COHEN & STEERS, INC. - FORM 10-K

Attached files

file	filename
EX-32.1 - CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 906 - COHEN & STEERS, INC.	cns10k-123116ex321.htm
EX-32.2 - CERTIFICATION OF THE CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 906 - COHEN & STEERS, INC.	cns10k-123116ex322.htm
EX-31.2 - CERTIFICATION OF THE CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 302 - COHEN & STEERS, INC.	cns10k-123116ex312.htm
EX-31.1 - CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 302 - COHEN & STEERS, INC.	cns10k-123116ex311.htm
EX-23.1 - CONSENT OF DELOITTE & TOUCHE LLP - COHEN & STEERS, INC.	cns10k-123116ex231.htm
EX-21.1 - SUBSIDIARIES OF THE REGRISTRANT - COHEN & STEERS, INC.	cns10k-123116ex211.htm

_______________________________________________________

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

(Mark One)

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2016

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO .

Commission File No. 001-32236

COHEN & STEERS, INC.

(Exact name of registrant as specified in its charter)



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

280 Park Avenue, New York, New York (Address of Principal Executive Offices)	10017 (Zip Code)

Registrant's telephone number, including area code: (212) 832-3232

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



Title of each class	Name of each exchange on which registered
Common Stock, $.01 par value	New York Stock Exchange

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

None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes ¨ No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No x

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein and will not be contained, to the best of the registrant's knowledge, in the definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

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



Large Accelerated Filer	x		Accelerated Filer	¨

Non Accelerated Filer	¨	(Do not check if a smaller reporting company)	Smaller reporting company	¨

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

The aggregate market value of the voting common stock held by non-affiliates of the Registrant as of June 30, 2016 was approximately $836 million. There is no non-voting common stock of the Registrant outstanding.

As of February 21, 2017, there were 46,285,336 shares of the Registrant's common stock outstanding.

Documents Incorporated by Reference

Portions of the definitive Proxy Statement of Cohen & Steers, Inc. (the Proxy Statement) to be filed pursuant to Regulation 14A of the general rules and regulations of the Securities Exchange Act of 1934, as amended, for the 2017 annual meeting of stockholders scheduled to be held on May 4, 2017 are incorporated by reference into Part III of this Form 10-K.

________________________________________________________

COHEN & STEERS, INC. AND SUBSIDIARIES

TABLE OF CONTENTS



		Page
Part I
Item 1	Business	1
Item 1A	Risk Factors	6
Item 1B	Unresolved Staff Comments	11
Item 2	Properties	11
Item 3	Legal Proceedings	11
Item 4	Mine Safety Disclosures	11
Part II
Item 5	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	12
Item 6	Selected Financial Data	13
Item 7	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
Item 7A	Quantitative and Qualitative Disclosures About Market Risk	31
Item 8	Financial Statements and Supplementary Data	32
Item 9	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	32
Item 9A	Controls and Procedures	32
Item 9B	Other Information	32
Part III
Item 10	Directors, Executive Officers and Corporate Governance	33
Item 11	Executive Compensation	33
Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	33
Item 13	Certain Relationships and Related Transactions, and Director Independence	33
Item 14	Principal Accountant Fees and Services	33
Part IV
Item 15	Exhibits and Financial Statement Schedules	34
Item 16	Form 10-K Summary	36

PART I

Item 1. Business

Overview

Cohen & Steers, Inc. (CNS), a Delaware corporation formed on March 17, 2004, 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. Headquartered in New York City, with offices in London, Hong Kong, Tokyo and Seattle, we serve institutional and individual investors around the world.

CNS is the holding company for its direct and indirect subsidiaries, including Cohen & Steers Capital Management, Inc. (CSCM), Cohen & Steers Securities, LLC (CSS), Cohen & Steers Asia Limited (CSAL), Cohen & Steers UK Limited (CSUK) and Cohen & Steers Japan, LLC (CSJL). CNS and its subsidiaries are collectively referred to as the Company, we, us or our.

Our revenue is derived from fees received from our clients, including fees for managing or sub-advising client accounts; investment advisory, administration, distribution and service fees received from Company-sponsored open-end and closed-end funds; and fees for portfolio consulting and other services. Our fees are paid in arrears, based on contractually specified percentages of the value of the assets we manage and, in certain cases, investment performance. Our revenue fluctuates with changes in the total value of our assets under management, which may occur as a result of investment performance, market conditions, foreign currency fluctuations, or investor subscriptions or redemptions, and is recognized over the period that the assets are managed.

At December 31, 2016, we managed $57.2 billion in assets - $28.7 billion in institutional accounts, $19.6 billion in open-end funds, and $9.0 billion in closed-end funds. Our assets under management increased 9% from $52.6 billion at December 31, 2015 as a result of net inflows of $6.7 billion and market appreciation of $3.1 billion, partially offset by distributions of $5.2 billion.

Investment Vehicles

We manage three types of investment vehicles: institutional accounts, open-end funds and closed-end funds.

Institutional Accounts

Institutional accounts for which we serve as investment adviser represent portfolios of securities we manage for institutional clients. We manage the assets in each institutional account in accordance with the investment requirements of that client as set forth in such client's investment advisory agreement and investment guidelines. The investment advisory agreements with our institutional account clients are generally terminable at any time. For the years ended December 31, 2016, 2015 and 2014, investment advisory fees from our institutional accounts totaled approximately $93.2 million, $85.5 million and $81.9 million, respectively, and accounted for 29%, 28% and 28%, respectively, of our investment advisory and administrative fee revenue.

Subadvisory assets, which represent accounts for which we have been appointed as a subadvisor by the investment adviser to that investment vehicle, are included in our institutional account assets. As subadvisor, we are responsible for managing the investments, while the investment adviser oversees our performance as subadvisor; the fund sponsor is responsible for decisions regarding the amount, timing and whether to pay distributions of income for the investment vehicle to its beneficial owners. As of December 31, 2016, approximately $19.6 billion of our institutional account assets were subadvisory assets.

Open-end Funds

The open-end funds for which we serve as investment adviser offer and issue new shares continuously as assets are invested and redeem shares when assets are withdrawn. The share price for purchases and redemptions of shares of each of the open-end funds is determined by each fund's net asset value, which is calculated at the end of each business day. The net asset value per share is the current value of a fund's assets less liabilities, divided by the fund's total shares outstanding.

The investment advisory fees that we receive from the open-end funds for which we serve as investment adviser vary based on each fund's investment strategy, fees charged by other comparable funds and the market in which the fund is offered. In addition, we receive a separate fee for providing administrative services to certain open-end funds at a rate that is designed to reimburse us for the cost of providing these services. The open-end funds pay us a monthly investment advisory fee and an

administration fee, if applicable, based on a percentage of the value of the fund's average assets under management. For the years ended December 31, 2016, 2015 and 2014, investment advisory and administrative fees from open-end funds totaled approximately $149.9 million, $136.9 million and $127.4 million, respectively, and accounted for 47%, 45% and 44%, respectively, of our investment advisory and administrative fee revenue.

Our investment advisory and administration agreements with the U.S. registered open-end funds for which we serve as investment adviser are generally terminable upon a vote of a majority of the fund's board of directors on 60 days' notice, and each investment advisory agreement, including the fees payable thereunder, is subject to annual approval, following the initial two-year term, by a majority of the directors of the fund's board who are not "interested persons," as defined by the Investment Company Act of 1940 (the Investment Company Act).

Closed-end Funds

The closed-end funds for which we serve as investment adviser are registered investment companies that have issued a fixed number of shares through public offerings. These shares are listed on the New York Stock Exchange and cannot be redeemed by the fund's shareholders. The trading price of the shares is determined by supply and demand in the marketplace, and, as a result, the shares may trade at a premium or discount to the net asset value of the fund.

The investment advisory fees that we receive from the closed-end funds for which we serve as investment adviser vary based on each fund's investment strategy, fees charged by other comparable funds and prevailing market conditions at the time each closed-end fund initially offered its shares to the public. In addition, we receive a separate fee for providing administrative services to eight of the nine closed-end funds at a rate that is designed to reimburse us for the cost of providing these services. The closed-end funds pay us a monthly investment advisory fee and an administration fee, if applicable, based on a percentage of the value of the fund's average assets under management. For the years ended December 31, 2016, 2015 and 2014, investment advisory and administrative fees from closed-end funds totaled approximately $76.6 million, $81.4 million and $82.5 million, respectively, and accounted for 24%, 27% and 28%, respectively, of our investment advisory and administrative fee revenue.

Our investment advisory agreements with each closed-end fund for which we serve as investment adviser are generally terminable upon a vote of a majority of the fund's board of directors on 60 days' notice and are subject to annual approval, following the initial two-year term, by a majority of the directors of the fund's board who are not "interested persons," as defined by the Investment Company Act.

Portfolio Consulting and Other Services

We maintain two proprietary indexes, Cohen & Steers Realty Majors Index (RMP) and Cohen & Steers Global Realty Majors Index (GRM). RMP is the basis for the iShares Cohen & Steers REIT ETF sponsored by BlackRock Institutional Trust Company, N.A. GRM is the basis for Cohen & Steers Global Realty Majors ETF sponsored by ALPS Fund Services, Inc. and iShares Global Real Estate Index Fund sponsored by BlackRock Investments Canada Inc. We earn a licensing fee based on a percentage of the funds' assets for the use of our indexes, which assets, as of December 31, 2016, were approximately $3.6 billion. While we receive a fee on these assets, they are not included in our reported assets under management.

We also provide services in connection with model-based strategies accounts. We construct portfolios of securities that fulfill the investment objective of a specified mandate and supply portfolio models on a regular basis. As of December 31, 2016, we provided such services to accounts with aggregate assets of $2.8 billion. While we receive a fee on these assets, they are not included in our reported assets under management.

In addition, we provide several services in connection with assets held by unit investment trusts (UITs). A UIT is a registered investment company that holds a portfolio of securities that generally does not change during the life of the UIT (generally two to five years) except that the sponsor of the UIT may sell portfolio securities under certain narrowly defined circumstances. As portfolio consultant to a number of UITs, we construct a portfolio of securities that we believe is well suited to satisfy the investment objective of the UIT. We also provide ongoing portfolio monitoring services and provide a license to certain firms to use our name in connection with certain of their investment products. At December 31, 2016, we provided such portfolio consulting services to UITs with aggregate assets of $1.0 billion. While we receive a fee on these assets, they are not included in our reported assets under management.

Our fee schedules for these services vary based on the type of services.

Our Investment Strategies

Each of our investment strategies is overseen by a specialist team, each of which is led by a portfolio manager, or a team of portfolio managers, supported by dedicated analysts. These personnel are located in our New York, Seattle, London and Hong Kong offices. Each team executes fundamentally driven, actively managed investment strategies and each has a unique

and well defined process that includes top-down macroeconomic and bottom-up fundamental research and portfolio management elements. These teams are subject to multiple levels of oversight and support from our President and Chief Investment Officer, our Chief Administrative Officer-Investments, our Investment Risk Committee, our Investment Operating Committee and our Legal and Compliance Department. Some of our strategies may involve multiple asset classes and are overseen by investment committees led by senior portfolio managers of our specialist teams.

Below is a summary of our investment strategies:

Real Assets Multi-Strategy invests in a diversified multi-strategy portfolio of companies and securities that generally own or are backed by tangible real assets, including real estate securities, global listed infrastructure, commodities and natural resource equities, with the objective of achieving attractive total returns over the long term, while providing diversification and maximizing the potential for real returns in periods of rising inflation and rising interest rates.

Real Estate Securities invests in a portfolio of common stocks and other securities issued by U.S. and non-U.S. real estate companies, including real estate investment trusts (REITs) and similar REIT-like entities. This strategy draws on the expertise of our integrated global real estate securities investment team. The investment objective is total return.

Global Listed Infrastructure invests in a diversified portfolio of U.S. and non-U.S. securities issued by infrastructure companies such as utilities, pipelines, toll roads, airports, railroads, marine ports and telecommunications companies located in developed markets with opportunistic allocations to emerging markets. The investment objective is total return.

MLPs and Midstream Energy invests in a diversified portfolio of energy-related master limited partnerships (MLPs) and securities of companies that derive revenues or operating income from the exploration, production, gathering, transportation, processing, storage, refining, distribution or marketing of natural gas, crude oil and other energy. The investment objective is total return.

Commodities invests in a diversified portfolio of exchange-traded commodity future contracts and other commodity-related financial derivative instruments. We take a fundamental, research-driven approach to commodities management, while seeking alpha through active trade implementation, which may entail going long, short or employing spread trades. The investment objective is total return.

