TORONTO--(BUSINESS WIRE)--Jun. 19, 2023--DREAM UNLIMITED CORP. (TSX:DRM) (“Dream”)today announced that, based on the preliminary results of Dream Office Real Estate Investment Trust’s (“Dream Office”) substantial issuer bid (the “Offer”) to purchase for cancellation up to 12,500,000 of its outstanding REIT Units, Series A (“REIT A Units”) at a purchase price of $15.50 per REIT A Unit (the “Purchase Price”) announced earlier today, Dream expects to have approximately 7.0 million of its REIT A Units taken up under the Offer.
Earlier today, Dream Office announced that based on the preliminary count by the depositary for the Offer, approximately 32.1 million REIT A Units (including LP Class B Units, Series 1 of Dream Office LP (“LP B Units”) tendered on an as exchanged basis) were tendered to the Offer and not withdrawn and, as the Offer was oversubscribed, Dream Office will purchase the successfully tendered REIT A Units on a pro rata basis following determination of the final results of the Offer, except that “odd lot” tenders (of holders beneficially owning fewer than 100 REIT A Units) will not be subject to pro ration. The pro ration factor under the Offer is preliminary and subject to verification by Dream Office. Based on the preliminary pro-ration factor, Dream expects to receive approximately $109 million of proceeds from the Offer and, following take-up, expects to own, together with its joint actors, approximately 33% of the outstanding REIT A Units (assuming the exchange of all LP B Units).
The Offer was announced by Dream Office on May 4, 2023, concurrently with its announcement of its sale of 12.5 million units of Dream Industrial Real Estate Investment Trust (the “DIR Units”) on a bought deal basis at a price of $14.20 per DIR Unit to a syndicate of underwriters led by TD Securities Inc. (the “Underwriters”) for total gross proceeds of approximately $177.5 million (the “Secondary Offering”). At that time, Dream Office announced that the Offer allowed it to monetize a portion of its holdings in Dream Industrial REIT and to offer its unitholders the option to either access liquidity by selling their REIT A Units for cash at a premium to the trading price of the REIT A Units or potentially increase their ownership in Dream Office.
“The Secondary Offering and the Offer provided unitholders of Dream Office with the opportunity to reduce their investment in Dream Office, funded from the sale of non-strategic assets, while continuing to own the same core office portfolio” said Michael Cooper, Chief Responsible Officer of Dream. “On May 4th, 2023, Dream’s 18,473,925 REIT A Units and LP B Units had a total value of approximately $233 million, based on the May 4thclosing price on the TSX. As a result of this transaction, Dream’s investment in Dream Office has been reduced by approximately $109 million or by 47% and its joint actors ownership has been slightly reduced from 40% to approximately 33%. Effectively, Dream continues to own a significant interest in the same strategic, core assets but has reduced its invested capital by 47%.”
Dream Office’s portfolio has been carefully curated through exceptional efforts since 2015. Through its strategic plan, Dream Office recycled 138 assets to create a core investment portfolio of 28 high-quality assets in irreplaceable locations, the vast majority of which are downtown Toronto. Together with Dream Office, we are actively redeveloping three properties in downtown Toronto and the GTA creating density for approximately 3.3 million square feet of residential space, while decarbonizing, modernizing and amenitizing the remainder of Dream Office’s core portfolio into competitive, high-quality assets. Given current geopolitical and macroeconomic uncertainty, combined with the rising interest rate environment and increased cost and reduced supply of new housing, together with the changes stemming from the COVID 19 pandemic and the evolving use of office space, Dream believes that increasing our liquidity benefits the Company and our shareholders.
“The opportunity to increase our cash assets by $109 million while maintaining similar ownership in the same core office portfolio is appealing” said Deborah Starkman, Chief Financial Officer of Dream. “As reported in our Q1 results, we continue to see growth in our asset management business, we have made exciting progress in developing our communities in western Canada, Arapahoe Basin just had a record winter season, we continue our progress on rezoning our urban developments and we recently achieved construction start on Forma, our 73-storey, Frank Gehry-designed condominium tower in downtown Toronto. With the proceeds from the Offer, we have bolstered our balance sheet with additional capital and resources that can be used to reduce debt or for future opportunistic investments, which could include new asset management products, new urban developments or communities in western Canada, repurchases of Dream shares, or purchases of additional REIT A Units along with other potential investments.”