Cohen & Steers (CNS) Q3 2026 Earnings Call Transcript

Image source: The Motley Fool.

DATE

Friday, Oct. 16, 2026

CALL PARTICIPANTS

• Head of Financial Planning and Analysis and Investor Relations - Brian Heller
• Chief Executive Officer - Joseph Harvey
• Chief Financial Officer - Amit Muni
• President and Chief Investment Officer - Jon Cheigh

Need a quote from a Motley Fool analyst? Email pr@fool.com

TAKEAWAYS

• Adjusted EPS -- $0.89, representing an increase from $0.85 in the second quarter.
• Assets Under Management -- $95.9 billion at the end of the quarter, decreasing from $100 billion in the second quarter due to negative market movement.
• Net Inflows -- $1.6 billion, marking the fifth consecutive quarter of organic growth and the strongest inflow period since the fourth quarter of 2021.
• Annualized Organic Growth -- more than 6% for the quarter, driven by broad-based growth across wealth and institutional channels.
• Average AUM -- $101 billion, increasing from the prior quarter despite late-period market volatility.
• Adjusted Net Income -- $46.5 million, reflecting an 11% increase from the third quarter of 2025.
• Adjusted Operating Margin -- 37.2%, benefiting from higher revenues and controlled expenses.
• Revenue -- $156 million, rising 3% sequentially as higher average assets under management offset the market decline experienced in September.
• Operating Expenses -- $98 million, up 2% from the second quarter due primarily to higher incentive compensation accruals.
• Institutional Pipeline -- $1.9 billion, increasing from $1.6 billion in the second quarter and representing the second largest pipeline in company history.
• Investment Performance -- 74% of assets under management outperformed in the third quarter, an improvement from 40% in the second quarter.
• US Real Estate Outperformance -- 86% of assets outperformed benchmarks, increasing from 15% in the second quarter.
• Global Real Estate Performance -- 67% of assets outperformed, representing a turnaround from 2% in the previous quarter.
• Infrastructure Performance -- 100% of strategy assets outperformed benchmarks over the one-year period.
• Wealth Channel Inflows -- $1.3 billion, with balanced growth across mutual funds, active ETFs, and SICAVs.
• Active ETF Assets -- $1.3 billion, growing 22% during the quarter as advisors increasingly adopt tax-efficient investment vehicles.
• Institutional Notified Outflows -- approximately $400 million, resulting from one client eliminating an asset class and another undergoing an acquisition.
• Multi-Strategy Real Asset Inflows -- nearly $900 million year to date, reflecting increased investor demand for inflation protection and diversification.
• Compensation and Benefits Guidance -- approximately 40% of revenues for the full year.
• Effective Tax Rate Guidance -- 25% to 26% on a pro forma basis.
• CNSREIT Portfolio -- $900 million in total assets with approximately $400 million in equity value.
• Pipeline New Mandates -- over $1.1 billion in new mandates were awarded during the quarter, reloading the pipeline after $700 million in fundings.

SUMMARY

Cohen & Steers, Inc. (NYSE:CNS) reported growth in net inflows and a significant expansion of its institutional pipeline despite market volatility driven by rising interest rates. Management highlighted the continued scaling of active ETFs and the SICAV business as core components of its global distribution strategy. Strategic discussions focused on the structural shift toward real assets as portfolio diversifiers and the relative fundamental strength in listed real estate and infrastructure sectors. The company emphasized its ability to generate operating leverage while investing in distribution and marketing to capture demand for alternative income solutions.

• Joseph Harvey stated, "Growth was broad based across strategies, vehicles, and distribution channels, and our institutional pipeline strengthened to 1.9 billion as it continued to replenish."
• Management launched the Cohen & Steers Real Assets Active ETF (CSRA) in August 2026, marking the firm's seventh active ETF and expanding its multi-strategy real assets offerings.
• Jon Cheigh noted that approximately half of the recent move in yields reflects resilient economic growth while the other half reflects higher term premiums associated with fiscal issues and global factors.
• The company reported that institutional allocators are increasingly combining listed and private infrastructure to manage liquidity needs and capture alpha across investment cycles.
• The SICAV business reached $2.1 billion in assets, with management identifying South Africa and Asia as key markets for future wealth-channel investment and distribution expansion.
• Joseph Harvey indicated that the CNSREIT strategy is approaching a three-year track record in Jan. 2027, which management expects will facilitate onboarding at larger wirehouse distributors.

