CNS AR24 Digital - Book - Page 24
Item 1A. Risk Factors
Risks Related to our Business
A decline in the absolute or relative performance or value of real estate securities, or the attractiveness of real
estate portfolios or investment strategies, would have an adverse effect on the assets we manage and our revenue.
As of December 31, 2024, approximately 65.2% of the assets we managed was concentrated in real estate securities
strategies, including approximately 26.2% in the aggregate in Cohen & Steers Real Estate Securities Fund, Inc., Cohen &
Steers Realty Shares, Inc. and Cohen & Steers Institutional Realty Shares, Inc. Real estate securities and real property
investments owned by the issuers of real estate securities are subject to varying degrees of risk that could affect investment
performance. Returns on investments in real estate securities depend on the amount of income and capital appreciation or loss
realized by the underlying real property. We are paid a management fee or incentive fee based on the net asset value or
returns, respectively, of certain of our investment vehicles and declines in the value of real estate securities and real property
investments may reduce the fees we earn and our assets under management. Income and real estate values may be adversely
affected by, among other things, unfavorable changes to tax laws and other laws and regulations applicable to real estate
securities, global or regional events and disruptions that directly impact the real estate sector, the cost of compliance with
applicable laws and regulations, sensitivity to certain economic factors such as interest rate changes and market volatility or
economic recession, the availability and terms of financing, the creditworthiness of tenants, the volume and market terms of
commercial real estate purchase and sale transactions, general and local economic conditions, the limited ability of issuers of
real estate securities to vary their portfolios promptly in response to changes in market conditions and other factors that are
beyond our control. In addition, distress in the commercial real estate sector, including office properties, as well as shifting
business trends and/or workforce reductions in certain geographies and industries, has negatively impacted and may continue
to negatively impact certain markets in which we invest, including for example, as a result of low occupancy rates, tenant
defaults, reduced rental rates, the maturation of a significant amount of commercial real property loans amid an elevated
interest rate environment, tightening credit conditions imposed by traditional sources of real estate financing and refinancing
and commercial mortgage loan defaults. Real estate values may also be adversely affected by new businesses and approaches
in the real estate market and sectors in which we invest that cause disruptions in the industry with technological and other
innovations, such as impacts to the value of hospitality properties due to competition from the non-traditional hospitality
sector (such as short-term rental services) and office properties due to competition from shared office spaces (including coworking environments) or remote work arrangements. Further, our investments in real estate securities and real property may
be exposed to new or increased risks and liabilities that could have a negative impact on our investment strategies and reduce
our assets under management, revenue and earnings, including risks associated with global climate change, such as increased
frequency and/or intensity of adverse weather and natural disasters. If underlying properties do not generate sufficient income
to pay for ongoing operating expenses, the income and the ability of an issuer of real estate securities to pay interest and
principal on debt securities or any dividends on common or preferred stocks will be adversely affected. A decline in the
performance or value of real estate securities would have an adverse effect on the assets we manage and reduce the fees we
earn and our revenue.
Our growth and the execution of our real estate investment strategy may be constrained by the size and number
of real estate securities issuers, as well as REIT ownership restrictions.
Investments in real estate securities play an important role in our overall investment strategy. Our ability to fully utilize
our investment capacity and continue to increase our ownership of real estate securities depends, in part, on growth in the size
and number of issuers in the real estate securities market, particularly in the U.S. Limited growth, or any consolidation
activity in the real estate sector, could limit or reduce the number of investment opportunities otherwise available to us. In
addition, increased competition for investment opportunities due to large amounts of available capital dedicated to real estate
strategies or due to alternative forms of investment methods, or a real or perceived trend towards merger and acquisition
activity in the sector, could affect real estate valuations and prices. A limited number of investment targets could adversely
impact our ability to make new investments based on fundamental valuations or at all, impair the full utilization of our overall
investment capacity and otherwise negatively affect our investment strategy.
Our ability to increase our ownership, or maintain existing levels of ownership, in securities issued by REITs may also
be constrained by REIT ownership limits, which limit the percentage ownership of a REIT9s outstanding capital stock,
common stock and/or preferred stock. REIT charters generally grant a REIT the right to unilaterally reduce any ownership
amount that it deems to be in violation of its ownership limits. Such charters do not typically provide for the elimination of
such right even in the event a REIT has previously provided waivers from such limits or acknowledgements that ownership
levels do not violate such limits. To the extent these ownership restrictions prevent us from acquiring new or additional real
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