UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
N-CSR
CERTIFIED
SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT
INVESTMENT COMPANIES
811-22742
(Investment
Company Act File Number)
Principal
Real Estate Income Fund
(Exact
Name of Registrant as Specified in Charter)
1290
Broadway, Suite 1000
Denver,
CO 80203
(Address
of Principal Executive Offices)
Nicholas
Adams
Principal
Real Estate Income Fund
1290
Broadway, Suite 1000
Denver,
CO 80203
(Name
and Address of Agent for Service)
(303)
623-2577
(Registrant’s
Telephone Number)
Date
of Fiscal Year End: October 31
Date
of Reporting Period: April 30, 2023
| Item
1. | Reports
to Stockholders. |
Section
19(b) disclosure
April
30, 2023 (Unaudited)
The
Principal Real Estate Income Fund (the “Fund”), acting pursuant to a Securities and Exchange Commission (“SEC”)
exemptive order and with the approval of the Fund’s Board of Trustees (the “Board”), has adopted a plan, consistent
with the Fund’s investment objectives and policies, to support a level monthly distribution of income, capital gains and/or
return of capital (the “Plan”). In accordance with the Plan, the Fund distributed $0.105 per share on a monthly basis
during the six months ended April 30, 2023.
The
fixed amount distributed per share is subject to change at the discretion of the Fund’s Board. Under the Plan, the Fund
will distribute all available investment income to its shareholders, consistent with the Fund’s primary investment objectives
and as required by the Internal Revenue Code of 1986, as amended (the “Code”). If sufficient investment income is
not available on a monthly basis, the Fund will distribute long-term capital gains and/or return of capital to shareholders in
order to maintain a level distribution. Each monthly distribution to shareholders is expected to be at the fixed amount established
by the Board, except for extraordinary distributions and potential distribution rate increases or decreases to enable the Fund
to comply with the distribution requirements imposed by the Code.
Shareholders
should not draw any conclusions about the Fund’s investment performance from the amount of these distributions or from the
terms of the Plan. The Fund’s total return performance on net asset value is presented in its financial highlights table.
The
Board may amend, suspend or terminate the Fund’s Plan at any time without prior notice if it deems such action to be in
the best interest of either the Fund or its shareholders. The suspension or termination of the Plan could have the effect of creating
a trading discount (if a Fund’s stock is trading at or above net asset value) or widening an existing trading discount.
The Fund is subject to risks that could have an adverse impact on its ability to maintain level distributions. Examples of potential
risks include, but are not limited to, economic downturns impacting the markets, increased market volatility, companies suspending
or decreasing corporate dividend distributions and changes in the Code. Please refer to the Fund’s prospectus for a more
complete description of its risks.
Please
refer to the Additional Information section in this shareholder report for a cumulative summary of the Section 19(a) notices for
the Fund’s current fiscal period. Section 19(a) notices for the Fund, as applicable, are available on the Principal Real
Estate Income Fund’s website; www.principalcef.com.
Table
of contents
| Performance
Overview |
2 |
| Statement
of Investments |
10 |
| Statement
of Assets and Liabilities |
16 |
| Statement
of Operations |
17 |
| Statements
of Changes in Net Assets |
18 |
| Statement
of Cash Flows |
19 |
| Financial
Highlights |
20 |
| Notes
to Financial Statements |
23 |
| Dividend
Reinvestment Plan |
34 |
| Additional
Information |
|
| Portfolio
holdings |
36 |
| Proxy
voting |
36 |
| Section
19(a) notices |
36 |
| Stockholder
meeting results |
37 |
| Unaudited
tax information |
37 |
| Licensing
agreement |
37 |
| Custodian
and transfer agent |
38 |
| Legal
counsel |
38 |
| Independent
registered public accounting firm |
38 |
| Privacy
Policy |
39 |
| Principal
Real Estate Income Fund |
Performance
Overview |
April
30, 2023 (Unaudited)
INVESTMENT
OBJECTIVE AND PRINCIPAL INVESTMENT STRATEGIES
The
Fund’s investment objective is to seek to provide high current income, with capital appreciation as a secondary objective,
by investing in commercial real estate-related securities. There can be no assurance that the Fund will achieve its investment
objective.
Under
normal market conditions, the Fund will invest at least 80% of its total assets in commercial real estate-related securities,
primarily consisting of commercial mortgage backed securities (“CMBS”) and other U.S. and non-U.S. real estate-related
securities (primarily real estate investment trusts (“REITs”) or REIT-like entities). Under normal circumstances,
the Fund will invest between 40% and 70% of its total assets in CMBS and will invest between 30% and 60% in other real estate-related
securities (including REITs).
PERFORMANCE
OVERVIEW
Principal
Real Estate Income Fund (“PGZ” or the “Fund”) was launched June 25, 2013. As of April 30, 2023, the Fund
was 64.49% allocated to commercial mortgage backed securities (“CMBS”) and 32.85% in U.S. and International real estate
securities, primarily real estate investment trusts (“REITs”). For the 6-month period ended April 30, 2023, the Fund
delivered a net return, at market price, of -4.94%, assuming dividends are reinvested back into the Fund, based on the closing
share price of $9.62 on April 30, 2023. This compares to the return of the S&P 500® Index, over the same time-period,
of 8.61% assuming dividends are reinvested into the index. This also compares to the return of the Bloomberg U.S. Aggregate Bond
Index of 6.91%.
The
April 30, 2023 closing market price of $9.62 represented a 15.4% discount to the Fund’s Net Asset Value (“NAV”).
This compares to an average 7.17% discount for equity real estate closed-end funds and a 1.43% premium for mortgage-backed securities
closed-end funds (source: Bloomberg).
Based
on NAV, the Fund returned -5.73%, including dividends, for the 6-month period ended April 30, 2023. The themes that dominated
the real estate markets during this period besides the Fed, inflation and recession which have been driving markets for over a
year, were the regional banking crisis in March and large office loan defaults making headlines in March and April. After a positive
start to the year which saw volatility subside and risk assets rally through February, the news of regional bank failures mid-March
resulted in volatility spiking due to fear of widespread bank failures. Volatility subsided by the end of the period after swift
action from the FDIC and the realization that the circumstances around the failures were specific to the 2-3 banks involved. This
left the market faced with the prospect of more restrictive lending due to new regulation and banks managing deposit risk and
the impact that might have on economic growth and specifically on the availability of financing for commercial real estate. Office
defaults also captured the market’s attention in February when Brookfield defaulted on two large floating rate office loans
in Los Angeles and additional loan defaults started to make headlines. While concerns on office fundamentals were already priced
into the market, the reality of loans defaulting on institutional quality properties in gateway markets made the risk become much
more urgent for investors.
CMBS
underperformed the broader market during the period because of the regional banking crisis and exposure to office. Office loans
make up roughly 30% of the fixed rated conduit market so higher market default and loss expectations on office loans has had a
material impact on market cumulative loss expectations and CMBS credit spreads. The regional bank crisis and the impact it might
have on lending standards and available capital focused the market on refinance risk, especially on office loans, which also supported
higher default and loss expectations. While the CMBS market has exposure to other property types, such as multifamily, industrial,
hotels and even retail, that are performing well on a fundamental basis, the potential for office risk, along with refinance risk,
becoming systematic has captured the market’s attention.
| Principal
Real Estate Income Fund |
Performance
Overview |
April
30, 2023 (Unaudited)
The
last six months for Global Real Estate securities ending April 30, 2023 was characterized by significant volatility, particularly
in the first quarter. Going into the beginning of the year, firmer economic data and moderating headline inflation sparked a rally
in equity markets with the narrative shifting quickly from a ‘soft landing’ to ‘no landing’. However,
a spate of firmer than expected core inflation readings and the sudden bank failures in March triggered a pullback in global equities
returns off their highs before rapid central bank action placed a floor under the declines. Markets ground higher into April,
supported by slightly better than anticipated start to the US earning season and moderating inflation. Overall, capital intensive
global REIT stocks were harder hit than broader equities by concerns over a possible credit crunch, with the FTSE EPRA/NAREIT
Developed Index returning 7%, underperforming equities by about 5%. More defensive sectors with stronger balance sheets like self-storage
and industrial were outperformers, while cyclical office was a big underperformer. All regions were positive performers, led by
Asia and Europe, with the Americas trailing behind.
CMBS
The
CMBS holdings within the Fund returned -7.62% for the 6 months ended April 30, 2023. The main drivers of returns for the period
were the steepening of the credit curve for BB rated bonds issued in 2019-2021, discounts getting larger for originally BBB and
BB rated bonds from seasoned deals issued in 2012-2014 and the strong carry and positive relative spread performance of interest
only securities. Spreads on more recently issued BB rated bonds, that were already under pressure due to recession fears, widened
dramatically as large floating rate office loan defaults in Los Angeles and other markets hitting the headlines brought the risk
of office exposure the forefront of the market. The price action indicates that higher default and loss expectations from office
exposure will put the subordination on BB rated bonds at risk over time. While the headline office defaults have been limited
to short-term, floating rate SASB loans that were due for loan extension or maturity into a much higher floating rate environment,
the market has extrapolated that risk into the fixed rate conduit markets. Price discounts on seasoned credit exposure in the
portfolio steepened on bonds where the return of principal is relying on maturing loans secured by performing regional malls refinancing.
The price action reflects assumptions that these maturing loans will be extended for 3-5 years, delaying the return of principal,
and remain at risk of loss on the eventual resolution of those loans. Positive performance in the portfolio came from exposure
to interest only loans that are structurally protected from initial loan defaults and benefit from loans not being able to refinance
and extending.
The
regional banking crisis and the role that regional banks play in financing commercial real estate has brought questions on will
there be capital available to refinance loans as they come due for maturity. The widening of credit spreads on recently issued
bonds implies that the market has extrapolated this refinance risk beyond 2023 into later years as the percentage of fixed rate
CMBS conduit loans that mature in 2023 is relatively low. Of the $335B of fixed rate conduit loans outstanding, 6% mature in 2023,
11% in 2024 and 13% in 2025 according to Trepp. The maturity schedule for fixed rate office loans, which make up 30% of the fixed
rate universe, is similar with 5% of loans maturing in 2023, 11% in 2024 and 12% in 2025. While the fixed rate CMBS market does
not face a wall of maturities, the market is assuming that fundamental and capital market stress, especially on office, will continue
beyond 2023 and 2024. These changes in market expectations have brought concerns about systematic risk back into the market which
is driving loss expectations and credit spreads higher.
| Semi-Annual
Report | April 30, 2023 |
3 |
| Principal
Real Estate Income Fund |
Performance
Overview |
April
30, 2023 (Unaudited)
The
performance of the CMBS holdings within the Fund reflects the material impact that the regional banking crisis had on the outlook
for the fundamental performance, and especially the outlook for refinancing prospects, of CMBS loans in the near-to-medium term.
This further dislocation in CMBS spreads in a market that has been under pressure since the post-Covid recovery stalled mid-2021
reinforces the impact that higher interest rates, declining office fundamentals and a potential recession has had on CMBS loan-level
loss expectations. We expect that the near-term direction of CMBS prices is going to be driven by broader risk sentiment as it
relates to a recession in the U.S. and more specifically, the resolution of loans maturing through the rest of 2023 and overall
delinquency trends.
GLOBAL
REAL ESTATE SECURITIES
The
global real estate securities holdings within the Fund returned approximately +6.97%, during the trailing six months ending April
30, 2023.
On
an absolute basis, our portfolio’s heavier exposures to sectors with stronger balance sheets and defensive natures, such
as global industrial, self-storage, net lease, and senior housing healthcare, was a significant contributor, with these sectors
being outperformers over cyclical stocks during the time period. Exposure to Hong Kong developers was a contributor, with these
stocks benefitting from higher home prices and improving homebuyer sentiment. Holding a French retail stock was additive, with
relative resilience of retail stocks in this area.
Central
banks now need to strike a dicey balance between the battle to tame inflation and the risk of tighter financial conditions triggering
an even greater economic slowdown or causing something else unforeseen to break. Whilst we believe a financial contagion has likely
been averted, bank lending especially in the U.S. will probably be curtailed by smaller banks who may now find it harder to attract
deposits. This will put an additional brake on economic growth over and above the sizeable interest rate hikes that have already
come through. It also provides more scope for central banks to pause their monetary tightening cycle. Some form of economic “landing”
now seems like the most likely outcome as tighter financial conditions start to bite more tangibly in the months and quarters
ahead.
After
a promising start to the year, global REITs have now given back most of those gains, as well as their initial outperformance against
equities. Much of the relative underperformance to equities came in March, as the prospect of a banking crisis driven credit crunch
weighed heavily on the capital-intensive real estate sector. The upshot is the crisis seems to have abated with swift bank action,
as evidenced by the sharp pullback in the MOVE Index of interest rate volatility.
There
remains the risk of a retrenchment in commercial real estate loans especially among U.S. regional banks (which account for the
lion’s share of banking lending to the sector) putting further downward pressure on an already challenged office sector.
However, there has already been a sizeable correction in publicly listed REITs in anticipation of such pressures. It should also
be noted that REITs have diverse sources of funding, with U.S. REITs obtaining approximately 60% of debt from the public bond
markets. REITs tend to own higher quality assets that are less vulnerable to tenant departures. Moreover, loan-to-value ratios
are markedly lower than they were entering the last financial crisis.
| Principal
Real Estate Income Fund |
Performance
Overview |
April
30, 2023 (Unaudited)
Under
our base case of no financial contagion but some degree of economic contagion from tighter lending standards and the lagged impact
of rate hikes, investors will likely continue to position for a growth slowdown. As the risk of a banking crisis recedes, REITs
are likely to benefit from a rotation into defense once again. REITs typically perform better against equities in the later stages
of the rate hike cycle with their relative outperformance becoming more marked as rates peak and fall. The Fed has already hinted
that tighter credit availability could substitute for more aggressive future rate hikes which has been reinforced after its May
meeting. REITs potentially offer downside risk mitigation against a weaker economic outlook given the staggered nature of leases
over multiple years. Many REIT leases are structured with annual rent escalations or cost pass throughs that mitigate against
rising cost pressures. These cost pressures are now well known after the surge in rates and commodity prices last year and have
arguably, been well priced in.
Our
portfolio construction process remains focused on bottom-up stock selection. At the same time, we are mindful of potential swings
in sentiment driven by dynamic macro news flow that can drive style shifts that cause performance leadership to flip between different
groups of stocks. We continue to maintain a core of select structural growth stocks which we believe have pricing power given
strong demand supply fundamentals and which should be well positioned to weather any growth slowdown driven by overzealous central
bank rate hikes or other geopolitical concerns.
The
Fund intends to make regular monthly distributions to stockholders at a constant and fixed (but not guaranteed) rate. The Board
of Trustees approve the distribution and may adjust it from time to time. The monthly distribution amount paid from November 1,
2022 to April 30, 2023 was $0.105 per share.
At
times, to maintain a stable level of distributions, the Fund may pay out less than all of its net investment income or pay out
accumulated undistributed income, or return of capital, in addition to current net investment income. There is no guarantee that
the Fund's current distribution policy will reduce or eliminate the Fund's market price discount to its net asset value per share
and the Fund's trustees have no fiduciary duty to take action, or to consider taking any action, to narrow any such discount.
The distribution policy may be changed or discontinued without notice.
| Semi-Annual
Report | April 30, 2023 |
5 |
| Principal
Real Estate Income Fund |
Performance
Overview |
April
30, 2023 (Unaudited)
References:
The
Premium/Discount is the amount (stated in dollars or percent) by which the selling or purchase price of a fund is greater than
(premium) or less than (discount) its face amount/value or net asset value (NAV).
Duration
is a measure of the sensitivity of the price (the value of principal) of a fixed-income investment to a change in interest rates.
Duration is expressed as a number of years. The duration number is a calculation involving present value, yield, coupon, final
maturity and call features. The bigger the duration number, the greater the interest-rate risk or reward for bond prices. Rising
interest rates mean falling bond prices, while declining interest rates mean rising bond prices.
S&P
500® Index – A large cap U.S. equities index that includes 500 leading companies and captures
approximately 80% coverage of available market capitalization.
Bloomberg
U.S. Aggregate Bond Index – A broad-based benchmark that measures the investment grade, U.S. dollar-denominated, fixed rate taxable
bond market, including Treasuries, government related and corporate securities, MBS (agency fixed-rate and hybrid ARM pass throughs),
ABS, and CMBS.
Morningstar
Developed Markets Index – An index that captures the performance of the stocks located in the developed countries across the world.
Stocks in the index are weighted by their float capital, which removes corporate cross ownership, government holdings and other
locked-in shares.
Basis
point (bps) refers to a common unit of measure for interest rates and other percentages in finance. One basis point is equal to
1/100th of 1%, or 0.01%, or 0.0001, and is used to denote the percentage change in a financial instrument.
A
bond rating is a grade given to bonds by private, independent ratings services that indicates their credit quality. Investment
grade bonds range from AAA to BBB- and will usually see bond yields increase as ratings decrease.