INDUSTRY GLOSSARY

• Alpha: The excess return of an investment relative to the return of a benchmark index.
• AUM: Assets under management, representing the total market value of investments managed by a firm on behalf of clients.
• Basis Point: A unit of measure equal to one one-hundredth of one percentage point (0.01%).
• EBITDA: Earnings before interest, taxes, depreciation, and amortization, used to evaluate operating performance.
• ETF: Exchange-traded fund, a type of investment fund traded on stock exchanges.
• ODCE: An index tracking the performance of open-end diversified core equity real estate funds.
• REIT: Real Estate Investment Trust, a company that owns, operates, or finances income-producing real estate.
• SICAV: Société d'Investissement à Capital Variable, an open-ended investment fund structure common in Europe and other international markets.
• TIPS: Treasury Inflation-Protected Securities, U.S. government bonds indexed to inflation.

Full Conference Call Transcript

Operator: And Ladies and gentlemen, thank you for standing by. Welcome to the Cohen and Steers Third Quarter 26 Earnings Call. During the presentation, all participants will be in a listen only mode. Afterwards, we will conduct a question and answer session. At that time, if you have a question, please press the star followed by 1 on your telephone. If at any time, As a reminder, this conference is being recorded Friday, 10/16/2026. I would now like to turn the conference over to Brian Heller, head of financial planning and analysis and investor relations of Cohen & Steers. Please go ahead.

Robert Klemens: Thank you, and welcome to the Cohen and Steers third quarter 26 Conference Call. Joining me are Joseph Harvey, our Chief Executive Officer; Amit Muni, our Chief financial officer and Jon Cheigh, our president and Chief Investment Officer. Before we begin, I want to remind you that statements made during today's call may include forward looking statements. Actual results may differ materially because of risks and uncertainties. Including those described in today's earnings release and presentation, our most recent annual report on Form 10-K and in our other SEC filings. We assume no obligation to update any forward looking statement. Nothing on this call constitutes an offer or solicitation with respect to any fund or other investment vehicles.

We will also refer to non GAAP financial measures, also referred to as adjusted financial measures. Reconciliations to the comparable GAAP financial measures are included in today's earnings release and presentation. To the extent reasonably available on the Investor Relations section of our website at www.cohenandsteers.com. Before I turn the call over to Amit, I want to note that we have made several enhancements to how we categorize our funds this quarter, and have posted our historical results in this same format to the investor relations section of our website. And with that, I will turn the call over to Amit.

Amit Muni: Thank you, Brian, and good morning, everyone. On today's call, I will begin with a review of our operating and financial highlights for the quarter, Jon will then discuss investment performance and the market environment, followed by Jon, who will close with our strategic growth priorities, and the momentum we are seeing across the business. We will then open the call for your questions. I will focus my remarks on our adjusted results. Turning to the highlights for the quarter. We reported adjusted earnings per share of $0.89, up from $0.85 in the second quarter.

Ended the quarter with assets under management of 95.9 billion down from $100 billion last quarter as negative market movement offset the strong flows generated during the period. But nevertheless, our average AUM increased to $101 billion in the quarter. We generated 1.6 billion of net inflows, representing our fifth consecutive quarter of organic growth and our strongest flow period since the fourth quarter of 21. Our institutional pipeline also increased to 1.9 billion from $1.6 billion last quarter. Also continue to make advancements in our strategic growth initiatives while maintaining consistent long term investment performance across our platform. Turning to flows on the next slide.

