PHILADELPHIA, PA — CBRE Global Real Estate Income Fund (NYSE: IGR) estimates that 92% of its September distribution will be a return of capital, as the closed-end real estate fund adjusts its per-share payout following a 1-for-3 reverse stock split.
The fund amended its September distribution to 18 cents per share from the previously declared 6 cents to account for the reverse split, which took effect after the market closed Sept. 4. The total amount of cash distributed to shareholders will remain unchanged.
Of the 18-cent monthly distribution, an estimated 16.6 cents, or 92%, represents return of capital. Net investment income accounts for an estimated 1.4 cents, or 8%, with no contribution currently estimated from realized short- or long-term capital gains.
The fund said the allocations are estimates and may change based on investment results during the remainder of its fiscal year and tax adjustments made after year-end.
IGR estimates it has distributed more than its net investment income and net realized capital gains, meaning part of the distribution may represent money being returned to investors rather than investment income or realized gains.
“A return of capital distribution does not necessarily reflect the Trust’s investment performance and should not be confused with ‘yield’ or ‘income,’” the fund said.
The September distribution is scheduled to be paid Sept. 30 to shareholders of record Sept. 21. The shares will trade ex-dividend Sept. 21.
Based on the fund’s Sept. 4 closing market price of $4.49, its annualized distribution rate was 16%. The rate was 16.4% based on its $4.39 net asset value on the same date.
The fund operates under a managed distribution policy authorized by an exemptive order from the U.S. Securities and Exchange Commission. Its regular monthly distributions may include investment income and, when applicable, realized capital gains.
The board reviews the distribution quarterly, taking into account the investment management team’s market outlook, net investment income, realized and unrealized gains, and other potential income or appreciation.
The fund said its policy seeks to maintain a level monthly distribution approximating net investment income and net realized capital gains over time, though the board continues to review whether the distribution can be sustained.
IGR primarily invests in real estate securities, including real estate investment trusts. Distributions received from REITs can later be reclassified as capital gains or returns of capital, which can alter the final tax characterization of the fund’s own distributions.
Shareholders will receive a Form 1099-DIV reflecting the final federal tax treatment for the calendar year.
CBRE Global Real Estate Income Fund trades on the New York Stock Exchange. The fund cautioned that investors should not use the size of its distribution or the terms of its managed distribution policy as a measure of investment performance.
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