Cohen & Steers Q4 2024 Earnings Report

Cohen & Steers EPS Results

• Actual EPS: $0.78
• Consensus EPS: $0.80
• Beat/Miss: Missed by -$0.02
• One Year Ago EPS: N/A

Cohen & Steers Revenue Results

• Actual Revenue: N/A
• Expected Revenue: $142.00 million
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Cohen & Steers Announcement Details

• Quarter: Q4 2024
• Date: 1/22/2025
• Time: Before Market Opens
• Conference Call Date: Thursday, January 23, 2025
• Conference Call Time: 10:00AM ET

Cohen & Steers (NYSE:CNS) is a holding company, which operates as an investment manager specializing in liquid real assets, which include real estate securities, listed infrastructure, commodities, natural resource equities, preferred securities, and other income solutions. It manages investment vehicles, such as institutional accounts, open-end funds and closed-end funds. The company was founded by Martin Cohen and Robert Hamilton Steers in 1986 and is headquartered in New York, NY.

Cohen & Steers Q4 2024 Earnings Call Transcript

Presentation

[Operator]

Ladies and gentlemen, thank you for standing by. Welcome to the Cohen and Steers 4th Quarter and Full Year 2024 Earnings Conference Call. During the presentation, all participants will be in a listen only mode. Afterwards, we will conduct a question and answer session. As a reminder, this conference is being recorded Thursday, January 23, 2025.

[Operator]

I would now like to turn the conference over to Brian Heller, Senior Vice President and Deputy General Counsel of Cohen and Sears. Please go ahead.

[Brian Heller, Senior Vice President and Deputy General Counsel at Cohen & Steers]

Thank you, and welcome to the Cohen and Sears 4th quarter and full year 2024 earnings conference call. Joining me are Joe Harvey, our Chief Executive Officer Raja Jacore, our Chief Financial Officer and Jeff Palma, our Head of Multi Asset Solutions. I want to remind you that some of our comments and answers to your questions may include forward looking statements. We believe these statements are reasonable based on information currently available to us, but actual outcomes could differ materially due to a number of factors, including those described in our accompanying Q4 and full year earnings release and presentation, our most recent annual report on Form 10 ks and our other SEC filings. We assume no duty to update any forward looking statement.

[Brian Heller, Senior Vice President and Deputy General Counsel at Cohen & Steers]

Further, none of our statements constitute an offer to sell or the solicitation of an offer to buy the securities of any fund or other investment vehicle. Our presentation also contains non GAAP financial measures referred to as adjusted financial measures that we believe are meaningful in evaluating our performance. These non GAAP financial measures should be read in conjunction with our GAAP results. A reconciliation of these non GAAP financial measures is included in the earnings release and presentation to the extent reasonably available. The earnings release and presentation as well as links to our SEC filings are available in the Investor Relations section of our website at www.conansteers.com.

[Brian Heller, Senior Vice President and Deputy General Counsel at Cohen & Steers]

With that, I'll turn the call over to Raja.

[Raja Dakkuri, Executive VP & CFO at Cohen & Steers]

Thank you, Brian, and good morning, everyone. My remarks today will focus on our as adjusted results. A reconciliation of GAAP to as adjusted results can be found in the earnings release and presentation. Yesterday, we reported earnings of $0.78 per share compared to $0.77 sequentially. Earnings for full year 2024 were $2.93 per share compared to $2.84 in 2023.

[Raja Dakkuri, Executive VP & CFO at Cohen & Steers]

Revenue for Q4 increased 4.9 percent sequentially to $139,900,000 Revenue for full year 2024 increased 5.9 percent to 518,000,000 dollars The increase in revenue from the prior quarter was driven by 2 items. The primary driver was higher average AUM during the quarter. The secondary driver was the recognition of $1,400,000 in performance fees. These performance fees recognized in Q4 related to the full year results of certain institutional accounts. Our effective fee rate during the quarter, excluding performance fees, was 58 basis points, which was consistent with the prior quarter.

