# COHEN & STEERS, INC. (CNS) FY 2021 MD&A

Verbatim Item 7 Management's Discussion and Analysis from COHEN & STEERS, INC.'s 10-K for fiscal year 2021.

SEC filing source: https://www.sec.gov/Archives/edgar/data/1284812/000128481222000117/cns-20211231.htm
Accession: 0001284812-22-000117
Filing date: 2022-02-25
Report date: 2021-12-31
Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary.
Confidence: high

Company profile: /company/CNS/
All MD&A years: /company/CNS/mda/
Next year: /company/CNS/mda/fy2022/ (FY 2022)

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This Annual Report on Form 10-K 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,” “continues,” “may,” “will,” “should,” “seeks,” “approximately,” “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 Item 1A. Risk Factors of this Annual Report on Form 10-K. These factors are not exhaustive and should be read in conjunction with the other cautionary statements that are included in this Annual Report on Form 10-K. We undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise.

Cohen & Steers, Inc. (CNS), a Delaware corporation formed in 2004, and its subsidiaries are collectively referred to as the Company, we, us or our.

Executive Overview

General

We are a global investment manager specializing in real assets and alternative income, including real estate, preferred securities, infrastructure, resource equities, commodities, as well as multi-strategy solutions. Founded in 1986, we are headquartered in New York City, with offices in London, Dublin, Hong Kong and Tokyo.

Our primary investment strategies include U.S. real estate, preferred securities including low duration preferred securities, global/international real estate, global listed infrastructure, real assets multi-strategy, midstream energy and MLPs, as well as 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 distribution network encompasses two major channels, wealth and institutional. Our wealth channel includes registered investment advisers, wirehouses, independent and regional broker dealers and bank trusts. Our institutional channel includes sovereign wealth funds, corporate plans, insurance companies and public funds, including defined benefit and defined contribution plans, as well as other financial institutions that access our investment management services directly or through consultants and other intermediaries.

Our revenue is derived from fees received from our clients, including fees for managing advised or subadvised client accounts as well as 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 and, in certain cases, may include a performance-based fee. 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, contributions or withdrawals from investor accounts and distributions. This revenue is recognized over the period that the assets are managed.

A majority of our revenue, 93.1%, 92.4% and 92.1% for the years ended December 31, 2021, 2020 and 2019, respectively, was derived from investment advisory and administration fees for providing asset management services to institutional accounts as well as open-end funds and closed-end funds sponsored by the Company.

COVID-19

We are continuously managing and evaluating our strategy and response to the COVID-19 pandemic. Please refer to Part I - Item 1A Risk Factors for additional information regarding the effect on our business COVID-19 has had and may continue to have.

19

Assets Under Management

By Investment Vehicle

(in millions)

[[GREPCENT_TABLE]]
[["","Years Ended December 31,"],["","2021","","2020","","2019"],["Institutional Accounts"],["Assets under management, beginning of period","$","33,255","","","$","31,813","","","$","27,148"],["Inflows","6,152","","","7,192","","","3,993"],["Outflows","(5,563)","","","(4,418)","","","(4,908)"],["Net inflows (outflows)","589","","","2,774","","","(915)"],["Market appreciation (depreciation)","10,041","","","53","","","6,873"],["Distributions","(1,184)","","","(1,385)","","","(1,306)"],["Transfers","26","","","\u2014","","","13"],["Total increase (decrease)","9,472","","","1,442","","","4,665"],["Assets under management, end of period","$","42,727","","","$","33,255","","","$","31,813"],["Percentage of total assets under management","40.1","%","","41.6","%","","44.1","%"],["Average assets under management","$","38,906","","","$","29,883","","","$","30,301"],["Open-end Funds"],["Assets under management, beginning of period","$","35,160","","","$","30,725","","","$","22,295"],["Inflows","19,542","","","17,556","","","12,484"],["Outflows","(10,765)","","","(12,135)","","","(7,745)"],["Net inflows (outflows)","8,777","","","5,421","","","4,739"],["Market appreciation (depreciation)","8,936","","","405","","","5,881"],["Distributions","(1,936)","","","(1,391)","","","(2,177)"],["Transfers","(26)","","","\u2014","","","(13)"],["Total increase (decrease)","15,751","","","4,435","","","8,430"],["Assets under management, end of period","$","50,911","","","$","35,160","","","$","30,725"],["Percentage of total assets under management","47.7","%","","44.0","%","","42.6","%"],["Average assets under management","$","42,991","","","$","30,152","","","$","27,595"],["Closed-end Funds"],["Assets under management, beginning of period","$","11,493","","","$","9,644","","","$","8,410"],["Inflows","206","","","2,652","","","5"],["Outflows","(119)","","","(89)","","","(80)"],["Net inflows (outflows)","87","","","2,563","","","(75)"],["Market appreciation (depreciation)","2,033","","","(197)","","","1,823"],["Distributions","(622)","","","(517)","","","(514)"],["Total increase (decrease)","1,498","","","1,849","","","1,234"],["Assets under management, end of period","$","12,991","","","$","11,493","","","$","9,644"],["Percentage of total assets under management","12.2","%","","14.4","%","","13.4","%"],["Average assets under management","$","12,317","","","$","9,140","","","$","9,381"],["Total"],["Assets under management, beginning of period","$","79,908","","","$","72,182","","","$","57,853"],["Inflows","25,900","","","27,400","","","16,482"],["Outflows","(16,447)","","","(16,642)","","","(12,733)"],["Net inflows (outflows)","9,453","","","10,758","","","3,749"],["Market appreciation (depreciation)","21,010","","","261","","","14,577"],["Distributions","(3,742)","","","(3,293)","","","(3,997)"],["Total increase (decrease)","26,721","","","7,726","","","14,329"],["Assets under management, end of period","$","106,629","","","$","79,908","","","$","72,182"],["Average assets under management","$","94,214","","","$","69,175","","","$","67,277"]]
[[/GREPCENT_TABLE]]

20

Assets Under Management - Institutional Accounts

By Account Type

(in millions)

[[GREPCENT_TABLE]]
[["","Years Ended December 31,"],["","2021","","2020","","2019"],["Advisory"],["Assets under management, beginning of period","$","17,628","","","$","15,669","","","$","12,065"],["Inflows","4,891","","","4,324","","","1,918"],["Outflows","(2,945)","","","(2,771)","","","(1,351)"],["Net inflows (outflows)","1,946","","","1,553","","","567"],["Market appreciation (depreciation)","4,999","","","406","","","3,032"],["Transfers","26","","","\u2014","","","5"],["Total increase (decrease)","6,971","","","1,959","","","3,604"],["Assets under management, end of period","$","24,599","","","$","17,628","","","$","15,669"],["Percentage of institutional assets under management","57.6","%","","53.0","%","","49.3","%"],["Average assets under management","$","22,092","","","$","15,650","","","$","14,752"],["Japan Subadvisory"],["Assets under management, beginning of period","$","9,720","","","$","10,323","","","$","9,288"],["Inflows","305","","","1,601","","","942"],["Outflows","(1,075)","","","(626)","","","(1,076)"],["Net inflows (outflows)","(770)","","","975","","","(134)"],["Market appreciation (depreciation)","3,563","","","(193)","","","2,475"],["Distributions","(1,184)","","","(1,385)","","","(1,306)"],["Total increase (decrease)","1,609","","","(603)","","","1,035"],["Assets under management, end of period","$","11,329","","","$","9,720","","","$","10,323"],["Percentage of institutional assets under management","26.5","%","","29.2","%","","32.4","%"],["Average assets under management","$","10,335","","","$","9,014","","","$","9,954"],["Subadvisory Excluding Japan"],["Assets under management, beginning of period","$","5,907","","","$","5,821","","","$","5,795"],["Inflows","956","","","1,267","","","1,133"],["Outflows","(1,543)","","","(1,021)","","","(2,481)"],["Net inflows (outflows)","(587)","","","246","","","(1,348)"],["Market appreciation (depreciation)","1,479","","","(160)","","","1,366"],["Transfers","\u2014","","","\u2014","","","8"],["Total increase (decrease)","892","","","86","","","26"],["Assets under management, end of period","$","6,799","","","$","5,907","","","$","5,821"],["Percentage of institutional assets under management","15.9","%","","17.8","%","","18.3","%"],["Average assets under management","$","6,479","","","$","5,219","","","$","5,595"],["Total Institutional Accounts"],["Assets under management, beginning of period","$","33,255","","","$","31,813","","","$","27,148"],["Inflows","6,152","","","7,192","","","3,993"],["Outflows","(5,563)","","","(4,418)","","","(4,908)"],["Net inflows (outflows)","589","","","2,774","","","(915)"],["Market appreciation (depreciation)","10,041","","","53","","","6,873"],["Distributions","(1,184)","","","(1,385)","","","(1,306)"],["Transfers","26","","","\u2014","","","13"],["Total increase (decrease)","9,472","","","1,442","","","4,665"],["Assets under management, end of period","$","42,727","","","$","33,255","","","$","31,813"],["Average assets under management","$","38,906","","","$","29,883","","","$","30,301"]]
[[/GREPCENT_TABLE]]

