I'm experiencing exactly the same issue.

1. Set multiline to true, and set the ultraTextEditor text

ultraTextEditor1.Text = "Line1\nLine2\nLine3";

2. when ultraTextEditor1 is in focus, the text looks like:

 Line1Line2Line3

3. when ultraTextEditor1 lose focus, the text like:

Line1

Line2

Line3

Library:

Infragistics2.Win.UltraWinEditors.v10.3

Version:

10.3.20103.2067