[Raja Dakkuri, Executive VP & CFO at Cohen & Steers]

Operating income was $49,700,000 during the quarter compared to $47,600,000 sequentially. Our operating margin was 35.5%, which was generally in line with the prior quarter. As noted, we did experience higher average AUM during Q4 as compared to the prior quarter. We generated net inflows during Q4, primarily related to our open end funds. This is the 2nd quarter of net inflows after strong flow results in Q3.

[Raja Dakkuri, Executive VP & CFO at Cohen & Steers]

However, our AUM was impacted by market depreciation during the quarter. As a result, AUM was $85,800,000,000 as of year end compared to $91,800,000,000 at the end of Q3. Joe Harvey will provide additional insights regarding our flows and our pipeline. Total expenses were higher compared to prior quarter, primarily due to an increase in compensation and benefits. To a lesser extent, expenses were impacted by increases in both distribution and service fees as well as G and A.

[Raja Dakkuri, Executive VP & CFO at Cohen & Steers]

During the quarter, the increase in compensation and benefits was generally in line with the sequential increase in revenue. The compensation ratio for the full year was just below 40.5%, which was within our expectations. The increase in distribution and service fees during the quarter was due to higher average AUM related to our open end funds. In addition, we did experience higher G and A expenses during the quarter, primarily related to travel and other business development activities. The full year G and A was within our expectations, increasing by 6.7% versus 2023.

[Raja Dakkuri, Executive VP & CFO at Cohen & Steers]

Regarding taxes, our effective rate was 25.3 percent for the quarter. Our earnings material presents at the end of Q4 and prior quarters our liquidity. Our liquidity totaled $361,000,000 at quarter end, which represents a slight increase versus the prior period. As a reminder, our liquidity normally decreases during Q1 of each year due to our compensation cycle with bonuses paid in the quarter. Let me now touch on a few items for 2025.

[Raja Dakkuri, Executive VP & CFO at Cohen & Steers]

We continue to dedicate resources to new strategies, vehicles and initiatives. In Q1 of 2025, we will be launching 3 new ETFs. These will be the 1st ETFs for Cohen and Steers. While we believe these ETFs will serve a variety of customers, we are particularly focused on opportunities within our wealth channel. With respect to the compensation and benefits, we would expect our compensation ratio to remain at 40.5%.

[Raja Dakkuri, Executive VP & CFO at Cohen & Steers]

Drivers of compensation are disciplined investment in our sales and distribution channels and resources applied towards new vehicles such as our ETFs. We expect our G and A to increase in the range of 6% to 7% for the year as compared to 2024. We continue to invest in our infrastructure, including our international offices. In addition, we expect increases in business development activities as we meet the needs of clients across the range of markets in which we operate. Further driving G and A are technology and marketing spend related to the upcoming ETF launch.

[Raja Dakkuri, Executive VP & CFO at Cohen & Steers]

Lastly, regarding 2025 guidance, we expect our effective tax rate to remain consistent at 25.3%. I'll now turn it over to Joe Harvey, who will lead discussions of our investment activities and business performance.

[Joseph Harvey, CEO at Cohen & Steers]

Thank you, Raja, and good morning. As noted, we've adjusted the speaker lineup for today's call. John Chae, our President and CIO, who usually joins these calls, is traveling Jeff Palma, Head of our Multi Asset Solutions Group will discuss the outlook for our asset classes. Following Jeff's remarks, I'll cover our investment performance and the market environment, key business metrics and our 2025 outlook. But first, let's turn it over to Jeff.

[Jeffrey Palma, Senior Vice President at Cohen & Steers]

Thank you, Joe. I would like to take a few minutes to discuss a topic that research shows is a dominant driver of aggregate portfolio returns, asset allocation, particularly during the current market and macro landscape. On this topic, we wrote a paper recently called FOMO, Reversals of Fortune and the Opportunity in Real Assets, which has generated positive feedback from our clients and is available on our website. I think it's resonating because market dynamics have truly been fascinating of late, but investors also need the occasional reminder that we've seen this movie before. To begin, consider the last decade.

