RMR

Image source: The Motley Fool. Thursday, Aug. 6, 2026, at 11 a.m. ET President and Chief Executive Officer - Adam David Portnoy Chief Operating Officer - Matthew Paul Jordan Chief Financial Officer - Matthew C. Brown Senior Vice President - Bryan Anthony Maher Operator: Good day, and welcome to the RMR Group Fiscal Third Quarter 26 Earnings Call. All participants will be in listen-only mode. And please note this event is being recorded. I would now like to turn the conference over to Bryan Anthony Maher, Senior Vice President. Please go ahead. Bryan Anthony Maher: Thank you. Good morning. Thank you for joining RMR's fiscal third quarter 26 conference call. With me on today's call are President and CEO, Adam David Portnoy; Chief Operating Officer, Matthew Paul Jordan and Chief Financial Officer, Matthew C. Brown. In just a moment, they will provide details about our business and quarterly results. Followed by a question and answer session. I would also like to note that the recording and retransmission of today's conference call is prohibited without the prior written consent of the company. Today's conference call contains forward looking statements within the meaning of the Private Securities Litigation Reform Act of 2000 and other securities laws. These forward looking statements are based on RMR's beliefs and expectations as of today 08/06/2026, actual results may differ materially from those that we project. The company undertakes no obligation to revise or publicly release the results of any revision to forward looking statements made in today's conference call. Additional information concerning factors that could cause those differences is contained in our filings with the Securities and Exchange Commission. Which can be found on our website at rmrgroup.com. Investors are cautioned not to place undue reliance upon any forward looking statements. In addition, we may discuss non GAAP numbers during this call. Including distributable earnings and adjusted EBITDA. A reconciliation of net income determined in accordance with U. S. Generally accepted accounting principles to these non GAAP figures can be found in our financial results. I will now turn the call over to Adam. Adam David Portnoy: Thanks, Bryan, and thank you all for joining us this morning. Yesterday, we reported third quarter financial results that were in line with our expectations despite broad economic and geopolitical uncertainty. Our quarterly results were highlighted by distributable earnings of $0.48 per share and adjusted EBITDA of $19.7 million Our results continue to reflect the organization's focus on our 2 primary strategic objectives. First, we are focused on driving continued improvements in the share prices of our managed REITs through strong business execution. And second, we are focused on growing our private capital business. While Matt will talk more about private capital, as it relates to our managed REITs, over the past 2 years, we have actively assisted the REITs in deleveraging efforts through strategic asset sales, refinancing debt on more attractive terms and driving property NOI growth through increased occupancy rent roll ups and disciplined expense management. These efforts continue to resonate with the investment community. As both DHC and ILPT remain among the best performing REITs in the U.S. Over the past 3 years. As a result of this continued outperformance, we have seen sequential quarter growth in management fees and we are on pace to generate over $40 million incentive fees this calendar year. Now turning to our managed REITs. At DHC, the REIT continues to experience significant operating improvement within senior housing segment following the transition of 116 communities to new operators over the past year. DHC has also materially improved its balance sheet metrics following over $600 million in non core asset sales, since the beginning of last year. Resulting in net debt to adjusted EBITDA declining to 7.1x as of June 30. In the second quarter, DHC generated normalized FFO of $0.16 per share and adjusted EBITDA of $82 million both exceeding consensus estimates. Same property SHOP NOI grew 37% over last year and same property shop margins improved 390 basis points to 17.3%. Importantly, we continue to believe that DHC is in the early innings of a multiyear acceleration in cash flow growth because of the demographic driven demand for its SHOP communities and limited supply growth. Which are amplified by operational improvements we are implementing across the portfolio. ILPT had a very successful quarter with its results highlighted by a record 5.4 million square feet of leasing and a weighted average rent roll up of more than 35% marking its seventh consecutive quarter of double digit rent growth. Additionally, RMR recently assisted ILPT with the refinancing of $1.6 billion of new debt for its consolidated Mountain joint venture, which we placed floating rate debt with interest only fixed rate debt and an attractive 5.7% interest rate. Given a materially improved debt profile and strong organic cash flow growth, ILPT recently doubled its quarterly dividend to 10 cents per share while maintaining significant dividend coverage. SVC continues to make progress strengthening its balance sheet while improving its portfolio composition through a combination of capital recycling in over $900 million in non core asset sales since the beginning of last year. Management's primary focus remains on working with Sonesta's new leadership team to drive hotel EBITDA margins higher while also looking to realize the anticipated benefits from nearly $650 million in capital improvements made to its retained hotel portfolio over the past 3 years. For the quarter, SVC's retained hotels saw RevPAR increase 6.6% and hotel EBITDA grow 4.2% reflecting the early benefits of the recently completed renovations. Normalized FFO per share came in at $0.43 and adjusted EBITDA was 146 million RMR was instrumental in helping SVC improve its balance sheet during the quarter using the net proceeds from its recent $575 million equity offering to redeem $550 million of unsecured notes due in 2027. As a result, SVC has meaningfully reduced near term refinancing risk while creating runway to optimize its hotel performance and advance its broader transformation into a net lease focused REIT. Lastly, OPI recently emerged from bankruptcy and its newly issued shares trade on the NASDAQ. As we previously highlighted, RMR will continue managing OPI for an initial 5-year term with RMR receiving a flat business management fee during the first 2 years of $14 million per year. To conclude, we are pleased with the significant progress RMR has made improving the financial positions of our managed REITs. We are particularly encouraged by the total shareholder returns that have been delivered by DHC and ILPT over the past 3 years, and we are working hard to deliver similar results across all of our clients. With that, I will now turn the call over to Matthew Paul Jordan. Matthew Paul Jordan: Thanks, Adam. While our publicly traded perpetual capital clients provide RMR and its shareholders, with a stable foundation of recurring cash flows, We continue to pursue growth strategies in our private capital business. Which as a reminder has grown from nearly 0 assets under management in 2020 to over $12 billion today. To further this initiative, over the past year, we have built a global in house sales and marketing team that continues to spend significant time increasing RMR's brand awareness. Given our expertise across most real estate sectors we are in an excellent position to tailor the opportunities we are seeing in the market to potential partners capital allocation strategies. While investor meetings continue to be constructive, and have helped establish our organization in a manner that will benefit us in the long term, The ongoing conflict in The Middle East continues to be a headwind. With global real estate fundraising in the first half of the calendar year coming in at a 9-year low. While we continue to make longer term investments to build our brand and expand our investor universe, Our residential business recently closed a joint venture acquisition in Greenwich, Connecticut for approximately $350 million. This venture involving RMR part involved RMR partnering with new institutional investors that represent 95% of the equity with RMR retaining a 5% general partner interest. Our multiyear plan for this asset is to modernize the community enhance the resident experience, and unlock embedded operating efficiencies. As general partner, RMR earned an acquisition fee at closing and will earn asset management and property management fees of approximately $750 thousand annually from this venture. As a reminder, the RMR residential platform we acquired in 2023 was historically built compete completing joint ventures like the Greenwich transaction with large institutional partners. To that end, while we continue to fundraise for our residential enhanced growth venture, we expect to continue executing 1 off joint ventures with RMR acting as a general partner. Further, as tailwinds continue to improve for multifamily real estate, whether it be continued strengthening of fundamentals or the continued slowdown in multifamily construction, we expect transaction activity to rebound over time. Our residential platform regularly exceeded $1 billion in transactions a year. Prior to the headwinds the sector has recently experienced. Beyond our general partner interest, RMR wholly owns 3 multifamily communities encompassing 781 units that are almost 92% occupied. This quarter's earnings presentation includes expanded color on these assets. All of which are performing in line with their value add business plans and collectively you are seeing operating fundamental improvements as supply eases. This is most notably starting to show in a continuing trend of rental rate improvements and the easing of tenant concessions. In closing, as investors may recall, last quarter we added a slide to our investor presentation that highlighted the material discount at which RMR shares trade relative to our peers. As an update, if 1 were to back out the carrying value of our investments, as well as the net carrying value of our wholly owned real estate and JV interest, RMR shares are trading at just over 5x the EBITDA generated primarily by the 20 year evergreen management contracts associated with some of our managed equity REITs. This is significantly below the 16.5x average