COHEN & STEERS INC

Previous wording

Set forth on the following pages is management's discussion and analysis of our financial condition and results of operations for the three months ended March 31, 2024 and 2023. Such information should be read in conjunction with our condensed consolidated financial statements and the related notes included herein. The condensed consolidated financial statements of the Company are unaudited. When we use the terms "Cohen & Steers," the "Company," "we," "us," and "our," we mean Cohen & Steers, Inc., a Delaware corporation, and its consolidated subsidiaries.

Current wording

Set forth on the following pages is management's discussion and analysis of our financial condition and results of operations for the three and six months ended June 30, 2024 and 2023. Such information should be read in conjunction with our condensed consolidated financial statements and the related notes included herein. The condensed consolidated financial statements of the Company are unaudited. When we use the terms "Cohen & Steers," the "Company," "we," "us," and "our," we mean Cohen & Steers, Inc., a Delaware corporation, and its consolidated subsidiaries.

Previous wording

Our revenue from the wealth channel is primarily derived from investment advisory, administration, distribution and service fees from open-end and closed-end funds as well as other commingled vehicles. Our revenue from the institutional channel is derived from fees received from our clients for managing advised and subadvised accounts. Our fees are based on contractually specified rates applied to the value of the assets we manage and, in certain cases, may include a performance-based fee. Our revenue fluctuates with changes in the total value of our assets under management, which may occur as a result of market appreciation and depreciation, contributions or withdrawals from investor accounts and distributions. This revenue is recognized over the period that the assets are managed.

Current wording

Our revenue from the wealth channel is primarily derived from investment advisory, administration, distribution and service fees from open-end and closed-end funds as well as other commingled vehicles. Our revenue from the institutional channel is derived from fees received from our clients for managing advised and subadvised accounts. Our fees are based on contractually specified rates applied to the value of the assets we manage and, in certain cases, may include a performance-based fee. Our revenue fluctuates with changes in the total value of our assets under management, which may occur as a result of market appreciation and depreciation, contributions to or withdrawals from investor accounts and distributions. This revenue is recognized over the period that the assets are managed.

Previous wording

Assets under management at March 31, 2024 increased 1.7% to $81.2 billion from $79.9 billion at March 31, 2023. The increase was due to market appreciation of $7.5 billion, partially offset by net outflows of $3.5 billion and distributions of $2.7 billion. Net outflows included $2.5 billion from global/international real estate and $1.0 billion from preferred securities. Market appreciation included $3.5 billion from U.S. real estate, $2.1 billion from preferred securities and $1.3 billion from global/international real estate. Distributions included $1.6 billion from U.S. real estate and $724 million from preferred securities. Our organic decay rate for the twelve months ended March 31, 2024 was (4.3%). The organic growth/decay rate represents the ratio of net flows for the period to the beginning assets under management.

Current wording

Assets under management at June 30, 2024 increased 0.4% to $80.7 billion from $80.4 billion at June 30, 2023. The increase was due to market appreciation of $6.2 billion, partially offset by net outflows of $3.3 billion and distributions of $2.6 billion. Net outflows included $2.6 billion from global/international real estate and $1.1 billion from preferred securities. Market appreciation included $2.8 billion from U.S. real estate, $1.9 billion from preferred securities and $887 million from global/international real estate. Distributions included $1.5 billion from U.S. real estate and $720 million from preferred securities. Our organic decay rate for the twelve months ended June 30, 2024 was (4.1%). The organic growth/decay rate represents the ratio of net flows for the period to the beginning assets under management.

Previous wording

Assets under management in open-end funds at March 31, 2024, which represented 46.4% of total assets under management, increased 3.5% to $37.7 billion from $36.4 billion at March 31, 2023. The increase was due to market appreciation of $3.5 billion, partially offset by net outflows of $802 million and distributions of $1.3 billion. Net outflows included $407 million from preferred securities and $212 million from global listed infrastructure. Market appreciation included $1.8 billion from U.S. real estate and $1.3 billion from preferred securities. Distributions included $610 million from U.S. real estate and $525 million from preferred securities. Of these distributions, $970 million was reinvested and included in net flows. Our organic decay rate for open-end funds for the twelve months ended March 31, 2024 was (2.2%).

