Cohen & Steers, Inc. (New York) Q3 FY2026 earnings call

• Strong Inflows and AUM Growth: Generated $1.3 billion in net inflows, the highest level in four and a half years, with the institutional pipeline remaining robust at $1.6 billion.
• Investment Performance: Over the last five years, 97% of AUM has outperformed benchmarks. However, U.S. REITs experienced short-term underperformance over the last year, attributed to positioning in cell tower REITs impacted by slowed carrier spending and fears regarding satellite displacement.
• Real Asset Recovery: Management believes real estate valuations and fundamentals are attractive, citing improved supply/demand dynamics in senior housing, data centers, retail, and industrial sectors. Private real estate values have stabilized, with the NFI Odyssey Index showing seven consecutive quarters of positive total returns.
• Strategic Initiives Progress: Active ETFs surpassed the $1 billion AUM mark, with the largest being the Real Estate strategy ($450 million). The CCAP fund growth initiative reached $2 billion in AUM, supported by record international inflows. The non-traded REIT continues to outperform peers by 760 basis points since inception.
• Organizational Changes: Established a new Chief Operating Officer role for distribution operations to improve efficiency and appointed Matt Pace to lead the global sub-advisory business growth initiative, targeting untapped potential in markets like Korea while acknowledging challenges in Japan.

The company reported adjusted earnings per share of $0.85, an increase from $0.79 in Q1 2026 and $0.73 in Q2 2025. Net income rose 8% quarter-over-quarter to $44 million, driven by a 5% revenue increase to $152 million, which was fueled by higher average assets under management (AUM) from positive market appreciation and net inflows. Operating expenses grew modestly by 3% to $97 million, primarily due to incentive compensation accruals, allowing the operating margin to expand to 36.3%. The firm generated $1.3 billion in net inflows, one of the strongest quarters in recent history, with AUM growing approximately 8% to over $100 billion. Key strategies contributing to flows included U.S. Real Estate ($833 million), Multi-Strategy Real Assets ($380 million), and Global Listed Infrastructure.

• Maintained expense guidance, expecting compensation and benefits expenses to remain approximately 40% of revenues.
• Projected mid-single-digit growth in General & Administrative (G&A) expenses relative to 2025.
• Expected pro forma effective tax rate remains between 25% and 26%.
• No specific forward-looking revenue or EPS targets were provided beyond the maintenance of these structural cost ratios.

• U.S. REIT Underperformance: Short-term alpha erosion in U.S. REITs due to specific sector positioning (cell towers) and macro fears regarding satellite technology.
• Japan Market Headwinds: Recent challenges in the Japanese market due to rising bond yields and strong local equity appetite diverting capital away from alternative investments.
• Private Real Estate Fundraising: Still challenging, down about 5% annualized, though management views this as an opening given the decline in private credit flows.
• Regulatory/Market Risks: Forward-looking statements carry risks related to actual outcomes differing materially due to factors described in SEC filings, including market volatility and geopolitical tensions affecting energy prices.

Q: John Dunn asked about the sustainability of demand for wealth management and institutional channels over the next 12-24 months, specifically regarding global real estate, and sought details on the RFP activity and composition of the unfunded pipeline. / A: Joe Harvey indicated that U.S. real estate remains the primary driver of inflows in both wealth and institutional channels, with performance signaling a market rotation that should attract capital. He noted the $1.6 billion pipeline is sustained by increasing interest in real assets, broadening geographic diversity (including first-time wins in Hong Kong and Korea), and good velocity of fundings and mandate replacements.