UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act File Number: 811-21326
Cohen & Steers REIT and Preferred Income Fund, Inc.
(Exact name of registrant as specified in charter)
280 Park Avenue, New York, NY 10017
(Address of principal executive offices) (Zip code)
Dana A. DeVivo
Cohen & Steers Capital Management, Inc.
280 Park Avenue
New York, New York 10017
(Name and address of agent for service)
Registrants telephone number, including area code: (212) 832-3232
Date of fiscal year end: December 31
Date of reporting period: December 31, 2018
Item 1. Reports to Stockholders.
COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
To Our Shareholders:
We would like to share with you our report for the year ended December 31, 2018. The total returns for Cohen & Steers REIT and Preferred Income Fund, Inc. (the Fund) and its comparative benchmarks were:
Six Months Ended December 31, 2018 |
Year Ended December 31, 2018 |
|||||||
Cohen & Steers REIT and Preferred Income Fund at Net Asset Valuea |
4.42 | % | 5.20 | % | ||||
Cohen & Steers REIT and Preferred Income Fund at Market Valuea |
4.68 | % | 9.47 | % | ||||
FTSE Nareit Equity REITs Indexb |
5.58 | % | 4.62 | % | ||||
ICE BofAML Fixed-Rate Preferred Securities Indexb |
4.38 | % | 4.34 | % | ||||
Blended Benchmark50% FTSE Nareit Equity REITs Index/50% ICE BofAML Fixed-Rate Preferred Securities Indexb |
4.85 | % | 4.21 | % | ||||
S&P 500 Indexb |
6.85 | % | 4.38 | % |
The performance data quoted represent past performance. Past performance is no guarantee of future results. The investment return and the principal value of an investment will fluctuate and shares, if sold, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. Performance results reflect the effects of leverage, resulting from borrowings under a credit agreement. Current total returns of the Fund can be obtained by visiting our website at cohenandsteers.com. The Funds returns assume the reinvestment of all dividends and distributions at prices obtained under the Funds dividend reinvestment plan. Index performance does not reflect the deduction of any fees, taxes or expenses. An investor cannot invest directly in an index. Performance figures for periods shorter than one year are not annualized.
Managed Distribution Policy
The Fund, acting in accordance with an exemptive order received from the U.S. Securities and Exchange Commission (SEC) and with approval of its Board of Directors (the Board), adopted a
a | As a closed-end investment company, the price of the Funds exchange-traded shares will be set by market forces and can deviate from the net asset value (NAV) per share of the Fund. |
b | The FTSE Nareit Equity REITs Index contains all tax-qualified real estate investment trusts (REITs) except timber and infrastructure REITs with more than 50% of total assets in qualifying real estate assets other than mortgages secured by real property that also meet minimum size and liquidity criteria. The ICE BofAML Fixed-Rate Preferred Securities Index tracks the performance of fixed-rate U.S. dollar-denominated preferred securities issued in the U.S. domestic market. The S&P 500 Index is an unmanaged index of 500 large-capitalization stocks that is frequently used as a general measure of U.S. stock market performance. Benchmark returns are shown for comparative purposes only and may not be representative of the Funds portfolio. The Funds benchmarks do not include below-investment-grade securities. |
1
COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
managed distribution policy under which the Fund intends to include long-term capital gains, where applicable, as part of the regular monthly cash distributions to its shareholders (the Plan). The Plan gives the Fund greater flexibility to realize long-term capital gains and to distribute those gains on a regular monthly basis. In accordance with the Plan, the Fund currently distributes $ 0.124 per share on a monthly basis.
The Fund may pay distributions in excess of the Funds investment company taxable income and net realized gains. This excess would be a return of capital distributed from the Funds assets. Distributions of capital decrease the Funds total assets and, therefore, could have the effect of increasing the Funds expense ratio. In addition, in order to make these distributions, the Fund may have to sell portfolio securities at a less than opportune time.
Shareholders should not draw any conclusions about the Funds investment performance from the amount of these distributions or from the terms of the Funds Plan. The Funds total return based on NAV is presented in the table above as well as in the Financial Highlights table.
The Plan provides that the Board of Directors may amend or terminate the Plan at any time without prior notice to Fund shareholders; however, at this time, there are no reasonably foreseeable circumstances that might cause the termination. The termination of the Plan could have the effect of creating a trading discount (if the Funds stock is trading at or above NAV) or widening an existing trading discount.
Market Review
Following a prolonged period of steady gains for stock markets, U.S. REITs declined in a difficult year for equities broadly. REITs initially struggled amid an early-period spike in bond yields and concerns about fundamentals for retail and health care landlords. REITs turned a corner in March as inflation remained generally benign, allowing bond yields to stabilize. Better-than-expected retail sales data added to positive sentiment, as did visible real estate merger and acquisition activity.
REIT returns reached their year-to-date highs in August, aided by continued U.S. job growth, reaccelerating economic activity, rising corporate profits and an 18-year high in consumer confidence. However, market conditions again turned challenging, reflecting a confluence of risk factors, including increased global trade tensions, slowing growth in China and Europe, and a sharp downturn in oil prices. Meanwhile, the U.S. Federal Reserve continued to raise short-term interest rates and as late as December indicated that it would hike rates at least two more times in 2019.
The fourth quarter saw a significant shift in investor preferences toward more defensive assets. After trailing the broad U.S. equity market for much of the year, real estate stocks began to outperform as investors generally favored them for their stable cash flows, high dividend yields and attractive relative valuations.
Preferred securities also delivered a negative total return for the year. The group had generally flat performance heading into the fourth quarter, but conditions became more challenging in part due to technical pressures. ETFs and mutual funds with sizable allocations to preferreds saw significant outflows late in the year, which resulted in widespread and often indiscriminate selling of preferred securities. Tax loss-related selling likely contributed to these pressures ahead of year end.
2
COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
Fund Performance
The Fund had a negative total return in the period and underperformed its blended benchmark on both a NAV and market price basis.
For REITs, the year saw a wide variation in returns by property type. Free-standing retail and health care landlords were positive standouts, favored for their relatively stable cash flows tied to typically long-term leases. Stock selection in both sectors detracted from the Funds relative performance. In health care, the Fund did not hold Omega Healthcare Investors, which had a significant gain.
The data center sector was a notable underperformer, following two years of exceptionally strong performance, amid concerns of slowing demand and its ties to the technology sector. The Funds overweight in the sector hindered relative performance.
Regional mall and shopping center REITs struggled amid secular concerns over loss of market share to online retailers and shifting consumer behaviors. Sentiment toward retail landlords was also hindered late in the year when Sears announced that it would file for bankruptcy and close more stores. The Fund was underweight both sectors, which aided relative performance; stock selection in regional malls further benefited performance, as the Fund did not own certain owners of lower-quality malls that had sizable share-price declines. Stock selection in the apartment and office sectors also helped performance.
In preferreds, security selection in the insurance sector detracted from relative performance. The Fund held out-of-benchmark securities from a U.K. insurer that had significant declines in the period. An underweight in the banking sector also hindered performance, as bank preferreds held up better than the broader preferreds market. Factors that aided performance in the Funds preferreds allocation included security selection in the real estate sector and an underweight in a security from General Electric that fell more than 20% as the company faced increased financial difficulties.
Impact of Leverage on Fund Performance
The Fund employs leverage as part of a yield-enhancement strategy. Leverage, which can increase total return in rising markets (just as it can have the opposite effect in declining markets), detracted from the Funds performance for the 12-month period ended December 31, 2018.
Impact of Derivatives on Fund Performance
The Fund used derivatives in the form of currency options for hedging purposes, as well as forward foreign currency exchange contracts for managing currency risk on certain Fund positions denominated in foreign currencies. These contracts did not have a material effect on the Funds total return for the 12-month period ended December 31, 2018.
3
COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
Sincerely,
| ||
THOMAS N. BOHJALIAN |
WILLIAM F. SCAPELL | |
Portfolio Manager |
Portfolio Manager |
JASON YABLON
Portfolio Manager
The views and opinions in the preceding commentary are subject to change without notice and are as of the date of the report. There is no guarantee that any market forecast set forth in the commentary will be realized. This material represents an assessment of the market environment at a specific point in time, should not be relied upon as investment advice and is not intended to predict or depict performance of any investment.
Visit Cohen & Steers online at cohenandsteers.com
For more information about the Cohen & Steers family of mutual funds, visit cohenandsteers.com. Here you will find fund net asset values, fund fact sheets and portfolio highlights, as well as educational resources and timely market updates.
Our website also provides comprehensive information about Cohen & Steers, including our most recent press releases, profiles of our senior investment professionals and their investment approach to each asset class. The Cohen & Steers family of mutual funds invests in major real asset categories including real estate securities, listed infrastructure, commodities and natural resource equities, as well as preferred securities and other income solutions.
4
COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
Our Leverage Strategy
(Unaudited)
Our current leverage strategy utilizes borrowings up to the maximum permitted by the Investment Company Act of 1940 to provide additional capital for the Fund, with an objective of increasing net income available for shareholders. As of December 31, 2018, leverage represented 27% of the Funds managed assets.
Through a combination of variable and fixed rate financing, the Fund has locked in interest rates on a significant portion of this additional capital for periods expiring in 2020, 2021 and 2022a (where we effectively reduce our variable rate obligation and lock in our fixed rate obligation over various terms). Locking in a significant portion of our leveraging costs is designed to protect the dividend-paying ability of the Fund. The use of leverage increases the volatility of the Funds NAV in both up and down markets. However, we believe that locking in portions of the Funds leveraging costs for the various terms partially protects the Funds expenses from an increase in short-term interest rates.
Leverage Factsb,c
Leverage (as a % of managed assets) |
27% | |
% Fixed Rate |
85% | |
% Variable Rate |
15% | |
Weighted Average Rate on Financing |
3.0%a | |
Weighted Average Term on Financing |
2.7 yearsa |
The Fund seeks to enhance its dividend yield through leverage. The use of leverage is a speculative technique and there are special risks and costs associated with leverage. The NAV of the Funds shares may be reduced by the issuance and ongoing costs of leverage. So long as the Fund is able to invest in securities that produce an investment yield that is greater than the total cost of leverage, the leverage strategy will produce higher current net investment income for shareholders. On the other hand, to the extent that the total cost of leverage exceeds the incremental income gained from employing such leverage, shareholders would realize lower net investment income. In addition to the impact on net income, the use of leverage will have an effect of magnifying capital appreciation or depreciation for shareholders. Specifically, in an up market, leverage will typically generate greater capital appreciation than if the Fund were not employing leverage. Conversely, in down markets, the use of leverage will generally result in greater capital depreciation than if the Fund had been unlevered. To the extent that the Fund is required or elects to reduce its leverage, the Fund may need to liquidate investments, including under adverse economic conditions which may result in capital losses potentially reducing returns to shareholders. There can be no assurance that a leveraging strategy will be successful during any period in which it is employed.
a | On February 24, 2015, the Fund amended its credit agreement to extend the fixed rate financing terms, originally expiring in 2017, 2018 and 2019, by three years, now expiring in 2020, 2021 and 2022, respectively. The weighted average rate on financing does not include the three year extension for the 2022 fixed-rate tranche and will increase as the extended fixed-rate tranche becomes effective in 2019. The weighted average term on financing includes the three year extension. |
b | Data as of December 31, 2018. Information is subject to change. |
c | See Note 7 in Notes to Financial Statements. |
5
COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
December 31, 2018
Top Ten Holdingsa
(Unaudited)
Security |
Value | % of Managed Assets |
||||||
Essex Property Trust, Inc. |
$ | 38,284,147 | 3.0 | |||||
Prologis, Inc. |
37,464,300 | 2.9 | ||||||
Equinix, Inc. |
30,692,816 | 2.4 | ||||||
Extra Space Storage, Inc. |
28,162,534 | 2.2 | ||||||
Ventas, Inc. |
28,154,897 | 2.2 | ||||||
UDR, Inc. |
27,485,107 | 2.1 | ||||||
Welltower, Inc. |
25,594,452 | 2.0 | ||||||
Crown Castle International Corp. |
24,629,245 | 1.9 | ||||||
Sun Communities, Inc. |
21,728,612 | 1.7 | ||||||
Realty Income Corp. |
21,357,763 | 1.6 |
a | Top ten holdings are determined on the basis of the value of individual securities held. The Fund may also hold positions in other types of securities issued by the companies listed above. See the Schedule of Investments for additional details on such other positions. |
Sector Breakdown
(Based on Managed Assets)
(Unaudited)
6
COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
SCHEDULE OF INVESTMENTS
December 31, 2018
Shares | Value | |||||||||||
COMMON STOCK |
66.4% | |||||||||||
COMMUNICATIONSTOWERS |
2.6% | |||||||||||
Crown Castle International Corp.a,b |
|
226,726 | $ | 24,629,245 | ||||||||
|
|
|||||||||||
REAL ESTATE |
63.8% | |||||||||||
DATA CENTERS |
6.7% | |||||||||||
CyrusOne, Inc.a,b |
|
234,170 | 12,382,909 | |||||||||
Digital Realty Trust, Inc.a,b |
|
189,809 | 20,224,149 | |||||||||
Equinix, Inc.a,b |
|
87,057 | 30,692,816 | |||||||||
|
|
|||||||||||
63,299,874 | ||||||||||||
|
|
|||||||||||
HEALTH CARE |
9.5% | |||||||||||
HCP, Inc.a,b |
|
662,362 | 18,499,771 | |||||||||
Healthcare Trust of America, Inc., Class Aa,b |
|
247,655 | 6,268,148 | |||||||||
Sabra Health Care REIT, Inc.a,b |
|
689,847 | 11,368,678 | |||||||||
Ventas, Inc.a |
|
480,541 | 28,154,897 | |||||||||
Welltower, Inc.a |
|
368,743 | 25,594,452 | |||||||||
|
|
|||||||||||
89,885,946 | ||||||||||||
|
|
|||||||||||
HOTEL |
3.6% | |||||||||||
Host Hotels & Resorts, Inc.a,b |
|
510,751 | 8,514,219 | |||||||||
Pebblebrook Hotel Trusta,b |
|
283,625 | 8,029,424 | |||||||||
RLJ Lodging Trusta,b |
|
407,541 | 6,683,673 | |||||||||
Sunstone Hotel Investors, Inc.a,b |
|
856,730 | 11,146,057 | |||||||||
|
|
|||||||||||
34,373,373 | ||||||||||||
|
|
|||||||||||
INDUSTRIALS |
3.9% | |||||||||||
Prologis, Inc.a,b |
|
638,016 | 37,464,300 | |||||||||
|
|
|||||||||||
NET LEASE |
3.0% | |||||||||||
Four Corners Property Trust, Inc. |
|
214,456 | 5,618,747 | |||||||||
Gaming and Leisure Properties, Inc.a,b |
|
118,280 | 3,821,627 | |||||||||
Spirit Realty Capital, Inc.a,b |
|
340,759 | 12,011,755 | |||||||||
VICI Properties, Inc.a,b |
|
367,769 | 6,906,702 | |||||||||
|
|
|||||||||||
28,358,831 | ||||||||||||
|
|
|||||||||||
OFFICE |
7.4% | |||||||||||
Alexandria Real Estate Equities, Inc.a,b |
|
109,768 | 12,649,664 | |||||||||
Boston Properties, Inc.a |
|
112,980 | 12,715,899 | |||||||||
Douglas Emmett, Inc.a,b |
|
231,178 | 7,890,105 | |||||||||
Hudson Pacific Properties, Inc.a,b |
|
278,968 | 8,106,810 |
See accompanying notes to financial statements.
7
COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
SCHEDULE OF INVESTMENTS(Continued)
December 31, 2018
Shares | Value | |||||||||||
Kilroy Realty Corp.a,b |
|
276,411 | $ | 17,380,724 | ||||||||
Vornado Realty Trusta,b |
|
194,861 | 12,087,228 | |||||||||
|
|
|||||||||||
70,830,430 | ||||||||||||
|
|
|||||||||||
RESIDENTIAL |
16.2% | |||||||||||
APARTMENT |
11.3% | |||||||||||
Apartment Investment & Management Co., Class Aa,b |
|
231,507 | 10,158,527 | |||||||||
Equity Residentiala,b |
|
258,968 | 17,094,478 | |||||||||
Essex Property Trust, Inc.a,b |
|
156,128 | 38,284,147 | |||||||||
Mid-America Apartment Communities, Inc.a,b |
|
150,186 | 14,372,800 | |||||||||
UDR, Inc.a,b |
|
693,718 | 27,485,107 | |||||||||
|
|
|||||||||||
107,395,059 | ||||||||||||
|
|
|||||||||||
MANUFACTURED HOME |
2.3% | |||||||||||
Sun Communities, Inc.a,b |
|
213,633 | 21,728,612 | |||||||||
|
|
|||||||||||
SINGLE FAMILY |
1.9% | |||||||||||
Invitation Homes, Inc.a,b |
|
887,482 | 17,820,639 | |||||||||
|
|
|||||||||||
STUDENT HOUSING |
0.7% | |||||||||||
American Campus Communities, Inc.a,b |
|
161,018 | 6,664,535 | |||||||||
|
|
|||||||||||
TOTAL RESIDENTIAL |
|
153,608,845 | ||||||||||
|
|
|||||||||||
SELF STORAGE |
4.2% | |||||||||||
Extra Space Storage, Inc.a,b |
|
311,257 | 28,162,534 | |||||||||
Life Storage, Inc.a |
|
129,987 | 12,087,491 | |||||||||
|
|
|||||||||||
40,250,025 | ||||||||||||
|
|
|||||||||||
SHOPPING CENTERS |
7.4% | |||||||||||
COMMUNITY CENTER |
3.6% | |||||||||||
Brixmor Property Group, Inc.a,b |
|
589,293 | 8,656,714 | |||||||||
Regency Centers Corp.a,b |
|
230,262 | 13,511,774 | |||||||||
Weingarten Realty Investorsa |
|
475,856 | 11,805,987 | |||||||||
|
|
|||||||||||
33,974,475 | ||||||||||||
|
|
|||||||||||
FREE STANDING |
2.2% | |||||||||||
Realty Income Corp.a,b |
|
338,797 | 21,357,763 | |||||||||
|
|
|||||||||||
REGIONAL MALL |
1.6% | |||||||||||
Simon Property Group, Inc.a,b |
|
90,224 | 15,156,730 | |||||||||
|
|
|||||||||||
TOTAL SHOPPING CENTERS |
|
70,488,968 | ||||||||||
|
|
|||||||||||
SPECIALTY |
1.9% | |||||||||||
Iron Mountain, Inc. |
|
272,340 | 8,826,539 |
See accompanying notes to financial statements.
