Cohen & Steers (CNS) 20 Oct 222022 Q3 Earnings call transcript

Ladies and gentlemen, thank you for standing by. Welcome to the Cohen & Steers Third Quarter 2022 Earnings Conference Call.

During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. [Operator Instructions] As a reminder, today's call is being recorded, Thursday, October 20, 2022. to President conference Cohen and like Heller, to & now Vice Senior Corporate would turn over the Brian Steers. I Counsel for ahead, go sir. Please

Thank Steers Cohen conference you to XXXX call. quarter earnings & and welcome third the

of assume believe to Further, none release me forward-looking that our Financial statements and offer update Harvey; Form number other currently offer factors, comments to some these Chief buy third statements. XX-K Officer, of Officer, Officer, want accompanying fund statements. I our answers our no any Chief Jon investment and our securities or described differ are other Cheigh. but based forward-looking any our statements your Stadler; materially our to an report quarter to reasonable our solicitation Joining SEC include or filings. on Executive on sell duty a and to the Investment to our of including to available We vehicle. Joe earnings most an We actual questions Chief constitute may Matt could those remind in outcomes are of presentation, and due recent you the information annual us, of

read With Relations over available I'll the non-GAAP referred links of Investor call conjunction section Our to in reconciliation our release we be is presentation adjusted believe as and financial with presentation evaluating non-GAAP A to presentation are our the measures in results. to these at our our financial the Matt. also the in website contains turn financial earnings included earnings are filings non-GAAP as release should extent measures measures meaningful as GAAP www.cohenandsteers.com. of as, reasonably measures The that to that, available. financial performance. These and SEC well in

adjusted remarks A the year's and quarters, Yesterday, results will compared sequentially. quarter Thank on of GAAP everyone. reported our with the prior this as of and results. earnings of adjusted and to reconciliation presentation. found earnings XX on earnings XX my share you, good Pages morning, through as XX previous Consistent we on of can per in be release and morning Brian, $X.XX focus with $X.XX the Slides XX $X.XX

and a third of increase ratio. compensation adjustment in to quarter The for was XXXX the one vehicles, the included the management year's average benefits quarter $XXX.X the to quarter million cumulative additional with was by lower second $XXX.X to that under $XXX.X compared primarily in partially from assets and offset the million day Revenue revenue investment prior decrease three all sequentially. attributable quarter. The quarter across compensation million

third expenses. revenue was and in rate the higher nine third guidance. The in the in referred was open assets sequentially. X.X% lower points U.S. into lower partially management was as the due basis travel hosted the compared under the million for conferences decreased shift previous for primarily an share classes. and increase margin quarter was were the as operating points higher in Expenses as to in primarily service and our with XX service increased XX.X% G&A with And in end and to $XX.X due to XX.X ratio well quarter The increase average cost G&A. XX.XX% XX.X% than compensation expense with income XX.X% funds million effective earlier months XX Our in and second higher is to lower mix and from entertainment quarter. cumulative $XX.X compared with and third basis quarter year's and fee points prior now in quarter to the to And basis the decrease Operating adjustment distribution fees by ended, million quarter. fee second quarter the when distribution offset our benefits compared compensation the last decreased $XX

Our rate equivalents, call. consistent and corporate Page for liquid U.S. our treasury investments with investments XX.XX% four in presentation XX trailing provided cash last the of our on securities guidance remained sets at forth and and effective the cash seed tax the current quarters. earnings

Our liquidity million with quarter at end, quarter last firm compared $XXX.X and free. to be $XXX.X we continued totaled million debt

decrease of and excluding to September management billion of under unfunded or at of market $XXX distributions quarter was second the billion, due $XXX million with awarded million. Sub-advisory The depreciation million Advisory had color $XX.X Harvey X.X% the outflows marks second from totaled pipeline net as $XXX billion Japan during Assets net had Joe the of of accounts of our compared on were during sub-advisory million an net million provide decrease $XXX institutional outflows a quarter. the of million with had XX, the with million of flows compared XX. net million June $XXX $X.X million $X.X well $XXX straight quarter. inflows. during quarter during outflows mandates. of inflows advisory update compared $XXX portfolios our Japan quarter, of some last compared on will of $XX Distributions net quarter. second of third quarter, during third million with as the net net from these This inflows $XXX during quarter. net third the outflows $XX inflows

