Overview
Founded in 1986, we are a leading global investment management firm focused on global real estate securities, global listed infrastructure, real assets, large cap value stocks, and preferred securities. We also manage alternative investment strategies such as hedged real estate securities portfolios and private real estate multimanager strategies for qualified investors. We serve institutional and individual investors through a broad range of investment vehicles.

Assets Under Management
We manage three types of accounts: institutional accounts, open-end mutual funds
and closed-end mutual funds.
The following table sets forth information regarding the net flows and
appreciation/(depreciation) of assets under management for the periods presented
(in millions):
                                                Three Months Ended
                                                    March 31,
                                                2012          2011
Institutional Accounts
Assets under management, beginning of period $  25,380     $ 19,625
Inflows                                          1,070        1,529
Outflows                                        (2,433 )       (321 )
Net (outflows) inflows                          (1,363 )      1,208
Market appreciation                              2,591        1,098
Total increase                                   1,228        2,306
Assets under management, end of period       $  26,608     $ 21,931
Average assets under management for period   $  25,884     $ 20,671

Open-End Mutual Funds
Assets under management, beginning of period $   9,619     $  8,484
Inflows                                          1,682        1,147
Outflows                                          (744 )       (640 )
Net inflows                                        938          507
Market appreciation                              1,031          399
Total increase                                   1,969          906
Assets under management, end of period       $  11,588     $  9,390
Average assets under management for period   $  10,567     $  8,803

Closed-End Mutual Funds
Assets under management, beginning of period $   6,285     $  6,353
Inflows                                              -          129
Outflows                                             -            -
Net inflows                                          -          129
Market appreciation                                409          227
Total increase                                     409          356
Assets under management, end of period       $   6,694     $  6,709
Average assets under management for period   $   6,557     $  6,613

Total
Assets under management, beginning of period $  41,284     $ 34,462
Inflows                                          2,752        2,805
Outflows                                        (3,177 )       (961 )
Net (outflows) inflows                            (425 )      1,844
Market appreciation                              4,031        1,724
Total increase                                   3,606        3,568
Assets under management, end of period       $  44,890     $ 38,030
Average assets under management for period   $  43,008     $ 36,087

Assets under management were $44.9 billion at March 31, 2012, a 18% increase from $38.0 billion at March 31, 2011.

The increase was due to net inflows of $5.2 billion, primarily from U.S. real estate strategies associated with subadvisory relationships, and market appreciation of $1.7 billion during the prior twelve month period. Average assets under management were $43.0 billion in the three months ended March 31, 2012, an increase of 19% from $36.1 billion in the three months ended March 31, 2011.
Institutional accounts
Institutional accounts assets under management were $26.6 billion at March 31, 2012, a 21% increase from $21.9 billion at March 31, 2011. The increase in assets under management was due to net inflows of $3.5 billion, primarily from U.S. real estate strategies associated with subadvisory relationships, and market appreciation of $1.2 billion during the prior twelve month period. Average assets under management for institutional accounts were $25.9 billion in the three months ended March 31, 2012, an increase of 25% from $20.7 billion in the three months ended March 31, 2011.
Net outflows for institutional accounts were $1.4 billion in the three months ended March 31, 2012, compared with net inflows of $1.2 billion in the three months ended March 31, 2011. Gross inflows were $1.1 billion in the three months ended March 31, 2012, compared with $1.5 billion in the three months ended March 31, 2011. Gross outflows totaled $2.4 billion in the three months ended March 31, 2012, compared with $321 million in the three months ended March 31, 2011. Market appreciation was $2.6 billion in the three months ended March 31, 2012, compared with market appreciation of $1.1 billion in the three months ended March 31, 2011.
Open-end mutual funds
Open-end mutual fund assets under management were $11.6 billion at March 31, 2012, a 23% increase from $9.4 billion at March 31, 2011. The increase in assets under management was due to net inflows of $1.7 billion and market appreciation of $480 million during the prior twelve month period.
Average assets under management for open-end mutual funds were $10.6 billion in the three months ended March 31, 2012, a 20% increase from $8.8 billion in the three months ended March 31, 2011.
Net inflows for open-end mutual funds were $938 million in the three months ended March 31, 2012, compared with $507 million in the three months ended March 31, 2011. Gross inflows were $1.7 billion in the three months ended March 31, 2012, compared with $1.1 billion in the three months ended March 31, 2011. Gross outflows totaled $744 million in the three months ended March 31, 2012, compared with $640 million in the three months ended March 31, 2011. Market appreciation was $1.0 billion in the three months ended March 31, 2012, compared with market appreciation of $399 million in the three months ended March 31, 2011.
Closed-end mutual funds
Closed-end mutual funds assets under management were $6.7 billion at both March 31, 2012 and March 31, 2011.
Average assets under management for closed-end mutual funds were $6.6 billion in both three months ended March 31, 2012 and three months ended March 31, 2011. Closed-end mutual funds had net inflows of $129 million in the three months ended March 31, 2011 through an increase in the use of the funds' credit facilities. Market appreciation was $409 million in the three months ended March 31, 2012, compared with market appreciation of $227 million in the three months ended March 31, 2011.

