Ladies and gentlemen, thank you for standing by. Welcome to the Cohen & Steers Second Quarter 2012 Financial Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded on Thursday, July 19, 2012. I would now like to turn the call over to Mr. Sal Rappa, Senior Vice President and Associate General Counsel. Please go ahead, sir.

Thank you and welcome to the Cohen & Steers second quarter 2012 earnings conference call. Joining me are Co-Chairman and Co-Chief Executive Officers, Marty Cohen and Bob Steers; our President, Joe Harvey; and our Chief Financial Officer, Matt Stadler. Before I turn the call over to Matt, I want to point out that during the course of this conference call, we may make a number of forward-looking statements. These forward-looking statements are subject to various risks and uncertainties and there are important factors that could cause actual outcomes to differ materially from those indicated in these statements. We believe that some of these factors are described in the Risk Factors section of our 2011 Form 10-K, which is available on our website at cohenandsteers.com. I want to remind you that the Company assumes no duty to update any forward-looking statements. Also, the presentation we make today may contain pro forma or non-GAAP financial measures, which we believe are meaningful in evaluating the Company's performance. For detailed disclosures on these pro forma metrics and their GAAP reconciliations, you should refer to the financial data contained within our previous earnings releases each available on our website. Finally, this presentation may contain information with respect to investment performance of certain of our funds and strategies. I want to remind you that past performance is not a guarantee of future performance. This presentation will also contain information about a fund that has filed a registration statement with the SEC, which has not yet become effective. This communication shall not constitute an offer to sell or the solicitation of any offer to buy these securities. For more complete information about these funds, including charges, expenses and risks, please call (800) 330-7348 for a prospectus. With that, I'll turn the call over to Matt.

Thank you, Sal, and good morning, everyone. Thanks for joining us today. Yesterday we reported net income of $0.36 per share compared with $0.36 in the prior year and $0.41 sequentially. Revenue for the quarter was a record $67.4 million compared with $61.5 million in the prior year and $63.7 million sequentially. The increase in revenue from the prior year was attributable to higher average assets, resulting from market appreciation partly offset by net outflows, primarily from sub-advisory accounts. Average assets for the quarter were a record $43.6 billion compared with $40.9 billion in the prior year and $43 billion sequentially. Our effective fee rate for the quarter was 55 basis points, up from 54.5 basis points last quarter. The increase was primarily due to a shift in the mix of our assets under management. Open-end mutual funds, which are higher fee paying, now make up a larger percentage of our overall assets under management. Operating income for the quarter was $26.1 million compared with $22.9 million in the prior year and $25.4 million sequentially. Our operating margin decreased to 38.7% from 39.8% last quarter. The 110 basis point decrease was primarily due to a higher G&A to revenue ratio. Pre-tax income for the quarter was $25.1 million net of non-controlling interest compared with $24.1 million in the prior year and $28.2 million sequentially. Assets under management totaled $44.4 billion at June 30, a decrease of $499 million or 1% from the first quarter. The decrease in assets under management was attributable to net outflows of $1.2 billion partially offset by market appreciation of $697 million. At June 30, our U.S. real estate strategy comprised 50% of the total assets we manage, followed by global and international real estate at 28%, large cap value at 8%, global infrastructure at 7%…

Thank you, Matt, and thank you all for joining us this morning. I don’t have a lot to add to Matt’s remarks on the operational side, but I would like to spend a few minutes updating you on our strategic positioning and also comment on some of our challenges. I am pleased to report that almost without exception our asset classes are performing exceptionally well. I’ll talk about our individual performance in a few minutes. The 2 most notable performers in the first-half of this year have been real estate and preferred securities. Real estate both U.S. and international enjoyed mid-teens total returns in the first half alone. This return led all other equity and for that matter all bond index returns, whereas there have been consistently large outflows from equity mutual funds in the United States. There have been consistent inflows into real estate funds. In the U.S., flows have been nearly $10 billion and in Japan more than $10 billion in the first half of this year. The only equity fund category that has attracted more capital this year has been emerging market equities. If you exclude ETFs from the flow statistics, our market share of net inflows into real estate funds in the U.S. was about 43%. Further, the U.S. real estate funds that we sub-advised in Japan were the #1 and #4 best-selling funds in the country. I should mention that offsetting the U.S. flows somewhat as Matt alluded to, there were outflows from our global real estate funds in Japan. Let me take a minute and clarify some of the questions as that have been raised in information that’s been put out there. With respect to the funds that we sub-advised in Japan there have been substantial inflows into U.S. funds and for our funds…

[Operator Instructions] And our first question comes from the line of Michael Carrier with Deutsche Bank.

