Dream Office REIT (D.UN.TO) – Odd Lot Tender Offer – C$60 Gain

Current Price – C$23.4

Offer Price – C$24

Upside – 2.5% or C$60 for odd lot holders

Expiration Date – May 3, 2018

Tender Announcement


This is a rather straight forward tender offer by Canada based REIT – buying back 14% of shares at C$24/unit (C$240m in total). Odd lot holders will not be prorated. Due to tax consequences this offer is suitable for Canada residents only (see below).

Dream Office REIT has recently gone through business transformation and sold down  more than half of portfolio to refocus on higher quality assets . The freed up cash and borrowing capacity is used to buy back shares.

Previous tender offer (Jun 28th, 2017) for C$440m was oversubscribed at the upper limit of $21/share resulting in proration factor of 85% (except for odd-lots which were not prorated). In this tender shares were being acquired below NAV. Thus, I would expected even more active participation when units are being repurchased above NAV in the current tender.

IMPORTANT: There seem to be adverse tax consequences for non-residents of Canada (from previous tender docs):

“A Non -Resident Unitholder will generally be subject to Canadian withholding tax at a rate of 15% (the “Mutual Fund Withholding Tax”) on any distribution in respect of a unit of a “mutual fund trust” that is a “Canadian property mutual fund investment” that is not otherwise subject to Canadian income tax under Part I of the Tax Act or Canadian withholding tax under Part XIII of the Tax Act. A REIT A Unit will be a “Canadian property mutual fund investment” to a Non Resident Unitholder. Assuming that the REIT A Units are not “taxable Canadian property” to the Non Resident Unitholder as described below and are therefore not subject to Part I tax on the disposition of the REIT A Units under the Offer, a Non Resident Unitholder will be subject to the Mutual Fund Withholding Tax on the amount of its payment by Dream Office REIT in connection with the purchase of its REIT A Units.

In effect, the entire amount paid to a Non Resident Unitholder on the purchase of its REIT A Units under the Offer will be subject to Canadian withholding tax.”


2 thoughts on “Dream Office REIT (D.UN.TO) – Odd Lot Tender Offer – C$60 Gain”

  1. I am long here, and think its worth noting that purchasing now should allow you to capture at least one monthly dividend of $0.0833 per unit.

  2. This a very timely opportunity that is most likely actionable only for Canadian investors. Dream Office REIT is conducting a tender offer for approx. 25% of its class A units at C$15.50/share. The offer includes an odd-lot provision, and based on current prices, an odd-lot account (99 shares) could potentially yield around C$50. The offer is set to expire today at 5 pm EST, and it also includes a guaranteed delivery clause.

    The tender is probably not actionable for non-Canadian investors as they will be subject to a mutual fund withholding tax of 15%. This tax applies to the whole tender price and not just the difference between the tender price and paid-up capital. Not sure if US IRA accounts will be exempt from this tax. Any insights would be appreciated.

    Controlling shareholder Dream Unlimited (owns around 33%) advised that it will participate in the tender but still hasn’t decided on the exact number of shares. Another major shareholder Artis Real Estate (12.5%) advised that it may participate as well.



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