Preferred Securities invests in a diversified portfolio of preferred and debt securities issued by U.S. and non-U.S. companies. The preferred securities are issued by banks, insurance companies, REITs and other diversified financial institutions as well as utility, energy, pipeline and telecommunications companies. We employ a unified investment process that underlies our traditional total return preferred securities strategy as well as the lower duration capital preservation strategies.

Large Cap Value invests in a diversified portfolio of stocks issued by U.S. large capitalization companies that appear to be undervalued but have good prospects for capital appreciation and dividend growth. The investment objective is total return.

Global Natural Resource Equities seeks to maximize total returns by investing in companies involved in the production, extraction, or processing of commodities and natural resources. Specifically, the strategy invests in energy producers, metals and mining companies and agriculture-based businesses. The investment objective is total return.

In addition, we offer variations on these strategies that may combine multiple strategies in a single portfolio. Individual portfolios may be customized to comply with client-specific guidelines, benchmarks or risk profiles. Certain portfolios may employ leverage.

Our Distribution Network

Our distribution network encompasses the major channels in the asset management industry, including large brokerage firms, registered investment advisers, institutional investors and retirement recordkeepers. The U.S. registered open-end funds for which we serve as investment adviser are available for purchase with and without commissions through full service and discount broker-dealers as well as the significant networks serving financial advisers. Our institutional account clients include corporate and public defined benefit and defined contribution pension plans, endowment funds and foundations, insurance companies and other financial institutions that access our investment management services directly, through consultants or through other intermediaries.

Geographic Information

The table below presents revenue by client domicile for the years ended December 31, 2016, 2015 and 2014 (in thousands):



	Years Ended December 31,
	2016		2015		2014
United States	$	282,516	$	266,583	$	256,137
Non - U.S.
Japan	43,458		41,899		40,179
Other	23,902		20,173		17,618
Total	$	349,876	$	328,655	$	313,934

Competition

We compete with a large number of global and U.S. investment managers, commercial banks, broker-dealers, insurance companies and other financial institutions. Many competing firms are parts of larger financial services companies and attract business through numerous channels, including retail banking, investment banking and underwriting contacts, insurance agencies and broker-dealers.

Our direct competitors in wealth management are other funds and exchange-traded-fund (ETF) sponsors, including large nationally recognized investment management firms that have a more diverse product offering and smaller boutique firms that specialize in particular asset classes. We also compete against managers that will manage separate-account portfolios for wealth management clients. In the institutional channel, we compete against a number of investment managers offering similar products and services, from boutique establishments to major commercial and investment banks.

Performance, price and brand are our principal sources of competition. Prospective clients will typically base their decisions to invest, or continue to invest, with us on our ability to generate returns in excess of a benchmark and the cost of doing so. We are evaluated based on our performance and our fees relative to our competitors. In addition, individual fund shareholders may also base their decision on the ability to access the funds we manage through a particular distribution channel.

As interest in real assets increases, we may face increased competition from other managers that are competing for the same client base that we serve. Financial intermediaries that offer our products to their clients may also offer competing products. Many of our competitors have greater brand name recognition and more extensive client bases than we do, which could be to our disadvantage. In addition, our larger competitors have more resources and may have more capacity to expand their distribution channels and capture market share through ongoing business relationships and extensive marketing efforts. However, compared to our larger competitors, we may be able to grow our business at a faster rate from a relatively smaller asset base and shift resources in response to changing market conditions more quickly.

Regulation

We are subject to regulation under U.S. federal and state laws, as well as applicable laws in the other jurisdictions in which we do business. Violation of applicable laws or regulations could result in fines, temporary or permanent prohibition of engagement in certain activities, reputational harm and loss of clients, suspension of personnel or revocation of their regulatory licenses, suspension or termination of investment adviser and/or broker-dealer registrations, or other sanctions and penalties.

CSCM is a registered investment adviser with the U.S. Securities and Exchange Commission (the SEC) and is an approved investment manager with the Luxembourg Commission de Surveillance du Secteur Financier (the CSSF) and the Irish Financial Services Regulatory Authority. CSCM has also obtained exemptions from registration that allow it to provide investment management services to institutions in Australia and Canada. CSCM is also a registered commodity trading advisor and a registered commodity pool operator with the Commodities Futures Trading Commission (the CFTC) and is a member of the National Futures Association (the NFA), a futures industry self-regulatory organization. The CFTC and NFA regulate futures contracts, swaps, and various other financial instruments in which certain of the Company’s clients may invest.

CSUK, our UK-based subsidiary, is a registered investment adviser with the SEC and the United Kingdom Financial Conduct Authority and is an approved investment manager with the CSSF. CSUK provides investment management services in several European Union member states pursuant to the Markets in Financial Instruments Directive (MiFID). CSUK is subject to the Financial Services and Markets Act 2000, which regulates, among other things, certain liquidity and capital resources requirements. Such requirements may limit our ability to withdraw capital from CSUK. CSUK is also subject to

certain pan-European regulations, including MiFID, the Capital Requirements Directive and the Alternative Investment Fund Managers Directive (AIFMD). MiFID regulates the provision of investment services throughout the European Economic Area and the Capital Requirements Directive regulates capital requirements. AIFMD regulates the management, administration and marketing of alternative investment funds domiciled in or marketed within the European Union and establishes a regime for the cross-border marketing of those funds. Please refer to Item 1A. Regulatory and Legal Risks for a discussion of the potential impact of the U.K. vote to exit the European Union on June 23, 2016 (referred to as "Brexit").

CSAL, our Hong Kong-based subsidiary, is a registered investment adviser with the SEC and the Hong Kong Securities and Futures Commission (the SFC) and is an approved investment manager with the CSSF. CSAL is subject to the Securities and Futures Ordinance (the SFO), which regulates, among other things, offers of investments to the public and the licensing of intermediaries. CSAL and its employees conducting any of the regulated activities specified in the SFO are required to be licensed with the SFC and are subject to the rules, codes and guidelines issued by the SFC.

In their capacity as U.S. registered investment advisers, CSCM, CSUK and CSAL are subject to the rules and regulations of the Investment Advisers Act of 1940 (the Advisers Act). The Advisers Act imposes numerous obligations on registered investment advisers, including recordkeeping, operational and marketing requirements, disclosure obligations and prohibitions on fraudulent activities. In addition, our subsidiaries that serve as investment adviser or subadviser to U.S. registered funds are subject to the Investment Company Act, which imposes additional governance, compliance, reporting and fiduciary obligations.

CSJL, our Tokyo-based subsidiary, is a financial instruments operator registered with the Financial Services Agency of Japan and the Kanto Local Finance Bureau and is subject to the Financial Instruments and Exchange Act. CSJL supports the marketing, client service and business development activities of the Company.

CSS is a registered broker-dealer regulated by the SEC, the Financial Industry Regulatory Authority and other federal and state agencies. CSS is subject to regulations governing, among other things, sales practices, capital structure, and recordkeeping. CSS is also subject to the SEC’s net capital rule, which specifies minimum net capital levels for registered broker-dealers and is designed to enforce minimum standards regarding the general financial condition and liquidity of broker-dealers. Under certain circumstances, this rule may limit our ability to withdraw capital and receive dividends from CSS.

Because of the global and integrated nature of our business, regulation applicable to an affiliate in one jurisdiction may affect the operation of affiliates in others or require compliance at a group level.

Employees

As of December 31, 2016, we had 287 full-time employees.

Available Information

We file annual, quarterly and current reports, proxy statements and all amendments to these reports and other information with the SEC. We make available free of charge on or through our website at www.cohenandsteers.com our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and all amendments to those reports as soon as reasonably practicable after such reports are electronically filed with or furnished to the SEC.

Item 1A. Risk Factors

Risks Related to our Business

A significant portion of our revenue for 2016 was derived from a single institutional client.

At December 31, 2016, our largest institutional client, Daiwa Asset Management, which holds accounts across numerous strategies and in subadvisory and model-based accounts and products, represented approximately 12% of our total revenue for 2016. Approximately 47% of the institutional account assets we managed and approximately 24% of our total assets under management were derived from this client. In addition, approximately 16% of our assets under advisement were derived from this client. Loss of, or significant withdrawal of assets from, any of these accounts would reduce our revenue and adversely affect our financial condition.

A decline in the absolute or relative performance of real estate securities would have an adverse effect on the assets we manage and our revenue.

As of December 31, 2016, a significant majority of the assets we managed were concentrated in real estate securities. 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 any returns we realize. Returns on investments in real estate securities depend on the amount of income and capital appreciation or loss realized by the underlying real property. Income and real estate values may be adversely affected by, among other things, the cost of compliance with applicable laws, interest rates, the availability of financing, the creditworthiness of the tenants, and the limited ability of issuers of real estate securities to vary their portfolios promptly in response to changes in market conditions. If the underlying properties do not generate sufficient income to meet 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 of real estate securities would have an adverse effect on the assets we manage, reducing the fees we earn and our revenue.

Our growth may be constrained by the size and number of real estate securities issuers, as well as REIT ownership restrictions.

Investments in real estate securities continue to play an important role in our overall business strategy. Our ability to 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. Our ability to increase our ownership may also be constrained by REIT ownership limits, which limit ownership of a REIT’s outstanding capital stock, common stock, and/or preferred stock. Although certain REITs in which we invest have granted us waivers from these ownership limits to allow greater investment, such REITs generally retain the right to revoke or reduce the waiver limits at any time. As a result of these constraints, we have in the past, and may in the future, be prevented from acquiring new or additional real estate securities, which may negatively affect our investment performance and our ability to increase the assets we manage and our revenue.

Support provided to new products may reduce fee income, increase expenses and expose us to potential losses on invested capital.

Our success is partially dependent on our ability to develop, launch, market and manage new investment strategies and products. New investment strategies and products require an initial cash investment, innovation, time and the appropriate resources as well as ongoing support. From time to time, we may support the launch of new investment strategies and products by making seed investments in those strategies. We may also be required to provide additional support to seed investment products after the initial cash investment. Numerous risks and uncertainties are associated with all stages of the seed investment product life cycle, including investment performance, market risks, shifting client or market preferences, the introduction of competing products and compliance with regulatory requirements.

Seed investments in new products utilize capital that would otherwise be available for other corporate purposes and potentially expose us to capital losses, against which we do not currently hedge. For the year ended December 31, 2016, we recorded non-operating income from seed investments of $6.7 million, excluding losses attributable to redeemable noncontrolling interest, the majority of which was unrealized. For the year ended December 31, 2015, we recorded non-operating loss from seed investments of $14.0 million, excluding losses attributable to redeemable noncontrolling interest, the majority of which was unrealized. To the extent we incur losses on our seed investments, our earnings and financial condition may be adversely impacted.

Increased competition from investment managers that charge lower fees may force us to reduce the fees we charge for our services which could have a negative impact on our revenue.

Increased competition from investment managers, including passive investment managers, that offer products and services at lower fees has resulted in downward pressure on fees. In order to maintain our current fee structure in a competitive environment, we must be able to provide clients with investment returns and service that will encourage them to pay our fees. In the event our competitors charge lower fees for substantially similar products and services, we may be forced to reduce our fees in order to attract and retain clients, which would have a negative impact on our revenue.

The inability to access clients through third-party intermediaries could have a material adverse effect on our business.

In recent years, a significant portion of the growth we have experienced in the assets we manage has been from assets obtained through the distribution of our products through third-party intermediaries. Our ability to distribute our funds is highly dependent on access to the client bases and product platforms of international, national and regional securities firms, banks, insurance companies, defined contribution plan administrators and other intermediaries which generally offer competing investment products. In addition, our separate account business and subadvisory and model delivery services depend in part on recommendations by consultants, financial planners and other professional advisors, as well as our existing clients.

The structure and terms of the distribution arrangements with intermediaries, including fees or rebates paid by us or our funds to intermediaries to assist with distribution efforts and the ability of our funds to participate in these intermediary platforms, are subject to changes driven by market competition and regulatory developments. For example, our existing relationships with third-party intermediaries and access to new intermediaries could be adversely affected by recent consolidation within the financial services industry. Consolidation may result in increased distribution costs, a reduction in the number of third parties distributing our investment products or increased competition to access third-party distribution channels. There can be no assurance that we will be able to retain access to these channels. Loss of any of these third-party distribution channels, or changes to their structure and terms, or any reduction in our ability to access clients and investors through existing and new distribution channels, could adversely affect our business.

The growth of our business could be adversely affected if we are unable to manage the costs associated with the implementation of our business strategy.

