Why Is AIQ Returning 100% Capital in Its Latest Special Distribution?
Alternative Investment Trust (ASX, AIQ) announces a special unfranked distribution of AUD 0.04647 per unit, representing a full return of capital payable in early August.
- Special unfranked distribution of AUD 0.04647 per unit
- 100% return of capital, not related to earnings
- Ex-date set for 25 July 2025, payment on 8 August 2025
- Dividend Reinvestment Plan not applicable for this distribution
- No external approvals required for payment
Special Distribution Announcement
Alternative Investment Trust (ASX, AIQ) has declared a special distribution of AUD 0.04647 per ordinary unit, scheduled for payment on 8 August 2025. This distribution is notable for being a 100% return of capital rather than a dividend derived from earnings, and it is unfranked, meaning it carries no attached franking credits.
Key Dates and Details
The distribution will go ex-dividend on 25 July 2025, with the record date set for 28 July 2025. Investors holding units as of the record date will be entitled to the payment. Importantly, the trust’s Dividend Reinvestment Plan (DRP) will not apply to this special distribution, so investors will receive the payment in cash rather than reinvested units.
Implications of a Return of Capital
A return of capital distribution reduces the cost base of the investment rather than representing income. This can have tax implications for investors, potentially deferring tax liabilities until the units are sold. The absence of franking credits further confirms this distribution is not from taxable profits. For the trust, this move may reflect a strategic capital management decision, possibly linked to asset sales or portfolio rebalancing.
No External Approvals Needed
The announcement confirms that no external approvals, such as security holder, court, or regulatory consents, were required to proceed with this distribution. This suggests the trust has sufficient internal authority and liquidity to make the payment without delay or complication.
Looking Ahead
While this special distribution provides immediate cash returns to investors, it raises questions about the trust’s future income-generating capacity and capital structure. Market participants will be watching closely for subsequent updates on the trust’s financial health and strategy.
Bottom Line?
AIQ’s full return of capital distribution marks a pivotal moment, prompting investors to reassess the trust’s outlook and tax positioning.
Questions in the middle?
- What is the underlying reason for the full return of capital at this time?
- How will this distribution affect AIQ’s unit price and future income streams?
- Are there any anticipated changes to the trust’s portfolio or strategy following this payment?
