The RMR Group(US:RMR)2022-11-15 19:48Financial Data and Key Metrics Changes - For Q4 2022, the company reported adjusted net income of $9.4 million or $0.57 per share, and adjusted EBITDA of $29.5 million, both reflecting at least a 12% increase year-over-year [8][27] - Total management advisory service revenues were $52 million, an increase of almost $5 million year-over-year but down approximately $1 million sequentially [28] Business Line Data and Key Metrics Changes - The leasing volumes for the entire fiscal year 2022 exceeded 13.5 million square feet, marking a 28% increase compared to fiscal year 2021 and a 78% increase compared to pre-pandemic levels in fiscal year 2019 [11] - At ILPT, the portfolio is over 99% leased, with new and renewable leases for approximately 1.7 million square feet and weighted average rental rates that were 77.5% higher than prior rates [13] - SVC's FFO doubled from prior year levels, while EBITDA increased 26% year-over-year, reflecting improvements in lodging fundamentals [17] Market Data and Key Metrics Changes - The company arranged 2.7 million square feet of leases this quarter, resulting in a 23% roll-up in rents and a weighted average lease term of 5.8 years [10] - DHC's same-property cash basis NOI for the office portfolio increased 4.7% year-over-year, while occupancy improved 110 basis points sequentially [20] Company Strategy and Development Direction - The company aims to navigate ongoing headwinds related to inflation, increasing interest rates, and capital markets volatility while focusing on operational improvements across managed equity REITs [9][21] - The company is pursuing external opportunities to grow and diversify its platform, with AUM increasing by $4.6 billion and private capital AUM growing to $3.9 billion [24][25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the recovery of managed equity REITs and highlighted the alignment with REIT shareholders, noting that revenues and cash flows are directly impacted by changes in REIT share prices [22][23] - The management team is focused on improving operational performance and addressing balance sheet issues to enhance shareholder performance [70] Other Important Information - The company closed the quarter with almost $190 million in cash and generated interest income of approximately $900,000 [36] - G&A costs were flat sequentially at $8.5 million, with projections of approximately $9 million per quarter in fiscal 2023 [35] Q&A Session Summary Question: Outlook on construction oversight for next year - The expected $500 million in projects will be fairly ratable, transitioning from OPI spend, with anticipated quarterly spending of $130 million to $120 million [38] Question: Appetite for acquisitions and investments in 2023 - Sovereign wealth funds remain open to investing in commercial real estate, while other capital providers are more cautious, preferring to wait for market stabilization [40][44] Question: Thoughts on share repurchases within capital allocation plans - The company has biased towards dividends over share repurchases but maintains significant liquidity for potential strategic M&A opportunities [52][54] Question: Factors driving potential improvements in managed equity REITs share prices - Improvements in operating performance and addressing balance sheet issues are crucial, with a focus on operational excellence to drive stock price performance [58][61]