Q3 2021 Cohen & Steers Inc Earnings Call

Yeah.

Okay.

Ladies and gentlemen, thank you for standing by and welcome to the Cohen <unk> Steers third quarter 2021 earnings conference 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 one followed by the four on your telephone.

Any time during the conference you need to reach the operator, Please press star zero.

As a reminder, this conference is being recorded Thursday October 'twenty, one 2021 I would now like to turn the conference over to Brian Heller Senior Vice President and corporate.

So I'm, calling in steers. Please go ahead.

Thank you and welcome to the Cohen <unk> Steers third quarter 2021 earnings conference call.

Joining me are our Chief Executive Officer, Bob Steers, our President, Joe Harvey and our Chief Financial Officer, Matt Stadler.

What counts I remind you that some of our comments and answers to your questions may include forward looking statements.

We believe these statements are reasonable based on information currently available to us, but actual outcomes could differ materially due to a number of factors, including those described in our accompanying third quarter earnings release and presentation.

Our most recent annual report on Form 10-K, and our other SEC filings.

We assume no duty to update any forward looking statements.

Further none of our statements constitute an offer to sell or the solicitation of an offer to buy the securities of any fund.

Our presentation also.

I y and non-GAAP financial measures referred to as as adjusted financial measures that we believe are meaningful in evaluating our performance.

These non-GAAP financial measures should be read in conjunction with our GAAP results.

A reconciliation of these non-GAAP financial measures is included in the earnings release and presentation.

So can tell the extent reasonably available.

The earnings release and presentation as well as links to our SEC filings are available in the Investor Relations section of our website at Www Dot Cohen <unk> steers Dot com.

With that I'll turn the call over to Matt.

Thank you Brian good morning.

Okay.

Our remarks this morning will focus on our as adjusted results a reconciliation of GAAP to as adjusted results can be found on pages 18, and 19 of the earnings release and on Slide 16 through 19 of the earnings presentation.

Yesterday, we reported record earnings of $1 six share.

Compared with 67 in the prior year's quarter and 94 cents sequentially.

Revenue was a record $1 $54 3 million for the quarter compared with 111 4 million in the prior year's quarter and $144 4 million sequentially.

The increase in revenue from the second.

Quarter was primarily attributable to higher average assets under management across all three investment vehicles and one additional day in the quarter, partially offset by a sequential decline in performance fees from certain institutional accounts.

Our implied effective fee rate was 57 five basis points in.

In the third quarter, compared with 58 basis points in the second quarter.

Excluding performance fees, our third quarter implied effective fee rate would have been 57, three basis points compared with 57 basis points in the second quarter.

Operating income was a record 74 million.

In the third quarter, compared with $44 2 million in the prior year's quarter, and 60 to $62 6 million sequentially and our operating margin increased to a record 45, 6% from 43, 4% last quarter.

Expenses increased two 6%.

Compared with the second quarter, primarily due to higher compensation and benefits distribution and service fees and G&A.

The compensation to revenue ratio, which included a cumulative adjustment to lower the incentive compensation accrual was $33 one 9% for the third quarter and is now 34.

<unk> percent for the trailing nine months.

The increase in expenses related to distribution and service fees was primarily due to higher average assets under management in U S. Open end funds, partially offset by a favorable change in share class mix.

And the increase in G&A was.

And a half merrily due to higher travel and entertainment expenses as well as costs attributable to preparation for a new closed end fund that combines public and private real estate with preferred and debt securities.

Our effective tax rate, which was 25, 93% for the quarter.

<unk> included a cumulative adjustment to bring the rate to 26, 5% for the trailing nine months.

The reduction in the effective tax rate from the second quarter was primarily due to the diminished effect of the nondeductible portion of executive compensation on a higher than previously forecasted pre.

<unk> space.

Page 15 of the earnings presentation sets forth, our cash corporate investments in U S Treasury Securities and seed investments for the current and trailing four quarters.

