NEWTON, Mass.--(BUSINESS WIRE)--The RMR Group (Nasdaq: RMR) today announced that it will issue a press release containing its fiscal first quarter 2026 financial results after the Nasdaq closes on Wednesday, February 4, 2026. On Thursday, February 5, 2026 at 10:00 a.m. Eastern Time, President and Chief Executive Officer Adam Portnoy, Chief Operating Officer Matt Jordan and Chief Financial Officer and Treasurer Matt Brown will host a conference call to discuss these results. The conference call. ...

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Core Viewpoint - The RMR Group Inc. is identified as an interesting value stock in the alternative asset management industry, currently considered undervalued [1]. Group 1: Company Overview - The RMR Group Inc. operates within the alternative asset management sector, focusing on real estate and renewable energy investments [1]. Group 2: Investment Potential - The company presents a potential investment opportunity due to its undervaluation in the market, suggesting a favorable entry point for investors [1].

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Financial Data and Key Metrics Changes - The company reported distributable earnings of $0.44 per share, adjusted net income of $0.22 per share, and adjusted EBITDA of $20.5 million for Q4 2025, all in line with expectations [4][17] - Recurring service revenues were approximately $45.5 million, a sequential increase of about $1.5 million, driven by increases in enterprise values at DHC, ILPT, and SVC [17] - The company expects recurring service revenues to decrease to approximately $42.5 million in the next quarter due to lost fee revenue from the sale of a life science business [17] Business Line Data and Key Metrics Changes - DHC's consolidated shop NOI increased 8% year over year to $29.6 million, with a 210 basis point increase in occupancy to 81.5% and a 5.3% increase in average monthly rates [5] - SVC completed the sale of 40 hotels for over $292 million and is on pace to sell a total of 121 hotels in 2025 for $959 million [6] - Seven Hills delivered solid performance with a fully performing $642 million loan portfolio and announced a rights offering to raise approximately $65 million in new equity [7][8] Market Data and Key Metrics Changes - The company arranged almost 1.4 million square feet of leases in the past quarter, with rental rates approximately 14% higher than previous rents for the same space [11] - The company believes that 2026 will be a better year for institutional investments in real estate, as recent conversations with potential partners have reinforced commitments to the U.S. and many sectors [12] Company Strategy and Development Direction - The company is focused on helping SVC drive EBITDA growth across its hotel portfolio while managing ongoing revenue displacement from renovation activity [6] - The company is pursuing new growth initiatives in the private capital space to drive future revenue and earnings growth [10] - The company is actively sourcing investment opportunities in the retail sector, aiming to build a portfolio of value-add multi-tenant retail properties [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strategic initiatives undertaken despite a continued unsettled economic environment [4] - The company anticipates a decline in adjusted EBITDA and distributable earnings per share in the next quarter primarily due to the sale of a life science business [20] - Management remains committed to supporting OPI during its restructuring process and believes the restructuring support agreement will strengthen OPI's financial position [9] Other Important Information - The company ended the quarter with $162 million of total liquidity, including $62 million in cash and $100 million of capacity on its undrawn revolving credit facility [20] - The company has agreed to backstop the rights offering for Seven Hills, demonstrating confidence in its business prospects [8] Q&A Session Summary Question: Does OPI's fee go up quarter to quarter? - The fee is effectively flat, with a fixed fee of $14 million per year for the first two years post-bankruptcy [26][27] Question: Where does shopping centers fit in the private capital strategy? - The company has core competency in retail and is looking to build a track record in investing in neighborhood and grocery-anchored shopping centers [29][30] Question: Any updates on the rights offering? - It is too early to tell how many shareholders will exercise their rights, but there is interest from new shareholders in buying rights from those who do not want to exercise [52] Question: What is the expected impact of the loss of managing AlerisLife? - A $1 million decrease in fee revenue is expected in the coming quarter, with an additional $400,000 reduction in fiscal Q2 [38] Question: How flexible is G&A spending if OPI's portfolio changes? - The company believes it could significantly reduce costs if it were not managing a large office portfolio, as office management is the most intensive [46]

Financial Performance - Net income attributable to The RMR Group Inc was $3414 thousand, or $020 per diluted share[18,22] - Adjusted Net Income Attributable to The RMR Group Inc was $3808 thousand, or $022 per diluted share[18,22] - Distributable Earnings was $14252 thousand, or $044 per diluted share[18,22] - Adjusted EBITDA was $20478 thousand with an Adjusted EBITDA Margin of 429%[18,22] - The company declared a quarterly dividend of $045 per share[11] Assets Under Management (AUM) - Total AUM reached $38968940 thousand, with $26703782 thousand (69%) from Managed Public Real Estate Capital and $12265158 thousand (31%) from Managed Private Real Estate Capital[18,32] Transactions and Liquidity - Two garden-style apartment communities were acquired for $147 million[9] - A $1 billion mortgage refinancing of Vertex Pharmaceuticals' headquarters in Boston was executed[9] - The company had $1623 million in total liquidity, including $623 million in cash on hand[19] Revenue Streams - Total Management & Advisory Services Revenues reached $45401 thousand[37,72] - Base Business Management & Advisory Revenues were $28760 thousand[37,71] - Base Property Management & Other Revenues amounted to $14574 thousand[37,71]

