DEFA14A: Principal Real Estate Income Fund Urges Shareholders to Reject Saba's Proxy Bid at Upcoming Annual Meeting

Principal Real Estate Income Fund is urging shareholders to vote for the fund's nominated incumbent trustees and discard the Saba GOLD proxy card at the upcoming Annual Meeting on April 12, 2024.

Summary

• Principal Real Estate Income Fund is asking shareholders to vote for their nominated incumbent trustees at the Annual Meeting on April 12, 2024.
• The board recommends discarding the Saba GOLD proxy card.
• The fund highlights steps taken to close the discount, including share repurchases and increased distributions, with the discount at 7.6% as of March 11, 2024, compared to the average closed-end fund discount of 7.9%.
• The CMBS portfolio is performing well, outperforming the Bloomberg US CMBS 2.0 BBB Index over various periods ending December 31, 2023.
• The fund's performance since January 1, 2024, has improved, with returns of 13.88% on Price and 7.08% on Net Asset Value as of March 11, 2024.
• The fund warns that adding Saba nominees could disrupt operations and potentially lead to a liquidity event.
• The fund believes Saba acts in its own self-interest and that a Saba takeover could jeopardize the fund's investment strategy and potentially lead to liquidation.
• The Fund plans to fight vigorously against Saba's attempted takeover and will continue fighting for ALL shareholders.

Sentiment

Score: 6

Explanation: The sentiment is neutral to slightly positive. The fund highlights its recent performance and efforts to close the discount, but there's also concern about the potential negative impact of Saba's involvement.

Positives

• The fund has taken steps to close the discount to NAV.
• The CMBS portfolio is performing well.
• The fund's performance has improved since the start of 2024.

Negatives

• Saba's involvement could disrupt fund operations.
• Saba's actions are perceived as self-serving.
• A Saba takeover could lead to liquidation of the fund.

Risks

• Saba's attempted takeover poses a risk to the fund's current investment strategy.
• There is a risk of disruption to fund operations if Saba's nominees are added.
• The fund's future is uncertain if Saba gains control.

Future Outlook

The fund intends to vigorously fight against Saba's attempted takeover and continue fighting for all shareholders.

Management Comments

• Your vote, no matter the number of shares you own, will have a significant impact on your Funds success.
• Your Board recommends that you vote on the WHITE proxy card today FOR The Funds Nominated Incumbent Trustees.
• Discard the Saba GOLD proxy card.
• If Saba takes control of your Fund, we believe the future of your Fund and its investment strategy are uncertain and at risk of being radically changed or liquidated.

Industry Context

This announcement reflects a common scenario in the closed-end fund industry where activist investors like Saba attempt to gain control to implement changes, often focused on unlocking value through liquidation or other strategies.

Comparison to Industry Standards

• The fund's discount of 7.6% is slightly better than the average closed-end fund discount of 7.9% as of March 11, 2024.
• The CMBS portfolio's performance is compared to the Bloomberg US CMBS 2.0 BBB Index, indicating a benchmark for evaluating its success.

Stakeholder Impact

• Shareholders face a critical decision that will impact the fund's future.
• Employees could be affected by potential changes in the fund's strategy or operations.
• The fund's investment strategy and potential liquidation could impact its creditors and other stakeholders.

Next Steps

• Shareholders need to vote on the proxy proposals before the Annual Meeting on April 12, 2024.

Key Dates

Keywords

Proxy, Shareholders, Saba, Trustees, CMBS, Discount, Fund