Our firm liquidity totaled $241 million at quarter end compared with 185 six.

$6 million last quarter.

And we continue to be debt free.

Total assets under management were $97 3 billion at September 30, an increase of $1 billion or 1% from June 30.

The increase was due to net inflows of $1 3 billion and market appreciation of.

Pre tax $69 million, partially offset by distributions of $718 million.

This marks our ninth straight quarter of net inflows.

Advisory accounts, which ended the quarter with $22 $8 billion of assets under management had net outflows of $311 million during the quarter.

Fourth we recorded $1 1 billion of inflows the majority of which were from existing accounts.

Offsetting these inflows were $1 billion of outflows from an unexpected account termination after a client decided to eliminate its allocation to multi strat real assets as well as $300 million of client.

Thanks.

This account termination is unrelated to the one noted on previous calls.

Bob Steers will provide an update on our institutional pipeline of awarded unfunded mandates.

Japan sub advisory had net outflows of $52 million during the quarter compared with net outflows of 270.

Rebounded during the second quarter.

Distributions from these portfolios totaled $295 million compared with $309 million last quarter.

Sub advisory excluding Japan had net outflows of $253 million, primarily from a client that decided to convert its global listed infrastructure portfolio.

<unk> two in the passive.

Open end funds, which ended the quarter with a record $45 6 billion of assets under management had net inflows of $2 billion during the quarter.

Net inflows were primarily into U S real estate and preferred funds.

Distributions totaled $276 million two.

<unk> $25 million of which was reinvested.

Let me briefly discuss a few items to consider for the fourth quarter.

With respect to compensation.

We continue to refine our estimates as we approach year end.

Given our double digit year over year growth in assets under management revenue and operate.

Operating income driven by our leading organic growth and strong investment performance, we reduced the compensation to revenue ratio from the previous quarter's guidance of 35.25% by 75 basis points to 34, 5%.

All things being equal we expect our compensation to revenue ratio for the fourth.

Quarter to remain at 34, 5%.

We now project that our G&A will increase by about 9% from the $42 6 million we recorded in 2020.

And finally, we expect that our effective tax rate will remain at approximately 26, 5%.

Now I'd like to turn it over to Joe Harvey, who will discuss our investment performance.

Thank you, Matt and good morning.

Today, I will review our investment performance.

Discuss the macro environment and its impact on our asset classes and talk about certain key priorities for our investment Department.

The third quarter felt like a transitory phase in the markets with the S&P 500 up 6% and low dispersion across sub sector performance the.

The markets are evaluating several important macro shifts including stabilization of virus trends after the various scares.

Deceleration and the economic recovery.

Potential for a transition from monetary easing to tightening.

And gridlock in Washington, DC regarding stimulus and potential tax increases.

The one trend that continued to gain traction with the likelihood that inflation will be more persistent.

Reflecting that commodities reached a seven year high and were up 7% in the quarter one of the top performing asset classes.

The commodities rally has been broad based with spot prices positive year to date for 80% of commodities.

Looking at our performance scorecard.

<unk> third quarter and for the for the last 12 months eight of nine core strategies outperformed their benchmarks.

International Real estate, which is global ex U S was the one strategy that underperformed for both time periods.

Measured by AUM, 79% of our portfolio.

And the sales are outperforming benchmarks on a one year basis, and compared with 99% last quarter.

On a three and five year basis, 100% of AUM is outperforming.

The one year figure declined primarily due to global real estate, where our batting average declined from 90.

9% last quarter to 25% in Q3.

Our core global real estate accounts are outperforming year to date. So if we at least breakeven in the fourth quarter, our figures will improve next quarter.

88% of our of our open end fund AUM is rated.

Waited four or five star by Morningstar, compared with 90% last quarter.

We believe the macro environment is favorable for most of our strategies in terms of both fundamentals and investor demand.

We expect above trend economic expansion and more persistent inflation.

If the pandemic continues to subside and the recovery broadens some of the most negatively affected subsectors in real estate and infrastructure should continue to recover and help sustain the fundamental recovery.

In terms of investor demand the need for income as acute as is the need for equity like return.

With diversification.

Adding inflation to the picture should increase demand for more of our strategies.

As we said last quarter, our reading of the factors contributing to inflation supports a phase of higher for longer inflation.

U S real estate returned.

And 2% in the quarter and we outperformed in all of our sub strategies.

Year to date U S. Real estate is up 21, 6% outperforming the S&P five hundred's 15, 9%.

The powerful recovery in real estate security prices has been driven by a return of.

Overall demand.

And increased market need for effective inflation hedges and the ongoing search for income.

So far in 2021 13 billion has flowed into REIT mutual funds and Etfs the largest inflow since 2014.

We continue to see increased adoption of listed Reits by institutional investors as a core component of their real estate allocations.

Investors better understand and can tolerate short term volatility knowing that over the long term rates are highly correlated to the fundamentals of the underlying real estate.

And the long term record of listed Reits compared with core private real estate is undeniably compelling.

Reits have outperformed by nearly 400 basis points annually for over 40 years, while providing liquidity. These.

These dynamics are powerful in terms of potential flows as.

<unk> allocations get right sized higher based on merit.

Global real estate returned negative <unk>, 7% in the quarter, while our core strategies outperformed slightly our international strategy underperformed, primarily due to the Asia sleeve of.

Portfolio.

Right.

Global listed infrastructure returned negative.

Two 5% in the quarter and we outperformed in all of our sub strategies.

The downward trajectory of the virus spread and return of travel and global Commerce is made marine ports and airports some of the best.

Best performing sectors in the quarter.

The Big news for infrastructure was what didn't happen that being passage of infrastructure legislation in Washington DC.

The longer the process takes the more it underscores the need for infrastructure capital investment and generates interest in the asset class.

Cleo institutionally infrastructure as an asset class is understood and accepted and we see strong search activity.

The dry powder are masked by private equity infrastructure managers reached a record $300 billion and.

<unk> fuel for our investment thesis that private.

Capital will find its way into the listed markets to buy companies and assets.

With the latest example, being the announce privatization of Sydney Airport.

In terms of the wealth channel, we need to continue to educate on how infrastructure best fits into allocation strategies.

Equity notwithstanding that we've seen strong inflows into our open end infrastructure fund in part based on the headlines related to significant infrastructure spending.

Preferred securities returned 6% for our core strategy and 2% for our low duration strategy.

We outperformed in both.

Preferreds continue to look attractive in the fixed income world with yields of four 8% for investment grade preferreds, and our core strategy and four 2% for our low duration strategy for context corporate bonds yield 2.25%.

Municipal yield one and three quarter percent and high yield yields four and three quarters percent.

Our portfolios are positioned defensively relative to interest rates and we continue to guide incremental allocations to our low duration strategy, which by design has a duration of less than.

<unk> years and is the only one of its kind.

The benchmark for our multi strategy real assets portfolio returned 1% in the quarter.

And we outperformed.

As a reminder, this strategy combines real estate infrastructure commodities resource equities go.

Gold and short duration credit with an asset allocation overlay.

Over the past year, the real assets portfolio returned 32, 5% compared with the S&P 500 at 30%.

This strategy is designed to provide protection from unexpected inflation.

And produce equity like returns with a low correlation to financial assets.

Somewhat surprisingly, we haven't seen a significant significant increase in demand for this portfolio.

But with a long history of head fakes on inflation, it's simply may be early and the demand for this strategy may follow.

Follow rather than lead inflation.

We continue to expand our investment department, including the addition of a portfolio manager and head of multi asset solutions, who will join US next month to oversee asset allocation strategy research and macroeconomic research.

This is a strategic role that will expand our real assets and real estate solution investment capabilities and enable us to engage with clients at a higher level.

We've made tremendous progress preparing strategies for our private real estate business, including our strategy with a capital appreciation.

<unk> objectives.

We have commenced the investment process and are evaluating acquisition opportunities.

In addition for our closed end real estate funds, we will pursue an income strategy to capitalize on mis priced property sectors.

This will expand our investment universe for our closed end fund.

Funds and supplement these funds primary focus on listed real estate with higher generate income generation and rifle shot opportunities in the private market.

These are examples of our broader vision using both listed and private real estate to broaden our opportunity sets and provide investors with optimize.

Optimize allocations to real estate by tilting portfolios to where the best values are.

Looking into 2022, we will be developing other vehicles for the wealth channel.

And we expect to add our real estate strategy to further enhance our asset allocation and advisory capabilities.

Time commercial real estate has a positive outlook with fundamentals strong or recovering compelling income generation and particularly in this environment attractive inflation sensitivity.

Finally, we're looking forward to the next phase of our return to office.

Men, whereby everyone will be in the office three days a week beginning next week.

While we have performed well working remotely as our operations and investment performance at test, we want to get back to in person interaction debate and decision, making on the investment team and across the.

Firms.

The creativity innovation and cross team collaboration our business requires is best done in person.

Current indicators point to the general containment of the pandemic, thereby allowing us to return safely as we transitioned to being together once again as a team.

I'll.

Having the best of both worlds with some work model flexibility.

I'll turn the call over to Bob Steers.

Thanks, Joe Good morning, everyone.

As you heard from Matt and Joe We had a very strong quarter.

Continued excellent investment performance across the board <unk>.

Our record.

<unk> AUM revenues earnings and profit margins.

For the first time in several years, we benefited from strong absolute and relative market returns.

We believe this is significant because fundamentals indicate that this is the beginning of a new trend not the end.

And inside.

Inside joke here Cohen <unk> steers as how often I use the metaphor of how important it is to skate to where the puck will be and not stare at where it is now.

Where the puck is now is only useful in helping to see where it's going.

Broad based demand driven inflation will persist and as most definitely.

<unk> not transient.

But the bond market like most investor portfolios is where the puck was.

The latest inflation measures have all moved broadly higher <unk>.

September CPI increased five 4% year over year in the core CPI was also up 4%.

And a surprise announcement, the social security administration last week disclosed that future payments will be increased by five 9% the largest such increase in over 40 years.

Consumer spending surged 11, 9% in the second quarter and 13, 9%.

<unk> in the month of September.

But the real story beyond these surging spot indicators is the steady increase of the more persistent and heavily weighted components of these inflation measures.

Rent as a key category as it makes up over 30% of CPI.

Tenant rent jumped.

Half of a percent in September which was the biggest monthly increase in 20 years.

Owners equivalent rent, which is the accepted measure of what homeowners would pay if they had to rent their homes rose 4%. The most since 2006.

Lastly, as.

<unk> persistent measures of inflation continue to rise it can cause expectations to become self fulfilling.

According to the New York Fed consumers median inflation expectations for the next three years is four 2%.

So where the puck is today isn't bad as we saw this.

This quarter, but to get to where the puck is going will require investors to reposition their portfolios to hedge against or even benefit from the shift to a more enduring inflationary environment.

All real asset classes, and especially infrastructure and real estate have historically provided.

<unk> investors with the solutions that they will be looking for.

Yeah.

At the risk of being repetitive and with the benefit of strong absolute and relative returns from our real asset strategies, we achieved record AUM of $97 3 billion and over 100 billion intra quarter.

Record open end fund AUM of $45 6 billion and $1 3 billion of net inflows in the quarter.

As has been the case recently the wealth channel led the way with $2 billion of net inflows, representing an 18% organic.

Representing 18% organic growth and our third best.

Quarter on record.

Both the BD and <unk> verticals were strong and D. CIO fund flows were positive for the 13th straight quarter.

From a product standpoint, we saw strength and preferred security strategies, which generated net inflows of $1 1 billion and in real estate.

State, which had net inflows of $755 million.

Looking forward as inflation and interest rates move higher we anticipate that flows into our low duration.

Infrastructure and multi strategy strategy real asset portfolios will all benefit.

In addition.

<unk>, we have filed with the SEC to launch a closed end fund offering in the first quarter of next year that will combine public and private real estate and one actively managed listed portfolio.

In the advisory channel due to a planned design change we had.

Unexpected billion dollar termination of our high performing multi strategy real asset portfolio, which resulted in $311 million of net outflows in the quarter.

Gross inflows remain strong totaling $1 1 billion with U S real estate accounting for over two thirds.

Of that amount.

The pipeline of awarded but unfunded mandates is at 900 million.

And we recorded $550 million of mandates, which were both won and funded in the quarter. Our second best result on record.

Japan sub advisory net outflow.

Outflows were $52 million pre distributions and totaled $347 million, including distributions.

All things being equal we are optimistic that flows, especially for our U S. Real estate portfolios may shortly begin to improve.

First the portfolios are performing extremely well.

Well, especially after currency adjustments second we are approaching the 12 month Mark for the last distribution cut which typically coincides with flows turning positive.

Lastly, the end of Covid restrictions.

With the end of Covid restrictions in Japan, our teams have been asked to resume a.

Significant number of in person sales seminars.

Sub advisory ex Japan had net outflows of $253 million as well, primarily driven by the termination of an offshore global listed infrastructure portfolio and modest outflows elsewhere.

We did bring on a new $83 million.

Total real estate mandates in the quarter.

We believe that the next several years will witness a generational shift in the economy and capital markets.

Higher growth rates sustained by unprecedented monetary and fiscal stimuli have produced demand driven supply demand imbalances.

Resulting in asset price inflation, which is becoming self fulfilling.

Real estate values and rents labor costs and commodity prices are rising with no current end in sight.

Many investors have never experienced this set of economic variables.

We believe that as investors begin to extrapolate these trends allocations to real assets, especially infrastructure and real estate will substantially increase.

Our traditional range of products is well positioned to capture this shift.

In addition, we recently commenced the marketing process.

For our private real estate strategies that we discussed last quarter and as I said, we hope to launch our first public private real estate closed end fund this February.

Given the favorable outlook for real assets, we are committed to adding new capabilities and products that will provide the solutions that investors'.

Need when they ultimately see where the puck is going.

With that.

Ask Tina to open the floor to questions.

Thank you.

If you would like to register a question or comment. Please press. The one followed by the four on your telephone.

Here the retail comps.

<unk> technology a request.

If your question has been answered and you would like to withdraw your registration. Please press the one followed by the <unk>.

One moment please for our first question.

Yes.

Our first question comes from John Dunn Evercore ISI. Please go ahead.

Hey, guys I'm.

Just maybe if you could talk a little more on the progress of the private real estate groups you know what Theyre doing just in with private strategies and then on the closed end fund is there anything different about selling the advantages of toggling between the you know.

Public and private strategies and is there any like some appetite.

In front of the launch in Q1.

Well.

All we all we can talk about with our private strategy is that we've.

Spent over a year of building the team and refining.

The very.

Various strategies that we're employing and we are employing.

A broad range of strategies already.

We are currently in the market for our pure private fund, where we've already begun to.

Look at adding.

Investments private.

Since two our existing.

Our real estate closed end funds.

And as I mentioned.

Closed end fund that we have filed for February intentionally is combining public and private for the closed end funds.

The private investments we're looking at.

Our.

Our.

Primarily designed to deliver higher yield than we can.

Obtained in the listed market.

And.

That opportunity is is quite wide and quite deep.

Our other.

Our.

<unk>.

We will have more of a maximum total return strategy associated with them, but the idea is that this will substantially broaden both the universe of real estate investments available to us and substantially broaden the.

The range of products that we can deliver both <unk>.

Additionally, and in the wealth market.

And again it'll be total return strategies maximum return strategies yield strategies.

And in a variety of different.

Structures.

I'd just add that in the closed end fund market.

What the market is looking for today is strategies that are unique that are that are differentiated and not generic available and many other vehicles, so having a private capability.

In real estate.

It makes us better positioned to offer what.

That market.

<unk>.

In the wealth channel and then back over to the to the institutional channel.

The dynamic that we're seeing is it.

Institutions are just much more agile in terms of going to where the best opportunities are so even if we don't have a vehicle per se.

There's been a kind of goes back and forth.

The public market, just simply being able to engage with our clients and to help them make their portfolios better whether it's to add next generation real estate to a.

Our portfolio of core property types or help them with with a.

Private strategy it just puts us in a better place with institutions that said, we do as we've been.

We've talked about expect to.

Add vehicles that will.

Enable us to tilt the portfolio between both markets.

Got you and then.

Maybe on expenses can you kind of ballpark how much of 'twenty. One G&A may have been depressed by the pandemic and and also as we get further out maybe what kind of natural growth rate might be for that.

Considering you've been you want to invest for growth, but you've also done a bunch over the last few years.

Well.

Next call, we'll give you a forecast or projection on where we think G&A is going to be but sufficient to say that with people coming back to the office.

Seemingly under control with the pandemic.

Our expenses should increase.

Increase.

Next year. We're also have all these new strategies and we want to market them in.

So we're going through that process right now so it'd be a little premature for me to just.

Say other than expected it would go up with respect to this year.

It's up 9% from last year, which was depressed.

So an increase in <unk> in the third quarter.

When you compare the.

'twenty, one forecast with the pre pandemic 2019, it's about flat.

For more than the first half of this year, we continued to have a suppression in a lot of the categories that we thought would increase it just got pushed back a little bit.

So I hope that answers your question John.

It does yeah. Thanks, Matt Thank you guys.

Thank you.

The next question comes from Robert Lee <unk>. Please go ahead.

Yes, hi, good morning, Thanks for taking my questions.

I guess my one of my first question would be kind of on the maybe.

Yes, we will tend to be in the business to some degree.

Talked about you mentioned potentially having a closed end fund coming up in the first quarter and clearly that its great business and clearly.

It does require more upfront capital than it used to.

Spanning into the private.

More into private real estate.

On the cabinet or getting those up and running can take more capital commitments. So how do you.

How is that impacting how we should maybe think about.

Your usual kind of special dividend at the end of the year.

Maybe going forward how are you thinking about the types of.

Excess cash capital.

Curt do you want to keep around.

To fund these growth initiatives.

Yes, that's a great question and very timely.

Yes next next year.

Anticipate.

We're hoping to launch a number of new vehicles.

Perhaps up to two closed.

There's some funds and <unk>.

Several private.

Our non traded.

Real estate vehicles.

All of which will consume significant capital.

Either in the case of the closed end funds.

To distribution costs.

<unk>.

And at the other.

Vehicles.

We'll require very significant co investment capital.

We are committed to and so.

I envision next year will be the most.

Capital intensive.

Ever for.

US by a lot.

If we're successful.

I mean, Joe.

I would just add that when you when you look at the economics of.

Us.

Fronting that front end costs.

Those funds.

Okay.

Attractive financial proposition.

No.

I think it's important to keep that in mind, we believe that the capital.

There will be we'll be laying out.

Have a good financial return on it.

Rob also.

Coming in in a couple of weeks, we're having another corporate board meeting and it's at that meeting.

We spent.

The last several years, we've done a special in each of the last 11 years as Bob pointed out we do have more to consider for 2022, which will influence.

Our ability to do a special not saying, we will not saying we won't but.

Right after that meeting we typically go out.

Out with.

Press release and so we're we're.

We're assessing that right now I mean, the good news is that we're coming off of the highest.

AUM and average annual base and as you know this.

Barry.

Cash generating business.

