RMR Filings — The Rmr Group Inc.

RMR Filings — The Rmr Group Inc. - FilingSpy

10-Q · Quarter ended Jun 30, 2026 · SEC filing ↗

Summary not available yet

The original filing sections are available below.

Original filing text

Management's Discussion and Analysis

The following information should be read in conjunction with our condensed consolidated financial statements and accompanying notes included in Part I, Item 1 of this Quarterly Report on Form 10-Q and with our 2025 Annual Report. OVERVIEW (dollars in thousands) RMR Inc. is a holding company and substantially all of its business is conducted by RMR LLC. RMR Inc. has no employees, and the personnel and various services it requires to operate are provided by RMR LLC. RMR LLC manages a diverse portfolio of real estate and real estate related businesses. Business Environment and Outlook The continuation and growth of our business depends upon our ability to manage the Managed Equity REITs, SEVN and our private capital clients so as to maintain, grow and increase the value of their businesses and to successfully expand our business through the execution of new business ventures and additional investments. Our business and the businesses of our clients generally follow the business cycle of the U.S. real estate industry, but with certain property type and regional geographic variations. Typically, as the general U.S. economy expands, commercial real estate occupancies increase and new real estate development occurs; new development frequently leads to increased real estate supply and reduced occupancies; and then the cycle repeats. These general trends can be impacted by property type characteristics or regional factors; for example, demographic factors such as the aging U.S. population, the growth of e-commerce retail sales or net population migration across different geographic regions can slow, accelerate, overwhelm or otherwise impact general cyclical trends. Because of such multiple factors, we believe it is often possible to grow real estate based businesses in selected property types or geographic areas despite general national trends. Despite some macroeconomic uncertainty, both we and our clients will continue to balance our pursuit of growth of our and our clients’ businesses by executing, on behalf of our clients, sensible capital recycling or business arrangement restructurings in an attempt to help our clients prudently manage leverage and increased operating costs. We also look to reposition their portfolios and businesses when circumstances warrant such changes or when other more desirable opportunities are identified. We are also actively investing in our capital formation capabilities and continuously engaging with institutional investors seeking to deploy capital into North American commercial real estate. Managed Equity REITs The base business management fees we earn from the Managed Equity REITs, with the exception of OPI, are calculated monthly in accordance with the applicable business management agreement and are based on a percentage of the lower of (i) the average historical cost of each REIT’s properties and (ii) each REIT’s average market capitalization. The property management fees we earn from the Managed Equity REITs are principally based on a percentage of the gross rents collected at certain managed properties owned by the Managed Equity REITs, excluding rents or other revenues from hotels, senior living communities, travel centers and wellness centers, which are separately managed by Sonesta or a third party. Also, under the terms of the property management agreements, we receive construction supervision fees in connection with certain construction activities undertaken at the properties owned by the Managed Equity REITs based on a percentage of the cost of such construction. In connection with OPI’s emergence from chapter 11 bankruptcy protection on June 17, 2026, we entered into an amended and restated business management agreement and an amended and restated property management agreement with OPI, each with initial terms of five years and terminable without payment of a termination fee after the first two years. Under the amended and restated business management agreement, we are entitled to an annual fee of $14.0 million during the first two years and we will be paid a 3.0% property management fee and a 5.0% construction supervision fee under the new property management agreement, consistent with the prior property management agreement. For further information regarding the fees we earn, see Note 4, Revenue Recognition, and for further information regarding our amended and restated management agreements with OPI, Note 3, Related Person Transactions, to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q. 26 Table of Contents The following table presents for each Managed Equity REIT, with the exception of OPI, a summary of its primary strategy and the lesser of the historical cost of its assets under management and its market capitalization as of June 30, 2026 and 2025, as applicable: Lesser of Historical Cost of Assets Under Management or Total Market Capitalization as of June 30, REIT Primary Strategy 2026 2025 DHC Senior living communities, medical office and life science properties and other healthcare related properties $ 4,694,770 $ 3,576,962 ILPT Industrial and logistics