Welcome to the Cohen & Steers' third quarter 2013 financial results conference call. (Operator Instructions) 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 third quarter 2013 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 2012 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 contains 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 the press release we issued yesterday as well as in our previous earnings releases each available on our website. Finally, this presentation may contain information with respect to the investment performance of certain of our funds and strategies. I want to remind you that past performance is not a guarantee of future performance. For more complete information about these funds, including charges, expenses and risks please call 800-330-7348 for perspectives. With that, I'll turn the call over to Matt.

Thank you, Sal. Good morning, everyone, and thanks for joining us today. Yesterday we reported net income of $0.41 per share, compared with $0.23 in the prior year and $0.34 sequentially. The third quarter of 2012, included after-tax expenses of approximately $0.21 per share, primarily due to costs associated with the offering of Cohen & Steers Limited Duration Preferred and Income Fund. After adjusting for these items, earnings per share for the third quarter of 2012 would have been $0.44. Revenue for the quarter was $74 million compared with $71.3 million in the prior year and $77.8 million sequentially. The increase in revenue from the prior year was attributable to higher average assets under management, resulting from market appreciation, net inflows into open-end funds and the launch of the Cohen & Steers MLP Income and Energy Opportunity Fund, partially offset by net outflows from institutional accounts. Average assets under management for the quarter were $47 billion compared with $45.2 billion in the prior year and $50.2 billion sequentially. Our effective fee rate was 57.2 basis points, up from 56.3 basis points last quarter. The increase was primarily due to a continued shift in the mix of our assets under management. Operating income for the quarter was $27.7 million compared with $12.2 million in the prior year and $28.6 million sequentially. Excluding the preferred closed-end fund offering costs, operating income for the third quarter of 2012 was $27.9 million. Our operating margin increased to 37.4% from 36.7% last quarter. The 74 basis point increase was the result of lower distribution in service fee expense and G&A, partially offset by an increase in the compensation to revenue ratio. Pre-tax income net of non-controlling interest was $29.5 million for the quarter compared with $15.2 million in the prior year and $25.2 million sequentially.…

Thank you, Matt. And thank you all for listening this morning. As you can tell from Matt's remark, a lot of numbers there. It appeared to be an uneventful quarter. On a statistical basis, we've ended up pretty much as we started the quarter. But when you dig a little deeper, which I'd like to do for you, there is a number of interesting trends that are emerging. Our real estate strategies had diverse absolute performance, it's not a homogeneous group. U.S. real estate experienced negative returns of about 2%, while international was nicely positive, up about 8%. Our non-real estate equity strategies were positive in line with the stock market in general. Infrastructure up 7%, large cap value up about 4% and this was offset by preferred, which were negative, falling in sympathy with the turning points in the bond market in the middle of the year. From a flow standpoint, our open and real estate funds have enjoyed steady positive flows in eight out of the nine month so far this year. This is important to us, because it suggest that despite popular sentiment that is counting out REITs in light of rising interest rate, this is just not the case with respect to investor behavior. Real estate and REITs remain a corner stone of many investment portfolios. Preferred on the other hand, which were our biggest driver of open-end funds, early this year turned negative, beginning in June, when interest rates began to rise and this negative flow trend has continued into October. The net of this is that the quarterly decline in our assets under management was the direct result of outflows of institutional accounts, a combination of real estate and large cap value. Encouragingly, we believe that our strong relative performance, particularly real estate has…

(Operator Instructions) Our first question comes from the line of Mac Sykes from Gabelli & Co. Mac Sykes - Gabelli & Co.: Marty, I think you briefly touched on this. But I wondered if you could give us more color, just looking at the outflows this quarter and whether you could differentiate them from relative performance or sort of getting out of the asset class or about fears of REIT. Is there any way to sort of differentiate that?

It's very hard to differentiate why someone redeems or not. But I can tell you that on the real estate side we have positive growth in the third quarter.