Our fee rates have maintained themselves or increase themselves as.

We've created more customized solutions so.

We're factoring that into.

Great and maybe as a follow up sticking with kind of the build that.

Of the private part of the business I mean.

There's obviously been a lot of M&A activity in the industry.

You know acquiring you know different types of some smallish real estate businesses.

Print stripes, and obviously, they're fairly pricey, but how do you think about the trade off between obviously you're building it organically, but you know there are potential that you would look to accelerate that growth.

Maybe it's a different market segments through M&A or is that just not.

A path here.

If you would you would think about it.

Well, we're we're very pleased with the team we have and the opportunity set that's in front of us for.

People are.

All of it.

Equity real estate opportunities really don't see any opportunity to.

M&A too.

Accelerating the growth there.

Again, we.

We expect very significant growth next year.

If there were niche areas.

Whether it's real estate.

Credit or debt things like that.

That may come our way.

We've said in the past, we look at things like that.

Sure. We've also looked at.

Potential strategic add ons and the infrastructure on the infrastructure side.

But as you can see from our track record of M&A, we have a very high bar for particularly for cultural integration of these.

<unk>.

We most definitely we would look at them.

<unk>.

The bar is high.

Great. Thank you so much for taking my questions I appreciate it sure.

Sure. Thank you.

Okay.

Thank you as a reminder, via the phone lines you May press, the one followed by the.

Four if you'd like to register a question or comment once again, the one followed by the four.

Our next question comes from Marla Backer of Sidoti. Please go ahead.

Okay.

So.

John you've added to the team.

Over the past several quarters.

And you didn't.

<unk> addressed that in your prepared remarks.

You think where you are now.

There's obviously a lot of.

Initiatives plan for next year do you think the current team that you have in place can fully support your growth initiatives or should we expect to see further additions to the team.

As it relates to the investment team.

I'd say, we're in a really great spot to take advantage of the opportunities. We have in front of US I mentioned, a couple of incremental additions in my talking points.

But.

And.

And one of them would be a real estate strategies that can help us.

Yes.

On the asset allocation front.

<unk> listed in private real estate and help us engage with clients to help them optimize portfolios.

But apart from that there is.

Not as significant.

But it will be in part dependent on on how our success in raising assets. So for example in the private real estate business, it's it's less scalable than the than the listed sick.

Securities business, and so as we raise assets and.

Acquire proper.

Need.

We will need to add.

Acquisitions officers and asset management folks too.

We continue to put money to work.

I would just note for the firm overall when you look over the past year, we've had such tremendous success with our business and increase.

<unk> activity, we've had meaningful head count growth.

So what going into next year, I think we're really well positioned and we're going to be mindful considering that the markets have been very strong and they can go the other way. So we're going to be very disciplined on head count looking into next year.

Thank you.

Thank you.

We have a follow up from John Dunn Evercore ISI. Please go ahead.

Can you give us kind of a lay of the land of the warehouse channel I mean, our distributors are still cutting lists and shelf space and are you guys taking share.

And maybe with strategies and generally what your competitors are doing.

I think they still are selectively paring back offerings.

And they are also developing their own models and creating their own model based programs.

<unk>.

We continue to gain market share in every one of our core strategies.

Especially.

Our preferred and U S and global real estate strategies and infrastructure more recently.

No.

We're we're not seeing any any headwinds ourselves but.

I think I think for.

Generic.

Strategies.

Yeah.

The market continues to.

Be tough.

Great. Thank you.

Thank you we have no further questions at this time I'll turn the call back over to Bob Steers for closing remarks.

Great. Thank you Tina and thank you all for joining US this morning, and we'll be speaking right. After year end. Thank you.

Thank you this does.

Conclude the conference call for today, we thank you for your participation and ask that you. Please disconnect. Your lines. Thank you and have a great day.

Okay.

Sure.

Yes.

Okay.

[music].

Yes.

[music].

Okay.

Okay.

Okay.

Okay.

[music].