UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-Q
QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF
REGISTERED MANAGEMENT COMPANY
Investment Company Act file number: 811-10481
Exact Name of Registrant
(as specified in charter): Cohen & Steers Quality Income Realty Fund, Inc.
Address of Principal Executive Office: 757 Third Avenue
New York, NY 10017
Name and address of agent for service: John E. McLean
757 Third Avenue
New York, NY 10017
Registrant telephone number, including area code: (212) 832-3232
Date of fiscal year end: December 31
Date of reporting period: September 30, 2004
Item 1. Schedule of Investments
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COHEN & STEERS QUALITY INCOME REALTY FUND, INC.
SCHEDULE OF INVESTMENTS
SEPTEMBER 30, 2004 (UNAUDITED)
NUMBER DIVIDEND
OF SHARES VALUE YIELD(a)
--------- -------------- ------------
EQUITIES 144.25%(b)
COMMON STOCK 114.91%
DIVERSIFIED 13.61%
Capital Trust -- Class A.............. 66,100 $ 1,923,510 6.19%
Colonial Properties Trust............. 582,300 23,420,106 6.66
Crescent Real Estate Equities Co...... 1,396,200 21,976,188 9.53
iStar Financial....................... 400,500 16,512,615 6.77
Vornado Realty Trust.................. 663,443 41,584,607 4.53
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105,417,026
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HEALTH CARE 17.85%
Health Care Property Investors........ 1,190,400 30,950,400 6.42
Health Care REIT...................... 969,625 34,130,800 6.82
LTC Properties........................ 131,200 2,347,168 6.71
Nationwide Health Properties.......... 1,205,300 25,009,975 7.13
Ventas................................ 1,766,500 45,787,680 5.02
--------------
138,226,023
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HOTEL 2.46%
Hospitality Properties Trust.......... 389,200 16,537,108 6.78
Strategic Hotel Capital............... 183,400 2,479,568 6.51
--------------
19,016,676
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INDUSTRIAL 2.93%
First Industrial Realty Trust......... 614,500 22,675,050 7.43
--------------
MORTGAGE 2.69%
Newcastle Investment Corp............. 678,528 20,830,810 7.82
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(a) Dividend yield is computed by dividing the security's current annual
dividend rate by the last sale price on the principal exchange or market, on
which such security trades.
(b) Percentages indicated are based on the net assets of the fund.
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COHEN & STEERS QUALITY INCOME REALTY FUND, INC.
SCHEDULE OF INVESTMENTS -- (CONTINUED)
SEPTEMBER 30, 2004 (UNAUDITED)
NUMBER DIVIDEND
OF SHARES VALUE YIELD
--------- -------------- ------------
OFFICE 32.31%
Arden Realty.......................... 826,800 $ 26,937,144 6.20%
BioMed Realty Trust................... 59,000 1,037,810 6.14
Brandywine Realty Trust............... 1,140,900 32,492,832 6.18
CarrAmerica Realty Corp............... 1,010,600 33,046,620 6.12
Equity Office Properties Trust........ 1,314,400 35,817,400 7.34
Highwoods Properties.................. 415,300 10,220,533 6.91
HRPT Properties Trust................. 635,400 6,983,046 7.64
Kilroy Realty Corp.................... 142,600 5,423,078 5.21
Mack-Cali Realty Corp................. 1,073,800 47,569,340 5.69
Maguire Properties.................... 604,800 14,702,688 6.58
Prentiss Properties Trust............. 1,000,200 36,007,200 6.22
--------------
250,237,691
--------------
OFFICE/INDUSTRIAL 8.43%
Liberty Property Trust................ 1,065,200 42,437,568 6.12
Reckson Associates Realty Corp........ 794,100 22,830,375 5.91
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65,267,943
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RESIDENTIAL 14.54%
APARTMENT 14.12%
AMLI Residential Properties Trust..... 77,000 2,352,350 6.28
Archstone-Smith Trust................. 754,100 23,859,724 5.44
AvalonBay Communities................. 307,200 18,499,584 4.65
Camden Property Trust................. 366,600 16,936,920 5.50
Gables Residential Trust.............. 586,900 20,042,635 7.06
Home Properties....................... 361,600 14,304,896 6.27
Mid-America Apartment Communities..... 309,400 12,051,130 6.01
Town & Country Trust.................. 50,000 1,272,500 6.76
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109,319,739
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MANUFACTURED HOME 0.42%
Affordable Residential Communities.... 225,200 3,287,920 8.56
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TOTAL RESIDENTIAL..................... 112,607,659
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SELF STORAGE 0.44%
Sovran Self Storage................... 87,300 3,420,414 6.18
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COHEN & STEERS QUALITY INCOME REALTY FUND, INC.
