of the partnerships or limited liability companies through which our operating partnership will own or hold interests in its properties, in whole or in part, loses its characterization as a partnership and is otherwise not disregarded for U.S. federal income tax purposes, it would be subject to taxation as a corporation, thereby reducing distributions to the operating partnership. Such a recharacterization of an underlying property owner could also threaten our ability to maintain our REIT qualification.

Dividends payable by REITs generally do not qualify for the reduced tax rates available for some dividends.

Currently, the maximum tax rate applicable to qualified dividend income payable to U.S. stockholders that are individuals, trusts and estates is 20%. Dividends payable by REITs, however, generally are not eligible for this reduced rate. Although this does not adversely affect the taxation of REITs or dividends payable by REITs, the more favorable rates applicable to regular corporate qualified dividends could cause investors who are

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individuals, trusts and estates to perceive investments in REITs to be relatively less attractive than investments in the stocks of non-REIT corporations that pay dividends, which could adversely affect the value of the shares of REITs, including our common stock. Tax rates could be changed in future legislation.

The share ownership restrictions of the Code for REITs and the 6.2% share ownership limit in our charter may inhibit market activity in shares of our stock and restrict our business combination opportunities.

In order to qualify as a REIT, five or fewer individuals, as defined in the Code, may not own, actually or constructively, more than 50% in value of our issued and outstanding shares of stock at any time during the last half of each taxable year, other than the first year for which a REIT election is made. Attribution rules in the Code determine if any individual or entity actually or constructively owns shares of our common stock under this requirement. Additionally, at least 100 persons must beneficially own shares of our common stock during at least 335 days of a taxable year for each taxable year, other than the first year for which a REIT election is made. To help insure that we meet these tests, among other purposes, our charter restricts the acquisition and ownership of shares of our common stock.

Our charter, with certain exceptions, authorizes our directors to take such actions as are necessary and desirable to preserve our qualification as a REIT while we so qualify. Unless exempted by our board of directors (prospectively or retroactively), for so long as we qualify as a REIT, our charter prohibits, among other limitations on ownership and transfer of shares of our stock, any person from beneficially or constructively owning (applying certain attribution rules under the Code) more than 6.2% in value of the aggregate of the outstanding shares of our capital stock and more than 6.2% (in value or in number of shares, whichever is more restrictive) of the outstanding shares of our common stock. Our board of directors may not grant an exemption from these restrictions to any proposed transferee whose ownership in excess of the 6.2% ownership limit would result in our failing to qualify as a REIT. The NXRT Board intends to grant waivers from the ownership limits for certain existing stockholders, including First Trust Portfolios L.P. and Advisors Asset Management and may grant additional waivers in the future. These waivers will be subject to certain initial and ongoing conditions designed to protect our status as a REIT. These restrictions on transferability and ownership will not apply, however, if our board of directors determines that it is no longer in our best interest to qualify as a REIT or that compliance with the restrictions is no longer required in order for us to so qualify as a REIT.

These ownership limits could delay or prevent a transaction or a change in control that might involve a premium price for our common stock or otherwise be in the best interest of the stockholders.

Complying with REIT requirements may limit our ability to hedge our liabilities effectively and may cause us to incur tax liabilities.

The REIT provisions of the Code may limit our ability to hedge our liabilities. Any income from a hedging transaction we enter into to manage risk of interest rate changes, price changes or currency fluctuations with respect to borrowings made or to be made to acquire or carry real estate assets, if properly identified under applicable Treasury Regulations, does not constitute “gross income” for purposes of the 75% or 95% gross income tests. To the extent that we enter into other types of hedging transactions, the income from those transactions will likely be treated as non-qualifying income for purposes of both of the gross income tests. As a result of these rules, we may need to limit our use of advantageous hedging techniques or implement those hedges through a taxable REIT subsidiary. This could increase the cost of our hedging activities because our taxable REIT subsidiaries would be subject to tax on gains or expose us to greater risks associated with changes in interest rates than we would otherwise want to bear. In addition, losses in a taxable REIT subsidiary generally will not provide any tax benefit, except for being carried forward against future taxable income of such taxable REIT subsidiary.

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Certain of our business activities are potentially subject to the prohibited transaction tax, which could reduce the return on your investment.

For so long as we qualify as a REIT, our ability to dispose of property during the first few years following acquisition may be restricted to a substantial extent as a result of our REIT qualification. Under applicable provisions of the Code regarding prohibited transactions by REITs, while we qualify as a REIT, we will be subject to a 100% penalty tax on any gain recognized on the sale or other disposition of any property (other than foreclosure property) that we own or hold an interest in, directly or indirectly through any subsidiary entity, including our operating partnership, but generally excluding TRSs, that is deemed to be inventory or property held primarily for sale to customers in the ordinary course of a trade or business. Whether property is inventory or otherwise held primarily for sale to customers in the ordinary course of a trade or business depends on the particular facts and circumstances surrounding each property. During such time as we qualify as a REIT, we intend to avoid the 100% prohibited transaction tax by (a) conducting activities that may otherwise be considered prohibited transactions through a TRS (but such TRS will incur corporate rate income taxes with respect to any income or gain recognized by it), (b) conducting our operations in such a manner so that no sale or other disposition of an asset we own or hold an interest in, directly or through any subsidiary, will be treated as a prohibited transaction, or (c) structuring certain dispositions of our properties to comply with the requirements of the prohibited transaction safe harbor available under the Code for properties that, among other requirements, have been held for at least two years. No assurance can be given that any particular property that we own or hold an interest in, directly or through any subsidiary entity, including our operating partnership, but generally excluding TRSs, will not be treated as inventory or property held primarily for sale to customers in the ordinary course of a trade or business.

Foreign investors may be subject to U.S. federal withholding tax and may be subject to U.S. federal income tax on distributions received from us and upon disposition of shares of our common stock.

Subject to certain exceptions, distributions received from us will be treated as dividends of ordinary income to the extent of our current or accumulated earnings and profits. Such dividends paid to a non-U.S. stockholder ordinarily will be subject to U.S. withholding tax at a 30% rate, or such lower rate as may be specified by an applicable income tax treaty, unless the distributions are treated as “effectively connected” with the conduct by the non-U.S. stockholder of a U.S. trade or business. Pursuant to the Foreign Investment in Real Property Tax Act of 1980, or FIRPTA, capital gain distributions attributable to sales or exchanges of “U.S. real property interests,” or USRPIs, generally will be taxed to a non-U.S. stockholder as if such gain were effectively connected with a U.S. trade or business. However, a capital gain dividend will not be treated as effectively connected income if (a) the distribution is received with respect to a class of stock that is regularly traded on an established securities market located in the United States and (b) the non-U.S. stockholder does not own more than 5% of the class of our stock at any time during the one-year period ending on the date the distribution is received.

Gain recognized by a non-U.S. stockholder upon the sale or exchange of our common stock generally will not be subject to U.S. federal income taxation unless such stock constitutes a USRPI under FIRPTA. Our common stock will not constitute a USRPI so long as we are a “domestically-controlled” REIT. A REIT is “domestically controlled” if less than 50% of the REIT’s stock, by value, has been owned directly or indirectly by persons who are not qualifying U.S. persons during a continuous five-year period ending on the date of disposition or, if shorter, during the entire period of the REIT’s existence. We cannot assure you that we will qualify as a “domestically controlled” REIT. If we were to fail to so qualify, gain realized by foreign investors on a sale of shares of our stock would be subject to FIRPTA tax, unless the shares of our stock were traded on an established securities market and the foreign investor did not at any time during a specified testing period directly or indirectly own more than 5% of the value of our outstanding common stock. See “U.S. Federal Income Tax Considerations—Taxation of Non-U.S. Holders of Our Common Stock.”

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The ability of the NXRT Board to revoke our REIT qualification without stockholder approval may cause adverse consequences to our stockholders.

Our charter provides that the NXRT Board may revoke or otherwise terminate our REIT election, without the approval of our stockholders, if it determines that it is no longer in our best interest to continue to qualify as a REIT. If we cease to be a REIT, we will not be allowed a deduction for dividends paid to stockholders in computing our taxable income and will be subject to U.S. federal income tax at regular corporate rates and state and local taxes, which may have adverse consequences on our total return to our stockholders.

Legislative or regulatory tax changes or other actions affecting REITs could have a negative effect on us, including our ability to qualify as a REIT or the federal income tax consequences of such qualification, and could adversely affect you.

At any time, the federal income tax laws governing REITs or the administrative interpretations of those laws or regulations may be amended. The rules dealing with federal income taxation are constantly under review by persons involved in the legislative process and by the IRS and the U.S. Department of the Treasury. Changes to the tax laws, including proposals in draft legislation contained in the Tax Reform Act of 2014, with or without retroactive application, could adversely affect our ability to qualify as a REIT or the federal income tax consequences of such qualification. Therefore, changes in tax laws, regulations or administrative interpretations or any amendments thereto could diminish the value of shares of our common stock or the value or the resale potential of our properties. We cannot predict how changes in the tax laws might affect our investors or us. We recommend you consult with your own tax advisor with respect to the impact of any relevant legislation on your investment in our common stock and the status of legislative, regulatory or administrative developments and proposals and their potential effect on an investment in our common stock.

Risks Related to the Ownership of our Common Stock

There are no established trading markets for our common stock and broad market fluctuations could negatively impact the market price of our stock.

Currently, there is no established trading market for our common stock. We intend to apply to list shares of our common stock on the NYSE under the symbol “NXRT,” to be effective upon completion of the Spin-Off. We cannot assure you that our listing application will be accepted or that, if accepted, an active trading market for our common stock will develop after the Spin-Off or if one does develop, that it will be sustained.

