Dream Office Real Estate Investment Trust T.D.UN

Here’s what going to happen IMHO

[CANCDN]

Here is what I think is going to happen after the annual meeting in June.

Two issues to be agreed upon at this annual meeting. One, they want permission to have a special distribution. Two, they want permission to perform a reverse split.

They are going to sell the DIR holdings for 450 million to someone (could be anyone, I have no guesses but lots of institutions would love to get that big chunk all at once). DIR is on fire.

They will then issue a special distribution for 450 million. At the same time. They will then dilute unitholders to the tune of 250 million (essentially clawing back 250 of the 450 million distributed). The share price will drop by about 7-8 dollars with the sale of DIR and they will then reverse split that same day to bring price back up to 10+.

Meanwhile that 250 million will be used to pay off this years maturity. As such reducing debt to 35% and not needing to renew debt at 6%. This is a huge savings now and in the long term.

Meanwhile they will continue buybacks max annually.

Shorts will be be absolutely devasted with an 8 dollar a unit special destribution.

and a reminder, Michael Cooper just exercised about 6 years of his saved vests deferred units last Friday. You don't so that if you know a cut or bad results are coming. 

200bps increase in committed occupancy based on my calculations from Dream leasing site.

[SNAKEYBOY]

Is this purely speculative or based on information hinted at? I generally dont know how much DAM or Sandpiper/Artis wanna watch this stock in free-fall if they have levers to pull.   I wouldnt mind selling DIR for a SIB at 10% premium and nothing else.   Then the dream and artis and sandpiper can privatize it giving the remaining shareholders a decent price. But your theory

[CANCDN]

Im basing it on what's in the annual meeting proxy. The board is asking for permission to use a special distribution. They are also asking for permission for a reverse share split. Why would they be asking for those two items?  long term, those over 18 will be fine. Wait until you see the jump in committee occupancy tonight. Once the shorts realize that they plan to sell DIR and do a

[SNAKEYBOY]

Assuming what you suggested does happen, after the big distribution is paid out, and SP recovers a little, wouldnt investors then just exit? It'll be a pure office play with the 250 million distributed to unit holders and even though debt improves it may make the REIT post reverse split be shorted again?

[CANCDN]

Maybe, but shorting office was a 6 months of thing. Go look at the pedestrian traffic. It's exploding Vs previous 3 month avg on Google maps. WFH is a fantasy. Most people will be back 3-4 days a week and are coming back. 

[Reece1986b]

Thank you so much for sharing this with us! There is only ~$73 million of debt maturing in 2024 per the Annual Report so if Dream Office pays off all 2023 debt then we will be in very good shape until 2025. I'm sure it will be much easier to refinance 2025 debt when Dream Office demonstrates this kind of commitment to debt repayment. I think this is a very good decision. 

[SNAKEYBOY]

You can bet Artis and Sandpiper are engineering a move with Cooper.   Artis isnt investing in FCR/D to be down -30% with a dividend less than their interest expense.  Anyway if shareholders  are to vote they would need specifics no? Sandpiper and  a rtis will ultiately decide what happens

[CANCDN]

Samir is a moron. Copper has control of the company. He didn't just exercise 430k units (years of savings) for nothing. 

[SNAKEYBOY]

Frankie's idea sounds more reasonable.  Would be hard to sell 450 million of dir units if it's not at a slight discount. 

