RMR GROUP INC. - Quarter Report: 2022 June (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 001-37616

THE RMR GROUP INC.

(Exact Name of Registrant as Specified in Its Charter)


Maryland			47-4122583
(State of Organization)			(IRS Employer Identification No.)

Two Newton Place, 255 Washington Street, Suite 300, Newton, MA 02458-1634

(Address of Principal Executive Offices) (Zip Code)

Registrant’s Telephone Number, Including Area Code 617-796-8230

Securities registered pursuant to Section 12(b) of the Act:

Title Of Each Class

Trading Symbol

Name Of Each Exchange On Which Registered

Class A common stock, $0.001 par value per share

RMR

The Nasdaq Stock Market LLC

(Nasdaq Capital Market)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☒

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided in Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of August 3, 2022, there were 15,500,716 shares of Class A common stock, par value $0.001 per share, 1,000,000 shares of Class B-1 common stock, par value $0.001 per share, and 15,000,000 shares of Class B-2 common stock, par value $0.001 per share outstanding.

Table of Contents

THE RMR GROUP INC.

FORM 10-Q

June 30, 2022

Table of Contents


		Page
PART I.	Financial Information

Item 1.	Financial Statements (unaudited)

	Condensed Consolidated Balance Sheets — June 30, 2022 and September 30, 2021	3

	Condensed Consolidated Statements of Income — Three and Nine Months Ended June 30, 2022 and 2021	4

	Condensed Consolidated Statements of Shareholders’ Equity — Three and Nine Months Ended June 30, 2022 and 2021	5

	Condensed Consolidated Statements of Cash Flows — Nine Months Ended June 30, 2022 and 2021	7

	Notes to Unaudited Condensed Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	35

Item 4.	Controls and Procedures	35

	Warning Concerning Forward-Looking Statements	35

PART II.	Other Information

Item 1A.	Risk Factors	38



Item 6.	Exhibits	38

	Signatures	39

Table of Contents

PART I. Financial Information

Item 1. Financial Statements

The RMR Group Inc.

Condensed Consolidated Balance Sheets

(dollars in thousands, except per share amounts)

(unaudited)


	June 30,		September 30,
	2022		2021
Assets
Current assets:
Cash and cash equivalents	$	195,936	$	159,835
Due from related parties	93,939		88,661
Prepaid and other current assets	6,003		6,021
Total current assets	295,878		254,517

Property and equipment, net	2,629		2,218
Due from related parties, net of current portion	15,167		14,331


Equity method investments accounted for under the fair value option	39,677		39,476


Goodwill and intangible assets, net of amortization	2,066		2,094
Operating lease right of use assets	29,567		32,293
Deferred tax asset	18,803		18,671
Other assets, net of amortization	127,249		134,311
Total assets	$	531,036	$	497,911

Liabilities and Equity
Current liabilities:
Reimbursable accounts payable and accrued expenses	$	67,320	$	55,115
Accounts payable and accrued expenses	32,063		15,027
Operating lease liabilities	4,867		4,922
Employer compensation liability	2,804		6,076
Total current liabilities	107,054		81,140


Operating lease liabilities, net of current portion	26,230		29,148
Amounts due pursuant to tax receivable agreement, net of current portion	25,577		25,577
Employer compensation liability, net of current portion	15,167		14,331
Total liabilities	174,028		150,196

Commitments and contingencies

Equity:
Class A common stock, $0.001 par value; 31,600,000 shares authorized; 15,500,716 and 15,485,236 shares issued and outstanding, respectively	16		15
Class B-1 common stock, $0.001 par value; 1,000,000 shares authorized, issued and outstanding	1		1
Class B-2 common stock, $0.001 par value; 15,000,000 shares authorized, issued and outstanding	15		15
Additional paid in capital	112,396		109,910
Retained earnings	343,949		321,945

Cumulative common distributions	(255,896)		(236,766)
Total shareholders’ equity	200,481		195,120
Noncontrolling interest	156,527		152,595
Total equity	357,008		347,715
Total liabilities and equity	$	531,036	$	497,911

See accompanying notes.

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The RMR Group Inc.

Condensed Consolidated Statements of Income

(amounts in thousands, except per share amounts)

(unaudited)


	Three Months Ended				Nine Months Ended
	June 30,				June 30,
	2022		2021		2022		2021
Revenues:
Management services	$	51,819	$	44,376	$	144,867	$	125,365
Incentive business management fees	—		—		—		620
Advisory services	1,137		1,134		3,392		2,849
Total management and advisory services revenues	52,956		45,510		148,259		128,834
Reimbursable compensation and benefits	14,189		13,069		42,092		39,453
Reimbursable equity based compensation	(69)		1,402		2,896		5,611
Other reimbursable expenses	144,012		85,263		397,063		259,856
Total reimbursable costs	158,132		99,734		442,051		304,920
Total revenues	211,088		145,244		590,310		433,754
Expenses:
Compensation and benefits	32,170		30,530		95,671		90,610
Equity based compensation	512		1,954		4,719		7,267
Separation costs	400		—		617		4,159
Total compensation and benefits expense	33,082		32,484		101,007		102,036
General and administrative	8,323		6,320		24,464		19,684
Other reimbursable expenses	144,012		85,263		397,063		259,856
Transaction and acquisition related costs	—		61		—		474
Depreciation and amortization	253		245		731		734
Total expenses	185,670		124,373		523,265		382,784
Operating income	25,418		20,871		67,045		50,970
Interest and other income	279		179		402		614


