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 endedJune 30, 2022 and 2021. 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 meanCohen & Steers, Inc. , aDelaware corporation, and its consolidated subsidiaries. Executive Overview General We are a global investment manager specializing in real assets and alternative income, including real estate, preferred securities, infrastructure, resource equities, commodities, as well as multi-strategy solutions. Founded in 1986, we are headquartered inNew York City , with offices inLondon ,Dublin ,Hong Kong andTokyo . Our primary investment strategies includeU.S. real estate, preferred securities and low duration preferred securities, global/international real estate, global listed infrastructure, real assets multi-strategy, midstream energy and MLPs, 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, includingU.S. and non-U.S. registered funds and other commingled vehicles, separate accounts and subadvised portfolios.
Our distribution network encompasses two major channels, wealth and institutional. Our wealth channel includes registered investment advisers, wirehouses, independent and regional broker dealers and bank trusts. Our institutional channel includes sovereign wealth funds, corporate plans, insurance companies and public funds, including defined benefit and defined contribution plans, as well as other financial institutions that access our investment management services directly or through consultants and other intermediaries.
Our revenue from the wealth channel is derived from investment advisory, administration, distribution and service fees from open-end and closed-end funds. 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. The Russian invasion ofUkraine has impacted global financial markets, introducing new threats to global economic growth and adding to inflationary pressures. We have taken measures to ensure ongoing compliance with all applicable sanctions and guidance issued by authorities globally against certain regions, entities, or individuals. Our overall exposure to Russian and Ukrainian securities is limited and we do not expect a material impact to our financial results. 21 -------------------------------------------------------------------------------- Assets Under Management By Investment Vehicle (in millions) Three Months Ended Six Months Ended June 30, June 30, 2022 2021 2022 2021 Open-end Funds Assets under management, beginning of period$ 48,105 $ 38,623 $ 50,911 $ 35,160 Inflows 4,859 4,577 9,745 9,647 Outflows (5,103) (2,490) (9,781) (5,396) Net inflows (outflows) (244) 2,087 (36) 4,251 Market appreciation (depreciation) (5,654) 3,134 (8,389) 4,671 Distributions (624) (312) (903) (550) Total increase (decrease) (6,522) 4,909 (9,328) 8,372
Assets under management, end of period
$ 41,583 $ 43,532 Percentage of total assets under management 47.3 % 45.2 % 47.3 % 45.2 % Average assets under management$ 45,188 $ 41,469
Institutional Accounts Assets under management, beginning of period$ 40,956 $ 36,538 $ 42,727 $ 33,255 Inflows 1,259 1,826 3,319 4,161 Outflows (1,734) (1,454) (3,800) (2,202) Net inflows (outflows) (475) 372 (481) 1,959 Market appreciation (depreciation) (5,733) 3,555 (7,227) 5,555 Distributions (242) (309) (513) (613) Total increase (decrease) (6,450) 3,618 (8,221) 6,901
Assets under management, end of period
$ 34,506 $ 40,156 Percentage of total assets under management 39.3 % 41.7 % 39.3 % 41.7 % Average assets under management$ 37,506 $ 39,103
Closed-end Funds Assets under management, beginning of period$ 13,061 $ 11,879 $ 12,991 $ 11,493 Inflows 2 103 556 168 Outflows - - - - Net inflows (outflows) 2 103 556 168 Market appreciation (depreciation) (1,137) 703 (1,474) 1,172 Distributions (153) (148) (300) (296) Total increase (decrease) (1,288) 658 (1,218) 1,044
Assets under management, end of period
$ 11,773 $ 12,537 Percentage of total assets under management 13.4 % 13.0 % 13.4 % 13.0 % Average assets under management$ 12,428 $ 12,372
Total
Assets under management, beginning of period
$ 106,629 $ 79,908 Inflows 6,120 6,506 13,620 13,976 Outflows (6,837) (3,944) (13,581) (7,598) Net inflows (outflows) (717) 2,562 39 6,378 Market appreciation (depreciation) (12,524) 7,392 (17,090) 11,398 Distributions (1,019) (769) (1,716) (1,459) Total increase (decrease) (14,260) 9,185 (18,767) 16,317
Assets under management, end of period
$ 87,862 $ 96,225 Average assets under management$ 95,122 $ 92,944 $ 98,139 $ 87,930 22