[Jeffrey Palma, Senior Vice President at Cohen & Steers]

Through 2024, Global Equities delivered annual total returns of more than 10%. U. S. Equities returned nearly 13.5% annually in those same 10 years. Private assets were likewise impressive with double digit returns in most categories amid extremely low reported volatility.

[Jeffrey Palma, Senior Vice President at Cohen & Steers]

Listed real assets were substantially lower by comparison over the last decade. Total returns on global real estate and commodities were less than 2% annualized, while global infrastructure and natural resource equities returned just under 5%. With the decade of near zero interest rates, fixed income was challenged too, driven by the low starting point of interest rates following the global financial crisis and the sharp rise in rates since 2022. Now consider the 10 years that ended in 2010. It's a stark contrast.

[Jeffrey Palma, Senior Vice President at Cohen & Steers]

During that decade, equity markets were the worst performing asset class with barely positive total returns. U. S. Treasury returns were strong and well above equities. Private markets were also substantially weaker and registered higher volatility.

[Jeffrey Palma, Senior Vice President at Cohen & Steers]

Conversely, listed real assets were standout performers. In short, assets that performed well between 2,000 and 2010 fared worse in the last decade and vice versa. It's easy to become enamored with what has worked best recently and it's challenging to resist FOMO or the fear of missing out, which is why many investors tend to stick with what's worked in the past expecting it to work in the future. But it's common to see reversals of fortune. It should come as no surprise that returns are often unstable and mean reverting, with starting valuations being key to future performance.

[Jeffrey Palma, Senior Vice President at Cohen & Steers]

And that leads me to today's markets. Recent market leaders now face headwinds and recent market laggards notably for our firm including real assets have tailwinds. The S and P 500 returned over 25% in each of the last 2 years. For the fear of missing out, investors may be over allocated to large cap equities. But equity markets increasingly depend on the fate of a handful of stocks, valuations are unappealing and stock bond correlations are near 50 year highs.

[Jeffrey Palma, Senior Vice President at Cohen & Steers]

Consider the Shiller PE, a measure of valuations, is near an all time high. History suggests

[Jeffrey Palma, Senior Vice President at Cohen & Steers]

that

[Jeffrey Palma, Senior Vice President at Cohen & Steers]

10 year forward returns tend to be challenged when the starting point for valuations is this elevated. There are also reasons to believe private markets, the other leader over the past decade, will struggle to repeat recent trends. For one, we believe interest rates of around 4.5% represent fair value in U. S. Treasuries.

[Jeffrey Palma, Senior Vice President at Cohen & Steers]

Consequently, the opportunity for private equity investors to lever investments at ultra low interest rates is gone. Higher rates also suggest that private valuation should fall as has already happened in private real estate. Tight credit spreads and potentially difficult exits from investments may also create headwinds. In contrast, all core real assets categories are either neutrally or attractively valued and we believe positioned for meaningfully better returns compared to the last decade and other asset classes. I'd like to make one final point.

[Jeffrey Palma, Senior Vice President at Cohen & Steers]

Diversification is a key aspect to portfolio construction. Beyond our favorable return outlook for real assets and in addition to their history of strong full cycle returns, real assets offer valuable diversification potential and inflation sensitivity, which make them increasingly attractive in portfolios. Most people we've met with recently understand the issues at play. The challenge is that timing these moves is difficult. That's why FOMO plays such a strong role as it influences timing.

[Jeffrey Palma, Senior Vice President at Cohen & Steers]

We believe that demand for asset classes that are currently out of favor will be strong when the tide turns. We understand the pressures of FOMO, particularly when so many investors haven't experienced anything but a market environment in which rates were low, inflation was contained and stock returns were so consistently strong. But we know from our experience that allocating by looking in the rearview mirror may be a recipe for poor future returns.