a $XXX had third outflows the of net inflow new million an compared quarter, real U.S. of quarter. million during million Open-end outflows a included net into during of $XXX relationship from with portfolio. second quarter estate the $XXX third funds The

quarter current REITs. and U.S. decided which estate net by and third securities. outflows to $XXX infrastructure its to U.S. into $X global estate eliminate who a The more million allocation real listed real preferred model inflows multi-strategy from billion totaled on than real million, global conditions Net was offset $XXX Distributions of attributable outflows to were reinvested. included assets of an intermediary market based

with this and have in that compensation depreciation quarters will have briefly decline response each average ended has our the past assets resulted our me start market increased for under in the year, items we the management incentive were fourth that Since the to In lower a decline to discuss ratio. two in Let accrual the compensation under revenue a present, of few consider management revenue assets than under corresponding assets meaningful we and to management. quarter. reduced of our

In addition, do respect with through to new and anticipate headcount meaningful we bar not additions the hires, been significantly raised any year end. has

fourth being XX.X%. expect As result, remain and revenue compensation all at our we a the to for things ratio to quarter equal,

XX% We XX% million $XX.X to from expect G&A we increase XXXX. in the to recorded

operational in included to were trading spending of we result to including Although, are discretionary identify reduce certain we ongoing where efficiencies. new implementation technology, order the necessary and management review investments order in system in and can a areas to costs, continue XXXX expected future that

our XX.XX%. will although tax from has addition, pre-pandemic remain last In it we still year, below rate is levels. And at T&E increased our effective expect finally,

our like over to Investment Cheigh discuss I'd it to Jon turn Now, to performance. investment Chief our Officer,

a high important Thank of and second, as takeaways infrastructure of you, Matt, current we case and private major complete three to view paper, how the environment, good cover for portfolio. first, morning. performing; our process very performance education like Today, scorecard; briefly asset and which areas: our the some recent last, are I'd white listed from entitled classes a the the beginning level our

strategies in their outperformed Turning to performance, nine benchmarks. third of the core quarter, eight

perspective, decline XX% greater basis our a XX our and value relatively From is AUM XX% outperformed. strategy, of which small from impacted one portfolios quarter basis, our three-year eight open rated Over five-year again, AUM the which oriented year the Morningstar U.S. XX XX% star fund basis by our last with by of five in AUM, their have of more end The competitive last energy estate quarter have to last strategies the benchmark X or by midstream weightings points XXX% the by modestly opportunity by quarter. it's a biggest year-to-date. very was On of sole The performance underperformer this is was points, on Measured still of nine basis been four past driver strategy, environment. caps, which but outperforming a our months, real tends are XX% outperforming. since outperforming decline quarter. of compared underperformed a

our are investment teams absolute in acutely bear our focused balance sheet returns excess challenging, we risk. be risk market, continue are to While a positive. broadly management, on quality returns earnings Because were QX and

in markets sometimes bear As times XXXX, and the deliver are in and mine XXXX our for we investors. to best demonstrated alpha

we increasingly bullish are being markets, that forward with While investment the our asset all opportunity about today, classes. swift of has are significant across in and happened repricing asset we cautious public the

monetary pivot very for hopes quarter, forward reflect the now During a policy. were curves dashed restrictive and Fed

underperformed modestly down was and to the assets global Barclays contrast quarter, generally equities real down outperformed Preferreds Aggregate For X.X% prior bonds. the global X.X%. In though meaningly quarters, were Global equities.

the real major as asset our and basis quarter, lagged broader estate preferreds. markets to the infrastructure, to Infrastructure Turning during in reacted XX in down the point the year third XX market the roughly three yield treasury increase the X.X%, period. of classes equity

sub-sectors infrastructure parts and the inflation telecom universe, more sensitive the cyclical of and outperformed, rate interest the infrastructure in While more sensitive lagged. utilities

a are the to private opportunity within equity is think inflation, supporting We to expect from creating levels infrastructure infrastructure and also to a yields and are continues strategic the real private find expectations premiums priced where but what infrastructure the companies today's these REITs coming in has listed by albeit Typically slowing sharp public and real quarter private lagged its attractively market macroenvironment, tailwind high growth, markets sell declines persistently higher global with in transactions we declining capital are listed allocation. U.S. a the tactical falling economic Further infrastructure is trading, characterized rise to for historically volatility. relative into markets. to our outperform instead view high valuations, that in significant market these respectively. the XX.X%, listed assets and dominated. as way funds, performance, growth traditionally of companies the Inflation estate XX.X% compared today's at market

some cited ODCE and Index strongly in contrast, real private their XX%. year-to-date For REITs not real public over average have XX.X% recession. last a perspective, In than We year-to-date priced versus plus U.S. between is recessions words, minus average estate. XX.X%. looking reflect the other this REITs has performance believe on of in worse likely estate difference performance intrinsic declined produced timing commonly XX and private a In does difference, the of have years,

