Rate Reaction Opens a REIT Opportunity
Real Estate
Rate Reaction Opens a REIT Opportunity Thomas Bohjalian, CFA, Executive Vice President and Head of U.S. Real Estate
Despite a generally healthy real estate market, REITs have been held back amid heightened short-term sensitivity to interest rates. While rates could remain a factor, we see the recent pullback as an opportunity to build allocations to REITs: they’re looking attractive next to stocks, bonds and private real estate, equity correlations are at a 16-year low, and better fundamentals may be on the horizon. Rising rates don’t happen in a vacuum. One of the things we find that some investors and the financial press consistently get wrong about REITs is the relationship with interest rates— that if rates are rising, you shouldn’t own REITs. This belief, however disconnected from historical evidence, often seems too ingrained to suggest otherwise.
An opportunity is emerging. Considering these unusual circumstances, we believe interest rates could continue to be an outsized factor in the current environment, and volatility could persist. However, waiting for the ideal environment in any asset class is not practical—and in the meantime, we are seeing credible indications of value on multiple fronts.
Interest rates are part of the equation, and sudden moves in bond yields can create volatility. But REITs are not bonds. In an improving economy, landlords can raise rents as tenants fight for more space, potentially increasing cash flows to offset the effects of higher rates. In other words, it should matter why rates are rising, not simply that rates are rising.
While there is no way of knowing exactly when a bottom will occur, we believe an opportunity is shaping up for increasing REIT allocations, taking advantage of their attractive valuations and diversification potential.
Rising Treasury yields have been historically positive for REITs when accompanied by a stronger economy. That hasn’t been the case recently.
REITs have the potential to be strong diversifiers with financial assets, illustrated by their low correlations to stocks and bonds (Exhibit 1). We believe the need for diversification is especially important at a time when bonds face challenging return prospects in the face of QE unwinding, which could suppress their effectiveness in countering the volatility of stocks.
What’s driving recent underperformance? Since the start of 2015, REITs have been among the most out-of-favor segments of the market, delivering flat returns even while growing cash flows at 7–8% per year. REITs have pulled back sharply in early 2018, trailing the broad market by 12% through February 15th, bringing their one-year underperformance to 24%. REITs have also fallen behind private real estate, compared with a 3% annual return premium to the private market over the past three decades.(1)
1) REIT correlations with stocks are at a 16-year low.
1.0 0.8
We believe a perfect storm of factors have contributed to the negative sentiment:
0.6
• Interest-rate sensitivity has been unusually high, with rates coming off historically low levels amid the unprecedented unwinding of quantitative easing (QE).
0.2
• Markets are anticipating the need for faster rate hikes in response to tax cuts, tight labor markets and rising inflation. • REIT fundamentals have slowed as the cycle has matured, while corporate tax cuts will not directly benefit REIT earnings (the benefit is likely to be more gradual as a result of stronger demand, and many investors may benefit from lower taxes on REIT distributions).
vs. Stocks vs. Bonds
Exhibit 1: REIT Correlations 90-Day Rolling Periods
0.4
0.29 0.28
0.0 -0.2 -0.4 2002
2004
2006
2008
2010
2012
2014
2016
2018
At January 31, 2018. Source: Morningstar, Cohen & Steers. Data quoted represents past performance, which is no guarantee of future results. Correlation is a statistical measure of how two data series move in relation to each other, with 1 representing perfect synchronization and -1 representing perfect opposition. See page 4 for index definitions and additional disclosures.
(1) At December 31, 2017. Source: Morningstar, NCREIF. Data quoted represents past performance, which is no guarantee of future results. Annualized returns for U.S. REITs/ private real estate: 1Y: 5.2%/7.6%; 3Y: 5.6%/10.4%; 5Y: 9.5%/11.5%; 10Y: 7.4%/5.0%; 20Y: 9.0%/8.9%; 30Y: 10.7%/7.3%. See page 4 for index definitions and additional disclosures.