-------------------------------------------------------------------------------- Assets Under Management - Institutional Accounts By Account Type (in millions) Three Months Ended Six Months Ended June 30, June 30, 2022 2021 2022 2021 Advisory
Assets under management, beginning of period
$ 24,599 $ 17,628 Inflows 769 1,512 2,342 3,449 Outflows (1,177) (493) (2,792) (736) Net inflows (outflows) (408) 1,019 (450) 2,713 Market appreciation (depreciation) (3,183) 1,817 (4,014) 2,774 Total increase (decrease) (3,591) 2,836 (4,464) 5,487
Assets under management, end of period
$ 20,135 $ 23,115 Percentage of institutional assets under management 58.4 % 57.6 % 58.4 % 57.6 % Average assets under management$ 21,869 $ 22,084
Japan Subadvisory Assets under management, beginning of period$ 10,692 $ 9,924 $ 11,329 $ 9,720 Inflows 249 22 468 120 Outflows (226) (294) (329) (596) Net inflows (outflows) 23 (272) 139 (476) Market appreciation (depreciation) (1,534) 1,160 (2,016) 1,872 Distributions (242) (309) (513) (613) Total increase (decrease) (1,753) 579 (2,390) 783
Assets under management, end of period
$ 8,939 $ 10,503 Percentage of institutional assets under management 25.9 % 26.2 % 25.9 % 26.2 % Average assets under management$ 9,604 $ 10,306
Subadvisory Excluding Japan Assets under management, beginning of period$ 6,538 $ 6,335 $ 6,799 $ 5,907 Inflows 241 292 509 592 Outflows (331) (667) (679) (870) Net inflows (outflows) (90) (375) (170) (278) Market appreciation (depreciation) (1,016) 578 (1,197) 909 Total increase (decrease) (1,106) 203 (1,367) 631
Assets under management, end of period
$ 5,432 $ 6,538 Percentage of institutional assets under management 15.7 % 16.3 % 15.7 % 16.3 % Average assets under management$ 6,033 $ 6,713
Total Institutional Accounts Assets under management, beginning of period$ 40,956 $ 36,538 $ 42,727 $ 33,255 Inflows 1,259 1,826 3,319 4,161 Outflows (1,734) (1,454) (3,800) (2,202) Net inflows (outflows) (475) 372 (481) 1,959 Market appreciation (depreciation) (5,733) 3,555 (7,227) 5,555 Distributions (242) (309) (513) (613) Total increase (decrease) (6,450) 3,618 (8,221) 6,901
Assets under management, end of period
$ 34,506 $ 40,156 Average assets under management$ 37,506 $ 39,103 $ 39,048 $ 36,877 23
-------------------------------------------------------------------------------- Assets Under Management By Investment Strategy (in millions) Three Months Ended Six Months Ended June 30, June 30, 2022 2021 2022 2021U.S. Real Estate Assets under management, beginning of period$ 47,268 $ 36,984 $ 49,915 $ 32,827 Inflows 2,582 2,592 5,875 5,718 Outflows (2,433) (1,723) (5,169) (3,114) Net inflows (outflows) 149 869 706 2,604 Market appreciation (depreciation) (6,542) 4,419 (9,334) 7,256 Distributions (697) (407) (1,109) (822) Total increase (decrease) (7,090) 4,881 (9,737) 9,038 Assets under management, end of period$ 40,178 $ 41,865 $ 40,178 $ 41,865 Percentage of total assets under management 45.7 % 43.5 % 45.7 % 43.5 % Average assets under management$ 43,917 $
40,269
Preferred Securities Assets under management, beginning of period$ 24,466 $ 23,790 $ 26,987 $ 23,185 Inflows 1,711 2,254 3,675 4,660 Outflows (2,757) (1,081) (5,629) (2,677) Net inflows (outflows) (1,046) 1,173 (1,954) 1,983 Market appreciation (depreciation) (1,769) 750 (3,169) 752 Distributions (202) (215) (415) (422) Total increase (decrease) (3,017) 1,708 (5,538) 2,313 Assets under management, end of period$ 21,449 $ 25,498 $ 21,449 $ 25,498 Percentage of total assets under management 24.4 % 26.5 % 24.4 % 26.5 % Average assets under management$ 22,915 $
24,546
Global/International Real Estate Assets under management, beginning of period$ 19,362 $ 16,421 $ 19,380 $ 15,214 Inflows 861 1,111 2,417 2,190 Outflows (1,164) (890) (1,944) (1,457) Net inflows (outflows) (303) 221 473 733 Market appreciation (depreciation) (3,303) 1,664 (4,078) 2,373 Distributions (47) (86) (66) (100) Total increase (decrease) (3,653) 1,799 (3,671) 3,006 Assets under management, end of period$ 15,709 $ 18,220 $ 15,709 $ 18,220 Percentage of total assets under management 17.9 % 18.9 % 17.9 % 18.9 % Average assets under management$ 17,524 $ 17,697 $ 18,183 $ 16,660 24
-------------------------------------------------------------------------------- Assets Under Management By Investment Strategy - continued (in millions) Three Months Ended Six Months Ended June 30, June 30, 2022 2021 2022 2021 Global Listed Infrastructure Assets under management, beginning of period$ 9,197 $ 7,604 $ 8,763 $ 6,729 Inflows 461 480 925 1,159 Outflows (353) (141) (652) (215) Net inflows (outflows) 108 339 273 944 Market appreciation (depreciation) (673) 355 (359) 670 Distributions (58) (52) (103) (97) Total increase (decrease) (623) 642 (189) 1,517
