Cohen & Steers, Inc. Aktie

Ladies and gentlemen, thank you for standing by. Welcome to the Cohen & Steers 2nd Quarter 2026 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded Friday, July 17, 2026.

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

Thank you, and welcome to the Cohen & Steers second quarter 2026 earnings webcast and conference call. Joining me are Joe Harvey, our Chief Executive Officer; Amit Muni, our Chief Financial Officer; and Jon Cheigh, our President and Chief Investment Officer.

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 second quarter earnings release and presentation our most recent annual report on Form 10-K and our other SEC filings. We assume no duty to update any forward-looking statement. 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 vehicles. The presentation that will accompany today's webcast also contains non-GAAP financial measures referred to as 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 the accompanying presentation as well as links to our SEC filings available in the Investor Relations section of our website at www.cohenandsteers.com.

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

Thank you, Brian, and good morning, everyone. On today's call, I'll begin with a review of our operating and financial results for the quarter. Jon Cheigh will then discuss investment performance and the market environment followed by Joe Harvey, who will highlight the growth momentum we are seeing across the business. We will then open the call for your questions.

Turning to our summary highlights. I'll focus my remarks on our adjusted results. We reported adjusted earnings per share of $0.85 for the quarter, up from $0.79 in the first quarter and $0.73 in the second quarter of last year. Assets under management increased approximately 8% to over $100 billion, reflecting both positive market performance and strong net inflows. We generated $1.3 billion of net inflows, one of the strongest flow quarters in our recent history, while our institutional pipeline remained robust at $1.6 billion. We also continue to make meaningful progress on our strategic growth initiatives, which Joe will discuss shortly, while maintaining strong long-term investment performance.

Turning to the next slide. This slide highlights our AUM and flows by investment vehicle. As reflected on the chart on the bottom, our net inflows were primarily driven by our open-end funds which includes mutual funds, ETFs and [ CCaaS. ] In our Advisory business, we experienced modest outflows related primarily to institutional client rebalancing activity and our sub-advisory business generated slight net inflows as over $500 million of new mandates were partly offset by redemptions.

The next slide reflects our AUM and flows by strategy. Looking at the chart on the bottom, U.S. real estate was the largest contributor, complemented by strong demand for our preferred securities and global listed infrastructure strategies.

Turning to the next slide, I'll review our financial performance. Net income was $44 million for the quarter, an increase of 8% from the first quarter and 18% from the second quarter of last year. Our operating margin improved to 36.3%, reflecting the benefit of higher revenues as we scale the business.

Turning to the next slide, I'll review the quarter-over-quarter changes in revenues and expenses. Revenue increased 5% to $152 million, driven by higher average AUM resulting from positive market appreciation and net inflows. Total operating expenses increased 3% to $97 million, primarily due to higher incentive compensation accruals associated with increased revenues. Importantly, expense growth remained below revenue growth contributing to margin expansion.

Looking ahead, we are maintaining our expense guidance. We continue to expect compensation and benefits expenses of approximately 40% of revenues, mid-single-digit growth in G&A expenses relative to 2025 and a pro forma effective tax rate of between 25% to 26%.

Turning to the next slide on liquidity. We ended the quarter with $219 million of cash and U.S. treasuries on our balance sheet providing substantial financial flexibility. In addition, we held approximately $136 million of liquid seed investments across our funds. Our strong liquidity position continues us to support our capital management priorities and strategic growth initiatives. Thank you, and I'll turn the call over to John.

Thank you, Amit, and good morning. Today, I'd like to cover three topics: our performance scorecard, the investment environment for the quarter and the accelerating real estate and real asset recovery. Beginning with our performance scorecard. Over the last 1, 3 and 5 years, 41%, 91% and 97% of our AUM, respectively, has outperformed. Given that our performance metrics are normally nearly 100%, I did want to address the 1-year outlier, the 1-year result is solely coming from our U.S. REIT relative performance as our other strategies, including international real estate continue to outperform. Within U.S. REITs, the vast majority of the short-term underperformance has been driven by our positioning within cell tower REITs, which have been impacted by a slowdown in carrier spending after an initial 5G build-out. And in our view, overblown fears that satellite will meaningfully displace towers. As we've demonstrated over 40 years, our U.S. REIT team is deep, and our investment process is resilient, and we would expect a reversion to the historical norm of 200 basis points of alpha going forward. Notably, our global list infrastructure team has outperformed by 370 basis points over the last year. Infrastructure has been and, we believe, will continue to be a significantly growing area of investor interest.

Turning to the market. Last quarter, I stated that we expected a war driven 3- to 6-month inflationary pause but that markets would look through that. Consistent with that view, the second quarter witnessed a resilient global economy, continued momentum in stocks and risk assets and year-to-date, a significant market rotation notably away from the MAG 7. We still believe that the spike in inflation has yet to fully work its way through the system and that long-term interest rates will generally remain steady. Despite this, the economy and markets are benefiting from a significant investment cycle, productivity growth and generally low levels of debt.

U.S. listed real estate returned 10.7% during the quarter and is now up 14.9% for the year, while global real estate is up 9.6% for the year. Infrastructure generated returns of 2.3% during the quarter, restrained somewhat by energy-sensitive sectors giving back some of their Q1 performance and have had a solid overall 10.7% year-to-date, [indiscernible] a softer second quarter, driven by declines in energy prices and precious metals remained up 9.9% through the first half of the year soundly beating a 60-40 portfolios, roughly 6% return. Real assets, in our view, continue to do their job of improving risk-adjusted returns in periods of elevated or rising inflation.

Looking at fixed income, performance was broadly positive as economic growth and corporate fundamentals remain strong enough to offset rate uncertainty preferred securities outperformed treasuries, corporate bonds and leverage loans. Real assets have outperformed the S&P 500 and a 64 [indiscernible]. We continue to believe that some of the most compelling opportunities are within real assets. We're improving fundamentals and still reasonable valuations are creating a particularly attractive backdrop.

Now at the start of the year, I stated that in our experience, discounted valuations with accelerating growth drives multiple expansion. Performance drives flows to the asset class and often we see [Audio gap] "rotation from laggard to leader and investors fear of missing out, take hold. And historically, the recurring share prices is a sharp rather than measured move." We believe that's precisely what has happened with REITs so far this year. For several years, investors viewed real estate incorrectly as just an interest rate sensitive sector. As rates move sharply higher beginning in 2022, valuations adjusted lower and sentiment deteriorated. The real estate earnings recovery remains underappreciated. Real estate is a long-cycle business. Over and undersupply conditions rebalance over years, not quarters, not every property type is at the same phase of recovery, but finally, all sectors are recovering. And in certain areas such as senior housing data centers, they are [Audio gap]. Real estate has benefited as there has been return to office in key metros like New York and San Francisco, strong performance of retail, where there has been little [Audio gap] added for 10 years, a recovery of industrial demand as PMIs are above 50 and excess residential supply has been absorbed and job growth has improved versus 2025.

The REIT recovery is now 3 years in the making with U.S. and global REIT delivering 10.1% and 10.7% annualized over that time period. Finally, investors are taking note that real estate valuations and fundamentals look attractive, particularly in a world where equity valuations are expensive, credit spreads are tight, private equity has delivered realizations or adequately addressed LP liquidity needs, and private credit has become crowded with concerns over lowering credit standards. The rally in REIT year-to-date only confirms our 3- to 5-year outlook with dividend yields in the 3% to 4% range and earnings growth above the historical norm of 6% and accelerating, we believe that the double-digit returns in the last 3 years is a sustainable forward outlook for our listed real estate strategies, even at the current or modestly higher interest rate level. At the same time, private real estate values have stabilized following a prolonged correction.

The transaction activity continues to recover. Private real estate as measured by the NFI Odyssey Index has delivered seven consecutive quarters of positive total returns through the first quarter of this year and appears on track for an eighth consecutive quarter of positive returns. Consistent with that recovery, but also bolstered by our investment focus on open-air shopping centers, our non-traded REIT, the Cohen & Steers Income Opportunities REIT or CNS REIT continues to deliver industry-leading performance, generating a 12.3% annualized total return as of this May since its 2024 inception.

We continue to believe that some older non-traded REITs are still contending with legacy assets, legacy valuations, constraints because of redemptions and an overall inability to pivot to the best opportunities of this new cycle and that our performance advantage is sustainable. While the recovery in real estate provides a powerful example of the opportunities we see today, the investment case extends well beyond REITs and speaks to a broader structural theme unfolding across real assets. For much of the prior decade, investors operated in a world of quantitative easing, lower inflation and geopolitical com. Today, the investment landscape is different. We are in a hardware not software world. The physical constraints are the bottlenecks and thus the source of pricing power. Demand for essential hard assets is rising. A renewed flare up in the Middle East underscores this reality amid renewed tensions and a spike in energy prices after weeks of come.

We don't anticipate conditions to deteriorate to the peak level of conflict seen earlier this year, even so, the fair value of oil prices and commodity prices more generally appears higher than where we began the year. The start and stop nature of the Iran conflict is just a reminder that investors need to be diversified for a wide variety of economic outcomes and stress tests and thus need true diversifiers. Real assets are once again demonstrating that they play a critical role in portfolios, providing diversification, liquidity, attractive total returns and inflation resilience.

With that, let me turn the call over to Joe.

Thank you, Jon, and good morning. Today, I will review our key business trends in the second quarter, provide an update on our growth initiatives and comment on an industry topic that touches a business. To get right to the point, the broad positive business momentum that we have experienced in recent quarters continued to steam during the second quarter. We had net inflows of $1.3 billion, the highest level in 4.5 years, and the seventh quarter of inflows in the past 8 quarters. Our 3- and 5-year investment performance is strong. The macro has become more favorable for our strategies. We're seeing greater breadth of allocation activity across our strategies and client segments. Our one unfunded pipeline continues to refill at a healthy clip. Our fee rates are stable and top quartile and our growth initiatives continue to progress. Highlights for the quarter include: With the sole exception of Global Real Estate, we had net inflows into every strategy. Our largest strategy, U.S. real estate led with $833 million in net inflows. Our multi-strategy real assets portfolio had $380 million in net inflows bringing strategy wide AUM to $3 billion, a compound annual growth rate of 29% since 2021. Our global listed infrastructure strategy had its sixth straight quarter of inflows and is very active in the institutional channel with both new allocations and takeaways.

Interpreting these highlights, the macro is align better with our strategies. Real estate has begun a new return cycle. Global listed infrastructure is in the middle of a powerful capital investment cycle in AI and power and is near the top of allocator to-do list and multi-strategy real assets is benefiting from persistent inflation.

Preferreds, our second largest strategy by AUM continued to improve with the second consecutive quarter of inflows. Our preferred AUM is $18 billion compared with $27 billion at its peak. While two quarters do not define a long-term trend, there are several fundamental drivers of these inflows, including continued search for yield and replacement of cash positions, rotation from private credit, dissatisfaction with municipal bond performance attractive yield spreads versus corporate investment-grade credit and attractiveness of short-duration preferreds. Our low-duration preferred strategy had a six straight quarter of inflows and led our preferred flows.

In addition to U.S. open-end fund, we have ETF, [ CCAV ] and closed-end vehicles for that strategy. Our 1 unfunded pipeline was $1.6 billion compared with $1.7 billion in the prior quarter. And importantly, the velocity of fundings and wins has been good. We had $804 million in fundings in the quarter and $1 billion in awarded mandates in the quarter. This pipeline is also the broadest by strategy in history with 27% in global listed infrastructure, 23% in our listed private real estate LP vehicle called [ TREF, ] 17% in U.S. real estate, 17% in global real estate, 11% in our multi-strategy real asset portfolio and 4% in private real estate. The domiciles of the pipeline reflect a global reach and include countries.

Turning to our growth initiatives. All of them enjoyed organic growth in the quarter. Active ETFs passed the $1 billion AUM mark. Our largest ETF is our real estate strategy at $450 million in AUM. To help frame the scope of our opportunity, the active category in total real estate ETFs, by example, has approximately $3 billion in AUM industry-wide. However, the passive category has $100 billion in AUM. As our active strategies consistently outperformed passive we are optimistic about our ability to take share from these passive vehicles. The most recent addition to our ETF lineup is our future of energy strategy, which was converted from an open-end fund during the quarter. CSEN its symbol, invest in both conventional and renewable energy. Its return over the past year was 43% and as 3- and 5-year terms were 21% and 18%, respectively. By default, we expect to launch our seventh ETF, a version of our multi-strategy real assets portfolio which has begun to see broader flows globally due to its inflation-sensitive return profile. Overseas, our [ CCAB ] fund growth initiative has advanced, and we have reached $2 billion in AUM. We had record net inflows of $326 million in the quarter, led by our real assets multi-strategy and our global listed infrastructure strategies.