Rate Reaction Opens a REIT Opportunity
2) REITs are trading at attractive historical values relative to stocks, bonds and private real estate. Vs. stocks (Exhibit 2): Over the past five years, REIT earnings multiples have contracted, while those of the S&P 500 have expanded, accounting for most of the broad market’s outperformance compared with dividends and earnings growth. Paradoxically, the market seems less concerned about the risk that higher interest rates and the QE unwind poses to stocks even though their multiples are more inflated by comparison. Vs. bonds (Exhibit 3): REITs are often valued in terms of the income they provide in relation to bonds. REITs currently offer a yield premium of 175 basis points over 10-year Treasuries, wider than their historical average of 114 bps, indicating relative value compared with fixed income. Vs. private real estate (Exhibit 4): Since 1994, REITs have traded at a 2.7% average premium relative to their property holdings, measured by net asset value (NAV). This premium partly reflects the expected value that REIT managements may add over and above the underlying real estate. As of February 15th, REITs were trading at a 4.3% overall discount based on our estimates—meaning investors gain access to properties for less than what private investors are likely to pay, while getting the management operations for free. Since the early 1990s, there have been 11 times when REITs ended the month at an NAV discount after spending at least six months at a premium (Exhibit 5). Most of these discounts occurred in periods of economic expansion and strong fundamentals, just like now. In the 12 months following these occurrences, REITs generated an average total return of 16.1% and, in the majority of cases, returned to trading at a premium to NAV. In our view, NAV discounts alone should not be viewed as a buy signal, but rather as context for understanding the relationship between REITs and the health of the underlying property market. When the economy is improving and real estate fundamentals are strong, yield-driven corrections have historically been a time to consider adding an allocation to REITs.
Exhibit 2: Diverging Multiples
S&P 500 P/E U.S. REITs P/FFO
26x 25.0 22x 18.9
18x
17.3 15.2
2012
2013
2014
2015
2016
U.S. REITs 10-Year Treasury
Exhibit 3: Yield Comparison 1990–2/15/2018 Yield Spread (in basis points) Historical Average: 114 Pre-Crisis (1990–2007): 88 Current: 175
12%
8% 4.65
4%
2.90
1990
1994
1998
2002
2006
2010
2014
2018
At February 15, 2018. Source: Morningstar. Data quoted represents past performance, which is no guarantee of future results.
Exhibit 4: Premium/Discount to NAV 10% 4.5
Historical Average
3.1
2.7
0% -0.4
-1.0
-1.7
-4.3 -9.9
-20%
2
2018
At January 31, 2018. Source: Morningstar, Cohen & Steers estimates based on proprietary metrics. Data quoted represents past performance, which is no guarantee of future results.
-10%
-12.2
-13.3
Ma Sh ll o Ce ppin nte g Ap r ar tm en t Of fic e U. S. RE ITs
na l
ar e hC
Re gio
e
tel
He alt
Ho
tor ag
lf S Se
Ind
nte
r us tria l
-17.7
Ce ta Da
Exhibit 2: P/E: price to earnings per share; P/FFO: price to funds from operations per share, the key earnings metric for REITs, calculated as GAAP net income, plus depreciation and amortization, minus any gains (or losses) from asset sales. Exhibit 3: Treasury yield represents yield to maturity. REIT dividend yield represents the current share price divided by total dividends per share over the trailing 12 months. Exhibit 4: Price to NAV is similar to price to book value, representing the net market value of a company’s assets minus liabilities. Sectors and market average represented by the FTSE NAREIT Equity REIT Index. See page 4 for index definitions and additional disclosures.
2017
At February 15, 2018. Source: Cohen & Steers (current estimates), UBS (historical average, 1/1994—1/2018). Data quoted represents past performance, which is no guarantee of future results.
