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”), have 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 $0.08 per share on a monthly basis during the six months ended April 30, 2021.
The fixed amount distributed per share is subject to change
at the discretion of the Fund’s Board. Effective May 2021 the monthly distribution rate was changed to $0.0825 per share.
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.
|
Performance Overview
|
2
|
|
Statement of Investments
|
9
|
|
Statement of Assets and Liabilities
|
15
|
|
Statement of Operations
|
16
|
|
Statements of Changes in Net Assets
|
17
|
|
Statement of Cash Flows
|
18
|
|
Financial Highlights
|
20
|
|
Notes to Financial Statements
|
22
|
|
Dividend Reinvestment Plan
|
32
|
|
Additional Information
|
|
|
Portfolio holdings
|
34
|
|
Proxy voting
|
34
|
|
Section 19(a) notices
|
34
|
|
Stockholder meeting results
|
35
|
|
Unaudited tax information
|
35
|
|
Licensing agreement
|
36
|
|
Custodian and transfer agent
|
36
|
|
Legal counsel
|
36
|
|
Independent registered public accounting firm
|
36
|
|
Privacy Policy
|
37
|
Beginning on January 1, 2021, as permitted
by regulations adopted by the U.S. Securities and Exchange Commission, paper copies of the Fund’s annual and semi-annual
shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports. Instead, the reports
will be made available on the Fund’s website at www.principalcef.com and you will be notified by mail each time a report
is posted and provided with a website link to access the report.
You may elect to receive all future
shareholder reports in paper free of charge. If you invest through a financial intermediary, you can contact your financial intermediary
or, if you invest directly with the Fund, you can call 855-552-6280 to request that you continue to receive paper copies of your
shareholder reports.
If you already elected to receive shareholder
reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder
reports and other communications from the Fund electronically anytime by contacting your financial intermediary (such as a broker-dealer
or bank) or, if you are a direct investor, by contacting the Fund directly at 855-552-6280.
www.principalcef.com
|
Principal Real Estate Income Fund
|
Performance Overview
|
|
|
April 30, 2021 (Unaudited)
|
PERFORMANCE OVERVIEW
Principal Real Estate Income Fund (“PGZ”
or the “Fund”) was launched June 25, 2013. As of April 30, 2021, the Fund was 63% allocated to commercial mortgage
backed securities (“CMBS”) and 37% in U.S. and International real estate securities, primarily real estate investment
trusts (“REITs”). For the 6-month period ended April 30, 2021, the Fund delivered a net return, at market price, of
66.59%, assuming dividends are reinvested back into the Fund, based on the closing share price of $15.19 on April 30, 2021. This
compares to the return of the S&P 500® Index, over the same time-period, of 28.86% assuming dividends are reinvested into
the index. This also compares to the return of the Bloomberg Barclays U.S. Aggregate Bond Index of -1.52%.
The April 30, 2021 closing market price
of $15.19 represented a 9.31% discount to the Fund’s Net Asset Value (“NAV”). This compares to an average 1.82%
discount for equity real estate closed-end funds and a 3.79% premium for mortgage-backed securities closed-end funds (source: Bloomberg).
These discounts to NAV reflect the recovery from the COVID-19 induced volatility that occurred in the closed-end fund market in
2020.
Based on NAV, the Fund returned 26.57%,
including dividends, for the 6-month period ended April 30, 2020. The theme that dominated the market during this period was the
relief after the vaccines were announced in early November and the recovery of the outlook for commercial real estate as the vaccines
began being distributed in early 2021. The unexpected availability of the vaccines helped the market become more confident in the
prospects of the economy re-opening and pull forward economic growth expectations to the second half of 2021. The response to the
events surrounding the vaccine was interest rates being driven higher by 100bps to a peak of 1.74% at the end of March and 1.63%
to end the period, CMBS credit spreads gapping tighter and a strong recovery in REIT prices. While still elevated, volatility trended
lower reflecting the optimism that came into the market. During the period, the VIX averaged 22 with a spike to 37 at the end of
January. Volatility subsided after this spike to end the period just under 19 after starting the period at 38.
Commercial real estate, including CMBS,
has been one of the asset classes most impacted by the economic shut down associated with the nation’s response to COVID-19
and most impacted by the distribution of multiple vaccines that is leading to the re-opening of the economy. Hotel and retail properties
that were basically shut down due to COVID-19 and have since reopened stand to benefit the most from leisure travel resuming and
consumers back out shopping. These were the property types that were most under stress with CMBS loan delinquencies peaking in
July at 25% for hotels and 15%. Since then, delinquencies have been trending lower as some borrowers have been granted forbearance
by the special servicers to get them to other side of COVID-19, some borrowers have brought loans current and the most distressed
loans have started to be liquidated through foreclosure. The pace of new defaults has slowed materially as well as borrowers who
were able to make it through the crisis are in a better position with the re-opening of the economy starting sooner than expected.