Equity in earnings of investees	—		28		—		755
Unrealized (loss) gain on equity method investments accounted for under the fair value option	(5,489)		1,312		(8,853)		6,032
Income before income tax expense	20,208		22,390		58,594		58,371
Income tax expense	(2,943)		(3,361)		(8,448)		(8,109)
Net income	17,265		19,029		50,146		50,262
Net income attributable to noncontrolling interest	(9,695)		(10,797)		(28,142)		(28,192)
Net income attributable to The RMR Group Inc.	$	7,570	$	8,232	$	22,004	$	22,070

Weighted average common shares outstanding - basic	16,343		16,269		16,332		16,259
Weighted average common shares outstanding - diluted	31,353		31,308		31,342		31,271

Net income attributable to The RMR Group Inc. per common share - basic	$	0.46	$	0.50	$	1.33	$	1.35
Net income attributable to The RMR Group Inc. per common share - diluted	$	0.46	$	0.50	$	1.33	$	1.31

Substantially all revenues are earned from related parties. See accompanying notes.

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The RMR Group Inc.

Condensed Consolidated Statements of Shareholders’ Equity

(dollars in thousands)

(unaudited)


	Class A Common Stock		Class B-1 Common Stock		Class B-2 Common Stock		Additional Paid In Capital		Retained Earnings		Cumulative Common Distributions		Total Shareholders' Equity		Noncontrolling Interest		Total Equity
Balance at September 30, 2021	$	15	$	1	$	15	$	109,910	$	321,945	$	(236,766)	$	195,120	$	152,595	$	347,715
Share awards, net	—		—		—		613		—		—		613		—		613
Net income	—		—		—		—		8,042		—		8,042		10,250		18,292

Tax distributions to member	—		—		—		—		—		—		—		(1,979)		(1,979)
Common share distributions	—		—		—		—		—		(6,264)		(6,264)		(4,500)		(10,764)

Balance at December 31, 2021	15		1		15		110,523		329,987		(243,030)		197,511		156,366		353,877
Share awards, net	1		—		—		1,144		—		—		1,145		—		1,145
Net income	—		—		—		—		6,392		—		6,392		8,197		14,589
Tax distributions to member	—		—		—		—		—		—		—		(4,277)		(4,277)
Common share distributions	—		—		—		—		—		(6,265)		(6,265)		(4,500)		(10,765)
Balance at March 31, 2022	16		1		15		111,667		336,379		(249,295)		198,783		155,786		354,569
Share awards, net	—		—		—		729		—		—		729		—		729
Net income	—		—		—		—		7,570		—		7,570		9,695		17,265
Tax distributions to member	—		—		—		—		—		—		—		(4,154)		(4,154)
Common share distributions	—		—		—		—		—		(6,601)		(6,601)		(4,800)		(11,401)
Balance at June 30, 2022	$	16	$	1	$	15	$	112,396	$	343,949	$	(255,896)	$	200,481	$	156,527	$	357,008

See accompanying notes.

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The RMR Group Inc.

Condensed Consolidated Statements of Shareholders’ Equity (Continued)

(dollars in thousands)

(unaudited)


	Class A Common Stock		Class B-1 Common Stock		Class B-2 Common Stock		Additional Paid In Capital		Retained Earnings		Cumulative Common Distributions		Total Shareholders' Equity		Noncontrolling Interest		Total Equity
Balance at September 30, 2020	$	15	$	1	$	15	$	106,622	$	286,249	$	(96,983)	$	295,919	$	244,983	$	540,902
Share awards, net	—		—		—		1,012		—		—		1,012		—		1,012
Net income	—		—		—		—		8,897		—		8,897		10,856		19,753

Tax distributions to member	—		—		—		—		—		—		—		(2,820)		(2,820)
Common share distributions	—		—		—		—		—		(6,230)		(6,230)		(4,500)		(10,730)

Balance at December 31, 2020	15		1		15		107,634		295,146		(103,213)		299,598		248,519		548,117
Share awards, net	—		—		—		1,298		—		—		1,298		—		1,298
Net income	—		—		—		—		4,941		—		4,941		6,539		11,480
Tax distributions to member	—		—		—		—		—		—		—		(4,459)		(4,459)
Common share distributions	—		—		—		—		—		(6,230)		(6,230)		(4,500)		(10,730)
Balance at March 31, 2021	15		1		15		108,932		300,087		(109,443)		299,607		246,099		545,706
Share awards, net	—		—		—		349		—		—		349		—		349
Net income	—		—		—		—		8,232		—		8,232		10,797		19,029
Tax distributions to member	—		—		—		—		—		—		—		(3,595)		(3,595)
Common share distributions	—		—		—		—		—		(6,237)		(6,237)		(4,500)		(10,737)
Balance at June 30, 2021	$	15	$	1	$	15	$	109,281	$	308,319	$	(115,680)	$	301,951	$	248,801	$	550,752

See accompanying notes.

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The RMR Group Inc.