multiple at which our peers trade and highlights the attractiveness of our shares at current levels. With that, I will now turn the call over to Matthew C. Brown. Matthew C. Brown: Thanks, Matthew, and good morning, everyone. For our fiscal third quarter, we reported adjusted EBITDA of $19.7 million and distributable earnings of $0.48 per share. Both of which met our guidance. Recurring service revenues were $45.5 million for a sequential quarter increase of approximately $3.5 million driven primarily by increases in the enterprise values of DHC and SVC seasonal improvements in Sonesta revenues and acquisition fees earned from our Greenwich joint venture acquisition. Next quarter, we expect recurring service revenues to remain consistent at approximately $45 million as enterprise values at our managed equity REITs continue to improve offset by acquisition fees recognized in the current quarter. Turning to expenses. Recurring cash compensation was $39.6 million for a sequential quarter increase of approximately $2 million largely driven by year to date adjustments recognized in the current quarter and changes in headcount mix. Our reimbursement rate in the quarter was approximately 42%, which we view as a good run rate moving forward based on our current headcount mix and strategic asset sales at certain of our managed equity REITs. Looking ahead to next quarter, we expect recurring cash compensation to decrease to approximately $38.5 million As it relates to equity based compensation, with our fiscal year end approaching, RMR share awards to employees are expected to occur in September. Based on historical grants, we expect approximately $600 thousand in incremental equity compensation next quarter. Recurring G and A this quarter was $10.7 million, a modest sequential quarter increase driven primarily by normal course legal and professional fees. Including third party construction management fees. We expect recurring G and A to decrease slightly next quarter. As noted in last quarter's call, our quarterly tax rate during the year is subject to fluctuation. However, these fluctuations are not expected to materially impact our full-year estimated tax rate of 17% to 18%. This quarter, our tax rate remained elevated at 20.4% as adjustments such as unrealized gains on our investments in SVC and 7 impacted the timing of tax expense recognition. As Adam highlighted earlier, OPI emerged from bankruptcy in June, we entered into amended and restated management agreements with OPI. As a result, we wrote off a contract asset associated with the previous management agreements which was partially offset by RMR receiving 2% of the equity in the new entity, to compensate us for our efforts through the bankruptcy process. The net impact of these noncash related items resulted in a net impairment charge of $19 million. Our investment in SVC generated approximately $420 thousand in dividends in the quarter, which contributed to adjusted EBITDA and distributable earnings and serves as a good run rate moving forward. Aggregating these collective assumptions, next quarter we expect adjusted EBITDA to be $19 million to $21 million and distributable earnings to be between $0.48 and $0.50 per share. We expect full year adjusted EBITDA to be approximately $76.5 million to $78.5 million, which excludes the $23.6 million of incentive fees earned for calendar year 2025, and a possible more than $40 million of incentive fees for calendar year 2026. We ended the quarter with over $130 million of total liquidity. Including over $55 million in cash, and $75 million of capacity on our revolving credit facility. We remain well positioned to execute on our strategic objectives and pursue growth opportunities that strengthen our competitive position and support future performance. That concludes our prepared remarks. Operator, please open the line for questions. Operator: We will now begin the question and answer session. Please pick up your handset before pressing the keys. Question. The first question comes from Tyler Anton Batory with Oppenheimer. Please go ahead. Tyler Anton Batory: Hey, good morning. Thanks for taking my question. First 1 is just on the private capital side of things, in particular, the enhanced growth venture. It sounds like it is just the macro that is impacting some of the fundraising, but just wanted to double click on that. I am not sure if maybe some of the potential investors out there are looking for something different in terms of this sort of an investment. it is just any updates on kind of how you think fundraising might progress over the next couple of quarters? Matthew Paul Jordan: Hey, Tyler. it is Matthew Paul Jordan. I guess there is a couple of things that play here. The fundraising cycle in general has really extended. You are looking at 18 to 24 months, and we are still about 9 months in. And we have had a series of global meetings and interest levels. So I would say the fundraising process is still very much underway. I think what is also impacting it is 2 things. You have the Middle East conflicts and the related market volatility. that is causing a lot of people to pause. And a lot of the capital that is most actively deploying in real estate is Middle Eastern money. So it is further compounding the issue. You also have a second issue of a lot of investments made in the peak years when interest rates were 0 or near 0. Those investors have not got that money back. So they do not have new monies to deploy. We just need to work through this and through that. We are in this for the long game. Some of the effort we are doing as we market EGV and market RMR broadly is what we believe going to pay dividends in the long term when things stabilize and people start redeploying again. Tyler Anton Batory: Okay. Thank you for that. And then another big picture question. I am just trying to think about operating leverage, potential margin improvement in the business. there is, I think, a lot of momentum a lot of potential on the top line in terms of revenue. So any guidepost you could provide in terms of flow through or EBITDA margin, what that might look like in medium term? Matthew C. Brown: Sure. So our current EBITDA margin is in the low 40% range. Historically, that number was trending at or above 50%. Our goal is to get there, and the way we are going to get there is to continue growing revenues, and we will see that flow through all the way down to the bottom line. So the goal is to get back towards that 50%-ish margin. Tyler Anton Batory: Okay. And then a couple of housekeeping questions. So the 40 million potential incentive fees, I guess I wanted to be clear, I think, I know, but I just want to be clear exactly which REITs are driving that. I do not know if there is any help in terms of potential sensitivity. I mean, it sounds like the $40 is kind of a point in time from right now. So maybe there is even more upside depending how the rest of the year plays out. Matthew C. Brown: Sure. The 2 REITs that are currently in the money for incentive fees right now are DHC and ILPT. With DHC representing about 75% of that total $40-ish million as of June 30. Yes. The fee is volatile, but both of those, REITs are outperforming significantly. And as a result of that are hitting the cap of the incentive fee, which is 1.5% of equity market cap for each of them. So we feel really good about incentive fees for 2026 And even looking forward into 2027, we also expect a similar trend to what we are seeing currently. Tyler Anton Batory: Okay, great. And then the last 1, so SVC investment that you have made, do you have an ideal holding period for that? Is that capital down the line that could be freed up and maybe an opportunity to monetize that at a gain? Adam David Portnoy: Tyler, it is Adam. I think you should think about that investment as a long term investment You know, we really are bullish about the prospects of SVC, which is what was partially led us to make that investment. And the business at SVC is going to the improvements that we are starting to see in the portfolio, we expect it to continue but it is going to be measured in years, not quarters or months. And I think from your perspective, the answer directly we expect to be long term holders of SVC. Tyler Anton Batory: Okay, great. that is all for me. Thank you. Operator: The next question is from Christopher Nolan with Ladenburg Thalmann. Please go ahead. Christopher Nolan: Adam, was the $40 million incentive fee for calendar year or fiscal year? Adam David Portnoy: it is a calendar year calculation So it would be calculated at the end of December and typically paid, I believe, in January. Right. Christopher Nolan: And then what was the driver for the 21 million investment gain? I might have missed it in the comments. Matthew C. Brown: that is really just the change in share price of our investments in SVC and 7 from where they were at Mark 31 to where those shares ended at June 30. Christopher Nolan: Great. And then I guess following up on the comments on the slowdown in commercial real estate. Is it I presume it is across sectors. it is not sector specific. And has this, like, sort of impacted valuations for commercial real estate, equity valuations for properties and so forth? Adam David Portnoy: So it is broad based generally. In terms of capital flowing into commercial real estate. For sure, there is a slowdown. Transaction volumes are down. Capital deployments are down. Capital raising is down, both in the private markets and public markets. There are some exceptions, the obvious 1 data centers. The other exception within the sectors we operate in, I would say that senior living is a sector that continues to see flows. There are sectors performing better than others in terms of transaction activity and capital flows. Another area that seems to have some pretty good capital flows and transaction activity is industrial. Which we have a large presence in. And sort of an up and coming area that is been up and coming now for a couple of years and continues to accelerate is retail. there is more capital flows coming into retail. So the whole sector is down, but there are some sectors doing better compared to others. In terms of pricing, pricing has not moved much in the last year or so for commercial real estate with the exception of maybe a couple of the sectors I just mentioned. I think cap rates are compressing in the senior living space. I think cap rates are starting to compress a little bit in the retail space. They are probably even coming