Dan Plettner

DWS Real Estate Fund II: Expect Shareholders to Succeed with Liquidation at Full NAV

The following quote from today's Sept 14 press release should provide some color:

DWS RREEF Real Estate Fund, Inc and DWS RREEF Real Estate Fund II, Inc. Announce Annual Meeting of Stockholders

"...In the event that stockholders approve the Plan of Liquidation and Dissolution being proposed at each Fund's upcoming Annual Meeting, it is possible that implementation of the Plan of Liquidation and Dissolution could be delayed or otherwise affected if this litigation is still pending at the time, although there is currently no certainty as to whether or how the pending litigation might affect a Plan’s implementation. Further details will be provided in each Fund's proxy statement for the Annual Meeting...."


On Sep 10 09:37 PM Dan Plettner wrote:

> I'm not going to be detailing the new issue in print. I do try and
> make myself pretty available to other shareholders. If you'd like
> to speak to me, simply shoot an e-mail to [e-mail] with
> your contact info.

DWS Real Estate Fund II: Expect Shareholders to Succeed with Liquidation at Full NAV

I'm not going to be detailing the new issue in print. I do try and make myself pretty available to other shareholders. If you'd like to speak to me, simply shoot an e-mail to [e-mail] with your contact info.


On Sep 09 01:35 PM cef watcher wrote:

> why has your confidence in a timely liquidation decreased? the board
> has essentially said that they will put this to vote again at the
> next meeting, after which there should be a liquidation.

DWS Real Estate Fund II: Expect Shareholders to Succeed with Liquidation at Full NAV

No question in my mind that a liquidation vote would/will pass... that's not my fear.

Regarding the SEC Filing, why do you think they sold on the secondary market and filed a 13-D amend generically mentioning "liquidating" rather than issuing a press release specifically indicating their intention to vote for liquidation.

As I commented yesterday, my confidence in timely liquidation has decreased significantly since writing this piece -- this is no reflection of any problem with voting challenges.


On Sep 02 11:21 AM Pat Shuff wrote:

> Horejsi bailing out of SRO
>
> www.sec.gov/Archives/e...

DWS Real Estate Fund II: Expect Shareholders to Succeed with Liquidation at Full NAV

For what may be obvious reasons, my confidence in timely liquidation has decreased significantly since writing this piece. The change has nothing to do with voting blocks. I do continue to own both SRO and SRQ myself.

DWS Real Estate Fund II: Expect Shareholders to Succeed with Liquidation at Full NAV

This morning (Aug 31), DWS has updated their website to include a letter to stockholders to be sent with the Semiannual Report:

https://dws-investments.com/EN...

DWS Real Estate Fund II: Expect Shareholders to Succeed with Liquidation at Full NAV

Generally in Closed-End Funds, the Advisor would like that opportunity. However, The Board's Fiduciary Duty is not to the Advisors; the Board's Fiduciary Duty is to its shareholders.

Being prudent, the Board must consider the shareholder and do what is prudent for the shareholders. When a fund is trading for a 20% discount to NAV, an immediate 25% return can be realized by liquidating the fund. Of course, 25% returns could be attained via portfolio gains (with risk, as SRO and SRQ shareholders should now well understand).

Liquidating a fund does not inhibit the shareholder from also achieving portfolio gains. Shareholders can take the immediate 25% gain in liquidation and then invest 125% of their prior $ into any portfolio they wish -- possibly even buying a portfolio managed by an alternate manager itself trading around a 20% discount to NAV.

If the Board's interest was for the Advisor and their fee revenues, it would be fighting to prevent liquidation. On the face of it, the Board's interest appears to be for its shareholders. With the fund trading around a 20% discount, they basically are willing to give everybody $125 for each $100 in shareholder market value.

Then, each shareholder can decide for themselves what manager is best suited to aid them from there...

Closed End Funds Lag the Market Advance

Sure, Joe

SRO is the liquidation trade (in my view). The "clinic" is in an article published Friday afternoon here on Seeking Alpha, but here is a briefing:

The voting dynamics of SRQ leave for a far greater deal of uncertainty that anything (other than a tender offer) could be accomplished by either side. The same was constraining SRO until a dramatically surprising fact became clear... again, details in Friday afternoon's article:

seekingalpha.com/artic...

Disclaimer: I own both SRO and SRQ. BIF (neither SRO or SRQ) is my largest closed end fund position, followed by SRO. SRQ is my smallest holding. All three of these are currently "special situations" in my view and should not be taken as an endorsement of any of the managements.