[Joseph Harvey, CEO at Cohen & Steers]

Thank you, Jeff. After a third quarter that looked like a turning point with the beginning of monetary easing and a positive inflection in our flows, the 4th quarter was decidedly mixed. Continued economic strength, persistent inflation and the recalibration in the macro for the Trump presidency caused the bond market to sell off and lifted the 10 year treasury yield 80 basis points to 4.6%. It's a reminder that regime change mostly happens over a period of time. Market depreciation in most of our asset classes and a lower batting average of outperformance tempered a second consecutive quarter of positive flows and a notable increase in business activity.

[Joseph Harvey, CEO at Cohen & Steers]

Turning to our performance scorecard. 49% of our AUM outperformed its benchmark in the quarter. While our outperformance metrics softened, we focus on longer term results, which remain strong. For 1 year, 95% of our AUM has outperformed its benchmark, while our 3, 5 10 year outperformance stands at 96%, 97% and 99%, respectively. Our 1, 3 5 year excess returns are 288 basis points, 162 and 224 basis points, respectively.

[Joseph Harvey, CEO at Cohen & Steers]

94% of our open end fund AUM is rated 4 or 5 star by Morningstar. In short, we are delivering alpha consistently for our clients. Transitioning to market conditions, the 4th quarter was modestly positive for stocks with growth in tech generally outperforming value. Listed real assets pulled back following the strong absolute performance in the 3rd quarter. For example, U.

[Joseph Harvey, CEO at Cohen & Steers]

S. REITs declined 8.2% in the 4th quarter, while global listed infrastructure fell 5.7%. By comparison, U. S. Equities rose 2.4% and the MSCI world was flat.

[Joseph Harvey, CEO at Cohen & Steers]

While the Federal Reserve cut interest rates in the quarter with 2 25 basis point rate reductions, it projected more modest cuts in 2025. The resulting upward effect on real interest rates pressured REIT share prices even as fundamentals remained mostly positive. Private Real Estate meanwhile had a total return of 1% as measured by the NACREFE Odyssey Index preliminary results. This marked the 2nd consecutive quarter of positive total returns. This underscores our view that private commercial real estate valuations have likely troughed, although we expect an uneven recovery across property types.

[Joseph Harvey, CEO at Cohen & Steers]

Within listed infrastructure, the rise in bond yields weighs on certain rate sensitive sectors, notably cell power companies. Midstream energy companies on the other hand had a large gain continuing to benefit from an improving growth profile. Importantly, as Jeff discussed, our core real asset classes are either neutrally or attractively valued. And while markets have been enamored of stocks over the past 2 years, we believe macro conditions plus valuations should favor our asset classes. We see improvements in tax and regulatory conditions and underlying business confidence that should be positive for future earnings power and provide potential ballast to elevated bond yields.

[Joseph Harvey, CEO at Cohen & Steers]

Turning to our key metrics and flows. We had firm wide net inflows of $860,000,000 in the 4th quarter, down from $1,300,000,000 in the 3rd quarter. Dollars 1,200,000,000 in net inflows in our open end funds drove the flows, partially offset by $101,000,000 of advisory outflows $205,000,000 in sub advisory outflows. Over the full year, net inflows in the 3rd 4th quarters offset some large institutional redemptions in the beginning of the year with firm wide net outflows improving to $171,000,000 out overall for 2024. Open end funds had positive flows in every sub segment, including U.

[Joseph Harvey, CEO at Cohen & Steers]

S, offshore, model portfolios, SMA and our non traded REIT. The majority of flows were in U. S. REIT funds and in large part came from independent registered investment advisers. We also had positive but lesser flows in our global listed infrastructure, our multi strategy real assets and our future of energy funds.

[Joseph Harvey, CEO at Cohen & Steers]

We had outflows from our global real estate and limited duration preferred funds. Advisory had net outflows of $101,000,000 with $305,000,000 of account terminations driven by clients funding private allocations or derisking into fixed income as well as $204,000,000 of net inflows from existing clients. Sub advisory ex Japan had outflows of $172,000,000 and Japan sub advisory had $33,000,000 of outflows. Our 1 unfunded pipeline was $530,000,000 compared with $651,000,000 last quarter and the average of $1,000,000,000 per quarter over the past 3 years. About 50% of the pipeline is in various real estate strategies, 42% is in global listed infrastructure and 8% is in multi strategy real assets.

