COHEN & STEERS, INC. (CNS)

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Set forth on the following pages is management's discussion and analysis of our financial condition and results of operations for the three months ended March 31, 2026 and 2025. Such information should be read in conjunction with our condensed consolidated financial statements and the related notes included herein. The condensed consolidated financial statements of the Company are unaudited. When we use the terms "Cohen & Steers," the "Company," "we," "us" and "our," we mean Cohen & Steers, Inc., a Delaware corporation, and its consolidated subsidiaries.

Executive Overview

General

We are a global investment manager specializing in real assets and alternative income, including listed and private real estate, preferred securities, infrastructure, resource equities, commodities, as well as multi-strategy solutions. Founded in 1986, we are headquartered in New York City, with offices in London, Dublin, Hong Kong, Tokyo and Singapore.

Our primary investment strategies include U.S. real estate, preferred securities, including low duration preferred securities, private real estate solutions, global/international real estate, global listed infrastructure, real assets multi-strategy, and global natural resource equities. Our strategies seek to achieve a variety of investment objectives for different risk profiles and are actively managed by specialist teams of investment professionals who employ fundamental-driven research and portfolio management processes. We offer our strategies through a variety of investment vehicles, including U.S. and non-U.S. registered funds and other commingled vehicles, including active exchange traded funds (ETFs), separate accounts and subadvised portfolios.

Our global distribution is concentrated in two channels: wealth and institutional. The wealth channel includes a variety of intermediaries such as global private banks, U.S. wirehouses, independent and regional broker dealers, bank trusts, registered investment advisers and discretionary portfolio managers using global custody or clearing platforms. The institutional channel comprises sovereign wealth funds, public and private pension and retirement plans, insurance companies, endowments, foundations, and global investment consultants who support these institutions.

Our revenue from the wealth channel is derived from investment advisory, administration, distribution and service fees from open-end and closed-end funds as well as other commingled vehicles including ETFs. Our revenue from the institutional channel is derived from fees received from our clients for managing advised and subadvised accounts. Our fees are based on contractually specified rates applied to the value of the assets we manage and, in certain cases, may include a performance-based fee. Investment advisory fee rates vary based on the vehicle, investment strategy, fees charged by other comparable products and prevailing market conditions. Investment administration fees from open-end funds and certain closed-end funds are designed to reimburse us for the cost of providing these services. The investment advisory and administration agreements are generally terminable upon specified notice periods and may also require a majority vote of the fund’s board of directors for certain contracts.

Our revenue fluctuates with changes in the total value of our assets under management, which may occur as a result of market appreciation and depreciation, contributions to or withdrawals from investor accounts and distributions. This revenue is recognized over the period that the assets are managed.

Macroeconomic Environment

Global economic conditions were volatile through the first quarter of 2026. Questions lingered on the impact of AI adoption on employment, private credit stress on economic growth and the listed markets, and most recently the impact of the war in the Middle East on commodities and economic inflation. Trade uncertainty remained high with the Administration’s hallmark policy regarding tariffs ruled unconstitutional by the Supreme Court. Central banks remained focused on balancing inflation risks against signs of moderating employment growth, and elevated policy uncertainty continued to weigh on market dynamics even as corporate fundamentals were relatively robust.

Despite these conditions, we continue to maintain our disciplined investment approach, supported by our portfolio management expertise and robust risk management framework. Our continued focus on prudent cost control and operational efficiency has supported our ability to navigate the evolving environment and respond to changing market conditions.

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Investment Performance as of March 31, 2026

_________________________

(1)    Past performance is no guarantee of future results. Outperformance is determined by comparing the annualized investment performance of each investment strategy to the performance of specified reference benchmarks. Investment performance in excess of the performance of the benchmark is considered outperformance. The investment performance calculation of each investment strategy is based on all active accounts and investment models pursuing similar investment objectives. For accounts, actual investment performance is measured gross of fees and net of withholding taxes. For investment models, for which actual investment performance does not exist, the investment performance of a composite of accounts pursuing comparable investment objectives is used as a proxy for actual investment performance. The performance of the specified reference benchmark for each account and investment model is measured net of withholding taxes, where applicable. This is not investment advice and may not be construed as sales or marketing material for any financial product or service sponsored or provided by Cohen & Steers.