21

Assets Under Management

By Investment Strategy

(in millions)

[[GREPCENT_TABLE]]
[["","Years Ended December 31,"],["","2021","","2020","","2019"],["U.S. Real Estate"],["Assets under management, beginning of period","$","32,827","","","$","31,024","","","$","24,627"],["Inflows","11,538","","","11,114","","","7,298"],["Outflows","(6,499)","","","(6,478)","","","(5,363)"],["Net inflows (outflows)","5,039","","","4,636","","","1,935"],["Market appreciation (depreciation)","14,417","","","(574)","","","7,346"],["Distributions","(2,294)","","","(2,282)","","","(2,886)"],["Transfers","(74)","","","23","","","2"],["Total increase (decrease)","17,088","","","1,803","","","6,397"],["Assets under management, end of period","$","49,915","","","$","32,827","","","$","31,024"],["Percentage of total assets under management","46.8","%","","41.1","%","","43.0","%"],["Average assets under management","$","41,315","","","$","28,972","","","$","29,117"],["Preferred Securities"],["Assets under management, beginning of period","$","23,185","","","$","17,581","","","$","13,068"],["Inflows","8,802","","","10,979","","","5,726"],["Outflows","(5,053)","","","(5,828)","","","(3,041)"],["Net inflows (outflows)","3,749","","","5,151","","","2,685"],["Market appreciation (depreciation)","964","","","1,172","","","2,406"],["Distributions","(985)","","","(696)","","","(597)"],["Transfers","74","","","(23)","","","19"],["Total increase (decrease)","3,802","","","5,604","","","4,513"],["Assets under management, end of period","$","26,987","","","$","23,185","","","$","17,581"],["Percentage of total assets under management","25.3","%","","29.0","%","","24.4","%"],["Average assets under management","$","25,262","","","$","18,278","","","$","15,702"],["Global/International Real Estate"],["Assets under management, beginning of period","$","15,214","","","$","13,509","","","$","11,047"],["Inflows","3,263","","","4,122","","","2,541"],["Outflows","(2,833)","","","(2,436)","","","(2,714)"],["Net inflows (outflows)","430","","","1,686","","","(173)"],["Market appreciation (depreciation)","3,933","","","102","","","2,887"],["Distributions","(197)","","","(83)","","","(252)"],["Total increase (decrease)","4,166","","","1,705","","","2,462"],["Assets under management, end of period","$","19,380","","","$","15,214","","","$","13,509"],["Percentage of total assets under management","18.2","%","","19.0","%","","18.7","%"],["Average assets under management","$","17,688","","","$","13,193","","","$","12,718"]]
[[/GREPCENT_TABLE]]

22

Assets Under Management

By Investment Strategy - continued

(in millions)

[[GREPCENT_TABLE]]
[["","Years Ended December 31,"],["","2021","","2020","","2019"],["Global Listed Infrastructure"],["Assets under management, beginning of period","$","6,729","","","$","8,076","","","$","6,517"],["Inflows","1,751","","","997","","","713"],["Outflows","(765)","","","(1,722)","","","(699)"],["Net inflows (outflows)","986","","","(725)","","","14"],["Market appreciation (depreciation)","1,256","","","(423)","","","1,520"],["Distributions","(208)","","","(199)","","","(201)"],["Transfers","\u2014","","","\u2014","","","226"],["Total increase (decrease)","2,034","","","(1,347)","","","1,559"],["Assets under management, end of period","$","8,763","","","$","6,729","","","$","8,076"],["Percentage of total assets under management","8.2","%","","8.4","%","","11.2","%"],["Average assets under management","$","7,970","","","$","6,972","","","$","7,455"],["Other"],["Assets under management, beginning of period","$","1,953","","","$","1,992","","","$","2,594"],["Inflows","546","","","188","","","204"],["Outflows","(1,297)","","","(178)","","","(916)"],["Net inflows (outflows)","(751)","","","10","","","(712)"],["Market appreciation (depreciation)","440","","","(16)","","","418"],["Distributions","(58)","","","(33)","","","(61)"],["Transfers","\u2014","","","\u2014","","","(247)"],["Total increase (decrease)","(369)","","","(39)","","","(602)"],["Assets under management, end of period","$","1,584","","","$","1,953","","","$","1,992"],["Percentage of total assets under management","1.5","%","","2.4","%","","2.8","%"],["Average assets under management","$","1,979","","","$","1,760","","","$","2,285"],["Total"],["Assets under management, beginning of period","$","79,908","","","$","72,182","","","$","57,853"],["Inflows","25,900","","","27,400","","","16,482"],["Outflows","(16,447)","","","(16,642)","","","(12,733)"],["Net inflows (outflows)","9,453","","","10,758","","","3,749"],["Market appreciation (depreciation)","21,010","","","261","","","14,577"],["Distributions","(3,742)","","","(3,293)","","","(3,997)"],["Total increase (decrease)","26,721","","","7,726","","","14,329"],["Assets under management, end of period","$","106,629","","","$","79,908","","","$","72,182"],["Average assets under management","$","94,214","","","$","69,175","","","$","67,277"]]
[[/GREPCENT_TABLE]]

23

Investment Performance as of December 31, 2021

_________________________

(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)    © 2022 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete, or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Morningstar calculates its ratings based on a risk-adjusted return measure that accounts for variation in a fund's monthly performance (including the effects of sales charges, loads, and redemption fees), placing more emphasis on downward variations and rewarding consistent performance. The top 10% of funds in each category receive five stars, the next 22.5% receive four stars, the next 35% receive three stars, the next 22.5% receive two stars and the bottom 10% receive one star. Past performance is no guarantee of future results. Based on independent rating by Morningstar, Inc. of investment performance of each Cohen & Steers-sponsored open-end U.S.-registered mutual fund for all share classes for the overall period at December 30, 2021. Overall Morningstar rating is a weighted average based on the 3-year, 5-year and 10-year Morningstar rating. Each share class is counted as a fraction of one fund within this scale and rated separately, which may cause slight variations in the distribution percentages. This is not investment advice and may not be construed as sales or marketing material for any financial product or service sponsored or provided by Cohen & Steers.