[Joseph Harvey, CEO at Cohen & Steers]

As we mentioned last quarter, we have indicated redemptions now around $800,000,000 which are expected to occur in the first half of the year, driven by reallocations to private investments, one restructuring of the investment lineup in a variable annuity vehicle and client rebalancing. Our search activity has increased, driven by asset allocation normalization. Fixed income allocations are shoring up, private allocations are loosening somewhat and there is more conviction around inflation and real asset allocations. Our continued strong performance and client engagement also contribute to this trend. We continue to see takeaway opportunities from underperforming managers, some conversion of passive to active mandates and continued adoption of our asset classes around the world.

[Joseph Harvey, CEO at Cohen & Steers]

We believe we are well positioned for growth in 2025 with the macro environment beginning to be more favorable for our core strategies. In addition, investment initiatives that we have been working on the past several years are coming to fruition. These include our launch of active ETFs, building the private real estate strategy and our non traded REITs, growing our listed infrastructure business and capitalizing on investor interest and utilizing both listed and private strategies side by side. Major trends in asset management such as growth in the RIA segment, increased allocations to alternatives and greater use of active ETFs will help guide our strategy. I also strongly believe that investors should focus more on the opportunity cost of illiquidity or the drag of shifting portfolios at opportune times, particularly in asset classes where private allocations haven't generated a return premium.

[Joseph Harvey, CEO at Cohen & Steers]

This applies specifically to core private real estate and I believe this will also play out over the long term in infrastructure. Listed real estate is our most active area, particularly as we go through the bottoming of the real estate price cycle and as investors increasingly recognize the consistent outperformance of listed over core private real estate. Listed infrastructure activity has picked up the most on a relative basis. We believe listed infrastructure complements private in terms of sector exposures, return cycle phasing and access to some of the most powerful themes today such as AI, power generation and data centers. Finally, with respect to multi strategy real assets, we're seeing increased activity from healthcare plans and smaller allocators reinforced by market expectations that Trump policies will bolster investor interest and the inflation mitigation benefits of real assets.

[Joseph Harvey, CEO at Cohen & Steers]

Preferred securities search activity has been slower than I would have expected, especially as our team delivered 11.3% for our core strategy in 2024 with 220 basis points of alpha. Competition from private credit and the normalization of the yield curve explains some of the slower pace, but I'd expect confidence in preferreds to continue to strengthen as time passes from the bank sector volatility of early 2023. We expect to launch 3 active ETFs in the Q1 of this year, an active U. S. REIT strategy, a preferred stock strategy that is broader using more global securities and our natural resources equity strategy.

[Joseph Harvey, CEO at Cohen & Steers]

We have an excellent track record with resource equities as a core component of our multi strategy real asset portfolio. Yet the ETF will be our 1st standalone vehicle. We intend to see these ETFs with firm capital and our initial distribution focus will be with RIAs and the model builders at those firms. We have a significant market share of actively managed open end funds in U. S.

[Joseph Harvey, CEO at Cohen & Steers]

And in preferreds. We believe given our track record in those asset classes, we can take our share of the growing ETF pie where passive strategies alone in REITs for example total $119,000,000,000 We've also put renewed focus into distribution for our offshore CCAVs which now total $1,000,000,000 across 5 vehicles. Our offshore SICAVS have had a positive flows in 18 of the past 20 quarters. We expect to launch a short duration preferred SICAV next month. On the Private Real Estate front, we are very focused on raising AUM and our non traded REIT, Kona Steers Income Opportunities REIT and deploying capital in private real estate markets that we believe have bottomed.

