Cohen & Steers, Inc. is a global investment manager specializing in real assets and alternative income strategies. Founded in 1986 and headquartered in New York City, the company has grown to become a leading provider of investment solutions across the real estate, infrastructure, resource equities, and multi-strategy asset classes.
Business Overview and History Cohen & Steers was founded in 1986 by Martin Cohen and Robert Steers, two pioneers in the real estate investment management industry with over 70 years of combined experience. The firm started as a boutique real estate investment manager, focusing on listed real estate securities. Over the years, Cohen & Steers has steadily expanded its investment capabilities, launching strategies in preferred securities, global listed infrastructure, resource equities, and multi-asset solutions.
The company was officially organized as a Delaware corporation on March 17, 2004. Cohen & Steers has established a global presence with offices in London, Dublin, Hong Kong, Tokyo, and Singapore, in addition to its New York City headquarters. During the global financial crisis of 2008-2009, the company faced challenges as the performance of its real estate and other asset classes were impacted. However, Cohen & Steers successfully navigated this difficult period through disciplined risk management and a continued focus on delivering strong investment performance for its clients.
In 2021, Cohen & Steers celebrated its 35th anniversary, marking a significant milestone in its history of growth and leadership in real assets and alternative income investing. As of December 31, 2023, the company had $736.55 million in total assets and managed $83.14 billion in assets across its various investment vehicles and client channels.
Today, Cohen & Steers manages $91.8 billion in assets as of September 30, 2024, across a diversified range of investment vehicles including open-end and closed-end funds, institutional accounts, and sub-advisory relationships. The firm’s client base spans wealth management, institutional, and global markets, with a strong presence in the United States, Japan, and Australia.
Financial Overview Cohen & Steers has demonstrated solid financial performance over the years, with revenue reaching $377.63 million and net income of $105.44 million for the nine months ended September 30, 2024. The company’s operating margin for the same period was 32.7%, reflecting the scalable nature of its asset management business model.
For the fiscal year 2023, Cohen & Steers reported revenue of $504.25 million, net income of $129.05 million, operating cash flow of $171.96 million, and free cash flow of $114.97 million. In the most recent quarter (Q3 2024), the company achieved revenue of $133.20 million, representing a year-over-year growth of 7.7%. Net income for Q3 2024 was $39.67 million, with operating cash flow of $25.63 million and free cash flow of $24.22 million.
The firm’s return on assets (ROA) and return on equity (ROE) for the twelve months ended September 30, 2024 were 18.59% and 31.56%, respectively, demonstrating the company’s ability to generate solid returns on its invested capital and equity.
Liquidity Cohen & Steers maintains a strong balance sheet, with $187.44 million in cash and cash equivalents as of the most recent quarter. The company’s current ratio and quick ratio, measures of short-term liquidity, both stood at 33.58, indicating ample resources to meet its near-term obligations. Cohen & Steers has a debt-to-equity ratio of 0, with $140.41 million in total debt and $381.23 million in stockholders’ equity. Additionally, the company has access to a $100 million senior unsecured revolving credit facility that has not been drawn upon, further enhancing its financial flexibility.
Investment Strategies and Performance Cohen & Steers’ investment strategies span a diverse range of real asset and alternative income solutions, including:
U.S. Real Estate: The firm’s U.S. REIT strategies have generated impressive long-term results, with the flagship Cohen & Steers Realty Shares Fund outperforming its benchmark by 394 basis points over the past 12 months and 192 basis points over the past 3 years.
Preferred Securities: Cohen & Steers’ preferred securities strategies have also delivered strong performance, with the firm’s funds outperforming the broader preferred securities market by a wide margin.
Global Listed Infrastructure: The Cohen & Steers Global Listed Infrastructure Fund has generated a 12-month return of 33.3%, outpacing its benchmark by nearly 5 percentage points. This strategy has proven particularly resilient, benefiting from the firm’s deep expertise in this growing asset class.
