Ladies and gentlemen, thank you for standing by. Welcome to the Cohen & Steers Third Quarter 2025 Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded, Friday, October 17, 2025. I would now like to turn the conference over to Brian Heller, Senior Vice President and Deputy General Counsel of Cohen & Steers. Please go ahead.

Thank you, and welcome to the Cohen & Steers Third Quarter 2025 Earnings Conference Call. Joining me are Joe Harvey, our Chief Executive Officer; Raja Dakkuri, our Chief Financial Officer; and Jon Cheigh, our President and Chief Investment Officer. I want to remind you that some of our comments and answers to your questions may include forward-looking statements. We believe these statements are reasonable based on information currently available to us but actual outcomes could differ materially due to a number of factors, including those described in our accompanying third quarter earnings release and presentation, our most recent annual report on Form 10-K and our other SEC filings. We assume no duty to update any forward-looking statement. Further, none of our statements constitute an offer to sell or the solicitation of an offer to buy the securities of any fund or other investment vehicles. Our presentation also contains non-GAAP financial measures referred to as adjusted financial measures that we believe are meaningful in evaluating our performance. These non-GAAP financial measures should be read in conjunction with our GAAP results. A reconciliation of these non-GAAP financial measures is included in the earnings release and presentation to the extent reasonably available. The earnings release and presentation as well as links to our SEC filings are available in the Investor Relations section of our website at www.cohenandsteers.com. With that, I'll turn the call over to Raja.

Thank you, Brian, and good morning, everyone. My remarks today will focus on our as-adjusted results. Yesterday, we reported earnings of $0.81 per share compared to $0.73 sequentially, representing an increase of 11.6% versus Q2. Key highlights for the quarter include meaningful revenue growth driven by higher AUM combined with a stable effective fee rate, expense management and discipline with revenue growth outpacing expense growth. Expanded operating margin as compared to both the prior quarter and prior year's quarter, net inflows during the period, a multiyear high in our one but unfunded pipeline resulting from investment performance and our focus on sales and distribution. And lastly, a strong balance sheet with high levels of liquidity and no leverage enabling us to be opportunistic. Now back to the detailed results. Revenue for Q3 increased 4.2% from the prior quarter to $141 million. The change in revenue from the prior quarter was driven by higher average AUM, plus an additional day during the period. Our effective fee rate was 59 basis points, in line with the prior quarter. Our operating margin increased meaningfully to 36.1% compared to 33.6% in Q2. As noted, we experienced higher average AUM compared to the prior quarter. In addition, ending AUM increased to $90.9 billion as of Q3. AUM was positively impacted by both market appreciation as well as net inflows. Net inflows into our open-end funds were partially offset by institutional net outflows. Our open-end funds have experienced positive net flows in the last 5 consecutive quarters. Joe Harvey will provide additional insights regarding our flows and pipeline. Total expenses during Q3 were essentially flat to the prior quarter due to several drivers. G&A expenses decreased meaningfully versus the prior quarter. G&A was lower across areas, including talent acquisition and travel costs. While compensation and benefits…

Thank you, Raja, and good morning. I'd like to focus on 2 key areas today: our performance scorecard and our investment outlook, particularly why we see emerging tailwinds for listed real assets and infrastructure. Beginning with our performance scorecard. Our shorter-term quarterly performance was slightly weaker with 33% of AUM outperforming with strong performance from our global listed infrastructure strategy offset by weaker U.S. REIT performance. Despite the short-term underperformance, we have maintained a record of consistent long-term outperformance. On a 1-year basis, 93% of our AUM has outperformed its benchmark, while our 3- and 5-year outperformance rates are above 95%. Our 1, 3 and 5-year excess returns of 184 basis points, 227 basis points and 216 basis points, respectively, are near or above our targets. 87% of our open-end fund AUM is rated 4 or 5 star by Morningstar versus 90% in the prior quarter. In short, we continue to meet our objective of providing long-term alpha for our investors, which has and will continue to create opportunities for new allocations and takeaways from underperforming managers. Last, I want to flag our exceptional performance since launch of our 3 active ETFs, our real estate ETF has outperformed by 217 basis points since inception and is #1 versus its peers. Our preferred ETF has outperformed by 124 basis points and is also #1 versus its peers. While our resource equities ETF has outperformed by 490 basis points. Our early business success with our active ETFs is a team effort, but we know it has to start with great performance. Congrats to our team for delivering. Transitioning to the market and our outlook, the third quarter was broadly positive for risk assets amid prospects for the Federal Reserve easing, corporate profits continuing to generally meet or exceed expectations and the AI…