This positive change in performance and market sentiment over the past six months has allowed lower rated BBB and BB bonds, which
lagged the recovery in higher rated bonds prior to November, to outperform as loan level loss expectations have been revised lower
by the market.
Among real estate stocks, higher leveraged,
higher volatility stocks outperformed, reflecting improved risk sentiment after the vaccine news. In the last six months, there
was a clear change in leadership towards value and cyclical sectors across all regions, with lodging and retail performing best,
while the past year’s biggest outperformers that performed defensively through the year (data centers and industrial) lagged.
|
Principal Real Estate Income Fund
|
Performance Overview
|
|
|
April 30, 2021 (Unaudited)
|
All major regions had positive performance.
The Americas region was lifted by the tailwind of stronger USD and rising treasury yields as the U.S. recovery and scale of economic
stimulus is far outpacing the rest of the world. Reopening plays outperformed, especially in retail and hotels. Performance in
Asia was led by retail heavy Australia, and higher beta non-REIT property stocks in Hong Kong. Singapore was the weakest performance
on a rotation from bond proxies to cyclicals. Continental Europe performance was led by retail heavy Dutch stocks while defensive
German residential were among the worst performers despite solid earnings results.
CMBS
The CMBS holdings within the Fund returned
13.87% for the 6 months ended April 30, 2021. The main driver of returns for the period was the flattening of the credit curve
and the material increase in interest rates BBB- and BB rated CMBS bonds were the beneficiaries of the market lowering loan level
loss expectations in response to the potential for the economy to re-open sooner and stronger with the availability of vaccines.
The lower loss projections were driven by the potential for more favorable outcomes on loans that had gone delinquent post-Covid
and for fewer performing loans being at risk of defaulting over the next 12-24 months. While uncertainty remains around how the
re-opening of the economy might impact different markets and property types, there is much more confidence on the resolution of
the health crisis. This change helped lower the systematic risk associated with Covid-19 and leaves the market to price the idiosyncratic
risk associated with each individual pool of loans.
For the 6 month period ending April 30,
2021, AAA spreads tightened 30-35bps, AA spreads tightened 40-45bps, A spreads tightened 65-70bps, BBB- spreads tightened 250bps
and BB spreads tightened over 800bps in response to the change in market sentiment, higher interest rates and limited new issue
supply. CMBS delinquencies peaked in July at just over 9.3% and has since leveled off and improved, ending the period at 6.8% driven
by the re-opening of the economy and the stimulus programs. Even with this strong recovery in CMBS spreads, BBB- and BB spreads
remain wide of the tights in the 1st quarter of 2020 reflecting the fact that lower rated CMBS remain exposed to the fundamental
credit risk in the CMBS market until the economy fully recovers. This is also true for what extent do changes in consumer and business
behavior in response to COVID-19 that might negatively impact the demand for commercial real estate become permanent even after
the crisis is over.
The performance of the CMBS holdings within
the Fund reflect the dramatic tightening of BBB- and BB- rated CMBS spreads in response to the improved outlook for recovery from
the crisis. The continued price recovery for the portfolio holdings will be driven by how quickly economic activity does recover
due to the vaccine and how many distressed borrowers are able to start making payments again as demand returns for their properties.
This is especially true for hotel and retail properties and how long owners can make up for missed payments and protect their properties
from foreclosure during this period. The recovery in market prices assume that more owners will be able to do that than before
the vaccine which is resulting in lower expected pool level loan losses.
|
|
|
|
Semi-Annual Report | April 30, 2021
|
3
|
|
Principal Real Estate Income Fund
|
Performance Overview
|
|
|
April 30, 2021 (Unaudited)
|
GLOBAL REAL ESTATE SECURITIES
The global real estate securities holdings within the fund returned
approximately 30.1%, during the trailing six months ending April 30th, 2021.
Exposure to U.S. apartments were notable
contributors, as the sector performed well with coastal landlords releasing data pointing to stabilization in demand and as renters
plan their return to coastal cities. Other large contributors to performance in the Americas include net lease, healthcare, industrial
and shopping centers. In Australia currency tailwinds further boosted results as stocks in the portfolio posted solid results.
Strong performance from Japan REITS was another notable contributors in the region. In Europe, key contributors to performance
were Spanish property stocks and UK industrial.
As we cycled through the tail end of winter
in the Northern hemisphere, investors are looking through the recent resurgence of COVID-19 cases in Europe and focusing on the
rollout of vaccines, the potential for an additional US$2.5 trillion of infrastructure stimulus on top of the US$1.4 trillion COVID-19
relief bill that just passed, and the dovish overtures of global central banks. With low base effects providing the setup for a
strong rebound in economic data and vaccinations paving the way for a more substantive economic reopening in the second half of
the year, the global recovery that is already underway looks firmly ensconced.