down in the office sector, but they are coming down off a very high point. In the office sector. So there has not been a lot-- there has not been a big move in valuations, but there has, but there is-- but transaction volume is way down. We are running at 50% of, let's say, what normal transaction volumes would be. And so because you are not seeing as much capital flows in volumes, that has not led to a deterioration in asset values. Significantly. Okay. Thank you. Operator: The next question is from John James Massocca with B. Riley. Please go ahead. In operating capital I am sorry, John James Massocca, could you please start your question over? John James Massocca: Had a I did not quite get you on the queue or on the podium as fast as I thought. No, no problem. [Inaudible]. So maybe sticking with the theme of kind of starting with the theme of on balance sheet real estate, how are you thinking about additional investments today Does that need to see a kind of ramp up in that private capital fundraising before you would feel comfortable putting more investments on balance sheet? Or given the capacity you have with some of the debt availability for RMR proper, would you feel comfortable continuing to see things and see attractive opportunities, in the multifamily space or other real estate sectors? Adam David Portnoy: Hi, John. I think until you are onto it and we are thinking about it in similar ways. Until there is a sort of an uptick in, let's say, fundraising around EGV, for multifamily. I do not think you will see us put another wholly owned asset on the balance sheet for, let's say, multifamily. The only area that we are actively thinking about putting a wholly owned investment on the balance sheet would be maybe retail. We have 1 retail asset on the balance sheet. it is possible we could put another 1 or 2 there. We feel pretty bullish about that sector. We are not the only ones that feel bullish about that sector, but we feel pretty good about our ability to execute a value add strategy in and around some lack of a better word, shopping centers. And we have got 1 on our balance sheet. it is actually performing pretty well. We are hopeful we will be having a very good return on that investment. And so we could see that in retail. And again, that follows the theme you have talked about, which is you know, we are not really thinking about putting more money to work in multi because we sort of have 3 assets. We are waiting to see if we can get the capital deployed or get or to raise capital in a private format around that. We have not really built out a strong track record in value add retail investment And so that is the impetus for us to use the balance sheet capital for that. But the goal is through the prism of we are doing this to help accelerate private capital raising so we can generate more fees. And fees for the organization. And so that is sort of the way we think about it. John James Massocca: Okay. In terms of the public vehicles OPI now back in the public markets, Can you maybe provide a little more disclosure on how you get to some of the potential fees there. And maybe how you are thinking about or how maybe you have to treat the 22% ownership stake you received as part of that transaction? Adam David Portnoy: Sure. So we are likely to be a long term hold of that 2% as well. You know, OPI is in the early innings Of its emergence from bankruptcy and sort of executing on its business plan. it is in the process of selling some real estate today. But everything about OPI is being thought about through the prism of how do we increase free cash flow for the business? How do we optimize the portfolio? How do we delever even further the balance sheet, even though we significantly have delevered it. So those are sort of you know, the themes that the board and management is focused on at OPI. And I think in the coming quarters, it will become clearer sort of exactly precisely what we will be focused on in terms of additional asset sales if there are any refinancing or cleaning up maybe the balance sheet as part of that. Those are things that I think we are focused on over the next couple of quarters. But we feel confident the company is on strong footing and we are focused on increasing free cash flow, deleveraging portfolio optimization. Those are the things we are focused on. John James Massocca: In the potential 8 percentage additional ownership stake, I mean, is that kind of contingent on more kind of going concern type of targets? Would that be kind of more of a liquidation type scenario? Just kind of curious broad strokes, how do you maybe get to at least some of that potential ownership upside? Adam David Portnoy: So it is a great question. John. We have not entered into the agreement yet on that is called the management incentive plan. We are currently in discussions regarding that and all those things are sort of on the table. Once we get that finalized, we will be happy to disclose details and how it is set up, but we just do not have it in place yet. John James Massocca: Okay. Understood. And that is it for me. Thank you very much. Operator: The next question is from Mitchell Bradley Germain with Citizens Bank. Please go ahead. Mitchell Bradley Germain: Great. Thank you. Your legacy investments, the first couple that you made on balance sheet, a couple of multifamily, 1 retail. I am curious, it is I do not know, it is been a year plus or so with some of them. How they are performing relative to your original underwriting? Matthew Paul Jordan: Hey, Mitchell. As a reminder, we have got 3 wholly owned multi deals. Research part research triangle, Florida and Denver on the multi side, and then Adam touched on our Chicago retail deal. As it relates to multifamily, those are 4 to 5 year business plans. So we are still somewhat in the early innings. But so far, again, they are almost 92% occupied. We are seeing respectable 3% to 4% rent growth on renewals. We are almost break even on new leasing, which are phenomenal numbers versus where we were a year ago in terms of the supply overhang. And on the renovations we are doing to the apartments, which is part of the business plan in terms of turning classic units into upgraded units. Thus far, we are seeing high teen ROIs that are being generated on those renovations in terms of realization of rent. So we feel really good. These are obviously generating recurring fees through property management and asset management. But the big goal is generating promote income for the organization when we realize these transactions in 4 to 5 years. In terms of their life cycle. And as of now, those are all trending on track with their business plan. Mitchell Bradley Germain: Thanks for that commentary. Adam, you have got shares in now 3 of your 5 public vehicles. Is there any consideration to maybe grow a stake in the other 2 remaining? I know that you have incentives that are coming from there. Can you trade some cash for stock? I mean, is this some sort of strategy that you are going to embark on in the future? Adam David Portnoy: Thanks, Mitchell. it is an interesting question. it is something we have thought about. You are right. there is not just RMR. RMR has interests large interests in SVC and 7 Hills. I personally have a large interest in DHC. So collectively, between RMR and myself, you are right. 3 in 3 of the REITs. I think it is an open question what we are open to it. there is no imminent plan to do so in terms to invest in those companies. But under the right circumstances, if they presented themselves and we felt good about the valuation and it would help sort of accelerate the business plan at those companies, I can see a scenario where it could present itself. But there is nothing currently planned to do so. Mitchell Bradley Germain: Great. Last 1 for me, and I apologize. I missed some of your You have a distributable earnings bridge in your presentation. And you have some higher compensation this quarter that impacts earnings. Is that is there a recurring nature to that? Or is this 1 time expenses? Matthew C. Brown: The majority of that is 1-time in nature. We do have slight change in headcount mix, is a slight factor. But more importantly, our bonus at RMR, which gets paid to employees in September is performance based, based off of EBITDA. And we have seen our EBITDA target grow as of June 30 for the balance of the fiscal year as compared to where it was in March. So the majority of the adjustment was driven based off that. Mitchell Bradley Germain: Great. Thank you, guys. Operator: This concludes the question and answer session. I would like to turn the conference back over to Adam David Portnoy, President and CEO, for any closing remarks. Adam David Portnoy: Thank you all for joining our call today. Operator, that concludes our call. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect. Before you buy stock in Rmr Group, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Rmr Group wasn’t one of them. The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $400,209!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,375,393!* That performance is why people listen. 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RMR (RMR) Q3 2026 Earnings Call Transcript was originally published by The Motley Fool

