According to a participant notice provided to plans invested in the Principal U.S. Property Separate Account, on Friday, May 14, payments were made available to partially satisfy approximately 18% of the value of pending transaction requests.
The fund last made a partial payment on January 29 that Principal said satisfied approximately 13% of the value of transaction requests subject to the withdrawal limitation imposed by the real estate fund on September 26, 2008 (see “Principal Real Estate Fund Makes a Distribution”).
As with the last distribution, the participant notice indicated that payments are being made on a pro-rata basis. Once again, Principal said that certain de minimis amounts (amounts less than $300) were paid in full. And once again Principal said that it was in the “best interest of all Separate Account participants” if distributions were generally made on a pro-rata basis, rather than on first-in first-out basis.
The proportion of the liquidity that the participant will receive is determined using the unit value on Thursday, May 13, and the payments were effective as of Friday, according to the firm. Values may differ due to the one-day change in unit value.
Principal said 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. 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.