BPJD36,
So sorry to hear about your Dad. The shortness of breath he is experiencing, could be due to pulmonary edema (fluid on the lungs), or a sign of heart disease. The fluid he is retaining in his body could be totally from the proteinuria, or decreased output from his heart, or from both conditions. His high BP and diabetes puts him at a high risk for heart disease. His doctors are aware of all of this, and will take care of him. Just make sure that he follows his doctors orders, and takes all of his medicines.
Here is some non copyrighted information from the National Institutes of Health (NIH). Merry Christmas and wishes of good health for your father

Jack
Proteinuria describes a condition in which urine contains an abnormal amount of protein. Proteins are the building blocks for all body parts, including muscles, bones, hair, and nails. Proteins in your blood also perform a number of important functions. They protect you from infection, help your blood coagulate,
and keep the right amount of fluid circulating through your body.
As blood passes through healthy kidneys, they filter the waste products out and leave in the things the body needs, like proteins. Most proteins are too big to pass through the kidneys' filters into the urine unless the kidneys are damaged. The main protein that is most likely to appear in urine is albumin. Albumin is smaller and therefore more likely to escape through the filters of the kidney, called glomeruli. Sometimes the term albuminuria is used when the test detects albumin specifically.
Albumin's function in the body includes retention of fluid in the blood. It acts like a sponge, soaking up fluid from body tissues.
Inflammation in the glomeruli is called glomerulonephritis, or simply nephritis. Many diseases can cause this inflammation, which leads to proteinuria. Additional processes that can damage the glomeruli and cause proteinuria include diabetes, hypertension, and other forms of kidney diseases.
Research shows that the level and type of proteinuria (whether the urinary proteins are albumin only or include other proteins) strongly determine the extent of damage and whether you are at risk for developing progressive kidney failure.
Proteinuria has also been shown to be associated with cardiovascular disease. Damaged blood vessels may lead to heart failure or stroke as well as kidney failure. If your doctor finds that you have proteinuria, you will want to do what you can to protect your health and prevent any of these diseases from developing.
What are the signs of proteinuria and kidney failure?
Large amounts of protein in your urine may cause it to look foamy in the toilet. Also, because the protein has left your body, your blood can no longer soak up enough fluid and you may notice swelling in your hands, feet, abdomen, or face. These are signs of very large protein loss.
In addition to blood glucose and blood pressure control, the National Kidney Foundation recommends
restricting dietary salt and protein. Your doctor may refer you to a dietitian to help you follow a healthy eating plan.