Until the market has fully analyzed the value of NXRT and of NHF without NXRT, the price of NXRT common stock and NHF common shares may fluctuate significantly. Further, even if an active trading market develops, the market price of our common stock may be volatile. In addition, the trading volume in our common stock may fluctuate and cause significant price variations to occur. We cannot assure you that the market price of our common stock will not fluctuate or decline significantly in the future. Some of the factors that could affect our stock price or result in fluctuations in the price or trading volume of our common stock include:

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In the past, class-action litigation has often been instituted against companies following periods of volatility in the price of their common stock. This type of litigation could result in substantial costs and divert our management’s attention and resources, which could have an adverse effect on our financial condition, results of operations, cash flow and trading price of our common stock.

The form, timing and/or amount of dividend distributions in future periods may vary and be impacted by economic and other considerations.

The form, timing and/or amount of dividend distributions will be declared at the discretion of the NXRT Board and will depend on actual cash from operations, our financial condition, capital requirements, the annual distribution requirements under the REIT provisions of the Code and other factors as the NXRT Board may consider relevant. The NXRT Board may modify our dividend policy from time to time.

We may be unable to make distributions at expected levels, which could result in a decrease in the market price of our common stock.

If sufficient cash is not available for distribution from our operations, we may have to fund distributions from working capital, borrow to provide funds for such distributions, reduce the amount of such distributions, or issue stock dividends. To the extent we borrow to fund distributions, our future interest costs would increase, thereby reducing our earnings and cash available for distribution from what they otherwise would have been. If cash available for distribution generated by our assets is less than we expect, our inability to make the expected distributions could result in a decrease in the market price of our common stock. In addition, if we make stock dividends in lieu of cash distributions it may have a dilutive effect on the holdings of our stockholders.

All distributions will be made at the discretion of the NXRT Board and will be based upon, among other factors, our historical and projected results of operations, financial condition, cash flows and liquidity, maintenance of our REIT qualification and other tax considerations, capital expenditure and other expense obligations, debt covenants, contractual prohibitions or other limitations and applicable law and such other matters as the NXRT Board may deem relevant from time to time. We may not be able to make distributions in the future, and our inability to make distributions, or to make distributions at expected levels, could result in a decrease in the market price of our common stock.

Our charter permits the NXRT Board to issue stock with terms that may subordinate the rights of our common stockholders or discourage a third party from acquiring us in a manner that could otherwise result in a premium price to our stockholders.

The NXRT Board may classify or reclassify any unissued shares of common stock or preferred stock and establish the preferences, conversion or other rights, voting powers, restrictions, limitations as to distributions,

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qualifications and terms or conditions of redemption of any such stock. Thus, the NXRT Board could authorize the issuance of preferred stock with terms and conditions that could have priority as to distributions and amounts payable upon liquidation over the rights of the holders of our common stock. Such preferred stock could also have the effect of delaying, deferring or preventing a change in control of us, including an extraordinary transaction (such as a merger, tender offer or sale of all or substantially all of our assets) that might provide a premium price to holders of our common stock.

Future issuances of debt securities and equity securities may negatively affect the market price of shares of our common stock and, in the case of equity securities, may be dilutive to existing stockholders and could reduce the overall value of your investment.

In the future, we may issue debt or equity securities or incur other financial obligations, including stock dividends and shares that may be issued in exchange for common units and equity plan shares/units. Upon liquidation, holders of our debt securities and other loans and preferred stock will receive a distribution of our available assets before common stockholders. We are not required to offer any such additional debt or equity securities to existing stockholders on a preemptive basis. Therefore, additional common stock issuances, directly or through convertible or exchangeable securities (including common units and convertible preferred units), warrants or options, will dilute the holdings of our existing common stockholders and such issuances or the perception of such issuances may reduce the market price of shares of our common stock. Any convertible preferred units would have, and any series or class of our preferred stock would likely have, a preference on distribution payments, periodically or upon liquidation, which could eliminate or otherwise limit our ability to make distributions to common stockholders.

Existing stockholders do not have preemptive rights to any shares we issue in the future. Upon commencement of the Spin-Off, our charter will authorize us to issue              shares of capital stock, of which              shares will be designated as common stock and              shares will be designated as preferred stock. The NXRT Board may increase the number of authorized shares of capital stock without stockholder approval. After the Spin-Off, the NXRT Board may elect to (1) sell additional shares in this or future public offerings; (2) issue equity interests in private offerings; (3) issue shares of our common stock under a long term incentive plan to our non-employee directors or to employees of our Advisor or its affiliates; (4) issue shares to our Advisor, its successors or assigns, in payment of an outstanding fee obligation or as consideration in a related-party transaction; or (5) issue shares of our common stock to sellers of properties we acquire in connection with an exchange of limited partnership interests of NXRT OP. To the extent we issue additional equity interests after the Spin-Off, your percentage ownership interest in us will be diluted. Further, depending upon the terms of such transactions, most notably the offering price per share, existing stockholders may also experience a dilution in the book value of their investment in us.

Our rights and the rights of our stockholders to recover claims against our independent directors are limited, which could reduce your and our recovery against them if they negligently cause us to incur losses.

Maryland law provides that a director has no liability in the capacity as a director if he or she performs his or her duties in good faith, in a manner he or she reasonably believes to be in the company’s best interests and with the care that an ordinarily prudent person in a like position would use under similar circumstances. As permitted by the Maryland General Corporation Law, or MGCL, our charter limits the liability of our directors and officers to the Company and our stockholders for money damages, except for liability resulting from:

In addition, our charter authorizes us to obligate the Company, and our bylaws require us, to indemnify our directors and officers for actions taken by them in those capacities and to pay or reimburse their reasonable

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expenses in advance of final disposition of a proceeding to the maximum extent permitted by Maryland law, and effective upon completion of the Spin-Off, we intend to enter into indemnification agreements with our directors and executive officers. As a result, we and our stockholders may have more limited rights against our directors and officers than might otherwise exist under common law. Accordingly, in the event that actions taken by any of our directors or officers are immune or exculpated from, or indemnified against, liability but which impede our performance, our stockholders’ ability to recover damages from that director or officer will be limited.

Our charter and bylaws contain provisions that may delay, defer or prevent an acquisition of our common stock or a change in control.

Our charter and bylaws contain a number of provisions, the exercise or existence of which could delay, defer or prevent a transaction or a change in control that might involve a premium price for our stockholders or otherwise be in their best interests, including the following:

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Certain provisions of Maryland law may limit the ability of a third party to acquire control of us.

Certain provisions of the MGCL may have the effect of inhibiting a third party from acquiring us or of impeding a change of control under circumstances that otherwise could provide our common stockholders with the opportunity to realize a premium over the then-prevailing market price of such shares, including:

Pursuant to the Maryland Business Combination Act, we expect that the NXRT Board will by resolution exempt from the provisions of the Maryland Business Combination Act all business combinations (i) between our Advisor, our Sponsor or their respective affiliates and us and (ii) between any other person and us, provided that such business combination is first approved by the NXRT Board (including a majority of our directors who are not affiliates or associates of such person). Our bylaws contain a provision exempting from the Maryland Control Share Acquisition Act any and all acquisitions by any person of shares of our stock. There can be no assurance that these exemptions or resolutions will not be amended or eliminated at any time in the future.

Additionally, Title 3, Subtitle 8 of the MGCL permits the NXRT Board, without stockholder approval and regardless of what is currently provided in our charter or bylaws, to implement certain takeover defenses, such as a classified board, some of which we do not have. See “Certain Provisions of Maryland Law and Our Charter and Bylaws—Business Combinations,” “—Control Share Acquisitions” and “—Subtitle 8.”

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Cautionary Statement Regarding Forward-Looking Statements

This information statement contains forward-looking statements that are subject to risks and uncertainties. In particular, statements relating to our liquidity and capital resources, Portfolio performance and results of operations contain forward-looking statements. Furthermore, all of the statements regarding future financial performance (including market conditions and demographics) are forward-looking statements. We caution investors that any forward-looking statements presented in this information statement are based on management’s beliefs and assumptions made by, and information currently available to, management. When used, the words “anticipate,” “believe,” “expect,” “intend,” “may,” “might,” “plan,” “estimate,” “project,” “should,” “will,” “would,” “result” and similar expressions that do not relate solely to historical matters are intended to identify forward-looking statements. You can also identify forward-looking statements by discussions of strategy, plans or intentions.

Forward-looking statements are subject to risks, uncertainties and assumptions and may be affected by known and unknown risks, trends, uncertainties and factors that are beyond our control. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or projected. We caution you therefore against relying on any of these forward-looking statements.

Some of the risks and uncertainties that may cause our actual results, performance, liquidity or achievements to differ materially from those expressed or implied by forward-looking statements include, among others, the following:

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While forward-looking statements reflect our good faith beliefs, they are not guarantees of future performance. They are based on estimates and assumptions only as of the date of this information statement. We undertake no obligation to update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, new information, data or methods, future events or other changes.

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The Spin-Off

General

The NHF Board has announced a plan to spin-off NexPoint Residential Trust. NHF will accomplish the Spin-Off by transferring or contributing all of its interests in the multifamily properties that NHF, through its subsidiary Freedom REIT, holds interests in prior to the Spin-Off to NXRT through a series of internal corporate restructurings. NHF will then distribute all of the outstanding shares of NXRT common stock held by NHF immediately prior to the Spin-Off to holders of NHF common shares. Immediately following the distributions, NHF shareholders will own 100% of the outstanding common shares of NHF and 100% of the outstanding common stock of NXRT.