8
COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
SCHEDULE OF INVESTMENTS(Continued)
December 31, 2018
Shares | Value | |||||||||||
Lamar Advertising Co., Class Aa,b |
|
133,077 | $ | 9,206,267 | ||||||||
|
|
|||||||||||
18,032,806 | ||||||||||||
|
|
|||||||||||
TOTAL REAL ESTATE |
|
606,593,398 | ||||||||||
|
|
|||||||||||
TOTAL COMMON
STOCK |
|
631,222,643 | ||||||||||
|
|
|||||||||||
EXCHANGE-TRADED FUNDS |
0.2% | |||||||||||
iShares US Preferred Stock ETF |
|
58,719 | 2,009,951 | |||||||||
|
|
|||||||||||
TOTAL EXCHANGE-TRADED
FUNDS |
|
2,009,951 | ||||||||||
|
|
|||||||||||
PREFERRED SECURITIES$25 PAR VALUE |
20.2% | |||||||||||
BANKS |
5.4% | |||||||||||
Bank of America Corp., 6.20%, Series CCa,c |
|
127,981 | 3,246,878 | |||||||||
Bank of America Corp., 6.00%, Series GGa,c |
|
104,775 | 2,629,853 | |||||||||
Bank of America Corp., 5.875%, Series HHc |
|
204,000 | 5,053,080 | |||||||||
Bank of America Corp., 6.50%, Series Ya,c |
|
168,268 | 4,270,642 | |||||||||
BB&T Corp., 5.625%, Series Ec |
|
64,591 | 1,508,846 | |||||||||
Citigroup, Inc., 6.30%, Series Sa,b,c |
|
189,006 | 4,819,653 | |||||||||
First Republic Bank/CA, 5.50%, Series Ic |
|
28,277 | 628,315 | |||||||||
GMAC Capital Trust I, 8.401%, (3 Month US LIBOR + 5.785%), due 2/15/40, Series 2 (TruPS) (FRN)a,d |
|
324,847 | 8,234,871 | |||||||||
Huntington Bancshares, Inc., 6.25%, Series Da,c |
|
110,273 | 2,736,976 | |||||||||
JPMorgan Chase & Co., 6.15%, Series BBc |
|
100,000 | 2,578,000 | |||||||||
JPMorgan Chase & Co., 6.125%, Series Ya,c |
|
223,861 | 5,674,876 | |||||||||
New York Community Bancorp, Inc., 6.375% to 3/17/27, Series Ac,e |
|
73,450 | 1,676,129 | |||||||||
Regions Financial Corp., 6.375% to 9/15/24, Series Bc,e |
|
76,426 | 1,894,601 | |||||||||
Synovus Financial Corp., 6.30% to 6/21/23, Series Dc,e |
|
66,000 | 1,586,640 | |||||||||
TCF Financial Corp., 5.70%, Series Cc |
|
73,000 | 1,667,320 | |||||||||
Wells Fargo & Co., 5.85% to 9/15/23, Series Qc,e |
|
122,748 | 3,015,918 | |||||||||
|
|
|||||||||||
51,222,598 | ||||||||||||
|
|
|||||||||||
ELECTRIC |
1.3% | |||||||||||
INTEGRATED ELECTRIC |
0.3% | |||||||||||
Integrys Holdings, Inc., 6.00% to 8/1/23, due 8/1/73e |
|
122,977 | 2,923,778 | |||||||||
|
|
|||||||||||
REGULATED ELECTRIC |
1.0% | |||||||||||
Southern Co./The, 6.25%, due 10/15/75 |
|
233,339 | 5,952,478 |
See accompanying notes to financial statements.
9
COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
SCHEDULE OF INVESTMENTS(Continued)
December 31, 2018
Shares | Value | |||||||||||
Southern Co./The, 5.25%, due 12/1/77 |
|
164,435 | $ | 3,589,616 | ||||||||
|
|
|||||||||||
9,542,094 | ||||||||||||
|
|
|||||||||||
TOTAL ELECTRIC |
|
12,465,872 | ||||||||||
|
|
|||||||||||
FINANCIAL |
2.6% | |||||||||||
DIVERSIFIED FINANCIAL SERVICES |
0.5% | |||||||||||
KKR & Co., Inc., 6.75%, Series Ac |
|
127,013 | 3,284,556 | |||||||||
Oaktree Capital Group LLC, 6.55%, Series Bc |
|
65,000 | 1,475,500 | |||||||||
State Street Corp., 5.25%, Series Cc |
|
15,000 | 337,800 | |||||||||
|
|
|||||||||||
5,097,856 | ||||||||||||
|
|
|||||||||||
INVESTMENT ADVISORY SERVICES |
0.4% | |||||||||||
Ares Management Corp., 7.00%, Series Ac |
|
136,000 | 3,538,720 | |||||||||
|
|
|||||||||||
INVESTMENT BANKER/BROKER |
1.7% | |||||||||||
Carlyle Group LP/The, 5.875%, Series Ac |
|
156,675 | 3,191,470 | |||||||||
Charles Schwab Corp./The, 5.95%, Series Dc |
|
74,982 | 1,874,550 | |||||||||
Morgan Stanley, 6.875% to 1/15/24, Series Fa,c,e |
|
210,524 | 5,452,571 | |||||||||
Morgan Stanley, 6.375% to 10/15/24, Series Ia,b,c,e |
|
164,338 | 4,146,248 | |||||||||
Morgan Stanley, 5.85% to 4/15/27, Series Kc,e |
|
56,056 | 1,361,040 | |||||||||
|
|
|||||||||||
16,025,879 | ||||||||||||
|
|
|||||||||||
TOTAL FINANCIAL |
|
24,662,455 | ||||||||||
|
|
|||||||||||
INDUSTRIALSCHEMICALS |
0.9% | |||||||||||
CHS, Inc., 7.10% to 3/31/24, Series 2a,c,e |
|
190,229 | 4,696,754 | |||||||||
CHS, Inc., 6.75% to 9/30/24, Series 3c,e |
|
90,453 | 2,176,299 | |||||||||
CHS, Inc., 7.50%, Series 4c |
|
74,495 | 1,881,744 | |||||||||
|
|
|||||||||||
8,754,797 | ||||||||||||
|
|
|||||||||||
INSURANCE |
4.1% | |||||||||||
LIFE/HEALTH INSURANCE |
0.7% | |||||||||||
MetLife, Inc., 5.625%, Series Ec |
|
80,000 | 1,884,000 | |||||||||
Prudential Financial, Inc., 5.625%, due 8/15/58 |
|
91,000 | 2,151,240 | |||||||||
Unum Group, 6.25%, due 6/15/58 |
|
107,900 | 2,446,093 | |||||||||
|
|
|||||||||||
6,481,333 | ||||||||||||
|
|
|||||||||||
LIFE/HEALTH INSURANCEFOREIGN |
0.2% | |||||||||||
Aegon NV, 6.375% (Netherlands)c |
|
63,000 | 1,585,080 | |||||||||
|
|
See accompanying notes to financial statements.
10
COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
SCHEDULE OF INVESTMENTS(Continued)
December 31, 2018
Shares | Value | |||||||||||
MULTI-LINE |
1.3% | |||||||||||
American Financial Group, Inc., 6.00%, due 11/15/55 |
|
107,384 | $ | 2,624,465 | ||||||||
American Financial Group, Inc., 6.25%, due 9/30/54 |
|
79,734 | 2,018,865 | |||||||||
Hanover Insurance Group, Inc./The, 6.35%, due 3/30/53 |
|
78,400 | 1,944,320 | |||||||||
Hartford Financial Services Group, Inc./The, 7.875% to 4/15/22, due 4/15/42e |
|
48,066 | 1,314,605 | |||||||||
WR Berkley Corp., 5.70%, due 3/30/58 |
|
56,505 | 1,245,935 | |||||||||
WR Berkley Corp., 5.75%, due 6/1/56 |
|
142,445 | 3,193,617 | |||||||||
|
|
|||||||||||
12,341,807 | ||||||||||||
|
|
|||||||||||
MULTI-LINEFOREIGN |
0.2% | |||||||||||
PartnerRe Ltd., 6.50%, Series G (Bermuda)c |
|
74,903 | 1,847,857 | |||||||||
|
|
|||||||||||
PROPERTY CASUALTY |
0.2% | |||||||||||
Axis Capital Holdings Ltd., 5.50%, Series Ec |
|
93,000 | 1,947,420 | |||||||||
|
|
|||||||||||
PROPERTY CASUALTYFOREIGN |
0.3% | |||||||||||
Enstar Group Ltd., 7.00% to 9/1/28, Series D (Bermuda)c,e |
|
123,000 | 2,878,200 | |||||||||
|
|
|||||||||||
REINSURANCE |
0.9% | |||||||||||
Arch Capital Group Ltd., 5.25%, Series E |
|
37,337 | 741,886 | |||||||||
Arch Capital Group Ltd., 5.45%, Series F |
|
142,999 | 2,907,170 | |||||||||
Reinsurance Group of America, Inc., 5.75% to 6/15/26, due 6/15/56a,b,e |
|
160,791 | 3,786,628 | |||||||||
Reinsurance Group of America, Inc., 6.20% to 9/15/22, due 9/15/42e |
|
50,000 | 1,251,000 | |||||||||
|
|
|||||||||||
8,686,684 | ||||||||||||
|
|
|||||||||||
REINSURANCEFOREIGN |
0.3% | |||||||||||
RenaissanceRe Holdings Ltd., 5.75%, Series F (Bermuda)c |
|
144,600 | 3,156,618 | |||||||||
|
|
|||||||||||
TOTAL INSURANCE |
|
38,924,999 | ||||||||||
|
|
|||||||||||
INTEGRATED TELECOMMUNICATIONS SERVICES |
0.2% | |||||||||||
AT&T, Inc., 5.625%, due 8/1/67 |
|
70,000 | 1,623,300 | |||||||||
|
|
|||||||||||
PIPELINES |
0.9% | |||||||||||
Enbridge, Inc., 6.375% to 4/15/23, due 4/15/78, Series B (Canada)e |
|
222,000 | 5,225,880 | |||||||||
Energy Transfer Operating LP, 7.625% to 8/15/23, |
|
135,000 | 3,094,200 | |||||||||
|
|
|||||||||||
8,320,080 | ||||||||||||
|
|
See accompanying notes to financial statements.
11
COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
SCHEDULE OF INVESTMENTS(Continued)
December 31, 2018
Shares | Value | |||||||||||
REAL ESTATE |
3.2% | |||||||||||
DIVERSIFIED |
0.5% | |||||||||||
Lexington Realty Trust, 6.50%, Series C ($50 Par Value)a,c |
|
76,536 | $ | 3,771,694 | ||||||||
Wells Fargo Real Estate Investment Corp., 6.375%, Series Ac |
|
60,862 | 1,524,593 | |||||||||
|
|
|||||||||||
5,296,287 | ||||||||||||
|
|
|||||||||||
HOTEL |
0.5% | |||||||||||
Hersha Hospitality Trust, 6.875%, Series Ca,c |
|
134,345 | 2,919,317 | |||||||||
Sunstone Hotel Investors, Inc., 6.95%, Series Ec |
|
65,000 | 1,615,250 | |||||||||
|
|
|||||||||||
4,534,567 | ||||||||||||
|
|
|||||||||||
INDUSTRIALS |
0.6% | |||||||||||
Monmouth Real Estate Investment Corp., 6.125%, Series Cc |
|
140,000 | 3,183,600 | |||||||||
STAG Industrial, Inc., 6.875%, Series Cc |
|
96,000 | 2,467,200 | |||||||||
|
|
|||||||||||
5,650,800 | ||||||||||||
|
|
|||||||||||
NET LEASE |
0.5% | |||||||||||
VEREIT, Inc., 6.70%, Series Fa,c |
|
189,902 | 4,493,081 | |||||||||
|
|
|||||||||||
SELF STORAGE |
0.2% | |||||||||||
National Storage Affiliates Trust, 6.00%, Series Ac |
|
115,000 | | 2,581,750 | ||||||||
|
|
|||||||||||
SHOPPING CENTERSCOMMUNITY CENTER |
0.5% | |||||||||||
Cedar Realty Trust, Inc., 7.25%, Series Ba,c |
|
33,020 | 765,073 | |||||||||
Saul Centers, Inc., 6.875%, Series Ca,c |
|
49,082 | 1,237,112 | |||||||||
SITE Centers Corp., 6.50%, Series Jc |
|
120,000 | 2,720,400 | |||||||||
|
|
|||||||||||
4,722,585 | ||||||||||||
|
|
|||||||||||
SPECIALTY |
0.4% | |||||||||||
Digital Realty Trust, Inc., 6.35%, Series Ic |
|
140,000 | 3,565,800 | |||||||||
|
|
|||||||||||
TOTAL REAL ESTATE |
|
30,844,870 | ||||||||||
|
|
|||||||||||
TECHNOLOGYSOFTWARE |
0.4% | |||||||||||
eBay, Inc., 6.00%, due 2/1/56 |
|
133,000 | 3,388,840 | |||||||||
|
|
|||||||||||
UTILITIES |
1.3% | |||||||||||
Algonquin Power & Utilities Corp., 6.875% to 10/17/23, due 10/17/78 (Canada)e |
|
31,625 | 789,676 | |||||||||
NiSource, Inc., 6.50% to 3/15/24, Series Bc,e |
|
84,445 | 2,120,625 |
See accompanying notes to financial statements.
12
COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
SCHEDULE OF INVESTMENTS(Continued)
December 31, 2018
Shares | Value | |||||||||||
SCE Trust II, 5.10%c |
|
11,725 | $ | 226,058 | ||||||||
SCE Trust IV, 5.375% to 9/15/25, Series Jc,e |
|
116,165 | 2,358,150 | |||||||||
SCE Trust V, 5.45% to 3/15/26, Series Ka,b,c,e |
|
149,335 | 3,118,115 | |||||||||
SCE Trust VI, 5.00%c |
|
187,644 | 3,413,244 | |||||||||
|
|
|||||||||||
12,025,868 | ||||||||||||
|
|
|||||||||||
TOTAL PREFERRED SECURITIES$25 PAR VALUE (Identified cost$196,904,679) |
|
192,233,679 | ||||||||||
|
|
|||||||||||
Principal Amount |
||||||||||||
PREFERRED SECURITIESCAPITAL SECURITIES |
47.7% | |||||||||||
BANKS |
9.9% | |||||||||||
Bank of America Corp., 6.25% to 9/5/24, Series Xc,e |
|
$ | 5,800,000 | 5,737,650 | ||||||||
Bank of America Corp., 6.50% to 10/23/24, Series Za,c,e |
|
5,713,000 | 5,791,554 | |||||||||
Citigroup Capital III, 7.625%, due 12/1/36a |
|
4,700,000 | 6,084,981 | |||||||||
Citigroup, Inc., 5.90% to 2/15/23c,e |
|
2,000,000 | 1,869,000 | |||||||||
Citigroup, Inc., 6.125% to 11/15/20, Series Rc,e |
|
4,806,000 | 4,697,865 | |||||||||
Citigroup, Inc., 6.25% to 8/15/26, Series Ta,c,e |
|
2,825,000 | 2,709,034 | |||||||||
Citizens Financial Group, Inc., 6.375% to 4/6/24, |
|
1,800,000 | 1,687,500 | |||||||||
CoBank ACB, 6.25% to 10/1/22, Series Fa,c,e |
|
33,000 | | 3,316,500 | ||||||||
CoBank ACB, 6.125%, Series Ga,c |
|
46,500 | | 4,673,250 | ||||||||
CoBank ACB, 6.25% to 10/1/26, Series Ia,c,e |
|
4,334,000 | 4,355,670 | |||||||||
Farm Credit Bank of Texas, 6.75% to 9/15/23, 144Aa,b,c,e,f |
|
63,000 | | 6,331,500 | ||||||||
Farm Credit Bank of Texas, 10.00%, Series 1a,c |
|
6,000 | | 6,690,000 | ||||||||
Goldman Sachs Group, Inc./The, 5.70% to 5/10/19, |
|
1,520,000 | 1,484,052 | |||||||||
JPMorgan Chase & Co., 5.99%, (3 Month US LIBOR + 3.47%), Series I (FRN)a,c,d |
|
5,738,000 | 5,680,620 | |||||||||
JPMorgan Chase & Co., 6.75% to 2/1/24, Series Sa,c,e |
|
6,650,000 | 6,879,425 | |||||||||
JPMorgan Chase & Co., 5.30% to 5/1/20, Series Zc,e |
|
1,500,000 | 1,485,000 | |||||||||
PNC Financial Services Group, Inc./The, 6.75% to 8/1/21c,e |
|
2,775,000 | 2,823,562 | |||||||||
Wells Fargo & Co., 6.558%, (3 Month US LIBOR + 3.77%), Series K (FRN)a,c,d |
|
12,274,000 | 12,212,630 | |||||||||
Wells Fargo & Co., 5.90% to 6/15/24, Series Sc,e |
|
1,750,000 | 1,669,500 |
See accompanying notes to financial statements.