Our business strategy continues to involve diversifying our investment management business to include products and services outside of investments in U.S. real estate securities. As part of the implementation of our strategy, we have emphasized the development of broader real assets strategies, including commodities, global listed infrastructure, and natural resource equities, and have expanded our geographical presence outside the U.S. This has entailed hiring additional portfolio managers and additional personnel to support our strategies. As a result, our fixed costs and other expenses have increased due to expenses incurred to support the development of new strategies and products and to enhance our infrastructure, including additional office space, increased travel and technology and compliance resources. The success of our business strategy and future growth is contingent upon our ability to continue to support the development and implementation of new strategies and products and our ability to successfully manage multiple offices and navigate legal and regulatory systems both domestically and internationally. In the future, we may not have sufficient resources to adequately support our growth.

Our clients may withdraw or reduce the amount of assets we manage or otherwise change the terms of our relationship which could have an adverse impact on our revenue.

Our institutional clients, and firms with which we have strategic alliances, may terminate their relationship with us, reduce the aggregate amount of assets we manage, shift their funds to other types of accounts with different fee structures, or renegotiate the fees we charge them for any number of reasons, including investment performance, changes in prevailing interest rates and financial market performance. Certain investors in the funds that we manage hold their shares indirectly through platforms sponsored by financial institutions that have the authority to make investment and asset allocation decisions on behalf of such shareholders. Decisions to redeem assets may cause the fund to sell assets at a disadvantageous time or price which could negatively affect the value of our assets under management. In a declining market or in conditions of poor relative or absolute performance, the pace of redemptions and withdrawals, and the loss of institutional and individual separate account clients could accelerate. The occurrence of any of these events could have a material adverse effect on our revenue.

Regulations restricting the use of commission credits to pay for research could result in increased expenses.

On behalf of our clients, we make decisions to buy and sell securities, select broker-dealers to execute trades and negotiate brokerage commission rates. In connection with these transactions, we may receive commission credits to pay for eligible research and services from broker-dealers and other eligible service providers that have the effect of reducing certain expenses. New regulations outside the U.S. may restrict or eliminate the Company’s ability to use commission credits to pay for such eligible research, which could increase our operating expenses.

Limitations on our ability to utilize leverage in the closed-end funds we sponsor could reduce our assets under management and revenue.

Certain of the closed-end funds sponsored by us utilize leverage in the form of bank financing, which in the aggregate amounted to $2.3 billion as of December 31, 2016. To the extent any closed-end fund sponsored by us elects or is required by regulation or the terms of its bank financing to reduce leverage, such fund may need to liquidate its investments. Reducing leverage or liquidation during adverse market conditions could reduce the Company's assets under management and revenue.

We could incur financial losses, reputational harm, and regulatory penalties if we fail to implement effective information security policies and procedures.

We are dependent on the effectiveness of our information security policies and procedures to protect our computer, network and telecommunications systems and the data that reside in or are transmitted through them.

As part of our normal operations, we maintain and transmit confidential information about our clients' portfolios as well as proprietary information relating to our business operations. We maintain a system of internal controls designed to provide reasonable assurance that fraudulent activity, including misappropriation of Company assets, fraudulent financial reporting, and unauthorized access to sensitive or confidential data is either prevented or timely detected and remediated. However, our technology systems may still be vulnerable to unauthorized access or may be corrupted by cyber attacks, computer viruses or other malicious software code, or authorized persons could inadvertently or intentionally release confidential or proprietary information. Although we take precautions to password protect and encrypt our mobile electronic hardware, if such hardware is stolen, misplaced or left unattended, it may become vulnerable to hacking or other unauthorized use, creating a possible security risk. Breach of our technology systems could result in the loss of valuable information, liability for stolen assets or information, remediation costs to repair damage caused by the breach, additional security costs to mitigate against future incidents and litigation costs resulting from the incident. Moreover, loss of confidential client information could harm our reputation, result in the termination of contracts by our existing clients and subject us to liability under laws that protect confidential personal data, resulting in increased costs or loss of revenues. We have minimal coverage under our existing insurance policies, and we do not currently maintain insurance coverage that specifically protects against cyber attacks. As such, we may be liable for all losses incurred in connection with any information security breaches, including cyber attacks.

Failure to maintain adequate business continuity plans could have a material adverse effect on the Company and its products.

Significant portions of our business operations and those of our critical third-party service providers are concentrated in a few geographic areas, including New York and New Jersey. Critical operations that are geographically concentrated in New York include portfolio management, trading operations, information technology, investment administration, and portfolio accounting services for the Company’s products and services. Should we, or our critical service providers, experience a material local or regional disaster or other significant business disruption, our ability to remain operational will depend in part on the safety and availability of our personnel, our office facilities, and the proper functioning of our computer, network, telecommunication and other related systems and operations. We have developed backup systems and contingency plans, but we cannot ensure that they will be adequate in all circumstances that could arise or that material interruptions and disruptions will not occur. In addition, we rely to varying degrees on outside vendors for disaster recovery support, and we cannot ensure that these vendors will be able to perform in an adequate and timely manner. Failure by us, or our critical service providers, to maintain up to date business continuity plans, including system backup facilities, would impede our ability to operate in the event of a significant business disruption, which could result in financial losses to the Company and our clients and investors.

We could suffer financial losses in earnings or revenue if our reputation is harmed.

Our reputation is important to the success of our business. We believe that the Cohen & Steers brand has been, and continues to be, well received globally both in our industry and with our clients, reflecting the fact that our brand, like our business, is based in part on trust and confidence. Our reputation may be harmed by a number of factors, including, but not

limited to, poor investment performance, the dissemination by current or former clients of unfavorable opinions relating to our services, and the imposition of legal or regulatory sanctions or penalties in connection with our business activities. If our reputation is harmed, existing clients and investors may reduce amounts held in, or withdraw entirely from, funds or accounts that we advise, or funds or accounts may terminate their relationship with us. In addition, reputational harm may cause us to lose current employees and we may be unable to attract new ones with similar qualifications or skills which could negatively affect our operations. If we fail to address, or appear to fail to address, successfully and promptly the underlying causes of any reputational harm, we may be unsuccessful in repairing any harm to our reputation and our future business prospects would likely be affected. The loss of client relationships could reduce our assets under management, revenue and earnings.

The failure of a key vendor to fulfill its obligations to the Company could have a material adverse effect on the Company and its products.

We depend on a number of key vendors for various fund administration, fund accounting, custody and transfer agent roles and other operational needs. The failure or inability of the Company to diversify its sources for key services or the failure of any key vendor to fulfill its obligations could lead to operational issues for the Company and certain of its products, which could result in financial losses for the Company and its clients.

Risks Related to our Common Stock

A majority of our common stock is owned by our Chairman and our Chief Executive Officer, which may limit the ability of other stockholders to influence the affairs of the Company.

Our Chairman and our Chief Executive Officer beneficially owned approximately 51% of our common stock as of December 31, 2016. As long as our Chairman and our Chief Executive Officer own a majority of our common stock, they will have the ability to, among other things:


•	elect all of the members of our board of directors, thereby controlling the management and affairs of the Company;


•	determine the outcome of matters submitted to a vote of our stockholders; and


•	prevent any unsolicited acquisition of us and, consequently, adversely affect the market price of our common stock or prevent our stockholders from realizing a premium on their shares.

The interests of our Chairman and our Chief Executive Officer may differ from those of other stockholders in instances where, for example, management compensation is being determined or where an unsolicited acquisition of us could result in a change in our management. The concentration of beneficial ownership in our Chairman and our Chief Executive Officer may limit the ability of our other stockholders to influence the affairs of the Company.

A sale of a substantial number of shares of our common stock may adversely affect the market price of our common stock, and the issuance of additional shares will dilute your percentage ownership in the Company.

A sale of a substantial number of shares of our common stock in the public market, or the perception that such sale may occur, could adversely affect the market price of our common stock. Our Chairman and our Chief Executive Officer, who beneficially owned, in the aggregate, 23,229,900 shares of our common stock as of December 31, 2016, may sell shares of our common stock in the open market, subject to any restrictions imposed by U.S. federal securities laws on sales by affiliates.

In addition, in connection with our initial public offering in 2004, we entered into a Registration Rights Agreement with our Chairman and our Chief Executive Officer and certain of their affiliates which requires us to register under the Securities Act of 1933, as amended, shares of our common stock (and other securities convertible into or exchangeable or exercisable for shares of common stock) held by them under certain circumstances. In August 2015, we filed a Registration Statement on Form S-3, as amended, covering (i) the resale of up to an aggregate of 23,578,122 shares owned by our Chairman and our Chief Executive Officer and (ii) the offer and sale of up to 10,000,000 shares by us to the public. The sale of a substantial number of shares of our common stock may adversely affect the market price of our common stock and any additional shares that we issue will dilute your percentage ownership in the Company.

Anti-takeover provisions in our charter documents and Delaware law may delay or prevent a change in control of us, which could decrease the trading price of our common stock.

Our certificate of incorporation and bylaws and Delaware law contain certain anti-takeover provisions that could have the effect of making it more difficult for a third-party to acquire, or of discouraging a third-party from attempting to acquire, control of the Company without negotiating with our board of directors. Such provisions could limit the price that certain

investors might be willing to pay in the future for the Company’s common stock. Certain of these provisions allow the Company to issue preferred stock with rights more senior to those of our common stock, impose various procedural and other requirements which could make it more difficult for stockholders to effect certain corporate actions and set forth rules regarding how stockholders may present proposals or nominate directors for election at annual meetings.

We believe these provisions protect our stockholders from coercive or other unfair takeover tactics by requiring potential acquirers to negotiate with our board of directors and by providing our board of directors with more time to assess acquisition proposals. However, these provisions apply even if an acquisition proposal may be considered beneficial by some stockholders and could have the effect of delaying or preventing an acquisition. In the event that our board of directors determines that a potential business combination transaction would be beneficial to the Company and its stockholders, such stockholders may elect to sell their shares in the Company and the trading price of our common stock could decrease.

Regulatory and Legal Risks

We may be adversely impacted by legal and regulatory changes in the U.S. and internationally.

We operate in a highly regulated industry and are subject to new regulations and revisions to, and evolving interpretations of, existing regulations in the U.S. and internationally. In recent years, regulators in the U.S. and abroad have increased oversight of the financial industry, which may result in regulation that increases the Company’s cost of conducting its business or limit or change the Company’s current or prospective business. Some of the newly adopted and proposed regulations are focused directly on the investment management industry, while others are more broadly focused, but impact our industry.

In the U.S., the SEC proposed rules governing the use of derivatives by registered investment companies, the Department of Labor’s final rule on conflicts of interest for fiduciary investment advice, as well as the SEC’s final rules and amendments to modernize investment company reporting and disclosure and to develop and implement a liquidity risk management program for open-end investment companies could limit investment opportunities for certain funds we manage, impact flows, and increase our expenses.

Outside the U.S., rules and regulations under MiFID II and the Markets in Financial Instruments Regulation in Europe are currently being promulgated and generally become effective on January 3, 2018. These will have direct and indirect effects on our operations in the European Economic Area, including marketing restrictions and increased compliance, disclosure and other obligations, which could impact our ability to operate in these markets.

In addition, Brexit could disrupt our business operations, including our reported financial results and the liquidity and value of our investments. Brexit has caused significant geo-political and legal uncertainty and market volatility in the U.K. and elsewhere, which may continue during the Brexit negotiation process. Depending on the outcome of these negotiations, CSUK’s ability to market its services or serve as a distributor of financial products within the European Economic area, as well as the ability of our EU-domiciled funds to be marketed in the U.K. could be restricted temporarily or in the long term.

Brexit has also caused exchange rate fluctuations that have resulted in the strengthening of the U.S. dollar against foreign currencies in which we conduct business, including the British pound and the Euro. The strengthening of the U.S. dollar relative to other currencies may adversely affect our results of operations. In addition, fluctuations in the exchange rate may affect operating expenses of CSUK where the functional currency is the British pound, cash balances we hold in non-U.S. currencies and investments we hold in non-U.S. currencies.

Although the full extent of the foregoing regulatory and political changes is still unclear, they may affect our business operations and increase our operating expenses.

Our involvement in legal proceedings could adversely affect our results of operations and financial condition.

Many aspects of our business involve risks of legal liability. Claims against us may arise in the ordinary course of business, and from time to time, we may receive subpoenas or other requests for information from various U.S. and non-U.S. governmental and regulatory authorities and third parties in connection with certain industry-wide, company-specific or other investigations or proceedings. In addition, certain of the funds that the Company manages may become subject to lawsuits, any of which could potentially harm the investment returns of the applicable fund.

We carry insurance in amounts and under terms that we believe are appropriate. We cannot guarantee that our insurance will cover all liabilities and losses to which we may be exposed, or that our insurance policies will continue to be available at acceptable terms and fees. Certain insurance coverage may not be available or may be prohibitively expensive in future periods. As our insurance policies are due for renewal, we may need to assume higher deductibles or pay higher premiums, which would increase our expenses and reduce our net income.

