The RMR Group Q1 Earnings Call Highlights

Core Insights - The RMR Group reported strong performance in Q1 2026, with distributable earnings of $0.47 per share, adjusted net income of $0.20 per share, and adjusted EBITDA of $19.5 million, all exceeding prior guidance [3][4][7] - Strategic actions over the past two years at Diversified Healthcare Trust (DHC) and Industrial Logistics Properties Trust (ILPT) have led to significant share price improvements and a total of $23.6 million in incentive fees earned for 2025 [2][6] Financial Performance - RMR's Q1 results included nearly $150 million in total liquidity, with $50 million in cash and $100 million available on an undrawn revolving credit facility [20] - Recurring service revenues were approximately $43 million, down $2.5 million sequentially, with expectations for a further decrease to about $41 million in the next quarter [15][16] - The effective tax rate for the quarter was 14.8%, expected to rise to about 17% in the second quarter [18] Strategic Actions - DHC sold 69 properties for approximately $605 million and repaid its zero-coupon senior secured notes due 2026, leaving no debt maturities until 2028 [7] - SVC sold 112 hotels for about $859 million in 2025 and redeemed $300 million of senior unsecured notes [7] - ILPT refinanced over $1.2 billion of debt and materially increased its dividend [7] Private Capital Initiatives - RMR is targeting approximately $250 million for an enhanced growth venture and plans to launch a multifamily fund in 2026 to manage its $4.5 billion residential portfolio [5][21] - The company is focused on scaling fundraising efforts and has hired Peter Welch to lead international capital formation [5][9] Leasing and Investment Activity - RMR arranged nearly 10 million square feet of leasing at rental rates approximately 13% higher than previous rents [9] - The company is underwriting investment opportunities in retail to build a value-add portfolio, with an initial investment of $21 million in a shopping center outside Chicago [12] Outlook - Management anticipates a sequential decline in adjusted net income due to various factors, including the loss of fees from AlerisLife and lower construction management fees [19] - Future loan activity is expected primarily at Seven Hills, with no plans to add additional loans to RMR's balance sheet [14]