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Please ISI. Thank you. ahead. from [Operator We have Dunn of question with Instructions] John do go line the Evercore a

Hi. Good morning.

effort. the estate on real private touched You

opportunity give how it relative could then going about about you or You you gathering making talked do you've an newer are be being for has this opportunity, update you you you talked like tactical can guys? and which you engaging, think assets, And maybe big public private, of investments? guys are gathering between more value are and a asset

after answer market our let strategy and are strategy. to Jon we start other on to Cheigh the return strategies strategies one raise But of more first, I'll capital in couple initiative, and me assets. So a a And of question. is add is to the private for terms ask appreciation begin I in opportunistic those income/total the

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and imagine, anything can you using that in we have opportunities sectors capital to add. the of property advantage as listed the some raised So take to Jon, we're market. -- certain

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a there spread. XX% is So

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are preferreds. into So to investors waiting go

bit that's So, say, probably more I'd near-term. a little

listed and many, do goes -- point I Jon what interest value we of we private cycle had not then the good at the would our actually a as out, market. this yet. laid estate, their opposite see bit that of we've In recommend listed market mentioned corrects, down feels terms but listed that's many the first, private to clients pretty because history first. of that seeing same little to the commitments what And then times fund trim in has investors couple real portfolios out played some we're the a recovers

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one And REIT you. quick on another Got maybe the piece.

potential off being down, might Do to in I 'XX some -- offensive REITs said you stuff you pay mentioned some expect like recaps get think that or You you like, XX%. we saw capital? what

Yeah.

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that going places. be opportunities some So we different expect in to would there is

thought which the on We the there side. frankly, haven't could growth a and be could had after could recaps, it doing of how for more Now opportunities, IPOs happened lot they a sudden help be a of cycle the private cornerstone had lot is also we there's pre-IPOs mean modern We was that has end companies to it then money been of IPOs. companies, We what been it recapitalize started. got in the S&L can plans, cycle. than all the public see were those crisis, on can really early the but side that mean that's radar IPOs, because

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have So we'll some those, think doesn't just we see recaps. but it of definitely to be

couple the Kind after this a then U.S. maybe about My point? what looks And sense maybe the now side. is Asia then business non-U.S. mentioned Good. looks you recently. then if And like advisory business a years of your Can -- third, too, priority. as org? side advisory could one investing outlook, and the Asia you've on of, you the at like the institutional more what on the talk been I and side that does on ex-Japan

to with all our brought our a more changed coverage. start would back and to made consultant really compensation me terms all that Advisory, unify of of within success unify it we've model structure where to we're changed the in let those sales, of and a goes And regional of also that relations two head along to then three Sharon, we and in those Charles in And So, we've been regions, Jeff of developments. be be and Dan when more biggest he distribution. relationship ago has two, our U.S. based. model pleased our the up with years And actually client Head investment, half, advisory

When at and heavily again U.S., of pipeline at pleased biggest this doing that between when performance, our our where been look And you the our been outside points, investments what pretty period where had again our scale relations our you and I pipeline we're supported look our the more and Middle investment advisory is And challenging said -- the the the at a what and East look and -- we're with made. in been for how in we've which about just good as segment. the my shifts, we've in that's and success happening has in the by feeling consultant along of environment and the where and is the we business. when changes strategies other we're backlog, interest there's the of on and of that Pacific. interest from some from But have a pandemic talking coming types at Asia so our doing activity shoot macroeconomic I'm it's real now which broader We've just with team front, been pipeline doing. a specifically on And the backlog what's our seeing been infrastructure real investors lot of green around estate world. by listed demonstrates there. adoption the advisory assets, we're in And so-called

and pipeline. And our recent think in going so we've in fundings mandates continue. some that's new we But to got our

with where one real listed, allocate Asia allocations in some portfolios. going that kind so trend for raising I And as And how be consistent that. of assets allocations this you've complement sales gotten is And view we're can complementing how private made. talked flavor to which very our resources of these and mediums within And with the and Pacific. each at then could the long-term to more and investors another. we're allocations is And of Jon about on those a have cycle in