The tax treatment of certain of our funds involves the interpretation of complex provisions of U.S. federal income tax law for which no precedent may be available and may be subject to potential legislative, judicial or administrative change and differing interpretations, possibly on a retroactive basis.

The U.S. federal income tax treatment of certain of our funds depends in some instances on determinations of fact and interpretations of complex provisions of U.S. federal income tax law for which no clear precedent or authority may be available. U.S. federal income tax rules are constantly under review by the IRS and the U.S. Department of Treasury, frequently resulting in revised interpretations of established concepts, statutory changes, revisions to regulations and other modifications and interpretations. Changes to the U.S. federal income tax laws and interpretations thereof could cause us to change our investments and commitments, affect the tax considerations of an investment in us and change the character or treatment of portions of our income. In addition, the Company may be required to make certain assumptions when electing a particular tax treatment. It is possible that the IRS could assert successfully that the assumptions made by us do not satisfy the technical requirements of the Internal Revenue Code and/or Treasury Regulations and could require items of income, gain, deduction, loss or credit, including interest deductions, be adjusted, reallocated or disallowed in a manner that adversely affects us and our clients.

Item 1B. Unresolved Staff Comments

The Company has no unresolved SEC staff comments.

Item 2. Properties

Our principal executive office is located in leased office space at 280 Park Avenue, New York, New York. In addition, we have leased office space in London, Hong Kong, Tokyo and Seattle.

Item 3. Legal Proceedings

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

Item 4. Mine Safety Disclosures

Not applicable.

PART II

Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Our common stock is listed on the New York Stock Exchange (NYSE) and is traded under the symbol “CNS”. As of February 21, 2017, there were 22 holders of record of our common stock. Holders of record include institutional and omnibus accounts that hold common stock on behalf of numerous underlying beneficial owners. The closing sale price of our common stock on February 21, 2017 was $36.30 per share.

The following table sets forth, for the periods indicated, the high and low reported sale prices and dividends declared per share for our common stock as reported by the NYSE:



Three Months Ended 2016	March 31		June 30		September 30		December 31
High price	$	39.63	$	42.37	$	43.83	$	43.11
Low price	$	26.72	$	36.74	$	38.56	$	33.16
Closing price	$	38.92	$	40.44	$	42.75	$	33.60
Cash dividends declared per share	$	0.26	$	0.26	$	0.26	$	0.76	*

Three Months Ended 2015	March 31		June 30		September 30		December 31
High price	$	47.16	$	41.82	$	35.15	$	32.00
Low price	$	40.27	$	33.94	$	26.63	$	25.84
Closing price	$	40.95	$	34.08	$	27.45	$	30.48
Cash dividends declared per share	$	0.25	$	0.25	$	0.25	$	0.75	*

* Includes special dividends declared by the Company in the amount of $0.50 per share on November 2, 2016 and

November 3, 2015.

Payment of any dividends to our common stockholders is subject to the discretion of our Board of Directors. When determining whether to pay a dividend, our Board of Directors takes into account such matters as general economic and business conditions, our strategic plans, our financial results and condition, contractual, legal and regulatory restrictions on the payment of dividends by us and our subsidiaries and such other factors that our Board of Directors deems relevant. On February 23, 2017, we declared a quarterly cash dividend on our common stock in the amount of $0.28 per share. As set forth in the table above, we have historically paid quarterly cash dividends.

Issuer Purchases of Equity Securities

During the three months ended December 31, 2016, we did not make any purchases of our equity securities that are registered pursuant to Section 12(b) of the Securities Exchange Act of 1934.

Recent Sales of Unregistered Securities

During the fiscal year ended December 31, 2016, we did not sell any equity securities that were not registered under the Securities Act of 1933, as amended.

Item 6. Selected Financial Data

The selected consolidated financial data, together with other information presented below, should be read in conjunction with our consolidated financial statements and the notes to those statements and “Management's Discussion and Analysis of Financial Condition and Results of Operations” included in this Annual Report on Form 10-K.

Selected Consolidated Financial and Other Data



(in thousands, except per share data)	As of and For the Years Ended December 31,
	2016		2015				2014			2013				2012
Consolidated Statements of Operations
Total revenue	$	349,876	$	328,655			$	313,934		$	297,713			$	273,553
Total expenses	214,365		201,106				191,993			191,371			(1)	177,121			(2)
Operating income	135,511		127,549				121,941			106,342				96,432
Total non-operating income (loss)	7,892		(14,805		)	(3)	73			(1,978		)		7,871
Income before provision for income taxes	143,403		112,744				122,014			104,364				104,303
Provision for income taxes	50,593		48,407				46,280			41,109				36,407
Net income	$	92,810	$	64,337			$	75,734		$	63,255			$	67,896
Less: Net loss (income) attributable to redeemable noncontrolling interest	126		214				(224		)	4,864				(1,779		)
Net income attributable to common stockholders	$	92,936	$	64,551			$	75,510		$	68,119			$	66,117

Earnings per share attributable to common stockholders
Basic	$	2.02	$	1.42			$	1.69		$	1.54			$	1.51
Diluted	$	2.00	$	1.41			$	1.65		$	1.51			$	1.49

Cash dividends declared per share
Quarterly	$	1.04	$	1.00			$	0.88		$	0.80			$	0.72
Special	$	0.50	$	0.50			$	1.00		$	1.00			$	1.50
Consolidated Statements of Financial Condition
Cash and cash equivalents	$	183,234	$	142,728			$	124,938		$	128,277			$	95,412
Trading investments	12,689		37,169				9,509			15,668				97,155
Equity method investments	6,459		16,974				28,550			24,724				8,106
Available-for-sale investments	35,396		17,191				21,269			10,449				25,322
Total assets	333,728		305,322				280,721			274,926				337,315
Total liabilities	67,061		62,212				52,133			51,162				67,547
Total stockholders' equity	265,814		231,776				227,981			223,557				216,580

Other Financial Data (in millions)
Assets under management (AUM) by investment vehicle:
Institutional accounts	$	28,659	$	26,105			$	26,201		$	22,926			$	24,850
Open-end funds	19,576		17,460				17,131			14,016				12,962
Closed-end funds	8,963		9,029				9,805			8,965				7,985
Total AUM	$	57,198	$	52,594			$	53,137		$	45,907			$	45,797

_________________________

(1) Includes $7.8 million expense associated primarily with the offering of a closed-end fund.

(2) Includes $15.7 million expense associated primarily with the offering of a closed-end fund.

(3) Includes $8.2 million of unrealized losses related to the reclassification of one of the company's seed investment from available-for-sale to equity method and a $2.8 million other-than-temporary impairment.

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,” “may,” “should,” “seeks,” “predicts,” “intends,” “plans,” “estimates,” “anticipates” or the negative versions of these words or other comparable words. Such forward-looking statements are subject to various risks and uncertainties. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these forward-looking statements. We believe that these factors include, but are not limited to, the risks described in 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 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, we are headquartered in New York City, with offices in London, Hong Kong, Tokyo and Seattle.

Our primary investment strategies include U.S. real estate securities, global/international real estate securities, global listed infrastructure, master limited partnerships (MLPs), commodities, real assets multi-strategy, preferred securities, large cap value and global natural resource equities. Our strategies seek to achieve a variety of investment objectives for different risk profiles and are actively managed by specialist teams of investment professionals who employ fundamental-driven research and portfolio management processes. We offer our strategies through a variety of investment vehicles, including U.S. registered funds and other commingled vehicles and separate accounts, including subadvised portfolios for financial institutions and individuals around the world.

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

2016 Financial Highlights

Revenue increased 6% from the year ended December 31, 2015 to $349.9 million for the year ended December 31, 2016. The increase in revenue was primarily attributable to higher average assets under management in open-end funds and institutional accounts. Operating income increased 6% from the year ended December 31, 2015 to $135.5 million for the year ended December 31, 2016. Operating margin decreased to 38.7% for the year ended December 31, 2016, compared with 38.8% for the year ended December 31, 2015. Our effective tax rate was 35.3% for the year ended December 31, 2016, compared with 42.9% for the year ended December 31, 2015.

Assets under management increased by $4.6 billion, or 9%, in 2016 from $52.6 billion as of December 31, 2015 to $57.2 billion as of December 31, 2016. The increase was driven by net inflows and market appreciation, partially offset by distributions. Average assets under management increased by 7% during 2016 from $52.7 billion during 2015 to $56.4 billion during 2016. Our overall annual organic growth rate was 12.7% for 2016. The organic growth rate represents the ratio of annual net flows to the beginning assets under management.

Recent Business Developments

•

In November 2016, Dr. Reena Aggarwal joined the Company's Board of Directors and became a member of the Company's Audit Committee, Compensation Committee, and Nominating and Corporate Governance Committee. Dr. Aggarwal currently serves as Vice Provost for Faculty at Georgetown University and as a Professor of Finance and the Director of the Georgetown Center for Financial Markets and Policy at Georgetown's McDonough School of Business. Dr. Aggarwal also serves on the Board of FBR & Co. and IndexIQ.

•

During the fourth quarter of 2016, our recently launched real assets multi-strategy collective investment trust (CIT) had net inflows of $425 million from a public pension fund. The CIT business and the retirement markets are a strategic focus of the Company for 2017, and we believe that our current suite of CIT vehicles is well positioned to facilitate efficient delivery of our real assets capabilities in the retirement markets.


•	In December 2016, a newly awarded separate account mandate in Japan of $140 million funded. This mandate is significant as the institutional market in Japan is another strategic focus of the Company.

•

In January 2017, the Company celebrated the three-year anniversary of the Cohen & Steers MLP & Energy Opportunity Fund. Since inception, the fund has been ranked in the top quartile versus 85 funds across all share classes of its Energy Limited Partnership Morningstar Category peer group. Additional information on the fund's performance and Morningstar ratings is available on the Company's website at www.cohenandsteers.com under "Funds - U.S. Mutual Funds - MLP & Energy Opportunity Fund."

•

In January 2017, the Company launched a new Irish-domiciled commodities fund which is available to institutional and sophisticated investors worldwide. The launch of this fund further expands our real assets strategy offerings outside of the U.S. after the launch of our Luxembourg-domiciled global listed infrastructure fund in September 2015. We now have four Luxembourg/Irish offshore vehicles for global real estate, European real estate, commodities and global listed infrastructure.


•	In January 2017, consistent with the Company's strategic focus on real assets, the Company seeded a track record account with $10 million for a second real assets multi-strategy portfolio with a balanced risk/return profile.

Assets Under Management

The following table sets forth information about net flows, appreciation/(depreciation) and distributions of assets under management by investment vehicle for the periods presented (in millions):



	Years Ended December 31,
	2016			2015 ⁽¹⁾			2014 ⁽¹⁾
Institutional Accounts
Assets under management, beginning of period	$	26,105		$	26,201		$	22,926
Inflows	6,374			3,646			3,170
Outflows	(2,414		)	(2,379		)	(4,216		)
Net inflows (outflows)	3,960			1,267			(1,046		)
Market appreciation	1,627			863			5,240
Distributions	(3,033		)	(2,226		)	(1,032		)
Other ⁽²⁾	—			—			113
Total increase (decrease)	2,554			(96		)	3,275
Assets under management, end of period	$	28,659		$	26,105		$	26,201
Average assets under management for period	$	28,085		$	25,884		$	24,856

Open-end Funds
Assets under management, beginning of period	$	17,460		$	17,131		$	14,016
Inflows	9,630			7,344			6,638
Outflows	(6,831		)	(5,901		)	(5,701		)
Net inflows	2,799			1,443			937
Market appreciation	917			560			3,201
Distributions	(1,600		)	(1,674		)	(910		)
Other ⁽²⁾	—			—			(113		)
Total increase	2,116			329			3,115
Assets under management, end of period	$	19,576		$	17,460		$	17,131
Average assets under management for period	$	19,176		$	17,252		$	16,097

Closed-end Funds
Assets under management, beginning of period	$	9,029		$	9,805		$	8,965
Inflows	—			—			—
Outflows	(88		)	(53		)	—
Net outflows	(88		)	(53		)	—
Market appreciation (depreciation)	554			(206		)	1,318
Distributions	(532		)	(517		)	(478		)
Total (decrease) increase	(66		)	(776		)	840
Assets under management, end of period	$	8,963		$	9,029		$	9,805
Average assets under management for period	$	9,108		$	9,586		$	9,680

Total
Assets under management, beginning of period	$	52,594		$	53,137		$	45,907
Inflows	16,004			10,990			9,808
Outflows	(9,333		)	(8,333		)	(9,917		)
Net inflows (outflows)	6,671			2,657			(109		)
Market appreciation	3,098			1,217			9,759
Distributions	(5,165		)	(4,417		)	(2,420		)
Other ⁽²⁾	—			—			—
Total increase (decrease)	4,604			(543		)	7,230
Assets under management, end of period	$	57,198		$	52,594		$	53,137
Average assets under management for period	$	56,369		$	52,722		$	50,633

_________________________


(1)	December 31, 2015 and 2014 amounts have been reclassified to show distributions separately and dividend reinvestments as inflows.