Our distribution team is doing a great job building a presence in more international markets, including rapidly growing Southeast Asia wealth market. Our non-traded REIT continues to gain momentum outperforming its peer average by 760 basis points since inception. We look forward to our 3-year anniversary coming this January, an important milestone for distributor platforming. We have a broadening group of independent and enterprise RIA firms that have begun allocations to this vehicle. Last month, we saw our highest level of non-seed subscriptions yet. While private real estate fund raising and wealth is still challenging, it's down about 5% annualized this year. We believe the headwinds in private credit are providing an opening with flows down 35% this year. And together with the bottoming in the real estate cycle, suggest to us that advisers should begin pivoting to real estate. That is being telegraphed by the listed market with REIT's strong performance, as Jon has articulated.

Our tactical real estate LP fund [ TREF, ] which was launched last July, holds the 2 spot by strategy in our pipeline. As a reminder, TREF combines listed and private real estate using our active REIT strategy and our partner, IDRs indexed approach to core private real estate funds. Continuing with our real estate business, we have been in the market with a rights offering, managed by UBS for our closed-end fund Cohen & Steers Quality Income Fund, symbol RQI. Notwithstanding the past months volatility, we are pleased to have raised $154 million, including associated leverage, this should increase our AUM by $220 million. This is the second rights offering we executed for our closed-end funds over the past year. As you know, growing our distribution platform has been a key priority. We recently created a new Chief Operating Officer role led by Amanda Icas to help run distribution operations under Dan Noonan. This role will improve our operational efficiency and allow our sales leaders to focus on what they do best, specifically strategy, talent management and working with clients.

In addition, we have asked our long-term relationship head Matt Pace to lead a growth initiative in our global sub-advisory business. We believe there is untapped potential for new allocations and takeaways in sub-advisory. We are seeing opportunities in the U.S., Canada, Australia and New Zealand, and we see potential in new markets such as Korea. By contrast, the Japan market has been a challenge lately. We believe this is due to the macro in Japan with bond yields up relatively meaningfully and with strong appetite for equities, both Japanese and global. Our new CEO in Japan joined us in January, and we are confident that he will lead us to inflows as his business plan takes hold.

Finally, looking at the market landscape, it has been refreshing to see increased IPO activity in the U.S., which is broad-based and not just SpaceX, with stock valuations either at all-time highs or close to them, it is not surprising to see the public markets functioning well and driving capital formation for the next-gen economy. Considering the capital investment needed in AI, power infrastructure and related businesses, both private equity and the listed market will be needed to finance global growth.

Of the top 10 IPOs this year, 4 are squarely in our global infrastructure and resource equities universes while one of them, a data center REIT, is a staple of both our REIT and infrastructure strategies. It's good to see our investment universes grow, providing more alpha opportunities. We look forward to seeing more real estate IPOs, particularly in the data center and health care sectors as well as some internationally. Key factors that will influence whether more real estate will go public include LP needs for liquidity as well as issuer needs for capital to refinance low-cost debt and drive growth. While a listed real estate allocations or valuations, which are not as attractive compared with marks in the private market have been an impediment that may be changing, enabling more REITs at cost of capital to help recapitalize private market. How these factors play out remains to be seen, but the increased IPO activity broadly should help grease the skids for real estate IPOs.

I will close by welcoming Amit Muni to the firm as CFO. Many of you have met Amit during his tenure as CFO at WisdomTree and CI Financial. It has been great to see the relationships that he has. And I will offer thanks to Mike Donahue, who stepped up as interim CFO during this transition.

Abby, could you please open the lines for Q&A?

[Operator Instructions] Our first question comes from the line of John Dunn with Evercore ISI.

I wanted to ask on real estate. With real estate performing better and rates you expect to go higher, maybe could you just like more closely frame the demand for wealth management and the institutional channels over the next 12 to 24 months? And also maybe a comment on the expected demand for global real estate.

Sure, John. Good morning. Well, U.S. real estate is our largest strategy. And by definition, it tends to be the largest driver of our inflows. In the wealth channel, U.S. real estate has been a leader of those flows so far this year. And I would say the same for the institutional market. And beyond the pipeline that I described, and we've got a nice backlog of potential clients that -- and allocators that we're working with. And some of them, I think, shorter time frame, some of them have longer time frames. But clearly, the recent performance of REITs is signaling a rotation in the markets as well as recognition of the fundamental picture that Jon has laid out. So as things go, performance tends to attract capital. And so we would expect frankly, an improving demand profile for U.S. REIT strategies.

Got it. And then on the pipeline, maybe you could just give some color on the sustainability of it and then maybe some of the more [indiscernible] metrics like RFP activity and kind of win percentage and composition, both by strategy and geography.

Sure. So for those of you who have been following this, our one unfunded pipeline has been at the $1.7 billion level, plus or minus, for the past four quarters. And that was a dramatic increase from a lower level that we experienced coming out of the regime change in interest rates. It's hard to forecast what that pipeline will look at. But based on the macro backdrop that Jon has described that I've talked about, we think that there is increasing interest in our strategy. So that, combined with our shadow pipeline, if you call it gives us confidence that that's the pipeline is going to be sustained. Importantly, one of the things I talk about is the velocity of what happens in our pipeline, i.e., the fundings that happened in a quarter and the placements that happened in the quarter. And we've been seeing good velocity for the past 2 or 3 quarters. So that's encouraging. As I talked about in my points, the breadth of the pipeline is as great as it's ever been and that speaks to the broader interest in real assets. And we are seeing more breadth in the dociles of the asset owners in our pipeline. And that's important to us. It's been an initiative. And frankly, in the past 6 months, we've seen the first allocations in places like -- that we've ever had in places like Hong Kong, Korea, Philippines. And so we still have more work to do in building out our international distribution. We see opportunity there, and we continue to invest. But we're encouraged by some of those first-time wins in some of those countries.

And our next question comes from the line of Craig Siegenthaler with Bank of America.

This is Ivy on for Craig. On the call, so you highlighted that European listed fund platform has surpassed that $2 billion in AUM and then also noted the positive flows into [ CCAV ] vehicles during the quarter. So where are you seeing the most traction internationally? I know you mentioned opportunities in Korea, New Zealand, to name a few. And then what needs to happen for non-U.S. distribution to become a more material contributor to organic growth?

Sure. So there's really three elements I'd say to our international distribution plan. The one is in the wealth channel which I think is the statistic that you were referencing the $2 billion and $2 billion in our offshore open-end funds are [ CCAP. ] They're domiciled in Luxembourg, but they have a broad international reach, including in Asia. So -- and those vehicles this year, we've seen the greatest flows in our multi-strategy real assets portfolio, which reflects the interest in inflation-sensitive strategies. The second would be in Global listed infrastructure and the third would be global real estate. And as per my comments, infrastructure being a very popular strategy for a lot of obvious reasons, not just AI, but also the huge capital investment needs that we have in infrastructure around the world. The greatest flows that we've seen in that wealth channel so far this year have been in the U.K., Japan and in South Africa, which is an interesting one in that there's desire to move more money offshore, offshore of South Africa and have great interest in resource equities and other real assets by way of example.

So that's the first international distribution area. The second is our core institutional business. And when you look at our pipeline right now, we've got mandates in New Zealand, Canada, Philippines, Singapore, Germany, Saudi Arabia, and per my breakdown of that pipeline, it's pretty broad-based in terms of our real asset lineup. The third initiative I'll point to is the global sub-advisory business where frankly, we think that there's opportunities that we haven't been as dialed in on, and it's working with financial intermediaries in a lot of those places and in some cases, it's new allocations to what we do. And in other cases, it's takeaway business from our peers who have not performed up to the expectations of the client. So as it relates to the international distribution area, as I said, we're seeing more success.

Some of that's environmentally driven by the macro for our asset classes, but it's also the investments that we've been making, and we still have more to do. So we'll talk more about that in future quarters.

And just as a follow-up, your active ETF platform has also now surpassed $1 billion, and you continue to expand the lineup. Can you discuss where you are in terms of model adoption or broker-dealer platform placement and adviser usage? And then as ETFs become a larger part of the business, how should we think about the impact on fee rates and margins?

Sure. Great questions. We're really pleased with our ETF launch. As I said, we've passed the $1 billion market. The distribution progression for the ETFs is first that we see them. Second, we work with RIAs who are the biggest adopters so far of active ETFs. And because of our relationships and in the RIA channel, we've been able to get some of them to scale pretty quickly. But the order of business is, number one, deliver performance we have. They're performing very well. Second is to get to critical mass so that we can get the ETFs onboarded at the wire houses. That has started with several of our funds, namely the U.S. real estate fund and the preferred stock fund. And as we continue to get bigger and gain scale, then that will make those vehicles appealing enough from a size perspective to attract model allocators and institutions who will use ETFs in certain circumstances.

So we like our progress as it relates to the fees, we're pricing them at a slight discount to our lowest cost open-end share classes on a net basis versus our overall fee rates, which are in the 58, 59 context. They are comparable, if not better, than our overall fee rates. So then just to close on the topic, our goal is to have all of our core strategies in the ETF vehicle. And so what that leaves us is at least for right now is our multi-strategy real assets portfolio that will happen if everything goes according to plan by the end of summer. We also need to address our global real estate strategy. And right now, we're just digesting all the 7 launches focused on getting them to critical mass. And then also seeing how things play out in the industry as it relates to things like ETFs as a share class, which requires a development in terms of the technology of the pipes and plumbing, but also distributor attitudes around having ETF vehicles alongside open-end funds that may have different price points. So we've got very good momentum with ETFs and just thankful that we have the resources to launch them as rapidly as we have.

And our next question comes from the line of John Dunn with Evercore ISI.

Maybe just a quick one on sub-advisory with the small but recent wins in Canada. Has anything changed in that channel? And maybe your outlook for demand there?

Well, in Canada, I'd say there's a couple of things. One is that they are fans of real asset strategies. So that's been a positive factor. But in addition, there have been takeaway opportunities from our peers that have underperformed. So the two things combined that is really attractive. And we've had nice growth in our Canadian asset base recently.

[Operator Instructions] Our next question comes from the line of Mac Sykes with Gabelli Funds.

Congrats, it's a great fit, and certainly glad to have you back in New York City. I was wondering if you could just provide a little more color on the mutual fund conversion. What were some of the considerations ahead of the conversion or some of the reactions from shareholders? And is this something -- is this a process you're going to consider in the future with some of the other funds?

Sure. Well, we had a -- our key future of energy open-end mutual fund, which was roughly $170 million in assets, and it just wasn't seeing take-up in the distribution area, probably for several reasons. One is its size. The second is just for smaller open-end mutual funds, they're not getting the attention and wirehouses and other distribution channels. So frankly, it was a vehicle that we thought was there a risk of being taken off of some of the platforms. So we thought it was a very good candidate for conversion because of our belief in the strategy. And the fact that it didn't have a lot of 401(k) retirement assets in it, which is a consideration when you convert an open-end fund to an ETF. You have the risk of losing -- not the risk, you will lose those 401(k) allocations. So we thought it was a conversion, and we converted it. And the market reception has been very good, a major wirehouse frankly, which was getting ready to take it off their platform, double down on it and increase their recommendation on the vehicle based on our conviction converting it to ETF, which showed our conviction in the strategy and providing a new technology, if you will, and how to deliver that strategy.

And that concludes our question-and-answer session. I will now turn the conference back over to Mr. Joe Harvey for closing remarks.

Okay. Well, thank you for joining us. Have a great summer, everyone. See you in October. And Abby, thank you for moderating.

Thank you. And ladies and gentlemen, this concludes today's call, and we thank you for your participation. You may now disconnect.

Ladies and gentlemen, thank you for standing by. Welcome to the Cohen & Steers First Quarter 2026 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded Friday, April 17, 2026. I would now like to turn the conference over to Brian Heller, Senior Vice President and Deputy General Counsel of Cohen Steers. Please go ahead.