Across its investment platform, Cohen & Steers has maintained a strong track record, with 96% of its assets under management outperforming benchmarks on a 1-year basis and 97% on 3-year and 5-year time frames as of September 30, 2024.
Product Segments Cohen & Steers operates in three key product segments:
Open-End Funds: This segment includes the company’s open-end mutual funds. At the end of the third quarter of 2024, assets under management (AUM) in open-end funds were $42.98 billion, representing 46.8% of the company’s total AUM. The open-end funds segment generated $187.85 million in investment advisory and administration fees during the first nine months of 2024, up 3.3% year-over-year. The annualized effective fee rate for open-end funds was 66.0 basis points for the nine-month period.
Institutional Accounts: This segment includes institutional separate accounts and subadvisory relationships. AUM in institutional accounts stood at $36.89 billion at the end of Q3 2024, accounting for 40.2% of total AUM. Investment advisory fees from institutional accounts were $93.49 million for the first nine months of 2024, up 0.9% year-over-year. The annualized effective fee rate for institutional accounts was 38.0 basis points.
Closed-End Funds: The closed-end funds segment managed $11.91 billion in AUM at the end of the third quarter, representing 13.0% of total AUM. Investment advisory and administration fees from closed-end funds were $73.98 million in the first nine months of 2024, an increase of 1.5% compared to the prior-year period. The annualized effective fee rate for closed-end funds was 88.6 basis points.
Growth Initiatives and Outlook Cohen & Steers is well-positioned to capitalize on several key industry trends, including the continued shift towards real assets and alternative income strategies, the growing adoption of private market solutions in the wealth management channel, and the increased focus on infrastructure investment globally.
To address these opportunities, the firm has taken several strategic actions, including:
Expanding private real estate offerings: The firm has committed significant seed capital to its non-traded Cohen & Steers Income Opportunities REIT, which has generated an 8.3% total return in the first nine months of 2024, outpacing the broader private real estate market.
Enhancing wealth management distribution: Cohen & Steers has realigned its U.S. wealth management team to better serve the rapidly growing registered investment advisor (RIA) channel, which has become a significant driver of flows for the firm.
These initiatives, coupled with the firm’s strong investment performance and growing brand recognition, position Cohen & Steers well to continue delivering long-term value for its clients and shareholders.
Guidance and Future Expectations Based on the company’s recent conference call, Cohen & Steers provided the following guidance for the remainder of 2024:
Risks and Challenges While Cohen & Steers has demonstrated resilience and adaptability, the firm faces several risks and challenges that investors should consider:
Competition: The asset management industry is highly competitive, with Cohen & Steers facing competition from larger, diversified firms as well as specialized boutiques in its core real asset and alternative income strategies.
Regulatory environment: Changes in the regulatory landscape, particularly those affecting the financial services industry, could impact Cohen & Steers’ operations and the competitive dynamics of its business.
Concentration risk: A significant portion of Cohen & Steers’ revenue is derived from its U.S. REIT strategies, making the firm’s performance vulnerable to changes in the real estate market.
Despite these risks, Cohen & Steers’ strong investment track record, diversified product suite, and strategic initiatives position the firm well to navigate the evolving industry landscape and continue its growth trajectory.
Conclusion Cohen & Steers has established itself as a leading global investment manager in the real assets and alternative income space. With a strong historical performance, a diversified product offering, and a focus on strategic growth initiatives, the firm is well-positioned to capitalize on the increasing investor demand for real asset and alternative income solutions. As Cohen & Steers continues to adapt and innovate, it remains an intriguing investment opportunity for those seeking exposure to the long-term growth potential of the real assets and alternative income markets.
Disclaimer: This article is for informational purposes only. It does not constitute financial, legal, or other types of advice. While every effort has been made to ensure the accuracy of the information presented here, the author and the publisher do not make any guarantees about the completeness, reliability, and accuracy of this information.