United Development Funding IV Recommends Shareholders Reject Hedge Fund NexPoint’s Sixth Extended Hostile Tender Offer

Shareholders should be aware that they are not required to tender any Shares to NexPoint. To reject the Tender Offer, a shareholder should simply ignore it. A shareholder that has already agreed to tender its Shares pursuant to the Tender Offer may withdraw any tender of shares up until July 10, 2021 (as described in the Tender Offer materials). A copy of this press release will be posted to the Trust’s website at www.udfiv.com. The Trust requests that a copy of this press release also be included with all distributions of materials relating to the Tender Offer.

The Trust’s Board of Trustees (the “Board”) has reviewed the terms and conditions of the sixth extended Tender Offer, considered other information relating to the Trust’s portfolio of assets, current financial condition and future opportunities and evaluated various other factors it deemed relevant, such as its knowledge of NexPoint and its affiliates, including NexPoint Advisors, L.P., Highland Capital Management, L.P. (“Highland”) and NexPoint’s portfolio manager, James Dondero (collectively, “NexPoint/Dondero”). As explained in the Trust’s press releases dated December 17, 2020, January 8, 2021, January 19, 2021, February 16, 2021, March 18, 2021, May 3, 2021, and June 2, 2021, the Board believes that NexPoint’s extended tender offer price of $1.10 per share represents a substantial discount to the current value of the Trust. In addition, the Board has serious concerns that the principal interests of NexPoint/Dondero and their affiliates in taking over the Trust may be to shield the participants in the illegal short and distort fraud scheme perpetrated against the Trust by notorious hedge fund manager J. Kyle Bass. Finally, the Trust has concerns arising from the lack of answers from NexPoint to specific questions posed by the Trust since July 2020 seeking information about NexPoint/Dondero’s relationships with J. Kyle Bass and NexPoint/Dondero’s intentions with respect to the Trust. These concerns and the Board’s additional reasons for recommending that shareholders reject the Tender Offer are described further in the press releases mentioned above, which are available at www.udfiv.com.

The Board also considered more recent developments in the Highland bankruptcy case before the U.S. Bankruptcy Court for the Northern District of Texas (the “Court”), which the Court has described as “very much like a nasty divorce” including, among other things: the Court’s decision to approve Highland’s amended reorganization plan despite the objections of Highland’s former CEO James Dondero; the Court’s entry of an order enjoining and restraining Dondero from threatening, interfering or contacting Highland or its officers and employees, as well as enjoining and restraining him from physically or virtually entering Highland offices or accessing Highland’s information systems or email, without prior written permission from Highland (the “TRO”); and the Court’s order that Dondero be held in civil contempt for violating the TRO and ordering Dondero to pay Highland $450,000 in compensation for his non-compliance and imposing an additional sanction of $100,000 for every unsuccessful attempt by Dondero to modify or appeal the Court’s ruling. Dondero has since appealed the Court’s order that he be held in civil contempt.

The Board further observed that none of these significant events regarding the Highland bankruptcy proceeding have been disclosed to Trust shareholders by NexPoint in the Tender Offer materials. The Board additionally considered that the 48^th Judicial District Court ruled in favor of the Trust granting the Trust’s motion to dismiss the defamation lawsuit brought by NexPoint Advisors, L.P. against the Trust. In the Board’s opinion, this lawsuit is further evidence of James Dondero’s willingness to waste NexPoint assets, resources and focus on vexatious litigation.

Highland Capital filed for bankruptcy in October 2019 and James Dondero ceded control over the bankrupt firm in January 2020 as part of a deal with creditors. The case and associated proceedings are Highland Cap. Mgmt., L.P. v. Highland Cap. Mgmt. Fund Advisors, L.P., Bankr. N.D. Tex., 19-34054, Highland Capital Management L.P. vs Highland Capital Management Fund Advisors, L.P., NexPoint Advisors, L.P., Highland Income Fund, NexPoint Strategic Opportunities Fund, et al, N.D. Tex., Adv. Proc. No. 21-03000 and Highland Cap. Mgmt., L.P. v. Dondero, Bankr. N.D. Tex., Adv. Proc. No. 20-3190, hearing 3/24/21.

About United Development Funding IV

United Development Funding IV is a Maryland real estate investment trust. UDF IV was formed primarily to generate current interest income by investing in secured loans and producing profits from investments in residential real estate. Additional information about UDF IV can be found on its website at www.udfiv.com. UDF IV may disseminate important information regarding its operations, including financial information, through social media platforms such as Twitter, Facebook and LinkedIn.

Cautionary Note Regarding Forward-Looking Statements

This press release contains forward-looking statements relating to United Development Funding IV and the Tender Offer that are based on management’s current expectations and estimates and are not guarantees of future performance or future events. Such forward-looking statements generally can be identified by our use of forward-looking terminology such as “may,” “will,” “expect,” “intend,” “anticipate,” “estimate,” “believe,” or other similar words. Readers should be aware that there are various factors, many of which are beyond the Trust’s control, which could cause actual results to differ materially from any forward-looking statements made in this correspondence. Accordingly, readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this correspondence. Forward-looking statements in this document speak only as of the date on which such statements were made, and the Trust undertakes no obligation to update any such statements that may become untrue because of subsequent events.