Financial Data and Key Metrics Changes - The company reported adjusted net income of $0.28 per share, distributable earnings of $0.43 per share, and adjusted EBITDA of $20.1 million, all in line with expectations [4][11] - Recurring service revenues were approximately $44 million, a sequential decrease of about $1.5 million, primarily due to lower property management fees at RMR Residential [11] - The company expects service revenues to increase to approximately $45 million next quarter based on favorable trends in managed REITs [11] Business Line Data and Key Metrics Changes - The Managed REITs have seen share price improvements, particularly for DHC and ILPT, which have increased substantially year to date [4] - The private capital business totals over $12 billion, with a focus on retail, residential, credit, and select development opportunities [4] - The retail sector is accumulating a portfolio of value-add multi-tenant retail assets valued at approximately $100 million, with a recent investment of $21 million in a community shopping center [5] Market Data and Key Metrics Changes - DHC's same property cash basis NOI increased by 18.5% year over year, driven by strong sector fundamentals [8] - SVC's RevPAR increased by 40 basis points year over year, outperforming the industry by 90 basis points despite renovation-related revenue displacement [9] - ILPT refinanced $1.2 billion of floating rate debt with new fixed-rate debt at a weighted average interest rate of 6.4% [9] Company Strategy and Development Direction - The company is focused on strategic initiatives for Managed REITs and private capital business, including deleveraging actions through asset sales and refinancings [4] - The residential sector is expected to benefit from decelerating supply growth and favorable migration trends, targeting mid to high teen returns [6] - The company aims to grow private capital AUM over the long term, with recent hiring of a Senior Vice President to enhance capital formation efforts [7] Management's Comments on Operating Environment and Future Outlook - Management noted ongoing economic uncertainty but remains focused on strategic initiatives [4] - The fundraising environment for private capital is challenging but showing signs of improvement, with expectations of continued ramp-up in the next six months [20] - The company anticipates adjusted EBITDA of approximately $20.5 million and distributable earnings between $0.44 and $0.46 per share for the next quarter [15] Other Important Information - The company expects to end the fiscal year with approximately $60 million in cash and no borrowings on its $100 million line of credit [15] - The dividend is funded through two sources: ARMOUR LLC and RMR Inc, with a coverage ratio of 74% from the operating business [45] Q&A Session Summary Question: What is the outlook for the fundraising environment on the private capital side? - Management acknowledged that while the fundraising environment remains challenging, it is improving, with increased meetings with potential capital providers [18][20] Question: Can you elaborate on the RMR Residential Enhanced Growth Venture? - The venture will include five assets, with a total equity investment of just under $100 million, aimed at attracting committed capital from investors [22][24] Question: What is the expected size of the fundraising on the residential side? - The goal is to raise about $300 million of equity for the residential venture, seeded with just under $100 million of assets [29] Question: How does the company view the performance of RMR Residential? - The current run rate is expected to remain steady until the fundraising environment normalizes, with AUM currently at about $4.6 billion [35][55] Question: What is the rationale behind the dividend coverage? - The dividend is funded through operating business contributions and cash reserves, with a focus on maintaining coverage as the business grows [45][47]