Core Insights - RMR Group reported quarterly earnings of $0.22 per share, matching the Zacks Consensus Estimate, but down from $0.34 per share a year ago [1] - The company posted revenues of $159.41 million for the quarter ended September 2025, missing the Zacks Consensus Estimate by 25.4% and down from $212.3 million year-over-year [2] - RMR Group shares have declined approximately 24.6% year-to-date, contrasting with the S&P 500's gain of 16.4% [3] Earnings and Revenue Performance - The company has not surpassed consensus EPS estimates in the last four quarters [1] - RMR Group has consistently missed consensus revenue estimates over the past four quarters [2] - The current consensus EPS estimate for the upcoming quarter is $0.25 on revenues of $221.8 million, and for the current fiscal year, it is $1.11 on revenues of $765.1 million [7] Market Outlook - The stock's immediate price movement will largely depend on management's commentary during the earnings call [3] - The Zacks Rank for RMR Group is currently 3 (Hold), indicating expected performance in line with the market [6] - The Real Estate - Operations industry is ranked in the bottom 35% of over 250 Zacks industries, which may impact RMR Group's stock performance [8]

Economic Risks and Market Conditions - The historical fees earned from clients should not be considered indicative of future results due to various risks, including adverse economic conditions and high interest rates [122]. - Clients may face significant competition for tenants and customers, which could impact their ability to generate revenue [122]. - A sustained period of high interest rates and inflation may increase operating costs and reduce property values, affecting clients' growth potential [123]. - Changes in market conditions and consumer preferences may lead to decreased demand for office space and hotel stays, impacting clients' financial performance [123]. - The ability of clients to adapt to changing economic conditions may be limited, particularly in less liquid real estate investments [123]. Financial Performance and Capital Access - The ability of clients to access capital on attractive terms is critical for pursuing acquisition and development opportunities [123]. - Deterioration in RMR LLC's financial condition could impair its ability to make distributions, affecting RMR Inc.'s liquidity [154]. - RMR Inc. is dependent on distributions from RMR LLC to cover taxes and expenses, as it has no independent revenue generation [153]. Shareholder and Governance Issues - ABP Trust controls a significant portion of voting power, which may limit other shareholders' influence and affect the market price of Class A Common Shares [131]. - Adam Portnoy holds more than 50.0% of the voting power of shares eligible to vote, classifying the company as a "controlled company" under Nasdaq rules [142]. - Related party transactions may increase the risk of conflicts of interest, potentially impacting the company's reputation and operations [136]. - The company may face reputational damage and financial risks due to potential conflicts of interest arising from overlapping investment objectives among clients [138]. - Shareholder litigation and dissident shareholder proposals may arise due to perceived conflicts of interest in business dealings with affiliated entities [141]. Debt and Interest Rate Exposure - As of September 30, 2025, RMR Inc. has $138,270 in outstanding floating rate debt with an average interest rate of 6.85% [236]. - A one percentage point increase in interest rates would raise the total floating rate interest expense to $9,927, impacting annual earnings per share by $0.59 [236]. - The fixed rate debt consists of a mortgage note with a principal balance of $46,500 at a 5.34% interest rate, requiring monthly interest payments until July 2029 [240]. - Changes in market interest rates will not affect the interest obligation of the fixed rate mortgage note, but a one percentage point change would alter annual interest costs by approximately $465 [240]. Investment and Growth Initiatives - Private Capital assets under management increased from approximately $1.3 billion as of September 30, 2021, to approximately $12.3 billion as of September 30, 2025 [152]. - The company has expanded its private capital real estate investments since entering the multifamily residential real estate sector in December 2023 [152]. - The TRMT Private Credit Fund was launched in July 2024, indicating a strategic initiative in private credit [152]. Tax and Financial Agreements - The tax receivable agreement requires RMR Inc. to pay ABP Trust 85.0% of cash savings realized from tax benefits, which may result in substantial payments [148]. - The company has a revolving credit facility with a total borrowing capacity of $100,000, with no amounts outstanding as of September 30, 2025 [239]. Cash Management - Cash and cash equivalents are maintained in U.S. bank accounts, with some balances exceeding FDIC insurance limits, but are not subject to material market risks [242].