properties 4,813,179 4,525,348 SVC Service-focused retail net lease properties and hotels 5,817,828 6,224,431 $ 15,325,777 $ 14,326,741 A Managed Equity REIT’s historical cost of assets under management includes the real estate it owns and its consolidated assets invested directly or indirectly in equity interests in real estate (including acquisition related costs which may be allocated to intangibles or are unallocated), all before reserves for depreciation, amortization, impairment charges or other similar non-cash reserves. A Managed Equity REIT’s average market capitalization includes the average value of the Managed Equity REIT’s outstanding common equity value during the period, plus the daily weighted average of each of the aggregate liquidation preference of preferred shares, if any, and the principal amount of consolidated indebtedness during the period. The table above presents for each Managed Equity REIT, with the exception of OPI, the lesser of the historical cost of its assets under management and its market capitalization as of the end of each period. The basis on which our base business management fees is calculated for the three and nine months ended June 30, 2026 and 2025 may differ from the basis at the end of the periods presented in the table above. As of June 30, 2026, the market capitalization was lower than the historical cost of assets under management for DHC, ILPT and SVC; the historical cost of assets under management for DHC, ILPT and SVC as of June 30, 2026, were $6,777,893, $5,713,404 and $9,904,087, respectively. 27 Table of Contents The fee revenues we earned from the Managed Equity REITs for the three and nine months ended June 30, 2026 and 2025 are set forth below: Three Months Ended June 30, 2026 Base Property Incentive Business Management Construction Business Management and Other Supervision Management REIT Revenues Revenues Revenues Revenues Total DHC $ 5,023 $ 1,012 $ 307 $ — $ 6,342 ILPT 6,068 3,371 159 — 9,598 OPI 3,042 2,942 126 — 6,110 SVC 6,669 2,748 550 — 9,967 $ 20,802 $ 10,073 $ 1,142 $ — $ 32,017 Three Months Ended June 30, 2025 Base Property Incentive Business Management Construction Business Management and Other Supervision Management REIT Revenues Revenues Revenues Revenues Total DHC $ 3,859 $ 1,220 $ 213 $ — $ 5,292 ILPT 5,793 3,237 105 — 9,135 OPI 2,778 2,628 375 — 5,781 SVC 7,046 2,110 465 — 9,621 $ 19,476 $ 9,195 $ 1,158 $ — $ 29,829 Nine Months Ended June 30, 2026 Base Property Incentive Business Management Construction Business Management and Other Supervision Management REIT Revenues Revenues Revenues Revenues Total DHC $ 13,793 $ 3,283 $ 908 $ 17,905 $ 35,889 ILPT 17,856 10,047 366 5,679 33,948 OPI 8,603 8,104 673 — 17,380 SVC 19,873 7,675 1,562 — 29,110 $ 60,125 $ 29,109 $ 3,509 $ 23,584 $ 116,327 Nine Months Ended June 30, 2025 Base Property Incentive Business Management Construction Business Management and Other Supervision Management REIT Revenues Revenues Revenues Revenues Total DHC $ 12,057 $ 3,851 $ 1,410 $ — $ 17,318 ILPT 17,471 9,716 316 — 27,503 OPI 8,608 8,203 1,377 — 18,188 SVC 21,317 5,704 2,511 — 29,532 $ 59,453 $ 27,474 $ 5,614 $ — $ 92,541 28 Table of Contents Other Clients We provide business management services to Sonesta and AlerisLife. Sonesta manages and franchises hotels, resorts and cruise ships in the United States, Latin America, the Caribbean and the Middle East; the majority of the U.S. hotels that Sonesta operates are owned by SVC. AlerisLife operated senior living communities throughout the U.S., many of which were owned by DHC. In September 2025, AlerisLife announced that it had entered into agreements to transition the management of its senior living communities to third party operators and in January 2026 completed the sale of all of its assets. AlerisLife will continue to wind down its business and operations. RMR LLC will continue to provide management services through the wind down period. Generally, our fees earned from business management services to Sonesta and AlerisLife are based on a percentage of certain revenues. In addition, we also provide management services to certain other Private Capital clients, including high-quality institutional investor relationships we maintain through RMR Residential, and earn fees based on a percentage of average invested capital, as defined in the applicable agreements, property management fees based on a percentage of rents collected from managed properties and construction supervision fees based on a percentage of the cost of construction activities. RMR Residential also provides us the potential to generate a carried interest on any new co-investments in the future. Our management fee revenues from services to these clients for the three and nine months ended June 30, 2026 and 2025, are set forth in the following tables: Three Months Ended June 30, 2026 Three Months Ended June 30, 2025 Base Property Base Property Business Management Construction Business Management Construction Management and Other Supervision Management and Other Supervision Revenues Revenues Revenues Total Revenues Revenues Revenues Total Sonesta $ 2,202 $ — $ — $ 2,202 $ 2,628 $ — $ — $ 2,628 RMR Residential 118 3,966 351 4,435 118 2,958 378 3,454 Other private entities 2,944 2,168 309 5,421 4,470 2,240 87 6,797 SEVN — 18 — 18 — 16 — 16 $ 5,264 $ 6,152 $ 660 $ 12,076 $ 7,216 $ 5,214 $ 465 $ 12,895 Nine Months Ended June 30, 2026 Nine Months Ended June 30, 2025 Base Property Base Property Business Management Construction Business Management Construction Management and Other Supervision Management and Other Supervision Revenues Revenues Revenues Total Revenues Revenues Revenues Total Sonesta $ 5,790 $ — $ — $ 5,790 $ 6,873 $ — $ — $ 6,873 RMR Residential 354 9,973 1,038 11,365 392 12,356 1,130 13,878 Other private entities 9,223 6,654 848 16,725 13,337 6,104 498 19,939 SEVN — 54 8 62 — 53 5 58 $ 15,367 $ 16,681 $ 1,894 $ 33,942 $ 20,602 $ 18,513 $ 1,633 $ 40,748 Advisory Business Tremont provides advisory services to SEVN, a publicly traded mortgage REIT that focuses on originating and investing in first mortgage loans secured by middle market and transitional commercial real estate. Tremont is primarily compensated pursuant to its management agreement with SEVN based on a percentage of equity, as defined in the applicable agreement. Tremont earned advisory services revenue of $1,343 and $1,115 for the three months ended June 30, 2026 and 2025, respectively, and $3,869 and $3,360 for the nine months ended June 30, 2026 and 2025, respectively. Tremont also earned incentive fees from SEVN of $90 and $229 for the three months ended June 30, 2026 and 2025, respectively, and $131 and $316 for the nine months ended June 30, 2026 and 2025, respectively. 29 Table of Contents RESULTS OF OPERATIONS (dollars in thousands) Three Months Ended June 30, 2026, Compared to the Three Months Ended June 30, 2025 The following table presents the changes in our operating results for the three months ended June 30, 2026 compared to the three months ended June 30, 2025: Three Months Ended June 30, 2026 2025 $ Change % Change Revenues: Management services $ 44,093 $ 42,724 $ 1,369 3.2% Incentive fees 90 229 (139) (60.7)% Advisory services 1,343 1,115 228 20.4% Total management, incentive and advisory services revenues 45,526 44,068 1,458 3.3% Income from loan investments, net — 677 (677) (100.0)% Rental property revenues 5,192 2,033 3,159 155.4% Reimbursable compensation and benefits 16,642 18,337 (1,695) (9.2)% Reimbursable equity based compensation 5,152 1,636 3,516 n/m Other reimbursable expenses 81,002 87,977 (6,975) (7.9)% Total reimbursable costs 102,796 107,950 (5,154) (4.8)% Total revenues 153,514 154,728 (1,214) (0.8)% Expenses: Compensation and benefits 39,607 38,603 1,004 2.6% Equity based compensation 5,639 2,090 3,549 169.8% Separation costs 1,720 1,880 (160) (8.5)% Total compensation and benefits expense 46,966 42,573 4,393 10.3% General and administrative 10,668 9,631 1,037 10.8% Other reimbursable expenses 81,002 87,977 (6,975) (7.9)% Rental property expenses 1,725 748 977 130.6% Transaction and acquisition related (recoveries) costs (1,054) 820 (1,874) n/m Loss on impairment of other assets 19,066 — 19,066 n/m Depreciation and amortization 4,413 3,006 1,407 46.8% Total expenses 162,786 144,755 18,031 12.5% Operating (loss) income (9,272) 9,973 (19,245) (193.0)% Interest income 416 1,182 (766) (64.8)% Interest expense (3,205) (1,062) (2,143) n/m Change in fair value of Earnout liability — 1,170 (1,170) (100.0)% Gain (loss) on investments 21,348 (215) 21,563 n/m Income before income tax expense 9,287 11,048 (1,761) (15.9)% Income tax expense (1,899) (1,753) (146) (8.3)% Net income 7,388 9,295 (1,907) (20.5)% Net income attributable to noncontrolling interest in The RMR Group LLC (4,545) (5,200) 655 12.6% Net loss attributable to other noncontrolling interests 354 91 263 n/m Net income attributable to The RMR Group Inc. $ 3,197 $ 4,186 $ (989) (23.6)% n/m - not meaningful Management services revenue. Management services revenue increased $1,369 due to higher property management revenues of $1,816 primarily due to contractual lease revenue increases at certain of our Managed Equity REITs and acquisition fees, as well as higher construction supervision revenues of $179 due to increases in capital spend at certain of our Private Capital clients, partially offset by a decrease in base business management revenues of $626 due to the wind down of AlerisLife’s business and deleveraging activities at certain of the Managed Equity REITs. The decrease in base business management revenues was partially offset by increases in certain of the Managed Equity REITs’ enterprise values. 30 Table of Contents Income from loan investments, net. Income from loan investments, net decreased $677 due to the sale of our two mortgage loans to SEVN in November 2025. Rental property revenues. Rental property revenues includes base rental income and non-cash straight line rent adjustments for our rental properties. Rental property revenues increased $3,159 primarily due to our acquisition of properties in Raleigh, NC and Orlando, FL after the third fiscal quarter of 2025. Reimbursable compensation and benefits. Reimbursable compensation and benefits includes reimbursements, at cost, that arise primarily from services our employees provide pursuant to our property management agreements at the properties of our clients. A significant portion of these compensation and benefits are charged or passed through to and paid by tenants of our clients. Reimbursable compensation and benefits decreased $1,695 primarily due to cost containment measures that included headcount reductions over the last