On Aug 24 11:21 AM Joe Eqcome wrote:

> Dan,
>
> Please do me the honor of a clinic on the issue(s).
>
> Would you be a buyer of SRO or SRQ?
>
> Joe Eqcome

Closed End Funds Lag the Market Advance

Joe, are you familiar with the voting block dynamics on SRO in contrast to SRQ? Obviously, there is a big difference between the overwhelming probability and merely the possibility of successful liquidation.

seekingalpha.com/artic...

DWS Real Estate Fund II: Expect Shareholders to Succeed with Liquidation at Full NAV

Quality: It sure makes things easy for me to demonstrate a special situation when the critical surpise facts (or in this case just one) are already public. Personally, I like to share what I know; I like to help people. I wish it was always "easy" to share what I know. I've been getting asked elsewhere what I've recently learned about different special situation and regrettably, I have had to abstain.

Closed-End Fund market pricing can be tremendously inefficient. I am not merely referring to general discounts. People like myself often know things that would have tremendous affects on market pricing. Despite obtaining knowledge legally and being able to trade on that knowledge ourselves, we may have limitations discouraging us from ourselves putting some types of market price affecting knowledge into the public domain.

As you may know, I did not anticipate liquidation success in the first go around (and thus did not take any financial position prior to the first liquidation vote). In fairness, please do not assume that my position in SRQ is in any similar size to my position of SRO. SRQ is my smallest position. SRO is my second largest position but itself is a very distant second to my largest position. I have no trading restrictions on anything I do.

DWS Real Estate Fund II: Expect Shareholders to Succeed with Liquidation at Full NAV

The easy answer to your question is in the last paragraph of my response... but I think other readers will benefit from the "color" of my entire response.

You are a "interesting" or "funny" guy... distributions are not being paid by the funds managed by the alternate group either... and management fees are far higher. Of course many may assume otherwise if they read statements from an opposing control group's spokesperson. Gee, what were you trying to imply?

I haven't seen anyone at DWS make misleading statements intended to take advantage of an unsophisticated and emotionally-tarnished public.

DWS has in the last week truly committed SRO and SRQ to corporate governance that truly serves its shareholders, sacrificing DWS' revenues. I believe DWS and parent company Deutsche Bank have actually learned that honoring its Fiduciary Duty is paramount in determining their own long term course.

Deutsche Band and DWS have demonstrated positive character. I believe that in choosing to commit itself to SRO and SRQ shareholders, DWS and parent Deutshe Bank realized that Character is Paramount in the long term. True, their managers did not see last years market challenges coming and the suffered tremendous misfortune as a result. This year certain other managers terribly mispositioned their portfolios. Nobody has a crystal ball for market performance, but governance and ethics are in a category of their own -- and clear Fiduciary Breaches are transparent to experts.

Boy, I've been long-winded here.. you'll have to forgive that I have a great deal of conviction in some details that lead to the simple explanation to the potential concern you have brought up...

There is no meaningful opposing SRO voting block. The reason the first vote failed was not the way votes were being cast, rather how many came in. At the time, DWS had not planned for the possibility of a meaningful challenge to liquidation. I've asked important questions. I've had important conversations with important people. They are committed now. Generally, its the Chairman of the Board that decides whether it is in all shareholders best interest to adjourn a meeting to solicit additional votes. The ability to adjourn a meeting exists because some Chairman might do so in shareholders' interests. Again, Deutshe Bank and DWS are taking a stand here (for shareholder benefit) and frankly I believe the benefit to their reputations will warrant both the lost business and headache's they have accepted to fulfill their Fiduciary Duty.


On Aug 21 05:59 PM ers wrote:

> They are still 5 million votes short of a majority 19mil is 50% of
> 38mm outstanding! How do they get these votes?? No dividends are
> being paid..just to the bored of directors!.these stocks have such
> canine qualities they should be wearing Vic's jersey on them!!<br/>

DWS Real Estate Fund II: Expect Shareholders to Succeed with Liquidation at Full NAV

On portfolio risk... obviously volatility (upside and downside) is tremendous in a leveraged REIT focused fund. I do not purport that my insights into market timing, nor the REIT sector are nearly on par with my Closed-End Fund specific knowledge. What I will tell you is that professional investors hedge the downside risk by buying puts in related securities and sometimes even sell that extra upside by writing calls in related securities. In this day an age, even small individual investors can do that.