Our organic growth momentum continued to strengthen with more than 6% annualized organic growth in the quarter. Importantly, the breadth of the growth is encouraging. Wealth continued to lead with strong flows across mutual funds, SICAVs, and ETFs, while institutional flows also turned modestly positive. At the strategy level, every investment strategy generated positive net inflows led by real estate, multi-strategy real assets, and preferred securities. Taken together, these results demonstrate increasingly broad based growth across strategies, vehicles, and distribution channels. Turning to the next slide. I will review our financial performance. Net income was 46.5 million for the quarter, an increase of 6% from the second quarter and 11% from the third quarter of last year.

Our operating margin expanded to 37.2% reflecting the benefit of higher revenues and controlled expenses demonstrating the operating leverage inherent in our business model. Turning to the next slide, I will review the quarter over quarter changes in revenues and expenses. Revenues increased 3% to a $156 million driven by higher average AUM, reflecting the continued strength in the business despite the negative market movement experienced mostly in September. Total operating expenses increased 2% to 98 million primarily due to higher incentive compensation accruals associated with increased revenues and lower G&A related costs.

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 25% to 26%. We remain focused on translating the momentum we are experiencing in the business into operating leverage over time. Thank you, and I will turn the call over to John.

Jon Cheigh: Thank you, Amit, and good morning. Today, I would like to cover 3 topics: our performance scorecard, and the improving trend the impact of higher interest rates, and the positioning of our asset classes in the current environment. Beginning with our performance scorecard, 74% of our AUM outperformed in the third quarter. Up from 40% in the second quarter over the last 1, 3, and 5 years, 57%, 97%, and 98% of our AUM, respectively, has outperformed. Last quarter, I addressed our 1-year result as an outlier driven by US REITs and noted that we expected a reversion to our historical norm of 200 basis points of alpha.

While 1 quarter does not make a trend, we are encouraged by the early evidence. 86% of our US real estate AUM outperformed this quarter. Up from 15% last quarter. Global real estate saw a similar turnaround. From 2% outperforming to 67%. And while it is early, fourth quarter momentum is encouraging, and we believe our REIT performance is back on trend. Notably, our infrastructure and preferred securities teams continue to deliver with 100%, 97% of AUM respectively outperforming over the last year. Turning to the market. Higher interest rates have weighed on our asset classes. REITs, listed infrastructure, and preferred securities have declined from their summer highs.

The primary driver has been the sharp rise in long-term treasury yields now above 5%. Despite all the attention being given to oil, this has not been an inflation story. it is been a real yield story. Nearly all of the roughly 100-basis-point rise in the 10-year this year has come from real yields. While inflation expectations have changed very marginally. In our view, roughly half of the most recent move in yields reflects resilient economic growth and the other half reflects higher term premium associated with fiscal issues, debt supply, and global factors. That distinction matters.

Stronger growth supports the higher earnings of the companies we invest in, while higher term premium affects the valuation of essentially all asset classes, not just ours. So while higher rates have created near term pressure, we do not believe they have changed the relative attractiveness of our asset classes. it is also important to put the current rate environment in historical perspective higher rates do not mean poor returns for real assets. For example, REITs have generated positive returns in 4 of the last 5 hiking Fed hiking cycles. The 2022, 2023 hiking cycle was clearly different. With REITs returning -11% annualized But in the 2004 and 2016 hiking cycles, annualized returns were a +24%, 8% respectively.

The lesson is that the level of interest rates alone does not determine returns. What matters is the pace of change relative to market expectations along with the underlying fundamental trajectory and valuations. And that leads to what I think is the most important point about today's environment. Unlike 2022, 2023, we are entering this period with improving fundamentals. In listed real estate, we see an early to mid cycle recovery. Reduced new supply, and growing demand should support growth above historical norms. And this is not just a real estate story. Real assets broadly are benefiting from significant secular investment needs which are driving earnings growth.

We expect 9% EBITDA growth for global listed infrastructure, versus a historical average of 6% to 7%. And 20% earnings growth for natural resource equities versus a historical average of 6% to 8% Rates matter. But valuations and fundamentals matter more. And today, we believe both are increasingly supportive of our asset classes. So how should investors think about this environment and positioning their portfolios? We believe the investment regime has changed from the 1 that prevailed for much of the past 15 years. Investors we speak with are increasingly seeking diversifiers. Investors now have attractive opportunities in fixed income, but they also face greater inflation risk. Greater equity market concentration, an acute need for diversification.