Institutionally we had $820 million of global real estate outflows from three clients and it was performance related. And as Marty mentioned, well, you never know for sure. We're highly confident that real estate outflows institutionally are behind us. And as Marty mentioned, we're getting net new mandates. And so as I mentioned in the second quarter call, our performance had turned around in the latest 12 months and longer, numbers look extremely good and we've got great feedback from our clients. So I think the $820 million of institutional outflows that we're real estate related is a significantly lagging indicator. And based on our analysis of our existing client base, we really don't see any meaningful risk going forward.

When I said positive flows in the quarter, I was referring to our open-end funds, which are I think a much broader measure of the asset class and its acceptance.

REIT flows were positive in the quarter, as Marty mentioned, eight out of nine months, and for the quarter we're still seeing positive flows. Mac Sykes - Gabelli & Co.: I'm just curious, what sorts of opportunities do you see there outside of Daiwa? And how much opening the office there help you there?

Well, Ken, as Marty mentioned, came from Wellington. And interestingly he brings with him a wide range of client relationships. Daiwa was not one of its clients, while at Wellington. So one of Ken's strength is that he is a business development person, who was very successful with Wellington and brings client relationships beyond Daiwa. And we're committed to Daiwa for our real estate strategies, but we have as Marty mentioned a broad range of real asset strategies that we're talking to other distributors about. I think it's also worth pointing out that one of the other important catalyst behind bringing on a senior person like Ken is that, early next year in Japan, they are launching their equivalent of the 401(k) or defined contribution business. So it's really a very significant new market opportunity, especially for banks, who have many of these retail client relationships already. So Daiwa and others are gearing up significantly to compete for what will be the beginning of an important new asset gathering opportunity for the entire industry over there.

And then, it's one that is not a fast money operation. It's where there's investors commit to a certain asset and not a lot of MLPs for outflow. So it's an interesting opportunity. How big it is, we don't know. But we're going to be there and the reputation, it should be good for us. Mac Sykes - Gabelli & Co.: My last question is, you continue to build cash in your balance sheet and have paid out special dividends last couple of years. So just any thought on capital deployment between now and the end of the year?

Well, that's something we bring up with our board annually and we'll let the board decide that when they next meet.

And our next question comes from the line of John Dunn from Sidoti.

My first question was on, it sound like the global real estate mandates look positive. What about in the U.S. real estate segment, what's it look for institutional mandates there?

I think it's solid. It's hard to project, but our U.S. performance numbers are extremely strong on a one year. Our three year numbers are now also very competitive five, 10, 20 are among the best. So I think that U.S. REITs are actually looking attractive. And I think there was some concern after the second quarter that REITs had gotten ahead of themselves and some interest waned a bit. I think the underperformance in the third quarter is causing, particularly people who are asset-allocation oriented to reexamine their weightings there. So I would say the demand is strong, but it's not unusually strong and we haven't really seen a lot of weakness either. Well, I would say, if like that, where we are seeing acceleration in demand on the institutional side is both listed infrastructure and commodities. And it's an interesting phenomenon, the institutional world is very, very interested in real assets and whether it's real estate commodities, infrastructure and natural resources has and looking into next year. And so we're winning mandates, as Marty mentioned, commodities we've got a very large mandate their. We are winning multiple mandates in infrastructure. So we're actually seeing an acceleration in institutional demand for the range of our products, whereas REITs are chugging along, but we have lost momentum in the preferred space.

Do you have a longer-term target of what percentage of AUM you'd like to realize asset strategy to be? Sidoti: Do you have a longer-term target of what percentage of AUM you'd like to realize asset strategy to be?

We can't predict the market and the market's going to tell us what that's going to be. Clearly, if you look at all the real asset funds that are out there, it's not been the best place to be for the last year or two. It's our view and looking at five years by virtue of a number of factors, continued economic growth, demographic shifts, the emerging markets and the diversification benefits of these combined asset classes that it will be in strong demand. As Bob said, the institutional market has picked up on this and we think the DC market has and will continue to, because there really are some important benefits in a diversified portfolio.

Marty makes an excellent point. A number of these mandates that we've gotten institutionally are sleeves of somebody else's real asset strategy that are being offered to target-date plans, DC funds on standalone basis and so on. So form a strategic standpoint, we see that most in large and dominants for example have 10% to 30% allocated to real assets. Many of the leading distributors, Merrill's, Morgan Stanley's and others are advocating significant ratings and client portfolio to real assets, which are currently close to zero today. And so we think that's where our investors' interest is going to be headed. And we're just confident that at some point along the way there will be very, very significant retail demand for all of these strategies.

