Dundee Corp. has sold stakes in two of its REITs after David Goodman took over as president and CEO.Fred Lum/The Globe and Mail
David Goodman isn't wasting time getting down to business.
Just three days after being named Dundee Corp.'s new chief executive officer, taking the reins from his father Ned Goodman, there was speculation that David had sold substantial stakes in two real estate investment trusts that originally carried the Dundee name, freeing up cash to deploy toward his own initiatives.
Late Thursday Dream Global REIT – formerly Dundee International REIT – and Dream Office REIT – formerly Dundee REIT – announced secondary offerings amounting to a total of $207-million.
On Friday all speculation was put to rest after Dundee Corp. announced it was indeed the seller, unloading 4.5 million shares of Dream Office and 8.6 million shares of Dream Global. Dundee said it will use the money for "working capital."
Is it just a coincidence that the deals came right after Mr. Goodman took over? Bay Street doesn't think so.
"We do not believe the timing of this sale is coincidental to the change in management that was announced recently," GMP Securities analyst Steve Boland wrote in a note to clients. "David Goodman as the new president and CEO has a desire to grow the wealth management operations once again. This may be through both organic and tuck-in acquisitions." To do that, he'll need cash.
Mr. Boland added that the proceeds could also be used to buy back Dundee Corp. shares to narrow their discount or to fund the company's merchant banking operations.
After selling DundeeWealth to Bank of Nova Scotia in 2011 and spinning out its real estate operations in 2013, Dundee Corp. is now focusing on wealth management, Mr. Goodman told The Globe this week. It's an area he knows well, having run DundeeWealth before the sale to Scotiabank.
However, this time around the goal isn't to create a large mutual fund company. Dundee's new wealth management arm will focus on alternative assets such as agriculture and real estate investments, and will initially target high-net worth investors.
Tim Kiladze