Interested in The RMR Group Inc.? Here are five stocks we like better. Q3 fiscal 2026 results met expectations: RMR reported distributable earnings of $0.48 per share and adjusted EBITDA of $19.7 million. Recurring service revenue increased to $45.5 million, while total liquidity exceeded $130 million. Managed REITs showed operating and balance-sheet improvements: DHC’s same-property senior-housing NOI rose 37% year over year, ILPT recorded 5.4 million square feet of leasing and a rent roll-up above 35%, and SVC continued reducing leverage. RMR expects more than $40 million in 2026 incentive fees, primarily from DHC and ILPT. Private-capital expansion continues despite fundraising challenges: Private-capital assets under management surpassed $12 billion, and RMR closed a roughly $350 million Greenwich residential joint venture. However, management cited market volatility and extended 18-to-24-month fundraising cycles as ongoing headwinds. The RMR Group (NASDAQ:RMR) reported fiscal third-quarter 2026 results that met its expectations, with distributable earnings of $0.48 per share and adjusted EBITDA of $19.7 million, as the real estate manager continued to emphasize improving the performance of its managed REITs and expanding its private-capital business. President and CEO Adam Portnoy said the company’s results came despite “broad economic and geopolitical uncertainty.” He cited continued operating and balance-sheet improvements at managed REITs Diversified Healthcare Trust, Industrial Logistics Properties Trust, Service Properties Trust and Office Properties Income Trust. → Meta’s Earnings Drop Shows Wall Street Wants More Than Ad Growth RMR said it is on pace to generate more than $40 million in incentive fees for calendar 2026, driven by the performance of DHC and ILPT. Chief Operating Officer Matt Jordan said DHC represented about 75% of the potential total as of June 30, while both REITs were at the 1.5% of equity-market-cap incentive-fee cap. Portnoy said DHC continued to improve its senior-housing operations following the transition of 116 communities to new operators over the past year. Since the start of 2025, DHC has completed more than $600 million of non-core asset sales, helping reduce net debt to adjusted EBITDA to 7.1 times as of June 30. → 4 Oil and Gas ETF Plays as Prices Stay Sky-High During DHC’s second quarter, normalized funds from operations were $0.16 per share and adjusted EBITDA was $82 million, both above consensus estimates, according to Portnoy. Same-property SHOP NOI increased 37% year over year, while same-property SHOP margins rose 390 basis points to 17.3%. At ILPT, RMR highlighted a record 5.4 million square feet of leasing and a weighted-average rent roll-up exceeding 35%. The company said this marked ILPT’s seventh consecutive quarter of double-digit rent growth. RMR also helped ILPT refinance $1.6 billion of debt for its consolidated Mountain joint venture, replacing floating-rate debt with interest-only fixed-rate debt carrying a 5.7% interest rate. ILPT subsequently doubled its quarterly dividend to $0.10 per share. → Sandisk Just Delivered a Blowout Quarter—Here's Why the Stock Is Falling Service Properties Trust continued to recycle capital and reduce leverage, completing more than $900 million of non-core asset sales since the beginning of last year. Portnoy said RMR is working with Sonesta’s new leadership team to increase hotel EBITDA margins and capture benefits from nearly $650 million of hotel capital improvements over the past three years. SVC’s retained hotels generated a 6.6% increase in revenue per available room, or RevPAR, and a 4.2% rise in hotel EBITDA during the quarter. SVC reported normalized FFO of $0.43 per share and adjusted EBITDA of $146 million. RMR also assisted SVC in using proceeds from a $575 million equity offering to redeem $550 million of unsecured notes due in 2027. Meanwhile, Office Properties Income Trust emerged from bankruptcy in June and began trading its newly issued shares on Nasdaq. RMR will continue to manage OPI under an initial five-year term and will receive a flat business-management fee of $14 million annually during the first two years. Jordan said RMR’s private-capital assets under management have expanded from nearly zero in 2020 to more than $12 billion. The company has built an in-house global sales and marketing team over the past year as it seeks to build its investor base and pursue new opportunities. However, Jordan said fundraising remains challenging. He cited the Middle East conflict, related market volatility and a broader slowdown in real estate fundraising, which he said reached a nine-year low in the first half of the calendar year. He added that fundraising cycles have extended to roughly 18 to 24 months, while RMR is about nine months into its Enhanced Growth Venture fundraising process. RMR recently closed a roughly $350 million joint-venture acquisition in Greenwich, Connecticut. New institutional investors contributed 95% of the venture’s equity, while RMR retained a 5% general-partner interest. RMR earned an acquisition fee at closing and expects to receive about $750,000 annually in asset-management and property-management fees. The company said it plans to modernize the Greenwich community, improve the resident experience and identify operating efficiencies. Jordan said RMR expects to continue pursuing one-off residential joint ventures while it raises capital for its residential enhanced-growth strategy. RMR also wholly owns three multifamily communities totaling 781 units. The properties were nearly 92% occupied and were performing in line with their value-add plans, Jordan said. The company cited 3% to 4% renewal rent growth, nearly break-even new leasing and high-teen returns on apartment renovation investments. Chief Financial Officer Matt Brown said recurring service revenue rose about $3.5 million sequentially to $45.5 million. The increase reflected higher enterprise values at DHC and SVC, seasonal improvement in Sonesta revenue and acquisition fees from the Greenwich transaction. For the next quarter, RMR expects recurring service revenue of about $45 million. It forecast adjusted EBITDA of $19 million to $21 million and distributable earnings of $0.48 to $0.50 per share. The company expects full-year adjusted EBITDA of approximately $76.5 million to $78.5 million, excluding $23.6 million of incentive fees earned for calendar 2025 and possible calendar 2026 incentive fees exceeding $40 million. RMR ended the quarter with more than $130 million of total liquidity, including more than $55 million of cash and $75 million of available capacity under its revolving credit facility. On profitability, Jordan said RMR’s EBITDA margin is currently in the low-40% range, compared with historical levels at or above 50%. He said the company’s goal is to move back toward a margin of roughly 50% through revenue growth and operating leverage. The RMR Group, Inc (NASDAQ: RMR) is a publicly traded asset management company that specializes in providing comprehensive real estate and investment management services to both public and private entities. Acting as an external manager, RMR offers a range of services encompassing property management, asset management, fund administration, accounting, investor relations and compliance oversight. Its client base includes real estate investment trusts (REITs), real estate operating companies (REOCs), closed-end real estate funds and institutional investors. Founded in 1986, RMR Group has built a business model centered on recurring fee revenue generated through long-term service agreements with its managed entities. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "The RMR Group Q3 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Management attributed quarterly performance to a dual focus on improving managed REIT share prices and expanding the private capital business despite global economic uncertainty. Managed REIT outperformance, particularly at DHC and ILPT, is driving sequential growth in management fees and is expected to generate over $40 million in incentive fees for calendar 2026. Strategic deleveraging efforts across the REIT portfolio included over $600 million in non-core asset sales at DHC and $900 million at SVC since the beginning of last year. The senior housing segment at DHC is seeing a multiyear acceleration in cash flow driven by demographic demand and operational improvements following the transition of 116 communities to new operators. ILPT achieved record leasing of 5.4 million square feet with a 35% rent roll-up, marking seven consecutive quarters of double-digit rent growth. The private capital business has grown from near zero in 2020 to over $12 billion in assets under management, supported by a newly established global in-house sales and marketing team. Management highlighted that RMR shares trade at approximately 5x EBITDA when backing out investment values, which they view as a significant discount compared to the 16.5x peer average. Fiscal Q4 guidance for distributable earnings of $0.48 to $0.50 per share assumes recurring service revenues remain stable at approximately $45 million. Management expects a multiyear recovery in the senior housing sector due to limited supply growth and increasing demand from aging demographics. Fundraising cycles for private capital have extended to 18-24 months, with current efforts facing headwinds from Middle East conflicts and market volatility. The company anticipates transaction activity in the residential sector will rebound as multifamily construction slows and fundamentals continue to strengthen. RMR intends to remain a long-term holder of its investments in SVC and OPI, viewing these as multiyear recovery and optimization plays. OPI emerged from bankruptcy in June, resulting in a $19 million net impairment charge as RMR transitioned to a new management agreement with a flat $14 million annual fee for the first two years. RMR received 2% of the equity in the new OPI entity as compensation for bankruptcy process efforts, with potential to increase ownership through a future management incentive plan. The company identified the ongoing conflict in the Middle East as a primary headwind for global real estate fundraising, which hit a 9-year low in the first half of the calendar year. A joint venture acquisition in Greenwich, Connecticut for $350 million illustrates the strategy of partnering with institutional investors where RMR retains a 5% general partner interest. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management noted the fundraising cycle has extended significantly, and they are currently about 9 months into a process that typically takes 18 to 24 months. Capital deployment is being hindered by Middle Eastern investors pausing due to regional volatility and other investors waiting for liquidity from peak-year investments. Current margins are in the low 40% range, but management aims to return to historical levels of 50% or higher through top-line revenue growth. Incremental revenue from management and incentive fees is expected to flow through efficiently to the bottom line. Transaction volumes are currently running at approximately 50% of normal levels, though pricing has remained relatively stable except in high-demand sectors. Cap rates are beginning to compress in senior living and retail, while the office sector remains challenged despite some stabilization in valuations. RMR is unlikely to add more wholly owned multifamily assets until private fundraising gains momentum, but may use the balance sheet for 1 or 2 more retail acquisitions. The goal of using balance sheet capital is to establish a track record in specific sectors to eventually accelerate private capital fee generation.

