The RMR Group(US:RMR)2022-05-09 14:27Financial Data and Key Metrics Changes - The company reported adjusted net income of $0.50 per share and adjusted EBITDA of $25.7 million, both showing meaningful sequential quarter increases [5][18] - Total revenues for the quarter were $49.3 million, approximately $7 million higher year-over-year and over $3 million higher sequentially [18] - The company expects revenues for the remaining quarters of the fiscal year to be between $52 million and $54 million [19][30] Business Line Data and Key Metrics Changes - The acquisition of Monmouth Real Estate Investment Corporation by ILPT contributed significantly to the increase in assets under management, reaching almost $38 billion [5][6] - RMR arranged almost 2 million square feet of leases with a weighted average lease term of approximately 9 years and a weighted average roll-up in rent of over 10% [8] - Managed private capital AUM ended the quarter at approximately $4 billion, a significant increase from less than $500 million two years ago [15] Market Data and Key Metrics Changes - Approximately 85% of leases managed by RMR have annual rent escalators, CPI adjustments, or percentage rent provisions, which help mitigate inflationary risks [7] - Office utilization and leasing volumes have shown steady improvement, with less available sublease space in the market [10] - SVC's hotel portfolio saw increases in hotel occupancy and RevPAR throughout the quarter as business travel rebounds [11] Company Strategy and Development Direction - The company is focused on expanding its private capital assets under management and is in discussions with institutional investors for potential joint ventures [15][16] - The management team emphasizes strengthening corporate governance by adding new independent trustees to the boards of its managed entities [17] - The company aims to leverage its infrastructure for increased profitability as assets under management grow [23] Management's Comments on Operating Environment and Future Outlook - Management believes the portfolio is well-positioned to weather market volatility, especially in inflationary environments [7] - There is optimism regarding the recovery of business travel and hospitality demand, which is expected to benefit OPI and SVC [9] - Management is confident in the trajectory of DHC, citing improvements in operating performance and liquidity [14] Other Important Information - The company closed the quarter with over $181 million in cash and continues to have no debt, positioning it well for future strategies [23] - AlerisLife appointed a new Interim President and CEO and retained a consulting group for an operational review, aiming for enhanced financial performance [13] Q&A Session Summary Question: How should investors think about further deleveraging in light of REIT performance? - Management indicated no capital at risk and emphasized focusing on operations and prudent balance sheet management, particularly for SVC and DHC [27][28] Question: Clarification on revenue guidance and construction revenues? - The revenue guidance of $52 million to $54 million is an all-in number, with construction revenues expected to increase as development projects progress [30] Question: Impact of Sonesta brand transition on SVC operations? - Management expressed optimism about Sonesta's growth and the potential for improved margins, highlighting the significance of the 34% ownership in Sonesta [34] Question: Insights on ILPT's capital discussions and refinancing? - Management is having productive discussions with equity providers for the joint venture, which is expected to significantly reduce leverage [39][40] Question: Will Amazon's overcapacity comments affect industrial market deals? - Management believes long-term fundamentals for industrial space remain strong despite Amazon's comments, with continued high occupancy and rent growth expected [41][42]