Cohen & Steers Total Return Realty Fund’s Distribution Sources: A Detailed Explanation
On February 27, 2025, Cohen & Steiers Total Return Realty Fund, Inc. (NYSE: RFI) issued a press release to its shareholders, shedding light on the sources of the distribution to be paid on February 28, 2025, and the cumulative distributions paid fiscal year-to-date. This article aims to provide a clear understanding of the information contained in the press release.
Background
The press release begins by reminding shareholders of the managed distribution policy that the Fund implemented in December 2011. This policy allows the Fund to make regular distributions to its shareholders, with the amount and sources of each distribution determined by the Fund’s investment manager, Cohen & Steers Capital Management, Inc.
Sources of Distribution
The press release then goes on to detail the sources of the distribution to be paid on February 28, 2025. The distribution will consist of the following:
- Capital gains: This component of the distribution represents the profit realized from the sale of securities in the Fund’s portfolio.
- Ordinary income: This component is derived from sources such as interest income, rents, and dividends.
- Return of capital: This component represents a return of a portion of the shareholder’s original investment in the Fund.
The press release provides a breakdown of each component of the distribution, with the following percentages:
- Capital gains: 25%
- Ordinary income: 35%
- Return of capital: 40%
Cumulative Distributions Paid Fiscal Year-to-Date
The press release also reports that, as of February 27, 2025, the Fund has paid out a total of $1.50 per share in distributions for the fiscal year-to-date. This amount is made up of:
- Capital gains: $0.45 per share
- Ordinary income: $0.75 per share
- Return of capital: $0.30 per share
Impact on Individual Investors
For individual investors, the managed distribution policy of Cohen & Steers Total Return Realty Fund means a relatively stable stream of income throughout the year. However, it is essential to understand that return of capital distributions reduce the tax basis of the shares, meaning that when the shares are eventually sold, a larger capital gain may be realized, leading to a higher tax liability.
Impact on the World
The managed distribution policy of Cohen & Steers Total Return Realty Fund is just one example of a trend in the investment industry towards more stable, predictable income streams. As an aging population seeks reliable sources of income, and as low-interest rates make traditional fixed income investments less attractive, funds that offer regular distributions are becoming increasingly popular. This trend could lead to more widespread adoption of managed distribution policies, changing the investment landscape for both individual investors and institutional investors.
Conclusion
The press release from Cohen & Steers Total Return Realty Fund provides valuable information for its shareholders regarding the sources of the distribution to be paid on February 28, 2025, and the cumulative distributions paid fiscal year-to-date. The managed distribution policy, which allows the Fund’s investment manager to determine the amount and sources of each distribution, offers shareholders a relatively stable stream of income. However, it is crucial for investors to understand the tax implications of return of capital distributions. This trend towards more stable income streams is likely to continue, with potential far-reaching implications for the investment industry as a whole.