Prior to the Spin-Off, NXRT and NHF will enter into a separation and distribution agreement setting forth the mechanics of the Spin-Off, certain organizational matters and other ongoing obligations of NHF and NXRT (the “Separation and Distribution Agreement”). NHF and NXRT or their respective subsidiaries, as applicable, may enter into other agreements prior to the Spin-Off to provide a framework for the restructuring and for the relationships between NXRT and NHF that will exist following the completion of the Spin-Off.

The NHF Board has reserved the right, in its sole discretion, to amend, modify or abandon the Spin-Off and related transactions at any time prior to the distribution date. In addition, the Spin-Off is subject to the satisfaction or waiver of a number of conditions. See “—Conditions to the Spin-Off.”

Reasons for the Spin-Off

NHF has acquired real estate assets through its capital contributions to its subsidiary Freedom REIT. Due to the amount of opportunities NHF believes are currently available in the multifamily property asset class, the NHF Board believes it is in the best interests of the NHF shareholders to spin off into a separate public REIT the multifamily properties that NHF, through its subsidiary Freedom REIT, holds interests in prior to the Spin-Off in order to better allow for the opportunity for growth in real estate-related assets in the multifamily asset class.

In addition, the NHF Board believes that the Spin-Off will result in the following benefits to the NHF common shareholders:

1. The NHF common shareholders will receive shares of NXRT that will have a different risk-return and asset profile from NHF, thereby providing common shareholders with the following alternatives: (a) retaining their shares in both NHF and NXRT, (b) selling their NXRT shares and retaining the NHF common shares; or (c) selling their NHF common shares and retaining their NXRT shares. As a consequence, NHF’s common shareholders may more closely align their investment portfolio with their desired exposure to different asset classes. If a shareholder sells his or her shares of either NHF or NXRT, the shareholder can be expected to incur brokerage commissions and such sale may constitute a taxable event for the stockholder.

2. NXRT common stock will be issued at a much lower transaction cost to investors than is typically the case for a newly-organized REIT since there will be no underwriting fees or commission costs for current NHF shareholders, which is not typical for a newly organized REIT. The Spin-Off will not result in an increase in the aggregate net assets of NHF and NXRT.

3. We believe NXRT, as a REIT, is a more efficient vehicle to raise debt and equity capital at lower cost than NHF, as a closed-end investment company.

The Number of Shares You Will Receive in the Spin-Off

For every              common shares of NHF that you owned at the close of business on              , 2014, the record date, you will receive              share of common stock of NXRT on the distribution date.

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When and How You Will Receive the Distribution

NHF will distribute the shares of NXRT common stock on              , 2014, the distribution date. However, the NHF Board may determine to delay or abandon the Spin-Off. American Stock Transfer & Trust Company will serve as transfer agent and registrar for the NXRT common stock and as distribution agent in connection with the Spin-Off.

If you own NHF common shares as of the close of business on the record date, the shares of NXRT common stock that you are entitled to receive in the Spin-Off will be issued electronically, as of the distribution date, to you or to your bank or brokerage firm on your behalf by way of direct registration in book-entry form. Registration in book-entry form refers to a method of recording stock ownership when no physical share certificates are issued to shareholders, as is the case in the Spin-Off.

Commencing on or shortly after the distribution date, if you hold physical share certificates that represent your common shares of NHF and you are the registered holder of the NHF common shares represented by those certificates, the distribution agent will mail to you an account statement that indicates the number of shares of NXRT common stock that have been registered in book-entry form in your name. If you have any questions concerning the mechanics of having shares of NXRT common stock registered in book-entry form, you are encouraged to contact our Corporate Secretary by mail at NexPoint Residential Trust, 300 Crescent Court, Suite 700, Dallas, Texas 75201 or by phone at 972-628-4100.

Most NHF shareholders hold their common shares of NHF through a bank or brokerage firm. In such cases, the bank or brokerage firm would be said to hold the shares in “street name” and ownership would be recorded on the bank or brokerage firm’s books. If you hold your NHF common shares through a bank or brokerage firm, your bank or brokerage firm will credit your account for the shares of common stock of NXRT that you are entitled to receive in the Spin-Off. If you have any questions concerning the mechanics of having shares of NXRT common stock held in “street name,” you are encouraged to contact your bank or brokerage firm.

Treatment of Fractional Shares

The distribution agent will not deliver any fractional shares of our common stock in connection with the delivery of NXRT common stock pursuant to the Spin-Off. Instead, the distribution agent will aggregate all fractional shares and sell them on behalf of those shareholders who otherwise would be entitled to receive fractional shares. These sales will occur as soon as practicable after the distribution date. Those shareholders will then receive a cash payment, in the form of a check, in an amount equal to their pro rata share of the total proceeds of those sales. Any applicable expenses, including brokerage fees, will be paid by us.

We expect that all fractional shares held in street name will be aggregated and sold by brokers or other nominees according to their standard procedures, and that brokers or other nominees may request the distribution agent to sell the fractional shares on their behalf. You should contact your broker or other nominee for additional details. None of NHF, us, or our distribution agent will guarantee any minimum sale price for fractional shares or pay any interest on the proceeds from the sale of fractional shares. The receipt of cash in lieu of fractional shares will generally be taxable to the recipient shareholders. See “—Certain U.S. Federal Income Tax Consequences of the Spin-Off.”

Results of the Spin-Off

After the Spin-Off, NXRT will be a separate publicly traded company. Immediately following the Spin-Off, (1) there will not be any outstanding options or warrants to purchase, or securities convertible into, common stock of NXRT and (2) based on the number of registered shareholders of NHF on              , 2014, and without giving effect to “when-issued” trading, we expect to have approximately              stockholders of record.

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The actual number of shares to be distributed will be determined based on the number of common shares of NHF outstanding on the record date.

The Spin-Off will not affect the rights of NHF shareholders.

Certain U.S. Federal Income Tax Consequences of the Spin-Off

The following is a summary of certain U.S. federal income tax consequences of the Spin-Off to U.S. holders (as defined below) of NHF common shares that receive shares of NXRT common stock and cash in lieu of fractional shares, if any, in the distribution. This summary is based on the Code, the U.S. Treasury regulations promulgated thereunder, and interpretations of the Code and the U.S. Treasury regulations by the courts and the IRS, in effect as of the date hereof, and all of which are subject to change, possibly with retroactive effect. This summary does not discuss all the tax considerations that may be relevant to NHF shareholders in light of their particular circumstances, nor does it address the consequences to NHF shareholders subject to special treatment under the U.S. federal income tax laws (such as holders other than U.S. Holders (as defined below), insurance companies, dealers or brokers in securities or currencies, tax-exempt organizations, financial institutions, mutual funds, pass-through entities and investors in such entities, holders who hold their shares as a hedge or as part of a hedging, straddle, conversion, synthetic security, integrated investment or other risk-reduction transaction or who are subject to alternative minimum tax or holders who acquired their shares upon the exercise of employee stock options or otherwise as compensation). In addition, this summary does not address the U.S. federal income tax consequences to those NHF shareholders who do not hold their NHF common shares as a capital asset. This summary also does not address any state, local or foreign tax consequences. Finally, based on advice provided to NXRT by NHF, this summary assumes that NHF qualifies as a RIC for U.S. federal income tax purposes.

NHF SHAREHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS CONCERNING THE U.S. FEDERAL, STATE AND LOCAL AND NON-U.S. TAX CONSEQUENCES OF THE SPIN-OFF TO THEM.

For purposes of this discussion, a U.S. holder is a beneficial owner of NHF common shares that is, for U.S. federal income tax purposes:

If a partnership, including any entity treated as a partnership for U.S. federal income tax purposes, holds NHF common shares, the tax treatment of a partner generally will depend on the status of the partner and on the activities of the partnership. Partners in a partnership holding NHF common shares should consult their own tax advisors regarding the tax consequences of the Spin-Off.

The distribution of NXRT’s common stock and cash in lieu of fractional shares, if any, will not qualify for tax-free treatment, and an amount equal to the fair market value of the common stock and the amount of any cash received by you on the distribution date will be treated as a taxable dividend up to the amount of your share of any current and accumulated earnings and profits of NHF for the year of the distribution, including any capital gains and dividends income taken into account by NHF with respect to the distribution by Freedom REIT of interests in the multifamily properties to NHF and the distribution by NHF of the NXRT common stock to you,

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and will be taxable to you as a distribution of ordinary income, long term capital gain or a combination of both, without a distribution of any corresponding amount of cash (other than cash in lieu of fractional shares) to you to pay the tax on such gain. If the fair market value of the NXRT common stock and cash exceeds the amount of earnings and profits allocated to such distribution, the excess will first be treated as a non-taxable return of capital, reducing your tax basis in its NHF common shares; and, to the extent that the fair market value of the NXRT common stock and cash then remaining exceeds your basis in your NHF common shares, such excess will be taxable as a gain realized from a deemed sale of NHF common shares. You will take a fair market value tax basis in the NXRT common stock received and will have a holding period for the NXRT common stock that begins on the day following the distribution date. In addition to other information necessary to file tax returns, NHF will provide you with information on the amount of the distribution to be treated as a taxable dividend, and whether it is a distribution of ordinary income, long term capital gain or a combination of both.

Information Reporting and Backup Withholding

NHF will report to you and the IRS the amount of dividends paid during each calendar year, including the value of our stock and the amount of cash in lieu of fractional shares, if any, distributed to you, and the amount of any tax withheld. Under the backup withholding rules, you may be subject to backup withholding with respect to dividends paid unless you are a corporation or come within other exempt categories and, when required, demonstrate this fact or provide a taxpayer identification number or social security number, certify as to no loss of exemption from backup withholding and otherwise comply with applicable requirements of the backup withholding rules. If backup withholding is required, NHF may withhold the required amount out of other distributions it would otherwise make to you, or may reduce the amount of your stock distribution. If you do not provide your correct taxpayer identification number or social security number you may also be subject to penalties imposed by the IRS. In addition, we may be required to withhold a portion of a capital gain distribution to you if you fail to certify your non-foreign status.

Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be allowed as a refund or a credit against your U.S. federal income tax liability provided the required information is furnished to the IRS.

THE FOREGOING IS A SUMMARY OF CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE SPIN-OFF UNDER CURRENT LAW AND IS FOR GENERAL INFORMATION ONLY. THE FOREGOING DOES NOT PURPORT TO ADDRESS ALL U.S. FEDERAL INCOME TAX CONSEQUENCES OR TAX CONSEQUENCES THAT MAY ARISE UNDER THE TAX LAWS OF OTHER JURISDICTIONS OR THAT MAY APPLY TO PARTICULAR CATEGORIES OF SHAREHOLDERS. EACH NHF SHAREHOLDER SHOULD CONSULT HIS, HER OR ITS TAX ADVISOR AS TO THE PARTICULAR TAX CONSEQUENCES OF THE SPINOFF TO SUCH SHAREHOLDER, INCLUDING THE APPLICATION OF U.S. FEDERAL, STATE, LOCAL AND FOREIGN TAX LAWS, AND THE EFFECT OF POSSIBLE CHANGES IN TAX LAWS THAT MAY AFFECT THE TAX CONSEQUENCES DESCRIBED ABOVE.

Market for Common Stock of NXRT

There is currently no public market for the NXRT common stock. We intend to list our common stock on NYSE under the symbol “NXRT.”

Trading Before the Distribution Date

Beginning on or shortly before the record date and continuing up to and through the distribution date, it is expected that there will be two markets in NHF common shares: a “regular-way” market and an “ex-distribution” market. Shares of NHF that trade on the “regular way” market will trade with an entitlement to shares of the common stock of NXRT distributed pursuant to the Spin-Off. Shares that trade on the “ex-distribution” market

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will trade without an entitlement to shares of the common stock of NXRT distributed pursuant to the Spin-Off. Therefore, if you sell common shares of NHF in the “regular-way” market up to and including through the distribution date, you will be selling your right to receive shares of the common stock of NXRT in the Spin-Off. If you own common shares of NHF at the close of business on the record date and sell those shares on the “ex-distribution” market, up to and including through the distribution date, you will still receive the shares of the common stock of NXRT that you would be entitled to receive pursuant to your ownership of the common shares of NHF.

Furthermore, beginning shortly before the distribution date and continuing up to and including the distribution date, it is expected that there will be a “when-issued” market in the common stock of NXRT. “When-issued” trading refers to a sale or purchase made conditionally because the security has been authorized but not yet issued. The “when-issued” trading market will be a market for shares of NXRT common stock that will be distributed to NHF shareholders on the distribution date. If you owned common shares of NHF at the close of business on the record date, you would be entitled to shares of NXRT’s common stock distributed pursuant to the Spin-Off. You may trade this entitlement to shares of common stock of NXRT, without the common shares of NHF you own, on the “when-issued” market. On the first trading day following the distribution date, “when-issued” trading with respect to NXRT common stock will end and “regular-way” trading will begin.

Conditions to the Spin-Off

The NHF Board has reserved the right, in its sole discretion, to amend, modify or abandon the Spin-Off and the related transactions at any time prior to the distribution date. This means NHF may cancel or delay the planned distribution of common stock of NXRT if at any time the NHF Board determines that the distribution of such common stock is not in the best interests of NHF. If the NHF Board determines to cancel the Spin-Off, shareholders of NHF will not receive any distribution of NXRT common stock and NHF will be under no obligation whatsoever to its shareholders to distribute such shares.

Your vote is not required to effect the Spin-Off. You do not need to make any payment, surrender or exchange your common shares of NHF or take any other action to receive your shares of NXRT common stock.

Prior to the Spin-Off, NHF will separately seek your vote to approve the terms of an Advisory Agreement to be entered into between NXRT and NexPoint Real Estate Advisors. Upon the completion of the Spin-Off and the approval of the Advisory Agreement, NXRT will be externally managed by NexPoint Real Estate Advisors, which will conduct substantially all of NXRT’s operations and provide asset management for NXRT’s real estate investments.

Absent a determination of the NHF Board to the contrary, NXRT expects that the Spin-Off will be effective on              , 2014, the distribution date. In addition, the Spin-Off and related transactions are subject to the satisfaction or waiver (by the NHF Board in its sole discretion) of the following conditions:

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The fulfillment of the foregoing conditions will not create any obligation on the part of NHF to effect the Spin-Off.

Spin-Off Expenses

NXRT will pay the out-of-pocket costs of the Spin-Off. We expect to incur costs of approximately $              in connection with the Spin-Off.

Accounting Treatment

After the Spin-Off, the balance sheet of NXRT will include all of the assets and liabilities associated with the multifamily properties held by NHF through its subsidiary Freedom REIT. The assets and liabilities associated with the multifamily properties held by NHF, through its subsidiary Freedom REIT, will be contributed and recorded at their respective historical carrying values at the time of the Spin-Off in accordance with the provisions of Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 505-60, Spinoffs and Reverse Spinoffs .

Financial Advisor

Ladenburg Thalmann & Co. Inc. provided financial advice in connection with the Spin-Off. Ladenburg was retained in connection with the transaction because of the firm’s familiarity with the businesses and assets of NHF and the firm’s qualifications and reputation. NXRT will pay a fee of $250,000 in connection with its engagement.

Reason for Furnishing this Information Statement

This information statement is being furnished solely to provide information to NHF shareholders who will receive shares of NXRT common stock in the Spin-Off. Your vote is not required to effect the Spin-Off. You do not need to make any payment, surrender or exchange your common shares of NHF or take any other action to receive your shares of NXRT common stock. Prior to the Spin-Off, NHF will separately seek your vote to approve the terms of an Advisory Agreement to be entered into between NXRT and NexPoint Real Estate Advisors. See “—Conditions to the Spin-Off.” Upon the completion of the Spin-Off and approval of the

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Advisory Agreement, NXRT will be externally managed by NexPoint Real Estate Advisors, which will conduct substantially all of NXRT’s operations and provide asset management for NXRT’s real estate investments.

We believe that the information contained in this information statement is accurate as of the date set forth on the cover. Changes to the information contained in this information statement may occur after that date, and neither we nor NHF undertakes any obligation to update the information except in the normal course of our respective public disclosure obligations and practices.

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Distributions

Distribution Policy

NXRT intends to be taxed as a REIT for U.S. federal income tax purposes. Commencing with NXRT’s first taxable year of operations as a separate public company, consistent with industry standards, NXRT expects to pay distributions in cash in an amount equal to approximately 80% of NXRT’s AFFO for each quarterly period but in no event will the annual dividend be less than 90% of NXRT’s REIT taxable income on an annual basis, determined without regard to the dividends paid deduction and excluding any net capital gains. U.S. federal income tax law generally requires that a REIT distribute annually at least 90% of its REIT taxable income, without regard to the deduction for dividends paid and excluding net capital gains, and that it pay regular corporate rates to the extent that it annually distributes less than 100% of its taxable income. For purposes of determining its cash distributions, NXRT’s AFFO will be calculated by starting with The National Association of Real Estate Investment Trusts’ (“NAREIT”) definition of “funds from operations,” which is net income (computed in accordance with generally accepted accounting principles), excluding gains (or losses) from sales of property, plus real estate depreciation and stock based compensation expense reduced by maintenance capital expenditures. The NAREIT definition will then be adjusted to exclude the effect of acquisition expenses, equity-based compensation expenses and the amortization of intangibles, resulting in AFFO for NXRT.

Initially, cash available for distribution to NXRT stockholders will be derived solely from rental payments and other revenues and cash reserves which the NXRT Board determines are no longer required. All distributions will be made by NXRT at the discretion of the NXRT Board and will depend on the financial position, results of operations, cash flows, capital requirements, debt covenants (which may include limits on distributions by our subsidiaries to us), applicable law and other factors as the NXRT Board deems relevant. The NXRT Board has not yet determined when any distributions will be declared or paid.

NXRT currently intends to pay quarterly distributions in cash. For purposes of satisfying the minimum distribution requirement to qualify for and maintain REIT status, NXRT’s taxable income will be calculated without reference to its cash flow. Consequently, under certain circumstances, NXRT may not have available cash to pay its required distributions and may distribute a portion of its dividends in the form of its stock or its debt instruments. In either event, a stockholder of NXRT will be required to report dividend income as a result of such distributions even though NXRT distributed no cash or only nominal amounts of cash to such stockholder. The IRS has issued private letter rulings to other REITs treating certain distributions that are paid partly in cash and partly in stock as taxable dividends that would satisfy that REIT annual distribution requirement and qualify for the dividends paid deduction for U.S. federal income tax purposes. Those rulings may be relied upon only by taxpayers to whom they were issued, but NXRT could request a similar ruling from the IRS. Accordingly, it is unclear whether and to what extent NXRT will be able to make taxable dividends payable in-kind. For more information, see “U.S. Federal Income Tax Considerations—Annual Distribution Requirements.” NXRT currently believes that it will have sufficient available cash to pay its required distribution for 2014 in cash, assuming the Spin-Off is consummated in 2014, but there can be no assurance that this will be the case.

NXRT may borrow funds, liquidate or sell a portion of its properties or find another source of funds, such as the issuance of equity securities, in order to pay its required distributions.