13
COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
SCHEDULE OF INVESTMENTS(Continued)
December 31, 2018
Principal Amount |
Value | |||||||||||
Wells Fargo & Co., 5.875% to 6/15/25, Series Uc,e |
|
$ | 4,330,000 | $ | 4,285,401 | |||||||
Wells Fargo Capital X, 5.95%, due 12/15/36, (TruPS)a |
|
3,700,000 | 3,838,750 | |||||||||
|
|
|||||||||||
94,303,444 | ||||||||||||
|
|
|||||||||||
BANKSFOREIGN |
15.4% | |||||||||||
Banco Bilbao Vizcaya Argentaria SA, 8.875% to 4/14/21 (Spain)c,e,g,h |
|
2,600,000 | 3,235,884 | |||||||||
Banco Santander SA, 6.75% to 4/25/22 (Spain)c,e,g,h |
|
1,000,000 | 1,167,916 | |||||||||
Bank of China Hong Kong Ltd., 5.90% to 9/14/23, 144A (Hong Kong)c,e,f |
|
5,200,000 | 5,214,284 | |||||||||
Bankia SA, 6.375% to 9/19/23 (Spain)c,e,g,h |
|
2,000,000 | 2,170,178 | |||||||||
Barclays PLC, 7.75% to 9/15/23 (United Kingdom)c,e,h |
|
3,800,000 | 3,664,796 | |||||||||
Barclays PLC, 7.875% to 3/15/22 (United Kingdom)c,e,g,h |
|
3,400,000 | 3,412,750 | |||||||||
BNP Paribas SA, 6.75% to 3/14/22, 144A (France)c,e,f,h |
|
1,000,000 | 977,500 | |||||||||
BNP Paribas SA, 7.195% to 6/25/37, 144A (France)a,c,e,f |
|
5,300,000 | 5,419,250 | |||||||||
BNP Paribas SA, 7.375% to 8/19/25, 144A (France)c,e,f,h |
|
2,900,000 | 2,896,375 | |||||||||
BNP Paribas SA, 7.625% to 3/30/21, 144A (France)a,c,e,f,h |
|
8,000,000 | 8,170,000 | |||||||||
Cooperatieve Rabobank UA, 11.00% to 6/30/19, 144A (Netherlands)a,c,e,f |
|
10,375,000 | 10,751,094 | |||||||||
Credit Agricole SA, 8.125% to 12/23/25, 144A (France)a,c,e,f,h |
|
7,300,000 | 7,528,125 | |||||||||
Credit Suisse Group AG, 7.125% to 7/29/22 (Switzerland)c,e,g,h |
|
3,400,000 | 3,361,750 | |||||||||
Credit Suisse Group AG, 7.50% to 7/17/23, 144A (Switzerland)c,e,f,h |
|
4,200,000 | 4,105,500 | |||||||||
DNB Bank ASA, 6.50% to 3/26/22 (Norway)c,e,g,h |
|
4,700,000 | 4,630,675 | |||||||||
Dresdner Funding Trust I, 8.151%, due 6/30/31, 144A (Germany)a,f |
|
3,835,906 | 4,650,652 | |||||||||
HSBC Capital Funding Dollar 1 LP, 10.176% to 6/30/30, 144A (United Kingdom)a,c,e,f |
|
5,192,000 | 7,463,500 | |||||||||
HSBC Holdings PLC, 6.25% to 3/23/23 (United Kingdom)c,e,h |
|
2,800,000 | 2,628,500 | |||||||||
HSBC Holdings PLC, 6.375% to 9/17/24 (United Kingdom)c,e,h |
|
1,300,000 | 1,212,250 | |||||||||
HSBC Holdings PLC, 6.375% to 3/30/25 (United Kingdom)a,b,c,e,h |
|
4,600,000 | 4,427,500 | |||||||||
HSBC Holdings PLC, 6.875% to 6/1/21 (United Kingdom)c,e,h |
|
5,200,000 | 5,357,300 | |||||||||
ING Groep N.V., 6.875% to 4/16/22 (Netherlands)c,e,g,h |
|
3,600,000 | 3,591,000 |
See accompanying notes to financial statements.
14
COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
SCHEDULE OF INVESTMENTS(Continued)
December 31, 2018
Principal Amount |
Value | |||||||||||
Lloyds Banking Group PLC, 7.50% to 6/27/24 (United Kingdom)a,c,e,h |
|
$ | 3,266,000 | $ | 3,159,202 | |||||||
Lloyds Banking Group PLC, 7.50% to 9/27/25 (United Kingdom)c,e,h |
|
3,600,000 | 3,483,720 | |||||||||
Macquarie Bank Ltd./London, 6.125% to 3/8/27, 144A (Australia)c,e,f,h |
|
1,200,000 | 1,027,500 | |||||||||
Nationwide Building Society, 10.25% (United Kingdom)c,g |
|
1,215,000 | 2,164,223 | |||||||||
RBS Capital Trust II, 6.425% to 1/3/34 (United Kingdom)c,e |
|
800,000 | 948,000 | |||||||||
Royal Bank of Scotland Group PLC, 7.648% to 9/30/31 (United Kingdom)a,c,e |
|
4,141,000 | 5,119,311 | |||||||||
Royal Bank of Scotland Group PLC, 8.00% to 8/10/25 (United Kingdom)c,e,h |
|
2,000,000 | 2,000,000 | |||||||||
Royal Bank of Scotland Group PLC, 8.625% to 8/15/21 (United Kingdom)a,c,e,h |
|
9,400,000 | 9,752,500 | |||||||||
Skandinaviska Enskilda Banken AB, 5.75% to 5/13/20, Series EMTN (Sweden)c,e,g,h |
|
1,400,000 | 1,367,470 | |||||||||
Societe Generale SA, 7.375% to 9/13/21, 144A (France)c,e,f,h |
|
4,600,000 | 4,490,750 | |||||||||
Standard Chartered PLC, 7.50% to 4/2/22, 144A (United Kingdom)c,e,f,h |
|
2,000,000 | 2,010,000 | |||||||||
Standard Chartered PLC, 7.75% to 4/2/23, 144A (United Kingdom)c,e,f,h |
|
800,000 | 790,000 | |||||||||
Swedbank AB, 6.00% to 3/17/22 (Sweden)c,e,g,h |
|
3,400,000 | 3,249,363 | |||||||||
UBS Group Funding Switzerland AG, 7.00% to 2/19/25 (Switzerland)c,e,g,h |
|
2,200,000 | 2,244,000 | |||||||||
UBS Group Funding Switzerland AG, 7.125% to 2/19/20 (Switzerland)c,e,g,h |
|
3,000,000 | 3,018,750 | |||||||||
UBS Group Funding Switzerland AG, 7.125% to 8/10/21 (Switzerland)c,e,g,h |
|
5,000,000 | 5,083,120 | |||||||||
|
|
|||||||||||
145,944,688 | ||||||||||||
|
|
|||||||||||
COMMUNICATIONSTOWERS |
0.4% | |||||||||||
Crown Castle International Corp., 6.875%, |
|
3,900 | | 4,093,619 | ||||||||
|
|
|||||||||||
ELECTRICINTEGRATED ELECTRIC |
0.6% | |||||||||||
CenterPoint Energy, Inc., 6.125% to 9/1/23, Series Ac,e |
|
3,790,000 | 3,699,988 | |||||||||
Southern California Edison Co., 6.25% to 2/1/22, |
|
2,041,000 | 1,949,155 | |||||||||
|
|
|||||||||||
5,649,143 | ||||||||||||
|
|
See accompanying notes to financial statements.
15
COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
SCHEDULE OF INVESTMENTS(Continued)
December 31, 2018
Principal Amount |
Value | |||||||||||
FOOD |
1.7% | |||||||||||
Dairy Farmers of America, Inc., 7.875%, 144Ac,f,i |
|
$ | 52,100 | | $ | 5,196,975 | ||||||
Dairy Farmers of America, Inc., 7.875%, Series B, 144Ac,f |
|
82,000 | | 8,734,804 | ||||||||
Land O Lakes, Inc., 7.00%, 144Ac,f |
|
1,650,000 | 1,611,844 | |||||||||
Land O Lakes, Inc., 7.25%, 144Ac,f |
|
945,000 | 919,012 | |||||||||
|
|
|||||||||||
16,462,635 | ||||||||||||
|
|
|||||||||||
INDUSTRIALSDIVERSIFIED MANUFACTURING |
0.8% | |||||||||||
General Electric Co., 5.00% to 1/21/21, Series Da,b,c,e |
|
9,536,000 | 7,306,960 | |||||||||
|
|
|||||||||||
INSURANCE |
13.4% | |||||||||||
LIFE/HEALTH INSURANCE |
5.3% | |||||||||||
MetLife Capital Trust IV, 7.875%, due 12/15/37, |
|
4,381,000 | 4,983,388 | |||||||||
MetLife, Inc., 10.75%, due 8/1/39a |
|
3,592,000 | 5,253,300 | |||||||||
MetLife, Inc., 9.25%, due 4/8/38, 144Aa,b,f |
|
9,265,000 | 11,720,225 | |||||||||
MetLife, Inc., 5.25% to 6/15/20, Series Cc,e |
|
4,266,000 | 4,106,025 | |||||||||
MetLife, Inc., 5.875% to 3/15/28, Series Dc,e |
|
1,421,000 | 1,365,936 | |||||||||
Prudential Financial, Inc., 5.20% to 3/15/24, due 3/15/44e |
|
2,000,000 | 1,875,000 | |||||||||
Prudential Financial, Inc., 5.625% to 6/15/23, due 6/15/43a,e |
|
10,464,000 | 10,260,789 | |||||||||
Prudential Financial, Inc., 5.70% to 9/15/28, due 9/15/48e |
|
2,600,000 | 2,424,500 | |||||||||
Prudential Financial, Inc., 5.875% to 9/15/22, due 9/15/42e |
|
1,500,000 | 1,516,875 | |||||||||
Voya Financial, Inc., 5.65% to 5/15/23, due 5/15/53a,e |
|
5,550,000 | 5,229,765 | |||||||||
Voya Financial, Inc., 6.125% to 9/15/23, Series Ac,e |
|
1,950,000 | 1,852,500 | |||||||||
|
|
|||||||||||
50,588,303 | ||||||||||||
|
|
|||||||||||
LIFE/HEALTH INSURANCEFOREIGN |
5.7% | |||||||||||
Dai-ichi Life Insurance Co. Ltd., 7.25% to 7/25/21, 144A (Japan)c,e,f |
|
1,000,000 | 1,062,500 | |||||||||
Dai-ichi Life Insurance Co. Ltd./The, 4.00% to 7/24/26, 144A (Japan)c,e,f |
|
5,100,000 | 4,725,150 |
See accompanying notes to financial statements.
16
COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
SCHEDULE OF INVESTMENTS(Continued)
December 31, 2018
Principal Amount |
Value | |||||||||||
Dai-ichi Life Insurance Co. Ltd./The, 5.10% to 10/28/24, 144A (Japan)a,c,e,f |
|
$ | 4,400,000 | $ | 4,400,000 | |||||||
Fukoku Mutual Life Insurance Co., 6.50% to 9/19/23 (Japan)c,e,g |
|
3,064,000 | 3,244,926 | |||||||||
Hanwha Life Insurance Co., Ltd., 4.70% to 4/23/23, due 4/23/48, 144A (South Korea)e,f |
|
3,200,000 | 3,061,619 | |||||||||
La Mondiale SAM, 4.80% to 1/18/28, due 1/18/48 (France)e,g |
|
1,400,000 | 1,137,500 | |||||||||
La Mondiale SAM, 7.625% to 4/23/19 (France)c,e,g |
|
4,500,000 | 4,546,233 | |||||||||
Meiji Yasuda Life Insurance Co., 5.10% to 4/26/28, due 4/26/48, 144A (Japan)e,f |
|
2,000,000 | 1,980,000 | |||||||||
Meiji Yasuda Life Insurance Co., 5.20% to 10/20/25, due 10/20/45, 144A (Japan)a,e,f |
|
7,350,000 | 7,368,375 | |||||||||
Nippon Life Insurance Co., 4.70% to 1/20/26, due 1/20/46, 144A (Japan)a,e,f |
|
5,600,000 | 5,453,000 | |||||||||
Nippon Life Insurance Co., 5.00% to 10/18/22, due 10/18/42, 144A (Japan)e,f |
|
3,100,000 | 3,181,375 | |||||||||
Nippon Life Insurance Co., 5.10% to 10/16/24, due 10/16/44, 144A (Japan)e,f |
|
1,000,000 | 1,005,000 | |||||||||
NN Group NV, 4.50% to 1/15/26 (Netherlands)c,e,g |
|
600,000 | 687,372 | |||||||||
Phoenix Group Holdings, 5.75% to 4/26/28 (United Kingdom)c,e,g,h |
|
1,800,000 | 1,860,374 | |||||||||
Phoenix Group Holdings, 5.375%, due 7/6/27, Series EMTN (United Kingdom)c,g |
|
2,600,000 | 2,249,621 | |||||||||
Sumitomo Life Insurance Co., 4.00% to 9/14/27, due 9/14/77, 144A (Japan)e,f |
|
2,200,000 | 2,035,000 | |||||||||
Sumitomo Life Insurance Co., 6.50% to 9/20/23, due 9/20/73, 144A (Japan)e,f |
|
6,200,000 | 6,595,250 | |||||||||
|
|
|||||||||||
54,593,295 | ||||||||||||
|
|
|||||||||||
MULTI-LINE |
0.2% | |||||||||||
American International Group, Inc., 5.75% to 4/1/28, due 4/1/48, Series A-9e |
|
860,000 | 750,350 |
See accompanying notes to financial statements.
17
COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
SCHEDULE OF INVESTMENTS(Continued)
December 31, 2018
Principal Amount |
Value | |||||||||||
Hartford Financial Services Group, Inc./The, 4.741%, (3 Month US
LIBOR + 2.125%), due 2/12/47, 144A, |
|
$ | 1,000,000 | $ | 802,500 | |||||||
|
|
|||||||||||
1,552,850 | ||||||||||||
|
|
|||||||||||
PROPERTY CASUALTY |
0.5% | |||||||||||
Assurant, Inc., 7.00% to 3/27/28, due 3/27/48e |
|
3,550,000 | 3,390,250 | |||||||||
Liberty Mutual Group, Inc., 7.80%, due 3/7/37, 144Af |
|
1,147,500 | 1,253,644 | |||||||||
|
|
|||||||||||
4,643,894 | ||||||||||||
|
|
|||||||||||
PROPERTY CASUALTYFOREIGN |
1.7% | |||||||||||
Mitsui Sumitomo Insurance Co., Ltd., 7.00% to 3/15/22, |
|
1,500,000 | 1,595,625 | |||||||||
QBE Insurance Group Ltd., 6.75% to 12/2/24, |
|
6,003,000 | 6,040,519 | |||||||||
QBE Insurance Group Ltd., 5.875% to 6/17/26, |
|
2,200,000 | 2,094,857 | |||||||||
Sompo Japan Nipponkoa Insurance, Inc., 5.325% to 3/28/23, due 3/28/73, 144A (Japan)e,f |
|
3,200,000 | 3,228,000 | |||||||||
VIVAT NV, 6.25% to 11/16/22 (Netherlands)c,e,g |
|
3,200,000 | 3,098,400 | |||||||||
|
|
|||||||||||
16,057,401 | ||||||||||||
|
|
|||||||||||
TOTAL INSURANCE |
|
127,435,743 | ||||||||||
|
|
|||||||||||
INTEGRATED TELECOMMUNICATIONS SERVICES |
0.7% | |||||||||||
Centaur Funding Corp., 9.08%, due 4/21/20, 144A |
|
3,254 | | 3,450,060 | ||||||||
Vodafone Group PLC, 6.25% to 7/3/24, due 10/3/78 |
|
3,400,000 | 3,167,525 | |||||||||
|
|
|||||||||||
6,617,585 | ||||||||||||
|
|
|||||||||||
MATERIALMETALS & MINING |
1.2% | |||||||||||
BHP Billiton Finance USA Ltd., 6.25% to 10/19/20, due 10/19/75, 144A (Australia)e,f |
|
2,000,000 | 2,047,090 | |||||||||
BHP Billiton Finance USA Ltd., 6.75% to 10/20/25, due 10/19/75, 144A (Australia)a,e,f |
|
9,000,000 | 9,373,275 | |||||||||
|
|
|||||||||||
11,420,365 | ||||||||||||
|
|
See accompanying notes to financial statements.