Thank you, and welcome to the Cohen & Steers First Quarter 2026 Earnings Conference Call. Joining me are Joe Harvey, our Chief Executive Officer; Mike Donohue, our Interim Chief Financial Officer, and Jon Cheigh, our President and Chief Investment Officer.

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 first quarter earnings release and presentation, our most recent annual report on Form 10-K and our other SEC filings. We assume no duty to update any forward-looking statement.

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 vehicles. 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.cohenandsteers.com. With that, I'll turn the call over to Mike.

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 $0.79 per share as compared to $0.81 sequentially. Revenue for Q1 increased from the prior quarter by 0.3% to $144.3 million. The change in revenue from the prior quarter was driven by higher average AUM, partially offset by 2 less days in the quarter.

In addition, and as we noted in last quarter's earnings call, there were $1.7 million of performance fees recognized in Q4 related to certain institutional accounts. We typically don't recognize such fees early in the year and we have few performance fee accounts.

Our effective tax rate during the quarter was 58.2 basis points. Excluding nonrecurring items, our fee rate was 58.4 basis points which is slightly lower than the prior quarter.

Operating income was $50.7 million during the quarter compared to $52.4 million sequentially. The and our operating margin was 35.1% compared to 36.4% in the prior quarter.

Ending AUM in Q1 was $93.1 billion, which was up from $90.5 billion at the end of Q4. This end of period change in AUM was driven by positive net inflows during Q1, primarily related to open-end funds.

In addition, end-of-period AUM was positively impacted by market appreciation of $2.7 billion during the quarter. As a result, average AUM increased during Q1 to $94.4 billion as compared to $90.8 billion in the prior quarter. Joe Harvey will provide additional insights regarding our flows and pipeline shortly.

Total expenses were higher compared to the prior quarter primarily due to increased comp and benefits and distribution and service fees expense. Compensation and benefits was higher compared to prior quarter as a result of the year-to-date compensation accrual true-up to actual that reduced compensation expense in Q4.

The compensation ratio for the quarter was 40%, which was in line with the guidance we provided. Distribution and service fee expense was up due to the increase in average AUM, and G&A expense remained consistent with the prior quarter.

Regarding taxes, our effective rate was 25.5% for the quarter on an as adjusted basis. Our earnings material presents liquidity at the end of Q1 and prior quarters. Our liquidity totaled $343 million at quarter end, which represents a decrease of $60 million versus the prior period. This quarterly change in liquidity is in line with prior years and driven by the annual incentive compensation cycle for the firm, which occurs in Q1.

Let me now touch on a few items regarding guidance for the remainder of 2026. With respect to compensation and benefits, we would expect our compensation ratio to remain at 40% as we experienced in Q1. We expect G&A to increase in the mid-single digits for the year as compared to the prior year. Lastly, regarding 2026 guidance, we expect our effective tax rate to remain consistent at 25.5% on an as-adjusted basis. I will now turn it over to Jon Cheigh, who will lead the discussion of our business performance.

Thank you, Mike, and good morning. Today, I'd like to cover three topics: our performance scorecard, our 2026 outlook given the recent geopolitical events, and last, our long-term structural view of the economy, the market regime and some asset allocation implications for investors.

Beginning with our performance scorecard. We continue to build on our record of consistent, long-term outperformance. On a 1-year basis, 86% of our AUM has outperformed its benchmark, while our 3- and 5-year outperformance rates are both above 97%.

95% of our open-end fund AUM is rated 4- or 5-star by Morningstar, which is up from 90% last quarter. In short, we continue to meet our primary objective of providing outstanding long-term performance for our investors. Turning to the investment environment.

Coming into 2026, we expected both an acceleration and a rebalancing of global growth with a corresponding broadening of market leadership. While that outlook was spot on early in the year, the current Middle East conflict may have brought that market leadership shift into question. U.S. and global REITs were both up about 10% through February, well ahead of flattish equity markets. As we saw market rotation into the relative laggards of the last several years.

While events in March raised some of those gains, REIT still posted positive absolute performance for the quarter with U.S. and global REITs up about 4% and 1%, respectively.

Listed infrastructure performance was resilient, up 8% for the quarter. Businesses such as utilities and midstream energy continue to demonstrate their criticality in the world of short-term energy scarcity and the continued power buildout, needed to serve increasing industrialization and AI-related demand.

Diversified Real assets rose 12% for the quarter, with strong gains in commodities and natural resource equities. As we saw in 2022, real assets have been a clear winner and diversifier for a 60-40 stock bond portfolio. The asset allocation case for real assets continues to be made.

Preferred securities and fixed income classes broadly declined slightly in the quarter as renewed inflation concerns indicate that monetary policy could be tighter for longer.

So as we update our economic and market outlook for the rest of 2026, our expectation is that the Middle East military deescalation that began several weeks ago, and will continue, including just this morning over the coming -- over the course of the coming weeks and months. We know it will have its starts and stops. But as long-term investors, our focus is on the trajectory of where we are headed.

As a result, our initial 2026 view of broadening economic growth and financial markets remains intact. Now thinking beyond 2026, we believe investors must see recent developments, not as a one-off or a surprise. But instead, as another chapter in a book, which will continue to shape markets for the next 10 years or more.

For some time, we have stated that the global economy is undergoing a structural transition one that looks meaningfully different than the prior 30 years. And there are four major themes that we expect will serve as important drivers of asset allocation shifts.

First, deglobalization or what we would call geopolitical fracturing. For 20 years, the global economy enjoyed friendly trading relationships and uninhibited delivery of just-in-time resources. In the 2000s, this drove a buildup of global supply chains, primarily in Asia, but a [ deindustrialization ] for much of the developed world. For nearly 10 years now, we've seen repeated reminders that this system, while leading to lower consumer goods prices and higher profit margins was fragile and exposed the global economy to tail risks. In the last 6 years, we've seen four consecutive supply shocks, the pandemic, followed by the War in Ukraine, then tariffs and now the conflict in the Middle East. These are not one-off events. But again, an outcome of shifts in global power dynamics and alliances. This geopolitical fracturing will drive significant fixed asset investment boom greater than what the 2,000 saw from China, driven by reindustrialization and remilitarization.

The second major theme is AI and technological disruption. Artificial intelligence is a transformational force on its own. But importantly, it is not a software but rather a hardware story. AI leadership will ultimately be about compute capacity and the marginal cost will likely be about the cost and availability of power.

The third theme is inflation uncertainty. In the last decade, inflation consistently undershot expectations. In contrast, inflation in recent years has consistently surprised to the upside, confounding forecasts that expected a quick return to the old normal of low and stable prices. Even as headline inflation has moderated from recent peaks, underlying pressures remain.

As you all read in our forthcoming capital markets assumptions, Cohen & Steers forecast consumer inflation to average 3% annually in the U.S. over the next 10 years. Below recent peaks, but well above the 1.6% experienced in the last cycle and significantly higher than the Federal Reserve's long-term 2% target.

While AI may produce a productivity boom, which could prove highly deflationary, the investment needed to produce that deflationary boom is highly inflationary. The job of any central banker over the next 10 years will be challenging.

Our conclusion is that while inflation is likely to be higher than markets expect. The precise path and pace of inflation represents a major market uncertainty and risk factor.

The final important trend is the end of low interest rates. Some of this is about inflation and some is about persistent fiscal deficits. Importantly, we also believe that the market continues to underestimate that we will live in a more capital-intensive world, we took interest rates and credit spreads wider.

Hyperscalers shifting from being highly cash flow positive -- [ CASM ] of this shift. Given these four major themes in the next phase, some of last cycle's winners may remain winner, but areas of structural change tend to disrupt market leadership new faces emerge, incumbents decline and entirely different parts of the economy of these shifts are natural resources and the picks and shovels of the global economy. Notably energy, infrastructure and the plumbing that supports construction, transportation and power delivery. This represents a tremendous investment opportunity but also one that comes with challenges of higher and more volatile inflation, as I mentioned earlier.

So for our clients, our advice is simple. First, diversification not just in terms of asset classes or listed versus private but instead diversification of investment exposure to different economic drivers, inflation regimes and factors.

Second, hard assets, including real assets must be a meaningful allocation sourced from equity and fixed income as a diversifier and as a total return opportunity.

Third, investors should use a broader toolkit with some private exposure when it provides unique exposure or an illiquidity premium. But in a highly uncertain world, where the old models may not work, the cost of illiquidity is very high and should be used thoughtfully rather than just for quarterly statement diversification.

We believe the first quarter is the continuation of the market's recognition of this major turn in leadership, which will unfold with the remaining chapters of this book. And with that, let me turn it over to Joe.

Thanks, Jon. You may be able to hear a fire arm in the background, everything is okay, we're going to proceed. Today, I will review our key business trends in the first quarter and provide an update on our growth initiatives.

While we started the year with accelerating fundamentals on February 28, the world changed with U.S. military operations and Iran. As is typical in these situations, business activity slowed for a period as investors attempted to calibrate how long the conflict will last and what the short- and long-term ramifications could be for economies, geopolitics and asset allocation.

If the U.S. economy Pre-Iran was reflationary with an upward bias in growth, consensus post war is for stagflation with the key unknowables being how much and for how long. Not to be forgotten, prewar investors were very focused on the existential risk of AI on certain industry groups in addition to credit and liquidity risk and private credit. We believe our liquid real asset strategies fit the so-called halo trade very well, that is heavy or hard assets, low obsolescence with liquidity becoming a more valued investment characteristic.

The first quarter's fundamental highlights include net inflows of $497 million a strong one unfunded pipeline of $1.7 billion, characterized by good velocity with continued fundings and new mandates, stable fee rates strong absolute performance and neutral relative performance, while 1-, 3- and 5-year relative performance continues to be excellent. We made good progress with our growth initiatives, including active ETFs, offshore SICAV open-end funds, our non-traded REIT and our recently launched listed private real estate for institutions.

Flow highlights by investment strategy include: multi-strategy real asset inflows totaled $142 million, the best quarter since third quarter of 2022. Preferred Securities generated $133 million of net outflows for its strongest quarter since the fourth quarter of '21. And global listed infrastructure recorded its fifth straight quarter of net inflows totaling $96 million after a record year in 2025.

The firm-wide net inflows of $497 million represent positive organic growth for 6 out of the past 7 quarters. We recorded our seventh straight quarter of net inflows into open-end funds, with U.S. open-end fund inflows of over $300 million and broad-based contributions of over $100 million into each of our U.S. real estate, preferred securities and our multi-strategy real asset strategies. Our active ETFs continued their momentum with $224 million of third-party net flows in the quarter. Our international SICAV continued their streak of net inflows in 25 of the past 27 quarters. The SICAV recorded $62 million this quarter across a range of countries most notably in the U.K. and South Africa. The most popular SICAV allocations were to our multi-strategy real assets and global listed infrastructure strategies.

Looking at institutional trends, our advisory channel had its second consecutive quarter of net inflows with $210 million in the quarter, comprised of five new mandates totaling $287 million partially offset by $76 million termination. Sub-advisory experienced $269 million of net outflows in the quarter with $164 million in outflows from Japan.

While we experienced net outflows in Japan sub-advisory for the past 2 quarters, as real estate flows have been challenged industry-wide amidst flows into local bond funds and equity funds, we have slightly improved our industry-leading market share in Japan.

The other sub-advisory outflows were due to normal rebalancing by existing clients, partially offset by two new mandates funding $83 million.

Looking through the Iran conflict, I like our core strategies as it relates to inflation, deglobalization, AI, rotation to heart assets, among other trends. As we continue to experience inflation, we believe our multi-strategy real assets portfolio is a great solution, which investors are increasingly recognizing.

With the long-term criticality of energy back and focus our future of energy strategy, which invests in both conventional and renewable energy could be upgraded to more than just a tactical allocation. Resource equities probably have the best supply-demand future of any strategy I can think of. And the Iran conflict has clearly demonstrated the strategic importance of these businesses due to the profound impact that resource scarcity can have on resource pricing and markets.

Real estate returns could be tempered by stagflation, but remember, valuations have reset versus normalized interest rates. The fundamental cycle has turned positive and investors are rotating into tangible assets.

Our global listed infrastructure strategy has shown both strong absolute and relative performance and is a beneficiary of the capital investment cycle underway.