The first question just on the performance, your long-term performance has been strong; it’s been strong for a long time, meaning consistently. The one-year it was a bit weak and then recently the 3-year has started to get a little bit weak in certain products. And then when we look at the flows, you see the outflows in more products than we've seen in the past, but I just want to try to maybe parse through how much of that is specific issues meaning like a loss mandate that’s more unique in nature versus harder to generate sales given some of the performance in some of the key products because it seems like it’s a little bit of both and you don’t want to look at it as just the performance issue?

Mike, it’s Bob. That’s a great question, and there is no simple answer really. We -- several years ago we had weak performance in large cap value. And in the last 1.5 years they’ve just really had an exceptionally good period and -- but we’ve lost some money there, but we’re not worried about that going forward, their numbers are so strong and their momentum is terrific. With respect to REITs, the real softness in performance has been in international, and clearly there’s been some cause and effect there in terms of losing accounts. Beyond that, the flows from Japan are not affected by any performance issues, as Marty mentioned earlier, flows they are really a function of levels and directions of distributions. So we feel very good about the outlook for large cap value given where we are performance-wise there. And as Marty mentioned, we’ve made some changes on the real estate side. We’re extremely confident that performance is not going to be an issue going forward.

Okay. And then maybe just on the Japan market, you mentioned the dividend cuts or the distribution cuts, based on what you saw I guess in the past with global, is there a way to try to size that up or is it -- in terms of what type of outflows you can see? And then probably more importantly, it just seems like when you look across markets and products it’s hard to find distributions that are anywhere near even a reduced level, so it’s -- I think being over here and trying to look at different market, it’s always hard to tell like what else would investors go into, but I don’t know if you guys have any sense in that, but just trying to box that in or how much more like accumulated distributions are in REIT funds in that market, not just yours, but just anyone in general?

Mike, it’s very hard -- it’s very hard for us as well. Actually I was in Japan last week, and this is with many people and I’ve asked the question if you reduce the distributions from a very high level to just a high level, where are investors going to go and I didn’t get any answers. So all we can do, we can’t predict flows. We just act as sub-advisors and do the best we can. And I think it is important to understand that this is a very strong asset class in Japan. In fact, I had a direct comment from one of our colleagues over there that Japanese investors love REIT funds. In fact, they think more highly of a REIT fund than they do of equity funds and that’s why they’ve not just the funds that we sub-advised, but our competitors have experienced a pretty substantial interest in the funds that we sub-advised. So there will be short-term fluctuations. If these funds are up 15% this year, investors had a very good experience. So hard to predict and we just do the best we can and manage it -- I wish we had more clarity, but it’s in the same in the United States, it’s very hard to predict flows.

Mike, I would simply add that, also an answer to your question, our partners in Japan and we are always working together on new products and we too ask the question if interests and REIT funds begins to wane, where is that money going to go? And so, we’re -- as we always are in deep discussions with our partner there on new products including non-REIT products and just as demand for preferred securities here in the United States is extremely strong, we talk to them about products that include preferred and covered core strategies and things like that. So to us, this is a broad and ongoing distribution relationship and our mutual goal is to provide Japanese investors with really solid yield ideas.

Okay, that’s helpful. And then, I don’t know if you hit on it, but just closed-end funds, we’ve seen a little bit of a pickup, just your guys’ outlook, because you -- in the past were fairly active in that space, the new environment got rougher, so just maybe the outlook ahead?

We’re opportunistic, we’ve -- the fund we’ve in the market this month is a limited duration fund, which will have a very strong yield and it seems to satisfy investor appetites today. So if we have a strategy where we can deliver a good investment, perspective investment results for investors, we’ll take advantage of that. It’s not something that’s in our business plan to do a certain number of closed-end funds every year. We did a -- the last fund we did was about 1.5 years ago, it was a preferred fund. It performed extremely well. It was a good raise and it performed extremely well and again, opportunistically we’ll do something if we have the strategy and the market conditions are right.

And our next question comes from the line of Adam Beatty with Bank of America Merrill Lynch.

If I could just one more on the Japan operations, I appreciate all the color and the commentary that you’ve given so far, the question is around the distribution cuts in the funds and just maybe more conceptually the dynamics there, last year there were some market losses and what have you, so to me it’s logical that if you’re distributing unrealized gains, you have market losses, you have to cut the distribution, this year as you mentioned, the absolute returns have actually been quite good. So do you’ve any sense of what’s driving those distribution cuts?