[Joseph Harvey, CEO at Cohen & Steers]

So far, this has included a portfolio of 5 open air shopping centers. CNS REIT's total return in 2024 since its inception last January was 11.6% for Class I shares. That return put us in the number 2 spot for performance among our peers for 2024, positioning the non traded REIT and its property portfolio as an important component of the expansion in our real estate franchise to span listed and private strategies along with investment strategy and asset allocation advice. I'll close by noting that we have a goal this year of enhancing focus on generating distribution alpha. At the margin, we'll be adding professionals for the wealth channel and the RIA segment as well as other sales and distribution resources globally.

[Joseph Harvey, CEO at Cohen & Steers]

At this point, I'll turn this call back to the operator, Julianne, to facilitate Q and A.

[Operator]

Thank you. Our first question comes from John Dunn from Evercore ISI. Please go ahead. Your line is open.

[John Dunn, Analyst at Evercore]

Hi. Thank you. Maybe could you just give us a little more color on the kind of the temperature of the sales conversation you guys are having in the wealth management channel for REITs and preferreds just given the rate crosscurrents we could see in 2025? And then also like your expectations for like the appetite for redemptions?

[Joseph Harvey, CEO at Cohen & Steers]

Well, in the wealth channel as our statistics support, we've had very strong interest in U. S. REITs

[Joseph Harvey, CEO at Cohen & Steers]

mostly

[Joseph Harvey, CEO at Cohen & Steers]

and preferreds have been less strong. And I outlined some of the reasons why in my comments on the U. S. REIT front. First, our performance has been very strong both absolute as REITs have bottomed and led the recovery in real estate generally and our excess returns are alpha.

[Joseph Harvey, CEO at Cohen & Steers]

In preferreds, just think there are a lot more there's a lot more competition for fixed income now that the yield curve has normalized, particularly with private credit now becoming more widely available in the wealth channel. Most of our flows have come over the past two quarters from the RIA channel, which is a place where AUM is growing the fastest. And we can talk about some of those reasons. But as I mentioned, we're focusing more of our resources on those types of investors because their models which tend to be more like a university endowment model tend to align better with how we do things in our active management. So, I guess, big picture, as you've seen for the past several years, our flows have been tended to be more correlated to interest rates as than they've been in the long term.

[Joseph Harvey, CEO at Cohen & Steers]

I think a large part of that relates to the very long period of monetary policy post GFC where rates have been pegged to 0 and then the normalization of rates. But now that things have stabilized, so to speak, or normalized, I think my belief, my view is that flow should be a little less sensitive to changes in rates as time marches on.

[John Dunn, Analyst at Evercore]

Got it. And then we've seen that active ETFs can really take off. So it's great you guys are getting into that. But it is new to you guys. So maybe could you just talk a little bit more about the plan for rolling it out?

[John Dunn, Analyst at Evercore]

You mentioned RIAs. But how is it different from selling or marketing than what the vehicles you have now? Any early indicators on interest and any concern on the potential cannibalization?

[Joseph Harvey, CEO at Cohen & Steers]

Well, we're leading with our core asset classes. So and the way that we have gained market share in the wealth channel And it's significant as I mentioned early, but just to put some statistics on that. In preferred securities and the open end fund vehicles, our market share is 38%. In U. S.

[Joseph Harvey, CEO at Cohen & Steers]

REITs, it's in the mid-forty percent. So the reason why we've been able to garner that is, A, our performance, but B, our educational efforts in explaining to advisors why those asset classes make sense in a diversified portfolio and how they should allocate over an economic cycle. So we will bring that knowledge and that education to the targeted investors for ETFs. We will initially start with the RIA market. We need to gain some critical mass before we can get onboarded at the wirehouses.

[Joseph Harvey, CEO at Cohen & Steers]

So it's going to be an aggressive campaign of introducing our vehicles, but also educating those advisors on our asset classes and how the nuances and the strategies that we're bringing to market will add value in their portfolios.

[John Dunn, Analyst at Evercore]

Thank you.

[Operator]

Our next question comes from Ben Rubin from UBS. Please go ahead. Your line is open.

