On January 17, Dundee REIT (D.UN) made a bid for Whiterock REIT (WRK.UN). I own Whiterock, a position of about 6% of my portfolio. Whiterock has been yielding about 6.9%, which is taxed favourably seeing that a large proportion is considered return of capital due to amortization.
I was fortunate to have just increased my holding in Whiterock the day before the takeover bid was announced. The stock price jumped from $14.30 to $16.08, given that Dundee offered either $16.25 cash or 0.4729 units in Dundee REIT for each unit of Whiterock tendered.
I have chosen to tender my units. I have two reasons for this. The first is that the transaction will defer the taxation that will occur when I realize my gains. That is to say, the transaction is a tax-free exchange, and I won’t owe capital gains tax until I choose to sell the units of Dundee (at the original ACB of my Whiterock units, some of which I purchased around $7.00).
The other reason is that Dundee units have continued to appreciate since the announcement. From $33.70 on January 18, the unit price has risen to $34.63 today, valuing units of Whiterock at $16.38. Besides that, the yield is almost the same, and I expect Dundee to continue to meet the same investment goals I had for Whiterock. I will spend more time researching Dundee in the near future.