Cohen & Steers, Inc. Q3 FY2025 earnings call

• Raja Dakkuri noted Q3 earnings of $0.81 per share, up 11.6% from Q2, driven by higher AUM, stable fee rate, expense management. Ending AUM at $90.9B, net inflows into open-end funds (5 consecutive quarters positive), but institutional net outflows. - Jon Cheigh discussed investment performance: shorter-term quarterly performance slightly weaker but long-term outperformance strong (93% AUM outperformed 1-year, >95% 3/5-year). Active ETFs performing well: real estate ETF +217bps, preferred ETF +124bps, resource equities ETF +490bps. Outlook: emerging tailwinds for real assets due to Fed easing, AI investment cycle, inflation sensitivity. - Joe Harvey reviewed Q3 business trends: solid financial results, positive flows, institutional pipeline at multiyear high ($1.75B), UTF rights offering raised $353M, active ETFs with $70M net inflows, progress in private real estate (final close of REIT fund, nontraded REIT performance).

Revenue for Q3 increased 4.2% from the prior quarter to $141 million. Ending AUM increased to $90.9 billion as of Q3, positively impacted by market appreciation and net inflows. Open-end funds had positive net flows in the last 5 consecutive quarters but were partially offset by institutional net outflows. Operating margin increased to 36.1% compared to 33.6% in Q2. Average AUM was higher, effective fee rate was 59 basis points (in line with prior quarter).

• Comp ratio to remain at 40.25% in 2025. - Full year 2025 G&A expected to increase ~9% due to talent acquisition, business development, Active ETF launch costs. - 2026 G&A expected to moderate to mid-single-digit growth. - Effective tax rate to remain at 25.1% on an as-adjusted basis. - UTF rights offering provides over $500M dry powder for infrastructure opportunities. - On track to launch 2 more ETFs in Q4 in preferred stock and listed infrastructure categories.

• Forward-looking statements subject to factors in SEC filings, actual outcomes may differ. - Market concentration risks as broader equity markets have record valuations and increased concentration, impacting diversification. - Potential challenges with private investments in retirement plans regarding liability and industry adoption.

Q: The demand for U.S. REITs in 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 -- in the wealth channel can accelerate from where they are in the past few months?

A: Joseph Harvey said historically returns stimulated by rate cuts, but current cycle is extreme with real estate pricing adjusting. Thinks at a good point in cycle, rates likely to continue down, catalyst for strong REIT performance. John Cheigh added it's not just rate story but also earnings and rental growth story.

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

A: Joseph Harvey said allocations to inflation-sensitive real asset strategies should increase, pointing to real estate, infrastructure, multi-strategy real assets. John Cheigh added expected movement to shorter duration preferreds as yield curve steepens, and potential from private credit moving to preferreds.