NXRT anticipates that its distributions generally will be taxable as ordinary income to its stockholders, although a portion of the distributions may be designated by NXRT as qualified dividend income or capital gain or may constitute a return of capital. NXRT will furnish annually to each NXRT stockholder a statement setting forth distributions paid during the preceding year and their characterization as ordinary income, return of capital, qualified dividend income or capital gain. For a more complete discussion of the U.S. federal income tax treatment of distributions to stockholders of NXRT, see “U.S. Federal Income Tax Considerations.”

We cannot assure you that our estimated distributions will be made or sustained or that the NXRT Board will not change our distribution policy in the future. Any distributions we pay in the future will depend upon our

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actual results of operations, liquidity, cash flows, financial conditions, economic conditions, debt service requirements and other factors that could differ materially from our current expectations. Our actual results of operations, liquidity, cash flows and financial conditions will be affected by a number of factors, including the revenue we receive from our properties, our operating expenses, interest expense, the ability of our residents to meet their obligations and unanticipated expenditures. For more information regarding risk factors that could materially adversely affect our ability to pay dividends and make other distributions to our stockholders, please see “Risk Factors.”

Distribution Reinvestment Program

In connection with the Spin-Off, we expect to implement a distribution reinvestment program. Our distribution reinvestment program will provide our stockholders with an opportunity to acquire additional shares of common stock by reinvesting distributions. Stockholders who elect to participate in the distribution reinvestment program will authorize us to use distributions payable to them to acquire additional shares of common stock. A participant will not be able to acquire common stock under the program if the purchase would cause the participant to exceed the 6.2% ownership limit or would violate any of the other stock ownership restrictions imposed by our charter or securities laws.

The distribution reinvestment program may purchase fractional shares of common stock, so that 100% of distributions will be used to acquire common stock. Common stock will be purchased under the distribution reinvestment program on the record date for the distribution used to purchase the common stock. Distributions on common stock acquired pursuant to the distribution reinvestment program will be paid at the same time as distributions are paid on common stock purchased outside the program and are calculated with a daily record and distribution declaration date.

Shares for the distribution reinvestment program will be acquired from the exchange or market on which our shares are listed at the prevailing market price. If we use the services of a broker to acquire shares of our common stock in connection with the distribution reinvestment program, we will allocate the costs of such broker among all of the participants in the program. We will not charge these investors for any fees other than the actual third-party out-of-pocket expenses that we incur. Neither we, nor our Advisor, nor our affiliates will receive a fee for managing the distribution reinvestment program. We do not warrant or guarantee that participants will acquire shares at the lowest possible price through the program.

A participant may stop participating in the distribution reinvestment program at any time without penalty, by delivering written notice to us. Within 90 days after the end of our fiscal year, we will provide each participant with an individualized report on his or her investment, including the purchase date, purchase price and number of shares owned, as well as the dates of distribution and amount of distributions received during the prior fiscal year. The individualized statement to participants will include receipts and purchases relating to each participant’s participation in the distribution reinvestment program including the tax consequences relative thereto.

The directors, including a majority of independent directors, by majority vote may amend or terminate the distribution reinvestment program upon 10 days’ notice to participants.

Stockholders who participate in the distribution reinvestment program will recognize dividend income, taxable to the extent of our current or accumulated earnings and profits (as determined for U.S. federal income tax purposes), in the amount and as though they had received the cash rather than purchased shares through the distribution reinvestment program. These deemed dividends will be treated as actual dividends and will retain the character and tax effects applicable to all dividends. Shares received under the distribution reinvestment program will have a holding period, for tax purposes, beginning with the day after purchase, and a tax basis equal to their cost, which is the gross amount of the deemed distribution. See “U.S. Federal Income Tax Considerations—Taxation of Stockholders” for a full discussion of the tax effects of distributions.

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Capitalization

The following table sets forth our capitalization as of June 30, 2014, on a historical basis and a pro forma basis to give effect to the Spin-Off, as if the Spin-Off occurred on June 30, 2014. An explanation of the pro forma net income (loss) adjustments made to NXRT’s financial statements and the Freedom REIT Contribution Group’s Combined Consolidated Carve Out Financial Statements can be found in the NXRT Unaudited Pro Forma Combined Consolidated Financial Statements included elsewhere in this information statement. The following table should be reviewed in conjunction with, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and NXRT’s historical and pro forma combined consolidated financial statements and accompanying notes included elsewhere in this information statement.

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Selected Historical and Pro Forma Financial and Operating Data

The following table sets forth the selected historical financial and operating data for the Freedom REIT Contribution Group (as described below) and the selected pro forma financial and operating data of NXRT. Prior to the Spin-Off, we will not have operated our business separate from NHF. We use the term “Freedom REIT Contribution Group” to mean the carve out business of the entities that own all or a majority interest in the multifamily properties that we will hold interests in following the Spin-Off.

The selected historical and pro forma financial data has been derived from the Freedom REIT Contribution Group’s Combined Consolidated Carve Out Financial Statements and NXRT’s Unaudited Pro Forma Combined Consolidated Financial Statements included elsewhere in this information statement. Our management believes the assumptions underlying the Freedom REIT Contribution Group’s Combined Consolidated Carve Out Financial Statements and accompanying notes and NXRT’s Unaudited Pro Forma Combined Consolidated Financial Statements and accompanying notes are reasonable. However, the Freedom REIT Contribution Group’s Combined Consolidated Carve Out Financial Statements and NXRT’s Unaudited Pro Forma Combined Consolidated Financial Statements may not necessarily reflect the financial condition and results of operations in the future or what they would have been had we been a separate, stand-alone company during the periods presented. The results of operations presented for interim periods are not necessarily representative of operations for the entire year.

The following should be read in conjunction with the Freedom REIT Contribution Group’s Combined Consolidated Financial Statements and accompanying notes, NXRT’s Unaudited Pro Forma Combined Consolidated Financial Statements and accompanying notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” each of which are included elsewhere in this information statement.

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Management’s Discussion and Analysis of Financial Condition

and Results of Operations

The following is a discussion and analysis of (a) our anticipated financial condition immediately following the Spin-Off and (b) the Freedom REIT Contribution Group’s historical results of operations, consisting of the carve out business of the entities that own all or a majority interest in the multifamily properties that we will hold interests in following the Spin-Off. The following should be read in conjunction with our financial statements and accompanying notes, the Freedom REIT Contribution Group’s Combined Consolidated Carve Out Financial Statements and accompanying notes, as well as our Unaudited Pro Forma Combined Consolidated Financial Statements and accompanying notes, each of which are included elsewhere in this information statement. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those projected, forecasted or expected in these forward-looking statements as a result of various factors, including those which are discussed below and elsewhere in this information statement. See also “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements.” Prior to the Spin-Off, we will not have operated our business separate from NHF. Our management believes the assumptions underlying the Freedom REIT Contribution Group’s Combined Consolidated Carve Out Financial Statements and accompanying notes and NXRT’s Unaudited Pro Forma Combined Consolidated Financial Statements and accompanying notes are reasonable. However, the Freedom REIT Contribution Group’s Combined Consolidated Carve Out Financial Statements and the NXRT Unaudited Pro Forma Combined Consolidated Financial Statements may not necessarily reflect our financial condition and results of operations in the future, or what they would have been had we been a separate, stand-alone company during the periods presented.

Overview

After the Spin-Off, NXRT will directly or indirectly hold all or a majority interest in all of the multifamily properties that NHF, through its subsidiary Freedom REIT, holds interests in prior to the Spin-Off. At the time of the Spin-Off, NXRT expects to own all or a majority interest in a portfolio of multifamily properties, or the Portfolio, primarily located in the Southeastern United States and Texas consisting of 32 multifamily properties encompassing 9,556 units of apartment space, which at the time of the Spin-Off, we expect to be approximately 94% leased. At the time of the Spin-Off, NXRT believes the occupancy rate for the Portfolio will be approximately 92% and the weighted average monthly effective rent per occupied apartment unit at those properties will be approximately $758.

Following the Spin-Off and our application to list our shares on the NYSE, we will be a separate, publicly-traded REIT, with our shares listed on the NYSE, primarily focused on directly or indirectly acquiring, owning, operating and selectively developing well-located Class A and B multifamily properties in large cities and suburban submarkets of large cities, primarily in the Southeastern United States and Texas. We expect to generate revenue primarily by leasing our multifamily properties. We also intend to employ a value-add component at a majority of our acquisitions in an attempt to improve rental rates and the net operating income at our properties. Upon completion of the Spin-Off and the approval of the Advisory Agreement, we will be externally managed by NexPoint Real Estate Advisors, or our Advisor, an affiliate of Highland Capital Management, L.P., a leading global alternative asset manager and an SEC-registered investment advisor which, together with its affiliates, had approximately $19 billion in assets under management as of June 30, 2014.

We intend to elect to be taxed and intend to qualify as a REIT for U.S. federal income tax purposes commencing with our first taxable year of operations as a separate public company. To maintain REIT status, we must meet a number of organizational and operational requirements, including a requirement that we annually distribute to our stockholders at least 90% of our REIT taxable income, determined without regard to the dividends paid deduction and excluding any net capital gains. See “U.S. Federal Income Tax Considerations.”

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Components of Our Revenues and Expenses Following the Spin-Off

Revenues

Following the Spin-Off, our earnings will primarily be attributable to the rental revenue from our multifamily properties. We anticipate that the leases we enter into for our multifamily properties will typically be for one year or less. We anticipate annual revenues from the Portfolio of between $80 million to $90 million in the first year after the Spin-Off.

