Newton, MA (May 4, 2022). The RMR Group Inc. (Nasdaq: RMR) today announced its financial results for the fiscal quarter ended March 31, 2022.
Adam Portnoy, President and Chief Executive Officer, made the following statement regarding the second quarter fiscal 2022 results:
“For the second fiscal quarter, RMR reported management and advisory services revenue of $49.3 million, a 17% increase from last year, reflecting early success in growing our private capital business and the execution of strategic growth and repositioning strategies at our Managed REITs. Similarly, Net income, Adjusted net income and Adjusted EBITDA all were in line with our second quarter guidance and each measure exceeded prior year results by at least 22%, fueled primarily by the successful integration of ILPT’s acquisition of Monmouth Real Estate Investment Corporation.
During the quarter, DHC closed on a $703 million joint venture with two global institutional investors, increasing RMR’s managed private real estate capital AUM to $3.9 billion. We believe this growth not only showcases our ability to expand our AUM through private capital transactions, but also highlights RMR’s alignment with our clients’ shareholders by expanding their access to capital.
With over $181 million of cash and no debt, we remain well positioned to continue pursuing a range of capital allocation strategies.”
Second Quarter Fiscal 2022 Highlights:
•The RMR Group LLC’s assets under management, or AUM, and management and advisory services revenue by source are as follows (dollars in thousands):
Total Management
and Advisory
AUM
Services Revenues (4)
For the Three Months Ended March 31, 2022
Managed Public Real Estate Capital (1)
$
31,725,815
84.2
%
$
38,008
77.1
%
Managed Private Real Estate Capital (2)
3,870,292
10.3
%
4,820
9.8
%
Managed Operating Companies (3)
2,069,957
5.5
%
6,460
13.1
%
Total
$
37,666,064
100.0
%
$
49,288
100.0
%
For the Three Months Ended March 31, 2021
Managed Public Real Estate Capital (1)
$
28,689,804
89.8
%
$
34,483
82.1
%
Managed Private Real Estate Capital (2)
1,335,050
4.2
%
2,134
5.1
%
Managed Operating Companies (3)
1,929,605
6.0
%
5,374
12.8
%
Total
$
31,954,459
100.0
%
$
41,991
100.0
%
(1)Managed Public Real Estate Capital includes: Diversified Healthcare Trust (DHC), Industrial Logistics Properties Trust (ILPT), Office Properties Income Trust (OPI) and Service Properties Trust (SVC), which are collectively referred to as the Managed Equity REITs, as well as Seven Hills Realty Trust (SEVN) and, until its merger with and into SEVN on September 30, 2021, Tremont Mortgage Trust (TRMT).
(2)Managed Private Real Estate Capital primarily consists of private entities that own commercial real estate. Some of the Managed Equity REITs own minority interests in those entities.
(3) Managed Operating Companies include: AlerisLife Inc. (ALR), Sonesta International Hotels Corporation (Sonesta) and TravelCenters of America Inc. (TA).
(4) Includes construction supervision fees of $3,794 and $1,327 for the three months ended March 31, 2022 and 2021, respectively.
•For the three months ended March 31, 2022, net income was $14.6 million and net income attributable to The RMR Group Inc. was $6.4 million, or $0.39 per diluted share, compared to net income of $11.5 million and net income attributable to The RMR Group Inc. of $4.9 million, or $0.30 per diluted share, for the three months ended March 31, 2021.
•For the three months ended March 31, 2022, adjusted net income attributable to The RMR Group Inc. was $8.2 million, or $0.50 per diluted share, compared to $6.1 million, or $0.37 per diluted share, for the three months ended March 31, 2021. The adjustments to net income attributable to The RMR Group Inc. this quarter included $1.7 million, or $0.10 per diluted share, of unrealized losses on our equity method investments in SEVN and TA and $0.1 million, or $0.01 per diluted share, of separation costs.
•For the three months ended March 31, 2022, Adjusted EBITDA was $25.7 million, Net Income Margin was 29.6% and Adjusted EBITDA Margin was 49.8%, compared to Adjusted EBITDA of $21.0 million, Net Income Margin of 27.3% and Adjusted EBITDA Margin of 48.1% for the three months ended March 31, 2021.
•As of March 31, 2022, The RMR Group Inc. had $181.7 million in cash and cash equivalents with no outstanding debt obligations.
