COHEN & STEERS, INC. - Quarter Report: 2019 September (Form 10-Q)

________________________________________________________

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)



☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2019



☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO

Commission File Number: 001-32236

________________

COHEN & STEERS, INC.

(Exact Name of Registrant as Specified in its Charter)

________________



Delaware	14-1904657
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

280 Park Avenue

New York, NY 10017

(Address of Principal Executive Offices and Zip Code)

(212) 832-3232

(Registrant's Telephone Number, Including Area Code)

________________

Securities registered pursuant to Section 12(b) of the Act:



Title of each class		Trading Symbol(s)	Name of each exchange on which registered
Common Stock	$.01 par value	CNS	New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):



Large accelerated filer	☒	Accelerated filer	☐

Non-accelerated filer	☐	Smaller reporting company	☐

Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares of the registrant's common stock, par value $0.01 per share, outstanding as of October 31, 2019 was 47,248,129.

COHEN & STEERS, INC. AND SUBSIDIARIES

Form 10-Q

Index



		Page
Part I.	Financial Information

Item 1.	Financial Statements	1

	Condensed Consolidated Statements of Financial Condition (Unaudited)	1

	Condensed Consolidated Statements of Operations (Unaudited)	2

	Condensed Consolidated Statements of Comprehensive Income (Unaudited)	3

	Condensed Consolidated Statements of Changes in Stockholders' Equity and Redeemable Noncontrolling Interests (Unaudited)	4

	Condensed Consolidated Statements of Cash Flows (Unaudited)	6

	Notes to Condensed Consolidated Financial Statements (Unaudited)	8

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	22

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	40

Item 4.	Controls and Procedures	40

Part II.	Other Information *

Item 1.	Legal Proceedings	41

Item 1A.	Risk Factors	41

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	41

Item 6.	Exhibits	42

Signatures		43

* Items other than those listed above have been omitted because they are not applicable.

Forward-Looking Statements

This report and other documents filed by us contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which reflect management's current views with respect to, among other things, our operations and financial performance. You can identify these forward-looking statements by the use of words such as "outlook," "believes," "expects," "potential," "may," "should," "seeks," "predicts," "intends," "plans," "estimates," "anticipates" or the negative versions of these words or other comparable words. Such forward-looking statements are subject to various risks and uncertainties. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these forward-looking statements. We believe that these factors include, but are not limited to, the risks described in the Risk Factors section of our Annual Report on Form 10-K for the year ended December 31, 2018 (the Form 10-K), which is accessible on the Securities and Exchange Commission's website at www.sec.gov and on our website at www.cohenandsteers.com. These factors are not exhaustive and should be read in conjunction with the other cautionary statements that are included in this report, the Form 10-K and our other filings with the Securities and Exchange Commission. We undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise.

PART I—Financial Information

Item 1. Financial Statements

COHEN & STEERS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Unaudited)

(in thousands, except share data)



	September 30, 2019			December 31, 2018⁽²⁾
ASSETS
Cash and cash equivalents	$	128,328		$	92,733
Investments ($80,492 and $136,113) ⁽¹⁾	168,331			224,932
Accounts receivable	65,614			50,381
Due from brokers ($3,677 and $11,187) ⁽¹⁾	3,677			14,240
Property and equipment—net	12,993			14,106
Operating lease right-of-use assets	40,833			48,488
Goodwill and intangible assets—net	19,261			19,751
Deferred income tax asset—net	7,119			7,200
Other assets ($4,061 and $2,604) ⁽¹⁾	13,548			9,208
Total assets	$	459,704		$	481,039

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accrued compensation	$	37,386		$	43,685
Distribution and service fees payable	8,503			8,493
Operating lease liabilities	46,047			54,304
Income tax payable	20,154			18,663
Due to brokers ($1,633 and $4,422) ⁽¹⁾	1,633			5,121
Other liabilities and accrued expenses ($3,243 and $440) ⁽¹⁾	13,971			13,935
Total liabilities	127,694			144,201
Commitments and contingencies (See Note 11)
Redeemable noncontrolling interests	53,109			114,192
Stockholders' equity:
Common stock, $0.01 par value; 500,000,000 shares authorized; 52,575,034 and 51,818,186 shares issued at September 30, 2019 and December 31, 2018, respectively	527			518
Additional paid-in capital	625,822			602,272
Accumulated deficit	(163,500		)	(208,404		)
Accumulated other comprehensive loss, net of tax	(9,123		)	(7,323		)
Less: Treasury stock, at cost, 5,329,820 and 5,050,285 shares at September 30, 2019 and December 31, 2018, respectively	(174,825		)	(164,417		)
Total stockholders' equity	278,901			222,646
Total liabilities and stockholders' equity	$	459,704		$	481,039

_________________________


(1)	Asset and liability amounts in parentheses represent the aggregated balances at September 30, 2019 and December 31, 2018 attributable to variable interest entities consolidated by the Company. Refer to Note 4 for further discussion.


(2)	Certain amounts have been recast to reflect the Company's adoption of the new leasing accounting standard on January 1, 2019. Refer to Notes 2 and 12 for further discussion of the Company's recently adopted accounting pronouncements and leases, respectively.

See notes to condensed consolidated financial statements

COHEN & STEERS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

(in thousands, except per share data)



	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Revenue: ⁽¹⁾
Investment advisory and administration fees	$	96,763		$	90,352		$	277,421		$	263,452
Distribution and service fees	7,681			7,451			22,072			22,108
Other	521			528			1,490			1,645
Total revenue	104,965			98,331			300,983			287,205
Expenses:
Employee compensation and benefits	37,877			33,126			108,438			96,788
Distribution and service fees	14,142			13,210			40,866			38,492
General and administrative	11,713			11,634			34,690			35,791
Depreciation and amortization	1,100			1,138			3,317			3,405
Total expenses	64,832			59,108			187,311			174,476
Operating income (loss)	40,133			39,223			113,672			112,729
Non-operating income (loss):
Interest and dividend income—net	1,713			2,747			5,174			7,434
Gain (loss) from investments—net	4,472			413			20,210			(4,692		)
Foreign currency gain (loss)—net	432			(2,113		)	679			(2,672		)
Total non-operating income (loss)	6,617			1,047			26,063			70
Income before provision for income taxes	46,750			40,270			139,735			112,799
Provision for income taxes	10,352			10,539			30,711			28,575
Net income	36,398			29,731			109,024			84,224
Less: Net (income) loss attributable to redeemable noncontrolling interests	(2,381		)	1,059			(11,131		)	4,111
Net income attributable to common stockholders	$	34,017		$	30,790		$	97,893		$	88,335

Earnings per share attributable to common stockholders:
Basic	$	0.72		$	0.66		$	2.07		$	1.89
Diluted	$	0.70		$	0.65		$	2.03		$	1.87
Dividends declared per share	$	0.36		$	0.33		$	1.08		$	0.99
Weighted average shares outstanding:
Basic	47,316			46,830			47,256			46,778
Diluted	48,412			47,524			48,118			47,327

_________________________


(1)	Prior period 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 condensed consolidated financial statements

COHEN & STEERS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)

(in thousands)



	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Net income	$	36,398		$	29,731		$	109,024		$	84,224
Less: Net (income) loss attributable to redeemable noncontrolling interests	(2,381		)	1,059			(11,131		)	4,111
Net income attributable to common stockholders	34,017			30,790			97,893			88,335
Other comprehensive income (loss), net of tax:
Foreign currency translation gain (loss)	(1,900		)	(300		)	(1,800		)	(1,377		)
Total comprehensive income attributable to common stockholders	$	32,117		$	30,490		$	96,093		$	86,958

See notes to condensed consolidated financial statements

COHEN & STEERS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY AND

REDEEMABLE NONCONTROLLING INTERESTS (Unaudited)

(in thousands, except per share data)



	Three Months Ended September 30, 2019
	Common Stock		Additional Paid-In Capital			Accumulated Deficit			Accumulated Other Comprehensive Income (Loss), Net of Tax			Treasury Stock			Total Stockholders' Equity			Redeemable Noncontrolling Interests
July 1, 2019	$	526	$	617,726		$	(179,852	)	$	(7,223	)	$	(174,802	)	$	256,375		$	38,104
Dividends ($0.36 per share)	—		—			(17,665		)	—			—			(17,665		)	—
Issuance of common stock	1		184			—			—			—			185			—
Repurchase of common stock	—		—			—			—			(23		)	(23		)	—
Issuance of restricted stock units	—		1,135			—			—			—			1,135			—
Amortization of restricted stock units	—		6,784			—			—			—			6,784			—
Forfeitures of restricted stock units	—		(7		)	—			—			—			(7		)	—
Net income (loss)	—		—			34,017			—			—			34,017			2,381
Other comprehensive income (loss), net of tax	—		—			—			(1,900		)	—			(1,900		)	—
Net contributions (distributions) attributable to redeemable noncontrolling interests	—		—			—			—			—			—			19,805
Net consolidation (deconsolidation) of Company-sponsored funds	—		—			—			—			—			—			(7,181		)
September 30, 2019	$	527	$	625,822		$	(163,500	)	$	(9,123	)	$	(174,825	)	$	278,901		$	53,109

	Three Months Ended September 30, 2018
	Common Stock		Additional Paid-In Capital			Accumulated Deficit			Accumulated Other Comprehensive Income (Loss), Net of Tax			Treasury Stock			Total Stockholders' Equity			Redeemable Noncontrolling Interests
July 1, 2018	$	518	$	584,035		$	(111,333	)	$	(5,843	)	$	(164,372	)	$	303,005		$	84,995
Dividends ($0.33 per share)	—		—			(16,001		)	—			—			(16,001		)	—
Issuance of common stock	—		155			—			—			—			155			—
Repurchase of common stock	—		—			—			—			(45		)	(45		)	—
Issuance of restricted stock units	—		699			—			—			—			699			—
Amortization of restricted stock units	—		5,961			—			—			—			5,961			—
Forfeitures of restricted stock units	—		(23		)	—			—			—			(23		)	—
Net income (loss)	—		—			30,790			—			—			30,790			(1,059		)
Other comprehensive income (loss), net of tax	—		—			—			(300		)	—			(300		)	—
Net contributions (distributions) attributable to redeemable noncontrolling interests	—		—			—			—			—			—			892
September 30, 2018	$	518	$	590,827		$	(96,544	)	$	(6,143	)	$	(164,417	)	$	324,241		$	84,828

See notes to condensed consolidated financial statements

COHEN & STEERS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY AND

REDEEMABLE NONCONTROLLING INTERESTS (Unaudited)—(Continued)

(in thousands, except per share data)



	Nine Months Ended September 30, 2019
	Common Stock		Additional Paid-In Capital			Accumulated Deficit			Accumulated Other Comprehensive Income (Loss), Net of Tax			Treasury Stock			Total Stockholders' Equity			Redeemable Noncontrolling Interests
January 1, 2019	$	518	$	602,272		$	(208,404	)	$	(7,323	)	$	(164,417	)	$	222,646		$	114,192
Dividends ($1.08 per share)	—		—			(52,989		)	—			—			(52,989		)	—
Issuance of common stock	9		718			—			—			—			727			—
Repurchase of common stock	—		—			—			—			(10,408		)	(10,408		)	—
Issuance of restricted stock units	—		2,718			—			—			—			2,718			—
Amortization of restricted stock units	—		20,129			—			—			—			20,129			—
Forfeitures of restricted stock units	—		(15		)	—			—			—			(15		)	—
Net income (loss)	—		—			97,893			—			—			97,893			11,131
Other comprehensive income (loss), net of tax	—		—			—			(1,800		)	—			(1,800		)	—
Net contributions (distributions) attributable to redeemable noncontrolling interests	—		—			—			—			—			—			3,171
Net consolidation (deconsolidation) of Company-sponsored funds	—		—			—			—			—			—			(75,385		)
September 30, 2019	$	527	$	625,822		$	(163,500	)	$	(9,123	)	$	(174,825	)	$	278,901		$	53,109