(2)    © 2026 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete, or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Morningstar calculates its ratings based on a risk-adjusted return measure that accounts for variation in a fund's monthly performance (including the effects of sales charges, loads, and redemption fees), placing more emphasis on downward variations and rewarding consistent performance. The top 10% of funds in each category receive five stars, the next 22.5% receive four stars, the next 35% receive three stars, the next 22.5% receive two stars and the bottom 10% receive one star. Past performance is no guarantee of future results. Based on independent rating by Morningstar, Inc. of investment performance of each Cohen & Steers-sponsored open-end U.S.-registered mutual fund for all share classes for the overall period at March 31, 2026. Overall Morningstar rating is a weighted average based on the 3-year, 5-year and 10-year Morningstar rating. Each share class is counted as a fraction of one fund within this scale and rated separately, which may cause slight variations in the distribution percentages. This is not investment advice and may not be construed as sales or marketing material for any financial product or service sponsored or provided by Cohen & Steers.

Assets Under Management

Below is a discussion of our assets under management for the quarter ended March 31, 2026. For additional details, please refer to the tables on pages 19 - 22.

Assets under management as of March 31, 2026 increased 6.3% to $93.1 billion from $87.6 billion as of March 31, 2025.

Open-end funds

Assets under management in open-end funds as of March 31, 2026 increased 6.0% to $44.8 billion from $42.3 billion as of March 31, 2025. Activity during the first quarter of 2026 included:

•Net inflows of $555 million including $224 million into U.S. real estate, $156 million into preferred securities and $147 million into real assets multi-strategy (included in "Other");

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•Market appreciation of $1.2 billion including $858 million from U.S. real estate; and

•Distributions of $306 million including $168 million from U.S. real estate and $133 million from preferred securities, of which $254 million was reinvested and included in net flows.

Institutional accounts

Assets under management in institutional accounts as of March 31, 2026 increased 6.3% to $36.0 billion from $33.9 billion as of March 31, 2025. Activity during the first quarter of 2026 included:

Advisory accounts:

•Net inflows of $210 million including $101 million into global listed infrastructure and $79 million into global/international real estate; and

•Market appreciation of $626 million including $380 million from global listed infrastructure and $224 million from U.S. real estate.

Subadvisory accounts:

•Net outflows of $269 million including $250 million from U.S. real estate;

•Market appreciation of $558 million including $306 million from U.S. real estate and $216 million from global listed infrastructure; and

•Distributions of $156 million including $147 million from U.S. real estate.

Closed-end funds

Assets under management in closed-end funds as of March 31, 2026 increased 7.6% to $12.3 billion from $11.4 billion as of March 31, 2025. Activity during the first quarter of 2026 included:

•Market appreciation of $375 million including $334 million from global listed infrastructure; and

•Distributions of $165 million.

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Assets Under Management

By Investment Vehicle

(in millions)

19

Assets Under Management - Institutional Accounts

By Account Type

(in millions)

[[GREPCENT_TABLE]]
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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This Annual Report on Form 10-K and other documents filed by us contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act), which reflect management’s current views with respect to, among other things, our operations and financial performance. You can identify these forward-looking statements by the use of words such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “seeks,” “approximately,” “predicts,” “intends,” “plans,” “estimates,” “anticipates” or the negative versions of these words or other comparable words. Such forward-looking statements are subject to various risks and uncertainties. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these forward-looking statements. We believe that these factors include, but are not limited to, the risks described in Item 1A. Risk Factors of this Annual Report on Form 10-K. These factors are not exhaustive and should be read in conjunction with the other cautionary statements that are included in this Annual Report on Form 10-K. We undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise.

Cohen & Steers, Inc. (CNS), a Delaware corporation formed in 2004, and its subsidiaries are collectively referred to as

the Company, we, us or our.

The following discussion includes a comparison of our results for 2025 and 2024. For a comparison of our results for 2024 and 2023, see Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2024, which was filed with the SEC on February 21, 2025, and is incorporated herein by reference.

Executive Overview

General

We are a global investment manager specializing in real assets and alternative income, including listed and private real estate, preferred securities, infrastructure, resource equities, commodities, as well as multi-strategy solutions. Founded in 1986, we are headquartered in New York City, with offices in London, Dublin, Hong Kong, Tokyo and Singapore.

Refer to Part I. Item 1 Business Overview for an overview of our business.

