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Mr. Cooper says the hype around him was always overblown.Simon Willms/The Globe and Mail

Michael Cooper doesn't mince words. By his own admission, the current commercial real estate environment is "grinding, painful and humbling."

Not even a decade ago, the Canadian real estate giant was elevated to sage status for timing the market so perfectly and scoring incredible returns for investors. Today, the biggest company in his empire is worth about half of what it was. Now everyone wants to know where it all went wrong.

Mr. Cooper's legend dates back to 2007. That June, just before the financial crisis, he sold two-thirds of his real estate investment trust's portfolio to GE Canada for $2.4-billion. Two years later, after waiting out the market turbulence, he bulked up the same company, Dundee REIT. The buying spree culminated with the blockbuster acquisition of Bank of Nova Scotia's Bay Street headquarters for a record $1.3-billion – the highest price ever paid for a Canadian office building.

As the REIT's market value soared, buoyed by seemingly insatiable investor appetite for yield, Mr. Cooper took two companies public. Shareholders happily piled in, believing in the industry's golden boy.

The third act came in 2013. Although Mr. Cooper took pride in running REITs, his passion was a company most investors had not heard of: Dream Unlimited. He owned a 30-per-cent stake in the division of Dundee Corp., which made a lot of money from buying property in Saskatchewan in the early 1990s, long before a commodity boom erupted in the prairie province.

Over the years, Dream had amassed more land in Calgary and Edmonton, cities that boomed along with energy prices, and the company earned fat asset management fees for overseeing acquisitions and property management for the Dundee portfolio of REITs. With the real estate market booming and his personal reputation in tiptop shape, this was the ideal time to make something of it.

So, at the height of the frothy real estate market, Mr. Cooper spun Dream out of Dundee, making his baby its own publicly traded company.

Around the same time, he rebranded all of the Dundee real estate trusts, changing their names to Dream Global REIT, Dream Office REIT and Dream Industrial REIT. It brought all of his empire under the same banner.

The timing could hardly have been worse. That same month, REIT valuations started to collapse amid fears the Federal Reserve would hike interest rates. Investors started to wonder if they needed to keep buying trusts if government bond yields were about to start paying better returns. Then the energy market cratered, causing panic about commercial vacancies, particularly in Western Canada. Dream Office, exposed to Calgary towers, sold shares at $35.90 to help fund the Scotia Plaza acquisition; today it trades at $14.15.

Dream Unlimited's stock rose during its first few months as a public company, but the shares started plummeting shortly after, down nearly 50 per cent since they started trading.

Now Mr. Cooper is left to pick up the pieces.

"This is a messed up time," he concedes in the cafeteria of his downtown Toronto headquarters. Yet as easy as it is to pile on, he says there are misconceptions about the decisions that have tarnished his reputation.

First, there's the timing of the spinout. Although it coincided with the frothy market, Mr. Cooper says it was driven by something deeper. He got his start in real estate by working closely with Ned Goodman, who controls Dundee, and served almost as a surrogate father in business. By 2012, Mr. Cooper started to worry about succession issues.

Not only was Mr. Goodman in his 70s, a major chunk of Mr. Cooper's net worth was tied up in Dream. Mr. Cooper worried a new CEO could shake things up. "I wanted to make sure that whatever happened, I wouldn't be forced to sell my shares," he says.

That has proven to be not so crazy a concern. The past six months have been punishing for Dundee, and its net loss is in excess of $400-million in the current fiscal year. It is conceivable the company would have tried to sell Dream Unlimited to raise cash amid the bleeding.

As for the hype around him, Mr. Cooper says it was always overblown. "I knew I couldn't do that twice," he says, referring to the impeccable timing of the GE deal. "Do you know how hard that is?"

He also wants the public to remember he personally suffers from Dream Unlimited's rough performance. As sexy as the spinout seemed, he did not sell a single share in the process, so there was no cashing out.

The gargantuan task now is persuading investors to stick by him. Having been in the industry for three decades, Mr. Cooper has seen real estate's cyclical nature. He got his start in the early 1990s, when scores of developers, including the Reichmanns, went bust. He also knows it is hard to swim against the tide. By the late 1990s, the real estate market had suffered for years and things were just picking up when the tech boom took off in 1998. It took another four years for real estate companies to get much love.

To those who still believe, he offers some assurance: This market rout is not nearly as bad as what he has seen. "It's nothing like 1992. And it's nothing like the financial crisis. And it's nothing like the technology boom," he says. Mr. Cooper says he has also learned from others' mistakes. Dream Unlimited's balance sheet is in fine form, in part because the company refinanced all his debt last year. It has enough liquidity to survive this storm. However, there is one thing Mr. Cooper cannot change quickly, and it may be what will hurt him the most: the public relations battle. It is easy to make people follow the herd, another to win them back.

"People probably gave me too high a grade before," Mr. Cooper concedes. And he is right. But he also did not do anything to calm that fervour. Now he is paying the price.

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