Maybe of the you. investment spending like about growth? are you the translate 'XX we you're the but side remind your cost organic into in in Got G&A where can and dollars the and now talk bulk can going us one particular what money can on January, quickest

members. growth is a just that situation asset our of See of fortunate been lot and we've looking accounts, there that and a requires for more in and buckets team portfolios two is historically talent we've customized part One organic are where had more more managers.

estate another capabilities as for our real strategies, added private we've talent. As driver need new that's such new of

with about, the going have set, by need be as think setup and asset As still about size obviously and opportunity illustrated both resources to and disciplined team have the change the levels, We Jon's investment in on more Matt opportunities. we matching we're our opportunity talked set. to I with our we

with the So that represented we that longer-term markets challenges are the opportunities the balancing that providing investments have. we're near-term by share the market

course sheet strategies represent real referred private uses of -- seeding preferred other is attractive we've which of a got bucket balance balance seed other -- using of the sheet very preferred capital capital. The our strategies estate and to and the couple strategies new big to

Great.

stuff, talk a of little real about more, Just and one area building some your more outlook you U.S. a on talked Difficulty] logistical about estate for growth You the to [Technical less your Just are activity foreign the some in? construction portfolio? you thank of more rents countervailing Can prices but caution again. you factors, I positive think secular what's real estate there's the

take Jon how terms about our let of now. I'll portfolio right question that in construction we're thinking

know, downshift bit we've I so Well, a question, downshift if as I little a seen and slowed mean material think I you fundamentals, a not the so little certainly but bit far of understand in economy the look, in fundamentals. a

most of think been this has year of cost the I So higher about expectations repricing capital. about

So a about been multiples shift and really bigger in downgrades. earnings it's

is so you've of that multiple impact where things. rates, higher cap And the from biggest seen in so far kind the lower

think, a as world, I we're -- if in one low looked industrial, they a low they treasury, like good rate things good sectors, said apartments, the was look in So quite cell while all Joe -- X.X%. rate attractive don't year towers,

biggest the seen we've where repricing. that's So

our In we portfolio are terms how of is balanced. very positioned,

office balance. the as gives but on particularly us as have self-storage such areas We're think also well we self-storage do on like residential we residential and pricing a the rates, REIT as on good power, the side. to as feel vulnerable side. as not little So as like and retail rising we there's it exposure to very well But we because

Yeah. question. like how under the you sales communicate maybe clients one side business during do And just those kind hood to insights, process? that Those correlate the to of

management our clients people, related I the where are we really upon of important and on asset chose views our existing important to clients all of are our Well, why we mean, these mean classes. active our in of the we're but it I about process, one And prospective client, is the ingredients asset least these classes. that, our kind depends with cycle. in that always at for talking

And those views. so expressing

the people about of how our own. X% might alpha in portfolio it's I zero at when certainly we're outlook that So tell owned created or our we Retail surprising for we retail, In REIT and basically example, have or when years is least part future. the ago, that's and U.S. office alpha them about U.S. five time. we very going talking and to six was that how favorably and is of process viewed the at to so portfolio create

close maybe here. to Yeah. I John, add, just out would

ways directly what commitment in substantial engaging is exactly our research interested prospect new the them our ranging clients to knowing just to website. with a capital of for version relationship that have having and many that's many, We producing out rolled from and client on our our We delivered a in website. managers

asset forum investors one-on-one educate of to Investor our thinking our couple because to been them. teams also course, ago Annual investment single meet our have then -- And Conference, a asset with with always class, our a work dedicated teams great classes. help We clients with of weeks where which they but had our and interested share to is on can always

lot of people thinking. we our ways that a deliver lot and got we've of So a

Great. it. Thank you very much. Appreciate

John. questions, your for Thanks

now to for back phone to over And questions the further no Harvey would remarks. like we I closing on have call lines. the turn Joe

in simply, we your and time Great. our XXXX. to appreciate look today we Well, next of January call forward earnings

So, thank you.

call. for That please We lines. participation, you concludes ask your to you disconnect your today's thank and