NEW YORK, July 25, 2016 /PRNewswire/ -- Neuberger
Berman Real Estate Securities Income Fund Inc. (NYSE MKT: NRO) (the
"Fund") has announced a 33.3% increase in its monthly distribution
rate to $0.04 per share of common
stock from the prior monthly distribution rate of $0.03 per share. The Fund has also declared
its next monthly distribution at the new rate, which is payable on
August 31, 2016, has a record date of
August 15, 2016 and has an ex-date of
August 11, 2016.
Like many closed-end funds, the Fund's common stock has traded
in the secondary market at a persistent discount to its net asset
value per share ("NAV"). Year to date through June 30, 2016, NRO's common stock has traded at
an average daily discount to its NAV of 12.89%. The Fund's
Board of Directors (the "Board") and the Fund's investment manager,
Neuberger Berman Investment Advisers LLC ("NBIA"), have conducted,
and will continue, a comprehensive review of potential actions that
may benefit the Fund and its stockholders. The distribution
rate increase and the tender offers being announced today are the
latest steps that the Board and NBIA have undertaken in an ongoing
effort to improve stockholder value.
Conditional Tender Offer and Tender Offer Program
As
part of the ongoing effort to improve the Fund's valuation in the
secondary market and narrow the discount at which the market price
of the Fund's common stock has traded relative to its NAV, the Fund
is also announcing today the adoption of a Conditional Tender Offer
and a Tender Offer Program (each as defined below).
In the near term, if the Fund's common stock trades at an
average daily discount to NAV of greater than 10% during the
measurement period from December 31,
2015 through September 30,
2016, the Fund will conduct a tender offer for up to 15% of
its outstanding shares of common stock at a price equal to 98% of
the Fund's NAV determined on the day the tender offer expires (the
"Conditional Tender Offer").
Additionally, the Fund is announcing the adoption of a tender
offer program that will commence on January
1, 2017 and consists of up to two tender offers (the "Tender
Offer Program"). Under the Tender Offer Program,
the Fund will conduct two 12-week measurement periods (each a
"Measurement Period"). If the Fund's common stock trades at
an average daily discount to NAV of greater than 10% during a
Measurement Period, the Fund will conduct a tender offer for at
least 8% of its outstanding shares of common stock at a price equal
to 98% of the Fund's NAV determined on the day the tender offer
expires. In determining the maximum size of the tender offers
under the Tender Offer Program, the Board may consider, among other
things, the then-current market conditions and outlook for the
Fund, the size of the average daily discount during the Measurement
Period, the potential impact of a tender offer at different levels
on the Fund's expense ratio, the potential tax consequences of the
tender offer on the Fund and non-tendering common stockholders and
the potential impact on the Fund as a whole. By maintaining
discretion over the maximum size of the tender offers, the Board
can more appropriately exercise its fiduciary duties and consider
the best interests of the Fund and its stockholders in light of the
then-current market conditions.
In approving the Conditional Tender Offer and the Tender Offer
Program (together, the "Tender Offers") as part of an ongoing
review and effort to improve stockholder value, the Board
considered numerous factors, including, the potential benefits to
stockholders, the ability of the Fund to pay for the tendered
shares, the current and historic discount that the Fund has traded
at relative to its NAV, concerns that certain common stockholders
have voiced to NBIA about the Fund's discount and inquiries from
other investors as to whether the Fund would conduct tender offers,
or had in place currently a tender offer program, in order to
address the discount. The Board also considered that the
Tender Offers may potentially: (i) narrow the discount to NAV at
which the Fund's common stock has traded; (ii) enable stockholders
to tender their shares at a price that would be greater than what
they could realize in the secondary market at that time; (iii)
increase liquidity of the common stock; and (iv) have a marginally
accretive impact on NAV for common stockholders that remain
invested in the Fund. There can be no assurance that the
Tender Offers will cause the discount at which the Fund's common
stock trades to narrow, particularly in the long term, or that the
common stock will trade at a price equal to or near its NAV.
