Company: PGZ
Filing Date: 2025-07-03
Form Type: N-CSRS
Source: 0001398344-25-012685
Chunk: 16

Company: Principal Real Estate Income Fund
Filing Date: 2025-07-03
Form: N-CSRS
Chunk 16
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 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.

| 24 | www.principalcef.com |

| Principal Real Estate Income Fund | Notes to Financial Statements |

April 30, 2025 (Unaudited)

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