However, as we look to the rest of the
year, there are a number of risks that investors will have to grapple with. First, easier comps will be behind us by the second
half of 2021, making it more difficult for earnings revisions to surprise to the upside. Second, even if additional U.S. infrastructure
stimulus is passed, the spending is likely to be phased out over a multi-year timeframe. Meanwhile, the U.S. will face a fiscal
cliff next year as the effect of this years’ spending binge wears off and corporate tax rates look slated to rise, nullifying
to some degree the effects of stimulus. Third, to the extent that economic data, especially on employment continue to come in strong,
the Fed could start to guide for a tapering of its bond purchase program even as it continues to hold down short rates until its
inflation target is reached. Fourth, the extent of post-COVID-19 scarring remains unclear. Within real estate, these issues include
the potential for longer-term behavioral changes that may adversely and structurally impact space market demand.
On balance, we are cautiously optimistic
going forward but will continue to evaluate relative valuations as we expect that uncertainty and policy-induced volatility is
likely here to stay. Rather than attempting to forecast sentiment shifts, our investment decisions are guided by fundamental valuation
levels and we will continue to search for opportunities using our bottom-up, stock selection focused approach. While we acknowledge
it is possible value stocks could continue to rally and further narrow the value/growth valuation gap, we do not believe a further
narrowing is warranted nor sustainable. We believe stocks with superior earnings prospects and favorable structural demand drivers
are best positioned, based on current valuation levels, to outperform in the intermediate to longer-term future. That said, we
have selectively added to cyclical themes on weakness, particularly where we feel consensus has been too bearish and there is scope
for earning upgrades, given some of the more near-term cyclically supportive factors highlighted earlier.
|
Principal Real Estate Income Fund
|
Performance Overview
|
|
|
April 30, 2021 (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 Barclays 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
|
|
|
|
Semi-Annual Report | April 30, 2021
|
5
|
|
Principal Real Estate Income Fund
|
Performance Overview
|
|
|
April 30, 2021 (Unaudited)
|
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, 2021.
|
ASSETS:
|
|
|
|
|
Investments, at value
|
|
$
|
158,546,293
|
|
|
Cash denominated in foreign currency, at value (Cost $15,147)
|
|
|
15,011
|
|
|
Receivable for investments sold
|
|
|
347,514
|
|
|
Interest receivable
|
|
|
584,310
|
|
|
Dividends receivable
|
|
|
120,130
|
|
|
Prepaid and other assets
|
|
|
30,040
|
|
|
Total
Assets
|
|
|
159,643,298
|
|
|
|
|
|
|
|
|
LIABILITIES:
|
|
|
|
|
|
Loan payable (Note 3)
|
|
|
45,000,000
|
|
|
Interest and commitment fee due on loan payable
|
|
|
35,041
|
|
|
Payable for investments purchased
|
|
|
247,480
|
|
|
Payable to adviser
|
|
|
134,969
|
|
|
Payable to administrator
|
|
|
31,229
|
|
|
Payable to transfer agent
|
|
|
4,633
|
|
|
Payable for trustee fees
|
|
|
39,756
|
|
|
Other payables
|
|
|
66,831
|
|
|
Total
Liabilities
|
|
|
45,559,939
|
|
|
Net Assets
|
|
$
|
114,083,359
|
|
|
|
|
|
|
|
|
NET ASSETS CONSIST OF:
|
|
|
|
|
|
Paid-in capital
|
|
$
|
125,978,790
|
|
|
Total distributable
earnings/(accumulated deficit)
|
|
|
(11,895,431
|
)
|
|
Net
Assets
|
|
$
|
114,083,359
|
|
|
|
|
|
|
|
|
PRICING OF SHARES:
|
|
|
|
|
|
Net Assets
|
|
$
|
114,083,359
|
|
|
Common Shares
of beneficial interest outstanding (unlimited number of shares authorized, no par value per share)
|
|
|
6,812,922
|
|
|
Net asset value per share
|
|
$
|
16.75
|
|
|
|
|
|
|
|
|
Cost of Investments
|
|
$
|
146,638,636
|
|
See Notes to Financial Statements.