AGNT (AGNT) reported break-even quarterly earnings per share versus the Zacks Consensus Estimate of $0.03. This compares to earnings of $0.06 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of -100.00%. A quarter ago, it was expected that this company would post a loss of $0.05 per share when it actually produced a loss of $0.03, delivering a surprise of +40%. Over the last four quarters, the company has surpassed consensus EPS estimates just once. AGNT, which belongs to the Zacks Real Estate - Operations industry, posted revenues of $1.45 billion for the quarter ended June 2026, surpassing the Zacks Consensus Estimate by 2.93%. This compares to year-ago revenues of $1.31 billion. The company has topped consensus revenue estimates four times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. AGNT shares have lost about 54.7% since the beginning of the year versus the S&P 500's gain of 11%. While AGNT has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for AGNT was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.09 on $1.36 billion in revenues for the coming quarter and $0.08 on $5.02 billion in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Real Estate - Operations is currently in the top 38% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. RMR Group (RMR), another stock in the same industry, has yet to report results for the quarter ended June 2026. The results are expected to be released on August 5. This real estate management services provider is expected to post quarterly earnings of $0.16 per share in its upcoming report, which represents a year-over-year change of -42.9%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. RMR Group's revenues are expected to be $147.6 million, down 4.6% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report AGNT, Inc. (AGNT) : Free Stock Analysis Report The RMR Group Inc. (RMR) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

NEWTON, Mass., July 09, 2026--(BUSINESS WIRE)--Seven Hills Realty Trust (Nasdaq: SEVN) today announced a regular cash distribution on its common shares of $0.28 per share ($1.12 per share per year). The distribution declared today will be paid to SEVN’s common shareholders of record as of the close of business on July 20, 2026 and distributed on or about August 13, 2026. About Seven Hills Realty Trust Seven Hills Realty Trust (Nasdaq: SEVN) is a real estate investment trust, or REIT, that originates and invests in first mortgage loans secured by middle market transitional commercial real estate. SEVN is managed by Tremont Realty Capital, an affiliate of The RMR Group (Nasdaq: RMR), a leading U.S. alternative asset management company with over $37 billion in assets under management and 40 years of institutional experience in buying, selling, financing and operating commercial real estate. For more information about SEVN, please visit www.sevnreit.com. 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. These forward-looking statements are based upon SEVN’s present intent, beliefs and expectations, but these statements and the implications of these statements are not guaranteed to occur and may not occur for various reasons, some of which are beyond SEVN’s control. For example, this press release states that SEVN’s quarterly cash distribution rate is $0.28 per share per quarter or $1.12 per share per year. A possible implication of this statement is that SEVN will continue to pay quarterly distributions of $0.28 per share or $1.12 per share per year in the future. SEVN’s Board of Trustees considers many factors when setting or resetting SEVN’s distribution rate, including SEVN’s Distributable Earnings, Distributable Earnings per share, the then current and expected needs and availability of cash to pay SEVN's obligations and fund its investments, distributions which may be required to be paid by SEVN to maintain SEVN’s qualification for taxation as a real estate investment trust and other factors deemed relevant by SEVN's Board of Trustees in its discretion. Accordingly, any future distributions to SEVN’s shareholders may be increased, decreased, suspended or discontinued, and SEVN cannot be sure as to the rate at which future distributions, if any, will be paid. You should not place undue reliance upon forward-looking statements. Except as required by law, SEVN does not intend to update or change any forward-looking statements as a result of new information, future events or otherwise. A Maryland Real Estate Investment Trust with transferable shares of beneficial interest listed on the Nasdaq. No shareholder, Trustee or officer is personally liable for any act or obligation of the Trust. View source version on businesswire.com: https://www.businesswire.com/news/home/20260708230113/en/ Contacts Matt Murphy, Manager, Investor Relations(617) 796-8253

NEWTON, Mass., July 09, 2026--(BUSINESS WIRE)--The RMR Group Inc. (Nasdaq: RMR) today announced a regular quarterly cash distribution on its shares of Class A Common Stock and Class B-1 Common Stock of $0.45 per share ($1.80 per share per year). This distribution will be paid to RMR’s shareholders of record as of the close of business on July 20, 2026 and distributed on or about August 13, 2026. About The RMR Group The RMR Group is a leading U.S. alternative asset management company, unique for its focus on both residential and commercial real estate (CRE) and related businesses. RMR’s vertical integration is supported by over 800 real estate professionals in more than 30 offices nationwide who manage over $37 billion in assets under management and leverage 40 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. WARNING REGARDING 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. These forward-looking statements are based upon RMR’s present beliefs and expectations, but these statements and the implications of these statements are not guaranteed to occur and may not occur for various reasons, some of which are beyond RMR’s control. For example, this press release states that RMR’s quarterly dividend will be $0.45 per share ($1.80 per share per year) on RMR Class A Common Stock and Class B-1 Common Stock. A possible implication of this statement is that RMR will continuously pay quarterly dividends of $0.45 per share per quarter or $1.80 per share per year in the future. RMR’s dividend rates are set and reset from time to time by RMR’s Board of Directors. The RMR Board of Directors considers many factors when setting dividend rates including RMR’s current and expected earnings, commitments to fund its investments and the availability of cash to fund dividends as compared to alternative uses of such cash. Accordingly, future dividend rates may be increased or decreased and there is no assurance as to the rate at which future dividends will be declared and paid. For these reasons, among others, investors are cautioned not to place undue reliance upon any forward-looking statements in this press release. Except as required by law, RMR does not intend to update or change any forward-looking statements as a result of new information, future events, or otherwise. View source version on businesswire.com: https://www.businesswire.com/news/home/20260708352092/en/ Contacts Bryan Maher, Senior Vice President(617) 796-8230

Interested in The RMR Group Inc.? Here are five stocks we like better. The RMR Group said fiscal Q2 2026 results came in at or above the high end of guidance, with distributable earnings of $0.44 per share and Adjusted EBITDA of $18.5 million. Management also said the company earned $23.6 million in incentive fees for 2025 and expects more incentive fees this year. RMR highlighted progress at its managed REITs, including stronger operating trends at Diversified Healthcare Trust, a major deleveraging move at Service Properties Trust, and better-than-expected results and refinancing at Industrial Logistics Properties Trust. Office Properties Income Trust also received court approval for its reorganization plan and is expected to emerge from bankruptcy by the end of the quarter. The company said its private capital platform has grown to nearly $12 billion in assets under management, even as fundraising remains challenged by geopolitical uncertainty. RMR also entered the Greenwich multifamily market with a roughly $350 million acquisition, and management guided for Q3 distributable earnings of $0.48 to $0.50 per share. The RMR Group (NASDAQ:RMR) reported fiscal second-quarter 2026 results at or above the high end of its outlook, as management highlighted incentive fees from managed REITs, ongoing private capital fundraising efforts and recent balance sheet investments. President and CEO Adam Portnoy said RMR generated distributable earnings of $0.44 per share and Adjusted EBITDA of $18.5 million for the quarter. He said the results came “despite operating in what remains an unsettled economic environment,” citing market volatility and geopolitical uncertainty. → Insider Sales: Top AST SpaceMobile Insider Cuts Postion Over 30% RMR earned $23.6 million of incentive fees for 2025, and Portnoy said the company is on track to earn incentive fees again this year, with both Diversified Healthcare Trust and Industrial Logistics Properties Trust accruing incentive fees during the quarter. Portnoy reviewed several developments across RMR’s managed REITs, saying the company has been active in executing clients’ strategic initiatives. → Light Speed Returns: Corning Cashes In on NVIDIA Growth At Diversified Healthcare Trust, or DHC, Portnoy said the company has focused on improving senior housing operating performance after transitioning 116 senior living communities to new operators in the second half of 2025. DHC generated first-quarter Normalized FFO of $33 million, or $0.14 per share, and Adjusted EBITDA of $74 million, both above analyst consensus estimates, according to Portnoy. Same-property NOI in the senior housing operating portfolio rose 13.5% year over year, while occupancy increased 110 basis points. DHC also sold 13 unencumbered non-core communities in March for gross proceeds of approximately $23 million. Portnoy said asset sales are expected to slow in 2026 after DHC completed about $605 million of sales in 2025, with management now focused on improving NOI in the retained portfolio. He also noted that Moody’s upgraded DHC’s debt ratings in April and revised its outlook to positive from stable. → Years in the Making, AMD’s Upside Movement Has Just Begun At Service Properties Trust, or SVC, Portnoy said RMR helped complete a $575 million equity offering that accelerated deleveraging, eliminated near-term refinancing risk and provided flexibility to improve hotel performance and pursue additional asset sales. RMR participated in the offering with a $50 million anchor investment. Portnoy said the proceeds allowed SVC to eliminate all unsecured debt maturities until 2028. For Industrial Logistics Properties Trust, or ILPT, Portnoy said first-quarter Normalized FFO of $0.33 per share and Adjusted EBITDA of $87 million exceeded the high end of management’s guidance. ILPT completed about 862,000 square feet of leasing during the quarter at rental rates 26% above prior rents. RMR also assisted ILPT with the refinancing of $1.6 billion of debt for its consolidated Mountain Joint Venture, replacing floating-rate and amortizing debt