Changes in Assets Under Management - 2021 Compared with 2020

Assets under management at December 31, 2021 increased 33.4% to $106.6 billion from $79.9 billion at December 31, 2020. The increase was due to net inflows of $9.5 billion and market appreciation of $21.0 billion, partially offset by distributions of $3.7 billion. Net inflows included $5.0 billion into U.S. real estate and $3.7 billion into preferred securities. Market appreciation included $14.4 billion from U.S. real estate and $3.9 billion from global/international real estate. Distributions included $2.3 billion from U.S. real estate and $985 million from preferred securities. Our overall organic growth rate was 11.8% for the year ended December 31, 2021. The organic growth/decay rate represents the ratio of net flows for the year to the beginning assets under management.

24

Average assets under management for the year ended December 31, 2021 increased 36.2% to $94.2 billion from $69.2 billion for the year ended December 31, 2020.

Institutional accounts

Assets under management in institutional accounts at December 31, 2021, which represented 40.1% of total assets under management, increased 28.5% to $42.7 billion from $33.3 billion at December 31, 2020. The increase was due to net inflows of $589 million and market appreciation of $10.0 billion, partially offset by distributions of $1.2 billion. Net inflows included $802 million into U.S. real estate and $603 million into global listed infrastructure, partially offset by net outflows of $1.0 billion from real assets multi-strategy (included in "Other" in the table on pages 22 and 23). Market appreciation included $5.6 billion from U.S. real estate and $3.5 billion from global/international real estate. Distributions included $1.1 billion from U.S. real estate. Our organic growth rate for institutional accounts was 1.8% for the year ended December 31, 2021.

Average assets under management for institutional accounts for the year ended December 31, 2021 increased 30.2% to $38.9 billion from $29.9 billion for the year ended December 31, 2020.

Assets under management in advisory accounts at December 31, 2021, which represented 57.6% of institutional assets under management, increased 39.5% to $24.6 billion from $17.6 billion at December 31, 2020. The increase was due to net inflows of $1.9 billion and market appreciation of $5.0 billion. Net inflows included $1.5 billion into U.S. real estate, $746 million into global listed infrastructure and $599 million into preferred securities, partially offset by net outflows of $1.0 billion from real assets multi-strategy (included in "Other" in the table on pages 22 and 23). Market appreciation included $2.3 billion from U.S. real estate and $1.9 billion from global/international real estate. Our organic growth rate for advisory accounts was 11.0% for the year ended December 31, 2021.

Average assets under management for advisory accounts for the year ended December 31, 2021 increased 41.2% to $22.1 billion from $15.7 billion for the year ended December 31, 2020.

Assets under management in Japan subadvisory accounts at December 31, 2021, which represented 26.5% of institutional assets under management, increased 16.6% to $11.3 billion from $9.7 billion at December 31, 2020. The increase was due to market appreciation of $3.6 billion, partially offset by net outflows of $770 million and distributions of $1.2 billion. Net outflows included $554 million from U.S. real estate. Market appreciation included $2.9 billion from U.S. real estate and $636 million from global/international real estate. Distributions included $1.1 billion from U.S. real estate. Our organic decay rate for Japan subadvisory accounts was (7.9%) for the year ended December 31, 2021.

Average assets under management for Japan subadvisory accounts for the year ended December 31, 2021 increased 14.7% to $10.3 billion from $9.0 billion for the year ended December 31, 2020.

Assets under management in subadvisory accounts excluding Japan at December 31, 2021, which represented 15.9% of institutional assets under management, increased 15.1% to $6.8 billion from $5.9 billion at December 31, 2020. The increase was due to market appreciation of $1.5 billion, partially offset by net outflows of $587 million. Net outflows included $374 million from global/international real estate and $137 million from global listed infrastructure. Market appreciation included $938 million from global/international real estate and $342 million from U.S. real estate. Our organic decay rate for subadvisory accounts excluding Japan was (9.9%) for the year ended December 31, 2021.

Average assets under management for subadvisory accounts excluding Japan for the year ended December 31, 2021 increased 24.1% to $6.5 billion from $5.2 billion for the year ended December 31, 2020.

Open-end funds

Assets under management in open-end funds at December 31, 2021, which represented 47.7% of total assets under management, increased 44.8% to $50.9 billion from $35.2 billion at December 31, 2020. The increase was due to net inflows of $8.8 billion and market appreciation of $8.9 billion, partially offset by distributions of $1.9 billion. Net inflows included $4.2 billion into U.S. real estate and $3.3 billion into preferred securities. Market appreciation included $7.8 million from U.S. real estate. Distributions included $1.0 billion from U.S. real estate ($935 million of which was reinvested and included in net inflows) and $762 million from preferred securities ($575 million of which was reinvested and included in net inflows). Our organic growth rate for open-end funds was 25.0% for the year ended December 31, 2021.

Average assets under management for open-end funds for the year ended December 31, 2021 increased 42.6% to $43.0 billion from $30.2 billion for the year ended December 31, 2020.

25

Closed-end funds

Assets under management in closed-end funds at December 31, 2021, which represented 12.2% of total assets under management, increased 13.0% to $13.0 billion from $11.5 billion at December 31, 2020. The increase was primarily due to market appreciation of $2.0 billion, partially offset by distributions of $622 million. Our organic growth rate for closed-end funds was 0.8% for the year ended December 31, 2021.

Average assets under management for closed-end funds for the year ended December 31, 2021 increased 34.8% to $12.3 billion from $9.1 billion for the year ended December 31, 2020.

Changes in Assets Under Management - 2020 Compared with 2019

Assets under management at December 31, 2020 increased 10.7% to $79.9 billion from $72.2 billion at December 31, 2019. The increase was due to net inflows of $10.8 billion and market appreciation of $261 million, which recovered from $15.3 billion of market depreciation in the first quarter of 2020, partially offset by distributions of $3.3 billion. Net inflows included $5.2 billion into preferred securities and $4.6 billion into U.S. real estate. Market appreciation included $1.2 billion from preferred securities, partially offset by market depreciation of $574 million from U.S. real estate and $423 million from global listed infrastructure. Distributions included $2.3 billion from U.S. real estate and $696 million from preferred securities. Our overall organic growth rate was 14.9% for the year ended December 31, 2020.

Average assets under management for the year ended December 31, 2020 increased 2.8% to $69.2 billion from $67.3 billion for the year ended December 31, 2019.

Institutional accounts

Assets under management in institutional accounts at December 31, 2020, which represented 41.6% of total assets under management, increased 4.5% to $33.3 billion from $31.8 billion at December 31, 2019. The increase was due to net inflows of $2.8 billion and market appreciation of $53 million, partially offset by distributions of $1.4 billion. Net inflows included $1.9 billion into global/international real estate and $1.6 billion into U.S. real estate, partially offset by net outflows of $662 million from global listed infrastructure. Distributions included $1.4 billion from U.S. real estate. Our organic growth rate for institutional accounts was 8.7% for the year ended December 31, 2020.

Average assets under management for institutional accounts for the year ended December 31, 2020 decreased 1.4% to $29.9 billion from $30.3 billion for the year ended December 31, 2019.

Assets under management in advisory accounts at December 31, 2020, which represented 53.0% of institutional assets under management, increased 12.5% to $17.6 billion from $15.7 billion at December 31, 2019. The increase was due to net inflows of $1.6 billion and market appreciation of $406 million. Net inflows included $1.3 billion into global/international real estate and $699 million into U.S. real estate, partially offset by net outflows of $565 million from global listed infrastructure. Market appreciation included $265 million from global/international real estate and $196 million from preferred securities. Our organic growth rate for advisory accounts was 9.9% for the year ended December 31, 2020.