Macroeconomic Environment

Global economic conditions remained volatile throughout 2025, with heightened uncertainty persisting into the fourth quarter. Fiscal policy shifts, evolving monetary strategies, and ongoing trade tensions continued to shape the macroeconomic landscape. Key developments included the passage of new U.S. tax legislation, the Federal Reserve’s initiation of an interest rate cutting cycle, historically large revisions to economic data, and the longest U.S. government shutdown on record. These factors, combined with diverging policy responses across major economies, influenced investor sentiment and drove significant asset flows across regions and sectors. Central banks remained focused on balancing inflation risks against mounting evidence of slowing growth, while elevated trade and policy uncertainty added further complexity to the operating environment.

Despite these challenges, we maintained our disciplined approach, leveraging our portfolio management expertise and robust risk management framework. Our continued emphasis on prudent cost control and operational efficiency has positioned us to navigate this complex environment and adapt to evolving market conditions.

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Investment Performance as of December 31, 2025

_________________________

(1)    Past performance is no guarantee of future results. Outperformance is determined by comparing the annualized investment performance of each investment strategy to the performance of specified reference benchmarks. Investment performance in excess of the performance of the benchmark is considered outperformance. The investment performance calculation of each investment strategy is based on all active accounts and investment models pursuing similar investment objectives. For accounts, actual investment performance is measured gross of fees and net of withholding taxes. For investment models, for which actual investment performance does not exist, the investment performance of a composite of accounts pursuing comparable investment objectives is used as a proxy for actual investment performance. The performance of the specified reference benchmark for each account and investment model is measured net of withholding taxes, where applicable. This is not investment advice and may not be construed as sales or marketing material for any financial product or service sponsored or provided by Cohen & Steers.

(2)    © 2026 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete, or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Morningstar calculates its ratings based on a risk-adjusted return measure that accounts for variation in a fund's monthly performance (including the effects of sales charges, loads, and redemption fees), placing more emphasis on downward variations and rewarding consistent performance. The top 10% of funds in each category receive five stars, the next 22.5% receive four stars, the next 35% receive three stars, the next 22.5% receive two stars and the bottom 10% receive one star. Past performance is no guarantee of future results. Based on independent rating by Morningstar, Inc. of investment performance of each Cohen & Steers-sponsored open-end U.S.-registered mutual fund for all share classes for the overall period at December 31, 2025. Overall Morningstar rating is a weighted average based on the 3-year, 5-year and 10-year Morningstar rating. Each share class is counted as a fraction of one fund within this scale and rated separately, which may cause slight variations in the distribution percentages. This is not investment advice and may not be construed as sales or marketing material for any financial product or service sponsored or provided by Cohen & Steers.

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Assets Under Management

Below is a discussion of our assets under management as of December 31, 2025. For additional details, please refer to the tables on pages 24 - 27.

Assets under management as of December 31, 2025 increased 5.5% to $90.5 billion from $85.8 billion as of December 31, 2024. The increase was due to net inflows of $1.5 billion and market appreciation of $6.1 billion, partially offset by distributions of $2.9 billion.

Open-end funds

Assets under management in open-end funds as of December 31, 2025 increased 6.0% to $43.4 billion from $41.0 billion as of December 31, 2024. The change was primarily due to:

•Net inflows of $1.7 billion including $1.2 billion into U.S. real estate, $354 million into real assets multi-strategy (included in "Other") and $333 million into global listed infrastructure, partially offset by net outflows of $582 million from preferred securities;

•Market appreciation of $2.4 billion including $862 million from U.S. real estate, $814 million from preferred securities and $295 million from global/international real estate; and

•Distributions of $1.6 billion including $765 million from U.S. real estate and $524 million from preferred securities, of which $1.1 billion was reinvested and included in net flows.

Institutional accounts

Assets under management in institutional accounts as of December 31, 2025 increased 4.5% to $35.1 billion from $33.6 billion as of December 31, 2024. The change was primarily due to:

Advisory accounts:

•Net outflows of $324 million including $316 million from real assets multi-strategy (included in "Other"); and

•Market appreciation of $1.8 billion including $702 million from global/international real estate, $522 million from global listed infrastructure and $310 million from U.S. real estate.

Subadvisory accounts:

•Net outflows of $417 million including $776 million from U.S. real estate and $308 million from global/international real estate, partially offset by net inflows of $709 million into global listed infrastructure;

•Market appreciation of $1.0 billion including $458 million from global/international real estate, $286 million from global listed infrastructure and $269 million from U.S. real estate; and

•Distributions of $667 million including $638 million from U.S. real estate.

