Ladies and gentlemen, thank you for standing by. Welcome to the Cohen & Steers Second Quarter 2016 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded, Thursday, July 21, 2016. I would now like to turn the conference over to Adam Johnson, Senior Vice President and Associate General Counsel of Cohen & Steers. Please go ahead sir.

Thank you and welcome to the Cohen & Steers second quarter 2016 earnings conference call. Joining me are Chief Executive Officer, 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 2015 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 non-GAAP financial measures, which we believe are meaningful in evaluating the company’s performance. For disclosures on these non-GAAP financial measures and their GAAP reconciliations, you should refer to the financial data contained in our second quarter earnings release and presentation, which are 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. This presentation may also contain information about funds that have filed registration statements with the SEC that have not yet become effective. This communication does not constitute an offer to sell or the solicitation of an offer to buy these securities. For more complete information about these funds, including charges, expenses and risks, please call 1800-330-7348 for a prospectus. With that, I will turn the call over to Matt.

Thanks very much, Adam. Good morning, everyone and thanks for joining us today. As I am sure you have noticed our earnings release now contains certain non-GAAP measures, which we believe provide greater transparency into our operating results. As this is a transition quarter, I will be speaking to both the GAAP and as adjusted results. With respect to the second half of the year, my comments will focus on the as-adjusted results. Yesterday, we reported diluted earnings per share of $0.53 compared with $0.42 in the prior year and $0.39 sequentially. The first quarter included a non-cash expense of $1.9 million or $0.03 per share associated with the accelerated vesting of certain restricted stock units. As adjusted, earnings per share were $0.46 in the first quarter – for the second quarter compared with $0.42 in the prior year and $0.41 sequentially. Adjusted earnings for these periods excluded the results from seed investments, the dividend and interest income on those seed investments and the non-cash expense on the accelerated vesting. Income taxes associated with these results have also been excluded. Page 4 of the earnings presentation which is available on our website shows the current and trailing 4-quarter trend in revenue and breaks out investment advisory fees by vehicle. Revenue was a record $86.4 million for the quarter compared with $83.5 million in the prior year’s quarter and $79.7 million sequentially. The increase in revenue from last quarter was primarily attributable to higher average assets under management. Average assets under management for the quarter were also a record at $55.9 billion compared with $53.3 billion in the prior year’s quarter and $51.6 billion sequentially. Operating income was $34.1 million compared with $31.2 million in the prior year and $28.3 million sequentially. Operating income as adjusted was $30.3 million in the…

Thank you, Matt and good morning everyone. We experienced positive trends in the second quarter and faced some challenges, yet overall, we were pleased with our results. Markets were volatile in the quarter, but strongly favored our core asset classes compared with the S&P 500 which returned 2.5%. Measured by the indexes, MLPs and commodities led the returns across our strategies at 20% and 13%, respectively. U.S. REIT returns were also strong at 7% as were natural resource equities at 7%. Markets expressed seemingly inconsistent expectations as the quarter progressed. The 10-year treasury yield declined to 1.5%, suggesting slow growth, disinflation and a flight to safety amidst Brexit concerns. Yet, oil and commodity prices continued to rally. These conflicting signals are hard to reconcile, especially in light of our view that inflation should accelerate towards 4% into 2017, driven by rising energy, rent and food prices. While part of the inflation bump should be temporary, rising wages, prospects for additional central bank and fiscal stimulus and a likelihood that commodities have entered a new bull market, suggest to us that the positive market performance in real assets will continue, while the fixed income bull market has less and less room to run. We are increasingly vary of the signals from the bond market considering the ever increasing influence of central banks. Turning to investment performance, Page 11 of the earnings presentation provides a high level overview of our relative performance and Morningstar fund rankings. For the quarter, 5 out of 10 core strategies outperformed or were in line with benchmarks. Similarly, 5 of 10 strategies outperformed or were in line for the trailing 12 months. Our commodity related strategies commodities, natural resource equities and MLPs, have performed well relative to benchmarks so far this year. Our preferred strategy which underperformed…

Thank you. [Operator Instructions] The first question is from the line of Adam Beatty with Bank of America/Merrill Lynch. Please go ahead.

Thank you and good morning. Just wanted to ask about Brexit kind of from another angle in terms of some of the disruption in the real estate market there, what extent you know or what magnitude you would expect from that and whether or not, you know it sound like your exposure right now is manageable, so whether or not you know that might lead to some buying opportunities or whether it’s just better ringed fenced at this point? Thanks.

