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Principal Real Estate Income Fund Announces Distribution Sources

The Principal Real Estate Income Fund (traded on the NYSE under the symbol PGZ) has recently communicated important information regarding its distribution scheduled for payment on November 22, 2024. Shareholders can expect to receive $0.1050 per share. This announcement comes as part of the Fund’s ongoing efforts to provide transparency in line with regulatory requirements from the U.S. Securities and Exchange Commission (SEC).

Details of the Distribution

The distribution is payable to those shareholders who were on record as of the close of business on November 8, 2024. Notably, the Fund manages its distributions in such a way that they can involve a return of capital. This means that while shareholders are receiving payments, a portion may be a return of their initial investment rather than direct income from the Fund’s earnings.

Breakdown of the Distribution

To provide further clarity, the sources of the current distribution have been outlined according to the guidelines of Section 19(a) of the Investment Company Act of 1940. According to the estimates:

• - Net Investment Income accounts for $0.0087, making up approximately 8.29% of the distribution.
• - Net Realized Short-Term Capital Gain shows no contribution with a total of $0.0000.
• - Net Realized Long-Term Capital Gain is also $0.0000.
• - A significant portion, $0.0963 or 91.71%, is categorized under the Return of Capital or other Capital Source.

The total of these components equals the entire distribution amount of $0.1050 per share. This categorization of income is critical as it informs shareholders about the composition of their distributions, especially regarding taxable income implications.

Financial Implications

Shareholders should be aware that the distribution received may not necessarily reflect the investment performance of the Fund. In fact, a return of capital does not equate to yield or income but is a return of some of the money initially invested. For tax purposes, how this distribution is characterized will hinge on federal tax regulations and will be finalized in January 2025 for reporting on IRS Form 1099-DIV.

Historical Perspective on Returns

The Fund has recorded significant distributions relative to its performance metrics. As of October 31, 2024, the annualized distribution rate based on the Fund’s Net Asset Value (NAV) stood at 10.63%. When considering cumulative distributions, this resulted in a total return of 36.35% over the fiscal year ending October 31, 2024. However, the average annual total return over a five-year period showed a decline, recorded at -3.05%. This contrast highlights the variability in performance and underscores the importance of understanding the evolving nature of investments within such funds.

While the Fund’s NAV performance can provide insights into its previous investment activities, it ultimately does not establish the value of a shareholder’s investment, which is determined by market price influences based on supply and demand.

Future Oversight and Distribution Policy

The Board of Trustees remains vigilant regarding potential distributions and the income levels within the Fund. They will continue reassessing the distribution structure, especially in response to fluctuations within the financial markets and the overall value of the Fund’s net assets. The distribution policy is dynamic and may be subject to changes, reflecting the considerations of market trends and investment performance.

In conclusion, this announcement not only serves as a notification of expected distributions but also acts as a cue for shareholders to reflect on the components and implications of their investment in the Principal Real Estate Income Fund. As always, retaining records of these distribution characteristics is essential for proper financial and tax reporting.

For further details, refer to the complete Form 1099-DIV that will be provided to shareholders in due course.

ALPS Advisors, Inc. serves as the investment adviser to the Fund, while Principal Real Estate Investors LLC holds the position of investment sub-adviser, maintaining independent operational boundaries as mandated by regulation.