Issuance
information – JPMorgan
| Principal
Real Estate Income Fund |
Performance
Overview |
April
30, 2023 (Unaudited)
PERFORMANCE
as of April 30, 2023
| TOTAL
RETURNS(1) |
CUMULATIVE |
|
AVERAGE
ANNUAL |
|
| Fund |
6
Month |
1
Year |
3
Year |
5
Year |
Since
Inception(2) |
| Net
Asset Value (NAV)(3) |
-5.73% |
-22.01% |
0.80% |
-2.11% |
3.56% |
| Market
Price(4) |
-4.94% |
-25.49% |
0.66% |
-2.63% |
1.34% |
| Bloomberg
U.S. Aggregate Bond Index |
6.91% |
-0.43% |
-3.15% |
1.18% |
1.77% |
| Morningstar
Developed Markets Index |
12.31% |
3.18% |
13.28% |
8.08% |
9.68% |
| (1) | Total
returns assume reinvestment of all distributions. |
| (2) | The
Fund commenced operations on June 25, 2013. |
| (3) | Performance
returns are net of management fees and other Fund expenses. |
| (4) | Market
price is the value at which the Fund trades on an exchange. This market price can be higher or lower than its NAV. |
Performance
data quoted represents past performance. Past performance does not guarantee future results. Investment return and principal value
of an investment will fluctuate so that an investor’s shares, when sold or redeemed, may be worth more or less than the
original cost. Current performance data may be higher or lower than actual data quoted. For the most current month-end performance
data please call 855.838.9485.
Total
Annual Expense Ratio as a Percentage of Net Assets Attributable to Common Shares including interest expense, as of April 30, 2023,
4.98%.
Total
Annual Expense Ratio as a Percentage of Net Assets Attributable to Common Shares excluding interest expense, as of April 30, 2023,
2.44%.
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 only in the secondary market. Investors wishing to buy or sell shares need to place orders through
an intermediary or broker and additional charges or commissions will apply. The share price of a closed-end fund is based on the
market’s value.
Distributions
may be paid from sources of income other than ordinary income, such as net realized short-term capital gains, net realized long-term
capital gains and return of capital. Based on current estimates, distributions have been paid in the current fiscal year from
net investment income and return of capital. The actual amounts and sources of the amounts for tax purposes will depend upon a
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. 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.
Indices
are unmanaged; their returns do not reflect any fees, expenses, or sales charges.
An
investor cannot invest directly in an index.
ALPS
Advisors, Inc. is the investment adviser to the Fund.
ALPS
Portfolio Solutions Distributor, Inc. is a FINRA member.
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.
Secondary
market support provided to the Fund by ALPS Advisors, Inc.’s affiliate, ALPS Portfolio Solutions Distributor, Inc., FINRA
Member
| Semi-Annual
Report | April 30, 2023 |
7 |
| Principal
Real Estate Income Fund |
Performance
Overview |
April
30, 2023 (Unaudited)
GROWTH
OF A HYPOTHETICAL $10,000 INVESTMENT
The
graph below illustrates the growth of a hypothetical $10,000 investment assuming the purchase of common shares of beneficial interest
at the closing market price (NYSE: PGZ) of $20.00 on June 25, 2013 (the date of commencement of operations), and tracking its
progress through April 30, 2023.
Past
performance does not guarantee future results. Performance will fluctuate with changes in market conditions. Current performance
may be lower or higher than the performance data shown. Performance information does not reflect the deduction of taxes that shareholders
would pay on Fund distributions or the sale of Fund shares. An investment in the Fund involves risk, including loss of principal.
| Principal
Real Estate Income Fund |
Performance
Overview |
April
30, 2023 (Unaudited)
SECTOR
ALLOCATION^
| ^ | Holdings
are subject to change. |
Percentages
are based on total investments of the Fund.
GEOGRAPHIC
BREAKDOWN as of April 30, 2023
| |
%
of Total
Investments |
| United
States |
87.89% |
| Japan |
2.52% |
| Australia |
1.76% |
| Hong
Kong |
1.75% |
| Canada |
1.65% |
| Great
Britain |
1.62% |
| Singapore |
1.10% |
| France |
0.65% |
| Spain |
0.39% |
| Netherlands |
0.21% |
| Poland |
0.20% |
| South
Korea |
0.14% |
| British
Virgin Islands |
0.12% |
| |
100.00% |
Holdings
are subject to change.
| Semi-Annual
Report | April 30, 2023 |
9 |
| Principal Real Estate Income Fund |
Statement of Investments |
April
30, 2023 (Unaudited)
| | |
| | |
Value | |
| Description | |
Shares | | |
(Note
2) | |
| COMMON STOCKS (47.88%) | |
| | | |
| | |
| Investment Management/Advisory
Services (0.31%) | |
| | | |
| | |
| RAM Essential
Services Property Fund(a) | |
| 501,275 | | |
$ | 235,502 | |
| | |
| | | |
| | |
| Real Estate Management/Services
(0.69%) | |
| | | |
| | |
| ESR Kendall Square
REIT Co., Ltd. | |
| 56,748 | | |
| 159,423 | |
| Qualitas, Ltd. | |
| 228,475 | | |
| 368,884 | |
| | |
| | | |
| 528,307 | |
| Real Estate Operation/Development
(2.40%) | |
| | | |
| | |
| Echo Investment SA | |
| 244,937 | | |
| 230,690 | |
| Mitsui Fudosan Co.,
Ltd. | |
| 30,700 | | |
| 606,361 | |
| Sun Hung Kai Properties,
Ltd. | |
| 72,000 | | |
| 999,790 | |
| | |
| | | |
| 1,836,841 | |
| REITS-Apartments (6.08%) | |
| | | |
| | |
| Apartment Income REIT
Corp. | |
| 17,162 | | |
| 634,651 | |
| AvalonBay Communities,
Inc. | |
| 5,489 | | |
| 990,051 | |
| Daiwa House REIT Investment
Corp. | |
| 167 | | |
| 354,850 | |
| Essex Property Trust,
Inc. | |
| 4,342 | | |
| 954,067 | |
| Independence Realty
Trust, Inc. | |
| 9,895 | | |
| 164,752 | |
| Invitation Homes, Inc. | |
| 46,759 | | |
| 1,560,348 | |
| | |
| | | |
| 4,658,719 | |
| REITS-Diversified (11.89%) | |
| | | |
| | |
| Activia Properties,
Inc. | |
| 142 | | |
| 412,727 | |
| American Tower Corp. | |
| 785 | | |
| 160,446 | |
| Arena REIT | |
| 41,418 | | |
| 102,225 | |
| Broadstone Net Lease,
Inc. | |
| 25,012 | | |
| 404,444 | |
| Covivio SA | |
| 3,056 | | |
| 173,422 | |
| Cromwell European Real
Estate Investment Trust(a) | |
| 226,160 | | |
| 383,778 | |
| Crown Castle, Inc. | |
| 4,283 | | |
| 527,195 | |
| Digital Core REIT Management
Pte, Ltd. | |
| 162,891 | | |
| 70,858 | |
| Digital Realty Trust,
Inc. | |
| 18,243 | | |
| 1,808,793 | |
| Gaming and Leisure
Properties, Inc. | |
| 23,011 | | |
| 1,196,572 | |
| Ingenia Communities
Group | |
| 31,741 | | |
| 89,683 | |
| LondonMetric Property
PLC | |
| 85,649 | | |
| 207,314 | |
| Merlin Properties Socimi
SA | |
| 49,928 | | |
| 440,677 | |
| Sekisui House Reit,
Inc. | |
| 845 | | |
| 478,179 | |
| Stockland | |
| 124,942 | | |
| 367,900 | |
| VICI Properties, Inc. | |
| 67,332 | | |
| 2,285,248 | |
| | |
| | | |
| 9,109,461 | |
| REITS-Health Care (6.46%) | |
| | | |
| | |
| Chartwell Retirement
Residence | |
| 30,700 | | |
| 200,762 | |
| Healthcare Realty Trust,
Inc. | |
| 12,480 | | |
| 246,854 | |
| HealthCo REIT | |
| 40,113 | | |
| 35,434 | |
| Medical Properties
Trust, Inc. | |
| 30,484 | | |
| 267,345 | |
| National Health Investors,
Inc. | |
| 8,614 | | |
| 428,719 | |
| Principal Real Estate Income Fund |
Statement of Investments |
April
30, 2023 (Unaudited)
| | |
| | |
Value | |
| Description | |
Shares | | |
(Note
2) | |
| REITS-Health Care (continued) | |
| | | |
| | |
| Physicians
Realty Trust | |
| 17,285 | | |
$ | 249,250 | |
| Sabra Health Care REIT,
Inc. | |
| 85,793 | | |
| 978,040 | |
| Ventas, Inc. | |
| 35,626 | | |
| 1,711,829 | |
| Welltower, Inc. | |
| 10,446 | | |
| 827,532 | |
| | |
| | | |
| 4,945,765 | |
| REITS-Hotels (0.19%) | |
| | | |
| | |
| Far East Hospitality
Trust | |
| 314,300 | | |
| 146,038 | |
| | |
| | | |
| | |
| REITS-Manufactured
Homes (1.25%) | |
| | | |
| | |
| Sun Communities, Inc. | |
| 6,903 | | |
| 959,034 | |
| | |
| | | |
| | |
| REITS-Office Property
(1.16%) | |
| | | |
| | |
| Alexandria Real Estate
Equities, Inc. | |
| 4,855 | | |
| 602,894 | |
| Brandywine Realty Trust | |
| 13,713 | | |
| 53,892 | |
| NSI NV | |
| 10,142 | | |
| 233,009 | |
| | |
| | | |
| 889,795 | |
| REITS-Regional Malls
(0.74%) | |
| | | |
| | |
| Klepierre SA | |
| 22,355 | | |
| 565,575 | |
| | |
| | | |
| | |
| REITS-Shopping Centers
(2.88%) | |
| | | |
| | |
| Lendlease Global Commercial
REIT | |
| 354,767 | | |
| 186,111 | |
| Link REIT | |
| 150,720 | | |
| 983,084 | |
| Saul Centers, Inc. | |
| 28,715 | | |
| 1,034,601 | |
| | |
| | | |
| 2,203,796 | |
| REITS-Single Tenant
(0.69%) | |
| | | |
| | |
| Spirit Realty Capital,
Inc. | |
| 13,723 | | |
| 527,787 | |
| | |
| | | |
| | |
| REITS-Storage (2.78%) | |
| | | |
| | |
| Big Yellow Group PLC | |
| 28,507 | | |
| 438,514 | |
| CubeSmart | |
| 31,262 | | |
| 1,422,109 | |
| National Storage REIT | |
| 161,882 | | |
| 267,793 | |
| | |
| | | |
| 2,128,416 | |
| REITS-Storage/Warehousing (0.53%) | |
| | | |
| | |
| National Storage Affiliates
Trust | |
| 10,529 | | |
| 405,893 | |
| | |
| | | |
| | |
| REITS-Warehouse/Industrials (9.37%) | |
| | | |
| | |
| AIMS AMP Capital Industrial
REIT | |
| 246,100 | | |
| 252,675 | |
| Centuria Industrial
REIT | |
| 200,099 | | |
| 413,105 | |
| CRE Logistics REIT,
Inc. | |
| 261 | | |
| 358,804 | |
| Dream Industrial Real
Estate Investment Trust | |
| 48,200 | | |
| 527,946 | |
| ESR-LOGOS REIT | |
| 856,471 | | |
| 208,606 | |
| First Industrial Realty
Trust, Inc. | |
| 7,183 | | |
| 376,892 | |
| Goodman Group | |
| 8,923 | | |
| 114,013 | |
| Industrial & Infrastructure
Fund Investment Corp. | |
| 312 | | |
| 356,781 | |
| Semi-Annual
Report | April 30, 2023 |
11 |
| Principal Real Estate Income Fund |
Statement of Investments |
April
30, 2023 (Unaudited)
| | |
| | |
Value | |
| Description | |
Shares | | |
(Note
2) | |
| REITS-Warehouse/Industrials
(continued) | |
| | | |
| | |
| Mitsubishi
Estate Logistics REIT Investment Corp. | |
| 97 | | |
$ | 297,240 | |
| Nexus Industrial REIT | |
| 131,400 | | |
| 962,090 | |
| Plymouth Industrial
REIT, Inc. | |
| 38,783 | | |
| 784,968 | |
| PRO Real Estate Investment
Trust | |
| 45,903 | | |
| 187,698 | |
| Prologis, Inc. | |
| 10,893 | | |
| 1,364,348 | |
| Segro PLC | |
| 41,660 | | |
| 437,072 | |
| SF Real Estate Investment
Trust(a) | |
| 367,000 | | |
| 132,781 | |
| Tritax Big Box REIT
PLC | |
| 206,744 | | |
| 402,991 | |
| | |
| | | |
| 7,178,010 | |
| Storage (0.46%) | |
| | | |
| | |
| Safestore Holdings
PLC | |
| 28,071 | | |
| 349,432 | |
| | |
| | | |
| | |
| TOTAL
COMMON STOCKS | |
| | | |
| | |
| (Cost
$37,209,662) | |
| | | |
| 36,668,371 | |
| | |
| | | |
| | |
| PREFERRED
STOCKS (0.84%) | |
| | | |
| | |
| REITS-Shopping Centers
(0.84%) | |
| | | |
| | |
| RPT Realty, 7.25%(b) | |
| 13,500 | | |
| 639,090 | |
| | |
| | | |
| | |
| TOTAL
PREFERRED STOCKS | |
| | | |
| | |
| (Cost
$534,888) | |
| | | |
| 639,090 | |
| | |
| | |
| | |
| | |
| |
| | |
| | |
Maturity | | |
Principal | | |
Value | |
| Description | |
Rate | | |
Date | | |
Amount | | |
(Note
2) | |
| COMMERCIAL
MORTGAGE BACKED SECURITIES (95.61%) | |
| | |
| | |
| | | |
| | |
| Commercial
Mortgage Backed Securities-Other (14.59%) | |
| | |
| | |
| | | |
| | |
| BANK: | |
| | |
| | |
| | | |
| | |
| 2020-BN29(c)(d)(e) | |
0.805% | | |
12/15/30 | | |
$ | 11,896,750 | | |
$ | 505,377 | |
| 2021-BN35(c)(d)(e) | |
1.500% | | |
06/15/64 | | |
| 3,100,000 | | |
| 274,522 | |
| Benchmark
2022-B36 Mortgage Trust 2022-B36(c)(d)(e) | |
2.790% | | |
05/15/32 | | |
| 15,860,000 | | |
| 2,832,288 | |
| Benchmark
Mortgage Trust: | |
| | |
| | |
| | | |
| | |
| 2020-B22(c)(d)(e) | |
1.534% | | |
10/15/30 | | |
| 7,717,000 | | |
| 655,554 | |
| 2020-B20(c)(d)(e) | |
1.664% | | |
10/15/30 | | |
| 7,126,000 | | |
| 621,209 | |
| Citigroup
Commercial Mortgage Trust: | |
| | |
| | |
| | | |
| | |
| 2019-GC43(c)(d)(e) | |
0.740% | | |
11/10/29 | | |
| 2,500,000 | | |
| 79,146 | |
| Citigroup
Commercial Mortgage Trust 2022-GC48 2022-GC48(c)(d)(e) | |
2.538% | | |
06/15/32 | | |
| 16,920,000 | | |
| 2,824,764 | |
| FHLMC
Multifamily Structured Pass Through Certificates 2012-K052(c)(e) | |
1.670% | | |
01/25/26 | | |
| 9,690,000 | | |
| 344,649 | |
| Goldman
Sachs Mortgage Securities Trust 2020-GSA2(c)(d)(e) | |
1.476% | | |
01/10/31 | | |
| 7,000,000 | | |
| 569,970 | |
| JPMorgan
Chase Commercial Mortgage Securities Trust: | |
| | |
| | |
| | | |
| | |
| 2015-C28(c)(e) | |
1.064% | | |
03/15/25 | | |
| 25,511,790 | | |
| 313,673 | |
| 2013-C15(c)(d)(e) | |
1.781% | | |
10/15/23 | | |
| 11,137,815 | | |
| 46,984 | |
| Principal Real Estate Income Fund |
Statement of Investments |
April
30, 2023 (Unaudited)
| | |
| | |
Maturity | | |
Principal | | |
Value | |
| Description | |
Rate | | |
Date | | |
Amount | | |
(Note 2) | |
| 2006-CB17(c) | |
5.489% | | |
12/12/43 | | |
$ | 514,860 | | |
$ | 376,855 | |
| Morgan Stanley Bank of America Merrill Lynch Trust 2015-C20(c)(d)(e) | |
1.752% | | |
02/15/25 | | |
| 23,967,000 | | |
| 541,139 | |
| Morgan Stanley Capital I Trust: | |
| | |
| | |
| | | |
| | |
| 2016-UB11(c)(d)(e) | |
1.500% | | |
08/15/26 | | |
| 13,495,500 | | |
| 542,080 | |
| 2021-L5(d) | |
2.500% | | |
05/15/31 | | |
| 1,400,000 | | |
| 507,412 | |
| Wells Fargo Commercial Mortgage Trust 2022-C62(c)(e) | |
0.047% | | |
04/15/55 | | |
| 45,827,000 | | |
| 141,143 | |
| | |
| | |
| | |
| | | |
| 11,176,765 | |
| | |
| | |
| | |
| | | |
| | |
| Commercial Mortgage Backed Securities-Subordinated (81.02%) | | |
| | | |
| | |
| BANK: | |
| | |
| | |
| | | |
| | |
| 2021-BN35(c)(d) | |
1.765% | | |
08/15/31 | | |
| 3,200,000 | | |
| 1,050,524 | |
| 2020-BN25(c)(d) | |
2.029% | | |
02/15/30 | | |
| 3,000,000 | | |
| 1,255,658 | |
| 2019-BN22(c)(d) | |
2.076% | | |
11/15/62 | | |
| 2,000,000 | | |
| 835,998 | |
| 2021-BN34(d) | |
2.250% | | |
06/15/31 | | |
| 1,400,000 | | |
| 489,474 | |
| 2020-BN27(d) | |
2.500% | | |
04/15/30 | | |
| 1,949,000 | | |
| 1,128,198 | |
| 2020-BN29(d) | |
2.500% | | |
12/15/30 | | |
| 3,300,000 | | |
| 1,711,437 | |
| 2018-BN12(c)(d) | |
3.045% | | |
05/15/28 | | |
| 2,500,000 | | |