(2)	Represents transfer of assets under management not related to subscriptions, redemptions, market appreciation (depreciation) or distributions.

The following table sets forth information about net flows, appreciation/(depreciation) and distributions of assets under management in institutional accounts by account type for the periods presented (in millions):



	Years Ended December 31,
	2016			2015 ⁽¹⁾			2014 ⁽¹⁾
Japan Subadvisory
Assets under management, beginning of period	$	13,112		$	13,377		$	11,043
Inflows	3,305			1,859			1,062
Outflows	(503		)	(607		)	(875		)
Net inflows	2,802			1,252			187
Market appreciation	818			709			3,179
Distributions	(3,033		)	(2,226		)	(1,032		)
Total increase (decrease)	587			(265		)	2,334
Assets under management, end of period	$	13,699		$	13,112		$	13,377
Average assets under management for period	$	13,607		$	12,973		$	12,462

Subadvisory Excluding Japan
Assets under management, beginning of period	$	5,428		$	5,480		$	5,650
Inflows	1,030			1,034			1,358
Outflows	(919		)	(1,013		)	(2,353		)
Net inflows (outflows)	111			21			(995		)
Market appreciation (depreciation)	353			(73		)	825
Total increase (decrease)	464			(52		)	(170		)
Assets under management, end of period	$	5,892		$	5,428		$	5,480
Average assets under management for period	$	5,961		$	5,537		$	5,500

Advisory
Assets under management, beginning of period	$	7,565		$	7,344		$	6,233
Inflows	2,039			753			750
Outflows	(992		)	(759		)	(988		)
Net inflows (outflows)	1,047			(6		)	(238		)
Market appreciation	456			227			1,236
Other ⁽²⁾	—			—			113
Total increase	1,503			221			1,111
Assets under management, end of period	$	9,068		$	7,565		$	7,344
Average assets under management for period	$	8,517		$	7,374		$	6,894

Total Institutional Accounts
Assets under management, beginning of period	$	26,105		$	26,201		$	22,926
Inflows	6,374			3,646			3,170
Outflows	(2,414		)	(2,379		)	(4,216		)
Net inflows (outflows)	3,960			1,267			(1,046		)
Market appreciation	1,627			863			5,240
Distributions	(3,033		)	(2,226		)	(1,032		)
Other ⁽²⁾	—			—			113
Total increase (decrease)	2,554			(96		)	3,275
Assets under management, end of period	$	28,659		$	26,105		$	26,201
Average assets under management for period	$	28,085		$	25,884		$	24,856

_________________________


(1)	December 31, 2015 and 2014 amounts have been reclassified to show distributions separately.


(2)	Represents transfer of assets under management not related to subscriptions, redemptions, market appreciation (depreciation) or distributions.

The following table sets forth information about net flows, appreciation/(depreciation) and distributions of assets under management by investment strategy for the periods presented (in millions):



	Years Ended December 31,
	2016			2015 ⁽¹⁾			2014 ⁽¹⁾
U.S. Real Estate
Assets under management, beginning of period	$	27,814		$	28,357		$	23,116
Inflows	7,821			5,410			3,900
Outflows	(4,091		)	(3,729		)	(4,182		)
Net inflows (outflows)	3,730			1,681			(282		)
Market appreciation	1,674			1,358			6,955
Distributions	(4,164		)	(3,582		)	(1,654		)
Other ⁽²⁾	(127		)	—			222
Total increase (decrease)	1,113			(543		)	5,241
Assets under management, end of period	$	28,927		$	27,814		$	28,357
Average assets under management for period	$	29,224		$	27,663		$	26,585

Preferred Securities
Assets under management, beginning of period	$	7,705		$	6,342		$	4,722
Inflows	4,857			3,048			2,336
Outflows	(2,592		)	(1,702		)	(1,044		)
Net inflows	2,265			1,346			1,292
Market appreciation	365			371			613
Distributions	(455		)	(354		)	(285		)
Total increase	2,175			1,363			1,620
Assets under management, end of period	$	9,880		$	7,705		$	6,342
Average assets under management for period	$	9,145		$	6,915		$	5,550

Global/International Real Estate
Assets under management, beginning of period	$	9,476		$	10,184		$	9,498
Inflows	1,596			1,017			1,785
Outflows	(1,867		)	(1,900		)	(2,244		)
Net outflows	(271		)	(883		)	(459		)
Market appreciation	336			389			1,366
Distributions	(265		)	(214		)	(221		)
Other ⁽²⁾	127			—			—
Total (decrease) increase	(73		)	(708		)	686
Assets under management, end of period	$	9,403		$	9,476		$	10,184
Average assets under management for period	$	9,734		$	9,938		$	9,954

Global Listed Infrastructure
Assets under management, beginning of period	$	5,147		$	5,697		$	4,714
Inflows	732			918			1,051
Outflows	(402		)	(608		)	(500		)
Net inflows	330			310			551
Market appreciation (depreciation)	428			(670		)	596
Distributions	(208		)	(190		)	(164		)
Total increase (decrease)	550			(550		)	983
Assets under management, end of period	$	5,697		$	5,147		$	5,697
Average assets under management for period	$	5,488		$	5,559		$	5,440

_________________________


(1)	December 31, 2015 and 2014 amounts have been reclassified to show distributions separately and dividend reinvestments as inflows.


(2)	Represents transfer of assets under management not related to subscriptions, redemptions, market appreciation (depreciation) or distributions.



Assets Under Management By Investment Strategy - continued	Years Ended December 31,
	2016			2015 ⁽¹⁾			2014 ⁽¹⁾
Other
Assets under management, beginning of period	$	2,452		$	2,557		$	3,857
Inflows	998			597			736
Outflows	(381		)	(394		)	(1,947		)
Net inflows (outflows)	617			203			(1,211		)
Market appreciation (depreciation)	295			(231		)	229
Distributions	(73		)	(77		)	(96		)
Other ⁽²⁾	—			—			(222		)
Total increase (decrease)	839			(105		)	(1,300		)
Assets under management, end of period	$	3,291		$	2,452		$	2,557
Average assets under management for period	$	2,778		$	2,647		$	3,104

Total
Assets under management, beginning of period	$	52,594		$	53,137		$	45,907
Inflows	16,004			10,990			9,808
Outflows	(9,333		)	(8,333		)	(9,917		)
Net inflows (outflows)	6,671			2,657			(109		)
Market appreciation	3,098			1,217			9,759
Distributions	(5,165		)	(4,417		)	(2,420		)
Other ⁽²⁾	—			—			—
Total increase (decrease)	4,604			(543		)	7,230
Assets under management, end of period	$	57,198		$	52,594		$	53,137
Average assets under management for period	$	56,369		$	52,722		$	50,633

_________________________


(1)	December 31, 2015 and 2014 amounts have been reclassified to show distributions separately and dividend reinvestments as inflows.


(2)	Represents transfer of assets under management not related to subscriptions, redemptions, market appreciation (depreciation) or distributions.

Overview

Assets under management were $57.2 billion at December 31, 2016, an increase of 9% from $52.6 billion at December 31, 2015 and an increase of 8% from $53.1 billion at December 31, 2014. The increase in assets under management during 2016 was due to net inflows of $6.7 billion and market appreciation of $3.1 billion, partially offset by distributions of $5.2 billion. Net inflows in 2016 included $3.7 billion into U.S. real estate and $2.3 billion into preferred securities. Market appreciation in 2016 included $1.7 billion from U.S. real estate, $428 million from global listed infrastructure and $365 million from preferred securities. Distributions in 2016 included $4.2 billion from U.S. real estate.

The decrease in assets under management during 2015 was due to distributions of $4.4 billion, partially offset by net inflows of $2.7 billion and market appreciation of $1.2 billion. Net inflows in 2015 included $1.7 billion into U.S. real estate, $1.3 billion into preferred securities and $310 million into global listed infrastructure, partially offset by net outflows of $883 million from global/international real estate. Market appreciation in 2015 included $1.4 billion from U.S. real estate and $389 million from global/international real estate, partially offset by market depreciation of $670 million from global listed infrastructure. Distributions in 2015 included $3.6 billion from U.S. real estate.

A majority of our revenue, approximately 91%, 92% and 93% for the years ended December 31, 2016, 2015 and 2014, respectively, was derived from investment advisory and administrative fees for providing asset management services to institutional accounts as well as open-end funds and closed-end funds sponsored by the Company.

Average assets under management were $56.4 billion for the year ended December 31, 2016, an increase of 7% from $52.7 billion for the year ended December 31, 2015 and an increase of 11% from $50.6 billion for the year ended December 31, 2014.

Institutional accounts

Assets under management in institutional accounts, which represented 50% of total assets under management, were $28.7 billion at December 31, 2016, compared with $26.1 billion at December 31, 2015 and $26.2 billion at December 31, 2014. The increase in institutional assets under management during 2016 was due to net inflows of $4.0 billion and market appreciation of $1.6 billion, partially offset by distributions of $3.0 billion. Net inflows in 2016 included $2.4 billion into U.S. real estate, $775 million into real assets multi-strategy (included in "Other" in the table above) and $428 million into preferred securities. Market appreciation in 2016 included $924 million from U.S. real estate, $306 million from global/international real estate and $167 million from global listed infrastructure. Distributions in 2016 included $3.0 billion from U.S. real estate.

The decrease in assets under management during 2015 was due to distributions of $2.2 billion, partially offset by net inflows of $1.3 billion and market appreciation of $863 million. Net inflows in 2015 included $1.3 billion from U.S. real estate. Market appreciation in 2015 included $815 million from U.S. real estate.

Average assets under management for institutional accounts were $28.1 billion for the year ended December 31, 2016, an increase of 9% from $25.9 billion for the year ended December 31, 2015 and an increase of 13% from $24.9 billion for the year ended December 31, 2014.

Assets under management in Japan subadvised accounts, which represented 48% of institutional assets under management, were $13.7 billion at December 31, 2016, compared with $13.1 billion at December 31, 2015 and $13.4 billion at December 31, 2014. The increase in Japan subadvised assets under management during 2016 was due to net inflows of $2.8 billion and market appreciation of $818 million, partially offset by distributions of $3.0 billion, all of which were primarily from U.S. real estate.

The decrease in assets under management during 2015 was due to distributions of $2.2 billion, partially offset by net inflows of $1.3 billion and market appreciation of $709 million, all of which were primarily from U.S. real estate.

Average assets under management for Japan subadvised accounts were $13.6 billion for the year ended December 31, 2016, an increase of 5% from $13.0 billion for the year ended December 31, 2015, and an increase of 9% from $12.5 billion for the year ended December 31, 2014.

Assets under management in institutional subadvised accounts excluding Japan, which represented 21% of institutional assets under management, were $5.9 billion at December 31, 2016, compared with $5.4 billion at December 31, 2015 and $5.5 billion at December 31, 2014. The increase in assets under management during 2016 was due to net inflows of $111 million and market appreciation of $353 million. Net inflows in 2016 included $201 million from global/international real estate, and $106 million from global listed infrastructure, partially offset by net outflows of $140 million from U.S. real estate. Market appreciation in 2016 included $91 million from global/international real estate, $77 million from global listed infrastructure, $69 million from large cap value and $63 million from commodities (both of which are included in "Other" in the table above).

The decrease in assets under management during 2015 was due to market depreciation of $73 million, partially offset by net inflows of $21 million.

Average assets under management for institutional subadvised accounts excluding Japan were $6.0 billion for the year ended December 31, 2016, an increase of 8% from $5.5 billion for each of the years ended December 31, 2015 and December 31, 2014.

Assets under management in institutional advised accounts, which represented 32% of institutional assets under management, were $9.1 billion at December 31, 2016, compared with $7.6 billion at December 31, 2015 and $7.3 billion at December 31, 2014. The increase in assets under management during 2016 was due to net inflows of $1.0 billion and market appreciation of $456 million. Net inflows in 2016 included $775 million into real assets multi-strategy (included in "Other" in the table above) and $321 million into global listed infrastructure. Market appreciation included $265 million from global/international real estate and $79 million from global listed infrastructure.

The increase in assets under management during 2015 was primarily due to market appreciation of $227 million.

Average assets under management for institutional advised accounts were $8.5 billion for the year ended December 31, 2016, an increase of 16% from $7.4 billion for the year ended December 31, 2015, and an increase of 24% from $6.9 billion for the year ended December 31, 2014.