Condensed Consolidated Statements of Cash Flows

(dollars in thousands)

(unaudited)


	Nine Months Ended June 30,
	2022		2021
Cash Flows from Operating Activities:
Net income	$	50,146	$	50,262
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization	731		734
Straight line office rent	(247)		60
Amortization expense related to other assets	7,062		7,062
Deferred income taxes	(132)		1,983
Operating expenses paid in The RMR Group Inc. common shares	2,518		2,881

Equity in earnings of investees	—		(755)
Distributions from equity method investments	415		1,024
Unrealized loss (gain) on equity method investments accounted for under the fair value option	8,853		(6,032)

Changes in assets and liabilities:
Due from related parties	(8,550)		(7,872)

Prepaid and other current assets	18		(1,590)
Reimbursable accounts payable and accrued expenses	12,205		5,651
Accounts payable and accrued expenses	16,837		18,963
Net cash from operating activities	89,856		72,371

Cash Flows from Investing Activities:
Purchase of property and equipment	(915)		(940)
Equity method investment in Seven Hills Realty Trust	(9,469)		—



Net cash used in investing activities	(10,384)		(940)

Cash Flows from Financing Activities:
Distributions to noncontrolling interest	(24,210)		(24,374)
Distributions to common shareholders	(19,130)		(18,697)
Repurchase of common shares	(31)		(222)



Net cash used in financing activities	(43,371)		(43,293)


Increase in cash and cash equivalents	36,101		28,138
Cash and cash equivalents at beginning of period	159,835		369,663
Cash and cash equivalents at end of period	$	195,936	$	397,801

Supplemental Cash Flow Information and Non-Cash Activities:
Income taxes paid	$	7,392	$	8,931
Fair value of share based payments recorded	$	2,896	$	5,611

Recognition of right of use assets and related lease liabilities	$	783	$	2,249

See accompanying notes.

The RMR Group Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

(dollars in thousands, except per share amounts)

Note 1. Basis of Presentation

The RMR Group Inc., or RMR Inc., is a holding company and substantially all of its business is conducted by its majority owned subsidiary, The RMR Group LLC, or RMR LLC. RMR Inc. is a Maryland corporation and RMR LLC is a Maryland limited liability company. RMR Inc. serves as the sole managing member of RMR LLC and, in that capacity, operates and controls the business and affairs of RMR LLC. In these financial statements, unless otherwise indicated, “we”, “us” and “our” refer to RMR Inc. and its direct and indirect subsidiaries, including RMR LLC.

As of June 30, 2022, RMR Inc. owned 15,500,716 class A membership units of RMR LLC, or Class A Units, and 1,000,000 class B membership units of RMR LLC, or Class B Units. The aggregate RMR LLC membership units RMR Inc. owns represented 52.4% of the economic interest of RMR LLC as of June 30, 2022. We refer to economic interest as the right of a holder of a Class A Unit or Class B Unit to share in distributions made by RMR LLC and, upon liquidation, dissolution or winding up of RMR LLC, to share in the assets of RMR LLC after payments to creditors. A wholly owned subsidiary of ABP Trust, a Maryland statutory trust, owns 15,000,000 redeemable Class A Units, representing 47.6% of the economic interest of RMR LLC as of June 30, 2022, which is presented as a noncontrolling interest within the condensed consolidated financial statements. Adam D. Portnoy, the chair of our Board and one of our Managing Directors, is the sole trustee of ABP Trust, and owns all of ABP Trust’s voting securities.

RMR LLC was founded in 1986 to manage public investments in real estate and, as of June 30, 2022, managed a diverse portfolio of real estate and real estate related businesses. RMR LLC provides management services to four publicly traded equity real estate investment trusts, or REITs: Diversified Healthcare Trust, or DHC, which owns medical office and life science properties, senior living communities and wellness centers; Industrial Logistics Properties Trust, or ILPT, which owns and leases industrial and logistics properties; Office Properties Income Trust, or OPI, which owns office properties primarily leased to single tenants and those with high quality credit characteristics, including the government; and Service Properties Trust, or SVC, which owns a diverse portfolio of hotels and net lease service and necessity-based retail properties. DHC, ILPT, OPI and SVC are collectively referred to as the Managed Equity REITs.

RMR LLC also provides management services to three real estate operating companies: AlerisLife Inc., or ALR, a publicly traded operator of senior living communities, many of which are owned by DHC; Sonesta International Hotels Corporation, or Sonesta, a privately owned franchisor and operator of hotels, resorts and cruise ships in the United States, Latin America, the Caribbean and the Middle East, and many of the U.S. hotels that Sonesta operates are owned by SVC; and TravelCenters of America Inc., or TA, an operator and franchisor of travel centers primarily along the U.S. interstate highway system, many of which are owned by SVC, and standalone truck service facilities. ALR, Sonesta and TA are collectively referred to as the Managed Operating Companies.

In addition, RMR LLC provides management services to private capital vehicles, including ABP Trust and its subsidiaries, or collectively ABP Trust, and other private entities that own commercial real estate of which certain of our Managed Equity REITs own minority equity interests. In these financial statements, we refer to these clients as the Managed Private Real Estate Capital clients.

RMR LLC’s wholly owned subsidiary, Tremont Realty Capital LLC, or Tremont Realty Capital, an investment adviser registered with the Securities and Exchange Commission, or SEC, provides advisory services for Seven Hills Realty Trust, or SEVN. SEVN is a publicly traded mortgage REIT that focuses on originating and investing in first mortgage whole loans secured by middle market and transitional commercial real estate. Until September 30, 2021, Tremont Realty Capital also provided advisory services to Tremont Mortgage Trust, or TRMT, a publicly traded mortgage REIT that merged with and into SEVN on September 30, 2021, or the Merger, with SEVN continuing as the surviving company. Tremont Realty Capital has in the past and may in the future manage additional accounts that invest in commercial real estate debt. Tremont Realty Capital may also act as a transaction broker for non-investment advisory clients for negotiated fees, which we refer to as the Tremont business.