Closed-end funds

Assets under management in closed-end funds as of December 31, 2025 increased 6.7% to $12.0 billion from $11.3 billion as of December 31, 2024. The change was primarily due to:

•Net inflows of $621 million including $513 million attributable to the Cohen & Steers Infrastructure Fund, Inc. (UTF) rights offering, including leverage;

•Market appreciation of $775 million including $383 million from global listed infrastructure and $227 million from preferred securities; and

•Distributions of $638 million including $227 million from U.S. real estate and $199 million from preferred securities.

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Assets Under Management

By Investment Vehicle

(in millions)

24

Assets Under Management - Institutional Accounts

By Account Type

(in millions)

25

Assets Under Management

By Investment Strategy

(in millions)

26

Assets Under Management

By Investment Strategy - continued

(in millions)

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Summary of Operating Results

_________________________

(1)Refer to pages 31-32 for reconciliations of U.S. GAAP to as adjusted results.

Year Ended December 31, 2025 Compared with Year Ended December 31, 2024

Revenue

Investment advisory and administration revenue increased from the year ended December 31, 2024, primarily due to higher average assets under management.

Total investment advisory and administration revenue from open-end funds compared with average assets under management implied an annual effective fee rate of 67.4 bps and 66.0 bps for the years ended December 31, 2025 and 2024, respectively.

Total investment advisory revenue from institutional accounts compared with average assets under management implied an annual effective fee rate of 38.8 bps and 38.5 bps for the years ended December 31, 2025 and 2024, respectively. Excluding performance fees of $1.7 million and $1.4 million, the implied annual effective fee rate would have been 38.3 bps and 38.1 bps for the years ended December 31, 2025 and 2024, respectively.

Total investment advisory and administration revenue from closed-end funds compared with average assets under management implied an annual effective fee rate of 89.2 bps and 88.7 bps for the years ended December 31, 2025 and 2024, respectively.

Distribution and service fees increased from the year ended December 31, 2024, primarily due to higher average assets under management in U.S. open-end funds, partially offset by a shift into lower fee paying share classes.

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Expenses

Employee compensation and benefits increased from the year ended December 31, 2024, primarily due to higher incentive compensation of $8.7 million and an increase in salaries of $2.2 million, partially offset by lower amortization of restricted stock units of $6.3 million.

Distribution and service fees expense increased from the year ended December 31, 2024, primarily due to $9.9 million of expenses related to the UTF rights offering and higher average assets under management in U.S. open-end funds.

General and administrative expenses increased from the year ended December 31, 2024, primarily due to expenses paid on behalf of certain Company-sponsored funds totaling $3.5 million, increased talent acquisition costs of $2.0 million, and fund organization cost related to the UTF rights offering of $1.5 million.

Operating Margin

Operating margin for the year ended December 31, 2025 decreased to 32.0% from 33.4% for the year ended December 31, 2024. Operating margin represents the ratio of operating income to revenue.

Non-operating Income (Loss)

_________________________

(1)Represents seed investments in funds that we are required to consolidate under U.S. GAAP.

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Income Taxes

A reconciliation of the Company’s statutory federal income tax rate to the effective income tax rate is summarized in the following table:

_________________________

*    Percentage rounds to less than 0.1%

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Reconciliations of U.S. GAAP to As Adjusted Financial Results

Management believes that use of the following as adjusted (non-GAAP) financial results provides greater transparency into the Company’s operating performance. In addition, these as adjusted financial results are used to prepare the Company's internal management reports that are used in evaluating its business. While management believes that these as adjusted financial results are useful in evaluating operating performance, this information should be considered as supplemental in nature and not as a substitute for the related financial information prepared in accordance with U.S. GAAP.

Net Income Attributable to Common Stockholders and Diluted Earnings per Share

_________________________

*    Amounts round to less than $0.01 per share.

(1)Represents the impact of consolidated funds and the net effect of corporate seed investment performance.

(2)Represents the impact of lease and other expenses related to the Company's prior headquarters, for which the lease expired in January 2024.

(3)Represents reimbursement of filing fees paid by certain members of senior leadership for the year ended December 31, 2025, and the impact of incremental expenses associated with the separation of certain employees for the year ended December 31, 2024.

(4)Represents net foreign currency exchange (gains) losses associated with U.S. dollar-denominated assets held by certain international subsidiaries.