Results of Operations
Three Months Ended March 31, 2012 compared with Three Months Ended March 31,
2011

                                            Three Months Ended
                                                March 31,
(in thousands)                              2012          2011
Results of operations
Total revenue                            $  63,730     $ 54,755
Total expenses                             (38,334 )    (35,842 )
Total non-operating income                   3,017          975
Income before provision for income taxes $  28,413     $ 19,888

Revenue
Total revenue increased 16% to $63.7 million in the three months ended March 31, 2012 from $54.8 million in the three months ended March 31, 2011. This increase was primarily attributable to higher investment advisory and administration fees resulting from higher average assets under management and higher portfolio consulting fees from higher average assets under advisement from model-based strategies. Average assets under management in the three months ended March 31, 2012 were $43.0 billion compared with $36.1 billion in the three months ended March 31, 2011.
In the three months ended March 31, 2012, total investment advisory and administration revenue from institutional accounts increased 17% to $22.8 million from $19.5 million in the three months ended March 31, 2011. The increase in institutional account revenue was attributable to higher average assets under management resulting from net inflows of $3.5 billion, primarily from U.S. real estate strategies associated with subadvisory relationships, and market appreciation of $1.2 billion during the prior twelve month period. Average assets under management for institutional accounts in the three months ended March 31, 2012 were $25.9 billion compared with $20.7 billion in the three months ended March 31, 2011.

In the three months ended March 31, 2012, total investment advisory and administration revenue from open-end mutual funds increased 19% to $21.8 million from $18.4 million in the three months ended March 31, 2011. The increase in open-end mutual fund revenue was attributable to higher average assets under management resulting from net inflows of $1.7 billion and market appreciation of $480 million. Average assets under management for open-end mutual funds in the three months ended March 31, 2012 were $10.6 billion compared with $8.8 billion in the three months ended March 31, 2011.
In the three months ended March 31, 2012, total investment advisory and administration revenue from closed-end mutual funds increased 3% to $13.6 million from $13.2 million in the three months ended March 31, 2011. Average assets under management for closed-end mutual funds in both three months ended March 31, 2012 and March 31, 2011 were $6.6 billion.
In the three months ended March 31, 2012, total portfolio consulting and other revenue increased 139% to $3.1 million from $1.3 million in the three months ended March 31, 2011. The increase was attributable to higher average assets under advisement from model-based strategies. Expenses
Total operating expenses increased 7% to $38.3 million in the three months ended March 31, 2012 from $35.8 million in the three months ended March 31, 2011, primarily due to increases in employee compensation and benefits and distribution and service fees.
Employee compensation and benefits increased 8% to $21.7 million in the three months ended March 31, 2012 from $20.0 million in the three months ended March 31, 2011. This increase was primarily due to higher salaries of approximately $418,000, higher incentive bonus and production compensation, net of deferrals, of approximately $331,000, higher amortization of restricted stock units of approximately $259,000 and higher payroll taxes of approximately $242,000 associated with the delivery of restricted stock units.
Distribution and service fee expenses increased 8% to $6.2 million in the three months ended March 31, 2012 from

$5.8 million in the three months ended March 31, 2011. This increase was primarily due to higher average assets under management in certain of our open-end no-load mutual funds.
Non-operating Income
Non-operating income was $3.0 million in the three months ended March 31, 2012, compared with non-operating income of $1.0 million in the three months ended March 31, 2011. The increase was primarily attributable to gain from trading securities in our sponsored onshore global real estate long-short fund. Income Taxes
We recorded an income tax expense of $10.2 million in the three months ended March 31, 2012, compared with $7.0 million in the three months ended March 31, 2011. The provision for income taxes in the three months ended March 31, 2012 included U.S. federal, state, local and foreign taxes at an approximate effective tax rate of 36%. The effective tax rate for the three months ended March 31, 2011 was approximately 35%. We expect our tax rate for the full year 2012 to approximate 36%, excluding discrete items.