Assets under management, end of period
$ 8,574 $ 8,246 Percentage of total assets under management 9.8 % 8.6 % 9.8 % 8.6 % Average assets under management$ 8,853 $ 8,051
Other
Assets under management, beginning of period
$ 1,584 $ 1,953 Inflows 505 69 728 249 Outflows (130) (109) (187) (135) Net inflows (outflows) 375 (40) 541 114 Market appreciation (depreciation) (237) 204 (150) 347 Distributions (15) (9) (23) (18) Total increase (decrease) 123 155 368 443
Assets under management, end of period
$ 1,952 $ 2,396 Percentage of total assets under management 2.2 % 2.5 % 2.2 % 2.5 % Average assets under management$ 1,913 $ 2,381
Total
Assets under management, beginning of period
$ 106,629 $ 79,908 Inflows 6,120 6,506 13,620 13,976 Outflows (6,837) (3,944) (13,581) (7,598) Net inflows (outflows) (717) 2,562 39 6,378 Market appreciation (depreciation) (12,524) 7,392 (17,090) 11,398 Distributions (1,019) (769) (1,716) (1,459) Total increase (decrease) (14,260) 9,185 (18,767) 16,317
Assets under management, end of period
$ 87,862 $ 96,225 Average assets under management$ 95,122 $ 92,944 $ 98,139 $ 87,930 25
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Investment Performance at
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(1) Past performance is no guarantee of future results.Outperformance is determined by comparing the annualized investment performance of each investment strategy to the performance of specified reference benchmarks. Investment performance in excess of the performance of the benchmark is considered outperformance. The investment performance calculation of each investment strategy is based on all active accounts and investment models pursuing similar investment objectives. For accounts, actual investment performance is measured gross of fees and net of withholding taxes. For investment models, for which actual investment performance does not exist, the investment performance of a composite of accounts pursuing comparable investment objectives is used as a proxy for actual investment performance. The performance of the specified reference benchmark for each account and investment model is measured net of withholding taxes, where applicable. This is not investment advice and may not be construed as sales or marketing material for any financial product or service sponsored or provided byCohen & Steers . (2) © 2022 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete, or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Morningstar calculates its ratings based on a risk-adjusted return measure that accounts for variation in a fund's monthly performance (including the effects of sales charges, loads, and redemption fees), placing more emphasis on downward variations and rewarding consistent performance. The top 10% of funds in each category receive five stars, the next 22.5% receive four stars, the next 35% receive three stars, the next 22.5% receive two stars and the bottom 10% receive one star. Past performance is no guarantee of future results. Based on independent rating by Morningstar, Inc. of investment performance of eachCohen & Steers -sponsored open-endU.S. -registered mutual fund for all share classes for the overall period atJune 30, 2022 . Overall Morningstar rating is a weighted average based on the 3-year, 5-year and 10-year Morningstar rating. Each share class is counted as a fraction of one fund within this scale and rated separately, which may cause slight variations in the distribution percentages. This is not investment advice and may not be construed as sales or marketing material for any financial product or service sponsored or provided byCohen & Steers . Overview Assets under management atJune 30, 2022 decreased 8.7% to$87.9 billion from$96.2 billion atJune 30, 2021 . The decrease was due to market depreciation of$7.5 billion and distributions of$4.0 billion , partially offset by net inflows of$3.1 billion . Net inflows included$3.1 billion intoU.S. real estate. Market depreciation included$3.0 billion from preferred securities,$2.5 billion from global/international real estate and$2.2 billion fromU.S. real estate, partially offset by market appreciation of$225 million from global listed infrastructure. Distributions included$2.6 billion fromU.S. real estate and$978 million from preferred securities. Our organic growth rate for the twelve months endedJune 30, 2022 was 3.2%. The organic growth/decay rate represents the ratio of net flows for the period to the beginning assets under management.