(5)Includes excess tax benefits related to the vesting and delivery of restricted stock units and unrecognized tax benefit adjustments.

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Revenue, Expenses, Operating Income and Operating Margin

_________________________

(1)Represents the impact of consolidated funds and expenses incurred on behalf of certain Company-sponsored funds.

(2)Represents the impact of lease and other expenses related to the Company's prior headquarters, for which the lease expired in January 2024.

(3)Represents reimbursement of filing fees paid by certain members of senior leadership for the year ended December 31, 2025, and the impact of incremental expenses associated with the separation of certain employees for the year ended December 31, 2024.

Non-operating Income (Loss)

_________________________

(1)Represents the impact of consolidated funds and the net effect of corporate seed investment performance.

(2)Represents net foreign currency exchange (gain) loss associated with U.S. dollar-denominated assets held by certain international subsidiaries.

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Changes in Financial Condition, Liquidity and Capital Resources

We seek to maintain a balance sheet that supports our business strategies and provides the appropriate amount of liquidity at all times.

Net liquid assets

Our current financial condition is highly liquid and is primarily comprised of cash and cash equivalents, U.S. Treasury securities, liquid seed investments and other current assets. Liquid assets are reduced by current liabilities (together, net liquid assets).

The table below summarizes net liquid assets:

Cash and cash equivalents

Cash and cash equivalents are on deposit with major national financial institutions and include short-term, highly liquid investments, which are readily convertible into cash.

U.S. Treasury securities

U.S. Treasury securities, recorded at fair value, are directly issued by the U.S. government and were classified as trading investments.

Liquid seed investments—net

Liquid seed investments, recorded at fair value, are generally traded in active markets on major exchanges and can typically be liquidated within a normal settlement cycle. Liquid seed investments include securities held directly for the purpose of establishing performance track records and the Company's economic interest in certain consolidated funds which are presented net of noncontrolling interests and seed investments in funds that are not consolidated.

Other current assets

Other current assets primarily represent investment advisory and administration fees receivable. We perform a review of our receivables on an ongoing basis to assess collectability and, based on our analysis as of December 31, 2025, no allowance for uncollectible accounts was required.

Current liabilities

Current liabilities include accrued compensation and benefits, distribution and service fees payable, operating lease obligations due within 12 months, certain income taxes payable and certain other liabilities and accrued expenses.

Future liquidity needs

Our business may become capital intensive over time to support growth initiatives. Potential uses of capital range from, among other things, seeding new strategies and investment vehicles, co-investing in private real estate vehicles, funding the upfront costs associated with product offerings and making various investments to grow our firm infrastructure as our business scales. In order to provide us with additional financial flexibility to pursue these opportunities, we have a $100.0 million senior unsecured revolving credit facility maturing on August 15, 2029.

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We have committed to invest up to a total of $175.0 million in certain of our investment vehicles, of which $74.3 million remained unfunded as of December 31, 2025. The timing for funding the remaining portion of our commitments is uncertain.

Cash flows

Our cash flows generally result from the operating activities of our business, with investment advisory and administration fees being the most significant contributor.

The table below summarizes our cash flows:

In 2025, cash and cash equivalents, excluding the effect of foreign exchange rate changes, decreased by $38.3 million when compared with 2024. Cash flows from operating activities primarily consisted of net income adjusted for certain non-cash items and changes in assets and liabilities. Net cash used in operating activities was $120.4 million, which included net purchases of investments by consolidated funds of $319.1 million. Net cash provided by investing activities was $8.4 million. Net cash provided by financing activities was $73.8 million, including net contributions from noncontrolling interests of $228.7 million, partially offset by dividends paid to stockholders of $126.9 million and repurchases of common stock to satisfy employee withholding tax obligations on the vesting and delivery of restricted stock units of $28.4 million.

Contractual Obligations, Commitments and Contingencies

The following table summarizes our contractual obligations as of December 31, 2025:

_________________________

(1)Represents contracts that are either noncancellable or cancellable with a penalty. Our obligations primarily reflect information technology equipment, software licenses and standard service contracts for market data.

Investment commitments

Refer to Note 14, Commitments and Contingencies, in the notes to the consolidated financial statements included in Part IV, Item 15 of this filing for further discussion.

Dividends

Subject to the approval of our board of directors, we anticipate paying dividends. When determining whether to pay a dividend, we consider general economic and business conditions, our strategic plans, our results of operations and financial condition, cash flows and liquidity, contractual, legal and regulatory restrictions on the payment of dividends, if any, by us and our subsidiaries and such other factors deemed relevant.