That, in turn, makes the case for a barbelled approach. On the 1 side, preferred securities can provide attractive income, and real returns. On the other side, real estate, infrastructure, and natural resource equities can provide growth, diversification, and inflation protection. So we see distinct opportunities across our strategies. For investors seeking income, preferred securities, for investors looking to participate in the real estate recovery our REIT strategies offer accelerating fundamentals. For investors seeking secular growth and diversification listed infrastructure and natural resource companies are benefiting from powerful global tailwinds such as commodity undersupply, reindustrialization, and AI infrastructure. For investors seeking a broad real asset solution, our multi-strategy real assets portfolio brings these exposures together in a diversified allocation.

We believe our asset classes offer compelling solutions for delivering income inflation protection, diversification, and liquidity. All while allowing investors to reduce exposure to the more concentrated and more expensively valued segments of the market. With that, let me turn the call over to Jon.

Joseph Harvey: Thank you, Jon, and good morning. Today, I will review key business trends, report on our growth initiatives, and discuss broadening interest in our listed infrastructure and multi-strategy real assets strategies. Our third quarter results provide further evidence our growth strategy continues to gain traction. Key indicators include strong 3- and 5-year investment performance, robust net inflows, and a sizable won and unfunded pipeline. We generated 1.6 billion of net inflows marking our fifth consecutive positive quarter and our strongest net flow quarter since the fourth quarter of 21. Growth was broad based across strategies, vehicles, and distribution channels, and our institutional pipeline strengthened to 1.9 billion as it continued to replenish.

We experienced modest quarterly asset appreciation driven primarily by market wide reaction to rising bond yields. Overall, our results demonstrate the strength and diversity of our business. Our wealth channel continues to drive organic growth with 1.3 billion of net inflows this quarter. Growth was balanced across mutual funds, active ETFs, and SICAVs, demonstrating alignment between our vehicle lineups and client investment models. Along those lines, we launched our 7th active ETF in August, Cohen & Steers Real Assets Active ETF, symbol CSRA. This ETF is an actively managed multi-strategy real assets portfolio we believe offers inflation sensitivity, long term total returns, and diversification across real asset sectors within a single allocation.

Believe this is an attractive strategy for investors who want a turnkey allocation to real assets. In addition, we see compelling use cases in both the retirement and health care markets. Adoption of our active ETFs is accelerating with growth of 22% during the quarter to 1.3 billion. Industry wide, US ETFs both active and passive, have taken in a record 1.5 trillion so far this year. Which beats the full year record set in 2025. ETFs are becoming the preferred vehicle for advisers and individuals we believe our active ETF strategies offer compelling solutions. With tax efficiency, attractive expense ratios, intraday trading and transparency, and a track record of alpha generation that passive cannot offer.

We continue to review options for the next phase of our ETF strategy which may include more core strategy launches, ETFs as a share class for existing funds, and potential international vehicles. Preferred securities are an example of strategy diversification compared with real assets in our business. This strategy had its third consecutive quarter of net inflows with low duration preferreds being the standout. This is a compelling environment for this strategy as advisers look for income without taking on meaningful rate risk. With yields near 6%, we believe it is 1 of the best risk adjusted income opportunities in fixed income debt today.

Especially as advisers are looking for alternatives to fixed income that is underperformed such as municipal bonds. Institutional flows were modestly positive with 49 million in the quarter. This includes strong net inflows from new advisory subadvisory mandates, which more than offset a 1-time portfolio reallocation by a Japanese sub advisory client in real estate. We are seeing continued progress with our institutional tactical real estate LP fund as it continues to contribute to our won and unfunded pipeline. We are also seeing success in our sub advisory ex Japan business with the funding of several new mandates driven primarily by takeaways from peers.

In global sub advisory, we intend to build on our momentum in The US Canada, New Zealand, and Australia. Focusing as well on opportunities in other countries and look forward to reporting on those initiatives in the future. Looking ahead, we have been notified of approximately 400 million in partial account rebalancing outflows from 2 institutional clients, which are not related to investment performance. 1 client is eliminating an asset class and the other is being acquired and changing portfolio strategy for a portion of its account. While institutional flows can be uneven from quarter to quarter, the sustaining replenishment of our pipeline gives us confidence in the direction of the business.