Current wording

Assets under management in open-end funds at June 30, 2024, which represented 46.4% of total assets under management, increased 3.4% to $37.5 billion from $36.2 billion at June 30, 2023. The increase was due to market appreciation of $2.9 billion, partially offset by net outflows of $395 million and distributions of $1.3 billion. Net outflows included $495 million from preferred securities and $160 million from global listed infrastructure, partially offset by net inflows of $301 million into U.S. real estate. Market appreciation included $1.4 billion from U.S. real estate and $1.2 billion from preferred securities. Distributions included $617 million from U.S. real estate and $521 million from preferred securities. Of these distributions, $978 million was reinvested and included in net flows. Our organic decay rate for open-end funds for the twelve months ended June 30, 2024 was (1.1%).

Previous wording

Assets under management in institutional accounts at March 31, 2024, which represented 39.9% of total assets under management, decreased 0.6% to $32.4 billion from $32.6 billion at March 31, 2023. The decrease was due to net outflows of $2.7 billion and distributions of $816 million, partially offset by market appreciation of $3.1 billion. Net outflows included $2.5 billion from global/international real estate. Market appreciation included $1.4 billion from U.S. real estate and $1.1 billion from global/international real estate. Distributions included $780 million from U.S. real estate. Our organic decay rate for institutional accounts for the twelve months ended March 31, 2024 was (8.2%).

Current wording

Assets under management in institutional accounts at June 30, 2024, which represented 39.9% of total assets under management, decreased 3.2% to $32.2 billion from $33.3 billion at June 30, 2023. The decrease was due to net outflows of $2.9 billion and distributions of $728 million, partially offset by market appreciation of $2.6 billion. Net outflows included $2.6 billion from global/international real estate. Market appreciation included $1.2 billion from U.S. real estate, $761 million from global/international real estate and $331 million from preferred securities. Distributions included $683 million from U.S. real estate. Our organic decay rate for institutional accounts for the twelve months ended June 30, 2024 was (8.7%).

Previous wording

Assets under management in advisory accounts at March 31, 2024, which represented 56.1% of institutional assets under management, decreased 1.6% to $18.2 billion from $18.5 billion at March 31, 2023. The decrease was due to net outflows of $2.3 billion, partially offset by market appreciation of $1.8 billion. Net outflows included $1.8 billion from global/international real estate and $631 million from preferred securities, partially offset by net inflows of $373 million into U.S. real estate. Market appreciation included $632 million from global/international real estate, $590 million from U.S. real estate and $380 million from preferred securities. Our organic decay rate for advisory accounts for the twelve months ended March 31, 2024 was (12.2%).

Current wording

Assets under management in advisory accounts at June 30, 2024, which represented 57.0% of institutional assets under management, decreased 2.4% to $18.4 billion from $18.8 billion at June 30, 2023. The decrease was due to net outflows of $2.0 billion, partially offset by market appreciation of $1.5 billion. Net outflows included $1.7 billion from global/international real estate. Market appreciation included $513 million from U.S. real estate, $434 million from global/international real estate and $323 million from preferred securities. Our organic decay rate for advisory accounts for the twelve months ended June 30, 2024 was (10.4%).

Previous wording

Assets under management in Japan subadvisory accounts at March 31, 2024, which represented 26.3% of institutional assets under management, decreased 2.0% to $8.5 billion from $8.7 billion at March 31, 2023. The decrease was due to net outflows of $288 million and distributions of $816 million, partially offset by market appreciation of $926 million. Net outflows included $275 million from global/international real estate. Market appreciation included $700 million from U.S. real estate. Distributions included $780 million from U.S. real estate. Our organic decay rate for Japan subadvisory accounts for the twelve months ended March 31, 2024 was (3.3%).

Current wording

Assets under management in Japan subadvisory accounts at June 30, 2024, which represented 25.8% of institutional assets under management, decreased 7.3% to $8.3 billion from $9.0 billion at June 30, 2023. The decrease was due to net outflows of $668 million and distributions of $728 million, partially offset by market appreciation of $745 million. Net outflows included $401 million from U.S. real estate and $261 million from global/international real estate. Market appreciation included $551 million from U.S. real estate and $184 million from global/international real estate. Distributions included $683 million from U.S. real estate. Our organic decay rate for Japan subadvisory accounts for the twelve months ended June 30, 2024 was (7.5%).

Previous wording

Assets under management in subadvisory accounts excluding Japan at March 31, 2024, which represented 17.6% of institutional assets under management, increased 5.4% to $5.7 billion from $5.4 billion at March 31, 2023. The increase was due to market appreciation of $419 million, partially offset by net outflows of $127 million. Net outflows included $391 million from global/international real estate, partially offset by net inflows of $220 million into U.S. real estate. Market appreciation included $239 million from global/international real estate and $124 million from U.S. real estate. Our organic decay rate for subadvisory accounts excluding Japan for the twelve months ended March 31, 2024 was (2.4%).