twelve months and disposition activities during 2025. Reimbursable equity based compensation. Reimbursable equity based compensation includes awards of common shares by our clients directly to certain of our officers and employees in connection with the provision of management services to those clients. We record an equal, offsetting amount as equity based compensation expense for the value of these awards. Reimbursable equity based compensation revenue increased $3,516 primarily as a result of increases in certain of our clients’ respective share prices and increases in total unvested shares as of the current fiscal period. Other reimbursable expenses. For further information about these reimbursements, see Note 4, Revenue Recognition, to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10‑Q. Compensation and benefits. Compensation and benefits consists of employee salaries and other employment related costs, including health insurance expenses and contributions related to our employee retirement plan. Compensation and benefits expense increased $1,004 due to headcount mix and cumulative compensation adjustments, partially offset by headcount reductions over the last twelve months and disposition activity during 2025. Equity based compensation. Equity based compensation consists of the value of vested shares awarded to certain of our employees under our and our clients’ equity compensation plans. We record an equal offsetting amount as reimbursable equity based compensation revenue for the value of awards under our clients’ equity compensation plans to certain of our employees. Equity based compensation increased $3,549 primarily as a result of increases in certain of our clients’ respective share prices and increases in total unvested shares as of the current fiscal period. Separation costs. Separation costs consists of employment termination costs. For further information about these costs, see Note 3, Related Person Transactions, to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10‑Q. General and administrative. General and administrative expenses consists of office related expenses, information technology related expenses, employee training, travel, professional services expenses, director compensation and other administrative expenses. General and administrative costs increased $1,037 primarily due to increases in recurring professional and legal fees. Rental property expenses. Rental property expenses includes property operating expenses, such as real estate taxes, repairs and maintenance and utility costs incurred at our owned properties. Rental property expenses increased $977 primarily due to our acquisition of properties in Raleigh, NC and Orlando, FL after the third fiscal quarter of 2025. Transaction and acquisition related (recoveries) costs. Transaction and acquisition related (recoveries) costs in the prior fiscal period primarily represent costs associated with our acquisition of MPC Partnership Holdings LLC, or MPC, and related integration expenses. Costs recovered in the current fiscal period relate to reimbursements of certain legal costs in connection with OPI’s bankruptcy proceedings. Loss on impairment of other assets. Loss on impairment of other assets relates to a write off of the unamortized portion of other assets attributable to the prior management agreements with OPI. For further information about this impairment and the associated amended and restated management agreements, see Note 3, Related Person Transactions, to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10‑Q. Depreciation and amortization. Depreciation and amortization increased $1,407 primarily due to depreciation in the current fiscal quarter of our owned properties in Raleigh, NC and Orlando, FL, which were acquired after the third fiscal quarter of 2025. 31 Table of Contents Interest income. Interest income decreased $766 due to a lower amount of investable cash and lower average interest rates during the current fiscal period compared to the prior fiscal period. Interest expense. Interest expense increased $2,143 primarily due to mortgage notes encumbering our owned properties in Raleigh, NC and Orlando, FL which were acquired after the third fiscal quarter of 2025. Change in fair value of Earnout liability. For further information about the Earnout liability, see Note 10, Fair Value of Financial Instruments to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q. Gain (loss) on investments. Gain (loss) on investments represents the unrealized and realized gains or losses on our investment in OPI, SVC and SEVN common shares, investment in Fund VII and investment in joint ventures. For further information, see Note 8, Investments, to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q. Income tax expense. The increase in income tax expense of $146 is primarily attributable to higher taxable income. 