Average assets under management for the three months ended
26 --------------------------------------------------------------------------------
Open-end funds
Assets under management in open-end funds atJune 30, 2022 , which represented 47.3% of total assets under management, decreased 4.5% to$41.6 billion from$43.5 billion atJune 30, 2021 . The decrease was due to market depreciation of$4.1 billion and distributions of$2.3 billion , partially offset by net inflows of$4.5 billion . Net inflows included$3.3 billion intoU.S. real estate and$708 million into real assets multi-strategy (included in "Other" in the table on pages 25 and 26). Market depreciation included$2.1 billion from preferred securities and$1.5 billion fromU.S. real estate. Distributions included$1.4 billion fromU.S. real estate and$756 million from preferred securities. Of these distributions,$2.0 billion was reinvested and included in net inflows. Our organic growth rate for open-end funds for the twelve months endedJune 30, 2022 was 10.3%. Average assets under management for open-end funds for the three months endedJune 30, 2022 increased 9.0% to$45.2 billion from$41.5 billion for the three months endedJune 30, 2021 . Institutional accounts Assets under management in institutional accounts atJune 30, 2022 , which represented 39.3% of total assets under management, decreased 14.1% to$34.5 billion from$40.2 billion atJune 30, 2021 . The decrease was due to net outflows of$1.9 billion , market depreciation of$2.7 billion and distributions of$1.1 billion . Net outflows included$1.1 billion from real assets multi-strategy (included in "Other" in the table on pages 24 and 25) and$589 million fromU.S. real estate. Market depreciation included$2.0 billion from global/international real estate and$467 million fromU.S. real estate. Distributions included$1.0 billion fromU.S. real estate. Our organic decay rate for institutional accounts for the twelve months endedJune 30, 2022 was (4.6%). Average assets under management for institutional accounts for the three months endedJune 30, 2022 decreased 4.1% to$37.5 billion from$39.1 billion for the three months endedJune 30, 2021 . Assets under management in advisory accounts atJune 30, 2022 , which represented 58.4% of institutional assets under management, decreased 12.9% to$20.1 billion from$23.1 billion atJune 30, 2021 . The decrease was due to net outflows of$1.3 billion and market depreciation of$1.8 billion . Net outflows included$1.1 billion from real assets multi-strategy (included in "Other" in the table on pages 25 and 26). Market depreciation included$1.2 billion from global/international real estate and$402 million from preferred securities. Our organic decay rate for advisory accounts for the twelve months endedJune 30, 2022 was (5.4%). Average assets under management for advisory accounts for the three months endedJune 30, 2022 decreased 1.0% to$21.9 billion from$22.1 billion for the three months endedJune 30, 2021 . Assets under management inJapan subadvisory accounts atJune 30, 2022 , which represented 25.9% of institutional assets under management, decreased 14.9% to$8.9 billion from$10.5 billion atJune 30, 2021 . The decrease was due to net outflows of$155 million , market depreciation of$325 million and distributions of$1.1 billion . Net outflows included$300 million fromU.S. real estate, partially offset by net inflows of$153 million into global/international real estate. Market depreciation included$203 million from global/international real estate and$111 million fromU.S. real estate. Distributions included$1.0 billion fromU.S. real estate. Our organic decay rate forJapan subadvisory accounts for the twelve months endedJune 30, 2022 was (1.5%). Average assets under management forJapan subadvisory accounts for the three months endedJune 30, 2022 decreased 6.8% to$9.6 billion from$10.3 billion for the three months endedJune 30, 2021 . Assets under management in subadvisory accounts excludingJapan atJune 30, 2022 , which represented 15.7% of institutional assets under management, decreased 16.9% to$5.4 billion from$6.5 billion atJune 30, 2021 . The decrease was due to net outflows of$480 million and market depreciation of$625 million . Net outflows included$289 million from global listed infrastructure and$192 million from global/international real estate. Market depreciation included$589 million from global/international real estate. Our organic decay rate for subadvisory accounts excludingJapan for the twelve months endedJune 30, 2022 was (7.3%).