In addition, we have all been watching the growing concerns in the private wealth channel about liquidity strengths in private vehicles and private infrastructure is probably the most illiquid private strategy being brought to wealth. We, therefore, see global listed infrastructure as a winner and wealth, either as a stand-alone allocation or as a complement to private with proper liquidity protection.

Our corporate strategy for active ETFs is going very well. Total AUM for our first five ETFs is currently $675 million. Flows are strong, investment performance is good, and we are gaining traction and scale. Our platforming efforts for ETFs are accelerating. And in the first quarter, we received our first placement on a major broker-dealer platform. We announced the conversion of our future of Energy open-end fund to an ETF which should occur sometime midyear. We intend to launch a version of our multi-strategy real assets portfolio later this year, and we filed for ETF as a share class as many other managers have done. We want full optionality to deliver all of our core strategies in the ETF structure.

Our nontraded REIT Coasters income opportunities REIT has established a portfolio of 11 properties owned or under contract totaling $650 million in assets and continues to provide investment performance at the top of the real estate peer group with 10.6% annualized returns since inception against a 4.3% peer average. Our focus on open-air shopping centers has helped drive performance as occupancies of 97% on average translate into very strong pricing power for landlords.

A key question for CNS REIT short term is how redemption constraints in private wealth vehicles will affect investor appetite for evergreen vehicles generally. As an industry, we must position these allocations as private strategies with liquidity provisioning as available. And emphasize the importance of liquidity frameworks to protect investors and effectively deploy a long-term investment strategy.

In the case of real estate, it is possible that since the return cycle has returned positive -- has turned positive, the category to garner allocations that previously were taken by private credit. The early data in March show increased redemption activity in private credit and an uptick in sales in real estate and infrastructure.

Time will tell. We remain constructive on the long-term benefits of blending listed and private real estate and wealth portfolios. And believe we offer compelling solutions across the liquidity spectrum for investors.

We've previously discussed the launch late last year of an LP vehicle that invests in core private property funds and listed REITs together. The goal is to deliver a better core allocation to institutional investors using an indexed approach to core funds, combined with listed reach to enhance returns without adding too much volatility and implying an asset allocation overlay. We now have $250 million of fundings or commitments and the strategy is earning the support of a growing list of asset consultants.

I wanted to also comment on our short duration preferred strategy. We now have three open-end vehicles with the launch of a SICAV and an active ETF over the past year to complement our $1.9 billion open-end mutual fund and our $1 billion closed-end fund. Our open-end vehicles have yields just shy of 6%, durations of 2.5 years and investment-grade credit profiles of BBB-. Taxable investors in the U.S. realized an additional 100 basis points of tax equivalent yield.

Relative to corporate bonds of similar duration, short duration preferreds provide nearly 300 basis points of additional tax equivalent yield to compensate for just three notches of credit quality moving from A- to BBB. As yields on cash and other fixed income allocations have declined, these strategies are starting to see more investor interest. Related in our core preferred strategies, we saw a return to positive flows in the quarter, perhaps as a substitute for private credit. I wouldn't be surprised to see investors accept a lower headline yield with tax benefits for a portfolio of strong, transparent credits dominated by banks, insurance companies and utilities, in the midst of greater uncertainty and less transparency around credit quality within private credit.

I'll close with a brief update on distribution, which we've highlighted as a priority for 2026 and 2027. We've made great strides on our plan to invest in distribution, including increased coverage of RIAs and expanded international coverage. All key hires have been made, including a new Head of Japan, a newly created Chief Operating Officer for distribution and additional RIA sales roles. We also promoted [ Brad ] is path to lead wealth and brought in a wealth sales leader on [ Brad's ] team. Our approach to expanding the sales team from here will be success-based, meaning additions will be tied to organic growth.

That concludes our prepared remarks. Julianne, please open the lines for questions.

[Operator Instructions] Our first question comes from John Dunn from Evercore ISI.

First on the advisory channel. You mentioned it's been 2 straight inflow quarters. Do you think you've moved to kind of a more sustainable place? And is it coming from more existing clients or new ones? And are you seeing potential for clients looking at multiple strategies?

Thanks, John. As we've been talking about for the past 3 or 4 quarters, we've seen an improvement in our institutional advisory business as broad conditions have become more favorable, more flexible in investor portfolios. An end toward upping allocations to fixed income and clients continuing to deal with liquidity in their private parts of their portfolio. But we now have a very strong pipeline, I think, for the third straight quarter at $1.7 billion.

I talk about the velocity, meaning in the quarter, we were awarded $74 million of new mandates. There was another $45 million that was won and funded in the quarter. And then we also had another $490 million fund in the quarter. So that's good velocity and demonstrates that things have been loosening up in the institutional channel.

We also just see more from an intangible perspective, increased activity by clients. It's not RFP business anymore, but we've seen a couple of large RFPs recently. So combined with the outlook that John laid out for our investment strategies, we're optimistic that the institutional advisory channel will continue to perform better and better.

Got it. Maybe a little more on ETFs. I mean just -- could you give a flavor of how you're finding clients' acceptance of the vehicle? And are you seeing any cannibalization? And then maybe just could you describe kind of the demand of the different buckets in wealth management? And any potential for any activity for institutional down the road?

The tone in active ETFs is very good. You can see that as our flows ramp. And most importantly, it starts with delivering strong performance, which we have done. And the design of these ETFs are to present our core strategies.

For distribution considerations, some of them have some slight differences versus our core strategies, but our performance has been very good. The so-called use cases make us very bullish on these vehicles. It starts with the RIAs, many of whom are converting their businesses to use exclusively ETFs compared with open-end funds. We're gaining scale, so that allows us to be placed into models. And as I mentioned in my remarks, with our real estate vehicle, which is now the largest and is what we're best known for, we've achieved platform placement on a major broker-dealer providers.

So I would say I'm very bullish on this vehicle. Everything that we're seeing validates the decision to invest in this. And as I said, we're going to continue to get all of our core strategies in these vehicles.

As it relates to institutional interest, they're going to need to scale up. We can see -- we've had discussions with different asset consultants about using the vehicles. So I think there are some use cases, but large institutions generally want to have a separate account.

Right. Okay. And then you went through the component pieces of the private real estate effort. Are you seeing rising demand? And since you don't have a lot of legacy assets and you're entering or ramping up in a good part of the cycle. Is that a big part of the pitch? And maybe where do you expect demand to come from?

I'm not sure I understand the question, John. But as it relates to the private real estate business, when you look at private allocations in wealth, real estate has been the laggard. Private credit has been the leader, as I mentioned, that inflected in March, we'll see if that continues to play out. Infrastructure continues to have good growth.

But we believe that based on our views and other views on the real estate cycle that you can see a rotation into the real estate strategies. We're seeing a little bit of that, but it's still early. Our approach to the wealth channel is that we believe that investors should have an allocation to both listed and private, and we're trying to coach our clients on how to do that and how to optimize those portfolios.

With our nontraded REIT, as I mentioned, we have -- we're at the top of the leaderboard in terms of performance. And as we gain scale, we believe we'll have the ability to get platformed on more RIA as well as [ wirehouse ] platforms in the future.

Yes. Yes, that's what I was driving that. And then maybe just one more, thinking about the theme of rotation of some money moving to non-U.S. strategies. Global real estate was positive this quarter. Are you seeing any like interest in diversifying? And is that -- could that drive positive flows for global real estate in this year and next?

We have been seeing more of that. Go back 1 year, 1.5 years, there weren't a lot of flows into global strategies except for global infrastructure. So I'm talking primarily about global real estate. That was primarily related to U.S. exceptionalism and related stock market performance. But as the world has turned geopolitics have turned, and we've started to see better performance in international markets broadly. We've seen more interest and flows into our global real estate strategy. So I would expect that to continue. It's magnitude. I can't say, but I definitely would expect to see our global portfolios have more interest.

[Operator Instructions] Our next question comes from Mac Sykes from Gabelli Funds.

Joe, I wish -- I wanted to ask a question about sort of historical context of shifts to real estate strategies. And I guess, as we think about some of the items you've mentioned this morning. When you're looking at educating capital allocators at some of these bigger platforms that do shifts in these models, what are some of the catalysts for that? Is it sort of adviser interest, is it returns that have just happened, so outperformance of the asset class interest rate. I guess, if you could just dig into some of the things we can watch for in anticipation of more sizable allocations to real estate.

Mac, this is Jon Cheigh. Well, first of all, of course, we're talking with all of the intermediaries about real estate. But of course, all of our asset classes, including infrastructure, preferreds and natural resources.

But specifically to real estate, look, it's a combination of investors thinking about the interest rate cycle as well as the fundamental or supply and demand cycle. And so I've said a few times that when you look over the last 3 or 4 years, sometimes people would say, "Oh, well, real estate is done poorly because interest rates are higher." And that's really only half the story. The other reality is that we had too much new supply that got built. So fundamentals weakened. So over the last several years, REIT earnings have probably grown 2%, 3%, 4%, while the S&P was growing 10%, 11%, 12%. So yes, it's an interest rate story, but it's also a fundamental story.

So when they revisit the story today, what they're looking at is the S&P is a lot more expensive from a valuation standpoint than it was 3, 4 years ago. It seems like the earnings growth is beginning to decelerate and we all know about the market concentration within the S&P and in some cases, concerns about the significant amount of CapEx that's occurring. So there's -- how is the S&P looking on a price-to-earnings basis versus on a free cash flow basis because you know just as well how capital-intensive the S&P 500 is becoming at the top end.

So some of it is as far as real estate versus broader equities is valuations look better. The interest rate adjustment has happened. So being in this 4% to 5% -- 4% to 4.5% range is the new normal, as I talked about. But what we're also talking to them about is the reacceleration of earnings or fundamentals. So that 2% to 3% growth of REITs will probably be more like 5% or 6% this year, 7% or 8% next year. So I'd say that's I'd say the fundamental inflection is probably the bigger thing that our investors are focused on.

And this kind of goes back to one of the earlier questions on shifts we're seeing on the advisory channel. We've had a lot of conversations with investors for the last few years. And I think they understood the valuation story, but they were focused on is today the right day? Why 2024, why 2025, why 2026? And real estate fundamentals are slow moving. They're not going to go from being below average to above average in 1 quarter. And so it's taken a couple of years. We've digested some of that excess supply. And that's why I think the story for 2026 to 2027 is about improving fundamentals and stable interest rates and attractive valuations.

And that's why we're seeing some of those shifts, whether it's in the public markets but also within the nontraded REIT side, again, a lot of money went into private credit. But as Joe talked about, as that money is looking for the next opportunity you're beginning to see it in the flow data, but we're certainly starting to hear it of -- well, real estate lag, other things have gone up. It seems like a place to pivot back to. So I think we're early in that pivoting process.

Just one other question on the private credit side, as you compete, I think a lot of the sales channel adviser-driven component has been some of the fee structures with some of these products. coming with pretty large fee structures and incentives to the adviser. And with your products, actually much more rationally priced and compelling, I believe.

But how do you sort of compete with that where the adviser centers? Maybe a more compelling yield perspective from you and liquidity and all that stuff, but yet they come with lower adviser incentives in terms of the sales component.

Well, I'm not too familiar with the adviser incentives that you're talking about. But what we think about every morning we would get up is delivering investment performance and managing risk. So we -- as it relates to the private real estate strategy need to deliver a good total return with a balance between current income and capital appreciation and not take undue risk.

So as it relates to the fee structure for that vehicle, we've made it very investor-friendly compared with the peer group.

[Operator Instructions] we have no more question [Audio Gap].

Thank you, Julianne. We look forward to reporting our second quarter results in July. Meantime, if you have any questions, please reach out to [ Brian Meta ], and we'll talk to you soon. Thank you.

This concludes today's conference call. Thank you for your participation. You may now disconnect.

Ladies and gentlemen, thank you for standing by. Welcome to the Cohen & Steers Fourth Quarter and Full Year 2025 Earnings Conference Call. [Operator Instructions]

As a reminder, this conference is being recorded, Friday, January 23, 2026. I would now like to turn the conference over to Brian Heller, Senior Vice President and Deputy General Counsel of Cohen & Steers. Please go ahead.