The Managed Equity REITs, SEVN, and, until September 30, 2021, TRMT, are collectively referred to as the Managed REITs or the Managed Public Real Estate Capital clients.

The accompanying condensed consolidated financial statements are unaudited. Certain information and disclosures required by U.S. Generally Accepted Accounting Principles, or GAAP, for complete financial statements have been condensed or omitted. We believe the disclosures made are adequate to make the information presented not misleading. However, the

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The RMR Group Inc.

Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

(dollars in thousands, except per share amounts)

accompanying condensed consolidated financial statements should be read in conjunction with the financial statements and notes contained in our Annual Report on Form 10-K for the fiscal year ended September 30, 2021, or our 2021 Annual Report. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair statement of results for the interim period have been included. All intercompany transactions and balances with or among our consolidated subsidiaries have been eliminated. Our operating results for interim periods are not necessarily indicative of the results that may be expected for the full year.

Preparation of these financial statements in conformity with GAAP requires our management to make certain estimates and assumptions that may affect the amounts reported in these financial statements and related notes. The actual results could differ from these estimates.

Note 2. Revenue Recognition

Revenues from services that we provide are recognized as earned over time as the services provided represent performance obligations that are satisfied over time.

Business Management Agreements with Managed Equity REITs

Base Business Management Fees — We earn annual base business management fees from the Managed Equity REITs by providing continuous services pursuant to business management agreements equal to the lesser of:

•the sum of (a) 0.5% of the historical cost of transferred real estate assets, if any, as defined in the applicable business management agreement, plus (b) 0.7% of the average invested capital (exclusive of the transferred real estate assets), as defined in the applicable business management agreement, up to $250,000, plus (c) 0.5% of the average invested capital exceeding $250,000; and

•the sum of (a) 0.7% of the average market capitalization, as defined in the applicable business management agreement, up to $250,000, plus (b) 0.5% of the average market capitalization exceeding $250,000.

The foregoing base business management fees are paid in cash monthly in arrears.

We earned aggregate base business management fees from the Managed Equity REITs of $25,446 and $24,471 for the three months ended June 30, 2022 and 2021, respectively, and $73,085 and $68,599 for the nine months ended June 30, 2022 and 2021, respectively.

Incentive Business Management Fees — We also may earn annual incentive business management fees from the Managed Equity REITs under the business management agreements. The incentive business management fees, which are payable in cash, are contingent performance based fees recognized only when earned at the end of each respective measurement period. Incentive business management fees are excluded from the transaction price until it becomes probable that there will not be a significant reversal of cumulative revenue recognized.

The incentive business management fees are calculated for each Managed Equity REIT as 12.0% of the product of (a) the equity market capitalization of the Managed Equity REIT, as defined in the applicable business management agreement, on the last trading day of the year immediately prior to the relevant measurement period and (b) the amount, expressed as a percentage, by which the Managed Equity REIT’s total return per share, as defined in the applicable business management agreement, exceeded the applicable benchmark total return per share, as defined in the applicable business management agreement, of a specified REIT index identified in the applicable business management agreement for the measurement period, as adjusted for net share issuances during the period and subject to caps on the values of the incentive fees. The measurement period for the annual incentive business management fees is defined as the three year period ending on December 31 of the year for which such fee is being calculated.

We did not earn incentive business management fees from the Managed Equity REITs for the calendar years 2021 and 2020.

Other Management Agreements

Managed Operating Companies — We earn management fees by providing continuous services pursuant to the management agreements from the Managed Operating Companies equal to 0.6% of: (i) in the case of ALR, ALR’s revenues

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The RMR Group Inc.

Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

(dollars in thousands, except per share amounts)

from all sources reportable under GAAP, less any revenues reportable by ALR with respect to properties for which it provides management services, plus the gross revenues at those properties determined in accordance with GAAP; (ii) in the case of Sonesta, Sonesta’s revenues from all sources reportable under GAAP, less any revenues reportable by Sonesta with respect to hotels for which it provides management services, plus the gross revenues at those hotels determined in accordance with GAAP; and (iii) in the case of TA, the sum of TA’s gross fuel margin, as defined in the applicable agreement, plus TA’s total nonfuel revenues. These management fees are estimated and payable in cash monthly in advance.

We earned aggregate fees from the Managed Operating Companies of $8,171 and $6,976 for the three months ended June 30, 2022 and 2021, respectively, and $21,201 and $17,988 for the nine months ended June 30, 2022 and 2021, respectively.

Managed Private Real Estate Capital — We earn management fees from the Managed Private Real Estate Capital clients based on a percentage of average invested capital, as defined in the applicable management agreements. These management fees are payable in cash monthly in arrears.

We earned aggregate fees from the Managed Private Real Estate Capital clients of $2,936 and $1,276 for the three months ended June 30, 2022 and 2021, respectively, and $7,095 and $3,463 for the nine months ended June 30, 2022 and 2021, respectively.