Average assets under management for subadvisory accounts excluding
27 --------------------------------------------------------------------------------
Closed-end funds
Assets under management in closed-end funds atJune 30, 2022 , which represented 13.4% of total assets under management, decreased 6.1% to$11.8 billion from$12.5 billion atJune 30, 2021 . The decrease was due to market depreciation of$612 million and distributions of$626 million , partially offset by net inflows of$474 million . Inflows of$482 million , which included leverage, were attributable to the Company's initial public offering of the Cohen & Steers Real Estate Opportunities and Income Fund (RLTY). Our organic growth rate for closed-end funds for the twelve months endedJune 30, 2022 was 3.8%.
Average assets under management for closed-end funds was
28 -------------------------------------------------------------------------------- Summary of Operating Results (in thousands, except percentages and per Three Months Ended Six Months Ended share data) June 30, June 30, 2022 2021 2022 2021 U.S. GAAP Revenue$ 147,431 $ 144,269 $ 301,620 $ 270,016 Expenses$ 86,437 $ 84,572 $ 189,635 $ 158,381 Operating income$ 60,994 $ 59,697 $ 111,985 $ 111,635 Non-operating income (loss) (1)$ (25,002) $ 8,536 $ (19,892) $ 13,489 Net income attributable to common stockholders$ 51,956 $ 46,579 $ 93,974 $ 95,431 Diluted earnings per share$ 1.06 $ 0.95 $ 1.91 $ 1.95 Operating margin 41.4 % 41.4 % 37.1 % 41.3 % As Adjusted (2) Net income attributable to common stockholders$ 47,202 $ 45,917 $ 98,354 $ 84,546 Diluted earnings per share$ 0.96 $ 0.94 $ 2.00 $ 1.73 Operating margin 43.3 % 43.4 % 44.0 % 42.9 % _________________________ (1)Includes amounts attributable to third-party interests in consolidated investment vehicles. Refer to non-operating income (loss) tables on pages 30 and 32 for additional detail. (2)Refer to pages 35-36 for reconciliations ofU.S. GAAP to as adjusted results.
Three Months EndedJune 30, 2022 Compared with Three Months EndedJune 30, 2021 Revenue (in thousands) Three Months Ended June 30, 2022 2021 $ Change % Change Investment advisory and administration fees Open-end funds$ 75,785 $ 69,706 $ 6,079 8.7 % Institutional accounts 34,429 37,381$ (2,952) (7.9 %) Closed-end funds 27,441 27,261$ 180 0.7 % Total 137,655 134,348$ 3,307 2.5 % Distribution and service fees 9,005 9,199$ (194) (2.1 %) Other 771 722$ 49 6.8 % Total revenue$ 147,431 $ 144,269 $ 3,162 2.2 % Investment advisory and administration fees increased from the three months endedJune 30, 2021 , primarily due to higher average assets under management in both open-end and closed-end funds, partially offset by lower average assets under management in institutional accounts. In addition, the three months endedJune 30, 2021 included the recognition of performance fees from certain institutional accounts. •Total investment advisory and administration revenue from open-end funds compared with average assets under management implied an annualized effective fee rate of 67.3 bps and 67.4 bps for the three months endedJune 30, 2022 and 2021, respectively. •Total investment advisory revenue from institutional accounts compared with average assets under management implied an annualized effective fee rate of 36.8 bps and 38.3 bps for the three months endedJune 30, 2022 and 2021, respectively. The decrease in the implied annualized effective fee rate was primarily due to the recognition of performance fees for the three months endedJune 30, 2021 . Excluding the performance fees, the implied annualized effective fee rate would have been 36.0 bps for the three months endedJune 30, 2021 . •Total investment advisory and administration revenue from closed-end funds compared with average assets under management implied an annualized effective fee rate of 88.6 bps and 88.4 bps for the three months endedJune 30, 2022 and 2021, respectively. 29 --------------------------------------------------------------------------------
Expenses (in thousands) Three Months Ended June 30, 2022 2021 $ Change % Change Employee compensation and benefits$ 53,857 $ 53,241 $ 616 1.2 % Distribution and service fees 18,236 18,848$ (612) (3.2 %) General and administrative 13,238 11,466$ 1,772 15.5 % Depreciation and amortization 1,106 1,017$ 89 8.8 % Total expenses$ 86,437 $ 84,572 $ 1,865 2.2 % Employee compensation and benefits increased from the three months endedJune 30, 2021 , primarily due to higher salaries of$1.3 million , an increase in amortization of restricted stock units of$1.0 million and higher severance expense of$427,000 , partially offset by lower incentive compensation of$2.1 million . Distribution and service fees decreased from the three months endedJune 30, 2021 , primarily due to a shift in the composition of assets under management into lower cost share classes.
General and administrative expenses increased from the three months ended
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