Exhibit 5: U.S. REIT Premium/Discount to NAV and Total Returns Months When REITs Began Trading at Discounts to NAV After 6+ Months at Premium to NAV October 1994 November 1995 August 1998 September 2002 December 2005 May 2007 September 2011 August 2013 September 2014 April 2015 October 2016 Average
12 Months Later Discount to NAV at Month End
Total Return
Premium or Discount to NAV
-0.7% -0.1% -7.7% -0.7% -10.8% -3.7% -6.0% -5.1% -1.1% -1.6% -3.2% -3.7%
12.2% 29.2% 2.7% 25.2% 35.1% -11.9% 32.6% 24.1% 9.9% 10.5% 7.3% 16.1%
-1.7% 19.0% -9.2% 11.8% 3.8% -3.3% 5.5% 5.0% -7.1% 6.2% -4.5% 2.2%
At February 15, 2018. Source: UBS and Cohen & Steers. Data quoted represents past performance, which is no guarantee of future results. Periods selected based on month-end data using UBS price-to-NAV. See page 4 for index definitions and additional disclosures.
3. Demand for private real estate is substantial and growing. Managers of private equity funds are holding onto a record $250 billion of uninvested capital (“dry powder”) earmarked for real estate (Exhibit 6). Fundraising efforts have increased for 2018, suggesting that this amount is only likely to grow. With the recent underperformance of REITs, private fund managers are warming up to acquisitions through the listed market, particularly for companies trading at deep and sustained discounts. Exhibit 6: Private Real Estate Dry Powder In $ Billions 250 200
REITs have lagged despite growing backlog of private capital amid strong demand for real estate 176 150
150
228 201
195
2013
2014
238
249
164 136
100
We are confident in the prospects for economic growth over the next year, supported by a continued upturn in the business cycle, regulatory relief and continued job growth amid one of the broadest global expansions on record—with added fuel from $200 billion in tax cuts for 2018. Furthermore, we believe property supply in the U.S. appears to be peaking, which could lead to some acceleration in fundamentals later in the year. In this context, we believe a reasonable framework for return expectations is roughly 9%, composed of mid-single-digit cash flow growth plus 4.7% dividend yields, assuming no multiple expansion.
50
2009
2010
2011
2012
2015
2016
2017
At June 30, 2017. Source: Preqin, Cohen & Steers. Dry powder measures total capital commitments to private equity funds minus capital that has been called by the general partner for investment. See page 4 for additional disclosures.
While we cannot say when REITs will reverse their recent underperformance, we see this as an attractive opportunity to begin legging into higher REIT allocations, taking advantage of low relative valuations, strong diversification potential and robust demand in the private market.
3
Index Associations and Definitions All returns and investment characteristics discussed in this report are based on the indexes below. An investor cannot invest directly in an index and index performance does not reflect the deduction of any fees, expenses or taxes. Bonds: Barclays Capital U.S. Aggregate Bond Index is a broad-market measure of the U.S. dollar-denominated investment-grade fixed-rate taxable bond market, and includes Treasuries, government-related and corporate securities, mortgage-backed securities, asset-backed securities, and commercial mortgage-backed securities. Private real estate: NCREIF Fund Index—Open-End Diversified Core Equity is a capitalization-weighted, gross-of-fees, time-weighted return index of 30 open-end commingled private funds pursuing a core U.S. real estate investment strategy. REITs: FTSE NAREIT Equity REIT Index contains all tax-qualified REITs, except timber and infrastructure REITs, with more than 50% of total assets in qualifying real estate assets other than mortgages secured by real property that also meet minimum size and liquidity criteria. Stocks: S&P 500 Index is an unmanaged index of 500 large-capitalization stocks that is frequently used as a general measure of U.S. stock market performance. Important Disclosures Data quoted represents past performance, which is no guarantee of future results. The information presented above does not reflect the performance of any fund or other account managed or serviced by Cohen & Steers, and there is no guarantee that investors will experience the type of performance reflected above. There is no guarantee that any historical trend illustrated herein will be repeated in the future, and there is no way to predict precisely when such a trend will begin. There is no guarantee that any market forecast made in this document will be realized. The views and opinions in the preceding document are as of the date of publication and are subject to change without notice. This material represents an assessment of the market environment at a specific point in time and should not be relied