Reconciliations to U.S. Generally Accepted Accounting Principles, or GAAP:
Adjusted net income attributable to The RMR Group Inc., Adjusted net income attributable to The RMR Group Inc. per diluted share, EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted EBITDA less Cash Tax Obligation are non-GAAP financial measures. The GAAP financial measure that is most directly comparable to adjusted net income attributable to The RMR Group Inc. is net income
2
attributable to The RMR Group Inc. The GAAP financial measure that is most directly comparable to adjusted net income attributable to The RMR Group Inc. per diluted share is net income attributable to The RMR Group Inc. per diluted share. The GAAP financial measure that is most directly comparable to EBITDA, Adjusted EBITDA and Adjusted EBITDA less Cash Tax Obligation is net income and the GAAP financial measure that is most directly comparable to Adjusted EBITDA Margin is Net Income Margin, which represents net income divided by total management and advisory services revenues. Reconciliations of net income attributable to The RMR Group Inc. determined in accordance with GAAP to adjusted net income attributable to The RMR Group Inc., net income attributable to The RMR Group Inc. per diluted share determined in accordance with GAAP to adjusted net income attributable to The RMR Group Inc. per diluted share, and of net income to EBITDA and Adjusted EBITDA, as well as calculations of Net Income Margin, Adjusted EBITDA Margin and Adjusted EBITDA less Cash Tax Obligation for each of the three months ended March 31, 2022 and 2021 are presented later in this press release.
Assets Under Management:
The calculation of AUM primarily includes: (i) the historical cost of real estate and related assets, excluding depreciation, amortization, impairment charges or other non-cash reserves, of the Managed Equity REITs and the Managed Private Real Estate Capital clients, plus (ii) the gross book value of real estate assets, property and equipment of the Managed Operating Companies, excluding depreciation, amortization, impairment charges or other non-cash reserves, plus (iii) the carrying value of loans held for investment at SEVN. Upon deconsolidation from a Managed Equity REIT, the respective real estate and related assets are characterized as Managed Private Real Estate Capital and their historical cost represents the fair value of the real estate at the time of deconsolidation.
All references in this press release to AUM on, or as of, a date are calculated at a point in time.
For additional information on the calculation of AUM for purposes of the fee provisions of the business management agreements, see The RMR Group Inc.’s Annual Report on Form 10-K for the fiscal year ended September 30, 2021, filed with the Securities and Exchange Commission, or SEC. The RMR Group Inc.’s SEC filings are available at the SEC website: www.sec.gov.
Conference Call:
On Thursday, May 5, 2022 at 1:00 p.m. Eastern Time, President and Chief Executive Officer, Adam Portnoy, and Executive Vice President, Chief Financial Officer and Treasurer, Matt Jordan, will host a conference call to discuss The RMR Group Inc.’s fiscal second quarter ended March 31, 2022 financial results.
The conference call telephone number is (877) 270-2148. Participants calling from outside the United States and Canada should dial (412) 902-6510. No pass code is necessary to access the call from either number. Participants should dial in about 15 minutes prior to the scheduled start of the call. A replay of the conference call will be available through 11:59 p.m. Eastern Time on Thursday, May 12, 2022. To access the replay, dial (412) 317-0088. The replay pass code is 7287848.
A live audio webcast of the conference call will also be available in a listen only mode on The RMR Group Inc.’s website, at www.rmrgroup.com. Participants wanting to access the webcast should visit The RMR Group Inc.’s website about five minutes before the call. The archived webcast will be available for replay on The RMR Group Inc.’s website following the call for about one week. The transcription, recording and retransmission in any way of The RMR Group Inc.’s fiscal second quarter ended March 31, 2022 financial results conference call are strictly prohibited without the prior written consent of The RMR Group Inc.
3
About The RMR Group Inc.
The RMR Group (Nasdaq: RMR) is a leading U.S. alternative asset management company, unique for its focus on commercial real estate (CRE) and related businesses. RMR’s vertical integration is supported by nearly 600 real estate professionals in over 30 offices nationwide who manage over $37 billion in assets under management and leverage 35 years of institutional experience in buying, selling, financing and operating CRE. RMR benefits from a scalable platform, a deep and experienced management team and a diversity of direct real estate strategies across its clients. RMR is headquartered in Newton, MA and was founded in 1986. For more information, please visit www.rmrgroup.com.
