Cohen & Steers Quality Income Realty Fund, Inc. (RQI) Notification of Sources of Distribution Under Section 19(a)

Rhea-AI Summary

Cohen & Steers Quality Income Realty Fund, Inc. provides shareholders with information on distribution sources and cumulative distributions. The managed distribution policy aims to deliver long-term total return potential through fixed-rate monthly distributions. Distributions may include capital gains, investment income, and return of capital. Shareholders' tax basis may be reduced by return of capital. Final tax characteristics are provided after the calendar year. The current distribution breakdown includes net investment income, return of capital, and long-term capital gains.

Insights

Financial Analyst

The distribution policy of Cohen & Steers Quality Income Realty Fund, Inc. reflects a strategic approach to providing shareholder value. The managed distribution policy allows the Fund to realize and distribute capital gains regularly, which may appeal to income-focused investors seeking consistent payouts. However, the reliance on return of capital indicates that a significant portion of the distribution is not from earned income but rather from the capital base of the Fund itself.

This approach could potentially erode the asset base over time if not managed correctly, especially if the Fund's investments do not generate sufficient returns. Shareholders might see a reduction in their tax basis, which could have implications for future capital gains taxes. It's important for investors to consider the sustainability of these distributions and the impact on the Fund's long-term capital growth potential.

Tax Advisor

The tax implications of the Fund's distributions are noteworthy. While return of capital is not immediately taxable, it does reduce the shareholder's cost basis in the investment, which could result in higher capital gains taxes upon the sale of shares. The recharacterization of distributions from REITs after year-end also adds a layer of complexity to shareholder tax planning.

Investors should be aware that the final tax characteristics of the Fund's distributions can only be confirmed at year-end, necessitating a careful review of the Form 1099-DIV for accurate reporting. This underscores the importance of understanding the tax consequences of investment strategies in managed funds and the need for tax planning in relation to investment income.

Market Research Analyst

The Fund's distribution strategy and its effect on market price can be influenced by several external factors, such as market volatility and changes in the real estate sector. The current distribution composition, with a high percentage attributed to return of capital, suggests that the Fund may be prioritizing yield over growth. While this may attract short-term investors looking for immediate income, it could deter growth-oriented investors who might be concerned about the long-term appreciation potential of their investment.

Furthermore, the announcement that the Board may amend, terminate, or suspend the distribution policy at any time adds an element of uncertainty that could affect investor sentiment. Market participants typically favor consistency and transparency in distribution policies and any potential changes could impact the Fund's attractiveness and, consequently, its share price.

NEW YORK, March 28, 2024 /PRNewswire/ -- This press release provides shareholders of Cohen & Steers Quality Income Realty Fund, Inc. (NYSE: RQI) (the "Fund") with information regarding the sources of the distribution to be paid on March 28, 2024 and cumulative distributions paid fiscal year-to-date.

In December 2012, the Fund implemented a managed distribution policy in accordance with exemptive relief issued by the Securities and Exchange Commission. The managed distribution policy seeks to deliver the Fund's long-term total return potential through regular monthly distributions declared at a fixed rate per common share. The policy gives the Fund greater flexibility to realize long-term capital gains throughout the year and to distribute those gains on a regular monthly basis to shareholders. The Board of Directors of the Fund may amend, terminate or suspend the managed distribution policy at any time, which could have an adverse effect on the market price of the Fund's shares. 

The Fund's monthly distributions may include long-term capital gains, short-term capital gains, net investment income and/or return of capital for federal income tax purposes. Return of capital includes distributions paid by the Fund in excess of its net investment income and net realized capital gains and such excess is distributed from the Fund's assets. A return of capital is not taxable; rather, it reduces a shareholder's tax basis in his or her shares of the Fund. In addition, distributions from the Fund's investments in real estate investment trusts (REITs) may later be characterized as capital gains and/or a return of capital, depending on the character of the dividends reported to the Fund after year end by REITs held by the Fund. The amount of monthly distributions may vary depending on a number of factors, including changes in portfolio and market conditions.

At the time of each monthly distribution, information will be posted to cohenandsteers.com and mailed to shareholders in a concurrent notice. However, this information may change at the end of the year because the final tax characteristics of the Fund's distributions cannot be determined with certainty until after the end of the calendar year. Final tax characteristics of all of the Fund's distributions will be provided on Form 1099-DIV, which is mailed after the close of the calendar year.

The following table sets forth the estimated amounts of the current distribution and the cumulative distributions paid this fiscal year-to-date from the sources indicated. All amounts are expressed per common share.

DISTRIBUTION ESTIMATES	March 2024		YEAR-TO-DATE (YTD) March 31, 2024*
Source	Per Share  Amount	% of Current  Distribution	Per Share  Amount	% of 2024  Distributions
Net Investment Income	$0.0681	85.13 %	$0.0958	39.92 %
Net Realized Short-Term Capital Gains	$0.0000	0.00 %	$0.0000	0.00 %
Net Realized Long-Term Capital Gains	$0.0000	0.00 %	$0.0037	1.54 %
Return of Capital (or other Capital Source)	$0.0119	14.87 %	$0.1405	58.54 %
Total Current Distribution	$0.0800	100.00 %	$0.2400	100.00 %

You should not draw any conclusions about the Fund's investment performance from the amount of this distribution or from the terms of the Fund's managed distribution policy. The Fund estimates that it has distributed more than its income and capital gains; therefore, a portion of your distribution may be a return of capital. A return of capital may occur, for example, when some or all of the money that you invested in the Fund is paid back to you. A return of capital distribution does not necessarily reflect the Fund's investment performance and should not be confused with 'yield' or 'income'. The amounts and sources of distributions reported in this Notice are only estimates, are likely to change over time, and are not being provided for tax reporting purposes. The actual amounts and sources of the amounts for accounting and tax reporting purposes will depend upon the Fund's investment experience during the remainder of its fiscal year and may be subject to changes based on tax regulations. The amounts and sources of distributions year-to-date may be subject to additional adjustments.

