Principal R/E Fund Reports a Gain, Makes Another Payment
The firm noted that, when combined with investor rescissions of previous withdrawal requests during the quarter of over $256 million, the Withdrawal Limitation dropped from a March 31 balance of $1,045 million to a June 30 balance of $502 million. Further, Principal said that the Separate Account received several additional contributions and commitments from institutional investors for additional deposits in 2010.
Of course, the fund has made another payment since then, constituting about 41% of the value of the remaining transactions, in July (see Principal Real Estate Fund Queues Up Another Payment).
Regarding the most recent distribution, the Principal noted that the proportion of the liquidity that the participant will receive is determined using the unit value on Thursday, September 9, 2010, and that the payments will be made effective on Friday, September 10, 2010. Values may differ due to the one-day change in unit value.
As to the timing of this payment, similar to previous partial payments, the announcement noted that “the Principal U.S. Property Separate Account has sufficient liquidity available to make a distribution to investors whose withdrawal requests are subject to the Limitation, while maintaining compliance with covenants and Investment Policy Statement guidelines,” and that “Principal Life has determined it is in the best interest of all investors to fund a partial payment at this time”.
Principal noted that, prior to beginning distributions (and since the inception of the withdrawal limitation), all sources of cash, including proceeds from sales of properties, rents from tenants and investor contributions, were first used to satisfy cash requirements at the properties, meet debt maturities, maintain compliance with debt covenants and meet upcoming Separate Account obligations.
“As such, the Separate Account eliminated debt, significantly reduced near-term debt maturities and reduced the outstanding balance on its line of credit. The combined result enabled the Separate Account to have liquidity available to pay a portion of requests subject to the Withdrawal Limitation while maintaining adequate cash and access to debt to continue to manage the Separate Account”.