| 1,094,906 | |
| 2017-BNK5(c)(d) | |
3.078% | | |
06/15/27 | | |
| 2,000,000 | | |
| 1,341,801 | |
| 2023-BNK45(d) | |
4.000% | | |
02/15/33 | | |
| 1,250,000 | | |
| 739,579 | |
| BBCMS Mortgage Trust 2022-C18 2022-C18(c)(d) | |
4.000% | | |
12/15/32 | | |
| 3,602,000 | | |
| 2,197,541 | |
| Benchmark Mortgage Trust: | |
| | |
| | |
| | | |
| | |
| 2020-B20(d) | |
2.000% | | |
10/15/30 | | |
| 1,800,000 | | |
| 853,411 | |
| 2022-C1(d) | |
2.000% | | |
02/15/32 | | |
| 5,048,000 | | |
| 2,422,568 | |
| 2021-B29(c)(d) | |
2.416% | | |
10/15/31 | | |
| 3,000,000 | | |
| 1,011,310 | |
| 2023-C4(c)(d) | |
6.059% | | |
01/15/33 | | |
| 2,125,000 | | |
| 1,539,054 | |
| Cantor Commercial Real Estate Lending 2019-CF2 2019-CF2(c) | |
3.766% | | |
10/15/29 | | |
| 1,750,000 | | |
| 1,349,762 | |
| Citigroup Commercial Mortgage Trust: | |
| | |
| | |
| | | |
| | |
| 2019-GC43(d) | |
3.000% | | |
11/10/29 | | |
| 3,350,000 | | |
| 1,459,482 | |
| Commercial Mortgage Trust: | |
| | |
| | |
| | | |
| | |
| 2014-UBS5(d) | |
3.495% | | |
09/10/24 | | |
| 4,569,500 | | |
| 3,312,778 | |
| 2012-CR3(d) | |
3.922% | | |
10/15/45 | | |
| 3,145,000 | | |
| 2,743,027 | |
| 2013-CR6(c)(d) | |
3.988% | | |
03/10/46 | | |
| 7,868,000 | | |
| 5,722,189 | |
| 2013-LC6(c)(d) | |
4.152% | | |
01/10/46 | | |
| 1,092,337 | | |
| 1,030,817 | |
| 2012-CR2(d) | |
4.250% | | |
08/15/45 | | |
| 1,900,000 | | |
| 1,366,433 | |
| 2015-LC19(c) | |
4.355% | | |
01/10/25 | | |
| 1,490,000 | | |
| 1,365,446 | |
| 2012-CR5(c)(d) | |
4.483% | | |
12/10/45 | | |
| 3,900,000 | | |
| 2,709,747 | |
| 2014-UBS2(c)(d) | |
5.147% | | |
02/10/24 | | |
| 2,932,500 | | |
| 2,375,163 | |
| 2012-CR1(c)(d) | |
5.504% | | |
05/15/45 | | |
| 5,274,000 | | |
| 3,748,500 | |
| Goldman Sachs Mortgage Securities Trust: | |
| | |
| | |
| | | |
| | |
| 2020-GC47(c)(d) | |
2.569% | | |
04/12/30 | | |
| 2,500,000 | | |
| 1,042,001 | |
| 2013-GC14(c)(d) | |
4.847% | | |
08/10/23 | | |
| 2,000,000 | | |
| 1,362,533 | |
| 2013-GC16(c)(d) | |
5.480% | | |
11/10/46 | | |
| 2,342,405 | | |
| 2,009,084 | |
| Semi-Annual
Report | April 30, 2023 |
13 |
| Principal Real Estate Income Fund |
Statement of Investments |
April
30, 2023 (Unaudited)
| | |
| | |
Maturity | | |
Principal | | |
Value | |
| Description | |
Rate | | |
Date | | |
Amount | | |
(Note 2) | |
| 2010-C1(c)(d) | |
5.635% | | |
08/10/43 | | |
$ | 3,250,000 | | |
$ | 3,163,945 | |
| JPMorgan Chase Commercial Mortgage Securities Trust: | |
| | |
| | |
| | | |
| | |
| 2013-C15(d) | |
3.500% | | |
10/15/23 | | |
| 2,500,000 | | |
| 2,271,817 | |
| 2012-C6(c)(d) | |
5.129% | | |
05/15/45 | | |
| 1,500,000 | | |
| 1,149,984 | |
| Morgan Stanley Bank of America Merrill Lynch Trust 2013-C11(c) | |
4.502% | | |
07/15/23 | | |
| 3,000,000 | | |
| 2,864,548 | |
| Morgan Stanley Capital I Trust 2020-L4 2020-L4 | |
3.082% | | |
02/15/30 | | |
| 541,000 | | |
| 437,272 | |
| Wells Fargo Commercial Mortgage Trust: | |
| | |
| | |
| | | |
| | |
| 2015-NXS3(d) | |
3.153% | | |
09/15/57 | | |
| 1,500,000 | | |
| 1,169,083 | |
| 2017-C40(c) | |
4.449% | | |
09/15/27 | | |
| 2,000,000 | | |
| 1,719,918 | |
| | |
| | |
| | |
| | | |
| 62,044,988 | |
| | |
| | |
| | |
| | | |
| | |
| TOTAL COMMERCIAL MORTGAGE BACKED SECURITIES | |
| | |
| | |
| | | |
| | |
| (Cost $89,491,416) | |
| | |
| | |
| | | |
| 73,221,753 | |
| | |
7-Day | | |
| | |
Value | |
| Description | |
Yield | | |
Shares | | |
(Note 2) | |
| SHORT TERM INVESTMENTS (3.95%) | |
| | |
| | | |
| | |
| State Street Institutional Treasury Plus Money Market Fund - Premier Class | |
4.204% | | |
| 3,025,161 | | |
| 3,025,161 | |
| | |
| | |
| | | |
| | |
| TOTAL SHORT TERM INVESTMENTS | |
| | |
| | | |
| | |
| (Cost $3,025,161) | |
| | |
| | | |
| 3,025,161 | |
| | |
| | |
| | | |
| | |
| TOTAL INVESTMENTS (148.28%) | |
| | |
| | | |
| | |
| (Cost $130,261,127) | |
| | |
| | | |
$ | 113,554,375 | |
| | |
| | |
| | | |
| | |
| Liabilities in Excess of Other Assets (-48.28%) | |
| | |
| | | |
| (36,975,102 | ) |
| NET ASSETS (100.00%) | |
| | |
| | | |
$ | 76,579,273 | |
| (a) | Securities
were purchased pursuant to Regulation S under the Securities Act of 1933, which exempts
securities offered and sold outside of the United States from registration. Such securities
cannot be sold in the United States without either an effective registration statement
filed pursuant to the Securities Act of 1933, or pursuant to an exemption from registration.
As of April 30, 2023, the aggregate value of those securities was $752,061 representing
0.98% of net assets. |
| (b) | Security
has no contractual maturity date, is not redeemable and contractually pays an indefinite
stream of interest. |
| (c) | Variable
rate investment. Interest rates reset periodically. Interest rate shown reflects the
rate in effect at April 30, 2023. Certain variable rate securities are not based on a
published reference rate and spread but are determined by the issuer or agent and are
based on current market conditions. These securities do not indicate a reference rate
and spread in their description above. |
| Principal Real Estate Income Fund |
Statement of Investments |
April
30, 2023 (Unaudited)
| (d) | Security
exempt from registration under Rule 144A of the Securities Act of 1933. Such securities
may normally be sold to qualified institutional buyers in transactions exempt from registration.
The total value of Rule 144A securities amounts to $64,308,487, which represents approximately
83.98% of net assets as of April 30, 2023. |
| (e) | Interest
only security. |
See
Notes to Financial Statements.
| Semi-Annual
Report | April 30, 2023 |
15 |
| Principal
Real Estate Income Fund |
|
| Statement
of Assets and Liabilities |
April
30, 2023 (Unaudited) |
| ASSETS: | |
| |
| Investments, at value | |
$ | 113,554,375 | |
| Foreign currency, at
value (Cost $11,080) | |
| 11,080 | |
| Receivable for investments
sold | |
| 281,706 | |
| Interest receivable | |
| 560,611 | |
| Dividends receivable | |
| 29,977 | |
| Prepaid and other assets | |
| 53,471 | |
| Total Assets | |
| 114,491,220 | |
| | |
| | |
| LIABILITIES: | |
| | |
| Loan payable (Note
3) | |
| 37,500,000 | |
| Interest and commitment
fee due on loan payable | |
| 90,577 | |
| Payable for investments
purchased | |
| 57,744 | |
| Payable to adviser | |
| 98,138 | |
| Payable to administrator | |
| 25,909 | |
| Payable to transfer
agent | |
| 9,247 | |
| Payable for trustee
fees | |
| 46,195 | |
| Other payables | |
| 84,137 | |
| Total Liabilities | |
| 37,911,947 | |
| Net Assets | |
$ | 76,579,273 | |
| | |
| | |
| NET ASSETS CONSIST
OF: | |
| | |
| Paid-in capital | |
$ | 124,480,563 | |
| Total distributable
earnings/(accumulated deficit) | |
| (47,901,290 | ) |
| Net Assets | |
$ | 76,579,273 | |
| | |
| | |
| PRICING OF SHARES: | |
| | |
| Net Assets | |
$ | 76,579,273 | |
| Common Shares of beneficial interest outstanding
(unlimited number of shares authorized, no par value per share) | |
| 6,735,367 | |
| Net asset value per share | |
$ | 11.37 | |
| | |
| | |
| Cost of Investments | |
$ | 130,261,127 | |
See
Notes to Financial Statements.
| Principal Real Estate Income Fund |
Statement of Operations |
For
the Six Months Ended April 30, 2023 (Unaudited)
| INVESTMENT INCOME: | |
| |
| Interest | |
$ | 3,039,451 | |
| Dividends (net of foreign
withholding tax of $41,618) | |
| 980,690 | |
| Total Investment
Income | |
| 4,020,141 | |
| | |
| | |
| EXPENSES: | |
| | |
| Investment advisory
fees | |
| 637,579 | |
| Interest on loan | |
| 1,052,537 | |
| Commitment fee on loan | |
| 26,215 | |
| Administration fees | |
| 109,821 | |
| Transfer agent fees | |
| 13,819 | |
| Audit fees | |
| 18,268 | |
| Legal fees | |
| 43,356 | |
| Custodian fees | |
| 9,793 | |
| Trustee fees | |
| 96,629 | |
| Printing fees | |
| 18,818 | |
| Insurance fees | |
| 17,642 | |
| Other | |
| 19,441 | |
| Total Expenses | |
| 2,063,918 | |
| Net Investment Income | |
| 1,956,223 | |
| | |
| | |
| REALIZED AND UNREALIZED
GAIN/(LOSS) ON INVESTMENTS AND FOREIGN CURRENCY: | |
| | |
| Net realized gain/(loss)
on: | |
| | |
| Investments | |
| (6,210,293 | ) |
| Foreign currency transactions | |
| 5,661 | |
| Net realized loss | |
| (6,204,632 | ) |
| Net change in unrealized
appreciation/depreciation on: | |
| | |
| Investments | |
| (1,236,130 | ) |
| Translation of assets
and liabilities denominated in foreign currencies | |
| 3,505 | |
| Net change in unrealized
appreciation/depreciation | |
| (1,232,625 | ) |
| Net Realized and
Unrealized Loss on Investments and Foreign Currency | |
| (7,437,257 | ) |
| Net Decrease in
Net Assets Resulting from Operations | |
$ | (5,481,034 | ) |
See
Notes to Financial Statements.
| Semi-Annual
Report | April 30, 2023 |
17 |
| Principal Real Estate Income Fund |
|
| Statements
of Changes in Net Assets |
|
| | |
For
the Six Months Ended April 30, 2023 (Unaudited) | | |
For
the Year Ended October 31, 2022 | |
| | |
| | |
| |
| OPERATIONS: | |
| | | |
| | |
| Net
investment income | |
$ | 1,956,223 | | |
$ | 7,063,896 | |
| Net
realized loss on investments and foreign currency transactions | |
| (6,204,632 | ) | |
| (4,259,317 | ) |
| Net
change in unrealized appreciation/depreciation on investments and translation of assets and liabilities denominated in foreign
currencies | |
| (1,232,625 | ) | |
| (28,587,485 | ) |
| Net
decrease in net assets resulting from operations | |
| (5,481,034 | ) | |
| (25,782,906 | ) |
| | |
| | | |
| | |
| DISTRIBUTIONS
TO SHAREHOLDERS: | |
| | | |
| | |
| Distributions
to shareholders | |
| (4,267,921 | ) | |
| (7,473,490 | ) |
| From
tax return of capital | |
| – | | |
| (650,610 | ) |
| Decrease
in net assets from distributions to | |
| (4,267,921 | ) | |
| (8,124,100 | ) |
| | |
| | | |
| | |
| CAPITAL
SHARE TRANSACTIONS (NOTE 6): | |
| | | |
| | |
| Cost
of shares repurchased | |
| (687,267 | ) | |
| (108,353 | ) |
| Net
decrease in net assets from capital share | |
| (687,267 | ) | |
| (108,353 | ) |
| | |
| | | |
| | |
| Net
Decrease in Net Assets | |
| (10,436,222 | ) | |
| (34,015,359 | ) |
| | |
| | | |
| | |
| NET
ASSETS: | |
| | | |
| | |
| Beginning
of period | |
| 87,015,495 | | |
| 121,030,854 | |
| End
of period | |
$ | 76,579,273 | | |
$ | 87,015,495 | |
| | |
| | | |
| | |
| OTHER
INFORMATION: | |
| | | |
| | |
| Share
Transactions: | |
| | | |
| | |
| Shares
outstanding - beginning of period | |
| 6,802,798 | | |
| 6,812,922 | |
| Shares
repurchased (Note 6) | |
| (67,431 | ) | |
| (10,124 | ) |
| Net
decrease in shares outstanding | |
| (67,431 | ) | |
| (10,124 | ) |
| Shares
outstanding - end of period | |
| 6,735,367 | | |
| 6,802,798 | |
See
Notes to Financial Statements.
| Principal Real Estate Income Fund |
Statement of Cash Flows |
For
the Six Months Ended April 30, 2023 (Unaudited)
| CASH
FLOWS FROM OPERATING ACTIVITIES: | |
| |
| Net
decrease in net assets resulting from operations | |
$ | (5,481,034 | ) |
| Adjustments
to reconcile net decrease in net assets from operations to net cash provided by operating activities: | |
| | |
| Purchases
of investment securities | |
| (24,746,069 | ) |
| Proceeds
from disposition of investment securities | |
| 29,787,529 | |
| Net
purchases of short-term investment securities | |
| 646,237 | |
| Net
realized (gain)/loss on: | |
| | |
| Investments | |
| 6,210,293 | |
| Net
change in unrealized appreciation/depreciation on: | |
| | |
| Investments | |
| 1,236,130 | |
| Amortization
of premiums and accretion of discounts on investments | |
| (209,731 | ) |
| (Increase)/Decrease
in assets: | |
| | |
| Interest
receivable | |
| 38,696 | |
| Dividends
receivable | |
| 16,795 | |
| Prepaid
and other assets | |
| (3,946 | ) |
| Increase/(Decrease)
in liabilities: | |
| | |
| Interest
and commitment fee due on loan payable | |
| 223 | |
| Payable
to transfer agent | |
| 4,461 | |
| Payable
to adviser | |
| (14,714 | ) |
| Payable
to administrator | |
| (29,511 | ) |
| Payable
for trustee fees | |
| (246 | ) |
| Other
payables | |
| (10,085 | ) |
| Net
cash provided by operating activities | |
$ | 7,445,028 | |
| | |
| | |
| CASH
FLOWS USED IN FINANCING ACTIVITIES: | |
| | |
| Repayment
from bank borrowing | |
$ | (2,500,000 | ) |
| Cost
of shares repurchased | |
| (687,267 | ) |
| Cash
distributions paid | |
| (4,267,921 | ) |
| Net
cash used in financing activities | |
$ | (7,455,188 | ) |
| | |
| | |
| Effect
of exchange rates on cash | |
$ | (3,428 | ) |
| | |
| | |
| Net
decrease in cash | |
$ | (13,588 | ) |
| Cash
and Foreign Currency, beginning balance | |
$ | 24,668 | |
| Cash
and Foreign Currency, ending balance | |
$ | 11,080 | |
| | |
| | |
| SUPPLEMENTAL
DISCLOSURE OF CASH FLOW INFORMATION: | |
| | |
| Cash
paid during the period for interest from bank borrowing | |
$ | 1,052,314 | |
See
Notes to Financial Statements.
| Semi-Annual
Report | April 30, 2023 |
19 |
| Principal Real Estate Income Fund |
|
| |
| Net asset value - beginning
of period |
| Income/(loss) from
investment operations: |
| Net investment income(a) |
| Net realized and unrealized
gain/(loss) on investments |
| Total income/(loss)
from investment operations |
| |
| Less distributions to
shareholders: |
| From net investment
income |
| From net realized gains |
| From tax return of capital |
| Total distributions |
| |
| Capital share transactions: |
| Impact of Capital Share
Transactions(a) |
| Total capital share
transactions |
| Net increase/(decrease)
in net asset value |
| Net asset value - end
of period |
| Market price - end of
period |
| |
| Total Return - NAV(c) |
| Total Return - Market
Price(c) |
| |
| Supplemental Data: |
| Net assets, end of period
(in thousands) |
| Ratios to Average
Net Assets: |
| Total expenses |
| Total expenses excluding
interest expense |
| Net investment income |
| Total expenses to average
managed assets(e) |
| Portfolio turnover
rate |
| Borrowings at End
of Period |
| Aggregate Amount Outstanding
(in thousands) |
| Asset Coverage Per $1,000
(in thousands) |
See
Notes to Financial Statements.