|
|
|
|
Semi-Annual Report | April 30, 2021
|
15
|
|
Principal Real Estate Income Fund
|
Statement of Operations
|
|
|
For the Six Months Ended April 30, 2021 (Unaudited)
|
|
INVESTMENT INCOME:
|
|
|
|
|
Interest
|
|
$
|
2,662,606
|
|
|
Dividends
(net of foreign withholding tax of $42,991)
|
|
|
1,716,092
|
|
|
Total
Investment Income
|
|
|
4,378,698
|
|
|
|
|
|
|
|
|
EXPENSES:
|
|
|
|
|
|
Investment advisory fees
|
|
|
769,455
|
|
|
Interest on loan
|
|
|
239,835
|
|
|
Commitment fee on loan
|
|
|
22,094
|
|
|
Administration fees
|
|
|
127,758
|
|
|
Transfer agent fees
|
|
|
12,734
|
|
|
Audit fees
|
|
|
17,477
|
|
|
Legal fees
|
|
|
41,309
|
|
|
Custodian fees
|
|
|
13,585
|
|
|
Trustee fees
|
|
|
77,801
|
|
|
Printing fees
|
|
|
25,203
|
|
|
Insurance fees
|
|
|
16,428
|
|
|
Other
|
|
|
15,741
|
|
|
Total
Expenses
|
|
|
1,379,420
|
|
|
Net
Investment Income
|
|
|
2,999,278
|
|
|
|
|
|
|
REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY:
|
|
Net realized gain/(loss) on:
|
|
|
|
|
|
Investments
|
|
|
(6,116,747
|
)
|
|
Foreign
currency transactions
|
|
|
(2,714
|
)
|
|
Net
realized loss
|
|
|
(6,119,461
|
)
|
|
Net change in unrealized appreciation/depreciation on:
|
|
|
|
|
|
Investments
|
|
|
26,106,419
|
|
|
Translation
of assets and liabilities denominated in foreign currencies
|
|
|
(2,357
|
)
|
|
Net change
in unrealized appreciation/depreciation
|
|
|
26,104,062
|
|
|
Net
Realized and Unrealized Gain on Investments and Foreign Currency
|
|
|
19,984,601
|
|
|
Net Increase
in Net Assets Resulting from Operations
|
|
$
|
22,983,879
|
|
See Notes to Financial Statements.
|
Principal Real Estate Income Fund
|
|
Statements of Changes in Net Assets
|
|
|
|
For
the Six Months Ended April 30, 2021
(Unaudited)
|
|
|
For
the Year Ended October 31, 2020
|
|
|
OPERATIONS:
|
|
|
|
|
|
|
|
Net
investment income
|
|
$
|
2,999,278
|
|
|
$
|
6,750,283
|
|
|
Net
realized loss on investments and foreign currency transactions
|
|
|
(6,119,461
|
)
|
|
|
(16,078,718
|
)
|
|
Net
change in unrealized appreciation/depreciation on investments and translation of assets and liabilities denominated in foreign
currencies
|
|
|
26,104,062
|
|
|
|
(43,767,887
|
)
|
|
Net
increase/(decrease) in net assets resulting from operations
|
|
|
22,983,879
|
|
|
|
(53,096,322
|
)
|
|
|
|
|
|
|
|
|
|
|
|
DISTRIBUTIONS
TO SHAREHOLDERS:
|
|
|
|
|
|
|
|
|
|
Distributions
to shareholders
|
|
|
(3,296,224
|
)
|
|
|
(7,219,577
|
)
|
|
From
tax return of capital
|
|
|
–
|
|
|
|
(1,888,159
|
)
|
|
Decrease
in net assets from distributions to shareholders
|
|
|
(3,296,224
|
)
|
|
|
(9,107,736
|
)
|
|
|
|
|
|
|
|
|
|
|
|
CAPITAL
SHARE TRANSACTIONS (NOTE 8):
|
|
|
|
|
|
|
|
|
|
Cost
of shares repurchased
|
|
|
(1,117,244
|
)
|
|
|
–
|
|
|
Net
decrease in net assets from capital share transactions
|
|
|
(1,117,244
|
)
|
|
|
–
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Increase/(Decrease) in Net Assets
|
|
|
18,570,411
|
|
|
|
(62,204,058
|
)
|
|
|
|
|
|
|
|
|
|
|
|
NET
ASSETS:
|
|
|
|
|
|
|
|
|
|
Beginning
of period
|
|
|
95,512,948
|
|
|
|
157,717,006
|
|
|
End
of period
|
|
$
|
114,083,359
|
|
|
$
|
95,512,948
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER
INFORMATION:
|
|
|
|
|
|
|
|
|
|
Share
Transactions:
|
|
|
|
|
|
|
|
|
|
Shares outstanding -
beginning of period
|
|
|
6,899,800
|
|
|
|
6,899,800
|
|
|
Shares
repurchased
|
|
|
(86,878
|
)
|
|
|
–
|
|
|
Net
decrease in shares outstanding
|
|
|
(86,878
|
)
|
|
|
–
|
|
|
Shares
outstanding - end of period
|
|
|
6,812,922
|
|
|
|
6,899,800
|
|
See Notes to Financial Statements.