4
The RMR Group Inc.
Condensed Consolidated Statements of Income
(amounts in thousands, except per share amounts)
(unaudited)
Three Months Ended March 31,
Six Months Ended March 31,
2022
2021
2022
2021
Revenues:
Management services (1)
$
48,151
$
40,242
$
93,048
$
80,989
Incentive business management fees
—
620
—
620
Advisory services
1,137
1,129
2,255
1,715
Total management and advisory services revenues
49,288
41,991
95,303
83,324
Reimbursable compensation and benefits
13,506
13,159
27,903
26,384
Reimbursable equity based compensation
1,367
1,206
2,965
4,209
Other reimbursable expenses
133,493
75,208
253,051
174,593
Total reimbursable costs
148,366
89,573
283,919
205,186
Total revenues
197,654
131,564
379,222
288,510
Expenses:
Compensation and benefits
31,710
30,586
63,501
60,080
Equity based compensation
1,988
1,752
4,207
5,313
Separation costs
217
—
217
4,159
Total compensation and benefits expense
33,915
32,338
67,925
69,552
General and administrative
8,470
7,104
16,141
13,364
Other reimbursable expenses
133,493
75,208
253,051
174,593
Transaction and acquisition related costs
—
296
—
413
Depreciation and amortization
242
251
478
489
Total expenses
176,120
115,197
337,595
258,411
Operating income
21,534
16,367
41,627
30,099
Interest and other income
66
204
123
435
Equity in earnings of investees
—
303
—
727
Unrealized (loss) gain on equity method investments accounted for under the fair value option
(4,560)
(3,402)
(3,364)
4,720
Income before income tax expense
17,040
13,472
38,386
35,981
Income tax expense
(2,451)
(1,992)
(5,505)
(4,748)
Net income
14,589
11,480
32,881
31,233
Net income attributable to noncontrolling interest
(8,197)
(6,539)
(18,447)
(17,395)
Net income attributable to The RMR Group Inc.
$
6,392
$
4,941
$
14,434
$
13,838
Weighted average common shares outstanding - basic (2)
16,329
16,256
16,327
16,254
Weighted average common shares outstanding - diluted (2)
31,331
31,280
31,328
31,254
Net income attributable to The RMR Group Inc. per common share - basic (2)
$
0.39
$
0.30
$
0.88
$
0.84
Net income attributable to The RMR Group Inc. per common share - diluted (2)
$
0.39
$
0.30
$
0.88
$
0.81
Substantially all revenues are earned from related parties. See Notes beginning on page 6.
5
The RMR Group Inc.
Notes to Condensed Consolidated Statements of Income
(dollars in thousands)
(unaudited)
(1) Includes base business management fees earned from the Managed Equity REITs monthly based upon the lower of (i) the average historical cost of each REIT’s properties and (ii) each REIT’s average market capitalization. The following table presents a summary of each Managed Equity REIT’s primary strategy and the lesser of the historical cost of its assets under management and its market capitalization as of March 31, 2022 and 2021, as applicable:
Lesser of Historical Cost of Assets
Under Management or
Total Market Capitalization (a)
As of March 31,
REIT
Primary Strategy
2022
2021
DHC
Medical office and life science properties, senior living communities and wellness centers
$
4,383,059
$
5,780,436
ILPT
Industrial and logistics properties
5,632,464
1,963,244
OPI
Office properties primarily leased to single tenants, including the government
3,855,970
3,571,910
SVC
Hotels and net lease service and necessity-based retail properties
8,657,762
9,154,813
$
22,529,255
$
20,470,403
(a) The basis on which base business management fees are calculated for the three months ended March 31, 2022 and 2021 may differ from the basis at the end of the periods presented in the table above. As of March 31, 2022, the market capitalization was lower than the historical cost of assets under management for DHC, OPI and SVC. The historical cost of assets under management for DHC, OPI and SVC as of March 31, 2022, were $7,120,120, $6,111,024 and $12,276,681, respectively. For ILPT, the historical cost of assets under management were lower than its market capitalization of $5,939,517 as of March 31, 2022.
6
The RMR Group Inc.