	Nine Months Ended September 30, 2018
	Common Stock		Additional Paid-In Capital			Accumulated Deficit			Accumulated Other Comprehensive Income (Loss), Net of Tax			Treasury Stock			Total Stockholders' Equity			Redeemable Noncontrolling Interests
January 1, 2018	$	511	$	570,486		$	(137,972	)	$	(3,671	)	$	(153,818	)	$	275,536		$	47,795
Cumulative-effect adjustment, net of tax, due to the adoption of the new financial instruments accounting standard	—		—			1,095			(1,095		)	—			—			—
Dividends ($0.99 per share)	—					(48,002		)	—			—			(48,002		)	—
Issuance of common stock	7		592			—			—			—			599			—
Repurchase of common stock	—		—			—			—			(10,599		)	(10,599		)	—
Issuance of restricted stock units	—		2,133			—			—			—			2,133			—
Amortization of restricted stock units	—		17,647			—			—			—			17,647			—
Forfeitures of restricted stock units	—		(31		)	—			—			—			(31		)	—
Net income (loss)	—		—			88,335			—			—			88,335			(4,111		)
Other comprehensive income (loss), net of tax	—		—			—			(1,377		)	—			(1,377		)	—
Net contributions (distributions) attributable to redeemable noncontrolling interests	—		—			—			—			—			—			41,144
September 30, 2018	$	518	$	590,827		$	(96,544	)	$	(6,143	)	$	(164,417	)	$	324,241		$	84,828

See notes to condensed consolidated financial statements

COHEN & STEERS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(in thousands)



	Nine Months Ended September 30,
	2019			2018 ⁽¹⁾
Cash flows from operating activities:
Net income	$	109,024		$	84,224
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Stock-based compensation expense	21,019			18,156
Amortization of deferred commissions	736			1,265
Depreciation and amortization	3,317			3,405
Amortization of right-of-use assets	7,655			6,843
Amortization (accretion) of premium (discount) on held-to-maturity investments	(408		)	(97		)
(Gain) loss from investments—net	(20,210		)	4,692
Deferred income taxes	108			(873		)
Foreign currency (gain) loss	(40		)	756
Changes in operating assets and liabilities:
Accounts receivable	(15,193		)	(7,012		)
Due from brokers	(945		)	179
Deferred commissions	(1,067		)	(799		)
Investments within consolidated funds	(15,654		)	(54,842		)
Other assets	(3,525		)	(2,165		)
Accrued compensation	(6,299		)	(9,651		)
Distribution and service fees payable	10			2,289
Operating lease liabilities	(8,257		)	(6,974		)
Due to brokers	1,312			511
Income tax payable	1,491			(939		)
Other liabilities and accrued expenses	704			355
Net cash provided by (used in) operating activities	73,778			39,323
Cash flows from investing activities:
Proceeds from redemptions of equity method investments	34			37
Purchases of investments	(47,776		)	(60,695		)
Proceeds from sales and maturities of investments	70,460			11,144
Purchases of property and equipment	(2,197		)	(2,504		)
Net cash provided by (used in) investing activities	20,521			(52,018		)
Cash flows from financing activities:
Issuance of common stock	619			509
Repurchase of common stock	(10,408		)	(10,599		)
Dividends to stockholders	(51,068		)	(46,345		)
Distributions to redeemable noncontrolling interests	(35,978		)	(4,333		)
Contributions from redeemable noncontrolling interests	39,149			45,477
Net cash provided by (used in) financing activities	(57,686		)	(15,291		)
Net increase (decrease) in cash and cash equivalents	36,613			(27,986		)
Effect of foreign exchange rate changes on cash and cash equivalents	(1,018		)	(1,006		)
Cash and cash equivalents, beginning of the period	92,733			193,452
Cash and cash equivalents, end of the period	$	128,328		$	164,460

_________________________


(1)	Certain amounts have been recast to reflect the Company's adoption of the new leasing accounting standard on January 1, 2019. Refer to Notes 2 and 12 for further discussion of the Company's recently adopted accounting pronouncements and leases, respectively.

See notes to condensed consolidated financial statements

COHEN & STEERS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS—(Continued)

(UNAUDITED)

Supplemental disclosures of cash flow information:

During the nine months ended September 30, 2019 and 2018, the Company paid taxes, net of tax refunds, of approximately $29,098,000 and $30,344,000, respectively.

Supplemental disclosures of non-cash investing and financing activities:

In connection with its stock incentive plan, the Company recorded restricted stock unit dividend equivalents, net of forfeitures, in the amount of approximately $1,921,000 and $1,657,000 for the nine months ended September 30, 2019 and 2018, respectively. These amounts are included in the issuance of restricted stock units and dividends in the condensed consolidated statements of changes in stockholders' equity.

Effective September 1, 2019, the Company's proportionate ownership interest in the Cohen & Steers Preferred Securities and Income SMA Shares, Inc. (PISH) decreased. 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 January 1, 2019, the Company's proportionate ownership interest in the Cohen & Steers SICAV Global Preferred Securities Fund (SICAV Preferred) decreased. Accordingly, the Company deconsolidated the assets and liabilities of SICAV Preferred resulting in a non-cash reduction of approximately $114,192,000 from investments and redeemable noncontrolling interests to remove amounts attributable to third-party investors in SICAV Preferred.

During the nine months ended September 30, 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.

During the nine months ended September 30, 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.

COHEN & STEERS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1. Organization and Description of Business

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 Asia Limited (CSAL), Cohen & Steers UK Limited (CSUK) and Cohen & Steers Japan, LLC (collectively, the Company).

The Company is a global investment manager specializing in liquid real assets, including real estate securities, listed infrastructure and natural resource equities, as well as preferred securities and other income solutions. Founded in 1986, the Company is headquartered in New York City, with offices in London, Hong Kong and Tokyo.

2. Basis of Presentation and Significant Accounting Policies

The condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). The condensed 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.

The condensed consolidated financial statements of the Company included herein are unaudited and have been prepared in accordance with the instructions to Form 10-Q pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the interim results have been made. The Company's condensed consolidated financial statements and the related notes should be read together with the consolidated financial statements and the related notes included in the Company's Annual Report on Form 10-K for the year ended December 31, 2018.

Recently Adopted Accounting Pronouncements—In February 2018, the Financial Accounting Standards Board (FASB) issued new guidance allowing entities to reclassify certain tax effects related to the enactment of the Tax Cuts and Jobs Act (the Tax Act) from accumulated other comprehensive income (AOCI) to retained earnings. Prior to the issuance of the new guidance, a portion of the previously recognized deferred tax effects recorded in AOCI was "left stranded" in AOCI as the effect of remeasuring the deferred taxes using the reduced federal corporate income tax rate was required to be recorded through income. The new guidance allows these stranded tax effects to be reclassified from AOCI to retained earnings. The new guidance became effective on January 1, 2019 and the Company adopted the standard using the prospective application. The Company's adoption of the new standard did not have a material effect on its consolidated financial statements and related disclosures.

In February 2016, the FASB issued guidance introducing a new lease model which requires lessees to recognize leases on-balance sheet and disclose key information about leasing arrangements. The new guidance establishes a right-of-use (ROU) model that requires a lessee to recognize an ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months. This new guidance became effective on January 1, 2019 and the Company adopted the standard, along with certain allowable practical expedients, using the modified retrospective transition approach, which required the recasting of prior period amounts.

The adoption of the new leasing standard resulted in the following changes to the Company's condensed consolidated statement of financial condition as of December 31, 2018:



(in thousands)	Previously Reported		Adjustments Due to New Leasing Standard to record ROU assets and lease liabilities		Reclassification of Deferred Rent			Recast
Operating lease right-of-use assets	$	—	$	54,304	$	(5,816	)	$	48,488
Operating lease liabilities	$	—	$	54,304	$	—		$	54,304
Deferred rent	$	5,816	$	—	$	(5,816	)	$	—

COHEN & STEERS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(UNAUDITED)

The adoption of the new standard had no material impact on the Company's other condensed consolidated financial statements. Refer to Note 12 for further discussion.

Accounting Estimates—The preparation of the condensed 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 condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods. Management believes the estimates used in preparing the condensed consolidated financial statements are reasonable and prudent. Actual results could differ from those estimates.

Consolidation of Company-sponsored Funds—Investments in Company-sponsored funds and management fees are evaluated at inception and thereafter, if there is a reconsideration event, in order to determine whether to apply the Variable 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. Investments 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. 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.

The Company records noncontrolling interests in consolidated funds for which the Company's ownership is less than 100%.

Cash and Cash Equivalents—Cash and cash equivalents are on deposit with three major financial institutions and consist of short-term, highly-liquid investments, which are readily convertible into cash and have original maturities of three months or less.

Due from/to Brokers—Company-sponsored funds that are consolidated transact with brokers for certain investment activities. The clearing and custody operations for these investment activities are performed pursuant to contractual agreements. The due from/to brokers balance represents cash and cash equivalents balances at brokers/custodians and/or receivables and payables for unsettled securities transactions.

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 September 30, 2019, the Company's investments were comprised of the following:


•	Equity investments at fair value, which includes securities held within the affiliated funds that the Company consolidates, individual 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.


•	Trading investments, which represent debt securities held within the affiliated funds that the Company consolidates and individual debt securities held directly for the purposes of establishing performance track records.


•	Held-to-maturity investments, which represent fixed income securities recorded at amortized cost. The Company periodically reviews held-to-maturity investments for other-than-temporary impairments (OTTI). If

COHEN & STEERS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(UNAUDITED)

the Company believes an OTTI exists, an impairment charge will be recognized in the Company’s condensed consolidated statements of operations.

•

Equity method investments, which represent seed investments in which the Company owns between 20-50% of the outstanding voting interests in the affiliated fund 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 the affiliated investee fund net income or loss for the period which is recorded as gain (loss) from investments—net in the Company's condensed consolidated statements of operations.

Realized and unrealized gains and losses on equity investments at fair value, trading investments and equity method investments are recorded in gain (loss) from investments—net in the Company's condensed consolidated statements of operations.

From time to time, the Company, including the affiliated funds consolidated by the Company, enters into derivative contracts to gain exposure to the underlying commodities markets or to hedge market and credit risks of the underlying portfolios, including options, futures and swaps contracts. Gains and losses on derivative contracts are recorded as gain (loss) from investments—net in the Company's condensed 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 condensed consolidated statements of financial condition. At September 30, 2019, none of the outstanding derivative contracts were subject to a master netting agreement or other similar arrangement.

Additionally, from time to time, the Company, including the affiliated funds consolidated by the Company, enters into foreign exchange contracts to 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 condensed 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 condensed consolidated statements of financial condition.

Leases—The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease ROU assets and operating lease liabilities on the Company’s condensed 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 liabilities are recognized at commencement date based on the net present value of lease payments over the lease term. The majority of the Company’s lease agreements do not provide an implicit rate. As a result, the Company used an implied incremental borrowing rate based on the information available at lease commencement dates in determining the present value of lease payments. The operating lease ROU asset reflects any upfront lease payments made as well as lease incentives received. 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 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.

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 noncontrolling interests represent third-party interests in the affiliated funds that the Company consolidates. These interests are redeemable at the option of the investors and therefore are not treated as permanent equity. Redeemable noncontrolling interest is remeasured at redemption value which approximates the fair value at each reporting period.

COHEN & STEERS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(UNAUDITED)

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 based on a contractual fee rate applied to the average assets in the portfolio. 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 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, investment advisory and administration fees represent variable consideration, as fees are based on average assets under management which fluctuate daily.