Liquidity and Capital Resources
Our investment advisory business does not require us to maintain significant capital balances. Our current financial condition is highly liquid, with a significant amount of our assets comprised of cash and cash equivalents, equity investments, investments, available-for-sale and accounts receivable. Our cash flows generally result from the operating activities of our business, with investment advisory and administrative fees being the most significant contributor. Cash and cash equivalents, equity investments, investments, available-for-sale and accounts receivable were 55% and 69% of total assets as of March 31, 2012 and December 31, 2011, respectively, excluding investments classified as level 3 in accordance with the Accounting Standard Codification (the "Codification") Topic 820, Fair Value Measurements and Disclosures ("Topic 820").
Cash and cash equivalents decreased by $38.0 million, excluding the effect of foreign exchange rate changes, in the three months ended March 31, 2012. Net cash used in operating activities was $56.3 million in the three months ended March 31, 2012. Net cash of $155,000 was provided by investing activities, primarily from proceeds from sales of investments, available-for-sale in the amount of $9.9 million, partially offset by purchases of $8.6 million of investments, available-for-sale and purchases of $1.1 million of property and equipment. Net cash of $18.1 million was provided by financing activities, primarily from contributions from redeemable noncontrolling interest of $23.4 million and excess tax benefits associated with the delivery of restricted stock units of $2.8 million, partially offset by repurchases of common stock of $8.3 million to satisfy employee withholding tax obligations on the delivery of restricted stock units.
Cash and cash equivalents decreased by $19.2 million, excluding the effect of foreign exchange rate changes, in the three months ended March 31, 2011. Net cash used in operating activities was $10.6 million in the three months ended March 31, 2011. Net cash of $3.8 million was used in investing activities, primarily for purchases of $11.0 million of investments, available-for-sale and purchases of $735,000 of property and equipment, partially offset by proceeds from sales of investments, available-for-sale in the amount of $8.0 million. Net cash of $4.7 million was used in financing activities, primarily for repurchases of common stock of $6.3 million to satisfy employee withholding tax obligations on the delivery of restricted stock units, partially offset by excess tax benefits associated with the delivery of restricted stock units of $1.4 million. It is our policy to continuously monitor and evaluate the adequacy of our capital. We have consistently maintained net capital in excess of the regulatory requirements for our broker/dealer, as prescribed by the Securities and Exchange Commission ("SEC"). At March 31, 2012, we exceeded our minimum regulatory capital requirements by approximately $800,000. The SEC's Uniform Net Capital Rule 15c3-1 imposes certain requirements that may have the effect of prohibiting a broker/dealer from distributing or withdrawing capital and requiring prior notice to the SEC for certain withdrawals of capital. On April 25, 2012, we made a capital contribution to our broker/dealer for $1.0 million. Our non-U.S. subsidiaries are regulated outside the U.S. by the Hong Kong Securities and Future Commission, the United Kingdom Financial Securities Authority, and the Belgium Financial Services and Markets Authority. At March 31, 2012, our non-U.S. subsidiaries exceeded their aggregate minimum regulatory requirements by approximately $64.4 million. We believe that our cash flows from operations will be more than adequate to meet our anticipated capital requirements and other obligations as they become due.
Included in cash and cash equivalents and investments, available-for-sale were approximately $67.6 million held by our

foreign subsidiaries as of March 31, 2012. We believe that our cash and cash equivalents and short term investments held in the U.S. are more than sufficient to cover our working capital needs. It is our current intention to permanently reinvest these funds outside of the U.S.
We periodically commit to fund a portion of the equity in certain of our sponsored investment products. We have committed to co-invest 5%, up to $25 million, of the total capital raised in Cohen & Steers Global Realty Partners III-TE, L.P. ("GRP-TE"), a global private equity multimanager fund that had an initial closing on October 4, 2011. Our investment with GRP-TE is illiquid and will be invested for up to 12 years through the life of the fund. The ultimate co-investment amount and actual timing of the funding of this commitment is currently unknown, as the co-investment amount will be based on investor commitments to GRP-TE through October 2012, and the drawdown of our commitment is contingent on the timing of drawdowns by the underlying funds and co-investments in which GRP-TE invests. The unfunded portion of this commitment was not recorded on our condensed consolidated statements of financial condition as of March 31, 2012.
Contractual Obligations and Contingencies We have contractual obligations to make future payments in connection with our non-cancelable operating lease agreements for office space. There were no material capital lease obligations as of March 31, 2012. The following summarizes our contractual obligations as of March 31, 2012 (in thousands):

                                                                           2017
                   2012       2013       2014         2015     2016     and after       Total
Operating leases $ 5,949    $ 8,079    $ 1,522  (1)  $ 539    $ 295    $         -    $ 16,384