Open-end funds

Assets under management in open-end funds, which represented 34% of total assets under management, were $19.6 billion at December 31, 2016, compared with $17.5 billion at December 31, 2015 and $17.1 billion at December 31, 2014. The increase in assets under management during 2016 was due to net inflows of $2.8 billion and market appreciation of $917 million, partially offset by distributions of $1.6 billion. Net inflows in 2016 included $1.8 billion into preferred securities and $1.3 billion into U.S. real estate, partially offset by net outflows of $383 million from global/international real estate. Market appreciation in 2016 included $594 million from U.S. real estate and $216 million from preferred securities. Distributions included $1.2 billion from U.S. real estate.

The increase in assets under management during 2015 was due to net inflows of $1.4 billion and market appreciation of $560 million, partially offset by distributions of $1.7 billion. Net inflows in 2015 included $1.6 billion into preferred securities and $421 million into U.S. real estate, partially offset by net outflows of $496 million from global/international real estate strategies. Market appreciation in 2015 included $395 million from U.S. real estate and $212 million from preferred securities, partially offset by market deprecation of $61 million from global listed infrastructure. Distributions were primarily from U.S. real estate.

Average assets under management for open-end funds were $19.2 billion for the year ended December 31, 2016, an increase of 11% from $17.3 billion for the year ended December 31, 2015 and an increase of 19% from $16.1 billion for the year ended December 31, 2014.

Closed-end funds

Assets under management in closed-end funds, which represented 16% of total assets under management, were $9.0 billion at both December 31, 2016 and December 31, 2015, compared with $9.8 billion at December 31, 2014. The decrease in assets under management during 2015 was primarily due to distributions of $517 million and market depreciation of $206 million.

Average assets under management for closed-end funds were $9.1 billion for the year ended December 31, 2016, a decrease of 5% from $9.6 billion for the year ended December 31, 2015 and a decrease of 6% from $9.7 billion for the year ended December 31, 2014.

Investment Performance as of December 31, 2016



	% of Total AUM in Outperforming Strategies ⁽¹⁾
	December 31, 2014	December 31, 2015	December 31, 2016
1-Year	95%	88%	44%
3-Year	76%	100%	96%
5-Year	60%	76%	76%
10-Year	61%	100%	95%



% of U.S. Open-End Fund AUM by Morningstar Rating ⁽²⁾,as of December 31, 2016
Not Rated	—	1%
1 or 2 Star	« or ««	4%
3 Star	«««	7%
4 or 5 Star	«««« or «««««	88%

_________________________

(1)

Past performance of investment strategies is no guarantee of future results. Outperformance determined by annualized investment performance of all accounts in each investment strategy measured gross of fees and net of withholding taxes in comparison to performance of each account’s reference benchmark 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)

Past performance is no guarantee of future results. Based on independent ratings by Morningstar, Inc. of investment performance of each Cohen & Steers-sponsored open-end U.S. registered mutual fund for the overall period as of December 31, 2016. 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.

© 2017 Morningstar, Inc. All Rights Reserved. The information contained in the table above: (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. Based on independent ratings 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 as of December 31, 2016. 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.

Results of Operations



(in thousands, except per share data and percentages)	Years Ended December 31,
	2016			2015			2014
U.S. GAAP
Revenue	$	349,876		$	328,655		$	313,934
Expenses	$	214,365		$	201,106		$	191,993
Operating income	$	135,511		$	127,549		$	121,941
Operating margin	38.7		%	38.8		%	38.8		%
Non-operating income (loss)	$	7,892		$	(14,805	)	$	73
Net income attributable to common stockholders	$	92,936		$	64,551		$	75,510
Diluted earnings per share	$	2.00		$	1.41		$	1.65

As Adjusted ⁽¹⁾
Net income attributable to common stockholders	$	86,109		$	78,694		$	75,897
Diluted earnings per share	$	1.85		$	1.71		$	1.66

_________________________


(1)	The as adjusted financial measures represent non-GAAP financial measures. Please refer to the “Non-GAAP Reconciliations” on pages 26-27 for a reconciliation to the most directly comparable U.S. GAAP financial measures.

U.S. GAAP

2016 Compared with 2015

Revenue

Revenue increased 6% to $349.9 million for the year ended December 31, 2016 from $328.7 million for the year ended December 31, 2015. This increase was primarily attributable to higher investment advisory and administration fees of $15.9 million, primarily resulting from higher average assets under management in institutional accounts and open-end funds.

For the year ended December 31, 2016:


•	Total investment advisory revenue from institutional accounts increased 9% to $93.2 million from $85.5 million for the year ended December 31, 2015. Total investment advisory revenue compared with average assets under management in institutional accounts implied an annual effective fee rate of 33 bps for both the years ended December 31, 2016 and 2015.


•	Total investment advisory and administration revenue from open-end funds increased 10% to $149.9 million from $136.9 million for the year ended December 31, 2015. Total investment advisory and administration revenue compared with average assets under management in open-end funds implied an annual effective fee rate of 78 bps and 79 bps for the years ended December 31, 2016 and 2015, respectively.

•

Total investment advisory and administration revenue from closed-end funds decreased 6% to $76.6 million from $81.4 million for the year ended December 31, 2015. Total investment advisory and administration revenue compared with average assets under management in closed-end funds implied an annual effective fee rate of 84 bps and 85 bps for the years ended December 31, 2016 and 2015, respectively.

Expenses

Total operating expenses increased 7% to $214.4 million for the year ended December 31, 2016 from $201.1 million for the year ended December 31, 2015, primarily due to increases of $7.9 million in employee compensation and benefits, $3.3 million in distribution and service fee expenses, and $705,000 in general and administrative expenses.

Employee compensation and benefits increased 7% to $115.6 million for the year ended December 31, 2016 from $107.7 million for the year ended December 31, 2015. This increase was primarily due to increases in incentive compensation of approximately $4.0 million, salaries of approximately $2.9 million, and higher production compensation of approximately $1.4 million, partially offset by lower amortization of restricted stock units of approximately $384,000.

Distribution and service fee expenses increased 9% to $39.6 million for the year ended December 31, 2016 from $36.3 million for the year ended December 31, 2015. The increase was primarily due to higher average assets under management in U.S. no-load open-end funds.

General and administrative expenses increased 1% to $51.6 million for the year ended December 31, 2016 from $50.9 million for the year ended December 31, 2015. The increase was primarily due to higher information technology expenses of approximately $719,000, professional fees of approximately $592,000, and rent and occupancy costs of approximately $305,000, partially offset by lower hosted conferences of approximately $528,000 and travel and entertainment of approximately $415,000.

Operating Margin

Operating margin for the year ended December 31, 2016 was 38.7%, compared with 38.8% for the year ended December 31, 2015.

Non-operating Income

Non-operating income for the year ended December 31, 2016 was $7.9 million, compared with a non-operating loss of $14.8 million for the year ended December 31, 2015, which included an unrealized non-operating loss of $8.2 million on a seed investment that, due to third-party shareholder redemptions, was reclassified from available-for-sale investments to equity method investments. In addition, non-operating loss for the year ended December 31, 2015 included a $2.8 million other-than-temporary impairment. Non-operating income for the year ended December 31, 2016 included net loss attributable to redeemable noncontrolling interest of $126,000. Non-operating loss for the year ended December 31, 2015 included net loss attributable to redeemable noncontrolling interest of $214,000.

Income Taxes

Income tax expense was $50.6 million for the year ended December 31, 2016, compared with $48.4 million for the year ended December 31, 2015. The provision for income taxes for the year ended December 31, 2016 included U.S. federal, state, local and foreign taxes at an effective tax rate of approximately 35.3%, which differs from the U.S. federal statutory rate primarily due to the release of a valuation allowance associated with gains on the Company's seed investments, as well as discrete items. The effective tax rate for the year ended December 31, 2015 was approximately 42.9%.

2015 Compared with 2014

Revenue

Revenue increased 5% to $328.7 million for the year ended December 31, 2015 from $313.9 million for the year ended December 31, 2014. This increase was primarily attributable to higher investment advisory and administration fees of $12.0 million, resulting from higher average assets under management in institutional accounts and open-end funds.

For the year ended December 31, 2015:


•	Total investment advisory revenue from institutional accounts increased 4% to $85.5 million from $81.9 million for the year ended December 31, 2014. Total investment advisory revenue compared with average assets under management in institutional accounts implied an annual effective fee rate of 33 bps for both the years ended December 31, 2015 and 2014.


•	Total investment advisory and administration revenue from open-end funds increased 7% to $136.9 million from $127.4 million for the year ended December 31, 2014. Total investment advisory and administration revenue compared with average assets under management in open-end funds implied an annual effective fee rate of 79 bps for both the years ended December 31, 2015 and 2014.


•	Total investment advisory and administration revenue from closed-end funds decreased 1% to $81.4 million from $82.5 million for the year ended December 31, 2014. Total investment advisory and administration revenue compared with average assets under management in closed-end funds implied an annual effective fee rate of 85 bps for both the years ended December 31, 2015 and 2014.

Expenses

Total operating expenses increased 5% to $201.1 million for the year ended December 31, 2015 from $192.0 million for the year ended December 31, 2014, primarily due to increases in employee compensation and benefits of $5.0 million, general and administrative expenses of $3.5 million and distribution and service fees of $860,000.

Employee compensation and benefits increased 5% to $107.7 million for the year ended December 31, 2015 from $102.7 million for the year ended December 31, 2014. This increase was primarily due to increases in incentive compensation of approximately $3.1 million, salaries and benefits of approximately $2.1 million primarily due to new hires and production compensation of approximately $1.1 million, partially offset by lower amortization of restricted stock units of approximately $2.9 million.

General and administrative expenses increased 7% to $50.9 million for the year ended December 31, 2015 from $47.3 million for the year ended December 31, 2014. The increase was primarily due to higher rent and occupancy costs of approximately $1.1 million attributable to the expansion of office space at our corporate headquarters, recruiting fees of approximately $1.0 million, travel and entertainment expenses of approximately $574,000 resulting from increased business travel and hosted and sponsored conference expenses of approximately $470,000.

Distribution and service fee expenses increased 2% to $36.3 million for the year ended December 31, 2015 from $35.5 million for the year ended December 31, 2014. The increase was primarily due to higher average assets under management in open-end funds, partially offset by a shift to lower cost share classes and the expiration of a compensation agreement entered into in connection with the common stock offering of one of our closed-end funds for which fees were incurred through January 2015.

Operating Margin

Operating margin for both years ended December 31, 2015 and December 31, 2014 was 38.8%.

Non-operating Income

Non-operating loss for the year ended December 31, 2015 was $14.8 million, compared with non-operating income of $73,000 for the year ended December 31, 2014. Non-operating loss for the year ended December 31, 2015 included an unrealized loss of $8.2 million on a seed investment that was reclassified from available-for-sale investments to equity method investments and a $2.8 million other-than-temporary impairment. Non-operating loss for the year ended December 31, 2015 included net loss attributable to redeemable noncontrolling interest of $214,000. Non-operating income for the year ended December 31, 2014 included net income attributable to redeemable noncontrolling interest of $224,000.

Income Taxes

Income tax expense was $48.4 million for the year ended December 31, 2015, compared with $46.3 million for the year ended December 31, 2014. The provision for income taxes for the year ended December 31, 2015 included U.S. federal, state, local and foreign taxes at an effective tax rate of approximately 42.9%, which included the effect of recording a valuation allowance on the tax benefit associated with the unrealized losses on the Company's seed investments. The effective tax rate for the year ended December 31, 2014 was approximately 38%.

As Adjusted

The term “as adjusted” is used to identify non-GAAP financial information in the discussion below and excludes the financial results associated with our seed investments, the effect of the accelerated vesting of certain restricted stock units in the first quarter of 2016 and related tax effect as well as certain discrete items. Please refer to the “Non-GAAP Reconciliations” on pages 26-27 for a reconciliation to the most directly comparable U.S. GAAP financial measures.

2016 Compared with 2015

Expenses

Total operating expenses, as adjusted, increased 6% to $212.3 million for the year ended December 31, 2016 from $201.1 million for the year ended December 31, 2015. Total operating expenses, as adjusted, excluded employee compensation and benefits attributable to the accelerated vesting of certain restricted stock units recorded during the first quarter of 2016 and general and administrative expenses from our consolidated seed investments.