32 Table of Contents Nine Months Ended June 30, 2026, Compared to the Nine Months Ended June 30, 2025 The following table presents the changes in our operating results for the nine months ended June 30, 2026 compared to the nine months ended June 30, 2025: Nine Months Ended June 30, 2026 2025 $ Change % Change Revenues: Management services $ 126,685 $ 133,289 $ (6,604) (5.0)% Incentive fees 23,715 316 23,399 n/m Advisory services 3,869 3,360 509 15.1% Total management, incentive and advisory services revenues 154,269 136,965 17,304 12.6% Income from loan investments, net 411 1,869 (1,458) (78.0)% Rental property revenues 15,432 5,080 10,352 n/m Reimbursable compensation and benefits 50,653 60,738 (10,085) (16.6)% Reimbursable equity based compensation 8,889 2,338 6,551 n/m Other reimbursable expenses 249,913 333,882 (83,969) (25.1)% Total reimbursable costs 309,455 396,958 (87,503) (22.0)% Total revenues 479,567 540,872 (61,305) (11.3)% Expenses: Compensation and benefits 114,745 123,216 (8,471) (6.9)% Equity based compensation 10,619 3,822 6,797 177.8% Separation costs 4,392 5,335 (943) (17.7)% Total compensation and benefits expense 129,756 132,373 (2,617) (2.0)% General and administrative 31,364 32,161 (797) (2.5)% Other reimbursable expenses 249,913 333,882 (83,969) (25.1)% Rental property expenses 5,435 1,569 3,866 n/m Transaction and acquisition related costs 631 2,156 (1,525) (70.7)% Loss on impairment of other assets 19,066 — 19,066 n/m Depreciation and amortization 13,548 7,810 5,738 73.5% Total expenses 449,713 509,951 (60,238) (11.8)% Operating income 29,854 30,921 (1,067) (3.5)% Interest income 1,467 4,115 (2,648) (64.3)% Interest expense (8,463) (2,632) (5,831) n/m Change in fair value of Earnout liability 3,639 5,850 (2,211) (37.8)% Gain (loss) on investments 17,389 (1,995) 19,384 n/m Loss on extinguishment of debt (452) — (452) n/m Gain on sale of real estate — 445 (445) (100.0)% Income before income tax expense 43,434 36,704 6,730 18.3% Income tax expense (7,149) (5,607) (1,542) (27.5)% Net income 36,285 31,097 5,188 16.7% Net income attributable to noncontrolling interest in The RMR Group LLC (21,033) (17,259) (3,774) (21.9)% Net loss attributable to other noncontrolling interests 1,142 344 798 n/m Net income attributable to The RMR Group Inc. $ 16,394 $ 14,182 $ 2,212 15.6% n/m - not meaningful Management services revenue. Management services revenue decreased $6,604 due to a decrease in base business management revenues of $4,563 primarily due to the wind down of AlerisLife’s business and deleveraging activities at certain of the Managed Equity REITs, lower construction supervision revenues of $1,844 due to declines in capital spend at our Managed Equity REITs and lower property management revenues of $197 due to third party management transitions within RMR Residential and disposition activities during 2025. 33 Table of Contents Incentive fees. Incentive fees increased $23,399 due to fees earned from DHC and ILPT for calendar year 2025. Each of DHC’s and ILPT’s respective total return per share exceeded the applicable benchmark total return per share for the measurement period, as defined in the respective management agreements for calendar year 2025. Income from loan investments, net. Income from loan investments, net decreased $1,458 due to the sale of our two mortgage loans to SEVN in November 2025. Rental property revenues. Rental property revenues increased $10,352 primarily due to our acquisition of properties in Chicago, IL, Raleigh, NC and Orlando, FL after the second fiscal quarter of 2025. Reimbursable compensation and benefits. Reimbursable compensation and benefits decreased $10,085 primarily due to cost containment measures that included headcount reductions over the last twelve months and disposition activities during 2025. Reimbursable equity based compensation. Reimbursable equity based compensation revenue increased $6,551 primarily as a result of increases in certain of our clients’ respective share prices and increases in total unvested shares as of the current fiscal period. Other reimbursable expenses. For further information about these reimbursements, see Note 4, Revenue Recognition, to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10‑Q. Compensation and benefits. Compensation and benefits expense decreased $8,471 due to cost containment measures that included headcount reductions over the last twelve months and disposition activities during 2025. Equity based compensation. Equity based compensation increased $6,797 primarily as a result of increases in certain of our clients’ respective share prices and increases in total unvested shares as of the current fiscal period. Separation costs. For further information about these costs, see Note 3, Related Person Transactions, to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10‑Q. General and administrative. General and administrative costs decreased $797 primarily due to declines in third party construction supervision fees and recurring professional fees. Rental property expenses. Rental property expenses increased $3,866 primarily due to our acquisition of properties in Chicago, IL, Raleigh, NC and Orlando, FL after the second fiscal quarter of 2025. Transaction and acquisition related costs. Transaction and acquisition related costs in the prior fiscal period primarily represent costs associated with our acquisition of MPC and related integration expenses. Costs incurred in the current fiscal period relate to other transactions and agreements with our Managed Equity REITs or private capital vehicles. Loss on impairment of other assets. Loss on impairment of other assets relates to a write off of the unamortized portion of other assets attributable to the prior management agreements with OPI. For further information about this impairment and the