upon as investment advice, does not constitute a recommendation to buy or sell a security or other investment and is not intended to predict or depict performance of any investment. This material is not being provided in a fiduciary capacity and is not intended to recommend any investment policy or investment strategy or take into account the specific objectives or circumstances of any investor. We consider the information in this presentation to be accurate, but we do not represent that it is complete or should be relied upon as the sole source of suitability for investment. Cohen & Steers does not provide investment, tax or legal advice. Please consult with your investment, tax or legal professional regarding your individual circumstances prior to investing. Risks of Investing in Real Estate Securities. The risks of investing in real estate securities are similar to those associated with direct investments in real estate, including falling property values due to increasing vacancies or declining rents resulting from economic, legal, political or technological developments, lack of liquidity, limited diversification and sensitivity to certain economic factors such as interest rate changes and market recessions. Cohen & Steers Capital Management, Inc. (Cohen & Steers) is a registered investment advisory firm that provides investment management services to corporate retirement, public and union retirement plans, endowments, foundations and mutual funds. Cohen & Steers UK Limited is authorized and regulated by the Financial Conduct Authority (FRN 458459). Cohen & Steers Japan, LLC, is a registered financial instruments operator (investment advisory and agency business with the Financial Services Agency of Japan and the Kanto Local Finance Bureau No. 2857) and is a member of the Japan Investment Advisers Association.
About Cohen & Steers Cohen & Steers is a global investment manager specializing in liquid real assets, including real estate securities, listed infrastructure, commodities and natural resource equities, as well as preferred securities and other income solutions. Founded in 1986, the firm is headquartered in New York City, with offices in London, Hong Kong, Tokyo and Seattle. Publication Date: February 2018. Copyright © 2018 Cohen & Steers, Inc. All rights reserved.
cohenandsteers.com U.S. Advisors & Investors: +1 800 330 7348 U.S. Institutions & Consultants: +1 212 822 1620
Hong Kong: +852 3667 0080 Tokyo: +81 3 4530 4710
London: +44 207 460 6350 MP857 NonUS 0218
Rate Reaction Opens a REIT Opportunity Thomas Bohjalian, CFA, Executive Vice President and Head of U.S. Real Estate
Despite a generally healthy real estate market, REITs have been held back amid heightened short-term sensitivity to interest rates. While rates could remain a factor, we see the recent pullback as an opportunity to build allocations to REITs: they’re looking attractive next to stocks, bonds and private real estate, equity correlations are at a 16-year low, and better fundamentals may be on the horizon. Rising rates don’t happen in a vacuum. One of the things we find that some investors and the financial press consistently get wrong about REITs is the relationship with interest rates— that if rates are rising, you shouldn’t own REITs. This belief, however disconnected from historical evidence, often seems too ingrained to suggest otherwise.
An opportunity is emerging. Considering these unusual circumstances, we believe interest rates could continue to be an outsized factor in the current environment, and volatility could persist. However, waiting for the ideal environment in any asset class is not practical—and in the meantime, we are seeing credible indications of value on multiple fronts.
Interest rates are part of the equation, and sudden moves in bond yields can create volatility. But REITs are not bonds. In an improving economy, landlords can raise rents as tenants fight for more space, potentially increasing cash flows to offset the effects of higher rates. In other words, it should matter why rates are rising, not simply that rates are rising.
While there is no way of knowing exactly when a bottom will occur, we believe an opportunity is shaping up for increasing REIT allocations, taking advantage of their attractive valuations and diversification potential.
Rising Treasury yields have been historically positive for REITs when accompanied by a stronger economy. That hasn’t been the case recently.
REITs have the potential to be strong diversifiers with financial assets, illustrated by their low correlations to stocks and bonds (Exhibit 1). We believe the need for diversification is especially important at a time when bonds face challenging return prospects in the face of QE unwinding, which could suppress their effectiveness in countering the volatility of stocks.