Operating Margin

Operating margin, as adjusted, for the year ended December 31, 2016 was 39.3% compared with 38.8% for the year ended December 31, 2015

Non-operating Income

Non-operating income, as adjusted, for the year ended December 31, 2016 was $1.2 million compared with non-operating loss, as adjusted, of $772,000 for the year ended December 31, 2015. Non-operating income, as adjusted, for the year ended December 31, 2016, was comprised primarily of net gains of $827,000 associated with forward contracts used to hedge certain non-U.S. dollar advisory fee receivables and interest earned on corporate cash of $395,000.

Income Taxes

Income tax expense, as adjusted, for the year ended December 31, 2016 was $52.8 million, compared with $48.2 million for the year ended December 31, 2015. The provision for income taxes, as adjusted, excluded income tax effects related to the accelerated vesting of certain restricted stock units in the first quarter of 2016 and certain discrete items. The effective tax rate, as adjusted, for both the year ended December 31, 2016 and December 31, 2015 was 38%.

2015 Compared with 2014

Operating Margin

Operating margin, as adjusted, for the year ended December 31, 2015 was 38.8% compared with 39.0% for the year ended December 31, 2014.

Non-operating Income

Non-operating loss, as adjusted, for the year ended December 31, 2015 was $772,000 compared with non-operating loss, as adjusted, of $18,000 for the year ended December 31, 2014. Non-operating loss, as adjusted, for the year ended

December 31, 2015, was comprised primarily of net losses of $630,000 associated with forward contracts used to hedge certain non-U.S. dollar advisory fee receivables and interest earned on corporate cash of $211,000.

Income Taxes

Income tax expense, as adjusted, for the year ended December 31, 2015 was $48.2 million, compared with $46.5 million for the year ended December 31, 2014. The effective tax rate, as adjusted, for both years ended December 31, 2015 and 2014 was 38%.

Non-GAAP Reconciliations

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

While we believe that this non-GAAP financial information is useful in evaluating our results and operating performance, this information should be considered as supplemental in nature and not as a substitute for the related financial information prepared in accordance with U.S. GAAP.

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



(in thousands, except per share data)	Years Ended December 31,
	2016			2015		2014
Net income attributable to common stockholders, U.S. GAAP	$	92,936		$	64,551	$	75,510
Accelerated vesting of restricted stock units⁽¹⁾	$	1,945		$	—	$	—
Deconsolidation ⁽²⁾	$	(654	)	$	2,136	$	1,776
Results from seed investments ⁽³⁾	$	(5,934	)	$	11,833	$	(1,152	)
Tax adjustments⁽⁴⁾	$	(2,184	)	$	174	$	(237	)
Net income attributable to common stockholders, as adjusted	$	86,109		$	78,694	$	75,897

Diluted weighted average shares outstanding	46,432			$	45,897	$	45,643
Diluted earnings per share, U.S. GAAP	$	2.00		$	1.41	$	1.65
Accelerated vesting of restricted stock units⁽¹⁾	$	0.04		$	—	$	—
Deconsolidation⁽²⁾	$	(0.01	)	$	0.05	$	0.04
Results from seed investments⁽³⁾	$	(0.13	)	$	0.25	$	(0.03	)
Tax adjustments⁽⁴⁾	$	(0.05	)	$	—	$	—
Diluted earnings per share, as adjusted	$	1.85		$	1.71	$	1.66

________________________


(1)	Represents amounts attributable to the accelerated vesting of certain restricted stock units in the first quarter of 2016.


(2)	Represents amounts related to deconsolidation of the Company’s consolidated seed investments in Company-sponsored funds.


(3)	Represents dividend income and realized gains on the Company’s seed investments classified as available-for-sale, and the Company’s proportionate share of the results of operations of seed investments classified as equity method investments, including realized and unrealized gains and losses.


(4)	Represents the tax benefit associated with the accelerated vesting of certain restricted stock units for the year ended December 31, 2016 as well as discrete items recorded in each of the periods presented.

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



(in thousands, except percentages)	Years Ended December 31,
	2016			2015			2014
Revenue, U.S. GAAP	$	349,876		$	328,655		$	313,934
Deconsolidation ⁽¹⁾	$	147		$	102		$	258
Revenue, as adjusted	$	350,023		$	328,757		$	314,192

Expenses, U.S. GAAP	$	214,365		$	201,106		$	191,993
Deconsolidation ⁽¹⁾	$	(106	)	$	(48	)	$	(233	)
Accelerated vesting of restricted stock units⁽²⁾	$	(1,945	)	$	—		$	—
Expenses, as adjusted	$	212,314		$	201,058		$	191,760

Operating income, U.S. GAAP	$	135,511		$	127,549		$	121,941
Deconsolidation ⁽¹⁾	$	253		$	150		$	491
Accelerated vesting of restricted stock units⁽²⁾	$	1,945		$	—		$	—
Operating income, as adjusted	$	137,709		$	127,699		$	122,432

Operating margin, U.S. GAAP	38.7		%	38.8		%	38.8		%
Operating margin, as adjusted	39.3		%	38.8		%	39.0		%

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



(in thousands)	Years Ended December 31,
	2016			2015			2014
Non-operating income (loss), U.S. GAAP	$	7,892		$	(14,805	)	$	73
Deconsolidation ⁽¹⁾	$	(781	)	$	2,200		$	1,061
Results from seed investments ⁽³⁾	$	(5,934	)	$	11,833		$	(1,152	)
Non-operating income (loss), as adjusted	$	1,177		$	(772	)	$	(18	)

________________________


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


(2)	Represents amounts attributable to the accelerated vesting of certain restricted stock units in the first quarter of 2016.


(3)	Represents dividend income and realized gains on the Company’s seed investments classified as available-for-sale, and the Company’s proportionate share of the results of operations of seed investments classified as equity method investments, including realized and unrealized gains and losses.

Changes in Financial Condition, Liquidity and Capital Resources

Our investment advisory business does not require us to maintain significant capital balances. Our current financial condition is highly liquid, with a significant amount of our assets comprised of cash and cash equivalents, equity method investments, available-for-sale investments and accounts receivable (together, liquid assets). Our cash flows generally result from the operating activities of our business, with investment advisory and administrative fees being the most significant contributor. Cash and cash equivalents, equity method investments (excluding investments measured at NAV (or its equivalent) as a practical expedient in accordance with Accounting Standards Codification Topic 820, Fair Value Measurement), available-for-sale investments and accounts receivable, were 79% and 71% of total assets as of December 31, 2016 and 2015, respectively.

Net cash provided by operating activities was $115.0 million for the year ended December 31, 2016, compared with $89.8 million and $54.6 million for the years ended December 31, 2015 and December 31, 2014, respectively. We expect that cash flows provided by operating activities will continue to serve as our principal source of working capital in the near future.

Net cash provided by investing activities was $2.9 million for the year ended December 31, 2016, compared with $397,000 for the year ended December 31, 2015 and $9.8 million for the year ended December 31, 2014. In 2016, net cash provided by investing activities was comprised of proceeds from sales of available-for-sale investments in the amount of

$20.8 million, partially offset by purchases of property and equipment in the amount of $10.2 million and purchases of available-for-sale investments in the amount of $8.1 million.

In 2015, net cash provided by investing activities was comprised of proceeds from sales of available-for-sale investments in the amount of $7.3 million and proceeds from redemption of equity method investments of $1.2 million, partially offset by purchases of available-for-sale investments in the amount of $5.7 million and purchases of property and equipment in the amount of $2.4 million. In 2014, net cash provided by investing activities was comprised of proceeds from sales of available-for-sale investments in the amount of $12.7 million and proceeds from the redemption of equity method investments of $10.9 million, partially offset by purchases of available-for-sale investments in the amount of $7.8 million and purchases of property and equipment in the amount of $5.9 million.

Net cash used in financing activities was $74.5 million for the year ended December 31, 2016, compared with $71.1 million for the year ended December 31, 2015 and $65.6 million for the year ended December 31, 2014. In 2016, net cash used in financing activities was primarily for dividends paid to stockholders of $70.8 million, which included a special dividend of approximately $22.9 million paid on December 14, 2016, and repurchases of common stock to satisfy employee withholding tax obligations on the vesting and delivery of restricted stock units of $8.0 million, partially offset by contributions from redeemable noncontrolling interest of $4.0 million.

In 2015, net cash used in financing activities was primarily for dividends paid to stockholders of $68.2 million, which included a special dividend of approximately $22.7 million paid on December 16, 2015, and repurchases of common stock to satisfy employee withholding tax obligations on the vesting and delivery of restricted stock units of $19.2 million, partially offset by contributions from redeemable noncontrolling interest of $11.0 million and excess tax benefits associated with the vesting and delivery of restricted stock units of $4.8 million. In 2014, net cash used in financing activities was primarily for dividends paid to stockholders of $84.2 million, which included a special dividend of approximately $44.8 million paid on December 19, 2014, repurchases of common stock to satisfy employee withholding tax obligations on the vesting and delivery of restricted stock units of $11.7 million and distributions to redeemable noncontrolling interest of $9.0 million, partially offset by contributions from redeemable noncontrolling interest of $36.3 million and excess tax benefits associated with the vesting and delivery of restricted stock units of $2.6 million.

For the year ended December 31, 2016, we redeemed our seed investment in Cohen & Steers Real Assets Fund, Inc. for total proceeds of $13.2 million. For the year ended December 31, 2015, we made two new seed investments totaling $20.0 million, including $5.0 million in connection with the launch of the Cohen & Steers SICAV Global Listed Infrastructure Fund and $15.0 million in connection with the launch of Cohen & Steers Low Duration Preferred and Income Fund, Inc. For the year ended December 31, 2014, we made one new seed investment of $10.0 million in connection with the launch of Cohen & Steers Active Commodities Strategy Fund, Inc.

We have committed to co-invest up to $5.1 million alongside Cohen & Steers Global Realty Partners III-TE, L.P. (GRP-TE). As of December 31, 2016, we have funded approximately $3.3 million with respect to this commitment. Our co-investment alongside GRP-TE is illiquid and is anticipated to be invested for the life of the fund. The timing of the funding of the unfunded portion of our commitment is currently unknown, as the drawdown of our commitment is contingent on the timing of drawdowns by the underlying funds and co-investments in which GRP-TE invests. The unfunded portion of this commitment was not recorded on our consolidated statements of financial condition as of December 31, 2016.

We continuously monitor and evaluate the adequacy of our capital. We have consistently maintained net capital in excess of the regulatory requirements for our broker-dealer, as prescribed by the Securities and Exchange Commission (SEC). The SEC’s Uniform Net Capital Rule 15c3-1 imposes certain requirements that may have the effect of prohibiting a broker-dealer from distributing or withdrawing capital and requiring prior notice to the SEC for certain withdrawals of capital. At December 31, 2016, we exceeded our minimum regulatory capital requirements by approximately $3.2 million. During July 2016, Cohen & Steers Capital Management, Inc. made a capital contribution of $2 million into Cohen & Steers Securities, LLC.

Cohen & Steers Asia Limited (CSAL) and Cohen & Steers UK Limited (CSUK) are regulated outside the U.S. by the Hong Kong Securities and Futures Commission and the United Kingdom Financial Conduct Authority, respectively. At December 31, 2016, CSAL and CSUK exceeded their aggregate minimum regulatory capital requirements by approximately $65.9 million. We believe that our cash and cash equivalents and cash flows from operations will be more than adequate to meet our anticipated capital requirements and other obligations as they become due.

Included in cash and cash equivalents was approximately $89.9 million held by our foreign subsidiaries as of December 31, 2016. It is our current intention to permanently reinvest funds held by our non-U.S. subsidiaries. We believe that our liquid assets held in the U.S. are more than sufficient to cover our working capital needs in the U.S.

On February 23, 2017, the Company declared a quarterly dividend on its common stock in the amount of $0.28 per share. This dividend will be payable on March 23, 2017 to stockholders of record at the close of business on March 9, 2017.

Contractual Obligations and Contingencies

We have contractual obligations to make future payments in connection with our noncancelable long-term operating leases for office space, information technology applications and office equipment. There were no material capital lease obligations as of December 31, 2016. The following summarizes our contractual obligations as of December 31, 2016 (in thousands):



	2017		2018		2019		2020		2021		2022 and after		Total
Operating leases	$	12,196	$	11,446	$	11,593	$	11,236	$	10,832	$	22,620	$	79,923

We had $7.9 million, $7.3 million and $6.3 million of total gross unrecognized tax benefits as of December 31, 2016, 2015 and 2014, respectively. The total amount of net unrecognized tax benefits that, if recognized, would affect the effective tax rate was $4.9 million, $4.7 million and $4.1 million (net of the federal benefit on state issues) as of December 31, 2016, 2015 and 2014, respectively. We accrue interest and penalties related to unrecognized tax benefits in the provision for income taxes. As of December 31, 2016 and 2015, we had accrued interest and penalties related to unrecognized tax benefits of approximately $2.3 million and $1.7 million, respectively. See Note 14 to the consolidated financial statements for additional disclosures related to income taxes.