[Benjamin Rubin, Director, Equity Research at UBS Group]

Hi. Thanks for taking my questions. My first question is for Raza. Last year, you guys saw some solid growth in your open end vehicles and also firm wide flows inflected positively later into the year as you touched on in your prepared remarks. Despite that, we still saw operating expenses outpace management fee growth.

[Benjamin Rubin, Director, Equity Research at UBS Group]

So obviously appreciating that operating leverage tends to lag inflows and general AUM build. Do you think you can grow operating margins off the 35% clip in 2025? And if so, do you require another year of positive market beta or appreciation to unlock that? Thank you.

[Raja Dakkuri, Executive VP & CFO at Cohen & Steers]

Yes. Let me just maybe kick it off and I'll turn it over to Joe to go deeper on this. So, I think as we've talked about with the initiatives and the investments that we have in process that we've been undertaking, this most recent year and also that we're looking forward into 2025 and the future years, there's a level of operating expense that's associated with those. But obviously, those initiatives, will have revenue attached to them in the medium and the long term, and that's going to create positive operating leverage. And so that's how we think about the context of the investments, the initiatives and the approach that we take towards balancing operating leverage in the near term as well as investing in the firm.

[Benjamin Rubin, Director, Equity Research at UBS Group]

Thank you. Just appreciate that Raja and that color. I believe in the last call you guys guided to $1,000,000,000 of known redemptions from a combination of both advisory and sub advisory clients. That would be split or is expected to be split evenly between the Q4 and then this quarter. So just want to clarify, did the $500,000,000 that you expected to come out did come out of the last quarter's numbers?

[Benjamin Rubin, Director, Equity Research at UBS Group]

And does your updated guidance of the $800,000,000 of expected redemptions in the first half of this year reflect some portion of that previous amount? Just want to clarify the updated redemption guidance. Thank you.

[Operator]

Ladies and gentlemen, this is the operator. We are experiencing technical difficulties. Please stay on the line. The call will resume shortly. The speaker line is now reconnected.

[Joseph Harvey, CEO at Cohen & Steers]

Okay. This is Joe Harvey. We got disconnected, but I was responding to the question on operating leverage. And just to recap, the drivers of operating leverage, number 1 are market levels or appreciation or depreciation. 2nd is organic growth.

[Joseph Harvey, CEO at Cohen & Steers]

And the third is, what we're doing from a new investment perspective. And the first one, appreciation and depreciation, we can't control. The second one, we can organic growth. And then the third is as it relates to the investments, and specifically to where we're situated today. We've made a lot of the investments for our private real estate business.

[Joseph Harvey, CEO at Cohen & Steers]

What we're doing on our active ETFs is factored into our comp ratio guidance for and G and A guidance for 2025. So and as you'll note, the comp ratio guidance is similar to what it was in 2024. So I would say the progression will be a function of what the markets do and how we do on generating organic growth.

[Benjamin Rubin, Director, Equity Research at UBS Group]

Got it. Thanks for those. Thanks for your responses. So sounds like more like a longer term theme as opposed to a near term phenomenon. So I believe in the last call you guys guided to $1,000,000,000 of known redemptions from a combination of both advisory and sub advisory clients and it was expected that that $1,000,000,000 dollars would be split evenly between the Q4 and this quarter.

[Benjamin Rubin, Director, Equity Research at UBS Group]

So just wanted to confirm, did the $500,000,000 come out in the 4th quarter? And does your updated guidance for $800,000,000 of redemptions in the first half of this year include some portion of that previous amount. Just want to clarify the updated guidance. Thanks.

[Joseph Harvey, CEO at Cohen & Steers]

The $800,000,000 would be the same on the same basis as the $1,000,000,000 So about $200,000,000 of it already occurred before year end.

[Benjamin Rubin, Director, Equity Research at UBS Group]

$200,000,000 came sorry, dollars 200,000,000 came out in the 4th quarter?

[Joseph Harvey, CEO at Cohen & Steers]

Correct.

[Benjamin Rubin, Director, Equity Research at UBS Group]

Got it. Thanks. And then just squeeze the last one in. We see a number of deals announced in the space in terms of active managers acquiring private managers or buying differentiated capabilities. Is that something you 2 would be open to pursuing?

