DUNDEE CORP. $22 - Toronto symbol DC.A

DUNDEE CORP. $22 (www.dundeecorp.com) has completed the spinoff of subsidiary DREAM Unlimited Corp. $12 (Toronto symbol DRM) as a separate, publicly traded firm. DREAM, which was formerly 70%-owned Dundee Realty Corp., develops and manages commercial and residential real estate in North America and Europe. Insiders still control 50% of DREAM.

DREAM gets half of its revenue from selling land, mainly in western Canada, to housing developers. It also develops its own housing and condominium properties, and holds stakes in Toronto’s King Edward Hotel and the Arapahoe Basin ski area in Colorado.

Dundee shareholders received one share of DREAM for each Dundee share they held. That’s why Dundee’s stock dropped from over $36 after the spinoff.

Dundee structured the deal as a tax-deferred distribution: investors are only liable for capital gains taxes when they sell their new shares. When they do sell, investors should allocate 71% of their adjusted cost base to Dundee, and 29% to DREAM.

Dundee Corp. is a buy. DREAM is a hold.

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