|
|
|
|
Semi-Annual Report | April 30, 2021
|
17
|
|
Principal Real Estate Income Fund
|
Statement of Cash Flows
|
|
|
For the Six Months Ended April 30, 2021 (Unaudited)
|
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
Net increase
in net assets resulting from operations
|
|
$
|
22,983,879
|
|
|
Adjustments to reconcile
net increase in net assets from operations to net cash used in operating activities:
|
|
|
|
|
|
Purchases of investment
securities
|
|
|
(38,310,747
|
)
|
|
Proceeds from disposition
of investment securities
|
|
|
33,615,510
|
|
|
Net proceeds from short-term
investment securities
|
|
|
1,170,765
|
|
|
Net realized loss on:
|
|
|
|
|
|
Investments
|
|
|
6,116,747
|
|
|
Net change in unrealized
appreciation/depreciation on:
|
|
|
|
|
|
Investments
|
|
|
(26,106,419
|
)
|
|
Amortization of premiums
and accretion of discounts on investments
|
|
|
460,191
|
|
|
(Increase)/Decrease in
assets:
|
|
|
|
|
|
Interest receivable
|
|
|
(27,055
|
)
|
|
Dividends receivable
|
|
|
2,233
|
|
|
Prepaid and other assets
|
|
|
7,918
|
|
|
Increase/(Decrease) in
liabilities:
|
|
|
|
|
|
Interest and commitment fee due on loan payable
|
|
|
(2,637
|
)
|
|
Payable to transfer agent
|
|
|
193
|
|
|
Payable to adviser
|
|
|
11,801
|
|
|
Payable to administrator
|
|
|
(528
|
)
|
|
Payable for trustee fees
|
|
|
426
|
|
|
Other
payables
|
|
|
(496
|
)
|
|
Net cash
used in operating activities
|
|
$
|
(78,219
|
)
|
|
|
|
|
|
|
|
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES:
|
|
|
|
|
|
Proceeds from bank borrowing
|
|
$
|
4,500,000
|
|
|
Cost of shares repurchased
|
|
|
(1,117,244
|
)
|
|
Cash distributions
paid
|
|
|
(3,296,224
|
)
|
|
Net cash
provided by financing activities
|
|
$
|
86,532
|
|
|
|
|
|
|
|
|
Effect of exchange rates on cash
|
|
$
|
(136
|
)
|
|
|
|
|
|
|
|
Net increase in cash
|
|
$
|
8,177
|
|
|
Cash and Foreign Currency, beginning balance
|
|
$
|
6,834
|
|
|
Cash and Foreign Currency, ending balance
|
|
$
|
15,011
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
|
|
|
|
|
|
Cash paid during the period for interest from bank borrowing
|
|
$
|
242,472
|
|
See Notes to Financial Statements.
Intentionally Left
Blank
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
|
|
Net increase/(decrease) in net asset value
|
|
Net asset value - end of period
|
|
Market price -end of period
|
|
|
|
Total Return(b)
|
|
Total
Return -Market Price(b)
|
|
|
|
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(d)
|
|
Portfolio
turnover rate Borrowings at End of Period
|
|
Aggregate
Amount Outstanding (in thousands)
|
|
Asset
Coverage Per $1,000 (in thousands)
|
|
|
(a)
|
Calculated using average shares throughout the period.
|
|
|
(b)
|
Total investment return 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.
|
|
|
(d)
|
Average managed assets represent net assets applicable to common shares plus average amount
of borrowings during the period
|
See Notes to Financial Statements.
|
Financial Highlights
|
|
For a share outstanding throughout the periods presented.