associated amended and restated management agreements, see Note 3, Related Person Transactions, to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10‑Q. Depreciation and amortization. Depreciation and amortization increased $5,738 primarily due to depreciation in the current fiscal period of our owned properties in Chicago, IL, Raleigh, NC and Orlando, FL, which were acquired after the second fiscal quarter of 2025. Interest income. Interest income decreased $2,648 due to a lower amount of investable cash and lower average interest rates during the current fiscal period compared to the prior fiscal period. Interest expense. Interest expense increased $5,831 primarily due to mortgage notes encumbering our owned properties in Raleigh, NC and Orlando, FL which were acquired after the third fiscal quarter of 2025. Change in fair value of Earnout liability. For further information about the Earnout liability, see Note 10, Fair Value of Financial Instruments to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q. Gain (loss) on investments. For further information, see Note 8, Investments, to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q. 34 Table of Contents Loss on extinguishment of debt. Loss on extinguishment of debt represents the loss recognized on unamortized deferred fees related to our secured financing facility which was terminated in the current fiscal period. Gain on sale of real estate. We recognized a $445 gain on sale of real estate resulting from the sale of a property in Woodstock, GA during the prior fiscal period. Income tax expense. The increase in income tax expense of $1,542 is primarily attributable to higher taxable income. LIQUIDITY AND CAPITAL RESOURCES (dollars in thousands, except per share amounts) Our current assets have historically been comprised predominantly of cash, cash equivalents and receivables for business management, property management and advisory services fees. As of June 30, 2026 and September 30, 2025, we had cash and cash equivalents of $58,203 and $62,297, respectively, of which $15,386 and $19,478, respectively, was held by RMR Inc., with the remainder being held at RMR LLC and its subsidiaries. Cash and cash equivalents include all short term, highly liquid investments that are readily convertible to known amounts of cash and have original maturities of three months or less from the date of purchase. As of June 30, 2026 and September 30, 2025, $46,478 and $50,662, respectively, of our cash and cash equivalents were invested in money market accounts. We believe that our cash and cash equivalents leave us well positioned to pursue a range of capital allocation strategies, with a focus on the growth of our private capital business, to fund our operations and cash distributions and enhance our technology infrastructure, in the next twelve months. Our experienced platform and existing relationships with institutional investors have provided us with significant opportunities to continue expanding our private capital business. We intend to diversify and further grow our private capital revenues by sponsoring and managing new real estate related investment funds that may invest in the equity of real estate or provide commercial mortgage loans secured by middle market and transitional real estate in the U.S. We anticipate that using our capital for possible formation costs and co-investment in these funds will diversify our revenues and generate management fees, incentive fees and potential carried interest. Our liquidity is highly dependent upon our receipt of fees from the businesses we manage. Historically, we have funded our working capital needs with cash generated from our operating activities. We expect that our future working capital needs will relate largely to our operating expenses, primarily consisting of employee compensation and benefits costs, our obligation to make quarterly tax distributions to the members of RMR LLC, our plan to make quarterly distributions on our Class A Common Shares and Class B-1 Common Shares and our plan to pay quarterly distributions to the members of RMR LLC in connection with the quarterly dividends to RMR Inc. shareholders. Our revolving credit facility is secured by substantially all of our assets and provides us with enhanced financial flexibility as we continue to invest in our private capital business and position ourselves to capitalize on long term growth opportunities. We can borrow, repay and reborrow funds available under our revolving credit facility until maturity, and no principal repayments on borrowings under our credit agreement are due until maturity. The maturity date of our credit agreement is January 22, 2028 and, subject to the payment of an extension fee and meeting certain other requirements, we can extend the maturity date of our revolving credit facility by one year. Interest is payable on borrowings under our credit agreement at a rate of SOFR plus a margin of 225 basis points. We are also required to pay a fee of 50 basis points per annum on the amount of unused lending commitments. Our credit agreement contains a number of covenants, including covenants that require us to maintain certain financial ratios and restrict our ability to incur additional debt in excess of calculated amounts. Availability of borrowings under our credit agreement is subject to our