Property-Operating Expenses

Property-level general and administrative expenses are anticipated to be approximately $45 million to $50 million in the first year after the Spin-Off. Property-operating expenses include real estate taxes, property maintenance costs, marketing, insurance, management fees, provisions for doubtful accounts and other property operating costs.

General and Administrative Expenses

General and administrative expenses of NXRT, excluding property-operating expenses, are anticipated to be approximately $7 million to $8 million in the first year after the Spin-Off, consisting of management fees, the reimbursement of expenses to our Advisor, professional service fees and administrative costs. The reimbursement of Operating Expenses, stock based compensation granted under any NXRT equity compensation plan and the base management fees paid to our Advisor will not exceed 1.5% of average gross real estate assets per year, which cap does not limit the reimbursement of expenses related to securities offerings. This limitation will also not apply to legal, accounting, financial, due diligence and other service fees incurred in connection with extraordinary litigation and mergers and acquisitions and other events outside the Company’s ordinary course of business. These amounts were determined based on the experience of our management team and discussions with outside service providers, consultants and advisors.

Depreciation and Amortization Expense

We will incur depreciation and amortization expense for the properties transferred to us from NHF, which is expected to be between $17 million and $19 million in the first year after the Spin-Off.

Discussion of Historical Results of Operations of the Freedom REIT Contribution Group

Basis of Presentation

The Freedom REIT Contribution Group’s Combined Consolidated Carve Out Financial Statements were prepared on a stand-alone basis and were derived from the combined financial statements and accounting records of NHF. These statements reflect the combined consolidated historical financial condition and results of operations of the carve out business of the entities that own all or a majority interest in the multifamily properties that we will hold interests in following the Spin-Off.

Operating Results

Our primary business consists of directly or indirectly acquiring, owning, operating and selectively developing well-located Class A and B multifamily properties in large cities and suburban submarkets of large cities, primarily in the Southeastern United States and Texas. At the time of the Spin-Off, NXRT expects to own all or a majority interest in a portfolio of multifamily properties, or the Portfolio, primarily located in the Southeastern United States and Texas consisting of 32 multifamily properties encompassing 9,556 units of apartment space, which at the time of the Spin-Off, we expect to be approximately 94% leased. At the time of the Spin-Off, we believe the occupancy rate for the Portfolio will be approximately 92% and the weighted average monthly effective rent per occupied apartment unit at those properties will be approximately $758.

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The following table sets forth a summary of the Freedom REIT Contribution Group’s operating results from the date of inception:

Non-GAAP Measurements

We believe that net income, as defined by GAAP, is the most appropriate earnings measure. We also believe that funds from operations, or FFO, as defined by NAREIT, and Adjusted funds from operations, or AFFO, are important non-GAAP supplemental measures of operating performance for a REIT. Because the historical cost accounting convention used for real estate assets requires straight-line depreciation except on land, such accounting presentation implies that the value of real estate assets diminishes predictably over time. However, since real estate values have historically risen or fallen with market and other conditions, presentations of operating results for a REIT that uses historical cost accounting for depreciation could be less informative. Thus, NAREIT created FFO as a supplemental measure of operating performance for REITs that excludes historical cost depreciation and amortization, among other items, from net income, as defined by GAAP. FFO is defined by NAREIT as net income computed in accordance with GAAP, excluding gains or losses from real estate dispositions, plus real estate depreciation and amortization and impairment charges. We compute FFO in accordance with NAREIT’s definition. AFFO is calculated by adjusting our FFO for items that do not reflect ongoing property operations, such as acquisition expenses, equity-based compensation expenses and the amortization of intangibles.

We believe that the use of FFO and AFFO, combined with the required GAAP presentations, improves the understanding of operating results of REITs among investors and makes comparisons of operating results among such companies more meaningful. We consider FFO and AFFO to be useful measures for reviewing comparative operating and financial performance because, by excluding gains or losses from real estate dispositions, impairment charges and real estate depreciation and amortization, and, for AFFO, by excluding non-cash expenses such as acquisition expenses, equity-based compensation expenses and the amortization of intangibles. FFO and AFFO can help investors compare our operating performance between periods and to other REITs. While FFO and AFFO are relevant and widely used measures of operating performance of REITs, they do not represent cash flows from operations or net income as defined by GAAP and should not be considered an alternative to those measures in evaluating our liquidity or operating performance. FFO and AFFO do not purport to be indicative of cash available to fund our future cash requirements. Further, our computation of FFO and AFFO may not be comparable to FFO and AFFO reported by other REITs that do not define FFO in accordance with the current NAREIT definition or that interpret the current NAREIT definition or define AFFO differently than we do.

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The following table reconciles our calculations of FFO and AFFO to net income, the most directly comparable GAAP financial measure, for the periods set forth below:

See “—Components of our Revenues and Expenses Following the Spin-Off” for a discussion of our forecasted revenues, general and administrative expenses and interest expense amounts.

Liquidity and Capital Resources

Our short-term liquidity requirements consist primarily of funds necessary to pay for operating expenses and other expenditures directly associated with our multifamily properties, including:

We expect to meet our short-term liquidity requirements generally through net cash provided by operations and existing cash balances. At the time of the Spin-Off, we will have reserved $56.9 million for our planned capital expenditures to implement our value-add program.

Our long-term liquidity requirements consist primarily of funds necessary to pay for the costs of acquiring additional multifamily properties, renovations and other capital expenditures to improve our multifamily properties and scheduled debt payments. We expect to meet our long-term liquidity requirements through various sources of capital, which may include a revolving credit facility and future debt or equity issuances, existing working capital, net cash provided by operations, long-term mortgage indebtedness and other secured and unsecured borrowings. However, there are a number of factors that may have a material adverse effect on our ability to access these capital sources, including the state of overall equity and credit markets, our degree of leverage, our unencumbered asset base and borrowing restrictions imposed by lenders (including as a result of any failure to comply with financial covenants in our existing and future indebtedness), general market conditions for REITs, our operating performance and liquidity and market perceptions about us. The success of our business strategy will depend, in part, on our ability to access these various capital sources.

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In addition to our value-add program, our multifamily properties will require periodic capital expenditures and renovation to remain competitive. In addition, acquisitions, redevelopments or expansions of our multifamily properties will require significant capital outlays. Long-term, we may not be able to fund such capital improvements solely from net cash provided by operations because we must distribute annually at least 90% of our REIT taxable income, determined without regard to the deductions for dividends paid and excluding net capital gains, to qualify and maintain our qualification as a REIT, and we are subject to tax on any retained income and gains. As a result, our ability to fund capital expenditures, acquisitions or redevelopment through retained earnings long-term is very limited. Consequently, we expect to rely heavily upon the availability of debt or equity capital for these purposes. If we are unable to obtain the necessary capital on favorable terms, or at all, our financial condition, liquidity, results of operations and prospects could be materially and adversely affected.

We believe that our available cash at the time of the Spin-Off, expected operating cash flows and potential debt or equity financings will provide sufficient funds for our operations, anticipated scheduled debt service payments and dividend requirements for the twelve-month period following the Spin-Off.

Mortgage Indebtedness

After the Spin-Off, we anticipate that our subsidiaries (assuming probable acquisitions close) will have aggregate mortgage indebtedness to third parties of approximately $493.9 million. This amount reflects existing mortgage indebtedness that totaled approximately $321.5 million as of September 15, 2014 and additional mortgage loans of approximately $172.5 million that we expect to obtain prior to the Spin-Off. As of September 15, 2014, the weighted average interest rate on the outstanding indebtedness related to the Portfolio was 2.59%.

We entered into and expect to continue to enter into interest rate cap agreements with various third parties to cap the variable interest rates on our outstanding indebtedness. These agreements generally have a term of three years and cover the outstanding principal amount of the underlying indebtedness. Under these agreements, we pay a fixed fee in exchange for the counterparty to pay any interest above a maximum rate. At September 15, 2014, interest rate hedge agreements covered $304.8 million of the $321.5 million of total outstanding indebtedness relating to the Portfolio. These interest rate hedge agreements cap our variable interest rate at a weighted average interest rate of 5.59%.

Each property has a separate non-recourse mortgage which is secured only by that property. These non-recourse mortgages have standard scope non-recourse carve outs required by agency lenders and generally call for protection by the borrower and the guarantor against losses by the lender for so-called “bad acts,” such as misrepresentations, and may include full recourse liability for more significant events such as bankruptcy. Our property manager, BH, and its affiliates provided non-recourse carve out guarantees for the mortgage indebtedness currently outstanding relating to the Portfolio except for the mortgage on Miramar. Following the Spin-Off, we do not expect BH to guarantee any future indebtedness.

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We intend to invest in additional multifamily properties as suitable opportunities arise and adequate sources of equity and debt financing are available. We expect that future investments in properties, including any improvements or renovations of current or newly-acquired properties, will depend on and will be financed by, in whole or in part, our existing cash, future borrowings and the proceeds from additional issuances of common stock or other securities. In addition, we may seek financing from U.S. government agencies, including through Freddie Mac and Fannie Mae and the U.S. Department of Housing and Urban Development, in appropriate circumstances in connection with acquisitions and refinancings of existing mortgage loans.

Although we expect to be subject to restrictions on our ability to incur indebtedness, we expect that we will be able to refinance existing indebtedness or incur additional indebtedness for acquisitions or other purposes, if needed. However, there can be no assurance that we will be able to refinance our indebtedness, incur additional indebtedness or access additional sources of capital, such as by issuing common stock or other debt or equity securities, on terms that are acceptable to us or at all.

