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Principal Real Estate Income Fund Announces Distribution Sources

The Principal Real Estate Income Fund (NYSE: PGZ) has made an important announcement regarding its financial distributions to shareholders for the year 2024. On December 31, 2024, the Fund will pay a distribution amounting to $0.1050 per share to shareholders recorded as of the close of business on December 16, 2024. This announcement is part of the Fund's managed distribution plan and complies with an exemptive order from the U.S. Securities and Exchange Commission (SEC).

Understanding the Distribution Breakdown

As mandated by the Investment Company Act of 1940, the Fund has provided detailed information on the sources of this distribution. The breakdown reveals that 63.71% of the distribution, equating to $0.0669 per share, will come from net investment income. Additionally, 36.29%, or $0.0381, will be sourced from a return of capital or other capital sources. Notably, no portions of the distribution will come from net realized short-term or long-term capital gains.

This transparency is essential for shareholders to understand where their distributions originate, which in this instance, indicates the presence of capital return.The Fund stresses that since it has distributed more than its income, a portion of the distribution may effectively represent a return of capital, indicating that it reflects a return of part of the original investment rather than investment earnings.

Tax Considerations

For shareholders, understanding the tax implications of such distributions is crucial. The timing and nature of distributions for tax purposes will be determined according to federal income tax regulations, which might vary from GAAP. Thus, portions of the distribution might be considered taxable income on the 2024 federal income tax return. The final tax classification will be communicated to shareholders in January 2025 via IRS Form 1099-DIV. The Fund emphasizes that the amounts specified in the distribution notice are preliminary estimates and are subject to adjustment based on its investment performance and prevailing tax regulations.

Performance Overview

The Fund's investment performance, as interpreted through its Net Asset Value (NAV), has consistent implications for shareholders. As of November 30, 2024, the annualized distribution rate was noted at 10.54% of NAV, and cumulative total returns on NAV stood at 1.92%. Noteworthy is a departure of -2.57% in the average annual total return over the five-year period ending on the same date. This data provides shareholders with a contextual framework to evaluate the Fund’s distribution in relation to its performance.

Shareholder Communication and Future Monitoring

The Board of Trustees will keep a vigilant eye on distribution amounts, taking into account the Fund's NAV and the broader financial market landscape. As such, the distribution policy is open to modifications by the Board whenever deemed necessary. Moreover, shareholders are encouraged not to equate the distribution amount directly with yield or total returns—they are contingent on broader investment success and market dynamics.

The Principal Real Estate Income Fund remains dedicated to providing clarity and integrity in its financial communications to shareholders. The ongoing management of its capital structure and market performance will be crucial in meeting the expectations of its investors. The announcement aims to reinforce the Fund's commitment to transparency while ensuring stakeholders are well-informed about their investments and potential returns.