ongoing satisfaction of minimum performance, certain financial covenants and other credit facility conditions. As of June 30, 2026 and July 31, 2026, we had $25,000 outstanding. Cash Flows The $22,819 increase in net cash flows provided by operating activities for the nine months ended June 30, 2026 compared to the prior period reflects the impact of incentive fees paid by DHC and ILPT in the current period, which amounted to $23,584 in the aggregate. The $13,875 decrease in net cash flows used in investing activities for the nine months ended June 30, 2026 compared to the prior period was due to proceeds from the sale of our loan investments in the current period and the acquisition of a rental property in the prior period, partially offset by our investment in SVC and SEVN shares in the current period. The $20,473 increase in net cash flows used in financing activities for the nine months ended June 30, 2026 compared to the prior period was due to repayment of our secured financing facility in connection with the sale of our loan investments noted above, partially offset by net borrowings under our revolving credit facility. As of June 30, 2026, we had no off-balance sheet arrangements that have had or that we expect would be reasonably likely to have a material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources. 35 Table of Contents In connection with OPI’s emergence from chapter 11 bankruptcy protection on June 17, 2026, we entered into an amended business management agreement and an amended property management agreement with OPI, each with initial terms of five years. Under the amended business management agreement, we are entitled to an annual fee of $14.0 million during the first two years. Under the amended property management agreement, we are entitled to a property management fee equal to 3.0% of gross rents and a construction supervision fee equal to 5.0% of construction costs, consistent with the prior property management agreement. Each management agreement is terminable without payment of a termination fee after the first two years. For further information regarding these transactions, see Note 3, Related Person Transactions, to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q. Tax Receivable Agreement We are party to a tax receivable agreement which provides for the payment by RMR Inc. to ABP Trust of 85.0% of the amount of savings, if any, in U.S. federal, state and local income tax or franchise tax that RMR Inc. realizes as a result of (a) the increases in tax basis attributable to RMR Inc.’s dealings with ABP Trust and (b) tax benefits related to imputed interest deemed to be paid by it as a result of the tax receivable agreement. See Note 3, Related Person Transactions, to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q and “Business—Our Organizational Structure—tax receivable agreement” in our Annual Report on Form 10-K for the fiscal year ended September 30, 2019. As of June 30, 2026, our condensed consolidated balance sheet reflects a liability related to the tax receivable agreement of $18,478, of which we expect to pay $2,552 to ABP Trust during the fourth quarter of fiscal year 2026. Related Person Transactions We have relationships and historical and continuing transactions with Adam Portnoy, the Chair of our Board and one of our Managing Directors, as well as our clients and certain employees. For further information about these and other such relationships and related person transactions, please see Note 3, Related Person Transactions, to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q, our 2025 Annual Report, our definitive Proxy Statement for our 2026 Annual Meeting of Shareholders and our other filings with the SEC. In addition, see the section captioned “Risk Factors” in our 2025 Annual Report for a description of risks that may arise as a result of these and other related person transactions and relationships. We may engage in additional transactions with related persons, including businesses to which RMR LLC or its subsidiaries provide management services. Critical Accounting Estimates The preparation of our condensed consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect reported amounts. Actual results could differ from those estimates. Significant estimates that impact the condensed consolidated financial statements include the revenue recognized during the reporting periods, the estimation of fair values of certain assets and liabilities and purchase price allocations.. A discussion of our critical accounting estimates is included in our 2025 Annual Report. There have been no significant changes in our critical accounting estimates since the fiscal year ended September 30, 2025. 36 Table of Contents

Quantitative and Qualitative Disclosures About Market Risk