18
COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
SCHEDULE OF INVESTMENTS(Continued)
December 31, 2018
Principal Amount |
Value | |||||||||||
PIPELINES |
1.2% | |||||||||||
Enbridge, Inc., 6.25% to 3/1/28, due 3/1/78 (Canada)e |
|
$ | 2,750,000 | $ | 2,481,735 | |||||||
Enbridge, Inc., 6.00% to 1/15/27, due 1/15/77, Series 16-A (Canada)e |
|
1,400,000 | 1,265,665 | |||||||||
Transcanada Trust, 5.625% to 5/20/25, due 5/20/75 (Canada)e |
|
1,309,000 | 1,183,009 | |||||||||
Transcanada Trust, 5.875% to 8/15/26, due 8/15/76, Series 16-A (Canada)a,e |
|
7,002,000 | 6,603,586 | |||||||||
|
|
|||||||||||
11,533,995 | ||||||||||||
|
|
|||||||||||
UTILITIES |
2.3% | |||||||||||
ELECTRIC UTILITIES |
0.3% | |||||||||||
Southern Co./The, 5.50% to 3/15/22, due 3/15/57, Series Be |
|
3,200,000 | 3,083,976 | |||||||||
|
|
|||||||||||
ELECTRIC UTILITIESFOREIGN |
1.7% | |||||||||||
Emera, Inc., 6.75% to 6/15/26, due 6/15/76, |
|
8,320,000 | 8,377,574 | |||||||||
Enel SpA, 8.75% to 9/24/23, due 9/24/73, 144A (Italy)a,e,f |
|
8,110,000 | 8,312,750 | |||||||||
|
|
|||||||||||
16,690,324 | ||||||||||||
|
|
|||||||||||
MULTI-UTILITIES |
0.3% | |||||||||||
NiSource, Inc., 5.65% to 6/15/23, 144Ac,e,f |
|
2,635,000 | 2,453,844 | |||||||||
|
|
|||||||||||
TOTAL UTILITIES |
|
22,228,144 | ||||||||||
|
|
|||||||||||
TOTAL PREFERRED
SECURITIESCAPITAL SECURITIES |
|
452,996,321 | ||||||||||
|
|
|||||||||||
CORPORATE BONDS |
0.3% | |||||||||||
FINANCIAL |
0.1% | |||||||||||
GE Capital International Funding Co. Unlimited Co., 3.373%, due 11/15/25 |
|
1,150,000 | 1,023,560 | |||||||||
|
|
|||||||||||
INDUSTRIALSDIVERSIFIED MANUFACTURING |
0.2% | |||||||||||
General Electric Co., 6.875%, due 1/10/39, Series GMTN |
|
630,000 | 661,444 | |||||||||
General Electric Co., 5.875%, due 1/14/38, Series MTN |
|
1,230,000 | 1,180,451 | |||||||||
|
|
|||||||||||
1,841,895 | ||||||||||||
|
|
|||||||||||
TOTAL CORPORATE
BONDS |
|
2,865,455 | ||||||||||
|
|
See accompanying notes to financial statements.
19
COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
SCHEDULE OF INVESTMENTS(Continued)
December 31, 2018
Shares | Value | |||||||||||
SHORT-TERM INVESTMENTS |
1.0% | |||||||||||
MONEY MARKET FUNDS |
||||||||||||
State Street Institutional Treasury Money Market Fund, Premier Class, 2.24%j |
|
9,685,520 | $ | 9,685,520 | ||||||||
|
|
|||||||||||
TOTAL SHORT-TERM
INVESTMENTS |
|
9,685,520 | ||||||||||
|
|
|||||||||||
PURCHASED OPTIONS CONTRACTS |
0.1% | 656,287 | ||||||||||
TOTAL INVESTMENTS IN
SECURITIES |
135.9% | 1,291,669,856 | ||||||||||
WRITTEN OPTION CONTRACTS |
(0.0) | (298,835 | ) | |||||||||
LIABILITIES IN EXCESS OF OTHER ASSETS |
(35.9) | (341,050,982 | ) | |||||||||
|
|
|
|
|||||||||
NET ASSETS (Equivalent to $19.98 per share based on 47,566,736 shares of common stock outstanding) |
100.0% | $ | 950,320,039 | |||||||||
|
|
|
|
Over-the-Counter Option Contracts
Purchased Options
Description | Counterparty | Exercise Price |
Expiration Date |
Number of Contracts |
Notional Amountk |
Premiums Paid |
Value | |||||||||||||||||||
PutGBP-USD |
BNP Paribas SA | $ | 1.26 | 2/1/19 | 23,257 | $ | 29,643,367 | $ | 365,920 | $ | 190,777 | |||||||||||||||
PutGBP-USD |
BNP Paribas SA | 1.26 | 5/1/19 | 11,560 | 14,734,373 | 397,185 | 247,974 | |||||||||||||||||||
PutGBP-USD |
BNP Paribas SA | 1.25 | 5/1/19 | 11,468 | 14,617,110 | 273,466 | 217,536 | |||||||||||||||||||
46,285 | $ | 58,994,850 | $ | 1,036,571 | $ | 656,287 | ||||||||||||||||||||
|
Written Options
Description | Counterparty | Exercise Price |
Expiration Date |
Number of Contracts |
Notional Amountk |
Premiums Received |
Value | |||||||||||||||||||
PutGBP-USD |
BNP Paribas SA | $ | 1.21 | 2/1/19 | (22,423 | ) | $ | (28,580,351 | ) | $ | (156,086 | ) | $ | (44,577 | ) | |||||||||||
PutGBP-USD |
BNP Paribas SA | 1.21 | 5/1/19 | (11,146 | ) | (14,206,689 | ) | (232,619 | ) | (135,825 | ) | |||||||||||||||
PutGBP-USD |
BNP Paribas SA | 1.20 | 5/1/19 | (11,054 | ) | (14,089,426 | ) | (147,203 | ) | (118,433 | ) | |||||||||||||||
(44,623 | ) | $ | (56,876,466 | ) | $ | (535,908 | ) | $ | (298,835 | ) | ||||||||||||||||
|
See accompanying notes to financial statements.
20
COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
SCHEDULE OF INVESTMENTS(Continued)
December 31, 2018
Forward Foreign Currency Exchange Contracts
Counterparty | Contracts to |
In Exchange For |
Settlement Date |
Unrealized Appreciation (Depreciation) |
||||||||||||||||
Brown Brothers Harriman |
EUR | 6,478,701 | USD | 7,356,824 | 1/3/19 | $ | (66,145 | ) | ||||||||||||
Brown Brothers Harriman |
GBP | 3,268,962 | USD | 4,178,878 | 1/3/19 | 12,259 | ||||||||||||||
Brown Brothers Harriman |
USD | 4,163,775 | GBP | 3,268,962 | 1/3/19 | 2,843 | ||||||||||||||
Brown Brothers Harriman |
USD | 7,406,840 | EUR | 6,478,701 | 1/3/19 | 16,130 | ||||||||||||||
Brown Brothers Harriman |
EUR | 6,410,193 | USD | 7,347,299 | 2/4/19 | (16,793 | ) | |||||||||||||
Brown Brothers Harriman |
GBP | 3,178,815 | USD | 4,054,992 | 2/4/19 | (3,146 | ) | |||||||||||||
$ | (54,852 | ) | ||||||||||||||||||
|
See accompanying notes to financial statements.
21
COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
SCHEDULE OF INVESTMENTS(Continued)
December 31, 2018
Glossary of Portfolio Abbreviations
EMTN |
Euro Medium Term Note | |
ETF |
Exchange-Traded Fund | |
EUR |
Euro Currency | |
FRN |
Floating Rate Note | |
GBP |
Great British Pound | |
GMTN |
Global Medium Term Note | |
LIBOR |
London Interbank Offered Rate | |
MTN |
Medium Term Note | |
REIT |
Real Estate Investment Trust | |
TruPS |
Trust Preferred Securities | |
USD |
United States Dollar |
| Represents shares. |
a | All or a portion of the security is pledged as collateral in connection with the Funds credit agreement. $732,347,819 in aggregate has been pledged as collateral. |
b | A portion of the security has been rehypothecated in connection with the Funds credit agreement. $320,919,097 in aggregate has been rehypothecated. |
c | Perpetual security. Perpetual securities have no stated maturity date, but they may be called/redeemed by the issuer. |
d | Variable rate. Rate shown is in effect at December 31, 2018. |
e | Security converts to floating rate after the indicated fixed-rate coupon period. |
f | Securities exempt from registration under Rule 144A of the Securities Act of 1933. These securities may only be resold to qualified institutional buyers. Aggregate holdings amounted to $178,376,335 which represents 18.8% of the net assets of the Fund, of which 0.5% are illiquid. |
g | Securities exempt from registration under Regulation S of the Securities Act of 1933. These securities are subject to resale restrictions. Aggregate holdings amounted to $66,824,406 which represents 7.0% of the net assets of the Fund, of which 0.0% are illiquid. |
h | Contingent Capital security (CoCo). CoCos are debt or preferred securities with loss absorption characteristics built into the terms of the security for the benefit of the issuer. Aggregate holdings amounted to $106,074,748 which represents 11.2% of the net assets of the Fund (8.2% of the managed assets of the Fund). |
i | Security value is determined based on significant unobservable inputs (Level 3). |
j | Rate quoted represents the annualized seven-day yield. |
k | Amount represents number of contracts multiplied by notional contract size multiplied by the underlying price. |
See accompanying notes to financial statements.
22
COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2018
ASSETS: |
||||
Investments in securities, at valuea (Identified cost$1,175,855,605) |
$ | 1,291,669,856 | ||
Cash |
1,259,518 | |||
Receivable for: |
||||
Dividends and interest |
9,487,237 | |||
Unrealized appreciation on forward foreign currency exchange contracts |
31,232 | |||
Other assets |
18,518 | |||
|
|
|||
Total Assets |
1,302,466,361 | |||
|
|
|||
LIABILITIES: |
||||
Written option contracts, at value (Premiums received$535,908) |
298,835 | |||
Unrealized depreciation on forward foreign currency exchange contracts |
86,084 | |||
Payable for: |
||||
Credit agreement |
350,000,000 | |||
Investment management fees |
737,009 | |||
Cash collateral received for over-the-counter options contracts |
410,000 | |||
Dividends declared |
253,142 | |||
Interest expense |
116,301 | |||
Administration fees |
68,032 | |||
Directors fees |
177 | |||
Other liabilities |
176,742 | |||
|
|
|||
Total Liabilities |
352,146,322 | |||
|
|
|||
NET ASSETS |
$ | 950,320,039 | ||
|
|
|||
NET ASSETS consist of: |
||||
Paid-in capital |
$ | 804,849,914 | ||
Total distributable earnings/(accumulated loss) |
145,470,125 | |||
|
|
|||
$ | 950,320,039 | |||
|
|
|||
NET ASSET VALUE PER SHARE: |
||||
($950,320,039 ÷ 47,566,736 shares outstanding) |
$ | 19.98 | ||
|
|
|||
MARKET PRICE PER SHARE |
$ | 17.80 | ||
|
|
|||
MARKET PRICE PREMIUM (DISCOUNT) TO NET ASSET VALUE PER SHARE |
(10.91 | )% | ||
|
|
a | Includes $732,347,819 pledged, of which $320,919,097 has been rehypothecated, in connection with the Funds credit agreement, as described in note 7. |
See accompanying notes to financial statements.
23
COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
STATEMENT OF OPERATIONS
For the Year Ended December 31, 2018
Investment Income: |
| |||
Dividend income (net of $13,267 of foreign withholding tax) |
$ | 36,182,354 | ||
Interest income (net of $13,539 of foreign withholding tax) |
24,969,295 | |||
Rehypothecation income |
74,773 | |||
|
|
|||
Total Investment Income |
61,226,422 | |||
|
|
|||
Expenses: |
| |||
Interest expense |
8,884,752 | |||
Investment management fees |
8,879,916 | |||
Administration fees |
963,884 | |||
Shareholder reporting expenses |
418,656 | |||
Custodian fees and expenses |
95,155 | |||
Professional fees |
86,641 | |||
Litigation expense |
67,638 | |||
Directors fees and expenses |
59,798 | |||
Transfer agent fees and expenses |
25,450 | |||
Miscellaneous |
100,619 | |||
|
|
|||
Total Expenses |
19,582,509 | |||
|
|
|||
Net Investment Income (Loss) |
41,643,913 | |||
|
|
|||
Net Realized and Unrealized Gain (Loss): |
| |||
Net realized gain (loss) on: |
| |||
Investments in securities |
47,574,639 | |||
Written option contracts |
2,861 | |||
Forward foreign currency exchange contracts |
1,171,500 | |||
Foreign currency transactions |
824,158 | |||
|
|
|||
Net realized gain (loss) |
49,573,158 | |||
|
|
|||
Net change in unrealized appreciation (depreciation) on: |
| |||
Investments in securities |
(155,010,544 | ) | ||
Written option contracts |
237,073 | |||
Forward foreign currency exchange contracts |
(43,001 | ) | ||
Foreign currency translations |
(5,712 | ) | ||
|
|
|||
Net change in unrealized appreciation (depreciation) |
(154,822,184 | ) | ||
|
|
|||
Net Realized and Unrealized Gain (Loss) |
(105,249,026 | ) | ||
|
|
|||
Net Increase (Decrease) in Net Assets Resulting from Operations |
$ | (63,605,113 | ) | |
|
|
See accompanying notes to financial statements.
24
COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
For the Year Ended December 31, 2018 |
For the Year Ended December 31, 2017 |
|||||||
Change in Net Assets: |
||||||||
From Operations: |
||||||||
Net investment income (loss) |
$ | 41,643,913 | $ | 44,941,900 | ||||
Net realized gain (loss) |
49,573,158 | 25,484,282 | ||||||
Net change in unrealized appreciation (depreciation) |
(154,822,184 | ) | 50,429,454 | |||||
|
|
|
|
|||||
Net increase (decrease) in net assets resulting from operations |
(63,605,113 | ) | 120,855,636 | |||||
|
|
|
|
|||||
Distributions to Shareholdersa |
(70,779,303 | ) | (70,779,304 | ) | ||||
|
|
|
|
|||||
Total increase (decrease) in net assets |
(134,384,416 | ) | 50,076,332 | |||||
Net Assets: |
||||||||
Beginning of year |
1,084,704,455 | 1,034,628,123 | ||||||
|
|
|
|
|||||
End of year |
$ | 950,320,039 | $ | 1,084,704,455 | ||||
|
|
|
|
a | Distributions to shareholders from net investment income and net realized gain for the year ended December 31, 2017 have been reclassified to distributions to shareholders to reflect required amendments to Regulation S-X and to conform to the current year presentation. The amounts reported within the December 31, 2017 annual report were as follows: |
For the Year Ended December 31, 2017 |
||||
Distributions to Shareholders from: |
||||
Net investment income |
$ | (43,787,460 | ) | |
Net realized gain |
(26,991,844 | ) | ||
|
|
|||
Total distributions to shareholders |
$ | (70,779,304 | ) | |
|
|
See accompanying notes to financial statements.
25
COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
Statement of Cash Flows
For the Year Ended December 31, 2018
Increase (Decrease) in Cash: |
||||
Cash Flows from Operating Activities: |
||||
Net increase (decrease) in net assets resulting from operations |
$ | (63,605,113 | ) | |
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by operating activities: |
||||
Purchases of long-term investments |
(532,459,558 | ) | ||
Proceeds from sales and maturities of long-term investments |
560,899,280 | |||
Net purchases, sales and maturities of short-term investments |
(4,463,486 | ) | ||
Net amortization of premium on investments in securities |
1,782,467 | |||
Net decrease in dividends and interest receivable and other assets |
1,472,519 | |||
Net increase in cash collateral received for over-the-counter options contracts |
410,000 | |||
Net decrease in interest expense payable, accrued expenses and other liabilities |
(89,212 | ) | ||
Increase in premiums received from written option contracts |
535,908 | |||
Net change in unrealized appreciation on written option contracts |
(237,073 | ) | ||
Net change in unrealized depreciation on investments in securities |
155,010,544 | |||
Net change in unrealized depreciation on forward foreign currency exchange contracts |
43,001 | |||
Net realized gain on investments in securities |
(47,574,639 | ) | ||
|
|
|||
Cash provided by operating activities |
71,724,638 | |||
|
|
|||
Cash Flows from Financing Activities: |
||||
Dividends and distributions paid |
(70,756,778 | ) | ||
|
|
|||
Increase (decrease) in cash |
967,860 | |||
Cash at beginning of year (including foreign currency) |
291,658 | |||
|
|
|||
Cash at end of year |
$ | 1,259,518 | ||
|
|
Supplemental Disclosure of Cash Flow Information and Non-Cash Activities:
During the year ended December 31, 2018, interest paid was $8,862,874.
During the year ended December 31, 2018, as part of an exchange offer from one of the Funds investments, the Fund received shares of a new security valued at $691,194, resulting in a realized gain of $13,907.
See accompanying notes to financial statements.
26
COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
FINANCIAL HIGHLIGHTS
The following table includes selected data for a share outstanding throughout each year and other performance information derived from the financial statements. It should be read in conjunction with the financial statements and notes thereto.
