Cohen & Steers European Real Estate Securities

Cohen & Steers is the industry leader in real estate securities. Cohen & Steers European Real Estate Securities fund has a tried and tested process allowing the well-resourced team to sift through the market and try to deliver consistent, above market returns led mostly by stock selection, as well as some sector and regional allocations.

Our opinion

There are a wide number of drivers behind the performance of the European real estate market, but the resources and experience of Rogier and the team allow them to disseminate all the information available to them and build a risk aware portfolio which can offer investors exposure to this diversifying asset class, knowing it is backed with a repeatable, sound process.

Fund manager

London based Rogier Quirijns is head of Europe real estate, overseeing the research and analyst teams. He joined Cohen & Steers in 2008, and now has over 22 years of investment experience. This experience was built at a number of firms, including as a real estate equity analyst at ABM AMRO in his native Netherlands. He has also had portfolio manager roles at Arthur Andersen. He holds a degree in business economics from the University of Amsterdam.

Rogier QuirijnsFund manager

Investment process

Rogier believes that there are many market inefficiencies in the REITs sector which allows him and the team to add value through active management. The process uses a combination of fundamental company analysis, and a view of the wider economic environment to balance investment views. This helps them cut through the market noise and understand the nuances behind each stock and what is driving performance.

The investment universe starts with around 120 different REITs (Real Estate Investment Trusts). The team analyses these from two angles; the short-term, when REITs can behave more like equities, and the long-term when they exhibit property-like characteristics.

When looking at valuations, the team will consider the buildings themselves and their net asset values (NAV), whereas equity analysis is more about using a dividend discount model (DDM) which is a way of valuing future income streams compared to today’s value.

Each analyst has the capacity to conduct extremely in-depth research on their holdings, because they only cover 20-25 stocks on average (compared to 40-60 for industry standards). This allows them to look beyond just the performance of the underlying company, to the drivers behind it. This gives the analysts a better understanding behind their ideas and enables them to build higher conviction in their ideas with the aim of generating better performance.

The combination of this fundamental analysis, long and short-term modelling, and factor analysis leads to a ranking of the universe by their estimate of discount to the current share price. It allows them to get the best idea of what looks cheapest globally today. Their positioning is driven by what they find most attractive at the biggest discount.

ESG

ESG - Integrated
Cohen & Steers views ESG as critical to unlocking value and mitigating risk. There is a four-stage process. First, ESG factors are identified by analysts using MSCI as a guide. Second, they score each E, S and G factor for a stock starting with third-party data and enhancing this with their own proprietary assessments. Thirdly, they will integrate this into the investment assumptions made in valuing a stock. They will make adjustments to cash flow growth, or valuation adjustments in the dividend discount model to make a quantitative impact to a stock. Finally, they will look to encourage better behaviour. Cohen & Steers will look to engage with a company.

Risk

The portfolio is reasonably concentrated in 20-45 positions, though this reflects the narrower universe across the continent. There are some restrictions on individual stock weightings, with a maximum of 10% in any one company, as well as a maximum of 10% in emerging European markets. The fund can take country exposures ±20% of the benchmark for those countries that are at least 20% of that index, and ±15% for those below 20% weight in the index. These constraints are designed to allow the stock selection to be the primary driver of performance. The risk of the portfolio is actively monitored, looking at active weights, as well as any factors that dominate the portfolio. Each stock is put through a scenario analysis to get an idea of what could go wrong and what damage this could do the portfolio.

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