Average assets under management for advisory accounts for the year ended December 31, 2020 increased 6.1% to $15.7 billion from $14.8 billion for the year ended December 31, 2019.

Assets under management in Japan subadvisory accounts at December 31, 2020, which represented 29.2% of institutional assets under management, decreased 5.8% to $9.7 billion from $10.3 billion at December 31, 2019. The decrease was due to market depreciation of $193 million and distributions of $1.4 billion, partially offset by net inflows of $975 million. Net inflows included $913 million into U.S. real estate. Market depreciation included $237 million from U.S. real estate, partially offset by market appreciation of $41 million from global/international real estate. Distributions included $1.4 billion from U.S. real estate. Our organic growth rate for Japan subadvisory accounts was 9.4% for the year ended December 31, 2020.

Average assets under management for Japan subadvisory accounts for the year ended December 31, 2020 decreased 9.4% to $9.0 billion from $10.0 billion for the year ended December 31, 2019.

Assets under management in subadvisory accounts excluding Japan at December 31, 2020, which represented 17.8% of institutional assets under management, increased 1.5% to $5.9 billion from $5.8 billion at December 31, 2019. The increase was due to net inflows of $246 million, partially offset by market depreciation of $160 million. Net inflows included $368 million into global/international real estate, partially offset by net outflows of $90 million from global listed infrastructure.

26

Market depreciation included $109 million from global/international real estate. Our organic growth rate for subadvisory accounts excluding Japan was 4.2% for the year ended December 31, 2020.

Average assets under management for subadvisory accounts excluding Japan for the year ended December 31, 2020 decreased 6.7% to $5.2 billion from $5.6 billion for the year ended December 31, 2019.

Open-end funds

Assets under management in open-end funds at December 31, 2020, which represented 44.0% of total assets under management, increased 14.4% to $35.2 billion from $30.7 billion at December 31, 2019. The increase was due to net inflows of $5.4 billion and market appreciation of $405 million, partially offset by distributions of $1.4 billion. Net inflows included $3.0 billion into preferred securities and $2.5 billion into U.S. real estate. Market appreciation included $851 million from preferred securities, partially offset by market depreciation of $260 million from U.S. real estate, $95 million from global/international real estate and $81 million from global listed infrastructure. Distributions included $742 million from U.S. real estate ($631 million of which was reinvested and included in net inflows) and $578 million from preferred securities ($402 million of which was reinvested and included in net inflows). Our organic growth rate for open-end funds was 17.6% for the year ended December 31, 2020.

Average assets under management for open-end funds for the year ended December 31, 2020 increased 9.3% to $30.2 billion from $27.6 billion for the year ended December 31, 2019.

Closed-end funds

Assets under management in closed-end funds at December 31, 2020, which represented 14.4% of total assets under management, increased 19.2% to $11.5 billion from $9.6 billion at December 31, 2019. The increase was due to net inflows of $2.6 billion, partially offset by market depreciation of $197 million and distributions of $517 million. Net inflows included $2.1 billion from the Company's initial public offering of the Cohen & Steers Tax-Advantaged Preferred Securities and Income Fund (PTA) and $526 million from the Cohen & Steers Quality Income Realty Fund, Inc. (RQI) rights offering. Our organic growth rate for closed-end funds was 26.6% for the year ended December 31, 2020.

Average assets under management for closed-end funds for the year ended December 31, 2020 decreased 2.6% to $9.1 billion from $9.4 billion for the year ended December 31, 2019.

27

Summary of Operating Information

[[GREPCENT_TABLE]]
[["","Years Ended December 31,"],["(in thousands, except percentages and per share data)","2021","","2020","","2019"],["U.S. GAAP"],["Revenue","$","583,832","","","$","427,536","","","$","410,830"],["Expenses (1)","$","323,460","","","$","332,479","","","$","250,696"],["Operating income","$","260,372","","","$","95,057","","","$","160,134"],["Non-operating income (loss)","$","21,572","","","$","(1,670)","","","$","27,415"],["Net income attributable to common stockholders","$","211,396","","","$","76,584","","","$","134,621"],["Diluted earnings per share","$","4.31","","","$","1.57","","","$","2.79"],["Operating margin","44.6","%","","22.2","%","","39.0","%"],["As Adjusted (2)"],["Net income attributable to common stockholders","$","197,947","","","$","125,291","","","$","124,360"],["Diluted earnings per share","$","4.03","","","$","2.57","","","$","2.57"],["Operating margin","46.0","%","","39.6","%","","39.6","%"]]
[[/GREPCENT_TABLE]]

_________________________

(1)    Included expenses of $60.6 million associated with the initial public offering of PTA for the year ended December 31, 2020.

(2)    Please refer to pages 33-34 for reconciliations of U.S. GAAP to as adjusted results.

U.S. GAAP

2021 Compared with 2020

Revenue

[[GREPCENT_TABLE]]
[["","Years Ended December 31,"],["(in thousands)","2021","","2020","","$ Change","","% Change"],["Open-end funds","$","288,359","","","$","201,135","","","$","87,224","","","43.4","%"],["Institutional accounts","146,345","","","115,876","","","30,469","","","26.3","%"],["Closed-end funds","108,840","","","78,026","","","30,814","","","39.5","%"],["Investment advisory and administration fees","543,544","","","395,037","","","148,507","","","37.6","%"],["Distribution and service fees","37,630","","","30,134","","","7,496","","","24.9","%"],["Other","2,658","","","2,365","","","293","","","12.4","%"],["Total revenue","$","583,832","","","$","427,536","","","$","156,296","","","36.6","%"]]
[[/GREPCENT_TABLE]]

Total investment advisory and administration revenue from open-end funds for the year ended December 31, 2021 increased primarily due to higher average assets under management. Total investment advisory and administration revenue compared with average assets under management implied an annual effective fee rate of 67.1 bps and 66.7 bps for the years ended December 31, 2021 and 2020, respectively.

Total investment advisory revenue from institutional accounts for the year ended December 31, 2021 increased primarily due to higher average assets under management, partially offset by lower performance fees. Total investment advisory revenue compared with average assets under management implied an annual effective fee rate of 37.6 bps and 38.8 bps for the years ended December 31, 2021 and 2020, respectively. The decrease in the implied annual effective fee rate was primarily due to lower performance fees for the year ended December 31, 2021. Excluding the performance fees of $5.6 million and $7.7 million, the implied annual effective fee rate would have been 36.2 bps for the years ended December 31, 2021 and 2020, respectively.

Total investment advisory and administration revenue from closed-end funds for the year ended December 31, 2021 increased primarily due to higher average assets under management. Total investment advisory and administration revenue compared with average assets under management implied an annual effective fee rate of 88.4 bps and 85.4 bps for the years ended December 31, 2021 and 2020, respectively. The increase in the implied annual effective fee rate was primarily due to the initial public offering of PTA in the fourth quarter of 2020.

Distribution and service fees for the year ended December 31, 2021 increased primarily due higher average assets under management in U.S. open-end funds.

28

Expenses

[[GREPCENT_TABLE]]
[["","Years Ended December 31,"],["(in thousands)","2021","","2020","","$ Change","","% Change"],["Employee compensation and benefits","$","195,443","","","$","156,457","","","$","38,986","","","24.9","%"],["Distribution and service fees","75,891","","","115,084","","","(39,193)","","","(34.1)","%"],["General and administrative","48,034","","","56,286","","","(8,252)","","","(14.7)","%"],["Depreciation and amortization","4,092","","","4,652","","","(560)","","","(12.0)","%"],["Total expenses","$","323,460","","","$","332,479","","","$","(9,019)","","","(2.7)","%"]]
[[/GREPCENT_TABLE]]

Employee compensation and benefits for the year ended December 31, 2021 increased primarily due to an increase in incentive compensation of $24.8 million and higher accelerated vesting of certain restricted stock units of $6.4 million.