Our won and unfunded pipeline grew to 1.9 billion in the third quarter, the second largest ever. Velocity of the pipe pipeline continues with 700 million of fundings reloaded with over 1.1 billion of new mandates awarded within the quarter. Similar to our flows, continue to see diversification on our pipeline with 20% in each of real estate, listed infrastructure, multi-strategy real assets, as well as diversification by region with 56% North America, 22% in EMEA, and 16% in APAC. We continue to invest in distribution, 1 example is our SICAV business where we are seeing strong results and we want to invest more as wealth markets develop in countries such as South Africa, and regions like Asia.

We are pleased to welcome Eric Schneeberger to Cohen & Steers as our new chief marketing officer. Eric has many years of experience leading and building award winning marketing teams. We look forward to Eric elevating our global marketing efforts and expanding our brand and media strategies digital innovation, and client engagement. Finally, I want to shine a spotlight on 2 strategies where allocator demand is broadening. Listed infrastructure is increasingly becoming recognized as a dedicated strategic allocation and portfolios. While early allocators favored private infrastructure, they are realizing the benefits of allocating to both listed and private together. Especially as liquidity has become a growing need in institutional portfolios.

While replacing and expanding aging infrastructure has been an investment theme for some time, capital investment has reemerged at the forefront of the growth of AI, reindustrialization, and supply chain trends. Giving the asset class renewed and widespread appeal. These trends have contributed to our seventh straight quarter of net inflows in the strategy. As allocators look at their real assets allocations holistically, infrastructure has been gaining portfolio share. We have been a direct beneficiary and right now, picking any time period 1, 3, 5, 10 years, and since inception going back to 2004, our performance has never looked better.

We are seeing interest in newer markets such as Europe and South Africa, with growing interest in Asia, including South Korea. We believe our 22 years of consistently generating alpha with our team of dedicated specialists makes us a natural partner. Investors are likewise turning to our multi-strategy real asset solutions with almost 900 million of year to date inflows. Our multi-strategy portfolios are compelling solution to diversification, offering equity like return potential, with less of the volatility of any single asset class plus meaningful inflation protection. And the sustained inflationary environment is motivating investors to make this allocation more strategic.

Furthermore, we believe we have moved into an era of scarcity and that we are still early in the large build out of supply chains and physical assets. Illustrate the characteristics of the real asset blend, index would have delivered annualized returns of 11% during periods of inflation since 2 thousand. Compared with 3.1% for global equities and 2.7% for tips. With the S&P more concentrated at 40% in its top-10 stocks, than any other point in modern history, investors are seeking solutions that have a low correlation to global equities. This is why I believe that all 401(k) plans should have a multi-strategy real assets fund for participants.

Our open end mutual fund has reached 2.1 billion in AUM, up from 150 million in 2020. Taken together, these trends support our view that real assets are becoming a core allocation in portfolios, and we are well positioned to capture that demand. To summarize, we believe our third quarter results demonstrate that our business strategy is working. Organic growth in our strategies has returned. Our investment teams are strong. Our range of vehicles is opening new avenues for growth. And our investments in distribution are extending our reach with clients around the world. We believe Cohen and Steers is well positioned to build on this momentum and deliver sustainable long term growth.

Thank you, and we will now take your questions. Julianne, can you open up the lines for questions?

Operator: We will now begin the question and answer session. Please limit yourself to 1 question and 1 follow-up. If you would like to ask a question, please press *1 to raise your hand. To withdraw your question, press *1 again. Ask that you please pick up your handset when asking a question to follow to allow for optimal sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. And our first question comes from, John Dunn from Evercore ISI.

John Dunn: Thanks. You know, you framed the broader picture in prepared remarks, so maybe to drill down a little more, you know, with rates likely moving higher. What gives you confidence demand for real estate? can sustain? Maybe give a flavor of the conversations you are having with FAs and then in the wealth channel and with institutional investors and consultants. Any differences between, like, the 2 sides?