For
a share outstanding throughout the periods presented.
| For
the | | |
| | |
| | |
| | |
| | |
| |
| Six
Months | | |
For
the | | |
For
the | | |
For
the | | |
For
the | | |
For
the | |
| Ended | | |
Year
Ended | | |
Year
Ended | | |
Year
Ended | | |
Year
Ended | | |
Year
Ended | |
| April
30, 2023 | | |
October
31, | | |
October
31, | | |
October
31, | | |
October
31, | | |
October
31, | |
| (Unaudited) | | |
2022 | | |
2021 | | |
2020 | | |
2019 | | |
2018 | |
| | | |
| | |
| | |
| | |
| | |
| |
| $ | 12.79 | | |
$ | 17.76 | | |
$ | 13.84 | | |
$ | 22.86 | | |
$ | 19.54 | | |
$ | 19.40 | |
| | | | |
| | | |
| | | |
| | | |
| | | |
| | |
| | 0.29 | | |
| 1.04 | | |
| 0.86 | | |
| 0.98 | | |
| 1.12 | | |
| 1.08 | |
| | (1.10 | ) | |
| (4.82 | ) | |
| 4.00 | | |
| (8.68 | ) | |
| 3.52 | | |
| 0.38 | |
| | (0.81 | ) | |
| (3.78 | ) | |
| 4.86 | | |
| (7.70 | ) | |
| 4.64 | | |
| 1.46 | |
| | | | |
| | | |
| | | |
| | | |
| | | |
| | |
| | | | |
| | | |
| | | |
| | | |
| | | |
| | |
| | (0.63 | ) | |
| (1.09 | ) | |
| (0.98 | ) | |
| (0.95 | ) | |
| (1.32 | ) | |
| (1.18 | ) |
| | – | | |
| – | | |
| – | | |
| (0.10 | ) | |
| – | | |
| – | |
| | – | | |
| (0.10 | ) | |
| – | | |
| (0.27 | ) | |
| – | | |
| (0.14 | ) |
| | (0.63 | ) | |
| (1.19 | ) | |
| (0.98 | ) | |
| (1.32 | ) | |
| (1.32 | ) | |
| (1.32 | ) |
| | | | |
| | | |
| | | |
| | | |
| | | |
| | |
| | | | |
| | | |
| | | |
| | | |
| | | |
| | |
| | 0.02 | | |
| 0.00 | (b) | |
| 0.04 | | |
| – | | |
| – | | |
| – | |
| | 0.02 | | |
| 0.00 | (b) | |
| 0.04 | | |
| – | | |
| – | | |
| – | |
| | (1.42 | ) | |
| (4.97 | ) | |
| 3.92 | | |
| (9.02 | ) | |
| 3.32 | | |
| 0.14 | |
| $ | 11.37 | | |
$ | 12.79 | | |
$ | 17.76 | | |
$ | 13.84 | | |
$ | 22.86 | | |
$ | 19.54 | |
| $ | 9.62 | | |
$ | 10.74 | | |
$ | 15.48 | | |
$ | 9.46 | | |
$ | 21.40 | | |
$ | 16.97 | |
| | | | |
| | | |
| | | |
| | | |
| | | |
| | |
| | (5.73 | %) | |
| (21.42 | %) | |
| 37.54 | % | |
| (33.27 | %) | |
| 25.53 | % | |
| 8.67 | % |
| | (4.94 | %) | |
| (24.29 | %) | |
| 75.38 | % | |
| (51.28 | %) | |
| 35.31 | % | |
| 7.13 | % |
| | | | |
| | | |
| | | |
| | | |
| | | |
| | |
| | | | |
| | | |
| | | |
| | | |
| | | |
| | |
| $ | 76,579 | | |
$ | 87,015 | | |
$ | 121,031 | | |
$ | 95,513 | | |
$ | 157,717 | | |
$ | 134,820 | |
| | | | |
| | | |
| | | |
| | | |
| | | |
| | |
| | 4.98 | %(d) | |
| 3.15 | % | |
| 2.61 | % | |
| 2.92 | % | |
| 3.45 | % | |
| 3.41 | % |
| | 2.44 | %(d) | |
| 2.26 | % | |
| 2.16 | % | |
| 2.13 | % | |
| 2.02 | % | |
| 2.09 | % |
| | 4.72 | %(d) | |
| 6.53 | % | |
| 5.25 | % | |
| 5.59 | % | |
| 5.31 | % | |
| 5.49 | % |
| | 3.39 | %(d) | |
| 2.19 | % | |
| 1.86 | % | |
| 2.08 | % | |
| 2.44 | % | |
| 2.36 | % |
| | 18 | %(f) | |
| 19 | % | |
| 37 | % | |
| 38 | % | |
| 17 | % | |
| 37 | % |
| | | | |
| | | |
| | | |
| | | |
| | | |
| | |
| $ | 37,500 | | |
$ | 40,000 | | |
$ | 50,000 | | |
$ | 40,500 | | |
$ | 60,000 | | |
$ | 60,000 | |
| $ | 3,042 | | |
$ | 3,175 | | |
$ | 3,421 | | |
$ | 3,358 | | |
$ | 3,629 | | |
$ | 3,247 | |
| Semi-Annual
Report | April 30, 2023 |
21 |
| Principal Real Estate Income Fund |
| (a) | Calculated
using average shares throughout the period. |
| (b) | Less
than $0.005 per share |
| (c) | Total
investment return on market price is calculated assuming a purchase of common share at
the opening on the first day and a sale at closing on the last day of each period reported.
For purposes of this calculation, dividends and distributions, if any, are assumed to
be reinvested at prices obtained under the Fund's dividend reinvestment plan. Total investment
returns do not reflect brokerage commissions, if any. Total return on net asset value
uses the same methodology, but with use of net asset value for the beginning and ending
values. |
| (e) | Average
managed assets represent net assets applicable to common shares plus average amount of
borrowings during the period. |
See
Notes to Financial Statements.
| Principal Real Estate Income Fund |
Notes to Financial Statements |
April
30, 2023 (Unaudited)
1.
ORGANIZATION
Principal
Real Estate Income Fund (the ‘‘Fund’’) is a Delaware statutory trust registered as a non-diversified,
closed-end management investment company under the Investment Company Act of 1940, as amended (the ‘‘1940 Act’’).
The
Fund’s investment objective is to seek to provide high current income, with capital appreciation as a secondary investment
objective, by investing in commercial real estate related securities.
Investing
in the Fund involves risks, including exposure to below-investment grade investments. The Fund’s net asset value per share
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.
2.
SIGNIFICANT ACCOUNTING POLICIES
Use
of Estimates: The financial statements are prepared in accordance with generally accepted accounting principles in the United
States of America (“GAAP”), which requires management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and reported
amount of increase or decrease in net assets from operations during the period reported. Management believes the estimates and
security valuations are appropriate; however, actual results may differ from those estimates, and the security valuations reflected
in the financial statements may differ from the value the Fund ultimately realizes upon sale of the securities. The Fund is considered
an investment company under GAAP and follows the accounting and reporting guidance applicable to investment companies in the Financial
Accounting Standards Board Accounting Standards Codification Topic 946 Financial Services - Investment Companies. The financial
statements have been prepared as of the close of the New York Stock Exchange (“NYSE”) on April 30, 2023.
Portfolio
Valuation: The net asset value per common share of the Fund is determined no less frequently than daily, on each day that
the NYSE is open for trading, as of the close of regular trading on the NYSE (normally 4:00 p.m. New York time). The Fund’s
net asset value per common share is calculated in the manner authorized by the Fund’s Board of Trustees (the "Board"
or "Trustees"). Net asset value per share is computed by dividing the value of the Fund’s total assets, less its
liabilities by the number of shares outstanding.
The
Board has established the following procedures for valuation of the Fund’s assets under normal market conditions. Marketable
securities listed on foreign or U.S. securities exchanges generally are valued at closing sale prices or, if there were no sales,
at the mean between the closing bid and ask prices on the exchange where such securities are primarily traded.
The
Fund values commercial mortgage-backed securities ("CMBS") and other debt securities not traded in an organized market
on the basis of valuations provided by an independent pricing service, approved by the Board, which uses information with respect
to transactions in such securities, interest rate movements, new issue information, cash flows, yields, spreads, credit quality,
and other
pertinent information as determined by the pricing service, in determining value. If the independent primary or secondary pricing
service is unable to provide a price for a security, if the price provided by the independent primary or secondary pricing service
is deemed unreliable, or if events occurring after the close of the market for a security but before the time as of which the
Fund values its common shares would materially affect net asset value, such security will be valued at its fair value as determined
in good faith under procedures approved by the Board.
| Semi-Annual
Report | April 30, 2023 |
23 |
| Principal Real Estate Income Fund |
Notes to Financial Statements |
April
30, 2023 (Unaudited)
Pursuant
to Rule 2a-5 under the Investment Company Act of 1940, the Board has appointed ALPS Advisors, Inc. ("AAI" or the "Adviser")
to serve as the valuation designee to perform fair value determinations for investments in the Fund. In fair valuing the Fund’s
investments, consideration is given to several factors, which may include, among others, the following: the fundamental business
data relating to the issuer, borrower, or counterparty; an evaluation of the forces which influence the market in which the investments
are purchased and sold; the type, size and cost of the investment; the information as to any transactions in or offers for the
investment; the price and extent of public trading in similar securities (or equity securities) of the issuer, or comparable companies;
the coupon payments, yield data/cash flow data; the quality, value and salability of collateral, if any, securing the investment;
the business prospects of the issuer, borrower, or counterparty, as applicable, including any ability to obtain money or resources
from a parent or affiliate and an assessment of the issuer’s, borrower’s, or counterparty’s management; the
prospects for the industry of the issuer, borrower, or counterparty, as applicable, and multiples (of earnings and/or cash flow)
being paid for similar businesses in that industry; one or more independent broker quotes for the sale price of the portfolio
security; and other relevant factors.
Securities
Transactions and Investment Income: Investment security transactions are accounted for on a trade date basis. Dividend income
is recorded on the ex-dividend date. Certain dividend income from foreign securities will be recorded, in the exercise of reasonable
diligence, as soon as the Fund is informed of the dividend if such information is obtained subsequent to the ex-dividend date
and may be subject to withholding taxes in these jurisdictions. Withholding taxes on foreign dividends have been provided for
in accordance with the Fund's understanding of the applicable country's tax rules and rates. Interest income, which includes amortization
of premium and accretion of discount, is recorded on the accrual basis. Discounts and premiums on commercial mortgage backed securities
purchased are accreted or amortized using the effective interest method. Realized gains and losses from securities transactions
and unrealized appreciation and depreciation of securities are determined using the specific identification method for both financial
reporting and tax purposes. Paydown gains and losses on mortgage-related and other asset-back securities, if any, are recorded
as components of interest income in the Statement of Operations. Interest-only stripped mortgage-backed securities (“IO
Strips”) are securities that receive only interest payments from a pool of mortgage loans. Little to no principal will be
received by the Fund upon maturity of an IO Strip. Periodic adjustments are recorded to reduce the cost of the security until
maturity, which are included in interest income.
Fair
Value Measurements: Investments in the Fund are recorded at their estimated fair value. The Fund discloses the classification
of its fair value measurements following a three-tier hierarchy based on the inputs used to measure fair value. Inputs refer broadly
to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk. Inputs
may be observable or unobservable. Observable inputs reflect the assumptions market participants would use in pricing the asset
or liability that are developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs
reflect the reporting entity’s own assumptions
about the assumptions market participants would use in pricing the asset or liability that are developed based on the best information
available.
| Principal Real Estate Income Fund |
Notes to Financial Statements |
April
30, 2023 (Unaudited)
Various
inputs are used in determining the value of the Fund’s investments as of the end of the reporting period. When inputs used
fall into different levels of the fair value hierarchy, the level in the hierarchy within which the fair value measurement falls
is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The designated
input levels are not necessarily an indication of the risk or liquidity associated with these investments. These inputs are categorized
in the following hierarchy under applicable financial accounting standards:
| |
Level
1 – | Unadjusted
quoted prices in active markets for identical investments, unrestricted assets or liabilities that a Fund has the ability to access
at the measurement date; |
| |
Level
2 – | Quoted prices which are not active, quoted prices for similar assets or liabilities in active markets or inputs other
than quoted prices that are observable (either directly or indirectly) for substantially the full term of the asset or liability;
and |
| |
Level
3 – | Significant unobservable prices or inputs (including the Fund’s own assumptions in determining the
fair value of investments) where there is little or no market activity for the asset or liability at the measurement
date. |
The
following is a summary of the inputs used to value the Fund’s investments as of April 30, 2023:
| Investments
in Securities at Value* | |
Level
1 -
Quoted Prices | | |
Level
2 -
Other Significant Observable Inputs | | |
Level
3 -
Significant Unobservable Inputs | | |
Total | |
| Common Stocks | |
$ | 36,668,371 | | |
$ | – | | |
$ | – | | |
$ | 36,668,371 | |
| Preferred Stocks | |
| 639,090 | | |
| – | | |
| – | | |
| 639,090 | |
| Commercial Mortgage Backed Securities | |
| – | | |
| 73,221,753 | | |
| – | | |
| 73,221,753 | |
| Short Term Investments | |
| 3,025,161 | | |
| – | | |
| – | | |
| 3,025,161 | |
| Total | |
$ | 40,332,622 | | |
$ | 73,221,753 | | |
$ | – | | |
$ | 113,554,375 | |
| * | See
Statement of Investments for industry classifications. |
The
Fund did not have any securities that used significant unobservable inputs (Level 3) in determining fair value, and there were
no transfers into or out of Level 3, during the six months ended April 30, 2023.
Commercial
Mortgage-Backed Securities: As part of its investments in commercial real estate related securities, the Fund will invest
in CMBS which are subject to certain risks associated with direct investments in CMBS. A CMBS is a type of mortgage-backed security
that is secured by a loan (or loans) on one or more interests in commercial real estate property. Investments in CMBS are subject
to the various risks which relate to the pool of underlying assets in which the CMBS represents an interest. CMBS may be backed
by obligations (including certificates of participation in obligations) that are principally secured by commercial real estate
loans or interests therein having multi-family or commercial use. Securities backed by commercial real estate assets are subject
to securities market risks as well as risks similar to those of direct ownership of commercial real estate loans because those
securities derive their cash flows and value from the performance of the commercial real estate underlying such investments and/or
the owners of such real estate.
| Semi-Annual
Report | April 30, 2023 |
25 |
| Principal Real Estate Income Fund |
Notes to Financial Statements |
April
30, 2023 (Unaudited)
Real
Estate Investment Trusts (“REITs”): As part of its investments in real estate related securities, the Fund will
invest in REITs and is subject to certain risks associated with direct investment in REITs. REITs possess certain risks which
differ from an investment in common stocks. REITs are financial vehicles that pool investors’ capital to acquire, develop
and/or finance real estate and provide services to their tenants. REITs may concentrate their investments in specific geographic
areas or in specific property types, e.g., regional malls, shopping centers, office buildings, apartment buildings and industrial
warehouses. REITs may be affected by changes in the value of their underlying properties and by defaults by borrowers or tenants.
REITs depend generally on their ability to generate cash flow to make distributions to shareowners, and certain REITs have selfliquidation
provisions by which mortgages held may be paid in full and distributions of capital returns may be made at any time.
As
REITs generally pay a higher rate of dividends than most other operating companies, to the extent application of the Fund’s
investment strategy results in the Fund investing in REIT shares, the percentage of the Fund’s dividend income received
from REIT shares will likely exceed the percentage of the Fund’s portfolio that is comprised of REIT shares. Distributions
received by the Fund from REITs may consist of dividends, capital gains and/or return of capital.
Dividend
income from REITs is recognized on the ex-dividend date. The calendar year-end amounts of ordinary income, capital gains, and
return of capital included in distributions received from the Fund’s investments in REITs are reported to the Fund after
the end of the calendar year; accordingly, the Fund estimates these amounts for accounting purposes until the characterization
of REIT distributions is reported to the Fund after the end of the calendar year. Estimates are based on the most recent REIT
distribution information available.