with interest-only fixed-rate debt at a 5.7% rate. Seven Hills Realty Trust originated three loans totaling $67.5 million during the quarter and generated distributable earnings of $0.24 per share, Portnoy said. Total loan commitments reached approximately $776 million, a record high for the portfolio. Portnoy also said Office Properties Income Trust, or OPI, received court approval for its plan of reorganization and is expected to emerge from bankruptcy by the end of the fiscal second quarter. He said RMR expects to continue managing OPI under previously disclosed terms, including a five-year term and a flat business management fee of $14 million per year for the first two years, while property management economics remain unchanged. Chief Operating Officer Matt Jordan said RMR’s private capital business has grown from “essentially zero” assets under management in 2020 to nearly $12 billion today. He said RMR is building brand awareness with global investors and has met with nearly 200 global investors representing almost $7 trillion in assets under management. Jordan said fundraising has been disrupted by the ongoing conflict in the Middle East, with global fundraising in the first quarter of 2026 down 50% from the prior year. However, he said North American real estate still attracted 65% of all dollars raised, and value-add strategies accounted for 56% of fundraising. RMR’s residential business now represents more than $4.7 billion in value-add residential real estate across 18,500 owned and managed units, Jordan said. In April, RMR closed on the acquisition of a multifamily portfolio in Greenwich, Connecticut, for almost $350 million. The transaction was sourced off-market and marks RMR’s entry into what Jordan described as one of the country’s most supply-constrained and affluent housing markets. RMR Residential will manage the properties and pursue a multiyear strategy to modernize communities, enhance the resident experience and improve efficiencies. The acquisition was completed through a joint venture in which RMR is a co-general partner and invested $6 million for a 5% ownership interest. Jordan said the remaining approximately $120 million of equity was raised from two institutional partners. RMR expects to recognize $600,000 of revenue from the transaction in fiscal Q3 and earn ongoing operating fees of about $750,000 annually. Jordan said the venture is expected to generate annual cash-on-cash returns of approximately 7.5% over the longer term, with potential carried interest as investment hurdles are met. Chief Financial Officer Matt Brown said recurring service revenues were $42 million in the quarter, down about $1 million sequentially, primarily due to hotel sales, lower enterprise values at SVC and DHC as those companies paid down debt, and the wind-down of AlerisLife’s business. Brown said RMR expects recurring service revenues to rise to about $44 million next quarter, driven by revenue from the Greenwich acquisition, higher construction management fees and enterprise value improvements at certain managed REITs. Recurring cash compensation was $37.7 million, up modestly from the prior quarter due to payroll tax and benefit resets, and is expected to remain consistent in fiscal Q3. Recurring general and administrative expense was $10.1 million, excluding $600,000 in annual director share grants, and is expected to remain around that level for the rest of the fiscal year. For fiscal Q3, Brown guided for Adjusted EBITDA of approximately $19 million to $21 million and distributable earnings of $0.48 to $0.50 per share. He said RMR will no longer provide guidance for adjusted net income because investments in leveraged real estate have reduced the metric’s usefulness due to depreciation and interest expense. Brown said RMR’s current liquidity is approximately $133 million, including $75 million of capacity on its revolving credit facility, after the $50 million SVC investment and the $6 million Greenwich joint venture investment. The SVC investment is expected to generate about $420,000 of incremental quarterly dividends. During the question-and-answer session, Portnoy said RMR’s multifamily investments are likely to remain private and continue to be structured through joint ventures and small portfolio investments. He said RMR is also trying to build a dedicated fund around the strategy, but he does not expect a transaction that would roll up the full $4.7 billion multifamily portfolio into a public vehicle. Portnoy said development and credit remain priorities, though development is difficult in the current market because of uncertainty and elevated required returns. He said Seven Hills has close to $500 million of capacity for new investments over the next year, supported by new capital and expected loan payoffs. Asked about RMR’s cash position, Portnoy said the company remains “all systems go” for the right opportunities, with more than $100 million of liquidity between cash and revolver capacity. He added that RMR is optimistic it could recover cash if it successfully syndicates its Enhanced Growth Venture tied to the multifamily strategy. Jordan said fundraising for equity remains challenging, with geopolitical volatility slowing conversations with investors. He said allocations to real estate remain in place over the long term, but fundraising cycles are taking longer. The RMR Group, Inc (NASDAQ: RMR) is a publicly traded asset management company that specializes in providing comprehensive real estate and investment management services to both public and private entities. Acting as an external manager, RMR offers a range of services encompassing property management, asset management, fund administration, accounting, investor relations and compliance oversight. Its client base includes real estate investment trusts (REITs), real estate operating companies (REOCs), closed-end real estate funds and institutional investors. Founded in 1986, RMR Group has built a business model centered on recurring fee revenue generated through long-term service agreements with its managed entities. The article "The RMR Group Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for May 2026.

Image source: The Motley Fool. Thursday, May 7, 2026 at 1 p.m. ET President and Chief Executive Officer — Adam Portnoy Chief Operating Officer — Matthew Paul Jordan Chief Financial Officer — Matthew Brown Need a quote from a Motley Fool analyst? Email [email protected] Bryan Maher: Good afternoon, and thank you for joining The RMR Group Inc.’s fiscal second quarter 2026 conference call. With me on today's call are President and CEO, Adam Portnoy; Chief Operating Officer, Matthew Paul Jordan; and Chief Financial Officer, Matthew Brown. In just a moment, we will provide details about our business and quarterly results, followed by a question-and-answer session. I would also like to note that the recording and retransmission of today's conference call is prohibited without the prior written consent of the company. Today's conference call contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws. These forward-looking statements are based on The RMR Group Inc.’s beliefs and expectations as of today, 05/07/2026, and actual results may differ materially from those that we project. The company undertakes no obligation to revise or publicly release the results of any revision to forward-looking statements made in today's conference call. Additional information concerning factors that could cause differences is contained in our filings with the SEC, which can be found on our website at rmrgroup.com. Investors are cautioned not to place undue reliance upon any forward-looking statements. In addition, we may discuss non-GAAP numbers during this call including adjusted net income per share, distributable earnings, and adjusted EBITDA. A reconciliation of net income determined in accordance with U.S. Generally Accepted Accounting Principles to these non-GAAP figures can be found in our financial results. I will now turn the call over to Adam. Adam Portnoy: Thanks, Bryan, and thank you all for joining us this afternoon. Yesterday, we reported second quarter results reflecting distributable earnings and adjusted EBITDA at the high end of our expectations, despite operating in what remains an unsettled economic environment. Our second quarter results were highlighted by distributable earnings of $0.44 per share and adjusted EBITDA of $18.5 million. Although we continue to navigate market volatility and geopolitical uncertainty, The RMR Group Inc. has been very active this year executing on our clients’ strategic initiatives. The markets continue to recognize our efforts as both DHC and ILPT remain among the best performing REITs in 2026 from a total shareholder return standpoint, extending the significant outperformance they each achieved in 2025. As a result, The RMR Group Inc. earned incentive fees for 2025 of $23.6 million, and we are on track to earn incentive fees again this year, as both DHC and ILPT accrued incentive fees this quarter. I would now like to go over some recent highlights at our managed REITs. Before turning the call over to Matthew Paul Jordan to provide an update on our private capital initiatives, at DHC, following the successful transition of 116 senior living communities to new operators in 2025, it has continued to focus on improving SHOP operating performance while also strengthening its balance sheet. In the first quarter, DHC generated normalized FFO of $33 million, or $0.14 per share, and adjusted EBITDA of $74 million, both exceeding analyst consensus estimates. SHOP performance showed positive momentum with year-over-year same-property NOI growth of 13.5% and occupancy increasing by 110 basis points. In March, DHC completed the sale of 13 unencumbered non-core communities for gross proceeds of approximately $23 million. Following an active 2025 in which DHC completed approximately $605 million of asset sales, we expect asset sales to decelerate in 2026 with management focused on improving NOI across the retained portfolio. Lastly, in April, Moody's upgraded DHC's debt ratings and revised its outlook to positive from stable, underscoring the company's improving operating performance and balance sheet. At SVC, we recently made significant progress improving its balance sheet and covenant ratios. The RMR Group Inc. was instrumental in helping SVC complete a $575 million equity offering, which accelerated its deleveraging strategy, eliminated near-term refinancing risk, and provided SVC additional flexibility to optimize its hotel performance and execute further asset sales. With the net proceeds, SVC eliminated all of its unsecured debt maturities until 2028. As it relates to SVC's equity offering, I would highlight that The RMR Group Inc. participated with a $50 million anchor investment, further aligning our interests with shareholders and demonstrating our confidence in SVC's business plan. Following several years of strategic capital investments to reposition the retained hotel portfolio, SVC is now transitioning toward an earnings recovery phase supported by new hotel leadership at Sonesta that is focused on improving operating performance. ILPT continues to deliver strong results with first quarter normalized FFO of $0.33 per share and adjusted EBITDA of $87 million, both