Priority Income Fund Proration Falls to 15% as NAV Drops to $3.15; Listing Timeline in Question

Priority Income Fund repurchased 15.23% of the shares each shareholder tendered in its latest annual buyback, the lowest rate in at least two years, as the fund’s net asset value fell to $3.15 per share.

The nontraded closed-end fund offered to repurchase up to 1,550,812 shares of common stock, equal to 2.5% of shares outstanding, at NAV. Shareholders tendered 10,184,037 shares, more than 6.5 times the maximum the fund offered to buy. Priority purchased the full 1,550,812 shares – 178 of which were purchased first from holders of fewer than 100 shares under the fund’s de minimis provision, with the remainder allocated pro rata – for a total of approximately $4.9 million.

The result is a sharp step down from recent cycles. Last year’s comparable annual tender, completed in August 2025, returned about 43% of tendered shares at a $6.09 NAV. An earlier 2025 repurchase offer returned about 60% of tendered shares at a $7.17 NAV as of April 30, 2025.

Proration has fallen as Priority’s NAV has slid more than 70% in roughly two years. NAV per share dropped from $10.85 as of June 30, 2024, to $6.14 a year later, then to $4.48 as of Dec. 31, 2025. It continued falling to $3.70 by April 30, 2026, and to $3.15 as of the July 31 tender.

Priority attributed the decline to elevated defaults and distressed exchanges in the broadly syndicated loan market, coupled with declining loan asset spreads. Those conditions have pressured the fund’s collateralized loan obligation equity holdings by reducing collateral levels and squeezing income, Priority said. The fund realized $178 million in investment losses in the fiscal year ended June 30, 2025, and another $82.2 million in the six months ended Dec. 31, 2025. Total assets fell to $479 million at the end of 2025, from more than $900 million a year earlier.

The fund said it is rotating some CLO equity holdings into CLO debt investments, which it expects to carry lower risk and volatility. Priority also said its distributions equaled 23.44% of NAV on an annualized basis as of Dec. 31, 2025; fiscal 2025 distributions included $71.5 million characterized as return of capital, against $11.6 million from earnings.

The buyback is also playing out against an approaching deadline. Priority has said it expects to list its common shares on a national securities exchange prior to Dec. 31, 2026, and shareholders approved tiered transfer restrictions at the fund’s December 2025 annual meeting, capping sales at 25% of a holder’s shares in each of the first three 90-day windows following any listing.

The fund has redeemed four series of preferred stock totaling $138 million in aggregate as it prepares for the transition, and the New York Stock Exchange moved to delist Priority’s 6% Series J Term Preferred Stock in April 2026. As of Dec. 31, 2025, however, Priority said current trading levels for comparable listed funds relative to NAV did not yet justify moving forward with the listing, a position that has not been publicly updated since.

For broker-dealers and advisers with clients holding Priority shares, the shrinking proration rate leaves fewer shareholders able to exit at NAV before any listing, with no updated guidance from the fund on when – or whether – a listing will happen by its stated deadline.

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