RFI Signals Year‑End Payout; Section 19(a) Notice Raises Tax and NAV Questions for Holders

Fund issues Section 19(a) notice ahead of Dec. 31, 2025 distribution

Cohen & Steers Total Return Realty Fund, Inc. (RFI) has issued a Section 19(a) notification tied to a distribution scheduled to be paid on Dec. 31, 2025. The fund used the legal notice to flag how the payment will be treated for tax reporting — an important step for closed‑end fund shareholders who must know whether a distribution is ordinary income, capital gains, return of capital, or some mix of those categories.

At the moment I don’t have the full text of the press release you linked, so I can’t quote the exact per‑share amount or reproduce the precise classification language from the notice. If you’d like the exact breakdown and the fund’s wording, paste the PR text or permit me to fetch it and I’ll extract the precise figures and language. Meanwhile, here’s a clear explanation of what a Section 19(a) notice means and the practical implications investors should expect.

What distribution sources usually look like — and why the split matters

Section 19(a) notices are a way for a fund to tell shareholders how a declared distribution will be categorized on tax forms. A typical breakdown lists amounts or percentages for ordinary income, long‑term capital gains, short‑term capital gains, and return of capital (ROC). Each label matters:

• Ordinary income: This is interest, dividends, and other regular income the fund earned. It’s taxed at ordinary income rates for shareholders.
• Long‑term capital gains: Profit from selling holdings held longer than a year. These gains usually get lower tax rates than ordinary income.
• Short‑term capital gains: Gains on assets held for a year or less, taxed like ordinary income.
• Return of capital (ROC): Money sent back to shareholders that is not current income. ROC reduces your cost basis in the shares; it isn’t immediately taxed as income but can increase taxable gain when you sell (or be taxed later when the basis hits zero).

When the fund provides exact numbers, those go into shareholders’ 1099s for the tax year. If the fund’s notice lists a mix — for example, some ordinary income plus a slice of ROC — shareholders will see those separate amounts on their year‑end reports.

Tax treatment and NAV consequences — what to expect

How the distribution is classified affects both taxes and the fund’s reported performance. Ordinary income and short‑term gains are taxable in the year received; long‑term gains normally carry preferential rates. Return of capital is not taxed as ordinary income when distributed, but it lowers your cost basis, meaning a larger taxable gain later unless the basis is recovered by future losses or additional ROC adjustments.

On the fund side, distributions reduce net asset value (NAV) by roughly the payout amount when they go ex‑dividend. If a large share of a distribution is ROC rather than earned income, it can signal that the fund is returning principal rather than paying from sustainable income — a point investors should treat as higher risk for future payouts. Conversely, a distribution made mostly from capital gains can reflect realized gains from portfolio trades and may be less concerning for future cash flow.

How this fits with RFI’s strategy and recent market context

Cohen & Steers Total Return Realty Fund, Inc. (RFI) is a closed‑end fund focused on real estate securities. Closed‑end REIT funds commonly show distribution mixes that change year‑to‑year depending on property market activity, realized gains, and interest income from REIT holdings. A year‑end distribution that leans on capital gains is common after a busy selling season; a payout composed largely of ROC can be a red flag if repeated over multiple quarters.

Because I don’t have the exact figures from the notice in front of me, I can’t say whether this particular distribution appears sustainable for RFI’s future yield. If the fund names material ROC or a large one‑time capital gain component, that should shape how investors view the near‑term payout reliability relative to peers.

Next steps for investors — dates and filings to watch

Watch for the fund’s formal filings: the final Section 19(a) disclosure, the related 8‑K or press release with per‑share figures, and the year‑end 1099 that will carry the official tax breakdown. Key dates to note are the ex‑dividend date and the record date (these determine who receives the distribution). Also look for follow‑up commentary from the manager explaining whether the payment reflects recurring income, realized gains from portfolio rebalancing, or return of capital.

If you want the exact per‑share amount and the precise classification language from RFI’s notice, paste the press release here or let me fetch it and I’ll update this note with the fund’s verbatim breakdown and a concise investor take on what it means for RFI shareholders.

Sources

• prnewswire.com