Joseph Harvey: I will ask Jon Cheigh to take the question on real estate, and I will respond to the question on wealth versus institute. Institutional markets.

Jon Cheigh: Hey, Jon. Thanks for your question. You know, I would say that we have not really seen any kind of notable change in tone in how the investors were talking to are looking at the real estate opportunity. I think for most investors, you know, real estate's been in the so called doghouse, if you will, you know, over the course of 22, 23, 24. So the idea that there is very good value here is very appreciated. The question has just been about the timing of the recovery and what that recovery looks like. And as I said, you know, we are seeing improving rental growth And so that, improvement in fundamentals is giving more investors a greater confidence.

So, you know, that is why we are seeing the pipeline continuing to grow. You know, that being said, you know, the winners and losers within real estate, and by that, I mean, the kinds of sectors that have been winners or losers, you know, they are gonna be different. And so it is not just about the beta or exposure to real estate. We have talked for the last couple calls about how strong for example, our non traded REIT, performance has been since inception and since this year. And that is because it is positioned very differently, frankly, than, its peers that have been out in the market.

And so, again, we think that is gonna create an opportunity that as investor interest in real estate continues to grow, there will also be a greater realization that it is not just getting the beta. it is about picking the new winners, for this new cycle.

Joseph Harvey: Then, John, just to talk a little bit about institutional and wealth. You know, on the institutional side, you know, the process is 1 where you know, allocations are deliberated over and made over say, a 9-month time period. So you cannot really look at the on the run, you know, data points to really see what that market is doing. But as we have been talking about in these calls, are won and unfunded pipeline has now been very strong for about 5 quarters and as I mentioned, We have hit a second, you know, best all time number this quarter. Importantly, it is broader than it has been historically. Across our investment strategies.

And in terms of the pace of, you know, prospect and client activity that we are conducting at. it is. You know, nothing has really changed as it relates to the changes in the macro over the past couple of months. And so when we look at you know, the searches that we are in and the so-called backlog pipeline, you know, we feel good about you know, the increased interest in, our strategies. As it relates to, the wealth channel, of course, with our vehicles, our open end, you know, daily vehicles, we can get more real time views on, you know, investor sentiment.

And, you know, I think that the historical view of retail is very coincident with the market. But, you know, we are increasingly spending our time with advisers who are more sophisticated allocators. They are. They follow more like an endowment model. So you know, you know, I would expect to see less of the coincident, type of flow activity in you know, get a real good read on, you know you know, how investors are thinking. If you look at our average daily flows over you know, the period for this quarter, July, August, September, you know, the. Our average daily flows increased in each of those of those months.

So, as far as we can see today, no real impact on flow activity from the changes in the macro environment recently.

John Dunn: Got it. And then, you know, thinking about some of the newer growth areas, could you give a little more detail on the SICAV lineup? Like where the demand preferences are? You mentioned a couple of regions, but are there any others to highlight you know, stuff like relative fee rates and any differences you are experiencing versus you what you have seen for a long time in the U.S. wealth channel?

Joseph Harvey: Well, you know, our offshore mutual funds, the SICAVs, you know, we have had a really strong quarter inflows. It was our second best quarter and that followed our best quarter in the second quarter. So I am very excited about this business. We are at about 2.1 billion in overall AUM. So it is not huge, but I think it has a very strong potential. And, you know, we are seeing good activity in the U.K. As I have mentioned a couple times, we are seeing good activity in South Africa. We are seeing increasing activity in Asia.

So you know, 1 of the things that we are seeing in a couple of these markets is the development of the wealth business, the advisory business. And South Africa is a good example of that. So, as we interact with these advisers, you can just kind of tell that their businesses are developing and they are, you know, being educated on, more asset classes globally. So it is a great opportunity for us to, educate on real assets. And a country like South Africa, they have appreciation for things like nat. Natural resources. So we are having some success there.

