Cohen & Steers (CNS) Q1 2026 Earnings Transcript

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DATE

Friday, April 17, 2026 at 10 a.m. ET

CALL PARTICIPANTS

• Chief Executive Officer — Joseph Martin Harvey
• President and Chief Investment Officer — Jon Young Cheigh
• Chief Financial Officer — Michael Donohue
• Operator

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TAKEAWAYS

• Compensation Ratio -- 40% for the quarter, which CFO Michael Donohue specified was "in line with the guidance we provided" and is expected to remain unchanged for the rest of 2026.
• Liquidity -- $343 million at quarter-end, down $60 million from the prior period, with the reduction tied to the annual incentive compensation cycle in Q1.
• Effective Tax Rate -- 25.5% on an as-adjusted basis, expected to remain steady throughout 2026 per Donohue's guidance.
• AUM Outperformance -- 86% of assets under management beat benchmarks on a one-year basis; both three- and five-year outperformance rates exceed 97%, per Jon Young Cheigh.
• Morningstar Ratings -- 95% of open-end fund AUM rated 4 or 5 stars, up from 90% last quarter.
• Net Inflows -- $497 million firmwide, marking positive organic growth in six of the past seven quarters.
• Unfunded Pipeline -- $1.7 billion, noted to have "good velocity" with continued fundings and new mandates, according to CEO Joseph Martin Harvey.
• Product-Specific Flow Highlights -- Multi-strategy real asset inflows were $142 million, preferred securities saw $133 million of net inflows, and global listed infrastructure posted $96 million of net inflows, all detailed as best results since at least 2022.
• Open-End Fund Flows -- U.S. open-end funds received over $300 million in net inflows, with at least $100 million each into U.S. real estate, preferred securities, and multi-strategy real asset strategies.
• Active ETF Flows -- $224 million of third-party net flows in the quarter; total five-ETF AUM at $675 million.
• Advisory Channel Flows -- $210 million net inflows, derived from five new mandates totaling $287 million, offset by $176 million in terminations.
• Subadvisory Outflows -- $269 million net outflows, with $164 million from Japan; this was described as consistent with industry-wide pressures in Japanese real estate flows.
• UCITS Flows -- International UCITS achieved net inflows in 25 of the past 27 quarters, recording $62 million in the quarter, notably in the U.K. and South Africa.
• Non-Traded REIT Performance -- 10.6% annualized returns since inception, compared to a 4.3% peer average; current assets total $650 million across 11 properties or contracts.
• Short Duration Preferred Yields -- Open-end vehicles yield just under 6% with durations of 2.5 years and investment-grade credit (BBB-); U.S. taxable investors receive an extra 100 bps of tax-equivalent yield.
• Fee Outlook -- Fee rates described as "stable" for the quarter.
• G&A Expense Guidance -- General and administrative expenses are expected to rise in the mid-single digits for the year versus the prior year, per Donohue.
• Strategic ETF Platform Progress -- First active ETF placed on a major broker-dealer platform, with plans to convert the Future of Energy fund to an ETF midyear and launch an ETF share class.
• Distribution Expansion -- All key hires completed for distribution, including new roles in Japan, a newly created COO for distribution, and RIA sales leadership, with further team additions tied to organic growth.

SUMMARY

Cohen & Steers (NYSE:CNS) delivered operational metrics in line with previously communicated expectations and demonstrated consistent long-term investment performance across strategies. Notable developments include continued organic growth in both core real asset and preferred securities strategies, increased client interest in listed infrastructure allocations, and progress in expanding ETF offerings to new channels. The company maintained strong new business pipeline activity and highlighted stable fee rates alongside incremental expansion of its international and RIA distribution networks.

• Management specifically identified "higher and more volatile inflation" and a "more capital-intensive world" as structural drivers impacting future asset allocation.
• Cheigh stated, “As you will read in our forthcoming capital markets assumptions, Cohen & Steers forecasts consumer inflation to average 3% annually in the U.S. over the next ten 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.”
• CEO Harvey described "increased redemption activity in private credit and an uptick in sales in real estate and infrastructure" occurring in March, identifying a potential inflection in allocation trends.
• Management confirmed recognition of "liquidity provisioning" as essential in private investment vehicles, citing the heightened importance of robust liquidity frameworks.

INDUSTRY GLOSSARY

• UCITS: Undertakings for Collective Investment in Transferable Securities; a regulatory framework of the European Union that creates a harmonized regime for the management and sale of mutual funds across Europe.
• REIT: Real Estate Investment Trust; a company that owns, operates, or finances income-generating real estate and distributes a substantial portion of income to shareholders.
• Non-Traded REIT: A real estate investment trust not listed on public exchanges, typically offering less liquidity but aiming for stable returns through real asset ownership.
• Preferred Securities: Hybrid financial instruments that possess characteristics of both bonds and stocks, offering fixed or floating dividends and priority over common stock in the event of liquidation.
• Active ETF: An exchange-traded fund managed by advisers who actively select and adjust holdings based on market conditions, differing from passive index-tracking ETFs.