_________________________________________

A thorough understanding of our accounting policies is essential when reviewing our reported results of operations and our financial position. Management considers the following accounting policies critical to an informed review of our condensed consolidated financial statements. For a summary of these and additional accounting policies, see the notes to the annual audited consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2011.
Investments
We determine the appropriate classification of our investments at the time of purchase and re-evaluate such determination at each statement of financial condition date.
Securities owned and securities sold but not yet purchased are classified as trading securities and are measured at fair value based on quoted market prices, market prices obtained from independent pricing services engaged by management or as determined by our valuation committee. Unrealized gains and losses are recorded as gain (loss) from trading securities reported in our condensed consolidated statements of operations.
Investments classified as equity investments are accounted for using the equity method, under which we recognize our respective share of the investee's net income or loss for the period. The carrying amounts of these investments approximate their fair value.
Investments classified as available-for-sale are comprised of equity securities, investment-grade preferred instruments

and investments in our sponsored open-end and closed-end mutual funds. These investments are carried at fair value based on quoted market prices or market prices obtained from independent pricing services engaged by management, with unrealized gains and losses, net of tax, reported in accumulated other comprehensive income. We periodically review each individual security position that has an unrealized loss, or impairment, to determine if that impairment is other than temporary. If we believe an impairment of a security position is other than temporary, the loss will be recognized in our condensed consolidated statements of operations. An other than temporary impairment is generally presumed to have occurred if the available-for-sale investment has an unrealized loss continuously for 12 or more months.
From time to time, our consolidated funds enter into derivative contracts to hedge market and credit risks of the underlying portfolios utilizing options, total return swaps, credit default swaps and futures contracts. These instruments are measured at fair value with gains and losses recorded as gain
(loss) from trading securities - net in our condensed consolidated statements of operations. The fair value of these instruments are recorded in other assets or other liabilities and accrued expenses in our condensed consolidated statements of financial condition. Additionally, from time to time, we enter into foreign currency forward contracts to hedge our currency exposure related to client receivables. These instruments are measured at fair value with gains and losses recorded in other non-operating income in our condensed consolidated statements of operations. We record these contracts as either assets or liabilities in due from broker or other liabilities and accrued expenses, respectively, in our condensed consolidated statements of financial condition. Goodwill and Intangible Assets
Goodwill represents the excess of the cost of our investment in the net assets of an acquired company over the fair value of the underlying identifiable net assets at the date of acquisition. Goodwill and indefinite lived intangible assets are not amortized but are tested at least annually for impairment by comparing the fair value to their carrying amounts. Finite lived intangible assets are amortized over their useful lives. We determined that the fair values of our goodwill and indefinite lived intangible assets substantially exceeded their carrying values as a result of the most recent impairment test performed as of November 30, 2011.
Stock-based Compensation
We recognize compensation expense for the grant-date fair value of awards of equity instruments granted to employees. This expense is recognized over the period during which employees are required to provide service. We also estimate forfeitures.
Income Taxes
We record the current and deferred tax consequences of all transactions that have been recognized in the condensed consolidated financial statements in accordance with the provisions of the enacted tax laws. Deferred tax assets are recognized for temporary differences that will result in deductible amounts in future years. Deferred tax liabilities are recognized for temporary differences that will result in taxable income in future years. We record a valuation allowance, when necessary, to reduce deferred tax assets to an amount that more likely than not will be realized. The effective tax rate for interim periods represents our best estimate of the effective tax rate expected to be applied to the full fiscal year.
Recently Issued Accounting Pronouncements In September 2011, the Financial Accounting Standards Board ("FASB") issued new guidance to simplify how entities test goodwill for impairment. The new guidance permits an entity to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the second step to measure the amount of the impairment loss, if any. This new guidance is effective for the first quarter of our 2012 fiscal year. The adoption of this new guidance did not have a material impact on our condensed consolidated financial statements.
In June 2011, the FASB issued new guidance eliminating the option to present components of other comprehensive income as part of the statement of changes in stockholders' equity. The new guidance requires changes to the components of net income and comprehensive income in stockholders' equity be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In the two-statement approach, the first statement should present total net income and its components followed consecutively by a second statement that should present total

other comprehensive income, the components of other comprehensive income, and the total of comprehensive income. The new guidance should be applied retrospectively. In December 2011, the FASB issued guidance to defer the effective date for amendments to the presentation of reclassifications of items out of accumulated other comprehensive income. This new guidance is effective for the first quarter of our 2012 fiscal year. The adoption of this new guidance did not have a material impact on our condensed consolidated financial statements.
In May 2011, the FASB issued new guidance regarding fair value measurement and disclosures. The new guidance results in common fair value measurement and disclosure requirements in U.S. Generally Accepted Accounting Principles ("GAAP") and International Financial Reporting Requirements. This new guidance changed the wording used to describe many of the requirements for measuring fair value and for disclosing information about fair value measurements. This new guidance is effective for the first quarter of our 2012 fiscal year. See Note 4 for further discussion about the Company's investments which incorporates this new guidance.
Forward-Looking Statements
This report and other documents filed by us contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, which reflect our current views with respect to, among other things, our operations and financial performance. You can identify these forward-looking statements by the use of words such as "outlook," "believes," "expects," "potential," "continues," "may," "should," "seeks," "approximately," "predicts," "intends," "plans," "estimates," "anticipates" or the negative versions of these words or other comparable words. . . .