Just last question, would it be fair to characterize when the REIT sectors gets less correlated in terms of stock price movements. Do you guys expect to, first of all outperform the rest of the REIT investors and pick up share. And maybe if what happened last time, we got close to the rate hike, how you guys did relative to everybody else? Sidoti: Just last question, would it be fair to characterize when the REIT sectors gets less correlated in terms of stock price movements. Do you guys expect to, first of all outperform the rest of the REIT investors and pick up share. And maybe if what happened last time, we got close to the rate hike, how you guys did relative to everybody else?

Traditionally or historically REITs have not been that interest rate sensitive. They are talked about as being interest rate sensitive and believed to be, but when you examine the track record, other than in brief periods, like we had perhaps over the summer, REITs are not that interest rate sensitive, because if rates are rising, because of strong economic activity and inflation, then real estate is what you want to own. And when you look at periods like that, then that has in fact been the case. So we don't expect that to change, although near-term anything can happen. I think it's important to emphasize, we are the go-to guys on this and every manager may have slump year or so. But basically there is no long-term track record that is either longer or superior to ours. So we expect to always be getting our share of flows and always be in the top ranks with respect to performance.

And this year we've gained market share both when REITs where moving higher with the broader market in the first half of the year as well in the third quarter, so as Marty said, when our performance is as strong as we expect it to be, we expect to gain market share. And that's been the case this year.

And our next question comes from the line of Marc Irizarry from Goldman Sachs.

This is Steven actually for Marc. Just a few questions. First, I was hoping you could speak to the dynamics in the assets under advisement, whether that was performance driven? The decline quarter-over-quarter if that's performance driven, flow-driven or any categorization changes we should know about?

The performance aspect of it is not dissimilar to what we experienced in our assets under management. The model based strategies, as we had pointed out, there is a component of that that's from our Japanese business relationships and there is a piece of that that's outflows. But the rest of it, you could apply it with the market deprecation was to some of the other classes and that would be consistent with the ETF piece and the UIT piece. The ETF piece is very low feed for us, model-based is a little bit higher. And the UITs had a small variation. So most of it was model-based and ETF.

And in the model-based primarily global, not U.S.

Second was just wondering what you see in terms of the opportunities in the next 12 months in closed-end funds?

Well, it looks like the window is somewhat closed now. There have not been any significant offering. We had one teed up for September in the preferred area. But the preferred funds are now selling at discounts and there is not that stronger demand. We always have a couple of funds on file, so that when the window opens we're ready to move. We have very strong relationships as you know with all of the underwriters. And we're one of the largest purveyors of closed-end funds. So when the window opens, we are confident that we'll have something to take advantage, first the investment opportunity and next the distribution opportunity.

And just one more question. I just was wondering, we talked some about Japan today from a client perspective. And I just was wondering sort of as you guys are building out abroad, how much hiring we should expect to see and just overall what the margin dynamics are as you scale some of your international businesses?

We're looking at bringing in the strongest talent possible wherever we have a need. We're not really looking at it from a budget standpoint. And so I think our senior ranks are relatively well staffed right now. So don't expect maybe major hires. We continue to develop the middle and the up and coming class of employees as well. So I wouldn't expect necessarily a big comp increase based on our current plans.

For marketing and distribution and product, we are where we want to be and we're really looking at 2014 as the year to execute where all the pieces are in place, I think the investment teams, sales and marketing people. Marty mentioned of serious new addition in the DCIO side, but all of the key people are in place, and so it's really just execution now, not building.

Our increase in our comp ratio, this modest increase is not due to an explosion in staff, but basically when we established our comp ratio early in the year, it was based on assets at that time and expected flows and without a market depreciations, since we've had some outflows and some depreciation that has challenged the revenue side a little bit which has caused that comp ratio to increase very, very slightly.