exceeding the high end of management's guidance. ILPT also executed approximately 862 thousand square feet of leasing during the quarter at rental rates 26% higher than prior rents. Additionally, The RMR Group Inc. recently assisted ILPT with the refinancing of $1.6 billion of new debt for its consolidated Mountain joint venture, which replaces floating-rate and amortizing debt with interest-only fixed-rate debt at an attractive 5.7% interest rate while also extending ILPT's debt maturity profile. Seven Hills, our mortgage REIT, has been actively deploying capital from its December rights offering. During the quarter, Seven Hills originated three loans totaling $67.5 million and generated distributable earnings of $0.24 per share. Total loan commitments increased to approximately $776 million in the first quarter, achieving a record high for the portfolio. Originations thus far in 2026 are at the highest net interest margins achieved over the past four years, which reflects the benefits of our focus on middle market lending where there tends to be less competition for high-quality loans. Lastly, OPI recently received court approval for its plan of reorganization, and we expect it to emerge from bankruptcy by the end of the second quarter and for its shares to be publicly traded. We also expect The RMR Group Inc.’s contract with OPI to be consistent with our previously disclosed terms. More specifically, The RMR Group Inc. will continue managing OPI for a five-year term, with The RMR Group Inc. receiving a flat business management fee during the first two years of $14 million per year, and our property management agreement economics will remain unchanged. To conclude, we are pleased with the progress The RMR Group Inc. has made assisting our clients with their financial and strategic objectives. While there remains more work to do, we are encouraged that the markets recognize the significant improvements at both DHC and ILPT. It is important to remember that our publicly traded perpetual capital clients provide The RMR Group Inc. with stable cash flows, which we are using to pursue new growth initiatives in the private capital space. The private capital segment of our business has grown from essentially zero AUM in 2020 to nearly $12 billion today, and we anticipate this segment will be a key driver of our future revenue and earnings growth. With that, I will now turn the call over to Matthew Paul Jordan to provide added insights on our platform and private capital growth initiatives. Matthew Paul Jordan: Thanks, Adam. As it relates to our private capital initiatives, with a global in-house sales team firmly in place, we are spending the necessary time building The RMR Group Inc. brand awareness. As an example, I recently had the privilege of joining Peter Welch, who leads our international fundraising efforts in Southeast Asia, meeting with potential partners and participating in events where The RMR Group Inc. stood side by side with larger, more well-established international brands. In aggregate, our international outreach has resulted in our leaders meeting with almost 100 global investors representing almost $7 trillion in AUM. With that said, the ongoing conflict in the Middle East has disrupted fundraising. This disruption has played out in the global fundraising data, as fundraising in 2026 dropped 50% from the same time last year. The positive news for The RMR Group Inc. is that North American real estate still garnered 65% of all dollars raised and value-add strategies represented 56% of all fundraising. Within our residential business, which today represents over $4.7 billion in value-add residential real estate across 18.5 thousand owned and managed units, in April we closed on the acquisition of a multifamily portfolio in Greenwich, Connecticut for almost $350 million. The transaction was sourced off market and marks our entry into one of the most supply constrained and affluent housing markets in the country. The RMR Group Inc. Residential will assume property management and will execute a multiyear strategy focused on modernizing the communities, enhancing the resident experience, and unlocking embedded efficiencies. The acquisition is part of a joint venture where The RMR Group Inc. is a co-general partner and, in that capacity, made a $6 million investment for a 5% ownership interest. The remaining equity of approximately $120 million was raised from two institutional partners. The RMR Group Inc. will recognize revenues from this transaction of $600 thousand in our third fiscal quarter and, as general partner, we will earn ongoing operating fees of approximately $750 thousand annually. Longer term, the venture is expected to generate annual cash-on-cash returns of approximately 7.5%, and we expect to receive carried interest from the venture as certain investment hurdles are met. Finally, the venture will not be consolidated given our ownership is limited to 5%, and a portion of our GP interest may become part of The RMR Group Inc. Enhanced Growth Venture. As it relates to the Enhanced Growth Venture, which was launched last fall with the goal of raising approximately $250 million of third-party equity, there remains significant interest in both U.S. value-add multifamily real estate and our seeded portfolio of assets. This interest has resulted in ongoing diligence with a number of potential investors, with the hope that we can provide a more meaningful update on our next earnings call. As it relates to the operating performance within our residential business, we, along with our joint venture partners, remain pleased as occupancy approaches 94%, with resident retention currently over 70% and retained residents absorbing rental rate increases of over 3%. Operating performance at these levels will continue to help with the fundraising in the highly competitive residential space. I would like to also highlight a new disclosure we have made in our investor presentation that emphasizes the discount our shares trade at when looking at our business from a sum-of-the-parts perspective. As we illustrate, if one were to back out the cash and investments held by The RMR Group Inc., our shares are currently trading at only five times the EBITDA generated from the durable cash flows associated with our 20-year evergreen management contracts from our perpetual capital vehicles. This is materially below EBITDA multiples at which our peers trade. We are hopeful this new slide illustrates the significant upside embedded in our shares. In closing, it remains an active time for our organization as we continue to invest in our people, technology, and brand awareness. We are leveraging these investments to reinvent our operating structure, materially increase productivity, and ultimately drive down operating costs to deliver meaningful EBITDA growth. With that, I will now turn the call over to Matthew Brown. Matthew Brown: Thanks, Matt, and good afternoon, everyone. For our fiscal second quarter, we reported adjusted EBITDA of $18.5 million and distributable earnings of $0.44 per share, which exceeded or were at the high end of our guidance. I would also like to note that we reported adjusted net income of $0.11 per share, which fell $0.01 short of our guidance. Going forward, we will no longer provide guidance on adjusted net income, as our investments in leveraged real estate have significantly reduced the usefulness of this metric as we incur depreciation and interest expense on these investments. Recurring service revenues were $42 million, a sequential quarter decrease of approximately $1 million driven primarily by hotel sales, a decrease in the enterprise value of SVC and DHC as they strategically paid off debt, and the wind-down of Alaris Life's business. Next quarter, we expect recurring service revenues to increase to approximately $44 million, driven by approximately $100 thousand of revenue from the multifamily portfolio acquisition in Greenwich, Connecticut that Matt discussed, increased construction management fees, and enterprise value improvements at certain of our managed REITs. Turning to expenses, recurring cash compensation was $37.7 million, a modest sequential quarter increase driven by calendar 2026 payroll tax and benefit resets. Looking ahead to next quarter, we expect recurring cash compensation to remain consistent with the second quarter. Recurring G&A this quarter was $10.1 million after excluding $600 thousand in annual director share grants, which is a slight sequential quarter decrease driven by a reduction in normal course legal and professional fees. We expect recurring G&A to remain at these levels for the remainder of the fiscal year. It is also worth noting that this quarter's income tax rate was elevated at 22% driven by the impact of certain fair value adjustments that we recognized during the quarter, mainly our investment in Seven Hills, that are subject to different statutory rates than our income. For modeling purposes, we may continue to see fluctuations in our income tax rate each quarter as these adjustments impact the timing of tax expense recognition. However, these fluctuations are not expected to materially impact our full-year estimated tax rate of 17% to 18%. Aggregating the collective assumptions I have outlined, next quarter we expect adjusted EBITDA to be approximately $19 million to $21 million and distributable earnings to be between $0.48 and $0.50 per share. As Adam and Matt highlighted earlier, subsequent to quarter end we participated in SVC's equity offering by acquiring nearly 42 million shares for $50 million and acquired a $6 million co-GP equity interest in the Greenwich, Connecticut multifamily joint venture. Our investment in SVC will result in approximately $420 thousand incremental quarterly dividends. Accounting for these transactions, our current liquidity is approximately $133 million, including $75 million of capacity on our revolving credit facility. We continue to be well capitalized with a strong dividend and look forward to executing on our strategic objectives and taking advantage of opportunistic investments as they arise. That concludes our prepared remarks. Operator, please open the line for questions. Operator: Thank you. We will now open the call for questions. We will begin the question-and-answer session. Today's first question comes from Mitchell Bradley Germain at Citizens Bank. Please go ahead. Mitchell Bradley Germain: Thank you for taking my question. Adam, there is a whole bunch of multifamily assets that are owned in different syndications. I am curious, is the expectation of one transaction if you can lock in a larger fund? Is the expectation that this all kind of cleans up with that, or is there the potential for some of these to just continue to remain as one-off investments? Adam Portnoy: Hi, Mitch. Thank you for that question. It is a good question. I think you have to keep in mind part of the way you answer that question is how we put together the portfolio that is our multifamily portfolio. It is the only asset class that we manage that is 100% private. We do not have a public vehicle around multifamily. That portfolio was originally, well, mostly constructed as part of the acquisition of our residential platform about a little over two years ago. Most of those investments are in joint