SCHEDULE OF INVESTMENTS -- (CONTINUED)
SEPTEMBER 30, 2004 (UNAUDITED)
NUMBER DIVIDEND
OF SHARES VALUE YIELD
--------- -------------- ------------
SHOPPING CENTER 19.34%
COMMUNITY CENTER 6.95%
Cedar Shopping Centers................ 200,000 $ 2,790,000 6.45%
Heritage Property Investment Trust.... 449,100 13,100,247 7.20
Kramont Realty Trust.................. 1,293,300 24,055,380 6.99
New Plan Excel Realty Trust........... 222,700 5,567,500 6.60
Urstadt Biddle Properties -- Class A.. 544,000 8,290,560 5.64
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53,803,687
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REGIONAL MALL 12.39%
Glimcher Realty Trust................. 605,200 14,706,360 7.90
Macerich Co........................... 807,857 43,050,700 4.58
Mills Corp............................ 737,400 38,248,938 4.59
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96,005,998
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TOTAL SHOPPING CENTER................. 149,809,685
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SPECIALTY 0.31%
American Campus Communities........... 130,800 2,427,648 7.27
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TOTAL COMMON STOCK
(Identified
cost -- $658,098,726).......... 889,936,625
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PREFERRED STOCK 29.34%
DIVERSIFIED 5.79%
Colonial Properties Trust, 8.125%,
Series D........................... 64,900 1,714,009 7.69
Crescent Real Estate Equities Co.,
6.75%, Series A (Convertible)(a)... 1,826,000 38,729,460 7.97
iStar Financial, 7.80%, Series F...... 94,600 2,385,812 7.73
iStar Financial, 7.65%, Series G...... 80,000 2,000,000 7.64
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44,829,281
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HEALTH CARE 0.14%
Omega Healthcare Investors, 8.375%,
Series D........................... 40,000 1,042,000 8.02
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-------------------
(a) 410,000 shares segregated as collateral for the interest rate swap
transactions.
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COHEN & STEERS QUALITY INCOME REALTY FUND, INC.
SCHEDULE OF INVESTMENTS -- (CONTINUED)
SEPTEMBER 30, 2004 (UNAUDITED)
NUMBER DIVIDEND
OF SHARES VALUE YIELD
--------- -------------- ------------
HOTEL 6.25%
FelCor Lodging Trust, 9.00%,
Series B........................... 652,500 $ 16,704,000 8.79%
Host Marriott Corp., 10.00%,
Series B........................... 14,100 368,292 9.57
Host Marriott Corp., 10.00%,
Series C........................... 30,700 826,444 9.29
Host Marriott Corp., 8.875%,
Series E........................... 10,000 275,600 8.06
Innkeepers USA Trust, 8.00%,
Series C........................... 92,000 2,327,600 7.91
LaSalle Hotel Properties, 10.25%,
Series A........................... 1,000,000 27,900,000 9.18
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48,401,936
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MORTGAGE 0.19%
Newcastle Investment Corp., 9.75%,
Series B........................... 56,000 1,505,840 9.07
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OFFICE 2.54%
HRPT Properties Trust, 8.75%,
Series B........................... 120,000 3,272,400 8.03
Highwoods Properties, 8.625%,
Series A........................... 13,195 13,764,034 8.27
Maguire Properties, 7.625%,
Series A........................... 106,600 2,654,340 7.67
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19,690,774
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OFFICE/INDUSTRIAL 0.05%
PS Business Parks, 8.75%, Series F.... 4,100 109,265 8.22
ProLogis, 8.54%, Series C............. 4,000 228,625 7.47
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337,890
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RESIDENTIAL -- APARTMENT 4.45%
Apartment Investment & Management Co.,
8.75%, Series D.................... 5,530 139,743 8.67
Apartment Investment & Management Co.,
10.10%, Series R................... 950,000 25,336,500 9.37
Home Properties, 9.00%, Series F...... 196,000 5,448,800 8.09
Mid-America Apartment Communities,
8.30%, Series H.................... 138,100 3,558,837 8.07
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34,483,880
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COHEN & STEERS QUALITY INCOME REALTY FUND, INC.