Over the next 12-36 months, we intend to reduce our leverage ratio by at least 20-30%. We will seek to accomplish this through paying down certain properties’ principal balances. Given the flexibility and attractive cost of our current indebtedness, together with the potential for increases in value from our capital expenditures and management programs, we may also elect to reduce the Portfolio-wide leverage by reducing the leverage level of future acquisitions and/or funding new acquisitions with a larger portion of equity.

Furthermore, following the completion of our value-add and capital expenditures programs, we will seek to refinance our floating rate debt into longer-term fixed rate debt at lower leverage levels.

We will assume the Freedom REIT Contribution Group’s existing mortgage indebtedness ($321.5 million as of September 15, 2014) on the properties that we will hold all or a majority interest in following the Spin-Off.

The following pro forma table summarizes our contractual obligations and commitments, including our mortgage indebtedness, at December 31, 2013, as if the Spin-Off had occurred on June 30, 2013.

Capital Expenditures and Value-Add Program

We anticipate incurring average annual capital expenditures of $175,000 to $275,000 per multifamily property in connection with the operations of our business. Although we will continuously monitor the adequacy

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of this average, we believe these figures to be sufficient to maintain the properties at a high level in the markets in which we operate. A majority of the properties in the Portfolio were underwritten and acquired with the premise that we would invest $4,000-10,000 per unit in the first 24 months of ownership, in an effort to add value to the asset’s exterior and interiors. In most cases, we escrowed equity at closing to fund these planned capital expenditures and value-add improvements. At the time of the Spin-Off, we will have reserved approximately $56.9 million for our planned capital expenditures and other expenses to implement our value-add program.

Emerging Growth Company

Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 13(a) of the Exchange Act, for complying with new or revised accounting standards applicable to public companies. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of this extended transition period. As a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates for such new or revised standards. We may elect to comply with public company effective dates at any time, and such election would be irrevocable pursuant to Section 107(b) of the JOBS Act.

Income Taxes

We anticipate that we will qualify to be taxed as a REIT for U.S. federal income tax purposes commencing with our first taxable year of operations as a separate public company, and we intend to continue to be organized and to operate in a manner that will permit us to qualify as a REIT. To qualify as a REIT, we must meet certain organizational and operational requirements, including a requirement to distribute at least 90% of our annual REIT taxable income to stockholders. As a REIT, we will generally not be subject to U.S. federal income tax on income that we distribute as dividends to our stockholders. If we fail to qualify as a REIT in any taxable year, we will be subject to U.S. federal income tax, including any applicable alternative minimum tax, on our taxable income at regular corporate income tax rates, and dividends paid to our stockholders would not be deductible by us in computing taxable income. Any resulting corporate liability could be substantial and could materially and adversely affect our net income and net cash available for distribution to stockholders. Unless we were entitled to relief under certain Code provisions, we also would be disqualified from re-electing to be taxed as a REIT for the four taxable years following the year in which we failed to qualify to be taxed as a REIT.

Historically, our operations have been included in Freedom REIT’s U.S. federal and state income tax returns and our operations for the current year until the Spin-Off will be included in Freedom REIT’s U.S. federal and state income tax returns for the taxable year ended December 31, 2014. Freedom REIT elected to be taxed as a REIT beginning with its taxable year ending December 31, 2013 and Freedom REIT has covenanted to us to use its reasonable best efforts to maintain its REIT status for its taxable year ending on December 31, 2014. With respect to its taxable year ending December 31, 2013, it distributed 100% of its REIT taxable income and therefore did not owe any U.S. federal income tax. If Freedom REIT fails to qualify as a REIT, it would be subject to U.S. federal income tax, including any applicable alternative minimum tax, on its taxable income at regular corporate income tax rates. In addition, unless we were entitled to relief under certain Code provisions, we also would be disqualified from electing to be taxed as a REIT if Freedom REIT fails to qualify as a REIT for its taxable years ending on or before December 31, 2014 and we are treated as a successor to Freedom REIT for U.S. federal income tax purposes. Although Freedom REIT represented in the Separation and Distribution Agreement that it has no knowledge of any fact or circumstance that would cause us to fail to qualify as a REIT, and covenanted in the Separation and Distribution Agreement to use its reasonable best efforts to maintain its REIT status for each of Freedom REIT’s taxable years ending on or before December 31, 2014 (unless Freedom REIT obtains an opinion from a nationally recognized tax counsel or a private letter ruling from the IRS to the effect that Freedom REIT’s failure to maintain its REIT status will not cause us to fail to qualify as a REIT under the successor REIT rule referred to above), no assurance can be given that such representation and covenant would prevent us from failing to qualify as a REIT.

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Dividends

We intend to elect to be taxed and intend to conduct our operations to qualify as a REIT for U.S. federal income tax purposes. We intend to make regular quarterly dividend payments to holders of our common stock. U.S. federal income tax law generally requires that a REIT distribute annually at least 90% of its REIT taxable income, without regard to the deduction for dividends paid and excluding net capital gains, and that it pay tax at regular corporate rates to the extent that it annually distributes less than 100% of its taxable income. We intend to make regular quarterly dividend payments of all or substantially all of our taxable income to holders of our common stock out of assets legally available for this purpose, if and to the extent authorized by our board of directors. Before we make any dividend payments, whether for U.S. federal income tax purposes or otherwise, we must first meet both our operating requirements and debt service on our debt payable. If our cash available for distribution is less than our taxable income, we could be required to sell assets, borrow funds or raise additional capital to make cash dividends or we may make a portion of the required dividend in the form of a taxable distribution of stock or debt securities.

We will make dividend payments based on our estimate of taxable earnings per share of common stock, but not earnings calculated pursuant to GAAP. Our dividends and taxable and GAAP earnings will typically differ due to items such as fair value adjustments, differences in premium amortization and discount accretion, and non-deductible general and administrative expenses. Our quarterly dividends per share may be substantially different than our quarterly taxable earnings and GAAP earnings per share.

Critical Accounting Policies

Management makes certain judgments and uses certain estimates and assumptions when applying accounting principles in the preparation of our financial statements. The nature of the estimates and assumptions are material due to the levels of subjectivity and judgment necessary to account for highly uncertain factors or the susceptibility of such factors to change. Management has identified the accounting for real estate investments, impairments, fair value measurements and financial instruments as critical accounting estimates, as they are the most important to our financial statement presentation and require difficult, subjective and complex judgments.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the date of the combined carve out financial statements, and the reported amounts of revenues and expenses during the reporting period. It is at least reasonably possible that these estimates could change in the near term.

Accounting for Joint Ventures

The Company first analyzes its investments in joint ventures to determine if the joint venture is a variable interest entity (a “VIE”) in accordance with FASB ASC 810, Consolidation , and if so, whether the Company is the primary beneficiary requiring consolidation. A VIE is an entity that has (i) insufficient equity to permit it to finance its activities without additional subordinated financial support or (ii) equity holders that lack the characteristics of a controlling financial interest. VIEs are consolidated by the primary beneficiary, which is the entity that has both the power to direct the activities that most significantly impact the entity’s economic performance and the obligation to absorb losses or the right to receive benefits from the entity that potentially could be significant to the entity. Variable interests in a VIE are contractual, ownership, or other financial interests in a VIE that change with changes in the fair value of the VIE’s net assets. The Company continuously re-assesses at each level of the joint venture whether the entity is (i) a VIE, and (ii) if the Company is the primary beneficiary of the VIE. If an entity in which the Company holds a joint venture interest qualifies as a VIE and the Company is determined to be the primary beneficiary, the joint venture would be consolidated.

In connection with its indirect equity investments in the properties acquired in 2014, the Company holds an LLC membership interest in the operating partnerships. These entities are deemed to be variable interest entities

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as we have disproportionately few voting rights (in the form of substantive participating rights over all of the decisions that are made that most significantly affect economic performance) relative to our economic interests in the entities and substantially all of the activities of the entities are performed on our behalf. The Company is considered the primary beneficiary of these VIEs as no single party meets both criteria to be the primary beneficiary, and it is a member of the related party group that has both the power to direct the activities that most significantly impact economic performance of the VIE and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. Within the related party group, the Company is the most closely associated to the VIE based on the purpose and design of the entity, the size of our ownership interests relative to the other investors, and the rights we hold with respect to the other investors’ equity interests, including our ability to preclude any transfers of their interests and ability to drag them along on the sale of our equity interest. All VIE’s are consolidated in the Company’s financial statements. The assets of these VIEs can only be used to settle obligations of the VIEs, and the creditors of these entities have no recourse to other assets of the Company.

Real Estate Investments

Upon acquisition, in accordance with FASB ASC 805, Business Combinations , the purchase price of a property is allocated to land, building, improvements, furniture, fixtures, and equipment, and intangible lease assets. The purchase price allocation is based on management’s estimate of the property’s “as-if” vacant fair value. The “as-if” vacant fair value is calculated by using all available information such as the replacement cost of such asset, appraisals, property condition reports, market data and other related information. The allocation of the purchase price to intangible lease assets represents the value associated with the in-place leases, which may include lost rent, leasing commissions, legal and other related costs.

If any debt is assumed in an acquisition, the difference between the fair value and the face value of the debt is recorded as a premium or discount and amortized to interest expense over the life of the debt assumed. Costs associated with the acquisition of a property, including acquisition fees paid, are expensed as incurred.

The results of operations for acquired properties are included in the combined consolidated carve out statements of operations from their respective acquisition dates.