Property Management Agreements

We earn property management fees by providing continuous services pursuant to property management agreements with our clients. We generally earn fees under these agreements equal to 3.0% of gross collected rents. Also, under the terms of the property management agreements, we receive additional fees for construction supervision services in connection with certain construction activities undertaken at the properties owned by the Managed Equity REITs and certain of the Managed Operating Companies up to 5.0% of the cost of such construction.

For the three months ended June 30, 2022 and 2021, we earned aggregate property management fees of $15,220 and $11,653, respectively, including construction supervision fees of $4,596 and $2,178, respectively. For the nine months ended June 30, 2022 and 2021, we earned aggregate property management fees of $43,387 and $35,056, respectively, including construction supervision fees of $11,623 and $6,007, respectively.

Management Agreements with Advisory Clients

Tremont Realty Capital is primarily compensated pursuant to its management agreements with SEVN (beginning January 6, 2021) and TRMT (until September 30, 2021 when it was terminated in connection with the Merger) at an annual rate of 1.5% of equity, as defined in the applicable agreements. Tremont Realty Capital waived any business management fees otherwise due and payable by TRMT pursuant to the management agreement for the period beginning July 1, 2018 until December 31, 2020.

Tremont Realty Capital may also earn an incentive fee under its management agreements with SEVN (beginning the second calendar quarter of 2021) and TRMT (until September 30, 2021) equal to, with respect to each company, the difference between: (a) the product of (i) 20% and (ii) the difference between (A) core earnings, as defined in the applicable agreements, for the most recent 12 month period (or such lesser number of completed calendar quarters, if applicable), including the calendar quarter (or part thereof) for which the calculation of the incentive fee is being made, and (B) the product of (1) equity in the most recent 12 month period (or such lesser number of completed calendar quarters, if applicable), including the calendar quarter (or part thereof) for which the calculation of the incentive fee is being made, and (2) 7% per year and (b) the sum of any incentive fees paid to Tremont Realty Capital with respect to the first three calendar quarters of the most recent 12 month period (or such lesser number of completed calendar quarters preceding the applicable period, if applicable). No incentive fee shall be payable with respect to any calendar quarter unless core earnings for the 12 most recently completed calendar quarters (or such lesser number of completed calendar quarters from January 5, 2021 for SEVN) in the aggregate is greater than zero. The incentive fee may not be less than zero. Tremont Realty Capital did not earn incentive fees from SEVN for the three and nine months ended June 30, 2022. Incentive fees earned from TRMT were zero and $620 for the three and nine months ended June 30, 2021, respectively.

The Tremont business earns between 0.5% and 1.0% of the aggregate principal amounts of any loans it brokers. The Tremont business earned fees for such brokerage services of $46 and zero for the three months ended June 30, 2022 and 2021,

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The RMR Group Inc.

Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

(dollars in thousands, except per share amounts)

respectively, and $99 and $259 for the nine months ended June 30, 2022 and 2021, respectively, which amounts are included in management services revenue in our condensed consolidated statements of income.

Reimbursable Costs

Reimbursable Compensation and Benefits — Reimbursable compensation and benefits include 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 were paid by tenants of our clients. We recognize the revenue for reimbursements when we incur the related reimbursable compensation and benefits expense on behalf of our clients.

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. The revenue in respect of each award is based on the fair value as of the award date for those shares that have vested, with subsequent changes in the fair value of the unvested awards being recognized in our condensed consolidated statements of income over the requisite service periods. We record an equal, offsetting amount as equity based compensation expense for the value of these awards.

Other Reimbursable Expenses — Other reimbursable expenses include reimbursements that arise from services we provide pursuant to our property management agreements, which include third party costs related to matters such as maintenance and repairs, security and cleaning services, a significant portion of which are charged or passed through to and were paid by tenants of our clients.

Note 3. Equity Method Investments

Seven Hills Realty Trust

As of June 30, 2022, Tremont Realty Capital owned 1,708,058, or approximately 11.7%, of SEVN’s outstanding common shares, which includes 882,407 shares acquired on May 11, 2022 from Diane Portnoy for $9,469 as further described in Note 6, Related Person Transactions. We account for our investment in SEVN using the equity method of accounting because we are deemed to exert significant influence, but not control, over SEVN’s most significant activities.

As a result of the Merger, we elected the fair value option to account for our equity method investment in SEVN and determine fair value using the closing price of SEVN’s common shares as of the end of the period, which is a Level 1 fair value input. The aggregate market value of our investment in SEVN at June 30, 2022 and September 30, 2021, based on quoted market prices, was $18,242 and $8,513, respectively. The unrealized (loss) gain in our condensed consolidated statements of income related to our investment in SEVN was $(209) and $675 for the three and nine months ended June 30, 2022, respectively. During the three and nine months ended June 30, 2022, we received distributions from SEVN of $207 and $415, respectively.

Immediately prior to the consummation of the Merger, Tremont Realty Capital owned 1,600,100, or approximately 19.3%, of TRMT’s then outstanding common shares that were accounted for under the equity method of accounting. Pursuant to the equity method, we recorded our share of earnings from our investment in TRMT in equity in earnings of investees in our condensed consolidated statements of income which totaled $28 and $755 for the three and nine months ended June 30, 2021, respectively. We received aggregate distributions from TRMT of $160 and $1,024 during the three and nine months ended June 30, 2021, respectively. Pursuant to the Merger, each common share of TRMT converted to 0.516 common shares of SEVN.

