RMR Funds Reports Redemption of Preferred Shares and Updates Status of Dividend Plans
27 November 2008 - 5:21AM
Business Wire
RMR Funds today announced that it has called for redemption the
amounts of Fund preferred shares of certain Funds, as follows: � �
� Fund Amount of Preferred Shares Called for Redemption
(liquidation preference value) Amount of Preferred Shares to be
Outstanding After Redemption (liquidation preference value) � RMR
Real Estate Fund $39,050,000 $10,950,000 (NYSE Alternext US: RMR) �
RMR Hospitality and Real Estate Fund $25,125,000 $2,875,000 (NYSE
Alternext US: RHR) � RMR F.I.R.E. Fund $9,625,000 $1,175,000 (NYSE
Alternext US: RFR) � RMR Preferred Dividend Fund $10,700,000
$3,600,000 (NYSE Alternext US: RDR) � RMR Dividend Capture Fund
$8,925,000 $1,075,000 (NYSE Alternext US: RCR) On October 16, 2008,
RMR Funds announced that payments of distributions to common
shareholders of each of the above listed Funds would be suspended
until further notice because each Fund did not meet the asset
coverage ratios of outstanding Fund preferred shares which are
preconditions to the payment of common share distributions
established by the Investment Company Act of 1940 (the �1940 Act�).
On November 10, 2008 these Funds announced that they had been
selling investment securities in order to accumulate the cash
necessary to redeem some of their outstanding Fund preferred shares
to bring these Funds into compliance with the preconditions in the
1940 Act for the payment of common share distributions. The amounts
of preferred shares called for redemption as listed in the table
above are the preferred shares called for redemption since November
10, 2008. Upon completion of the redemptions announced today, each
of these Funds expects it will be in compliance with applicable
preconditions in the 1940 Act for the payment of common shares
distributions. However, in addition to the preconditions for the
payment of common share distributions arising under the 1940 Act,
the bylaws of each of these Funds which were adopted at the times
each of these Funds issued Fund preferred shares require that each
Fund maintain certain financial ratios established by the rating
agencies which rate the Fund�s preferred shares. These bylaws
require each Fund to be in compliance with these ratios both at the
time the concerned Fund declares a common share distribution and at
the time such distributions are paid. As of the market close
yesterday, each of these Funds was also in compliance with its
bylaws� preconditions for the declaration of common share
distributions. In order to satisfy the bylaws� preconditions for
the payment of common share distributions and because market
conditions for the securities in which each of these Funds�s
invests remain volatile, each of these Funds expects to sell
additional investment securities to raise cash for additional
redemptions of Fund preferred shares. Each of these Funds is
principally invested in income paying securities primarily issued
by real estate investment trusts. These Funds expect to calculate
and pay distributions to common shareholders in December equal to
the approximate amounts of the income earned during 2008 which was
not previously distributed; however, the amounts of these
distributions, if any, are not known at this time. Also, in
December 2008, these Funds expect to consider their distribution
policies for 2009 and to make announcements concerning such
policies at that time. It is expected that the distributions
payable to common shareholders in 2009, if any, will be
substantially less than the distribution rates paid before these
Funds suspended distributions in October 2008. WARNING REGARDING
FORWARD LOOKING STATEMENTS THIS PRESS RELEASE CONTAINS FORWARD
LOOKING STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995 AND OTHER SECURITIES LAWS. THESE
FORWARD LOOKING STATEMENTS ARE BASED UPON THE PRESENT BELIEFS AND
EXPECTATIONS OF THE RMR FUNDS REFERENCED IN THIS PRESS RELEASE.