For the Year Ended December 31, | ||||||||||||||||||||
Per Share Operating Performance: |
2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||
Net asset value, beginning of year |
$22.80 | $ 21.75 | $ 21.63 | $ 21.62 | $ 17.88 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Income (loss) from investment operations: |
||||||||||||||||||||
Net investment income (loss)a |
0.88 | 0.94 | 1.03 | 0.91 | 0.96 | |||||||||||||||
Net realized and unrealized gain (loss) |
(2.21 | )b | 1.60 | 0.57 | 0.57 | 4.07 | c | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total from investment operations |
(1.33 | ) | 2.54 | 1.60 | 1.48 | 5.03 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Less dividends and distributions to shareholders from: |
||||||||||||||||||||
Net investment income |
(0.92 | ) | (0.92 | ) | (0.97 | ) | (1.48 | ) | (1.29 | ) | ||||||||||
Net realized gain |
(0.57 | ) | (0.57 | ) | (0.51 | ) | | | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total dividends and distributions to shareholders |
(1.49 | ) | (1.49 | ) | (1.48 | ) | (1.48 | ) | (1.29 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Anti-dilutive effect from the repurchase of shares |
| | | 0.01 | | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net increase (decrease) in net asset value |
(2.82 | ) | 1.05 | 0.12 | 0.01 | 3.74 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net asset value, end of year |
$19.98 | $22.80 | $ 21.75 | $ 21.63 | $ 21.62 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Market value, end of year |
$17.80 | $21.27 | $19.12 | $18.44 | $18.99 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total net asset value returnd |
-5.20 | %b | 12.65 | % | 8.43 | % | 8.45 | % | 29.87 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total market value returnd |
-9.47 | % | 19.58 | % | 11.79 | % | 5.26 | % | 29.91 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Ratios/Supplemental Data: |
||||||||||||||||||||
Net assets, end of year (in millions) |
$950.3 | $1,084.7 | $1,034.6 | $1,029.0 | $1,032.7 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Ratios to average daily net assets: |
||||||||||||||||||||
Expenses |
1.93 | %b | 1.67 | % | 1.65 | % | 1.67 | % | 1.71 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Expenses (excluding interest expense) |
1.05 | % | 1.01 | % | 1.01 | % | 1.03 | % | 1.03 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net investment income (loss) |
4.10 | % | 4.19 | % | 4.64 | % | 4.18 | % | 4.76 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Ratio of expenses to average daily managed assetse |
1.43 | % | 1.26 | % | 1.24 | % | 1.25 | % | 1.26 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Portfolio turnover rate |
39 | % | 26 | % | 46 | % | 42 | % | 54 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
See accompanying notes to financial statements.
27
COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
FINANCIAL HIGHLIGHTS(Continued)
For the Year Ended December 31, | ||||||||||||||||||||
2018 | 2017 | 2016 | 2015 | 2014 | ||||||||||||||||
Credit Agreement |
||||||||||||||||||||
Asset coverage ratio for credit agreement |
372 | % | 410 | % | 396 | % | 394 | % | 395 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Asset coverage per $1,000 for credit agreement |
$3,715 | $4,099 | $3,956 | $3,940 | $3,951 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
a | Calculation based on average shares outstanding. |
b | During the reporting period the Fund settled legal claims against one issuer of securities previously held by the Fund. As a result, the net realized and unrealized gain (loss) on investments per share includes proceeds received from the settlement. Without these proceeds the net realized and unrealized gain (loss) on investments per share would have been $(2.22). Additionally, the expense ratio includes extraordinary expenses related to the direct action. Without these expenses, the ratio of expenses to average daily net assets would have been 1.92%. Excluding the proceeds from and expenses relating to the settlements, the total return on a NAV basis would have been -5.24%. |
c | Includes gains resulting from class action litigation payments on securities owned in prior years. Without these gains, the net realized and unrealized gains (losses) on investments per share would have been $3.99 and the total return on a NAV basis would have been 29.58%. |
d | Total net asset value return measures the change in net asset value per share over the period indicated. Total market value return is computed based upon the Funds market price per share and excludes the effects of brokerage commissions. Dividends and distributions are assumed, for purposes of these calculations, to be reinvested at prices obtained under the Funds dividend reinvestment plan. |
e | Average daily managed assets represent net assets plus the outstanding balance of the credit agreement. |
See accompanying notes to financial statements.
28
COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS
Note 1. Organization and Significant Accounting Policies
Cohen & Steers REIT and Preferred Income Fund, Inc. (the Fund) was incorporated under the laws of the State of Maryland on March 25, 2003 and is registered under the Investment Company Act of 1940 (the 1940 Act) as a diversified, closed-end management investment company. The Funds investment objective is high current income.
The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. The Fund is an investment company and, accordingly, follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board Accounting Standards Codification (ASC) Topic 946Investment Companies. The accounting policies of the Fund are in conformity with accounting principles generally accepted in the United States of America (GAAP). The preparation of the financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates.
Portfolio Valuation: Investments in securities that are listed on the New York Stock Exchange (NYSE) are valued, except as indicated below, at the last sale price reflected at the close of the NYSE on the business day as of which such value is being determined. If there has been no sale on such day, the securities are valued at the mean of the closing bid and ask prices on such day or, if no ask price is available, at the bid price. Exchange-traded options are valued at their last sale price as of the close of options trading on applicable exchanges on the valuation date. In the absence of a last sale price on such day, options are valued at the average of the quoted bid and ask prices as of the close of business. Over-the-counter (OTC) options are valued based upon prices provided by a third-party pricing service or counterparty. Forward contracts are valued daily at the prevailing forward exchange rate.
Securities not listed on the NYSE but listed on other domestic or foreign securities exchanges (including NASDAQ) are valued in a similar manner. Securities traded on more than one securities exchange are valued at the last sale price reflected at the close of the exchange representing the principal market for such securities on the business day as of which such value is being determined. If after the close of a foreign market, but prior to the close of business on the day the securities are being valued, market conditions change significantly, certain non-U.S. equity holdings may be fair valued pursuant to procedures established by the Board of Directors.
Readily marketable securities traded in the OTC market, including listed securities whose primary market is believed by Cohen & Steers Capital Management, Inc. (the investment manager) to be OTC, are valued on the basis of prices provided by a third-party pricing service or third-party broker-dealers when such prices are believed by the investment manager, pursuant to delegation by the Board of Directors, to reflect the fair value of such securities.
Fixed-income securities are valued on the basis of prices provided by a third-party pricing service or third-party broker-dealers when such prices are believed by the investment manager, pursuant to delegation by the Board of Directors, to reflect the fair market value of such securities. The pricing services or broker-dealers use multiple valuation techniques to determine fair value. In instances where sufficient market activity exists, the pricing services or broker-dealers may utilize a market-based approach through which quotes from market makers are used to determine fair value. In instances
29
COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS(Continued)
where sufficient market activity may not exist or is limited, the pricing services or broker-dealers also utilize proprietary valuation models which may consider market transactions in comparable securities and the various relationships between securities in determining fair value and/or characteristics such as benchmark yield curves, option-adjusted spreads, credit spreads, estimated default rates, coupon rates, anticipated timing of principal repayments, underlying collateral, and other unique security features which are then used to calculate the fair values.
Short-term debt securities with a maturity date of 60 days or less are valued at amortized cost, which approximates fair value. Investments in open-end mutual funds are valued at net asset value (NAV).
The policies and procedures approved by the Funds Board of Directors delegate authority to make fair value determinations to the investment manager, subject to the oversight of the Board of Directors. The investment manager has established a valuation committee (Valuation Committee) to administer, implement and oversee the fair valuation process according to the policies and procedures approved annually by the Board of Directors. Among other things, these procedures allow the Fund to utilize independent pricing services, quotations from securities and financial instrument dealers and other market sources to determine fair value.
Securities for which market prices are unavailable, or securities for which the investment manager determines that the bid and/or ask price or a counterparty valuation does not reflect market value, will be valued at fair value, as determined in good faith by the Valuation Committee, pursuant to procedures approved by the Funds Board of Directors. Circumstances in which market prices may be unavailable include, but are not limited to, when trading in a security is suspended, the exchange on which the security is traded is subject to an unscheduled close or disruption or material events occur after the close of the exchange on which the security is principally traded. In these circumstances, the Fund determines fair value in a manner that fairly reflects the market value of the security on the valuation date based on consideration of any information or factors it deems appropriate. These may include, but are not limited to, recent transactions in comparable securities, information relating to the specific security and developments in the markets.
The Funds use of fair value pricing may cause the NAV of Fund shares to differ from the NAV that would be calculated using market quotations. Fair value pricing involves subjective judgments and it is possible that the fair value determined for a security may be materially different than the value that could be realized upon the sale of that security.
Fair value is defined as the price that the Fund would expect to receive upon the sale of an investment or expect to pay to transfer a liability in an orderly transaction with an independent buyer in the principal market or, in the absence of a principal market, the most advantageous market for the investment or liability. The hierarchy of inputs that are used in determining the fair value of the Funds investments is summarized below.
| Level 1quoted prices in active markets for identical investments |
| Level 2other significant observable inputs (including quoted prices for similar investments, interest rates, credit risk, etc.) |
| Level 3significant unobservable inputs (including the Funds own assumptions in determining the fair value of investments) |
30
COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS(Continued)
The inputs or methodology used for valuing investments may or may not be an indication of the risk associated with those investments. Changes in valuation techniques may result in transfers into or out of an assigned level within the disclosure hierarchy.
The following is a summary of the inputs used as of December 31, 2018 in valuing the Funds investments carried at value:
Total | Quoted Prices In Active Markets for Identical Investments (Level 1) |
Other Significant Observable Inputs (Level 2) |
Significant Unobservable Inputs (Level 3) |
|||||||||||||
Common Stock |
$ | 631,222,643 | $ | 631,222,643 | $ | | $ | | ||||||||
Exchange-Traded Funds |
2,009,951 | 2,009,951 | | | ||||||||||||
Preferred Securities$25 Par Value: |
||||||||||||||||
ElectricIntegrated Electric |
2,923,778 | | 2,923,778 | | ||||||||||||
Shopping CentersCommunity Center |
4,722,585 | 3,485,473 | 1,237,112 | | ||||||||||||
Utilities |
12,025,868 | 9,905,243 | 2,120,625 | | ||||||||||||
Other Industries |
172,561,448 | 172,561,448 | | | ||||||||||||
Preferred SecuritiesCapital Securities: |
||||||||||||||||
Food |
16,462,635 | | 11,265,660 | 5,196,975 | ||||||||||||
Other Industries |
436,533,686 | | |
436,533,686 |
|
| ||||||||||
Corporate Bonds |
2,865,455 | | 2,865,455 | | ||||||||||||
Short-Term Investments |
9,685,520 | | 9,685,520 | | ||||||||||||
Purchase Options Contracts |
656,287 | | 656,287 | | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total Investments in Securitiesa |
$ | 1,291,669,856 | $ | 819,184,758 | $ | 467,288,123 | $ | 5,196,975 | b | |||||||
|
|
|
|
|
|
|
|
|||||||||
Forward Foreign Currency Exchange Contracts |
$ | 31,232 | $ | | $ | 31,232 | $ | | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Total Derivative Assetsa |
$ | 31,232 | $ | | $ | 31,232 | $ | | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Forward Foreign Currency Exchange Contracts |
$ | (86,084 | ) | $ | | $ | (86,084 | ) | $ | | ||||||
Written Option Contracts |
(298,835 | ) | | (298,835 | ) | | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total Derivative Liabilitiesa |
$ | (384,919 | ) | $ | | $ | (384,919 | ) | $ | | ||||||
|
|
|
|
|
|
|
|
a | Portfolio holdings are disclosed individually on the Schedule of Investments. |
b | Level 3 investments are valued by a third-party pricing service. The inputs for these securities are not readily available or cannot be reasonably estimated. A change in the significant unobservable inputs could result in a significantly lower or higher value in such Level 3 investments. |
31
COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS(Continued)
The following is a reconciliation of investments for which significant unobservable inputs (Level 3) were used in determining fair value:
Preferred SecuritiesCapital SecuritiesFood |
||||
Balance as of December 31, 2017 |
$ | 5,471,630 | ||
Change in unrealized appreciation (depreciation) |
(274,655 | ) | ||
|
|
|||
Balance as of December 31, 2018 |
$ | 5,196,975 | ||
|
|
The change in unrealized appreciation (depreciation) attributable to securities owned on December 31, 2018 which were valued using significant unobservable inputs (Level 3) amounted to $(274,655).
Security Transactions and Investment Income: Security transactions are recorded on trade date. Realized gains and losses on investments sold are recorded on the basis of identified cost. Interest income, which includes the amortization of premiums and accretion of discounts, is recorded on the accrual basis. Dividend income is recorded on the ex-dividend date, except for certain dividends on foreign securities, which are recorded as soon as the Fund is informed after the ex-dividend date. Distributions from REITs are recorded as ordinary income, net realized capital gain or return of capital based on information reported by the REITs and managements estimates of such amounts based on historical information. These estimates are adjusted when the actual source of distributions is disclosed by the REITs and actual amounts may differ from the estimated amounts.
Options: The Fund may purchase and write exchange-listed and OTC put or call options on securities, stock indices, currencies and other financial instruments for hedging purposes, to enhance portfolio returns and reduce overall volatility.
When the Fund writes (sells) an option, an amount equal to the premium received by the Fund is recorded on the Statement of Assets and Liabilities as a liability. The amount of the liability is subsequently marked-to-market to reflect the current market value of the option written. When an option expires, the Fund realizes a gain on the option to the extent of the premium received. Premiums received from writing options which are exercised or closed are added to or offset against the proceeds or amount paid on the transaction to determine the realized gain or loss. If a put option on a security is exercised, the premium reduces the cost basis of the security purchased by the Fund. If a call option is exercised, the premium is added to the proceeds of the security sold to determine the realized gain or loss. The Fund, as writer of an option, bears the market risk of an unfavorable change in the price of the underlying index, currency or security. Other risks include the possibility of an illiquid options market or the inability of the counterparties to fulfill their obligations under the contracts.
Put and call options purchased are accounted for in the same manner as portfolio securities. Premiums paid for purchasing options which expire are treated as realized losses. Premiums paid for purchasing options which are exercised or closed are added to the amounts paid or offset against the proceeds on the underlying investment transaction to determine the realized gain or loss when the underlying transaction is executed. The risk associated with purchasing an option is that the Fund pays
32
COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS(Continued)
a premium whether or not the option is exercised. Additionally, the Fund bears the risk of loss of the premium and change in market value should the counterparty not perform under the contract.
Foreign Currency Translation: The books and records of the Fund are maintained in U.S. dollars. Investment securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars based upon prevailing exchange rates on the date of valuation. Purchases and sales of investment securities and income and expense items denominated in foreign currencies are translated into U.S. dollars based upon prevailing exchange rates on the respective dates of such transactions. The Fund does not isolate that portion of the results of operations resulting from fluctuations in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss on investments.
Net realized foreign currency transaction gains or losses arise from sales of foreign currencies, (excluding gains and losses on forward foreign currency exchange contracts, which are presented separately, if any) currency gains or losses realized between the trade and settlement dates on securities transactions, and the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Funds books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign currency translation gains and losses arise from changes in the values of assets and liabilities, other than investments in securities, on the date of valuation, resulting from changes in exchange rates. Pursuant to U.S. federal income tax regulations, certain foreign currency gains/losses included in realized and unrealized gains/losses are included in or are a reduction of ordinary income for federal income tax purposes.
Forward Foreign Currency Exchange Contracts: The Fund enters into forward foreign currency exchange contracts to hedge the currency exposure associated with certain of its non-U.S. dollar denominated securities. A forward foreign currency exchange contract is a commitment between two parties to purchase or sell foreign currency at a set price on a future date. The market value of a forward foreign currency exchange contract fluctuates with changes in foreign currency exchange rates. These contracts are marked to market daily and the change in value is recorded by the Fund as unrealized appreciation and/or depreciation on forward foreign currency exchange contracts. Realized gains or losses equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed are included in net realized gain or loss on forward foreign currency exchange contracts. For federal income tax purposes, the Fund has made an election to treat gains and losses from forward foreign currency exchange contracts as capital gains and losses.
Forward foreign currency exchange contracts involve elements of market risk in excess of the amounts reflected on the Statement of Assets and Liabilities. The Fund bears the risk of an unfavorable change in the foreign exchange rate underlying the contract. Risks may also arise upon entering these contracts from the potential inability of the counterparties to meet the terms of their contracts. In connection with these contracts, securities may be identified as collateral in accordance with the terms of the respective contracts.
Dividends and Distributions to Shareholders: Dividends from net investment income and capital gain distributions are determined in accordance with U.S. federal income tax regulations, which may differ from GAAP. Dividends from net investment income, if any, are declared quarterly and paid monthly. Net realized capital gains, unless offset by any available capital loss carryforward, are typically
33
COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS(Continued)
distributed to shareholders at least annually. Dividends and distributions to shareholders are recorded on the ex-dividend date and are automatically reinvested in full and fractional shares of the Fund in accordance with the Funds Reinvestment Plan, unless the shareholder has elected to have them paid in cash.
The Fund has a managed distribution policy in accordance with exemptive relief issued by the U.S. Securities and Exchange Commission (SEC). The Plan gives the Fund greater flexibility to realize long-term capital gains throughout the year and to distribute those gains on a more regular basis to shareholders. Therefore, regular monthly distributions throughout the year may include a portion of estimated realized long-term capital gains, along with net investment income, short-term capital gains and return of capital, which is not taxable. In accordance with the Plan, the Fund is required to adhere to certain conditions in order to distribute long-term capital gains during the year. For the year ended December 31, 2018, the Fund paid distributions from net investment income and net realized gain.
Income Taxes: It is the policy of the Fund to continue to qualify as a regulated investment company (RIC), if such qualification is in the best interest of the shareholders, by complying with the requirements of Subchapter M of the Internal Revenue Code applicable to regulated investment companies, and by distributing substantially all of its taxable earnings to its shareholders. Also, in order to avoid the payment of any federal excise taxes, the Fund will distribute substantially all of its net investment income and net realized gains on a calendar year basis. Accordingly, no provision for federal income or excise tax is necessary. Dividend and interest income from holdings in non-U.S. securities is recorded net of non-U.S. taxes paid. Management has analyzed the Funds tax positions taken on federal and applicable state income tax returns as well as its tax positions in non-U.S. jurisdictions in which it trades for all open tax years and has concluded that as of December 31, 2018, no additional provisions for income tax are required in the Funds financial statements. The Funds tax positions for the tax years for which the applicable statutes of limitations have not expired are subject to examination by the Internal Revenue Service, state departments of revenue and by foreign tax authorities.