Distribution and service fee expenses for the year ended December 31, 2020 included expenses of $57.8 million associated with the initial public offering of PTA. Excluding these expenses, distribution and service fees for the year ended December 31, 2021 increased $18.6 million primarily due to higher average assets under management in U.S. open-end funds.

General and administrative expenses for the year ended December 31, 2020 included expenses of $11.9 million associated with the RQI rights offering. Excluding these expenses, general and administrative expenses for the year ended December 31, 2021 increased $3.6 million primarily due to higher recruitment fees of $1.7 million and higher information technology related expenses of $1.2 million.

Operating Margin

Operating margin for the year ended December 31, 2021 increased to 44.6% from 22.2% for the year ended December 31, 2020. The year ended December 31, 2020 included costs associated with the initial public offering of PTA and the RQI rights offering noted above. Operating margin represents the ratio of operating income to revenue.

Non-operating Income (Loss)

[[GREPCENT_TABLE]]
[["","Years Ended December 31,"],["","2021","","2020"],["(in thousands)","Seed Investments (1)","","Other","","Total","","Seed Investments (1)","","Other","","Total"],["Interest and dividend income\u2014net","$","2,818","","","$","59","","","$","2,877","","","$","2,358","","","$","1,004","","","$","3,362"],["Gain (loss) from investments\u2014net","18,710","","","74","","","18,784","","","(4,116)","","","\u2014","","","(4,116)"],["Foreign currency gain (loss)\u2014net","330","","","(419)","","","(89)","","","(399)","","","(517)","","","(916)"],["Total non-operating income (loss)","$","21,858","","","$","(286)","","","$","21,572","","","$","(2,157)","","","$","487","","","$","(1,670)"]]
[[/GREPCENT_TABLE]]

_________________________

(1)    Seed investments included net income of $14.8 million and net loss of $1.4 million attributable to third-party interests in consolidated Company-sponsored funds for the years ended December 31, 2021 and 2020, respectively.

Income Taxes

[[GREPCENT_TABLE]]
[["","Years Ended December 31,"],["(in thousands, except percentages)","2021","","2020","","$ Change","","% Change"],["Income tax expense","$","55,790","","","$","18,222","","","$","37,568","","","206.2","%"],["Effective tax rate","20.9","%","","19.2","%"]]
[[/GREPCENT_TABLE]]

The effective tax rate for the year ended December 31, 2021 differed from the U.S. federal statutory rate of 21.0% primarily due to state, local and foreign income taxes as well as limitations on the deductibility of executive compensation. These were offset by certain discrete tax items, the most significant being the reversal of certain liabilities associated with unrecognized tax benefits and the appreciated value of the restricted stock units delivered in January 2021. The effective tax rate for the year ended December 31, 2020 differed from the U.S. federal statutory rate of 21.0% primarily due to state, local and foreign income taxes as well as limitations on the deductibility of executive compensation. These were more than offset by certain discrete tax items, the most significant being the appreciated value of the restricted stock units delivered in January 2020.

29

2020 Compared with 2019

Revenue

[[GREPCENT_TABLE]]
[["","Years Ended December 31,"],["(in thousands)","2020","","2019","","$ Change","","% Change"],["Open-end funds","$","201,135","","","$","187,730","","","$","13,405","","","7.1","%"],["Institutional accounts","115,876","","","110,346","","","5,530","","","5.0","%"],["Closed-end funds","78,026","","","80,502","","","(2,476)","","","(3.1)","%"],["Investment advisory and administration fees","395,037","","","378,578","","","16,459","","","4.3","%"],["Distribution and service fees","30,134","","","30,048","","","86","","","0.3","%"],["Other","2,365","","","2,204","","","161","","","7.3","%"],["Total revenue","$","427,536","","","$","410,830","","","$","16,706","","","4.1","%"]]
[[/GREPCENT_TABLE]]

Total investment advisory and administration revenue from open-end funds for the year ended December 31, 2020 increased primarily due to higher average assets under management. Total investment advisory and administration revenue compared with average assets under management implied an annual effective fee rate of 66.7 bps and 68.0 bps for the years ended December 31, 2020 and 2019, respectively. The decrease in the implied annual effective fee rate is primarily due to the full year impact of a reduction of the investment advisory fee rate resulting from imposition of an expense cap effective July 1, 2019 by Cohen & Steers Realty Shares, Inc.

Total investment advisory revenue from institutional accounts for the year ended December 31, 2020 increased primarily due to higher performance fees from certain institutional accounts, partially offset by lower average assets under management. Total investment advisory revenue compared with average assets under management implied an annual effective fee rate of 38.8 bps and 36.4 bps for the years ended December 31, 2020 and 2019, respectively. The increase in the implied annual effective fee rate is primarily due to higher performance fees in 2020. Excluding the performance fees of $7.7 million and $1.0 million, the implied annual effective fee rate for the years ended December 31, 2020 and 2019, respectively, would have been 36.2 bps and 36.1bps.

Total investment advisory and administration revenue from closed-end funds for the year ended December 31, 2020 decreased primarily due to lower average assets under management. Total investment advisory and administration revenue compared with average assets under management implied an annual effective fee rate of 85.4 bps and 85.8 bps for the years ended December 31, 2020 and 2019, respectively.

Expenses

[[GREPCENT_TABLE]]
[["","Years Ended December 31,"],["(in thousands)","2020","","2019","","$ Change","","% Change"],["Employee compensation and benefits","$","156,457","","","$","143,431","","","$","13,026","","","9.1","%"],["Distribution and service fees","115,084","","","55,237","","","59,847","","","108.3","%"],["General and administrative","56,286","","","47,632","","","8,654","","","18.2","%"],["Depreciation and amortization","4,652","","","4,396","","","256","","","5.8","%"],["Total expenses","$","332,479","","","$","250,696","","","$","81,783","","","32.6","%"]]
[[/GREPCENT_TABLE]]

Employee compensation and benefits for the year ended December 31, 2020 increased primarily due to higher salaries of $3.7 million, an increase in incentive compensation of $3.4 million, an increase in severance expenses of $1.8 million, higher payroll taxes of $1.2 million and commissions of $1.1 million.

Distribution and service fees expense for the year ended December 31, 2020 increased primarily due to costs

associated with the initial public offering of PTA of $57.8 million.

General and administrative expenses for the year ended December 31, 2020 increased primarily due to costs associated with the RQI rights offering of $11.7 million, partially offset by lower travel and entertainment expenses of $3.3 million.

Operating Margin

Operating margin for the year ended December 31, 2020 decreased to 22.2% from 39.0% for the year ended December 31, 2019. The decrease was primarily due to costs associated with the initial public offering of PTA and the RQI rights offering for the year ended December 31, 2020 noted above.

30

Non-operating Income (Loss)

[[GREPCENT_TABLE]]
[["","Years Ended December 31,"],["","2020","","2019"],["(in thousands)","Seed Investments (1)","","Other","","Total","","Seed Investments (1)","","Other","","Total"],["Interest and dividend income\u2014net","$","2,358","","","$","1,004","","","$","3,362","","","$","3,052","","","$","3,664","","","$","6,716"],["Gain (loss) from investments\u2014net","(4,116)","","","\u2014","","","(4,116)","","","21,673","","","\u2014","","","21,673"],["Foreign currency gain (loss)\u2014net","(399)","","","(517)","","","(916)","","","381","","","(1,355)","","","(974)"],["Total non-operating income (loss)","$","(2,157)","","","$","487","","","$","(1,670)","","","$","25,106","","","$","2,309","","","$","27,415"]]
[[/GREPCENT_TABLE]]
_________________________

(1)    Seed investments included net loss of $1.4 million and net income of $12.4 million attributable to third-party interests in consolidated Company-sponsored funds for the years ended December 31, 2020 and 2019, respectively.

