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 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.

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 nine months ended September 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 primary investment strategies include U.S. real estate, preferred securities, including low duration preferred securities, private real estate solutions, global/international real estate, global listed infrastructure, real assets multi-strategy, as well as global natural resource equities. Our strategies seek to achieve a variety of investment objectives for different risk profiles and are actively managed by specialist teams of investment professionals who employ fundamental-driven research and portfolio management processes. We offer our strategies through a variety of investment vehicles, including U.S. and non-U.S. registered funds and other commingled vehicles, separate accounts and subadvised portfolios.

Current wording

Our primary investment strategies include U.S. real estate, preferred securities, including low duration preferred securities, private real estate solutions, global/international real estate, global listed infrastructure, real assets multi-strategy, and global natural resource equities. Our strategies seek to achieve a variety of investment objectives for different risk profiles and are actively managed by specialist teams of investment professionals who employ fundamental-driven research and portfolio management processes. We offer our strategies through a variety of investment vehicles, including U.S. and non-U.S. registered funds and other commingled vehicles, separate accounts and subadvised portfolios.

Previous 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.

Current wording

Assets under management at September 30, 2024 increased 22.1% to $91.8 billion from $75.2 billion at September 30, 2023. The increase was due to market appreciation of $21.2 billion, partially offset by net outflows of $2.0 billion and distributions of $2.6 billion. Our organic decay rate for the twelve months ended September 30, 2024 was (2.6%). 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 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%).

Current wording

•Distributions of $1.3 billion including $622 million from U.S. real estate and $518 million from preferred securities, of which $982 million was reinvested and included in net flows

Previous 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%).

Current wording

Our organic decay rate for advisory accounts for the twelve months ended September 30, 2024 was (12.0%).

Previous 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%).

Current wording

Our organic decay rate for Japan subadvisory accounts for the twelve months ended September 30, 2024 was (8.6%).

Previous 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%).

Current wording

•Net outflows of $267 million including $444 million from global/international real estate, partially offset by net inflows of $207 million into U.S. real estate

Previous 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.

Current wording

Assets under management in closed-end funds at September 30, 2024, which represented 13.0% of total assets under management, increased 15.9% to $11.9 billion from $10.3 billion at September 30, 2023. The change was primarily due to:

Previous wording

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

Current wording

(1)Refer to pages 29-30 for reconciliations of U.S. GAAP to as adjusted results.

Previous wording

Total investment advisory and administration fees from open-end funds compared with average assets under management implied an annualized effective fee rate of 65.9 bps for both the six months ended June 30, 2024 and 2023.

Current wording

Total investment advisory fees from institutional accounts compared with average assets under management implied an annualized effective fee rate of 37.9 bps for both the three months ended September 30, 2024 and 2023.

Previous wording

Total investment advisory and administration fees from closed-end funds compared with average assets under management implied an annualized effective fee rate of 88.4 and 88.6 bps for the three months ended June 30, 2024 and 2023, respectively.

Current wording

Total investment advisory and administration fees from closed-end funds compared with average assets under management implied an annualized effective fee rate of 88.8 bps for both the three months ended September 30, 2024 and 2023.

Previous wording

Employee compensation and benefits increased from the three months ended June 30, 2023, primarily due to higher amortization of restricted stock units of $3.0 million, which included $2.4 million of accelerated vesting attributable to retirements, and an increase in salaries of $864,000.

Current wording

Employee compensation and benefits increased from the three months ended September 30, 2023 primarily due to higher amortization of restricted stock units of $2.3 million including $2.0 million of accelerated vesting of certain restricted stock units, and an increase in salaries of $621,000.

Previous wording

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

Current wording

General and administrative expenses decreased from the three months ended September 30, 2023 primarily due to lower rent expense of $2.3 million related to the expiration of the lease for the Company’s prior headquarters in January 2024. The three months ended September 30, 2023 also included $1.4 million of reduced projected costs associated with the implementation of the Company's trade order management system to reflect the actual amount paid.

Previous 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.

Current wording

Depreciation and amortization increased from the three months ended September 30, 2023 primarily due to depreciation and amortization of 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 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.

Current wording

Operating margin for the three months ended September 30, 2024 increased to 33.7% from 33.0% for the three months ended September 30, 2023. Operating margin represents the ratio of operating income to revenue.

Previous wording

A reconciliation of the Company’s statutory federal income tax rate and the effective income tax rate is summarized in the following table:

Current wording

A reconciliation of the Company’s statutory federal income tax rate to the effective income tax rate is summarized in the following table:

Previous wording

Six Months Ended June 30, 2024 Compared with Six Months Ended June 30, 2023

Current wording

Nine Months Ended September 30, 2024 Compared with Nine Months Ended September 30, 2023

Previous 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.

Current wording

Total investment advisory fees from institutional accounts compared with average assets under management implied an annualized effective fee rate of 38.0 bps and 37.4 bps for the nine months ended September 30, 2024 and 2023, respectively.

Previous wording

Total investment advisory and administration fees from closed-end funds compared with average assets under management implied an annualized effective fee rate of 88.6 bps and 88.8 bps for the six months ended June 30, 2024 and 2023, respectively.

Current wording

Total investment advisory and administration fees from closed-end funds compared with average assets under management implied an annualized effective fee rate of 88.6 bps and 88.8 bps for the nine months ended September 30, 2024 and 2023, respectively.

Previous wording

Distribution and service fees decreased from the three months ended June 30, 2023, primarily due to a shift in the composition of assets under management.

Current wording

Distribution and service fees decreased from the nine months ended September 30, 2023, primarily due to a shift in the composition of assets under management.