The
performance of a REIT may be affected by its failure to qualify for tax-free pass-through of income under the Internal Revenue
Code of 1986, as amended (the “Code”), or its failure to maintain exemption from registration under the 1940 Act.
Due to the Fund’s investments in REITs, the Fund may also make distributions in excess of the Fund’s earnings and
capital gains. Distributions, if any, in excess of the Fund’s earnings and profits will first reduce the adjusted tax basis
of a holder’s common shares and, after that basis has been reduced to zero, will constitute capital gains to the common
shareholder.
Concentration
Risk: The Fund invests in companies in the real estate industry, which may include CMBS, REITs, REIT-like structures, and
other securities that are secured by, or otherwise have exposure to, real estate. Any fund that concentrates in a particular segment
of the market will generally be more volatile than a fund that invests more broadly. Any market price movements, regulatory changes,
or economic conditions affecting CMBS, REITs, REIT-like structures, and real estate more generally, will have a significant impact
on the Fund’s performance.
Foreign
Currency Risk: The Fund expects to invest in securities denominated or quoted in currencies other than the U.S. dollar. Changes
in foreign currency exchange rates may affect the value of securities owned by the Fund, the unrealized appreciation or depreciation
of investments and gains on and income from investments. Currencies of certain countries may be volatile and therefore may affect
the value of securities denominated in such currencies, which means that the Fund’s net asset value could decline as a result
of changes in the exchange rates between foreign currencies and the U.S. dollar. These risks often are heightened for investments
in smaller, emerging capital markets.
| Principal Real Estate Income Fund |
Notes to Financial Statements |
April
30, 2023 (Unaudited)
The
accounting records of the Fund are maintained in U.S. dollars. Prices of securities denominated in foreign currencies are translated
into U.S. dollars at the closing rates of the exchanges at period end. Amounts related to the purchase and sale of foreign securities
and investment income are translated at the rates of exchange prevailing on the respective dates of such transactions.
The
Fund does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments
from the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized
and unrealized gain or loss from investments.
Reported
net realized foreign exchange gains or losses arise from sales of foreign currencies, currency gains or losses realized between
the trade and settlement dates on securities transactions, and the difference between the amounts of dividends, interest, and
foreign withholding taxes recorded on the Fund's books and the U.S. dollar equivalent of the amounts actually received or paid.
Net unrealized foreign exchange gains and losses arise from changes in the fair values of assets and liabilities, other than investments
in securities at fiscal period-end, resulting from changes in exchange rates.
A
foreign currency contract is a commitment to purchase or sell a foreign currency at a future date, at a negotiated rate. The Fund
may enter into foreign currency contracts to settle specific purchases or sales of securities denominated in a foreign currency
and for protection from adverse exchange rate fluctuation. Risks to a Fund include the potential inability of the counterparty
to meet the terms of the contract.
Market
Disruption and Geopolitical Risk: The value of your investment in the Fund is based on the market prices of the securities
the Fund holds. These prices change daily due to economic and other events that affect markets generally, as well as those that
affect particular regions, countries, industries, companies or governments. These price movements, sometimes called volatility,
may be greater or less depending on the types of securities the Fund owns and the markets in which the securities trade. Securities
in the Fund’s portfolio may underperform due to inflation (or expectations for inflation), interest rates, global demand
for particular products or resources, natural disasters, pandemics, epidemics, terrorism, regulatory events and governmental or
quasi-governmental actions. The occurrence of global events similar to those in recent years, such as the war in Ukraine, terrorist
attacks around the world, natural disasters, social and political discord or debt crises and downgrades, among others, may result
in market volatility and may have long term effects on both the U.S. and global financial markets. The occurrence of such events
may be sudden and unexpected, and it is difficult to predict when similar events affecting the U.S. or global financial markets
may occur, the effects that such events may have and the duration of those effects. Any such event(s) could have a significant
adverse impact on the value and risk profile of the Fund’s portfolio. There is a risk that you may lose money by investing
in the Fund.
| Semi-Annual
Report | April 30, 2023 |
27 |
| Principal Real Estate Income Fund |
Notes to Financial Statements |
April
30, 2023 (Unaudited)
Social,
political, economic and other conditions and events, such as natural disasters, health emergencies (e.g., epidemics and pandemics),
tariffs and trade disruptions, recession, changes in currency rates, terrorism, conflicts and social unrest, may occur and could
significantly impact issuers, industries, governments and other systems, including the financial markets. As global systems, economies
and financial markets are increasingly interconnected, events that once had only local impact are now more likely to have regional
or even global effects. Events that occur in one country, region or financial market will, more frequently, adversely impact issuers
in other countries, regions or markets. For example, developments in the banking or financial services sectors could adversely
impact a wide range of companies and issuers. These impacts can be exacerbated by failures of governments and societies to adequately
respond to an emerging event or threat. These types of events quickly and significantly impact markets in the U.S. and across
the globe leading to extreme market volatility and disruption. The extent and nature of the impact on supply chains or economies
and markets from these events is unknown, particularly if a health emergency or other similar event, persists for an extended
period of time. Such events could impact the Adviser's investment advisory activities and services of other service providers,
which in turn could adversely affect the Fund’s investments and other operations. The value of the Fund’s investments
may decrease as a result of such events, particularly if these events adversely impact the operations and effectiveness of the
Adviser or key service providers or if these events disrupt systems and processes necessary or beneficial to the investment advisory,
other activities on behalf the Fund.
3.
LEVERAGE
Under
normal market conditions, the Fund’s policy is to utilize leverage through Borrowings and the issuance of preferred shares
in an amount that represents approximately 33 1/3% of the Fund’s total assets, including proceeds from such Borrowings and
issuances (or approximately 50% of the Fund’s net assets). It is possible that the assets of the Fund will decline due to
market conditions such that this 33 1/3% limit will be exceeded. In that case, the leverage risk to shareholders will increase.
Borrowings will be subject to interest costs, which may or may not be recovered by appreciation of the securities purchased. In
certain cases, interest costs may exceed the return received on the securities purchased.
The
Fund maintains a $60,000,000 line of credit with State Street Bank and Trust Company (“SSB”), which by its terms expires
on September 8, 2023, subject to the restrictions and terms of the credit agreement. As of April 30, 2023 the Fund has drawn down
$37,500,000 from the SSB line of credit, the maximum borrowing outstanding during the period was $40,000,000. The Fund is charged
an interest rate of 1.00% (per annum) above the one-month SOFR (Secured Overnight Financing Rate) or 5.89%, as of the last renewal
date, for borrowing under this credit agreement, on the last day of the interest period. The Fund was charged a commitment fee
on the average daily unused balance of the line of credit at a rate of 0.25% (per annum). The Fund pledges its investment securities
as the collateral for the line of credit per the terms of the agreement. The average annualized interest rate charged and the
average outstanding loan payable for the six months ended April 30, 2023 was as follows:
| Average
Interest Rate | 5.23% |
| Average Outstanding
Loan Payable | $39,198,895 |
| Principal Real Estate Income Fund |
Notes to Financial Statements |
April
30, 2023 (Unaudited)
4.
INVESTMENT ADVISORY AND OTHER AGREEMENTS
ALPS
Advisors, Inc. serves as the Fund’s investment adviser pursuant to an Investment Advisory Agreement with the Fund. As compensation
for its services to the Fund, AAI receives an annual investment advisory fee of 1.05% based on the Fund’s average Total
Managed Assets (as defined below). Pursuant to an Investment Sub-Advisory Agreement, AAI has retained Principal Real Estate Investors,
LLC (‘‘PrinRei’’) as the Fund’s sub-advisor and pays PrinRei an annual fee of 0.55% based on the
Fund’s average Total Managed Assets. Investment advisory fees are paid monthly.
ALPS
Fund Services, Inc. (‘‘AFS’’), an affiliate of AAI, serves as administrator to the Fund. Under an Administration,
Bookkeeping and Pricing Services Agreement, AFS is responsible for calculating the net asset values, providing additional fund
accounting and tax services, and providing fund administration and compliance-related services to the Fund. AFS is entitled to
receive a monthly fee, accrued daily based on the Fund’s average Total Managed Assets, as defined below, plus a fixed fee
for completion of certain regulatory filings and reimbursement for certain out-of-pocket expenses.
DST
Systems, Inc. (‘‘DST’’), the parent company of AAI and AFS, serves as the Transfer Agent to the Fund.
Under the Transfer Agency Agreement, DST is responsible for maintaining all shareholder records of the Fund. DST is entitled to
receive an annual minimum fee of $24,413 plus out-of-pocket expenses. DST is a wholly-owned subsidiary of SS&C Technologies
Holdings, Inc. (“SS&C”), a publicly traded company listed on the NASDAQ Global Select Market.
The
Fund pays no salaries or compensation to any of its interested Trustees or Officers. The four independent Trustees of the Fund
each receive an annual retainer of $24,000 and an additional $5,000 for attending each meeting of the Board. In addition to the
attendance fee, the Chairman of the Board will be paid a meeting fee of $1,500 for each Board meeting and the Chairman of the
Audit Committee of the Board will be paid a meeting attendance fee of $1,250 for each meeting of the Audit Committee of the Board.
The Trustees are also reimbursed for all reasonable out-of-pocket expenses relating to attendance at meetings of the Board.
Certain
Officers of the Fund are also officers of AAI and AFS.
Total
Managed Assets: For these purposes, the term Total Managed Assets is defined as the value of the total assets of the Fund
minus the sum of all accrued liabilities of the Fund (other than aggregate liabilities representing Limited Leverage, as defined
below), calculated as of 4:00 p.m. Eastern time on such day or as of such other time or times as the Board may determine in accordance
with the provisions of applicable law and of the declaration and bylaws of the Fund and with resolutions of the Board as from
time to time in force. Under normal market conditions, the Fund’s policy is to utilize leverage through Borrowings (as defined
below) and through the issuance of preferred shares (if any) in an amount that represents approximately 33 1/3% of the Fund’s
total assets, including proceeds from such Borrowings and issuances (or approximately 50% of the Fund’s net assets) (collectively,
‘‘Limited Leverage’’). ‘‘Borrowings’’ are defined to include: amounts received
by the Fund pursuant to loans from banks or other financial institutions; amounts borrowed from banks or other parties through
reverse repurchase agreements; amounts received by the Fund from the Fund’s issuance of any senior notes or similar debt
securities. Other than with respect to reverse repurchase agreements, Borrowings do not include trading practices or instruments
that, according to the SEC or its staff, may cause senior securities concerns, and are intended to include transactions that are
subject to the asset coverage requirements in Section 18 of the 1940 Act for the issuance of senior securities evidencing indebtedness
(e.g., bank borrowings and the Fund’s issuance of any senior notes or similar securities) and senior securities in the form
of stock (e.g., the Fund’s issuance of preferred shares).
| Semi-Annual
Report | April 30, 2023 |
29 |
| Principal Real Estate Income Fund |
Notes to Financial Statements |
April
30, 2023 (Unaudited)
5.
DISTRIBUTIONS
The
Fund intends to make a monthly distribution to common shareholders after payment of interest on any outstanding borrowings or
dividends on any outstanding preferred shares. Distributions to shareholders are recorded by the Fund on ex-dividend date. The
Fund may also retain cash reserves if deemed appropriate by PrinRei to meet the terms of any leverage or derivatives transactions.
Such distributions shall be administered by DST. While a portion of the Fund’s distributed income may qualify as qualified
dividend income, all or a portion of the Fund’s distributed income may also be fully taxable. Any such income distributions,
as well as any distributions by the Fund of net realized short-term capital gains, will be taxed as ordinary income. A portion
of the distributions the Fund receives from its investments may be treated as return of capital. While the Fund anticipates distributing
some or all of such return of capital, it is not required to do so in order to maintain its status as a regulated investment company
under Subchapter M of the Code.
The
Fund has a managed distribution plan in accordance with AAI’s Section 19(b) exemptive order described below (the “Managed
Distribution Plan”). Under the Managed Distribution Plan, to the extent that sufficient investment income is not available
on a monthly basis, the Fund will make regular monthly distributions, which may consist of long-term capital gains and/or return
of capital in order to maintain the distribution rate. In accordance with the Managed Distribution Plan, the Fund made monthly
distributions to common shareholders at a fixed monthly rate of $0.105 per common share.
The
amount of the Fund's distributions pursuant to the Managed Distribution Plan are not related to the Fund's performance and, therefore,
investors should not make any conclusions about the Fund’s investment performance from the amount of the Fund’s distributions
or from the terms of the Fund’s Managed Distribution Plan. The Board may amend, suspend or terminate the Managed Distribution
Plan at any time without notice to shareholders.
AAI
has received an order granting an exemption from Section 19(b) of the 1940 Act and Rule 19b-1 thereunder to permit the Fund, subject
to certain terms and conditions, to include realized long-term capital gains as a part of its regular distributions to its stockholders
more frequently than would otherwise be permitted by the 1940 Act (generally once per taxable year). To the extent that the Fund
relies on the exemptive order, the Fund will be required to comply with the terms and conditions therein, which, among other things,
requires the Fund to make certain disclosures to shareholders and prospective shareholders regarding distributions, and would
require the Board to make determinations regarding the appropriateness of the use of the distribution policy. Under such a distribution
policy, it is possible that the Fund might distribute more than its income and net realized capital gains; therefore, distributions
to shareholders may result in a return of capital. The amount treated as a return of capital will reduce a shareholder’s
adjusted basis in the shareholder’s shares, thereby increasing the potential gain or reducing the potential loss on the
sale of shares. There is no assurance that the Fund will continue to rely on the exemptive order in the future.
| Principal Real Estate Income Fund |
Notes to Financial Statements |
April
30, 2023 (Unaudited)
6.
CAPITAL TRANSACTIONS
The
Fund is a statutory trust established under the laws of the state of Delaware by an Agreement and Declaration of Trust dated August
31, 2012, as amended and restated through the date hereof. The Declaration of Trust provides that the Trustees of the Fund may
authorize separate classes of shares of beneficial interest. The Trustees have authorized an unlimited number of common shares.
The Fund intends to hold annual meetings of common shareholders in compliance with the requirements of the NYSE.
Additional
shares of the Fund may be issued under certain circumstances pursuant to the Fund’s Dividend Reinvestment Plan, as defined
within the Fund’s organizational documents. Additional information concerning the Dividend Reinvestment Plan is included
within this report.
On
December 16, 2020, the Board announced that it approved a share repurchase program. Under the share repurchase program, the Fund
could purchase up to 5% of its outstanding common shares beginning January 19, 2021 in the open market, until January 19, 2022.
On December 13, 2021 the Board announced that it approved a renewal of the share repurchase program, under which the Fund may
purchase up to approximately 4% of its outstanding common shares beginning January 20, 2022 in the open market, until January
20, 2023. On December 19, 2022 the Board announced that it approved a renewal of the share repurchase program. Under the share
repurchase program, the Fund may purchase up to approximately 3.5% of its outstanding common shares beginning January 21, 2023
in the open market, until January 21, 2024.
The
total shares remaining that can be repurchased as of April 30, 2023 are 180,557. During the six months ended April 30, 2023, the
Fund repurchased 67,431 shares (1.00% of the shares outstanding at April 30, 2023) of its shares for a total cost of $687,267
at an average discount of 16.12% of net asset value. The average market price paid per share for the six months ended April 30,
2023 was $10.19.
7.
PORTFOLIO INFORMATION
For
the six months April 30, 2023, the cost of purchases and proceeds from sales of securities, excluding short-term securities, were
as follows:
| Purchases |
Sales |
| $21,762,056 |
$24,565,282 |
8.
TAXES
Classification
of Distributions: Net investment income/(loss) and net realized gain/(loss) may differ for financial statement and tax purposes.
The character of distributions made during the year from net investment income or net realized gains may differ from its ultimate
characterization for federal income tax purposes. Also, due to the timing of dividend distributions, the fiscal year in which
amounts are distributed may differ from the fiscal year in which the income or realized gain was recorded by the Fund.
| Semi-Annual
Report | April 30, 2023 |
31 |
| Principal Real Estate Income Fund |
Notes to Financial Statements |
April
30, 2023 (Unaudited)
The
amounts and characteristics of tax basis distributions and composition of distributable earnings/(accumulated losses) are finalized
at fiscal year-end and are not available for the six months ended April 30, 2023.
The
tax character of distributions paid during the year ended October 31, 2022 was as follows:
| | |
For the Year Ended
October 31, 2022 | |
| Ordinary Income | |
$ | 7,473,490 | |
| Return
of Capital | |
| 650,610 | |
| Total | |
$ | 8,124,100 | |
Tax
Basis of Investments: Net unrealized appreciation/(depreciation) of investments based on federal tax cost as of April 30,
2023, were as follows:
| Cost of investments for income tax purposes | |
$ | 130,530,294 | |
| Gross appreciation on investments (excess of value over tax cost) | |
$ | 4,239,377 | |
| Gross depreciation on investments (excess of tax cost over value) | |
| (21,215,296 | ) |
| Net unrealized depreciation on investments | |
$ | (16,975,919 | ) |
These
differences are primarily attributed to the different tax treatment of wash sales. In addition, certain tax cost basis adjustments
are finalized at fiscal year-end and therefore have not been determined as of April 30, 2023.