|
For the
Six Months
Ended April 30, 2021
(Unaudited)
|
|
|
For the
Year Ended
October 31,
2020
|
|
|
For the
Year Ended
October 31,
2019
|
|
|
For the
Year Ended
October 31,
2018
|
|
|
For the
Year Ended
October 31,
2017
|
|
|
For the
Year Ended
October 31,
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
13.84
|
|
|
$
|
22.86
|
|
|
$
|
19.54
|
|
|
$
|
19.40
|
|
|
$
|
19.02
|
|
|
$
|
19.88
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.44
|
|
|
|
0.98
|
|
|
|
1.12
|
|
|
|
1.08
|
|
|
|
0.99
|
|
|
|
1.35
|
|
|
|
2.95
|
|
|
|
(8.68
|
)
|
|
|
3.52
|
|
|
|
0.38
|
|
|
|
1.10
|
|
|
|
(0.47
|
)
|
|
|
3.39
|
|
|
|
(7.70
|
)
|
|
|
4.64
|
|
|
|
1.46
|
|
|
|
2.09
|
|
|
|
0.88
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.48
|
)
|
|
|
(0.95
|
)
|
|
|
(1.32
|
)
|
|
|
(1.18
|
)
|
|
|
(1.51
|
)
|
|
|
(1.74
|
)
|
|
|
—
|
|
|
|
(0.10
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(0.03
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(0.27
|
)
|
|
|
—
|
|
|
|
(0.14
|
)
|
|
|
(0.17
|
)
|
|
|
—
|
|
|
|
(0.48
|
)
|
|
|
(1.32
|
)
|
|
|
(1.32
|
)
|
|
|
(1.32
|
)
|
|
|
(1.71
|
)
|
|
|
(1.74
|
)
|
|
|
2.91
|
|
|
|
(9.02
|
)
|
|
|
3.32
|
|
|
|
0.14
|
|
|
|
0.38
|
|
|
|
(0.86
|
)
|
|
$
|
16.75
|
|
|
$
|
13.84
|
|
|
$
|
22.86
|
|
|
$
|
19.54
|
|
|
$
|
19.40
|
|
|
$
|
19.02
|
|
|
$
|
15.19
|
|
|
$
|
9.46
|
|
|
$
|
21.40
|
|
|
$
|
16.97
|
|
|
$
|
17.09
|
|
|
$
|
16.62
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25.56
|
%
|
|
|
(33.27
|
%)
|
|
|
25.53
|
%
|
|
|
8.67
|
%
|
|
|
12.46
|
%
|
|
|
5.94
|
%
|
|
|
66.59
|
%
|
|
|
(51.28
|
%)
|
|
|
35.31
|
%
|
|
|
7.13
|
%
|
|
|
13.37
|
%
|
|
|
4.80
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
114,083
|
|
|
$
|
95,513
|
|
|
$
|
157,717
|
|
|
$
|
134,820
|
|
|
$
|
133,886
|
|
|
$
|
131,260
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2.64
|
%(c)
|
|
|
2.92
|
%
|
|
|
3.45
|
%
|
|
|
3.41
|
%
|
|
|
3.03
|
%
|
|
|
2.82
|
%
|
|
|
2.18
|
%(c)
|
|
|
2.13
|
%
|
|
|
2.02
|
%
|
|
|
2.09
|
%
|
|
|
2.06
|
%
|
|
|
2.07
|
%
|
|
|
5.73
|
%(c)
|
|
|
5.59
|
%
|
|
|
5.31
|
%
|
|
|
5.49
|
%
|
|
|
5.18
|
%
|
|
|
7.04
|
%
|
|
|
1.89
|
%(c)
|
|
|
2.08
|
%
|
|
|
2.44
|
%
|
|
|
2.36
|
%
|
|
|
2.09
|
%
|
|
|
1.94
|
%
|
|
|
23
|
%(e)
|
|
|
38
|
%
|
|
|
17
|
%
|
|
|
37
|
%
|
|
|
45
|
%
|
|
|
41
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
45,000
|
|
|
$
|
40,500
|
|
|
$
|
60,000
|
|
|
$
|
60,000
|
|
|
$
|
60,000
|
|
|
$
|
60,000
|
|
|
$
|
3,535
|
|
|
$
|
3,358
|
|
|
$
|
3,629
|
|
|
$
|
3,247
|
|
|
$
|
3,231
|
|
|
$
|
3,188
|
|
|
|
|
|
Semi-Annual Report | April 30, 2021
|
21
|
|
Principal
Real Estate Income Fund
|
Notes
to Financial Statements
|
|
|
April 30, 2021 (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 accounting principles generally accepted 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, 2021.
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”). 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.
|
Principal
Real Estate Income Fund
|
Notes
to Financial Statements
|
|
|
April 30, 2021 (Unaudited)
|
When applicable, fair value of
an investment is determined by the Fund’s Fair Valuation Committee as a designee of the Board. 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.
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.
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:
|
|
|
|
Semi-Annual Report | April 30, 2021
|
23
|
|
Principal
Real Estate Income Fund
|
Notes
to Financial Statements
|
|
|
April 30, 2021 (Unaudited)
|
|
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, 2021.
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, 2021.
|
Principal
Real Estate Income Fund
|
Notes
to Financial Statements
|
|
|
April 30, 2021 (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 self-liquidation 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.
|
|
|
|
Semi-Annual Report | April 30, 2021
|
25
|
|
Principal
Real Estate Income Fund
|
Notes
to Financial Statements
|
|
|
April 30, 2021 (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 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. The increasing interconnectivity between global economies
and financial markets increases the likelihood that events or conditions in one region or financial market may adversely impact
issuers in a different country, region or financial market. 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 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 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, such as the recent COVID-19 outbreak, persists for an extended period of time. 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.