HOWEVER THESE FORWARD LOOKING STATEMENTS AND THEIR IMPLICATIONS ARE
NOT GUARANTEED TO OCCUR, AND THEY MAY NOT OCCUR FOR VARIOUS
REASONS, SOME OF WHICH ARE BEYOND THE CONTROL OF THE CONCERNED
FUNDS. FOR EXAMPLE: THIS PRESS RELEASE STATES THAT EACH OF THE
CONCERNED FUNDS BELIEVES IT IS NOW IN COMPLIANCE WITH APPLICABLE
PRECONDITIONS IN THE 1940 ACT FOR THE PAYMENT OF COMMON SHARE
DISTRIBUTIONS AND WITH EACH FUND�S BYLAWS� PROVISIONS REGARDING THE
DECLARATIONS OF COMMON SHARES DISTRIBUTIONS. THIS PRESS RELEASE
ALSO STATES THAT EACH FUND�S BYLAWS GOVERNING ITS ISSUANCE OF FUND
PREFERRED SHARES REQUIRE THAT THE FUND BE IN COMPLIANCE WITH
CERTAIN FINANCIAL RATIOS ESTABLISHED BY CERTAIN RATING AGENCIES
BOTH AT THE TIME THE FUND DECLARES COMMON SHARE DISTRIBUTIONS AND
AT THE TIME THE COMMON SHARE DISTRIBUTIONS ARE PAID. THE
IMPLICATIONS OF THESE STATEMENTS MAY BE THAT EACH OF THESE FUNDS
MAY RESUME PAYING DISTRIBUTIONS TO COMMON SHAREHOLDERS. HOWEVER,
BECAUSE THE MARKET VALUES FOR THE SECURITIES IN WHICH EACH OF THESE
FUNDS HAS INVESTED HAVE BEEN BOTH VOLATILE AND DECLINING, EACH FUND
MAY NOT REMAIN IN COMPLIANCE WITH THE 1940 ACT PRECONDITIONS OR BE
IN COMPLIANCE WITH ITS BYLAW REQUIREMENTS WHEN THE FUND INTENDS TO
DECLARE COMMON SHARE DISTRIBUTIONS OR AFTER IT DECLARES COMMON
SHARE DISTRIBUTIONS AT THE TIME SUCH DISTRIBUTIONS ARE PAYABLE.
ACCORDINGLY, THERE CAN BE NO ASSURANCE THAT THESE FUNDS, OR ANY OF
THEM, WILL PAY COMMON SHARE DISTRIBUTIONS. THIS PRESS RELEASE
STATES THAT THE FUNDS EXPECT TO DECLARE DISTRIBUTIONS IN DECEMBER
2008 APPROXIMATELY EQUAL TO THE AMOUNTS OF THEIR INCOME EARNED IN
2008 WHICH WAS NOT PREVIOUSLY DISTRIBUTED. THE FINAL AMOUNTS OF
THESE DISTRIBUTIONS ARE SUBJECT TO COMPLEX CALCULATIONS BASED UPON
THE CHARACTER OF THE INCOME RECEIVED BY EACH FUND. ACCORDINGLY,
THERE CAN BE NO ASSURANCE AS TO THE AMOUNTS OF SUCH DISTRIBUTIONS,
IF ANY. ALSO, ANY DISTRIBUTIONS MADE FROM A FUND WILL REDUCE THE
NET ASSET VALUE OF THAT FUND AND MAY RESULT IN A CORRESPONDING
DECREASE IN THE MARKET VALUE OF THE FUND�S COMMON SHARES. THIS
PRESS RELEASE STATES THAT EACH FUND EXPECTS TO RECONSIDER IN
DECEMBER 2008 ITS COMMON SHARE DISTRIBUTION POLICY FOR 2009. THE
IMPLICATION OF THIS STATEMENT IS THAT EACH FUND WILL IN FACT PAY
DISTRIBUTIONS IN 2009. THE SALES OF INVESTMENT SECURITIES AND THE
REDEMPTIONS OF FUND PREFERRED SHARES BY THESE FUNDS HAS
SUBSTANTIALLY REDUCED THE EARNINGS WHICH EACH FUND MAY REALIZE FROM
ITS INVESTMENTS AND SIMULTANEOUSLY INCREASED THE RATIOS OF
OPERATING EXPENSES TO NET ASSETS. IN THESE CIRCUMSTANCES, INVESTORS
SHOULD EXPECT THAT FUTURE COMMON SHARE DISTRIBUTION RATES WILL BE
SUBSTANTIALLY DECREASED FROM THE DISTRIBUTION RATES PREVIOUSLY PAID
BY THESE FUNDS; AND, IN FACT, THERE CAN BE NO ASSURANCE THAT ANY
COMMON SHARE DISTRIBUTIONS WILL BE PAID IN 2009. FOR THESE REASONS,
AMONG OTHERS, INVESTORS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE
UPON FORWARD LOOKING STATEMENTS IN THIS PRESS RELEASE.
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