What’s driving recent underperformance? Since the start of 2015, REITs have been among the most out-of-favor segments of the market, delivering flat returns even while growing cash flows at 7–8% per year. REITs have pulled back sharply in early 2018, trailing the broad market by 12% through February 15th, bringing their one-year underperformance to 24%. REITs have also fallen behind private real estate, compared with a 3% annual return premium to the private market over the past three decades.(1)
1) REIT correlations with stocks are at a 16-year low.
1.0 0.8
We believe a perfect storm of factors have contributed to the negative sentiment:
0.6
• Interest-rate sensitivity has been unusually high, with rates coming off historically low levels amid the unprecedented unwinding of quantitative easing (QE).
0.2
• Markets are anticipating the need for faster rate hikes in response to tax cuts, tight labor markets and rising inflation. • REIT fundamentals have slowed as the cycle has matured, while corporate tax cuts will not directly benefit REIT earnings (the benefit is likely to be more gradual as a result of stronger demand, and many investors may benefit from lower taxes on REIT distributions).
vs. Stocks vs. Bonds
Exhibit 1: REIT Correlations 90-Day Rolling Periods
0.4
0.29 0.28
0.0 -0.2 -0.4 2002
2004
2006
2008
2010
2012
2014
2016
2018
At January 31, 2018. Source: Morningstar, Cohen & Steers. Data quoted represents past performance, which is no guarantee of future results. Correlation is a statistical measure of how two data series move in relation to each other, with 1 representing perfect synchronization and -1 representing perfect opposition. See page 4 for index definitions and additional disclosures.
(1) At December 31, 2017. Source: Morningstar, NCREIF. Data quoted represents past performance, which is no guarantee of future results. Annualized returns for U.S. REITs/ private real estate: 1Y: 5.2%/7.6%; 3Y: 5.6%/10.4%; 5Y: 9.5%/11.5%; 10Y: 7.4%/5.0%; 20Y: 9.0%/8.9%; 30Y: 10.7%/7.3%. See page 4 for index definitions and additional disclosures.
Rate Reaction Opens a REIT Opportunity
2) REITs are trading at attractive historical values relative to stocks, bonds and private real estate. Vs. stocks (Exhibit 2): Over the past five years, REIT earnings multiples have contracted, while those of the S&P 500 have expanded, accounting for most of the broad market’s outperformance compared with dividends and earnings growth. Paradoxically, the market seems less concerned about the risk that higher interest rates and the QE unwind poses to stocks even though their multiples are more inflated by comparison. Vs. bonds (Exhibit 3): REITs are often valued in terms of the income they provide in relation to bonds. REITs currently offer a yield premium of 175 basis points over 10-year Treasuries, wider than their historical average of 114 bps, indicating relative value compared with fixed income. Vs. private real estate (Exhibit 4): Since 1994, REITs have traded at a 2.7% average premium relative to their property holdings, measured by net asset value (NAV). This premium partly reflects the expected value that REIT managements may add over and above the underlying real estate. As of February 15th, REITs were trading at a 4.3% overall discount based on our estimates—meaning investors gain access to properties for less than what private investors are likely to pay, while getting the management operations for free. Since the early 1990s, there have been 11 times when REITs ended the month at an NAV discount after spending at least six months at a premium (Exhibit 5). Most of these discounts occurred in periods of economic expansion and strong fundamentals, just like now. In the 12 months following these occurrences, REITs generated an average total return of 16.1% and, in the majority of cases, returned to trading at a premium to NAV. In our view, NAV discounts alone should not be viewed as a buy signal, but rather as context for understanding the relationship between REITs and the health of the underlying property market. When the economy is improving and real estate fundamentals are strong, yield-driven corrections have historically been a time to consider adding an allocation to REITs.
Exhibit 2: Diverging Multiples
S&P 500 P/E U.S. REITs P/FFO
26x 25.0 22x 18.9
18x
17.3 15.2
2012
2013
2014
2015
2016
U.S. REITs 10-Year Treasury
Exhibit 3: Yield Comparison 1990–2/15/2018 Yield Spread (in basis points) Historical Average: 114 Pre-Crisis (1990–2007): 88 Current: 175
12%
8% 4.65
4%
2.90
1990
1994
1998
2002
2006
2010
2014
2018
At February 15, 2018. Source: Morningstar. Data quoted represents past performance, which is no guarantee of future results.