Notes to Condensed Consolidated Statements of Income (Continued)
(amounts in thousands, except per share amounts)
(unaudited)
(2) The RMR Group Inc. calculates earnings per share, or EPS, using the two-class method. As such, earnings attributable to unvested participating shares are excluded from earnings before calculating per share amounts. In addition, diluted EPS includes the assumed issuance of Class A Common Shares pursuant to The RMR Group Inc.’s equity compensation plan and the issuance of Class A Common Shares related to the assumed redemption of the noncontrolling interest’s 15,000 Class A Units using the if-converted method. In computing the dilutive effect, if any, that the aforementioned redemption would have on EPS, The RMR Group Inc. considered that net income available to holders of Class A Common Shares would increase due to elimination of the noncontrolling interest offset by any tax effect, which may be dilutive. For the three and six months ended March 31, 2022 and 2021, the assumed redemption is dilutive to earnings per share as presented in the table below. The calculation of basic and diluted EPS is as follows:
Three Months Ended March 31,
Six Months Ended March 31,
2022
2021
2022
2021
Numerators:
Net income attributable to The RMR Group Inc.
$
6,392
$
4,941
$
14,434
$
13,838
Income attributable to unvested participating securities
(62)
(44)
(140)
(121)
Net income attributable to The RMR Group Inc. used in calculating basic EPS
6,330
4,897
14,294
13,717
Effect of dilutive securities:
Add back: income attributable to unvested participating securities
62
44
140
121
Add back: net income attributable to noncontrolling interest
8,197
6,539
18,447
17,395
Add back: income tax expense
2,451
1,992
5,505
4,748
Income tax expense assuming redemption of noncontrolling interest’s Class A Units for Class A Common Shares (a)
(4,894)
(4,113)
(10,909)
(10,547)
Net income used in calculating diluted EPS
$
12,146
$
9,359
$
27,477
$
25,434
Denominators:
Common shares outstanding
16,502
16,413
16,502
16,413
Unvested participating securities
(173)
(157)
(175)
(159)
Weighted average common shares outstanding - basic
16,329
16,256
16,327
16,254
Effect of dilutive securities:
Assumed redemption of noncontrolling interest’s Class A Units for Class A Common Shares
15,000
15,000
15,000
15,000
Incremental unvested shares
2
24
1
—
Weighted average common shares outstanding - diluted
31,331
31,280
31,328
31,254
Net income attributable to The RMR Group Inc. per common share - basic
$
0.39
$
0.30
$
0.88
$
0.84
Net income attributable to The RMR Group Inc. per common share - diluted
$
0.39
$
0.30
$
0.88
$
0.81
(a)Income tax expense assumes the hypothetical conversion of the noncontrolling interest, which results in estimated tax rates of 28.7% and 30.5% for the three months ended March 31, 2022 and 2021, respectively, and 28.4% and 29.3% for the six months ended March 31, 2022 and 2021, respectively.
7
The RMR Group Inc.
Reconciliation of Adjusted Net Income and Adjusted Net Income Per Diluted Share
(amounts in thousands, except per share amounts)
(unaudited)
The RMR Group Inc. is providing the reconciliations below regarding certain individually significant items occurring or impacting its financial results for the three months ended March 31, 2022 and 2021 for supplemental informational purposes in order to enhance the understanding of The RMR Group Inc.’s condensed consolidated statements of income and to facilitate a comparison of The RMR Group Inc.’s current operating performance with its historical operating performance. This information should be considered in conjunction with net income, net income attributable to The RMR Group Inc., net income attributable to The RMR Group Inc. per diluted share and operating income as presented in The RMR Group Inc.’s condensed consolidated statements of income.
The following tables present the impact of certain individually significant items on the financial results for the three months ended March 31, 2022 and 2021, assuming the redemption of the noncontrolling interest’s 15,000 Class A Units is dilutive to earnings per share as presented in Note 2 on page 7:
Net Income Attributable to The RMR Group Inc.
Add: Net Income Attributable to Noncontrolling Interest
Add: Income Tax Expense
Income Before Income Tax Expense
Less:
Estimated Income Tax Expense (1)
Net Income Used in Calculating Diluted EPS
Weighted Average Common Shares Outstanding - Diluted
Net Income Attributable to The RMR Group Inc. per Common Share - Diluted
Three Months Ended March 31, 2022:
Net income attributable to The RMR Group Inc.