Sure. I will concentrate my comments on real estate and just as a high level remark I think that Brexit over the long-term will be good for the UK. It will result in some short-term pain, probably a brush with recession. But long term, I think it’s good that they can control their own destiny apart from being tied to Europe. And in terms of commercial real estate in the UK, we are expecting prices to decline anywhere from 5% to 15% or 20% depending on the property type and the biggest declines are being expected in the office market. However, we think that for some other property type such as industrial where for example the decline in the pound could be good for trade interest and to the property markets in London. I mentioned in my remarks the comment about the daily liquidity properties funds and you know this has always been a big topic for us because we provide liquidity to our investors daily and without fail. We have never been able to understand why you can provide daily liquidity from an asset class that inherently is not liquid. And so we have not tried to be involved in those types of vehicles and we do think as I mentioned that particularly for certain channels like retirement where daily liquidity is very important that it could result in increasing interest in what we do in listed real estate.

Great, thank you. Appreciate your perspective there. And then turning to Japan, just wanted to get maybe an update on kind of the diversification of accounts there and you know how you are seeing flows. Obviously the Daiwa account is larger and perhaps more susceptible to some net redemptions whereas the others are maybe faster growing but just wanted to get your comments around that? Thank you.

So, our business in Japan is till concentrated with our partner, Daiwa Asset Management and it still is very concentrated in U.S. REITs. We have expanded our business development team in Japan not just to help support Daiwa and the improved flows that we have seen in U.S. REITs but we have also been pursuing with other distributors and asset managers our other strategies. As I mentioned, the preferred strategy as you might expect with some of the highest yields in the global capital markets, it will continue to be of interest and we are – have a lot of discussions that are going on with distributors for new strategies, new versions of preferred security strategies. We are also spending more time in the institutional market that I am sure you are aware as something that takes some time. There is a process involved and so we don’t have a lot to report there today, but we are encouraged by the increased activity in the preferred area.

Great, thank you for taking my questions.

The next question is from the line of Ari Ghosh with Credit Suisse. Please go ahead.

Hey, good morning, guys.

Good morning.

So, could you just give us a quick update on maybe how mutual funds slows the cracking quarter-to-date compared to 2Q? And then if you have any color on what distribution should look like for the rest of the year maybe just focusing on maybe the end denominated fees if you have more clarity on that assuming of course you know normal markets and unchanged FX? Thanks.

I think the – we will be providing information in another few days or a week or so on the July flows, but everything has been continuing to track pretty consistently subsequent to June 30 on the open-end funds. On the distributions, I think you know, we had consistently said that we had about a $2 billion to $2.1 billion annual bogie on distributions and in my points I have mentioned that, that number was increased of late because of the strengthening yen and the growth of the funds that we sub-advised on the Japan side. So the numbers that we just cited were probably notwithstanding an adjustment in the currency, you know the new bogy which is a high class problem given the growth in the funds.

Got it. That’s helpful. And basically to follow-up, if you could touch on the appetite for preferreds outside the U.S. retail channel maybe you can just talk about some of the underpenetrated segments maybe new product launches or geographies that you are exploring? Thanks.

Well, as we mentioned that because of the high yields on preferreds and a zero interest rate environment there very much in demand. Heretofore it’s been primarily a retail strategy but we are – we have been seeing growing interest from financial intermediaries and institutional end clients. In our pipeline, for example, as I mentioned, we have one new mandate for an insurance company. When you look outside of the U.S., we don’t have open-end fund vehicle, but that’s something that we are talking about potentially could happen over the next year. So, we believe that because of the yield environment and with the growing issuance of preferreds by banks, and to a lesser extent, insurance companies to help meet their capital requirements that there is going to be continued growing interest in the preferred market.

Great. Thanks for taking my questions.

The next question is from the line of John Dunn with Evercore ISI. Please go ahead.

Thanks. You guys talked about somewhat to see – in the global retail area some underperformance versus U.S. and different structures etcetera. But looking forward, just with global rates where they are, do you think there is eventually going to be a pickup in demand for those over the next – over the medium-term?

John, could you restate your question, I didn’t get the gist of it?

Sure. On global REITs, just given where – looking forward, where global REITs are, do you think there could possibly be a pickup in demand for it is a product, but ends just always for your guys strategy given that you have improved performance?

