Featuring:
Mat Kirschner
Portfolio Manager, U.S. Real Estate
Cohen & Steers
Public real estate now trades at compelling valuations, offering potential for improved returns as fundamentals strengthen. Mat Kirschner, Lead Portfolio Manager for the Cohen & Steers Quality Income Realty Fund (RQI), shares views on the real estate market, potential opportunities, and market outlook for 2026.
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.
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. 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 January 20th, 2026, is 8.7% annualized since inception in February 2002.
CEFA:
RQI's distribution rate has recently been increased. Can you comment on that?
Mat Kirschner:
Although not guaranteed, RQI's distribution rate has been high and consistent for the past decade. And recently, the fund raised its monthly distribution rate from $0.08 per share to $0.09 per share, reflecting the strength of RQI's balance sheet. RQI's distribution rate, based on market price, is now between 9% and 9.5% paying monthly. The distribution rate increase reflects RQI's investment success over full market cycles and the realization of capital gains, which are being applied to RQI's monthly distribution. Importantly, We believe that RQI's balance sheet, which has an adequate amount of realized and unrealized capital gains, is strong and should be able to support the distribution rate for the foreseeable future.
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 cash flow growth. 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, 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 to uncover the most mispriced securities in the public 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 in the public markets. Then we'll construct A portfolio overlaying thoughtful risk management that owns the securities we believe are most discounted, while also adhering to the focus on stock and sector selection instead of macro or common factor risks.
CEFA:
What factors or events would lead you to significantly change your portfolio allocation?
Mat Kirschner:
At Cohen and Steers, we're active managers in a dynamic world, and we're constantly assessing the portfolio relative to changes in the market. Our competitive edge is in stock selection and sector allocation. We work alongside our risk team to make sure the portfolio is constructed in such a way that we're minimizing market factor risk in the portfolio so that high conviction stock selection and sector allocation decisions are driving our returns. We're always looking for inflection points and fundamentals or something that changes the trajectory of a company from a growth perspective. which could also include things such as management changes or changes in capital allocation. Identifying inflection points, combined with a rigorous and disciplined approach to determining relative value, are where we find our most attractive opportunities to outperform for our clients.
CEFA:
Mat, the Federal Reserve has been easing short-term interest rates, while inflation rates have been stable, but a bit higher than the Fed target. Where do you see the real estate markets currently, particularly regarding valuations in the sector?
Mat Kirschner:
Yeah, it's no secret that real estate has lagged the broader market for much of the past five years, as we've dealt with the headwinds of the pandemic and then the after-effects of a shifting interest rate regime. This underperformance has caused a historic spread in terms of the valuation of the broader equity market and REITs, one that we've only ever seen during the global financial crisis and during the pandemic. Historically, the returns following these periods of significant discounting have been very positive for real estate on both an absolute and relative basis. Comparing listed real estate to the core private market We also believe that REITs represent more attractive value today as they fully reset to reflect the higher interest rate regime that we find ourselves in, and they have a more attractive composition of sectors to choose from that we believe will be leaders coming out of this industry reset.
CEFA:
How do fundamentals position real estate securities as we move forward in 2026, and what is your outlook for the sector?
Mat Kirschner:
Growth's been pretty lackluster over the past three years in the real estate space, in the low single-digit range annually, as real estate faced the headwinds of higher interest rates and significant amounts of new supply in a lot of sectors. However, we believe those headwinds are fading, and the outlook over the next three to five years is much more constructive, with growth expected to accelerate to above-average historical levels of mid to high single digits. Sectors well-represented in the public REIT space that are driven by very positive long-term secular trends, such as the aging population and technological adoption, are leading the growth recovery, driven by healthcare and data centers.
CEFA:
What are the most significant risks you consider in the current environment?
Mat Kirschner:
We always try to take into account potential geopolitical risks, and of course, risks associated with policies of the administration. However, I would say the re-emergence of inflation is something we are watching very closely, as that would be a concern, because it could cause the Fed to have to reverse course on their policy.
CEFA:
How is the RQI portfolio currently positioned?
Mat Kirschner:
From A top-down perspective, we're slightly overweight equities relative to fixed income, as our total return expectations are higher for equities today. and we have a favorable view on the economy. We're currently underweight industrial and apartments and overweight the tower, data center, and senior housing sectors.
CEFA:
Mat, how do you see an allocation to an actively managed real estate security strategy like RQI best positioned in an income-oriented investor's portfolio and likewise for a broadly diversified portfolio of an investor?
Mat Kirschner:
Keep in mind the commercial real estate market total market size is around $22 trillion, sitting in between fixed income at about $58 trillion and equities at about $62 trillion. The listed part of the real estate market is about $1.5 trillion in market capitalization, and it consists of about 150 securities today. REIT's long-term performance has been underpinned by their stable business models, which focus on acquiring and developing high-quality assets that generate recurring income tied to leases with credit-worthy tenants. As we move forward in an environment shaped by healthy growth and a stabilization in rates, we believe real estate stocks have already repriced for the next phase of the cycle and now offer compelling relative value versus broader equities and risk assets. With a dividend yield over 9% today, modest leverage, improving fundamentals, and attractive values, we think RQI is well-positioned to deliver attractive total returns over the long term.
CEFA:
Before we wrap up, what is the best way to get more information on real estate and RQI?
Mat Kirschner:
Investors can access Cohen & Steers and our Real Estate Insights by going to www..cohenandsteers.com and or by calling 1-800-330-7348.
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 January 2026.
Disclosure
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 information. 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 a sale would be unavailable or unlawful.