*THE FUND WILL SEND YOU A FORM 1099-DIV FOR THE CALENDAR YEAR THAT WILL TELL YOU HOW TO REPORT THESE DISTRIBUTIONS FOR FEDERAL INCOME TAX PURPOSES.

The Fund's Year-to-date Cumulative Total Return for fiscal year 2024 (January 1, 2024 through February 29, 2024) is set forth below. Shareholders should take note of the relationship between the Year-to-date Cumulative Total Return with the Fund's Cumulative Distribution Rate for 2024. In addition, the Fund's Average Annual Total Return for the five-year period ending February 29, 2024 is set forth below. Shareholders should note the relationship between the Average Annual Total Return with the Fund's Current Annualized Distribution Rate for 2024. The performance and distribution rate information disclosed in the table is based on the Fund's net asset value per share (NAV). The Fund's NAV is calculated as the total market value of all the securities and other assets held by the Fund minus the total liabilities, divided by the total number of shares outstanding. While NAV performance may be indicative of the Fund's investment performance, it does not measure the value of a shareholder's individual investment in the Fund. The value of a shareholder's investment in the Fund is determined by the Fund's market price, which is based on the supply and demand for the Fund's shares in the open market.

Fund Performance and Distribution Rate Information:

Year-to-date January 1, 2024 to February 29, 2024
Year-to-date Cumulative Total Return1	-2.15 %
Cumulative Distribution Rate2	1.90 %
Five-year period ending February 29, 2024
Average Annual Total Return3	6.98 %
Current Annualized Distribution Rate4	7.62 %

1.	Year-to-date Cumulative Total Return is the percentage change in the Fund's NAV over the year-to-date time period including distributions paid and assuming reinvestment of those distributions.
2.	Cumulative Distribution Rate for the Fund's current fiscal period (January 1, 2024 through March 31, 2024) measured on the dollar value of distributions in the year-to-date period as a percentage of the Fund's NAV as of February 29, 2024.
3.	Average Annual Total Return represents the compound average of the Annual NAV Total Returns of the Fund for the five-year period ending February 29, 2024. Annual NAV Total Return is the percentage change in the Fund's NAV over a year including distributions paid and assuming reinvestment of those distributions.
4.	The Current Annualized Distribution Rate is the current fiscal period's distribution rate annualized as a percentage of the Fund's NAV as of February 29, 2024.

Investors should consider the investment objectives, risks, charges and expense of the Fund carefully before investing. You can obtain the Fund's most recent periodic reports, when available, and other regulatory filings by contacting your financial advisor or visiting cohenandsteers.com. These reports and other filings can be found on the Securities and Exchange Commission's EDGAR Database. You should read these reports and other filings carefully before investing.

Shareholders should not use the information provided here in preparing their tax returns. Shareholders will receive a Form 1099-DIV for the calendar year indicating how to report Fund distributions for federal income tax purposes.

Website: https://www.cohenandsteers.com
Symbol: (NYSE: CNS)

About Cohen & Steers. Cohen & Steers is a leading global investment manager specializing in real assets and alternative income, including real estate, preferred securities, infrastructure, resource equities, commodities, as well as multi-strategy solutions. Founded in 1986, the firm is headquartered in New York City, with offices in London, Dublin, Hong Kong, Tokyo and Singapore.  

Forward-Looking Statements
This press release and other statements that Cohen & Steers may make may contain forward looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, which reflect the company's current views with respect to, among other things, its operations and financial performance. You can identify these forward-looking statements by the use of words such as "outlook," "believes," "expects," "potential," "continues," "may," "will," "should," "seeks," "approximately," "predicts," "intends," "plans," "estimates," "anticipates," or the negative versions of these words or other comparable words. Such forward-looking statements are subject to various risks and uncertainties.

Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. The company undertakes no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise.

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SOURCE Cohen & Steers, Inc.

FAQ

What is the ticker symbol for Cohen & Steers Quality Income Realty Fund, Inc.?

The ticker symbol is CNS.

What is the purpose of the managed distribution policy implemented by the Fund?

The managed distribution policy aims to provide long-term total return potential through regular fixed-rate monthly distributions.

What are the sources of the Fund's distributions?

The sources include net investment income, return of capital, and capital gains.

How are distributions from the Fund's investments in REITs characterized?

Distributions from REIT investments may later be characterized as capital gains or return of capital, depending on the dividends reported by REITs.

How are shareholders affected by return of capital distributions?

Return of capital distributions reduce a shareholder's tax basis in their shares of the Fund.

When are the final tax characteristics of the Fund's distributions provided?

Final tax characteristics are provided on Form 1099-DIV after the close of the calendar year.

What are the components of the current distribution breakdown for March 2024?

The breakdown includes net investment income, return of capital, and long-term capital gains.