Thank you, and welcome to the Cohen & Steers Fourth Quarter and Full Year 2025 Earnings Conference Call. Joining me are Joe Harvey, our Chief Executive Officer; Mike Donohue, our Chief Financial Officer; and Jon Cheigh, our President and Chief Investment Officer.

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 fourth quarter and full year earnings release and presentation, our most recent annual report on Form 10-K and our other SEC filings. We assume no duty to update any forward-looking statement. 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 vehicles.

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. 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.cohenandsteers.com.

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

Thank you, Brian, and good morning, everyone. My remarks today will focus on the as-adjusted results. Reconciliation of GAAP to as adjusted results can be found in the earnings release and presentation.

Yesterday, reported earnings of $0.81 per share, which equaled EPS reported in the prior quarter. Earnings for the full year 2025 was $3.09 per share compared to $2.93 in 2024. Key highlights for the quarter include: solid revenue growth driven by higher average AUM and combined with a stable effective fee rate. We had another quarter of net inflows, which makes 5 out of 6 trailing quarters with net inflows. Operating income was higher than prior quarter and prior year and our [ 1 but ] unfunded pipeline is again near multiyear highs.

Now I'll provide some detail on our financial results. Revenue for Q4 increased 2% sequentially to $143.8 million. Revenues for the full year increased 6.9% versus the prior year to $554 million. The increase in revenue from the prior quarter was driven by higher average AUM and the recognition of $1.7 million in performance fees. Our effective fee rate during the quarter, excluding performance fees, was 59 basis points, which was consistent with the prior quarter. Operating income increased 3% to $52.4 million during the quarter. Operating income for the full year increased 6.3% to $195.1 million. And our operating margin was 36.4% as compared to 36.1% in the prior quarter.

Ending AUM in Q4 was $90.5 billion, which was down slightly from the end of Q3. However, as noted earlier, we experienced higher average AUM during Q4 as compared to the prior quarter. Net inflows during Q4 were $1.2 billion, primarily related to advisory and closed-end funds, which was offset by market depreciation and distributions. Joe Harvey will provide additional insights regarding our flows and pipeline.

Total expenses were higher compared to the prior quarter, primarily due to increased G&A expense. During the quarter, the increase in compensation and benefits was below the sequential increase in revenue to reflect actual incentive compensation to be paid. As a result, our compensation ratio for the quarter decreased to 39% and was 40% for the full year. This was just below the guidance we provided at the beginning of the year of 40.5%.

The decrease in distribution and service fees during the quarter was due to reduced fees paid to intermediaries as investors shifted into lower fee paying share classes. G&A expenses were higher during the quarter primarily related to travel and other business development-related activities as well as increased talent acquisition costs.

Regarding taxes, our effective rate was 25.7% for the quarter and 25.3% for the year, which was consistent with 2024. Our earnings material presents liquidity at the end of Q4 and prior quarters. Our liquidity totaled $403 million at year-end, which represents a $39 million increase versus the prior quarter end. As a reminder, our liquidity normally decreases during Q1 of each year due to our compensation cycle as year-end bonuses are paid.

Let me now touch on a few items for 2026. With respect to compensation and benefits, we would expect our compensation ratio to remain at 40%. We continue to maintain a disciplined approach to managing talent by balancing our business needs and strategic priorities with revenue growth. We expect annual G&A growth in 2026 to moderate from 2025 and are projecting it to be in the mid-single-digit percentage range. Lastly, regarding 2026 guidance, we expect our effective tax rate to be 25.4% on an as-adjusted basis.

I will now turn it over to Jon Cheigh, who will discuss our investment outlook.

Thank you, Mike, and good morning. Today, I'd like to cover 3 topics: our performance scorecard, the investment environment for the fourth quarter and our 2026 outlook for the economy, markets and the opportunity in our asset classes.

Beginning with our performance scorecard. We have maintained a record of consistent long-term outperformance. On a 1-year basis, 95% of our AUM has outperformed its benchmark, while our 3-, 5- and 10-year outperformance rates or all above 95%. 90% of our open-end fund AUM is rated 4- or 5-star by Morningstar, a modest increase from last quarter. Importantly, our nontraded REIT, CNS REIT has enjoyed a 10.3% annualized return since its January 2024 inception, which is more than double the return of the median equity nontraded REIT.

In short, we continue to meet our objective of providing long-term alpha for our clients. Transitioning to investment market conditions, equities finished 2025 with double-digit gains for the third consecutive year. Although sentiment in the fourth quarter generally shifted toward value-type stocks as investors trimmed positions in prior AI winners. In this environment, diversified real assets rose about 3% in the quarter, in line with global equities but outperformed equities for the full year, which we believe is significant as market drivers broaden, which I will touch on later.

Natural Resource equities were a positive standout in the quarter, up more than 6%, driven by strength in metals and mining stocks amid reduced tariff uncertainty and expectations for stronger economic growth in 2026. Global real estate stocks were flattish overall in the quarter as gains in Asia Pacific markets were countered by weakness elsewhere. While U.S. REIT had a modest decline in the quarter, we continued to see large return disparities by property cut. In this case, industrial and hotel REITs had sizable games, while data center and telecommunification landlords remained sluggish.

Private real estate meanwhile, had a total return of 0.9% as measured by the preliminary results of NCREIF Odyssey Index. This marked the sixth consecutive quarter that total returns have increased. The clearest private real estate recovery signal we've seen since the 2022 downturn. Within listed infrastructure, airports were a notable winner on strong passenger traffic volumes amid steady air travel demand.

Most fixed income classes, including preferred securities, had slightly positive total returns in the quarter with treasury yields ending the period largely unchanged and as credit spreads remained historically tight.

Turning to our economic and investment outlook. Last quarter, I noted that economic growth for 2025 was historically narrow, the so-called K-shaped economy. Unsurprisingly, corporate profit growth and market performance have also been narrow. As we enter 2026, we expect economic activity and market returns to broaden after several years of highly concentrated games. Our view is for above consensus global growth inflation and interest rates.

We believe the economic and market rotation is well underway. Real assets, which have lagged for some time are evidence of this shift. In 2025, a diversified portfolio of real assets outperformed equities, with virtually all categories generating double-digit returns. Natural resource equities led rising nearly 30%, followed by commodities up 16%, global listed infrastructure at 14% and global real estate just under 10%. We also can't forget about gold, which had a banner year, climbing 64% last year.

Gold is an interesting case study. from mid-2020 to mid-2023, gold generally traded around $1,800 per ounce with a range of plus or minus $200. Some argued that maybe gold had become displaced by bitcoin and secular change or that gold couldn't work in a higher interest rate environment. 2.5 years later, gold is up 250% to 4,800 an ounce. Few people today now argue that gold is obsolete versus Bitcoin. In our experience, claims that this time is different, or that an asset class, like real estate is also obsolete, tend to correct over time. And when the sentiment and fund flows shift, valuations can move meaningfully and quickly.

Equities are at historically high valuations. Everyone knows this and has known this. Just because equity valuations were expensive at the start of 2025 and the market still went up doesn't mean relative valuations don't matter or the asset allocations don't need to shift. Instead, it means the case for asset allocation changes is even stronger today with the location just starting.

Turning to more specific drivers by asset class. Real estate has been a [ laggard ] for the last several years because of the rapid rise in long-term interest rates from 2022 to 2023, oversupply in industrial, apartments and self-storage and growth rates that decelerated from double digits down to only 3.3% growth in 2025. But that performance and those drivers are now in the past.

Long-term interest rates have essentially been flat now for 2.5 years. Those same higher rates plus construction costs that are up 40% since 2020, have driven new supply materially lower. Our companies are not in the construction business. Lower supply is good for real estate. We expect the combination of lower supply and accelerating economic growth and thus demand to result in accelerating REIT earnings above trend to roughly 8% in 2026 and 2027.

In our experience, discounted valuations with accelerating growth drives multiple expansion. Performance drives flows to the asset class. And often, we see the rotation from laggard to leader and investors fear of missing out, take hold. And historically, the recovery in share prices is a sharp rather than measured move. Natural resource equities and global listed infrastructure represent some of the clearest examples of how broadening market leadership can unlock return over a longer time horizon. Capacity discipline, higher borrowing costs and aging infrastructure have constrained the supply of natural resources.

Meanwhile, growing populations, AI infrastructure needs, defense growth, and increased electrification or accelerating demand, record metal prices and persistent supply chain disruptions in 2025 highlight this shift. Against this backdrop, natural resource equities led real asset returns last year. And importantly, we believe we're still early in a multiyear commodity super cycle.

As market leadership broadens beyond mega cap tech, these companies offer structural growth, yield, diversification, and an attractive complement to richly valued traditional assets. Last, in fixed income markets, lower short-end rates combined with stronger broadening growth bode well for preferred securities.

To be sure, overall credit spreads are tight, but preferreds represent high income from high-quality issues and generally with tax advantages. In short, we continue to believe that the combination of a broadening economic growth engine along with relative valuation attractiveness will benefit our asset classes in 2026, while secular forces provide an exciting backdrop for many years to come. The stage is set for natural resource equities, along with listed infrastructure and listed real estate play a larger role in portfolios as the next leg of participation unfolds.

With that, let me turn the call over to Joe.

Thank you, Jon, and good morning. Today, I will review key business trends in the fourth quarter and then discuss our plans to drive organic growth and realize returns on investments we have made in recent years.

We ended 2025 with good momentum across key business metrics. We saw positive flows into nearly all vehicles. Fee rates were stable. Our institutional pipeline continued to strengthen and we are making progress on distribution initiatives. We ended the year with $90.5 billion in AUM compared with the full year average of $88.6 billion. While markets were strong in 2025, our largest strategy by AUM, U.S. REITs returned just 3.2%, ranking 11 out of the 11 gig sectors in the S&P 500.

Some of our smaller strategies performed exceptionally well, such as natural resource equities at 30%, real assets multi-strategy at 17% and global listed infrastructure ranging from 14% to 22%, depending on the sub strategy, and that's before our teams generated alpha on top of those benchmarks.

In the fourth quarter, we had net inflows of $1.28 billion, bringing full year 2025 flows to $1.5 billion. Major story lines included net inflows in all vehicles, including improved advisory flows, which led at $651 million, flow leadership by strategy in U.S. REITs and global listed infrastructure and an inflow of $513 million from a rights offering and associated leverage for our infrastructure closed-end fund.

Open-end funds had a small net inflow at $13 million with large inflows into 2 of our U.S. real estate open-end funds and outflows from our third real estate fund and our core preferred stock fund. Our non-U.S. CCAP funds had inflows of $89 million. Active ETFs had $175 million in net inflows, comprised of $25 million of seed capital and $150 million from clients. Advisory had 4 new mandates totaling $689 million plus existing client inflows of $86 million offset by 1 termination of $124 million.

Subadvisory had $30 million of net inflows, framed by significant activity, including 2 new mandates of $532 million, 1 account termination of $330 million and client rebalancing outflows of $172 million. Our one unfunded pipeline continued to strengthen at $1.72 billion at year-end across 20 mandates compared with $5 billion last quarter and a 3-year average of $970 million.

We were awarded $660 million of new mandates in the quarter and an additional $385 million was won and funded within the quarter and therefore, did not hit the pipeline. The largest percentage of the pipeline at 54% is U.S. REIT strategies with another 23% in global listed infrastructure and 16% in global real estate. The factors driving improved activity are similar to last quarter. More confidence by allocators in the macro environment and interest rate cycle additional flexibility in portfolios due to listed equity outperformance, increased interest in more inflation-sensitive allocations and takeaways from underperforming competitors.

Over the past several quarters, we have disclosed known terminations and last quarter, that AUM was $500 million to $600 million. As before, those terminations were principally driven by client allocation and investment vehicle changes rather than performance. We have transitioned to a more typical low level of termination activity now that those outflows are complete. Other full year highlights include record net inflows of $1.6 billion into global listed infrastructure, record inflows into our 6 CCAB vehicles of $291 million and the doubling of our AUM in Australia over the past 2 years to $1.2 billion. All of these areas deserve continued focus in 2026.

Since the Fed began easing in September 2024, we have had 6 -- 5 of 6 quarters of net inflows averaging $612 million. This contrasts with 9 prior quarters of outflows during the interest rate tightening period. While on the surface that may seem to reflect a business that is interest rate sensitive, I believe the right depiction is more muted especially considering that interest rates have normalized and that will likely be in a more inflation persistent environment. The need for diversification amidst top decile valuations alongside persistent inflation backdrop is helping to drive more listed real asset allocations.