Current wording

Assets under management in subadvisory accounts excluding Japan at June 30, 2024, which represented 17.2% of institutional assets under management, were $5.5 billion at both June 30, 2024 and 2023. Assets under management at June 30, 2024 included market appreciation of $330 million, partially offset by net outflows of $275 million. Net outflows included $638 million from global/international real estate, partially offset by net inflows of $292 million into U.S. real estate. Market appreciation included $143 million from global/international real estate and $112 million from U.S. real estate. Our organic decay rate for subadvisory accounts excluding Japan for the twelve months ended June 30, 2024 was (5.0%).

Previous wording

Assets under management in closed-end funds at March 31, 2024, which represented 13.7% of total assets under management, increased 2.3% to $11.1 billion from $10.9 billion at March 31, 2023. The increase was primarily due to market appreciation of $865 million, partially offset by distributions of $616 million.

Current wording

Assets under management in closed-end funds at June 30, 2024, which represented 13.7% of total assets under management, increased 1.0% to $11.0 billion from $10.9 billion at June 30, 2023. The increase was primarily due to market appreciation of $719 million, partially offset by distributions of $615 million.

Previous wording

(1)Included amounts attributable to third-party interests in consolidated investment vehicles. Refer to non-operating income (loss) tables on pages 28-29 for additional detail.

Current wording

(1)Included amounts attributable to third-party interests in consolidated investment vehicles.

Previous wording

(2)Refer to pages 30-31 for reconciliations of U.S. GAAP to as adjusted results.

Current wording

(2)Refer to pages 32-33 for reconciliations of U.S. GAAP to as adjusted results.

Previous wording

Total investment advisory and administration revenue from open-end funds compared with average assets under management implied an annualized effective fee rate of 66.2 bps and 66.0 bps for the three months ended March 31, 2024 and 2023, respectively.

Current wording

Total investment advisory and administration fees from open-end funds compared with average assets under management implied an annualized effective fee rate of 65.6 bps and 66.0 bps for the three months ended June 30, 2024 and 2023, respectively.

Previous wording

Total investment advisory revenue from institutional accounts compared with average assets under management implied an annualized effective fee rate of 37.8 bps and 37.2 bps for the three months ended March 31, 2024 and 2023, respectively.

Current wording

Total investment advisory fees from institutional accounts compared with average assets under management implied an annualized effective fee rate of 38.3 bps and 37.0 bps for the three months ended June 30, 2024 and 2023, respectively. The increase in the implied annualized effective fee rate reflected net inflows into higher fee paying accounts.

Previous wording

General and administrative expenses decreased from the three months ended March 31, 2023, primarily due to lower rent expense of $1.6 million related to the expiration of the lease for the Company’s prior headquarters in January 2024 and a decrease in recruitment fees of $468,000.

Current wording

General and administrative expenses decreased from the three months ended June 30, 2023, primarily due to lower

Previous wording

Depreciation and amortization increased from the three months ended March 31, 2023. The three months ended March 31, 2024 included depreciation and amortization on fixed assets and leasehold improvements associated with the Company's new corporate headquarters, which were placed in service in December 2023.

Current wording

Depreciation and amortization increased from the three months ended June 30, 2023. The three months ended June 30, 2024 included depreciation and amortization on fixed assets and leasehold improvements associated with the Company's current headquarters that were placed in service in December 2023.

Previous wording

Operating margin for the three months ended March 31, 2024 decreased to 32.8% from 35.6% for the three months ended March 31, 2023. Operating margin represents the ratio of operating income to revenue.

Current wording

Operating margin for the three months ended June 30, 2024 decreased to 31.5% from 33.9% for the three months ended June 30, 2023. Operating margin represents the ratio of operating income to revenue.

Previous wording

Employee compensation and benefits increased from the three months ended March 31, 2023, primarily due to the accelerated vesting of certain restricted stock units.

Current wording

Employee compensation and benefits increased from the six months ended June 30, 2023, primarily due to higher

Previous wording

(2)Represents adjustment to remove the impact of lease and other expenses related to the Company's prior headquarters, for which the lease expired in January 2024. From a GAAP perspective, the Company recognized lease expense on both its prior and current headquarters as a result of overlapping lease terms.