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 sponsored 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-sponsored 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). 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 sponsored open-end 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 (Rule 12b-1). 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 fee expense is generally based on the average assets under management or the number of accounts being serviced.

Intermediary assistance payments represent payments to qualified intermediaries for activities related to distribution, shareholder servicing and marketing and support of the Company's sponsored open-end funds and are incremental to those described above. Intermediary assistance payments are generally based on the average assets under management or the number of accounts being serviced.

Stock-based Compensation—The Company recognizes compensation expense for the grant-date fair value of awards of equity instruments to employees. This expense is recognized over the period during which employees are required to provide service. Forfeitures are recorded as incurred.

Income Taxes—The Company records the current and deferred tax consequences of all transactions that have been recognized in the condensed 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 effective

COHEN & STEERS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(UNAUDITED)

tax rate for interim periods is based on the Company's best estimate of the effective tax rate expected to be applied to the full fiscal year.

The calculation of tax liabilities involves dealing with uncertainties in the application of complex tax laws and regulations in a multitude of jurisdictions across the Company's global operations. 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 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 condensed consolidated statements of operations.

Currency Translation and Transactions—Assets and liabilities of subsidiaries having non-U.S. dollar functional currencies are translated at exchange rates at the applicable condensed 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's condensed consolidated statements of comprehensive income. The cumulative translation adjustment was $(9,123,000) and $(7,323,000) at September 30, 2019 and December 31, 2018, respectively. Gains or losses resulting from transactions denominated in currencies other than the U.S. dollar held by certain foreign subsidiaries are included in non-operating income (loss) in the condensed consolidated statements of operations. Gains and losses arising on revaluation of U.S. dollar-denominated assets and liabilities held by foreign subsidiaries are also included in non-operating income (loss) in the Company’s condensed consolidated statements of operations.

Comprehensive Income—The Company reports all changes in comprehensive income in the condensed consolidated statements of comprehensive income. Comprehensive income 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 January 2017, the FASB issued guidance to simplify the goodwill impairment test by removing the requirement to perform a hypothetical purchase price allocation. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. This new guidance will be effective on January 1, 2020. The Company does not expect the adoption of the new guidance to have a material effect on its condensed consolidated financial statements and related disclosures.

COHEN & STEERS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(UNAUDITED)

3. Revenue

The following tables summarize revenue recognized from contracts with customers by client domicile and by vehicle:



	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2019		2018		2019		2018
Client domicile:
North America	$	90,674	$	83,377	$	258,384	$	243,193
Japan	8,552		8,951		25,170		26,927
Asia excluding Japan	3,387		3,263		9,093		9,356
Europe, Middle East and Africa	2,352		2,740		8,336		7,729
Total	$	104,965	$	98,331	$	300,983	$	287,205



	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2019		2018		2019		2018
Investment vehicle:
Open-end funds ⁽¹⁾	$	56,220	$	51,040	$	158,680	$	148,583
Closed-end funds	20,714		19,861		59,768		58,171
Institutional accounts	27,510		26,902		81,045		78,806
Other ⁽²⁾	521		528		1,490		1,645
Total	$	104,965	$	98,331	$	300,983	$	287,205

________________________


(1)	Included distribution and service fees of $7.7 million and $7.5 million for the three months ended September 30, 2019 and 2018, respectively, and $22.1 million for both the nine months ended September 30, 2019 and 2018.


(2)	Prior period amounts related to model-based portfolios were reclassified from other (previously reported as portfolio consulting and other) to open-end funds and institutional accounts.

4. Investments

The following table summarizes the Company's investments:



(in thousands)	September 30, 2019		December 31, 2018
Equity investments at fair value	$	89,745	$	66,795
Trading	17,730		108,363
Held-to-maturity⁽¹⁾	49,722		49,748
Equity method	11,134		26
Total investments	$	168,331	$	224,932

_________________________


(1)	Held-to-maturity investments had a fair value of approximately $49.9 million and $49.8 million at September 30, 2019 and December 31, 2018, respectively. Original maturities ranged from 12 to 24 months at September 30, 2019 and 6 to 24 months at December 31, 2018.

The Company seeded two new funds during the nine months ended September 30, 2019 and one new fund during the nine months ended September 30, 2018.

COHEN & STEERS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(UNAUDITED)

The following table summarizes gain (loss)—net from investments:



	Three Months Ended September 30,					Nine Months Ended September 30,
(in thousands)	2019		2018			2019		2018
Net realized gains (losses)	$	1,359	$	(278	)	$	5,118	$	(445	)
Net unrealized gains (losses)	3,113		691			15,092		(4,247		)
Gain (loss) from investments—net ⁽¹⁾	$	4,472	$	413		$	20,210	$	(4,692	)

________________________

(1) Included net income (loss) attributable to redeemable noncontrolling interests.

At September 30, 2019, the Company's consolidated VIEs included the Cohen & Steers SICAV Global Listed Infrastructure Fund (GLI SICAV), the Cohen & Steers Co-Investment Partnership, L.P. (GRP-CIP), SICAV GRE and the Cohen & Steers SICAV Diversified Real Assets Fund (SICAV RAP). At December 31, 2018, the Company's consolidated VIEs included GLI SICAV, GRP-CIP, SICAV Preferred and SICAV RAP.

The following tables summarize the condensed consolidated statements of financial condition attributable to the Company's consolidated VIEs:



	September 30, 2019
(in thousands)	GLI SICAV		GRP-CIP		SICAV GRE		SICAV RAP		Total
Assets ⁽¹⁾
Investments	$	6,770	$	459	$	50,891	$	22,372	$	80,492
Due from brokers	296		86		2,437		858		3,677
Other assets	75		—		931		3,055		4,061
Total assets	$	7,141	$	545	$	54,259	$	26,285	$	88,230

Liabilities ⁽¹⁾
Due to brokers	$	—	$	—	$	1,214	$	419	$	1,633
Other liabilities and accrued expenses	69		5		153		3,016		3,243
Total liabilities	$	69	$	5	$	1,367	$	3,435	$	4,876



	December 31, 2018
(in thousands)	GLI SICAV		GRP-CIP		SICAV Preferred		SICAV RAP		Total
Assets ⁽¹⁾
Investments	$	5,704	$	550	$	120,930	$	8,929	$	136,113
Due from brokers	49		103		10,868		167		11,187
Other assets	171		—		2,136		297		2,604
Total assets	$	5,924	$	653	$	133,934	$	9,393	$	149,904

Liabilities ⁽¹⁾
Due to brokers	$	—	$	—	$	4,398	$	24	$	4,422
Other liabilities and accrued expenses	74		5		212		149		440
Total liabilities	$	74	$	5	$	4,610	$	173	$	4,862

_________________________


(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 CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(UNAUDITED)

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. If the asset or liability has a specified (contractual) term, the level 2 input must be observable for substantially the full term of the asset or liability.


•	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. In determining the appropriate levels, the Company performed a detailed analysis of the assets and liabilities that are subject to ASC 820.

The following tables present fair value measurements:



	September 30, 2019
(in thousands)	Level 1		Level 2		Level 3		Investments Measured at NAV		Investments Carried at Amortized Cost		Total
Cash equivalents	$	100,759	$	—	$	—	$	—	$	—	$	100,759
Equity investments at fair value
Common stocks	$	86,978	$	209	$	—	$	—	$	—	$	87,187
Company-sponsored funds	136		—		—		—		—		136
Limited partnership interests	1,061		—		—		459		—		1,520
Preferred securities	662		109		—		—		—		771
Other	—		—		—		131		—		131
Total	$	88,837	$	318	$	—	$	590	$	—	$	89,745
Trading investments
Fixed income	$	—	$	17,730	$	—	$	—	$	—	$	17,730
Total	$	—	$	17,730	$	—	$	—	$	—	$	17,730
Held-to-maturity investments
Fixed income	$	—	$	—	$	—	$	—	$	49,722	$	49,722
Total	$	—	$	—	$	—	$	—	$	49,722	$	49,722
Equity method investments	$	10,600	$	—	$	—	$	534	$	—	$	11,134

Total investments	$	99,437	$	18,048	$	—	$	1,124	$	49,722	$	168,331

Derivatives - assets
Commodity futures contracts	$	617	$	—	$	—	$	—	$	—	$	617
Commodity swap contracts	—		174		—		—		—		174
Foreign exchange contracts	—		50		—		—		—		50
Total	$	617	$	224	$	—	$	—	$	—	$	841
Derivatives - liabilities
Commodity futures contracts	$	477	$	—	$	—	$	—	$	—	$	477
Foreign exchange contracts	—		93		—		—		—		93
Total	$	477	$	93	$	—	$	—	$	—	$	570

COHEN & STEERS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(UNAUDITED)



	December 31, 2018
(in thousands)	Level 1		Level 2		Level 3		Investments Measured at NAV		Investments Carried at Amortized Cost		Total
Cash equivalents	$	78,147	$	—	$	—	$	—	$	—	$	78,147
Equity investments at fair value
Common stocks	$	21,982	$	—	$	—	$	—	$	—	$	21,982
Company-sponsored funds	9,456		—		—		—		—		9,456
Limited partnership interests	1,056		—		—		550		—		1,606
Preferred securities	30,448		3,193		—		—		—		33,641
Other	—		—		—		110		—		110
Total	$	62,942	$	3,193	$	—	$	660	$	—	$	66,795
Trading investments
Fixed income	$	—	$	108,363	$	—	$	—	$	—	$	108,363
Total	$	—	$	108,363	$	—	$	—	$	—	$	108,363
Held-to-maturity investments
Fixed income	$	—	$	—	$	—	$	—	$	49,748	$	49,748
Total	$	—	$	—	$	—	$	—	$	49,748	$	49,748
Equity method investments	$	—	$	—	$	—	$	26	$	—	$	26

Total investments	$	62,942	$	111,556	$	—	$	686	$	49,748	$	224,932

Derivatives - assets
Commodity futures contracts	$	486	$	—	$	—	$	—	$	—	$	486
Commodity swap contracts	—		739		—		—		—		739
Total	$	486	$	739	$	—	$	—	$	—	$	1,225
Derivatives - liabilities
Commodity futures contracts	$	2,181	$	—	$	—	$	—	$	—	$	2,181
Foreign exchange contracts	—		205		—		—		—		205
Total	$	2,181	$	205	$	—	$	—	$	—	$	2,386

Cash equivalents were comprised of investments in actively traded U.S. Treasury money market funds measured at NAV.

Equity investments at fair value classified as level 2 were comprised of certain preferred securities with predominately equity-like characteristics whose 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 yields 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.

Trading investments classified as level 2 were comprised of U.S. Treasury securities held within consolidated funds carried at amortized cost, which approximates fair value, corporate debt securities, as well as certain preferred securities with predominately debt-like characteristics. The fair value amounts 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. Since these securities do not trade on a daily basis, the pricing services evaluate pricing applications and apply available information through processes such as yield curves, benchmarking of like securities, sector groupings, and matrix pricing, to prepare evaluations.

COHEN & STEERS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(UNAUDITED)

Investments measured at NAV were comprised of certain investments measured at fair value using NAV (or its equivalent) as a practical expedient. These investments were comprised of:

•

Equity investments at fair value - limited partner interests in limited partnership vehicles that invest in non-registered real estate funds and the Company's co-investment in a Cayman trust invested in global listed infrastructure securities, both of which are valued based on the NAVs of the underlying investments. At September 30, 2019 and December 31, 2018, the Company did not have the ability to redeem the interests in the limited partnership vehicles; there were no contractual restrictions on the Company's ability to redeem its interest in the Cayman trust.

•

Equity method investments - includes 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). 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 September 30, 2019 or December 31, 2018. GRF was seeded in 2019 and invests in global real estate investment trusts and other publicly traded real estate companies. The Company's ownership interest was approximately 5.9% and the Company had the ability to redeem the investment in GRF with 15 days' notice at September 30, 2019. 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 12 to 24 months at September 30, 2019 and 6 to 24 months at December 31, 2018. These securities were purchased with the intent to hold to maturity and are recorded at amortized cost.

Investments measured at NAV and held-to-maturity investments 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 statement of financial position.

Commodity swap contracts classified as level 2 were valued based on the underlying futures contracts.

Foreign currency exchange contracts classified as level 2 were valued based on the prevailing forward exchange rate.

The following table summarizes the changes in level 3 limited partnership interests in trading investments measured at fair value on a recurring basis:



(in thousands)	Three Months Ended September 30, 2018		Nine Months Ended September 30, 2018
Balance at beginning of the period	$	—	$	605
Purchases / contributions	—		—
Sales / distributions	—		(598		)
Realized gains (losses)	—		(68		)
Unrealized gains (losses)	—		61
Transfers into (out of) level 3	—		—
Balance at end of the period	$	—	$	—

Realized and unrealized gains (losses) in the above table were recorded as gain (loss) from investments—net in the Company's condensed consolidated statements of operations.

Valuation Techniques

In certain instances, debt, equity and preferred 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

COHEN & STEERS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(UNAUDITED)

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 involves a significant degree of judgment, taking into consideration a combination of internal and external factors. Such investments are valued 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 includes 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 of the valuation policies and procedures.

6. Derivatives

The following tables summarize the notional amount and fair value of the derivative financial instruments. The notional amount represents the aggregate absolute value of all outstanding derivative contracts:



	As of September 30, 2019
			Fair Value ⁽¹⁾
(in thousands)	Notional Amount		Assets		Liabilities
Commodity futures	$	17,184	$	617	$	477
Commodity swap	8,907		174		—
Foreign exchange	16,589		50		93
Total			$	841	$	570



	As of December 31, 2018
			Fair Value ⁽¹⁾
(in thousands)	Notional Amount		Assets		Liabilities
Commodity futures	$	22,795	$	486	$	2,181
Commodity swap	8,761		739		—
Foreign exchange	10,996		—		205
Total			$	1,225	$	2,386

________________________

(1) The fair value of the derivative financial instruments is recorded in other assets and other liabilities and accrued expenses on the

Company's condensed consolidated statements of financial condition.

Cash included in due from brokers of approximately $2,002,000 on the condensed consolidated statements of financial condition at December 31, 2018 was held as collateral for futures contracts. Investments of approximately $1,608,000 and $1,807,000 on the condensed consolidated statements of financial condition at September 30, 2019 and December 31, 2018, respectively, were held as collateral for futures contracts.

COHEN & STEERS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(UNAUDITED)

The following table summarizes net gains (losses) from derivative financial instruments:



	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands)	2019			2018			2019			2018
Commodity futures	$	(236	)	$	(186	)	$	505		$	(193	)
Commodity swap	211			—			(135		)	—
Foreign exchange	198			414			162			805
Total⁽¹⁾	$	173		$	228		$	532		$	612

________________________

(1) Gains and losses on the derivative financial instruments are recorded as gain (loss) from investments—net in the Company's

condensed consolidated statements of operations.

7. 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 using the treasury stock method by dividing net income attributable to common stockholders by the total weighted average shares of common stock outstanding and common stock equivalents. 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.

There were no anti-dilutive common stock equivalents for either the three and nine months ended September 30, 2019 or 2018.

The following table reconciles income and share data used in the basic and diluted earnings per share computations:



	Three Months Ended September 30,					Nine Months Ended September 30,
(in thousands, except per share data)	2019			2018		2019			2018
Net income	$	36,398		$	29,731	$	109,024		$	84,224
Less: Net (income) loss attributable to redeemable noncontrolling interests	(2,381		)	1,059		(11,131		)	4,111
Net income attributable to common stockholders	$	34,017		$	30,790	$	97,893		$	88,335
Basic weighted average shares outstanding	47,316			46,830		47,256			46,778
Dilutive potential shares from restricted stock units	1,096			694		862			549
Diluted weighted average shares outstanding	48,412			47,524		48,118			47,327

Basic earnings per share attributable to common stockholders	$	0.72		$	0.66	$	2.07		$	1.89
Diluted earnings per share attributable to common stockholders	$	0.70		$	0.65	$	2.03		$	1.87

8. Income Taxes

The provision for income taxes includes U.S. federal, state, local and foreign taxes. The effective tax rate for the three months ended September 30, 2019 was approximately 23.3%, compared with 25.5% for the three months ended September 30, 2018. The effective tax rate for the three months ended September 30, 2019 differed from the U.S. federal statutory rate of 21% primarily due to state, local and foreign taxes, partially offset by the release of a portion of the valuation allowance associated with unrealized gains on the Company's seed investments. The effective tax rate for the three months ended September 30, 2018 differed from the U.S. federal statutory rate of 21% primarily due to state, local and foreign taxes, partially offset by a benefit related to an adjustment to the Company's transition tax liability in connection with the Tax Act.

The effective tax rate for the nine months ended September 30, 2019 was approximately 23.9%, compared with 24.4% for the nine months ended September 30, 2018. The effective tax rate for the nine months ended September 30, 2019 differed from the U.S. federal statutory rate of 21% primarily due to state, local and foreign taxes, partially offset by the release of a portion of the valuation allowance associated with unrealized gains on the Company's seed investments and tax effects related to the delivery of restricted stock units. The effective tax rate for the nine months ended September 30, 2018 differed from the U.S. federal statutory rate of 21% primarily due to state, local and foreign taxes, partially offset by tax effects related to the delivery of restricted stock units and an adjustment to the Company's transition tax liability in connection with the Tax Act.

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's net deferred tax asset was primarily comprised of future income tax deductions attributable to the delivery of unvested restricted stock units. The Company records a valuation allowance, when necessary, to reduce deferred tax assets to an amount that more likely than not will be realized.

9. 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 September 30, 2019, CSS had net capital of approximately $3.3 million, which exceeded its requirement by approximately $3.1 million. The Rule also provides that equity capital 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. CSS does not carry customer accounts and is exempt from SEC Rule 15c3-3 pursuant to provisions (k)(1) and (k)(2)(i) of such rule.

CSAL is subject to regulation by the Hong Kong Securities and Futures Commission. At September 30, 2019, CSAL had regulatory capital of approximately $7.0 million, which exceeded its minimum regulatory capital requirement by approximately $6.6 million. During the three months ended September 30, 2019, CSAL paid a dividend in the amount of approximately $17.5 million to its parent, Cohen & Steers Capital Management, Inc.

CSUK is subject to regulation by the United Kingdom Financial Conduct Authority. At September 30, 2019, CSUK had regulatory capital of approximately $35.5 million, which exceeded its minimum regulatory capital requirement by approximately $29.9 million.

10. Related Party Transactions

The Company is an investment adviser to, and has administration agreements with, affiliated funds for which certain employees are officers and/or directors.

The following table summarizes the amount of revenue the Company earned from these affiliated funds:



	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2019		2018		2019		2018
Investment advisory and administration fees ⁽¹⁾	$	68,224	$	62,474	$	193,329	$	181,368
Distribution and service fees	7,681		7,451		22,072		22,108
Total	$	75,905	$	69,925	$	215,401	$	203,476

_________________________


(1)	Investment advisory and administration fees are reflected net of fund reimbursements of $3.2 million and $2.1 million for the three months ended September 30, 2019 and 2018, respectively, and $7.9 million and $6.4 million for the nine months ended September 30, 2019 and 2018, respectively.

COHEN & STEERS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(UNAUDITED)

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:



	Three Months Ended September 30,					Nine Months Ended September 30,
(in thousands)	2019		2018			2019			2018
Proceeds from sales	$	—	$	3,053		$	26,506		$	10,782
Gross realized gains	—		28			32			28
Gross realized losses	—		(1		)	(907		)	(4,448		)
Dividend income	1		102			31			369

Included in accounts receivable at September 30, 2019 and December 31, 2018 are receivables due from Company-sponsored funds of approximately $26,445,000 and $22,560,000, respectively. Included in accounts payable at September 30, 2019 and December 31, 2018 are payables due to Company-sponsored funds of approximately $813,000 and $845,000, respectively.

11. 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 commits to fund a portion of the equity in certain of its sponsored investment products. The Company has committed to co-invest up to $5.1 million alongside Cohen & Steers Global Realty Partners III-TE, L.P. (GRP-TE), a portion of which is made through GRP-TE and the remainder of which is made through Cohen & Steers Co-Investment Partnership, L.P. (GRP-CIP) for up to 12 years through the life of GRP-TE. As of September 30, 2019, the Company had funded approximately $3.8 million with respect to this commitment. The actual timing for funding the unfunded portion 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 CRP-CIP invest. At September 30, 2019, the unfunded commitment was not recorded on the Company's condensed consolidated statements of financial condition.

12. 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 condensed consolidated statements of operations:



	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2019		2018		2019		2018
Operating lease cost	$	2,882	$	2,877	$	8,643	$	8,671

Supplemental cash flow information related to operating leases is summarized below:



	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2019		2018		2019		2018
Cash paid for amounts included in the measurement of lease liabilities	$	3,080	$	2,891	$	9,246	$	8,803
Right-of-use assets obtained in exchange for new lease liabilities	—		—		—		614

COHEN & STEERS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(UNAUDITED)

Other information related to operating leases is summarized below:



	September 30, 2019		December 31, 2018
Weighted-average remaining lease term (years)	4		5
Weighted-average discount rate	2.8	%	2.8	%

The following table summarizes the maturities of lease liabilities at September 30, 2019 (in thousands):



Year Ending December 31,	Operating Leases
2019	$	3,109
2020	11,907
2021	11,160
2022	10,858
2023	10,831
Thereafter	958
Total remaining undiscounted lease payments	48,823
Less: imputed interest	2,776
Total remaining discounted lease payments	$	46,047

13. Concentration of Credit Risk

The Company's cash and cash equivalents are principally on deposit with three major financial institutions. The Company is subject to credit risk should these financial institutions be unable to fulfill their obligations.

14. Subsequent Events

The Company has evaluated the need for disclosures and/or adjustments resulting from subsequent events through the date the condensed consolidated financial statements were issued. Other than the items described below, the Company determined that there were no additional subsequent events that require disclosure and/or adjustment.

On November 7, 2019, the Company declared quarterly and special cash dividends on its common stock in the amount of $0.36 and $2.00 per share, respectively. The dividends will be payable on December 3, 2019 to stockholders of record at the close of business on November 18, 2019.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Set forth on the following pages is management's discussion and analysis of our financial condition and results of operations for the three and nine months ended September 30, 2019 and 2018. Such information should be read in conjunction with our condensed consolidated financial statements and the related notes included herein. The condensed consolidated financial statements of the Company are unaudited. When we use the terms "Cohen & Steers," the "Company," "we," "us," and "our," we mean Cohen & Steers, Inc., a Delaware corporation, and its consolidated subsidiaries.

Executive Overview

General

We are a global investment manager specializing in liquid real assets, including real estate securities, listed infrastructure and natural resource equities, as well as preferred securities and other income solutions. Founded in 1986, we are headquartered in New York City, with offices in London, Hong Kong and Tokyo.

Our primary investment strategies include U.S. real estate securities, global/international real estate securities, global listed infrastructure, midstream energy, real assets multi-strategy, preferred securities, low duration preferred securities and global natural resource equities. Our strategies seek to achieve a variety of investment objectives for different risk profiles and are actively managed by specialist teams of investment professionals, who employ fundamental-driven research and portfolio management processes. We offer our strategies through a variety of investment vehicles, including U.S. and non-U.S. registered funds and other commingled vehicles, separate accounts, and subadvised portfolios.

Our products and services are marketed through multiple distribution channels. We distribute our U.S. registered funds principally through financial intermediaries, including broker-dealers, registered investment advisers, banks and fund supermarkets. Our funds domiciled in Europe are marketed globally to individual and institutional investors through financial intermediaries, as well as privately to institutional investors. Our institutional clients include corporate and public defined benefit and defined contribution pension plans, endowment funds and foundations, insurance companies and other financial institutions that access our investment management services directly, through consultants or through other intermediaries.

Our revenue is derived from fees received from our clients, including fees for managing or subadvising client accounts, investment advisory, administration, distribution and service fees received from Company-sponsored open-end and closed-end funds. Our fees are based on contractually specified rates applied to the value of the assets we manage. Our revenue fluctuates with changes in the total value of our assets under management, which may occur as a result of market appreciation and depreciation, addition or termination of client accounts, contributions or withdrawals from client accounts, foreign currency fluctuations, distributions and investor subscriptions or redemptions. This revenue is recognized over the period that the assets are managed.

Assets Under Management

By Investment Vehicle



(in millions)	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018 ⁽¹⁾			2019			2018 ⁽¹⁾
Institutional Accounts
Assets under management, beginning of period	$	29,602		$	29,850		$	27,148		$	30,896
Inflows	1,158			383			2,962			1,878
Outflows	(646		)	(884		)	(4,007		)	(2,433		)
Net inflows (outflows)	512			(501		)	(1,045		)	(555		)
Market appreciation (depreciation)	1,723			350			6,423			492
Distributions	(304		)	(433		)	(998		)	(1,599		)
Transfers	—			—			5			32
Total increase (decrease)	1,931			(584		)	4,385			(1,630		)
Assets under management, end of period	$	31,533		$	29,266		$	31,533		$	29,266
Percentage of total assets under management	44.5		%	46.2		%	44.5		%	46.2		%
Average assets under management	$	30,515		$	29,538		$	29,975		$	29,211

Open-end Funds
Assets under management, beginning of period	$	27,563		$	24,559		$	22,295		$	25,188
Inflows	2,794			2,000			8,896			6,654
Outflows	(2,178		)	(1,575		)	(5,707		)	(6,102		)
Net inflows (outflows)	616			425			3,189			552
Market appreciation (depreciation)	1,632			277			5,349			72
Distributions	(213		)	(241		)	(1,230		)	(760		)
Transfers	—			—			(5		)	(32		)
Total increase (decrease)	2,035			461			7,303			(168		)
Assets under management, end of period	$	29,598		$	25,020		$	29,598		$	25,020
Percentage of total assets under management	41.8		%	39.5		%	41.8		%	39.5		%
Average assets under management	$	28,548		$	24,991		$	26,767		$	24,379

Closed-end Funds
Assets under management, beginning of period	$	9,436		$	9,061		$	8,410		$	9,406
Inflows	2			—			2			12
Outflows	—			—			—			—
Net inflows (outflows)	2			—			2			12
Market appreciation (depreciation)	396			151			1,676			50
Distributions	(127		)	(128		)	(381		)	(384		)
Total increase (decrease)	271			23			1,297			(322		)
Assets under management, end of period	$	9,707		$	9,084		$	9,707		$	9,084
Percentage of total assets under management	13.7		%	14.3		%	13.7		%	14.3		%
Average assets under management	$	9,580		$	9,177		$	9,301		$	9,078

Total
Assets under management, beginning of period	$	66,601		$	63,470		$	57,853		$	65,490
Inflows	3,954			2,383			11,860			8,544
Outflows	(2,824		)	(2,459		)	(9,714		)	(8,535		)
Net inflows (outflows)	1,130			(76		)	2,146			9
Market appreciation (depreciation)	3,751			778			13,448			614
Distributions	(644		)	(802		)	(2,609		)	(2,743		)
Total increase (decrease)	4,237			(100		)	12,985			(2,120		)
Assets under management, end of period	$	70,838		$	63,370		$	70,838		$	63,370
Average assets under management	$	68,643		$	63,706		$	66,043		$	62,668

_________________________


(1)	Prior period amounts have been recast to include model-based portfolios which were previously classified as assets under advisement.

Assets Under Management - Institutional Accounts

By Account Type



(in millions)	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018 ⁽¹⁾			2019			2018 ⁽¹⁾
Advisory
Assets under management, beginning of period	$	14,099		$	12,149		$	12,065		$	11,341
Inflows	$	567		$	303		$	1,580		$	1,242
Outflows	(126		)	(155		)	(1,104		)	(366		)
Net inflows (outflows)	441			148			476			876
Market appreciation (depreciation)	703			130			2,697			178
Transfers	—			—			5			32
Total increase (decrease)	1,144			278			3,178			1,086
Assets under management, end of period	$	15,243		$	12,427		$	15,243		$	12,427
Percentage of total assets under management	48.3		%	42.5		%	48.3		%	42.5		%
Average assets under management	$	14,666		$	12,303		$	13,896		$	11,695

Japan Subadvisory
Assets under management, beginning of period	$	9,846		$	11,074		$	9,288		$	12,672
Inflows	289			35			388			138
Outflows	(280		)	(349		)	(863		)	(940		)
Net inflows (outflows)	9			(314		)	(475		)	(802		)
Market appreciation (depreciation)	754			145			2,490			201
Distributions	(304		)	(433		)	(998		)	(1,599		)
Total increase (decrease)	459			(602		)	1,017			(2,200		)
Assets under management, end of period	$	10,305		$	10,472		$	10,305		$	10,472
Percentage of total assets under management	32.7		%	35.8		%	32.7		%	35.8		%
Average assets under management	$	10,009		$	10,659		$	9,893		$	10,943

Subadvisory Excluding Japan
Assets under management, beginning of period	$	5,657		$	6,627		$	5,795		$	6,883
Inflows	302			45			994			498
Outflows	(240		)	(380		)	(2,040		)	(1,127		)
Net inflows (outflows)	62			(335		)	(1,046		)	(629		)
Market appreciation (depreciation)	266			75			1,236			113
Total increase (decrease)	328			(260		)	190			(516		)
Assets under management, end of period	$	5,985		$	6,367		$	5,985		$	6,367
Percentage of total assets under management	19.0		%	21.8		%	19.0		%	21.8		%
Average assets under management	$	5,840		$	6,576		$	6,186		$	6,573

Total Institutional Accounts
Assets under management, beginning of period	$	29,602		$	29,850		$	27,148		$	30,896
Inflows	1,158			383			2,962			1,878
Outflows	(646		)	(884		)	(4,007		)	(2,433		)
Net inflows (outflows)	512			(501		)	(1,045		)	(555		)
Market appreciation (depreciation)	1,723			350			6,423			492
Distributions	(304		)	(433		)	(998		)	(1,599		)
Transfers	—			—			5			32
Total increase (decrease)	1,931			(584		)	4,385			(1,630		)
Assets under management, end of period	$	31,533		$	29,266		$	31,533		$	29,266
Average assets under management	$	30,515		$	29,538		$	29,975		$	29,211

_________________________


(1)	Prior period amounts have been recast to include model-based portfolios which were previously classified as assets under advisement.

Assets Under Management

By Investment Strategy



(in millions)	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018 ⁽¹⁾			2019			2018 ⁽¹⁾
U.S. Real Estate
Assets under management, beginning of period	$	28,841		$	27,425		$	24,627		$	29,241
Inflows	1,638			1,008			4,893			3,362
Outflows	(1,519		)	(1,024		)	(4,008		)	(3,739		)
Net inflows (outflows)	119			(16		)	885			(377		)
Market appreciation (depreciation)	2,436			383			7,335			497
Distributions	(413		)	(575		)	(1,885		)	(1,985		)
Transfers	(19		)	(34		)	2			(193		)
Total increase (decrease)	2,123			(242		)	6,337			(2,058		)
Assets under management, end of period	$	30,964		$	27,183		$	30,964		$	27,183
Percentage of total assets under management	43.7		%	42.9		%	43.7		%	42.9		%
Average assets under management	$	29,862		$	27,406		$	28,586		$	26,798

Preferred Securities
Assets under management, beginning of period	$	15,735		$	14,228		$	13,068		$	14,435
Inflows	1,371			980			4,406			3,200
Outflows	(732		)	(808		)	(2,274		)	(2,743		)
Net inflows (outflows)	639			172			2,132			457
Market appreciation (depreciation)	510			138			1,966			(232		)
Distributions	(154		)	(142		)	(436		)	(423		)
Transfers	19			34			19			193
Total increase (decrease)	1,014			202			3,681			(5		)
Assets under management, end of period	$	16,749		$	14,430		$	16,749		$	14,430
Percentage of total assets under management	23.6		%	22.8		%	23.6		%	22.8		%
Average assets under management	$	16,268		$	14,382		$	15,232		$	14,330

Global/International Real Estate
Assets under management, beginning of period	$	12,196		$	11,853		$	11,047		$	11,194
Inflows	672			199			1,912			1,331
Outflows	(349		)	(298		)	(2,226		)	(855		)
Net inflows (outflows)	323			(99		)	(314		)	476
Market appreciation (depreciation)	638			94			2,502			294
Distributions	(16		)	(25		)	(94		)	(141		)
Total increase (decrease)	945			(30		)	2,094			629
Assets under management, end of period	$	13,141		$	11,823		$	13,141		$	11,823
Percentage of total assets under management	18.6		%	18.7		%	18.6		%	18.7		%
Average assets under management	$	12,633		$	11,867		$	12,532		$	11,401

_________________________


(1)	Prior period 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)	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018 ⁽¹⁾			2019			2018 ⁽¹⁾
Global Listed Infrastructure
Assets under management, beginning of period	$	7,544		$	6,953		$	6,517		$	6,982
Inflows	212			93			494			465
Outflows	(92		)	(77		)	(414		)	(287		)
Net inflows (outflows)	120			16			80			178
Market appreciation (depreciation)	159			101			1,326			10
Distributions	(49		)	(48		)	(149		)	(148		)
Total increase (decrease)	230			69			1,257			40
Assets under management, end of period	$	7,774		$	7,022		$	7,774		$	7,022
Percentage of total assets under management	11.0		%	11.1		%	11.0		%	11.1		%
Average assets under management	$	7,650		$	7,065		$	7,383		$	6,956

Other
Assets under management, beginning of period	$	2,285		$	3,011		$	2,594		$	3,638
Inflows	61			103			155			186
Outflows	(132		)	(252		)	(792		)	(911		)
Net inflows (outflows)	(71		)	(149		)	(637		)	(725		)
Market appreciation (depreciation)	8			62			319			45
Distributions	(12		)	(12		)	(45		)	(46		)
Transfers	—			—			(21		)	—
Total increase (decrease)	(75		)	(99		)	(384		)	(726		)
Assets under management, end of period	$	2,210		$	2,912		$	2,210		$	2,912
Percentage of total assets under management	3.1		%	4.6		%	3.1		%	4.6		%
Average assets under management	$	2,230		$	2,986		$	2,310		$	3,183

Total
Assets under management, beginning of period	$	66,601		$	63,470		$	57,853		$	65,490
Inflows	3,954			2,383			11,860			8,544
Outflows	(2,824		)	(2,459		)	(9,714		)	(8,535		)
Net inflows (outflows)	1,130			(76		)	2,146			9
Market appreciation (depreciation)	3,751			778			13,448			614
Distributions	(644		)	(802		)	(2,609		)	(2,743		)
Total increase (decrease)	4,237			(100		)	12,985			(2,120		)
Assets under management, end of period	$	70,838		$	63,370		$	70,838		$	63,370
Average assets under management	$	68,643		$	63,706		$	66,043		$	62,668

_________________________


(1)	Prior period amounts have been recast to include model-based portfolios which were previously classified as assets under advisement.

Investment Performance at September 30, 2019

_________________________

(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)

© 2019 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 September 30, 2019. 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.

Overview

Assets under management at September 30, 2019 increased 11.8% to $70.8 billion from $63.4 billion at September 30, 2018. The increase was due to net inflows of $954 million and market appreciation of $10.0 billion, partially offset by distributions of $3.5 billion. Net inflows included $1.5 billion into preferred securities and $593 million into U.S. real estate, partially offset by net outflows of $671 million from large cap value (which is included in “Other” in the table on page 27) and $483 million from global/international real estate. Market appreciation included $5.7 billion from U.S. real estate, $2.0 billion from global/international real estate and $1.4 billion from preferred securities. Distributions included $2.5 billion from U.S. real estate and $572 million from preferred securities. Average assets under management for the three months ended September 30, 2019 increased 7.7% to $68.6 billion from $63.7 billion for the three months ended September 30, 2018.

Institutional accounts

Assets under management in institutional accounts at September 30, 2019, which represented 44.5% of total assets under management, increased 7.7% to $31.5 billion from $29.3 billion at September 30, 2018. The increase was due to market appreciation of $4.9 billion, partially offset by net outflows of $1.2 billion and distributions of $1.4 billion. Net outflows included $514 million from large cap value (which is included in “Other” in the table on page 27) and $417 million from U.S. real estate. Market appreciation included $2.4 billion from U.S. real estate and $1.7 billion from global/international real estate. Distributions included $1.3 billion from U.S. real estate. Average assets under management for institutional accounts for the three months ended September 30, 2019 increased 3.3% to $30.5 billion from $29.5 billion for the three months ended September 30, 2018.

Assets under management in institutional advisory accounts at September 30, 2019, which represented 48.3% of institutional assets under management, increased 22.7% to $15.2 billion from $12.4 billion at September 30, 2018. The increase was due to net inflows of $777 million and market appreciation of $2.0 billion. Net inflows included $476 million into global/international real estate and $306 million into preferred securities. Market appreciation included $756 million from global/international real estate, $622 million from U.S. real estate and $325 million from global listed infrastructure. Average assets under management for institutional advisory accounts for the three months ended September 30, 2019 increased 19.2% to $14.7 billion from $12.3 billion for the three months ended September 30, 2018.

Assets under management in Japan subadvised accounts at September 30, 2019, which represented 32.7% of institutional assets under management, decreased 1.6% to $10.3 billion from $10.5 billion at September 30, 2018. The decrease was due to net outflows of $780 million and distributions of $1.4 billion, partially offset by market appreciation of $2.0 billion. Net outflows included $466 million from U.S. real estate and $170 million from global/international real estate. Market appreciation and distributions included $1.6 billion and $1.3 billion, respectively, from U.S. real estate. Average assets under management for Japan subadvised accounts for the three months ended September 30, 2019 decreased 6.1% to $10.0 billion from $10.7 billion for the three months ended September 30, 2018.

Assets under management in institutional subadvised accounts excluding Japan at September 30, 2019, which represented 19.0% of institutional assets under management, decreased 6.0% to $6.0 billion from $6.4 billion at September 30, 2018. The decrease was due to net outflows of $1.2 billion, partially offset by market appreciation of $850 million. Net outflows included $702 million from global/international real estate and $423 million from large cap value (which is included in "Other" in the table page 27). Market appreciation included $597 million from global/international real estate and $172 million from U.S. real estate. Average assets under management for institutional subadvised accounts excluding Japan for the three months ended September 30, 2019 decreased 11.2% to $5.8 billion from $6.6 billion for the three months ended September 30, 2018.

Open-end funds

Assets under management in open-end funds at September 30, 2019, which represented 41.8% of total assets under management, increased 18.3% to $29.6 billion from $25.0 billion at September 30, 2018. The increase was due to net inflows of $2.2 billion and market appreciation of $4.0 billion, partially offset by distributions of $1.6 billion. Net inflows included $1.3 billion into preferred securities and $1.0 billion into U.S. real estate. Market appreciation included $2.8 billion from U.S. real estate and $902 million from preferred securities. Distributions included $1.0 billion from U.S. real estate and $453 million from preferred securities. Average assets under management for open-end funds for the three months ended September 30, 2019 increased 14.2% to $28.5 billion from $25.0 billion for the three months ended September 30, 2018.

Closed-end funds

Assets under management in closed-end funds at September 30, 2019, which represented 13.7% of total assets under management, increased 6.9% to $9.7 billion from $9.1 billion at September 30, 2018. The increase was due to market appreciation of $1.1 billion, partially offset by distributions of $509 million. Average assets under management for closed-end funds for the three months ended September 30, 2019 increased 4.4% to $9.6 billion from $9.2 billion for the three months ended September 30, 2018.

Summary of Operating Information



	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands, except percentages and per share data)	2019			2018			2019			2018
U.S. GAAP
Revenue	$	104,965		$	98,331		$	300,983		$	287,205
Expenses	$	64,832		$	59,108		$	187,311		$	174,476
Operating income	$	40,133		$	39,223		$	113,672		$	112,729
Non-operating income (loss)	$	6,617		$	1,047		$	26,063		$	70
Net income attributable to common stockholders	$	34,017		$	30,790		$	97,893		$	88,335
Diluted earnings per share	$	0.70		$	0.65		$	2.03		$	1.87
Operating margin	38.2		%	39.9		%	37.8		%	39.3		%

As Adjusted ⁽¹⁾
Net income attributable to common stockholders	$	31,257		$	30,272		$	88,363		$	87,146
Diluted earnings per share	$	0.65		$	0.64		$	1.84		$	1.84
Operating margin	38.8		%	40.2		%	38.4		%	39.8		%

_________________________


(1)	The "As Adjusted" amounts represent non-GAAP financial measures. Refer to pages 36-37 for reconciliations to the most directly comparable U.S. GAAP financial measures.

U.S. GAAP

Three Months Ended September 30, 2019 Compared with Three Months Ended September 30, 2018

Revenue ⁽¹⁾



	Three Months Ended September 30,
(in thousands)	2019		2018		$ Change			% Change
Institutional accounts	$	27,510	$	26,902	$	608		2.3	%
Open-end funds	48,540		43,589		4,951			11.4	%
Closed-end funds	20,713		19,861		852			4.3	%
Investment advisory and administration fees	96,763		90,352		6,411			7.1	%
Distribution and service fees	7,681		7,451		230			3.1	%
Other	521		528		(7		)	(1.3	)%
Total revenue	$	104,965	$	98,331	$	6,634		6.7	%

_________________________


(1)	Prior period 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 three months ended September 30, 2019 increased 6.7% to $105.0 million from $98.3 million for the three months ended September 30, 2018, primarily attributable to higher investment advisory and administration fees of $6.4 million due to higher average assets under management in all three investment vehicles.

For the three months ended September 30, 2019:


•	Total investment advisory revenue compared with average assets under management in institutional accounts implied an annualized effective fee rate of 35.8 bps and 36.1 bps for the three months ended September 30, 2019 and 2018, respectively.


•	Total investment advisory and administration revenue compared with average assets under management in open-end funds implied an annualized effective fee rate of 67.5 bps and 69.2 bps for the three months ended September 30, 2019 and 2018, respectively. The decrease in the annualized effective fee rate is primarily due to

higher fund reimbursements, mainly related to the imposition of a 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 annualized effective fee rate of 85.8 bps and 85.9 bps for the three months ended September 30, 2019 and 2018, respectively.

Expenses



	Three Months Ended September 30,
(in thousands)	2019		2018		$ Change			% Change
Employee compensation and benefits	$	37,877	$	33,126	$	4,751		14.3	%
Distribution and service fees	14,142		13,210		932			7.1	%
General and administrative	11,713		11,634		79			0.7	%
Depreciation and amortization	1,100		1,138		(38		)	(3.3	)%
Total expenses	$	64,832	$	59,108	$	5,724		9.7	%

Expenses for the three months ended September 30, 2019 increased 9.7% to $64.8 million from $59.1 million for the three months ended September 30, 2018, primarily due to higher employee compensation and benefits of $4.8 million as well as higher distribution and service fees expense of $932,000.

Employee compensation and benefits for the three months ended September 30, 2019 increased 14.3% to $37.9 million from $33.1 million for the three months ended September 30, 2018, primarily due to higher incentive compensation of $2.7 million, higher amortization of restricted stock units of $993,000 and higher salaries of approximately $251,000.

Distribution and service fees expense for the three months ended September 30, 2019 increased 7.1% to $14.1 million from $13.2 million for the three months ended September 30, 2018, primarily due to higher average assets under management in U.S. open-end funds.

Operating Margin

Operating margin for the three months ended September 30, 2019 decreased to 38.2% from 39.9% for the three months ended September 30, 2018.

Non-operating Income



	Three Months Ended
	September 30, 2019								September 30, 2018
(in thousands)	Seed Investments				Other		Total		Seed Investments				Other		Total
Interest and dividend income—net	$	691			$	1,022	$	1,713	$	1,674			$	1,073	$	2,747
Gain (loss) from investments—net	4,472				—		4,472		413				—		413
Foreign currency gains (losses)—net	(945		)		1,377		432		(2,339		)		226		(2,113		)
Total non-operating income (loss)	$	4,218		⁽¹⁾	$	2,399	$	6,617	$	(252	)	⁽¹⁾	$	1,299	$	1,047

_________________________


(1)	Amounts included income of $2.4 million and loss of $1.1 million attributable to third-party interests for the three months ended September 30, 2019 and 2018, respectively.

Non-operating income for the three months ended September 30, 2019 was $6.6 million, compared with $1.0 million for the three months ended September 30, 2018. For the three months ended September 30, 2019, the Company’s share of non-operating income from seed investments was $1.8 million, approximating a return of 2.7%. For the three months ended September 30, 2018, the Company’s share of non-operating income from seed investments was $807,000, approximating a return of 1.1%.

Income Taxes



	Three Months Ended September 30,
(in thousands, except percentages)	2019			2018			$ Change			% Change
Income tax expense	$	10,352		$	10,539		$	(187	)	(1.8	)%
Effective tax rate	23.3		%	25.5		%

The effective tax rate for the three months ended September 30, 2019 differed from the U.S. federal statutory rate of 21% primarily due to state, local and foreign taxes, partially offset by the release of a portion of the valuation allowance associated with unrealized gains on the Company's seed investments. The effective tax rate for the three months ended September 30, 2018 differed from the U.S. federal statutory rate of 21% primarily due to state, local and foreign taxes.

Nine Months Ended September 30, 2019 Compared with Nine Months Ended September 30, 2018

Revenue ⁽¹⁾



	Nine Months Ended September 30,
(in thousands)	2019		2018		$ Change			% Change
Institutional accounts	$	81,045	$	78,806	$	2,239		2.8	%
Open-end funds	136,609		126,474		10,135			8.0	%
Closed-end funds	59,767		58,172		1,595			2.7	%
Investment advisory and administration fees	277,421		263,452		13,969			5.3	%
Distribution and service fees	22,072		22,108		(36		)	(0.2	)%
Other	1,490		1,645		(155		)	(9.4	)%
Total revenue	$	300,983	$	287,205	$	13,778		4.8	%

_________________________


(1)	Prior period 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 nine months ended September 30, 2019 increased 4.8% to $301.0 million from $287.2 million for the nine months ended September 30, 2018, primarily attributable to higher investment advisory and administration fees of $14.0 million due to higher average assets under management in all three investment vehicles.