Note 2. Investment Management Fees, Administration Fees and Other Transactions with Affiliates
Investment Management Fees: Cohen & Steers Capital Management, Inc. serves as the Funds investment manager pursuant to an investment management agreement (the investment management agreement). Under the terms of the investment management agreement, the investment manager provides the Fund with day-to-day investment decisions and generally manages the Funds investments in accordance with the stated policies of the Fund, subject to the supervision of the Board of Directors.
For the services provided to the Fund, the investment manager receives a fee, accrued daily and paid monthly, at the annual rate of 0.65% of the average daily managed assets of the Fund. Managed assets are equal to the net assets plus the amount of any borrowings, used for leverage, outstanding.
Administration Fees: The Fund has entered into an administration agreement with the investment manager under which the investment manager performs certain administrative functions for the Fund and receives a fee, accrued daily and paid monthly, at the annual rate of 0.06% of the average daily
34
COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS(Continued)
managed assets of the Fund. For the year ended December 31, 2018, the Fund incurred $819,684 in fees under this administration agreement. Additionally, the Fund pays State Street Bank and Trust Company as co-administrator under a fund accounting and administration agreement.
Directors and Officers Fees: Certain directors and officers of the Fund are also directors, officers and/or employees of the investment manager. The Fund does not pay compensation to directors and officers affiliated with the investment manager except for the Chief Compliance Officer, who received compensation from the investment manager, which was reimbursed by the Fund, in the amount of $15,955 for the year ended December 31, 2018.
Note 3. Purchases and Sales of Securities
Purchases and sales of securities, excluding short-term investments, for the year ended December 31, 2018, totaled $532,459,558 and $553,489,037, respectively.
Note 4. Derivative Investments
The following tables present the value of derivatives held at December 31, 2018 and the effect of derivatives held during the year ended December 31, 2018, along with the respective location in the financial statements.
Statement of Assets and Liabilities
Assets |
Liabilities |
|||||||||||
Derivatives |
Location |
Fair Value | Location |
Fair Value | ||||||||
Foreign Exchange Risk: |
||||||||||||
Forward Foreign Currency Exchange Contractsa |
Unrealized appreciation | $ | 31,232 | Unrealized depreciation | $ | 86,084 | ||||||
Purchased Option ContractsOver the Counterb |
Investments in securities | 656,287 | | | ||||||||
Written Option ContractsOver the Counter |
|
| Written option contracts | 298,835 |
a | Forward foreign currency exchange contracts executed with Brown Brothers Harriman are not subject to a master netting arrangement or another similar agreement. |
b | Includes purchased options at value as reported in the Schedule of Investments. |
35
COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS(Continued)
Statement of Operations
Derivatives |
Location |
Realized Gain (Loss) |
Change in Unrealized Appreciation (Depreciation) |
|||||||
Foreign Exchange Risk: |
||||||||||
Forward Foreign Currency Exchange Contracts |
Net Realized and Unrealized Gain (Loss) | $ | 1,171,500 | $ | (43,001 | ) | ||||
Purchased Option Contracts |
Net Realized and Unrealized Gain (Loss) | 42,669 | (380,284 | ) | ||||||
Written Option ContractsOver-the-Counter |
Net Realized and Unrealized Gain (Loss) | 2,861 | 237,073 |
a | Purchased options are included in net realized gain (loss) and change in unrealized appreciation (depreciation) on investments in securities. |
At December 31, 2018, the Funds derivative assets and liabilities (by type), which are subject to a master netting agreement, are as follows:
Derivative Financial Instruments |
Assets | Liabilities | ||||||
Foreign Exchange Risk: |
||||||||
Purchased Option Contracts |
$ | 656,287 | $ | | ||||
Written Option Contracts |
| 298,835 |
The following tables present the Funds derivative assets and liabilities by counterparty net of amounts available for offset under a master netting agreement and net of the related collateral pledged and/or received by the Fund, if any, as of December 31, 2018:
Counterparty |
Gross Amount of Assets Presented in the Statement of Assets and Liabilities |
Financial Instruments and Derivatives Available for Offset |
Collateral Receiveda |
Net Amount of Derivative Assetsb |
||||||||||||
BNP Paribas SA |
$ | 656,287 | $ | (298,835 | ) | $ | (357,452 | ) | $ | | ||||||
Counterparty |
Gross Amount of Liabilities Presented in the Statement of Assets and Liabilities |
Financial Instruments and Derivatives Available for Offset |
Collateral Pledgeda |
Net Amount of Derivative Liabilitiesb |
||||||||||||
BNP Paribas SA |
$ | 298,835 | $ | (298,835 | ) | $ | | $ | |
a | In some instances, the actual collateral pledged and/or received may be more than amount shown. |
b | Net amount represents the net receivable/payable due from/to the counterparty in the event of default. |
36
COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS(Continued)
The following summarizes the volume of the Funds purchased and written option contracts and forward foreign currency exchange contracts activity for the year ended December 31, 2018:
Purchased Option Contractsa,b |
Written Option Contractsa,b |
Forward Foreign Currency Exchange Contracts |
||||||||||
Average Notional Amount |
$ | 49,860,587 | $ | 48,071,249 | $ | 20,022,883 |
a | Notional amount is calculated using the number of contracts multiplied by notional contract size multiplied by the underlying price. |
b | Average for the period November 20, 2018 through December 31, 2018, which represents the period the Fund had option contracts outstanding. |
Note 5. Income Tax Information
The tax character of dividends and distributions paid was as follows:
For the Year Ended December 31, |
||||||||
2018 | 2017 | |||||||
Ordinary income |
$ | 43,805,331 | $ | 43,787,460 | ||||
Long-term capital gain |
26,973,972 | 26,991,844 | ||||||
|
|
|
|
|||||
Total dividends and distributions |
$ | 70,779,303 | $ | 70,779,304 | ||||
|
|
|
|
As of December 31, 2018, the tax-basis components of accumulated earnings, the federal tax cost and net unrealized appreciation (depreciation) in value of investments held were as follows:
Cost of investments in securities for federal income tax purposes |
$ | 1,176,603,363 | ||
|
|
|||
Gross unrealized appreciation on investments |
$ | 152,787,905 | ||
Gross unrealized depreciation on investments |
(37,464,880 | ) | ||
|
|
|||
Net unrealized appreciation (depreciation) on investments |
$ | 115,323,025 | ||
|
|
|||
Undistributed long-term capital gains |
$ | 27,729,684 | ||
|
|
As of December 31, 2018, the Fund had temporary book/tax differences primarily attributable to wash sales on portfolio securities, certain REIT dividends and certain fixed income securities and permanent book/tax differences primarily attributable to certain fixed income securities. To reflect reclassifications arising from the permanent differences, paid-in capital was charged $4,839 and total distributable earnings/(accumulated loss) was credited $4,839. Net assets were not affected by this reclassification.
37
COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS(Continued)
Note 6. Capital Stock
The Fund is authorized to issue 100 million shares of common stock at a par value of $0.001 per share.
During the years ended December 31, 2018 and December 31, 2017, the Fund did not issue shares of common stock for the reinvestment of dividends.
The Board of Directors approved the continuation of the delegation of its authority to management to effect repurchases, pursuant to managements discretion and subject to market conditions and investment considerations, of up to 10% of the Funds common shares outstanding (Share Repurchase Program) from January 1, 2019, through the fiscal year ended December 31, 2019.
During the years ended December 31, 2018 and December 31, 2017, the Fund did not effect any repurchases.
Note 7. Borrowings
The Fund has entered into an amended and restated credit agreement (the credit agreement) with BNP Paribas Prime Brokerage International, Ltd. (BNPP) in which the Fund pays a monthly financing charge based on a combination of LIBOR-based variable and fixed rates. The commitment amount of the credit agreement is $350,000,000. On April 7, 2017, the Fund entered into an amended and restated credit agreement with BNPP, which reduced the fee on any unused portion of the credit agreement from 0.55% per annum to 0.45% per annum. BNPP may not change certain terms of the credit agreement except upon 360 days notice. Also, if the Fund violates certain conditions, the credit agreement may be terminated. The Fund is required to pledge portfolio securities as collateral in an amount up to two times the loan balance outstanding (or more depending on the terms of the credit agreement) and has granted a security interest in the securities pledged to, and in favor of, BNPP as security for the loan balance outstanding. If the Fund fails to meet certain requirements, or maintain other financial covenants required under the credit agreement, the Fund may be required to repay immediately, in part or in full, the loan balance outstanding under the credit agreement, necessitating the sale of portfolio securities at potentially inopportune times. The Fund may, upon prior written notice to BNPP, prepay all or a portion of the fixed and variable rate portions of the credit facility. The Fund may have to pay a breakage fee with respect to a prepayment of all or a portion of the fixed rate financing under the credit facility. The credit agreement also permits, subject to certain conditions, BNPP to rehypothecate portfolio securities pledged by the Fund up to the amount of the loan balance outstanding and the Fund will receive a portion of the fees earned by BNPP in connection with the rehypothecated securities. The Fund continues to receive dividends and interest on rehypothecated securities. The Fund also has the right under the credit agreement to recall the rehypothecated securities from BNPP on demand. If BNPP fails to deliver the recalled security in a timely manner, the Fund will be compensated by BNPP for any fees or losses related to the failed delivery or, in the event a recalled security will not be returned by BNPP, the Fund, upon notice to BNPP, may reduce the loan balance outstanding by the amount of the recalled security failed to be returned.
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COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS(Continued)
On February 24, 2015, the Fund amended its credit agreement in order to extend the term length of the 5-year, 6-year and 7-year fixed rate tranches, originally expiring in 2017, 2018 and 2019, by three years, now expiring in 2020, 2021 and 2022, respectively. The new rates will increase and become effective as the extended fixed-rate tranches become effective. In connection with the extension, the Fund paid an arrangement fee based on the aggregate fixed rate financing amount.
As of December 31, 2018, the Fund had outstanding borrowings of $350,000,000 at a weighted average rate of 3.0%. During the year ended December 31, 2018, the Fund borrowed an average daily balance of $350,000,000 at a weighted average borrowing cost of 2.5%.
Note 8. Other Risks
Common Stock Risk: While common stocks have historically generated higher average returns than fixed income securities over the long-term, common stock has also experienced significantly more volatility in those returns, although under certain market conditions, fixed-income investments may have comparable or greater price volatility. An adverse event, such as an unfavorable earnings report, may depress the value of common stock held by the Fund. Also, the price of common stock is sensitive to general movements in the stock market. A drop in the stock market may depress the price of common stock held by the Fund.
Real Estate Market Risk: Since the Fund concentrates its assets in companies engaged in the real estate industry, an investment in the Fund will be closely linked to the performance of the real estate markets. Risks of investing in real estate securities include falling property values due to increasing vacancies, declining rents resulting from economic, legal, tax, political or technological developments, lack of liquidity, limited diversification, and sensitivity to certain economic factors such as interest-rate changes and market recessions. Real estate company prices also may drop because of the failure of borrowers to pay their loans and poor management, and residential developers, in particular, could be negatively impacted by falling home prices, slower mortgage origination and rising construction costs. The risks of investing in REITs are similar to those associated with direct investments in real estate securities.
REIT Risk: In addition to the risks of securities linked to the real estate industry, REITs are subject to certain other risks related to their structure and focus. REITs are dependent upon management skills and generally may not be diversified. REITs are also subject to heavy cash flow dependency, defaults by borrowers and self-liquidation. In addition, REITs could possibly fail to (i) qualify for pass-through of income under applicable tax law, or (ii) maintain their exemptions from registration under the 1940 Act. The above factors may also adversely affect a borrowers or a lessees ability to meet its obligations to the REIT. In the event of a default by a borrower or lessee, the REIT may experience delays in enforcing its rights as a mortgagee or lessor and may incur substantial costs associated with protecting its investments.
Small- and Medium-Sized Companies Risk: Real estate companies in the industry tend to be small- to medium-sized companies in relation to the equity markets as a whole. There may be less trading in a smaller companys stock, which means that buy and sell transactions in that stock could have a larger impact on the stocks price than is the case with larger company stocks. Smaller companies also may have fewer lines of business so that changes in any one line of business may have a greater impact on a smaller companys stock price than is the case for a larger company. Further, smaller company stocks may perform differently in different cycles than larger company stocks. Accordingly, real estate company shares can, and at times will, perform differently than large company stocks.
39
COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS(Continued)
Preferred Securities Risk: Preferred securities are subject to credit risk, which is the risk that a security will decline in price, or the issuer of the security will fail to make dividend, interest or principal payments when due, because the issuer experiences a decline in its financial status. Preferred securities are also subject to interest rate risk and may decline in value because of changes in market interest rates. The Fund may be subject to a greater risk of rising interest rates than would normally be the case in an environment of low interest rates and the effect of potential government fiscal policy initiatives and resulting market reaction to those initiatives. In addition, an issuer may be permitted to defer or omit distributions. Preferred securities are also generally subordinated to bonds and other debt instruments in a companys capital structure. During periods of declining interest rates, an issuer may be able to exercise an option to redeem (call) its issue at par earlier than scheduled, and the Fund may be forced to reinvest in lower yielding securities. Certain preferred securities may be substantially less liquid than many other securities, such as common stocks. Generally, preferred security holders have no voting rights with respect to the issuing company unless certain events occur. Certain preferred securities may give the issuers special redemption rights allowing the securities to be redeemed prior to a specified date if certain events occur, such as changes to tax or securities laws.
Contingent Capital Securities Risk: Contingent capital securities (sometimes referred to as CoCos) are debt or preferred securities with loss absorption characteristics built into the terms of the security, for example, a mandatory conversion into common stock of the issuer under certain circumstances, such as the issuers capital ratio falling below a certain level. Since the common stock of the issuer may not pay a dividend, investors in these instruments could experience a reduced income rate, potentially to zero, and conversion would deepen the subordination of the investor, hence worsening the investors standing in a bankruptcy. Some CoCos provide for a reduction in the value or principal amount of the security under such circumstances. In addition, most CoCos are considered to be high yield or junk securities and are therefore subject to the risks of investing in below investment-grade securities.
Credit and Below-Investment-Grade Securities Risk: Preferred securities may be rated below investment grade or may be unrated. Below-investment-grade securities, or equivalent unrated securities, which are commonly known as high-yield bonds or junk bonds, generally involve greater volatility of price and risk of loss of income and principal, and may be more susceptible to real or perceived adverse economic and competitive industry conditions than higher grade securities. It is reasonable to expect that any adverse economic conditions could disrupt the market for lower-rated securities, have an adverse impact on the value of those securities and adversely affect the ability of the issuers of those securities to repay principal and interest on those securities.
Liquidity Risk: Liquidity risk is the risk that particular investments of the Fund may become difficult to sell or purchase. The market for certain investments may become less liquid or illiquid due to adverse changes in the conditions of a particular issuer or due to adverse market or economic conditions. In addition, dealer inventories of certain securities, which provide an indication of the ability of dealers to engage in market making, are at, or near, historic lows in relation to market size, which has the potential to increase price volatility in the fixed income markets in which the Fund invests. Federal banking regulations may also cause certain dealers to reduce their inventories of certain securities, which may further decrease the Funds ability to buy or sell such securities. As a result of this decreased liquidity, the Fund may have to accept a lower price to sell a security, sell other securities to raise cash,
40
COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS(Continued)
or give up an investment opportunity, any of which could have a negative effect on performance. Further, transactions in less liquid or illiquid securities may entail transaction costs that are higher than those for transactions in liquid securities.
Foreign (Non-U.S.) Securities Risk: Risks of investing in foreign securities, include currency risks, future political and economic developments and possible imposition of foreign withholding taxes on income or proceeds payable on the securities. In addition, there may be less publicly available information about a foreign issuer than about a domestic issuer, and foreign issuers may not be subject to the same accounting, auditing and financial recordkeeping standards and requirements as domestic issuers.
Investing in securities of companies in emerging markets may entail special risks relating to potential economic, political or social instability and the risks of expropriation, nationalization, confiscation, trade sanctions or embargoes or the imposition of restrictions on foreign investment, the lack of hedging instruments, and repatriation of capital invested. The securities and real estate markets of some emerging market countries have in the past experienced substantial market disruptions and may do so in the future.
Foreign Currency Risk: Although the Fund will report its NAV and pay dividends in U.S. dollars, foreign securities often are purchased with and make any dividend and interest payments in foreign currencies. Therefore, the Funds investments in foreign securities will be subject to foreign currency risk, which means that the Funds NAV could decline solely as a result of changes in the exchange rates between foreign currencies and the U.S. dollar. Certain foreign countries may impose restrictions on the ability of issuers of foreign securities to make payment of principal, dividends and interest to investors located outside the country, due to blockage of foreign currency exchanges or otherwise. The Fund may, but is not required to, engage in various investments that are designed to hedge the Funds foreign currency risks, and such investments are subject to the risks described under Derivatives and Hedging Transactions Risk below.