Asia is the most rapidly growing wealth market in the world. it is much bigger and a little more complicated, but we are seeing kind of some similar you activity as it relates to the early development of the wealth of the wealth market. So, you know, taking a step back, based on this success, we are going to invest more in this in this area. You know, by virtue of you know, our sales professionals and data to know where to go. And so it is it is a very it is a very exciting know, part of our business. Thank you.

Operator: Our next question comes from Craig Siegenthaler from Bank of America. Please go ahead. Your line is open.

Analyst: Morning. This is Ivory on for Craig. On infrastructure, it had another quarter of strong inflows and you stated that listed infra is becoming a dedicated strategic allocation. Are you seeing allocators move from private infra to listed because of liquidity or slow distribution? And are you considering a semi liquid infra product for the wealth channel as you kind of did with CNSREIT?

Joseph Harvey: So, you know, I would say that the growing interest in listed infrastructure is not coming at the expense of private infrastructure. Private infrastructure has been 1 of the largest growth areas of institutional allocation So it does not look like the, you know, the allocations to private infrastructure are you know, the rates of acceleration are leveling off. But I think it is just a natural evolution just as we have seen in real estate where you know, investors recognize that you put the 2 together listed in private and you can end up with better results.

And that comes, you know, from many dimensions whether it is the sectors you can get allocated to, the management teams that you can get in each sector. And the fact that the return cycles are out of phase so that allocators who have the capability to move between the list and private markets can generate alpha from those things. So I think that infrastructure is still in a bull market, and it is gonna continue to be based on the things that John and I talked about, you know, with respect to the capital investment cycle pertaining to AI and power. and such.

As it relates to the wealth market, it is it is it is been a bull market in the vehicles for private infrastructure. We have something that is in the lab but we are not ready to talk about it. But as it relates to, you know, private strategies in the wealth channel, we are we are very focused on our non traded REIT CNSREIT. Got it.

Analyst: Thank you. And just as a follow-up, you said data centers are 1 of the booming parts of real estate, and your deck now puts listed infrastructure at the forefront of AI growth. How much of the recent performance and pipeline in your REIT and infra strategies depends specifically on the AI and data center demand. And if AI CapEx were to slow, how exposed would the flows be across the 2?

Jon Cheigh: Sure. I will take that. So, within our US real estate strategy, just roughly speaking, you know, data centers are about, you know, 10% of our portfolio. So they have been beneficiaries of, obviously, the significant demand, for data centers. But most of that has come from existing assets as opposed to new development. So is there some exposure? I would say, yes. Certainly, at the margin, there is some exposure. But this roughly 10% of the portfolio is not very frontier or development.

On the infrastructure side, there is less direct exposure, but there is indirect exposure in the sense that, let's just say, roughly 1/3 of our infrastructure business is in the utility space where, historically, earnings for utilities have been, call it 4% or so. And there is been, a step up in that growth rate more in the 7% to 8% range. A part of that is because the need for, investment for, you know, power generation of which, of course, AI and data centers are a big, but definitely not the only part of that. So, you know, look, there are some, exposure there, but it is it is not direct.

And, you know, as we look out over the next, you know, 3, 4, 5 years or so. In both cases, we would say data centers power generator. You know, this is a so-called infrastructure layer, if you will. We do not believe there is excess capacity of compute. And so know, to the extent certain stocks sell off, because of a concern about the future trajectory of growth slowing. I mean, that is not really gonna have an impact on this infrastructure layer. It might change the long term growth, but it is certainly not having any kind of a short term direct impact.

So, if anything, we think real estate and infrastructure are a really good risk reward way to play AI and the need for compute. Obviously, there is other ways to, invest in those themes that can be much higher reward. But as we have seen over the last few days, also much higher risk because of the operating leverage or financial leverage embedded in some of those other noninfrastructure, nonreal estate business models. Thank you.

Operator: For any additional questions please press star followed by 1 on your telephone keypad. Our next question comes from John Dunn from Evercore ISI. Please go ahead. Your line is open.

John Dunn: Private real estate. You know, it seems to be gaining some traction lately. When do you think we could see an acceleration in organic growth there? And then is it seen that there are advantages to being a newer platform And does that resonate with investors like when you are competing against the legacy brands? In that space?

