Featuring:
Mat Kirschner
Portfolio Manager, U.S. Real Estate
Cohen & Steers
Mat Kirschner, lead portfolio manager for the Cohen & Steers Quality Income Realty Fund (RQI), an actively managed real estate closed-end fund, shares views on the entry point for commercial real estate investors. He also highlights three potential opportunities, backed by powerful macroeconomic themes and limited supply dynamics.
Cohen & Steers is a leading global investment manager specializing in real assets and alternative income, focused on delivering attractive returns, income and diversification. Learn more about the Cohen & Steers Quality Income Realty Fund (RQI) here.
Transcript
CEFA:
Welcome to CEF Insights, your source for closed-end fund information and
education, brought to you by the Closed-End Fund Association.
Today we are joined by Mat Kirschner, Portfolio Manager
with Cohen & Steers Real Estate Securities Team, and Lead Portfolio Manager
for the Cohen & Steers Quality Income Realty Fund, ticker symbol RQI. Cohen & Steers is a leading global
investment manager specializing in real assets and alternative income,
including listed and private real estate, preferred securities, infrastructure,
resource equities, commodities, as well as multi-strategy solutions.
Mat, thank you for being with us today.
Mat Kirschner:
Thank you for having me.
CEFA:
Mat, I mentioned the Cohen and Steers Quality Income Realty Fund, an active
managed strategy that invests in a broad range of real estate securities and
commercial real estate. Can you discuss the investment strategy as well as the
key objectives of the fund?
Mat Kirschner:
Sure. The fund seeks a high level of current income with a secondary objective
of capital appreciation. It does this by investing in real estate securities,
which include common stock, preferred stock, and other equity securities of any
market capitalization issued by real estate companies, including REITs and
similar REIT-like entities. But as a sector-focused fund, we also provide an
efficient and liquid way for all investors to access the large and dynamic
commercial real estate market with the added benefit of active management.
While past performance is no guarantee of future results, RQI's market price
performance as of March 31, 2026, was 8.7% annualized and 647% cumulative since
inception in February 2002.
CEFA:
What are the key characteristics and advantages of real estate investment
trusts?
Mat Kirschner:
REITs combine the characteristics of fixed income and equities, paying higher
than average income driven by rental income, plus capital appreciation from
rising property values and increasing cash flows. They provide an efficient way
to access the highest quality real estate assets and operators in nearly 20
different sectors across all aspects of the economy. Listed REITs, like the
ones found in RQI, can provide access to this institutional market, which
typically would be hard to access, for individual investors requiring large
capital allocations.
CEFA:
How do you allocate your portfolio among the different types of real estate
securities?
Mat Kirschner:
Well, we rely upon our highly experienced team and platform here at Cohen &
Steers to uncover the most mispriced securities in the listed real estate
market. Our team utilizes a disciplined and consistent methodology. We
underwrite all the securities in our investable universe and then compare the
valuations to where the stocks are trading. Then we'll construct a portfolio,
overlaying thoughtful risk management, that owns the securities we believe are
most discounted, while also adhering to a strict focus on stock and sector
selection instead of macro or common factor risks.
CEFA:
Mat, the broad stock markets continue to make all-time highs, and fixed
income market prices have held up well, is now a good time to consider
commercial real estate?
Mat Kirschner:
The way we look at it, when looking at valuation metrics for different
asset classes, listed and private real estate, we think both of them actually
look really attractive compared with broader stocks and bonds, indicating that
real estate has repriced for what we believe is the beginning of a new cycle.
For example, using forward one-year P/E multiples, U.S. and international
equities are trading well above their 10-year average, and high-yield bonds are
also expensive versus their 10-year average, when you consider option adjusted
spreads. However, when looking at funds from operations in the listed real
estate space and also capitalization rates in the private core real estate
market, you can actually see that both are trading well below their 10-year averages,
which potentially signals an attractive entry point for commercial real estate.
CEFA:
Based on the valuation picture that you just presented, do you believe that
commercial real estate has found a bottom and is now recovering?
Mat Kirschner:
Yes. We believe that both listed and private core real estate fundamentals
and prices have hit bottom, and a recovery is underway. To put that in
perspective in terms of private real estate, historically, since 1978 there
have been five calendar years when core real estate prices were negative. Those
years were 1991, 1992, 2008, 2009, and 2023. The periods following the first
four calendar years were marked with multi-year cycles of positive returns that
spanned anywhere from 13 years and 15 years.
This time we believe lower supply and moderating interest
rate headwinds, combined with a healthy demand backdrop, are creating that
dynamic for a positive inflection in fundamentals. While no performance is indication of future
returns, the most recent cycle is still underway and has been marked with two
years of positive returns following that negative year in 2023.
CEFA:
Mat, what are some of the most
interesting opportunities that you are currently looking at?
Mat Kirschner:
There are several opportunities that we are looking at across sectors and
stocks, I'd highlight the three kind of most interesting opportunities today
which are all being driven by powerful macroeconomic themes and limited supply.
So those three areas that are of most interest today, one
would be what we would like to categorize as the retail renaissance, another is
the digital transformation of economies, and then the third is an aging
population. All of these are powerful
demand drivers that are happening amidst varying levels of constrained supply, which
is creating that environment for opportunities across listed and private real
estate.
CEFA:
Can you elaborate more on what you mean by a retail renaissance? And what type
of retail will benefit the most?