Exhibit 4: Premium/Discount to NAV 10% 4.5
Historical Average
3.1
2.7
0% -0.4
-1.0
-1.7
-4.3 -9.9
-20%
2
2018
At January 31, 2018. Source: Morningstar, Cohen & Steers estimates based on proprietary metrics. Data quoted represents past performance, which is no guarantee of future results.
-10%
-12.2
-13.3
Ma Sh ll o Ce ppin nte g Ap r ar tm en t Of fic e U. S. RE ITs
na l
ar e hC
Re gio
e
tel
He alt
Ho
tor ag
lf S Se
Ind
nte
r us tria l
-17.7
Ce ta Da
Exhibit 2: P/E: price to earnings per share; P/FFO: price to funds from operations per share, the key earnings metric for REITs, calculated as GAAP net income, plus depreciation and amortization, minus any gains (or losses) from asset sales. Exhibit 3: Treasury yield represents yield to maturity. REIT dividend yield represents the current share price divided by total dividends per share over the trailing 12 months. Exhibit 4: Price to NAV is similar to price to book value, representing the net market value of a company’s assets minus liabilities. Sectors and market average represented by the FTSE NAREIT Equity REIT Index. See page 4 for index definitions and additional disclosures.
2017
At February 15, 2018. Source: Cohen & Steers (current estimates), UBS (historical average, 1/1994—1/2018). Data quoted represents past performance, which is no guarantee of future results.
Exhibit 5: U.S. REIT Premium/Discount to NAV and Total Returns Months When REITs Began Trading at Discounts to NAV After 6+ Months at Premium to NAV October 1994 November 1995 August 1998 September 2002 December 2005 May 2007 September 2011 August 2013 September 2014 April 2015 October 2016 Average
12 Months Later Discount to NAV at Month End
Total Return
Premium or Discount to NAV
-0.7% -0.1% -7.7% -0.7% -10.8% -3.7% -6.0% -5.1% -1.1% -1.6% -3.2% -3.7%
12.2% 29.2% 2.7% 25.2% 35.1% -11.9% 32.6% 24.1% 9.9% 10.5% 7.3% 16.1%
-1.7% 19.0% -9.2% 11.8% 3.8% -3.3% 5.5% 5.0% -7.1% 6.2% -4.5% 2.2%
At February 15, 2018. Source: UBS and Cohen & Steers. Data quoted represents past performance, which is no guarantee of future results. Periods selected based on month-end data using UBS price-to-NAV. See page 4 for index definitions and additional disclosures.
3. Demand for private real estate is substantial and growing. Managers of private equity funds are holding onto a record $250 billion of uninvested capital (“dry powder”) earmarked for real estate (Exhibit 6). Fundraising efforts have increased for 2018, suggesting that this amount is only likely to grow. With the recent underperformance of REITs, private fund managers are warming up to acquisitions through the listed market, particularly for companies trading at deep and sustained discounts. Exhibit 6: Private Real Estate Dry Powder In $ Billions 250 200
REITs have lagged despite growing backlog of private capital amid strong demand for real estate 176 150
150
228 201
195
2013
2014
238
249
164 136
100
We are confident in the prospects for economic growth over the next year, supported by a continued upturn in the business cycle, regulatory relief and continued job growth amid one of the broadest global expansions on record—with added fuel from $200 billion in tax cuts for 2018. Furthermore, we believe property supply in the U.S. appears to be peaking, which could lead to some acceleration in fundamentals later in the year. In this context, we believe a reasonable framework for return expectations is roughly 9%, composed of mid-single-digit cash flow growth plus 4.7% dividend yields, assuming no multiple expansion.
50
2009
2010
2011
2012
2015
2016
2017
At June 30, 2017. Source: Preqin, Cohen & Steers. Dry powder measures total capital commitments to private equity funds minus capital that has been called by the general partner for investment. See page 4 for additional disclosures.
