I agree with most of what you said, but there is something missing from the analysis. Most of the earnings are being generated by a taxable REIT subsidiary which is taxed and does not have to pay dividends (within some reason) to CSE, the REIT. Only when these earnings are distributed to CSE will they be included in income of which 90% needs to be distributed. Thus, they can reduce dividends without de-REITing. In other words, they can still receive a better tax outcome for other earnings not within the taxabel REIT structure. Of course, there are other considerations in remaining a REIT besides the income distribution.
My point is CSE is not FORCED to de-reit. It can make that decision in coordination with the Street to maximize shareholder value. I believe this will occur when the PE attending the de-reit will equal shareholder value of $20+ share.