$
6,392
$
8,197
$
2,451
$
17,040
$
(4,894)
$
12,146
31,331
$
0.39
Unrealized loss on equity method investments accounted for under the fair value option
1,733
2,171
656
4,560
(1,310)
3,250
31,331
0.10
Separation costs
83
103
31
217
(62)
155
31,331
0.01
Adjusted net income attributable to The RMR Group Inc.
$
8,208
$
10,471
$
3,138
$
21,817
$
(6,266)
$
15,551
31,331
$
0.50
Three Months Ended March 31, 2021:
Net income attributable to The RMR Group Inc.
$
4,941
$
6,539
$
1,992
$
13,472
$
(4,113)
$
9,359
31,280
$
0.30
Unrealized loss on equity method investment accounted for under the fair value option
1,275
1,624
503
3,402
(1,039)
2,363
31,280
0.08
Incentive business management fees
(232)
(296)
(92)
(620)
189
(431)
31,280
(0.01)
Transaction and acquisition related costs
111
141
44
296
(90)
206
31,280
—
Adjusted net income attributable to The RMR Group Inc.
$
6,095
$
8,008
$
2,447
$
16,550
$
(5,053)
$
11,497
31,280
$
0.37
(1) Estimated income tax expense assumes the hypothetical conversion of the noncontrolling interest and the resulting consolidated entities’ estimated tax rate of approximately 28.7% and 30.5% for the three months ended March 31, 2022 and 2021, respectively.
8
The RMR Group Inc.
Reconciliation of EBITDA and Adjusted EBITDA from Net Income
and Calculation of Net Income Margin, Adjusted EBITDA Margin
and Adjusted EBITDA less Cash Tax Obligation (1) (2)
(dollars in thousands)
(unaudited)
Three Months Ended March 31,
Six Months Ended March 31,
2022
2021
2022
2021
Reconciliation of EBITDA and Adjusted EBITDA from net income:
Net income
$
14,589
$
11,480
$
32,881
$
31,233
Income tax expense
2,451
1,992
5,505
4,748
Depreciation and amortization
242
251
478
489
EBITDA
17,282
13,723
38,864
36,470
Other asset amortization
2,354
2,354
4,708
4,708
Operating expenses paid in the form of The RMR Group Inc.'s common shares
1,168
1,317
1,789
1,875
Separation costs
217
—
217
4,159
Transaction and acquisition related costs
—
296
—
413
Straight line office rent
(85)
32
(151)
47
Unrealized loss (gain) on equity method investments accounted for under the fair value option
4,560
3,402
3,364
(4,720)
Equity in earnings of investees
—
(303)
—
(727)
Distributions from equity method investments
208
847
208
864
Incentive business management fees earned
—
(620)
—
(620)
Adjusted EBITDA
$
25,704
$
21,048
$
48,999
$
42,469
Calculation of Net Income Margin:
Total management and advisory services revenues
$
49,288
$
41,991
$
95,303
$
83,324
Net income
$
14,589
$
11,480
$
32,881
$
31,233
Net Income Margin
29.6
%
27.3
%
34.5
%
37.5
%
Calculation of Adjusted EBITDA Margin:
Contractual management and advisory fees (excluding incentive business management fees, if any) (3)
$
51,642
$
43,725
$
100,011
$
87,412
Adjusted EBITDA
$
25,704
$
21,048
$
48,999
$
42,469
Adjusted EBITDA Margin
49.8
%
48.1
%
49.0
%
48.6
%
Calculation of Adjusted EBITDA less Cash Tax Obligation:
Adjusted EBITDA
$
25,704
$
21,048
$
48,999
$
42,469
Less: Tax distributions to members (4)
(9,028)
(9,571)
(13,186)
(15,426)
Adjusted EBITDA less Cash Tax Obligation
$
16,676
$
11,477
$
35,813
$
27,043
Common share distributions
$
10,765
$
10,730
$
21,529
$
21,460
(1)EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP financial measures calculated as presented in the tables above. The RMR Group Inc. considers EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin to be appropriate supplemental measures of its operating performance, along with net income, net income attributable to The RMR Group Inc. and net income margin. The RMR Group Inc. believes that EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin provide useful information to investors because by excluding the effects of certain amounts, such as those outlined in the tables above, EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin may facilitate a comparison of current operating performance with The RMR Group Inc.’s historical operating performance and with the performance of other asset management businesses. In addition, The RMR Group Inc. believes that providing Adjusted EBITDA Margin may help investors assess The RMR Group Inc.’s performance of its business by providing the margin that Adjusted EBITDA represents to its contractual management and advisory fees (excluding incentive business management fees, if any). EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin do not represent cash generated by operating activities in accordance with GAAP and should not be considered as alternatives to net income, net income attributable to The RMR Group Inc. or net income margin as an indicator of The RMR Group Inc.’s financial performance or as a
9
The RMR Group Inc.