Off-Balance Sheet Arrangements

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

Critical Accounting Policies and Estimates

A thorough understanding of our accounting policies is essential when reviewing our reported results of operations and our financial condition. The preparation of our consolidated financial statements in accordance with accounting principles generally accepted in the United States of America requires us to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the dates of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates.

Our significant accounting policies are disclosed in Note 2 to the consolidated financial statements and should be read in conjunction with the summarized information below. Management considers the following accounting policies 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 policies were applied or the estimates determined.

Consolidation of Company-sponsored Funds

The Company evaluates its investments in Company-sponsored funds at inception and subsequently if there is a reconsideration event to determine whether the investment represents a variable interest entity (VIE) or a voting interest entity (VOE). This evaluation involves the use of judgment and analysis on an entity by entity basis. In performing this analysis, we consider the legal structure of the entity, management fees earned by the Company and the nature of the ownership interest and rights of interest holders in the entity, including the Company. If we determine that the entity is a VIE, we must then assess whether the Company absorbs a majority of the VIEs expected variability in which case it is deemed to be the primary beneficiary of the VIE. The Company consolidates VIEs for which it is deemed to be the primary beneficiary. We consolidate VOEs if we own a majority of the voting interest in the entity or when the Company is the general partner of the fund and the limited partners do not have substantive kick-out or participating rights. Amounts attributable to third parties in the funds that we consolidate are recorded in redeemable noncontrolling interest on the consolidated statements of financial condition and net (income) loss attributable to redeemable noncontrolling interest on the consolidated statements of operations.

Investments

Our investments are classified as trading investments, equity method investments or available-for-sale investments at the time of purchase and at the date of each consolidated statement of financial condition. Investments classified as trading investments represent securities held within the Company-sponsored funds that we consolidate. Investments classified as equity method investments represent investments in Company-sponsored funds in which the Company’s ownership is between 20-50% of the outstanding voting interests of the entity or when the Company is able to exercise significant influence but not control over the investments. Investments for which the Company has neither control nor the ability to exercise significant influence are classified as available-for-sale.

Fair Value

The majority of our investments are carried at fair value or amounts that approximate fair value on our consolidated statement of financial condition with the periodic mark-to-market included in accumulated other comprehensive income for available-for-sale investments and directly in earnings for trading investments and equity method investments. Fair value is the price that would be received to sell an asset or transfer a liability in an orderly transaction between market participants at the measurement date. Assets and liabilities reported at fair value are classified and disclosed in a fair value hierarchy based on whether the inputs to the valuation techniques are observable or unobservable. The classification within the hierarchy is determined based on the lowest level of input that is significant to the fair value measurement:

Level 1 - Unadjusted quoted prices for identical instruments in active markets.

Level 2 - Quoted prices for similar instruments in active markets, quoted prices of identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable.

Level 3 - Valuations derived from valuation techniques in which significant inputs or significant value drivers are unobservable.

The Company periodically reviews each individual available-for-sale investment that has an unrealized loss to determine if the loss is other-than-temporary. In evaluating whether such losses are other-than-temporary, the Company considers such factors as the extent and duration of the loss, as well as qualitative and quantitative information about the financial condition and near term prospects of the issuer or fund and the underlying portfolio. If the Company believes that an unrealized loss on an available-for-sale investment is other-than-temporary, the loss will be recognized in the consolidated statement of operations.

Goodwill

Goodwill represents the excess of the cost of our investment in the net assets of an acquired company over the fair value of the underlying identifiable net assets at the date of acquisition. Goodwill is not amortized but is tested annually for impairment and at other times if an event or circumstances occur indicating that it is more likely than not that an impairment has occurred. We estimate the fair value of goodwill using a market approach based upon multiples of AUM and earnings before interest, taxes, depreciation and amortization from a set of comparable peers for the current year and the trailing four years. We determined that the fair value of our goodwill substantially exceeded its carrying value based on the most recent impairment test performed as of November 30, 2016.

Stock-based Compensation

We recognize compensation expense for the grant-date fair value of awards of equity instruments granted to employees. This expense is recognized over the period during which employees are required to provide service and reflects an adjustment for anticipated forfeitures.

Income Taxes

We operate in numerous states and countries through our subsidiaries and therefore must allocate our income, expenses, and earnings to these taxing jurisdictions taking into account the various laws and regulations in each jurisdiction. Our tax provision represents an estimate of the total liability that we have incurred in these jurisdictions as a result of our operations. Each year we file tax returns in each jurisdiction and settle our tax liabilities which may be subject to audit by the taxing authorities. The determination of our annual provision is subject to judgments and estimates and the actual results may vary from the amounts reported in our consolidated financial statements. Accordingly, we recognize additions to, or reductions of, income tax expense during reporting periods that may pertain to prior period provisions as our estimated liabilities are revised

and actual tax returns and audits, if any, are settled. Such adjustments are recognized in the discrete quarterly period in which they are determined.

In addition, we record 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. Deferred tax liabilities are recognized for temporary differences that will result in taxable income in future 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 dealing with uncertainties in the application of complex tax laws and regulations in a multitude of 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 result in a payment that is materially different from our current estimate of the unrecognized tax benefit liabilities. These differences are reflected as increases or decreases to income tax expense in the period in which new information becomes available.

We consider the earnings of certain non-U.S. subsidiaries to be indefinitely invested outside of the United States on the basis of estimates that future domestic cash generation will be sufficient to meet future domestic cash needs and our specific plans for reinvestment of those subsidiary earnings. We have not recorded a deferred tax liability related to the U.S. federal and state income taxes and foreign withholding taxes on approximately $91.1 million of undistributed earnings of foreign subsidiaries indefinitely invested outside of the United States. Were these foreign earnings repatriated, we would need to adjust our income tax provision in the period we determine that the earnings will no longer be indefinitely invested outside of the United States.

Recently Issued Accounting Pronouncements

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

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

In the normal course of our business, we are exposed to risk as a result of changes in interest and currency rates and securities market and general economic fluctuations, which may have an adverse impact on the value of our investments. At December 31, 2016, we had approximately $12.7 million of trading investments as a result of consolidating GLI SICAV, CDF and Cohen & Steers Co-Investment Partnership, L.P. (GRP-CIP). At December 31, 2016, we had approximately $6.5 million of equity method investments, which represented our equity interests in ACOM and GRP-TE. As of December 31, 2016, we had approximately $35.4 million of available-for-sale investments, which were comprised of approximately $4.5 million invested in foreign and domestic common stocks, $1.0 million invested in preferred securities and $29.9 million invested in our sponsored funds.

The following is a summary of the effect that a 10 percent increase or decrease in equity prices would have on our investments subject to equity price fluctuation at December 31, 2016:



	Carrying Value		Carrying Value Assuming a 10% Increase		Carrying Value Assuming a 10% Decrease
Trading investments	$	12,689	$	13,958	$	11,420
Equity method investments	6,459		7,105		5,813
Available-for-sale investments	35,396		38,936		31,856

At December 31, 2016, the Company had outstanding foreign currency forward contracts to hedge its currency exposure related to client receivables with aggregated notional value of approximately $13.8 million. The Company estimates that a 10 percent adverse change in market prices would result in an increase of approximately $141,700 in the fair value of open foreign currency forward contracts held at December 31, 2016.

A majority of our revenue—approximately 91%, 92% and 93% for the years ended December 31, 2016, 2015 and 2014, respectively—was derived from investment advisory and administration agreements with our clients. Under these agreements, the investment advisory and administration fee we receive is based on the market value of the assets we manage. Accordingly, a decline in the prices of securities generally, and real estate securities in particular, attributable to market conditions including inflation, interest rate changes and a general economic downturn, may cause our revenue and income to decline by causing the value of the assets we manage to decrease, which would result in lower investment advisory and administration fees; or by causing our clients to withdraw funds in favor of investments that they perceive as offering greater opportunity or lower risk or cost, which would also result in lower investment advisory and administration fees.

Market conditions may also preclude us from increasing the assets we manage in closed-end funds. The market conditions for these offerings may not be as favorable in the future, which could adversely impact our ability to grow the assets we manage and realize higher fee revenue associated with such growth. Depending on market conditions, the closed-end funds we manage may increase or decrease their leverage in order to maintain the funds' target leverage ratios, thereby increasing or decreasing the assets we manage.

As of December 31, 2016, 51% and 17% of the assets we managed were concentrated in U.S. real estate and preferred securities, respectively. An increase in interest rates or prolonged economic downturn could have a negative impact on the valuation of real estate and preferred securities in our clients' portfolios, which could reduce our revenue. In addition, an increase in interest rates or prolonged economic downturn could negatively impact our ability to increase assets in our open-end funds and to offer new funds.

Item 8. Financial Statements and Supplementary Data

The report of our independent registered public accounting firm and financial statements listed in the accompanying index are included in Item 15 of this Annual Report on Form 10-K. See the Index to Financial Statements on page F-1.

Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

There have been no disagreements on accounting and financial disclosure matters.

Item 9A. Controls and Procedures

We maintain disclosure controls and procedures (as that term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act)) that are designed to ensure that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

Our management, including our Chief Executive Officer and our Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of December 31, 2016. Based on that evaluation and subject to the foregoing, our Chief Executive Officer and our Chief Financial Officer have concluded that our disclosure controls and procedures as of December 31, 2016 were effective to accomplish their objectives at a reasonable assurance level.

There has been no change in our internal control over financial reporting that occurred during the three months ended December 31, 2016 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Management's report on internal control over financial reporting is located on page F-2 of this Annual Report on Form 10-K and Deloitte & Touche LLP's report on the effectiveness of our internal control over financial reporting is located on page F-3.

Item 9B. Other Information

None.

PART III

Item 10. Directors, Executive Officers and Corporate Governance

The information regarding directors and executive officers set forth under the headings “Nominee Information” and “Other Executive Officers” of the Proxy Statement is incorporated by reference herein.

The information regarding compliance with Section 16(a) of the Exchange Act set forth under the heading “Section 16(a) Beneficial Ownership Reporting Compliance” in the Proxy Statement is incorporated by reference herein.

The information regarding our Code of Business Conduct and Ethics and committees of our Board of Directors under the headings “Corporate Governance” and “Board Meetings and Committees” in the Proxy Statement is incorporated by reference herein.

Item 11. Executive Compensation

The information contained under the headings “Executive Compensation”, “Board Meetings and Committees” and “Report of the Compensation Committee” of the Proxy Statement is incorporated by reference herein.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information under the headings “Ownership of Cohen & Steers Common Stock” and “Equity Compensation Plan Information” of the Proxy Statement is incorporated by reference herein.

Item 13. Certain Relationships and Related Transactions, and Director Independence

The information under the headings “Certain Relationships and Related Transactions” and “Corporate Governance” of the Proxy Statement is incorporated by reference herein.

Item 14. Principal Accountant Fees and Services

The information regarding our independent registered public accounting firm fees and services set forth under the heading “Ratification of the Appointment of Independent Registered Public Accounting Firm” of the Proxy Statement is incorporated by reference herein.

PART IV

Item 15. Exhibits and Financial Statement Schedules



(a)	1	Financial Statements Included herein at pages F-1 through F-35.
	2	Financial Data Schedules All schedules have been omitted because they are not applicable, not required, or the information required is included in the financial statements or notes thereto.
	3	Exhibits

The agreements and other documents filed as exhibits to this report are not intended to provide factual information or other disclosure other than with respect to the terms of the agreements or other documents themselves, and you should not rely on them for that purpose. In particular, any representations and warranties made by us in these agreements or other documents were made solely within the specific context of the relevant agreement or document and may not describe the actual state of affairs as of the date they were made or at any other time.



Exhibit Number		Description
3.1	—	Form of Amended and Restated Certificate of Incorporation of the Company ⁽¹⁾
3.2	—	Form of Amended and Restated Bylaws of the Company ⁽²⁾
4.1	—	Specimen Common Stock Certificate ⁽⁷⁾
4.2	—	Form of Registration Rights Agreement among the Company, Martin Cohen, Robert H. Steers, The Martin Cohen 1998 Family Trust and Robert H. Steers Family Trust ⁽¹⁾
10.1	—	Form of Tax Indemnification Agreement among Cohen & Steers Capital Management, Inc., Martin Cohen, Robert H. Steers, The Martin Cohen 1998 Family Trust and Robert H. Steers Family Trust ⁽¹⁾
10.2	—	Form of Employment Agreement between Cohen & Steers Capital Management, Inc. and Martin Cohen* ⁽¹⁾
10.3

COHEN & STEERS, INC. - FORM 10-K - February 24, 2017

Attached files