During 2026, we expect to focus on harvesting ROI or return on investment for investments we've made over the past several years in new strategies, vehicles and talents. In November, we announced Dan Noonan's promotion to Head of Global Distribution after watching him implement his strategic plan for wealth that is well underway. Key goals include increasing coverage of the RIA channel, while maintaining our presence in the wirehouses, putting greater resources on global sub-advisory and growing our institutional presence outside of the U.S. with focuses on Japan, the Middle East and Asia.

We believe our largest AUM strategy, real estate, is entering a favorable return cycle. Looked at through REITs, real estate has been among the worst S&P sectors for multiyear periods driven by asset pricing adjustments as well as earnings deceleration. But we expect earnings to inflect positively, as Jon discussed. REITs are statistically cheap versus equities in our view, but fairly priced versus bonds. And reflecting inflation, reprices are 18% below trend versus replacement cost.

In our view, at this time, real estate should garner 15% of the 60-40 medium risk portfolio with 9% allocated to listed real estate and 6% to private. Our U.S. REIT performance is outstanding, and global strategies are seeing increasing interest. Meantime, our private business is gaining momentum with strong investment performance by our non-traded REIT while distribution is expanding through an increasing number of independent and enterprise RIA firms.

What's more, last year, we launched an institutional vehicle that combines a listed real estate strategy with an indexed approach to core private property funds through our partner, IDR. We have commenced fundraising and are excited about this vehicle's prospects. My favorite investment strategy, the one to allocate to and forget about, so to speak, is natural resource equities. These companies produce critical real assets, which are connected to the economy survival, national security and capital investment. Their supply-demand profiles are attractive because of depleting resources in many cases and result in strong pricing power. As Jon articulated, resource equities are in a multiyear return cycle in our view.

Following record flows in global listed infrastructure in 2025, we expect the allocation momentum to continue. The investment case remains compelling, centered around critical themes such as deglobalization and evolving supply chains, digitalization and power demand and decarbonization. We successfully completed a rights offering for our closed-end fund and are excited about our recently launched active ETF.

Interestingly, several of the institutional wins in 2025 include open-end vehicles which provide opportunities for organic growth. Our core preferred strategy has been in outflows in spite of yields normalizing and fixed income allocations being reestablished potentially the result of competition from private credit strategies. Nevertheless, preferreds had very strong returns on '25, and we delivered alpha.

We are prepared for allocations to return to preferred with open-end fund, ETF and CCAP vehicles in both our core and short duration preferred strategies. We are very pleased with the launch of active ETFs, we closed the year with 5 ETFs and total AUM of $378 million, of which our seed capital is $90 million. We are pleased with their trading spreads, performance and flows. Our first launches in February were REITs, preferreds and natural resource equities. In December, we launched short duration preferreds and the global infrastructure strategy, which is more concentrated and opportunistic in nature than our open-end fund.

We are working toward threshold AUM milestones for allocators while continuing to deliver performance. Next milestone is to achieve profitability. Efforts to grow our offshore CCAP vehicles are paying off with record net inflows in 2025 and in '24 of the past 26 quarters. The leading flow CCAB is our real assets multi-strategy a reflection of the inflation environment. These vehicles are seeing flows in over 8 countries, led by the U.K. and South Africa. We expect to achieve profitability in 2026, and the next milestone is to scale AUM.

Turning to our investment initiatives. We have invested significantly in the business the past few years across vehicles and strategies. As these businesses scale, we will add more distribution resources calibrated to organic growth. At this point, we expect that we're reaching the peak of balance sheet funding for new vehicles and strategies.

In closing, Cohen & Steers will celebrate its 40th anniversary in 2026. We'll be celebrating both our evolution from a single strategy manager to a global real asset manager as well as the role of the listed markets. What Martin Cohen and Bob Steers our founders created in 1986 is truly remarkable. First, in terms of pioneering a better way to invest in core real estate through the listed REIT market. Second was to lead the way in evolving the traditional 60-40 portfolio construction to include real asset allocations and the 20% context to enhance returns with better inflation sensitivity and diversification.

Our founders backed their belief in the listed markets by bringing Cohen & Steers public in 2004. It has been a spectacular way for us to organize for our clients, our employees and the business, particularly now with the speed of change in asset management. Part of the 40-year celebration will be to extol the virtues of the listed markets. Too many companies have false impressions about the costs and risks of being public. To us, it's easy. It's like waking up in the morning. and being public provides discipline, governance, brand awareness and resources to continually innovate and improve our business.

Going public also provided a strong balance sheet to support [ seeding ] strategies and funding co-investments. Our active ETF launches and the nontraded REIT are prominent recent examples. We will continue to do our part to promote capital formation in the listed markets in 2026.

Now I will turn the call back to Abby to facilitate Q&A.

[Operator Instructions] And our first question comes from the line of John Dunn with Evercore ISI.

Wanted to ask a little more on the private real estate. It seems like we're seeing signs of some improving demand for that asset class. First of all, are you seeing that? And then also, do you think it can be a more significant contributor in 2026?

Well, I think we're early in the process of investor interest coming back to private real estate, but we're seeing some good early phase signs. The level of interest is increasing, particularly with some cracks showing up in the private credit markets and the vehicles in the wealth channel that have raised a lot of money.

So when you just follow the chain of factors that are starting to drive that private credit is wrestling with interest rates coming down some, some potential credit problems and the fact that there's been a lot of money raised. So the recent articles that have followed the outflows that are coming from those vehicles, and we believe that some of that capital will find its way into the real estate market because the factors driving what's going on in private credit will help the private real estate market, namely, the reduction in the interest rates and the fact that prices have adjusted in the commercial real estate and the capital flows have really slowed.

So as with all these types of transitions, it will take -- it will unfold over a period of time. But we're -- as I said, we're seeing more shoppers, more lookers and we're really well positioned with our nontraded REIT because we believe we have the right investment strategy. We've delivered performance. We're gaining critical mass and we're starting to broaden the number of platforms that we're on. So we're ready in case that transition does follow through.

Got it. And then on the active ETFs, other vehicle launches take time for the market to kind of accept. But because these are based on established strategies, do you think active ETFs can scale more quickly for you guys?

Absolutely. And there are a lot of factors behind that. You named one of them, there are core strategies. They're just delivered in a different vehicle and the market has voted that active ETFs are the way to go for the future. Of course, there's nothing wrong with open-end funds, and there will be a lot of advisers and individual investors that continue to hold them. But at the margin, the new business models are using active ETFs more. So because we've got proven strategies or strategies that close cousins and based on our core strategies. Investors know what they're getting is just happening through a different vehicle.

So I think that, as I said in my remarks, we've got our milestones. We want to get the vehicles as we launch them to scale so that allocators know they can come in and have efficient trading spreads on them. They -- because of the strategies in some cases, they're a little bit different. They'll get comfortable with those differences and the performance that we're delivering. And once we get to critical mass so that model-based users and other allocators are comfortable.

I think they have the potential to scale up very rapidly. And that stands in contrast to some of the private strategies you're seeing in nontraded REITs or interval funds, et cetera, where it is a new allocation for the wealth market and some of the strategies are less tested. And because they have a private element to them, there's more risk for the gatekeepers and they want to see more performance.

So I think it's very different, and it makes us very excited because we can see how for the new capital going into active ETFs, it can help these vehicles scale very rapidly.

John, this is Jon Cheigh. I would just add one thing. I think our REIT is a really good example of that. So this is a CSRE. So as an example, it took us 159 days to get to $50 million of AUM in that ETF. And with each proceeding $50 million, it's -- we're achieving that faster and faster and faster, meaning it took us almost half a year to get the first $50 million at this stage. It's taken us a little bit more than a month to get the last $50 million. So clearly, adoption is accelerating and has continued to accelerate.

And our next question comes from the line of Rodrigo Ferreira with Bank of America.

Can you talk a little bit about the recent progress in the institutional channel? Just what have conversations looked like and maybe contrast it to what I had looked a year ago? And then if you also can maybe expand like based on the conversations you're having right now, where do you think it can go from here?

Sure, Rodrigo. Yes, I think that's one of the critical inflections in our business, and we've been talking about this for the past year or so. And again, like a lot of these transitions, it takes time. But we've now had a very strong pipeline for 2 quarters in a row. This quarter, I'd say that, that pipeline has broadened a little bit. It's deepened a little bit with the number of mandates, the location of the domicile of the allocator and the range of strategies.

So I think it's a combination of our team just being very steadfast and sticking with the process and the program. but also the environment changing, as I said, I think the environment is improved for allocators with more liquidity in the portfolios. It's not totally -- and the free and clear because there's still illiquidity and private allocations.

But with -- for -- going back a couple of years, allocators are reestablishing fixed income allocations, okay. Now with equities, it's created more flexibility. And so -- and then with the backdrop of persistent inflation, we just see more allocators coming back to the strategies we manage. And so it's a better environment. Our teams are very focused and there's disciplined about pursuing the process.

So I would expect as these things go for this to continue to unfold. And as we've talked about also in prior calls, we're working on investing in the institutional side of our business and with adding sales professionals, adding consultants to help us in different [ rickets ]. So becoming more bullish on this segment of the market and can wait to report in future quarters.

Got it. And then maybe for my follow-up. On the [ 1 but ] unfunded pipeline, it seems like the amount that you're winning and funding intra-quarter has been going up. Is that a fair observation? And then also, can you comment on any dynamics driving that?

I think over the longer history, what happens in the 1 and unfunded or the intra-quarter is pretty consistent. So the fact that it's turned up in the recent quarters is just a reflection of the broader dynamic that I described. I don't think there's anything unique to that. But over the longer term, it's been pretty consistent.

[Operator Instructions] And we will take a follow-up question from John Dunn with Evercore ISI.

So just thinking about like regional demand. You mentioned on the wealth management side, where there's demand for the CCAP. But on the institutional side, could you just kind of give us a flavor of any pockets of demand around the world for both advisory and subadvisory.

But again, if you go back a couple of years in a more challenging environment for advisory and it's also been a period when the U.S. has really performed well market-wise. More of the activity got concentrated in the U.S. I would say we're starting to see that expanding now with -- now with the non-U.S. international markets performing better.

A little bit of concern on the geopolitical front and non-U.S. allocators not wanting to be so concentrated in the U.S. But just to give you a flavor for the domiciles of our allocators, it's Belgium, it's Canada, it's Japan, it's Philippines, it's the U.K. So it's starting to expand. And I would hope to see that continue as we are allocating more resources, more sales talent in the non-U.S. markets.

Got it. And then maybe just one more quick one. On the global real estate side, what do you think some of the dynamics that could change that would move that to become more of a tailwind?

Well, I think there -- this is Jon. I think there's 2 factors. So the first is, generally speaking, global real estate is more favored by global institutions. So as we've talked about, there have been lower interest in real estate overall in 2022 to 2023, 2024. So I think as we see a reacceleration in demand for real estate from global institutions. I think generally, they're going to have a preference for global real estate. So that's the first thing.

I think the second thing is that for U.S.-based investors, and so that's both for wealth and institutional, the reality is that international underperformed for the last 10, 11, 12 years, not every year, but a majority of those years. And so it's like the comments I talked about sometimes when something underperforms, people say, oh, there's something structurally wrong. It's never going to perform. And there's elements of that, but the realities are more that growth had slowed in China. That growth was slow in Europe and that places like Europe and Japan had to go through interest rate resetting cycle.

Again, a majority of those factors are more in the rearview mirror. And we've seen last year, international real estate did meaningfully better than U.S. real estate. And that's probably a harbinger of what we're likely to see over the next few years. So I think we're seeing changes in behavior, both from global institutions and thinking about the U.S. versus global as well as U.S. institutions.

And our next question comes from the line of Macrae Sykes with Gabelli.

Just on -- going back to the ETFs, the active ETFs, could you perhaps break down some of the areas of demand that you're seeing? And any surprises there. So retail platforms, RIAs, Institutional?

I wouldn't say there's been too many surprises. But when you see it actually happen, it gives you more conviction about the strategy but we're seeing examples of RIAs who only use ETFs in their practice. So this is money that we never would have seen that. Had we not launched active ETFs. We're seeing existing holders of our open-end funds who are converting their practices to using ETFs. And so there's some swapping going on.

