COHEN & STEERS Q2 FY26 earnings call CNS

Cohen & Steers reported adjusted EPS of $0.85, an increase from both the prior quarter ($0.79) and year-ago period ($0.73). Assets under management (AUM) grew by 8% to exceed $100 billion, driven by positive market performance and $1.3 billion in net inflows, marking one of the strongest flow quarters recently. The operating margin improved to 36.3% as revenue growth of 5% outpaced expense increases of 3%.

The firm experienced broad-based net inflows, with U.S. real estate leading with $833 million. Multi-strategy real assets saw $380 million in net inflows, reaching $3 billion in AUM, while global listed infrastructure recorded its sixth consecutive quarter of inflows. Preferred securities also showed improvement with a second consecutive quarter of inflows, driven by a search for yield and rotation from private credit, with current AUM at $18 billion compared to a peak of $27 billion.

The active ETF platform surpassed $1 billion in AUM, with the largest ETF being the real estate strategy at $450 million. The firm converted its Future of Energy open-end fund into an ETF and plans to launch a multi-strategy real assets ETF by the end of summer. Overseas, the CCAB fund initiative reached $2 billion in AUM with record net inflows of $326 million, particularly strong in Southeast Asia, the U.K., Japan, and South Africa.

U.S. listed real estate returned 10.7% during the quarter, up 14.9% year-to-date, with global real estate up 9.6%. The firm believes the REIT recovery is three years in the making, with attractive valuations and fundamentals, delivering 10.1% and 10.7% annualized returns for U.S. and global REITs respectively over that period. The non-traded REIT, CNS REIT, continues to outperform its peer average by 760 basis points since inception, benefiting from a bottoming real estate cycle and headwinds in private credit.

The institutional pipeline remains robust at $1.6 billion, with broad strategy representation including global listed infrastructure (27%) and listed private real estate LP vehicles (23%). The firm successfully raised $154 million through a rights offering for its RQI closed-end fund, increasing AUM by $220 million. A new Chief Operating Officer role was created to enhance distribution operations, and efforts are underway to expand the global sub-advisory business in regions like Canada, Australia, and Korea.

Increased IPO activity, particularly in sectors like data centers and healthcare REITs, is seen as a positive for the firm's investment universes, providing more alpha opportunities. Of the top 10 IPOs this year, four are in global infrastructure and resource equities, and one data center REIT is a staple for both REIT and infrastructure strategies. The capital investment needs in AI, power infrastructure, and related businesses are expected to drive global growth, requiring both private equity and listed market financing.