Real estate assets, including land, building, improvements, furniture, fixtures and equipment, and intangible lease assets are stated at historical cost less accumulated depreciation and amortization. Costs associated with the development and improvement of the Company’s real estate assets are capitalized as incurred. Costs incurred in making repairs and maintaining real estate assets are expensed as incurred. Real estate-related depreciation and amortization are computed on a straight-line basis over the estimated useful lives as described in the following table:

Impairment

Real estate assets that are determined to be held and used will be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable, and the Company will evaluate the recoverability of such real estate assets based on estimated future cash flows and the estimated liquidation value of such real estate assets, and provide for impairment if such undiscounted cash flows are insufficient to recover the carrying amount of the real estate asset. If impaired, the real estate asset will be written down to its estimated fair value. For the year ended December 31, 2013, and the six month ended June 30, 2014, the Company did not record any impairment charges related to real estate assets.

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Fair Value Measurements

Fair value measurements are determined based on the assumptions that market participants would use in pricing an asset or liability. As a basis for considering market participant assumptions in fair value measurements, FASB ASC 820, Fair Value Measurement and Disclosures , establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy.

The Company utilizes an independent third party to perform the valuation analysis for each property acquisition and has established policies, as described above, processes and procedures intended to ensure that the valuation methodologies for investments are fair and consistent as of the measurement date.

Revenue Recognition

The Company’s operations consist of rental income earned from its tenants under lease agreements with terms of one year or less. Rental income is recognized when earned. This policy effectively results in income recognition on the straight-line method over the related terms of the leases. Resident reimbursements and other income consist of charges billed to tenants for utilities, carport and garage rental, pets, administrative, application and other fees and are recognized when earned.

Off-Balance Sheet Arrangements

At the time of the Spin-Off, we do not expect to have any off-balance sheet arrangements.

Quantitative and Qualitative Disclosures About Market Risk

Market risk is the adverse effect on the value of a financial instrument that results from a change in interest rates. Our primary market risk exposure will be interest rate risk with respect to our expected indebtedness after the Spin-Off. This indebtedness will include existing mortgage indebtedness ($321.5 million as of September 15, 2014) that we will assume in connection with the Spin-Off.

An increase in interest rates could make the financing of any acquisition by us more costly. Rising interest rates could also limit our ability to refinance our debt when it matures or cause us to pay higher interest rates upon refinancing and increase interest expense on refinanced indebtedness. We may manage, or hedge, interest rate risks related to our borrowings by means of interest rate swap agreements. At September 15, 2014, interest rate hedge agreements covered $304.8 million of the $321.5 million of total outstanding indebtedness relating to the Portfolio. These interest rate hedge agreements cap our variable interest rate at a weighted average interest rate of 5.59% for the term of the agreements, which is generally 3 years. We also expect to manage our exposure to interest rate risk by maintaining a mix of fixed and variable rates for our indebtedness.

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Each quarter point change in interest rates on the variable portion of our indebtedness would result in a change of approximately $762,030 to our interest expense on an annual basis. This does not include the indebtedness outstanding on Miramar because of its LIBOR Floor.

We may also be exposed to credit risk in derivative contracts we may use. Credit risk is the failure of the counterparty to perform under the terms of the derivative contract. If the fair value of a derivative contract is positive, the counterparty will owe us, which creates credit risk for us. If the fair value of a derivative contract is negative, we will owe the counterparty and, therefore, do not have credit risk. We seek to minimize the credit risk in derivative instruments by entering into transactions with high-quality counterparties.

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Business and Properties

Overview

NXRT was formed on September 19, 2014 as a Maryland corporation, and intends to be taxed as a REIT commencing with its first taxable year operating as a separate public company. Prior to the Spin-Off, NHF will transfer or contribute all of its interests in the multifamily properties to NXRT and its subsidiaries that NHF, through its subsidiary Freedom REIT, holds interests in prior to the Spin-Off. NHF is a publicly listed closed-end fund that was incorporated on June 29, 2006 and is managed by NexPoint Advisors, L.P., an SEC-registered investment advisor. Upon the completion of the Spin-Off and the approval of the Advisory Agreement, we will be externally managed by NexPoint Real Estate Advisors, or our Advisor, an affiliate of Highland Capital Management, L.P., a leading global alternative asset manager and an SEC-registered investment advisor which, together with its affiliates, had approximately $19 billion in assets under management as of June 30, 2014.

Following the distribution of NXRT shares by NHF to NHF’s shareholders, NXRT will be a separate, publicly traded REIT, with its shares listed on the New York Stock Exchange under the symbol “NXRT,” primarily focused on directly or indirectly acquiring, owning, operating and selectively developing well-located Class A and B multifamily properties with “value-add” potential (our “Target Assets”) in large cities and suburban submarkets of large cities, primarily in the Southeastern United States and Texas. We consider our Target Assets to:

NXRT intends to employ a value-add component to a majority of its acquisitions in an attempt to improve rental rates and the net operating income at its properties. Our value-add program will be implemented by BH Management at the direction and supervision of our Advisor.

We seek to own and operate multifamily properties in areas that have:

At the time of the Spin-Off, NXRT expects to own all or a majority interest in a portfolio of multifamily properties, or the Portfolio, primarily located in the Southeastern United States and Texas consisting of 32 multifamily properties encompassing 9,556 units of apartment space, which at the time of the Spin-Off, we expect to be approximately 94% leased. At the time of the Spin-Off, we believe the occupancy rate for the Portfolio will be approximately 92% and the weighted average monthly effective rent per occupied apartment unit at those properties will be approximately $758. At the time of the Spin-Off, we expect all of our business will be conducted in the United States.

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We may also allocate up to approximately 30% of our portfolio to investments in real estate-related debt, mezzanine and preferred equity and other securities in situations where the risk-return profile is more attractive than investments in common equity. This strategy would be designed to minimize potential losses during market downturns and maximize risk adjusted total returns to our stockholders in all market cycles.

Our Business Objectives and Strategy

Our primary business objectives are to:

We intend to accomplish these objectives by:

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Our Market Opportunity

We believe that economic conditions will continue to favor apartment housing for the foreseeable future. Since 2008 and the recession, the market for more affordable low and moderate income apartment housing has experienced high demand and low levels of new affordable multifamily construction. Younger adults have experienced stricter mortgage underwriting standards and high levels of student loan debt, which has made home ownership financially more difficult.

We also believe that changing attitudes regarding home ownership and tighter underwriting standards imposed by mortgage lenders will continue to drive Americans to rent apartments rather than purchase homes. Following the housing crisis and resulting economic downturn of 2008 and 2009, home values in the United States declined, resulting in many Americans no longer viewing their homes as stable, appreciating assets tantamount to savings and leading many of them to choose to rent rather than own homes. The decline in home values has been coupled with a substantial tightening of lending standards by mortgage lenders in the United States. According to the 2010 U.S. census, for each one percent decline in home ownership in the U.S., rental households increase by approximately 1.3 million.

Furthermore, demographic factors should continue to positively influence demand for existing apartment units. According to the Census Bureau, there are currently approximately 80 million echo boomers (those born after 1977 and before 1997) in the United States. In 2010, echo boomers surpassed baby boomers (those born after 1946 and before 1965) to become the United States’ largest generation and currently account for one-quarter of the United States’ population. Echo boomers are generally well educated, career-oriented and mobile, and carry significant amounts of student loan debt. These factors contribute to the high propensity of echo boomers to rent apartments, rather than buy homes.

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Description of the Existing Portfolio

Abbington Heights: Abbington Heights is located in Antioch, Tennessee, within the metropolitan area of Nashville. The property was built in 1986 and is a 274-unit, garden-style Class B apartment complex situated on 20.3 acres. The property has 22 two- and three-story apartment buildings and a management/leasing office. The property offers 431 open parking spaces and includes a mixture of one- and two-bedroom floor plans. The property was renovated in 2011 and is currently undergoing a targeted exterior and interior renovation campaign. Recently completed capital improvements include siding, welding/step pans, a French drainage system, awnings, exterior paint, chimney repair, gates, a golf cart, parking lots, dumpster enclosures, new signage, ridge vents, retaining walls, all new windows, office, model, pool/furniture, landscaping, fitness center, and sand volleyball courts. Common area amenities include an outdoor pool, sand volleyball courts, two tennis courts, a covered picnic area, controlled access gates, a business center, lounge seating, a clubhouse, a fitness center and a coffee bar. Unit amenities include washer/dryer and heating/air conditioning. Upgraded kitchen and bathroom appliances and plumbing fixtures, 2” faux wood blinds, carpet/vinyl replacement, air register replacement and

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interior lighting package upgrades were added to select units. We have budgeted and reserved approximately $1.57 million, or $5,715 per unit, for exterior and interior repairs and upgrades.

Arbors on Forest Ridge: Arbors on Forest Ridge is located in Bedford, Texas, which is in the Dallas-Fort Worth metropolitan area. The property was built in 1986 and consists of 210 units with 10 different floor plans ranging from a one bed/one bath with 592 square feet to the 882 square foot one bed/one bath and is situated on 8.91 acres. The property offers amenities such as free reserved covered parking, a swimming pool and spa, wireless internet access in the pool area, 24-hour fitness facility, a basketball court, laundry care center and gated access. The property also includes barbeque and picnic areas. The average unit size is 736 square feet and includes a microwave, a refrigerator with ice maker, white on white cabinetry, ceiling fans in living rooms and bedrooms and intrusion alarms. Select units include washer/dryer connections and a fireplace. Arbors on Forest Ridge also offers upgraded units which include new appliances, white satin beveled cabinetry, nickel finish hardware, two-inch faux wood blinds and Hampton Bay ceiling fans. The property has undergone a series of renovations and capital improvements. The property was repainted in 2009 and again in 2014, roof repairs were made in 2011, and asphalt sealcoat and a new plaster coat were put on the pool in 2012. We have budgeted and reserved approximately $1.02 million for capital improvements, or $4,868 per unit, to upgrade approximately 70% of the units and enhance community amenities.