Operator: John, I missed the very beginning of your question, but I think I know what it is.

Joseph Harvey: So let me let me start, and then you can, you know, follow-up. But, you know, as it relates to CNSREIT, our non traded you know, real estate vehicle. We continue to have among the best performance in the in the peer group. Since our inception, it is the number 1 performing non traded REIT, and that is based on our investment team nailing it as it relates to an investment thesis around OpenAir shopping centers, both grocery-anchored shopping centers and power centers. And so we have continued to work toward getting critical mass The portfolio is about 900 million in total assets with equity you know, value of about 400 million.

So we are getting to the point size wise and you know, track record wise, i.e., we are going to hit our 3-year track record in January where it is now more viable to get platformed at larger distributors. We have been very focused on working with, you know, endowment type RIA firms and that is where the majority of our capital has been raised. You know, in terms of the onboarding process at the wirehouses, real estate is still a less favored strategy compared with infrastructure, and private credit. So we are going to have to, you know, get further into the cycle to see a broader take up from the largest distributors.

That said, in the RIA channel, these allocators get the investment thesis. They have enjoyed the returns that we have delivered. And, as our team starts to think about you know, what is next on the investing front, we think we are going to be able to sustain the type of relative performance that we have delivered in that Cohen & Steers income Opportunities REIT. So we are we are very excited about the whole initiative. The investment you know, landscape is gonna get even better for us and we. We have been talking about these calls and in that in other places.

I think with about your second question, which is a lot of capital has gone into certain segments of the real estate industry namely apartments and industrial. And you know, the current rate environment is gonna pressure the return cycle of those strategies. So we are not affected by that because we have not been allocating to them. However, in 2 years' time, it may present a great investment opportunity for our private team. So we are excited about where we are at in the real estate cycle and what the rate environment is doing to private markets that, you know, maybe got a little excessive and are going through their downcycle.

But that is that is the Cohen & Steers brand. We are about innovating and innovating around performance. So, we are we are we are we are we are ready.

John Dunn: Got it. And then if I could sneak 1 on the pipeline. You talked about 9 months to kind of win the mandate. What about the timing of converting the pipeline? And you mentioned it is broadening, maybe just a flavor of the composition of what is in it?

Joseph Harvey: Well, the life cycle in terms of getting from the pipeline to fund is roughly about 4 months. In terms of, know, getting to the won point, you know, that could. That can be it can be very short or it can be very long in terms of in terms of years. So the composition of it, just like last quarter, is very diverse. And so that is that is very exciting. it is it is across real estate. Both US, real estate and global real estate. And that is something that is changed a little bit. You know, there was a period of time amidst peak, US exceptionalism where, you know, global allocations were not very prevalent.

You know, we have seen more global allocations in real estate. So it is real estate. it is infrastructure. it is multi-strategy real assets, and I would say that is gone up in the pipeline and flows. And, again, it is if 3 years ago, people were saying, yeah, I see it. inflation's ticked up. But I think that is transitory. it is gonna come back down. And they did not think about real assets as a strategic allocation, I think by now, inflation is so embedded in our economy and the psyche. So inflation sensitive allocations have to become strategic in investor portfolios.

So and then, of course, you know, other, you know, real estate strategies that are institutional listed private vehicle that I referenced, the tactical real estate fund is a part of the pipeline. We are seeing a lot of interest in that strategy. From institutions who own the core property funds, the so called ODCE funds. And the tactical real estate fund is a solution for them to get a better allocation in terms of having a better core real estate allocation by virtue of returns and diversity and liquidity. So the composition of the pipeline, looks very good. Thank you.

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

Joseph Harvey: Well, thank you, Julianne. I said, it was a good quarter, and we are looking forward to reporting to you on the fourth quarter and at the beginning of the New Year. So thank you.

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

This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. Parts of this article were created using Large Language Models (LLMs) based on The Motley Fool's insights and investing approach. It has been reviewed by our AI quality control systems. Since LLMs cannot (currently) own stocks, it has no positions in any of the stocks mentioned. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability.

The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.