Financial Performance - RMR Group reported net income of $7.6 million for the fiscal fourth quarter 2025, with a net income margin of 16.6%[19] - Adjusted Net Income attributable to RMR Group was $3.8 million, or $0.22 per diluted share, while Distributable Earnings were $14.3 million, or $0.44 per diluted share[19] - Adjusted EBITDA for the quarter was $20.5 million, with an Adjusted EBITDA margin of 42.9%[19] - Total revenues for the three months ended September 30, 2025, were $159,412, a decrease from $212,300 in the same period last year, representing a decline of approximately 25%[45] - Net income attributable to The RMR Group Inc. for the three months ended September 30, 2025, was $3,414, down from $5,336 in the same period last year, reflecting a decrease of about 36%[48] - The company reported operating income of $10,861 for the three months ended September 30, 2025, compared to $9,983 in the same period last year, indicating an increase of approximately 8.8%[48] - The adjusted net income attributable to The RMR Group Inc. was $10,885 for the three months ended September 30, 2025, with an adjusted diluted EPS of $0.22[59] - Distributable earnings for the three months ended September 30, 2025, were $14,252, with distributable earnings per share of $0.44[70] Assets and Liabilities - RMR Group's Assets Under Management (AUM) stood at $39.0 billion as of September 30, 2025[19] - The total assets of The RMR Group Inc. increased to $718,245 as of September 30, 2025, compared to $700,494 in the previous year, marking a growth of about 2.5%[54] - The company’s total liabilities stood at $316,232 as of September 30, 2025, compared to $281,077 a year earlier, reflecting an increase of approximately 12.5%[54] - Cash and cash equivalents held by The RMR Group Inc. totaled $19,478 as of September 30, 2025, down from $23,189 a year earlier[54] - Total liquidity as of September 30, 2025, was $162.3 million, including $62.3 million in cash and $100 million available on its revolving credit facility[20] Dividends and Payouts - The company declared a quarterly dividend of $0.45 per share, payable on or about November 13, 2025[11] - The RMR Group Inc. paid a total dividend of $12,391, which translates to $0.45 per share, with a payout ratio of 71.6% for the three months ended September 30, 2025[40] - The distribution payout ratio for the quarter was 71.6%[19] - The company expects to maintain dividends at current levels for more than three years based on its cash balance and expected distributable earnings[43] Acquisitions and Investments - The company acquired two garden-style apartment communities in North Carolina and Florida for a total of $147 million, enhancing its Enhanced Growth Venture portfolio[9] - RMR Group executed several refinancing transactions, including a $1 billion mortgage refinancing for Vertex Pharmaceuticals' headquarters[9] - RMR Group plans to sell its loan portfolio to Seven Hills Realty Trust, expecting net proceeds of approximately $16.7 million[20] Revenue and Service Performance - Total management, incentive, and advisory services revenue for the three months ended September 30, 2025, was $45,738, compared to $48,490 for the same period in 2024[70] Tax and Financial Strategy - Total tax distributions from The RMR Group LLC for the three months ended September 30, 2025, were $6,226,000, compared to $5,530,000 for the previous quarter, reflecting an increase of approximately 12.6%[81] - The RMR Group LLC's estimated tax liabilities are determined quarterly, leading to fluctuations in cash distributions based on ownership percentages[82] - The company emphasizes the importance of maintaining or increasing distributions to shareholders as part of its financial strategy[93] Risks and Future Outlook - RMR's future profitability is influenced by economic conditions, including interest rates and market trends, which may impact client performance and revenue[92] - The company faces risks related to client dependence, market conditions, and regulatory compliance, which could affect its financial performance[94] - RMR's ability to successfully integrate acquired businesses is crucial for realizing expected returns on investments[93] - The company is focused on enhancing its technology infrastructure and pursuing capital allocation strategies to limit risk exposure[92]

Core Viewpoint - Wall Street anticipates a year-over-year decline in earnings for RMR Group despite higher revenues, with the actual results being crucial for near-term stock price movements [1][2]. Earnings Expectations - RMR Group is expected to report quarterly earnings of $0.22 per share, reflecting a year-over-year decrease of 35.3% [3]. - Revenue projections stand at $213.7 million, indicating a slight increase of 0.7% from the previous year [3]. Estimate Revisions - The consensus EPS estimate has been revised down by 3.85% over the last 30 days, indicating a reassessment by analysts [4]. - The Most Accurate Estimate aligns with the Zacks Consensus Estimate, resulting in an Earnings ESP of 0%, suggesting no recent differing analyst views [12]. Earnings Surprise Prediction - The Zacks Earnings ESP model indicates that a positive or negative reading can predict deviations from consensus estimates, but its predictive power is stronger for positive readings [9][10]. - RMR Group currently holds a Zacks Rank of 3, complicating predictions of an earnings beat [12]. Historical Performance - In the last reported quarter, RMR Group met the expected earnings of $0.28 per share, resulting in no surprise [13]. - The company has not surpassed consensus EPS estimates in the last four quarters [14]. Conclusion - RMR Group does not appear to be a strong candidate for an earnings beat, and investors should consider additional factors when evaluating the stock ahead of the earnings release [17].