Current wording

(3)Represents adjustment to remove the impact of lease and other expenses related to the Company's prior headquarters, for which the lease expired in January 2024. From a GAAP perspective, the Company recognized lease expense on both its prior and current headquarters as a result of overlapping lease terms.

Previous wording

(4)Tax adjustments are summarized in the following table:

Current wording

(5)Tax adjustments are summarized in the following table:

Previous wording

(2)Represents adjustment to remove the impact of lease and other expenses related to the Company's prior headquarters, for which the lease expired in January 2024. From a GAAP perspective, the Company recognized lease expense on both its prior and current headquarters as a result of overlapping lease terms.

Current wording

(3)Represents adjustment to remove the impact of lease and other expenses related to the Company's prior headquarters, for which the lease expired in January 2024. From a GAAP perspective, the Company recognized lease expense on both its prior and current headquarters as a result of overlapping lease terms.

Previous wording

(2)Represents net foreign currency exchange (gain) loss associated with U.S. dollar-denominated assets held by certain foreign subsidiaries.

Current wording

(2)Represents net foreign currency exchange (gains) losses associated with U.S. dollar-denominated assets held by certain foreign subsidiaries.

Previous wording

Other current assets primarily represent investment advisory and administration fees receivable. At March 31, 2024, receivables from institutional accounts comprised 48.6% of other current assets, while receivables from open-end and closed-end funds, together, comprised 44.3% of other current assets. We perform a review of our receivables on an ongoing basis in order to assess collectability and, based on our analysis at March 31, 2024, there was no allowance for uncollectible accounts required.

Current wording

Other current assets primarily represent investment advisory and administration fees receivable. At June 30, 2024, receivables from institutional accounts comprised 43.5% of other current assets, while receivables from open-end and closed-end funds, together, comprised 49.1% of other current assets. We perform a review of our receivables on an ongoing basis in order to assess collectability and, based on our analysis at June 30, 2024, there was no allowance for uncollectible accounts required.

Previous wording

On April 22, 2024, we issued 1,007,057 shares of common stock through an “at-the-market” equity offering program (the ATM Program). The net proceeds to the Company, after deducting commissions and estimated offering expenses, were approximately $68.4 million. We intend to use the net proceeds for general corporate purposes, including seeding track record strategies and investment vehicles. We will not offer or sell any additional shares of our common stock under the ATM Program and have terminated the program effective April 22, 2024.

Current wording

On April 22, 2024, we issued 1,007,057 shares of common stock through an offering. The net proceeds to the Company, after deducting commissions and offering expenses, were approximately $68.5 million. We intend to use the net proceeds for general corporate purposes, including seeding track record strategies and investment vehicles. We will not offer or sell any additional shares of our common stock and terminated the offering effective April 22, 2024.

Previous wording

We have committed to invest up to $50.0 million in Cohen & Steers Real Estate Opportunities Fund, L.P. (REOF) of which $28.3 million remained unfunded. On May 1, 2024, we funded an additional $6.6 million of this commitment. In addition, we have committed to invest up to $125.0 million in Cohen & Steers Income Opportunities REIT, Inc. (CNSREIT) of which $101.2 million remained unfunded as of March 31, 2024. There are contractual restrictions on redemption of our seed investments in REOF and CNSREIT.

Current wording

We have committed to invest up to $50.0 million in Cohen & Steers Real Estate Opportunities Fund, L.P. (REOF) of which $21.7 million remained unfunded. In addition, we have committed to invest $125.0 million in Cohen & Steers Income Opportunities REIT, Inc. (CNSREIT) of which $101.2 million remained unfunded as of June 30, 2024. In July 2024, the Company funded an additional $8.4 million of its commitment to CNSREIT. There are contractual restrictions on redemption of our seed investments in REOF and CNSREIT.

Previous wording

Cash and cash equivalents decreased by $88.8 million, excluding the effect of foreign exchange rate changes, for the three months ended March 31, 2024. Cash flows from operating activities primarily consisted of net income adjusted for certain non-cash items and changes in assets and liabilities. Net cash provided by operating activities was $4.9 million for the three months ended March 31, 2024. Net cash used in investing activities was $29.4 million, which included the funding of $23.6 million of our $125.0 million commitment to CNSREIT and purchases of property and equipment of $4.3 million. Net cash used in financing activities was $64.3 million, including dividends paid to stockholders of $29.3 million, repurchases of common stock to satisfy employee withholding tax obligations on the vesting and delivery of restricted stock units of $19.4 million and net distributions from noncontrolling interests of $15.9 million.