[Frankie10]

I would actually prefer what CADCDN is suggesting... im just bouncing off ideas and noting specifics related to the document we are referencing. What I am suggesting is inline with the document, which formed the basis of this discussion and would be much, much easier to pull off. Both make complete sense imho. For the record, if DIR was spun out as a distribution, for valuation purposes, you

[BlueJay2020]

Whichever way you slice it, isn't it utterly bizarre that you could increase the stock price significantly with some basic engineering.  I mean, it's not as though the value investment in Dream Industrial is opaque and nor is it meaningfully illiquid - you could in theory sell the entire stake in a few minutes for reasonably close to publicly disclosed market value. It's times

[CANCDN]

Market gives zero F s about your holdings.. exit A, Dream Office, exhibit B, Artis.  Monetize the value which will make D amazing and focuses on IPP only. Wait until you see the committeed occupancy tonight. I'm calling for a 200bps bump from 84.6 to at least 86.6 assuming Dream leasing site is accurate. we are oh so close to the narritive changing. I hope Copper pulls this DIR

[CANCDN]

Absolutely not hard at all. In fact it should get a premium.  sinapore Sovierngn wealth fund is fully in bed with Dream Industral  and woild love to get more of the pie.  Companies can't buy big chunks on the market or it causes unit price spikes (like what happen to Artis buying D).

[SNAKEYBOY]

If Dream was such a no brainer down here wouldnt we see cooper and DAM buying more every week? I know they own a lot and did a big buy at $15+ a while ago but still

[CANCDN]

Have you heard of blackouts and insider trading? Copper was liekly allowd to exercise differed units because they technically already belong to him. He isn't buying or selling, he is simply transferred ownership to himself directly. 

[SNAKEYBOY]

I meant buying before the blackout last month.  BTW how do you calculate SD will be $8/share.   Are there 45 million units of D.UN or 33 million?

[CANCDN]

Why was Cooper exercising rights last Friday. Who knows. I have no idea why DRM buys when they do.  51 million units per q4 2022 report. 450 million is the value of DIR at NAV. 8.81 per unit is the value of DIR at NAV.  probably paid out 4 unit in cash and 4.50 unit in D units (and shareholder units will be diluted by the same amount making that 4.50 in Dream units a wash, but

[Frankie10]

Do you know what price he excerised at? No data on sedi and I would rather ask before digging - you seem like you're on the ball here...

[CANCDN]

They werent options, they were deferred units. he just gets the ability to take possesssion of said units whenever he wants at whatever price the units are trading at on that day. It creates a taxable event for him. He could have held them on his deferred account until he died if he wanted too.  if you read the May 2 AGm you see he has 470k deferred units. That document was made April 21

[CANCDN]

For tax reasons Cooper might have wanted to take possession NOW to show potential ACB losses from when they were issued to him. Regardless, if he thought D was going lower, you don't exercise 5.5 million dollars of units. You wait until it tanks more. Now if you think it's going to go UP soon, lock in the market ge lower ACB now so pay less taxes. 

[Frankie10]

Sounds about right - I'm rusty on my tax. Not the signal I originally thought, but certainly positive. Thank you for sharing your thoughts.

[Reece1986b]

I wonder if the special distribution might see DAM and Artis resume their Dream Office buying with some of their special distribution cash portion. Samir Manji was pretty glowing about the opportunity Dream Office presented in the Artis Letter to Unitholders. Might be a good time for Artis to swap some FCR for Dream Office. 

[SNAKEYBOY]

I really doubt they can crystallize DIR at full $18 when trading at 14.80. But that's just me

[CANCDN]

NAV is just over 17 on DIR.    

[CANCDN]

Exactly and the bonus is that the shorts are going to be lieterally bankrupted while we're at it.  they will need to pay 3.50 and somehow get a hold of enough units to satisfy the 4.50 D units in lieu of cash. 

[Frankie10]

Very interesting... thank you for sharing your thoughts.  if you read the circular the proposal is not for a special distribution but to make an amendment to allow the trust to distribute non cash assets... wow... they may just distribute the DIR units directly to unit holders... then consolidate to bring up price as you suggested. very interesting... so many levers... so many financial games

[CANCDN]

Hi Frankie,  they need to be able to distribute the 'non cash' portion as units in order to pull off what I outlined.  for example, they will sell Dir at or above NAV no question. Someone will easily pay a premium to market to get a huge chunk without creating market spike.  so to distribute the 450mill or more (they are required to or they pay taxes), they will pay