In our business projections for the ETFs, we've factored in some the cannibalization, so to speak. And to the extent that you can measure that, we'd say that it's kind of in line with what we've expected. But -- and if there's money that would be going away for us, we're net-net better off for having launched the active ETF.

So there are model builders who only use ETFs, and so that's a dynamic. So far, the activity has been with the independent RIAs because for the wire houses, we need to go through the process of getting onboarded. We're in that process for several of our ETFs. So as that happens, we're going to be able to see other dimensions to how this transition from open-end funds to ETFs is going to unfold.

And as we talk about these launches, we talk about it in phases, so we've launched 5. We're going to continue to create vehicles that we have all of our core strategies in ETF. But then over time, there's going to be a longer-term exercise of figuring out how to create vehicles for other of our open-end fund AUM which we haven't been able to address with what we currently have. So it's going to be a process that unfolds over multiple years.

And that concludes our question-and-answer session. I will now turn the conference back over to Mr. Joe Harvey for closing remarks.

Well, thank you, Abby, and thank you, everyone, for taking the time to listen to our outlook and look forward to reporting our first quarter in April. See you then.

And ladies and gentlemen, this concludes today's call, and we thank you for your participation. You may now disconnect.

Ladies and gentlemen, thank you for standing by. Welcome to the Cohen & Steers Third Quarter 2025 Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded, Friday, October 17, 2025. I would now like to turn the conference over to Brian Heller, Senior Vice President and Deputy General Counsel of Cohen & Steers. Please go ahead.

Thank you, and welcome to the Cohen & Steers Third Quarter 2025 Earnings Conference Call. Joining me are Joe Harvey, our Chief Executive Officer; Raja Dakkuri, our Chief Financial Officer; and Jon Cheigh, our President and Chief Investment Officer.

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 third quarter earnings release and presentation, our most recent annual report on Form 10-K and our other SEC filings. We assume no duty to update any forward-looking statement. Further, none of our statements constitute an offer to sell with the solicitation of an offer to buy the securities of any fund or other investment vehicles.

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

Thank you, Brian, and good morning, everyone. My remarks today will focus on our as-adjusted results. Yesterday, we reported earnings of $0.81 per share compared to $0.73 sequentially, representing an increase of 11.6% versus Q2. We Key highlights for the quarter include meaningful revenue growth driven by higher AUM, combined with a stable effective fee rate, expense management and discipline with revenue growth outpacing expense growth. Expanded operating margin as compared to both the prior quarter and prior year's quarter, net inflows during the period a multiyear high in our 1 but unfunded pipeline resulting from investment performance and our focus on sales and distribution. And lastly, a strong balance sheet with high levels of liquidity and no leverage enabling us to be opportunistic.

Now back to the detailed results. Revenue for Q3 increased 4.2% from the prior quarter to $141 million. The change in revenue from the prior quarter was driven by higher average AUM, plus an additional day during the period. Our effective fee rate was 59 basis points, in line with the prior quarter. Our operating margin increased meaningfully to 36.1% compared to 33.6% in Q2. As noted, we experienced higher average AUM compared to the prior quarter. In addition, ending AUM increased to $90.9 billion as of Q3. AUM was positively impacted by both market appreciation as well as net inflows. Net inflows into our open-end funds were partially offset by institutional net outflows. And our open-end funds have experienced positive net flows in the last 5 consecutive quarters.

Joe Harvey will provide additional insights regarding our flows and pipeline. Total expenses during Q3 were essentially flat to the prior quarter due to several drivers. G&A expenses decreased meaningfully versus the prior quarter. G&A was lower across areas, including talent acquisition and travel costs. While compensation and benefits increased during the quarter, the change in comp and benefits was below the change in revenue. As a result, our compensation ratio for the quarter was lower. This has driven our year-to-date compensation ratio down to 40.5%. And lastly, on expenses, distribution and service fees were impacted by higher average AUM in our open-end funds. Regarding taxes, our effective rate was lower for the quarter, resulting in our year-to-date rate being 25.1%. Our earnings material presents liquidity at the end of Q3 and prior quarters. Our liquidity totaled $364 million at quarter end which compares positively to $323 million in the prior quarter.

Let me now touch on a few items regarding full year 2025 guidance. With respect to comp and benefits for 2025. We expect our compensation ratio to remain at 40.25% for the full year. We expect full year G&A increase of around 9% compared to full year 2024. This full year G&A increase has been primarily driven by talent acquisition and business development costs incurred in the first half of the year. Also impacting G&A this year have been expenses such as marketing and related costs for our active ETF launch. We remain focused on expense management and will be disciplined but balanced as we see investment opportunities in our business. In 2026, we expect annual G&A changes to moderate from this year's growth level to being in the mid-single-digit percentage range. Lastly, we expect our effective tax rate to remain at 25.1% on an as-adjusted basis. I'll now turn it over to Jon Cheigh, who will discuss investment performance.

Thank you, Raj, and good morning. I'd like to focus on 2 key areas today: our performance scorecard and our investment outlook, particularly why we see emerging tailwinds for listed real assets and infrastructure. Beginning with our performance scorecard. Our shorter-term quarterly performance was slightly weaker with 33% of AUM outperforming with strong performance from our global listed infrastructure strategy offset by weaker U.S. REIT performance. Despite the short-term underperformance, we have maintained a record of consistent long-term outperformance. On a 1-year basis, 93% of our AUM has outperformed its benchmark, while our 3- and 5-year outperformance rates are above 95%. Our 1, 3 and 5-year excess returns of 184 basis points, 227 basis points and 216 basis points, respectively, are near or above our targets. 87% of our open-end fund AUM is rated 4 or 5 star by Morningstar versus 90% in the prior quarter.

In short, we continue to meet our objective of providing long-term alpha for our investors, which has and will continue to create opportunities for new allocations and takeaways from underperforming managers. Last, I want to flag our exceptional performance since launch of our 3 active ETFs, our real estate ETF has outperformed by 217 basis points since inception and is #1 versus its peers. Our preferred ETF has outperformed by 124 basis points and is also #1 versus its peers. While our resource equities ETF has outperformed by 490 basis points. Our early business success with our active ETFs is a team effort, but we know it has to start with great performance. Congrats to our team for delivering.

Transitioning to the market and our outlook, the third quarter was broadly positive for risk assets amid prospects for the Federal Reserve easing, corporate profits continuing to generally meet or exceed expectations and the AI CapEx boom accelerating. While the MAX 7 lagged the broader equity market at the start of the year, the group has surged back since the market lows in April. This continued in the third quarter as a technology sector, for example, outperformed the S&P 500 by more than 500 basis points. So far this year, the drivers of economic growth have been fairly narrow leading to the so-called k-shaped economy, where some segments, notably AI investment and high-end consumers who have been supported by wealth effects are performing well. while other segments appear more sluggish.

Looking ahead, we believe economic growth and thus corporate profits should remain resilient, but the foundations of growth will likely broaden with both monetary and fiscal stimulus. This is also consistent with estimates for earnings growth were forecast for sectors that have seen sluggish growth in 2025, which is real estate, energy and materials accelerate in 2026. In addition to a broadening economy and market we believe 2 interrelated dynamics are also worth highlighting because they inform our investment outlook. First, despite stocks trading at all-time highs, along with lofty valuations and inflation closer to 3% rather than the Federal Reserve stated 2% target. The Fed seems focused on cutting rates at least once more if not place, in 2025, the Fed is focused on slowing job growth and modestly rising unemployment. Notably, an environment just like this of slightly elevated inflation and lower rates is a positive backdrop for real assets.

Under the surface of the [indiscernible] or even the press focus on record gold and surging silver prices, natural resource equities were up nearly 21% year-to-date and our diversified real asset strategy which, as a reminder, focuses on the core 4 real asset classes of real estate, infrastructure, commodities and natural resource equities is up over 13%. We believe these results are telling us that the market is anticipating the reacceleration of non-wage inflation as well as the continued scarcity of many commodities. The supply-demand dynamic for natural resource equities given increasing power demand and underinvestment over the last decade is a very favorable trend for the asset class. Second, we are believers in the significant productivity enhancement potential of AI, which we anticipate will lead to a multiyear period of healthy GDP growth and corporate profits, it will likely also lead to more muted employment growth.

The current balancing act for the Fed between muted job growth and elevated inflation is likely to be a multiyear, if not decade challenge. Again, the risk to higher nonwage inflation remain elevated. We are only in year 2 of what is likely to be a $4 billion to $5 trillion AI-driven investment cycle lasting at least the next 5 years. This view has driven our optimism in areas like electric utilities, levered to accelerate demand growth and companies geared to natural gas production and infrastructure. Within real estate, we favor data center owners of stabilized assets focused on cloud, inference and to a lesser degree, training. Barring a shock that undercuts profitability for the fundamental growth outlook, markets will probably remain patient and optimistic about the longer-term monetization potential of AI. Further, power constraints will be a healthy governor of excess.

But as we look further out, there was a long history of CapEx cycles like this ending in pain and underperformance for the initial CapEx investors. In short, we believe it will be hard to thread the needle to get the hand off in spending to revenue collection. While the technology is likely to be lasting and valuable, we're reluctant to conclude that this time will be different from the narrow set of winners so far. So as stocks trade at record valuations across a range of metrics and provide investors with less diversification because of increased market concentration, we believe real assets can and should help investors diversify, create more resilient portfolios and improve sharp ratios given more attractive valuations and greater inflation sensitivity. With this in mind, the global listed infrastructure sector deserves a meaningful strategic allocation to begin these companies often have inflation-linked pricing built into their revenue models, allowing them to adjust contract prices.

For instance, airport and toll road operators typically have agreements that allow service rate hikes at fixed triggers above the inflation rate. There are mechanisms built into the contract structure for most infrastructure businesses that allow them to pass higher costs whether from inflation or tariffs on to customers. This is one reason why infrastructure offers investors higher inflation sensitivity and stocks or bonds. We wrote a piece 12 months ago, which I believe remains at, the piece was called [indiscernible] reversals of fortune and the opportunity in real assets. Frankly, I have even more conviction that a major market shift is right around the corner today than I did a year ago. elevated inflation, a dovish Fed focused on muted job growth, a significant investment cycle and attractively valued real assets versus historically expensive broader equity markets, creates an extremely compelling case for strategic allocation of listed real assets including infrastructure, natural resources, commodities and real estate.

With our strong investment performance, we believe our combination of alpha and beta will drive continued allocations to our asset classes. With that, let me call -- let me turn the call to Joe.

Thank you, Jon, and good morning. Today, I will review key business trends in the third quarter and then discuss our strategic priorities and some industry topics. For the quarter, our financial results were solid. Flows were positive. Our institutional pipeline built up meaningfully. New strategies and vehicles are gaining traction, and we are making progress on distribution initiatives. On the investment front, while all of our strategies had positive returns, our equity strategy returns except for natural resource equities at 10.7%, lagged the S&P 500 with our largest strategy, U.S. REITs returning 1.4% and ranking ninth of the 11 S&P industry groups. Our preferred stock strategies continued to perform well versus fixed income, reflecting the continued strength of credit and the soundness of the U.S. banking system. If the macro outlook transitions to slower growth with a bias toward lower short rates with sticky inflation our strategies should perform better on a relative basis, particularly with equities at top decile valuations across most metrics.

Since the Fed began easing in September 2024, a we have had 4 or 5 quarters of net inflows averaging $494 million. This contrasts with 9 quarters of outflows, averaging $745 million during the Fed rate tightening period from March 2022 to September 2024. In the third quarter, we had net inflows of $233 million bringing year-to-date inflows to $325 million. Major story lines were net inflows of $768 million into open-end funds and net outflows of $455 million and $82 million from institutional advisory and subadvisory respectively. We had net inflows into all of our strategies except U.S. real estate with the largest flows in global and international real estate, which has seen a positive inflection in terms of market performance and investor interest. Open-end funds, active ETFs and offshore CCAP funds all had net inflows, while model portfolios for wealth had modest net outflows. With respect to institutional advisory, we had 2 account terminations totaling $269 million and net outflows from existing client accounts totaling $186 million.