Leverage Risk: The use of leverage is a speculative technique and there are special risks and costs associated with leverage. The NAV of the Funds shares may be reduced by the issuance and ongoing costs of leverage. So long as the Fund is able to invest in securities that produce an investment yield that is greater than the total cost of leverage, the leverage strategy will produce higher current net investment income for the shareholders. On the other hand, to the extent that the total cost of leverage exceeds the incremental income gained from employing such leverage, shareholders would realize lower net investment income. In addition to the impact on net income, the use of leverage will have an effect of magnifying capital appreciation or depreciation for shareholders. Specifically, in an up market, leverage will typically generate greater capital appreciation than if the Fund were not employing leverage. Conversely, in down markets, the use of leverage will generally result in greater capital depreciation than if the Fund had been unlevered. To the extent that the Fund is required or elects to reduce its leverage, the Fund may need to liquidate investments, including under adverse economic conditions which may result in capital losses potentially reducing returns to shareholders. The use of leverage also results in the investment management fees payable to the investment manager being higher than if the Fund did not use leverage and can increase operating costs, which may reduce total return. There can be no assurance that a leveraging strategy will be successful during any period in which it is employed.
41
COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS(Continued)
Derivatives and Hedging Transactions Risk: The Funds use of derivatives, including for the purpose of hedging interest rate or foreign currency risks, presents risks different from, and possibly greater than, the risks associated with investing directly in traditional securities. Among the risks presented are counterparty risk, financial leverage risk, liquidity risk, OTC trading risk and tracking risk. The use of derivatives can lead to losses because of adverse movements in the price or value of the underlying asset, index or rate, which may be magnified by certain features of the derivatives.
Options Risk: Gains on options transactions depend on the investment managers ability to predict correctly the direction of stock prices, indexes, interest rates, and other economic factors, and unanticipated changes may cause poorer overall performance for the Fund than if it had not engaged in such transactions. A rise in the value of the security or index underlying a call option written by the Fund exposes the Fund to possible loss or loss of opportunity to realize appreciation in the value of any portfolio securities underlying or otherwise related to the call option. By writing a put option, the Fund assumes the risk of a decline in the underlying security or index. There can be no assurance that a liquid market will exist when the Fund seeks to close out an option position, and for certain options not traded on an exchange no market usually exists. Trading could be interrupted, for example, because of supply and demand imbalances arising from a lack of either buyers or sellers, or an options exchange could suspend trading after the price has risen or fallen more than the maximum specified by the exchange.
Although the Fund may be able to offset to some extent any adverse effects of being unable to liquidate an option position, that Fund may experience losses in some cases as a result of such inability, may not be able to close its position and, in such an event would be unable to control its losses.
Geopolitical Risk: Occurrence of global events similar to those in recent years, such as war, terrorist attacks, natural or environmental disasters, country instability, infectious disease epidemics, market instability, debt crises and downgrades, embargoes, tariffs, sanctions and other trade barriers and other governmental trade or market control programs, the potential exit of a country from its respective union and related geopolitical events, may result in market volatility and may have long-lasting impacts on both the U.S. and global financial markets. Additionally, those events, as well as other changes in foreign and domestic political and economic conditions, could adversely affect individual issuers or related groups of issuers, securities markets, interest rates, secondary trading, credit ratings, inflation, investor sentiment and other factors affecting the value of the Funds investments. The decision of the United Kingdom (UK) to exit from the European Union following the June 2016 vote on the matter (referred to as Brexit) may cause uncertainty and thus adversely impact financial results of the Fund and the global financial markets. Growing tensions, including trade disputes, between the United States and other nations, or among foreign powers, and possible diplomatic, trade or other sanctions could adversely impact the global economy, financial markets and the Fund. The strengthening or weakening of the U.S. dollar relative to other currencies may, among other things, adversely affect the Funds investments denominated in non-U.S. dollar currencies. It is difficult to predict when similar events affecting the U.S. or global financial markets may occur, the effects that such events may have, and the duration of those effects.
Regulatory Risk: The U.S. government has proposed and adopted multiple regulations that could have a long-lasting impact on the Fund and on the mutual fund industry in general. The SECs final rules and amendments that modernize reporting and disclosure, along with other potential upcoming regulations, could, among other things, restrict the Funds ability to engage in transactions and/or
42
COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS(Continued)
increase overall expenses of the Fund. In addition, the SEC, Congress, various exchanges and regulatory and self-regulatory authorities, both domestic and foreign, have undertaken reviews of the use of derivatives by registered investment companies, which could affect the nature and extent of derivatives used by the Fund. While the full extent of these regulations is still unclear, these regulations and actions may adversely affect both the Fund and the instruments in which the Fund invests as well as its ability to execute its investment strategy. Similarly, regulatory developments in other countries may have an unpredictable and adverse impact on the Fund.
LIBOR Risk: Many financial instruments use or may use a floating rate based on the LIBOR which is the offered rate for short-term Eurodollar deposits between major international banks. On July 27, 2017, the head of the UKs Financial Conduct Authority announced a desire to phase out the use of LIBOR by the end of 2021. There remains uncertainty regarding the future utilization of LIBOR and the nature of any replacement rate. As such, the potential effect of a transition away from LIBOR on the Fund or the financial instruments in which the Fund invests cannot yet be determined. When LIBOR is discontinued, the LIBOR replacement rate may be lower than market expectations, which could have an adverse impact on the value of preferred and debt-securities with floating or fixed-to-floating rate coupons.
Note 9. Other
In the normal course of business, the Fund enters into contracts that provide general indemnifications. The Funds maximum exposure under these arrangements is dependent on claims that may be made against the Fund in the future and, therefore, cannot be estimated; however, based on experience, the risk of material loss from such claims is considered remote.
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COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS(Continued)
Note 10. New Accounting Guidance
In March 2017, the FASB issued ASU No. 2017-08, ReceivablesNonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities. The amendments in the ASU shorten the amortization period for certain callable debt securities, held at a premium, to be amortized to the earliest call date. The ASU is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2018. The adoption will not have a material effect on the timing of income recognized by the Fund and will have no effect on the Funds net assets or overall results of operations.
In August 2018, the Financial Accounting Standards Board (FASB) issued a new Accounting Standards Update (ASU) No. 2018-13, Fair Value Measurement (Topic 820), Disclosure Framework- Changes to the Disclosure Requirements for Fair Value Measurement. The amendments to ASU 2018-13 are intended to improve the effectiveness of disclosures in the notes to financial statements through modifications to disclosure requirements on fair value measurements. ASU 2018-13 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019, with early adoption permitted. The Fund has adopted the amended disclosures permissible under the update. The adoption had no effect on the Funds net assets or results of operations.
In August 2018, the SEC adopted amendments to Regulation S-X which are intended to facilitate the disclosure of information to investors and simplify compliance without significantly altering the information provided to investors. The amendments include eliminating the requirement to: separately state book basis components of net assets on the Statement of Assets & Liabilities; separately state the sources of distributions paid (except tax return of capital distributions must still be separately disclosed) on the Statement of Changes in Net Assets; and state the book basis amount of undistributed net investment income on the Statement of Changes in Net Assets. Fund adopted the amendments within the financial statements for the year ended December 31, 2018, which had no effect on the Funds net assets or results of operations.
Note 11. Subsequent Events
On January 24, 2019, the Funds Board of Directors approved a change to the name of the Fund from Cohen & Steers REIT and Preferred Income Fund, Inc. to Cohen & Steers REIT and Preferred and Income Fund, Inc., effective January 25, 2019.
Management has evaluated events and transactions occurring after December 31, 2018 through the date that the financial statements were issued, and has determined that no additional disclosure in the financial statements is required.
44
COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of
Cohen & Steers REIT and Preferred and Income Fund, Inc.
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Cohen & Steers REIT and Preferred Income Fund, Inc. (the Fund) as of December 31, 2018, the related statements of operations and cash flows for the year ended December 31, 2018, the statement of changes in net assets for each of the two years in the period ended December 31, 2018, including the related notes, and the financial highlights for each of the five years in the period ended December 31, 2018 (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of December 31, 2018, the results of its operations and its cash flows for the year then ended, the changes in its net assets for each of the two years in the period ended December 31, 2018 and the financial highlights for each of the five years in the period ended December 31, 2018 in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Funds management. Our responsibility is to express an opinion on the Funds financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of December 31, 2018 by correspondence with the custodian, transfer agent and brokers. We believe that our audits provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
New York, New York
February 26, 2019
We have served as the auditor of one or more investment companies in the Cohen & Steers family of mutual funds since 1991.
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COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
AVERAGE ANNUAL TOTAL RETURNS
(Periods ended December 31, 2018) (Unaudited)
Based on Net Asset Value | Based on Market Value | |||||||||||||||||||||||||||||||||
One Year | Five Years | Ten Years | Since Inception (6/27/03) |
One Year | Five Years | Ten Years | Since Inception (6/27/03) |
|||||||||||||||||||||||||||
5.20 | % | 10.28 | % | 17.95 | % | 8.99 | % | 9.47 | % | 10.60 | % | 20.33 | % | 7.86 | % |
The performance data quoted represent past performance. Past performance is no guarantee of future results. The investment return will vary and the principal value of an investment will fluctuate and shares, if sold, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. Performance results reflect the effect of leverage from utilization of borrowings under a credit agreement and/or from the issuance of preferred shares. Current total returns of the Fund can be obtained by visiting our website at cohenandsteers.com. The Funds returns assume the reinvestment of all dividends and distributions at prices obtained under the Funds dividend reinvestment plan.
TAX INFORMATION2018 (Unaudited)
For the calendar year ended December 31, 2018, for individual taxpayers, the Fund designates $26,503,069 as qualified dividend income eligible for reduced tax rates, long-term capital gain distributions of $26,973,972 taxable at the maximum 20% rate and $12,531,701 as qualified business income eligible for the 20% deduction. In addition, for corporate taxpayers, 28.10% of the ordinary dividends paid qualified for the dividends received deduction (DRD).
REINVESTMENT PLAN
The Fund has a dividend reinvestment plan commonly referred to as an opt-out plan (the Plan). Each common shareholder who participates in the Plan will have all distributions of dividends and capital gains (Dividends) automatically reinvested in additional common shares by Computershare as agent (the Plan Agent). Shareholders who elect not to participate in the Plan will receive all Dividends in cash paid by check mailed directly to the shareholder of record (or if the shares are held in street or other nominee name, then to the nominee) by the Plan Agent, as dividend disbursing agent. Shareholders whose common shares are held in the name of a broker or nominee should contact the broker or nominee to determine whether and how they may participate in the Plan.
The Plan Agent serves as agent for the shareholders in administering the Plan. After the Fund declares a Dividend, the Plan Agent will, as agent for the shareholders, either: (i) receive the cash payment and use it to buy common shares in the open market, on the NYSE or elsewhere, for the participants accounts or (ii) distribute newly issued common shares of the Fund on behalf of the participants.
The Plan Agent will receive cash from the Fund with which to buy common shares in the open market if, on the Dividend payment date, the NAV per share exceeds the market price per share plus estimated brokerage commissions on that date. The Plan Agent will receive the Dividend in newly issued common shares of the Fund if, on the Dividend payment date, the market price per share plus estimated brokerage commissions equals or exceeds the NAV per share of the Fund on that date. The number of shares to be issued will be computed at a per share rate equal to the greater of (i) the NAV or (ii) 95% of the closing market price per share on the payment date.
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COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
If the market price per share is less than the NAV on a Dividend payment date, the Plan Agent will have until the last business day before the next ex-dividend date for the common stock, but in no event more than 30 days after the Dividend payment date (as the case may be, the Purchase Period), to invest the Dividend amount in shares acquired in open market purchases. If at the close of business on any day during the Purchase Period on which NAV is calculated the NAV equals or is less than the market price per share plus estimated brokerage commissions, the Plan Agent will cease making open market purchases and the uninvested portion of such Dividends shall be filled through the issuance of new shares of common stock from the Fund at the price set forth in the immediately preceding paragraph.
Participants in the Plan may withdraw from the Plan upon notice to the Plan Agent. Such withdrawal will be effective immediately if received not less than ten days prior to a Dividend record date; otherwise, it will be effective for all subsequent Dividends. If any participant elects to have the Plan Agent sell all or part of his or her shares and remit the proceeds, the Plan Agent is authorized to deduct a $15.00 fee plus $0.10 per share brokerage commissions.
The Plan Agents fees for the handling of reinvestment of Dividends will be paid by the Fund. However, each participant will pay a pro rata share of brokerage commissions incurred with respect to the Plan Agents open market purchases in connection with the reinvestment of Dividends. The automatic reinvestment of Dividends will not relieve participants of any income tax that may be payable or required to be withheld on such Dividends.
The Fund reserves the right to amend or terminate the Plan. All correspondence concerning the Plan should be directed to the Plan Agent at 800-432-8224.
OTHER INFORMATION
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available (i) without charge, upon request, by calling 800-330-7348, (ii) on our website at cohenandsteers.com or (iii) on the SECs website at http://www.sec.gov. In addition, the Funds proxy voting record for the most recent 12-month period ended June 30 is available by August 31 of each year (i) without charge, upon request, by calling 800-330-7348 or (ii) on the SECs website at http://www.sec.gov.
The Fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Funds Forms N-Q are available (i) without charge, upon request, by calling 800-330-7348 or (ii) on the SECs website at http://www.sec.gov. In addition, the Forms N-Q may be reviewed and copied at the SECs Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 800-SEC-0330.
Please note that distributions paid by the Fund to shareholders are subject to recharacterization for tax purposes and are taxable up to the amount of the Funds investment company taxable income and net realized gains. Distributions in excess of the Funds investment company taxable income and net realized gains are a return of capital distributed from the Funds assets. To the extent this occurs, the Funds shareholders of record will be notified of the estimated amount of capital returned to shareholders for each such distribution and this information will also be available at cohenandsteers.com. The final tax treatment of all distributions is reported to shareholders on their 1099-DIV forms, which are mailed after the close of each calendar year. Distributions of capital
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COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
decrease the Funds total assets and, therefore, could have the effect of increasing the Funds expense ratio. In addition, in order to make these distributions, the Fund may have to sell portfolio securities at a less than opportune time.
Notice is hereby given in accordance with Rule 23c-1 under the 1940 Act that the Fund may purchase, from time to time, shares of its common stock in the open market.
Benchmark Change
On December 4, 2018, the Funds Board of Directors approved a change to the Funds benchmark from the FTSE Nareit Equity REITs Index to the FTSE Nareit All Equity REITs Index, effective after the close of business on March 31, 2019.
Change in Board of Directors
Frank K. Ross retired from the Board of Directors on December 31, 2018 pursuant to the Funds mandatory retirement policy.
Qualified REIT Dividends Paid by the Fund to Non-Corporate Shareholders
Starting in calendar year 2018, non-corporate taxpayers are permitted to deduct from their taxable income a portion of any amounts received from a REIT that are qualified REIT dividends. As of December 31, 2018, it was unclear if this deduction was available with respect to such amounts paid by a REIT to the Fund and distributed by the Fund to its shareholders. However, on January 18, 2019, the Internal Revenue Service issued proposed regulations that would permit funds to pay qualified REIT dividends to their shareholders subject to certain holding period requirements. The regulation is effective retroactively beginning with calendar year 2018.
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COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
MANAGEMENT OF THE FUND
The business and affairs of the Fund are managed under the direction of the Board of Directors. The Board of Directors approves all significant agreements between the Fund and persons or companies furnishing services to it, including the Funds agreements with its investment advisor, administrator, co-administrator, custodian and transfer agent. The management of the Funds day-to-day operations is delegated to its officers, the investment advisor, administrator and co-administrator, subject always to the investment objective and policies of the Fund and to the general supervision of the Board of Directors.
The Board of Directors and officers of the Fund and their principal occupations during at least the past five years are set forth below.