SCHEDULE OF INVESTMENTS -- (CONTINUED)
SEPTEMBER 30, 2004 (UNAUDITED)
NUMBER DIVIDEND
OF SHARES VALUE YIELD
--------- -------------- ------------
SHOPPING CENTER 9.93%
COMMUNITY CENTER 4.90%
Developers Diversified Realty Corp.,
8.60%, Series F.................... 1,039,400 $ 27,855,920 8.02%
Federal Realty Investment Trust,
8.50%, Series B.................... 276,300 7,476,678 7.84
Urstadt Biddle Properties, 8.50%,
Series C........................... 24,000 2,622,000 7.78
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37,954,598
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FREE STANDING 0.09%
Commercial Net Lease Realty, 9.00%,
Series A........................... 25,000 681,250 8.26
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OUTLET CENTER 0.11%
Chelsea Property Group, 8.375%,
Series A........................... 14,000 843,500 6.95
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REGIONAL MALL 4.83%
CBL & Associates Properties, 8.75%,
Series B........................... 430,000 23,112,500 8.15
Glimcher Realty Trust, 8.75%,
Series F........................... 40,000 1,059,600 8.27
Glimcher Realty Trust, 8.125%,
Series G........................... 40,000 1,018,000 7.98
Mills Corp., 9.00%, Series B.......... 55,300 1,503,054 8.28
Mills Corp., 9.00%, Series C.......... 159,600 4,389,000 8.18
Mills Corp., 8.75%, Series E.......... 84,000 2,268,000 8.11
Simon Property Group, 8.75%,
Series F........................... 30,000 809,700 8.11
Taubman Centers, 8.30%, Series A...... 127,600 3,281,872 8.09
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37,441,726
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TOTAL SHOPPING CENTER................. 76,921,074
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TOTAL PREFERRED STOCK (Identified
cost -- $208,568,719).......... 227,212,675
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TOTAL EQUITIES (Identified
cost -- $866,667,445).......... 1,117,149,300
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COHEN & STEERS QUALITY INCOME REALTY FUND, INC.
SCHEDULE OF INVESTMENTS -- (CONTINUED)
SEPTEMBER 30, 2004 (UNAUDITED)
PRINCIPAL
AMOUNT VALUE
---------- --------------
COMMERCIAL PAPER 0.36%
State Street Corp., 1.40%, due 10/01/04
(Identified cost -- $2,803,000)................ $2,803,000 $ 2,803,000
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TOTAL INVESTMENTS (Identified
cost -- $869,470,445)......................... 144.61% 1,119,952,300(a)
LIABILITIES IN EXCESS OF OTHER ASSETS........... (0.71)% (5,505,760)
LIQUIDATION VALUE OF TAXABLE AUCTION MARKET
PREFERRED SHARES: SERIES T, SERIES W,
SERIES TH, AND SERIES F (Equivalent to $25,000
per share based on 2,800 shares outstanding
for Series T, Series W, Series TH and
Series F)..................................... (36.15)% (280,000,000)
LIQUIDATION VALUE OF AUCTION MARKET PREFERRED
SHARES: SERIES M28 (Equivalent to $25,000 per
share based on 2,400 shares outstanding)...... (7.75)% (60,000,000)
NET ASSETS APPLICABLE TO COMMON SHARES ------ --------------
(Equivalent to $19.93 per share based on
38,856,074 shares of capital stock
outstanding).................................. 100.00% $ 774,446,540
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(a) At September 30, 2004, net unrealized appreciation was $250,481,855 based on
cost for federal income tax purposes of $869,470,445. This consisted of
aggregate gross unrealized appreciation on investments of $252,228,742 and
aggregate gross unrealized depreciation on investments of $1,746,887.