On February 26, 2025, we declared a quarterly dividend on our common stock in the amount of $0.67 per share. This dividend will be payable on March 19, 2026 to stockholders of record at the close of business on March 9, 2026.

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Net Capital Requirements

Several of our subsidiaries are subject to minimum net capital requirements by local laws and regulations. As of December 31, 2025, each of our subsidiaries subject to a minimum net capital requirement satisfied the applicable requirement. See Note 12, Regulatory Requirements, in the notes to the consolidated financial statements included in Part IV, Item 15 of this filing.

Critical Accounting Estimates

The preparation of our consolidated financial statements in accordance with accounting principles generally accepted in the United States of America requires us to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the dates of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods. Management believes the estimates used in preparing the consolidated financial statements are reasonable and prudent. Actual results could differ from those estimates.

Our significant accounting policies are disclosed in Note 2, Summary of Significant Accounting Policies, in the notes to the consolidated financial statements included in Part IV, Item 15 of this filing and should be read in conjunction with the summarized information below. Management considers the following accounting estimates critical to an informed review of our consolidated financial statements as they require management to make certain judgments about matters that may be uncertain at the time the estimates were determined.

Valuation of Investments

There is no established market for private real estate investments, and there may not be any comparable public market valuations. As a result, the valuation of a private real estate investment may be based on subjective information and is subject to inherent uncertainties, and the resulting values may differ from values that would have been determined had a ready market existed for such investments, from values placed on such investments by other investors and from prices at which such investments may ultimately be sold.

We have retained an independent valuation services firm to assist in the determination of the fair value of certain of our private real estate investments. Each real property investment is valued no less than quarterly in accordance with the applicable governing documents. Limited partnerships that hold real property investments are valued using the valuation methodology we deem most appropriate and consistent with industry best practices and market conditions. We expect the primary methodology used to value real property investments will be the income approach, whereby value is derived by determining the present value of an asset’s expected stream of future cash flows (for example, discounted cash flow analysis). Consistent with industry practices, the income approach incorporates actual contractual lease income, professional judgments regarding comparable rental and operating expense data, the capitalization or discount rate and projections of future rent and expenses based on appropriate market evidence, and other subjective factors. Other methodologies that may also be used to value a real property investment include, among other approaches, sales comparisons and cost approaches. We monitor the real property investments for events that we believe could have a material impact on the most recent estimated fair values of such real property investments.

Income Taxes

We operate globally through our subsidiaries and therefore must allocate our income, expenses, and earnings considering various laws and regulations. Our tax provision represents an estimate of the total liability that we have incurred as a result of our global operations. The determination of our annual provision is subject to judgments and estimates and the actual results included in our annual tax returns may vary from the amounts reported in our consolidated financial statements. Accordingly, we recognize additions to, or reductions from, income tax expense as our estimated liabilities are revised, actual tax returns are filed and audits, if any, are settled. Such adjustments are recognized in the quarterly period in which they are determined.

In addition, we record current and deferred tax consequences of all transactions that have been recognized in the consolidated financial statements in accordance with the provisions of the enacted tax laws. Deferred tax assets are recognized for temporary differences that will result in deductible amounts in future years at tax rates that are expected to apply in those years. We record a valuation allowance, when necessary, to reduce deferred tax assets to an amount that more likely than not will be realized. Deferred tax liabilities are recognized for temporary differences that will result in taxable income in future years at tax rates that are expected to apply in those years.

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The calculation of our tax liabilities involves uncertainties in the application of complex tax laws and regulations in several jurisdictions across our global operations. In accordance with Accounting Standards Codification ( Topic 740, Income Taxes (ASC 740), a tax benefit from an uncertain tax position is recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, on the basis of the technical merits.

We record unrecognized tax benefits as liabilities in accordance with ASC 740 and adjust these liabilities when our judgment changes as a result of the evaluation of new information not previously available. Because of the complexity of these uncertainties, the ultimate resolution may differ from our current estimate of the unrecognized tax benefit liabilities. These differences are reflected as increases or decreases in income tax expense in the period in which new information becomes available.

Recently Issued Accounting Pronouncements

See discussion of Recently Issued Accounting Pronouncements in Note 2 of the consolidated financial statements included in Part IV, Item 15 of this filing.

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