Likewise, there can be no assurance that the Tender Offers
will not have a negative impact on the Fund's earnings per
share. In approving the Tender Offers, the Board also
considered other potential negative effects, such as the effect the
Tender Offers may have on the Fund's expense ratio and the amount
of leverage that it will be able to employ.
Distribution Rate Increase
The increased distribution
rate being announced today represents an annualized distribution
rate of 8.20% per share based on the Fund's closing market price of
$5.85 per share on July 22, 2016. The decision to increase the
Fund's common stock distribution rate was the result of an ongoing
effort to enhance stockholder value, including an effort to address
the discount at which the Fund's common stock trades relative to
its NAV. As part of its evaluation, the Board considered the
Fund's current and projected level of earnings, as well as the
expected cost of leverage.
Under the Fund's level distribution policy, the Fund anticipates
that it will make regular monthly distributions, subject to market
conditions, at the increased rate of $0.04 per share, unless further action is taken
to determine another rate. There is no assurance that the
Fund will always be able to pay a distribution of any particular
size, or that a distribution will consist of only net investment
income. The Fund's ability to maintain its current
distribution rate will depend on a number of factors, including the
stability of income received from its investments, availability of
capital gains, the cost of leverage and the level of other Fund
expenses.
The distribution announced today, as well as future
distributions, may consist of net investment income, realized
capital gains and return of capital. In compliance with Section 19
of the Investment Company Act of 1940, as amended, a notice would
be provided for any distribution that does not consist solely of
net investment income. The notice would be for informational
purposes, and would disclose, among other things, estimated
portions of the distribution, if any, consisting of net investment
income, capital gains and return of capital.
The distribution rate increase and the Tender Offers being
announced today are the latest steps that the Board and NBIA have
undertaken in an ongoing effort to enhance stockholder value and to
address the discount at which the Fund's common stock has traded
relative to its NAV. Both the Board and NBIA will continue
their comprehensive review of potential actions that may benefit
the Fund and its stockholders.
This announcement is not a recommendation, an offer to purchase
or a solicitation of an offer to sell shares of the Fund. The
Fund has not commenced the Tender Offers described in this
release. Any Tender Offer will be made only by an offer to
purchase, a related letter of transmittal and other documents which
will be filed with the Securities and Exchange Commission as
exhibits to a tender offer statement on Schedule TO.
Stockholders should read the relevant offer to purchase and tender
offer statement on Schedule TO and related exhibits when those
documents are filed and become available, as they will contain
important information about the Tender Offers.
About Neuberger Berman
Neuberger Berman, founded in
1939, is a private, independent, employee-owned investment manager.
The firm manages equities, fixed income, private equity and
hedge fund portfolios for institutions and advisors worldwide.
With offices in 19 countries, Neuberger Berman's team is more
than 2,100 professionals and the company was named by Pensions
& Investments as a 2013, 2014 and 2015 Best Place to Work in
Money Management. Tenured, stable and long-term in focus, the
firm fosters an investment culture of fundamental research and
independent thinking. It manages $246
billion in client assets as of June
30, 2016. For more information, please visit our
website at www.nb.com.
Statements made in this release that look forward in time
involve risks and uncertainties and are forward-looking statements
within the meaning of the Private Securities Litigation Reform Act
of 1995. Such risks and uncertainties include, without
limitation, the adverse effect from a decline in the securities
markets or a decline in the Fund's performance, a general downturn
in the economy, competition from other closed-end investment
companies, changes in government policy or regulation, inability of
the Fund's investment adviser to attract or retain key employees,
inability of the Fund to implement its investment strategy,
inability of the Fund to manage rapid expansion and unforeseen
costs and other effects related to legal proceedings or
investigations of governmental and self-regulatory
organizations.
Contact:
Neuberger Berman
Investor Information
(877) 461-1899
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