And maybe just on that last piece. Are you sort of hinting that maybe $24 million or so on a quarterly basis is maybe a better way to think about it than a ratio or no?

No, I wouldn't think about it that way. We always try to give some forward-looking guidance on a ratio based on our modeling here and our understanding of where we think the business is going. So I wouldn't say using an absolute number is necessarily a good proxy. I'd just use the 32.5% for the fourth quarter and we'll give guidance for 2014 on the next call.

Our next question comes from the line of Adam Beatty from Bank of America.

Just a follow-up question on Japan. It looks like the sub-advisory flows while they're still negative, continue to improve. So I was hoping you could just maybe, even in the face of maybe some folks turning away from the asset class and some of your other channels, so I was hoping maybe you could give some color on that, whether why feel as though the fast money is kind of left at this point or are there performance dynamics behind that or any other thoughts? Bank of America: Just a follow-up question on Japan. It looks like the sub-advisory flows while they're still negative, continue to improve. So I was hoping you could just maybe, even in the face of maybe some folks turning away from the asset class and some of your other channels, so I was hoping maybe you could give some color on that, whether why feel as though the fast money is kind of left at this point or are there performance dynamics behind that or any other thoughts?

Well, we mentioned in the last call that this summer we work with Daiwa on some road shows for some of our existing funds. And they were very well received and I think that's the main reason why outflows have continued to improve. I don't have the numbers in front of me, but we're very close to kind of breakeven there with respect to sales and in redemptions out. The main contributing factor to flows out now, are simply that they make very large distributions on a monthly basis and it varies by month. But as a general statement, we're basically at treading water here. And to your comment, yes, we're not seeing velocity in or out right now, which was our goal. As you know, we had high velocity. And after the dividend cut, we had some high velocity out, now we're stabilizing. And as I mentioned earlier, we met with Daiwa here in New York this week. Marty and I will be there next month. And we're having ongoing very high level discussions on how to collaborate on both marketing the existing funds, but take advantage of this what could be long-term as big an opportunity as the DC market place is here. There is not going to be any overnight success, but the bell rings on January 1, and it's a very big opportunity. And it's something that Daiwa absolutely has two of our funds in their product line up and we're going to work very hard to make sure that we're front and center once the bell goes off. So we're in I think a very good position right now over there.

Just turning to, earlier I think Matt mentioned the blended fee rate and it sounds like there has been a bit of positive mix shift. My mind, of course, first goes to sub-advisory and maybe some of the prior outflows, helping the fee mix a little bit. Are there any other dynamics there in terms of either asset class or products that have distinctly higher or lower fees that might shift that point of rate? Bank of America: Just turning to, earlier I think Matt mentioned the blended fee rate and it sounds like there has been a bit of positive mix shift. My mind, of course, first goes to sub-advisory and maybe some of the prior outflows, helping the fee mix a little bit. Are there any other dynamics there in terms of either asset class or products that have distinctly higher or lower fees that might shift that point of rate?

No. I think it's just when you look at the composition of our asset mix open-end funds and closed-end funds have been getting higher concentrations or percentage of our overall and that's just had the effect of increasing the effective fee rate. As you pointed out, you lose sub-advisory assets, they are our lowest fee rate and advisory are next, but open-end and closed-end our highest fee rate.

In terms of G&A and you did give some guidance for 4Q, so that's helpful. You mentioned in the release some IT consolidation streamlining, just wondering if there is any other initiatives kind of ongoing with that where you might be in the mode right now to spend now, save later or we might look for some additional kind of ratcheting down on that account. Bank of America: In terms of G&A and you did give some guidance for 4Q, so that's helpful. You mentioned in the release some IT consolidation streamlining, just wondering if there is any other initiatives kind of ongoing with that where you might be in the mode right now to spend now, save later or we might look for some additional kind of ratcheting down on that account.

I think we're always looking to automate as much as possible and add a lot of efficiencies into our processes and that was evidenced in the quarter. Going forward, there's nothing of note that would have an influence on the G&A line, relates to IT spend.

And there are no further questions in the phone lines. I'll turn the call back to you Mr. Rappa.

Well, thank you all for joining us today. And we look forward to talking to you next quarter. Thank you.