Cohen & Steers is a global investment manager specializing in liquid real assets, including real estate securities, listed infrastructure, and natural resource equities, as well as preferred securities and other income solutions. In 1986, Martin Cohen and Robert Steers established Cohen & Steers as the first investment company to specialize in listed real estate. As the global real estate securities market evolved, we expanded our operations to Europe and Asia Pacific, forming the industry’s largest global investment team dedicated to real estate securities. Through careful consideration, we have added to our investment offerings over the years, developing related strategies designed to meet investors’ increasing demand for dividend income and real returns.
- Pioneers in REIT investing
- Focused on specialty asset classes where we can offer a competitive advantage
- Consistent in our investment process
- Global in our capabilities, offering clients a broad opportunity set
- Relentless in our pursuit of superior investment performance
- Advocates of industry change on behalf of shareholders
- Dedicated to providing best-in-class client service
- Stable in our company leadership
- Majority owned by employees, aligning our interests with those of investors
- Committed to offering insights and solutions to complex investing challenges
- Trusted by large and small investors around the world
Philosophy for REITs
We believe that investing in publicly traded real estate securities is a compelling way to invest in global real estate. The philosophy that guides all our real estate strategies is underpinned by the following principles:
Market inefficiencies may create opportunities: Equity markets tend to be inherently inefficient at pricing real estate fundamentals due to the need to understand local economic conditions, supply and demand of various property types, tenants’ financial health, equity market technical factors and the unique financial metrics used to measure real estate performance. While REITs may trade like equities in the short term, long- term performance is primarily driven by the performance of the underly- ing property portfolio. As a result, active managers have the potential to capitalise on inefficiencies through stock selection by identifying material dislocations between share prices and fundamentals.
A relative value process, supported by rigorous fundamental research, can deliver a sustainable advantage: Generating consistent alpha requires a deeply resourced fundamental research platform, providing an information edge for identifying undervalued securities relative to asset values and growth prospects. As listed real estate specialists, we tend to be more attuned to changes in property fundamentals, often allowing us to trade on information earlier and faster than generalist managers, for which real estate tends to comprise only a small portion of their portfolios.
Attracting and developing a deep bench of talent is critical to long-term success: A team approach that emphasises stability, collaboration and continuous improvement fosters a culture of investment excellence, providing the experience and perspective to successfully navigate real estate and stock market cycles.
Local decision-making within a global process: The drivers of real estate fundamentals are inherently local, so there is a benefit to locating analysts on the ground in the regions they cover. When integrated into a global team, these analysts can elevate the exchange of ideas, combining local and global perspectives.
Integrated risk management is paramount: Delivery of superior risk-adjusted returns demands an embedded, comprehensive and multi-dimensional approach to risk management.
Environmental, social and governance (ESG) factors are central to sustainable business practices: ESG analysis is explicitly integrated into our securities analysis and portfolio construction process, helping us to gain a deeper under-standing of the risks and opportunities associated with corporate governance, environmental risks and social policies. We combine this with active engagement with management teams to effect change that we believe may enhance long-term shareholder value. Please see more details on our ESG integration approach in the next section.
As a firm that was founded as the first investment advisor to focus on real estate securities and that has had continued commitment to the asset class, our primary priority is maintaining our industry-leading real estate securities platform. Our commitment, combined with our drive for excellence has led to us build a platform that is positioned to outperform our peers and deliver compelling returns for our clients. Specifically, our investment organization and process provide the following competitive advantages:
1. Large, Experienced and Dedicated Investment Team: With 21 professionals, we employ one of the largest and most experienced investment teams dedicated to global real estate securities, providing superior access to information on listed property investments. We have portfolio managers, research analysts and traders located in key markets including New York, London, and Hong Kong. Our nine portfolio managers have an average of 22 years of investment experience and have been with the firm for an average of 13 years.
Our team’s size and depth of experience allow us to go deeper in our analysis of companies and management teams and expend significant time extensively testing investment theses and investments cases. Our global analysts are located in the regions they cover, and the teams spend a significant amount of time reviewing investment theses, allowing for extensive testing of assumptions and investment cases. The real estate research analysts conduct more than 1,300 company visits annually through in-person meetings, property visits, conference calls and at industry conferences. The team makes over 300 property visits each year and communicates closely with management teams. By virtue of our large team and our access to management and boards, we typically interact with companies in which we are invested 10-20 times per year. In addition, as noted in more detail below, we also take an active approach to talent management, with an eye on positioning our team to generate consistent alpha. We believe our commitment to maintaining an industry-leading team is unmatched among our key competitors.
We also employ dedicated macro strategy and risk management teams that are focused on issues and factors specific to real asset investing. More details on these teams are provided below.
2. Disciplined Investment Process: We believe Cohen & Steers’ disciplined, globally integrated investment process distinguishes us from other real estate managers, as outlined below: Notably, our commitment to continuous improvement drives ongoing evaluation of our methods, structure and investment process to promote continued success.
· Extensive proprietary research. The research, conducted by our investment teams, and our analysts specifically, is the hallmark of all that we do at Cohen & Steers. We believe the unique factor that separates us from our competitors is the depth of the proprietary, fundamental research and analysis that we are able to undertake by virtue of the depth and experience of our team.
· Valuation methodology. We assess value based on a combination of net asset value (NAV ) and dividend discount model (DDM) estimates. These methods are utilised specifically in our capacity as a REIT specialist, and, in our experi- ence, are typically not among the valuation tools used by generalist equity man- agers or private real estate managers.
· Portfolio construction process. Our portfolio construction process is grounded in our propriety valuation model, which distills our research findings and systematically ranks companies in our universe based on their relative value. This process instills a disciplined approach to portfolio construction and trading decisions. Additionally, we employ advanced risk tools, including pro- prietary analytical software designed to support our portfolio construction and monitoring processes in real estate securities.
Innovative use of technology and alternative data. Our analysts continue to identify new technologies to enhance their research efforts, tracking extensive volumes of real-time data from multiple sources to inform views on the companies and sectors they cover. An example is our ‘web scraper’, which tracks real- time pricing data from various sources and helps inform our views on the companies and sectors in which we invest. The scraper provides real-time insights into property fundamentals and helps the team assess top-line revenue trends relative to expectations. The web scraper is used for apartments, single family residential, senior housing, hotels, casinos and self-storage.
3. Advantageous Market Position: In our view, the size of our assets under management in listed real estate and significant presence in global markets offer advantageous access to information. We believe we are viewed by company managements, sell-side analysts, real estate specialists, boutique research firms and other real estate and securities resources as a priority shareholder and client. We have strong relationships with the global brokerage community in terms of research and trading access. We leverage this access and information into value-added investment decisions for our clients.
In addition, our market position enables us to influence company management teams to benefit shareholders. For example, we were a driving player in the recapitalization of REITs during the Global Financial Crisis and are now monitoring opportunities to provide capital infusions to REITs in a variety of ways, including: helping healthy companies take advantage of opportunistic acquisitions, improving strained capital structures of otherwise sound businesses and assisting high quality but cyclically challenged businesses survive.
4. Financial Strength: In our view, the size of our assets under management in listed real estate and our significant presence in global markets offer advantageous access to information. We believe we are viewed by company managements, sell-side analysts, real estate specialists, boutique research firms and other real estate and securities resources as a priority shareholder and client. We have strong relationships with the global brokerage community in terms of research and trading access. We leverage this access and information into value-added investment decisions for our clients.
5. Ownership Structure: Our ownership structure provides transparency to investors and enables us to attract and retain key professionals who are strongly incentivised to deliver compelling, long-term investment returns for our REIT strategies.