Well, over the past couple of years, we have not seen a lot of global search activity, but in the RFP activity that I mentioned, REIT searches overall picked up a lot and global has been a big part of that. And just to reiterate some of my comments, while 5, 6 years ago, there was a very significant trend toward allocating to global. Over the past couple of years, it slowed down because of the global macro challenges that we all know well, whether it’s Europe or the economy in Japan, slowing growth in China, etcetera. So, when you look at the performance of the global REIT market, internationally, those companies have underperformed the U.S. REIT market. Because the search activity and global is picking up, it’s likely that some of that interest is focused on that underperformance, international versus the U.S. and thinking about improving global growth. So, again, the increase in RFP activity is pretty recent. So, I think we need to see that what’s going to happen over the next months and yet, but we are encouraged by the pickup in global REIT searches.

Got it. And then I think you had a little bit of outflows in the advisory channel for U.S. REITs. Has there been any change in the discussions, the client discussions and of the $1 billion in discussion, are there – what are the major areas comprising that pre-pipeline?

That includes U.S. REITs, global REITs and preferreds.

Got it. And then just the demand for U.S. REITs and the advisory channel, just having had a little bit of outflows this past quarter?

John, it’s Bob. The outflows in the quarter are mainly just due to rebalancing. The U.S. REITs have performed extraordinarily well. And you maybe seeing as Joe alluded to some reallocation out of U.S. and the global. Now, you are saying and I think in money started going to go back into emerging market strategies since they have underperformed for a long time and maybe represent relative values. So, it’s really, I think that’s all it is.

Got it. Just want to check. Thanks, guys.

The next question is from the line of Ann Dai with KBW. Please go ahead.

Hi, thank you and good morning. I was hoping to focus a little bit on the European business. You talked about it briefly. Can you give us an update on the work that you are doing in Europe? And maybe what are some of the things that Marc Haynes has been most focused on his first half year there?

Well, as I think most of you know, we, about 18 months ago, decided to really take a fresh look and a new start to our business strategy in Europe where while we managed about $3 billion of client capital, we think we should be doing much better than that. And so we undertook a market survey with Greenwich Associates. Mark joined us not too long ago, 6 months ago or so, put together a deep business plan, including growing the team, which Joe talked about. And we are done growing the team. Mark has, I think, been spending his first 6 months elevating the firm’s profile. He was recently outspoken and well-published on the, what I would call the, private real estate open-end fund debacle in the UK, which I think highlights the problems with investing in real estate in that mode and the benefits of investing to listed. The goal here is to elevate and develop relationships with both the consulting community, the financial institution channel for sub-advisory business and to get our existing and future products on platforms as well as to deepen along with our new Head of Consultant Relations, our institutional global consultant relations. And again, Mark has been extremely active in that endeavor and now, he will have three or four – two or three very senior people working side by side with him going forward.

Great, thanks. Also kind of on UK and Europe, you guys talked about the exposure AUM and securities wise, but could you provide a little color around what Europe internal conversations have been around Brexit focusing on the operations of the business and sales activity and just really how logistically how everything would work in that scenario?

Could you expand on that a little, are you wondering whether we might be doing more hedging of our cash and fee streams or what is it exactly you would like us to focus on here?

I am more focused on the daily operations of the business, whether you have people sitting in places where you might have to reconsider what offices people are in to do certain activities and things like that?

Sure. Our offices in London, we don’t have any other offices in Europe. And in terms of our activities, we can do them all in London just as we have. In terms of our offshore funds there use its related vehicles and we don’t expect there to be any impact on our ability to sell in the markets we are in now. So, said simply, no impact on our operations.

Okay, thanks so much.

[Operator Instructions] The next question is from the line of Mac Sykes with Cohen & Steers [sic] [Gabelli]. Please go ahead.

Good morning, gentlemen. Thanks for taking my question. Can you talk about setting up products in sub-advisory going forward, is there anyway to reduce the distribution aspects? It just seems like this mitigates to some extent your great efforts on asset gathering. And I guess for the future, should we just assume that this is sort of the nature of the business in Japan?

Yes. The distribution policies for Japan funds are set by Daiwa Asset Management. We have no input on that whatsoever and so they are set by in part the market and the market conventions and the decision by the asset managers.

Thank you.

And there are no other questions at this time. I will now turn the call back to you. Please continue with your presentation or closing remarks.

Well, thanks for joining us on the call. And as I mentioned, we will look forward to reporting our progress on all fronts next quarter.

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