We are exposed to risks associated with market changes in interest rates. We manage our exposure to this market risk by monitoring available financing alternatives, including fixed rate debt, and employing derivative instruments, including interest rate caps, to limit our exposure to increasing interest rates. Other than as described below, we do not currently expect any significant changes in our exposure to fluctuations in interest rates or in how we manage this exposure in the near future. Floating Rate Debt As of June 30, 2026, our outstanding floating rate debt consisted of the following: Principal Balance Annual Interest Rate (1) Annual Interest Expense Maturity Interest Payments Due Mortgage Loans Raleigh, NC mortgage loan $ 41,079 — 5.50% $ 2,259 2028 Monthly Orlando, FL mortgage loan 53,914 5.55% 2,992 2028 Monthly $ 94,993 $ 5,251 (1) The annual interest rate is the rate stated in the applicable contract, as adjusted by the related interest rate cap. The Raleigh, NC loan has two remaining one year extension options and requires interest to be paid at an annual rate of SOFR plus a premium of 2.50%. The Orlando, FL loan has two remaining one year extension options and requires interest to be paid at an annual rate of SOFR plus a premium of 2.55%. We are vulnerable to changes in the U.S. dollar based on short term interest rates, specifically SOFR. In conjunction with these borrowings, to hedge our exposure to risk related to changes in SOFR and as required under the applicable loan agreements, we obtained interest rate caps with current SOFR strike rates equal to 3.00% for the Raleigh, NC loan and Orlando, FL loan. In addition, upon renewal or refinancing of these obligations, we are vulnerable to increases in interest rate premiums, including increases in the cost of replacement interest rate caps, due to market conditions and our perceived credit risk. Generally, a change in interest rates would not affect the value of our floating rate debt but would affect our operating results. The following table presents the approximate impact a one percentage point increase in interest rates would have on the annual interest expense of our floating rate mortgage notes as of June 30, 2026: Impact of an Increase in Interest Rates Weighted Average Interest Rate Outstanding Debt Total Interest Expense Per Year Annual Earnings Per Share Impact (1) At June 30, 2026 5.53% $ 94,993 $ 5,251 $ 0.10 One percentage point increase (2) 5.53% $ 94,993 $ 5,251 $ 0.10 (1) Based on the diluted weighted average common shares outstanding and income tax rate for the three months ended June 30, 2026 and includes the impact of noncontrolling interests. (2) A one percentage point increase in interest rates would not have an impact on annual interest expense for our floating rate mortgage loans because current interest rates exceed the strike rates of our interest rate caps. However, a one percentage point increase in the weighted average interest rate of our floating rate debt at June 30, 2026 would result in a weighted average interest rate of 6.53%, total floating rate interest expense per year of $6,201 and a decrease in annual earnings per share of $0.12. The foregoing table shows the impact of an immediate one percentage point change in floating interest rates, including the impact of our interest rate caps. Our exposure to fluctuations in floating interest rates will increase or decrease in the future with increases or decreases in the outstanding amounts of any floating rate debt we may incur and the impact, if any, of interest rate caps we may purchase. Generally, if interest rates were to change gradually over time, the impact would be spread over time. As of June 30, 2026, neither of our floating rate mortgage notes had an active interest rate floor. We also maintain our revolving credit facility which has a total borrowing capacity of $100,000. Interest is payable on borrowings under our credit agreement at a rate of SOFR plus a margin of 225 basis points. As of June 30, 2026 and July 31, 2026, we had $25,000 outstanding. 37 Table of Contents Fixed Rate Debt As of June 30, 2026, our outstanding fixed rate debt consisted of one mortgage note with a principal balance of $46,500 with a 5.34% fixed interest rate. This mortgage note requires monthly payments of interest only until maturity in July 2029. Because interest is to be paid at a fixed rate, changes in market interest rates during the term of this mortgage note will not affect our interest obligation. If this mortgage note is refinanced at an interest rate which is one percentage point higher or lower than shown above, our annual interest cost would increase or decrease by approximately $465. Changes in market interest rates would affect the fair value of our mortgage note. Increases in market interest rates decrease the fair value of our fixed rate debt, while decreases in market interest rates increase the fair value of our fixed rate debt. Based on the balances outstanding at June 30, 2026 and assuming no other changes in factors that may affect the fair value of our fixed rate debt obligation, a hypothetical immediate one percentage point change in the interest rates would change the fair value of this obligation by approximately $1,333. Risks Related to Cash and Short Term Investments Our cash and cash equivalents include short term, highly liquid investments readily convertible to known amounts of cash that have original maturities of three months or less from the date of purchase. We invest a substantial amount of our cash in money market bank accounts and all of our cash is maintained in U.S. bank accounts. Some U.S. bank account balances exceed the Federal Deposit Insurance Corporation insurance limit. We believe our cash and short term investments are not subject to any material interest rate risk, equity price risk, credit risk or other market risk.

Read original filing text →