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COHEN & STEERS QUALITY INCOME REALTY FUND, INC.
SCHEDULE OF INVESTMENTS -- (CONTINUED)
SEPTEMBER 30, 2004 (UNAUDITED)
NOTE 1. INVESTMENTS IN INTEREST RATE SWAPS
The fund has entered into interest rate swap transactions with Merrill Lynch
Derivative Products, UBS AG, Banc of America Securities, and Royal Bank of
Canada. Under the agreements, the fund receives a floating rate of interest and
pays a respective fixed rate of interest on the nominal values of the swaps. The
fund has segregated 410,000 shares of Crescent Real Estate Equities Co., 6.75%,
Series A as collateral for the interest rate swap transactions. Details of the
interest rate swap transactions as of September 30, 2004 are as follows:
UNREALIZED
NOTIONAL FIXED FLOATING RATE(a) APPRECIATION/
COUNTERPARTY AMOUNT RATE (RESET MONTHLY) TERMINATION DATE (DEPRECIATION)
-------------------------------- ------------ ------- ---------------- ---------------- --------------
Banc of America Securities...... 14,000,000 3.2125% 1.6700% October 2, 2008 $ 126,952
Merrill Lynch Derivative
Products...................... 46,000,000 4.5600% 1.6963% April 5, 2005 (638,319)
Merrill Lynch Derivative
Products...................... 46,000,000 5.2100% 1.6963% April 5, 2007 (2,457,928)
Merrill Lynch Derivative
Products...................... 46,000,000 5.5800% 1.6963% April 5, 2009 (3,823,767)
Royal Bank of Canada............ 14,000,000 3.6800% 1.8275% October 22, 2008 (108,525)
UBS AG.......................... 24,000,000 4.4500% 1.7600% April 15, 2005 (319,267)
UBS AG.......................... 24,000,000 5.1200% 1.7600% April 15, 2007 (1,225,241)
UBS AG.......................... 24,000,000 5.4950% 1.7600% April 15, 2009 (1,904,033)
------------
$(10,350,128)
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(a) Based on LIBOR (London Interbank Offered Rate). Represents rates in effect
at September 30, 2004.
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Item 2. Controls and Procedures
(a) The registrant's principal executive officer and principal financial
officer have concluded that the registrant's disclosure controls and
procedures (as defined in Rule 30a-3(c) under the Investment Company
Act of 1940) are effective based on their evaluation of these
disclosure controls and procedures required by Rule 30a-3(b) under the
Investment Company Act of 1940 and Rule 13a-15(b) or 15d-15(b) under
the Securities Exchange Act as of a date within 90 days of the filing
of this report.
(b) During the last fiscal quarter, there were no changes in the
registrant's internal control over financial reporting (as defined in
Rule 30a-3(d) under the Investment Company Act of 1940) that has
materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
Item 3. Exhibits.
(a) Certifications of principal executive officer and principal financial
officer as required by Rule 30a-2(a) under the Investment Company Act
of 1940.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
COHEN & STEERS QUALITY INCOME REALTY FUND, INC.
By: /s/ Robert H. Steers
--------------------------------
Name: Robert H. Steers
Title: Chairman
Date: November 29, 2004
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ Robert H. Steers By: /s/ Martin Cohen
---------------------------------- ----------------------------------
Name: Robert H. Steers Name: Martin Cohen
Title: Chairman, Secretary and Title: President, Treasurer and
principal executive officer principal financial officer
Date: November 29, 2004
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