[Benjamin Rubin, Director, Equity Research at UBS Group]

And if so, which asset classes would be most appealing? And would you be open to putting debt on the balance sheet to finance such a transaction? Thank you.

[Joseph Harvey, CEO at Cohen & Steers]

Yes. I mean, we've historically been very focused on organic growth and have had a lot of success with that. And as you can surmise from these comments today, whether it's our private real estate business or active ETFs or international CCAPs, we've got a lot of opportunities and growth initiatives underway. And so we're going to stay very focused on that. Some of those activities require capital because we're seeding all of those vehicles.

[Joseph Harvey, CEO at Cohen & Steers]

And so our very strong balance sheet puts us in a very good position to pursue these types of opportunities. In our history, we made one small acquisition and that enabled us to expand our what was one strategy at the time U. S. REITs into a global strategy and it began the process of us going global as it relates to distribution. And so there are circumstances where an acquisition can really be a strategic change for the company.

[Joseph Harvey, CEO at Cohen & Steers]

Right now, it's not what we're focused on. But if we could find an investment strategy that would make sense to enhance our lineup, something that we would have the interest in doing and have the resources to do. But acquisitions, M and A is not part of our day to day business. Delivering excess returns and generating organic growth is.

[Benjamin Rubin, Director, Equity Research at UBS Group]

Great. Thank you for taking my questions.

[Operator]

Our next question comes from John Dunn from Evercore ISI. Please go ahead. Your line is open.

[John Dunn, Analyst at Evercore]

Thanks. So you mentioned that you're investing in your international offices. So maybe could you talk about like what are the best and most important markets outside the U. S. For flow demand?

[John Dunn, Analyst at Evercore]

And are there any different like preferences or behavioral differences to point to for those markets?

[Joseph Harvey, CEO at Cohen & Steers]

Well, I believe Raj's comment on G and A reflected the fact that we have expanded some of our international offices London and Tokyo and Hong Kong. And in most cases, we've expanded our footprint because we need more space. But to the essence of your question, we think there are opportunities in many parts of

[Joseph Harvey, CEO at Cohen & Steers]

the

[Joseph Harvey, CEO at Cohen & Steers]

world. We opened an office in Singapore, I don't know, 1.5 years or so ago and that was driven by 2 factors. 1 is that we wanted to have another office in case our employees in Hong Kong wanted to relocate to another domicile, but also there are many clients in Singapore and the region that want to see you have an office in Singapore. I've been talking about for several quarters now how we're starting to see adoption of our asset classes, real estate infrastructure primarily in Asia ex Japan. And that is continuing and it's a slow process in some cases, but it certainly justifies having a bigger commitment personnel wise in the region.

[Joseph Harvey, CEO at Cohen & Steers]

So we have confidence to do that. In Japan, I've talked about the investment renaissance. It hasn't played out in terms of our flows yet, but we continue to add some sales resources to support our partner, Daiwa Asset Management there. And that'll be subject to market conditions, but still confident in the very positive trajectory and the investment and asset management industry in Japan. So those are just some color, but we're we think we have a lot of opportunities in the markets outside of the U.

[Joseph Harvey, CEO at Cohen & Steers]

S.

[John Dunn, Analyst at Evercore]

Thanks again.

[Operator]

We have no further questions. I will now turn the call back over to Joe Harvey for closing remarks.

[Joseph Harvey, CEO at Cohen & Steers]

Okay. Well, thank you for listening this quarter, and I look forward to talking about the progress on our strategic plan as we progress throughout 2025 and we'll talk to you next in April. So thank you.

[Operator]

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.

Participants

Executives

• Brian Heller, Senior Vice President and Deputy General Counsel
• Raja Dakkuri, Executive VP & CFO
• Joseph Harvey, CEO
• Jeffrey Palma, Senior Vice President

Analysts

• John Dunn, Analyst at Evercore
• Benjamin Rubin, Director, Equity Research at UBS Group