Name, Address and |
Position(s) Held |
Term of |
Principal Occupation |
Number of |
Length | |||||||
Interested Directors4 | ||||||||||||
Robert H. Steers 1953 |
Director, Chairman | Until Next Election of Directors | Chief Executive Officer of Cohen & Steers Capital Management, Inc. (CSCM or the Advisor) and its parent, Cohen & Steers, Inc. (CNS) since 2014. Prior to that, Co-Chairman and Co-Chief Executive Officer of the Advisor since 2003 and CNS since 2004. Prior to that, Chairman of the Advisor; Vice President of Cohen & Steers Securities, LLC. |
20 | Since 1991 | |||||||
Joseph M. Harvey 1963 |
Director | Until Next Election of Directors | President and Chief Investment Officer of the Advisor (since 2003) and President of CNS (since 2004). Prior to that, Senior Vice President and Director of Investment Research of CSCM. |
20 | Since 2014 |
(table continued on next page)
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COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
(table continued from previous page)
Name, Address and |
Position(s) Held |
Term of |
Principal Occupation |
Number of |
Length | |||||||
Disinterested Directors | ||||||||||||
Michael G. Clark 1965 |
Director | Until Next Election of Directors | From 2006 to 2011, President and Chief Executive Officer of DWS Funds and Managing Director of Deutsche Asset Management. | 20 | Since 2011 | |||||||
George Grossman 1953 |
Director | Until Next Election of Directors | Attorney-at-law. | 20 | Since 1993 | |||||||
Dean A. Junkans 1959 |
Director | Until Next Election of Directors | C.F.A.; Advisor to SigFig since July, 2018: Adjunct Professor and Executive -In -Residence, Bethel University since 2015; Chief Investment Officer at Wells Fargo Private Bank from 2004 to 2014 and Chief Investment Officer of the Wealth, Brokerage and Retirement group at Wells Fargo & Company from 2011 to 2014; Former member and Chair, Claritas Advisory Committee at the CFA Institute from 2013 to 2015; Board Member and Investment Committee member, Bethel University Foundation since 2010; formerly Corporate Executive Board Member of the National Chief Investment Officers Circle, 2010 to 2015; formerly, Member of the Board of Governors of the University of Wisconsin Foundation, River Falls, 1996 to 2004; U.S. Army Veteran, Gulf War. |
20 | Since 2015 |
(table continued on next page)
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COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
(table continued from previous page)
Name, Address and |
Position(s) Held |
Term of |
Principal Occupation |
Number of |
Length | |||||
Gerald J. Maginnis 1955 |
Director | Until Next Election of Directors | Philadelphia Office Managing Partner, KPMG LLP from 2006 to 2015; Partner in Charge, KPMG Pennsylvania Audit Practice from 2002 to 2008; President, Pennsylvania Institute of Certified Public Accountants (PICPA) from 2014 to 2015; member, PICPA Board of Directors from 2012 to 2016; member, Council of the American Institute of Certified Public Accountants (AICPA) from 2013 to 2017; member, Board of Trustees of AICPA Foundation since 2015. | 20 | Since 2015 | |||||
Jane F. Magpiong 1960 |
Director | Until Next Election of Directors | President, Untap Potential since 2013; Senior Managing Director, TIAA-CREF, from 2011 to 2013; National Head of Wealth Management, TIAA-CREF, from 2008 to 2011; and prior to that, President, Bank of America Private Bank from 2005 to 2008. | 20 | Since 2015 |
(table continued on next page)
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COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
(table continued from previous page)
Name, Address and |
Position(s) Held |
Term of |
Principal Occupation |
Number of |
Length | |||||
Daphne L. Richards 1966 |
Director | Until Next Election of Directors | Independent Director of Cartica Management, LLC since 2015; Member of the Investment Committee of the Berkshire Taconic Community Foundation since 2015; Member of the Advisory Board of Northeast Dutchess Fund since 2016; President and CIO of Ledge Harbor Management since 2016; Formerly, worked at Bessemer Trust Company from 1999 to 2014; Prior thereto, Ms. Richards held investment positions at Frank Russell Company from 1996 to 1999, Union Bank of Switzerland from 1993 to 1996; Credit Suisse from 1990 to 1993; and Hambros International Venture Capital Fund from 1988 to 1989. | 20 | Since 2017 |
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COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
(table continued from previous page)
Name, Address and |
Position(s) Held |
Term of |
Principal Occupation |
Number of |
Length | |||||
Frank K. Ross 1943 |
Director |
5 |
Visiting Professor of Accounting and Director of the Center for Accounting Education at Howard University School of Business since 2004; Board member and member of Audit Committee (Chairman from 2007 to 2012) and Human Resources and Compensation Committee Member, Pepco Holdings, Inc. (electric utility) from 2004 to 2014; Formerly, Mid-Atlantic Area Managing Partner for Assurance Services at KPMG LLP and Managing Partner of its Washington, DC offices from 1995 to 2003. | 20 | Since 2004 | |||||
C. Edward Ward, Jr. 1946 |
Director | Until Next Election of Directors | Member of The Board of Trustees of Manhattan College, Riverdale, New York from 2004 to 2014. Formerly, Director of closed-end fund management for the New York Stock Exchange (the NYSE) where he worked from 1979 to 2004. | 20 | Since 2004 |
1 | The address for each director is 280 Park Avenue, New York, NY 10017. |
2 | On March 12, 2008, the Board of Directors adopted a mandatory retirement policy stating a Director must retire from the Board on December 31st of the year in which he or she turns 75 years of age. |
3 | The length of time served represents the year in which the Director was first elected or appointed to any fund in the Cohen & Steers fund complex. |
4 | Interested person, as defined in the 1940 Act, of the Fund because of affiliation with CSCM (Interested Directors). |
5 | Frank K. Ross retired from the Board of Directors on December 31, 2018 pursuant to the Funds mandatory retirement policy. |
53
COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
The officers of the Fund (other than Messrs. Steers and Harvey, whose biographies are provided above), their address, their year of birth and their principal occupations for at least the past five years are set forth below.
Name, Address and Year of Birth1 |
Position(s) Held With Fund |
Principal Occupation During At Least the Past 5 Years |
Length of
Time | |||
Adam M. Derechin 1964 |
President and Chief Executive Officer | Chief Operating Officer of CSCM since 2003 and CNS since 2004. | Since 2005 | |||
Thomas N. Bohjalian 1965 |
Vice President | Executive Vice President of CSCM since 2012. Prior to that, Senior Vice President of the CSCM since 2006. | Since 2006 | |||
Yigal D. Jhirad 1964 |
Vice President | Senior Vice President of CSCM since 2007. | Since 2007 | |||
Dana A. DeVivo 1981 |
Secretary and Chief Legal Officer | Senior Vice President of CSCM since 2019. Prior to that, Vice President of CSCM since 2013. | Since 2015 | |||
James Giallanza 1966 |
Chief Financial Officer | Executive Vice President of CSCM since 2014. Prior to that, Senior Vice President of CSCM since 2006. |
Since 2006 | |||
Albert Laskaj 1977 |
Treasurer | Senior Vice President of CSCM since 2019. Prior to that, Vice President of CSCM since 2015. Prior to that, Director of Legg Mason & Co. since 2013. | Since 2015 | |||
Lisa D. Phelan 1968 |
Chief Compliance Officer | Executive Vice President of CSCM since 2015. Prior to that, Senior Vice President of CSCM since 2008. Chief Compliance Officer of CSCM, the Cohen & Steers funds, Cohen & Steers Asia Limited and CSSL since 2007, 2006, 2005 and 2004, respectively. | Since 2006 |
1 | The address of each officer is 280 Park Avenue, New York, NY 10017. |
2 | Officers serve one-year terms. The length of time served represents the year in which the officer was first elected as an officer of any fund in the Cohen & Steers fund complex. All of the officers listed above are officers of one or more of the other funds in the complex. |
54
COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
Cohen & Steers Privacy Policy
Facts | What Does Cohen & Steers Do With Your Personal Information? | |
Why? | Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do. | |
What? | The types of personal information we collect and share depend on the product or service you have with us. This information can include:
Social Security number and account balances
Transaction history and account transactions
Purchase history and wire transfer instructions | |
How? | All financial companies need to share customers personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers personal information; the reasons Cohen & Steers chooses to share; and whether you can limit this sharing. |
Reasons we can share your personal information | Does Cohen & Steers share? |
Can you limit this sharing? | ||
For our everyday business purposes such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or reports to credit bureaus |
Yes | No | ||
For our marketing purposes to offer our products and services to you |
Yes | No | ||
For joint marketing with other financial companies | No | We dont share | ||
For our affiliates everyday business purposes information about your transactions and experiences |
No | We dont share | ||
For our affiliates everyday business purposes information about your creditworthiness |
No | We dont share | ||
For our affiliates to market to you | No | We dont share | ||
For non-affiliates to market to you | No | We dont share | ||
Questions? Call 800.330.7348 |
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COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
Cohen & Steers Privacy Policy(Continued)
Who we are | ||
Who is providing this notice? | Cohen & Steers Capital Management, Inc., Cohen & Steers Asia Limited, Cohen & Steers Japan, LLC, Cohen & Steers UK Limited, Cohen & Steers Securities, LLC, Cohen & Steers Private Funds and Cohen & Steers Open and Closed-End Funds (collectively, Cohen & Steers). | |
What we do | ||
How does Cohen & Steers protect my personal information? | To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include computer safeguards and secured files and buildings. We restrict access to your information to those employees who need it to perform their jobs, and also require companies that provide services on our behalf to protect your information. | |
How does Cohen & Steers collect my personal information? | We collect your personal information, for example, when you:
Open an account or buy securities from us
Provide account information or give us your contact information
Make deposits or withdrawals from your account
We also collect your personal information from other companies. | |
Why cant I limit all sharing? | Federal law gives you the right to limit only:
sharing for affiliates everyday business purposesinformation about your creditworthiness
affiliates from using your information to market to you
sharing for non-affiliates to market to you
State law and individual companies may give you additional rights to limit sharing. | |
Definitions | ||
Affiliates | Companies related by common ownership or control. They can be financial and nonfinancial companies.
Cohen & Steers does not share with affiliates. | |
Non-affiliates | Companies not related by common ownership or control. They can be financial and nonfinancial companies.
Cohen & Steers does not share with non-affiliates. | |
Joint marketing | A formal agreement between non-affiliated financial companies that together market financial products or services to you.
Cohen & Steers does not jointly market. |
56
COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
Cohen & Steers Investment Solutions
Distributed by Cohen & Steers Securities, LLC.
Please consider the investment objectives, risks, charges and expenses of any Cohen & Steers U.S. registered open-end fund carefully before investing. A summary prospectus and prospectus containing this and other information can be obtained by calling 800-330-7348 or by visiting cohenandsteers.com. Please read the summary prospectus and prospectus carefully before investing.
57
COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.
58
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Cohen & Steers
REIT and
Preferred
Income Fund
Annual Report December 31, 2018
Beginning on January 1, 2021, as permitted by regulations adopted by the U.S. Securities and Exchange Commission, paper copies of the Funds annual and semi-annual shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports. Instead, the reports will be made available on the Funds website at www.cohenandsteers.com, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you have already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from a Fund electronically anytime by contacting your financial intermediary or, if you are a direct investor, by signing up at www.cohenandsteers.com.
Beginning on January 1, 2019, you may elect to receive all future reports in paper free of charge. If you invest through a financial intermediary, you can contact your financial intermediary or, if you are a direct investor, you can call (866) 227-0757 to let the Fund know you wish to continue receiving paper copies of your shareholder reports. Your election to receive reports in paper will apply to all Funds held in your account if you invest through your financial intermediary or all Funds held within the fund complex if you invest directly with the Fund.
RNPAR
Item 2. Code of Ethics.
The registrant has adopted an Amended and Restated Code of Ethics that applies to its Principal Executive Officer and Principal Financial Officer. The Code of Ethics was in effect during the reporting period. The registrant amended the personal trading blackout period in the Code of Ethics during the reporting period to reflect changes to the timeline for processing Fund distributions. The registrant has not granted any waiver, including an implicit waiver, from a provision of the Code of Ethics as described in Form N-CSR during the reporting period. A current copy of the Code of Ethics is available on the registrants website at https://www.cohenandsteers.com/assets/content/uploads/Code_of_Ethics_for_Principal_Executive_and_Principal_Financial_Officers_of_the_Funds.pdf. Upon request, a copy of the Code of Ethics can be made by calling 800-330-7348 or writing to the Secretary of the registrant, 280 Park Avenue, 10th floor, New York, NY 10017.
Item 3. Audit Committee Financial Expert.
The registrants board has determined that Gerald J. Maginnis and Frank K. Ross qualify as audit committee financial experts based on their years of experience in the public accounting profession. The registrants board has determined that Michael G. Clark qualifies as an audit committee financial expert based on his years of experience in the public accounting profession and the investment management and financial services industry. Until December 31, 2018, each of Messrs. Clark, Ross and Maginnis was a member of the boards audit committee, and each was independent as such term is defined in Form N-CSR. Mr. Ross retired from the registrants board on December 31, 2018 pursuant to the Funds mandatory retirement policy and is no longer a member of the boards audit committee. Effective January 1, 2019, each of Messrs. Clark and Maginnis is a member of the boards audit committee, and each is independent as such term is defined in Form N-CSR.
Item 4. Principal Accountant Fees and Services.
(a) (d) Aggregate fees billed to the registrant for the last two fiscal years ended December 31, 2018 and December 31, 2017 for professional services rendered by the registrants principal accountant were as follows:
2018 | 2017 | |||
Audit Fees |
$46,400 | $45,440 | ||
Audit-Related Fees |
$0 | $0 | ||
Tax Fees |
$5,850 | $5,740 | ||
All Other Fees |
$0 | $0 |
Tax fees were billed in connection with tax compliance services, including the preparation and review of federal and state tax returns and the computation of corporate and franchise tax amounts.
(e)(1) The registrants audit committee is required to pre-approve audit and non-audit services performed for the registrant by the principal accountant. The audit committee also is required to pre-approve non-audit services performed by the registrants principal accountant for the registrants investment advisor (not including any sub-advisor whose role is primarily portfolio management and is subcontracted with or overseen by another investment advisor) and/or to any entity controlling, controlled by or under common control with the registrants investment advisor that provides ongoing services to the registrant, if the engagement for services relates directly to the operations and financial reporting of the registrant.
The audit committee may delegate pre-approval authority to one or more of its members who are independent members of the board of directors of the registrant. The member or members to whom such authority is delegated shall report any pre-approval decisions to the audit committee at its next scheduled meeting. The audit committee may not delegate its responsibility to pre-approve services to be performed by the registrants principal accountant to the investment advisor.
(e)(2) No services included in (b) (d) above were approved by the audit committee pursuant to paragraphs (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
(f) Not applicable.
(g) For the fiscal years ended December 31, 2018 and December 31, 2017, the aggregate fees billed by the registrants principal accountant for non-audit services rendered to the registrant and for non-audit services rendered to the registrants investment advisor (not including any sub-advisor whose role is primarily portfolio management and is subcontracted with or overseen by another investment advisor) and/or to any entity controlling, controlled by or under common control with the registrants investment advisor that provides ongoing services to the registrant were:
2018 | 2017 | |||
Registrant |
$5,850 | $5,740 | ||
Investment Advisor |
$0 | $0 |
(h) The registrants audit committee considered whether the provision of non-audit services that were rendered to the registrants investment advisor (not including any sub-advisor whose role is primarily portfolio management and is subcontracted with or overseen by another investment advisor) and/or to any entity controlling, controlled by or under common control with the registrants investment advisor that provides ongoing services to the registrant that were not required to be pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X was compatible with maintaining the principal accountants independence.
Item 5. Audit Committee of Listed Registrants.
The registrant has a separately-designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934. As of December 31, 2018, the members of the committee were Frank K. Ross (chairman), Michael G. Clark, George Grossman
and Gerald J. Maginnis. Mr. Ross retired on December 31, 2018 pursuant to the Funds mandatory retirement policy, and Mr. Maginnis was elected to serve as Audit Committee Chair effective January 1, 2019. Effective January 1, 2019, the members of the committee are Messrs. Maginnis (chairman), Clark and Grossman.
Item 6. Schedule of Investments.
Included in Item 1 above.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
The registrant has delegated voting of proxies in respect of portfolio holdings to Cohen & Steers Capital Management, Inc. (C&S), in accordance with the policies and procedures set forth below.
COHEN & STEERS CAPITAL MANAGEMENT, INC.
STATEMENT OF POLICIES AND PROCEDURES REGARDING THE VOTING OF SECURITIES
This statement sets forth the policies and procedures that Cohen & Steers Capital Management, Inc. and its affiliated advisors (Cohen & Steers, we or us) follow in exercising voting rights with respect to securities held in its client portfolios. All proxy-voting rights that are exercised by Cohen & Steers shall be subject to this Statement of Policy and Procedures.
General Proxy Voting Guidelines
Objectives
Voting rights are an important component of corporate governance. Cohen & Steers has three overall objectives in exercising voting rights:
· | Responsibility. Cohen & Steers shall seek to ensure that there is an effective means in place to hold companies accountable for their actions. While management must be accountable to its board, the board must be accountable to a companys shareholders. Although accountability can be promoted in a variety of ways, protecting shareholder voting rights may be among our most important tools. |
· | Rationalizing Management and Shareholder Concerns. Cohen & Steers seeks to ensure that the interests of a companys management and board are aligned with those of the companys shareholders. In this respect, compensation must be structured to reward the creation of shareholder value. |
· | Shareholder Communication. Since companies are owned by their shareholders, Cohen & Steers seeks to ensure that management effectively communicates with its owners about the companys business operations and financial performance. It is only with effective communication that shareholders will be able to assess the performance of management and to make informed decisions on when to buy, sell or hold a companys securities. |
General Principles
In exercising voting rights, Cohen & Steers shall conduct itself in accordance with the general principles set forth below.
· | The ability to exercise a voting right with respect to a security is a valuable right and, therefore, must be viewed as part of the asset itself. |
· | In exercising voting rights, Cohen & Steers shall engage in a careful evaluation of issues that may materially affect the rights of shareholders and the value of the security. |
· | Consistent with general fiduciary principles, the exercise of voting rights shall always be conducted with reasonable care, prudence and diligence. |
· | In exercising voting rights on behalf of clients, Cohen & Steers shall conduct itself in the same manner as if Cohen & Steers were the constructive owner of the securities. |
· | To the extent reasonably possible, Cohen & Steers shall participate in each shareholder voting opportunity. |
· | Voting rights shall not automatically be exercised in favor of management-supported proposals. |
· | Cohen & Steers, and its officers and employees, shall never accept any item of value in consideration of a favorable proxy voting decision. |
General Guidelines
Set forth below are general guidelines that Cohen & Steers shall follow in exercising proxy voting rights:
· | Prudence. In making a proxy voting decision, Cohen & Steers shall give appropriate consideration to all relevant facts and circumstances, including the value of the securities to be voted and the likely effect any vote may have on that value. Since voting rights must be exercised on the basis of an informed judgment, investigation shall be a critical initial step. |
· | Third Party Views. While Cohen & Steers may consider the views of third parties, Cohen & Steers shall never base a proxy voting decision solely on the opinion of a third party. Rather, decisions shall be based on a reasonable and good faith determination as to how best to maximize shareholder value. |
· | Shareholder Value. Just as the decision whether to purchase or sell a security |