While we cannot say when REITs will reverse their recent underperformance, we see this as an attractive opportunity to begin legging into higher REIT allocations, taking advantage of low relative valuations, strong diversification potential and robust demand in the private market.
3
Index Associations and Definitions All returns and investment characteristics discussed in this report are based on the indexes below. An investor cannot invest directly in an index and index performance does not reflect the deduction of any fees, expenses or taxes. Bonds: Barclays Capital U.S. Aggregate Bond Index is a broad-market measure of the U.S. dollar-denominated investment-grade fixed-rate taxable bond market, and includes Treasuries, government-related and corporate securities, mortgage-backed securities, asset-backed securities, and commercial mortgage-backed securities. Private real estate: NCREIF Fund Index—Open-End Diversified Core Equity is a capitalization-weighted, gross-of-fees, time-weighted return index of 30 open-end commingled private funds pursuing a core U.S. real estate investment strategy. REITs: FTSE NAREIT Equity REIT Index contains all tax-qualified REITs, except timber and infrastructure REITs, with more than 50% of total assets in qualifying real estate assets other than mortgages secured by real property that also meet minimum size and liquidity criteria. Stocks: S&P 500 Index is an unmanaged index of 500 large-capitalization stocks that is frequently used as a general measure of U.S. stock market performance. Important Disclosures Data quoted represents past performance, which is no guarantee of future results. The information presented above does not reflect the performance of any fund or other account managed or serviced by Cohen & Steers, and there is no guarantee that investors will experience the type of performance reflected above. There is no guarantee that any historical trend illustrated herein will be repeated in the future, and there is no way to predict precisely when such a trend will begin. There is no guarantee that any market forecast made in this document will be realized. The views and opinions in the preceding document are as of the date of publication and are subject to change without notice. This material represents an assessment of the market environment at a specific point in time and should not be relied upon as investment advice, does not constitute a recommendation to buy or sell a security or other investment and is not intended to predict or depict performance of any investment. This material is not being provided in a fiduciary capacity and is not intended to recommend any investment policy or investment strategy or take into account the specific objectives or circumstances of any investor. We consider the information in this presentation to be accurate, but we do not represent that it is complete or should be relied upon as the sole source of suitability for investment. Cohen & Steers does not provide investment, tax or legal advice. Please consult with your investment, tax or legal professional regarding your individual circumstances prior to investing. Risks of Investing in Real Estate Securities. The risks of investing in real estate securities are similar to those associated with direct investments in real estate, including falling property values due to increasing vacancies or declining rents resulting from economic, legal, political or technological developments, lack of liquidity, limited diversification and sensitivity to certain economic factors such as interest rate changes and market recessions. Cohen & Steers Capital Management, Inc. (Cohen & Steers) is a registered investment advisory firm that provides investment management services to corporate retirement, public and union retirement plans, endowments, foundations and mutual funds. Cohen & Steers UK Limited is authorized and regulated by the Financial Conduct Authority (FRN 458459). Cohen & Steers Japan, LLC, is a registered financial instruments operator (investment advisory and agency business with the Financial Services Agency of Japan and the Kanto Local Finance Bureau No. 2857) and is a member of the Japan Investment Advisers Association.
About Cohen & Steers Cohen & Steers is a global investment manager specializing in liquid real assets, including real estate securities, listed infrastructure, commodities and natural resource equities, as well as preferred securities and other income solutions. Founded in 1986, the firm is headquartered in New York City, with offices in London, Hong Kong, Tokyo and Seattle. Publication Date: February 2018. Copyright © 2018 Cohen & Steers, Inc. All rights reserved.
cohenandsteers.com U.S. Advisors & Investors: +1 800 330 7348 U.S. Institutions & Consultants: +1 212 822 1620
Hong Kong: +852 3667 0080 Tokyo: +81 3 4530 4710
London: +44 207 460 6350 MP857 NonUS 0218