Thank you, Jon, and good morning. Today, I will review key business trends in the third quarter and then discuss our strategic priorities and some industry topics. For the quarter, our financial results were solid. Flows were positive. Our institutional pipeline built up meaningfully. New strategies and vehicles are gaining traction, and we are making progress on distribution initiatives. On the investment front, while all of our strategies had positive returns, our equity strategy returns except for natural resource equities at 10.7%, lagged the S&P 500 with our largest strategy, U.S. REITs returning 1.4%, ranking ninth of the 11 S&P industry groups. Our preferred stock strategies continued to perform well versus fixed income, reflecting the continued strength of credit and the soundness of the U.S. banking system. If the macro outlook transitions to slower growth with a bias toward lower short rates with sticky inflation our strategies should perform better on a relative basis, particularly with equities at top decile valuations across most metrics. Since the Fed began easing in September 2024, we have had 4 or 5 quarters of net inflows averaging $494 million. This contrasts with 9 quarters of outflows, averaging $745 million during the Fed rate tightening period from March 2022 to September 2024. In the third quarter, we had net inflows of $233 million bringing year-to-date inflows to $325 million. Major story lines were net inflows of $768 million into open-end funds and net outflows of $455 million and $82 million from institutional advisory and subadvisory respectively. We had net inflows into all of our strategies except U.S. real estate with the largest flows in global and international real estate, which has seen a positive inflection in terms of market performance and investor interest. Open-end funds, active ETFs and offshore CCAP funds all had net inflows,…

[Operator Instructions] Our first question today comes from John Dunn from Evercore ISI.

The demand for U.S. REITs in the wealth management channel has been good lately. Can you maybe compare how that's developed versus past cycles leading up to interest rates? Has it been slower to materialize. Has it been about the same? And then do you think flows can -- in the wealth channel can accelerate from where they are in the past few months?

Well, the long story is that historically, returns have tended to be stimulated by interest rate cuts, but that's a pretty one-dimensional way to think about it. You also have to think about what's happening in the economy, fundamentally, the trajectory of growth rates and inflation and such. I would say that the progression of the interest rate cycle this time, which has been about as extreme as we've ever seen it, because of the transition from quantitative easing and leaving 0 interest rates behind has created a different dynamic and that real estate pricing had really advanced with -- in the 0 interest rate environment. And as rates have normalized real estate pricing has had to adjust. We think that's mostly occurred. But in some sectors it still needs to happen. So there's less of a feeling that we're going to have a V-shaped recovery in the REIT return cycle. All of that said, we think we're at a good point in that cycle. And that it's likely that, as Jon said, rates are going to continue to come down. And I think that's going to be a continued catalyst for strong REIT performance. In terms of your question, I think we've had very good results in wealth. We're also seeing good activity in the institutional market for U.S. REIT. As I mentioned, 66% of the $1.75 billion pipeline is in U.S. REIT strategies, and that there are a lot of different stories with that. So maybe with that, I'll stop and see if Jon like to add anything.

The only thing I'd add is, like Joe said, it's -- of course, everyone wants to talk about the interest rate cycle and that's important. But there's also the so-called fundamental cycle, supply and demand. Fundamentals were very, very strong in 2021, but the reality is, is that low interest rates planted the seeds to frankly, too much building in places like industrial and apartments. And so the industry is going through a hangover, if you will, of oversupply of warehouses and apartments. We are going through that process. And so importantly, and I talked about how just overall, we should see the economy and earnings growth begin to broaden out, we expect REIT earnings to accelerate into 2026 and 2027. So again, it's not just a rate story, it is also an earnings and rental growth story.