Income Taxes

[[GREPCENT_TABLE]]
[["","Years Ended December 31,"],["(in thousands, except percentages)","2020","","2019","","$ Change","","% Change"],["Income tax expense","$","18,222","","","$","40,565","","","$","(22,343)","","","(55.1)","%"],["Effective tax rate","19.2","%","","23.2","%"]]
[[/GREPCENT_TABLE]]

The effective tax rate for the year ended December 31, 2020 differed from the U.S. federal statutory rate of 21.0% primarily due to state, local and foreign income taxes as well as limitations on the deductibility of executive compensation. These were more than offset by certain discrete tax items, the most significant being the appreciated value of the restricted stock units delivered in January 2020. The effective tax rate for the year ended December 31, 2019 differed from the U.S. federal statutory rate of 21.0% primarily due to state, local and foreign income taxes. These were partially offset by certain discrete tax items, the most significant being the reversal of certain liabilities associated with unrecognized tax benefits and the appreciated value of restricted stock units delivered in January 2019, as well as the release of a portion of the valuation allowance associated with unrealized gains on the Company's seed investments.

As Adjusted

This section discusses as adjusted results. Please refer to pages 33-34 for reconciliations of U.S. GAAP to as adjusted results.

2021 Compared with 2020

Revenue

Revenue, as adjusted, for the year ended December 31, 2021 was $584.2 million, compared with $427.8 million as adjusted, for the year ended December 31, 2020.

Revenue, as adjusted, excluded the consolidation of certain of our seed investments for both years.

Expenses

Expenses, as adjusted, for the year ended December 31, 2021 were $315.4 million, compared with $258.4 million as adjusted, for the year ended December 31, 2020.

Expenses, as adjusted, excluded the following:

•The consolidation of certain of our seed investments for both years;

•Amounts related to the accelerated vesting of certain restricted stock units for both years;

•Costs associated with the initial public offering of PTA for the year ended December 31, 2020;

•Costs associated with the RQI rights offering for the year ended December 31, 2020; and

•Other non-recurring expenses for the year ended December 31, 2020.

Operating Margin

Operating margin, as adjusted, for the year ended December 31, 2021 was 46.0%, compared with 39.6% as adjusted, for the year ended December 31, 2020.

31

Non-operating Income (Loss)

Non-operating loss, as adjusted, for the year ended December 31, 2021 was $761,000, compared with non-operating income, as adjusted, of $1.4 million for the year ended December 31, 2020.

Non-operating income (loss), as adjusted, excluded the following for both years:

•Results from our seed investments; and

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

Income Taxes

The effective tax rate, as adjusted, for the year ended December 31, 2021 was 26.2%, compared with 26.7% as adjusted, for the year ended December 31, 2020.

The effective tax rate, as adjusted, excluded the following for both years:

•Tax effects associated with items noted above; and

•Discrete tax items.

2020 Compared with 2019

Revenue

Revenue, as adjusted, for the year ended December 31, 2020 was $427.8 million, compared with $410.4 million as adjusted, for the year ended December 31, 2019.

Revenue, as adjusted, excluded the consolidation of certain of our seed investments for both years.

Expenses

Expenses, as adjusted, for the year ended December 31, 2020 were $258.4 million, compared with $247.7 million as adjusted, for the year ended December 31, 2019.

Expenses, as adjusted, excluded the following:

•The consolidation of certain of our seed investments for both years;

•Amounts related to the accelerated vesting of certain restricted stock units for both years;

•Costs associated with the initial public offering of PTA for the year ended December 31, 2020;

•Costs associated with the RQI rights offering for both years; and

•Other non-recurring expenses for the year ended December 31, 2020.

Operating Margin

Operating margin, as adjusted, was 39.6% for both years ended December 31, 2020 and 2019.

Non-operating Income (Loss)

Non-operating income, as adjusted, for the year ended December 31, 2020 was $1.4 million, compared with $4.2 million as adjusted, for the year ended December 31, 2019.

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

•Results from our seed investments; and

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

Income Taxes

The effective tax rate, as adjusted, for the year ended December 31, 2020 was 26.7%, compared with 25.5% as adjusted, for the year ended December 31, 2019.

The effective tax rate, as adjusted, excluded the following for both years:

•Tax effects associated with items noted above; and

•Discrete tax items.

32

Reconciliations of U.S. GAAP to As Adjusted Financial Results

Management believes that use of the following as adjusted (non-GAAP) financial results provides greater transparency into the Company’s operating performance. In addition, these as adjusted financial results are used to prepare the Company's internal management reports which are used in evaluating its business.

While we believe that these as adjusted financial results are useful in evaluating 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 to As Adjusted Financial Results

Net Income Attributable to Common Stockholders and Diluted Earnings per Share

[[GREPCENT_TABLE]]
[["","Years Ended December 31,"],["(in thousands, except per share data)","2021","","2020","","2019"],["Net income attributable to common stockholders, U.S. GAAP","$","211,396","","","$","76,584","","","$","134,621"],["Seed investments (1)","(5,870)","","","1,443","","","(11,858)"],["Accelerated vesting of restricted stock units","7,197","","","774","","","1,344"],["Initial public offering costs (2)","\u2014","","","60,559","","","\u2014"],["Rights offering costs (3)","\u2014","","","11,859","","","346"],["Other non-recurring expenses (4)","\u2014","","","500","","","\u2014"],["Foreign currency exchange (gains) losses\u2014net (5)","(475)","","","871","","","1,909"],["Tax adjustments (6)","(14,301)","","","(27,299)","","","(2,002)"],["Net income attributable to common stockholders, as adjusted","$","197,947","","","$","125,291","","","$","124,360"],["Diluted weighted average shares outstanding","49,090","","","48,676","","","48,297"],["Diluted earnings per share, U.S. GAAP","$","4.31","","","$","1.57","","","$","2.79"],["Seed investments","(0.12)","","","0.03","","","(0.25)"],["Accelerated vesting of restricted stock units","0.15","","","0.02","","","0.02"],["Initial public offering costs","\u2014","","","1.24","","","\u2014"],["Rights offering costs","\u2014","","","0.24","","","0.01"],["Other non-recurring expenses","\u2014","","","0.01","","","\u2014"],["Foreign currency exchange (gains) losses\u2014net","(0.01)","","","0.02","","","0.04"],["Tax adjustments","(0.30)","","","(0.56)","","","(0.04)"],["Diluted earnings per share, as adjusted","$","4.03","","","$","2.57","","","$","2.57"]]
[[/GREPCENT_TABLE]]

_________________________

(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 costs associated with the initial public offering of PTA. Costs are summarized in the following table:

[[GREPCENT_TABLE]]
[["","Years Ended December 31,"],["(in thousands)","2021","","2020","","2019"],["Employee compensation and benefits","$","\u2014","","","$","1,317","","","$","\u2014"],["Distribution and service fees","\u2014","","","57,818","","","\u2014"],["General and administrative","\u2014","","","1,424","","","\u2014"],["Initial public offering costs","$","\u2014","","","$","60,559","","","$","\u2014"]]
[[/GREPCENT_TABLE]]

(3)     Represents costs associated with the RQI rights offering, which were recorded in general and administrative expense.

(4)     Represents non-recurring expenses, which were recorded in distribution and service fees.

