Company: PGZ
Filing Date: 2025-07-03
Form Type: N-CSRS
Source: 0001398344-25-012685
Chunk: 3

Company: Principal Real Estate Income Fund
Filing Date: 2025-07-03
Form: N-CSRS
Chunk 3
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5 and a strong jobs number in January resulted in 10yr treasuries rates
moving over 60bps higher to peak at 4.79% before rallying back to end the month at 4.54% after a better-than-expected inflation print.
Risk tolerance in the market started to turn in February as tariff threats hit the headlines and concerns of economic growth took hold.
Market fears culminated the week following Liberation Day with the CBOE Volatility Index (“VIX”) spiking to levels not seen
since Covid as the market fully priced a tariff-induced recession, while at the same time, 10yr treasury rates sold off from 4.0% to 4.5%
on tariff-induced inflation fears. Market relief only came after the Trump administration capitulated and delayed most tariffs for 90
days to allow time to negotiate trade deals. After all of that, 10yr interest rates ended the period 0.12% lower at 4.16%, the yield curve
steepened, the S&P 500 was down 2.4% and markets remained very sensitive to the perceived economic impact of future trade and fiscal
policy coming from the Trump administration.

CMBS performance during the period was strongly correlated
with market expectations for recession. Spreads tightened and the credit curve continued to flatten through mid-February as expectations
for economic growth remained supported by strong jobs growth and lower taxes and less regulation coming from the new administration. CMBS
spreads initially widened in sympathy with corporate spreads as tariff policy induced growth fears started to come into the market but
dislocated as those fears took hold in March and spiked following Liberation Day. While AAA rated bond spreads recovered in the relief
rally following the tariff delays, credit spreads remained wider and the credit curve steeper as the risk of tariffs negatively impacting
the economy remain in the market.

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| Principal Real Estate Income Fund | Performance Overview |

April 30, 2025 (Unaudited)

Global REITs return -1.93% in the six months ending
April 30, 2025. Returns were choppy influenced by shifting interest rate expectations, geopolitical risks, and evolving tariff policies.
At the end of 2024, REITs experienced a sharp pullback amid a more hawkish Fed outlook and rising long-term yields. While year to date
2025, REITs have come back modestly as investors sought defensives amid tariff-related growth concerns