The RMR Group Inc. Q1 FY2026 earnings call

Management Statement and Operational Highlights

• Strategic Actions: Strategic actions at DHC and ILPT drove share price improvements, with RMR receiving $23.6M in incentive fees for 2025. DHC and ILPT were #1 and #3 best-performing REITs in US by total shareholder return in 2025.
• DHC Actions: Sold 37 properties in Q4 2025 and 69 in full year 2025, repaid debt, and transitioned SHOP communities.
• SVC Actions: Sold 66 hotels in Q1 2026 and 112 in 2025, early redeemed senior notes, and focuses on EBITDA growth despite renovation-related revenue displacement.
• ILPT Actions: Successful leasing, refinanced debt, and is exploring refinancing of remaining debt.
• Seven Hills: Completed rights offering, RMR backstopped, and deployed $101M in new loans in Q4.
• Private Capital Growth: Hired Peter Welch for international capital formation, focusing on residential and select development; enhanced growth venture fundraising launched in Sept 2025 with goal to raise ~$250M.
• Cost Control: Rationalized headcount, implemented AI initiatives, and reduced functional redundancies across locations.

Segment Performance

• DHC: In the quarter, DHC continued improving SHOP NOI margins and selling noncore assets. In Q4, completed sale of 37 properties for ~$250M gross proceeds; full year 2025 saw 69 properties sold for ~$605M. Repaid zero coupon senior secured notes due in 2026, leaving no debt maturities until 2028. Transitioned 116 SHOP communities from AlerisLife to new operators.
• ILPT: Had successful leasing activity in 2025, refinanced over $1.2B of debt, materially increased dividend, and is exploring refinancing of remaining $1.4B of floating rate debt due in 2027.
• SVC: Sold 66 hotels in the quarter for ~$534M, with 112 hotels sold in 2025 for $859M. Announced early redemption of $300M of senior unsecured notes due Feb 2027 using hotel sale proceeds.
• Seven Hills: Completed a rights offering in Dec 2025, raising $65.2M. RMR backstopped the offering, acquiring remaining shares. Deployed $101M into three new loans in Q4.
• RMR Residential: $4.5B value-add residential portfolio, ~93% occupied, resident retention over 70% for the year, nominal delinquencies.
• Retail: First investment, a $21M shopping center outside Chicago, is ahead of business plan due to successful leasing efforts.

Guidance

• Q1 Results: Adjusted EBITDA was $19.5M, distributable earnings $0.47 per share, and adjusted net income $0.20 per share, all exceeding or at the high end of guidance.
• Next Quarter Expectations: Recurring service revenues expected ~$41M, adjusted EBITDA预计$17M-$19M, distributable earnings预计$0.41-$0.43 per share, and adjusted net income预计$0.12-$0.14 per share. Incentive fees of $23.6M collected in Jan 2026 improved liquidity.

Risks

• Economic Uncertainty: Continued elevated uncertainty in the economic environment.
• OPI Bankruptcy: OPI filed Chapter 11 bankruptcy in Oct 2025, process ongoing with potential impact.
• Fundraising Challenges: Challenging environment for private capital fundraising, particularly in current market conditions.

Question and Answer

Q: Peter's addition to fundraising, is it globalizing efforts?

A: Bolstering existing efforts, Peter Welch is focused on ex-US, Asia, and Middle East capital formation to expand RMR's brand globally.

Q: Products for capital raising?

A: Focus on multifamily, loans, retail, and development; interest in office and continued focus on multifamily due to market trends.

Q: Multifamily asset performance?

A: Early in life cycle, Sunbelt-based, strong operational results with ~93% occupancy, 70% resident retention, and rent growth approaching 5%.

Q: Adjusted net income guidance?

A: Impact from AlerisLife fees, loan sales, lower construction management fees, tax impact, and director share grants in March affecting next quarter's figures.

Q: Loan investment appetite?

A: Active 2026 through Seven Hills mortgage REIT, with no plan to seed loans on RMR's balance sheet; focus on Seven Hills for new loan deployments.

Q: Multifamily fund timeline?

A: ASAP, focus in 2026 fiscal year (ending Sept 30), with significant effort ongoing to fundraise and offload assets from RMR's balance sheet.