TravelCenters of America Inc.

As of June 30, 2022, we owned 621,853, or approximately 4.2%, of TA’s outstanding common shares. We account for our investment in TA using the equity method of accounting because we are deemed to exert significant influence, but not control, over TA’s most significant activities. We elected the fair value option to account for our equity method investment in TA and determine fair value using the closing price of TA’s common shares as of the end of the period, which is a Level 1 fair value input. The aggregate market value of our investment in TA at June 30, 2022 and September 30, 2021, based on quoted market prices, was $21,435 and $30,963, respectively. The unrealized (loss) gain in our condensed consolidated statements of income related to our investment in TA was $(5,280) and $1,312 for the three months ended June 30, 2022 and 2021, respectively, and $(9,528) and $6,032 for the nine months ended June 30, 2022 and 2021, respectively.

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The RMR Group Inc.

Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

(dollars in thousands, except per share amounts)

Note 4. Income Taxes

We are the sole managing member of RMR LLC. We are a corporation subject to U.S. federal and state income tax with respect to our allocable share of any taxable income of RMR LLC and its tax consolidated subsidiaries. RMR LLC is treated as a partnership for U.S. federal and most applicable state and local income tax purposes. As a partnership, RMR LLC is generally not subject to U.S. federal and most state income taxes. Any taxable income or loss generated by RMR LLC is passed through to and included in the taxable income or loss of its members, including RMR Inc. and ABP Trust, based on each member’s respective ownership percentage.

For the three months ended June 30, 2022 and 2021, we recognized estimated income tax expense of $2,943 and $3,361, respectively, which includes $2,162 and $2,467, respectively, of U.S. federal income tax and $781 and $894, respectively, of state income taxes. For the nine months ended June 30, 2022 and 2021, we recognized estimated income tax expense of $8,448 and $8,109, respectively, which includes $6,205 and $5,953, respectively, of U.S. federal income tax and $2,243 and $2,156, respectively, of state income taxes.

A reconciliation of the statutory income tax rate to the effective tax rate is as follows:


	Three Months Ended June 30,				Nine Months Ended June 30,
	2022		2021		2022		2021
Income taxes computed at the federal statutory rate	21.0	%	21.0	%	21.0	%	21.0	%
State taxes, net of federal benefit	3.1	%	3.2	%	3.1	%	3.2	%

Permanent items	0.6	%	0.9	%	0.4	%	0.7	%
Net income attributable to noncontrolling interest	(10.1)	%	(10.1)	%	(10.1)	%	(10.1)	%
Other (1)	—	%	—	%	—	%	(0.9)	%
Total	14.6	%	15.0	%	14.4	%	13.9	%

(1) In December 2020, the Internal Revenue Service and Department of Treasury released final regulations which, among other clarifications, established the effective date as it relates to limitations on the deductibility of certain executive compensation. The final regulations provide that the application of the limit applies to deductions after December 18, 2020. As such, during the three months ended December 31, 2020, we reduced our provision for income taxes for limitations applied prior to the effective date by $520, or $0.02 per diluted share.

ASC 740, Income Taxes, provides a model for how a company should recognize, measure and present in its financial statements uncertain tax positions that have been taken or are expected to be taken with respect to all open years and in all significant jurisdictions. Pursuant to this topic, we recognize a tax benefit only if it is “more likely than not” that a particular tax position will be sustained upon examination or audit. To the extent the “more likely than not” standard has been satisfied, the benefit associated with a tax position is measured as the largest amount that is greater than 50.0% likely to be realized upon settlement. As of June 30, 2022 and 2021, we had no uncertain tax positions.

Note 5. Fair Value of Financial Instruments

As of June 30, 2022 and September 30, 2021, the fair values of our financial instruments, which include cash and cash equivalents, amounts due from related parties, accounts payable and accrued expenses and reimbursable accounts payable and accrued expenses, were not materially different from their carrying values due to the short term nature of these financial instruments.

On a recurring basis, we measure certain financial assets and financial liabilities at fair value based upon quoted market prices. ASC 820, Fair Value Measurements, establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets and liabilities (Level 1), and the lowest priority to unobservable inputs (Level 3). A financial asset’s or financial liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs.

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The RMR Group Inc.

Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

(dollars in thousands, except per share amounts)

The following are our assets and liabilities that have been measured at fair value using Level 1 inputs in the fair value hierarchy as of June 30, 2022 and September 30, 2021:


	June 30,		September 30,
	2022		2021
Money market funds included in cash and cash equivalents	$	175,459	$	131,065
Current portion of due from related parties related to share based payment awards	2,804		6,076
Long term portion of due from related parties related to share based payment awards	15,167		14,331
Equity method investment in SEVN	18,242		8,513
Equity method investment in TA	21,435		30,963
Current portion of employer compensation liability related to share based payment awards	2,804		6,076
Long term portion of employer compensation liability related to share based payment awards	15,167		14,331

Note 6. Related Person Transactions

Adam D. Portnoy, the chair of our Board and one of our Managing Directors, is the sole trustee of our controlling shareholder, ABP Trust, and owns all of ABP Trust’s voting securities and a majority of the economic interests of ABP Trust. As of June 30, 2022, Adam D. Portnoy beneficially owned, in aggregate, (i) 173,502 shares of Class A common stock of RMR Inc., or Class A Common Shares; (ii) all the outstanding shares of Class B-1 common stock of RMR Inc., or Class B-1 Common Shares; (iii) all the outstanding shares of Class B-2 common stock of RMR Inc., or Class B-2 Common Shares; and (iv) 15,000,000 Class A Units of RMR LLC. Adam D. Portnoy and Jennifer B. Clark, our other Managing Director, are also officers of ABP Trust and RMR Inc. and officers and employees of RMR LLC. Matthew P. Jordan, our Executive Vice President, Chief Financial Officer and Treasurer, is also an officer of ABP Trust and an officer and employee of RMR LLC.