Full Conference Call Transcript

Michael Donohue: 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 fees expense was up due to the increased 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 the call over to Jon Young Cheigh who will lead discussion of our business performance.

Jon Young Cheigh: Thank you, Mike, and good morning. Today, I would like to cover three topics: our performance scorecard, our 2026 outlook given 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 one-year basis, 86% of our AUM has outperformed its benchmark, while our three- and five-year outperformance rates are both above 97%. 95% of our open-end fund AUM is rated 4 or 5 stars 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 erased some of those gains, REITs still posted positive absolute performance for the quarter with U.S. and global REITs up about 41%, respectively. Listed infrastructure performance was resilient, up 8% for the quarter.

Businesses such as utilities and midstream energy continue to demonstrate their criticality in a 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 de-escalation that began several weeks ago and will continue, including just this morning, over the course of the coming weeks and months, 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 ten 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 thirty 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 twenty 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 ten years now, we have 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 six years, we have 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 a significant fixed-asset investment boom, greater than what the 2000s 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 will read in our forthcoming capital markets assumptions, Cohen & Steers, Inc. forecasts consumer inflation to average 3% annually in the U.S. over the next ten 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 ten 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, which will keep interest rates and credit spreads wider. Hyperscalers shifting from being highly cash-flow positive to becoming significant incremental issuers of debt is a microcosm of this shift. Given these four major themes, in the next phase, some of last cycle's winners may remain winners, but eras of structural change tend to disrupt market leadership. New faces emerge, incumbents decline, and entirely different parts of the economy take the lead.

To us, the clear beneficiaries 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 a 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.

Joseph Martin Harvey: Thanks, John, and good morning. You may be able to hear a fire alarm in the background. Everything is okay. We are 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 in 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 postwar 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 in 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 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 one-, three-, and five-year relative performance continues to be excellent. We made good progress with our growth initiatives, including active ETFs, offshore UCITS open-end funds, our non-traded REIT, and our recently launched listed private real estate LP for institutions. Flow highlights by investment strategy include multi-strategy real asset inflows totaling $142 million, the best quarter since 2022.

Preferred securities generated $133 million of net inflows for its strongest quarter since 2021, and global listed infrastructure recorded its fifth straight quarter of net inflows totaling $96 million after a record year in 2025. The firmwide net inflows of $497 million represent positive organic growth for six out of the past seven 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 multi-strategy real asset strategies. Our active ETFs continued their momentum with $224 million of third-party net flows in the quarter.

Our international UCITS continued their streak of net inflows in 25 of the past 27 quarters. The UCITS recorded $62 million this quarter across a range of countries, most notably in the U.K. and South Africa. Most popular UCITS 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 $176 million of terminations. Subadvisory experienced $269 million of net outflows in the quarter with $164 million in outflows from Japan.

While we experienced net outflows in Japan subadvisory for the past two 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 subadvisory outflows were due to normal rebalancings 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 hard 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 in 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 strains 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 in 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; 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 ETFs 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 non-traded REIT has 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 turned positive, the category could 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 in wealth portfolios, and believe we offer compelling solutions across the liquidity spectrum for investors.

We 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 REITs to enhance returns without adding too much volatility and employing 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 UCITS 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. realize 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 would not 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 will close with a brief update on distribution, which we have highlighted as a priority for 2026 and 2027. We have 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 Ispas 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. We will now open the call for questions. Julianne, please open the lines for questions.

Operator: Thank you. To withdraw any questions, press 1 again. Our first question comes from John Joseph Dunn from Evercore ISI.

John Joseph Dunn: First on the advisory channel, you mentioned it has been two straight inflow quarters. Do you think you have moved to 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.

Joseph Martin Harvey: Good morning. As we have been talking about for the past three or four quarters, we have seen an improvement in our institutional advisory business as broad conditions have become more favorable, more flexible in investor portfolios, and oriented toward upping allocations to fixed income, with clients continuing to deal with illiquidity in their private parts of the portfolio. 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 $574 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 of funding in the quarter.

So that is good velocity and demonstrates that things have been loosening up in the institutional channel. We also see more, from an intangible perspective, increased activity by clients. It is not an RFP business anymore, but we have seen a couple of large RFPs recently. So combined with the outlook that Jon laid out for our investment strategies, we are optimistic that the institutional advisory channel will continue to perform better and better.

John Joseph Dunn: Got it. Maybe one more on ETFs. Could you give a flavor of how you are finding clients' acceptance of the vehicle? And are you seeing any cannibalization? And then maybe describe the demand of the different buckets in wealth management and any potential for any activity for the institutional channel down the road?

Joseph Martin Harvey: The tone in active ETFs is very good. Most importantly, it starts with delivering strong performance, which we have done. The design of these ETFs is to present our core strategies for distribution considerations. Some of them have slight differences versus our core strategies, but performance has been very good. The so-called use cases make us very bullish on these vehicles. It starts with RIAs, many of whom are converting their businesses to use ETFs exclusively compared with open-end funds.