No, the prospect of liquidation is not nearly as strong for SRQ as SRO. As even Gwailo noted in his piece... DWS did not really employ a significant solicitation strategy for either fund last time. As you probably know, there is a block shareholder who wants to assign assets under management fee contracts to Private Companies beneficially owned by the same family. In my view, the prior results' "votes against" show that block shareholders' voting power (possibly including its sphere of influence). That voting power certainly is inclined to vote against SRQ liquidating if it thinks that in time it can obtain a voting majority itself. That same voting block is just not significant in SRO, and thanks to constraints dictated in the SRO Rights Announcement, it never will be. There are more details which would be less easy for a novice to understand which contribute to the same ultimate conclusion. Put simply, nearly anything could happen SRQ.

Comparing to the other "idea" you mentioned... BIF. I would best characterize each of these as "special situations" than "ideas". Having said that, I know things about the BIF situation that you don't, and which I'm not in a position to write about right now. I expect a much greater financial performance for all shareholders of BIF, and thus my financial position in BIF is much, much larger. Published NAV of BIF ignores much of what public shareholders are entitled to and will ultimately receive, in my view. In the case of SRO, the pie only gets bigger based on portfolio performance.


On Aug 21 01:16 PM oldfisherman wrote:

> Nice to read something intelligent in the Closed-End Fund Space that
> isn't just bogus propaganda again... Very thankful to have you writing
> here again, Dan! Some of the garbage that gets published on SA in
> the Closed-End Fund space is obvious propaganda... worse than having
> no information at all.
>
> Does the portfolio risk of SRO and SRQ concern you? SRO is hard to
> get into because of the value... is the prospect of SRQ liquidating
> as good as SRO?
>
> Is SRO a better or worse idea than BIF?

Deutsche Bank's DWS Fund: Beyond the Ethical Edge

I am a shareholder of SRO and SRQ. I also have done quite a bit of research into the alternate control choice. I hope Gwailo chooses to become aware of each shareholder alternative in detail. If so, I expect that he will not allow his one-sided research to be used as propaganda for reprints.

Press Contact: [e-mail]

Deutsche Bank's DWS Fund - Temptation by Proxy

Gwailo

I give everybody the benefit of the doubt, including you -- for as long as possible. When you gave Horejsi permission to use your articles, were you compensated?

My apologies for making you feel antagonized. I barely even touched the surface in published articles of what I later discovered. If my impression of your lack of objectivity was truly mistaken, touch base with me at [e-mail]. Your are clearly capable of understanding what I know and never published about. And, I'm certain it would affect your take on your project. If you'd rather not reach out, but you aren't personally aligned with Horejsi, include BIF, BTF, DNY, and FF in articles that refer to Horejsi.... not doing so (much like telling only one side of the story) gives the impression that you are protecting DWS' proxy opponent.

Hope to meet you, and to give you every benefit of every doubt.


On Aug 03 07:17 PM Gwailo wrote:

> Dan - Let's see if I understand your situation:
>
> You have acquired a sizeable position in BIF, which is controlled
> by Stewart Horejsi and has been trading at a substantial (20%+) discount
> to net asset value. BIF now looks like a "value trap", because the
> fund has been sitting on the cash raised by its June '08 rights offering,
> even tho it yields less than BIF's ongoing cost of leveraging with
> ARP's, while the management fees that BIF pays Horejsi are many basis
> points higher than the industry norm. Horejsi-controlled trusts have
> been selling shares of BTF, another fund he controls, and aggressively
> buying BIF (now up to @18% ownership), perhaps to thwart any challenge
> to his control from Ron Olin and Doliver Capital, who own @ 17%.
>
>
> You would like to profit from having BIF pay a large special dividend
> or make a tender offer, even if the offer were in-kind so as to exclude
> smaller shareholders. Horesi does not seem inclined to do what you
> want. You have been seeking evidence to support your belief that
> Horejsi has manipulated the price of BIF stock, and you have published
> several articles on Seeking Alpha with inflammatory headlines that
> went beyond the facts offered in support. Seeking Alpha's editors
> removed those articles after complaints from Horejsi -- an act of
> censorship that I believe was wrong.
>
> "In my opinion, what you have written so far is exceedingly lacking
> in objectivity. It can be perceived as propaganda. Given that you
> are an anonymous author it would be particularly important for you
> to make clear your opinions after researching both DWS and the Horejsi
> Group who may assign the SRO and SRQ fee streams to its Privately
> Owned Co-Advisor Companies." - Dan
>
> You are entitled to your opinion, although you seem to have mastered
> the art of antagonizing potential allies, such as myself.
> I have chosen to focus on problems within the DWS fund group, which
> touch on Horejsi because he has mounted a proxy contest at two of
> those funds, the wretchedly performing real estate twins SRO and
> SRQ. Painting Horejsi as a devil does not make the DWS folks into
> angels. I have given Horejsi folks permission to reprint an article,
> but have not endorsed his proxy. Instead, as I wrote last May: "Each
> SRO and SRQ shareholder should make up their own mind about Horejsi's
> investment skills, and decide whether his self-interest will coincide
> with theirs." Your research may help them make that decision, and
> there is no need for me to duplicate your work.
>
> "The current boards of SRO and SRQ proposed a liquidity event, providing
> their shareholders the opportunity to sell without being subjected
> to any discount at all.... GF recently conducted a tender offer,
> another shareholder friendly activity. I don’t see any mention of
> those positive governance decisions which reflect on conflicts of
> interest within the investment industry." - Dan re Part I
>
> There was something peculiar about that proposal to kill off SRQ
> and SRO, a/k/a "liquidity event". Why weren't similar "events" proposed
> at any other hi-discount DWS fund? As Herzfeld's closed-end fund
> report saw it: "What puzzles us most is management's motivation to
> fight [the Trust] so hard. Management is devoting significant legal
> and proxy expense to fight [the Trust], but if they win, the ultimate
> outcome gives them no future benefit." My own, unproven guess is
> that DWS-RREEF bungled the redemption of those funds' Auction Rate
> preferreds, which magnified last fall's losses, and DWS worries about
> its liability exposure if internal fund documents were to fall into
> unfriendly hands. The right to sue DWS for mismanagement would disappear
> on liquidation, and those potential claims were not priced into "net
> asset value". (It's just a theory...) As for the New Germany (seekingalpha.com/symbo...)
> tender offer you mention -- it was actually forced upon a reluctant
> fund as the price of settling a class action lawsuit that challenged
> the Board's refusal to count any votes cast for Phil Goldstein's
> slate in a proxy contest back in 2005, on the ground that he wasn't
> "German" enough. See the fund's SC TO-I filing dated 12/21/07 for
> details.
>
> Finally, a few months ago you asked: "Gwailo, have you ever met any
> of the people associated with this proxy fight?" Just so the record
> will be clear, the answer is "no." -'G

Deutsche Bank's DWS Fund - Temptation by Proxy

So Gwailo, are you suggesting that SRO and SRQ Board Efforts to provide liquidity at no discount to NAV would have been bad for shareholders?

Gwailo, do you want to yourself share any comparison between governance at BIF (of the Horejsi Group) with that of DWS?

In my opinion, what you have written so far is exceedingly lacking in objectivity. It can be perceived as propaganda. Given that you are an anonymous author it would be particularly important for you to make clear your opinions after researching both DWS and the Horejsi Group who may assign the SRO and SRQ fee streams to its Privately Owned Co-Advisor Companies.

Deutsche Bank's Strange Curse

If this series of articles is truly “about conflicts within the investment fund industry” it has to potential to be groundbreaking. But will the work be objective? I’ve done an enormous deal of investigative research on the subject. If the goal here is propaganda, Part 2 and Part 3 may just turn out to be objective after reader comments regardless of how the articles themselves are written. I’m curious who (Gwailo or readers) will introduce the relevance of Merrill Lynch and others firms.

As a publicly anonymous author, Gwailo’s work here will be very interesting.

Will this really be “about conflicts within the investment fund industry”? The subject seems to be governance and ethics.... The current boards of SRO and SRQ proposed a liquidity event, providing their shareholders the opportunity to sell without being subjected to any discount at all.... GF recently conducted a tender offer, another shareholder friendly activity.

I don’t see any mention of those positive governance decisions which reflect on conflicts of interest within the investment industry... I did here observe a picture of a burning building with a Deutsche Bank headline. I’ve also observed some interesting choices in Gwailo’s former writings.

To be clear there is nothing wrong with Gwailo being an anonymous author. The question is the validity of the work’s stated purpose. Gwailo might be surprised to know some things I know.