For the nine months ended September 30, 2019:


•	Total investment advisory revenue compared with average assets under management in institutional accounts implied an annualized effective fee rate of 36.2 bps and 36.1 bps for the nine months ended September 30, 2019 and 2018, respectively.

•

Total investment advisory and administration revenue compared with average assets under management in open-end funds implied an annualized effective fee rate of 68.2 bps and 69.4 bps for the nine months ended September 30, 2019 and 2018, respectively. The decrease in the annualized effective fee rate is primarily due to higher fund reimbursements, mainly related to the imposition of a 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 annualized effective fee rate of 85.9 bps and 85.7 bps for the nine months ended September 30, 2019 and 2018, respectively.

Expenses



	Nine Months Ended September 30,
(in thousands)	2019		2018		$ Change			% Change
Employee compensation and benefits	$	108,438	$	96,788	$	11,650		12.0	%
Distribution and service fees	40,866		38,492		2,374			6.2	%
General and administrative	34,690		35,791		(1,101		)	(3.1	)%
Depreciation and amortization	3,317		3,405		(88		)	(2.6	)%
Total expenses	$	187,311	$	174,476	$	12,835		7.4	%

Expenses for the nine months ended September 30, 2019 increased 7.4% to $187.3 million from $174.5 million for the nine months ended September 30, 2018, primarily due to higher employee compensation and benefits of $11.7 million as well as distribution and service fees expense of $2.4 million, partially offset by lower general and administrative expenses of $1.1 million.

Employee compensation and benefits for the nine months ended September 30, 2019 increased 12.0% to $108.4 million from $96.8 million for the nine months ended September 30, 2018, primarily due to higher incentive compensation of $5.2 million, higher amortization of restricted stock units of $2.8 million and higher salaries of $1.7 million.

Distribution and service fees expense for the nine months ended September 30, 2019 increased 6.2% to $40.9 million from $38.5 million for the nine months ended September 30, 2018, primarily due to higher average assets under management in U.S. open-end funds and incremental intermediary assistance payments and sub-transfer agent fees on certain assets by one of the Company's intermediaries, partially offset by the impact of redemptions from a higher cost intermediary.

General and administrative expenses for the nine months ended September 30, 2019 decreased 3.1% to $34.7 million from $35.8 million for the nine months ended September 30, 2018, primarily due to lower costs associated with hosted and sponsored conferences of approximately $462,000. In addition, the nine months ended September 30, 2018 included expenses of approximately $871,000 associated with the evaluation of a potential business transaction that the Company did not pursue.

Operating Margin

Operating margin for the nine months ended September 30, 2019 decreased to 37.8% from 39.3% for the nine months ended September 30, 2018.

Non-operating Income



	Nine Months Ended
	September 30, 2019								September 30, 2018
(in thousands)	Seed Investments				Other		Total		Seed Investments				Other		Total
Interest and dividend income—net	$	2,458			$	2,716	$	5,174	$	4,953			$	2,481	$	7,434
Gain (loss) from investments—net	20,210				—		20,210		(4,692		)		—		(4,692		)
Foreign currency gains (losses)—net	(392		)		1,071		679		(3,798		)		1,126		(2,672		)
Total non-operating income (loss)	$	22,276		⁽¹⁾	$	3,787	$	26,063	$	(3,537	)	⁽¹⁾	$	3,607	$	70

_________________________


(1)	Amounts included income of $11.1 million and loss of $4.1 million attributable to third-party interests for the nine months ended September 30, 2019 and 2018, respectively.

Non-operating income for the nine months ended September 30, 2019 was $26.1 million, compared with $70,000 for the nine months ended September 30, 2018. For the nine months ended September 30, 2019, the Company’s share of non-operating income from seed investments was $11.1 million, approximating a return of 16.0%. For the nine months ended September 30, 2018, the Company’s share of non-operating income from seed investments was $575,000, approximating a return of 0.8%.

Income Taxes



	Nine Months Ended September 30,
(in thousands, except percentages)	2019			2018			$ Change		% Change
Income tax expense	$	30,711		$	28,575		$	2,136	7.5	%
Effective tax rate	23.9		%	24.4		%

The effective tax rate for the nine months ended September 30, 2019 differed from the U.S. federal statutory rate of 21% primarily due to state, local and foreign taxes, partially offset by the release of a portion of the valuation allowance associated with unrealized gains on the Company's seed investments and tax effects related to the delivery of restricted stock units. The effective tax rate for the nine months ended September 30, 2018 differed from the U.S. federal statutory rate of 21% primarily due to state, local and foreign taxes, partially offset by tax effects related to the delivery of restricted stock units 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 36-37 for reconciliations to the most directly comparable U.S. GAAP financial measures.

Three Months Ended September 30, 2019 Compared with Three Months Ended September 30, 2018

Revenue

Revenue, as adjusted, for the three months ended September 30, 2019 was $104.9 million, compared with $98.2 million for the three months ended September 30, 2018.

Revenue, as adjusted, excluded the impact of consolidation of certain of the Company's seed investments for both periods.

Expenses

Expenses, as adjusted, for the three months ended September 30, 2019 was $64.1 million, compared with $58.7 million for the three months ended September 30, 2018.

Expenses, as adjusted, excluded the following:


•	The impact of consolidation of certain of the Company's seed investments for both periods; and


•	Amounts related to the accelerated vesting of certain restricted stock units for the three months ended September 30, 2019.

Operating Margin

Operating margin, as adjusted, for the three months ended September 30, 2019 was 38.8%, compared with 40.2% for the three months ended September 30, 2018.

Non-operating Income

Non-operating income, as adjusted, was $1.1 million for both the three months ended September 30, 2019 and 2018.

Non-operating income, as adjusted, excluded the following for both periods:


•	Results from the Company's seed investments; and


•	Net foreign currency exchange gains associated with U.S. dollar-denominated assets held by certain foreign subsidiaries.

Income Taxes

The effective tax rate, as adjusted, was 25.3% for both the three months ended September 30, 2019 and 2018.

The effective tax rate, as adjusted, excluded the tax effects associated with non-GAAP adjustments for both periods as well as certain discrete items for the three months ended September 30, 2019.

Nine Months Ended September 30, 2019 Compared with Nine Months Ended September 30, 2018

Revenue

Revenue, as adjusted, for the nine months ended September 30, 2019 was $300.6 million, compared with $286.8 million for the nine months ended September 30, 2018.

Revenue, as adjusted, excluded the impact of consolidation of certain of the Company's seed investments for both periods.

Expenses

Expenses, as adjusted, for the nine months ended September 30, 2019 was $185.2 million, compared with $172.6 million for the nine months ended September 30, 2018.

Expenses, as adjusted, excluded the following:


•	The impact of consolidation of certain of the Company's seed investments for both periods;


•	Amounts related to the accelerated vesting of certain restricted stock units for the nine months ended September 30, 2019; and


•	Expenses incurred associated with the evaluation of a potential business transaction that the Company did not pursue in the first quarter of 2018.

Operating Margin

Operating margin, as adjusted, for the nine months ended September 30, 2019 was 38.4%, compared with 39.8% for the nine months ended September 30, 2018.

Non-operating Income

Non-operating income, as adjusted, for the nine months ended September 30, 2019 was $2.9 million, compared with $2.4 million for the nine months ended September 30, 2018.

Non-operating income, as adjusted, excluded the following for both periods:


•	Results from the Company's seed investments; and


•	Net foreign currency exchange gains associated with U.S. dollar-denominated assets held by certain foreign subsidiaries.

Income Taxes

The effective tax rate, as adjusted, was 25.3% for both the nine months ended September 30, 2019 and 2018.

The effective tax rate, as adjusted, excluded the following:


•	Tax effects associated with non-GAAP adjustments as well as certain discrete items for both periods; and


•	Tax effects related to the Tax Act for the nine months ended September 30, 2018.

Non-GAAP Reconciliations

Management believes that use of these non-GAAP financial measures enhances the evaluation of our results, as they provide greater transparency into our operating performance. In addition, these non-GAAP financial measures are used to prepare our internal management reports and are used by management in evaluating our business.

While we believe that this non-GAAP financial information is 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.

Reconciliation of U.S. GAAP Net Income Attributable to Common Stockholders and U.S. GAAP Earnings per Share to Net Income Attributable to Common Stockholders, As Adjusted, and Earnings per Share, As Adjusted



	Three Months Ended September 30,							Nine Months Ended September 30,
(in thousands, except per share data)	2019				2018			2019			2018
Net income attributable to common stockholders, U.S. GAAP	$	34,017			$	30,790		$	97,893		$	88,335
Seed investments ⁽¹⁾	(1,630		)		(614		)	(10,465		)	(28		)
Accelerated vesting of restricted stock units	387				—			986			—
General and administrative ⁽²⁾	—				—			—			871
Foreign currency exchange (gains) losses—net ⁽³⁾	(1,310		)		(217		)	(913		)	(1,170		)
Tax adjustments ⁽⁴⁾	(207		)		313			862			(862		)
Net income attributable to common stockholders, as adjusted	$	31,257			$	30,272		$	88,363		$	87,146

Diluted weighted average shares outstanding	48,412				47,524			48,118			47,327
Diluted earnings per share, U.S. GAAP	$	0.70			$	0.65		$	2.03		$	1.87
Seed investments ⁽¹⁾	(0.03		)		(0.01		)	(0.21		)	—			*
Accelerated vesting of restricted stock units	0.01				—			0.02			—
General and administrative ⁽²⁾	—				—			—			0.02
Foreign currency exchange (gain) loss—net ⁽³⁾	(0.03		)		(0.01		)	(0.02		)	(0.03		)
Tax adjustments	—			*	0.01			0.02			(0.02		)
Diluted earnings per share, as adjusted	$	0.65			$	0.64		$	1.84		$	1.84

_________________________


*	Amounts round to less than $0.01 per share.


(1)	Represents amounts related to the deconsolidation of seed investments in Company-sponsored funds as well as non-operating (income) loss from seed investments that were not consolidated.


(2)	Represents expenses associated with the evaluation of a potential business transaction that the Company did not pursue in the first quarter of 2018.


(3)	Represents net foreign currency exchange gains associated with U.S. dollar-denominated assets held by certain foreign subsidiaries.


(4)	Tax adjustments are summarized in the following table:



	Three Months Ended September 30,					Nine Months Ended September 30,
(in thousands)	2019			2018		2019			2018
Transition tax liability in connection with the Tax Act	$	—		$	—	$	—		$	(123	)
Tax effect of non-GAAP adjustments	(200		)	313		1,065			208
Delivery of restricted stock units	(7		)	—		(203		)	(947		)
Total tax adjustments	$	(207	)	$	313	$	862		$	(862	)

Reconciliation of U.S. GAAP Operating Income and U.S. GAAP Operating Margin to Operating Income, As Adjusted, and Operating Margin, As Adjusted



	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands, except percentages)	2019			2018			2019			2018
Revenue, U.S. GAAP	$	104,965		$	98,331		$	300,983		$	287,205
Seed investments ⁽¹⁾	(99		)	(180		)	(419		)	(425		)
Revenue, as adjusted	$	104,866		$	98,151		$	300,564		$	286,780

Expenses, U.S. GAAP	$	64,832		$	59,108		$	187,311		$	174,476
Seed investments ⁽¹⁾	(306		)	(373		)	(1,099		)	(971		)
Accelerated vesting of restricted stock units	(387		)	—			(986		)	—
General and administrative⁽²⁾	—			—			—			(871		)
Expenses, as adjusted	$	64,139		$	58,735		$	185,226		$	172,634

Operating income, U.S. GAAP	$	40,133		$	39,223		$	113,672		$	112,729
Seed investments ⁽¹⁾	207			193			680			546
Accelerated vesting of restricted stock units	387			—			986			—
General and administrative⁽²⁾	—			—			—			871
Operating income, as adjusted	$	40,727		$	39,416		$	115,338		$	114,146

Operating margin, U.S. GAAP	38.2		%	39.9		%	37.8		%	39.3		%
Operating margin, as adjusted	38.8		%	40.2		%	38.4		%	39.8		%

_________________________


(1)	Represents amounts related to the deconsolidation of seed investments in Company-sponsored funds.


