Cohen & Steers Calls for Waivers of Pre-emptive Rights in the U.K. and Continental Europe

By Cohen Steers, PRNE
Monday, March 7, 2011

NEW YORK, March 8, 2011 - A new Cohen & Steers whitepaper makes the case for shareholders in the
U.K. and Continental Europe to vote for waivers of pre-emptive rights, in
order to promote broader access to equity capital for real estate companies.

Why Europe Must Open Access to Equity Markets: Executive Summary

In the midst of the financial crisis, Cohen & Steers first made the case
that pre-emptive rights in the U.K. and Continental Europe were
disadvantageous to shareholders of listed real estate companies (Financial
Times, August 10, 2009). As one of the largest global investors in real
estate securities, the Firm continues to advocate this position, two years
into market recovery.

According to Joseph Harvey, President and CIO of Cohen & Steers,
pre-emptive rights restrict the ability of a company to act quickly on
investment opportunities and issue equity when share prices are
attractive-two avenues for management to add value. These limitations, over
the long term, can lead to poor capital allocation decisions and ultimately
impair shareholder returns. By contrast, U.S. companies can raise equity from
an authorized share base without pre-emptive rights, enabling managements to
pursue acquisitions, mitigate financing risk and issue shares when valuations
are more opportunistic.

In the new March 2011 whitepaper, Why Europe Must Open Access to Equity
Markets, Mr. Harvey frames the benefits that could be realized through less
restrictive pre-emptive rights policies. First, the ability to issue equity
capital, free from pre-emptive rights, could lead to higher equity valuations
for listed property companies in the U.K. and Continental Europe. More
liberal policies could also engender a larger and healthier universe of these
companies, while facilitating growth through the securitization of private
real estate. According to Mr. Harvey, free access to equity markets could
actually lower the cost of equity capital, the price tag of which has long
been obscured by pre-emptive rights practices.

After outlining the new issuance practices of various regional markets,
Mr. Harvey makes the case that shareholders vote in favor of equity issuance
without pre-emptive rights. Supporting this position is Cohen & Steers
research on long-term returns, which points to the significant outperformance
of U.S. securities relative to European listed property companies and private
market real estate indexes. In summary:

    -- Over the past 20 years, direct property indexes in the U.K. and U.S.
       achieved similar total-return performance. Yet listed U.S. REITS
       significantly outperformed the comparable direct property index, while
       UK listed property companies underperformed.
    -- Over the recent bear market and recovery, U.S. REITS significantly
       outperformed U.K. listed real estate companies.
    -- U.K. listed real estate companies with pre-emptive rights consistently
       trade at lower valuations than U.S. companies with more liberal access
       to equity markets.

The agenda of the Cohen & Steers whitepaper was made clear in an action
plan to raise awareness of this issue. Excerpts include the following:

    -- Shareholders and industry analysts should lobby proxy voting firms and
       shareholder advocacy groups to change their voting policies on
       pre-emptive rights.
    -- Recognizing that pre-emptive rights can be waived through a
       shareholder vote, shareholders should:
           1. begin voting in favor of waiver proposals that allow meaningful
              share issuances free from pre-emptive rights
           2. begin asking managements to propose issuances without
              pre-emptive rights at their annual general meetings, and
           3. propose for annual general meetings, as large individual
              shareholders or as groups, resolutions to permit issuances
              without pre-emptive rights.
    -- Companies should educate their shareholders, advocacy groups and proxy
       voting firms that the real estate business is a special case and that
       issuing equity without pre-emptive rights can benefit shareholder
    -- Companies should prepare organizationally to implement these
    -- Regulators should consider liberalizing the prospectus registration
       process to be more like that of the U.S. shelf-registration system,
       which allows real-time share issuance.

For each of these stakeholders, it is important to understand that the
sophistication and efficiency of today's public markets do more to protect
shareholders than do the outdated practice of pre-emptive rights. With
respect to real estate, public markets can offer a solution to help de-lever
the private property sector, as is currently taking place in the U.S. in a
significant way. But in order for it to take place in Europe, real estate
companies must gain better access to the public market, at a cheaper cost,
without pre-emptive rights.

The whitepaper, Why Europe Must Open Access to Equity Markets is
available at Mr. Harvey's views on pre-emptive
rights practices are also discussed in a March 7, 2011 article published in
the Financial Times.

Risks of investing in real estate securities: Investing in real estate
securities are similar to those associated with direct investments in real
estate, including falling property values due to increasing vacancies,
declining rents resulting from economic, legal, tax, political or technical
developments, lack of liquidity, limited diversification and sensitivity to
certain economic factors such as interest rate changes and market recessions.
No representation or warranty is made as to the efficacy of any particular
strategy or fund or the actual returns that may be achieved.

This press release must be accompanied by the most recent applicable
quarterly Cohen & Steers mutual fund fact sheet(s) if used in connection with
the sale of mutual fund shares.

About Cohen & Steers

Cohen & Steers is a manager of portfolios specializing in U.S. and
international real estate securities, large cap value stocks, listed
infrastructure and utilities, and preferred securities. The company also
manages alternative investment strategies such as hedged real estate
securities portfolios and private real estate multimanager strategies for
qualified investors. Headquartered in New York City, with offices in London,
Brussels, Hong Kong and Seattle, Cohen & Steers serves individual and
institutional investors through a broad range of investment vehicles.

Anthony Ialeggio, Senior Vice President, Director of Global Marketing, Cohen & Steers, Inc., +1-212-796-9345

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