ventures, one-off joint ventures per investment. A few of them are small portfolios. That is how that whole business has been structured, similar to the way we bought it. I expect that we will continue to have many of those joint ventures be the form of the investments we make, especially over the short term. But I think what you are seeing in terms of the Enhanced Growth fund that Matthew Paul Jordan talked about and we have talked about on many calls is we are starting to try to put together a portfolio among the approximately $4.7 billion, which is mostly joint ventures, into, let us say, a fund that we can raise money around. So we are trying to do both. I do not think you will see a transaction that will suddenly, let us say, roll up all $4.7 billion into a new public vehicle— I am not sure if that was your question, but that is not where we are going with that. It is likely to all stay private, likely to continue to be joint ventures, one-offs, small portfolio joint ventures, and our hope is that we can start to build a more dedicated fund around that strategy as well. Mitchell Bradley Germain: Taking that a little bit further, I think the last couple of quarters you seemed a little bit more positive on a potential venture in, I guess we will call it commercial mortgage, as well as, I think, you have mentioned development. Are those two products just a little bit behind multifamily right now with regards to your priorities? Adam Portnoy: They are all top priorities. I will tell you, we are continuing to talk to investors and partners about development projects. I think in the current market environment, the returns required for development projects are pretty high. Development is always difficult when you have a lot of uncertainty, and it is hard to predict the next quarter, let alone 18 months from now, which is typically what you have to sign off on for development projects. So we are continuing to work on those. I expect we will, in the course of the year or so, have some joint venture development projects underway. It is just that today, in the multifamily space, with the portfolio that we have assembled, we are generating the highest amount of interest around that. One comment on the credit that you mentioned, Mitch. We are also very active in talking to investors around credit as well. I would not say it is less of a priority, but we have a lot of money to put out in our Seven Hills mortgage REIT right now, and I think the number is close to $500 million of capacity over the next year of new investments that we are going to be able to make between new money coming into that vehicle and expected loan payoffs. So we have a pretty good pipeline and capacity with our existing vehicles there. We are still talking to investors around credit. There has been a general pullback around credit, given what is going on in the marketplace around some other funds that are in the credit space, especially retail-oriented funds, and so there has been some hesitancy among investors to take those conversations further at the moment. But that is okay from our perspective because we can do a lot of work there anyway. We can put a lot of AUM to work otherwise. Mitchell Bradley Germain: Gotcha. Last one for me. I think at one point you might have had close to $300 million of cash on hand. I think that, obviously, that balance has come down a bit as you are buying some of these assets and warehousing them on balance sheet in anticipation of some of your fundraising. Where are you with regards to how much cash you want to keep on hand for some sort of rainy day? Are we getting close to an amount where you are starting to become a little bit more conservative with allocating capital, or are you still all systems go if the right opportunities are presented? Adam Portnoy: More the “all systems go” if the right opportunities present themselves. We have over $100 million of liquidity between cash on hand and undrawn capacity on our revolver. We are also fairly optimistic that we will be getting some cash back, especially as we are hopefully successful in syndicating the Enhanced Growth value-add fund that we have built up around the multifamily strategy. We have just under $100 million of capital committed to that venture, and if we are successful in syndicating that and getting that fund launched— and we are optimistic that we will get it done— a lot of cash will also be coming back to us, we think. Thank you. Operator: Thank you. Our next question today comes from Christopher Nolan at Ladenburg Thalmann. Please go ahead. Christopher Nolan: Hi, guys. Adam, is Seven Hills participating in the Greenwich project, providing debt financing? Adam Portnoy: Hi, Chris. No. Seven Hills is not providing any sort of financing with the multifamily acquisition in Greenwich. No. Christopher Nolan: And then, I guess, Matthew Brown, did you say adjusted EBITDA in the next quarter will be $19 million to $21 million, or did I mishear you? Matthew Brown: Adjusted EBITDA in the fiscal third quarter is expected to be $19 million to $21 million. Christopher Nolan: Great. I guess as a follow-up in general, Adam, how would you characterize the market for raising equity for commercial real estate as opposed to raising debt for commercial real estate? Adam Portnoy: It is a great question. First, I am going to let Matthew Paul Jordan answer that question. Go ahead, Matt. Matthew Paul Jordan: Well, in terms of the debt, there is a lot of debt available to lend against real estate. We have no lack of interest— just having done this on the Greenwich asset. Adam touched on fundraising around credit, which is very challenging right now for a number of reasons, including a lot of supply in the market in terms of organizations like ours going out with credit vehicles. Fundraising for equity is a very challenging effort right now. The volatility in the Middle East has taken a large number of folks that were putting a lot of money out and put them on the sidelines. Volatility is not a good thing for those that are fiduciaries of deploying capital. The money and the allocations to real estate will be there in the long term, but right now a lot of the conversations we have had are continuing but have slowed significantly. And to Adam's point on the Enhanced Growth venture, I just think it is elongating the fundraising cycle for what we are doing. But there continue to be significant allocations— as we highlighted, we have met with a significant number of global LPs. The RMR Group Inc. itself is still a new brand, so we are spending a lot of time getting our name out there. People are amazed at the capabilities we bring and the breadth of our organization. But things are just going to take longer until the Middle East settles down. Christopher Nolan: Okay. And then I guess as a final question, you are seeing with some private equity shops that they are setting up distressed commercial real estate funds. Is that a potential strategy that you would consider? In my view, that tends to be preparing for some sort of, you know, down cycle. Adam Portnoy: Chris, it is not something we are actively pursuing at the moment in terms of setting up a distressed real estate fund. We have limited pockets within The RMR Group Inc., in the different funds that we manage and groups, that if a really attractive distressed opportunity presented itself to us, we could seriously consider executing on it. But we are not building out a strategy around that today. Christopher Nolan: Okay. Thank you. Operator: Thank you. And our next question today comes from John James Massocca at B. Riley. Please go ahead. John James Massocca: Maybe sticking with the big-picture fundraising theme, you have seen some pullback in some other types of credit funds, private lending being the most notable. Are you seeing any indications of that capital potentially being reallocated to things that are a little more tangible like real estate, or is that just an unrelated phenomenon in your mind? Matthew Paul Jordan: Yeah. I do not think they are related. It is interesting— when you meet with LPs, lending may not even sit in the real estate bucket. It may be in fixed income and other pockets within these large organizations. So we have not yet experienced where credit allocations have been redeployed in a way that has benefited us on the equity side. John James Massocca: Okay. And maybe switching gears a little bit, going back to a little bit of Mitch's last question, what is the appetite today for more wholly owned assets, or at least consolidated assets on balance sheet, to help create the base for funding either the multifamily-focused fund or even maybe a retail fund going forward? Just kind of curious if you think you are at a good point in terms of the wholly owned assets you have today, or if there is more capacity to continue to add to that? Adam Portnoy: Yeah. I think there is a little more capacity to add to it. I do not think we will be adding— until we are successful syndicating the Enhanced Growth venture— wholly owned multifamily assets on the balance sheet. But you mentioned retail. Retail is an area that we could maybe add a couple more assets to the balance sheet if it was the right type of asset. So that is an area that you could see us do some more asset-level acquisitions on The RMR Group Inc. balance sheet to help get that retail strategy further along. John James Massocca: Okay. And then thinking about the quarterly financials, you predicted a little bit— construction supervision revenues were down pretty big, certainly quarter over quarter, but even year over year. How much of that is just the new normal, how much is maybe one-off, and how much is seasonality? Any color on how you would expect that to trend over the remainder of the year? Matthew Brown: Yes. When you look at our construction management fee revenue sequentially, it is really just driven by the start of the year generally being a little bit slower for us as budgets are reset. As we look year over year, at some of our managed public vehicles we had some pretty extensive capital improvement projects going on— mainly within DHC and SVC— that have largely wound down. Those REITs are now forecasting less capital spend in 2026 than they were. We do expect a little bit of a ramp next quarter as we progress throughout the year. John James Massocca: But maybe the year-over-year decline as you think about comparing it to the comparable quarter in 2025 is kind of a good way to think about it going forward? Matthew Brown: Yeah, I think that is a good run rate. Operator: Thank you. And that does conclude our question-and-answer session. I would like to turn the conference back over to President and CEO, Adam Portnoy, for any closing remarks. Adam Portnoy: Thank you all for joining our call today. We look forward to seeing many of you at our upcoming industry conferences, including NAREIT in June, and we encourage institutional investors to contact The RMR Group Inc. Investor Relations if you would like to schedule a meeting with management. Operator, that concludes our call. Operator: Yes, sir. 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See the 10 stocks » *Stock Advisor returns as of May 7, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. RMR (RMR) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool