Assets Under Management
By Investment Strategy
(in millions) | | | | | | | | | | | | | | | | | |
| Years Ended December 31, |
| 2023 | | 2022 | | 2021 |
U.S. Real Estate | | | | | |
Assets under management, beginning of period | $ | 35,108 | | | $ | 49,915 | | | $ | 32,827 | |
Inflows | 7,077 | | | 10,572 | | | 11,538 | |
Outflows | (6,521) | | | (10,869) | | | (6,499) | |
Net inflows (outflows) | 556 | | | (297) | | | 5,039 | |
Market appreciation (depreciation) | 4,495 | | | (12,097) | | | 14,417 | |
Distributions | (1,679) | | | (2,406) | | | (2,294) | |
Transfers | 70 | | | (7) | | | (74) | |
Total increase (decrease) | 3,442 | | | (14,807) | | | 17,088 | |
Assets under management, end of period | $ | 38,550 | | | $ | 35,108 | | | $ | 49,915 | |
Percentage of total assets under management | 46.4 | % | | 43.7 | % | | 46.8 | % |
Average assets under management | $ | 36,034 | | | $ | 41,627 | | | $ | 41,315 | |
| | | | | |
Preferred Securities | | | | | |
Assets under management, beginning of period | $ | 19,767 | | | $ | 26,987 | | | $ | 23,185 | |
Inflows | 4,997 | | | 7,059 | | | 8,802 | |
Outflows | (6,890) | | | (10,212) | | | (5,053) | |
Net inflows (outflows) | (1,893) | | | (3,153) | | | 3,749 | |
Market appreciation (depreciation) | 1,029 | | | (3,240) | | | 964 | |
Distributions | (739) | | | (834) | | | (985) | |
Transfers | — | | | 7 | | | 74 | |
Total increase (decrease) | (1,603) | | | (7,220) | | | 3,802 | |
Assets under management, end of period | $ | 18,164 | | | $ | 19,767 | | | $ | 26,987 | |
Percentage of total assets under management | 21.8 | % | | 24.6 | % | | 25.3 | % |
Average assets under management | $ | 18,439 | | | $ | 22,638 | | | $ | 25,262 | |
| | | | | |
Global/International Real Estate | | | | | |
Assets under management, beginning of period | $ | 14,782 | | | $ | 19,380 | | | $ | 15,214 | |
Inflows | 1,529 | | | 3,848 | | | 3,263 | |
Outflows | (1,975) | | | (3,289) | | | (2,833) | |
Net inflows (outflows) | (446) | | | 559 | | | 430 | |
Market appreciation (depreciation) | 1,616 | | | (5,039) | | | 3,933 | |
Distributions | (93) | | | (118) | | | (197) | |
Transfers | (70) | | | — | | | — | |
Total increase (decrease) | 1,007 | | | (4,598) | | | 4,166 | |
Assets under management, end of period | $ | 15,789 | | | $ | 14,782 | | | $ | 19,380 | |
Percentage of total assets under management | 19.0 | % | | 18.4 | % | | 18.2 | % |
Average assets under management | $ | 14,899 | | | $ | 16,692 | | | $ | 17,688 | |
| | | | | | | | | | | | | | | | | |
| Years Ended December 31, |
| 2020 | | 2019 | | 2018 (1) |
U.S. Real Estate | | | | | |
Assets under management, beginning of period | $ | 31,024 | | | $ | 24,627 | | | $ | 29,241 | |
Inflows | 11,114 | | | 7,298 | | | 4,488 | |
Outflows | (6,478) | | | (5,363) | | | (5,158) | |
Net inflows (outflows) | 4,636 | | | 1,935 | | | (670) | |
Market appreciation (depreciation) | (574) | | | 7,346 | | | (1,151) | |
Distributions | (2,282) | | | (2,886) | | | (2,561) | |
Transfers | 23 | | | 2 | | | (232) | |
Total increase (decrease) | 1,803 | | | 6,397 | | | (4,614) | |
Assets under management, end of period | $ | 32,827 | | | $ | 31,024 | | | $ | 24,627 | |
Percentage of total assets under management | 41.1 | % | | 43.0 | % | | 42.6 | % |
Average assets under management | $ | 28,972 | | | $ | 29,117 | | | $ | 26,605 | |
| | | | | |
Preferred Securities | | | | | |
Assets under management, beginning of period | $ | 17,581 | | | $ | 13,068 | | | $ | 14,435 | |
Inflows | 10,979 | | | 5,726 | | | 4,503 | |
Outflows | (5,828) | | | (3,041) | | | (4,723) | |
Net inflows (outflows) | 5,151 | | | 2,685 | | | (220) | |
Market appreciation (depreciation) | 1,172 | | | 2,406 | | | (803) | |
Distributions | (696) | | | (597) | | | (560) | |
Transfers | (23) | | | 19 | | | 216 | |
Total increase (decrease) | 5,604 | | | 4,513 | | | (1,367) | |
Assets under management, end of period | $ | 23,185 | | | $ | 17,581 | | | $ | 13,068 | |
Percentage of total assets under management | 29.0 | % | | 24.4 | % | | 22.6 | % |
Average assets under management | $ | 18,278 | | | $ | 15,702 | | | $ | 14,237 | |
| | | | | |
Global/International Real Estate | | | | | |
Assets under management, beginning of period | $ | 13,509 | | | $ | 11,047 | | | $ | 11,194 | |
Inflows | 4,122 | | | 2,541 | | | 1,975 | |
Outflows | (2,436) | | | (2,714) | | | (1,669) | |
Net inflows (outflows) | 1,686 | | | (173) | | | 306 | |
Market appreciation (depreciation) | 102 | | | 2,887 | | | (254) | |
Distributions | (83) | | | (252) | | | (199) | |
| | | | | |
Total increase (decrease) | 1,705 | | | 2,462 | | | (147) | |
Assets under management, end of period | $ | 15,214 | | | $ | 13,509 | | | $ | 11,047 | |
Percentage of total assets under management | 19.0 | % | | 18.7 | % | | 19.1 | % |
Average assets under management | $ | 13,193 | | | $ | 12,718 | | | $ | 11,341 | |
_________________________
(1) Amounts have been recast to include model-based portfolios which were previously classified as assets under advisement.
Assets Under Management
By Investment Strategy - continued
(in millions) | | | | | | | | | | | | | | | | | |
| Years Ended December 31, |
| 2023 | | 2022 | | 2021 |
Global Listed Infrastructure | | | | | |
Assets under management, beginning of period | $ | 8,596 | | | $ | 8,763 | | | $ | 6,729 | |
Inflows | 487 | | | 1,566 | | | 1,751 | |
Outflows | (725) | | | (1,112) | | | (765) | |
Net inflows (outflows) | (238) | | | 454 | | | 986 | |
Market appreciation (depreciation) | 204 | | | (405) | | | 1,256 | |
Distributions | (206) | | | (216) | | | (208) | |
| | | | | |
Total increase (decrease) | (240) | | | (167) | | | 2,034 | |
Assets under management, end of period | $ | 8,356 | | | $ | 8,596 | | | $ | 8,763 | |
Percentage of total assets under management | 10.1 | % | | 10.7 | % | | 8.2 | % |
Average assets under management | $ | 8,291 | | | $ | 8,700 | | | $ | 7,970 | |
| | | | | |
Other | | | | | |
Assets under management, beginning of period | $ | 2,172 | | | $ | 1,584 | | | $ | 1,953 | |
Inflows | 849 | | | 1,384 | | | 546 | |
Outflows | (819) | | | (588) | | | (1,297) | |
Net inflows (outflows) | 30 | | | 796 | | | (751) | |
Market appreciation (depreciation) | 130 | | | (150) | | | 440 | |
Distributions | (55) | | | (58) | | | (58) | |
| | | | | |
Total increase (decrease) | 105 | | | 588 | | | (369) | |
Assets under management, end of period | $ | 2,277 | | | $ | 2,172 | | | $ | 1,584 | |
Percentage of total assets under management | 2.7 | % | | 2.7 | % | | 1.5 | % |
Average assets under management | $ | 2,228 | | | $ | 1,967 | | | $ | 1,979 | |
| | | | | |
Total | | | | | |
Assets under management, beginning of period | $ | 80,425 | | | $ | 106,629 | | | $ | 79,908 | |
Inflows | 14,939 | | | 24,429 | | | 25,900 | |
Outflows | (16,930) | | | (26,070) | | | (16,447) | |
Net inflows (outflows) | (1,991) | | | (1,641) | | | 9,453 | |
Market appreciation (depreciation) | 7,474 | | | (20,931) | | | 21,010 | |
Distributions | (2,772) | | | (3,632) | | | (3,742) | |
| | | | | |
Total increase (decrease) | 2,711 | | | (26,204) | | | 26,721 | |
Assets under management, end of period | $ | 83,136 | | | $ | 80,425 | | | $ | 106,629 | |
Average assets under management | $ | 79,891 | | | $ | 91,624 | | | $ | 94,214 | |
| | | | | | | | | | | | | | | | | |
| Years Ended December 31, |
| 2020 | | 2019 | | 2018 (1) |
Global Listed Infrastructure | | | | | |
Assets under management, beginning of period | $ | 8,076 | | | $ | 6,517 | | | $ | 6,982 | |
Inflows | 997 | | | 713 | | | 601 | |
Outflows | (1,722) | | | (699) | | | (448) | |
Net inflows (outflows) | (725) | | | 14 | | | 153 | |
Market appreciation (depreciation) | (423) | | | 1,520 | | | (419) | |
Distributions | (199) | | | (201) | | | (199) | |
Transfers | — | | | 226 | | | — | |
Total increase (decrease) | (1,347) | | | 1,559 | | | (465) | |
Assets under management, end of period | $ | 6,729 | | | $ | 8,076 | | | $ | 6,517 | |
Percentage of total assets under management | 8.4 | % | | 11.2 | % | | 11.3 | % |
Average assets under management | $ | 6,972 | | | $ | 7,455 | | | $ | 6,924 | |
| | | | | |
Other | | | | | |
Assets under management, beginning of period | $ | 1,992 | | | $ | 2,594 | | | $ | 3,638 | |
Inflows | 188 | | | 204 | | | 222 | |
Outflows | (178) | | | (916) | | | (971) | |
Net inflows (outflows) | 10 | | | (712) | | | (749) | |
Market appreciation (depreciation) | (16) | | | 418 | | | (245) | |
Distributions | (33) | | | (61) | | | (66) | |
Transfers | — | | | (247) | | | 16 | |
Total increase (decrease) | (39) | | | (602) | | | (1,044) | |
Assets under management, end of period | $ | 1,953 | | | $ | 1,992 | | | $ | 2,594 | |
Percentage of total assets under management | 2.4 | % | | 2.8 | % | | 4.5 | % |
Average assets under management | $ | 1,760 | | | $ | 2,285 | | | $ | 3,075 | |
| | | | | |
Total | | | | | |
Assets under management, beginning of period | $ | 72,182 | | | $ | 57,853 | | | $ | 65,490 | |
Inflows | 27,400 | | | 16,482 | | | 11,789 | |
Outflows | (16,642) | | | (12,733) | | | (12,969) | |
Net inflows (outflows) | 10,758 | | | 3,749 | | | (1,180) | |
Market appreciation (depreciation) | 261 | | | 14,577 | | | (2,872) | |
Distributions | (3,293) | | | (3,997) | | | (3,585) | |
| | | | | |
Total increase (decrease) | 7,726 | | | 14,329 | | | (7,637) | |
Assets under management, end of period | $ | 79,908 | | | $ | 72,182 | | | $ | 57,853 | |
Average assets under management | $ | 69,175 | | | $ | 67,277 | | | $ | 62,182 | |
_________________________
(1) Amounts have been recast to include model-based portfolios which were previously classified as assets under advisement.
Investment Performance as of December 31, 20202023
_________________________
(1) Past performance is no guarantee of future results. Outperformance is determined by comparing the annualized investment performance of each investment strategy to the performance of specified reference benchmarks. Investment performance in excess of the performance of the benchmark is considered outperformance. The investment performance calculation of each investment strategy is based on all active accounts and investment models pursuing similar investment objectives. For accounts, actual investment performance is measured gross of fees and net of withholding taxes. For investment models, for which actual investment performance does not exist, the investment performance of a composite of accounts pursuing comparable investment objectives is used as a proxy for actual investment performance. The performance of the specified reference benchmark for each account and investment model is measured net of withholding taxes, where applicable. This is not investment advice and may not be construed as sales or marketing material for any financial product or service sponsored or provided by Cohen & Steers.
(2) © 20212024 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete, or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Morningstar calculates its ratings based on a risk-adjusted return measure that accounts for variation in a fund's monthly performance (including the effects of sales charges, loads, and redemption fees), placing more emphasis on downward variations and rewarding consistent performance. The top 10% of funds in each category receive five stars, the next 22.5% receive four stars, the next 35% receive three stars, the next 22.5% receive two stars and the bottom 10% receive one star. Past performance is no guarantee of future results. Based on independent rating by Morningstar, Inc. of investment performance of each Cohen & Steers-sponsored open-end U.S.-registered mutual fund for all share classes for the overall period at December 31, 2020.2023. Overall Morningstar rating is a weighted average based on the 3-year, 5-year and 10-year Morningstar rating. Each share class is counted as a fraction of one fund within this scale and rated separately, which may cause slight variations in the distribution percentages. This is not investment advice and may not be construed as sales or marketing material for any financial product or service sponsored or provided by Cohen & Steers.
Changes in Assets Under Management - 20202023 Compared with 20192022
Assets under management at December 31, 20202023 increased 10.7%3.4% to $79.9$83.1 billion from $72.2$80.4 billion at December 31, 2019.2022. The increase was due to net inflows of $10.8 billion and market appreciation of $261 million, which recovered from $15.3$7.5 billion, of market depreciation in the first quarter of 2020, partially offset by net outflows of $2.0 billion and distributions of $3.3$2.8 billion. Net inflowsoutflows included $5.2$1.9 billion intofrom preferred securities and $4.6 billion into U.S. real estate.securities. Market appreciation included $1.2$4.5 billion from preferred securities, partially offset by market depreciation of $574 million from U.S. real estate, $1.6 billion from global/international real estate and $423 million$1.0 billion from global listed infrastructure.preferred securities. Distributions included $2.3$1.7 billion from U.S. real estate and $696$739 million from preferred securities. Our overall organic growthdecay rate was 14.9%(2.5%) for the year ended December 31, 2020, compared with 6.5% for the
year ended December 31, 2019.2023. The organic growthgrowth/decay rate represents the ratio of net flows for the year to the beginning assets under management.
Open-end funds
Assets under management in open-end funds at December 31, 2023, which represented 44.5% of the respective period.
Averagetotal assets under management, increased 0.3% to $37.0 billion from $36.9 billion at December 31, 2022. The increase was due to market appreciation of $3.2 billion, partially offset by net outflows of $1.7 billion and distributions of $1.3 billion. Net outflows included $1.4 billion from preferred securities. Market appreciation included $2.4 billion from U.S. real estate and $547 million from preferred securities. Distributions included $608 million from U.S. real estate and $538 million from preferred securities. Of these distributions, $977 million was reinvested and included in net flows. Our organic decay rate for open-end funds was (4.5%) for the year ended December 31, 2020 increased 2.8% to $69.2 billion from $67.3 billion for the year ended December 31, 2019.2023.
Institutional accounts
Assets under management in institutional accounts at December 31, 2020,2023, which represented 41.6%42.1% of total assets under management, increased 4.5%8.2% to $33.3$35.0 billion from $31.8$32.4 billion at December 31, 2019.2022. The increase was due to market appreciation of $3.6 billion, partially offset by net outflows of $240 million and distributions of $891 million. Net outflows included $435 million from preferred securities, $375 million from global/international real estate and $124 million from global listed infrastructure, partially offset by net inflows of $680 million into U.S. real estate. Market appreciation included $1.8 billion from U.S. real estate and $1.4 billion from global/international real estate. Distributions included $864 million from U.S. real estate. Our organic decay rate for institutional accounts was (0.7%) for the year ended December 31, 2023.
Assets under management in advisory accounts at December 31, 2023, which represented 57.9% of institutional assets under management, increased 8.8% to $20.3 billion from $18.6 billion at December 31, 2022. The increase was due to market appreciation of $1.9 billion, partially offset by net outflows of $453 million. Net outflows included $428 million from preferred securities. Market appreciation included $811 million from global/international real estate, $716 million from U.S. real estate and $271 million from preferred securities. Our organic decay rate for advisory accounts was (2.4%) for the year ended December 31, 2023.
Assets under management in Japan subadvisory accounts at December 31, 2023, which represented 25.8% of institutional assets under management, increased 7.8% to $9.0 billion from $8.4 billion at December 31, 2022. The increase was due to net inflows of $2.8 billion$349 million and market appreciation of $53 million,$1.2 billion, partially offset by distributions of $1.4 billion. Net inflows included $1.9 billion into global/international real estate and $1.6 billion into U.S. real estate, partially offset by net outflows of $662 million from global listed infrastructure. Distributions included $1.4 billion from U.S. real estate. Our organic growth rate for institutional accounts was 8.7% for the year ended December 31, 2020, compared with organic decay of 3.4% for the year ended December 31, 2019.
Average assets under management for institutional accounts for the year ended December 31, 2020 decreased 1.4% to $29.9 billion from $30.3 billion for the year ended December 31, 2019.
Assets under management in institutional advisory accounts at December 31, 2020, which represented 53.0% of institutional assets under management, increased 12.5% to $17.6 billion from $15.7 billion at December 31, 2019. The increase was due to net inflows of $1.6 billion and market appreciation of $406$891 million. Net inflows included $1.3 billion into global/international real estate and $699$428 million into U.S. real estate, partially offset by net outflows of $565 million from global listed infrastructure. Market appreciation included $265$67 million from global/international real estate and $196 million from preferred securities. Our organic growth rate for institutional advisory accounts was 9.9% for the year ended December 31, 2020, compared with 4.7% for the year ended December 31, 2019.
Average assets under management for institutional advisory accounts for the year ended December 31, 2020 increased 6.1% to $15.7 billion from $14.8 billion for the year ended December 31, 2019.
Assets under management in Japan subadvisory accounts at December 31, 2020, which represented 29.2% of institutional assets under management, decreased 5.8% to $9.7 billion from $10.3 billion at December 31, 2019. The decrease was due to market depreciation of $193 million and distributions of $1.4 billion, partially offset by net inflows of $975 million. Net inflows included $913 million into U.S. real estate. Market depreciationappreciation included $237$912 million from U.S. real estate partially offset by market appreciation of $41and $267 million from global/international real estate. Distributions included $1.4 billion$864 million from U.S. real estate. Our organic growth rate for Japan subadvisory accounts was 9.4%4.2% for the year ended December 31, 2020, compared with organic decay of 1.4% for the year ended December 31, 2019.
Average assets under management for Japan subadvisory accounts for the year ended December 31, 2020 decreased 9.4% to $9.0 billion from $10.0 billion for the year ended December 31, 2019.2023.
Assets under management in institutional subadvisory accounts excluding Japan at December 31, 2020,2023, which represented 17.8%16.4% of institutional assets under management, increased 1.5%6.9% to $5.9$5.7 billion from $5.8$5.4 billion at December 31, 2019.2022. The increase was due to net inflowsmarket appreciation of $246$508 million, partially offset by market depreciationnet outflows of $160$136 million. Net inflowsoutflows included $368$376 million intofrom global/international real estate, partially offset by net inflows of $169 million into U.S. real estate and $91 million into real assets multi-strategy (included in "Other" in the Assets under Management - By Investment Strategy
table). Market appreciation included $298 million from global/international real estate and $157 million from U.S. real estate. Our organic decay rate for subadvisory accounts excluding Japan was (2.5%) for the year ended December 31, 2023.
Closed-end funds
Assets under management in closed-end funds at December 31, 2023, which represented 13.3% of total assets under management, were $11.1 billion at both December 31, 2023 and December 31, 2022. Assets under management in closed-end funds included net outflows of $90$74 million and distributions of $616 million, partially offset by market appreciation of $617 million. Our organic decay rate for closed-end funds was (0.7%) for the year ended December 31, 2023.
Changes in Assets Under Management - 2022 Compared with 2021
Assets under management at December 31, 2022 decreased 24.6% to $80.4 billion from $106.6 billion at December 31, 2021. The decrease was due to net outflows of $1.6 billion, market depreciation of $20.9 billion and distributions of $3.6 billion. Net outflows included $3.2 billion from preferred securities, partially offset by net inflows of $748 million into real assets multi-strategy (included in "Other" in the Assets under Management - By Investment Strategy table), $559 million into global/international real estate and $454 million into global listed infrastructure. Market depreciation included $109 million$12.1 billion from U.S. real estate, $5.0 billion from global/international real estate.estate and $3.2 billion from preferred securities. Distributions
included $2.4 billion from U.S. real estate and $834 million from preferred securities. Our overall organic growthdecay rate for institutional subadvisory accounts excluding Japan was 4.2%(1.5%) for the year ended December 31, 2020, compared with organic decay of 23.3% for the year ended December 31, 2019.
Average assets under management for institutional subadvisory accounts excluding Japan for the year ended December 31, 2020 decreased 6.7% to $5.2 billion from $5.6 billion for the year ended December 31, 2019.2022.
Open-end funds
Assets under management in open-end funds at December 31, 2020,2022, which represented 44.0%45.9% of total assets under management, increased 14.4%decreased 27.5% to $35.2$36.9 billion from $30.7$50.9 billion at December 31, 2019.2021. The increasedecrease was due to net inflowsoutflows of $5.4$1.8 billion, market depreciation of $10.3 billion and market appreciation of $405 million, partially offset by distributions of $1.4$2.0 billion. Net inflowsoutflows included $3.0$3.1 billion into preferred securities and $2.5 billion into U.S. real estate. Market appreciation included $851 million from preferred securities, partially offset by marketnet inflows of $733 million into real assets multi-strategy (included in "Other" in the Assets under Management - By Investment Strategy table), $248 million into global/international real estate and $184 million into global listed infrastructure. Market depreciation of $260 millionincluded $7.1 billion from U.S. real estate $95 millionand $2.2 billion from global/internationalpreferred securities. Distributions included $1.2 billion from U.S. real estate and $81 million from global listed infrastructure. Distributions included $742 million from U.S. real
estate and $578$611 million from preferred securities. Of these distributions, $1.6 billion was reinvested and included in net flows. Our organic growthdecay rate for open-end funds was 17.6%(3.5%) for the year ended December 31, 2020, compared with 21.3%2022.
Institutional accounts
Assets under management in institutional accounts at December 31, 2022, which represented 40.3% of total assets under management, decreased 24.2% to $32.4 billion from $42.7 billion at December 31, 2021. The decrease was due to net outflows of $442 million, market depreciation of $8.9 billion and distributions of $1.0 billion. Net outflows included $799 million from U.S. real estate, partially offset by net inflows of $310 million into global/international real estate. Market depreciation included $4.2 billion from global/international real estate and $4.0 billion from U.S. real estate. Distributions included $934 million from U.S. real estate. Our organic decay rate for institutional accounts was (1.0%) for the year ended December 31, 2019.2022.
AverageAssets under management in advisory accounts at December 31, 2022, which represented 57.6% of institutional assets under management, decreased 24.3% to $18.6 billion from $24.6 billion at December 31, 2021. The decrease was due to net outflows of $1.1 billion and market depreciation of $4.9 billion. Net outflows included $1.5 billion from U.S. real estate, partially offset by net inflows of $316 million into global listed infrastructure and $313 million into global/international real estate. Market depreciation included $2.4 billion from global/international real estate and $1.9 billion from U.S. real estate. Our organic decay rate for open-end fundsadvisory accounts was (4.3%) for the year ended December 31, 2020 increased 9.3%2022.
Assets under management in Japan subadvisory accounts at December 31, 2022, which represented 25.9% of institutional assets under management, decreased 26.1% to $30.2$8.4 billion from $27.6$11.3 billion at December 31, 2021. The decrease was due to market depreciation of $2.5 billion and distributions of $1.0 billion, partially offset by net inflows of $552 million. Net inflows included $488 million into U.S. real estate. Market depreciation included $1.8 billion from U.S. real estate and $659 million from global/international real estate. Distributions included $934 million from U.S. real estate. Our organic growth rate for Japan subadvisory accounts was 4.9% for the year ended December 31, 2019.2022.
Assets under management in subadvisory accounts excluding Japan at December 31, 2022, which represented 16.6% of institutional assets under management, decreased 21.1% to $5.4 billion from $6.8 billion at December 31, 2021. The decrease was due to market depreciation of $1.5 billion, partially offset by net inflows of $68 million. Market depreciation included $1.1 billion from global/international real estate. Our organic growth rate for subadvisory accounts excluding Japan was 1.0% for the year ended December 31, 2022.
Closed-end funds
Assets under management in closed-end funds at December 31, 2020,2022, which represented 14.4%13.9% of total assets under management, increased 19.2%decreased 14.2% to $11.5$11.1 billion from $9.6$13.0 billion at December 31, 2019.2021. The increasedecrease was due to market depreciation of $1.7 billion and distributions of $695 million, partially offset by net inflows of $2.6 billion, partially offset by market depreciation$575 million. Inflows of $197 $482
million, and distributions of $517 million. Net inflowswhich included $2.1 billion fromleverage, were attributable to the Company's initial public offering of the Cohen & Steers Tax-Advantaged Preferred SecuritiesReal Estate
Opportunities and Income Fund (PTA) and $526 million from the Cohen & Steers Quality Income Realty Fund, Inc. (RQI) rights offering.(RLTY). Our organic growth rate for closed-end funds was 26.6%4.4% for the year ended December 31, 2020, compared with organic decay of 0.9% for the year ended December 31, 2019.
Average assets under management for closed-end funds for the year ended December 31, 2020 decreased 2.6% to $9.1 billion from $9.4 billion for the year ended December 31, 2019.
Changes in Assets Under Management - 2019 Compared with 2018
Assets under management at December 31, 2019 increased 24.8% to $72.2 billion from $57.9 billion at December 31, 2018. The increase was due to net inflows of $3.7 billion and market appreciation of $14.6 billion, partially offset by distributions of $4.0 billion. Net inflows included $2.7 million into preferred securities and $1.9 billion into U.S. real estate, partially offset by net outflows of $676 million from large cap value (which is included in “Other” in the table on pages 23-24). Market appreciation included $7.3 billion from U.S. real estate, $2.9 billion from global/international real estate, $2.4 billion from preferred securities and $1.5 billion from global listed infrastructure. Distributions included $2.9 billion from U.S. real estate and $597 million from preferred securities. Our overall organic growth rate was 6.5% for the year ended December 31, 2019, compared with organic decay of 1.8% for the year ended December 31, 2018.
Average assets under management for the year ended December 31, 2019 increased 8.2% to $67.3 billion from $62.2 billion for the year ended December 31, 2018.
Institutional accounts
Assets under management in institutional accounts at December 31, 2019, which represented 44.1% of total assets under management, increased 17.2% to $31.8 billion from $27.1 billion at December 31, 2018. The increase was due to market appreciation of $6.9 billion, partially offset by net outflows of $915 million and distributions of $1.3 billion. Net outflows included $510 million from large cap value (which is included in “Other” in the table on pages 23-24) and $356 million from preferred securities, partially offset by net inflows of $231 million into U.S. real estate. Market appreciation included $3.0 billion from U.S. real estate and $2.4 million from global/international real estate. Distributions included $1.2 billion from U.S. real estate. Our organic decay rate for institutional accounts was 3.4% for the year ended December 31, 2019, compared with 2.4% for the year ended December 31, 2018.
Average assets under management for institutional accounts for the year ended December 31, 2019 increased 4.9% to $30.3 billion from $28.9 billion for the year ended December 31, 2018.
Assets under management in institutional advisory accounts at December 31, 2019, which represented 49.3% of institutional assets under management, increased 29.9% to $15.7 billion from $12.1 billion at December 31, 2018. The increase was due to net inflows of $567 million and market appreciation of $3.0 billion. Net inflows included $592 million into global/international real estate and $124 million into U.S. real estate, partially offset by net outflows of $92 million from large cap value (which is included in “Other” in the table on pages 23-24) and $69 million from global listed infrastructure. Market appreciation included $1.1 billion from global/international real estate, $803 million from U.S. real estate and $512 million from global listed infrastructure. Our organic growth rate for institutional advisory accounts was 4.7% for the year ended December 31, 2019, compared with 10.4% for the year ended December 31, 2018.
Average assets under management for institutional advisory accounts for the year ended December 31, 2019 increased 25.0% to $14.8 billion from $11.8 billion for the year ended December 31, 2018.2022.
Assets under management in Japan subadvisory accounts at December 31, 2019, which represented 32.4% of institutional assets under management, increased 11.1% to $10.3 billion from $9.3 billion at December 31, 2018. The increase was due to market appreciation of $2.5 billion, partially offset by net outflows of $134 million and distributions of $1.3 billion. Net outflows included $180 million from preferred securities and $104 million from global/international real estate, partially offset by net inflows of $152 million into U.S. real estate. Market appreciation included $1.9 billion from U.S. real estate and $445 million from global/international real estate. Distributions included $1.2 billion from U.S. real estate. Our organic decay rate for Japan subadvisory accounts was 1.4% for the year ended December 31, 2019, compared with 8.7% for the year ended December 31, 2018.
Average assets under management for Japan subadvisory accounts for the year ended December 31, 2019 decreased 6.2% to $10.0 billion from $10.6 billion for the year ended December 31, 2018.
Assets under management in institutional subadvisory accounts excluding Japan at December 31, 2019, which represented 18.3% of institutional assets under management, were $5.8 million at both December 31, 2019 and 2018 as net outflows were offset by market appreciation. Our organic decay rate for institutional subadvisory accounts excluding Japan was 23.3% for the year ended December 31, 2019, compared with 11.8% for the year ended December 31, 2018.
Average assets under management for institutional subadvisory accounts excluding Japan for the year ended December 31, 2019 decreased 13.7% to $5.6 billion from $6.5 billion for the year ended December 31, 2018.
Open-end funds
Assets under management in open-end funds at December 31, 2019, which represented 42.6% of total assets under management, increased 37.8% to $30.7 billion from $22.3 billion at December 31, 2018. The increase was due to net inflows of $4.7 billion and market appreciation of $5.9 billion, partially offset by distributions of $2.2 billion. Net inflows included $3.0 billion into preferred securities and $1.7 billion into U.S. real estate. Market appreciation included $3.7 billion from U.S. real estate and $1.6 billion from preferred securities. Distributions included $1.5 billion from U.S. real estate and $478 million from preferred securities. Our organic growth rate for open-end funds was 21.3% for the year ended December 31, 2019, compared with organic decay of 1.8% for the year ended December 31, 2018.
Average assets under management for open-end funds for the year ended December 31, 2019 increased 13.7% to $27.6 billion from $24.3 billion for the year ended December 31, 2018.
Closed-end funds
Assets under management in closed-end funds at December 31, 2019, which represented 13.4% of total assets under management, increased 14.7% to $9.6 billion from $8.4 billion at December 31, 2018. The increase was due to market appreciation of $1.8 billion, partially offset by net outflows of $75 million related to decreases in certain funds' outstanding leverage and distributions of $514 million. Our organic decay rate for closed-end funds was 0.9% for the year ended December 31, 2019, compared with an organic growth rate of 0.1% for the year ended December 31, 2018.
Average assets under management for closed-end funds for the year ended December 31, 2019 increased 4.1% to $9.4 billion from $9.0 billion for the year ended December 31, 2018.
Summary of Operating Information
| | | | | | | | | | | | | | | | | |
| Years Ended December 31, |
(in thousands, except percentages and per share data) | 2020 | | 2019 | | 2018 |
U.S. GAAP | | | | | |
Revenue | $ | 427,536 | | | $ | 410,830 | | | $ | 381,111 | |
Expenses (1) | $ | 332,479 | | | $ | 250,696 | | | $ | 234,073 | |
Operating income (loss) | $ | 95,057 | | | $ | 160,134 | | | $ | 147,038 | |
Non-operating income (loss) | $ | (1,670) | | | $ | 27,415 | | | $ | (3,259) | |
Net income attributable to common stockholders | $ | 76,584 | | | $ | 134,621 | | | $ | 113,896 | |
Diluted earnings per share | $ | 1.57 | | | $ | 2.79 | | | $ | 2.40 | |
Operating margin | 22.2 | % | | 39.0 | % | | 38.6 | % |
| | | | | |
As Adjusted (2) | | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
Net income attributable to common stockholders | $ | 125,291 | | | $ | 124,360 | | | $ | 113,849 | |
Diluted earnings per share | $ | 2.57 | | | $ | 2.57 | | | $ | 2.40 | |
Operating margin | 39.6 | % | | 39.6 | % | | 39.1 | % |
Results | | | | | | | | | | | | | | | | | |
(in thousands, except percentages and per share data) | Years Ended December 31, |
| 2023 | | 2022 | | 2021 |
U.S. GAAP | | | | | |
Revenue | $ | 489,637 | | | $ | 566,906 | | | $ | 583,832 | |
Expenses | $ | 325,160 | | | $ | 350,968 | | | $ | 323,460 | |
Operating income | $ | 164,477 | | | $ | 215,938 | | | $ | 260,372 | |
Non-operating income (loss) (1) | $ | 15,774 | | | $ | (19,041) | | | $ | 21,572 | |
Net income attributable to common stockholders | $ | 129,049 | | | $ | 171,042 | | | $ | 211,396 | |
Diluted earnings per share | $ | 2.60 | | | $ | 3.47 | | | $ | 4.31 | |
Operating margin | 33.6 | % | | 38.1 | % | | 44.6 | % |
| | | | | |
As Adjusted (2) | | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
Net income attributable to common stockholders | $ | 140,511 | | | $ | 182,251 | | | $ | 197,947 | |
Diluted earnings per share | $ | 2.84 | | | $ | 3.70 | | | $ | 4.03 | |
Operating margin | 36.2 | % | | 43.0 | % | | 46.0 | % |
_________________________
(1) Includes expensesIncluded amounts attributable to third-party interests in consolidated investment vehicles. Refer to non-operating income (loss) tables on pages 32 and 34 for additional detail.
(2)Refer to pages 35-37 for reconciliations of $60.6 million associatedU.S. GAAP to as adjusted results.
2023 Compared with the initial public offering of PTA for2022
Revenue | | | | | | | | | | | | | | | | | | | | | | | |
(in thousands) | Years Ended December 31, | | | | |
| 2023 | | 2022 | | $ Change | | % Change |
Investment advisory and administration fees | | | | | | | |
Open-end funds | $ | 239,501 | | | $ | 288,577 | | | $ | (49,076) | | | (17.0) | % |
Institutional accounts | 123,565 | | | 134,012 | | | $ | (10,447) | | | (7.8) | % |
Closed-end funds | 96,345 | | | 106,722 | | | $ | (10,377) | | | (9.7) | % |
Total | 459,411 | | | 529,311 | | | $ | (69,900) | | | (13.2) | % |
Distribution and service fees | 28,200 | | | 35,093 | | | $ | (6,893) | | | (19.6) | % |
Other | 2,026 | | | 2,502 | | | $ | (476) | | | (19.0) | % |
Total revenue | $ | 489,637 | | | $ | 566,906 | | | $ | (77,269) | | | (13.6) | % |
Investment advisory and administration fees decreased from the year ended December 31, 2020.
(2) The “As Adjusted” amounts represent non-GAAP financial measures. Refer2022, primarily due to pages 34-35 for reconciliations to the most directly comparable U.S. GAAP financial measures.
U.S. GAAP
2020 Compared with 2019
Revenue
| | | | | | | | | | | | | | | | | | | | | | | |
| Years Ended December 31, | | | | |
(in thousands) | 2020 | | 2019 | | $ Change | | % Change |
Institutional accounts | $ | 115,876 | | | $ | 110,346 | | | $ | 5,530 | | | 5.0 | % |
Open-end funds | 201,135 | | | 187,730 | | | 13,405 | | | 7.1 | % |
Closed-end funds | 78,026 | | | 80,502 | | | (2,476) | | | (3.1) | % |
Investment advisory and administration fees | 395,037 | | | 378,578 | | | 16,459 | | | 4.3 | % |
Distribution and service fees | 30,134 | | | 30,048 | | | 86 | | | 0.3 | % |
Other | 2,365 | | | 2,204 | | | 161 | | | 7.3 | % |
Total revenue | $ | 427,536 | | | $ | 410,830 | | | $ | 16,706 | | | 4.1 | % |
Revenue for the year ended December 31, 2020 increased primarily attributable to higherlower average assets under management in open-end funds and the recognitionacross all three types of $7.7 million ofinvestment vehicles, partially offset by higher performance fees from certain institutional accounts, partially offset by lower average assets under management in institutional accounts and closed-end funds.accounts.
•Total investment advisory and administration revenue from open-end funds compared with average assets under management in institutional accounts implied an annual effective fee rate of 38.866.2 bps and 36.466.8 bps for the years ended December 31, 20202023 and 2019,2022, respectively. The increase in the annual effective fee rate is primarily due to higher performance fees in 2020.
•Total investment advisory and administration revenue from institutional accounts compared with average assets under management in open-end funds implied an annual effective fee rate of 66.737.6 bps and 68.036.8 bps for the years ended December 31, 20202023 and 2019,2022, respectively. The decreaseincrease in the implied annual effective fee rate iswas primarily due to higher performance fees of $2.5 million for the full year impact of a reduction ofended December 31, 2023 versus $636,000 for the investment advisoryyear ended December 31, 2022. Excluding the performance fees, the implied annual effective fee rate resulting from imposition of an expense cap effective July 1, 2019 by Cohen & Steers Realty Shares, Inc.would have been 36.8 bps and 36.7 bps for the years ended December 31, 2023 and 2022, respectively.
•Total investment advisory and administration revenue from closed-end funds compared with average assets under management in closed-end funds implied an annual effective fee rate of 85.488.8 bps and 85.888.6 bps for the years ended December 31, 20202023 and 2019,2022, respectively. In 2021,
Distribution and service fees for the annual effective fee rate is expectedyear ended December 31, 2023 decreased primarily due to increase as a result of the initial public offering of PTA, which concluded on October 27, 2020.lower average assets under management in U.S. open-end funds.
Expenses
| | | | | | | | | | | | | | | | | | | | | | | |
| Years Ended December 31, | | | | |
(in thousands) | 2020 | | 2019 | | $ Change | | % Change |
Employee compensation and benefits | $ | 156,457 | | | $ | 143,431 | | | $ | 13,026 | | | 9.1 | % |
Distribution and service fees | 115,084 | | | 55,237 | | | 59,847 | | | 108.3 | % |
General and administrative | 56,286 | | | 47,632 | | | 8,654 | | | 18.2 | % |
Depreciation and amortization | 4,652 | | | 4,396 | | | 256 | | | 5.8 | % |
Total expenses | $ | 332,479 | | | $ | 250,696 | | | $ | 81,783 | | | 32.6 | % |
| | | | | | | | | | | | | | | | | | | | | | | |
(in thousands) | Years Ended December 31, | | | | |
| 2023 | | 2022 | | $ Change | | % Change |
Employee compensation and benefits | $ | 200,181 | | | $ | 208,831 | | | $ | (8,650) | | | (4.1) | % |
Distribution and service fees | 54,170 | | | 82,928 | | | $ | (28,758) | | | (34.7) | % |
General and administrative | 66,704 | | | 54,826 | | | $ | 11,878 | | | 21.7 | % |
Depreciation and amortization | 4,105 | | | 4,383 | | | $ | (278) | | | (6.3) | % |
Total expenses | $ | 325,160 | | | $ | 350,968 | | | $ | (25,808) | | | (7.4) | % |
Employee compensation and benefits fordecreased from the year ended December 31, 2020 increased2022, primarily due to lower incentive compensation of $11.1 million and a decrease in amortization of restricted stock units of $5.5 million, partially offset by higher salaries of $3.7$6.9 million an increase in incentive compensation of $3.4 million,and an increase in severance expenses of $1.8 million, higher payroll taxes of $1.2 million and commissions of $1.1$1.4 million.
Distribution and service fees expense forfee expenses decreased by $28.8 million from the year ended December 31, 2020 increased2022, which included $14.2 million of costs associated with the offering of RLTY. The remainder of the decrease was primarily due to costs
associated with the initial public offering of PTA of $57.8 million.lower average assets under management in U.S. open-end funds.
General and administrative expenses forincreased from the year ended December 31, 2020 increased2022, primarily due to incremental lease costs associated withof $10.6 million related to the RQI rights offering of $11.7 million, partially offset by lower travel and entertainment expenses of $3.3 million.Company's new headquarters.
Operating Margin
Operating margin for the year ended December 31, 20202023 decreased to 22.2%33.6% from 39.0%38.1% for the year ended December 31, 2019.2022. The operating margin for the year ended 2022 included costs associated with the offering of RLTY. Excluding those costs, the operating margin would have been 40.8%. The 720 basis point decrease in operating margin from December 31, 2022 was primarily due to higher employee compensation and benefits relative to revenue as well as an increase in general and administrative expenses associated with the initial public offering of PTA and the RQI rights offering for the year ended December 31, 2020.relative to revenue. Operating margin represents the ratio of operating income to revenue.
Non-operating Income (Loss)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Years Ended December 31, |
| 2020 | | 2019 |
(in thousands) | Seed Investments | | Other | | Total | | Seed Investments | | Other | | Total |
Interest and dividend income—net | $ | 2,358 | | | $ | 1,004 | | | $ | 3,362 | | | $ | 3,052 | | | $ | 3,664 | | | $ | 6,716 | |
Gain (loss) from investments—net | (4,116) | | | — | | | (4,116) | | | 21,673 | | | — | | | 21,673 | |
Foreign currency gains (losses)—net | (399) | | | (517) | | | (916) | | | 381 | | | (1,355) | | | (974) | |
Total non-operating income (loss) | $ | (2,157) | | (1) | $ | 487 | | | $ | (1,670) | | | $ | 25,106 | | (1) | $ | 2,309 | | | $ | 27,415 | |
| | | | | | | | | | | | | | | | | | | | | | | |
(in thousands) | Year Ended December 31, 2023 |
| Consolidated Investment Vehicles | | Corporate Seed Investments | | Corporate Other | | Total |
Interest and dividend income—net | $ | 3,622 | | | $ | 3,547 | | | $ | 7,449 | | | $ | 14,618 | |
Gain (loss) from investments—net | 4,915 | | | 1,246 | | | (1,870) | | (1) | 4,291 | |
Foreign currency gain (loss)—net | (556) | | | (22) | | | (2,557) | | (2) | (3,135) | |
Total non-operating income (loss) | 7,981 | | | 4,771 | | | 3,022 | | | 15,774 | |
Net (income) loss attributable to noncontrolling interests | (7,560) | | | — | | | — | | | (7,560) | |
Non-operating income (loss) attributable to the Company | $ | 421 | | | $ | 4,771 | | | $ | 3,022 | | | $ | 8,214 | |
_________________________(1) Seed investments included net loss of $1.4 million and net income of $12.4 million attributable to third-party interests for the years ended December 31, 2020 and 2019, respectively.
Income Taxes
| | | | | | | | | | | | | | | | | | | | | | | |
| Years Ended December 31, | | | | |
(in thousands, except percentages) | 2020 | | 2019 | | $ Change | | % Change |
Income tax expense | $ | 18,222 | | | $ | 40,565 | | | $ | (22,343) | | | (55.1) | % |
Effective tax rate | 19.2 | % | | 23.2 | % | | | | |
(1)
The effective tax rate for the year ended December 31, 2020 differed from the U.S. federal statutory rateComprised primarily of 21.0% primarily duegain (loss) on derivative contracts, which are utilized to state, local and foreign taxes as well as the effect of certain permanent differences, the most significant of which related to limitations on the deductibility of executive compensation. These were more than offset by discrete tax items, primarily related to the appreciated value of restricted stock units delivered in January 2020. The effective tax rate for the year ended December 31, 2019 differed from the U.S. federal statutory rate of 21.0% primarily due to state, local and foreign taxes, partially offset by the reversal of certain liabilities associated with unrecognized tax benefits, the release ofeconomically hedge a portion of the valuation allowance associated with unrealized gains onmarket risk of the Company's seed investments included in both Consolidated Investment Vehicles and a discrete tax item related to the appreciated value of restricted stock units delivered in January 2019.
2019 Compared with 2018
Revenue
| | | | | | | | | | | | | | | | | | | | | | | |
| Years Ended December 31, | | | | |
(in thousands) | 2019 | | 2018 (1) | | $ Change | | % Change |
Institutional accounts | $ | 110,346 | | | $ | 104,327 | | | $ | 6,019 | | | 5.8 | % |
Open-end funds | 187,730 | | | 168,273 | | | 19,457 | | | 11.6 | % |
Closed-end funds | 80,502 | | | 77,270 | | | 3,232 | | | 4.2 | % |
Investment advisory and administration fees | 378,578 | | | 349,870 | | | 28,708 | | | 8.2 | % |
Distribution and service fees | 30,048 | | | 29,090 | | | 958 | | | 3.3 | % |
Other | 2,204 | | | 2,151 | | | 53 | | | 2.5 | % |
Total revenue | $ | 410,830 | | | $ | 381,111 | | | $ | 29,719 | | | 7.8 | % |
_________________________
(1) Amounts related to model-based portfolios were reclassified from other (previously reported as portfolio consulting and other) to investment advisory and administration fees.
Revenue for the year ended December 31, 2019 increased primarily attributable to higher average assets under management in all three investment vehicles.
•Total investment advisory revenue compared with average assets under management in institutional accounts implied an annual effective fee rate of 36.4 bps and 36.1 bps for the years ended December 31, 2019 and 2018, respectively.Corporate Seed Investments.
•(2)Total investment advisory and administration revenue compared with average assets under management in open-end funds implied an annual effective fee rateComprised primarily of 68.0 bps and 69.3 bps for the years ended December 31, 2019 and 2018, respectively. The decrease in the annual effective fee rate is primarily due to a reduction of the investment advisory fee rate and higher fund reimbursements related to the imposition of an expense cap effective July 1, 2019 by Cohen & Steers Realty Shares, Inc.
•Total investment advisory and administration revenue compared with average assets under management in closed-end funds implied an annual effective fee rate of 85.8 bps and 85.7 bps for the years ended December 31, 2019 and 2018, respectively.
Expenses
| | | | | | | | | | | | | | | | | | | | | | | |
| Years Ended December 31, | | | | |
(in thousands) | 2019 | | 2018 | | $ Change | | % Change |
Employee compensation and benefits | $ | 143,431 | | | $ | 131,292 | | | $ | 12,139 | | | 9.2 | % |
Distribution and service fees | 55,237 | | | 50,043 | | | 5,194 | | | 10.4 | % |
General and administrative | 47,632 | | | 48,265 | | | (633) | | | (1.3) | % |
Depreciation and amortization | 4,396 | | | 4,473 | | | (77) | | | (1.7) | % |
Total expenses | $ | 250,696 | | | $ | 234,073 | | | $ | 16,623 | | | 7.1 | % |
Employee compensation and benefits for the year ended December 31, 2019 increased primarily due to higher incentive compensation of $4.8 million, higher amortization of restricted stock units of $3.5 million and higher salaries of $2.0 million.
Distribution and service fees expense for the year ended December 31, 2019 increased primarily due to higher average assets under management in U.S. open-end funds of approximately $3.8 million and an increase in sub-transfer agent fees on certain assets by one of the Company's intermediaries of approximately $2.3 million, partially offset by the impact of redemptions from a higher cost intermediary of approximately $1.0 million.
General and administrative expenses for the year ended December 31, 2019 decreased primarily due to expenses of approximately $871,000 associated with the evaluation of a potential business transaction that the Company did not pursue that were included in the year ended December 31, 2018, partially offset by costs associated with the RQI rights offering of approximately $346,000 as well as higher professional fees of approximately $100,000 for the year ended December 31, 2019.
Operating Margin
Operating margin for the year ended December 31, 2019 increased to 39.0% from 38.6% for the year ended December 31, 2018.
Non-operating Income (Loss)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Years Ended December 31, |
| 2019 | | 2018 |
(in thousands) | Seed Investments | | Other | | Total | | Seed Investments | | Other | | Total |
Interest and dividend income—net | $ | 3,052 | | | $ | 3,664 | | | $ | 6,716 | | | $ | 6,754 | | | $ | 3,672 | | | $ | 10,426 | |
Gain (loss) from investments—net | 21,673 | | | — | | | 21,673 | | | (14,264) | | | — | | | (14,264) | |
Foreign currency gains (losses)—net | 381 | | | (1,355) | | | (974) | | | (1,702) | | | 2,281 | | | 579 | |
Total non-operating income (loss) | $ | 25,106 | | (1) | $ | 2,309 | | | $ | 27,415 | | | $ | (9,212) | | (1) | $ | 5,953 | | | $ | (3,259) | |
_________________________
(1) Amounts included net income of $12.4 million and net loss of $4.4 million attributable to third-party interests for the years ended December 31, 2019 and 2018, respectively.
Income Taxes
| | | | | | | | | | | | | | | | | | | | | | | |
| Years Ended December 31, | | | | |
(in thousands, except percentages) | 2019 | | 2018 | | $ Change | | % Change |
Income tax expense | $ | 40,565 | | | $ | 34,257 | | | $ | 6,308 | | | 18.4 | % |
Effective tax rate | 23.2 | % | | 23.1 | % | | | | |
The effective tax rate for the year ended December 31, 2019 differed from the U.S. federal statutory rate of 21.0% primarily due to state, local and foreign taxes, partially offset by the reversal of certain liabilities associated with unrecognized tax benefits, the release of a portion of the valuation allowance associated with unrealized gains on the Company's seed investments and a discrete tax item related to the appreciated value of restricted stock units delivered in January 2019. The effective tax rate for the year ended December 31, 2018 differed from the U.S. federal statutory rate of 21.0% primarily due to state, local and foreign taxes, partially offset by the reversal of certain liabilities associated with unrecognized tax benefits, a discrete tax item related to the appreciated value of restricted stock units delivered in January 2018 and an adjustment to the Company's transition tax liability in connection with the Tax Cuts and Jobs Act (the Tax Act).
As Adjusted
The term “As Adjusted” is used to identify non-GAAP financial information in the discussion below. Refer to pages 34-35 for reconciliations to the most directly comparable U.S. GAAP financial measures.
2020 Compared with 2019
Revenue
Revenue, as adjusted, for the year ended December 31, 2020 was $427.8 million, compared with $410.4 million for the year ended December 31, 2019.
Revenue, as adjusted, excluded the consolidation of certain of our seed investments for both years.
Expenses
Expenses, as adjusted, for the year ended December 31, 2020 were $258.4 million, compared with $247.7 million for the year ended December 31, 2019.
Expenses, as adjusted, excluded the following:
•The consolidation of certain of our seed investments for both years;
•Amounts related to the accelerated vesting of certain restricted stock units for both years;
•Costs associated with the initial public offering of PTA for the year ended December 31, 2020;
•Costs associated with the RQI rights offering for both years; and
•Other non-recurring expenses for the year ended December 31, 2020.
Operating Margin
Operating margin, as adjusted, was 39.6% for both years ended December 31, 2020 and 2019.
Non-operating Income
Non-operating income, as adjusted, for the year ended December 31, 2020 was $1.4 million, compared with $4.2 million for the year ended December 31, 2019.
Non-operating income, as adjusted, excluded the following for both years:
•Results from our seed investments; and
•Net foreign currency exchange gains and lossesgain (loss) associated with U.S. dollar-denominated assets held by certain foreign subsidiaries.
Income Taxes | | | | | | | | | | | | | | | | | | | | | | | |
(in thousands) | Year Ended December 31, 2022 |
| Consolidated Investment Vehicles | | Corporate Seed Investments | | Corporate Other | | Total |
Interest and dividend income—net | $ | 3,718 | | | $ | 1,355 | | | $ | 1,745 | | | $ | 6,818 | |
Gain (loss) from investments—net | (26,480) | | | (2,345) | | | 3,719 | | (1) | (25,106) | |
Foreign currency gain (loss)—net | (3,765) | | | (14) | | | 3,026 | | (2) | (753) | |
Total non-operating income (loss) | (26,527) | | | (1,004) | | | 8,490 | | | (19,041) | |
Net (income) loss attributable to noncontrolling interests | 21,556 | | | — | | | — | | | 21,556 | |
Non-operating income (loss) attributable to the Company | $ | (4,971) | | | $ | (1,004) | | | $ | 8,490 | | | $ | 2,515 | |
_________________________The effective tax rate, as adjusted, for(1)Comprised primarily of gain (loss) on derivative contracts, which are utilized to economically hedge a portion of the year ended December 31, 2020 was 26.7%, compared with 25.5% formarket risk of the year ended December 31, 2019.
The effective tax rate, as adjusted, excluded the tax effects associated with non-GAAP adjustments as well as discrete tax items for both years.
2019 Compared with 2018
Revenue
Revenue, as adjusted, for the year ended December 31, 2019 was $410.4 million, compared with $380.4 million for the year ended December 31, 2018.
Revenue, as adjusted, excluded the consolidation of certain of ourCompany's seed investments forincluded in both years.
Expenses
Expenses, as adjusted, for the year ended December 31, 2019 were $247.7 million, compared with $231.8 million for the year ended December 31, 2018.
Expenses, as adjusted, excluded the following:
•The consolidation of certain of our seed investments for both years;Consolidated Investment Vehicles and Corporate Seed Investments.
•(2)Amounts related to the accelerated vestingComprised primarily of certain restricted stock units for the year ended December 31, 2019;
•Costs associated with the RQI rights offering for the year ended December 31, 2019; and
•Expenses associated with the evaluation of a potential business transaction that we did not pursue for the year ended December 31, 2018.
Operating Margin
Operating margin, as adjusted, for the year ended December 31, 2019 was 39.6%, compared with 39.1% for the year ended December 31, 2018.
Non-operating Income
Non-operating income, as adjusted, for the year ended December 31, 2019 was $4.2 million, compared with $3.7 million for the year ended December 31, 2018.
Non-operating income, as adjusted, excluded the following for both years:
•Results from our seed investments; and
•Netnet foreign currency exchange gains and lossesgain (loss) associated with U.S. dollar-denominated assets held by certain foreign subsidiaries.
Income Taxes
The effectiveA reconciliation of the Company’s statutory federal income tax rate and the effective income tax rate is summarized in the following table:
| | | | | | | | | | | |
| Years Ended December 31, |
| 2023 | | 2022 |
U.S. statutory tax rate | 21.0 | % | | 21.0 | % |
State and local income taxes, net of federal benefit | 3.2 | | | 3.3 | |
Non-deductible executive compensation | 1.9 | | | 3.0 | |
Excess tax benefits related to the vesting and delivery of restricted stock units | (1.2) | | | (2.7) | |
Unrecognized tax benefit adjustments | — | | | (3.3) | |
| | | |
Other | 0.4 | | | 0.4 | |
Effective income tax rate | 25.3 | % | | 21.7 | % |
2022 Compared with 2021
Revenue | | | | | | | | | | | | | | | | | | | | | | | |
(in thousands) | Years Ended December 31, | | | | |
| 2022 | | 2021 | | $ Change | | % Change |
Investment advisory and administration fees | | | | | | | |
Open-end funds | $ | 288,577 | | | $ | 288,359 | | | $ | 218 | | | 0.1 | % |
Institutional accounts | 134,012 | | | 146,345 | | | $ | (12,333) | | | (8.4) | % |
Closed-end funds | 106,722 | | | 108,840 | | | $ | (2,118) | | | (1.9) | % |
Total | 529,311 | | | 543,544 | | | $ | (14,233) | | | (2.6) | % |
Distribution and service fees | 35,093 | | | 37,630 | | | $ | (2,537) | | | (6.7) | % |
Other | 2,502 | | | 2,658 | | | $ | (156) | | | (5.9) | % |
Total revenue | $ | 566,906 | | | $ | 583,832 | | | $ | (16,926) | | | (2.9) | % |
Investment advisory and administration fees decreased from the year ended December 31, 2021, primarily due to lower average assets under management in both institutional accounts and closed-end funds, as adjusted,well as lower performance fees from certain institutional accounts.
Total investment advisory and administration revenue from open-end funds compared with average assets under management implied an annual effective fee rate of 66.8 bps and 67.1 bps for the years ended December 31, 2022 and 2021, respectively.
Total investment advisory revenue from institutional accounts compared with average assets under management implied an annual effective fee rate of 36.8 bps and 37.6 bps for the years ended December 31, 2022 and 2021, respectively. The decrease in the implied annual effective fee rate was primarily due to lower performance fees of $636,000 for the year ended December 31, 2019 was 25.5%, compared with 25.3%2022 versus $5.6 million for the year ended December 31, 2018.2021. Excluding the performance fees, the implied annual effective fee rate would have been 36.7 bps and 36.2 bps for the years ended December 31, 2022 and 2021, respectively.
TheTotal investment advisory and administration revenue from closed-end funds compared with average assets under management implied an annual effective taxfee rate as adjusted, excludedof 88.6 bps and 88.4 bps for the tax effects associated with non-GAAP adjustments as well as discrete tax itemsyears ended December 31, 2022 and 2021, respectively.
Distribution and service fees for both years.the year ended December 31, 2022 decreased primarily due to lower average assets under management in U.S. open-end funds.
Non-GAAP Expenses | | | | | | | | | | | | | | | | | | | | | | | |
(in thousands) | Years Ended December 31, | | | | |
| 2022 | | 2021 | | $ Change | | % Change |
Employee compensation and benefits | $ | 208,831 | | | $ | 195,443 | | | $ | 13,388 | | | 6.9 | % |
Distribution and service fees | 82,928 | | | 75,891 | | | $ | 7,037 | | | 9.3 | % |
General and administrative | 54,826 | | | 48,034 | | | $ | 6,792 | | | 14.1 | % |
Depreciation and amortization | 4,383 | | | 4,092 | | | $ | 291 | | | 7.1 | % |
Total expenses | $ | 350,968 | | | $ | 323,460 | | | $ | 27,508 | | | 8.5 | % |
Employee compensation and benefits increased from the year ended December 31, 2021, primarily due to higher amortization of restricted stock units of $9.1 million and an increase in salaries of $6.0 million, partially offset by
lower incentive compensation of $2.3 million.
Distribution and service fee expenses increased from the year ended December 31, 2021, primarily due to costs of $14.2 million associated with the offering of RLTY in 2022, partially offset by a shift in the composition of assets under management into lower cost share classes.
General and administrative expenses increased from the year ended December 31, 2021, primarily due to higher information technology-related expenses of $2.4 million, an increase in travel and entertainment of $1.9 million and one month of incremental lease expense related to the Company's future headquarters at 1166 Avenue of the Americas of $1.1 million.
Operating margin for the year ended December 31, 2022 decreased to 38.1% from 44.6% for the year ended December 31, 2021. The year ended December 31, 2022 included costs associated with the initial public offering of RLTY.
Non-operating Income (Loss) | | | | | | | | | | | | | | | | | | | | | | | |
(in thousands) | Year Ended December 31, 2022 |
| Consolidated Investment Vehicles | | Corporate Seed Investments | | Corporate Other | | Total |
Interest and dividend income—net | $ | 3,718 | | | $ | 1,355 | | | $ | 1,745 | | | $ | 6,818 | |
Gain (loss) from investments—net | (26,480) | | | (2,345) | | | 3,719 | | (1) | (25,106) | |
Foreign currency gain (loss)—net | (3,765) | | | (14) | | | 3,026 | | (2) | (753) | |
Total non-operating income (loss) | (26,527) | | | (1,004) | | | 8,490 | | | (19,041) | |
Net (income) loss attributable to noncontrolling interests | 21,556 | | | — | | | — | | | 21,556 | |
Non-operating income (loss) attributable to the Company | $ | (4,971) | | | $ | (1,004) | | | $ | 8,490 | | | $ | 2,515 | |
_________________________ (1)Comprised primarily of gain (loss) on derivative contracts, which are utilized to economically hedge a portion of the market risk of the Company's seed investments included in both Consolidated Investment Vehicles and Corporate Seed Investments.
(2)Comprised primarily of net foreign currency exchange gain (loss) associated with U.S. dollar-denominated assets held by certain foreign subsidiaries.
| | | | | | | | | | | | | | | | | | | | | | | |
(in thousands) | Year Ended December 31, 2021 |
| Consolidated Investment Vehicles | | Corporate Seed Investments | | Corporate Other | | Total |
Interest and dividend income—net | $ | 2,166 | | | $ | 652 | | | $ | 59 | | | $ | 2,877 | |
Gain (loss) from investments—net | 20,072 | | | 6,130 | | | (7,418) | | (1) | 18,784 | |
Foreign currency gain (loss)—net | 331 | | | (1) | | | (419) | | (2) | (89) | |
Total non-operating income (loss) | 22,569 | | | 6,781 | | | (7,778) | | | 21,572 | |
Net (income) loss attributable to noncontrolling interests | (14,758) | | | — | | | — | | | (14,758) | |
Non-operating income (loss) attributable to the Company | $ | 7,811 | | | $ | 6,781 | | | $ | (7,778) | | | $ | 6,814 | |
_________________________
(1)Comprised primarily of gain (loss) on derivative contracts, which are utilized to economically hedge a portion of the market risk of the Company's seed investments included in both Consolidated Investment Vehicles and Corporate Seed Investments.
(2)Comprised primarily of net foreign currency exchange gain (loss) associated with U.S. dollar-denominated assets held by certain foreign subsidiaries.
Income Taxes | | | | | | | | | | | |
| Years Ended December 31, |
| 2022 | | 2021 |
U.S. statutory tax rate | 21.0 | % | | 21.0 | % |
State and local income taxes, net of federal benefit | 3.3 | | | 3.8 | |
Non-deductible executive compensation | 3.0 | | | 2.3 | |
Unrecognized tax benefit adjustments | (3.3) | | | (3.2) | |
Excess tax benefits related to the vesting and delivery of restricted stock units | (2.7) | | | (2.2) | |
| | | |
Other | 0.4 | | | (0.8) | |
Effective income tax rate | 21.7 | % | | 20.9 | % |
Reconciliations of U.S. GAAP to As Adjusted Financial Results
Management believes that use of these non-GAAPthe following as adjusted (non-GAAP) financial measures enhances the evaluation of our results as they provideprovides greater transparency into ourthe Company’s operating performance. In addition, these non-GAAPas adjusted financial measuresresults are used to prepare ourthe Company's internal management reports, andwhich are used by management in evaluating ourits business.
While we believemanagement believes that this non-GAAPthese as adjusted financial information isresults are useful in evaluating our results and operating performance, this information should be considered as supplemental in nature and not as a substitute for the related financial information prepared in accordance with U.S. GAAP.
Effective January 1, 2023, the Company revised its methodology for as adjusted results to include interest and dividends from seed investments. Prior period amounts have not been recast to conform with the current period results as the impact was not significant.
Reconciliation of U.S. GAAP to As Adjusted Financial Results
Net Income Attributable to Common Stockholders and U.S. GAAPDiluted Earnings per Share to Net Income Attributable to Common Stockholders, As Adjusted, and Earnings per Share, As Adjusted
| | | | | | | | | | | | | | | | | |
| Years Ended December 31, |
(in thousands, except per share data) | 2020 | | 2019 | | 2018 |
Net income attributable to common stockholders, U.S. GAAP | $ | 76,584 | | | $ | 134,621 | | | $ | 113,896 | |
Seed investments (1) | 1,443 | | | (11,858) | | | 5,552 | |
Accelerated vesting of restricted stock units | 774 | | | 1,344 | | | — | |
Initial public offering costs (2) | 60,559 | | | — | | | — | |
Rights offering costs (3) | 11,859 | | | 346 | | | — | |
| | | | | |
Other non-recurring expenses (4) | 500 | | | — | | | 871 | |
Foreign currency exchange (gains) losses—net (5) | 871 | | | 1,909 | | | (2,270) | |
Tax adjustments (6) | (27,299) | | | (2,002) | | | (4,200) | |
Net income attributable to common stockholders, as adjusted | $ | 125,291 | | | $ | 124,360 | | | $ | 113,849 | |
| | | | | |
Diluted weighted average shares outstanding | 48,676 | | | 48,297 | | | 47,381 | |
Diluted earnings per share, U.S. GAAP | $ | 1.57 | | | $ | 2.79 | | | $ | 2.40 | |
Seed investments | 0.03 | | | (0.25) | | | 0.12 | |
Accelerated vesting of restricted stock units | 0.02 | | | 0.02 | | | — | |
Initial public offering costs | 1.24 | | | — | | | — | |
Rights offering costs | 0.24 | | | 0.01 | | | — | |
| | | | | |
Other non-recurring expenses | 0.01 | | | — | | | 0.02 | |
Foreign currency exchange (gains) losses—net | 0.02 | | | 0.04 | | | (0.05) | |
Tax adjustments | (0.56) | | | (0.04) | | | (0.09) | |
Diluted earnings per share, as adjusted | $ | 2.57 | | | $ | 2.57 | | | $ | 2.40 | |
| | | | | | | | | | | | | | | | | |
| Years Ended December 31, |
(in thousands, except per share data) | 2023 | | 2022 | | 2021 |
Net income attributable to common stockholders, U.S. GAAP | $ | 129,049 | | | $ | 171,042 | | | $ | 211,396 | |
Seed investments—net (1) | 2,252 | | | 4,317 | | | (5,870) | |
Accelerated vesting of restricted stock units | 1,318 | | | 10,260 | | | 7,197 | |
Lease transition and other costs - 280 Park Avenue (2) | 9,721 | | | 776 | | | — | |
Closed-end fund offering costs (3) | — | | | 15,239 | | | — | |
| | | | | |
| | | | | |
Foreign currency exchange (gains) losses—net (4) | 2,371 | | | (4,741) | | | (475) | |
Tax adjustments—net (5) | (4,200) | | | (14,642) | | | (14,301) | |
Net income attributable to common stockholders, as adjusted | $ | 140,511 | | | $ | 182,251 | | | $ | 197,947 | |
| | | | | |
Diluted weighted average shares outstanding | 49,553 | | | 49,297 | | | 49,090 | |
Diluted earnings per share, U.S. GAAP | $ | 2.60 | | | $ | 3.47 | | | $ | 4.31 | |
Seed investments—net (1) | 0.05 | | | 0.09 | | | (0.12) | |
Accelerated vesting of restricted stock units | 0.03 | | | 0.21 | | | 0.15 | |
Lease transition and other costs - 280 Park Avenue (2) | 0.20 | | | 0.02 | | | — | |
Closed-end fund offering costs (3) | — | | | 0.31 | | | — | |
| | | | | |
| | | | | |
Foreign currency exchange (gains) losses—net (4) | 0.05 | | | (0.10) | | | (0.01) | |
Tax adjustments—net (5) | (0.09) | | | (0.30) | | | (0.30) | |
Diluted earnings per share, as adjusted | $ | 2.84 | | | $ | 3.70 | | | $ | 4.03 | |
_________________________
(1)Represents amountsadjustment to remove the impact of consolidated investment vehicles and other seed investments from the Company's financial results. In accordance with the Company’s revised methodology, interest and dividends from seed investments were not included in the adjustment for the year ended December 31, 2023.
(2)Represents adjustment to remove the impact of lease and other expenses related to the deconsolidationCompany's prior headquarters, for which the lease expired in January 2024. From a GAAP perspective, the Company recognized lease expense on both its prior and current headquarters as a result of seed investments in Company-sponsored funds as well as non-operating (income) loss from seed investments that were not consolidated.overlapping lease terms.
(3)Represents costs associated with the initial public offering of PTA.RLTY. Costs are summarized in the following table:
| | | | | | | | | | | | | | | | | |
Employee compensation and benefits | $ | 1,317 | | | $ | — | | | $ | — | |
Distribution and service fees | 57,818 | | | — | | | — | |
General and administrative | 1,424 | | | — | | | — | |
Initial public offering costs | $ | 60,559 | | | $ | — | | | $ | — | |
| | | | | | | | | | | | | | | | | |
| Years Ended December 31, |
(in thousands) | 2023 | | 2022 | | 2021 |
Employee compensation and benefits | $ | — | | | $ | 357 | | | $ | — | |
Distribution and service fees | — | | | 14,224 | | | — | |
General and administrative | — | | | 658 | | | — | |
Closed-end fund offering costs | $ | — | | | $ | 15,239 | | | $ | — | |
(4)
(3) Represents costs associated with the RQI rights offering which were recorded in general and administrative expense in 2020 and 2019.
(4) Represents non-recurring expenses which were recorded in distribution and service fees in 2020 and expenses associated with the evaluation of a potential business transaction that the Company did not pursue which were recorded in general and administrative expense in 2018.
(5) Represents net foreign currency exchange (gains) losses associated with U.S. dollar-denominated assets held by certain foreign subsidiaries.
(6) (5)Tax adjustments are summarized in the following table:
| | | | | | | | | | | | | | | | | |
Discrete tax items | $ | (10,180) | | | $ | (2,040) | | | $ | (4,417) | |
Tax-effect of non-GAAP adjustments | (17,119) | | | 38 | | | 217 | |
Total tax adjustments | $ | (27,299) | | | $ | (2,002) | | | $ | (4,200) | |
| | | | | | | | | | | | | | | | | |
| Years Ended December 31, |
(in thousands) | 2023 | | 2022 | | 2021 |
Exclusion of tax effects associated with items noted above | $ | (3,085) | | | $ | (3,522) | | | $ | (2,262) | |
Exclusion of discrete tax items | (1,115) | | | (11,120) | | | (12,039) | |
Total tax adjustments | $ | (4,200) | | | $ | (14,642) | | | $ | (14,301) | |
Reconciliation of U.S. GAAP to As Adjusted Financial Results
Revenue, Expenses, Operating Income and Operating Margin | | | | | | | | | | | | | | | | | |
| Years Ended December 31, |
(in thousands, except percentages) | 2023 | | 2022 | | 2021 |
Revenue, U.S. GAAP | $ | 489,637 | | | $ | 566,906 | | | $ | 583,832 | |
Seed investments—net (1) | (466) | | | 790 | | | 411 | |
Revenue, as adjusted | $ | 489,171 | | | $ | 567,696 | | | $ | 584,243 | |
| | | | | |
Expenses, U.S. GAAP | $ | 325,160 | | | 350,968 | | | $ | 323,460 | |
Seed investments (1) | (2,021) | | | (838) | | | (819) | |
Accelerated vesting of restricted stock units | (1,318) | | | (10,260) | | | (7,197) | |
Lease transition and other costs - 280 Park Avenue (2) | (9,721) | | | (776) | | | — | |
Closed-end fund offering costs (3) | — | | | (15,239) | | | — | |
| | | | | |
| | | | | |
Expenses, as adjusted | $ | 312,100 | | | $ | 323,855 | | | $ | 315,444 | |
| | | | | |
Operating income, U.S. GAAP | $ | 164,477 | | | $ | 215,938 | | | $ | 260,372 | |
Seed investments (1) | 1,555 | | | 1,628 | | | 1,230 | |
Accelerated vesting of restricted stock units | 1,318 | | | 10,260 | | | 7,197 | |
Lease transition and other costs - 280 Park Avenue (2) | 9,721 | | | 776 | | | — | |
Closed-end fund offering costs (3) | — | | | 15,239 | | | — | |
| | | | | |
| | | | | |
Operating income, as adjusted | $ | 177,071 | | | $ | 243,841 | | | $ | 268,799 | |
| | | | | |
Operating margin, U.S. GAAP | 33.6 | % | | 38.1 | % | | 44.6 | % |
Operating margin, as adjusted | 36.2 | % | | 43.0 | % | | 46.0 | % |
_________________________
(1)Represents adjustment to remove the impact of consolidated investment vehicles from the Company's financial results.
34(2)Represents adjustment to remove the impact of lease and other expenses related to the Company's prior headquarters, for which the lease expired in January 2024. From a GAAP perspective, the Company recognized lease expense on both its prior and current headquarters as a result of overlapping lease terms.
(3)Represents costs associated with the offering of RLTY. Costs are summarized in the following table: | | | | | | | | | | | | | | | | | |
| Years Ended December 31, |
(in thousands) | 2023 | | 2022 | | 2021 |
Employee compensation and benefits | $ | — | | | $ | 357 | | | $ | — | |
Distribution and service fees | — | | | 14,224 | | | — | |
General and administrative | — | | | 658 | | | — | |
Closed-end fund offering costs | $ | — | | | $ | 15,239 | | | $ | — | |
Reconciliation of U.S. GAAP Operating Income and U.S. GAAP Operating Margin to Operating Income, As Adjusted and Operating Margin, As AdjustedFinancial Results
| | | | | | | | | | | | | | | | | |
| Years Ended December 31, |
(in thousands, except percentages) | 2020 | | 2019 | | 2018 |
Revenue, U.S. GAAP | $ | 427,536 | | | $ | 410,830 | | | $ | 381,111 | |
Seed investments (1) | 281 | | | (438) | | | (694) | |
Revenue, as adjusted | $ | 427,817 | | | $ | 410,392 | | | $ | 380,417 | |
| | | | | |
Expenses, U.S. GAAP | $ | 332,479 | | | $ | 250,696 | | | $ | 234,073 | |
Seed investments (1) | (424) | | | (1,323) | | | (1,408) | |
Accelerated vesting of restricted stock units | (774) | | | (1,344) | | | — | |
Initial public offering costs (2) | (60,559) | | | — | | | — | |
Rights offering costs (3) | (11,859) | | | (346) | | | — | |
| | | | | |
Other non-recurring expenses (4) | (500) | | | — | | | (871) | |
Expenses, as adjusted | $ | 258,363 | | | $ | 247,683 | | | $ | 231,794 | |
| | | | | |
Operating income, U.S. GAAP | $ | 95,057 | | | $ | 160,134 | | | $ | 147,038 | |
Seed investments (1) | 705 | | | 885 | | | 714 | |
Accelerated vesting of restricted stock units | 774 | | | 1,344 | | | — | |
Initial public offering costs (2) | 60,559 | | | — | | | — | |
Rights offering costs (3) | 11,859 | | | 346 | | | — | |
| | | | | |
Other non-recurring expenses (4) | 500 | | | — | | | 871 | |
Operating income, as adjusted | $ | 169,454 | | | $ | 162,709 | | | $ | 148,623 | |
| | | | | |
Operating margin, U.S. GAAP | 22.2 | % | | 39.0 | % | | 38.6 | % |
Operating margin, as adjusted | 39.6 | % | | 39.6 | % | | 39.1 | % |
Non-operating Income (Loss) | | | | | | | | | | | | | | | | | |
| Years Ended December 31, |
(in thousands) | 2023 | | 2022 | | 2021 |
Non-operating income (loss), U.S. GAAP | $ | 15,774 | | | $ | (19,041) | | | $ | 21,572 | |
Seed investments—net (1) | (6,863) | | | 24,245 | | | (21,858) | |
Foreign currency exchange (gains) losses—net (2) | 2,371 | | | (4,741) | | | (475) | |
Non-operating income (loss), as adjusted | $ | 11,282 | | | $ | 463 | | | $ | (761) | |
_________________________
(1)Represents amounts relatedadjustment to remove the deconsolidationimpact of consolidated investment vehicles and other seed investments in Company-sponsored funds.
(2) Represents costs associatedfrom the Company's financial results. In accordance with the initial public offering of PTA. Costs are summarized in the following table:
| | | | | | | | | | | | | | | | | |
Employee compensation and benefits | $ | 1,317 | | | $ | — | | | $ | — | |
Distribution and service fees | 57,818 | | | — | | | — | |
General and administrative | 1,424 | | | — | | | — | |
Initial public offering costs | $ | 60,559 | | | $ | — | | | $ | — | |
(3) Represents costs associated with the RQI rights offering which were recorded in generalCompany’s revised methodology, interest and administrative expense in 2020 and 2019.
(4) Represents non-recurring expenses which were recorded in distribution and service fees in 2020 and expenses associated with the evaluation of a potential business transaction that the Company did not pursue which were recorded in general and administrative expense in 2018.
Reconciliation of U.S. GAAP Non-operating Income (Loss) to Non-operating Income (Loss), As Adjusted
| | | | | | | | | | | | | | | | | |
| Years Ended December 31, |
(in thousands) | 2020 | | 2019 | | 2018 |
Non-operating income (loss), U.S. GAAP | $ | (1,670) | | | $ | 27,415 | | | $ | (3,259) | |
Seed investments (1) | 2,157 | | | (25,106) | | | 9,212 | |
Foreign currency exchange (gains) losses—net (2) | 871 | | | 1,909 | | | (2,270) | |
Non-operating income (loss), as adjusted | $ | 1,358 | | | $ | 4,218 | | | $ | 3,683 | |
_________________________
(1) Represents amounts related to the deconsolidation of seed investments in Company-sponsored funds as well as non-operating (income) lossdividends from seed investments that were not consolidated.included in the adjustment for the year ended December 31, 2023.
(2)Represents net foreign currency exchange (gains) losses associated with U.S. dollar-denominated assets held by certain foreign subsidiaries.
Changes in Financial Condition, Liquidity and Capital Resources
Our principal objectives areWe seek to maintain a capital structurebalance sheet that supports our business strategies and to maintainprovides the appropriate amount of liquidity at all times. Furthermore, we currently expect cash flows from operations to be more than adequate to fund our present and reasonably foreseeable future commitments for investing and financing activities.
Net Liquid Assets
Our current financial condition is highly liquid and is primarily comprisingcomprised of cash and cash equivalents, U.S. Treasury securities, liquid seed investments and other current assets. Liquid assets are reduced by current liabilities which are generally defined as obligations due within one year (together, net liquid assets). The Company does not currently have any outstanding debt.
The table below summarizes net liquid assets:
| | | | | | | | | | | |
(in thousands) | December 31, 2020 | | December 31, 2019 |
Cash and cash equivalents | $ | 41,232 | | | $ | 101,352 | |
U.S. Treasury securities | 41,648 | | | 49,807 | |
Seed investments—net | 60,083 | | | 53,130 | |
Current assets | 70,208 | | | 59,927 | |
Current liabilities | (93,870) | | | (85,274) | |
Net liquid assets | $ | 119,301 | | | $ | 178,942 | |
| | | | | | | | | | | |
(in thousands) | December 31, 2023 | | December 31, 2022 |
Cash and cash equivalents | $ | 187,442 | | | $ | 247,418 | |
U.S. Treasury securities | 59,942 | | | — | |
Liquid seed investments—net | 71,375 | | | 67,987 | |
Other current assets | 73,360 | | | 70,716 | |
Current liabilities | (106,603) | | | (114,522) | |
Net liquid assets | $ | 285,516 | | | $ | 271,599 | |
Cash and cash equivalents
Cash and cash equivalents are on deposit with several highly ratedmajor national financial institutions and include short-term, highly-liquidhighly liquid investments, which are readily convertible into cash and have original maturities of three months or less. The decrease in cash and cash equivalents compared with 2019 was primarily due to the payment of expenses of $60.6 million associated with the initial public offering of PTA and $12.0 million associated with the RQI rights offering. Cash and cash equivalents reflected special cash dividends of $1.00 per share, or $47.8 million, and $2.00 per share, or $94.5 million, paid on December 3, 2020 and 2019, respectively.cash.
U.S. Treasury securities
U.S. Treasury securities, recorded at fair value, are directly issued by the U.S. government and were classified as held to maturity, with original maturities ranging from 6 to 24 months.trading investments.
SeedLiquid seed investments—net
SeedLiquid seed investments, are primarily comprised of investments in Company-sponsored funds that we do not consolidate, our
pro-rata share of the net assets of the funds that we do consolidate, and listed securities held for the purpose of establishing
performance track records. Seed investments are recorded at fair value, are generally traded in active markets on major
exchanges and can typically be liquidated within a normal settlement cycle. SeedLiquid seed investments include corporate securities held directly for the purpose of establishing performance track records and the Company's economic interest in consolidated investment vehicles which are presented net of redeemable noncontrolling interests.
CurrentOther current assets
CurrentOther current assets primarily represent investment advisory and administration fees receivable. At December 31, 2020,2023, receivables from institutional accounts comprised 55.6%47.7% of total accounts receivable,other current assets, while receivables from open-end and closed-end funds, together, comprised 44.0%45.5% of total accounts receivable.other current assets. We perform a review of our receivables on an ongoing basis in order to assess collectibilitycollectability and, based on our analysis at December 31, 2020,2023, there was no allowance for uncollectible accounts required.
Current liabilities
Current liabilities are generally defined as obligations due within one year, which includeincluded accrued compensation and benefits, distribution and service fees payable, operating lease payments,obligations due within 12-months, certain income taxes payable and other liabilities and accrued expenses.
Future liquidity needs
Our business has become more capital intensive. Potential uses of capital range from, among other things, funding the upfront costs associated with closed-end fund launches and rights offerings, seeding new strategies and vehicles, co-investing in private real estate vehicles and making various one-time investments to grow our firm infrastructure as our business scales. In order to provide us with the financial flexibility to pursue these opportunities, on January 20, 2023, we entered into a Credit Agreement providing for a $100.0 million senior unsecured revolving credit facility maturing on January 20, 2026.
Borrowings under the Credit Agreement, if any, will be used for working capital and other general corporate purposes. To date, we have not drawn on the Credit Agreement.
We have committed to invest up to $50.0 million in Cohen & Steers Real Estate Opportunities Fund, L.P. (REOF) of which $28.3 million remains unfunded. In addition, we have committed to invest up to $125.0 million in Cohen & Steers Income Opportunities REIT, Inc. (CNSREIT) of which $124.8 million remained unfunded as of December 31, 2023. In January 2024, the Company funded an additional $23.6 million of its commitment to CNSREIT. There are contractual restrictions on redemption of our seed investments in REOF and CNSREIT.
Cash flows
Our cash flows generally result from the operating activities of our business, with investment advisory and administration fees being the most significant contributor.
The table below summarizes our cash flows:
| | | | | | | | | | | | | | | | | |
| Years Ended December 31, |
(in thousands) | 2020 | | 2019 | | 2018 |
Cash Flow Data: | | | | | |
Net cash provided by (used in) operating activities | $ | 89,186 | | | $ | 141,445 | | | $ | 72,598 | |
Net cash provided by (used in) investing activities | (1,770) | | | 35,949 | | | (53,194) | |
Net cash provided by (used in) financing activities | (148,895) | | | (170,130) | | | (118,110) | |
Net increase (decrease) in cash and cash equivalents | (61,479) | | | 7,264 | | | (98,706) | |
Effect of foreign exchange rate changes on cash and cash equivalents | 1,359 | | | 1,355 | | | (2,013) | |
Cash and cash equivalents, beginning of the period | 101,352 | | | 92,733 | | | 193,452 | |
Cash and cash equivalents, end of the period | $ | 41,232 | | | $ | 101,352 | | | $ | 92,733 | |
We expect that cash flows provided by operating activities will continue to serve as our principal source of working capital in the near future. | | | | | | | | | | | | | | | | | |
| Years Ended December 31, |
(in thousands) | 2023 | | 2022 | | 2021 |
Cash Flow Data: | | | | | |
Net cash provided by (used in) operating activities | $ | 171,961 | | | $ | 61,680 | | | $ | 242,901 | |
Net cash provided by (used in) investing activities | (114,776) | | | (2,857) | | | 47,648 | |
Net cash provided by (used in) financing activities | (119,052) | | | 8,975 | | | (145,426) | |
Net increase (decrease) in cash and cash equivalents | (61,867) | | | 67,798 | | | 145,123 | |
Effect of foreign exchange rate changes on cash and cash equivalents | 2,756 | | | (4,440) | | | (999) | |
Cash and cash equivalents, beginning of the period | 248,714 | | | 185,356 | | | 41,232 | |
Cash and cash equivalents, end of the period | $ | 189,603 | | | $ | 248,714 | | | $ | 185,356 | |
In 2020,2023, cash and cash equivalents, decreased by $61.5 million, excluding the effect of foreign exchange rate changes. The decrease in cash was primarily due to the payment of expenses of $60.6changes, decreased by $61.9 million associatedwhen compared with the initial public offering of PTA and $12.0 million associated with the RQI rights offering for the year ended December 31, 2020. Net cash provided by operating activities was $89.2 million. Cash flows from operating activities primarily consisted of net income adjusted for certain non-cash items and changes in assets and liabilities. Net cash used in investing activities was $1.8 million, which included $71.0 million of investment purchases, partially offset by $71.7 million of proceeds from the sales and maturities of investments. Sales and maturities of investments included maturities of U.S. Treasury securities of $58.4 million. Purchases of investments included purchases of U.S. Treasury securities of $50.0 million. Net cash used in financing activities was $148.9 million, including dividends paid to stockholders of $122.5 million, which included a special dividend of $47.8 million paid on December 1, 2020, repurchases of common stock to satisfy employee withholding tax obligations on the vesting and delivery of restricted stock units of $25.9 million, as well as distributions to redeemable noncontrolling interests of $6.0 million, partially offset by contributions from redeemable noncontrolling interests of $4.7 million.
In 2019, cash and cash equivalents increased by $7.3 million, excluding the effect of foreign exchange rate changes. Net cash provided by operating activities was $141.4 million.2022. Cash flows from operating activities primarily consisted of net income adjusted for certain non-cash items and changes in assets and liabilities. Net cash provided by operating activities was $172.0 million. Net cash used in investing activities was $35.9$114.8 million, which included $89.6 million of proceeds from the sales and maturities of investments, partially offset by $50.9 million of investment purchases. Sales and maturities of investments included maturities of U.S. Treasury securities of $33.3 million and sales of Company-sponsored funds of $37.3 million. Purchases of investments includednet purchases of U.S. Treasury securities held for corporate purposes of $32.9 million.$59.7 million and purchases of property and equipment of $57.0 million, primarily related to the build-out of our new corporate headquarters. Net cash used in financing activities was $170.1$119.1 million, including dividends paid to stockholders of $162.7$112.4 million which included a special dividend of $94.5 million paid on December 3, 2019,and repurchases of common stock to satisfy employee withholding tax obligations on the vesting and delivery of restricted stock units of $10.4 million, as well as distributions to redeemable noncontrolling interests of $43.5$21.5 million, partially offset by net contributions from redeemable noncontrolling interests of $45.7$14.5 million.
In 2018,2022, cash and cash equivalents, decreased by $98.7 million, excluding the effect of foreign exchange rate changes. Net cash providedchanges, increased by operating activities was $72.6 million.$67.8 million when compared with 2021. Cash flows from operating activities primarily consisted of net income adjusted for certain non-cash items and changes in assets and liabilities. Net cash provided by operating activities was $61.7 million. Net cash used in investing activities was $53.2$2.9 million, which included $63.6purchases of property and equipment of $4.2 million, of investment purchases, including the seeding of five new track record accountspartially offset by net proceeds from sales and investmentmaturities of $49.5 million into U.S. Treasury securities partially offset by $13.8 millionheld for corporate purposes and securities held directly for the purpose of proceeds from the saleestablishing performance track records of investments.$1.0 million. Net cash used inprovided by financing activities was $118.1$9.0 million, including net contributions from noncontrolling interests of $142.1 million, partially offset by dividends paid to stockholders of $178.9$107.4 million which included a special dividend of $116.9 million paid on December 3, 2018,and repurchases of common stock to satisfy employee withholding tax obligations on the vesting and delivery of restricted stock units of $10.6$26.8 million.
In 2021, cash and cash equivalents, excluding the effect of foreign exchange rate changes, increased by $145.1 million as well as distributionswhen compared with 2020. The year ended December 31, 2020 included costs associated with the offering of the Cohen & Steers Tax-Advantaged Preferred Securities and Income Fund and the Cohen & Steers Quality Income Realty Fund, Inc. rights offering. Cash flows from operating activities primarily consisted of net income adjusted for certain non-cash items and changes in assets and liabilities. Net cash provided by operating activities was $242.9 million. Net cash provided by investing activities was $47.6 million, which included $41.7 million of proceeds from sales and maturities of U.S. Treasury securities held for corporate purposes and net proceeds from sales of securities held directly for the purpose of establishing performance track records of $8.1 million. Net cash used in financing activities was $145.4 million, including dividends paid to redeemable noncontrolling interestsstockholders of $10.9$147.6 million, partially offset by contributions from redeemable noncontrolling interestswhich included a special dividend of $81.6 million.$60.3 million paid on November 30, 2021, repurchases
Net Capital Requirementsof common stock to satisfy employee withholding tax obligations on the vesting and delivery of restricted stock units of $22.6 million, partially offset by net contributions from noncontrolling interests of $23.7 million.
We continually monitorContractual Obligations, Commitments and evaluateContingencies
The following table summarizes our contractual obligations at December 31, 2023: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(in thousands) | 2024 | | 2025 | | 2026 | | 2027 | | 2028 | | Thereafter | | Total |
Operating leases | $ | 11,872 | | | $ | 13,945 | | | $ | 14,640 | | | $ | 14,623 | | | $ | 14,436 | | | $ | 153,442 | | | $ | 222,958 | |
Purchase obligations (1) | 7,825 | | | 6,178 | | | 3,269 | | | 341 | | | 26 | | | — | | | 17,639 | |
Other liability (2) | 1,662 | | | 2,077 | | | — | | | — | | | — | | | — | | | 3,739 | |
Total | $ | 21,359 | | | $ | 22,200 | | | $ | 17,909 | | | $ | 14,964 | | | $ | 14,462 | | | $ | 153,442 | | | $ | 244,336 | |
_________________________
(1)Represents contracts that are either noncancellable or cancellable with a penalty. Our obligations primarily reflect information technology equipment, software licenses and standard service contracts for market data.
(2)Consists of the adequacytransition tax liability based on the cumulative undistributed earnings and profits of our capital. foreign subsidiaries in connection with the enactment of the Tax Cuts and Jobs Act in 2017. See Note 15, Income Taxes, in the notes to the consolidated financial statements included in Part IV, Item 15 of this filing.
Investment Commitments
We have consistently maintained net capitalcommitted to invest up to $50.0 million in excessREOF. As of the regulatory requirements for Cohen & Steers Securities, LLC (CSS), our registered broker-dealer, as prescribed by the Securities and Exchange Commission (SEC). At December 31, 2020, CSS2023, we had net capitalfunded $21.7 million of approximately $4.3this commitment. In addition, we have committed to invest up to $125.0 million which exceeded its minimum regulatory capital requirement by approximately $4.1 million. The SEC’s Uniform Net Capital Rule 15c3-1 imposes certain requirements that may have the effectin CNSREIT. As of prohibiting a broker-dealer from distributing or withdrawing capital and requiring prior notice to the SEC for certain withdrawals of capital. During 2020, Cohen & Steers Capital Management, Inc. (CSCM), its parent, made a capital contribution of $2.0 million to CSS.
Cohen & Steers Asia Limited (CSAL) is subject to regulation by the Hong Kong Securities and Futures Commission. At December 31, 2020, CSAL2023, we had regulatory capital of approximately $5.0funded $0.2 million which exceeded its minimum regulatory capital requirement by approximately $4.6 million. During 2020, CSAL paid dividends in the amount of approximately $12.9 million to its parent, CSCM.
Cohen & Steers UK Limited (CSUK) is subject to regulation by the United Kingdom Financial Conduct Authority. At December 31, 2020, CSUK had regulatory capital of approximately $28.9 million, which exceeded its minimum regulatory capital requirement by approximately $23.6 million. During 2020, CSUK paid a dividend in the amount of approximately $14.8 million to its parent, Cohen & Steers, Inc. (CNS).
Cohen & Steers Ireland Limited (CSIL) is subject to regulation by the Central Bank of Ireland. At December 31, 2020, CSIL had regulatory capital of approximately $2.9 million, which exceeded its minimum regulatory capital requirement by approximately $2.6 million. During 2020, CNS, its parent, made a capital contribution of $2.9 million to CSIL.
CSJL is registered with the Financial Services Agency of Japan and the Kanto Local Finance Bureau and is subject to the Financial Instruments and Exchange Act. In accordance with its license, CSJL is required to maintain regulatory capital, as defined, of approximately $630,000. At December 31, 2020, CSJL had stated capital in excess of this requirement.
We believe thatcommitment. In January 2024, the Company funded an additional $23.6 million of its commitment to CNSREIT. The timing for funding the remaining portion of our cash and cash equivalents and cash flows from operations will be more than adequate to meet our anticipated capital requirements and other obligations as they become due.commitments is uncertain.
Dividends
Subject to the approval of our Boardboard of Directors,directors, we anticipate paying dividends. When determining whether to pay a dividend, we take into account general economic and business conditions, our strategic plans, our results of operations and financial condition, cash flows and liquidity, contractual, legal and regulatory restrictions on the payment of dividends, if any, by us and our subsidiaries and such other factors deemed relevant.
On February 25, 2021, the Company22, 2024, we declared a quarterly dividend on itsour common stock in the amount of $0.45 $0.59 per share. This dividend will be payable on March 18, 202114, 2024 to stockholders of record at the close of business on March 8, 2021.
Investment Commitments
We have committed to co-invest up to $5.1 million alongside Cohen & Steers Global Realty Partners III-TE, L.P. (GRP-TE). At December 31, 2020, we have funded approximately $3.8 million of this commitment. Our co-investment alongside GRP-TE is illiquid and is anticipated to be invested for the life of the fund. The timing of the funding of the unfunded portion of our commitment is currently unknown, as the drawdown of our commitment is contingent on the timing of drawdowns by the underlying funds in which GRP-TE invests. The unfunded portion of this commitment is not recorded on our consolidated statements of financial condition.
4, 2024.
Contractual Obligations and Contingencies
The following table summarizes our contractual obligations at December 31, 2020:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(in thousands) | 2021 | | 2022 | | 2023 | | 2024 | | 2025 | | 2026 and after | | Total |
Operating leases | $ | 12,173 | | | $ | 11,875 | | | $ | 11,428 | | | $ | 966 | | | $ | — | | | $ | — | | | $ | 36,442 | |
Purchase obligations | 2,405 | | | 1,845 | | | 1,026 | | | 699 | | | 677 | | | 339 | | | 6,991 | |
Other liability | 665 | | | 665 | | | 1,246 | | | 1,662 | | | 2,077 | | | — | | | 6,315 | |
Total | $ | 15,243 | | | $ | 14,385 | | | $ | 13,700 | | | $ | 3,327 | | | $ | 2,754 | | | $ | 339 | | | $ | 49,748 | |
Operating Leases
Operating leases generally consist of noncancellable long-term leases for office space and certain information technology equipment.
Purchase Obligations
Purchase obligations represent executory contracts, which are either noncancellable or cancellable with a penalty. The Company’s obligations primarily reflected standard service contracts for market data.
Other Liability
Other liability consists of the transition tax liability based on the cumulative undistributed earnings and profits of our foreign subsidiaries in connection with the enactment of the Tax Act in 2017. This tax liability, paid over eight years on an interest-free basis, is included as part of income tax payable on our consolidated statement of financial condition.
Contingencies
Due to the uncertainty with respect to the timing of future cash flows associated with unrecognized tax benefits at December 31, 2020,2023, the Company is unable to make reasonably reliable estimates of the period of cash settlement with the respective taxing authorities. Therefore, $13.6$2.5 million of gross unrecognized tax benefits have been excluded from the contractual obligations table above. See Note 1415, Income Taxes, in the notes to the consolidated financial statements for additional disclosures relatedincluded in Part IV, Item 15 of this filing.
Net Capital Requirements
Several of our subsidiaries are subject to income taxes.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have, orminimum net capital requirements by the local laws and regulations to which they are reasonably likelysubject. As of December 31, 2023, each of our subsidiaries subject to have, a material current or future effect on ourminimum net capital requirement satisfied the applicable requirement. See Note 12, Regulatory Requirements, in the notes to the consolidated financial condition, results of operations, liquidity or capital resources.statements included in Part IV, Item 15.
Critical Accounting Policies and Estimates
A thorough understanding of our accounting policies is essential when reviewing our reported results of operations and our financial condition. The preparation of our consolidated financial statements in accordance with accounting principles generally accepted in the United States of America requires us to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the dates of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods. Management believes the estimates used in preparing the consolidated financial statements are reasonable and prudent. Actual results could differ from those estimates due to factors we cannot fully predict including the extent of the impact on the Company's business from the ongoing COVID-19 pandemic.estimates.
Our significant accounting policies are disclosed in Note 2, Summary of Significant Accounting Policies, in the notes to the consolidated financial statements included in Part IV, Item 15 of this filing and should be read in conjunction with the summarized information below. Management considers the following accounting policiesestimates critical to an informed review of our consolidated financial statements as they require management to make certain judgments about matters that may be uncertain at the time the policiesestimates were applied ordetermined.
Valuation of Investments
There is no established market for private real estate investments, and there may not be any comparable public market valuations. As a result, the estimates determined.
Consolidationvaluation of Company-sponsored Funds
The Company evaluates its investments in Company-sponsored funds at inceptiona private real estate investment may be based on imperfect information and thereafter, if there is a reconsideration event, in ordersubject to determine whether to apply the variable interest entity (VIE) model or the voting interest entity (VOE) model. This evaluation involves the use of judgment and analysis on an entity by entity basis. In performing
this analysis, we consider the legal structure of the entity, management fees earned by the Companyinherent uncertainties, and the nature of the ownership interestresulting values may differ from values that would have been determined had a ready market existed for such investments, from values placed on such investments by other investors and rights of interest holdersfrom prices at which such investments may ultimately be sold.
We have retained an independent valuation services firm to assist in the entity, including the Company. If we determine that the entity is a VIE, we must then assess whether the Company absorbs a majoritydetermination of the VIEs expected variability in which case it is deemed to be the primary beneficiary of the VIE. The Company consolidates VIEs for which it is deemed to be the primary beneficiary. The Company consolidates VOEs if we own a majority of the voting interest in the entity or when the Company is the general partner of the fund and the limited partners do not have substantive kick-out or participating rights. Amounts attributable to third parties in the funds that we consolidate are recorded in redeemable noncontrolling interests on the consolidated statements of financial condition and net (income) loss attributable to redeemable noncontrolling interests on the consolidated statements of operations.
Investments
Our investments are classified as equity investments at fair value, trading investments, held-to-maturity investments or equity method investments at the time of purchase and re-evaluated on an ongoing basis and at the date of each consolidated statement of financial condition. Investments classified as equity investments at fair value represent equity securities held within the consolidated Company-sponsored funds, individual equity securities held directly for the purposes of establishing performance track records and seed investments in Company-sponsored open-end funds where the Company has neither control nor the ability to exercise significant influence. Investments classified as trading investments represent debt securities held within the consolidated Company-sponsored funds and individual debt securities held directly for the purposes of establishing performance track records. Held-to-maturity investments represent corporate investments in U.S. Treasury securities recorded at amortized cost. Equity method investments represent seed investments in Company-sponsored funds in which the Company owns between 20-50% of the outstanding voting interests or when it is determined that the Company is able to exercise significant influence but not control over the investments.
Fair Value
The majority of our investments are carried at fair value or amounts that approximate fair value on our consolidated statement of financial condition with the periodic mark-to-market included directly in earnings. Fair value is the price that would be received to sell an asset or transfer a liability in an orderly transaction between market participants at the measurement date. Assets and liabilities reported at fair value are classified and disclosed in a fair value hierarchy based on whether the inputs to the valuation techniques are observable or unobservable. The classification within the hierarchy is determined based on the lowest level of input that is significant to the fair value measurement:
Level 1 - Unadjusted quoted pricesof certain of our private real estate investments. Each real property investment is valued no less than quarterly in accordance with the applicable governing documents. Limited partnerships that hold real property investments are valued using the valuation methodology we deem most appropriate and consistent with industry best practices and market conditions. We expect the primary methodology used to value real property investments will be the income approach, whereby value is derived by determining the present value of an asset’s expected stream of future cash flows (for example, discounted cash flow analysis). Consistent with industry practices, the income approach incorporates actual contractual lease income, professional judgments regarding comparable rental and operating expense data, the capitalization or discount rate and projections of future rent and expenses based on appropriate market evidence, and other subjective factors. Other methodologies that may also be used to value a real property investment include, among other approaches, sales comparisons and cost approaches. We will monitor the real property investments for identical instruments in active markets.
Level 2 - Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in marketsmaterial events that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable.
Level 3 - Valuations derived from valuation techniques in which significant inputs or significant value drivers are unobservable.we believe may be expected to have a material impact on the most recent estimated fair values of such real property investments.
Income Taxes
We operate globally through our subsidiaries and therefore must allocate our income, expenses, and earnings taking into account various laws and regulations. Our tax provision represents an estimate of the total liability that we have incurred as a result of our global operations. Each year we file tax returns and settle our tax liabilities which may be subject to audit by the taxing authorities. The determination of our annual provision is subject to judgments and estimates and the actual results included in our annual tax returns may vary from the amounts reported in our consolidated financial statements. Accordingly, we recognize additions to, or reductions of,from, income tax expense during reporting periods that may pertain to prior period provisions as our estimated liabilities are revised and actual tax returns and audits, if any, are settled. Such adjustments are recognized in the discrete quarterly period in which they are determined.
In addition, we record current and deferred tax consequences of all transactions that have been recognized in the consolidated financial statements in accordance with the provisions of the enacted tax laws. Deferred tax assets are recognized for temporary differences that will result in deductible amounts in future years at tax rates that are expected to apply in those years. Deferred tax liabilities are recognized for temporary differences that will result in taxable income in future years at tax rates that are expected to apply in those years. We record a valuation allowance, when necessary, to reduce deferred tax assets to an amount that more likely than not will be realized.
The calculation of our tax liabilities involves uncertainties in the application of complex tax laws and regulations in several jurisdictions across our global operations. In accordance with Accounting Standards Codification Topic 740, Income
Taxes (ASC 740), a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, on the basis of the technical merits.
We record unrecognized tax benefits as liabilities in accordance with ASC 740 and adjust these liabilities when our judgment changes as a result of the evaluation of new information not previously available. Because of the complexity of some of these uncertainties, the ultimate resolution may differ from our current estimate of the unrecognized tax benefit liabilities. These differences are reflected as increases or decreases in income tax expense in the period in which new information becomes available.
Recently Issued Accounting Pronouncements
See discussion of Recently Issued Accounting Pronouncements in Note 2 of the consolidated financial statements.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
In the normal course of our business, we are exposed to risk as a result of changes in interest and currency rates,
securities markets and other general economic fluctuations,conditions including inflation, which may have an adverse impact on the value of our investments. While markets have recovered since the first quarter of 2020, the impactassets under management and ongoing uncertainty related to the COVID-19 pandemic continued into the end of 2020.
Seed Investments—net
Our seed investments are primarily comprised of investments in Company-sponsored funds that we do not consolidate, our pro-rata share of the net assets of the funds that we do consolidate, and listed securities held for the purpose of establishing performance track records. Seed investments are recorded at fair value, are generally traded in active markets on major exchanges and can typically be liquidated within a normal settlement cycle.
Our seed investments are subject to price risk. We may mitigate this by entering into derivative contracts to economically hedge a portion of our risk. The following table summarizes the effect that a ten percent increase or decrease in prices would have on the carrying value of our seed investments, which are presented net of redeemable noncontrolling interests, as of December 31, 2020 (in thousands):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Carrying Value | | Notional Value - Hedges | | Net Carrying Value | | Net Carrying Value Assuming a 10% increase | | Net Carrying Value Assuming a 10% decrease |
Seed investments—net | | $ | 60,083 | | | $ | (27,286) | | | $ | 32,797 | | | $ | 36,077 | | | $ | 29,517 | |
Ainvestments. The majority of our revenue—92.4%, 92.1% and 91.8% for the years ended December 31, 2020, 2019 and 2018, respectively—wasrevenue is derived from investment advisory and administration agreements with our clients. Under these agreements, the investment advisory and administration fee we receive isfees which are based on the market value of theaverage assets we manage.under management. Accordingly, a declinewhere there are changes in the prices of securities generally, and real estate securities in particular, attributable to market conditions including inflation, interest rate changes and a general economic downturn, may cause our revenue and income to decline by causing the value of the assets we manage to decrease, which wouldas a result in lower investment advisoryof market fluctuations, our revenue and administration fees; or by causingthe value of our clients to withdraw funds in favor ofseed investments that they perceive as offering greater opportunity or lower risk or cost, which would also result in lower investment advisory and administration fees.may change.
The economic environment may also preclude us from increasing the assets we manage in closed-end funds. The market conditions for these offerings may not be as favorable in the future, which could adversely impact our ability to grow the assets we manage and realize higher fee revenue associated with such growth.manage. Depending on market conditions, the closed-end funds we manage may increase or decrease their leverage in order to maintain the funds’ target leverage ratios, thereby increasing or decreasing the assets we manage.
AsCorporate Seed investments—net
Our seed investments are comprised of both liquid and illiquid holdings. Liquid seed investments are generally traded in active markets on major exchanges and can typically be liquidated within a normal settlement cycle. Illiquid seed investments are generally comprised of limited partnership interests in private real estate vehicles for which there may be contractual restrictions on redemption.
Our seed investments are subject to market risk. We may mitigate this risk by entering into derivative contracts designed to hedge certain portions of our risk. The following table summarizes the effect of a ten percent increase or decrease on the carrying value of our seed investments, which are presented net of noncontrolling interests, if any, as of December 31, 2020, 60.1% and 29.0% of the assets we managed were concentrated in real estate and preferred securities, respectively. A change in interest rates or prolonged economic downturn could have a negative impact on the valuation of real estate and preferred securities in our clients’ portfolios, reduce our revenue, and impact our ability to increase assets in our open-end funds or offer new funds.2023 (in thousands): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Carrying Value | | Notional Value - Hedges | | Net Carrying Value | | Net Carrying Value Assuming a 10% increase | | Net Carrying Value Assuming a 10% decrease |
Liquid seed investments—net | | $ | 71,375 | | | $ | (37,933) | | | $ | 33,442 | | | $ | 36,786 | | | $ | 30,098 | |
Illiquid seed investments—net | | $ | 16,749 | | | $ | — | | | $ | 16,749 | | | $ | 18,424 | | | $ | 15,074 | |
Item 8. Financial Statements and Supplementary Data
The report of our independent registered public accounting firm and financial statements listed in the accompanying index are included in Item 15 of this Annual Report on Form 10-K. See the Index to Financial Statements on page F-1.
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
There have been no disagreements on accounting and financial disclosure matters.
Item 9A. Controls and Procedures
We maintain disclosure controls and procedures (as that term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act)) that are designed to ensure that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our Acting Chief Executive Officer and our ChiefInternal Control over Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.
Our management, including our Acting Chief Executive Officer and our Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of December 31, 2020. Based on that evaluation and subject to the foregoing, our Acting Chief Executive Officer and our Chief Financial Officer have concluded that our disclosure controls and procedures as of December 31, 2020 were effective to accomplish their objectives at a reasonable assurance level.Reporting
There has been no change in our internal control over financial reporting that occurred during the three months ended December 31, 20202023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. We have not experienced any material impact to our internal control over financial reporting related to the COVID-19 pandemic.
Management’s report on internal control over financial reporting is located on page F-2 of this Annual Report on Form 10-K and Deloitte & Touche LLP’s report on the effectiveness of our internal control over financial reporting is locatedbegins on page F-3.
Disclosure Controls and Procedures
Under the direction of our Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Annual Report on Form 10-K. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective.
Item 9B. Other Information
None.During the three months ended December 31, 2023, none of our directors or officers (as defined in Rule 16a-1(f) of the Securities Exchange Act) adopted, terminated, or modified a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement (as such terms are defined in Item 408 of Regulation S-K of the Securities Act of 1933, as amended).
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
PART III
Item 10. Directors, Executive Officers and Corporate Governance
The information regarding directors and executive officers set forth under the headings “Nominee Information” and “Other Executive Officers” of the Proxy Statement is incorporated by reference herein.
The information regarding our Code of Business Conduct and Ethics and committees of our Boardboard of Directorsdirectors under the headings “Corporate Governance” and “Board Meetings and Committees” in the Proxy Statement is incorporated by reference herein.
Item 11. Executive Compensation
The information contained under the headings “Executive Compensation”, “Board Meetings and Committees” and “Report of the Compensation Committee” of the Proxy Statement is incorporated by reference herein.herein to the extent required by this Item 11.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information under the headings “Ownership of Cohen & Steers Common Stock” and “Equity Compensation Plan Information” of the Proxy Statement is incorporated by reference herein.
Item 13. Certain Relationships and Related Transactions, and Director Independence
The information under the headings “Certain Relationships and Related Transactions” and “Corporate Governance” of the Proxy Statement is incorporated by reference herein.
Item 14. Principal Accountant Fees and Services
The information regarding our independent registered public accounting firm fees and services set forth under the heading “Ratification of the Appointment of Independent Registered Public Accounting Firm” of the Proxy Statement is incorporated by reference herein.
PART IV
Item 15. Exhibits and Financial Statement Schedules
| | | | | | | | |
(a) | 1 | Financial Statements Included herein at pages F-1 through F-32.F-30. |
| 2 | Financial Data Schedules All schedules have been omitted because they are not applicable, not required, or the information required is included in the financial statements or notes thereto. |
| 3 | Exhibits |
The agreements and other documents filed as exhibits to this report are not intended to provide factual information or other disclosure other than with respect to the terms of the agreements or other documents themselves, and you should not rely on them for that purpose. In particular, any representations and warranties made by us in these agreements or other documents were made solely within the specific context of the relevant agreement or document and may not describe the actual state of affairs as of the date they were made or at any other time.
| | | | | | | | |
Exhibit Number | | Description |
3.1 | — | |
3.2 | — | |
4.1 | — | |
4.2 | — | |
4.3 | — | |
10.1 | — | |
10.2 | — | |
| 10.3 | — |
10.4 | — | |
10.5 | — | |
10.6 | — | |
10.7 | — | |
10.8 | — | |
10.9 | — | Credit Agreement, dated as of January 20, 2023, among Cohen & Steers, Inc., Bank of America, N.A., as administrative agent, sole lead arranger and sole bookrunner, State Street Bank and Trust Company, as syndication agent, and the other lending institutions from time to time party thereto (10) |
10.10 | — | Letter Agreement between the Company and Matthew S. Stadler (filed herewith)* |
21.1 | — | |
23.1 | — | |
24.1 | — | |
31.1 | — | Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith) |
31.2 | — | Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith) |
32.1 | — | Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith) |
32.2 | — | Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith) |
97.1 | — | Cohen & Steers, Inc. Incentive Compensation Recoupment Policy (filed herewith) |
101 | — | The following financial statements from the Company’s Annual Report on Form 10-K for the year ended December 31, 20202023 formatted in Inline XBRL (eXtensible Business Reporting Language): (i) the Consolidated Statements of Financial Condition, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statements of Changes in Stockholders’ Equity and Redeemable Noncontrolling Interests, (v) the Consolidated Statements of Cash Flows, and (vi) the Notes to the Consolidated Financial Statements. |
104 | — | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
_________________________
(1)Incorporated by reference to the Company’s Registration Statement on Form S-1, as amended, originally filed with the Securities and Exchange Commission on March 30, 2004.
(2)Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2008.
(3)Incorporated by reference to the Company’s Current Report on Form 8-K filed on May 13, 2013.
(4)Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2015.
(5)(3)Incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2007.
(6)(4)Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2015.
(7)(5)Incorporated by reference to the Company’s Current Report on Form 8-K filed on May 9, 2022.
(6)Incorporated by reference to the Company’s Annual Report on Form 10-K for the May 10,year ended December 31, 2017.
(7)Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 2019.
(8)Incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2017.2021.
(9)Incorporated by reference to the Company's AnnualCompany’s Quarterly Report on Form 10-K10-Q for the yearquarter ended December 31, 2019.September 30, 2022.
(10)Incorporated by reference to the Company’s Current Report on Form 8-K filed on January 23, 2023.
* Denotes management contract or compensatory plan.
Item 16. Form 10-K Summary
None.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| | | | | | | | | | | | | | |
| | COHEN & STEERS, INC. |
| | | |
| | By: | /S/ JOSEPHs/ Joseph M. HARVEY Harvey | |
| | | JOSEPHJoseph M. HARVEYHarvey
President, Director and Acting Chief Executive Officer, President and Director |
February 26, 202123, 2024
Each of the officers and directors of Cohen & Steers, Inc. whose signature appears below, in so signing, also makes, constitutes and appoints Joseph M. Harvey, acting alone, his or her true and lawful attorney-in-fact, with full power and substitution, for him or her in any and all capacities, to execute and cause to be filed with the Securities and Exchange Commission any and all amendments to the Annual Report on Form 10-K, with exhibits thereto and other documents connected therewith and to perform any acts necessary to be done in order to file such documents, and hereby ratifies and confirms all that said attorney-in-fact or his substitute or substitutes may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Company and in the capacities and on the dates indicated.
| | | | | | | | | | | |
Signature | | Title | Date |
| | | |
/s/ Martin CohenS/ MARTIN COHEN | | | |
Martin Cohen | | Chairman and Director | February 26, 202123, 2024 |
| | | |
/s/ Robert H. Steers | | | |
Robert H. Steers | | Executive Chairman and Director | February 23, 2024 |
| | | |
/S/ JOSEPHs/ Joseph M. HHarveyARVEY | | | |
Joseph M. Harvey | | President, Director and Acting Chief Executive Officer, President and Director (Principal Executive Officer) | February 26, 202123, 2024 |
| | | |
/S/ PETER L. RHEIN
| | | |
Peter L. Rhein/s/ Matthew S. Stadler | | | Director | February 26, 2021
| | | |
/S/ RICHARD P. SIMON
| | | |
Richard P. Simon | | Director | February 26, 2021 |
| | | |
/S/ EDMOND D. VILLANI
| | | |
Edmond D. Villani | | Director | February 26, 2021 |
| | | |
/s/ FRANK CONNOR
| | | |
Frank Connor | | Director | February 26, 2021 |
| | | |
/s/ REENA AGGARWAL
| | | |
Reena Aggarwal | | Director | February 26, 2021 |
| | | |
/s/ DASHA SMITH
| | | |
Dasha Smith | | Director | February 26, 2021 |
| | | |
/S/ MATTHEW S. STADLER
| | | |
Matthew S. Stadler | | Chief Financial Officer (Principal Financial Officer) | February 26, 202123, 2024 |
| | | |
/s/ Elena DulikS/ ELENA DULIK | | | |
Elena Dulik | | Chief Accounting Officer (Principal Accounting Officer) | February 26, 202123, 2024 |
| | | |
/s/ Reena Aggarwal | | | |
Reena Aggarwal | | Director | February 23, 2024 |
| | | |
/s/ Frank T. Connor | | | |
Frank T. Connor | | Director | February 23, 2024 |
| | | |
/s/ Peter L. Rhein | | | |
Peter L. Rhein | | Director | February 23, 2024 |
| | | |
/s/ Richard P. Simon | | | |
Richard P. Simon | | Director | February 23, 2024 |
| | | |
/s/ Dasha Smith | | | |
Dasha Smith | | Director | February 23, 2024 |
| | | |
/s/ Edmond D. Villani | | | |
Edmond D. Villani | | Director | February 23, 2024 |
| | | |
TABLE OF CONTENTS
FINANCIAL STATEMENTS
COHEN & STEERS, INC.
MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
The management of Cohen & Steers, Inc. (the Company) is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control system is designed to provide reasonable assurance to the Company’s management and Board of Directors regarding the reliability of financial reporting and the preparation of published financial statements in accordance with accounting principles generally accepted in the United States of America. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.
The Company’s internal control over financial reporting (1) includes policies and procedures that pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of assets; (2) provides reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that receipts and expenditures are being made only in accordance with authorizations of management and the directors of the Company; and (3) and provides reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the Company’s financial statements.
The Company’s management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2020.2023. In making this assessment, it used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework (2013). Based on its assessment, our management believes that, as of December 31, 2020,2023, the Company’s internal control over financial reporting is effective based on those criteria.
The Company’s independent registered public accounting firm that audited the accompanying Consolidated Financial Statements has issued an attestation report on the effectiveness of the Company’s internal control over financial reporting. Their report appears on the following page.
February 26, 202123, 2024
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and Board of Directors of Cohen & Steers, Inc.
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated statements of financial condition of Cohen & Steers, Inc. and subsidiaries (the "Company") as of December 31, 20202023 and 2019,2022, the related consolidated statements of operations, comprehensive income, changes in stockholders’ equity and redeemable noncontrolling interests, and cash flows for each of the three years in the period ended December 31, 20202023 and the related notes (collectively referred to as the “financial statements”). We also have audited the Company’s internal control over financial reporting as of December 31, 2020,2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 20202023 and 2019,2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020,2023, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020,2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by COSO.
Basis for Opinions
The Company’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on these financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCOAB.PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the financial statements included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures to respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit mattermatters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Income TaxesFair Value - Level 3 Investments - Refer to Note 14Notes 4 and 5 to the consolidated financial statements
Unrecognized Tax Benefits
Critical Audit Matter Description
As discussed in Note 14 to the consolidated financial statements, as of December 31, 2020, the Company had $13.6 million of gross unrecognized tax benefits.
The Company records unrecognized tax benefits as liabilities in accordance with Accounting Standards Codification Topic 740, Income Taxes (ASC 740) and adjusts these liabilities when its judgment changes as a resultCertain of the evaluation of new information not previously available. Because of the complexity of someCompany’s consolidated funds have Level 3 investments that are reported at fair value. The fair value of these uncertainties,investments is determined based on unobservable pricing assumptions (or "inputs"). These investments have limited observable market activity and the ultimate resolution may differ from the Company's current estimates of the unrecognized tax benefit liabilities. These differences are reflected as increases or decreases in income tax expenseinputs used in the period in which new information becomes available.determination of fair value require significant management judgment or estimation.
We identified the evaluationvaluation of the Company’s unrecognized tax benefitsthese investments as a critical audit matter because of the calculationunobservable pricing inputs used to estimate their value, and changes in the value of these tax liabilities involves dealing with uncertainties ininvestments directly impacts the applicationamount of complex tax laws and regulations in a multitude of jurisdictions across the Company’s global operations. Tax laws and regulations are subject to change in jurisdictions whereunrealized gain/loss the Company operates, coupled with uncertainty associated with interpretationsrecognizes for the period. Performing audit procedures to evaluate the appropriateness of applicable tax law provisions.
In accordance with ASC 740, a tax benefit from an uncertain tax position may be recognized when it is more likely than not thatthese inputs used in determining the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, on the basis of the technical merits. Auditing management’s analysis of its uncertain tax positions and resulting unrecognized income tax benefitsfair value required a high degree of auditor judgment due to limited publicly available information regarding resolution of litigation appeals in different jurisdictions and absence of clarifying guidance from government agencies, resulting in an increased extent of effort, to evaluate management’s analysis, including the need to involve our income tax specialists.
specialists who possess significant valuation expertise.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the evaluationunobservable pricing inputs used by management to estimate the fair values of unrecognized income tax benefitsthese investments included the following, among others:
•We tested the design, implementation, and operating effectiveness of controls that addressover the risksdetermination of material misstatement relatingthe inputs used to uncertain tax positions.value these investments.
•We, withWith the supportassistance of our income taxfair value specialists, we evaluated management’s valuation inputs, including their determination of the recognition, measurement and accuracy of unrecognized income tax benefits.unobservable pricing inputs used to determine fair value. Our procedures included but were not limited to:
–On a sample basis, inspectedTesting the Company’s analysis of uncertain income tax positions and examined the reasonablenessunderlying source information of the assumptions, as well as developing a range of independent estimates and calculationscomparing those to the Companyinputs used to develop the related unrecognized income tax benefit amounts by position and jurisdiction.management.
–On a sample basis, testedEvaluating the roll forwardimpact of unrecognized tax benefits fromcurrent market events and conditions, as well as relevant comparable transactions, on the prior year.valuation techniques and assumptions used by management (e.g., sector and geographic location performance, occupancy rates and other market fundamentals, and interest rate environment).
–For sampled positions, obtained the Company's supporting documentation to assess the technical tax merit, the more-likely-than-not recognition, and measurement thresholds, and examined interpretation and application of relevant tax laws in the Company's recognition determination.
–Evaluated the Company’s income tax disclosures concerning these matters included in Note 14 to the consolidated financial statements.
–Tested whether selected unrecognized tax benefits were consistent with evidence obtained in other areas of the audit.
–Based on company specific activities, performed completeness test of uncertain tax positions identified.
–For those uncertain tax positions which have not been effectively settled, we inspected whether management had appropriately considered new information that could significantly change the recognition, measurement, or disclosure of the uncertain tax positions.
/s/ DELOITTE & TOUCHE LLP
New York, New York
February 26, 202123, 2024
We have served as the Company’s auditor since 2003.
COHEN & STEERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(in thousands, except share data)
| | December 31, 2020 | | December 31, 2019 |
ASSETS | | | |
| December 31, 2023 | | | December 31, 2023 | | December 31, 2022 |
Assets: | |
Cash and cash equivalents | Cash and cash equivalents | $ | 41,232 | | | $ | 101,352 | |
Investments ($80,743 and $82,829) (1) | 154,978 | | | 155,213 | |
Cash and cash equivalents | |
Cash and cash equivalents | |
Investments ($159,931 and $134,929) (1) | |
Accounts receivable | Accounts receivable | 69,680 | | | 59,101 | |
Due from brokers ($223 and $1,743) (1) | 5,125 | | | 1,743 | |
Due from brokers ($13 and $38) (1) | |
| Property and equipment—net | Property and equipment—net | 10,341 | | | 12,486 | |
Operating lease right-of-use assets | 31,203 | | | 38,440 | |
Property and equipment—net | |
Property and equipment—net | |
Operating lease right-of-use assets—net | |
Goodwill and intangible assets—net | Goodwill and intangible assets—net | 20,495 | | | 19,560 | |
Deferred income tax asset—net | 6,995 | | | 7,091 | |
Other assets ($637 and $1,041) (1) | 8,404 | | | 7,433 | |
| Other assets ($644 and $576) (1) | |
Other assets ($644 and $576) (1) | |
Other assets ($644 and $576) (1) | |
Total assets | Total assets | $ | 348,453 | | | $ | 402,419 | |
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |
Liabilities: | Liabilities: | |
Accrued compensation | $ | 52,056 | | | $ | 48,105 | |
Liabilities: | |
Liabilities: | |
Accrued compensation and benefits | |
Accrued compensation and benefits | |
Accrued compensation and benefits | |
Distribution and service fees payable | Distribution and service fees payable | 7,748 | | | 7,318 | |
Operating lease liabilities | Operating lease liabilities | 34,926 | | | 43,349 | |
Income tax payable | Income tax payable | 12,672 | | | 22,194 | |
Due to brokers ($128 and $366) (1) | 501 | | | 366 | |
Other liabilities and accrued expenses ($326 and $784) (1) | 15,646 | | | 13,972 | |
Due to brokers ($119 and $11) (1) | |
Other liabilities and accrued expenses ($449 and $664) (1) | |
Total liabilities | Total liabilities | 123,549 | | | 135,304 | |
Commitments and contingencies (See Note 13) | 0 | | 0 |
Commitments and contingencies (See Note 14) | | Commitments and contingencies (See Note 14) | | | |
Redeemable noncontrolling interests | Redeemable noncontrolling interests | 50,665 | | | 53,412 | |
Stockholders’ equity: | Stockholders’ equity: | | | |
Common stock, $0.01 par value; 500,000,000 shares authorized; 53,462,621 and 52,580,246 shares issued at December 31, 2020 and 2019, respectively | 535 | | | 527 | |
Common stock, $0.01 par value; 500,000,000 shares authorized; 55,788,720 and 55,051,975 shares issued at December 31, 2023 and 2022, respectively | |
Common stock, $0.01 par value; 500,000,000 shares authorized; 55,788,720 and 55,051,975 shares issued at December 31, 2023 and 2022, respectively | |
Common stock, $0.01 par value; 500,000,000 shares authorized; 55,788,720 and 55,051,975 shares issued at December 31, 2023 and 2022, respectively | |
Additional paid-in capital | Additional paid-in capital | 670,142 | | | 636,788 | |
Accumulated deficit | Accumulated deficit | (291,542) | | | (242,461) | |
Accumulated other comprehensive income (loss), net of tax | (4,134) | | | (6,326) | |
Less: Treasury stock, at cost, 5,674,510 and 5,329,820 shares at December 31, 2020 and 2019, respectively | (200,762) | | | (174,825) | |
Accumulated other comprehensive loss | |
Treasury stock, at cost, 6,633,273 and 6,329,178 shares at December 31, 2023 and 2022, respectively | |
Total stockholders’ equity attributable to Cohen & Steers, Inc. | |
Nonredeemable noncontrolling interests | |
Total stockholders’ equity | Total stockholders’ equity | 174,239 | | | 213,703 | |
Total liabilities and stockholders’ equity | $ | 348,453 | | | $ | 402,419 | |
Total liabilities, redeemable noncontrolling interests and stockholders’ equity | |
_________________________
(1) Asset and liability amountsAmounts in parentheses represent the aggregatedaggregate balances at December 31, 20202023 and 20192022 attributable to variable interest entities consolidated by the Company. Refer to Note 4, Investmentsfor further discussion.
See notes to consolidated financial statements
COHEN & STEERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
| | | | | | | | | | | | | | | | | |
| Years Ended December 31, |
| 2023 | | 2022 | | 2021 |
Revenue: | | | | | |
Investment advisory and administration fees | $ | 459,411 | | | $ | 529,311 | | | $ | 543,544 | |
Distribution and service fees | 28,200 | | | 35,093 | | | 37,630 | |
Other | 2,026 | | | 2,502 | | | 2,658 | |
Total revenue | 489,637 | | | 566,906 | | | 583,832 | |
Expenses: | | | | | |
Employee compensation and benefits | 200,181 | | | 208,831 | | | 195,443 | |
Distribution and service fees | 54,170 | | | 82,928 | | | 75,891 | |
General and administrative | 66,704 | | | 54,826 | | | 48,034 | |
Depreciation and amortization | 4,105 | | | 4,383 | | | 4,092 | |
Total expenses | 325,160 | | | 350,968 | | | 323,460 | |
Operating income | 164,477 | | | 215,938 | | | 260,372 | |
Non-operating income (loss): | | | | | |
Interest and dividend income—net | 14,618 | | | 6,818 | | | 2,877 | |
Gain (loss) from investments—net | 4,291 | | | (25,106) | | | 18,784 | |
Foreign currency gain (loss)—net | (3,135) | | | (753) | | | (89) | |
Total non-operating income (loss) | 15,774 | | | (19,041) | | | 21,572 | |
Income before provision for income taxes | 180,251 | | | 196,897 | | | 281,944 | |
Provision for income taxes | 43,642 | | | 47,411 | | | 55,790 | |
Net income | 136,609 | | | 149,486 | | | 226,154 | |
Net (income) loss attributable to noncontrolling interests | (7,560) | | | 21,556 | | | (14,758) | |
Net income attributable to common stockholders | $ | 129,049 | | | $ | 171,042 | | | $ | 211,396 | |
| | | | | |
Earnings per share attributable to common stockholders: | | | | | |
Basic | $ | 2.62 | | | $ | 3.51 | | | $ | 4.38 | |
Diluted | $ | 2.60 | | | $ | 3.47 | | | $ | 4.31 | |
Weighted average shares outstanding: | | | | | |
Basic | 49,308 | | | 48,781 | | | 48,316 | |
Diluted | 49,553 | | | 49,297 | | | 49,090 | |
| | | | | | | | | | | | | | | | | |
| Years Ended December 31, |
| 2020 | | 2019 | | 2018 (1) |
Revenue: | | | | | |
Investment advisory and administration fees | $ | 395,037 | | | $ | 378,578 | | | $ | 349,870 | |
Distribution and service fees | 30,134 | | | 30,048 | | | 29,090 | |
Other | 2,365 | | | 2,204 | | | 2,151 | |
Total revenue | 427,536 | | | 410,830 | | | 381,111 | |
Expenses: | | | | | |
Employee compensation and benefits | 156,457 | | | 143,431 | | | 131,292 | |
Distribution and service fees | 115,084 | | | 55,237 | | | 50,043 | |
General and administrative | 56,286 | | | 47,632 | | | 48,265 | |
Depreciation and amortization | 4,652 | | | 4,396 | | | 4,473 | |
Total expenses | 332,479 | | | 250,696 | | | 234,073 | |
Operating income (loss) | 95,057 | | | 160,134 | | | 147,038 | |
Non-operating income (loss): | | | | | |
Interest and dividend income—net | 3,362 | | | 6,716 | | | 10,426 | |
Gain (loss) from investments—net | (4,116) | | | 21,673 | | | (14,264) | |
Foreign currency gain (loss)—net | (916) | | | (974) | | | 579 | |
Total non-operating income (loss) | (1,670) | | | 27,415 | | | (3,259) | |
Income before provision for income taxes | 93,387 | | | 187,549 | | | 143,779 | |
Provision for income taxes | 18,222 | | | 40,565 | | | 34,257 | |
Net income | 75,165 | | | 146,984 | | | 109,522 | |
Less: Net (income) loss attributable to redeemable noncontrolling interests | 1,419 | | | (12,363) | | | 4,374 | |
Net income attributable to common stockholders | $ | 76,584 | | | $ | 134,621 | | | $ | 113,896 | |
| | | | | |
Earnings per share attributable to common stockholders: | | | | | |
Basic | $ | 1.60 | | | $ | 2.85 | | | $ | 2.43 | |
Diluted | $ | 1.57 | | | $ | 2.79 | | | $ | 2.40 | |
Weighted average shares outstanding: | | | | | |
Basic | 47,800 | | | 47,273 | | | 46,794 | |
Diluted | 48,676 | | | 48,297 | | | 47,381 | |
_________________________
(1) Revenue amounts related to model-based portfolios were reclassified from other (previously reported as portfolio consulting and other) to investment advisory and administration fees.
See notes to consolidated financial statements
COHEN & STEERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
| | Years Ended December 31, |
| 2020 | | 2019 | | 2018 |
| Years Ended December 31, | | | Years Ended December 31, |
| 2023 | | | 2023 | | 2022 | | 2021 |
Net income | Net income | $ | 75,165 | | | $ | 146,984 | | | $ | 109,522 | |
Less: Net (income) loss attributable to redeemable noncontrolling interests | 1,419 | | | (12,363) | | | 4,374 | |
Net (income) loss attributable to noncontrolling interests | |
Net income attributable to common stockholders | Net income attributable to common stockholders | 76,584 | | | 134,621 | | | 113,896 | |
Other comprehensive income (loss), net of tax: | | | | | |
Other comprehensive income (loss): | |
Foreign currency translation gain (loss) | |
Foreign currency translation gain (loss) | |
Foreign currency translation gain (loss) | Foreign currency translation gain (loss) | 2,192 | | | 997 | | | (2,557) | |
Total comprehensive income attributable to common stockholders | Total comprehensive income attributable to common stockholders | $ | 78,776 | | | $ | 135,618 | | | $ | 111,339 | |
See notes to consolidated financial statements
COHEN & STEERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY AND
REDEEMABLE NONCONTROLLING INTERESTS
(in thousands)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Common Stock | | Additional Paid-In Capital | | Accumulated Deficit | | Accumulated Other Comprehensive Income (Loss), Net of Tax | | Treasury Stock | | Total Stockholders’ Equity | | Redeemable Noncontrolling Interests | | Shares of Common Stock, Net |
January 1, 2018 | | $ | 511 | | | $ | 570,486 | | | $ | (137,972) | | | $ | (3,671) | | | $ | (153,818) | | | $ | 275,536 | | | $ | 47,795 | | | 46,315 | |
Cumulative-effect adjustment, net of tax, due to the adoption of the new financial instruments accounting standard | | — | | | — | | | 1,095 | | | (1,095) | | | — | | | — | | | — | | | — | |
Dividends ($3.82 per share) | | — | | | — | | | (185,423) | | | — | | | — | | | (185,423) | | | — | | | — | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Issuance of common stock | | 7 | | | 696 | | | — | | | — | | | 0 | | | 703 | | | — | | | 714 | |
Repurchase of common stock | | — | | | — | | | — | | | — | | | (10,599) | | | (10,599) | | | — | | | (261) | |
Issuance of restricted stock units—net | | — | | | 7,170 | | | — | | | — | | | — | | | 7,170 | | | — | | | — | |
Amortization of restricted stock units | | — | | | 23,984 | | | — | | | — | | | — | | | 23,984 | | | — | | | — | |
Forfeitures of restricted stock units | | — | | | (64) | | | — | | | — | | | — | | | (64) | | | — | | | — | |
Net income (loss) | | — | | | — | | | 113,896 | | | — | | | — | | | 113,896 | | | (4,374) | | | — | |
Other comprehensive income (loss), net of tax | | — | | | — | | | — | | | (2,557) | | | — | | | (2,557) | | | — | | | — | |
Net contributions (distributions) attributable to redeemable noncontrolling interests | | — | | | — | | | — | | | — | | | — | | | — | | | 70,771 | | | — | |
December 31, 2018 | | $ | 518 | | | $ | 602,272 | | | $ | (208,404) | | | $ | (7,323) | | | $ | (164,417) | | | $ | 222,646 | | | $ | 114,192 | | | 46,768 | |
| | | | | | | | | | | | | | | | |
Dividends ($3.44 per share) | | 0 | | | 0 | | | (168,678) | | | 0 | | | 0 | | | (168,678) | | | — | | | — | |
Issuance of common stock | | 9 | | | 861 | | | 0 | | | 0 | | | 0 | | | 870 | | | 0 | | | 762 | |
Repurchase of common stock | | 0 | | | 0 | | | 0 | | | 0 | | | (10,408) | | | (10,408) | | | 0 | | | (280) | |
Issuance of restricted stock units—net | | 0 | | | 7,039 | | | 0 | | | 0 | | | 0 | | | 7,039 | | | 0 | | | — | |
Amortization of restricted stock units | | 0 | | | 26,883 | | | 0 | | | 0 | | | 0 | | | 26,883 | | | 0 | | | — | |
Forfeitures of restricted stock units | | 0 | | | (267) | | | 0 | | | 0 | | | 0 | | | (267) | | | 0 | | | — | |
Net income (loss) | | — | | | 0 | | | 134,621 | | | 0 | | | 0 | | | 134,621 | | | 12,363 | | | — | |
Other comprehensive income (loss), net of tax | | 0 | | | 0 | | | 0 | | | 997 | | | 0 | | | 997 | | | 0 | | | — | |
Net contributions (distributions) attributable to redeemable noncontrolling interests | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 2,242 | | | — | |
Net consolidation (deconsolidation) of Company-sponsored funds | | — | | | — | | | — | | | — | | | — | | | — | | | (75,385) | | | — | |
December 31, 2019 | | $ | 527 | | | $ | 636,788 | | | $ | (242,461) | | | $ | (6,326) | | | $ | (174,825) | | | $ | 213,703 | | | $ | 53,412 | | | 47,250 | |
Dividends ($2.56 per share) | | 0 | | | 0 | | | (125,665) | | | 0 | | | 0 | | | (125,665) | | | — | | | — | |
Issuance of common stock | | 8 | | | 1,002 | | | 0 | | | 0 | | | 0 | | | 1,010 | | | 0 | | | 883 | |
Repurchase of common stock | | 0 | | | 0 | | | 0 | | | 0 | | | (25,937) | | | (25,937) | | | 0 | | | (345) | |
| | | | | | | | | | | | | | | | |
Issuance of restricted stock units—net | | 0 | | | 3,865 | | | 0 | | | 0 | | | 0 | | | 3,865 | | | 0 | | | — | |
Amortization of restricted stock units | | 0 | | | 28,740 | | | 0 | | | 0 | | | 0 | | | 28,740 | | | 0 | | | — | |
Forfeitures of restricted stock units | | 0 | | | (253) | | | 0 | | | 0 | | | 0 | | | (253) | | | 0 | | | — | |
Net income (loss) | | 0 | | | 0 | | | 76,584 | | | 0 | | | 0 | | | 76,584 | | | (1,419) | | | — | |
Other comprehensive income (loss), net of tax | | 0 | | | 0 | | | 0 | | | 2,192 | | | 0 | | | 2,192 | | | 0 | | | — | |
Net contributions (distributions) attributable to redeemable noncontrolling interests | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | (1,328) | | | — | |
| | | | | | | | | | | | | | | | |
December 31, 2020 | | $ | 535 | | | $ | 670,142 | | | $ | (291,542) | | | $ | (4,134) | | | $ | (200,762) | | | $ | 174,239 | | | $ | 50,665 | | | 47,788 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Common Stock | | Additional Paid-In Capital | | Accumulated Deficit | | Accumulated Other Comprehensive Income (Loss) | | Treasury Stock | | Nonredeemable Noncontrolling Interests | | Total Stockholders’ Equity | | Redeemable Noncontrolling Interests | | Shares of Common Stock, Net |
January 1, 2021 | $ | 535 | | | $ | 670,142 | | | $ | (291,542) | | | $ | (4,134) | | | $ | (200,762) | | | $ | — | | | $ | 174,239 | | | $ | 50,665 | | | 47,788 | |
Dividends ($3.05 per share) | — | | | — | | | (151,821) | | | — | | | — | | | — | | | (151,821) | | | — | | | — | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
Issuance of common stock | 8 | | | 1,170 | | | — | | | — | | | — | | | — | | | 1,178 | | | — | | | 805 | |
Repurchase of common stock | — | | | — | | | — | | | — | | | (22,592) | | | — | | | (22,592) | | | — | | | (323) | |
Issuance of restricted stock units—net | — | | | 6,389 | | | — | | | — | | | — | | | — | | | 6,389 | | | — | | | — | |
Amortization of restricted stock units—net | — | | | 38,146 | | | — | | | — | | | — | | | — | | | 38,146 | | | — | | | — | |
| | | | | | | | | | | | | | | | | |
Net income (loss) | — | | | — | | | 211,396 | | | — | | | — | | | — | | | 211,396 | | | 14,758 | | | — | |
Other comprehensive income (loss) | — | | | — | | | — | | | (1,752) | | | — | | | — | | | (1,752) | | | — | | | — | |
| | | | | | | | | | | | | | | | | |
Net contributions (distributions) attributable to noncontrolling interests | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 23,720 | | | — | |
December 31, 2021 | $ | 543 | | | $ | 715,847 | | | $ | (231,967) | | | $ | (5,886) | | | $ | (223,354) | | | $ | — | | | $ | 255,183 | | | $ | 89,143 | | | 48,270 | |
| | | | | | | | | | | | | | | | | |
Dividends ($2.20 per share) | — | | | — | | | (110,492) | | | — | | | — | | | — | | | (110,492) | | | — | | | — | |
Issuance of common stock | 8 | | | 1,219 | | | — | | | — | | | — | | | — | | | 1,227 | | | — | | | 785 | |
Repurchase of common stock | — | | | — | | | — | | | — | | | (26,815) | | | — | | | (26,815) | | | — | | | (332) | |
Issuance of restricted stock units—net | — | | | 5,803 | | | — | | | — | | | — | | | — | | | 5,803 | | | — | | | — | |
Amortization of restricted stock units—net | — | | | 46,504 | | | — | | | — | | | — | | | — | | | 46,504 | | | — | | | — | |
| | | | | | | | | | | | | | | | | |
Net income (loss) | — | | | — | | | 171,042 | | | — | | | — | | | (765) | | | 170,277 | | | (20,791) | | | — | |
Other comprehensive income (loss) | — | | | — | | | — | | | (4,898) | | | — | | | — | | | (4,898) | | | — | | | — | |
Net contributions (distributions) attributable to noncontrolling interests | — | | | — | | | — | | | — | | | — | | | 4,819 | | | 4,819 | | | 137,280 | | | — | |
Net consolidation (deconsolidation) of Company-sponsored funds | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (120,297) | | | — | |
December 31, 2022 | $ | 551 | | | $ | 769,373 | | | $ | (171,417) | | | $ | (10,784) | | | $ | (250,169) | | | $ | 4,054 | | | $ | 341,608 | | | $ | 85,335 | | | 48,723 | |
Dividends ($2.28 per share) | — | | | — | | | (115,818) | | | — | | | — | | | — | | | (115,818) | | | — | | | — | |
Issuance of common stock | 7 | | | 1,244 | | | — | | | — | | | — | | | — | | | 1,251 | | | — | | | 736 | |
Repurchase of common stock | — | | | — | | | — | | | — | | | (21,536) | | | — | | | (21,536) | | | — | | | (304) | |
| | | | | | | | | | | | | | | | | |
Issuance of restricted stock units—net | — | | | 4,495 | | | — | | | — | | | — | | | — | | | 4,495 | | | — | | | — | |
Amortization of restricted stock units—net | — | | | 43,157 | | | — | | | — | | | — | | | — | | | 43,157 | | | — | | | — | |
| | | | | | | | | | | | | | | | | |
Net income (loss) | — | | | — | | | 129,049 | | | — | | | — | | | (884) | | | 128,165 | | | 8,444 | | | — | |
Other comprehensive income (loss) | — | | | — | | | — | | | 3,076 | | | — | | | — | | | 3,076 | | | — | | | — | |
Net contributions (distributions) attributable to noncontrolling interests | — | | | — | | | — | | | — | | | — | | | 1,786 | | | 1,786 | | | 12,684 | | | — | |
| | | | | | | | | | | | | | | | | |
December 31, 2023 | $ | 558 | | | $ | 818,269 | | | $ | (158,186) | | | $ | (7,708) | | | $ | (271,705) | | | $ | 4,956 | | | $ | 386,184 | | | $ | 106,463 | | | 49,155 | |
See notes to consolidated financial statements
COHEN & STEERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands) | | | | | | | | | | | | | | | | | |
| Years Ended December 31, |
| 2023 | | 2022 | | 2021 |
Cash flows from operating activities: | | | | | |
Net income | $ | 136,609 | | | $ | 149,486 | | | $ | 226,154 | |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | | | | | |
Stock-based compensation expense—net | 44,468 | | | 49,352 | | | 40,464 | |
| | | | | |
Depreciation and amortization | 5,142 | | | 5,667 | | | 5,721 | |
Amortization of right-of-use assets | 14,496 | | | 11,798 | | | 10,343 | |
Amortization (accretion) of premium (discount) on U.S. Treasury securities | (1,954) | | | (115) | | | (31) | |
(Gain) loss from investments—net | (4,291) | | | 25,106 | | | (18,784) | |
Deferred income taxes | 537 | | | (1,199) | | | 104 | |
Foreign currency (gain) loss | (787) | | | 1,587 | | | 1,974 | |
Changes in operating assets and liabilities: | | | | | |
Accounts receivable | (1,426) | | | 15,827 | | | (16,384) | |
Due from brokers | (2,605) | | | (1,632) | | | 1,539 | |
Investments within consolidated investment vehicles | (19,260) | | | (170,372) | | | (27,525) | |
| | | | | |
Other assets | (7,268) | | | 1,712 | | | 2,894 | |
Accrued compensation and benefits | (11,382) | | | (1,403) | | | 22,783 | |
Distribution and service fees payable | 1,723 | | | (1,762) | | | 2,435 | |
Operating lease liabilities | 19,199 | | | (11,935) | | | (11,550) | |
Due to brokers | 109 | | | 3,046 | | | 450 | |
| | | | | |
Income tax payable | (2,743) | | | (15,036) | | | 9,991 | |
Other liabilities and accrued expenses | 1,394 | | | 1,553 | | | (7,677) | |
Net cash provided by (used in) operating activities | 171,961 | | | 61,680 | | | 242,901 | |
Cash flows from investing activities: | | | | | |
| | | | | |
Purchases of investments | (169,402) | | | (145,345) | | | (54,043) | |
Proceeds from sales and maturities of investments | 111,612 | | | 146,711 | | | 104,386 | |
Purchases of property and equipment | (56,986) | | | (4,223) | | | (2,695) | |
Net cash provided by (used in) investing activities | (114,776) | | | (2,857) | | | 47,648 | |
Cash flows from financing activities: | | | | | |
Issuance of common stock—net | 1,063 | | | 1,043 | | | 1,001 | |
Repurchase of common stock | (21,536) | | | (26,815) | | | (22,592) | |
Dividends to stockholders | (112,446) | | | (107,352) | | | (147,555) | |
Net contributions (distributions) from noncontrolling interests | 14,470 | | | 142,099 | | | 23,720 | |
Other | (603) | | | — | | | — | |
Net cash provided by (used in) financing activities | (119,052) | | | 8,975 | | | (145,426) | |
Net increase (decrease) in cash and cash equivalents | (61,867) | | | 67,798 | | | 145,123 | |
Effect of foreign exchange rate changes on cash and cash equivalents | 2,756 | | | (4,440) | | | (999) | |
Cash and cash equivalents, beginning of the year | 248,714 | | | 185,356 | | | 41,232 | |
Cash and cash equivalents, end of the year | $ | 189,603 | | | $ | 248,714 | | | $ | 185,356 | |
| | | | | | | | | | | | | | | | | |
| Years Ended December 31, |
| 2020 | | 2019 | | 2018 (1) |
Cash flows from operating activities: | | | | | |
Net income | $ | 75,165 | | | $ | 146,984 | | | $ | 109,522 | |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: |
Stock-based compensation expense—net | 29,337 | | | 27,811 | | | 24,626 | |
Amortization of deferred commissions | 1,701 | | | 1,079 | | | 1,559 | |
Depreciation and amortization | 4,652 | | | 4,396 | | | 4,473 | |
Amortization of right-of-use assets | 10,128 | | | 10,048 | | | 9,364 | |
Amortization (accretion) of premium (discount) on held-to-maturity investments | (208) | | | (493) | | | (246) | |
(Gain) loss from investments—net | 4,116 | | | (21,673) | | | 14,264 | |
Deferred income taxes | 107 | | | 96 | | | (1,373) | |
Foreign currency (gain) loss | (1,269) | | | 9 | | | 211 | |
Changes in operating assets and liabilities: | | | | | |
Accounts receivable | (9,310) | | | (8,729) | | | 3,262 | |
Due from brokers | (3,382) | | | 989 | | | (7,811) | |
Deferred commissions | (1,474) | | | (1,628) | | | (982) | |
Investments | (3,605) | | | (13,997) | | | (81,182) | |
| | | | | |
Other assets | (771) | | | (120) | | | (2,689) | |
Accrued compensation | 3,951 | | | 4,420 | | | 2,341 | |
Distribution and service fees payable | 430 | | | (1,175) | | | 2,262 | |
Operating lease liabilities | (11,314) | | | (10,955) | | | (9,542) | |
Due to brokers | 135 | | | 45 | | | 1,839 | |
| | | | | |
Income tax payable | (9,640) | | | 3,531 | | | (1,229) | |
Other liabilities and accrued expenses | 437 | | | 807 | | | 3,929 | |
Net cash provided by (used in) operating activities | 89,186 | | | 141,445 | | | 72,598 | |
Cash flows from investing activities: | | | | | |
Proceeds from redemptions of equity method investments | 6 | | | 52 | | | 37 | |
Purchases of investments | (70,963) | | | (50,943) | | | (63,557) | |
Proceeds from sales and maturities of investments | 71,689 | | | 89,592 | | | 13,796 | |
Purchases of property and equipment | (2,502) | | | (2,752) | | | (3,470) | |
Net cash provided by (used in) investing activities | (1,770) | | | 35,949 | | | (53,194) | |
Cash flows from financing activities: | | | | | |
Issuance of common stock—net | 859 | | | 741 | | | 597 | |
Repurchase of common stock | (25,937) | | | (10,408) | | | (10,599) | |
Dividends to stockholders | (122,489) | | | (162,705) | | | (178,879) | |
Distributions to redeemable noncontrolling interests | (6,024) | | | (43,483) | | | (10,862) | |
Contributions from redeemable noncontrolling interests | 4,696 | | | 45,725 | | | 81,633 | |
Net cash provided by (used in) financing activities | (148,895) | | | (170,130) | | | (118,110) | |
Net increase (decrease) in cash and cash equivalents | (61,479) | | | 7,264 | | | (98,706) | |
Effect of foreign exchange rate changes on cash and cash equivalents | 1,359 | | | 1,355 | | | (2,013) | |
Cash and cash equivalents, beginning of the year | 101,352 | | | 92,733 | | | 193,452 | |
Cash and cash equivalents, end of the year | $ | 41,232 | | | $ | 101,352 | | | $ | 92,733 | |
_________________________
(1) Certain amounts have been recast to reflect the Company's adoption of the lease accounting standard on January 1, 2019.
See notes to consolidated financial statements
COHEN & STEERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS—(Continued)
Supplemental disclosures of cash flow information:
The following table provides a reconciliation of cash and cash equivalents reported within the consolidated statements of financial condition to the cash and cash equivalents reported within the consolidated statements of cash flows above:
| | | | | | | | | | | | | | | | | |
| As of December 31, |
(in thousands) | 2023 | | 2022 | | 2021 |
Cash and cash equivalents | $ | 187,442 | | | $ | 247,418 | | | $ | 184,373 | |
Cash included in investments (1) | 2,161 | | | 1,296 | | | 983 | |
Total cash and cash equivalents within consolidated statements of cash flows | $ | 189,603 | | | $ | 248,714 | | | $ | 185,356 | |
________________________
(1) Cash included in investments represents operating cash held in consolidated investment vehicles.
For the yearyears ended December 31, 2020, 20192023, 2022 and 2018,2021, the Company paid taxes, net of tax refunds, of approximately $27,719,000, $37,036,000$45.8 million, $63.6 million and $36,795,000,$45.7 million, respectively.
Supplemental disclosures of non-cash investing and financing activities:
In connection with its stock incentive plan, the Company recordedissued dividend equivalents in the form of restricted stock unit dividend equivalents,units, net of forfeitures, in the amount of approximately $3,176,000, $5,973,000$3.4 million, $3.1 million and $6,544,000$4.3 million for the years ended December 31, 2020, 20192023, 2022 and 2018,2021, respectively. These amounts are included in the issuance of restricted stock unitsunits—net and in dividends in the consolidated statements of changes in stockholders' equity.
Non-cash investing activities included $4.7 million related to purchases of property and equipment in connection with the Company's new headquarters that remain unpaid at December 31, 2023.
Effective SeptemberAugust 1, 2019,2022, the Company's proportionate ownership interest in the Cohen & Steers Preferred Securities and Income SMA Shares, Inc. (PISH) decreased and the Company reclassified its ownershipa variable interest to equity method investments. Accordingly, the Company deconsolidated the assets and liabilities of PISH resulting in a non-cash reduction of approximately $7,181,000 from investments and redeemable noncontrolling interests to remove amounts attributable to third-party investors in PISH. Effective November 1, 2019, the Company’s proportionate ownership interest in PISH fell below 20% and, as a result, the Company recorded a non-cash reclassification of approximately $5,370,000, from equity method investments into equity investments at fair value until the Company sold its remaining interest in PISH in December 2019.
Effective January 1, 2019, the Company's proportionate ownership interest inentity, the Cohen & Steers SICAV Global Preferred SecuritiesDiversified Real Assets Fund (SICAV Preferred) decreasedRAP), fell below 10% and the Company reclassified its ownership interest to equity investments at fair value. Accordingly, the Company deconsolidated the assets and liabilities of SICAV PreferredRAP resulting in a non-cash reduction of approximately $114,192,000$120.3 million from both investments and redeemable noncontrolling interests to remove amounts attributable to third-party investors in SICAV Preferred.
For the year ended December 31, 2019, the Company's proportionate ownership interest in the Cohen & Steers SICAV Global Real Estate Fund (SICAV GRE) increased. Accordingly, the Company consolidated the assets and liabilities and the results of operations of SICAV GRE, resulting in a non-cash increase of approximately $45,988,000 to investments and redeemable noncontrolling interests to record amounts attributable to third-party investors in SICAV GRE from equity investments at fair value.
For the year ended December 31, 2018, the Company's proportionate ownership interest in the Cohen & Steers Funds ICAV (ICAV), an Irish alternative investment fund, increased and, as a result, the Company consolidated the assets and liabilities and the results of operations of ICAV, resulting in a non-cash increase of approximately $6,411,000 to investments and redeemable noncontrolling interests to record amounts attributable to third-party investors in ICAV. ICAV was subsequently liquidated effective April 2019.interests.
COHEN & STEERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
Cohen & Steers, Inc. (CNS) was organized as a Delaware corporation on March 17, 2004. CNS is the holding company for its direct and indirect subsidiaries, including Cohen & Steers Capital Management, Inc. (CSCM), Cohen & Steers Securities, LLC (CSS), Cohen & Steers AsiaUK Limited (CSAL)(CSUK), Cohen & Steers UKIreland Limited (CSUK)(CSIL), Cohen & Steers Asia Limited (CSAL), Cohen & Steers Japan Limited (CSJL) and Cohen & Steers IrelandSingapore Private Limited (CSIL)(CSSG) (collectively, the Company).
The Company is a global investment manager specializing in liquid real assets and alternative income, including listed and private real estate, preferred securities, listed infrastructure, and natural resource equities, commodities, as well as preferred securities and other incomemulti-strategy solutions. Founded in 1986, the Company is headquartered in New York City, with offices in London, Dublin, Hong Kong, Tokyo and Tokyo.Singapore.
The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). The consolidated financial statements set forth herein include the accounts of CNS and its direct and indirect subsidiaries. Intercompany balances and transactions have been eliminated in consolidation.
2. Summary of Significant Accounting Policies
Recently Adopted Accounting Pronouncements—In August 2018, the Financial Accounting Standards Board (FASB) issued guidance to align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. Under the new standard, implementation costs are deferred and presented in the same financial statement caption on the consolidated statements of financial condition as a prepayment of related arrangement fees. The deferred costs are recognized over the term of the arrangement in the same financial statement caption in the consolidated statements of operations as the related fees of the arrangement. This new guidance became effective on January 1, 2020. The Company has adopted this new standard using a prospective approach to all implementation costs incurred after adoption. The Company's adoption of the new standard did not have a material effect on its consolidated financial statements and related disclosures.
In January 2017, the FASB issued guidance to simplify the goodwill impairment test by removing the requirement to perform a hypothetical purchase price allocation. As a result of the revised guidance, a goodwill impairment will be the amount by which a reporting unit’s carrying value exceeds its fair value. This new guidance became effective on January 1, 2020. The Company's adoption of the new standard did not have a material effect on its consolidated financial statements and related disclosures.
In June 2016, the FASB issued guidance on the measurement of credit losses on financial instruments. This standard amended guidance related to reporting credit losses for financial assets measured at amortized cost and replaced the incurred loss impairment model with a current expected credit loss (CECL) model. CECL requires a company to estimate lifetime expected credit losses based on relevant information about historical events, current conditions and reasonable and supportable forecasts. This new guidance became effective on January 1, 2020. The Company's adoption of the new standard had no impact on its consolidated financial statements and related disclosures.
Accounting Estimates—The preparation of the consolidated financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosures of contingent assets and liabilities at the dates of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods. Management believes the estimates used in preparing the consolidated financial statements are reasonable and prudent. Actual results could differ from those estimates due to factors the Company cannot fully predict including the extent of the impact to the Company's business from the ongoing COVID-19 pandemic.
Reclassifications—The Company reclassified certain prior period amounts in the consolidated financial statements to conform with the current period presentation.estimates.
Consolidation of Company-sponsored FundsInvestment Vehicles—InvestmentsThe Company's financial interests in Company-sponsored funds andinvestment vehicles, including the management fees that are received, are evaluated at inception and thereafter, if there is a reconsideration event, in order to determine whether to apply the Variable
COHEN & STEERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Interest Entity (VIE) model or the Voting Interest Entity (VOE) model. In performing this analysis, all of the Company’s management fees are presumed to be commensurate and at market and are therefore not considered variable interests.
A VIE is an entity in which either (i) the equity investment at risk is not sufficient to permit the entity to finance its own activities without additional financial support or (ii) the group of holders of the equity investment at risk lack certain characteristics of a controlling financial interest. The primary beneficiary is the entity that has (i) the power to direct the activities of the VIE that most significantly affect its performance, and (ii) the obligation to absorb losses of the entity or the right to receive benefits from the entity that could potentially be significant to the VIE. InvestmentsSubscriptions and redemptions or amendments to the governing documents of the respective entities could affect an entity's status as a VIE or the determination of the primary beneficiary. Limited partnerships and similar entities are determined to be a VIE when the Company is the general partner and the limited partners do not hold substantive kick-out or participation rights. The Company assesses whether it is the primary beneficiary of any VIEs identified by evaluating its economic interests in the entity held either directly by the Company and its affiliates or indirectly through employees. VIEs for which the Company is deemed to be the primary beneficiary are consolidated.
Investments in Company-sponsored funds that are determined to be VOEs are consolidated when the Company’s ownership interest is greater than 50% of the outstanding voting interests of the fund or when the Company is the general partner of the fund and the limited partners do not have substantive kick-out or participating rights in the fund.vehicle.
The Company records noncontrolling interests in consolidated Company-sponsored fundsinvestment vehicles for which the Company’s ownership is less than 100%.
Cash and Cash Equivalents—Cash and cash equivalents are on deposit with several highly rated financial institutions and include short-term, highly-liquidhighly liquid investments, which are readily convertible into cash and have original maturities of three months or less.cash.
Due from/to Brokers—The Company, including the consolidated Company-sponsored funds,investment vehicles, may transact with brokers for certain investment activities. The clearing and custody operations for these investment activities are performed pursuant to
COHEN & STEERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
contractual agreements. The due from/to brokers balance representsbalances represent cash and/or cash collateral balances at brokers/custodians and/or receivables and payables for unsettled securities transactions with brokers.brokers/custodians.
Investments—Management of the Company determines the appropriate classification of its investments at the time of purchase and re-evaluates such determination no less than on a quarterly basis. At December 31, 2020, theThe Company's investments were comprised of the following:are categorized as follows:
•Equity investments at fair value which generally represent equitycommon stocks, limited partnership interests, master limited partnership interests, preferred securities held within the consolidated Company-sponsored funds, individual equity securities held directly for the purposes of establishing performance track records and other seed investments in Company-sponsored open-end funds where the Company has neither control nor the ability to exercise significant influence.vehicles.
•Trading investments which generally represent debt securities held within the consolidated Company-sponsored funds and individual debt securities held directly for the purposes of establishing performance track records.
•Held-to-maturity investments, which generally represent corporate investments in U.S. Treasury securities recorded at amortized cost. Under the CECL model, any expected credit losses are recognized as an allowance, which represents an adjustment to the amortized costs basis. The Company did not record any provision for credit losses on these securities during the year ended December 31, 2020.
•Equity method investments, which generally represent seed investments in Company-sponsored funds in which the Company owns between 20-50% of the outstanding voting interests or when it is determined that the Company is able to exercise significant influence but not control over the investments. When using the equity method, the Company recognizes its respective share of net income or loss for the period which is recorded as gain (loss) from investments—net in the Company's consolidated statements of operations.and investment-grade corporate debt securities.
Realized and unrealized gains and losses on equity investments at fair value, trading investments and equity methodthe Company's investments are recorded in gain (loss) from investments—net in the Company's consolidated statements of operations.
COHEN & STEERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
From time to time, the Company, including the consolidated Company-sponsored funds,investment vehicles, may enter into derivative contracts, including options, futures and swaps contracts, to gain exposure to the underlying commodities markets or to economically hedge market risk of the underlying portfolios. Gains and losses on derivative contracts are recorded asin gain (loss) from investments—net in the Company's consolidated statements of operations. The fair values of these instruments are recorded in other assets or other liabilities and accrued expenses on the Company's consolidated statements of financial condition.
Additionally, from time to time, the Company, including the consolidated Company-sponsored funds,investment vehicles, may enter into forward foreign exchange contracts to economically hedge its currency exposure. These instruments are measured at fair value based on the prevailing forward exchange rate with gains and losses recorded in foreign currency gain (loss)—net in the Company’s consolidated statements of operations. The fair values of these contracts are recorded in other assets or other liabilities and accrued expenses on the Company’s consolidated statements of financial condition.
Leases—The Company determines if an arrangement is a lease at inception. The Company has operating leases for corporate offices and certain information technology equipment and these leaseswhich are included in operating lease right-of-use (ROU) assets and operating lease liabilities on the Company’s consolidated statements of financial condition.
ROU assets represent the right to use an underlying asset for the lease term and lease liabilities represent obligations to make lease payments arising from the lease. Operating lease ROU assets and lease liabilities are recognized at commencement date based on the net present value of lease payments over the life of the lease term.and thereafter, are remeasured if there is a change in lease terms. The majority of the Company’s lease agreements do not provide an implicit rate. As a result, the Company used anits estimated incremental borrowing rate based on the information available as of lease commencement dates in determining the present value of lease payments. The operating lease ROU asset reflectsassets reflect any upfront lease payments made as well as lease incentives received. During the year ended 2023, the Company incurred costs related to the build-out of its new headquarters that qualified for reimbursement from the landlord. As a result, the Company reduced its ROU asset by $25.7 million.
The lease terms may include options to extend or terminate the lease and these are factored into the determination of the ROU asset and lease liability at lease inception when and if it is reasonably certain that the Company will exercise that option. Lease expense for fixed lease payments is recognized on a straight-line basis over the lease term.
The Company has certain lease agreements with non-lease components such as maintenance and executory costs, which are accounted for separately and not included in ROU assets.
ROU assets are tested for impairment whenever changes in facts or circumstances indicate that the carrying amount of an asset may not be recoverable. Modification of a lease term would result in re-measurementremeasurement of the lease liability and a corresponding adjustment to the ROU asset.
Goodwill and Intangible Assets—Goodwill represents the excess of the cost of the Company’s investment in the net assets of an acquired company over the fair value of the underlying identifiable net assets at the date of acquisition. Goodwill and indefinite-lived intangible assets are not amortized but are tested at least annually for impairment by comparing the fair value to their carrying amounts.
Redeemable Noncontrolling Interests—Redeemable noncontrollingNoncontrolling interests representconsist of nonredeemable and redeemable third-party interests in the Company's consolidated Company-sponsored funds. Theseinvestment vehicles. Noncontrolling interests that are not redeemable at the option of the investors are classified as nonredeemable noncontrolling interests and are included in stockholders’ equity. Noncontrolling
COHEN & STEERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
interests that are redeemable at the option of the investors are classified as redeemable noncontrolling interests and therefore are not treated as permanent equity. Redeemable noncontrolling interest isNoncontrolling interests are recorded at fair value which approximates the redemptionnet asset value at each reporting period.
Investment Advisory and Administration Fees—The Company earns revenue by providing asset management services to institutional accounts, Company-sponsored open-end and closed-end funds as well as model-based portfolios. Investment advisory fees are earned pursuant to the terms of investment management agreements and are generally based on a contractual fee rate applied to the average daily assets under management. The Company also earns administration fees from certain Company-sponsored open-end and closed-end funds pursuant to the terms of underlying administration contracts. Administration fees are based on the average daily assets under management of such funds. Investment advisory and administration fee revenue is recognized when earned and is recorded net of any fund reimbursements. The investment advisory and administration contracts each include a single performance obligation as the services provided are not separately identifiable and are accounted for as a series satisfied over time using a time-based method (days elapsed). Additionally,
COHEN & STEERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
investment advisory and administration fees represent variable consideration, as fees are based on average assets under management which fluctuate daily.
In certain instances, the Company may earn performance fees when specified performance hurdles are met during the performance period. Performance fees are forms of variable consideration and are not recognized until it becomes probable that there will not be a significant reversal of the cumulative revenue recognized.
Distribution and Service Fee Revenue—Distribution and service fee revenue is based on the average daily net assets of certain share classes of the Company’s sponsoredU.S. open-end funds distributed by CSS. Distribution and service fee revenue is earned daily and is generally recorded gross of any third-party distribution and service fee expense for applicable share classes.
Distribution fee agreements include a single performance obligation that is satisfied at a point in time when an investor purchases shares in a Company-sponsoredan open-end fund. Distribution fees represent variable consideration, as fees are based on average assets under management which fluctuate daily. For all periods presented, a portion of the distribution fee revenue recognized in the period may relate to performance obligations satisfied (or partially satisfied) in prior periods. Service fee agreements include a single performance obligation as the services provided are not separately identifiable and are accounted for as a series satisfied over time using a time-based method (days elapsed). ServiceAdditionally, distribution and service fees represent variable consideration, as fees are based on average assets under management which fluctuate daily.
Distribution and Service Fee Expense—Distribution and service fee expense includes distribution fees, shareholder servicing fees and intermediary assistance payments. Distribution and service fee expense is recorded on an accrual basis.
Distribution fees represent payments made to qualified intermediaries for (i) assistance in connection with the distribution of the Company’s sponsoredcertain open-end funds’funds' shares and (ii) for other expenses such as advertising, printing and distribution of prospectuses to investors. Such amounts may also be used to pay financial intermediaries for services as specified in the terms of written agreements complying with Rule 12b-1 of the Investment Company Act of 1940. Distribution fees are based on the average daily net assets under management of certain share classes of certain of the funds.
Shareholder servicing fees represent payments made to qualified intermediaries for shareholder account service and maintenance. These services are provided pursuant to written agreements with such qualified institutions. Shareholder servicing fees are generally based on the average daily net assets under management.
Intermediary assistance payments represent payments to qualified intermediaries for activities related to distribution, shareholder servicing andas well as marketing and support of the Company’s sponsoredcertain open-end funds and are incremental to those described above. Intermediary assistance payments are generally based on the average daily net assets under management.
Stock-based Compensation—The Company recognizes compensation expense for the grant-date fair value of restricted stock unit awards of equity instruments to certain employees. This expense is recognized over the period during which employees are required to provide service. Forfeitures are recorded as incurred. Any change to the key terms of an employee’s award subsequent to the grant date is evaluated and, if necessary, accounted for as a modification. If the modification results in the remeasurement of the fair value of the award, the remeasured compensation cost is recognized over the remaining service period.
COHEN & STEERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Income Taxes—The Company records the current and deferred tax consequences of all transactions that have been recognized in the consolidated financial statements in accordance with the provisions of the enacted tax laws. Deferred tax assets are recognized for temporary differences that will result in deductible amounts in future years at tax rates that are expected to apply in those years. Deferred tax liabilities are recognized for temporary differences that will result in taxable income in future years at tax rates that are expected to apply in those years. The Company records a valuation allowance, when necessary, to reduce deferred tax assets to an amount that more likely than not will be realized.
The calculation of tax liabilities involves uncertainties in the application of complex tax laws and regulations across the Company’sCompany's global operations. A tax benefit from an uncertain tax position is recognized when it is more likely than not that the position will be sustained upon examination, including resolution of any related appeals or litigation processes, on the basis of the technical merits. The Company records potential interest and penalties related to uncertain tax positions in the provision for income taxes in the consolidated statements of operations.
Comprehensive Income
—The Company reports all changes in comprehensive income in the consolidated statements of comprehensive income. Comprehensive income generally includes net income or loss attributable to common stockholders and amounts attributable to foreign currency translation gain (loss).
COHEN & STEERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Currency Translation and Transactions—Assets and liabilities of subsidiaries having non-U.S. dollar functional currencies are translated at exchange rates at the applicable consolidated statement of financial condition date. Revenue and expenses of such subsidiaries are translated at average exchange rates during the period. The gains or losses resulting from translating non-U.S. dollar functional currency into U.S. dollars are included in the Company’sCompany's consolidated statements of comprehensive income. The cumulative translation adjustment was $(4,134,000), $(6,326,000)$(7.7) million, $(10.8) million and $(7,323,000)$(5.9) million as of December 31, 2020, 20192023, 2022 and 2018, respectively.2021, respectively, and was reported within accumulated other comprehensive income (loss) on the consolidated statements of financial condition. Gains or losses resulting from transactions denominated in currencies other than the U.S. dollar within certain foreign subsidiaries are included in non-operating income (loss) in the consolidated statements of operations. Gainsand gains and losses arising on revaluation of U.S. dollar-denominated assets and liabilities held by certain foreign subsidiaries are also included in non-operating incomeforeign currency gain (loss)—net in the Company’s consolidated statements of operations.
Comprehensive Income—The Company reports all changes in comprehensive income in the consolidated statements of comprehensive income. Comprehensive income generally includes net income or loss attributable to common stockholders and amounts attributable to foreign currency translation gain (loss), net of tax.
Recently Issued Accounting Pronouncements—In December 2019,June 2022, the FASBFinancial Accounting Standards Board (FASB) issued Accounting Standards Update 2019-12,2022-03 (ASU), Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions. The standard clarifies that contractual sale restrictions are not considered in measuring the fair value of equity securities, which would be a change in practice for certain entities. The ASU also indicates that a contractual sale restriction is not a separate unit of account, and requires new disclosures for all entities with equity securities subject to a contractual sale restriction. This new guidance was effective on January 1, 2024. The Company's adoption of this new standard will not have an impact on the Company's consolidated financial statements and related disclosures.
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The standard requires enhanced disclosure of the reportable segments and additional information about a segment’s expenses. This standard is effective for the Company’s Form 10-K for the year ending on December 31, 2024. The Company does not expect that the adoption of this new standard will have a material impact on the Company's consolidated financial statements and related disclosures.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Simplifying Accounting forImprovements to Income TaxesTax Disclosures. The standard requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as additional information on income taxes paid. The standard is intended to simplify various aspects related tobenefit investors by providing more detailed income taxes and removes certain exceptions to the general principlestax disclosures that would be useful in Topic 740.making capital allocation decisions. This new guidance will be effective on January 1, 2021.2025. The Company does not expectis currently evaluating the impact that the adoption of thethis new standard towill have a material effect on itsthe Company's consolidated financial statements and related disclosures.
3. Revenue
The following tables summarize revenue recognized from contracts with customers by client domicile and by investment vehicle:
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| Years ended December 31, |
(in thousands) | 2020 | | 2019 | | 2018 |
Client domicile: | | | | | |
North America | $ | 363,834 | | | $ | 352,629 | | | $ | 322,964 | |
Japan | 32,517 | | | 33,967 | | | 35,283 | |
Europe, Middle East and Africa | 19,869 | | | 11,087 | | | 10,371 | |
Asia Pacific excluding Japan | 11,316 | | | 13,147 | | | 12,493 | |
Total | $ | 427,536 | | | $ | 410,830 | | | $ | 381,111 | |
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F-14
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| Years ended December 31, |
(in thousands) | 2020 | | 2019 | | 2018 (2) |
Investment vehicle: | | | | | |
Open-end funds (1) | $ | 231,269 | | | $ | 217,778 | | | $ | 197,363 | |
Institutional accounts | 115,876 | | | 110,346 | | | 104,327 | |
Closed-end funds | 78,026 | | | 80,502 | | | 77,270 | |
Other | 2,365 | | | 2,204 | | | 2,151 | |
Total | $ | 427,536 | | | $ | 410,830 | | | $ | 381,111 | |
________________________
(1) Included distribution and service fees of $30.1 million, $30.0 million and $29.1 million for the years ended December 31, 2020, 2019 and 2018, respectively.
(2) Amounts related to model-based portfolios were reclassified from other (previously reported as portfolio consulting and other) to open-end funds and institutional accounts.
COHEN & STEERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
3. Revenue
The following tables summarize revenue recognized from contracts with customers by client domicile and by investment vehicle: | | | | | | | | | | | | | | | | | |
| Years ended December 31, |
(in thousands) | 2023 | | 2022 | | 2021 |
Client domicile: | | | | | |
North America | $ | 423,129 | | | $ | 496,368 | | | $ | 506,364 | |
Japan | 31,869 | | | 36,056 | | | 38,039 | |
Europe, Middle East and Africa | 21,418 | | | 21,439 | | | 26,330 | |
Asia Pacific excluding Japan | 13,221 | | | 13,043 | | | 13,099 | |
Total | $ | 489,637 | | | $ | 566,906 | | | $ | 583,832 | |
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| Years ended December 31, |
(in thousands) | 2023 | | 2022 | | 2021 |
Investment vehicle: | | | | | |
Open-end funds | $ | 269,727 | | | $ | 326,172 | | | $ | 328,647 | |
Institutional accounts | 123,565 | | | 134,012 | | | 146,345 | |
Closed-end funds | 96,345 | | | 106,722 | | | 108,840 | |
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Total | $ | 489,637 | | | $ | 566,906 | | | $ | 583,832 | |
4. Investments
The following table summarizes the Company’s investments:
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(in thousands) | December 31, 2020 | | December 31, 2019 |
Equity investments at fair value | $ | 94,089 | | | $ | 89,872 | |
Trading | 18,700 | | | 14,980 | |
Held-to-maturity carried at amortized cost (1) | 41,648 | | | 49,807 | |
Equity method | 541 | | | 554 | |
Total investments | $ | 154,978 | | | $ | 155,213 | |
_________________________
(1) Held-to-maturity investments had a fair value of approximately $41.7 million and $50.0 million at December 31, 2020 and 2019, respectively. These securities would be classified as level 2 within the fair value hierarchy if carried at fair value. Original maturities ranged from 6 to 24 months at December 31, 2020 and 2019. | | | | | | | | | | | |
(in thousands) | December 31, 2023 | | December 31, 2022 |
Equity investments at fair value | $ | 180,958 | | | $ | 157,646 | |
Trading | 77,996 | | | 15,289 | |
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Equity method | 16 | | | 20 | |
Total investments | $ | 258,970 | | | $ | 172,955 | |
The Company seeded 1 new fund for the year ended December 31, 2020 and 2 new funds for the year ended December 31, 2019.
The following table summarizes gain (loss)— from investments—net, from investments:
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| Years Ended December 31, |
(in thousands) | 2020 | | 2019 | | 2018 |
Net realized gains (losses) during the period | $ | (5,395) | | | $ | 12,227 | | | $ | (1,486) | |
Net unrealized gains (losses) during the period on investments still held at the end of the period | 1,279 | | | 9,446 | | | (12,778) | |
Gain (loss) from investments—net (1) | $ | (4,116) | | | $ | 21,673 | | | $ | (14,264) | |
including derivative financial instruments, the majority of which are used to economically hedge certain exposures (see Note 6, Derivatives): | | | | | | | | | | | | | | | | | |
| Years Ended December 31, |
(in thousands) | 2023 | | 2022 | | 2021 |
Net realized gains (losses) during the period | $ | (6,016) | | | $ | 7,147 | | | $ | 8,402 | |
Net unrealized gains (losses) during the period on investments still held at the end of the period | 10,307 | | | (32,253) | | | 10,382 | |
Gain (loss) from investments—net (1) | $ | 4,291 | | | $ | (25,106) | | | $ | 18,784 | |
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(1) Included net incomegain (loss) attributable to redeemable noncontrolling interests.
At December 31, 20202023 and 2019,2022, the Company's consolidated VIEs included the Cohen & Steers SICAV Global Listed Infrastructure Fund (GLI SICAV)(SICAV GLI), SICAV GRE, the Cohen & Steers SICAV DiversifiedGlobal Real AssetsEstate Fund (SICAV RAP) andGRE), the Cohen & Steers Co-Investment Partnership, L.P. (GRP-CIP) and the Cohen & Steers Real Estate Opportunities Fund, L.P. (REOF).
The following tables summarize the consolidated statements of financial condition attributable to the Company's consolidated VIEs:
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| December 31, 2020 |
(in thousands) | GLI SICAV | | SICAV GRE | | SICAV RAP | | GRP-CIP | | Total |
Assets (1) | | | | | | | | | |
Investments | $ | 7,140 | | | $ | 39,672 | | | $ | 33,654 | | | $ | 277 | | | $ | 80,743 | |
Due from brokers | 69 | | | 45 | | | 52 | | | 57 | | | 223 | |
Other assets | 44 | | | 359 | | | 234 | | | 0 | | | 637 | |
Total assets | $ | 7,253 | | | $ | 40,076 | | | $ | 33,940 | | | $ | 334 | | | $ | 81,603 | |
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Liabilities (1) | | | | | | | | | |
Due to brokers | $ | 27 | | | $ | 40 | | | $ | 61 | | | $ | 0 | | | $ | 128 | |
Other liabilities and accrued expenses | 29 | | | 211 | | | 81 | | | 5 | | | 326 | |
Total liabilities | $ | 56 | | | $ | 251 | | | $ | 142 | | | $ | 5 | | | $ | 454 | |
F-15
COHEN & STEERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
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| December 31, 2019 |
(in thousands) | GLI SICAV | | SICAV GRE | | SICAV RAP | | GRP-CIP | | Total |
Assets (1) | | | | | | | | | |
Investments | $ | 7,048 | | | $ | 45,468 | | | $ | 29,976 | | | $ | 337 | | | $ | 82,829 | |
Due from brokers | 264 | | | 663 | | | 613 | | | 203 | | | 1,743 | |
Other assets | 92 | | | 681 | | | 268 | | | 0 | | | 1,041 | |
Total assets | $ | 7,404 | | | $ | 46,812 | | | $ | 30,857 | | | $ | 540 | | | $ | 85,613 | |
| | | | | | | | | |
Liabilities (1) | | | | | | | | | |
Due to brokers | $ | 45 | | | $ | 92 | | | $ | 229 | | | $ | 0 | | | $ | 366 | |
Other liabilities and accrued expenses | 100 | | | 466 | | | 213 | | | 5 | | | 784 | |
Total liabilities | $ | 145 | | | $ | 558 | | | $ | 442 | | | $ | 5 | | | $ | 1,150 | |
The following tables summarize the consolidated statements of financial condition attributable to the Company's consolidated VIEs: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(in thousands) | December 31, 2023 |
| SICAV GLI | | SICAV GRE | | | | GRP-CIP | | REOF | | Total |
Assets (1) | | | | | | | | | | | |
Investments | $ | 41,799 | | | $ | 96,494 | | | | | $ | 110 | | | $ | 21,528 | | | $ | 159,931 | |
Due from brokers | — | | | — | | | | | 13 | | | — | | | 13 | |
Other assets | 207 | | | 436 | | | | | — | | | 1 | | | 644 | |
Total assets | 42,006 | | | 96,930 | | | | | 123 | | | 21,529 | | | 160,588 | |
| | | | | | | | | | | |
Liabilities (1) | | | | | | | | | | | |
Due to brokers | $ | 55 | | | $ | 64 | | | | | $ | — | | | $ | — | | | $ | 119 | |
Other liabilities and accrued expenses | 127 | | | 165 | | | | | 5 | | | 152 | | | 449 | |
Total liabilities | 182 | | | 229 | | | | | 5 | | | 152 | | | 568 | |
| | | | | | | | | | | |
Net assets | $ | 41,824 | | | $ | 96,701 | | | | | $ | 118 | | | $ | 21,377 | | | $ | 160,020 | |
| | | | | | | | | | | |
Attributable to the Company | $ | 19,418 | | | $ | 12,644 | | | | | $ | 118 | | | $ | 16,421 | | | $ | 48,601 | |
Attributable to noncontrolling interests | 22,406 | | | 84,057 | | | | | — | | | 4,956 | | | 111,419 | |
Net assets | $ | 41,824 | | | $ | 96,701 | | | | | $ | 118 | | | $ | 21,377 | | | $ | 160,020 | |
_________________________
(1) The assets may only be used to settle obligations of each VIE and the liabilities are the sole obligation of each VIE, for which creditors do not have recourse to the general credit of the Company.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(in thousands) | December 31, 2022 |
| SICAV GLI | | SICAV GRE | | GRP-CIP | | REOF | | Total |
Assets (1) | | | | | | | | | |
Investments | $ | 36,296 | | | $ | 79,434 | | | $ | 147 | | | $ | 19,052 | | | $ | 134,929 | |
Due from brokers | 11 | | | — | | | 27 | | | — | | | 38 | |
Other assets | 151 | | | 370 | | | — | | | 55 | | | 576 | |
Total assets | 36,458 | | | 79,804 | | | 174 | | | 19,107 | | | 135,543 | |
| | | | | | | | | |
Liabilities (1) | | | | | | | | | |
Due to brokers | $ | 11 | | | $ | — | | | $ | — | | | $ | — | | | $ | 11 | |
Other liabilities and accrued expenses | 91 | | | 214 | | | 5 | | | 354 | | | 664 | |
Total liabilities | 102 | | | 214 | | | 5 | | | 354 | | | 675 | |
| | | | | | | | | |
Net assets | $ | 36,356 | | | $ | 79,590 | | | $ | 169 | | | $ | 18,753 | | | $ | 134,868 | |
| | | | | | | | | |
Attributable to the Company | $ | 19,116 | | | $ | 11,495 | | | $ | 169 | | | $ | 14,699 | | | $ | 45,479 | |
Attributable to noncontrolling interests | 17,240 | | | $ | 68,095 | | | $ | — | | | $ | 4,054 | | | $ | 89,389 | |
Net assets | $ | 36,356 | | | $ | 79,590 | | | $ | 169 | | | $ | 18,753 | | | $ | 134,868 | |
_________________________
(1) The assets may only be used to settle obligations of each VIE and the liabilities are the sole obligation of each VIE, for which creditors do not have recourse to the general credit of the Company.
COHEN & STEERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
5. Fair Value
Accounting Standards Codification Topic 820, Fair Value Measurement (ASC 820) specifies a hierarchy of valuation classifications based on whether the inputs to the valuation techniques used in each valuation classification are observable or unobservable. These classifications are summarized in the three broad levels listed below:
•Level 1—Unadjusted quoted prices for identical instruments in active markets.
•Level 2—Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable.
•Level 3—Valuations derived from valuation techniques in which significant inputs or significant value drivers are unobservable.
Inputs used to measure fair value might fall in different levels of the fair value hierarchy, in which case the Company defaults to the lowest level input that is significant to the fair value measurement in its entirety. These levels are not necessarily an indication of the risk or liquidity associated with the investments.
The following tables present fair value measurements: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2023 |
(in thousands) | Level 1 | | Level 2 | | Level 3 | | Investments Measured at NAV (1) | | Total |
Cash equivalents | $ | 151,915 | | | $ | — | | | $ | — | | | $ | — | | | $ | 151,915 | |
Equity investments at fair value: | | | | | | | | | |
Common stocks | $ | 163,365 | | | $ | 697 | | | $ | — | | | $ | — | | | $ | 164,062 | |
| | | | | | | | | |
Limited partnership interests | — | | | — | | | 13,202 | | | 1,228 | | | 14,430 | |
Master limited partnership interests | 282 | | | — | | | — | | | — | | | 282 | |
Preferred securities | 1,775 | | | 62 | | | — | | | — | | | 1,837 | |
Other | 226 | | | — | | | — | | | 121 | | | 347 | |
Total | $ | 165,648 | | | $ | 759 | | | $ | 13,202 | | | $ | 1,349 | | | $ | 180,958 | |
Trading investments: | | | | | | | | | |
Fixed income | $ | — | | | $ | 77,996 | | | $ | — | | | $ | — | | | $ | 77,996 | |
| | | | | | | | | |
Equity method investments | $ | — | | | $ | — | | | $ | — | | | $ | 16 | | | $ | 16 | |
| | | | | | | | | |
Total investments | $ | 165,648 | | | $ | 78,755 | | | $ | 13,202 | | | $ | 1,365 | | | $ | 258,970 | |
| | | | | | | | | |
Derivatives - assets: | | | | | | | | | |
Total return swaps | $ | — | | | $ | 28 | | | $ | — | | | $ | — | | | $ | 28 | |
| | | | | | | | | |
Total | $ | — | | | $ | 28 | | | $ | — | | | $ | — | | | $ | 28 | |
Derivatives - liabilities: | | | | | | | | | |
Total return swaps | $ | — | | | $ | 2,488 | | | $ | — | | | $ | — | | | $ | 2,488 | |
Forward contracts - foreign exchange | — | | | 405 | | | — | | | — | | | 405 | |
Total | $ | — | | | $ | 2,893 | | | $ | — | | | $ | — | | | $ | 2,893 | |
________________________
(1) Comprised of certain investments measured at fair value using net asset value (NAV) as a practical expedient.
COHEN & STEERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following tables present | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2022 |
(in thousands) | Level 1 | | Level 2 | | Level 3 | | Investments Measured at NAV (1) | | | | Total |
Cash equivalents | $ | 208,557 | | | $ | — | | | $ | — | | | $ | — | | | | | $ | 208,557 | |
Equity investments at fair value: | | | | | | | | | | | |
Common stocks | $ | 142,268 | | | $ | 987 | | | $ | — | | | $ | — | | | | | $ | 143,255 | |
| | | | | | | | | | | |
Limited partnership interests | — | | | — | | | 10,759 | | | 1,544 | | | | | 12,303 | |
Master limited partnership interests | 316 | | | — | | | — | | | — | | | | | 316 | |
Preferred securities | 1,391 | | | 49 | | | — | | | — | | | | | 1,440 | |
Other | 200 | | | — | | | — | | | 132 | | | | | 332 | |
Total | $ | 144,175 | | | $ | 1,036 | | | $ | 10,759 | | | $ | 1,676 | | | | | $ | 157,646 | |
Trading investments: | | | | | | | | | | | |
Fixed income | $ | — | | | $ | 15,289 | | | $ | — | | | $ | — | | | | | $ | 15,289 | |
| | | | | | | | | | | |
Equity method investments | $ | — | | | $ | — | | | $ | — | | | $ | 20 | | | | | $ | 20 | |
| | | | | | | | | | | |
Total investments | $ | 144,175 | | | $ | 16,325 | | | $ | 10,759 | | | $ | 1,696 | | | | | $ | 172,955 | |
| | | | | | | | | | | |
Derivatives - assets: | | | | | | | | | | | |
| | | | | | | | | | | |
Total return swaps | $ | — | | | $ | 276 | | | $ | — | | | $ | — | | | | | $ | 276 | |
| | | | | | | | | | | |
Total | $ | — | | | $ | 276 | | | $ | — | | | $ | — | | | | | $ | 276 | |
Derivatives - liabilities: | | | | | | | | | | | |
Total return swaps | $ | — | | | $ | 717 | | | $ | — | | | $ | — | | | | | $ | 717 | |
Forward contracts - foreign exchange | — | | | 742 | | | — | | | — | | | | | 742 | |
Total | $ | — | | | $ | 1,459 | | | $ | — | | | $ | — | | | | | $ | 1,459 | |
________________________
(1) Comprised of certain investments measured at fair value measurements:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2020 |
(in thousands) | Level 1 | | Level 2 | | Level 3 | | Investments Measured at NAV as FV | | Investments Carried at Amortized Cost | | Total |
Cash equivalents | $ | 23,372 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 23,372 | |
Equity investments at fair value | | | | | | | | | | | |
Common stocks | $ | 91,614 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 91,614 | |
Company-sponsored funds | 246 | | | — | | | — | | | — | | | — | | | 246 | |
Limited partnership interests | 831 | | | — | | | — | | | 277 | | | — | | | 1,108 | |
Preferred securities | 983 | | | 12 | | | — | | | — | | | — | | | 995 | |
Other | — | | | — | | | — | | | 126 | | | — | | | 126 | |
Total | $ | 93,674 | | | $ | 12 | | | $ | — | | | $ | 403 | | | $ | — | | | $ | 94,089 | |
Trading investments | | | | | | | | | | | |
Fixed income | $ | — | | | $ | 18,700 | | | $ | — | | | $ | — | | | $ | — | | | $ | 18,700 | |
Held-to-maturity investments | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 41,648 | | | $ | 41,648 | |
Equity method investments | $ | — | | | $ | — | | | $ | — | | | $ | 541 | | | $ | — | | | $ | 541 | |
| | | | | | | | | | | |
Total investments | $ | 93,674 | | | $ | 18,712 | | | $ | — | | | $ | 944 | | | $ | 41,648 | | | $ | 154,978 | |
| | | | | | | | | | | |
Derivatives - assets | | | | | | | | | | | |
Futures - commodities | $ | 1,012 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 1,012 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
Derivatives - liabilities | | | | | | | | | | | |
Futures - commodities | $ | 416 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 416 | |
Total return swaps - commodities | — | | | 136 | | | — | | | — | | | — | | | 136 | |
Total return swaps - equities | — | | | 1,562 | | | — | | | — | | | — | | | 1,562 | |
Forward contracts - foreign exchange | — | | | 345 | | | — | | | — | | | — | | | 345 | |
Total | $ | 416 | | | $ | 2,043 | | | $ | — | | | $ | — | | | $ | — | | | $ | 2,459 | |
COHEN & STEERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2019 |
(in thousands) | Level 1 | | Level 2 | | Level 3 | | Investments Measured at NAV as FV | | Investments Carried at Amortized Cost | | Total |
Cash equivalents | $ | 85,889 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 85,889 | |
Equity investments at fair value | | | | | | | | | | | |
Common stocks | $ | 87,408 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 87,408 | |
Company-sponsored funds | 132 | | | — | | | — | | | — | | | — | | | 132 | |
Limited partnership interests | 1,048 | | | — | | | — | | | 337 | | | — | | | 1,385 | |
Preferred securities | 704 | | | 108 | | | — | | | — | | | — | | | 812 | |
Other | — | | | — | | | — | | | 135 | | | — | | | 135 | |
Total | $ | 89,292 | | | $ | 108 | | | $ | — | | | $ | 472 | | | $ | — | | | $ | 89,872 | |
Trading investments | | | | | | | | | | | |
Fixed income | $ | — | | | $ | 14,980 | | | $ | — | | | $ | — | | | $ | — | | | $ | 14,980 | |
Held-to-maturity investments | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 49,807 | | | $ | 49,807 | |
Equity method investments | $ | — | | | $ | — | | | $ | — | | | $ | 554 | | | $ | — | | | $ | 554 | |
| | | | | | | | | | | |
Total investments | $ | 89,292 | | | $ | 15,088 | | | $ | — | | | $ | 1,026 | | | $ | 49,807 | | | $ | 155,213 | |
| | | | | | | | | | | |
Derivatives - assets | | | | | | | | | | | |
Futures - commodities | $ | 570 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 570 | |
Forward contracts - foreign exchange | — | | | 74 | | | — | | | — | | | — | | | 74 | |
Total | $ | 570 | | | $ | 74 | | | $ | — | | | $ | — | | | $ | — | | | $ | 644 | |
Derivatives - liabilities | | | | | | | | | | | |
Futures - commodities | $ | 339 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 339 | |
Total return swaps - commodities | — | | | 173 | | | — | | | — | | | — | | | 173 | |
Forward contracts - foreign exchange | — | | | 44 | | | — | | | — | | | — | | | 44 | |
Total | $ | 339 | | | $ | 217 | | | $ | — | | | $ | — | | | $ | — | | | $ | 556 | |
Cash equivalents were comprised of investments in actively traded U.S. Treasury money market funds measured at NAV.using NAV as a practical expedient.
Equity investments at fair value classified as levelLevel 2 were comprised of certain preferred securities with predominately equity-like characteristics whosecommon stocks for which quoted prices in active markets are not available. Fair values for the common stocks classified as Level 2 were generally based on quoted prices for similar instruments in active markets.
Equity investments at fair values are generally determined using third-party pricing services. The pricing services may utilize pricing models, and inputs into those models may include reported trades, executable bid and ask prices, broker-dealer quotations, prices or yieldsvalue classified as Level 3 were comprised of similar securities, benchmark curves and other market information. The pricing services may use a matrix approach, which considers information regarding securities with similar characteristics to determine the valuation for a security.limited partnership interests in joint ventures that hold investments in private real estate.
Trading investments classified as levelLevel 2 were comprised of U.S. Treasury securities and corporate debt securities. The fair value amountsFair values were generally determined using third-party pricing services. The pricing services may utilize evaluated pricing models that vary by asset class and incorporate available trade, bid and other market information.
Investments measured at NAV were comprised of certain investments measured at fair value using NAV (or its equivalent) as a practical expedient. Theseexpedient as follows:
•Equity investments were comprised of:at fair value included:
◦limited partnership interests in private real estate funds; and
◦the Company's co-investment in a Cayman trust invested in global listed infrastructure securities (which is included in "Other" in the leveling table).
•Equity method investments included the Company's partnership interests in Cohen & Steers Global Realty Partners III-TE, L.P. (GRP-TE) and Cohen & Steers Global Listed Infrastructure Fund L.P. (LPGI). GRP-TE invests in non-registered real estate funds and LPGI invests in global infrastructure securities. The Company's
COHEN & STEERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
•Equity investmentsownership interest in GRP-TE was approximately 0.2% at fair value - included limited partner interestsDecember 31, 2023 and 2022. The Company's ownership interest in limited partnership vehicles that invest in non-registered real estate fundsLPGI was approximately 0.01% at December 31, 2023 and the Company's co-investment in a Cayman trust invested in global listed infrastructure securities (which is included in "Other" in the leveling table), both of which are valued based on the NAVs of the underlying investments. 2022.
At December 31, 20202023 and 2019,2022, the Company did not have the ability to redeem theits limited partnership interests in the limited partnership vehicles; thereprivate real estate funds or its interest in GRP-TE. There were no contractual restrictions on the Company's ability to redeem its interest in the Cayman trust.
•Equity method investments - included the Company's partnership interests in the Cohen & Steers Global Realty Partners III-TE, L.P. (GRP-TE) and the Cohen & Steers Global Realty Focus Fund (GRF), a series of Cohen & Steers Series LP. GRP-TE invests in non-registered real estate funds. The Company's ownership interest was approximately 0.2% and the Company did not have the ability to redeem the investment at either December 31, 2020trust or 2019. GRF invests in global real estate investment trusts and other publicly traded real estate companies. The Company's ownership interest was approximately 0.5% and the Company had the ability to redeem the investment in GRF with 15 days' notice. The Company's risk with respect to both investments is limited to its equity ownership interest and any uncollected management fees.
Held-to-maturity investments were comprised of U.S. Treasury securities, which were directly issued by the U.S. government, with original maturities of 6 to 24 months at December 31, 2020 and 2019. These securities were purchased with the intent to hold to maturity and are recorded at amortized cost.LPGI.
Investments measured at NAV and held-to-maturity investmentsas a practical expedient have not been classified in the fair value hierarchy. The amounts presented in the above tables are intended to permit reconciliation of the fair value hierarchy to the amounts presented on the consolidated statements of financial condition.
SwapTotal return swap contracts classified as levelLevel 2 were valued based on the underlying futures contracts or equity indices.
Foreign currency exchange contracts classified as levelLevel 2 were valued based on the prevailing forward exchange rate.rate, which is an input that is observable in active markets.
The following table summarizes the changes in Level 3 investments measured at fair value on a recurring basis:
| | | | | | | | | | | |
| Years Ended December 31, |
(in thousands) | 2023 | | 2022 |
Balance at beginning of period | $ | 10,759 | | | $ | — | |
Purchases/contributions | 11,856 | | | 19,380 | |
Sales/distributions | (5,352) | | | (5,874) | |
| | | |
Unrealized gains (losses) | (4,061) | | | (2,747) | |
| | | |
Balance at end of period | $ | 13,202 | | | $ | 10,759 | |
Unrealized gains (losses) and realized gains (losses), if any, in the above table were recorded in gain (loss) from investments—net in the Company's consolidated statements of operations.
Valuation Techniques
In certain instances, debt equity and preferredequity securities are valued on the basis of prices from an orderly transaction between market participants provided by reputable broker-dealers or independent pricing services. In determining the value of a particular investment, independent pricing services may use information with respect to transactions in such investments, broker quotes, pricing matrices, market transactions in comparable investments and various relationships between investments. As part of its independent price verification process, the Company generally performs reviews of valuations provided by broker-dealers or independent pricing services. Investments in Company-sponsored funds are valued at their closing price or NAV (or its equivalent) as a practical expedient.
Foreign exchange contracts are valued based on the prevailing forward exchange rate, which is an input that is observable in active markets.
In the absence of observable market prices, the Company values its investments using valuation methodologies applied on a consistent basis. For some investments, little market activity may exist; management's determination of fair value is then based on the best information available in the circumstances, and may incorporate management's own assumptions and involve a significant degree of judgment, taking into consideration a combination of internal and external factors. Such investments which are generally immaterial, are valued no less than on a quarterly basis, taking into consideration any changes in key inputs and changes in economic and other relevant conditions, and valuation models are updated accordingly. The valuation process also includesCompany has established a review by the Company's valuation committee, which is comprised of senior members from various departments within the Company, including investment management. The valuation committee provides independent oversight ofto administer, implement and oversee the valuation policies and procedures.
procedures (the Valuation Committee). Additionally, the Company has retained an independent valuation services firm to assist in the determination of the fair value of certain private real estate investments.
COHEN & STEERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following table summarizes the valuation techniques and significant unobservable inputs approved by the Valuation Committee for Level 3 investments measured at fair value on a recurring basis: | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Fair Value as of December 31, 2023 (in thousands) | | Valuation Technique | | Unobservable Inputs | | Value |
Limited partnership interests | | $13,202 | | Discounted cash flow | | Discount rate Terminal capitalization rate | | 9.25% 7.75% |
| | | | Transaction price | | n/a | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Fair Value as of December 31, 2022 (in thousands) | | Valuation Technique | | Unobservable Inputs | | Value |
Limited partnership interest | | $10,759 | | Discounted cash flow | | Discount rate Terminal capitalization rate | | 8.75% 7.25% |
Changes in the significant unobservable inputs in the above tables may result in a materially higher or lower fair value measurement.
6. Derivatives
The following tables summarize the notional amountsamount and fair value of the outstanding derivative financial instruments, none of which were designated in a formal hedging relationship.relationship: | | | | | | | | | | | | | | | | | | | | | | | |
| As of December 31, 2023 |
| Notional Amount | | Fair Value (1) |
(in thousands) | Long | | Short | | Assets | | Liabilities |
Corporate derivatives: | | | | | | | |
| | | | | | | |
Total return swaps | $ | 2,284 | | | $ | 37,933 | | | $ | 28 | | | $ | 2,488 | |
Forward contracts - foreign exchange | — | | | 9,641 | | | — | | | 405 | |
Total corporate derivatives | $ | 2,284 | | | $ | 47,574 | | | $ | 28 | | | $ | 2,893 | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| As of December 31, 2020 |
| Notional Amount | | Fair Value (1) |
(in thousands) | Long | | Short | | Assets | | Liabilities |
Futures - commodities | $ | 13,624 | | | $ | 4,257 | | | $ | 1,012 | | | $ | 416 | |
Total return swaps - commodities | 0 | | | 9,598 | | | 0 | | | 136 | |
Total return swaps - equities | 0 | | | 17,688 | | | 0 | | | 1,562 | |
Forward contracts - foreign exchange | 0 | | | 14,061 | | | 0 | | | 345 | |
| $ | 13,624 | | | $ | 45,604 | | | $ | 1,012 | | | $ | 2,459 | |
| | As of December 31, 2019 |
| Notional Amount | | Fair Value (1) |
| As of December 31, 2022 | | | As of December 31, 2022 |
| Notional Amount | | | Notional Amount | | Fair Value (1) |
(in thousands) | (in thousands) | Long | | Short | | Assets | | Liabilities | (in thousands) | Long | | Short | | Assets | | Liabilities |
Futures - commodities | $ | 14,394 | | | $ | 4,623 | | | $ | 570 | | | $ | 339 | |
Total return swaps - commodities | 0 | | | 8,909 | | | 0 | | | 173 | |
Corporate derivatives: | |
Total return swaps | |
Total return swaps | |
Total return swaps | |
Forward contracts - foreign exchange | Forward contracts - foreign exchange | 0 | | | 10,787 | | | 74 | | | 44 | |
| $ | 14,394 | | | $ | 24,319 | | | $ | 644 | | | $ | 556 | |
Total corporate derivatives | |
________________________
(1)The fair value of derivative financial instruments is recorded in other assets and other liabilities and accrued expenses on the
Company's consolidated statements of financial condition.
Commodity swap contracts are utilized as economic hedges to reduce the overall risk of theThe Company's market exposure to seed investments in commodity futures. Equity swap contractscorporate derivatives included:
•Total return swaps which are utilized to economically hedge a portion of the market risk of certain seed investments. The Company enters intoinvestments and to gain exposure for the purpose of establishing a performance track record; and
•Forward foreign exchange contracts to sell currencywhich are utilized to economically hedge currency exposure arising from certain non-U.S. dollar investment advisory fees.
Cash included in due from brokers of approximately $4,902,000 on the consolidated statement of financial condition at December 31, 2020 was held as collateralCollateral pledged for forward and swap contracts. Investments of approximately $1,544,000contracts totaled $4.5 million and $1,713,000 on the consolidated statements of financial condition$2.2 million at December 31, 20202023 and 2019, respectively, comprised of U.S. Treasury securities, were held as collateral for futures and swap contracts.2022, respectively.
The following table summarizes net gains (losses) from derivative financial instruments:
| | | | | | | | | | | | | | | | | |
| Years Ended December 31, |
(in thousands) | 2020 | | 2019 | | 2018 |
Futures - commodities | $ | (105) | | | $ | 881 | | | $ | (2,093) | |
Total return swaps - commodities | (266) | | | (485) | | | 739 | |
Total return swaps - equities | (1,562) | | | 0 | | | 0 | |
Forward contracts - foreign exchange | (375) | | | 235 | | | (141) | |
| | | | | |
| | | | | |
Total (1) | $ | (2,308) | | | $ | 631 | | | $ | (1,495) | |
________________________
(1) Gains and losses on derivative financial instruments are recorded in gain (loss) from investments—net in the Company's
consolidated statements of operations.
F-20
COHEN & STEERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following table summarizes net gains (losses) from derivative financial instruments: | | | | | | | | | | | | | | | | | |
| Years Ended December 31, |
(in thousands) | 2023 | | 2022 | | 2021 |
Corporate derivatives: | | | | | |
Futures - commodities (1) | $ | — | | | $ | — | | | $ | 3,391 | |
Total return swaps | (2,589) | | | 3,691 | | | (7,612) | |
Forward contracts - foreign exchange | 337 | | | (948) | | | 550 | |
Total corporate derivatives | $ | (2,252) | | | $ | 2,743 | | | $ | (3,671) | |
Derivatives held by consolidated investment vehicles: | | | | | |
Total return swaps | — | | | 3,988 | | | 1,526 | |
| | | | | |
Total (2) | $ | (2,252) | | | $ | 6,731 | | | $ | (2,145) | |
________________________
(1)The Company liquidated its commodity futures contracts during 2021.
(2)Gains and losses on futures and total return swaps are included in gain (loss) from investments—net in the Company's consolidated statements of operations. Gains and losses on forward foreign exchange contracts are included in foreign currency gain (loss)—net in the Company's consolidated statements of operations.
7. Property and Equipment
The following table summarizes the Company’s property and equipment:
| | | | | | | | | | | |
| December 31, |
(in thousands) | 2020 | | 2019 |
Equipment | $ | 6,725 | | | $ | 5,951 | |
Furniture and fixtures | 3,685 | | | 3,651 | |
Software | 21,789 | | | 19,988 | |
Leasehold improvements | 16,085 | | | 16,048 | |
Subtotal | 48,284 | | | 45,638 | |
Less: Accumulated depreciation and amortization | (37,943) | | | (33,152) | |
Property and equipment, net | $ | 10,341 | | | $ | 12,486 | |
| | | | | | | | | | | |
| December 31, |
(in thousands) | 2023 | | 2022 |
Equipment | $ | 15,525 | | | $ | 8,153 | |
Furniture and fixtures | 13,588 | | | 3,704 | |
Software | 27,554 | | | 26,848 | |
Leasehold improvements | 59,260 | | | 15,466 | |
Subtotal | 115,927 | | | 54,171 | |
Less: Accumulated depreciation and amortization | (49,591) | | | (45,414) | |
Property and equipment, net | $ | 66,336 | | | $ | 8,757 | |
Depreciation and amortization expense related to property and equipment was $4,652,000, $4,396,000$4.2 million, $4.4 million and $4,378,000$4.1 million for the years ended December 31, 2020, 20192023, 2022 and 2018,2021, respectively.
Depreciation and amortization expense related to property and equipment is recorded using the straight-line method over the estimated useful lives of the related assets which range from 3-7 years. Leasehold improvements are amortized using the straight-line method over the lease term.
8. Earnings Per Share
Basic earnings per share is calculated by dividing net income attributable to common stockholders by the weighted average shares outstanding. Diluted earnings per share is calculated by dividing net income attributable to common stockholders by the total weighted average shares of common stock outstanding and common stock equivalents determined using the treasury stock method. Common stock equivalents are comprised of dilutive potential shares from restricted stock unit awards and are excluded from the computation if their effect is anti-dilutive.
The following table reconciles income and share data used in the basic and diluted earnings per share computations:
| | | | | | | | | | | | | | | | | |
| Years Ended December 31, |
(in thousands, except per share data) | 2020 | | 2019 | | 2018 |
Net income | $ | 75,165 | | | $ | 146,984 | | | $ | 109,522 | |
Less: Net (income) loss attributable to redeemable noncontrolling interests | 1,419 | | | (12,363) | | | 4,374 | |
Net income attributable to common stockholders | $ | 76,584 | | | $ | 134,621 | | | $ | 113,896 | |
Basic weighted average shares outstanding | 47,800 | | | 47,273 | | | 46,794 | |
Dilutive potential shares from restricted stock units | 876 | | | 1,024 | | | 587 | |
Diluted weighted average shares outstanding | 48,676 | | | 48,297 | | | 47,381 | |
| | | | | |
Basic earnings per share attributable to common stockholders | $ | 1.60 | | | $ | 2.85 | | | $ | 2.43 | |
Diluted earnings per share attributable to common stockholders | $ | 1.57 | | | $ | 2.79 | | | $ | 2.40 | |
| | | | | |
Anti-dilutive common stock equivalents excluded from the calculation | 0 | | | 0 | | | 0 | |
F-21
COHEN & STEERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following table reconciles income and share data used in the basic and diluted earnings per share computations: | | | | | | | | | | | | | | | | | |
| Years Ended December 31, |
(in thousands, except per share data) | 2023 | | 2022 | | 2021 |
Net income | $ | 136,609 | | | $ | 149,486 | | | $ | 226,154 | |
Net (income) loss attributable to noncontrolling interests | (7,560) | | | 21,556 | | | (14,758) | |
Net income attributable to common stockholders | $ | 129,049 | | | $ | 171,042 | | | $ | 211,396 | |
Basic weighted average shares outstanding | 49,308 | | | 48,781 | | | 48,316 | |
Dilutive potential shares from restricted stock units | 245 | | | 516 | | | 774 | |
Diluted weighted average shares outstanding | 49,553 | | | 49,297 | | | 49,090 | |
| | | | | |
Basic earnings per share attributable to common stockholders | $ | 2.62 | | | $ | 3.51 | | | $ | 4.38 | |
Diluted earnings per share attributable to common stockholders | $ | 2.60 | | | $ | 3.47 | | | $ | 4.31 | |
| | | | | |
Anti-dilutive common stock equivalents excluded from the calculation | 77 | | | 3 | | | — | |
9. Stock-Based Compensation
Amended and Restated Stock Incentive Plan
The Amended and Restated Cohen & Steers, Inc. Stock Incentive Plan (the SIP) provides for the issuance of Restricted Stock Units (RSUs), stock options and other stock-based awards to eligible employees and directors. AThe SIP was amended in 2022 to (i) extend the term of the SIP an additional ten years through May 5, 2032, and (ii) increase the number of shares of common stock of the Company with respect to which awards may be granted under the plan. As of December 31, 2023, a total of 20.023.0 million shares of common stock may be granted under the SIP. The board of directors is authorized to increase the number of shares available for issuance under the SIP, subject to shareholder approval. At December 31, 2020,2023, 19.5 million RSUs, with respect to approximately 17,248,000 sharesrepresenting the same amount of common stock, had been issued under the SIP. As of December 31, 2020,2023, there was $50,801,000$72.7 million of unearned compensation related to unvestedunamortized RSUs that hashad not yet been recognized in the consolidated statement of operations. The Company expects to recognize this expense over approximately the next three years. In January 2021,2024, the Company granted approximately 691,000596,000 RSUs under the SIP with a grant date fair value of approximately $46,030,000$42.7 million, which generally vest over a four-year period.
Restricted Stock Units
Vested Restricted Stock Unit Grants
The Company grants awards of vested RSUs to the non-management directors and certain employees of the Company pursuant to the SIP. The directors are entitled to receive delivery of the underlying common stock on the third anniversary of the date of grant. Dividends declared during the periodon these awards are paid to the directors in cash. In connection with the grant of these vested RSUs, the Company recorded non-cash stock-based compensation expense of approximately $699,000, $614,000$1.0 million, $2.7 million and $626,000$2.1 million for the years ended December 31, 2020, 20192023, 2022 and 2018,2021, respectively.
Unvested Restricted Stock Unit Grants
From time to time, the Company grants awards of unvested RSUs to certain employees pursuant to the SIP. The fair value at the date of grant is expensed on a straight-line basis over the applicable service periods,period, which is generally four years. Dividends declared by the Company are paid in additional RSUs andwhich are forfeitablesubject to forfeiture until they are delivered. The dividend equivalent RSUs will generally vest and be delivered on the fourth anniversary of the original grant date. The Company recorded non-cash stock-based compensation expense, net of forfeitures, of approximately $4,595,000, $4,443,000$8.8 million, $8.8 million and $4,216,000$8.5 million for the years ended December 31, 2020, 20192023, 2022 and 2018,2021, respectively.
Incentive Bonus Plans for Employees of the Company
The Company has implemented a program for employees which, based upon compensation levels, automatically allocates a portion of their year-end bonuses in the form of unvested RSUs (Mandatory Program). The fair value at the date of grant of the RSUs under the Mandatory Program is generally expensed on a straight-line basis over the vesting period, which will generally vest and be delivered ratably overis typically four years. Dividends declared by the Company are paid in additional RSUs andwhich are forfeitablesubject to forfeiture until they are delivered. The dividend equivalent RSUs will generally vest and be delivered on the fourth anniversary of the original grant date. The Company recorded stock-based compensation under the Mandatory Program, net of forfeitures, of approximately $23,884,000, $22,637,000 and $19,710,000 for the years ended December 31, 2020, 2019 and 2018, respectively.
COHEN & STEERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
they are delivered. The dividend equivalent RSUs will generally vest and be delivered on the fourth anniversary of the original grant date. The Company recorded non-cash stock-based compensation expense under the Mandatory Program, net of forfeitures, of $34.4 million, $37.5 million and $29.9 million for the years ended December 31, 2023, 2022 and 2021, respectively.
During the year ended December 31, 2023, RSU awards representing approximately 87,000 shares of common stock were modified resulting in a reduction of compensation expense of $0.7 million to be recognized over the requisite service period, of which $0.4 million was realized in 2023.
The following table sets forth activity relating to the Company’s RSUs under the SIP (share data in thousands):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Vested Restricted Stock Unit Grants | | Unvested Restricted Stock Unit Grants | | Incentive Bonus Plans Restricted Stock Unit Grants |
(in thousands, except per share data) | Number of Shares | | Weighted Average Grant Date Fair Value | | Number of Shares | | Weighted Average Grant Date Fair Value | | Number of Shares | | Weighted Average Grant Date Fair Value |
Balance at January 1, 2018 | 42 | | | $ | 36.98 | | | 318 | | | $ | 34.14 | | | 1,550 | | | $ | 34.60 | |
Granted | 15 | | | 38.29 | | | 134 | | | 39.02 | | | 757 | | | 39.42 | |
Delivered | (12) | | | 34.95 | | | (146) | | | 35.13 | | | (539) | | | 34.94 | |
Forfeited | — | | | — | | | 0 | | | 0 | | | (23) | | | 37.16 | |
Balance at December 31, 2018 | 45 | | | 37.93 | | | 306 | | | 35.80 | | | 1,745 | | | 36.55 | |
Granted | 22 | | | 50.29 | | | 132 | | | 40.97 | | | 763 | | | 39.92 | |
Delivered | (13) | | | 37.61 | | | (131) | | | 35.46 | | | (601) | | | 36.30 | |
Forfeited | — | | | — | | | (5) | | | 38.15 | | | (33) | | | 38.31 | |
Balance at December 31, 2019 | 54 | | | 44.06 | | | 302 | | | 38.78 | | | 1,874 | | | 38.38 | |
Granted | 12 | | | 55.71 | | | 189 | | | 63.17 | | | 437 | | | 73.29 | |
Delivered | (16) | | | 38.22 | | | (143) | | | 36.96 | | | (705) | | | 36.30 | |
Forfeited | — | | | — | | | (7) | | | 50.60 | | | (78) | | | 49.73 | |
Balance at December 31, 2020 | 50 | | | 48.80 | | | 341 | | | 52.80 | | | 1,528 | | | 48.76 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Vested Restricted Stock Unit Grants | | Unvested Restricted Stock Unit Grants | | Incentive Bonus Plans Restricted Stock Unit Grants |
(in thousands, except per share data) | Number of Shares | | Weighted Average Grant Date Fair Value | | Number of Shares | | Weighted Average Grant Date Fair Value | | Number of Shares | | Weighted Average Grant Date Fair Value |
Balance at January 1, 2021 | 50 | | | $ | 48.80 | | | 341 | | | $ | 52.80 | | | 1,528 | | | $ | 48.76 | |
Granted | 26 | | | 81.05 | | | 285 | | | 71.74 | | | 672 | | | 72.81 | |
Delivered | (18) | | | 46.34 | | | (139) | | | 46.80 | | | (632) | | | 44.15 | |
Forfeited | — | | | — | | | (31) | | | 59.35 | | | (186) | | | 57.61 | |
Balance at December 31, 2021 | 58 | | | 64.07 | | | 456 | | | 66.02 | | | 1,382 | | | 61.37 | |
Granted | 16 | | | 71.26 | | | 64 | | | 74.96 | | | 662 | | | 82.04 | |
Delivered | (22) | | | 54.86 | | | (160) | | | 57.90 | | | (586) | | | 52.33 | |
Forfeited | — | | | — | | | (4) | | | 72.98 | | | (50) | | | 69.54 | |
Balance at December 31, 2022 | 52 | | | 70.12 | | | 356 | | | 71.18 | | | 1,408 | | | 74.57 | |
Granted | 16 | | | 62.01 | | | 78 | | | 66.01 | | | 791 | | | 71.18 | |
Delivered | (17) | | | 62.55 | | | (144) | | | 65.86 | | | (557) | | | 67.57 | |
Forfeited | — | | | — | | | (10) | | | 74.32 | | | (108) | | | 75.04 | |
Balance at December 31, 2023 | 51 | | | 69.99 | | | 280 | | | 72.34 | | | 1,534 | | | 75.33 | |
Employee Stock Purchase Plan
Pursuant to the Amended and Restated Employee Stock Purchase Plan (ESPP), the Company allows eligible employees, as defined in the ESPP, to purchase common stock at a 15% discount from fair market value up to a maximum of $25,000 in annual aggregate purchases by any one individual. The number of shares of common stock authorized for purchase by eligible employees is 600,000. Through December 31, 2020,2023, the Company had issued approximately 448,000501,000 shares of common stock under the ESPP. For each yearthe years ended December 31, 2020, 20192023, 2022 and 2018,2021, approximately 20,000, 18,000 and 15,000 shares, respectively, was purchased by eligible employees through the ESPP. For the years ended December 31, 2020, 20192023, 2022 and 2018,2021, the Company recorded a non-cash stock-based compensation expense of approximately $152,000, $131,000$188,000, $184,000 and $105,000,$177,000, respectively, which represents the discount on the shares issued pursuant to this plan. The ESPP will terminate upon the earliest to occur of (1) termination of the ESPP by the board of directors or (2) issuance of all of the shares reserved for issuance under the ESPP. The board of directors is authorized to increase the number of shares available for issuance under the ESPP, subject to shareholder approval.
COHEN & STEERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
10. 401(k) and Profit-Sharing Plan
The Company sponsors a profit-sharing plan (the Plan) covering all U.S. employees who meet certain age and service requirements. Subject to limitations, the Plan permits participants to defer up to 100% of their eligible compensation pursuant to Section 401(k) of the Internal Revenue Code. Employee contributions are matched by the Company at $0.50 per $1.00 deferred. The Plan also allows the Company to make discretionary contributions, which are integrated with the taxable wage base under the Social Security Act. No discretionary contributions were made for the years ended December 31, 2020, 20192023, 2022 and 2018.2021.
Forfeitures occur when participants terminate employment before becoming entitled to their full benefits under the Plan. In accordance with the Plan document, forfeited amounts are used to reduce the Company’s contributions to the Plan or to pay Plan expenses. Forfeitures for the years ended December 31, 2020, 20192023, 2022 and 20182021 totaled approximately $147,000, $131,000$283,000, $193,000 and $101,000,$248,000, respectively.
Matching contributions, net of forfeitures, to the Plan for the years ended December 31, 2020, 20192023, 2022 and 20182021 totaled approximately $2,498,000, $2,057,000$3.0 million, $2.6 million and $1,770,000,$2.3 million, respectively.
11. Related Party Transactions
The Company is an investment adviser to, and has administration agreements with, Company-sponsored funds and investment products for which certain employees are officers and/or directors.
The following table summarizes the amount of revenue the Company earned from these affiliated funds:
| | | | | | | | | | | | | | | | | |
| Years Ended December 31, |
(in thousands) | 2020 | | 2019 | | 2018 |
Investment advisory and administration fees (1) | $ | 274,566 | | | $ | 264,116 | | | $ | 241,255 | |
Distribution and service fees | 30,134 | | | 30,048 | | | 29,090 | |
Total | $ | 304,700 | | | $ | 294,164 | | | $ | 270,345 | |
| | | | | | | | | | | | | | | | | |
| Years Ended December 31, |
(in thousands) | 2023 | | 2022 | | 2021 |
Investment advisory and administration fees (1) | $ | 328,398 | | | $ | 386,000 | | | $ | 389,648 | |
Distribution and service fees | 28,200 | | | 35,093 | | | 37,630 | |
Total | $ | 356,598 | | | $ | 421,093 | | | $ | 427,278 | |
_________________________
(1) Investment advisory and administration fees are reflected net of fund reimbursements of $13.6$16.2 million, $11.1$18.1 million and $8.6$16.6 million for and the years ended December 31, 2020, 20192023, 2022 and 2018,2021, respectively.
The following table summarizes sales proceeds, gross realized gains, gross realized losses and dividend income from investments in Company-sponsored funds that are not consolidated:
| | | | | | | | | | | | | | | | | |
| Years Ended December 31, |
(in thousands) | 2020 | | 2019 | | 2018 |
Proceeds from sales | $ | 7 | | | $ | 37,326 | | | $ | 10,872 | |
Gross realized gains | 0 | | | 241 | | | 28 | |
Gross realized losses | 0 | | | (907) | | | (4,448) | |
Dividend income | 5 | | | 52 | | | 481 | |
Included in accounts receivable at December 31, 20202023 and 20192022 are receivables due from Company-sponsored funds, which are generally collectible the next business day, of approximately $30,163,000$32.5 million and $26,701,000,$32.9 million, respectively. Included in accounts payable at December 31, 20202023 and December 31, 20192022 are payables due to Company-sponsored funds of approximately $574,000$1.9 million and $474,000,$1.0 million, respectively.
Included in other assets at December 31, 2023 and December 31, 2022 is an advance to Cohen & Steers Income
Opportunities REIT, Inc. (CNSREIT) of $7.3 million and $3.5 million, respectively. CNSREIT will reimburse the Company ratably over a 60-month period commencing at the earlier of December 31, 2025, or the month that CNSREIT's NAV is at least $1.0 billion. At December 31, 2023 and 2022, the Company determined the advance to be collectible. At December 31, 2023, the Company reclassified the advance from accounts receivable to other assets on its consolidated statement of financial condition as of December 31, 2022.
See discussion of commitments to Company-sponsored vehicles in Note 14.
COHEN & STEERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
12. Regulatory Requirements
CSS, a registered broker-dealer in the U.S., is subject to the SEC’s Uniform Net Capital Rule 15c3-1 (the Rule), which requires that broker-dealers maintain a minimum level of net capital, as prescribed by the Rule. At December 31, 2020,2023, CSS had net capital of approximately $4,332,000,$5.4 million, which exceeded its requirementsrequirement by approximately $4,099,000.$5.1 million. The Rule also provides thatmay limit the amounts of equity capital that may not be withdrawn or cash dividends paid if the resulting net capital of a broker-dealer is less than the amount required under the Rule and requires prior notice to the SEC for certain withdrawals of capital.that may be paid. CSS does not carry customer accounts and has no possession or control obligations under SEA Rule 15c3-3(b) or reserve deposit obligations under SEA Rule 153-3(e)15c3-3(e). During 2020,2023, CSCM, its parent, made a capital contribution of $2,000,000contributions totaling $4.5 million to CSS.
CSAL is subject to regulation by the Hong Kong Securities and Futures Commission. At December 31, 2020,2023, CSAL had regulatory capital of approximately $5,000,000,$8.9 million, which exceeded its minimum regulatory capital requirement by approximately $4,613,000. During 2020, CSAL paid dividends in the amount of approximately $12,935,000 to its parent, CSCM.$8.5 million.
CSUK is subject to regulation by the United Kingdom Financial Conduct Authority. At December 31, 2020,2023, CSUK had regulatory capital of approximately $28,929,000,$34.2 million, which exceeded its minimum regulatory capital requirement by approximately $23,597,000. During 2020, CSUK paid a dividend in the amount of approximately $14,800,000 to its parent, CNS.$25.1 million.
CSIL is subject to regulation by the Central Bank of Ireland. At December 31, 2020,2023, CSIL had regulatory capital of approximately $2,854,000,$4.1 million, which exceeded its minimum regulatory capital requirement by approximately $2,630,000. During 2020, CNS, its parent, made a capital contribution of $2,854,000 to CSIL.$3.7 million.
CSJL is registered with the Financial Services Agency of Japan and the Kanto Local Finance Bureau and is subject to the Financial Instruments and Exchange Act. In accordance with its license, CSJL is required to maintain regulatory capital, as defined, of approximately $630,000.$0.5 million. At December 31, 2020,2023, CSJL had stated capital in excess of this requirement.
13. Credit Agreement
On January 20, 2023, the Company entered into a Credit Agreement with Bank of America, N.A. (the Credit Agreement) providing for a $100.0 million senior unsecured revolving credit facility maturing on January 20, 2026. Borrowings under the Credit Agreement bear interest at a variable annual rate equal to, at the Company’s option, either, (i) in respect of Term Secured Overnight Financing Rate (SOFR) Loans (as defined in the Credit Agreement), a rate equal to Term SOFR (as defined in the Credit Agreement) in effect for such period plus an applicable rate as determined according to a performance pricing grid and, (ii) in respect of Base Rate Loans (as defined in the Credit Agreement), a rate equal to a Base Rate (as defined in the Credit Agreement) plus an applicable rate as determined according to a performance pricing grid. The Company is also required to pay a quarterly commitment fee determined according to a performance pricing grid and based on the actual daily unused amount of the Credit Agreement.
Borrowings under the Credit Agreement may be used for working capital and other general corporate purposes. The Credit Agreement contains affirmative, negative and financial covenants, which are customary for facilities of this type, including with respect to leverage and interest coverage, limitations on priority indebtedness, asset dispositions and fundamental corporate changes. As of December 31, 2023, the Company was in compliance with these covenants.
To date, the Company has not drawn upon the credit agreement.
14. Commitments and Contingencies
From time to time, the Company is involved in legal matters relating to claims arising in the ordinary course of business. There are currently no such matters pending that the Company believes could have a material adverse effect on its consolidated results of operations, cash flows or financial position.
The Company periodically commitshas committed to fund a portioninvest up to $50.0 million in REOF. As of December 31, 2023, the equity in certainCompany had funded $21.7 million of its sponsored investment products. Thethis commitment.
In addition, the Company has committed to co-investinvest up to $5,100,000 alongside GRP-TE, a portion of which is made through GRP-TE and the remainder of which is made through GRP-CIP for up to 12 years through the life of GRP-TE.$125.0 million in CNSREIT. As of December 31, 2020,2023, the Company had funded approximately $3,800,000 with respect to$0.2 million of this commitment. The actual timing for funding In January 2024, the unfunded portionCompany funded an additional $23.6 million of this commitment is currently unknown, as the drawdown of the Company’s unfunded commitment is contingent on the timing of drawdowns by the underlying funds in which GRP-TE and GRP-CIP invest. The unfunded commitment is not recorded on the Company’s consolidated statements of financial condition.commitment.
COHEN & STEERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
14.The timing for funding the remaining portion of the Company's commitments is determined by the investment vehicles.
15. Income Taxes
The income before provision for income taxes and provision for income taxes are as follows:
| | | | | | | | | | | | | | | | | |
| Years Ended December 31, |
(in thousands) | 2020 | | 2019 | | 2018 |
Income before provision for income taxes - U.S. (1) | $ | 83,617 | | | $ | 171,497 | | | $ | 132,838 | |
Income before provision for income taxes - Non-U.S. | 9,770 | | | 16,052 | | | 10,941 | |
Total income before provision for income taxes | $ | 93,387 | | | $ | 187,549 | | | $ | 143,779 | |
_________________________ (1) Included loss of $1.4 million, income of $12.4 million and loss of $4.4 million attributable to third-party interests for the years ended December 31, 2020, 2019 and 2018, respectively. |
| | | | | |
Current tax expense: | | | | | |
U.S. federal | $ | 12,859 | | | $ | 30,818 | | | $ | 26,223 | |
State and local | 3,291 | | | 7,627 | | | 7,378 | |
Non-U.S. | 1,965 | | | 2,024 | | | 2,029 | |
| 18,115 | | | 40,469 | | | 35,630 | |
Deferred tax (benefit) expense: | | | | | |
U.S. federal | (67) | | | (133) | | | (748) | |
State and local | (32) | | | (74) | | | (281) | |
Non-U.S. | 206 | | | 303 | | | (344) | |
| 107 | | | 96 | | | (1,373) | |
Provision for income taxes | $ | 18,222 | | | $ | 40,565 | | | $ | 34,257 | |
| | | | | | | | | | | | | | | | | |
| Years Ended December 31, |
(in thousands) | 2023 | | 2022 | | 2021 |
Income before provision for income taxes - U.S. (1) | $ | 175,290 | | | $ | 189,577 | | | $ | 262,102 | |
Income before provision for income taxes - Non-U.S. | 4,961 | | | 7,320 | | | 19,842 | |
Total income before provision for income taxes | $ | 180,251 | | | $ | 196,897 | | | $ | 281,944 | |
_________________________ (1)Included income of $7.6 million, loss of $21.6 million and income of $14.8 million attributable to noncontrolling interests for the years ended December 31, 2023, 2022 and 2021, respectively. |
| | | | | |
| Years Ended December 31, |
(in thousands) | 2023 | | 2022 | | 2021 |
Current tax expense: | | | | | |
U.S. federal | $ | 34,310 | | | $ | 44,965 | | | $ | 41,658 | |
State and local | 8,249 | | | 1,125 | | | 12,068 | |
Non-U.S. | 546 | | | 2,520 | | | 1,960 | |
| 43,105 | | | 48,610 | | | 55,686 | |
Deferred tax (benefit) expense: | | | | | |
U.S. federal | 2,241 | | | 82 | | | (739) | |
State and local | (1,290) | | | (59) | | | (149) | |
Non-U.S. | (414) | | | (1,222) | | | 992 | |
| 537 | | | (1,199) | | | 104 | |
Provision for income taxes | $ | 43,642 | | | $ | 47,411 | | | $ | 55,790 | |
A reconciliation of the Company’s statutory federal income tax rate and the effective tax rate is as follows: | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Years Ended December 31, |
(in thousands) | 2023 | | 2022 | | 2021 |
U.S. statutory tax rate | $ | 36,265 | | 21.0 | % | | $ | 45,875 | | 21.0 | % | | $ | 56,110 | | 21.0 | % |
State and local income taxes, net of federal benefit | 5,453 | | 3.2 | % | | 7,210 | | 3.3 | % | | 10,190 | | 3.8 | % |
Non-deductible executive compensation | 3,270 | | 1.9 | % | | 6,534 | | 3.0 | % | | 6,037 | | 2.3 | % |
Excess tax benefits related to the vesting and delivery of restricted stock units | (2,044) | | (1.2) | % | | (5,784) | | (2.7) | % | | (5,762) | | (2.2) | % |
Unrecognized tax benefit adjustments | 56 | | — | % | * | (7,244) | | (3.3) | % | | (8,515) | | (3.2) | % |
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Other | 642 | | 0.4 | % | | 820 | | 0.4 | % | | (2,270) | | (0.8) | % |
Income tax expense and effective income tax rate | $ | 43,642 | | 25.3 | % | | $ | 47,411 | | 21.7 | % | | $ | 55,790 | | 20.9 | % |
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| Years Ended December 31, |
| 2020 | | 2019 | | 2018 |
U.S. statutory tax rate | 21.0 | % | | 21.0 | % | | 21.0 | % |
Stock-based compensation | (9.0) | % | | (0.1) | % | | (0.6) | % |
State and local income taxes, net of federal income taxes | 4.1 | % | | 3.4 | % | | 3.8 | % |
Unrecognized tax benefit adjustments | 2.4 | % | | (1.0) | % | | (1.0) | % |
Foreign operations tax differential | 0.1 | % | | (0.5) | % | | 0.3 | % |
Non-deductible (gains) losses on investments | 0.1 | % | | (1.6) | % | | 0.2 | % |
Non-taxable (gains) losses on investments | 0.3 | % | | 0.9 | % | | 0.1 | % |
Tax Cuts and Jobs Act | 0 | % | | 0 | % | | (0.1) | % |
Other | 0.2 | % | | 1.1 | % | | (0.6) | % |
Effective income tax rate | 19.2 | % | | 23.2 | % | | 23.1 | % |
_________________________
•Amounts round to less than 0.1%.
Deferred income taxes represent the tax effects of the temporary differences between book and tax bases and are measured using enacted tax rates that will be in effect when such items are expected to reverse. The Company records a valuation allowance, when necessary, to reduce deferred tax assets to an amount that more likely than not will be realized. The Company's net deferred income tax asset is included in other assets on the consolidated statements of financial condition.
COHEN & STEERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Significant components of the Company’s net deferred income tax asset consist of the following: | | | | | | | | | | | |
| At December 31, |
(in thousands) | 2023 | | 2022 |
Deferred income tax assets: | | | |
Stock-based compensation | $ | 8,625 | | | $ | 7,611 | |
Lease liabilities | 31,882 | | | 33,063 | |
| | | |
Realized losses on investments | 1,713 | | | 1,624 | |
| | | |
Net unrealized losses on investments | 1,264 | | | 552 | |
| | | |
Other | 342 | | | 542 | |
| 43,826 | | | 43,392 | |
Less: valuation allowance | (3,419) | | | (2,698) | |
| 40,407 | | | 40,694 | |
| | | |
Deferred income tax liabilities: | | | |
Right-of-use assets | (22,979) | | | (32,507) | |
Property and equipment depreciation | (9,788) | | | — | |
| (32,767) | | | (32,507) | |
Net deferred income tax asset | $ | 7,640 | | | $ | 8,187 | |
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| At December 31, |
(in thousands) | 2020 | | 2019 |
Deferred income tax assets (liabilities): | | | |
Stock-based compensation | $ | 5,329 | | | $ | 5,310 | |
Realized losses on investments | 3,567 | | | 4,218 | |
Dividend equivalents on unvested restricted stock units | 1,735 | | | 1,725 | |
Net unrealized (gains) losses on investments | (1,364) | | | (1,632) | |
Deferred compensation | 52 | | | 290 | |
Deferred rent | 904 | | | 1,205 | |
Other | (530) | | | (824) | |
Subtotal | 9,693 | | | 10,292 | |
Less: valuation allowance | (2,698) | | | (3,201) | |
Deferred income tax asset—net | $ | 6,995 | | | $ | 7,091 | |
At December 31, 2023, the Company revised the prior year presentation of amounts related to its lease liabilities and right-of-use assets in the table above.
The Company had capital loss carryforwards of approximately $14,311,000$7.1 million and $17,027,000$6.8 million for the years ended December 31, 20202023 and 20192022, respectively, which, if unused, will expire in years 20212024 to 2025.2028. The valuation allowance on the net deferred income tax asset decreasedincreased by approximately $503,000$0.7 million during the year ended December 31, 2020.2023.
At December 31, 2020,2023, the Company had approximately $13,616,000$2.5 million of total gross unrecognized tax benefits. Of this total, approximately $10,027,000$2.0 million (net of the federal benefit on state issues) represents the amount of unrecognized tax benefits that, if recognized, would favorably affect the Company’s effective tax rate in future periods. The Company believes it is reasonably possible that it will reduce its net unrecognized tax benefits by $9,000,000 to $10,000,000$0.1 million within the next twelve months due to the expected conclusion of jurisdictional reviews and the lapse of the statute of limitations on certain positions.
A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows:F-27
| | | | | |
(in thousands)
| Liability for Unrecognized Tax Benefits |
Gross unrecognized tax benefits balance at January 1, 2018 | $ | 12,406 | |
Addition for tax positions of current year | 2,233 | |
| |
Reduction of tax positions from prior years | (2,602) | |
Gross unrecognized tax benefits balance at December 31, 2018 | $ | 12,037 | |
Addition for tax positions of current year | 2,430 | |
Addition for tax positions of prior years | 133 | |
Reduction of tax positions from prior years | (1,720) | |
Gross unrecognized tax benefits balance at December 31, 2019 | $ | 12,880 | |
Addition for tax positions of current year | 1,697 | |
Addition for tax positions of prior years | 3,599 | |
Reduction of tax positions from prior years | (4,560) | |
Gross unrecognized tax benefits balance at December 31, 2020 | $ | 13,616 | |
The Company records potential interest and penalties related to uncertain tax positions in the provision for income taxes. At December 31, 2020 and 2019, the Company had approximately $6,778,000 and $3,179,000, respectively, in potential interest and penalties associated with uncertain tax positions.
The tax years 2013 through 2020 remain open to examination by various taxing jurisdictions.
COHEN & STEERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows: | | | | | |
(in thousands) | Liability for Unrecognized Tax Benefits |
Gross unrecognized tax benefits balance at January 1, 2021 | $ | 13,616 | |
Addition for tax positions of current year | 4,092 | |
| |
Reduction for tax positions from prior years | (7,322) | |
Gross unrecognized tax benefits balance at December 31, 2021 | $ | 10,386 | |
Addition for tax positions of current year | 958 | |
| |
Reduction for tax positions from prior years | (6,367) | |
Gross unrecognized tax benefits balance at December 31, 2022 | $ | 4,977 | |
Addition for tax positions of current year | 1,076 | |
| |
Reduction for tax positions from prior years | (116) | |
Reduction related to settlements with taxing authorities | (3,156) | |
Reduction related to lapse of statue of limitations | (250) | |
Gross unrecognized tax benefits balance at December 31, 2023 | $ | 2,531 | |
The Company records potential interest and penalties related to uncertain tax positions in the provision for income taxes. At December 31, 2023 and 2022, the Company had $0.2 million and $0.9 million, respectively, in potential interest and penalties associated with uncertain tax positions.
The tax years 2017 through 2022 remain open to examination by various taxing jurisdictions.
In connection with the enactment of the Tax Cuts and Jobs Act (the Tax Act),in 2017, the Company recorded a provisional transition tax liability of $8,432,000 at December 31, 2017, which reflected a one-time tax on deemed repatriated accumulated earnings and profits of the Company’s foreign subsidiaries. Based on refinement of the calculation, the Company adjusted its transition tax liability from $8,432,000 at December 31, 2017 to $8,310,000 during the second quarter of 2018.$8.3 million. This tax liability, paid over eight years on an interest-free basis, was included as part of income tax payable on the Company's consolidated statements of financial condition at December 31, 20202023 and 2019.2022.
The following table summarizes the remaining transition tax liability at December 31, 20202023 (in thousands):
| | | | | |
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2021 | $ | 665 | |
2022 | 665 | |
2023 | 1,246 | |
2024 | 1,662 | |
2025 | 2,077 | |
| $ | 6,315 | |
In addition to the transition tax, the Tax Act requires certain income earned by foreign subsidiaries, referred to as global intangible low-taxed income (GILTI), be included in the U.S. taxable income of the parent company. GILTI requires an accounting policy election to either (1) treat taxes due on future U.S. inclusions in taxable income related to GILTI as a current period expense when incurred or (2) factor such amounts into the measurement of deferred taxes. The Company has made an accounting policy election to account for any additional tax resulting from the GILTI provisions in the year in which it is incurred. Based upon its calculation, the Company was not required to record any material income tax expense attributable to the GILTI provisions for the year ended December 31, 2020. | | | | | |
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2024 | $ | 1,662 | |
2025 | 2,077 | |
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| $ | 3,739 | |
15.16. Goodwill and Intangible Assets
The following table summarizes the changes in the Company’s goodwill and non-amortizedindefinite-lived intangible assets:
| (in thousands) | (in thousands) | Goodwill | | | Indefinite-Lived Intangible Assets |
Balance at January 1, 2019 | $ | 18,501 | | | | $ | 1,250 | |
(in thousands) | |
(in thousands) | | Goodwill | | | | Indefinite-Lived Intangible Assets |
Balance at January 1, 2022 | |
Currency revaluation | Currency revaluation | (191) | | | | — | |
| Balance at December 31, 2019 | $ | 18,310 | | | | $ | 1,250 | |
Balance at December 31, 2022 | |
Balance at December 31, 2022 | |
Balance at December 31, 2022 | |
Currency revaluation | Currency revaluation | 935 | | | | — | |
| Balance at December 31, 2020 | $ | 19,245 | | | | $ | 1,250 | |
Balance at December 31, 2023 | |
Balance at December 31, 2023 | |
Balance at December 31, 2023 | |
Goodwill and indefinite-lived intangible assets are not amortized but are tested at least annually for impairment by comparing the fair value to their carrying amounts. The Company's evaluation indicated that no impairment existed at December 31, 2023.
COHEN & STEERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
17. Leases
The Company has operating leases for corporate offices and certain information technology equipment.
The following table summarizes the Company's lease cost included in general and administrative expense in the consolidated statements of operations: | | | | | | | | | | | | | | | | | |
| Years Ended December 31, |
(in thousands) | 2023 | | 2022 | | 2021 |
Operating lease cost | $ | 22,556 | | | $ | 12,148 | | | $ | 11,097 | |
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| Years Ended December 31, |
(in thousands) | 2020 | | 2019 | | 2018 |
Operating lease cost | $ | 11,247 | | | $ | 11,495 | | | $ | 11,552 | |
Supplemental information related to operating leases is summarized below: | | | | | | | | | | | | | | | | | |
| Years Ended December 31, |
(in thousands) | 2023 | | 2022 | | 2021 |
Supplemental cash flow information: | | | | | |
Cash paid for amounts included in the measurement of lease liabilities | $ | 12,041 | | | $ | 12,271 | | | $ | 12,303 | |
Supplemental non-cash information: | | | | | |
Right-of-use assets obtained in exchange for new lease liabilities | 8,251 | | | 126,230 | | | 1,149 | |
Other information related to operating leases is summarized below: | | | | | | | | | | | | | | | | | |
| Years Ended December 31, |
| 2023 | | 2022 | | 2021 |
Weighted-average remaining lease term (years) | 15 | | 15 | | 2 |
Weighted-average discount rate | 6.0 | % | | 5.7 | % | | 2.7 | % |
The following table summarizes the maturities of lease liabilities at December 31, 2023 (in thousands): | | | | | |
Year Ending December 31, | Operating Leases |
2024 | $ | 9,210 | |
2025 | 13,596 | |
2026 | 14,291 | |
2027 | 14,274 | |
2028 | 14,086 | |
Thereafter | 153,355 | |
Total lease payments | 218,812 | |
Less: interest | (78,404) | |
Present value of lease payments | $ | 140,408 | |
COHEN & STEERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Supplemental information related to operating leases is summarized below:
| | | | | | | | | | | | | | | | | |
| Years Ended December 31, |
(in thousands) | 2020 | | 2019 | | 2018 |
Supplemental cash flow information: | | | | | |
Cash paid for amounts included in the measurement of lease liabilities | $ | 12,408 | | | $ | 12,365 | | | $ | 11,709 | |
Supplemental non-cash information: | | | | | |
Right-of-use assets obtained in exchange for new lease liabilities | 3,026 | | | 0 | | | 614 | |
Other information related to operating leases is summarized below:
| | | | | | | | | | | | | | | | | |
| Years Ended December 31, |
| 2020 | | 2019 | | 2018 |
Weighted-average remaining lease term (years) | 3 | | 4 | | 5 |
Weighted-average discount rate | 2.8 | % | | 2.8 | % | | 2.8 | % |
The following table summarizes the maturities of lease liabilities at December 31, 2020 (in thousands):
| | | | | |
Year Ending December 31, | Operating Leases |
2021 | $ | 12,173 | |
2022 | 11,875 | |
2023 | 11,428 | |
2024 | 966 | |
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Total remaining undiscounted lease payments | 36,442 | |
Less: imputed interest | 1,516 | |
Total remaining discounted lease payments | $ | 34,926 | |
17. Concentration of Credit Risk18. Concentrations
The Company’s cash and cash equivalents are principally on deposit with major financial institutions. The Company is subject to credit risk should these financial institutions be unable to fulfill their obligations.
The following affiliated funds provided 10% or more of the total revenue of the Company:
| | | | | | | | | | | | | | | | | |
| Years Ended December 31, |
(in thousands, except percentages) | 2020 | | 2019 | | 2018 |
Cohen & Steers Preferred Securities and Income Fund, Inc. (CPX): | | | | | |
Investment advisory and administration fees | $ | 69,197 | | | $ | 56,638 | | | $ | 53,059 | |
Distribution and service fees | 13,499 | | | 12,753 | | | 13,525 | |
Total | $ | 82,696 | | | $ | 69,391 | | | $ | 66,584 | |
Percent of total revenue | 19.3 | % | | 16.9 | % | | 17.5 | % |
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Cohen & Steers Real Estate Securities Fund, Inc. (CSI): | | | | | |
Investment advisory and administration fees | $ | 38,961 | | | $ | 41,971 | | | $ | 31,759 | |
Distribution and service fees | 6,943 | | | 8,128 | | | 6,841 | |
Total | $ | 45,904 | | | $ | 50,099 | | | $ | 38,600 | |
Percent of total revenue | 10.7 | % | | 12.2 | % | | 10.1 | % |
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COHEN & STEERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
18. Selected Quarterly Financial Data (unaudited)
The following table presents selected quarterly financial data:
| | | | | | | | | | | | | | | | | |
| Quarter |
(in thousands, except per share data) | 1st | 2nd | 3rd | 4th | Total |
2020 | | | | | |
Revenue | $ | 105,830 | | $ | 94,087 | | $ | 111,159 | | $ | 116,460 | | $ | 427,536 | |
Operating income (loss) | 28,369 | | 35,295 | | 43,307 | | (11,914) | | 95,057 | |
Net income (loss) attributable to common stockholders | 20,572 | | 28,520 | | 31,904 | | (4,412) | | 76,584 | |
Earnings (loss) per share attributable to common stockholders: | | | | | |
Basic | 0.43 | | 0.60 | | 0.67 | | (0.09) | | 1.60 | |
Diluted | 0.42 | | 0.59 | | 0.66 | | (0.09) | | 1.57 | |
Weighted-average shares outstanding: | | | | | |
Basic | 47,651 | | 47,826 | | 47,855 | | 47,867 | | 47,800 | |
Diluted | 48,591 | | 48,572 | | 48,681 | | 48,857 | | 48,676 | |
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2019 | | | | | |
Revenue | $ | 94,226 | | $ | 101,792 | | $ | 104,965 | | $ | 109,847 | | $ | 410,830 | |
Operating income | 35,435 | | 38,104 | | 40,133 | | 46,462 | | 160,134 | |
Net income attributable to common stockholders | 32,543 | | 31,333 | | 34,017 | | 36,728 | | 134,621 | |
Earnings per share attributable to common stockholders: | | | | | |
Basic | 0.69 | | 0.66 | | 0.72 | | 0.78 | | 2.85 | |
Diluted | 0.68 | | 0.65 | | 0.70 | | 0.75 | | 2.79 | |
Weighted-average shares outstanding: | | | | | |
Basic | 47,146 | | 47,304 | | 47,316 | | 47,324 | | 47,273 | |
Diluted | 47,642 | | 48,175 | | 48,412 | | 48,703 | | 48,297 | |
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| Years Ended December 31, |
(in thousands, except percentages) | 2023 | | 2022 | | 2021 |
Cohen & Steers Preferred Securities and Income Fund, Inc. (CPX): | | | | | |
Investment advisory and administration fees | $ | 57,428 | | | $ | 74,683 | | | $ | 88,705 | |
Distribution and service fees | 9,526 | | | 12,549 | | | 15,279 | |
Total | $ | 66,954 | | | $ | 87,232 | | | $ | 103,984 | |
Percent of total revenue | 13.7 | % | | 15.4 | % | | 17.8 | % |
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Cohen & Steers Real Estate Securities Fund, Inc. (CSI): | | | | | |
Investment advisory and administration fees | $ | 49,862 | | | $ | 54,973 | | | $ | 53,250 | |
Distribution and service fees | 7,460 | | | 8,313 | | | 8,658 | |
Total | $ | 57,322 | | | $ | 63,286 | | | $ | 61,908 | |
Percent of total revenue | 11.7 | % | | 11.2 | % | | 10.6 | % |
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Cohen & Steers Realty Shares, Inc. (CSR): | | | | | |
Investment advisory and administration fees | $ | 39,025 | | | $ | 52,499 | | | $ | 55,402 | |
Distribution and service fees | 5,197 | | | 7,048 | | | 7,279 | |
Total | $ | 44,222 | | | $ | 59,547 | | | $ | 62,681 | |
Percent of total revenue | 9.0 | % | | 10.5 | % | | 10.7 | % |
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19. Subsequent Events
The Company has evaluated the need for disclosures and/or adjustments resulting from subsequent events through the date the consolidated financial statements were issued. Other than the items described below or elsewhere in the footnotes, the Company determined that there were no additional subsequent events that require disclosure and/or adjustment.
On February 25, 2021, CNS22, 2024, the Company declared a quarterly dividend on its common stock in the amount of $0.45$0.59 per share. This dividend will be payable on March 18, 202114, 2024 to stockholders of record at the close of business on March 8, 2021.4, 2024.