Reconciliation of EBITDA and Adjusted EBITDA from Net Income
and Calculation of Net Income Margin, Adjusted EBITDA Margin
and Adjusted EBITDA less Cash Tax Obligation (1) (2) (Continued)
(dollars in thousands)
(unaudited)
measure of The RMR Group Inc.’s liquidity. Other asset management businesses may calculate EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin differently than The RMR Group Inc. does.
(2)Adjusted EBITDA less Cash Tax Obligation is a non-GAAP financial measure calculated as presented in the table above. The RMR Group Inc. considers Adjusted EBITDA less Cash Tax Obligation to be an appropriate measure of its operating performance, along with net income attributable to The RMR Group Inc. The RMR Group Inc. believes that Adjusted EBITDA less Cash Tax Obligation provides useful information to investors because by excluding amounts payable for tax obligations, it increases comparability between periods and more accurately reflects earnings that may be available for distribution to shareholders. Adjusted EBITDA less Cash Tax Obligation is among the factors The RMR Group Inc.’s Board of Directors considers when determining the amount of dividends to its shareholders. Other asset management businesses may calculate Adjusted EBITDA less Cash Tax Obligation differently than The RMR Group Inc. does.
(3)Contractual management and advisory fees are the base business management fees, property management fees and advisory fees The RMR Group Inc. or its subsidiaries earns pursuant to its management agreements. These amounts are calculated pursuant to the contractual formulas and do not deduct other asset amortization of $2,354 for each of the three months ended March 31, 2022 and 2021, or $4,708 for each of the six months ended March 31, 2022 and 2021, required to be recognized as a reduction to management services revenues in accordance with GAAP and do not include the incentive business management fees of $620 that The RMR Group Inc. recognized under GAAP for the three and six months ended March 31, 2021.
(4)Under the RMR LLC operating agreement, RMR LLC is required to make quarterly pro rata cash distributions to The RMR Group Inc. and its noncontrolling interest based on each’s estimated tax liabilities and respective ownership percentages. Estimated tax liabilities are determined quarterly on a cumulative basis. As such, there may be fluctuations from quarter to quarter to account for prior periods where pro rata cash distributions were more or less than amounts determined cumulatively through a particular quarter. For the three and six months ended March 31, 2022 and 2021, RMR LLC made required quarterly tax distributions as follows:
Three Months Ended March 31,
Six Months Ended March 31,
2022
2021
2022
2021
RMR LLC tax distributions to The RMR Group Inc.
$
4,751
$
5,112
$
6,930
$
8,147
RMR LLC tax distributions to non-controlling interest
4,277
4,459
6,256
7,279
Total RMR LLC tax distributions to members
$
9,028
$
9,571
$
13,186
$
15,426
10
The RMR Group Inc.