Regarding the 2 largest outflows, one was due to a European client derisking their U.S. allocation in favor of international and one was due to the restructuring of a retirement plan which I put in the category of old architecture. Our one unfunded pipeline grew substantially to $1.75 billion at quarter end compared with $776 million last quarter and a 3-year average of $900 million. That is the largest pipeline since the fourth quarter of 2021. We were awarded million of new mandates in the quarter and an additional $55 million was one and funded. The largest percentage of the pipeline at 66% is in U.S. REIT strategies with a balanced spread across 5 other strategies. We believe this increased activity is driven by several factors, including more confidence by allocators in the interest rate cycle a bit more flexibility in portfolios due to listed equity outperformance, the search for more inflation-sensitive allocations and reallocations from underperforming managers.

Of the $500 million in known terminations we disclosed last quarter, 72% has been realized. Incremental additions since then have brought the total back to $500 million to $600 million. As the pipeline demonstrates, we believe we have transitioned to a net positive position on the institutional flow front. In addition to the pipeline, last night, we priced an equity rights offering for our closed-end fund Cohen & Steers Infrastructure Fund listed on the New York Stock Exchange under symbol UTF. We raised $353 million in equity, which combined with associated leverage, will provide over $500 million in dry powder to allocate to opportunities in global infrastructure, such as increased power demand and decarbonization, the digital transformation of economies and deglobalization with transforming supply chains. This was the third largest closed-end fund rights offering -- transferable rights offering ever and was a firm-wide team effort. I'd like to give special thanks to Ted Valenti from our product team, who was a closed-end fund champion and led this effort.

UTFs returns have compounded at 9.7% since its inception over 21 years ago. The time line for scaling up our active ETF strategy is a bit ahead of plan. We had $70 million in net inflows into our 3 active ETFs and real estate, preferreds and natural resource equities lifting total AUM, including our seed capital to over $200 million. We are on track to launch 2 more ETFs in the fourth quarter in the preferred stock and listed infrastructure categories. Together with others in the industry, we continue to evaluate the model of ETFs as a share class of an open-end fund. Given the complexities with that structure, we are comfortable with our decision to move forward and establish our market position with these individual launches, more to come.

In private real estate, we continue to make progress on both the capital raising and investment fronts. Our first closed-end drawdown fund, Cohen & Steers Real Estate Opportunities Fund had its final close at the end of September raising $236 million overall. Our nontraded REIT Cohen & Steers Income Opportunities REIT has continued its industry-leading investment performance with a focus on open-air shopping centers. We are targeting the RIA channel for both additional strategic seed capital as well as traditional allocations. We will be launching on a major enterprise RIA firm in a few weeks, and we are in advanced discussions to onboard with the second major distribution partner. With these 2 vehicles, we have begun to record revenue from the private real estate business and are focused on driving this strategic initiative to profitability. One of the hotly debated topics in the asset management industry today is the potential addition of private investments to individual retirement plans, principally through target date funds.

From an industry perspective, it's far from clear how far this will advance in light of the wariness of 401(k) sponsors against potential liability, which has resulted in sterile lineups of core style box strategies in equities and bonds with passive strategies and low fees pervading. I'm a huge advocate for adding diversifiers via listed real asset strategies to these plans. However, that goal can be achieved right now simply by using mutual funds and CITs and listed strategies real estate, infrastructure and diversified real assets. And these products, unlike most private vehicles, come with the added benefits of attractive fees, daily liquidity and market-based, not stale or appraisal-based pricing. Today, about 16% of our mutual FMS assets are from 401(k) plans with the vast majority being listed real estate. We welcome the conversation on adding real assets to 401(k) lineups and believe we can make a strong case that there is an easy way to do it without the illiquidity, opacity and potential liability associated with private allocations.

This year marks the 65th anniversary of the legislation of the REIT structure signed by President Eisenhower. This innovation was genius and has resulted in a -- we're relatively quiet, but the early 1990, you saw a flurry of activity when the public market was called upon to rescue the commercial real estate industry with much needed IPO equity capital that couldn't otherwise be found. This phenomenon fundamentally reshape the landscape, corporatizing the real estate industry, both organizationally and strategically. It's amazing to see how real estate has helped foster the growth of our economy in recent decades, from an industrial age to today's digital age with the largest sectors comprising data centers, cell towers, single and multifamily and seniors housing among many others. Listed REIT returns have vested core private real estate returns by 150 basis points annually from 1998 to 1992, according to a CEM benchmarking study. Amazingly, despite this outperformance, listed allocations in U.S. pension portfolios are just 60 basis points compared with 6% in private real estate.

So you ask, what gives, despite the 150 basis point net of fee performance advantage, allocators continue to choose private real estate extensively due to the higher perceived volatility of listed REITs and the desire to have something unique. While we continue to build our private real estate platform in order to serve clients across the real estate spectrum, we're not satisfied with getting just 10% of the allocation pie for listed. Hence, at the 65-year mile marker, we will continue to make the case for listed REITs to innovate and find ways to help our clients build better portfolios. If this sounds like a full-throated endorsement of the listed markets, it is, it happens there first.

I'll close by thanking Raja Dakkuri for his service to coin his steers and wish him all the best in his new opportunity. We'll be cheery for him as we do with many alumni. Mike Donahue will take on the role of interim CFO; and Brian Meda as Head of FP&A and IR, will continue to facilitate communications with you. Now I will turn the call back to the operator, Julianne, to facilitate Q&A.

[Operator Instructions] Our first question today comes from John Dunn from Evercore ISI.

The demand for U.S. REITs and the wealth management channel has been good lately. Can you maybe compare how that's developed versus past cycles leading up to interest rates? Has it been slower to materialize. Has it been about the same? And then do you think flows can into what the channel can accelerate from where they are in the past few months?

Well, the long story is that historically, returns have tended to be stimulated by interest rate cuts. But that's a pretty one-dimensional way to think about it. You also have to think about what's happening in the economy, fundamentally, the trajectory of growth rates and inflation and such. I would say that the progression of the interest rate cycle this time, which has been about as extreme as we've ever seen it, because of the transition from quantitative easing and leaving 0 interest rates behind has created a different dynamic that real estate pricing had really advanced with -- in the 0 interest rate environment. And as rates have normalized real estate pricing has had to adjust. We think that's mostly occurred.

But in some sectors, it still needs to happen. So there's less of a feeling that we're going to have a V-shaped recovery and in the REIT return cycle. All of that said, we think we're at a good point in that cycle. And that it's likely that, as Jon said, rates are going to continue to come down. And I think that's going to be a continued catalyst for strong REIT performance. In terms of your question, I think we've had very good results in wealth. We're also seeing good activity in the institutional market for U.S. REIT. As I mentioned, 66% of the $1.75 billion pipeline is in U.S. REIT strategies, and that there are a lot of different stories with that. So maybe with that, I'll stop and see if Jon like to add anything.

The only thing I'd add is, like Joe said, it's -- of course, everyone wants to talk about the interest rate cycle, and that's important. But there's also the so-called fundamental cycle, supply and demand. Fundamentals were very, very strong in 2021, but the reality is, is that low interest rates planted the seeds to frankly, too much building in places like industrial and apartments. And so the industry is going through a hangover, if you will, of oversupply of warehouses and apartments. We are going through that process. And so importantly, and I talked about how just overall, we should see the economy and earnings growth begin to broaden out, we expect REIT earnings to accelerate into 2026 and 2027. So again, it's not just a rate story, it is also an earnings and rental growth story.

Got you. And then I guess on the institutional side, you gave us the kind of the profile of the people who are -- the clients who are redeeming. Maybe could you give us a flavor of who's giving you money geographically client-type profile? Any other areas besides U.S. REITs in particular that people are putting money to work?

Well, in the pipeline -- for the pipeline, it's predominantly North America, and it's a wide variety of investors, including retirement plans for individuals, annuity providers. Interestingly, I keep talking about the old architecture structure of vehicles, and we've been -- we've had some losses due to that. One of the big wins recently is where we're being with the beneficiary of a restructuring of annuity-type plans. So the one interesting non-U.S. allocation we've seen recently, I mentioned in my talking points was from a European institution who just is less comfortable with what's going on here in the U.S. and redeemed some of the U.S. position, but they actually added about half of what they redeemed into a European real estate strategy. We also have another interesting in the pipeline of global real estate allocation from a nuclear decommissioning entity in Europe. So I'd say there's really good stories in the pipeline, and they span strategic allocation changes to us continuing to make wins from underperforming peer managers and that continues to be a story both in real estate as well as infrastructure.

[Operator Instructions] Our next question comes from Rodrigo Ferreira from Bank of America.

As rates continue to go down, where do you expect that cash sitting on the sidelines to go into? And I guess, what your strategies do you feel stand to benefit the most from a flows perspective?

Well, as everybody knows, we've had record levels of cash sitting in my funds and T-bills and such. And I would expect as Jon laid out, the big picture that allocations to diversifiers to real asset strategies and price insensitive probably should be going up. So that would point to our real estate strategies, our infrastructure strategies and our multi-strategy real assets portfolios, which are the most inflation sensitive because they include resource equities and commodities along with real estate and infrastructure.

The only other thing I'd add in we would probably expect some movement to go into preferreds, probably our shorter duration and lower duration preferreds where, of course, high tax-advantaged income is an investment objective, but capital preservation is also an investment objective. And so what we found when short rates were high was that cash was yielding more than short and long duration fixed income, in some cases, including preferred. So I think to the extent the yield curve continues to steepen, we should see more of that deposit and money market move into things like short-duration preferreds.

I'd also say that, of course, a lot of money at the margin has gone into private credit funds over the last several years to the extent there are new allocations to the extent of SOFR is coming down with Fed funds. And obviously, total returns for private credit are expected to be compressed. So again, I think both of those incremental movement from private credit into preferreds and out of cash into preferreds are likely places to look.

Got it. And then just for my follow-up, you've given us good visibility on the comp ratio in 2025. How should we think about it in 2026 and longer term? I guess at this moment, like how do you think about the balance of investing in the business versus the opportunity to continue to expand the operating margin.

Yes. Well, I mean, so far this year, we've had decent revenue growth, and that appreciation is the best formula to help the comp ratio and, of course, the associated margin impact. Part of what has been happening toward the end of this year is the timing of some of our hiring is getting pushed out into next year. So I wouldn't extrapolate the trend too much yet. But then we need to focus on kind of what's been happening with some of our new initiatives and the fact that we're beginning to generate revenue from things like private real estate and active ETFs, where the costs associated with those initiatives are in the system. But as everyone knows, we're just still in the launching and buildup phase.

So I'd say the last thing to think about is simply this appreciation dynamic for us relative to the markets more broadly, this year, we've been on the losing side of that. In other words, the S&P 500 has done tremendously well. And that helps drive compensation in the industry, and we need to compete for talent. So that's a dynamic at the margin, too. But overall, we feel like we're in a better position on the comp ratio with how markets performing, how we're performing investment-wise but also with our new initiatives beginning to generate revenues and kick in. On the investment front, it's still a time in the industry where things are changing very fast, and we have a lot of opportunities. A significant amount of the things that we've been working on are kind of done or in the numbers. But we continue to see opportunities and will continue because there are strategic things happening in the industry.

And then we have an optimistic situation from time to time, like with the UTF rights offering. But just to recap some of the investing on corporate infrastructure, we have 4 new headquarter facility or office facilities around the world. So we have plenty of high-quality space to accommodate our growth. We've launched the active ETFs and as we launch more, that will include some additional expenses, but we will scale this up and we expect it to be additive at the margin. As I mentioned, with private real estate, the costs are in place. And so now as we raise assets and generate revenue that will help on the comp ratio front. Elsewhere and investing in terms of seed capital, we still have some more money to put to work with our commitments for our nontraded REIT and with the new ETF launches. But we're getting to the point where some of that capital will be recycled and there will be less needs on the seed front for now.

Elsewhere on investing, I talked at the past couple of quarters about investing in distribution and particularly in the RIA segment of the wealth market, and this is something that we've made a tremendous amount of headway, but as we continue to have success, we'll continue to scale up our efforts on that front. So hopefully, that kind of provides you the waterfront of -- on those topics.

We have no further questions in queue. I'd like to turn the call back over to Joe Harvey for any closing remarks.

Great. Well, thanks, Julian. And -- we look forward to reporting fourth quarter next January. In the meantime, please call us, call Brian Nita with any questions that you have. Thank you.

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