(2)	Represents expenses associated with the evaluation of a potential business transaction that the Company did not pursue in the first quarter of 2018.

Reconciliation of U.S. GAAP Non-operating Income (Loss) to Non-operating Income (Loss), As Adjusted



	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands)	2019			2018			2019			2018
Non-operating income (loss), U.S. GAAP	$	6,617		$	1,047		$	26,063		$	70
Seed investments ⁽¹⁾	(4,218		)	252			(22,276		)	3,537
Foreign currency exchange (gains) losses—net ⁽²⁾	(1,310		)	(217		)	(913		)	(1,170		)
Non-operating income (loss), as adjusted	$	1,089		$	1,082		$	2,874		$	2,437

_________________________


(1)	Represents amounts related to the deconsolidation of seed investments in Company-sponsored funds as well as non-operating (income) loss from seed investments that were not consolidated.


(2)	Represents net foreign currency exchange gains associated with U.S. dollar-denominated assets held by certain foreign subsidiaries.

Changes in Financial Condition, Liquidity and Capital Resources

Our principal objectives are to maintain a capital structure that supports our business strategies and to maintain the appropriate amount of liquidity at all times. Furthermore, we believe that our cash flows generated from operations are 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, primarily comprising cash and cash equivalents, U.S. Treasury securities, seed investments and 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 debt outstanding.

The table below summarizes net liquid assets:



(in thousands)	September 30, 2019			December 31, 2018
Cash and cash equivalents	$	128,328		$	92,733
U.S. Treasury securities	49,722			49,748
Seed investments	68,114			70,757
Current assets	66,402			52,628
Current liabilities	(73,699		)	(78,461		)
Net liquid assets	$	238,867		$	187,405

Cash and cash equivalents

Cash and cash equivalents are on deposit with three major financial institutions and consist of short-term, highly-liquid investments, which are readily convertible into cash and have original maturities of three months or less.

U.S. Treasury securities

U.S. Treasury securities are directly issued by the U.S. government and classified as held to maturity, with original maturities ranging from 12 to 24 months.

Seed investments

Seed investments are primarily comprised of Company-sponsored funds, securities held within the funds that we consolidate, and listed securities held for the purpose of establishing performance track records. Seed investments approximate fair value, are generally traded in active markets and can typically be liquidated within a normal settlement cycle. Seed investments are presented net of redeemable noncontrolling interests.

Current assets

Current assets primarily represent investment advisory and administration fees receivable. At September 30, 2019, institutional accounts comprised 57.1% of total accounts receivable, while open-end and closed-end funds, together, comprised 40.2% of total accounts receivable. We perform a review of our receivables on an ongoing basis in order to assess collectibility and, based on our analysis at September 30, 2019, there was no allowance for uncollectible accounts.

Current liabilities

Current liabilities are generally defined as obligations due within one year, which includes accrued compensation, distribution and service fees payable, certain income taxes payable, and other liabilities and accrued expenses.

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 cash flows:



	Nine Months Ended September 30,
(in thousands)	2019			2018
Cash Flow Data:
Net cash provided by (used in) operating activities	$	73,778		$	39,323
Net cash provided by (used in) investing activities	20,521			(52,018		)
Net cash provided by (used in) financing activities	(57,686		)	(15,291		)
Net increase (decrease) in cash and cash equivalents	36,613			(27,986		)
Effect of foreign exchange rate changes on cash and cash equivalents	(1,018		)	(1,006		)
Cash and cash equivalents, beginning of the period	92,733			193,452
Cash and cash equivalents, end of the period	$	128,328		$	164,460

Cash and cash equivalents increased by $36.6 million, excluding the effect of foreign exchange rate changes, for the nine months ended September 30, 2019. Net cash provided by operating activities was $73.8 million for the nine months ended September 30, 2019. 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 investing activities was $20.5 million, which included $70.5 million of proceeds from sales and maturities of investments, partially offset by $47.8 million of investment purchases. Net cash used in financing activities was $57.7 million, including dividends paid to stockholders of $51.1 million, distributions to redeemable noncontrolling interests of $36.0 million and repurchases of common stock to satisfy employee withholding tax obligations on the vesting and delivery of restricted stock units of $10.4 million, partially offset by contributions from redeemable noncontrolling interests of $39.1 million.

Cash and cash equivalents decreased by $28.0 million, excluding the effect of foreign exchange rate changes, for the nine months ended September 30, 2018. Net cash provided by operating activities was $39.3 million for the nine months ended September 30, 2018. 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 $52.0 million, which included $60.7 million of investment purchases, including the seeding of five new track record accounts and an investment of $49.5 million into U.S. treasury securities, partially offset by $11.1 million of proceeds from the sale of investments. Net cash used in financing activities was $15.3 million, including dividends paid to stockholders of $46.3 million, repurchases of common stock to satisfy employee withholding tax obligations on the vesting and delivery of restricted stock units of $10.6 million and distributions to redeemable noncontrolling interests of $4.3 million, partially offset by contributions from redeemable noncontrolling interests of $45.5 million.

Net Capital Requirements

We continually monitor and evaluate the adequacy of our capital. We have consistently maintained net capital in excess of the regulatory requirements for our broker-dealer, as prescribed by the Securities and Exchange Commission (SEC). At September 30, 2019, we exceeded our minimum regulatory capital requirement by approximately $3.1 million. The SEC's Uniform Net Capital Rule 15c3-1 imposes certain requirements that may have the effect of prohibiting a broker-dealer from distributing or withdrawing capital and requiring prior notice to the SEC for certain withdrawals of capital.

CSAL is subject to regulation by the Hong Kong Securities and Futures Commission. At September 30, 2019, CSAL exceeded its minimum regulatory capital requirement by approximately $6.6 million. During the three months ended September 30, 2019, CSAL paid a dividend in the amount of approximately $17.5 million to its parent, Cohen & Steers Capital Management, Inc.

CSUK is subject to regulation by the United Kingdom Financial Conduct Authority. At September 30, 2019, CSUK exceeded its aggregate minimum regulatory capital requirement by approximately $29.9 million.

We believe that 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.

Dividends

Subject to the approval of our Board of 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, contractual, legal and regulatory restrictions on the payment of dividends, if any, by us and our subsidiaries and such other factors deemed relevant.

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). As of September 30, 2019, we had 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 was not recorded on our condensed consolidated statements of financial condition at September 30, 2019.

Contractual Obligations and Contingencies

The following table summarizes our contractual obligations at September 30, 2019:



(in thousands)	2019		2020		2021		2022		2023		2024 and after		Total
Operating leases	$	3,109	$	11,907	$	11,160	$	10,858	$	10,831	$	958	$	48,823
Purchase obligations	746		2,260		572		82		—		—		3,660
Other liability	—		192		665		665		1,246		3,739		6,507
Total	$	3,855	$	14,359	$	12,397	$	11,605	$	12,077	$	4,697	$	58,990

Operating Leases

Operating leases generally consist of noncancelable long-term leases for office space and certain information technology equipment.

Purchase Obligations

Purchase obligations represent executory contracts, which are either noncancelable or cancelable 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. This tax liability, which is payable over eight years on an interest-free basis, was included as part of income tax payable on our condensed consolidated statement of financial condition at September 30, 2019.

Off-Balance Sheet Arrangements

We do not invest in any off-balance sheet vehicles that provide liquidity, capital resources, market or credit risk support, or engage in any leasing activities that expose us to any liability that is not reflected in our condensed consolidated financial statements.

Critical Accounting Policies and Estimates

A complete discussion of our critical accounting policies is included in Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2018.

Recently Issued Accounting Pronouncements

See discussion of Recently Issued Accounting Pronouncements in Note 2 of the Notes to Condensed Consolidated Financial Statements contained in Part I, Item 1 of this report.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes to our Quantitative and Qualitative Disclosures About Market Risk from those previously reported in our Annual Report on Form 10-K for the year ended December 31, 2018.

Item 4. 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 Chief Executive Officer and our Chief 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 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) at September 30, 2019. Based on that evaluation and subject to the foregoing, our Chief Executive Officer and our Chief Financial Officer have concluded that our disclosure controls and procedures at September 30, 2019 were effective to accomplish their objectives at a reasonable assurance level.

There has been no change in our internal control over financial reporting that occurred during the three months ended September 30, 2019 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II—Other Information

Item 1. Legal Proceedings

From time to time, we may become involved in legal matters relating to claims arising in the ordinary course of our business. There are currently no such matters pending that we believe could have a material effect on our condensed consolidated results of operations, cash flows or financial condition. In addition, from time to time, we may receive subpoenas or other requests for information from various U.S. federal and state governmental authorities, domestic and international regulatory authorities and third parties in connection with certain industry-wide inquiries or other investigations or legal proceedings. It is our policy to cooperate fully with such requests.

Item 1A. Risk Factors

For a discussion of the potential risks and uncertainties associated with our business, please see Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2018 (the Form 10-K). There have been no material changes to the risk factors disclosed in Part 1, Item 1A of the Form 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

During the three months ended September 30, 2019, we made the following purchases of our equity securities that are registered pursuant to Section 12(b) of the Securities Exchange Act of 1934.



Period	Total Number of Shares Purchased ⁽¹⁾	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
July 1 through July 31, 2019	—	$	—	—	—
August 1 through August 31, 2019	342	$	54.00	—	—
September 1 through September 30, 2019	92	$	54.76	—	—
Total	434	$	54.16	—	—

_________________________


(1)	Purchases made to satisfy the income tax withholding obligations of certain employees upon the vesting and delivery of restricted stock units issued under the Company's Amended and Restated Stock Incentive Plan.

Item 6. Exhibits

Any agreements or 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 should not be relied upon for that purpose. In particular, any representations and warranties made by the Company 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 at the date they were made or at any other time.



Exhibit No.		Description

3.1	—	Form of Amended and Restated Certificate of Incorporation of the Company (1)

3.2	—	Form of Amended and Restated Bylaws of the Company (2)

4.1	—	Specimen Common Stock Certificate (3)

4.2	—	Form of Registration Rights Agreement among the Company, Martin Cohen, Robert H. Steers, The Martin Cohen 1998 Family Trust and Robert H. Steers Family Trust (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)

101	—	The following financial statements from the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2019 formatted in inline XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Statements of Financial Condition (unaudited), (ii) the Condensed Consolidated Statements of Operations (unaudited), (iii) the Condensed Consolidated Statements of Comprehensive Income (unaudited), (iv) the Condensed Consolidated Statements of Changes in Stockholders' Equity and Redeemable Noncontrolling Interests (unaudited), (v) the Condensed Consolidated Statements of Cash Flows (unaudited), and (vi) the Notes to the Condensed 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 (Registration No. 333-114027), 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 (Commission File No. 001-32236) for the quarter ended June 30, 2008.


(3)	Incorporated by reference to the Company's Quarterly Report on Form 10-Q (Commission File No. 001-32236) for the quarter ended June 30, 2015.

SIGNATURES

Pursuant to the requirements 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.



Date:	November 12, 2019	Cohen & Steers, Inc.

		/s/ Matthew S. Stadler
		Name: Matthew S. Stadler
		Title: Executive Vice President & Chief Financial Officer



Date:	November 12, 2019	Cohen & Steers, Inc.

		/s/ Elena Dulik
		Name: Elena Dulik
		Title: Senior Vice President & Chief Accounting Officer