Q4 2022 Cohen & Steers Inc Earnings Call
Ladies and gentlemen, thank you for standing by welcome to the Cohen, <unk> steers fourth quarter and full year 2022 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 star followed by the number one on your telephone.
If at any time during the conference you need to reach an operator, Please press star zero.
As a reminder, this conference is being recorded Thursday January 26 2023.
I would now like to turn the conference over to Brian Heller Senior Vice President and corporate Counsel of Cohen <unk> Steers. Please go ahead.
Okay.
Thank you and welcome to the Cohen <unk> Steers fourth quarter full year 2022 earnings conference call.
Joining me are our Chief Executive Officer, Joe Harvey, Our Chief Financial Officer, Matt Stadler, and our Chief Investment Officer John .
I want to 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 company's fourth quarter and full year 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 statement.
Further none of our statements constitute an offer to sell or the solicitation of an offer to buy the securities of any funds or other investment vehicles.
Our presentation also contains non-GAAP financial measures referred to as adjusted financial measures.
We believe are meaningful in evaluating our performance.
These non-GAAP financial measures should be ready in conjunction with our GAAP results.
A reconciliation of these non-GAAP financial measures is included in the earnings release and presentation to the <unk>.
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.
Www Dot Cohen <unk> steers dot com.
With that I'll turn the call over to Matt.
Thank you Brian good morning, everyone.
As with previous quarters My remarks, this morning focus.
Good results.
A reconciliation of GAAP to our suggestions.
19 of the earnings release.
<unk> 19 of.
Earnings presentation.
Yesterday, we reported earnings of 79 cents per share compared with.
Prior year's quarter.
And 92.
Sure.
Revenue was $125 5 million.
Sure David.
$7 million or years.
And $142 million sequentially.
The decrease in revenues from the third quarter was primarily attributable to.
Lower average assets.
Across all three types of investments.
Our effective fee rate was 57 eight basis points.
Compared with 58 basis points in the third.
Operating income was $50 9 million.
Sure.
$6 million in the prior year's quarter.
$60 1 million.
And our operating margin decreased to 45% from 42, 8% last quarter.
Expenses decreased six 8% compared with the third quarter, primarily due to lower compensation and benefits expenses and lower distribution and service fees.
Compensation and benefits expenses were lower in the fourth quarter.
Third quarter, primarily due to a reduction in incentive compensation to reflect actual amounts expected to be paid.
This reduction was more than offset by the sequential decline in revenue.
As a result the comps.
Sensation to revenue ratio was 36, 4%.
Yes.
For the year the compensation to revenue ratio was 34, 9%.
Increase of 40 basis points from last quarter's guidance of 34.
<unk>.
And the decrease in distribution and service fees was primarily due to lower average assets under management.
The U S open end funds.
Our effective tax rate, which was $25, 95% for the quarter.
Included a cumulative adjustment to bring the rate to 25, 4% for the year, an increase of 15 basis points from last quarter's guidance of $25 two 5%.
The higher effective tax rate, primarily due to the effect of the non deductible portion of executive compensation and lower than forecasted pre tax it.
Page 15 of the earnings presentation sets forth, our cash cash equivalents corporate investments in U S Treasury securities and liquid seed investments.
Trailing four quarters.
Our firm liquidity totaled $316 1 million at quarter end compared.
Compared with $269 9 million.
As mentioned on previous calls our business has become more capital intense.
Potential uses of capital range from funding the upfront cost associated with closed end fund launches and <unk> offerings.
The new strategies and vehicles.
Testing in private real estate vehicles.
And making various one time investments to grow our firm.
As our business scales.
Our new corporate headquarters in New York City.
Associated build out and related technology infrastructure.
Example of that.
In order to provide us with the financial flexibility to pursue these.
Earlier this week, we announced a range for $100 million rate year senior unsecured revolving credit facility.
As you know we have historically been debt free meeting our capital needs and commitments.
Consistent with that long term philosophy, it would be our intent.
Any amounts borrowed under the credit facility with cash from operations as soon as practice.
Assets under management were 84 billion at December 30 <unk>.
Slightly from $79 2 billion at September 30.
The increase was due to market appreciation of $3 5 billion, partially offset by net outflows of $1 1 billion.
And distributions of $1 2 billion.
Assets under management declined to 26.
$26 2 billion on December 31, 2021, the decrease was due to market depreciation of $20 9 billion net outflows of $1 6 billion.
Distributions resources.
Joe Harvey who will be providing an update on our flows in institutional pipeline of awarded.
Unfunded mandates.
Let me briefly discuss a few items to consider for 2023.
First regarding our expected compensation to revenue ratio, we intend to balance the anticipated revenue decline that will occur from our year end assets under management.
12% below 2020, two's average assets under management with a disciplined approach towards human capital.
In addition to the increase in compensation expense from higher stock amortization salary increases and the full year impact of our 2022, new hires we plan on making control investments in our business in order to broaden our product offerings.
And our public and private distribution efforts and most importantly to maintain our strong investment performance.
As a result, we expect our compensation to revenue ratio to increase to 38, 5% from the 34, 9% reported in 2042.
Next we expect G&A to increased 12% to 14% from the $52 6 million reported in 2022.
The majority of this increase relates to costs associated with our new corporate headquarters at 11 66 Americans.
Americans.
Excluding these costs, we would expect G&A to increase 4% to 6%.
By relocating to 11 66, we are able to expand our footprint.
Create a next generation state of the art working environment at more favorable economic terms in it.
Additionally, we intend to make incremental investments during 2023, and our existing technology, including the implementation of new systems that will then efficiencies and expand our capabilities cloud migration and upgrades to our infrastructure and secure.
And we expect that sponsored conferences and travel and entertainment costs, we will incur.
Greece in 2023 as business travel resumes.
More normal levels.
Finally, we expect our effective tax rate will increase to 25, 5%.
Now I'd like to turn it over to our Chief financial Chief Investment Officer, John J to discuss our investment performance.
Thank you, Matt and good morning today I'd like to briefly cover three areas first our performance scorecard second how are major asset classes performed in the quarter.
And finally, our 2023 investments.
In particular I want to focus on the real estate and topics such as how we expect public and private real estate.
Our view on recent non traded REIT redemptions, and our initiative to be a market leader, providing research and advice to clients across both public and private real estate.
Turning to performance in the fourth quarter four of nine core strategies outperformed their benchmarks over the past 12 months eight of nine strategies outperformed.
While our batting average in the quarter was lower than normal the magnitude of underperformance by strategy was generally modest.
All related to strategies that ultimately up to the year.
Measured by <unk>.
74% of our portfolios are outperforming there.
On a year basis declined from 81% last quarter.
The biggest driver.
Our U S real estate focus strategy, which is more concentrated in has had greater weight in small cap real estate stocks, which lagged during the year and the fourth quarter bounce back.
This strategy has a 25 plus year track record of 400 plus basis points of annual Alpha.
<unk> underperformance is occasionally happens.
Defining our track record here is a key investment priorities.
On a three and five year basis, 99% of our AUM.
These are performing slightly down from a 100% last quarter.
From a competitive perspective, 98% of our opening.
One is rated four or five star by Morningstar.
Up from 97% last quarter.
For the quarter risk assets broadly recover global equities up nine 9% and the Barclays Global aggregate up four 6%.
Our asset classes were led by natural resource up 17, 1% International real estate up two 3% and global listed infrastructure up 9%.
Ill then by U S reached four 1% before currency.
T core preferred securities up three 4%.
Digging into the detail infrastructure continued to perform well.
In U S equities, but modestly.
Global equities.
This performance narrowed year to date performance to only down four 9% in the year.
Candidly, beating very negative will be broader equities fixed income indices.
Sub sector level performance dispersion during the quarter was tae sik.
Cyclical subsectors, such as railways and reopening plays such as airports and toll roads outperforming.
Midstream energy, our pipelines reversed its earlier trend.
Performing in the fourth quarter, but still ending the year.
Best performing sub sector.
For our preferreds the November CPI report and subsequent inflation readings supported the central bank's hikes deceleration occurred.
Central banks remain.
The market's priced in following inflation.
We also began a price and a better growth outlook base falling energy prices warm winter weather and the China reopening Covid policy change.
Overall, the retro award profile and fixed income markets and groups.
For our real estate international reach led the way up to 3% benefiting from the same dynamics, including a weakening U S dollar.
While U S rates were up.
One 1%.
The U S. A significant sector dispersion retail real estate up 17% to 33% while sectors, such as self storage and residential were down 17% in the quarter.
Global markets saw similar levels of performance dispersion.
Markets in Europe by 2025% in Hong Kong, and Australia up 12, and 18% respectively.
Page Covid reopening combined with more divergent economic trajectories.
Strengthening the investment case for global real estate and the diversification it can provide.
We see this shift continue I would expect investors to begin to allocate more to global real estate, either incrementally or at the expense of U S.
So a lot of quarter was generally positive where does that position us for 2023.
At a high level, we believe inflation will continue to come down.
Will stabilize at around that 3% level by year end.
Which will prove to be the new tool.
In order to get there, we think we will likely experience in average recession.
We think that over time long term interest rates should be a bit higher than where they are today.
With that as our backdrop, we see the economy transitioning to early cycle by the end of the year and positive returns for all of our asset classes in 2023.
For preferreds, we see very good absolute value.
Coupled with the fundamentals of our issuers remaining very strong, particularly balance sheets.
Nonperforming loans are moving up.
Gradually.
<unk> low levels.
Meanwhile, net interest margins to expand at a higher rate environment.
So the preferred we would expect potentially double digit total returns in 2020.
For infrastructure, we continue to expect the asset class as well.
But in the early cycle phase typically performed more in line with global equities.
Despite that we don't pound the table on infrastructure because of just 2023, our conviction in the asset class is in its long term strategic role in the new regime, where the criticality of infrastructure businesses.
<unk> is less economically sensitive.
Plus it's pricing mechanisms tied to inflation will help even in a new normal inflationary environments.
Those are multiyear benefits rather than for a single phase.
In terms of how we see our biggest asset class real estate.
2022 U S Reits were down roughly 25%.
As these listed asset class the price quickly to the changing macro environment.
In contrast reported private real estate values generally increased as they tend to be historically laminate.
Fuel volume declines.
For example in May increase honesty index, a measure of private real estate had a positive total return of seven 5% versus.
Versus listed REIT.
But minus 25%.
In 2023, we expect this trend to reverse.
With listed outperformed private real estate consistent with what we normally see in a transition to early cycle.
This performance shift uplifted outperforming private has already started.
In Q4 decreased was actually down 5%.
While this degree.
4%.
Historically listed REIT separate one remark lately well afterwards.
Since 1990 recent returned on average 10, 8% 12 months after a recession and a notable 24% on average 12 months after early cycle recovery periods.
Because of these lags private real estate, specifically declined on average 11, 8% in the 12 months following the recession.
By understanding the leading and lagging behaviors of listed in private markets real estate investors can assemble a much more efficient portfolio.
Tactically allocate at different times across the two asset classes.
We've always been the REIT experts, but we believe investors need integrated advice and research around both listed and private and this is why we have committed over the last two years to build out our solutions and advice business.
We strongly believe that our vantage point at this intersection of public and private real estate.
Issues us to provide frameworks models and guidance for investors to help them be better real estate allocators.
As an example, we've recently been sharing our thoughts and views on the non traded REIT redemptions, which have been in the news recently.
First these redemptions do not reflect broad economic versus them Chris.
The redemption limits are designed to protect us from having to liquidate significant real estate holdings.
Prices.
Our materially boosting leverage in response to elevated redemption requests.
We do not see a disorderly unwind or panic selling Sierra for real estate funds to meet redemptions.
<unk> also only represent 1% of the $21 billion commercial real estate market.
The non traded REIT story is not one of systemic risk or commercial real estate crashing. It is simply that investors are rebalancing away from prices. They believe are extensive.
And are seeking higher returns.
In other asset classes, including listed real estate.
We believe the redemption activity underscores the potential rebalancing opportunity that exists for investors.
Private and then holistic real estate.
With that let me turn the call CEO .
Thank you John and good morning.
I will first discuss our fourth quarter business fundamentals and then follow with a review of our 2023 corporate priorities.
The fourth quarter was weak measured by the fundamentals that we focus on yes, hopefully represents the climax of what I have characterized as the greatest macro regime change in my career.
If the fourth quarter is mostly reflected investor reactions to regime change and hopefully the first half of 2023 will be the start of the transition to the next variance where after the resetting of financial asset prices.
New return cycle can follow up.
Our investment performance continues to be strong overall.
One quarter does not change our strong long term record and we remained well positioned to win investor allocations.
Notably our market share as measured by active open end funds continues to expand and U S real estate global real estate and global listed infrastructure.
With U S real estate most notable at 37%.
Our market share in preferreds has declined to 43%, which reflects more asset managers offering. This strategy in response to investor views of preferreds as an attractive source of alternative income.
We remain very competitive thanks to our performance and what arguably is the broadest range of preferred strategies and vehicles in the market.
Firm wide outflows in the fourth quarter were $1 $1 billion led primarily by preferreds at $873 million.
But notably in for the first time ever all of our core strategies experienced net outflows.
Even though markets rallied in the quarter and all of our asset classes had positive returns the outflows in the quarter had already been prompted by broader dynamics, such as year end tax loss, selling and reallocations to cash and treasuries.
Open end funds dominated outflows with $1 billion out.
Both our core preferred mutual fund covenants series preferred securities and income fund and our low duration preferreds mutual fund net outflows totaling $819 million.
And U S. REIT funds, our flagship Kona Steers Realty shares had outflows of 276 million, which included the completion of the redemption by a large allocator that we mentioned last quarter.
Our real estate fund Cohen, <unk> Steers real estate Securities Fund, which has a broader opportunistic mandate had $210 million of inflows.
Clothes in other segments of our open end fund category, where small by comparison, but we had inflows for the 10th straight quarter into our offshore <unk> vehicles and outflows from our USAA and SMA vehicles in the U S.
Institutional advisory had outflows of $392 million.
While redemptions from Covid, driven opportunistic investments has subsided.
Asset owners have been trimming portfolios for various funding needs such as benefits private investment commitments and overall rebalancing in light of market movements.
Outflows from existing clients totaled $573 million.
In the quarter, we had four new mandates fund a total of 242 million across four strategies.
The largest being a global real estate mandate for $182 million from our European corporate pension funds.
Sub advisory ex Japan was slightly positive at $27 million.
Japan sub advisory continued its trend of inflows with $281 million, which netted to 44 million after distributions.
The rotation out of technology and growth and the strength in the U S. Dollar contributed to Japan sub advisory inflows.
We expect to see increased marketing activity with our partners in Japan in 2023 as the country continues to reopen for business.
And we look forward to celebrating our 20 year anniversary with our key distribution partner Daiwa asset management.
Our one unfunded pipeline was $885 million at year end compared with $1 1 billion at the end of the third quarter and the three year average of one 3 billion.
72% of our pipeline.
As in global real estate strategies led by recently won completion portfolio, which is a customized strategy designed to complement existing private holdings by expressing allocations in the listed market that are cheaper or cannot be expressed in the private market.
50% of our pipeline is in Asia Pacific, which is consistent with our recent commentary about emerging demand in the region for listed real assets.
To set the table for our 2023 priorities, we are expecting that the macro environment over the next 12 to 18 months will include the following elements.
The fed will over Titan and will endure and average recession as foreshadowed by the seemingly daily pace of corporate layoffs announcements.
The futures markets indicate that we see we should see the peak of monetary tightening at some point this year.
So sometime in 2023.
Unknowable exactly when we should see the emergence of a new return cycle as financial assets have already repriced and markets anticipate fed easing as the economy segments.
Inflation is expected to remain a wildcard with root causes embedded in the system itself.
In terms of investment strategy priorities, we believe that global listed infrastructure and multi strategy real assets strategies are generally underrepresented in portfolios and we will continue to gain share.
Although infrastructure has been defending very well in the current volatile environment institutional allocations have averaged only four 6% compared with our targets.
Six 6%.
Our research has demonstrated how listed infrastructure and complement private infrastructure allocations through similar to slightly better returns and low correlations.
We will continue to educate while broadening our investment often offerings and universe to include energy transition and other secular opportunities.
With respect to multi strategy real assets, even though we expect inflation to come down we believe investors are under allocated to inflation solutions.
We therefore expect demand to grow as the continuing risks of inflation states the case for insurance.
We are expanding our educational outreach through our real assets Institute.
And our focus on customization, which includes plans to launch a solution using <unk> vehicles to customize allocations for retirement plans.
In terms of reach and preferreds. We believe these asset classes are poised to benefit from our next return cycle and we expect to see attractive entry points over the next year.
As John mentioned listed real estate return cycles, historically precedes private so investors, who utilize both markets and more and more are.
It should be focused on allocated to the listed market now.
We expect private real estate prices to correct and that listed Reits will see acquisition opportunities and values, 10% to 20% lower than the peak in 2022.
Due to higher debt costs and slower growth.
Our firm is now organized with deep expertise and resources to help advise investors on allocations between listed and private real estate and implement custom solutions.
With respect it's preferreds, John characterized our favorable outlook and accordingly, we're looking for ways to invest in the business. By example, we've seeded a new preferred strategy that is more global than composition with a focus on the large universe.
Foreign currency denominated preferreds outside of the U S.
Our other strategic priority is private real estate.
With our expectation that prices should correct between 10 and 20% we believe that sometime in 2023, we will see emerging opportunities to deploy capital.
After several confidential filings on Wednesday, we publicly filed registration statements for our non traded REIT Cohen <unk> steers income opportunities right.
Because we're in registration that is all I can say at this time.
In addition, we continue to focus on other private real estate investment strategies for institutional investors.
Finally, we have integrated our private in listed real estate capabilities with our real estate strategy group led by Rich Hill.
Will help identify the best property sectors geographies and themes, while identifying where real estate is the cheapest.
Looking at distribution priorities, we recently filled key positions by hiring Kimberly Lapointe as head of wealth.
Our core institutional and wealth teams are now fully staffed.
Incrementally, we are adding resources to focus on distributing the non traded REIT and providing advice for optimism rising real estate portfolios in the wealth channel specifically.
Specifically, how much real estate to have in our portfolio and how to divide that between list and in private.
And consistent with emerging demand for real assets in Asia, we are expanding our sales capabilities there.
Closing, we're highly focused on our priorities and I believe well organized to pursue them. This year will be key in helping clients adapt to regime change and the next phase, which will include shifts in allocations between asset classes, including listed versus private.
In each case calibrating for how the return and risk profile has changed and anticipating the new return cycles.
Our strategy with respect to Resourcing is to ensure we have the talent to run the business navigate regulation and execute the new initiatives right in front of us such as private real estate.
But we have set a higher bar with success based triggers for any other roles.
While some of our peers are announcing layoffs, we are in a phase of potential growth that requires resources and we are committed to helping our clients achieve their objectives.
Change creates opportunity and we are committed to capitalizing on this for our clients and for our shareholders.
Thank you for listening operator, please open the lines for questions.
Thank you as a reminder to ask a question. Please press star followed by the number one on your telephone keypad to withdraw your question. Please press star one again.
Our first question comes from John Dunn from Evercore ISI. Please go ahead. Your line is open.
Thank you very much.
Maybe just to start off.
Micro side.
<unk> wise you talked about.
Yes.
Realty shares outflow.
Real estate Securities and club.
What do you think in 2023 and the wealth management channel what do you think it's going to be.
Inflows versus outflows.
Well as I mentioned John .
Sure.
Sure.
The end of last year with reaching down in the mid 20 percents.
As you normally would expect we saw tax loss selling.
And I believe as you.
Identified looking at the mutual fund flow data.
We are starting to see improved flows this year, which.
Kind of validates the shift from tax loss selling back to.
Investors capitalizing.
Capitalizing on the decline in prices in the <unk>.
The.
Potential positive entry point.
I described but I think both John and I complimented it a little bit.
And we think that theyre going to be really good entry points for.
For retail investors.
<unk> thousand 23.
So we would expect flows to.
To improve for our open end mutual funds.
Yes, yes.
Sure.
And then on preferred.
What do you think like the net okay demand rate environment.
Not necessarily.
When you.
Leader.
Less of a drag.
John could you repeat that.
Some static so I didn't hear the question.
Sure.
Im preferred what do you think.
Okay demand environment.
Sure.
Why.
Well again, John laid this out.
This was slightly on a case for double digit returns from preferreds.
And one of the things that we've always experienced with preferreds and considering that they have some of the highest income.
Levels of.
In the fixed income world is.
Vessels are very attracted to them, particularly when consider the tax benefit on top of that so.
One of the things that is.
The change that the margin is.
Fixed income yields up across the yield curve and across different sub segments.
There is more competition for.
For income, but again preferreds still have some of the highest income rates out there. So.
We're thinking that between that and what's the capital appreciation opportunity Jon mentioned with double digit return opportunity.
I think once investors seek kind of an all clear signal from the fed that we will see.
Inflows into our preferred vehicles.
Gotcha.
So can you talk a little bit about.
Private real estate effort.
You give a little more kind of state of the Union.
Not just now but over the next few years.
Do you think that's going to develop.
Sure so.
Really for the past two years, we've been building our private real estate investment.
Consistent with our philosophy, and we didn't try to go out and acquire something that was up and running so we build it piece by piece and I'd say, we're gaining momentum.
On.
All fronts, including the capital raising front.
Outline.
Two vehicles that we are working on.
But most importantly.
We.
With commercial our expectations that commercial real estate prices will correct.
10% to 20%. This year I think there is going to be a really great entry point for us to commence our track record.
That's the thing that we are obsessed about is making sure we get the timing right.
And considering the private real estate business is new business that we started with a really great track record.
And so we're more focused on back then.
Raising assets as fast as we can so.
The next phase will be to get the non traded REIT up and running.
As I said, because we're in registration, we're not going to get into some of the things that are happening there but.
Our overall.
Effort and private real estate is.
It is gaining momentum.
Gotcha.
So this.
Just a question I get.
What do you think it takes to get U S infrastructure flows really go in and.
Kind of a potential timeframe is it.
In 2023 or is it more.
In the out years.
Well I would say for infrastructure overall on the institutional side.
It's probably one of the most active areas that we have.
Our pipelines.
Characterize it in terms of things that are.
Specific active searches and then.
Behind that there is shadow pipeline.
Or is that I'm thinking about it.
I'd say, it's one of the most active areas that we have.
That's that's been enhanced recently by Howe.
Infrastructure has performed in this environment.
On the on the wealth side.
We have gotten a little bit of a pickup from all.
All of those all of the current administration.
<unk> focus on infrastructure structure spending has been a great advertisement for infrastructure. So our our flows into our open end funds.
Have improved.
But I think that it.
It's still early days in terms of.
Broader adoption of infrastructure and the Welch.
John I would only add so we're seeing certainly more interest in the wealth channel four.
The restructure.
And.
Theyre CSU was upgraded to <unk> a few months ago.
We've seen with all of our other funds, obviously, we need.
Four to five stars.
Pretty meaningful shifts.
Investor interest.
Yes.
Okay.
Gotcha.
Okay.
Uh huh.
So.
So you guys have a lot of growth engine.
And Kevin recognizing but.
Maybe to distill it down a little bit if you think about your regions as being U S Asia, Europe , and now like sovereign wealth funds in the middle East.
What's the what's the number one thing in each of those regions that you think is going to do back then.
Great.
Well, let me start with the U S.
Our wealth.
Business is one of our larger businesses.
So when the conditions are right for well.
That can really have the biggest impact on the.
Business.
I would say with with some of the private real estate things that we're doing and John mentioned that I mentioned that in terms of our vision of being able to.
Hello.
The wealth channel with real estate allocations, you're considering all of the mandates by the largest firms to increase alternatives weightings in portfolios I think thats something that in time.
And really help our market share.
In the wealth channel.
Just sticking with the U S.
Sure.
There are when you look at our our shadow pipeline.
There's some very large.
Pension plans that are conducting searches for strategies like U S real estate global infrastructure.
And our multi strategy real assets portfolio.
Which is consistent with the comments around investors.
Looking backwards not needing inflation protection.
That obviously has changed so the U S is one of the biggest markets.
Got it.
Considering our presence in both wells.
The institutional channel I think could have the biggest.
Overall, the impact on the business.
Europe , we've talked about what's going on in the Middle East.
And Thats most active in real estate and then the infrastructure.
Elsewhere in Europe .
One of the interesting things is that the same.
The unallocated two are.
Also to our multi strategy real assets portfolio.
Asia is as we've talked about in the past couple of calls sale emerging.
Demand front for listed real assets.
Yes.
That's going to focus on mostly on real estate, but infrastructure to a lesser extent.
Because of some of the.
The mandates that we've won in the.
Mandates that are.
And competition still.
We wanted to.
Boost our sales presence.
Asia, because if they have now begun to adopt we want to make sure we.
Our market positioning.
These are mandates coming from <unk>.
Southern wealth type curve.
Bonds from Thailand, Malaysia and Korea.
But overall again based on size and based on our presence our rank order as U S. The U S is the largest most.
Influential on the overall business.
But the middle East.
In Asia our comp.
Emerging areas.
Demand.
Okay.
Alright.
On that.
On that last one.
Can you frame for us.
What inning, maybe we are in and the shift from private real estate the public.
And do you think.
Is that just a rebalancing thing or a couple of quarter thing or a multi year thing.
And just in terms of the.
The return cycle I'm going to let John elaborate on that.
Sorry.
Hey, John .
As we mentioned earlier so.
Again last year U S reach about 25%.
But I think it was up 78%. So there's been a 30 plus percent GAAP.
From a performance standpoint.
Of course, knowing exactly knows how much of that gap performance standpoint, we expect to close out.
We could see.
In relative terms, probably 10% to 20% outperformance over the next 12 to 18 months between again the private market.
Public markets.
It's pretty significant.
Of course for different kinds of investors their ability to take advantage of that from a tactical standpoint.
For some of the large sovereigns and other institutional investors. They are in inflow mode. They have capital to put to work. So I think for institutions like that.
They are.
They are able to rebalance, where they are investing incremental capital.
And we are certainly seeing that a lot of these conversations with institutions that have been going on for <unk>.
12 months 24 months and this is similar to what we saw in 2020 you had those conversations.
That's a miss something and then they get the opportunity.
They are a little bit nervous because things are going down.
But then.
As things start to stabilize they get into a position to take advantage of opportunities though.
<unk>.
We think we are transitioning from this.
As volatile everything's are correctly.
By the falling knife to or in a better position to.
Take advantage of where they see relative value. So I think for institutions like that.
And you can certainly take advantage of it and look I talked about what's happening on the non traded REIT side.
I think that the redemptions are a symptom.
Sure.
Of.
Investors recognizing that most things in their portfolio.
Listed Reits went down.
10, 20, 30% last year and something Dennis and.
That creates a really good rebalancing opportunities.
I think the redemption activity.
As an outcome.
The relative value that's been created.
And so I definitely think we're going to see some shifts at the margin.
Right.
Which which we're already seeing.
Right Yeah yeah.
On that last point.
Sure.
Beyond that but right now.
Or would you kind of categorize the closed end fund window in.
Do you have.
Our target for the number of launches per year.
Okay.
We don't we don't have a target for <unk>.
The launches per year, we have ideas that we.
We think of it grad yesterday.
Market as you know right now is as close it's been closed for now.
Now well over a year.
Yes.
Market volatility.
Interest rate.
You'll cycle at the most.
But.
One of the things that has been happening as we get further along the interest rate cycle.
Discounts on.
Some of our closed end funds have been narrowing.
By example are listed infrastructure fund.
<unk> been trading pretty close to NAV.
I expect that once we get.
Through the end of the.
Tightening cycle.
Closer sooner.
So the easing cycle.
Some of these discounts will have.
Closed fully in perhaps on the premiums and then the commission.
We'll set up for the new issue market to open up.
So right now it's not.
Factoring into our planning other than we have investment ideas.
We think are good.
But.
It's going to take a while before the new issue market opens up.
Got you.
And then maybe turning to the institutional side.
10 years ago, you guys pipeline with.
On average about $500 million and then it kind of leveled up too.
1 billion, five often plus plus that.
Do you think over the next maybe two.
<unk> is their ability to level up again at some point get consistently above maybe $2 billion.
Is that even an aspiration.
Okay.
Hi.
That's not something that we can protect.
I would say.
In my comments that it's averaged $1 1 billion for the last three years, which.
<unk>.
A favorable.
<unk> for investing in our.
Our asset classes.
So I would expect.
This adoption of real assets.
To continue.
<unk> and <unk>.
The environment gets better that that.
We should revert back to that level.
And when you think.
Think about what we've invested in our.
<unk> distribution capabilities and the fact that we've extended.
Those markets I would I would expect something to it.
Our multiple.
Be.
Added onto that so I don't know what that number ends up being but.
Got it.
Okay.
I would be disappointed if we didn't get into wanted to have.
Plus $1 billion range.
As we as we get back into work normal earnings.
Makes sense.
Okay.
Yes.
I got this question recently.
What's kind of like the profile of your REIT competitors.
Exiting the space, they shrinking or the larger.
Players getting larger what's going on with <unk>.
<unk> best in competition.
Well the first thing is.
Joe mentioned, how much are.
Market share in active reset grow and the FERC is.
I will not going to say all of our competitors have shrunk significantly.
Over the last 10 years, Anthony some comparative.
Got it gone way.
And there are some that have.
Shrunk.
Incidentally.
And over the last 10 years or so there's certainly been other competitors or layer.
Players in the space that have been in favor and then I would say to be honest because they had good performance.
And then there have been and then sometimes they have gone out of favor.
I think we've been consistently in the mix because we've been consistently top quartile, even though listening in that top quartile.
Laxson wanes over time, so we continue to take market share because we're putting up consistent performance, we have a consistent team.
Our platform is very healthy so we are able to continue to.
And our people invest in the research that we need.
And the resources, we needed 20 years ago, they are very different today.
And I.
I think our.
Clients and prospective clients see that we are investing on the macro side on the risk side.
On the.
Data side on the quantitative side.
And all of those things have allowed us to.
We will keep getting better.
I would just add a perspective on that John from the from the wells.
Channel.
Which is that.
With the.
The adoption of <unk>.
Private.
Strategies in the wealth channel, we have a new competitor so while we have.
Don.
Extraordinarily well versus our actives.
Tears in open end funds in the wealth channel.
And we've also had to.
Competed against passive strategies, which have gained share versus.
Active as you know.
We're now competing with private equity firms, who are offering private or.
Our semi private.
And real estate solutions in the wealth channel so.
That is.
Big part of our.
The impetus for us too.
Create a vehicle.
And private real estate for the wealth channel.
The vehicle that has a little differentiation.
<unk>.
But when it's.
Itself.
Take advantage of the opportunity that we see.
Help advisors.
Optimize their portfolios.
The private equity firms are going to do that they're going to.
They're going to.
Trying to optimize there.
Private allocations are not going to.
Health Advisors add listed allocations to that so.
For us it's on one hand.
Our competitive channels on the other hand.
It's a great business opportunity investment opportunity for for the wealth channel.
So is there.
Just last one maybe more big picture.
When I think about current figures over the last.
The last phase I think of you guys broadening in the strategy tragedy, if you wanted to and getting deeper in the wealth management channel Revamping U S advisory in adding.
Private real estate.
What's your vision for the next few years.
Starts with creating great investment performance.
And then.
Maximizing all of the investments that we've made.
In distribution and <unk>.
Capitalizing on.
Just overall position.
Buses are real assets provider.
And so looking backward.
We've mentioned that our multi strategy real assets portfolio a couple of times.
Because inflation hasn't been a thing that hadn't.
Matt its full potential.
But when we.
I look at how we're positioned today.
We've invested in.
And the distribution and vehicles.
I think bounce.
Our time to maximize our market share.
And the potential.
So we see real assets in the investment portfolio as well, adding private real estate in the mix.
Okay.
Great. Thank you very much much appreciated.
We have no further questions in queue I would like to turn the call over to Joe Harvey Chief Executive Officer of Cohen, <unk> steers for closing remarks.
Great well. Thank you everyone for your time. This morning, we look forward to speaking with you next in April when we.
Release, our first quarter results.
Have a great day.
This concludes today's conference call. Thank you for your participation you may now disconnect.
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Okay.
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Okay.