PRINCIPAL REAL ESTATE INCOME FUND DECLARES MONTHLY DISTRIBUTIONS OF $0.105 PER SHARE
- The Fund announces monthly distributions of $0.105 per common share.
- The annualized distribution rate is 10.99% based on the Fund's current net asset value of $11.46.
- Distributions are payable on specific dates in May, June, and July 2024.
- Investing in the Fund involves risks, including potential loss of investment and exposure to below-investment grade investments.
- Fluctuations in net asset value may occur due to factors like market spread, interest rates, and leverage.
- Shareholders may receive Form 1099-DIV in early 2025 for tax reporting purposes.
- Investors should carefully consider the risks before investing in the Fund.
- Investing in the Fund may result in little or no return or potential loss of investment.
- Exposure to below-investment grade investments (junk bonds) poses a risk to investors.
- Fluctuations in net asset value may be magnified due to the Fund's use of leverage.
- Shares of closed-end investment companies may trade at a discount from their net asset value.
Insights
The declaration of monthly distributions at an annualized rate of 10.99% by Principal Real Estate Income Fund is a significant indicator of the Fund's current performance and strategy. This distribution rate is notably high, which could imply a robust income-generating capability of the Fund's underlying real estate assets or potentially a strategic distribution policy to attract income-focused investors. However, the sustainability of such a high payout ratio should be scrutinized, especially in the context of the real estate market's cyclical nature and interest rate environment.
Investors should also consider the Fund's use of leverage, which may magnify fluctuations in net asset value (NAV). While leverage can enhance returns when underlying assets perform well, it equally increases the risk of amplified losses during downturns. The Fund's exposure to 'junk bonds' adds another layer of risk, as these below-investment-grade securities carry a higher risk of default. The potential for trading at a discount to NAV in the secondary market is another aspect that investors must consider, as it can lead to capital erosion if shares are sold when the market valuation is below the NAV.
Investors in Principal Real Estate Income Fund should be aware of the specific risks associated with securities backed by commercial real estate assets. Market risks, such as declines in property values and occupancy rates, could directly impact the Fund's performance. Additionally, general and local economic conditions can significantly influence the real estate market, affecting the Fund's ability to maintain its distribution rate.
It is also important to note the Fund's policy of not seeking to return the initial investment to investors, which indicates a focus on long-term capital appreciation rather than capital preservation. Given the Fund's investment strategy and the inherent volatility of real estate and credit markets, the distributions may include a return of capital, which essentially reduces the invested principal over time. This could be a concern for investors seeking to maintain or grow their initial investment.
From a tax perspective, the Fund's distributions can have varying characterizations, such as ordinary income, long-term capital gains, or return of capital, which have different tax implications for investors. The Fund's practice of providing a Section 19(a) notice offers an estimate of distribution sources, but the final tax characterization will only be confirmed after the fiscal year ends. Investors should plan for potential tax liabilities and consult with tax professionals to understand the implications of these distributions on their personal tax situation.
Moreover, the Fund's status as a closed-end fund means shares are not issued continuously and the secondary market trading could lead to discrepancies between share price and NAV. This aspect may affect the tax treatment of gains or losses on the shares if sold. Understanding the tax considerations and the timing of distributions is important for shareholders in optimizing their investment strategy in relation to their tax liabilities.
The following dates apply to the distributions declared:
Ex Date | Record Date | Payable Date |
May 15, 2024 | May 16, 2024 | May 31, 2024 |
June 13, 2024 | June 13, 2024 | June 28, 2024 |
July 17, 2024 | July 17, 2024 | July 31, 2024 |
RISKS
This press release is not for tax reporting purposes but is being provided to announce the amount of the Fund's distributions. In early 2025, after definitive information is available, the Fund will send shareholders a Form 1099-DIV, if applicable, specifying how the distributions paid by the Fund during the prior calendar year should be characterized for purposes of reporting the distributions on a shareholder's tax return (e.g., ordinary income, long-term capital gain or return of capital). An investment in the Fund is not appropriate for all investors and is not intended to be a complete investment program. The Fund is designed as a long-term investment and not as a trading vehicle.
Investing in the Fund involves risks, including the risk that you may receive little or no return on your investment or that you may lose part or even all of your investment and exposure to below-investment grade investments (i.e., "junk bonds"). The Fund's net asset value will vary and its distribution rate may vary and both may be affected by numerous factors, including changes in the market spread over a specified benchmark, market interest rates and performance of the broader equity markets. Fluctuations in net asset value may be magnified as a result of the Fund's use of leverage. Therefore, before investing you should carefully consider the risks that you assume when you invest in the Fund's common shares.
Securities backed by commercial real estate assets are subject to market risks similar to those of direct ownership of commercial real estate assets including, but not limited to, declines in the value of real estate, declines in rental or occupancy rates and risks related to general and local economic conditions.
The Fund's investment objectives and policies are not designed to seek to return the initial investment to investors that purchase shares.
Sources of distributions to shareholders may include net investment income, net realized short-term capital gains, net realized long-term capital gains and return of capital. The actual amounts and sources of the amounts for 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. If a distribution includes anything other than net investment income, the fund provides a Section 19(a) notice of the best estimate of its distribution sources at that time, available at www.principalcef.com. These estimates may not match the final tax characterization (for the full year's distributions) contained in shareholders' 1099-DIV forms after the end of the year. Past performance is not a guarantee of future results.
An investor should consider investment objectives, risks, charges and expenses carefully before investing. To obtain an annual report or semi-annual report which contains this and other information visit www.principalcef.com or call 855.838.9485. Please read them carefully before investing.
Shares of closed-end investment companies frequently trade at a discount from their net asset value and initial offering prices.
NOT FDIC INSURED | May Lose Value | No Bank Guarantee
The Fund is a closed-end fund and does not continuously issue shares for sale as open-end mutual funds do. Since the initial public offering, the Fund now trades in the secondary market. Investors wishing to buy or sell shares need to place orders through an intermediary or broker. The share price of a closed-end fund is based on the market's value.
ALPS Advisors, Inc. is the investment adviser to the Fund.
Principal Real Estate Investors LLC is the investment sub-adviser to the Fund. Principal Real Estate Investors LLC is not affiliated with ALPS Advisors, Inc. or any of its affiliates.
ALPS Portfolio Solutions Distributor, Inc. is the FINRA Member firm.
About SS&C Technologies
SS&C is a global provider of services and software for the financial services and healthcare industries. Founded in 1986, SS&C is headquartered in
About SS&C ALPS Advisors
SS&C ALPS Advisors, a wholly-owned subsidiary of SS&C Technologies, is a leading provider of investment products for advisors and institutions. With over
About Principal Real Estate Investors
Principal Real Estate Investors manages or sub-advises
PRE000408 3/31/2025
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SOURCE Principal Real Estate Income Fund
FAQ
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