Got you. And then I guess on the institutional side, you gave us the kind of the profile of the people who are -- the clients who are redeeming. Maybe could you give us a flavor of who's giving you money geographically client-type profile? Any other areas besides U.S. REITs in particular that people are putting money to work?

Well, in the pipeline -- for the pipeline, it's predominantly North America, and it's a wide variety of investors, including retirement plans for individuals, annuity providers. Interestingly, I keep talking about the old architecture structure of vehicles, and we've been -- we've had some losses due to that. One of the big wins recently is where we're being with the beneficiary of a restructuring of annuity-type plans. So the one interesting non-U.S. allocation we've seen recently, I mentioned in my talking points was from a European institution who just is less comfortable with what's going on here in the U.S. and redeemed some of the U.S. position, but they actually added about half of what they redeemed into a European real estate strategy. We also have another interesting in the pipeline of global real estate allocation from a nuclear decommissioning entity in Europe. So I'd say there's really good stories in the pipeline, and they span strategic allocation changes to us continuing to make wins from underperforming peer managers and that continues to be a story both in real estate as well as infrastructure.

[Operator Instructions] Our next question comes from Rodrigo Ferreira from Bank of America.

As rates continue to go down, where do you expect that cash sitting on the sidelines to go into? And I guess, which of your strategies do you feel stand to benefit the most from a flows perspective?

Well, as everybody knows, we've had record levels of cash sitting in money funds and T-bills and such. And I would expect as Jon laid out, the big picture that allocations to and diversifiers to real asset strategies that are inflation sensitive probably should be going up. So that would point to our real estate strategies, our infrastructure strategies and our multi-strategy real assets portfolios, which are the most inflation sensitive because they include resource equities and commodities along with real estate and infrastructure.

The only other things I'd add in we would probably expect some movement to go into preferreds, probably our shorter duration and lower duration preferreds where, of course, high tax-advantaged income is an investment objective, but capital preservation is also an investment objective. And so what we found when short rates were high was that cash was yielding more than short and long duration fixed income, in some cases, including preferred. So I think to the extent the yield curve continues to steepen, we should see more of that deposit and money market move into things like short-duration preferreds. I'd also say that, of course, a lot of money at the margin has gone into private credit funds over the last several years to the extent there are new allocations to the extent of SOFR is coming down with Fed funds. And obviously, total returns for private credit are expected to be compressed. So again, I think both of those incremental movement from private credit into preferreds and out of cash into preferreds are likely places to look.

Got it. And then just for my follow-up, you've given us good visibility on the comp ratio in 2025. How should we think about it in 2026 and longer term? I guess at this moment, like how do you think about the balance of investing in the business versus the opportunity to continue to expand the operating margin.

Yes. Well, I mean, so far this year, we've had decent revenue growth, and that appreciation is the best formula to help the comp ratio and, of course, the associated margin impact. Part of what has been happening toward the end of this year is the timing of some of our hiring is getting pushed out into next year. So I wouldn't extrapolate the trend too much yet. But then we need to focus on kind of what's been happening with some of our new initiatives and the fact that we're beginning to generate revenue from things like private real estate and active ETFs, where the costs associated with those initiatives are in the system. But as everyone knows, we're just still in the launching and buildup phase. So I'd say the last thing to think about is simply this appreciation dynamic for us relative to the markets more broadly, this year, we've been on the losing side of that. In other words, the S&P 500 has done tremendously well. And that helps drive compensation in the industry, and we need to compete for talent. So that's a dynamic at the margin, too. But overall, we feel like we're in a better position on the comp ratio with how markets performing, how we're performing investment-wise but also with our new initiatives beginning to generate revenues and kick in. On the investment front, it's still a time in the industry where things are changing very fast, and we have a lot of opportunities. A significant amount of the things that we've been working on are kind of done or in the numbers. But we continue to see opportunities and will continue because there are strategic things happening in the industry. And then we have an opportunistic situation from time to time,…

No, that was perfect.

We have no further questions in queue. I'd like to turn the call back over to Joe Harvey for any closing remarks.

Great. Well, thanks, Julianne. And we look forward to reporting fourth quarter next January. In the meantime, please call us, call Brian Meta with any questions that you have. Thank you.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.