Cohen & Steers Real Estate Opportunities and Income Fund

RLTY

Market cap $245M

Cohen & Steers Real Estate Opportunities and Income Fund offers a 9%+ yield and trades at an -8% discount to NAV. RLTY provides diversified real estate exposure, blending 70% equity (mainly REITs) with 30% fixed income, but employs high leverage (~34%). With interest rates expected to decline further into 2026, RLTY is positioned for potential capital appreciation and narrowing discounts.

Cohen & Steers Real Estate Opportunities and Income Fund appears superficially attractive with a 9% yield and 8% NAV discount. The case looks even more interesting if we factor in the fact that the lion's share of the RLTY portfolio is linked to high-quality REITs. Yet, the actual reality is different. In the article, I detail why RLTY is a clear avoid and why the 9% yield is misleading for income-focused investors.

Cohen & Steers Real Estate Opportunities and Income Fund is rated a Strong Buy due to its 9% yield and -6.9% discount to NAV. RLTY offers consistent $0.11 monthly dividends, professional management, and a diversified portfolio of high-quality REITs and preferred securities. Active management, 34% leverage, and tactical trading enable RLTY to pursue both income and capital appreciation, outperforming many CEF peers.

Lower interest rates create a favorable environment for REITs, enhancing valuations, reducing borrowing costs, and supporting high-yield distributions for income investors. Cohen & Steers Quality Income Realty Fund (RQI) and peers like RLTY, RNP, RFI, and IGR offer diversified exposure to top REITs with yields up to 15%. Welltower (WELL) and Equinix (EQIX) stand out among REIT holdings, with WELL benefiting from senior housing demand and EQIX positioned for data center growth.

Cohen & Steers Real Estate Opportunities and Income Fund now offers an 8.7% yield but is downgraded to a hold rating. RLTY underperforms peers due to high leverage and elevated interest rates, with inconsistent earnings and limited capital appreciation potential. The fund trades at a smaller discount to NAV than usual, reflecting investor confidence, but relies on positive market conditions to sustain payouts.

Cohen & Steers Real Estate Opportunities and Income Fund offers leveraged exposure to high-quality REITs, preferred stock, and bonds with an 8.6% yield. RLTY currently trades at a 5% discount to NAV, and benefits from renewed interest as the Federal Reserve resumes rate cuts, improving real estate prospects. Despite attractive valuations, commercial real estate faces risks from economic uncertainty, rising costs, and sector-specific pressures, warranting caution.

Market timing is futile; a disciplined, diversified, and rules-based approach is essential for long-term investing success. A Near-Perfect Strategy portfolio aims for consistent income, growth, and lower volatility through diversification and strategic planning. The portfolio targets 6% income and S&P 500-beating returns, with lower volatility and drawdowns, making it suitable for investors seeking financial freedom or retirement income.

A diversified, funds-only portfolio can deliver reliable 6-7% income and market-matching growth, ideal for retirees seeking simplicity and peace of mind. Asset allocation spans dividend growth, bonds, real estate, energy, covered calls, utilities, commodities, preferreds, and specialty funds for broad diversification. Fund selection prioritizes low fees, competent management, and minimal leverage, balancing income, growth, and capital preservation across market cycles.

RLTY offers an attractive 8.6% yield, diversified real estate exposure, and currently trades at a modest discount to NAV, making it a Buy. The fund's income is enhanced by leverage, which increases yield but adds risk, especially in declining markets or rising rate environments. RLTY is well positioned to benefit from future Fed rate cuts, which should boost both NAV and dividends for investors.

I prefer funds like Cohen & Steers Real Estate Opportunities and Income Fund for their high-yield and monthly cash flow without tenant headaches. RLTY offers a nearly 9% dividend yield, superior diversification, and better financing rates, making it attractive despite the current high-interest rate environment. Leverage has impacted RLTY's performance, but potential future interest rate cuts could serve as a positive catalyst for growth and improved valuations.