Previous wording

Depreciation and amortization increased from the six months ended June 30, 2023. The six 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.

Current wording

Depreciation and amortization increased from the nine months ended September 30, 2023 primarily due to depreciation and amortization of 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 six months ended June 30, 2024 decreased to 32.2% from 34.8% for the six months ended June 30, 2023.

Current wording

Operating margin for the nine months ended September 30, 2024 decreased to 32.7% from 34.2% for the nine months ended September 30, 2023.

Previous wording

A reconciliation of the Company’s statutory federal income tax rate and the effective income tax rate is summarized in the following table:

Current wording

A reconciliation of the Company’s statutory federal income tax rate to the effective income tax rate is summarized in the following table:

Previous wording

(1)Represents adjustment to remove the impact of consolidated investment vehicles and the net effect of corporate seed performance.

Current wording

(1)Represents the impact of consolidated investment vehicles and the net effect of corporate seed performance.

Previous wording

(2)Represents incremental expenses associated with the separation of certain employees.

Current wording

(2)Represents the impact of incremental expenses associated with the separation of certain employees.

Previous 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.

Current wording

(3)Represents 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 incremental expenses associated with the separation of certain employees.

Current wording

(1)Represents the impact of incremental expenses associated with the separation of certain employees.

Previous 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.

Current wording

(2)Represents 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

(1)Represents adjustment to remove the impact of consolidated investment vehicles and the net effect of corporate seed performance.

Current wording

(1)Represents the impact of consolidated investment vehicles and the net effect of corporate seed performance.

Previous wording

Liquid seed investments, recorded at fair value, are generally traded in active markets on major exchanges and can typically be liquidated within a normal settlement cycle. Liquid seed investments include corporate securities held directly for the purpose of establishing performance track records and the Company's economic interest in consolidated investment vehicles which are presented net of noncontrolling interests.

Current wording

Liquid seed investments, recorded at fair value, are generally traded in active markets on major exchanges and can typically be liquidated within a normal settlement cycle. Liquid seed investments are primarily securities held directly for the purpose of establishing performance track records and the Company's economic interest in certain consolidated investment vehicles which are presented net of noncontrolling interests.

Previous 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.

Current wording

Other current assets primarily represent investment advisory and administration fees receivable. At September 30, 2024, receivables from institutional accounts comprised 48.4% of other current assets, while receivables from open-end and closed-end funds, together, comprised 46.3% of other current assets. We perform a review of our receivables on an ongoing basis to assess collectability and, based on our analysis at September 30, 2024, there was no allowance for uncollectible accounts required.

Previous wording

Current liabilities included accrued compensation and benefits, distribution and service fees payable, operating lease obligations due within 12-months, certain income taxes payable and other liabilities and accrued expenses.

Current wording

Current liabilities included accrued compensation and benefits, distribution and service fees payable, operating lease obligations due within 12 months, certain income taxes payable and certain other liabilities and accrued expenses.

Previous wording

Our business has become more capital intensive. Potential uses of capital range from, among other things, seeding new strategies and investment vehicles, co-investing in private real estate vehicles, funding the upfront costs associated with closed-end fund launches and rights offerings, and making various investments to grow our firm infrastructure as our business scales. In order to provide us with the financial flexibility to pursue these opportunities, we have a $100.0 million senior unsecured revolving credit facility maturing on January 20, 2026. Borrowings under the Credit Agreement, if any, will be used for working capital and other general corporate purposes. To date, we have not drawn on the Credit Agreement.

Current wording

Our business has become more capital intensive. Potential uses of capital range from, among other things, seeding new strategies and investment vehicles, co-investing in private real estate vehicles, funding the upfront costs associated with closed-end fund launches and rights offerings, and making various investments to grow our firm infrastructure as our business scales. In order to provide us with the financial flexibility to pursue these opportunities, we have a $100.0 million senior unsecured revolving credit facility maturing on January 20, 2026. To date, we have not drawn on the credit facility.

Previous 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.

Current wording

On April 22, 2024, we issued 1,007,057 shares of common stock through an offering. The net proceeds, 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. The offering was completed on April 22, 2024 after the issuance of the shares.

Previous 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.

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 as of September 30, 2024. In addition, we have committed to invest $125.0 million in Cohen & Steers Income Opportunities REIT, Inc. (CNSREIT) of which $92.8 million remained unfunded as of September 30, 2024. There are contractual restrictions on redemption of our seed investments in REOF and CNSREIT.

Previous 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.

Current wording

Cash and cash equivalents decreased by $75.9 million, excluding the effect of foreign exchange rate changes, for the nine months ended September 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 $61.9 million for the nine months ended September 30, 2024. Net cash used in investing activities was $142.8 million, which included net purchases of U.S. Treasury securities held for corporate purposes of $106.8 million and the funding of $32.0 million of our $125.0 million commitment to CNSREIT. Net cash provided by financing activities was $5.1 million, including proceeds from issuance of common stock from offering of $68.5 million and net contributions from noncontrolling interests of $44.5 million, partially offset by dividends paid to stockholders of $89.2 million and repurchases of common stock to satisfy employee withholding tax obligations on the vesting and delivery of restricted stock units of $19.6 million.

Previous 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.

Current wording

We have committed to invest up to $50.0 million in REOF. As of September 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 September 30, 2024, we had funded $32.2 million of this commitment.

Previous 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.

Current wording

On November 7,2024, we declared a quarterly dividend on our common stock in the amount of $0.59 per share. This dividend will be payable on December 2, 2024 to stockholders of record at the close of business on November 18, 2024.