Current wording

Cash and cash equivalents decreased by $66.0 million, excluding the effect of foreign exchange rate changes, for the six months ended June 30, 2024. Cash flows from operating activities primarily consisted of net income adjusted for certain non-cash items and changes in assets and liabilities. Net cash provided by operating activities was $36.2 million for the six months ended June 30, 2024. Net cash used in investing activities was $103.7 million, which included net purchases of U.S. Treasury securities held for corporate purposes of $68.0 million and the funding of $23.6 million of our $125.0 million commitment to CNSREIT. Net cash provided by financing activities was $1.5 million, including proceeds from issuance of common stock from offering of $68.5 million and net contributions from noncontrolling interests of $11.1 million, partially offset by dividends paid to stockholders of $59.2 million and repurchases of common stock to satisfy employee withholding tax obligations on the vesting and delivery of restricted stock units of $19.5 million.

Previous wording

Cash and cash equivalents decreased by $96.5 million, excluding the effect of foreign exchange rate changes, for the three months ended March 31, 2023. Cash flows from operating activities primarily consisted of net income adjusted for certain non-cash items and changes in assets and liabilities. Net cash used in operating activities was $15.0 million for the three months ended March 31, 2023. Net cash used in investing activities was $35.0 million, which included purchases of U.S. Treasury securities held for corporate purposes of $30.0 million. Net cash used in financing activities was $46.5 million, including dividends paid to stockholders of $28.1 million and repurchases of common stock to satisfy employee withholding tax obligations on the vesting and delivery of restricted stock units of $20.4 million, partially offset by net contributions from noncontrolling interests of $2.2 million.

Current wording

Cash and cash equivalents decreased by $69.6 million, excluding the effect of foreign exchange rate changes, for the six months ended June 30, 2023. Cash flows from operating activities primarily consisted of net income adjusted for certain non-cash items and changes in assets and liabilities. Net cash provided by operating activities was $38.7 million for the six months ended June 30, 2023. Net cash used in investing activities was $31.2 million, which included purchases of property and equipment of $20.1 million, primarily related to the build-out of our current headquarters, and net purchases of U.S. Treasury securities held for corporate purposes of $11.5 million. Net cash used in financing activities was $77.1 million, including dividends paid to stockholders of $56.2 million and repurchases of common stock to satisfy employee withholding tax obligations on the vesting and delivery of restricted stock units of $20.6 million.

Previous wording

We have committed to invest up to $50.0 million in REOF. As of March 31, 2024, we had funded $21.7 million of this commitment. On May 1, 2024, we funded an additional $6.6 million of this commitment. In addition, we have committed to invest up to $125.0 million in CNSREIT. As of March 31, 2024, we had funded $23.8 million of this commitment. The timing for funding the remaining portion of our commitments is uncertain.

Current wording

We have committed to invest up to $50.0 million in REOF. As of June 30, 2024, we had funded $28.3 million of this commitment. In addition, we have committed to invest $125.0 million in CNSREIT. As of June 30, 2024, we had funded $23.8 million of this commitment. In July 2024, the Company funded an additional $8.4 million of its commitment to CNSREIT. The timing for funding the remaining portion of our commitments is uncertain.

Previous wording

Subject to the approval of our board of directors, we anticipate paying dividends. When determining whether to pay a dividend, we take into account general economic and business conditions, our strategic plans, our results of operations and financial condition, cash flows and liquidity, contractual, legal and regulatory restrictions on the payment of dividends, if any, by us and our subsidiaries and such other factors deemed relevant.

Current wording

Subject to the approval of our board of directors, we anticipate paying dividends. When determining whether to pay a dividend, we take into account general economic and business conditions, our strategic plans, our results of operations and financial condition, cash flow and liquidity, contractual, legal and regulatory restrictions on the payment of dividends, if any, by us and our subsidiaries and such other factors deemed relevant.

Previous wording

On May 2, 2024, we declared a quarterly dividend on our common stock in the amount of $0.59 per share. This dividend will be payable on May 23, 2024 to stockholders of record at the close of business on May 13, 2024.

Current wording

On August 1,2024, we declared a quarterly dividend on our common stock in the amount of $0.59 per share. This dividend will be payable on August 22, 2024 to stockholders of record at the close of business on August 12, 2024.