Condensed Consolidated Balance Sheets
(dollars in thousands, except per share amounts)
(unaudited)
March 31,
September 30,
2022
2021
Assets
Current assets:
Cash and cash equivalents
$
181,740
$
159,835
Due from related parties
96,212
88,661
Prepaid and other current assets
6,051
6,021
Total current assets
284,003
254,517
Property and equipment, net
2,604
2,218
Due from related parties, net of current portion
25,244
14,331
Equity method investments accounted for under the fair value option
35,904
39,476
Goodwill and intangible assets, net of amortization
2,075
2,094
Operating lease right of use assets
30,752
32,293
Deferred tax asset
18,394
18,671
Other assets, net of amortization
129,603
134,311
Total assets
$
528,579
$
497,911
Liabilities and Equity
Current liabilities:
Reimbursable accounts payable and accrued expenses
$
64,897
$
55,115
Accounts payable and accrued expenses
22,528
15,027
Operating lease liabilities
5,066
4,922
Employer compensation liability
3,386
6,076
Total current liabilities
95,877
81,140
Operating lease liabilities, net of current portion
27,312
29,148
Amounts due pursuant to tax receivable agreement, net of current portion
25,577
25,577
Employer compensation liability, net of current portion
25,244
14,331
Total liabilities
174,010
150,196
Commitments and contingencies
Equity:
Class A common stock, $0.001 par value; 31,600,000 shares authorized; 15,501,536 and 15,485,236 shares issued and outstanding, respectively
16
15
Class B-1 common stock, $0.001 par value; 1,000,000 shares authorized, issued and outstanding
1
1
Class B-2 common stock, $0.001 par value; 15,000,000 shares authorized, issued and outstanding
15
15
Additional paid in capital
111,667
109,910
Retained earnings
336,379
321,945
Cumulative common distributions
(249,295)
(236,766)
Total shareholders’ equity
198,783
195,120
Noncontrolling interest
155,786
152,595
Total equity
354,569
347,715
Total liabilities and equity
$
528,579
$
497,911
11
WARNING CONCERNING FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws. Forward-looking statements can be identified by use of words such as “outlook,” “believe,” “expect,” “potential,” “will,” “may,” “estimate,” “anticipate” and derivatives or negatives of such words or similar words. Forward-looking statements in this press release are based upon present beliefs or expectations. However, forward-looking statements and their implications are not guaranteed to occur and may not occur for various reasons, including some reasons beyond The RMR Group Inc.’s control. For example:
•Mr. Portnoy states that for the second fiscal quarter, management and advisory services revenues of $49.3 million increased 17% from last year, reflecting early success in growing The RMR Group Inc.’s private capital business and the execution of strategic growth and repositioning strategies at the Managed REITs. Mr. Portnoy also states that similarly, net income, adjusted net income and Adjusted EBITDA all were in line with second quarter guidance and each measure exceeded prior year results by at least 22%, fueled primarily by the successful integration of ILPT’s acquisition of Monmouth Real Estate Investment Corporation. These statements may imply that The RMR Group Inc. will continue to earn increased management and advisory services revenues, net income, adjusted net income and Adjusted EBITDA in the future. However, The RMR Group Inc.’s and its clients’ businesses are subject to various risks, including risks outside its and their control. Further, the impact and duration of the COVID-19 pandemic is not known and economic conditions could deteriorate, including as a result of inflation, for a prolonged period and negatively impact The RMR Group Inc.’s and its clients’ businesses operating and financial results;
•Mr. Portnoy states that during the quarter, DHC closed on a $703 million joint venture with two global institutional investors, increasing The RMR Group Inc.’s managed private real estate capital AUM to $3.9 billion. In addition, Mr. Portnoy also states that he believes this growth not only showcases The RMR Group Inc.’s ability to expand its AUM through private capital transactions, but also highlights The RMR Group Inc.’s alignment with its clients’ shareholders by expanding their access to capital. These statements may imply that the DHC joint venture will be successful and that it will benefit DHC and The RMR Group Inc. as a result. However, this transaction may not be successful and the fees earned from clients may decline or not meet expectations as a result. In addition, The RMR Group Inc. may not succeed in expanding its AUM through private transactions in the future and any such expansion may not realize the benefits to it and its clients; and
•Mr. Portnoy states that The RMR Group Inc. has over $181 million of cash and no debt, and that it remains well positioned to continue pursuing a range of capital allocation strategies. This statement may imply that The RMR Group Inc. will successfully identify and execute one or more capital allocation strategies and that any capital allocation strategy it may pursue will be successful and benefit it and its shareholders. However, identifying and executing on capital allocation strategies are subject to various uncertainties and risks and it may take an extended period of time to realize any benefits. In addition, The RMR Group Inc. may elect to not continue pursuing a capital allocation strategy or abandon any such strategy it may pursue.
The information contained in The RMR Group Inc.’s filings with the SEC, including under the caption “Risk Factors” in The RMR Group Inc.’s periodic reports, or incorporated therein, identifies important factors that could cause differences from the forward-looking statements in this press release. The RMR Group Inc.’s filings with the SEC are available on its website and at www.sec.gov.
You should not place undue reliance on forward-looking statements.
Except as required by law, The RMR Group Inc. undertakes no obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise.
