Cohen & Steers REIT & Preferred Income Stock Price, News & Analysis

Cohen & Steers REIT and Preferred and Income Fund, Inc. (NYSE: RNP) is a diversified, closed-end investment management fund. According to available information, its stated investment objective is to provide high current income, with capital appreciation as a secondary objective. Under normal circumstances, the Fund invests at least its total assets in common stocks issued by real estate investment trusts (REITs) and in preferred securities.

The Fund is part of the Cohen & Steers family of funds. Cohen & Steers is described in company communications as a global investment manager specializing in real assets and alternative income, including listed and private real estate, preferred securities, infrastructure, resource equities, commodities and multi-strategy solutions. The Fund’s shares trade on the New York Stock Exchange under the ticker symbol RNP.

Investment focus and strategy

The Fund’s portfolio is focused on securities issued by REITs and on preferred securities. By concentrating on these asset types, the Fund seeks to generate a stream of current income while also pursuing capital appreciation over time. The emphasis on REIT common stocks ties the Fund’s performance to companies that own or operate real estate, while preferred securities can provide an additional source of income.

RNP has implemented a managed distribution policy in accordance with exemptive relief issued by the U.S. Securities and Exchange Commission. Company notices state that this policy is designed to deliver the Fund’s long-term total return potential through regular monthly distributions declared at a fixed rate per common share. The policy is intended to give the Fund flexibility to realize long-term capital gains throughout the year and distribute those gains on a regular monthly basis to shareholders.

The Board of Directors of the Fund may amend, terminate or suspend the managed distribution policy at any time. Company communications note that such changes could have an adverse effect on the market price of the Fund’s shares, since the level and stability of distributions can influence investor demand for a closed-end fund.

Distributions and tax characterization

Notices to shareholders explain that the Fund’s monthly distributions may include several components for federal income tax purposes: long-term capital gains, short-term capital gains, net investment income and/or return of capital. Return of capital is defined as distributions paid by the Fund in excess of its net investment income and net realized capital gains, with such excess distributed from the Fund’s assets.

According to these notices, a return of capital is not taxable when received; instead, it reduces a shareholder’s tax basis in their shares of the Fund. The Fund also notes that distributions from its investments in REITs may later be characterized as capital gains and/or return of capital, depending on the character of the dividends reported to the Fund after year-end by the REITs it holds. Because of this, the final tax characteristics of distributions cannot be determined with certainty until after the end of the calendar year.

At the time of each monthly distribution, information about the estimated sources of that distribution and cumulative distributions fiscal year-to-date is posted and mailed to shareholders in a concurrent notice. The Fund emphasizes that these amounts and sources are only estimates, are likely to change over time, and are not provided for tax reporting purposes. Shareholders receive a Form 1099-DIV after the close of the calendar year that sets out how to report distributions for federal income tax purposes.

Managed distribution policy considerations

In its recurring Section 19(a) notices, the Fund cautions that investors should not draw conclusions about investment performance from the amount of a distribution or from the terms of the managed distribution policy. The Fund has stated that it estimates it has distributed more than its income and capital gains at various points, so a portion of distributions may represent a return of capital. Company materials explain that a return of capital may occur when some or all of the money originally invested in the Fund is paid back to shareholders, and that such distributions should not be confused with yield or income.

The Fund also provides information on concepts such as net asset value (NAV), year-to-date cumulative total return, cumulative distribution rate, average annual total return, and current annualized distribution rate. NAV is defined as the total market value of all securities and other assets held by the Fund minus total liabilities, divided by the total number of shares outstanding. The Fund notes that while NAV performance may be indicative of investment performance, it does not measure the value of an individual shareholder’s investment, which is determined by the Fund’s market price based on supply and demand for its shares in the open market.

Relationship to Cohen & Steers

The Fund is advised by Cohen & Steers, an investment manager that focuses on real assets and alternative income strategies. Company descriptions state that Cohen & Steers was founded in 1986 and is headquartered in New York City, with additional offices in London, Dublin, Hong Kong, Tokyo and Singapore. This association links the Fund to a manager that emphasizes listed and private real estate, preferred securities, infrastructure, resource equities, commodities and multi-strategy approaches.

Investors are repeatedly encouraged in Fund communications to consider the investment objectives, risks, charges and expenses of the Fund carefully before investing. They are directed to obtain the Fund’s most recent periodic reports and other regulatory filings and to read these materials carefully. These reports and filings are available through financial intermediaries and through the Securities and Exchange Commission’s EDGAR database.

Regulatory and reporting framework

As a closed-end fund with shares listed on the New York Stock Exchange, RNP operates within the U.S. investment company regulatory framework. The Fund issues periodic notices under Section 19(a) of the Investment Company Act to disclose the estimated sources of distributions. It also prepares periodic reports and other regulatory filings that are made available through the SEC’s EDGAR system.

The Fund’s communications emphasize that the amounts and sources of distributions may be subject to adjustment based on the Fund’s investment experience and on applicable tax regulations. Shareholders are advised not to use the interim distribution information provided in Section 19(a) notices when preparing tax returns, and instead to rely on the Form 1099-DIV issued after year-end.