Federal
Income Tax Status: For federal income tax purposes, the Fund currently qualifies, and intends to remain qualified, as a regulated
investment company under the provisions of Subchapter M of the Code by distributing substantially all of its investment company
taxable net income and realized gain, not offset by capital loss carryforwards, if any, to its shareholders. No provision for
federal income taxes has been made.
As
of and during the six months ended April 30, 2023, the Fund did not have a liability for any unrecognized tax benefits. The Fund
files U.S. federal, state, and local tax returns as required. The Fund’s tax returns are subject to examination by the relevant
tax authorities until expiration of the applicable statute of limitations, which is generally three years after the filing of
the tax return. Tax returns for open years have incorporated no uncertain tax positions that require a provision for income taxes.
The
Fund recognizes interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the Statement of
Operations. During the six months ended April 30, 2023, the Fund did not incur any interest or penalties.
| Principal Real Estate Income Fund |
Notes to Financial Statements |
April
30, 2023 (Unaudited)
9. SUBSEQUENT EVENTS
Subsequent
to April 30, 2023, the Fund paid the following distributions:
| Ex-Date |
Record
Date |
Payable
Date |
Rate
(per share) |
| May 15, 2023 |
May
16, 2023 |
May
31, 2023 |
$0.105 |
| June 15,
2023 |
June
16, 2023 |
June
30, 2023 |
$0.105 |
| Semi-Annual
Report | April 30, 2023 |
33 |
| Principal Real Estate Income Fund |
Dividend Reinvestment Plan |
April
30, 2023 (Unaudited)
Unless
the registered owner of Common Shares elects to receive cash by contacting DST Systems, Inc. (the “Plan Administrator”),
all dividends declared on Common Shares will be automatically reinvested by the Plan Administrator for shareholders in the Fund’s
Automatic Dividend Reinvestment Plan (the “Plan”), in additional Common Shares. Common Shareholders who elect not
to participate in the Plan will receive all dividends and other distributions in cash paid by check mailed directly to the shareholder
of record (or, if the Common Shares are held in street or other nominee name, then to such nominee) by the Plan Administrator
as dividend disbursing agent. Participation in the Plan is completely voluntary and may be terminated or resumed at any time without
penalty by notice if received and processed by the Plan Administrator prior to the dividend record date; otherwise such termination
or resumption will be effective with respect to any subsequently declared dividend or other distribution. Such notice will be
effective with respect to a particular dividend or other distribution (together, a “Dividend”). Some brokers may automatically
elect to receive cash on behalf of Common Shareholders and may re-invest that cash in additional Common Shares.
The
Plan Administrator will open an account for each Common Shareholder under the Plan in the same name in which such Common Shareholder’s
Common Shares are registered. Whenever the Fund declares a Dividend payable in cash, non-participants in the Plan will receive
cash and participants in the Plan will receive the equivalent in Common Shares. The Common Shares will be acquired by the Plan
Administrator for the participants’ accounts, depending upon the circumstances described below, either (i) through receipt
of additional unissued but authorized Common Shares from the Fund (“Newly Issued Common Shares”) or (ii) by purchase
of outstanding Common Shares on the open market (“Open-Market Purchases”) on the NYSE or elsewhere. If, on the payment
date for any Dividend, the closing market price plus estimated brokerage commissions per Common Share is equal to or greater than
the NAV per Common Share, the Plan Administrator will invest the Dividend amount in Newly Issued Common Shares on behalf of the
participants. The number of Newly Issued Common Shares to be credited to each participant’s account will be determined by
dividing the dollar amount of the Dividend by the NAV per Common Share on the payment date; provided that, if the NAV is less
than or equal to 95% of the closing market value on the payment date, the dollar amount of the Dividend will be divided by 95%
of the closing market price per Common Share on the payment date. If, on the payment date for any Dividend, the NAV per Common
Share is greater than the closing market value plus estimated brokerage commissions, the Plan Administrator will invest the Dividend
amount in Common Shares acquired on behalf of the participants in Open-Market Purchases.
In
the event of a market discount on the payment date for any Dividend, the Plan Administrator will have until the last business
day before the next date on which the Common Shares trade on an “exdividend” basis or 30 days after the payment date
for such Dividend, whichever is sooner (the “Last Purchase Date”), to invest the Dividend amount in Common Shares
acquired in Open-Market Purchases. It is contemplated that the Fund will pay monthly income Dividends. If, before the Plan Administrator
has completed its Open-Market Purchases, the market price per Common Share exceeds the NAV per Common Share, the average per Common
Share purchase price paid by the Plan Administrator may exceed the NAV of the Common Shares, resulting in the acquisition of fewer
Common Shares than if the Dividend had been paid in Newly Issued Common Shares on the Dividend payment date. Because of the foregoing
difficulty with respect to Open-Market Purchases, the Plan provides that if the Plan Administrator is unable to invest the full
Dividend amount in Open-Market Purchases during the purchase period or if the market discount shifts to a market premium during
the purchase period, the Plan Administrator may cease making Open-Market Purchases and may invest the uninvested portion of the
Dividend amount in Newly Issued Common Shares at the NAV per Common Share at the close of business on the Last Purchase Date provided
that, if the NAV is less than or equal to 95% of the then current market price per Common Share, the dollar amount of the Dividend
will be divided by 95% of the market price on the payment date for purposes of determining the number of shares issuable under
the Plan.
| Principal Real Estate Income Fund |
Dividend Reinvestment Plan |
April
30, 2023 (Unaudited)
The
Plan Administrator maintains all shareholders’ accounts in the Plan and furnishes written confirmation of all transactions
in the accounts, including information needed by shareholders for tax records. Common Shares in the account of each Plan participant
will be held by the Plan Administrator on behalf of the Plan participant, and each shareholder proxy will include those shares
purchased or received pursuant to the Plan. The Plan Administrator will forward all proxy solicitation materials to participants
and vote proxies for shares held under the Plan in accordance with the instructions of the participants.
In
the case of Common Shareholders such as banks, brokers or nominees which hold shares for others who are the beneficial owners,
the Plan Administrator will administer the Plan on the basis of the number of Common Shares certified from time to time by the
record shareholder’s name and held for the account of beneficial owners who participate in the Plan.
There
will be no brokerage charges with respect to Common Shares issued directly by the Fund. However, each participant will pay a pro
rata share of brokerage commissions incurred in connection with Open-Market Purchases. The automatic reinvestment of Dividends
will not relieve participants of any federal, state or local income tax that may be payable (or required to be withheld) on such
Dividends. Participants that request a sale of Common Shares through the Plan Administrator are subject to brokerage commissions.
The
Fund reserves the right to amend or terminate the Plan. There is no direct service charge to participants with regard to purchases
in the Plan; however, the Fund reserves the right to amend the Plan to include a service charge payable by the participants.
All
correspondence or questions concerning the Plan should be directed to the Plan Administrator. 430 West 7th Street, Kansas City,
MO 64105-1407 or toll free: 1-855-552-6280
| Semi-Annual
Report | April 30, 2023 |
35 |
| Principal Real Estate Income Fund |
Additional Information |
April
30, 2023 (Unaudited)
PORTFOLIO
HOLDINGS
The
Fund files a complete schedule of portfolio holdings with the U.S. Securities and Exchange Commission (“SEC”) for
the first and third quarters of each fiscal year on Form N-PORT within 60 days after the end of the period. Copies of the Fund’s
Form N-PORT are available without a charge, upon request, by contacting the Fund at 1-855-838-9485 and on the SEC’s website
at http://www.sec.gov.
PROXY
VOTING
A
description of the Fund’s proxy voting policies and procedures is available (1) without charge, upon request, by calling
1-855-838-9485, (2) on the Fund’s website located at http://www.principalcef.com, or (3) on the SEC’s website at http://www.sec.gov.
Information regarding how the Fund voted proxies relating to portfolio securities during the twelve- month period ended June 30th
is available on the SEC’s website at http://www.sec.gov.
SECTION
19(a) NOTICES
The
following table sets forth the estimated amount of the sources of distribution for purposes of Section 19 of the Investment Company
Act of 1940, as amended, and the related rules adopted there under. The Fund estimates the following percentages, of the total
distribution amount per share, attributable to (i) current and prior fiscal year net investment income, (ii) net realized shortterm
capital gain, (iii) net realized long-term capital gain and (iv) return of capital or other capital source as a percentage of
the total distribution amount. These percentages are disclosed for the fiscal year-to-date cumulative distribution amount per
share for the Fund. The amounts and sources of distributions reported in these 19(a) notices are only estimates and not for tax
reporting purposes. The actual amounts and sources of the amounts for tax reporting purposes will depend upon the Fund’s
investment experience during the remainder of the calendar year and may be subject to changes based on tax regulations. 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.
Per
Share Cumulative Distributions
for
the Six Months Ended April 30, 2023 |
|
Percentage
of the Total
Cumulative
Distributions for the
Six
Months Ended April 30, 2023 |
| Net
Investment Income |
Short-Term
Capital Gains |
Long-Term
Capital Gains |
Return
of Capital |
Total
Per Share |
|
Net
Investment Income |
Short-Term
Capital Gains |
Long-Term
Capital Gains |
Return
of Capital |
Total
Per Share |
| $0.2487 |
$0.00 |
$0.00 |
$0.3813 |
$0.6300 |
39.48% |
0.00% |
0.00% |
60.52% |
100.00% |
| Principal Real Estate Income Fund |
Additional Information |
April
30, 2023 (Unaudited)
STOCKHOLDER
MEETING RESULTS
On
April 12, 2023 the Fund held a Meeting of Stockholders to consider the proposal set forth below: The following votes were recorded:
Proposal
1: The election of one (1) Trustee of the Fund to a three-year term to expire at the Fund’s 2026 Annual Meeting of Stockholders
or until his successor is duly elected and qualified.
Election
of Jerry Rutledge as a Trustee of the Fund to a three-year term to expire at the Fund’s 2026 Annual Meeting of Stockholders
or until his successor is duly elected and qualified.
| |
Shares voted |
% of Shares
voted |
| For |
3,660,554 |
73.894% |
| Against |
1,293,256 |
26.106% |
| Abstain |
0 |
0.000% |
| Total |
4,953,810 |
100.000% |
UNAUDITED
TAX INFORMATION
Of
the distributions paid by the Fund from ordinary income for the calendar year ended December 31, 2022, the following percentages
met the requirements to be treated as qualifying for the corporate dividends received deduction and qualified dividend income:
| |
Dividend
Received Deduction |
Qualified
Dividend Income |
| Principal
Real Estate Income Fund |
0.08% |
5.07% |
Of
the distributions paid by the Fund for the calendar year ended December 31, 2022, pursuant to Section 852(b)(3) of the Internal
Revenue Code, the Fund had no long-term capital gain dividends.
In
early 2023, if applicable, shareholders of record should have received this information for the distributions paid to them by
the Fund during the calendar year 2022 via Form 1099. The Fund will notify shareholders in early 2024 of amounts paid to them
by the Fund, if any, during the calendar year 2023.
LICENSING
AGREEMENT
Morningstar
The
Fund is not sponsored, endorsed, sold or promoted by Morningstar, Inc. or any of its affiliates (all such entities, collectively,
“Morningstar Entities”). The Morningstar Entities make no representation or warranty, express or implied, to the owners
of the Fund or any member of the public regarding the advisability of investing in mutual funds generally or in the Fund in particular
or the ability of the Morningstar Index Data to track general mutual fund market performance.
THE
MORNINGSTAR ENTITIES DO NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE MORNINGSTAR INDEX DATA OR ANY DATA INCLUDED
THEREIN AND MORNINGSTAR ENTITIES SHALL HAVE NO LIABILITY FOR ANY ERRORS, OMISSIONS, OR INTERRUPTIONS THEREIN.
| Semi-Annual
Report | April 30, 2023 |
37 |
| Principal Real Estate Income Fund |
Additional Information |
April
30, 2023 (Unaudited)
CUSTODIAN
AND TRANSFER AGENT
State
Street Bank and Trust Company, located at State Street Financial Center, One Congress Street, Suite 1, Boston, MA 02114-2016,
serves as the Fund’s custodian and will maintain custody of the securities and cash of the Fund.
DST
Systems, Inc., located at 333 West 11th Street, 5th Floor, Kansas City, Missouri 64105, serves as the Fund’s transfer agent
and registrar.
LEGAL
COUNSEL
Dechert
LLP, located at 1095 Avenue of the Americas, New York, New York 10036, serves as legal counsel to the Trust.
INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
Cohen
& Company, Ltd. is the independent registered public accounting firm for the Fund.
| Principal
Real Estate Income Fund |
Privacy
Policy |
April
30, 2023 (Unaudited)
| FACTS |
WHAT DOES PRINCIPAL REAL ESTATE INCOME FUND DO WITH YOUR PERSONAL INFORMATION? |
| WHY? |
Financial companies choose how they share your personal information. Federal law gives consumers the right
to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information.
Please read this notice carefully to understand what we do. |
| WHAT? |
The types of personal information we collect and share depend on the product or service you have with
us. This information can include:
● Social
Security number
● Assets
● Retirement
Assets
● Transaction
History
● Checking
Account Information
● Purchase
History
● Account
Balances
● Account
Transactions
● Wire
Transfer Instructions
When you are no longer our
customer, we continue to share your information as described in this notice. |
| HOW? |
All financial companies need to share customers’ personal information to run their everyday business.
In the section below, we list the reasons financial companies can share their customers’ personal information; the reasons
Principal Real Estate Income Fund chooses to share; and whether you can limit this sharing. |
REASONS WE CAN SHARE YOUR
PERSONAL INFORMATION |
DOES PRINCIPAL REAL ESTATE INCOME FUND SHARE? |
CAN YOU LIMIT THIS SHARING? |
|
For our everyday business purposes –
such as to process your transactions, maintain your
account(s), respond to court orders and legal investigations, or report to credit bureaus |
Yes |
No |
|
For our marketing purposes –
to offer our products and services to you |
No |
We don't share |
| For joint marketing with other financial companies |
No |
We don't share |
|
For our affiliates’ everyday business purposes –
information about your transactions and experiences |
No |
We don't share |
For our affiliates’ everyday business purposes –
information about your creditworthiness |
No |
We don't share |
| For non-affiliates to market to you |
No |
We don't share |
| QUESTIONS? |
Call 1-855-838-9485 |
|
|
| Semi-Annual
Report | April 30, 2023 |
39 |
| Principal
Real Estate Income Fund |
Privacy
Policy |
April
30, 2023 (Unaudited)
| WHO WE ARE |
| Who is providing this notice? |
Principal Real Estate Income Fund |
| WHAT WE DO |
| How does Principal Real Estate Income protect my personal information? |
To protect your personal information from unauthorized access
and use, we use security measures that comply with federal law. These measures include computer safeguards and secured files and
buildings.
Our service providers are held accountable for adhering to strict
policies and procedures to prevent any misuse of your nonpublic personal information. |
| How does Principal Real Estate Income collect my personal information? |
We collect your personal information, for example, when you
● Open
an account
● Provide
account information
● Give
us your contact information
● Make
deposits or withdrawals from your account
● Make
a wire transfer
● Tell
us where to send the money
● Tells
us who receives the money
● Show
your government-issued ID
● Show
your driver’s license
We also collect your personal information from other companies. |
| Why can’t I limit all sharing? |
Federal law gives you the right to limit only:
● Sharing
for affiliates’ everyday business purposes – information about your creditworthiness
● Affiliates
from using your information to market to you
● Sharing
for nonaffiliates to market to you
State laws and individual companies may give you additional
rights to limit sharing. |
| Principal
Real Estate Income Fund |
Privacy
Policy |
April
30, 2023 (Unaudited)
| DEFINITIONS |
|
| Affiliates |
Companies related by common ownership or control. They
can be financial and nonfinancial companies.
● Principal
Real Estate Income Fund does not share with our affiliates for marketing purposes. |
| Non-affiliates |
Companies not related by common ownership or control.
They can be financial and nonfinancial companies.
● Principal
Real Estate Income Fund does not share with nonaffiliates so they can market to you. |
| Joint marketing |
A formal agreement between nonaffiliated financial companies
that together market financial products or services to you.
● Principal
Real Estate Income Fund does not jointly market. |
| Semi-Annual
Report | April 30, 2023 |
41 |
Not
applicable to semi-annual report.
| Item
3. | Audit
Committee Financial Expert. |
Not
applicable to semi-annual report.
| Item
4. | Principal
Accountant Fees and Services. |
Not
applicable to semi-annual report.
| Item
5. | Audit
Committee of Listed Registrants. |
Not
applicable.
| Item
6. | Schedule
of Investments. |
| (a) | Schedule
of Investments is included as part of the Report to Stockholders filed under Item 1(a)
of this form. |
| (b) | Not
applicable to the Registrant. |
| Item
7. | Disclosure
of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. |
Not
applicable to semi-annual report.
| Item
8. | Portfolio
Managers of Closed-End Management Investment Companies. |
| (a) | Not
applicable to semi-annual report. |
| Item
9. | Purchases
of Equity Securities by Closed-End Management Company and Affiliated Purchasers. |
| Period
|
(a)
Total Number
of
Shares
(or Units)
Purchased |
(b) Average Price
Paid per Share
(or Unit) |
(c) Total Number
of
Shares
(or Units)
Purchased as
Part
of Publicly Announced
Plans or Programs |
(d) Maximum Number
(or Approximate
Dollar Value) of
Shares
(or Units)
that May
Yet Be Purchased
Under the Plans
or Programs |
| November
1, 2022 – November 30, 2022 |
7,772 |
$10.95 |
7,772 |
240,216 |
| December
1, 2022 – December 31, 2022 |
27,476 |
$10.76 |
27,476 |
212,740 |
| January
1, 2023 – January 31, 2023 |
2,075 |
$10.54 |
2,075 |
210,665 |
| February
1, 2023 – February 28, 2023 |
– |
$- |
– |
210,665 |
| March
1, 2023 – March 31, 2023 |
3,443 |
$9.72 |
3,443 |
207,222 |
| April
1, 2023 – April 30, 2023 |
26,665 |
$9.43 |
26,665 |
180,557 |
| Total |
67,431 |
$10.19 |
67,431 |
180,557 |
The
Repurchase Program was announced on December 16, 2020. On December 19, 2022 the Board announced that it approved a renewal of
the Repurchase Program.