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

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

[[GREPCENT_TABLE]]
[["","Years Ended December 31,"],["(in thousands)","2021","","2020","","2019"],["Exclusion of tax effects associated with items noted above","$","(2,262)","","","$","(17,119)","","","$","38"],["Exclusion of discrete tax items","(12,039)","","","(10,180)","","","(2,040)"],["Total tax adjustments","$","(14,301)","","","$","(27,299)","","","$","(2,002)"]]
[[/GREPCENT_TABLE]]

33

Reconciliation of U.S. GAAP to As Adjusted Financial Results

Revenue, Expenses, Operating Income and Operating Margin

[[GREPCENT_TABLE]]
[["","Years Ended December 31,"],["(in thousands, except percentages)","2021","","2020","","2019"],["Revenue, U.S. GAAP","$","583,832","","","$","427,536","","","$","410,830"],["Seed investments (1)","411","","","281","","","(438)"],["Revenue, as adjusted","$","584,243","","","$","427,817","","","$","410,392"],["Expenses, U.S. GAAP","$","323,460","","","$","332,479","","","$","250,696"],["Seed investments (1)","(819)","","","(424)","","","(1,323)"],["Accelerated vesting of restricted stock units","(7,197)","","","(774)","","","(1,344)"],["Initial public offering costs (2)","\u2014","","","(60,559)","","","\u2014"],["Rights offering costs (3)","\u2014","","","(11,859)","","","(346)"],["Other non-recurring expenses (4)","\u2014","","","(500)","","","\u2014"],["Expenses, as adjusted","$","315,444","","","$","258,363","","","$","247,683"],["Operating income, U.S. GAAP","$","260,372","","","$","95,057","","","$","160,134"],["Seed investments (1)","1,230","","","705","","","885"],["Accelerated vesting of restricted stock units","7,197","","","774","","","1,344"],["Initial public offering costs (2)","\u2014","","","60,559","","","\u2014"],["Rights offering costs (3)","\u2014","","","11,859","","","346"],["Other non-recurring expenses (4)","\u2014","","","500","","","\u2014"],["Operating income, as adjusted","$","268,799","","","$","169,454","","","$","162,709"],["Operating margin, U.S. GAAP","44.6","%","","22.2","%","","39.0","%"],["Operating margin, as adjusted","46.0","%","","39.6","%","","39.6","%"]]
[[/GREPCENT_TABLE]]

_________________________

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

(2)    Represents costs associated with the initial public offering of PTA. Costs are summarized in the following table:

[[GREPCENT_TABLE]]
[["","Years Ended December 31,"],["(in thousands)","2021","","2020","","2019"],["Employee compensation and benefits","$","\u2014","","","$","1,317","","","$","\u2014"],["Distribution and service fees","\u2014","","","57,818","","","\u2014"],["General and administrative","\u2014","","","1,424","","","\u2014"],["Initial public offering costs","$","\u2014","","","$","60,559","","","$","\u2014"]]
[[/GREPCENT_TABLE]]

(3)     Represents costs associated with the RQI rights offering, which were recorded in general and administrative expense.

(4)     Represents non-recurring expenses, which were recorded in distribution and service fees.

Reconciliation of U.S. GAAP to As Adjusted Financial Results

Non-operating Income (Loss)

[[GREPCENT_TABLE]]
[["","Years Ended December 31,"],["(in thousands)","2021","","2020","","2019"],["Non-operating income (loss), U.S. GAAP","$","21,572","","","$","(1,670)","","","$","27,415"],["Seed investments (1)","(21,858)","","","2,157","","","(25,106)"],["Foreign currency exchange (gains) losses\u2014net (2)","(475)","","","871","","","1,909"],["Non-operating income (loss), as adjusted","$","(761)","","","$","1,358","","","$","4,218"]]
[[/GREPCENT_TABLE]]

_________________________

(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) losses associated with U.S. dollar-denominated assets held by certain foreign subsidiaries.

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Changes in Financial Condition, Liquidity and Capital Resources

We seek to maintain a capital structure that supports our business strategies and maintains the appropriate amount of liquidity at all times. Furthermore, we currently expect cash flows from operations to be more than adequate to fund our present and reasonably foreseeable future commitments for investing and financing activities.

Net Liquid Assets

Our current financial condition is highly liquid and is primarily comprised of cash and cash equivalents, U.S. Treasury securities, if any, seed investments and other current assets. Liquid assets are reduced by current liabilities, which are generally defined as obligations due within one year (together, net liquid assets). The Company does not currently have any outstanding debt.

The table below summarizes net liquid assets:

[[GREPCENT_TABLE]]
[["(in thousands)","December 31, 2021","","December 31, 2020"],["Cash and cash equivalents","$","184,373","","","$","41,232"],["U.S. Treasury securities","\u2014","","","41,648"],["Seed investments\u2014net","62,679","","","60,083"],["Other current assets","84,533","","","70,208"],["Current liabilities","(118,888)","","","(93,870)"],["Net liquid assets","$","212,697","","","$","119,301"]]
[[/GREPCENT_TABLE]]

Cash and cash equivalents

Cash and cash equivalents are on deposit with several highly-rated financial institutions and include short-term, highly liquid investments, which are readily convertible into cash and have original maturities of three months or less. The year ended December 31, 2020 included the payment of expenses associated with the initial public offering of PTA ($60.6 million) and the RQI rights offering ($12.0 million).

On February 15, 2022, we funded $18.0 million of our investment commitment in the Cohen & Steers Real Estate Opportunities Fund, L.P. (REOF). Refer to Investment Commitments, Contractual Obligations, Commitments and Contingencies for further discussion.

On February 24, 2022, we announced the initial public offering of the Cohen & Steers Real Estate Opportunities and Income Fund (the Fund). The Fund raised approximately $305.0 million in proceeds, excluding leverage. In addition, the underwriters have an option to purchase, within 45 days, up to an additional 2,287,500 common shares at the public offering price of $20.00 per share. We expect to incur costs of approximately $15.0 million in connection with the offering, excluding any additional costs that would be incurred should the underwriters exercise their option to purchase additional shares.

U.S. Treasury securities

U.S. Treasury securities are directly issued by the U.S. government and were classified as held to maturity.

Seed investments—net

Seed investments are primarily comprised of investments in Company-sponsored funds that we do not consolidate, our

pro-rata share of the net assets of the funds that we do consolidate and listed securities held directly for the purpose of establishing performance track records. Seed investments are recorded at fair value, are generally traded in active markets on major exchanges and can typically be liquidated within a normal settlement cycle. Seed investments are presented net of redeemable noncontrolling interests.

Other current assets

Other current assets primarily represent investment advisory and administration fees receivable. At December 31, 2021, institutional accounts comprised 49.1% of total accounts receivable, while open-end and closed-end funds, together, comprised 50.2% 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 December 31, 2021, there was no allowance for uncollectible accounts required.

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Current liabilities

Current liabilities included accrued compensation and benefits, distribution and service fees payable, operating lease obligations due within 12 months, 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:

[[GREPCENT_TABLE]]
[["","Years Ended December 31,"],["(in thousands)","2021","","2020","","2019"],["Cash Flow Data:"],["Net cash provided by (used in) operating activities","$","242,901","","","$","89,186","","","$","141,445"],["Net cash provided by (used in) investing activities","47,648","","","(1,770)","","","35,949"],["Net cash provided by (used in) financing activities","(145,426)","","","(148,895)","","","(170,130)"],["Net increase (decrease) in cash and cash equivalents","145,123","","","(61,479)","","","7,264"],["Effect of foreign exchange rate changes on cash and cash equivalents","(999)","","","1,359","","","1,355"],["Cash and cash equivalents, beginning of the period","41,232","","","101,352","","","92,733"],["Cash and cash equivalents, end of the period","$","185,356","","","$","41,232","","","$","101,352"]]
[[/GREPCENT_TABLE]]

We expect that cash flows provided by operating activities will provide sufficient liquidity to meet our obligations and continue to serve as our principal source of working capital for the foreseeable future.