Mat Kirschner:
Sure. The retail renaissance is driven by I'd say a better balance of online
and physical point of sales in terms of how retailers are thinking about their
business models and how customers are shopping. The omni channel retail is
growing, physical stores are proving to be more important than ever, as
customers purchase products online and oftentimes pick them up in a store. So
when you look at the percentage of sales fulfilled in store versus the portion
delivered to the home for retailers like Best Buy, Target, Walmart and even
Home Depot it's clear that a meaningful portion of those online orders are
fulfilled in the store, increasing the importance of that physical store and
shopping center it is located in. This is reinforced by mid-teens annual growth
estimates in that click and collect on-line sales market.
Importantly, the growth in omni-channel which is both online
and physical retail, is occurring at a time when occupancies are quite high in
the shopping center space and supply is very low. So we believe that this will
drive cash flows and property values higher for listed and privately owned
shopping centers.
CEFA:
Mat, you mention privately owned shopping centers. How much private real estate
can RQI own?
Mat Kirschner:
Private real estate investments will typically not exceed 10% of RQI's managed
assets. And yes, the opportunity we are currently speaking about with regards
to open-air, necessity driven shopping centers, is in the private market
primarily and we are talking about shopping centers and not malls.
CEFA:
Thank you, Mat. Shifting gears, can
you talk about the drivers of opportunity in the data centers?
Mat Kirschner:
Absolutely. Due to an acceleration in digitalization and AI adoption,
technology companies are driving global data center workload expectations
exponentially higher. Whether it is cloud computing, storage and networking or
AI training and inference growth, data centers are the engine that is now
powering this AI revolution.
As a result, global data center workloads are expected to
grow exponentially over the next several years. We believe
that this increasing demand, coupled with measured supply, should benefit data
centers, and drive significantly higher rental income growth.
CEFA:
What about the aging population theme? Can you elaborate on that?
Mat Kirschner:
Yes, the 80+ age cohort in the U.S. is expected to grow much faster than
the rest of the population, and this is happening at a time when construction
in the senior housing sector is continuing to go down on a year over year
basis. So simply put, the U.S. population is getting older, which is driving
demand for senior housing and that is happening at a rate that is much faster
than what we think the supply growth is likely to be for the foreseeable future.
And it is that combination that we believe will also drive very strong rental
income growth.
CEFA:
Mat, before we wrap up, we noticed a press release on June 8th for a rights offering on RQI. Where can existing stockholders and potential
investors get more information about that?
Mat Kirschner:
Investors can go to www.cohenandsteers.com and click the "RQI" button on the homepage of our website to learn more about
RQI's rights offering or they can call our sales desk at 800-330-7348, and hit
option 1.
CEFA:
Mat, thank you so much for taking the time to join us today.
Mat Kirschner:
Thank you for having me.
CEFA:
We want to thank you for tuning into another CEF Insights podcast. For more
educational content, please visit our website at www.CEFA.com
Podcast recorded June 2026.
Disclosure
Data quoted represents past performance, which is no
guarantee of future results. The views and opinions expressed herein are as of
May 31, 2026 and subject to change without notice. There is no guarantee that
any market forecast set forth in this interview will be realized. There is no
guarantee that any historical trend illustrated herein will be repeated in the
future, and there is no way to predict precisely when such a trend will begin.
Investors should consider RQI's investment objective,
risks, charges and expenses carefully before investing. The Fund's prospectus
supplement and accompanying prospectus will contain this and additional
information about the Fund and additional information about the rights offering
and should be read carefully before investing. For further information
regarding the rights offering, or to obtain a prospectus supplement and the
accompanying prospectus, please contact the Fund's information agent, Georgeson
LLC, at 888-812-7762.
This material is not, and is not intended as investment
advice, an indication of trading intent or holdings or the prediction of
investment performance. All fund-specific information is the latest publicly
available. All other information is current as of the date of this
presentation. All opinions and forward-looking statements are subject to change
at any time.
Cohen & Steers disclaims any responsibility to update
such views and/or information. This information is deemed to be from reliable
sources; however, Cohen & Steers does not warrant its completeness or
accuracy. This presentation is not intended to, and does not constitute an
offer or solicitation to sell or a solicitation of an offer to buy any
security, product, investment advice or service (nor shall any security,
product, investment advice or service be offered or sold) in any jurisdiction in
which Cohen & Steers is not licensed to conduct business, and/or an offer,
solicitation, purchase or sale would be unavailable or unlawful.
CERTAIN RISKS. Investing in the Fund involves risks,
including the risk that investors may receive little or no return on their
investment or may lose part or all of their investment. An investment in the Fund is subject to investment
and market risk, including the possible loss of an investor's entire
investment. Before making an investment decision, a prospective investor should
(i) consider the suitability of this investment with respect to his or her
investment objectives and personal situation and (ii) consider factors such as
his or her personal net worth, income, age, risk tolerance and liquidity needs.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements contained herein constitute forward-looking statements.
These statements involve known and unknown risks, uncertainties and other
factors that may cause the Fund's actual results or level of performance to be
materially different from any future results or level of performance expressed
or implied by such forward looking statements. As a result of these and other
factors, the Fund cannot give you any assurances as to its future results or
level of performance, and neither the Fund nor any other person assumes
responsibility for the accuracy and completeness of such statements.
UBS Securities LLC is acting as dealer manager for the
rights offering. In the U.S., securities underwriting, trading, and brokerage
activities and M&A advisory activities are provided by UBS Securities LLC,
a registered broker/dealer that is a wholly owned subsidiary of UBS AG, a
member of the New York Stock Exchange and other principal exchanges, and a
member of Securities Investor Protection Corporation.