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:
- Real estate securities markets are inefficient: Markets are inherently inefficient at pricing in REIT fundamentals, which are primary drivers of long-term returns, creating opportunities to add value through active management.
- 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 systematically identifying undervalued securities relative to asset values and growth prospects.
- Attracting and developing a deep bench of talent is critical to long-term success: A team approach that emphasizes continuity, 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: Real estate is inherently local, so there is a benefit to locating analysts on the ground in the regions they cover. When integrated into a global team, this 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.
- We believe in investing with responsibility: Analysis of environmental, social and governance components of a company’s business, along with active engagement with managements, should be integral to the investment process, supporting a better understanding of risks and opportunities and helping to unlock value.
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:
· 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
NAV and cash flow estimates are equally important to our valuations. By blending both valuation approaches, we are assessing value specifically as a REIT manager, and not as a generalist equity manager or private real estate manager may.
· Portfolio construction process
Our portfolio construction process is grounded in the outputs of our tried and tested propriety valuation model, which distills our research findings and systematically ranks the companies in our universe on their relative value, instilling a disciplined approach to portfolio construction and to buy and sell decision-making. Additionally, we employ cutting edge risk tools including proprietary analytical software that has been designed specifically to support our portfolio construction and monitoring processes in real estate securities.
· Innovative use of technology and alternative data
The analysts have been utilizing technology to enhance their research efforts. They use technology to track extensive amounts of data from various sources on a real-time basis to help inform views on the companies and sectors in which we invest. An example is our “Self Storage Scraper”, which tracks pricing data from different markets and storage units from the key self storage companies, to highlight pricing and supply/demand trends to project a street growth rate for each company. This information helps the team assess whether the companies will beat or miss revenue guidance.
· Commitment to continuous improvement
Our commitment to continuous improvement drives ongoing evaluation of our methods, structure and investment process. We will continue to seek out ways to enhance our ability to offer compelling investment portfolios. Our investment process is designed to generate meaningful and consistent alpha for our clients. We believe this consistent alpha can be achieved through rigorous fundamental research, providing an information edge for identifying companies that are undervalued relative to asset values and growth prospects
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.
Finally, our industry-leading presence in the REIT space serves as a retention and recruitment tool to attract the most talented investors.
4. Financial Strength
Given our strong balance sheet (no debt and substantial cash and liquid assets), we have the resources to expand and enhance our global real estate platform as necessary. As we have in the past, we will continue to evolve as a firm to accommodate the growing demands of our customer base and tailor our resources to deliver the best performance for our clients.
In addition, our strong balance sheet has allowed us to weather challenging market environments and market downturns. For example, during the Global Financial Crisis, the firm did not make any reductions to its core functions or headcount and was actually able to reinvest in the platform to position the firm for strength during the market recovery. The firm continues to be in sound financial condition and similarly has no plans to reduce headcount or functions during the 2020 downturn.
5. Ownership Structure
The ownership structure provides transparency to investors and also enables us to attract and retain key professionals; the majority of our investment team is Cohen & Steers shareholders and receive a significant part of their annual compensation in Cohen & Steers restricted stock. The majority insider ownership aligns interest to promote the long-term continuity of the firm. Also since real estate securities are the dominant part of the firm’s business, we are strongly incentivized to deliver compelling, long-term investment returns for our REIT strategies.
While past performance is no guarantee of future results, our history of generating consistently strong risk-adjusted returns in our real estate securities portfolios and creating value for our clients for over 30 years is, in our view, reflective of the effectiveness of our platform, and its potential to be successful in the future.