In 2021, cash and cash equivalents, excluding the effect of foreign exchange rate changes, increased by $145.1 million when compared with 2020. The year ended December 31, 2020 included costs associated with the initial public offering of PTA and the RQI rights offering. Net cash provided by operating activities was $242.9 million. Cash flows from operating activities primarily consisted of net income adjusted for certain non-cash items and changes in assets and liabilities. Net cash provided by investing activities was $47.6 million, which included $41.7 million of proceeds from the sales and maturities of U.S. Treasury securities held for corporate purposes and net proceeds of securities held directly for the purpose of establishing performance track records of $8.1 million. Net cash used in financing activities was $145.4 million, including dividends paid to stockholders of $147.6 million, which included a special dividend of $60.3 million paid on November 30, 2021, repurchases of common stock to satisfy employee withholding tax obligations on the vesting and delivery of restricted stock units of $22.6 million, partially offset by net contributions from redeemable noncontrolling interests of $23.7 million.

In 2020, cash and cash equivalents, excluding the effect of foreign exchange rate changes, decreased by $61.5 million when compared with 2019. The decrease in cash was primarily due to the payment of expenses of $60.6 million associated with the initial public offering of PTA and $12.0 million associated with the RQI rights offering for the year ended December 31, 2020. Net cash provided by operating activities was $89.2 million. Cash flows from operating activities primarily consisted of net income adjusted for certain non-cash items and changes in assets and liabilities. Net cash used in investing activities was $1.8 million, primarily attributable to net purchases of securities held directly for the purpose of establishing performance track records of $7.3 million and purchases of property and equipment of $2.5 million, partially offset by $8.4 million of proceeds from the sales and maturities of U.S. Treasury securities held for corporate purposes. Net cash used in financing activities was $148.9 million, including dividends paid to stockholders of $122.5 million, which included a special dividend of $47.8 million paid on December 1, 2020 and repurchases of common stock to satisfy employee withholding tax obligations on the vesting and delivery of restricted stock units of $25.9 million.

In 2019, cash and cash equivalents, excluding the effect of foreign exchange rate changes, increased by $7.3 million when compared with 2018. Net cash provided by operating activities was $141.4 million. Cash flows from operating activities primarily consisted of net income adjusted for certain non-cash items and changes in assets and liabilities. Net cash provided by investing activities was $35.9 million, primarily attributable to net proceeds from the sales of securities held directly for the purpose of establishing performance track records of $33.7 million. Net cash used in financing activities was $170.1 million, including dividends paid to stockholders of $162.7 million, which included a special dividend of $94.5 million paid on December 3, 2019 and repurchases of common stock to satisfy employee withholding tax obligations on the vesting and delivery of restricted stock units of $10.4 million.

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Contractual Obligations, Commitments and Contingencies

The following table summarizes our contractual obligations at December 31, 2021:

[[GREPCENT_TABLE]]
[["(in thousands)","2022","","2023","","2024","","2025","","","","","","Total"],["Operating leases","$","12,354","","","$","11,912","","","$","1,131","","","$","\u2014","","","","","","","$","25,397"],["Purchase obligations (1)","4,047","","","2,825","","","1,092","","","378","","","","","","","8,342"],["Other liability (2)","665","","","1,246","","","1,662","","","2,077","","","","","","","5,650"],["Total","$","17,066","","","$","15,983","","","$","3,885","","","$","2,455","","","","","","","$","39,389"]]
[[/GREPCENT_TABLE]]

_________________________

(1)    Represents contracts which are either noncancellable or cancellable with a penalty. The Company’s obligations primarily reflected standard service contracts for market data.

(2)    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 Cuts and Jobs Act in 2017. See Note 14, Income Taxes, in the notes to the consolidated financial statements included in Part IV, Item 15 of this filing.

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.

On February 24, 2022, we declared a quarterly dividend on our common stock in the amount of $0.55 per share. This dividend will be payable on March 17, 2022 to stockholders of record at the close of business on March 7, 2022.

Investment Commitments

We have committed to invest up to $50.0 million in REOF. As of December 31, 2021, we had funded $3.1 million of this commitment. On February 15, 2022, we funded an additional $18.0 million of this commitment.

Contingencies

Due to the uncertainty with respect the timing of future cash flows associated with unrecognized tax benefits at December 31, 2021, the Company is unable to make reasonably reliable estimates of the period of cash settlement with the respective taxing authorities. Therefore, $10.4 million of gross unrecognized tax benefits have been excluded from the contractual obligations table above. See Note 14, Income Taxes, in the notes to the consolidated financial statements included in Part IV, Item 15 of this filing.

Net Capital Requirements

Several of our subsidiaries are subject to minimum net capital requirements by the local laws and regulations to which they are subject. As of December 31, 2021, each of our subsidiaries subject to a minimum net capital requirement satisfied the applicable requirement. See Note 12, Regulatory Requirements, in the notes to the consolidated financial statements included in Part IV, Item 15.

Critical Accounting Estimates

The preparation of our consolidated financial statements in accordance with accounting principles generally accepted in the United States of America requires us to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the dates of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods. Management believes the estimates used in preparing the consolidated financial statements are reasonable and prudent. Actual results could differ from those estimates.

Our significant accounting policies are disclosed in Note 2, Summary of Significant Accounting Policies, in the notes to the consolidated financial statements included in Part IV, Item 15 of this filing and should be read in conjunction with the summarized information below. Management considers the following accounting estimates critical to an informed review of our consolidated financial statements as they require management to make certain judgments about matters that may be uncertain at the time the estimates were determined.

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Income Taxes

We operate globally through our subsidiaries and therefore must allocate our income, expenses, and earnings taking into account various laws and regulations. Our tax provision represents an estimate of the total liability that we have incurred as a result of our global operations. The determination of our annual provision is subject to judgments and estimates and the actual results included in our annual tax returns may vary from the amounts reported in our consolidated financial statements. Accordingly, we recognize additions to, or reductions from, income tax expense during reporting periods that may pertain to prior period provisions as our estimated liabilities are revised and actual tax returns and audits, if any, are settled. Such adjustments are recognized in the quarterly period in which they are determined.

In addition, we record current and deferred tax consequences of all transactions that have been recognized in the consolidated financial statements in accordance with the provisions of the enacted tax laws. Deferred tax assets are recognized for temporary differences that will result in deductible amounts in future years at tax rates that are expected to apply in those years. Deferred tax liabilities are recognized for temporary differences that will result in taxable income in future years at tax rates that are expected to apply in those years. We record a valuation allowance, when necessary, to reduce deferred tax assets to an amount that more likely than not will be realized.

The calculation of our tax liabilities involves uncertainties in the application of complex tax laws and regulations in several jurisdictions across our global operations. In accordance with Accounting Standards Codification Topic 740, Income Taxes (ASC 740), a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, on the basis of the technical merits.

We record unrecognized tax benefits as liabilities in accordance with ASC 740 and adjust these liabilities when our judgment changes as a result of the evaluation of new information not previously available. Because of the complexity of some of these uncertainties, the ultimate resolution may differ from our current estimate of the unrecognized tax benefit liabilities. These differences are reflected as increases or decreases in income tax expense in the period in which new information becomes available.

Recently Issued Accounting Pronouncements

See discussion of Recently Issued Accounting Pronouncements in Note 2 of the consolidated financial statements.

38