The
Fund was approved to purchase up to 3.5% of its outstanding shares through January 21, 2024. |
| Item
10. | Submission
of Matters to a Vote of Security Holders. |
There
have been no material changes to procedures by which shareholders may recommend nominees to the registrant’s board of directors.
| Item
11. | Controls
and Procedures. |
| (a) | The
Registrant’s principal executive officer and principal financial officer have concluded
that the Registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c)
under the Investment Company Act of 1940, as amended) are effective based on their evaluation
of these controls and procedures as of a date within 90 days of the filing date of this
document. |
| (b) | There
was no change in the Registrant's internal control over financial reporting (as defined
in Rule 30a-3(d) under the Investment Company Act of 1940, as amended) during the period
covered by this report that has materially affected, or is reasonably likely to materially
affect, the Registrant's internal control over financial reporting. |
Item
12. Disclosure of Securities Lending Activities for Closed-End Management Investment Companies.
Item
13. Exhibits.
| (a)(1) | Not
applicable to semi-annual report |
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused
this report to be signed on its behalf by the undersigned, thereunto duly authorized.
PRINCIPAL
REAL ESTATE INCOME FUND
| By: |
/s/
Kathryn Burns |
|
| |
Kathryn Burns |
|
| |
President (Principal Executive Officer) |
|
| |
|
|
| Date: |
July 7, 2023 |
|
Pursuant
to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed
below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| By: |
/s/
Kathryn Burns |
|
| |
Kathryn Burns |
|
| |
President (Principal Executive Officer) |
|
| |
|
|
| Date: |
July 7, 2023 |
|
| By: |
/s/
Erich Rettinger |
|
| |
Erich Rettinger |
|
| |
Treasurer (Principal Financial Officer) |
|
| |
|
|
| Date: |
July 7, 2023 |
|
EX-99CERT
CERTIFICATIONS
PURSUANT TO SECTION 302 OF THE
SARBANES-OXLEY
ACT OF 2002
I,
Kathryn Burns, certify that:
| 1. | I
have reviewed this report on Form N-CSR of Principal Real Estate Income Fund; |
| 2. | Based
on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect
to the period covered by this report; |
| 3. | Based
on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material
respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are
required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; |
| 4. | The
registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting
(as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: |
| (a) | Designed
such disclosure controls and procedures, or caused such disclosure controls and procedures
to be designed under our supervision, to ensure that material information relating to
the registrant, including its consolidated subsidiaries, is made known to us by others
within those entities, particularly during the period in which this report is being prepared; |
| (b) | Designed
such internal control over financial reporting, or caused such internal control over
financial reporting to be designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with generally accepted accounting principles; |
| (c) | Evaluated
the effectiveness of the registrant’s disclosure controls and procedures and presented
in this report our conclusions about the effectiveness of the disclosure controls and
procedures, as of a date within 90 days prior to the filing date of this report based
on such evaluation; and |
| (d) | Disclosed
in this report any change in the registrant’s internal control over financial reporting that occurred during the period
covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal
control over financial reporting; and |
| 5. | The
registrant’s other certifying officer(s) and I have disclosed to the registrant’s
auditors and the audit committee of the registrant’s board of directors (or persons
performing the equivalent functions): |
| (a) | All
significant deficiencies and material weaknesses in the design or operation of internal
control over financial reporting which are reasonably likely to adversely affect the
registrant’s ability to record, process, summarize, and report financial information;
and |
| (b) | Any
fraud, whether or not material, that involves management or other employees who have
a significant role in the registrant’s internal control over financial reporting. |
| By: |
/s/
Kathryn Burns |
|
| |
Kathryn Burns |
|
| |
President (Principal Executive Officer) |
|
| |
|
|
| Date: |
July 7, 2023 |
|
I,
Erich Rettinger, certify that:
| 1. | I
have reviewed this report on Form N-CSR of Principal Real Estate Income Fund; |
| 2. | Based
on my knowledge, this report does not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with respect to the
period covered by this report; |
| 3. | Based
on my knowledge, the financial statements, and other financial information included in
this report, fairly present in all material respects the financial condition, results
of operations, changes in net assets, and cash flows (if the financial statements are
required to include a statement of cash flows) of the registrant as of, and for, the
periods presented in this report; |
| 4. | The
registrant’s other certifying officer(s) and I are responsible for establishing
and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under
the Investment Company Act of 1940) and internal control over financial reporting (as
defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant
and have: |
| (a) | Designed
such disclosure controls and procedures, or caused such disclosure controls and procedures
to be designed under our supervision, to ensure that material information relating to
the registrant, including its consolidated subsidiaries, is made known to us by others
within those entities, particularly during the period in which this report is being prepared; |
| (b) | Designed
such internal control over financial reporting, or caused such internal control over
financial reporting to be designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with generally accepted accounting principles; |
| (c) | Evaluated
the effectiveness of the registrant’s disclosure controls and procedures and presented
in this report our conclusions about the effectiveness of the disclosure controls and
procedures, as of a date within 90 days prior to the filing date of this report based
on such evaluation; and |
| (d) | Disclosed
in this report any change in the registrant’s internal control over financial reporting
that occurred during the period covered by this report that has materially affected,
or is reasonably likely to materially affect, the registrant’s internal control
over financial reporting; and |
| 5. | The
registrant’s other certifying officer(s) and I have disclosed to the registrant’s
auditors and the audit committee of the registrant’s board of directors (or persons
performing the equivalent functions): |
| (a) | All
significant deficiencies and material weaknesses in the design or operation of internal
control over financial reporting which are reasonably likely to adversely affect the
registrant’s ability to record, process, summarize, and report financial information;
and |
| (b) | Any
fraud, whether or not material, that involves management or other employees who have
a significant role in the registrant’s internal control over financial reporting. |
| By: |
/s/
Erich Rettinger |
|
| |
Erich Rettinger |
|
| |
Treasurer (Principal Financial Officer) |
|
| |
|
|
| Date: |
July 7, 2023 |
|
EX-99.906CERT
This
certification is furnished pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. § 1350, and accompanies the
report on Form N-CSR (the “Report”) for the period ended April 30, 2023 of Principal Real Estate Income Fund (the
“Company”).
I,
Kathryn Burns, the President and Principal Executive Officer of the Company, certify that:
| (i) | the
Report fully complies with the requirements of Section 13(a) or Section 15(d), as applicable,
of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and |
| (ii) | the
information contained in the Report fairly presents, in all material respects, the financial
condition and results of operations of the Company. |
| Date: |
July 7, 2023 |
|
| |
|
|
| By: |
/s/ Kathryn
Burns |
|
| |
Kathryn Burns |
|
| |
President (Principal Executive Officer) |
|
This
certification is furnished pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. § 1350, and accompanies the
report on Form N-CSR (the “Report”) for the period ended April 30, 2023 of Principal Real Estate Income Fund (the
“Company”).
I,
Erich Rettinger, the Treasurer and Principal Financial Officer of the Company, certify that:
| (i) | the
Report fully complies with the requirements of Section 13(a) or Section 15(d), as applicable,
of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and |
| (ii) | the
information contained in the Report fairly presents, in all material respects, the financial
condition and results of operations of the Company. |
| Date: |
July 7, 2023 |
|
| |
|
|
| By: |
/s/ Erich
Rettinger |
|
| |
Erich Rettinger |
|
| |
Treasurer (Principal Financial Officer) |
|
PRINCIPAL
REAL ESTATE INCOME FUND
Principal
Real Estate Fund Announces Notification of Sources of Distribution
DENVER
– November 30, 2022 - The Principal Real Estate Income Fund (NYSE:PGZ) announces the sources of a distribution paid
on November 30, 2022 of $0.1050 per share to shareholders of record at the close of business on November 15, 2022, pursuant to
the Fund's managed distribution plan. This press release is issued as required by an exemptive order granted to the Fund by the
U.S. Securities and Exchange Commission and includes the notice below sent to shareholders regarding the source of the distribution.
Statement
Pursuant to Section 19(a) of the Investment Company Act of 1940
The
following table sets forth the estimated amount of the sources of distribution for purposes of Section 19 of the Investment Company
Act of 1940, as amended, and the related rules adopted thereunder. In accordance with generally accepted accounting principles
(“GAAP”), the Fund estimates the following percentages, of the total distribution amount per share, attributable to
(i) current and prior fiscal year net investment income, (ii) net realized short-term capital gain, (iii) net realized long-term
capital gain and (iv) return of capital or other capital source as a percentage of the total distribution amount. These percentages
are disclosed for the current distribution as well as the fiscal year-to-date cumulative distribution amount per share for the
Fund.
| Current
Distribution from: |
Per Share ($)
|
%
|
| Net Investment Income |
0.0081 |
7.71% |
| Net Realized Short-Term Capital Gain |
0.0000 |
0.00% |
| Net Realized Long-Term Capital Gain |
0.0000 |
0.00% |
| Return of Capital or other Capital Source |
0.0969 |
92.29% |
| Total (per common share) |
0.1050 |
100.00% |
| |
|
|
Fiscal
Year-to-Date Cumulative |
|
|
| Distributions from: |
Per Share ($)
|
%
|
| Net Investment Income |
0.0081 |
7.71% |
| Net Realized Short-Term Capital Gain |
0.00000 |
0.00% |
| Net Realized Long-Term Capital Gain |
0.00000 |
0.00% |
| Return of Capital or other Capital Source |
0.0969 |
92.29% |
| Total
(per common share) |
0.1050 |
100.00% |
The
Fund estimates that it has distributed more than its income; 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
timing and character of distributions for federal income tax purposes are determined in accordance with income tax regulations
which may differ from GAAP. As such, all or a portion of this distribution may be reportable as taxable income on your 2022 federal
income tax return. The final tax character of any distribution declared in 2022 will be determined in January 2023 and reported
to you on IRS Form 1099-DIV.
The
amounts and sources of distributions reported in this 19(a) Notice are only estimates and not for tax reporting purposes. 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. 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.
Presented
below are return figures, based on the change in the Fund’s Net Asset Value per share (“NAV”), compared to the
annualized distribution rate for this current distribution as a percentage of the NAV on the last day of the month prior to distribution
record date.
Fund
Performance & Distribution Information
| Fiscal
YTD (11/1/21 – 10/31/22) |
| Annualized
Distribution Rate as % of NAV^ |
9.84% |
| Cumulative
Distribution Rate on NAV^ |
0.82% |
| Cumulative
Total Return on NAV* |
(21.36)% |
| |
|
Average
Annual Total Return on NAV for the 5 Year Period Ended 10/31/2022** |
(0.31)% |
| ^ | Based
on the Fund’s NAV as of October 31, 2022. |
| * | Cumulative
fiscal year-to-date return is based on the change in NAV including distributions paid and assuming reinvestment of these distributions
for the period November 1, 2021 through October 31, 2022. |
| ** | The
5 year average annual total return is based on change in NAV including distributions paid and assuming reinvestment of these distributions
and is through the last business day of the month prior to the month of the current distribution record date. |
While
the NAV performance may be indicative of the Fund’s investment performance, it does not measure the value of a shareholder’s
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. Past performance does not guarantee future
results. Shareholders 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 Plan.
Furthermore,
the Board of Trustees reviews the amount of any potential distribution and the income, capital gain or capital available. The
Board of Trustees will continue to monitor the Fund’s distribution level, taking into consideration the Fund’s net
asset value and the financial market environment. The Fund’s distribution policy is subject to modification by the Board
of Trustees at any time. The distribution rate should not be considered the dividend yield or total return on an investment in
the Fund.
Please
retain this document for your records.
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.
PRINCIPAL REAL ESTATE INCOME
FUND
Principal Real Estate Fund Announces
Notification of Sources of Distribution
DENVER – December 30, 2022
- The Principal Real Estate Income Fund (NYSE:PGZ) announces the sources of a distribution paid on December 30, 2022 of $0.1050 per
share to shareholders of record at the close of business on December 15, 2022, pursuant to the Fund's managed distribution plan. This
press release is issued as required by an exemptive order granted to the Fund by the U.S. Securities and Exchange Commission and includes
the notice below sent to shareholders regarding the source of the distribution.
Statement Pursuant to Section 19(a)
of the Investment Company Act of 1940
The following table sets forth the estimated
amount of the sources of distribution for purposes of Section 19 of the Investment Company Act of 1940, as amended, and the related
rules adopted thereunder. In accordance with generally accepted accounting principles (“GAAP”), the Fund estimates the
following percentages, of the total distribution amount per share, attributable to (i) current and prior fiscal year net investment
income, (ii) net realized short-term capital gain, (iii) net realized long-term capital gain and (iv) return of capital or other
capital source as a percentage of the total distribution amount. These percentages are disclosed for the current distribution as
well as the fiscal year-to-date cumulative distribution amount per share for the Fund.
| Current Distribution from: |
|
|
| |
Per Share ($) |
% |
| Net Investment Income |
0.0643 |
61.24% |
| Net Realized Short-Term Capital Gain |
0.0000 |
0.00% |
| Net Realized Long-Term Capital Gain |
0.0000 |
0.00% |
| Return of Capital or other Capital Source |
0.0407 |
38.76% |
| Total (per common share) |
0.1050 |
100.00% |
| |
|
|
| Fiscal Year-to-Date Cumulative |
|
|
| Distributions from: |
|
|
| |
Per Share ($) |
% |
| Net Investment Income |
0.0724 |
34.48% |
| Net Realized Short-Term Capital Gain |
0.0000 |
0.00% |
| Net Realized Long-Term Capital Gain |
0.0000 |
0.00% |
| Return of Capital or other Capital Source |
0.1376 |
65.52% |
| Total (per common share) |
0.2100 |
100.00% |
The Fund estimates that it has distributed
more than its income; 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 timing and character of distributions
for federal income tax purposes are determined in accordance with income tax regulations which may differ from GAAP. As such, all or a
portion of this distribution may be reportable as taxable income on your 2022 federal income tax return. The final tax character of any
distribution declared in 2022 will be determined in January 2023 and reported to you on IRS Form 1099-DIV.
The amounts and sources of distributions
reported in this 19(a) Notice are only estimates and not for tax reporting purposes. 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. 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.
Presented below are return figures,
based on the change in the Fund’s Net Asset Value per share (“NAV”), compared to the annualized distribution rate for
this current distribution as a percentage of the NAV on the last day of the month prior to distribution record date.
Fund Performance & Distribution
Information
| Fiscal YTD (11/1/22 – 11/30/22) |
| Annualized Distribution Rate as % of NAV^ |
9.58% |
| Cumulative Distribution Rate on NAV^ |
0.80% |
| Cumulative Total Return on NAV* |
3.70% |
| |
|
| Average Annual Total Return on NAV for the 5 Year Period Ended 11/30/2022** |
0.12% |
| ^ | Based on the Fund’s NAV as of November 30, 2022. |
| * | Cumulative fiscal year-to-date return is based on the change
in NAV including distributions paid and assuming reinvestment of these distributions for the period November 1, 2022 through November
30, 2022. |
| ** | The 5 year average annual total return is based on change in
NAV including distributions paid and assuming reinvestment of these distributions and is through the last business day of the month prior
to the month of the current distribution record date. |
While the NAV performance may be indicative
of the Fund’s investment performance, it does not measure the value of a shareholder’s 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. Past performance does not guarantee future results. Shareholders 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
Plan.
Furthermore, the Board of Trustees
reviews the amount of any potential distribution and the income, capital gain or capital available. The Board of Trustees will continue
to monitor the Fund’s distribution level, taking into consideration the Fund’s net asset value and the financial market environment.
The Fund’s distribution policy is subject to modification by the Board of Trustees at any time. The distribution rate should not
be considered the dividend yield or total return on an investment in the Fund.
Please retain this document for your records.
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.
Media Contact:
Christopher Murphy*
Head of Advisor
Marketing
SS&C ALPS Advisors
720.277.7861
Christopher.murphy@alpsinc.com
| * | Registered Representative of ALPS Distributors, Inc. |
###
PRE000359 11/30/2023
PRINCIPAL REAL ESTATE INCOME
FUND
Principal Real Estate Fund Announces Notification
of Sources of Distribution
DENVER – January 31, 2023 -
The Principal Real Estate Income Fund (NYSE:PGZ) announces the sources of a distribution paid on January 31, 2023 of $0.1050 per share
to shareholders of record at the close of business on January 13, 2023, pursuant to the Fund's managed distribution plan. This press release
is issued as required by an exemptive order granted to the Fund by the U.S. Securities and Exchange Commission and includes the notice
below sent to shareholders regarding the source of the distribution.