I think what -- I don’t know exactly what it is, but I think that the distribution yield was just so high that the prudent thing to do was to reduce it, so that it was just in line with other REIT funds. I don’t think it was a fundamental issue there. In fact I think it’s important that we articulated to the investors there that this distribution cut is not the result of any -- there is no suggestion here that the outlook has changed to the negative, on the contrary it hasn’t.

Okay, that’s fair. And then, turning to the institutional advisory, touch on that business briefly, my sense and maybe I lost track a little bit, that there was still a won, but unfunded backlog out there, is that true right now?

We always have a backlog, and we’ve shared that with you all when there has been something extraordinary. I think today we’re just in that -- we’ve got a pipeline of accounts that will be funded and I think it’s probably prudent just as when -- just -- it will show up in our statistics when we report them quarterly. There is nothing extraordinary out there that we think we’re focusing on.

Okay. And maybe just a couple of quick ones for Matt. Firstly, on the seed fund gains and losses, I assume a substantial part of that was the real assets fund and just – I’d like to get some color from you, if I could on kind of the balance there and what’s the glide path for kind of backing off of that seed investment?

Well, it’s an open-end mutual fund. So we’re consolidating it now because we’re over 50%, as Marty mentioned in his points, maybe a little ahead of the curve there it’s going to get some attention, but the economic factors that’s going to really make that sizzle is not necessarily in place at this moment in time. So although we’re gathering assets, it’s not yet at the pace that it would be if the economic environment is a little bit different, as soon as it -- if we get under 50% it becomes the comprehensive income, so it’s not going to be on the income statement at all. I think we’re still a couple of quarters away from that occurring.

Okay, that’s very helpful. And then just one last one if I could on the distribution expense, I heard you emphasize that it’s on the balance of open-end load funds, it fluctuates somewhat, but it seems like it’s been coming down just as a proportion, I’m assuming that’s -- that indicates the proportion of load funds coming down, is that right?

Well, the reason why it’s sequentially up this quarter is our no-load funds it’s essentially that and CSR is a $5 billion fund, that’s where a lot of our growth has been occurring and as that growth occurs adapts to that [ph] fund increases and that’s the majority of the delta.

And our next question comes from the line of Mac Sykes with Gabella & Company (sic) [Gabelli & Company].

That’s actually Gabelli & Company. I was just talking, I mean, you’ve done a great job with these alternative strategies or the portfolio, the model portfolio strategies; I was just curious if you could give us some color on what you thought potential was for that business, how you’re thinking about that? And then, maybe some comment on the margins versus the complex in general?

I’m sorry, you’re asking for comment on which alternative strategies?

I’m sorry, the model strategies, you’ve had nice growth in that business, I was just curious if you could give us some color on the potential for what you see for that business and maybe some color on the margins in that business versus the complex in general.

Well, as I mentioned, some of the Japanese funds that we manage when there are inflows they’re going into model-based strategies. And there -- but there is also a unit investment trust, we have a couple of ETFs and these SMA and UMA accounts. So there is not much really to say, they have grown due to what I mentioned earlier that the Japanese fund flows and we just can’t predict how they’re going to be in the future.

Okay. And so should I gather the growth rates are really being pushed by the redistribution from the Japanese funds rather than your marketing externally?

To a great extent, that’s correct.

Okay. And then should we also expect a slight blip in G&A from the launch potentially next week?

Oh, yes.

Good for you to mention that.

Yes.

There will be a -- there will be some distribution expenses associated with this closed-end fund. And we will segregate those expenses out, but the more success we have, the greater the marketing expense of course and it could be that our headline number is going to look less attractive than it is actually underlying. But we will separate that out.

Yes Mac, in my prepared remarks I didn’t hit on that because typically when we’ve had launches in the past between compensation agreements and marketing costs, it is in the headline number, but we always put in release that what our earnings would have been without these one-time charges. So they will be in there, but they will be anomalized out essentially and I think it’s not really a run rate, but we’re really left with on a recurring basis would be the assets that are raised, at the fee rate.

Okay. Look forward to that and just my last question, I’m going to try to ask this, but -- I think in last quarters or a year ago in the second quarter you talked about the Daiwa relationship of $5 billion in assets in the first half. I was just curious, if you could give us a sense of what the AUM percentage is dedicated right now -- coming from the Japan region?

We are really not in the practice of segregating out individual relationships and their size.

Fair enough.

And gentlemen there are no further questions at this time.

Well, great. Thank you all for listening and we look forward to reporting back to you again after the summer.

Thank you. Ladies and gentlemen, that does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your lines.