See Notes to Financial Statements.
|
Principal
Real Estate Income Fund
|
Notes
to Financial Statements
|
|
|
April 30, 2021 (Unaudited)
|
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 10, 2021,
subject to the restrictions and terms of the credit agreement. As of April 30, 2021 the Fund has drawn down $45,000,000 from the
SSB line of credit, which was the maximum borrowing outstanding during the period. The Fund is charged an interest rate of 1.00%
(per annum) above the one-month LIBOR (London Interbank Offered Rate) or 1.11%, 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, 2021, was as follows:
|
Average Interest Rate
|
|
|
1.14
|
%
|
|
Average Outstanding Loan Payable
|
|
$
|
42,339,779
|
|
|
4. INVESTMENT ADVISORY
AND OTHER AGREEMENTS
|
ALPS Advisors, Inc. (“AAI”)
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.
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 $22,500 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.
|
|
|
|
Semi-Annual Report | April 30, 2021
|
27
|
|
Principal
Real Estate Income Fund
|
Notes
to Financial Statements
|
|
|
April 30, 2021 (Unaudited)
|
The Fund pays no salaries or compensation
to any of its Officers. The three independent Trustees and the interested Trustee of the Fund each receive an annual retainer of
$21,000 and an additional $4,000 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 $1,125 for each Board meeting and the Chairman of the Audit Committee of the Board will be
paid a meeting attendance fee of $1,125 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).
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 $0.08
per common share for the six months ended April 30, 2021.
|
Principal
Real Estate Income Fund
|
Notes
to Financial Statements
|
|
|
April 30, 2021 (Unaudited)
|
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.
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 may purchase up to 5% of its
outstanding common shares beginning January 19, 2021 in the open market, until January 19, 2022. During the six months ended April
30, 2021, the Fund repurchased 86,878 shares (1.28% of the shares outstanding at April 30, 2021) of its shares for a total cost
of $1,117,244 at an average discount of 18.02% of net asset value.
|
|
|
|
Semi-Annual Report | April 30, 2021
|
29
|
|
Principal
Real Estate Income Fund
|
Notes
to Financial Statements
|
|
|
April 30, 2021 (Unaudited)
|
For the six months ended April 30, 2021, the cost of
purchases and proceeds from sales of securities, excluding short-term securities, were as follows:
|
Purchases
|
|
|
Sales
|
|
|
|
$ 36,479,445
|
|
|
|
$ 33,648,872
|
|
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.
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, 2021.
The tax character of distributions paid during the year ended October
31, 2020 were as follows:
|
|
|
For the Year Ended
October 31, 2020
|
|
|
Ordinary Income
|
|
$
|
6,500,092
|
|
|
Long-Term Capital Gain
|
|
|
719,485
|
|
|
Return of Capital
|
|
|
1,888,159
|
|
|
Total
|
|
$
|
9,107,736
|
|
Tax Basis of Investments: Net unrealized appreciation/(depreciation)
of investments based on federal tax cost as of April 30, 2021, were as follows:
|
Cost of investments for income tax purposes
|
|
$
|
146,873,475
|
|
|
Gross appreciation on investments (excess of value over tax cost)
|
|
$
|
17,291,622
|
|
|
Gross depreciation on investments (excess of tax cost over value)
|
|
|
(5,618,804
|
)
|
|
Net unrealized appreciation on investments
|
|
$
|
11,672,818
|
|
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, 2021.
|
Principal
Real Estate Income Fund
|
Notes
to Financial Statements
|
|
|
April 30, 2021 (Unaudited)
|
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, 2021, 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, 2021, the Fund did not incur any interest or penalties.
Subsequent to April 30, 2021, the Fund paid the following distributions:
|
Ex-Date
|
Record Date
|
Payable Date
|
Rate (per share)
|
|
May 13, 2021
|
May 14, 2021
|
May 28, 2021
|
$0.0825
|
|
June 15, 2021
|
June 16, 2021
|
June 30, 2021
|
$0.0825
|
|
|
|
|
Semi-Annual Report | April 30, 2021
|
31
|
|
Principal
Real Estate Income Fund
|
Dividend
Reinvestment Plan
|
|
|
April 30, 2021 (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 “ex-dividend” 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, 2021 (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.
|
|
|
|
Semi-Annual Report | April 30, 2021
|
33
|
|
Principal
Real Estate Income Fund
|
Additional
Information
|
|
|
April 30, 2021 (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 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 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, 2021
|
|
|
Percentage of the Total
Cumulative Distributions for the
Six Months Ended April 30, 2021
|
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
|
|
|
$
|
0.4109
|
|
|
$
|
0.0000
|
|
|
$
|
0.0000
|
|
|
$
|
0.0691
|
|
|
$
|
0.4800
|
|
|
85.58%
|
|
|
0.00
|
%
|
|
|
0.00
|
%
|
|
|
14.42
|
%
|
|
|
100.00
|
%
|
|
Principal
Real Estate Income Fund
|
Additional
Information
|
|
|
April 30, 2021 (Unaudited)
|
STOCKHOLDER MEETING RESULTS
On April 9, 2021 the Fund held a Meeting of Stockholders
to consider the proposal set forth below. The following votes were recorded:
Proposal 1: The election of two (2) Trustees of the
Fund to a three-year term to expire at the Fund’s 2024 Annual Meeting of Stockholders or until his successor is duly elected
and qualified.
