Company: PGZ
Filing Date: 2025-07-03
Form Type: N-CSRS
Source: 0001398344-25-012685
Chunk: 2

Company: Principal Real Estate Income Fund
Filing Date: 2025-07-03
Form: N-CSRS
Chunk 2
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“CMBS”) and other U.S. and non-U.S. real estate-related securities (primarily real estate investment trusts (“REITs”)
or REIT-like entities). Under normal circumstances, the Fund will invest between 40% and 70% of its total assets in CMBS and will invest
between 30% and 60% in other real estate-related securities (including REITs).

PERFORMANCE OVERVIEW

Principal Real Estate Income Fund (“PGZ”
or the “Fund”) was launched June 25, 2013. As of April 30, 2025, the Fund was 65.71% allocated to commercial mortgage-backed
securities (“CMBS”) and 31.39% in U.S. and International real estate securities, primarily real estate investment trusts (“REITs”).
For the 6-month period ended April 30, 2025, the Fund delivered a net return, at market price, of 2.42%, assuming dividends are reinvested
back into the Fund, based on the closing share price of $10.32 on April 30, 2025. This compares to the return of the S&P 500®
Index, over the same time-period, of -1.75% assuming dividends are reinvested into the index. This also compares to the return of the
Bloomberg U.S. Aggregate Bond Index of 2.57%.

The April 30, 2025 closing market price of $10.32
represented a 10.4% discount to the Fund’s Net Asset Value (“NAV”). This compares to an average 3.8% discount for equity
real estate closed-end funds and a 3.3% discount for mortgage-backed securities closed-end funds (source: Bloomberg).

Based on NAV, the Fund returned 3.23%, assuming reinvestment
of all distributions, for the 6-month period ended April 30, 2025. The themes that had the attention of the market were inflation and
recession with Trump tariff policies taking center stage and the path of interest rates being caught in the middle. Prior to the lead
up to “Liberation Day” on April 2, broader markets were risk-on as the results of the election were expected
to be pro-growth and the Fed lowered interest rates 100bps in the 4 quarter. Volatility picked up starting in December as
the Fed signaled a slower than expected pace of rate cuts in 202