Statement Pursuant to Section 19(a)
of the Investment Company Act of 1940
The following table sets forth the estimated
amount of the sources of distribution for purposes of Section 19 of the Investment Company Act of 1940, as amended, and the related
rules adopted thereunder. In accordance with generally accepted accounting principles (“GAAP”), the Fund estimates the
following percentages, of the total distribution amount per share, attributable to (i) current and prior fiscal year net investment
income, (ii) net realized short-term capital gain, (iii) net realized long-term capital gain and (iv) return of capital or other
capital source as a percentage of the total distribution amount. These percentages are disclosed for the current distribution as
well as the fiscal year-to-date cumulative distribution amount per share for the Fund.
| Current Distribution from: |
|
|
| |
Per Share ($) |
% |
| Net Investment Income |
0.0644 |
61.33% |
| Net Realized Short-Term Capital Gain |
0.0000 |
0.00% |
| Net Realized Long-Term Capital Gain |
0.0000 |
0.00% |
| Return of Capital or other Capital Source |
0.0406 |
38.67% |
| Total (per common share) |
0.1050 |
100.00% |
| |
|
|
| Fiscal Year-to-Date Cumulative |
|
|
| Distributions from: |
|
|
| |
Per Share ($) |
% |
| Net Investment Income |
0.1368 |
43.43% |
| Net Realized Short-Term Capital Gain |
0.0000 |
0.00% |
| Net Realized Long-Term Capital Gain |
0.0000 |
0.00% |
| Return of Capital or other Capital Source |
0.1782 |
56.57% |
| Total (per common share) |
0.3150 |
100.00% |
The Fund estimates that it has distributed
more than its income; 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 timing and character of distributions
for federal income tax purposes are determined in accordance with income tax regulations which may differ from GAAP. As such, all or a
portion of this distribution may be reportable as taxable income on your 2023 federal income tax return. The final tax character of any
distribution declared in 2023 will be determined in January 2024 and reported to you on IRS Form 1099-DIV.
The amounts and sources of
distributions reported in this 19(a) Notice are only estimates and not for tax reporting purposes. 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. 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.
Presented below are return figures,
based on the change in the Fund’s Net Asset Value per share (“NAV”), compared to the annualized distribution rate for
this current distribution as a percentage of the NAV on the last day of the month prior to distribution record date.
Fund Performance & Distribution Information
| Fiscal YTD (11/1/22 – 12/31/22) |
| Annualized Distribution Rate as % of NAV^ |
10.02% |
| Cumulative Distribution Rate on NAV^ |
1.67% |
| Cumulative Total Return on NAV* |
0.12% |
| |
|
| Average Annual Total Return on NAV for the 5 Year Period Ended 12/31/2022** |
-0.87% |
| ^ | Based on the Fund’s NAV as of December 31, 2022. |
| * | Cumulative fiscal year-to-date return is based on the change
in NAV including distributions paid and assuming reinvestment of these distributions for the period November 1, 2022 through December
31, 2022. |
| ** | The 5 year average annual total return is based on change in
NAV including distributions paid and assuming reinvestment of these distributions and is through the last business day of the month prior
to the month of the current distribution record date. |
While the NAV performance may be
indicative of the Fund’s investment performance, it does not measure the value of a shareholder’s 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. Past performance does not guarantee future results. Shareholders 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 Plan.
Furthermore, the Board of Trustees reviews
the amount of any potential distribution and the income, capital gain or capital available. The Board of Trustees will continue to monitor
the Fund’s distribution level, taking into consideration the Fund’s net asset value and the financial market environment.
The Fund’s distribution policy is subject to modification by the Board of Trustees at any time. The distribution rate should not
be considered the dividend yield or total return on an investment in the Fund.
Please retain this document for your records.
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.
Media Contact:
Christopher Murphy*
Director of Marketing
SS&C ALPS Advisors
720.277.7861
christopher.murphy@sscinc.com
| * | Registered Representative of ALPS Distributors, Inc. |
###
PRE000366 01/31/2024
PRINCIPAL REAL ESTATE INCOME
FUND
Principal Real Estate Fund Announces Notification
of Sources of Distribution
DENVER – February 28, 2023 -
The Principal Real Estate Income Fund (NYSE:PGZ) announces the sources of a distribution paid on February 28, 2023 of $0.1050 per share
to shareholders of record at the close of business on February 10, 2023, pursuant to the Fund's managed distribution plan. This press
release is issued as required by an exemptive order granted to the Fund by the U.S. Securities and Exchange Commission and includes the
notice below sent to shareholders regarding the source of the distribution.
Statement Pursuant to Section 19(a)
of the Investment Company Act of 1940
The following table sets forth the estimated
amount of the sources of distribution for purposes of Section 19 of the Investment Company Act of 1940, as amended, and the related
rules adopted thereunder. In accordance with generally accepted accounting principles (“GAAP”), the Fund estimates the
following percentages, of the total distribution amount per share, attributable to (i) current and prior fiscal year net investment
income, (ii) net realized short-term capital gain, (iii) net realized long-term capital gain and (iv) return of capital or other
capital source as a percentage of the total distribution amount. These percentages are disclosed for the current distribution as
well as the fiscal year-to-date cumulative distribution amount per share for the Fund.
| Current Distribution from: |
|
|
| |
Per Share ($) |
% |
| Net Investment Income |
0.0000 |
0.00% |
| Net Realized Short-Term Capital Gain |
0.0000 |
0.00% |
| Net Realized Long-Term Capital Gain |
0.0000 |
0.00% |
| Return of Capital or other Capital Source |
0.1050 |
100.00% |
| Total (per common share) |
0.1050 |
100.00% |
| |
|
|
| Fiscal Year-to-Date Cumulative |
|
|
| Distributions from: |
|
|
| |
Per Share ($) |
% |
| Net Investment Income |
0.1368 |
32.57% |
| Net Realized Short-Term Capital Gain |
0.0000 |
0.00% |
| Net Realized Long-Term Capital Gain |
0.0000 |
0.00% |
| Return of Capital or other Capital Source |
0.2832 |
67.43% |
| Total (per common share) |
0.4200 |
100.00% |
The Fund estimates that it has distributed
more than its income; 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 timing and character of distributions
for federal income tax purposes are determined in accordance with income tax regulations which may differ from GAAP. As such, all or a
portion of this distribution may be reportable as taxable income on your 2023 federal income tax return. The final tax character of any
distribution declared in 2023 will be determined in January 2024 and reported to you on IRS Form 1099-DIV.
The amounts and sources of
distributions reported in this 19(a) Notice are only estimates and not for tax reporting purposes. 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. 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.
Presented below are return figures,
based on the change in the Fund’s Net Asset Value per share (“NAV”), compared to the annualized distribution rate for
this current distribution as a percentage of the NAV on the last day of the month prior to distribution record date.
Fund Performance & Distribution Information
| Fiscal YTD (11/1/22 – 1/31/23) |
| Annualized Distribution Rate as % of NAV^ |
9.89% |
| Cumulative Distribution Rate on NAV^ |
2.47% |
| Cumulative Total Return on NAV* |
2.39% |
| |
|
| Average Annual Total Return on NAV for the 5 Year Period Ended 1/31/2023** |
-0.52% |
| ^ | Based on the Fund’s NAV as of January 31, 2023. |
| * | Cumulative fiscal year-to-date return is based on the change
in NAV including distributions paid and assuming reinvestment of these distributions for the period November 1, 2022 through January
31, 2023. |
| ** | The 5 year average annual total return is based on change in
NAV including distributions paid and assuming reinvestment of these distributions and is through the last business day of the month prior
to the month of the current distribution record date. |
While the NAV performance may be
indicative of the Fund’s investment performance, it does not measure the value of a shareholder’s 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. Past performance does not guarantee future results. Shareholders 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 Plan.
Furthermore, the Board of Trustees reviews
the amount of any potential distribution and the income, capital gain or capital available. The Board of Trustees will continue to monitor
the Fund’s distribution level, taking into consideration the Fund’s net asset value and the financial market environment.
The Fund’s distribution policy is subject to modification by the Board of Trustees at any time. The distribution rate should not
be considered the dividend yield or total return on an investment in the Fund.
Please retain this document for your records.
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.
Media Contact:
Christopher Murphy*
Director of Marketing
SS&C ALPS Advisors
720.277.7861
christopher.murphy@sscinc.com
| * | Registered Representative of ALPS Distributors, Inc. |
###
PRE000369 2/28/2024
PRINCIPAL REAL ESTATE INCOME
FUND
Principal Real Estate Fund Announces Notification
of Sources of Distribution
DENVER – March 31, 2023 -
The Principal Real Estate Income Fund (NYSE:PGZ) announces the sources of a distribution paid on March 31, 2023 of $0.1050 per share to
shareholders of record at the close of business on March 17, 2023, pursuant to the Fund's managed distribution plan. This press release
is issued as required by an exemptive order granted to the Fund by the U.S. Securities and Exchange Commission and includes the notice
below sent to shareholders regarding the source of the distribution.
Statement Pursuant to Section 19(a)
of the Investment Company Act of 1940
The following table sets forth the estimated
amount of the sources of distribution for purposes of Section 19 of the Investment Company Act of 1940, as amended, and the related
rules adopted thereunder. In accordance with generally accepted accounting principles (“GAAP”), the Fund estimates the
following percentages, of the total distribution amount per share, attributable to (i) current and prior fiscal year net investment
income, (ii) net realized short-term capital gain, (iii) net realized long-term capital gain and (iv) return of capital or other
capital source as a percentage of the total distribution amount. These percentages are disclosed for the current distribution as
well as the fiscal year-to-date cumulative distribution amount per share for the Fund.
| Current Distribution from: |
|
|
| |
Per Share ($) |
% |
| Net Investment Income |
0.0548 |
52.19% |
| Net Realized Short-Term Capital Gain |
0.0000 |
0.00% |
| Net Realized Long-Term Capital Gain |
0.0000 |
0.00% |
| Return of Capital or other Capital Source |
0.0502 |
47.81% |
| Total (per common share) |
0.1050 |
100.00% |
| |
|
|
| Fiscal Year-to-Date Cumulative |
|
|
| Distributions from: |
|
|
| |
Per Share ($) |
% |
| Net Investment Income |
0.1916 |
36.50% |
| Net Realized Short-Term Capital Gain |
0.0000 |
0.00% |
| Net Realized Long-Term Capital Gain |
0.0000 |
0.00% |
| Return of Capital or other Capital Source |
0.3334 |
63.50% |
| Total (per common share) |
0.5250 |
100.00% |
The Fund estimates that it has distributed
more than its income; 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 timing and character of distributions
for federal income tax purposes are determined in accordance with income tax regulations, which may differ from GAAP. As such, all or
a portion of this distribution may be reportable as taxable income on your 2023 federal income tax return. The final tax character of
any distribution declared in 2023 will be determined in January 2024 and reported to you on IRS Form 1099-DIV.
The amounts and sources of
distributions reported in this 19(a) Notice are only estimates and not for tax reporting purposes. 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. 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.
Presented below are return figures,
based on the change in the Fund’s Net Asset Value per share (“NAV”), compared to the annualized distribution rate for
this current distribution as a percentage of the NAV on the last day of the month prior to distribution record date.
Fund Performance & Distribution Information
| Fiscal YTD (11/1/22 – 2/28/23) |
| Annualized Distribution Rate as % of NAV^ |
10.34% |
| Cumulative Distribution Rate on NAV^ |
3.45% |
| Cumulative Total Return on NAV* |
-0.64% |
| |
|
| Average Annual Total Return on NAV for the 5 Year Period Ended 2/28/2023** |
-0.60% |
| ^ | Based on the Fund’s NAV as of February 28, 2023. |
| * | Cumulative fiscal year-to-date return is based on the change
in NAV including distributions paid and assuming reinvestment of these distributions for the period November 1, 2022 through February
28, 2023. |
| ** | The 5 year average annual total return is based on change in
NAV including distributions paid and assuming reinvestment of these distributions and is through the last business day of the month prior
to the month of the current distribution record date. |
While the NAV performance may be
indicative of the Fund’s investment performance, it does not measure the value of a shareholder’s 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. Past performance does not guarantee future results. Shareholders 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 Plan.
Furthermore, the Board of Trustees reviews
the amount of any potential distribution and the income, capital gain or capital available. The Board of Trustees will continue to monitor
the Fund’s distribution level, taking into consideration the Fund’s net asset value and the financial market environment.
The Fund’s distribution policy is subject to modification by the Board of Trustees at any time. The distribution rate should not
be considered the dividend yield or total return on an investment in the Fund.
Please retain this document for your records.
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.
Media Contact:
Christopher Murphy*
Director of Marketing
SS&C ALPS Advisors
720.277.7861
christopher.murphy@sscinc.com
| * | Registered Representative of ALPS Distributors, Inc. |
###
PRE000372 3/31/2024
PRINCIPAL REAL ESTATE INCOME
FUND
Principal Real Estate Fund Announces
Notification of Sources of Distribution
DENVER –
April 28, 2023 - The Principal Real Estate Income Fund (NYSE:PGZ) announces the sources of a distribution paid on April 28, 2023 of
$0.1050 per share to shareholders of record at the close of business on April 14, 2023, pursuant to the Fund's managed distribution plan.
This press release is issued as required by an exemptive order granted to the Fund by the U.S. Securities and Exchange Commission and
includes the notice below sent to shareholders regarding the source of the distribution.
Statement Pursuant to Section 19(a)
of the Investment Company Act of 1940
The following table sets forth the estimated
amount of the sources of distribution for purposes of Section 19 of the Investment Company Act of 1940, as amended, and the related
rules adopted thereunder. In accordance with generally accepted accounting principles (“GAAP”), the Fund estimates the
following percentages, of the total distribution amount per share, attributable to (i) current and prior fiscal year net investment
income, (ii) net realized short-term capital gain, (iii) net realized long-term capital gain and (iv) return of capital or other
capital source as a percentage of the total distribution amount. These percentages are disclosed for the current distribution as
well as the fiscal year-to-date cumulative distribution amount per share for the Fund.
| Current Distribution from: |
|
|
| |
Per Share ($) |
% |
| Net Investment Income |
0.0571 |
54.38% |
| Net Realized Short-Term Capital Gain |
0.0000 |
0.00% |
| Net Realized Long-Term Capital Gain |
0.0000 |
0.00% |
| Return of Capital or other Capital Source |
0.0479 |
45.62% |
| Total (per common share) |
0.1050 |
100.00% |
| |
|
|
| Fiscal Year-to-Date Cumulative |
|
|
| Distributions from: |
|
|
| |
Per Share ($) |
% |
| Net Investment Income |
0.2487 |
39.48% |
| Net Realized Short-Term Capital Gain |
0.0000 |
0.00% |
| Net Realized Long-Term Capital Gain |
0.0000 |
0.00% |
| Return of Capital or other Capital Source |
0.3813 |
60.52% |
| Total (per common share) |
0.6300 |
100.00% |
The Fund estimates that it has distributed
more than its income; 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 timing and character of distributions
for federal income tax purposes are determined in accordance with income tax regulations, which may differ from GAAP. As such, all or
a portion of this distribution may be reportable as taxable income on your 2023 federal income tax return. The final tax character of
any distribution declared in 2023 will be determined in January 2024 and reported to you on IRS Form 1099-DIV.
The amounts and sources of distributions
reported in this 19(a) Notice are only estimates and not for tax reporting purposes. 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. 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.
Presented below are return figures,
based on the change in the Fund’s Net Asset Value per share (“NAV”), compared to the annualized distribution rate for
this current distribution as a percentage of the NAV on the last day of the month prior to distribution record date.
Fund Performance & Distribution
Information
| Fiscal YTD (11/1/22 – 3/31/23) |
| Annualized Distribution Rate as % of NAV^ |
11.02% |
| Cumulative Distribution Rate on NAV^ |
4.59% |
| Cumulative Total Return on NAV* |
-6.25% |
| |
|
| Average Annual Total Return on NAV for the 5 Year Period Ended 3/31/2023** |
-2.12% |
| ^ | Based on the Fund’s NAV as of March 31, 2023. |
| * | Cumulative fiscal year-to-date return is based on the change
in NAV including distributions paid and assuming reinvestment of these distributions for the period November 1, 2022 through March 31,
2023. |
| ** | The 5 year average annual total return is based on change in
NAV including distributions paid and assuming reinvestment of these distributions and is through the last business day of the month prior
to the month of the current distribution record date. |
While the NAV performance may be indicative
of the Fund’s investment performance, it does not measure the value of a shareholder’s 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. Past performance does not guarantee future results. Shareholders 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
Plan.
Furthermore, the
Board of Trustees reviews the amount of any potential distribution and the income, capital gain or capital available. The Board of Trustees
will continue to monitor the Fund’s distribution level, taking into consideration the Fund’s net asset value and the financial
market environment. The Fund’s distribution policy is subject to modification by the Board of Trustees at any time. The distribution
rate should not be considered the dividend yield or total return on an investment in the Fund.
Please retain this document for your records.
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.
Media Contact:
Christopher Murphy*
Director of
Marketing
SS&C ALPS Advisors
720.277.7861
christopher.murphy@sscinc.com
| * | Registered Representative of ALPS Distributors, Inc. |
###
PRE000376 4/30/2024
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