Election of Rick A. Pederson as a Trustee of the Fund
to a three-year term to expire at the Fund’s 2024 Annual Meeting of Stockholders or until his successor is duly elected and
qualified
|
|
|
|
Shares voted
|
|
|
% of Shares voted
|
|
|
|
For
|
|
|
|
4,965,172
|
|
|
|
96.811
|
%
|
|
|
Against
|
|
|
|
163,564
|
|
|
|
3.189
|
%
|
|
|
Abstain
|
|
|
|
—
|
|
|
|
0.000
|
%
|
|
|
Total
|
|
|
|
5,128,736
|
|
|
|
100.000
|
%
|
Election of Jeremy Held as a Trustee of the Fund to
a three-year term to expire at the Fund’s 2024 Annual Meeting of Stockholders or until his successor is duly elected and
qualified
|
|
|
|
Shares voted
|
|
|
% of Shares voted
|
|
|
|
For
|
|
|
|
5,020,298
|
|
|
|
97.886
|
%
|
|
|
Against
|
|
|
|
108,438
|
|
|
|
2.114
|
%
|
|
|
Abstain
|
|
|
|
—
|
|
|
|
0.000
|
%
|
|
|
Total
|
|
|
|
5,128,736
|
|
|
|
100.000
|
%
|
UNAUDITED TAX INFORMATION
Of the distributions paid by the
Fund from ordinary income for the calendar year ended December 31, 2020, 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
|
|
|
0.00
|
%
|
|
|
5.32
|
%
|
Of the distributions paid by the
Fund for the calendar year ended December 31, 2020, pursuant to Section 852(b)(3) of the Internal Revenue Code, the Fund designates
the amount of $719,485 as long-term capital gain dividends.
In early 2021, if applicable, shareholders
of record should have received this information for the distributions paid to them by the Fund during the calendar year 2020 via
Form 1099. The Fund will notify shareholders in early 2022 of amounts paid to them by the Fund, if any, during the calendar year
2021.
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Semi-Annual Report | April 30, 2021
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35
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Principal
Real Estate Income Fund
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Additional
Information
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April 30, 2021 (Unaudited)
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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.
CUSTODIAN AND TRANSFER AGENT
State Street Bank and Trust Company,
located at State Street Financial Center, One Lincoln Street, Boston, MA 02111, 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.
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Principal
Real Estate Income Fund
|
Privacy
Policy
|
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April 30, 2021 (Unaudited)
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FACTS
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WHAT DOES PRINCIPAL REAL ESTATE INCOME FUND DO WITH YOUR PERSONAL INFORMATION?
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WHY?
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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.
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WHAT?
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The types of personal information we collect and share depend on the product or service you have with us. This information can include:
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·
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Social Security number
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·
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Assets
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·
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Retirement Assets
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·
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Transaction History
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·
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Checking Account Information
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·
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Purchase History
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·
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Account Balances
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·
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Account Transactions
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·
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Wire Transfer Instructions
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When you are no longer our customer, we continue to share your information as described in this notice.
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HOW?
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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.
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REASONS
WE CAN SHARE YOUR
PERSONAL INFORMATION
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DOES
PRINCIPAL
REAL ESTATE
INCOME FUND
SHARE?
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CAN
YOU LIMIT
THIS SHARING?
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For our everyday business purposes
–
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such as to process your transactions,
maintain your
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account(s), respond to court orders
and legal investigations,
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Yes
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No
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or
report to credit bureaus
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For our marketing purposes –
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to
offer our products and services to you
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No
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We
don't share
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For
joint marketing with other financial companies
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No
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We
don't share
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For our affiliates’ everyday
business purposes –
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information
about your transactions and experiences
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No
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We
don't share
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For our affiliates’ everyday
business purposes –
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information
about your creditworthiness
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No
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We
don't share
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For
non-affiliates to market to you
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No
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We
don't share
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QUESTIONS?
|
Call
1-855-838-9485
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Semi-Annual Report | April 30, 2021
|
37
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Principal
Real Estate Income Fund
|
Privacy
Policy
|
|
|
April 30, 2021 (Unaudited)
|
|
WHO WE ARE
|
|
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Who is providing this notice?
|
Principal Real Estate Income Fund
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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.
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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.
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|
Principal
Real Estate Income Fund
|
Privacy
Policy
|
|
|
April 30, 2021 (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.
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Non-affiliates
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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.
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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.
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Semi-Annual Report | April 30, 2021
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39
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