We are 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 what we are best known for, we have achieved platform placement on a major broker-dealer provider. So I am very bullish on this vehicle. Everything that we are seeing validates the decision to invest in this, and we are going to continue to get all of our core strategies in these vehicles. As it relates to institutional interest, they are going to need to scale up.

We have 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.

John Joseph Dunn: You went through the component pieces of the private real estate effort. Are you seeing rising demand, and since you do not have a lot of legacy assets and you are 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?

Joseph Martin Harvey: I am not sure I understand the question, John, but as it relates to the private real estate business, if you look at private allocations in wealth, real estate has been the laggard and private credit has been the leader. As I mentioned, that inflected in March; we will see if that continues to play out. Infrastructure continues to have good growth. But we believe that, based on our views and others' views on the real estate cycle, you could see a rotation into the real estate strategies. We are seeing a little bit of that, but it is still early.

Our approach to the wealth channel is that we believe investors should have an allocation to both listed and private, and we are trying to coach our clients on how to do that and how to optimize those portfolios. With our non-traded REIT, as I have mentioned, we are at the top of the leaderboard in terms of performance, and as we gain scale, we believe we will have the ability to get platformed on more RIA as well as wirehouse platforms in the future.

John Joseph Dunn: That is what I was driving at. 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 interest in diversifying, and could that drive positive flows for global real estate this year and next?

Joseph Martin Harvey: We have been seeing more of that. Go back a year, year and a half—there were not a lot of flows into global strategies except for global infrastructure. I am 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 have started to see better performance in the international markets broadly, we have seen more interest in and flows into our global real estate strategy. I would expect that to continue. Its magnitude, I cannot say, but I definitely would expect to see our global portfolios have more interest.

Operator: Thank you. Our next question comes from Macrae Sykes from Gabelli Funds.

Macrae Sykes: Great. Good morning, everyone. Joe, I wanted to ask about the historical context of shifts to real estate strategies. As we think about some of the items you have mentioned this morning, when you are 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 adviser interest? Is it returns that have just happened—so outperformance of the asset class—interest rates? If you could dig into some of the things we can watch for in anticipation of more sizable allocations to real estate.

Jon Young Cheigh: Hey, Mac. Well, first of all, of course, we are talking with all of the intermediaries about real estate, but of course, all of our asset classes, including infrastructure, preferreds, and natural resources. Specifically to real estate, it is a combination of investors thinking about the interest rate cycle as well as the fundamental, or supply and demand, cycle. I have said a few times that when you look over the last three or four years, sometimes people would say, “Oh, well, real estate has done poorly because interest rates are higher,” and that is really only half the story. The other reality is that we had too much new supply that got built, so fundamentals weakened.

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 is an interest rate story, but it is also a fundamental story. When investors revisit the story today, what they are looking at is the S&P is a lot more expensive, from a valuation standpoint, than it was three or four years ago. It seems like the earnings growth is beginning to slow, and we all know about the market concentration within the S&P and, in some cases, concerns about the significant amount of CapEx that is occurring. 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, valuations look better. The interest rate adjustment has happened, so being in this 4% to 4.5% range is the new normal as I talked about. But what we are also talking to them about is the reacceleration of earnings or fundamentals. That 2% to 3% growth of REITs will probably be more like 5% or 6% this year, 7% or 8% next year. I would say the fundamental inflection is probably the bigger thing that our investors are focused on.

This goes back to one of the earlier questions on shifts we are seeing on the advisory channel. We have had a lot of conversations with investors for the last few years, and I think they understood the valuation story, but they focused on, “Is today the right day? Why 2024? Why 2025? Why 2026?” Real estate fundamentals are slow moving; they are not going to go from being below average to above average in one quarter. It has taken a couple of years, we have digested some of that excess supply.

That is why I think the story for 2026 and 2027 is about improving fundamentals and stable interest rates with attractive valuations, and that is why we are seeing some of those shifts, whether it is in the public markets but also within the non-traded REIT side. Again, a lot of money went into private credit. As Joe talked about, as that money is looking for the next opportunity, you are beginning to see it in the flow data, but we are certainly starting to hear it—“Wow, real estate.” Other things have gone up; this seems like a place to pivot back to. I think we are early in that pivoting process.

Macrae Sykes: Thank you. I have 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. With your products actually much more rationally priced and compelling, how do you compete with that—where the adviser incentives may be higher elsewhere—even if you offer a more compelling yield perspective and liquidity, but with lower adviser incentives in terms of the sales component?

Joseph Martin Harvey: I am not too familiar with the adviser incentives that you are talking about, but what we think about every morning when we get up is delivering investment performance and managing risk. As it relates to the private real estate strategy, we need to deliver a good total return with a balance between current income and capital appreciation and not take undue risk. As it relates to the fee structure for that vehicle, we have made it very investor-friendly compared with the peer group.

Macrae Sykes: Thank you. Great quarter, guys.

Operator: We have no further questions. I would like to turn the call back over to Joseph Martin Harvey for any closing remarks.

Joseph Martin Harvey: Thank you, Julianne. We look forward to reporting our second quarter results in July. In the meantime, if you have any questions, please reach out to Brian Mida. We will talk to you soon. Thank you.

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

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