Adam D. Portnoy is the chair of the board of each of the Managed REITs, ALR and TA, a managing trustee or managing director of each of the Managed REITs, ALR and TA, a director of Sonesta (and its parent) and the controlling shareholder of Sonesta (and its parent). Jennifer B. Clark is a managing trustee of OPI, a managing director of ALR and a director of Sonesta (and its parent), and she previously served as a managing trustee of each of DHC and RMRM (now known as SEVN) until June 3, 2021 and January 5, 2021, respectively. Ms. Clark also serves as the secretary of all our publicly traded clients and Sonesta.

As of June 30, 2022, Adam D. Portnoy beneficially owned, in aggregate, 6.2% of ALR’s outstanding common shares, 1.1% of SVC’s outstanding common shares, 1.2% of ILPT’s outstanding common shares, 1.5% of OPI’s outstanding common shares, 1.1% of DHC’s outstanding common shares, 4.5% of TA’s outstanding common shares (including through RMR LLC) and 13.5% of SEVN’s outstanding common shares (including through Tremont Realty Capital).

The Managed REITs have no employees. RMR LLC provides or arranges for all the personnel, overhead and services required for the operation of the Managed Equity REITs pursuant to management agreements with them. All the officers of the Managed Equity REITs and ABP Trust are officers or employees of RMR LLC. All the officers, overhead and required office space of SEVN are provided or arranged by Tremont Realty Capital, and prior to the Merger, Tremont Realty Capital provided or arranged for the officers, overhead and required office space for TRMT. All of SEVN’s officers are officers or employees of Tremont Realty Capital or RMR LLC. Many of the executive officers of the Managed Operating Companies are officers or employees of RMR LLC. Some of our executive officers are also managing directors or managing trustees of certain of the Managed REITs and the Managed Operating Companies.

Additional information about our related person transactions appears in Note 7, Shareholders’ Equity, below and in our 2021 Annual Report.

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The RMR Group Inc.

Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

(dollars in thousands, except per share amounts)

Revenues from Related Parties

For the three months ended June 30, 2022 and 2021, we recognized revenues from related parties as set forth in the following table:


	Three Months Ended June 30, 2022						Three Months Ended June 30, 2021
	Total						Total
	Management						Management
	and Advisory		Total				and Advisory		Total
	Services		Reimbursable		Total		Services		Reimbursable		Total
	Revenues		Costs		Revenues		Revenues		Costs		Revenues
Managed Public Real Estate Capital:(1)
DHC	$	7,208	$	41,318	$	48,526	$	9,699	$	32,722	$	42,421
ILPT	9,803		8,126		17,929		4,243		4,719		8,962
OPI	10,640		80,083		90,723		9,320		50,527		59,847
SVC	10,721		10,412		21,133		12,000		2,800		14,800
Total Managed Equity REITs	38,372		139,939		178,311		35,262		90,768		126,030
SEVN	1,137		1,006		2,143		757		533		1,290
TRMT (2)	—		—		—		377		1,218		1,595
	39,509		140,945		180,454		36,396		92,519		128,915

Managed Private Real Estate Capital:(1)
ABP Trust	1,048		5,473		6,521		1,073		5,457		6,530
Other private entities	4,182		11,042		15,224		1,065		1,429		2,494
	5,230		16,515		21,745		2,138		6,886		9,024

Managed Operating Companies:
ALR	1,239		99		1,338		1,794		104		1,898
Sonesta	2,491		46		2,537		1,522		91		1,613
TA	4,441		527		4,968		3,660		134		3,794
	8,171		672		8,843		6,976		329		7,305

Total revenues from related parties	52,910		158,132		211,042		45,510		99,734		145,244
Revenues from unrelated parties	46		—		46		—		—		—
	$	52,956	$	158,132	$	211,088	$	45,510	$	99,734	$	145,244

(1)On December 23, 2021, DHC sold a 35% equity interest in its existing joint venture with an institutional investor. Following this sale, DHC owned a 20% equity interest in this joint venture. As a result, the management fees earned with respect to this joint venture are characterized as Managed Private Real Estate Capital for periods on and after December 23, 2021 and as Managed Public Real Estate Capital for periods prior to December 23, 2021. On June 29, 2022, DHC sold an additional 10% equity interest in this joint venture. Following this additional sale, DHC owns a 10% equity interest in this joint venture.

(2)As discussed in Note 1, Basis of Presentation, TRMT merged with and into SEVN on September 30, 2021, with SEVN continuing as the surviving company. This table presents revenues for the three months ended June 30, 2021, for TRMT separately as they relate to a period prior to the Merger.

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The RMR Group Inc.

Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

(dollars in thousands, except per share amounts)

For the nine months ended June 30, 2022 and 2021, we recognized revenues from related parties as set forth in the following table:


	Nine Months Ended June 30, 2022						Nine Months Ended June 30, 2021
	Total						Total
	Management						Management
	and Advisory		Total				and Advisory		Total
	Services		Reimbursable		Total		Services		Reimbursable		Total
	Revenues		Costs		Revenues		Revenues		Costs		Revenues
Managed Public Real Estate Capital: (1)
DHC	$	23,737	$	109,241	$	132,978	$	27,273	$	105,907	$	133,180
ILPT	21,545		20,387		41,932		13,290		14,386		27,676
OPI	31,722		221,249		252,971		27,215		147,984		175,199
SVC	34,113		43,641		77,754		33,498		11,166		44,664
Total Managed Equity REITs	111,117		394,518		505,635		101,276		279,443		380,719
SEVN	3,392		4,563		7,955		2,057		1,474		3,531
TRMT (2)	—		—		—		1,412		2,856		4,268
	114,509		399,081		513,590		104,745		283,773		388,518

Managed Private Real Estate Capital: (1)
ABP Trust	3,139		18,314		21,453		3,171		16,022		19,193
Other private entities	9,311		23,092		32,403		2,671		4,090		6,761
	12,450		41,406		53,856		5,842		20,112		25,954

Managed Operating Companies:
ALR	3,610		245		3,855		5,573		289		5,862
Sonesta	6,092		84		6,176		2,511		170		2,681
TA	11,499		1,235		12,734		9,904		576		10,480
	21,201		1,564		22,765		17,988		1,035		19,023

Total revenues from related parties	148,160		442,051		590,211		128,575		304,920		433,495
Revenues from unrelated parties	99		—		99		259		—		259
	$	148,259	$	442,051	$	590,310	$	128,834	$	304,920	$	433,754

(2)As discussed in Note 1, Basis of Presentation, TRMT merged with and into SEVN on September 30, 2021, with SEVN continuing as the surviving company. This table presents revenues for the nine months ended June 30, 2021, for TRMT separately as they relate to a period prior to the Merger.

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The RMR Group Inc.

Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

(dollars in thousands, except per share amounts)

Amounts Due From Related Parties

The following table represents amounts due from related parties as of the dates indicated:


	June 30, 2022						September 30, 2021
	Accounts		Reimbursable				Accounts		Reimbursable
	Receivable		Costs		Total		Receivable		Costs		Total
Managed Public Real Estate Capital:
DHC	$	4,210	$	18,860	$	23,070	$	6,005	$	17,866	$	23,871
ILPT	3,560		9,878		13,438		2,934		6,928		9,862
OPI	6,974		35,190		42,164		8,625		33,693		42,318
SVC	4,170		4,077		8,247		5,841		8,992		14,833
Total Managed Equity REITs	18,914		68,005		86,919		23,405		67,479		90,884
SEVN	1,063		802		1,865		1,717		1,180		2,897

	19,977		68,807		88,784		25,122		68,659		93,781

Managed Private Real Estate Capital:
ABP Trust	1,011		2,849		3,860		1,202		2,678		3,880
Other private entities	2,661		4,998		7,659		869		770		1,639
	3,672		7,847		11,519		2,071		3,448		5,519

Managed Operating Companies:
ALR	120		673		793		136		422		558
Sonesta	(63)		—		(63)		17		—		17
TA	109		7,964		8,073		124		2,993		3,117
	166		8,637		8,803		277		3,415		3,692

	$	23,815	$	85,291	$	109,106	$	27,470	$	75,522	$	102,992

Leases

As of June 30, 2022, RMR LLC leased from ABP Trust and certain Managed Equity REITs office space for use as our headquarters and local offices. We incurred rental expense under related party leases aggregating $1,470 and $1,420 for the three months ended June 30, 2022 and 2021, respectively, and $4,444 and $4,246 for the nine months ended June 30, 2022 and 2021, respectively.

Tax-Related Payments

Pursuant to our tax receivable agreement with ABP Trust, RMR Inc. pays to ABP Trust 85.0% of the amount of cash 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 our dealings with ABP Trust and (b) tax benefits related to imputed interest deemed to be paid by us as a result of the tax receivable agreement. As of June 30, 2022, our condensed consolidated balance sheet reflects a liability related to the tax receivable agreement of $27,792, including $2,215 classified as a current liability in accounts payable and accrued expenses that we expect to pay to ABP Trust during the fourth quarter of fiscal year 2022.

Under the RMR LLC operating agreement, RMR LLC is also required to make certain pro rata distributions to each member of RMR LLC quarterly on the basis of the estimated tax liabilities of its members, subject to future adjustment based on actual results. For the nine months ended June 30, 2022 and 2021, pursuant to the RMR LLC operating agreement, RMR LLC made required quarterly tax distributions to holders of its membership units totaling $21,969 and $23,201, respectively, of which $11,559 and $12,327, respectively, was distributed to us and $10,410 and $10,874, respectively, was distributed to ABP Trust, based on each membership unit holder’s respective ownership percentage. The amounts distributed to us were eliminated in our condensed consolidated financial statements, and the amounts distributed to ABP Trust were recorded as a reduction of

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The RMR Group Inc.

Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

(dollars in thousands, except per share amounts)

its noncontrolling interest. We used funds from these distributions to pay certain of our U.S. federal and state income tax liabilities and to pay part of our obligations under the tax receivable agreement.

Purchase of SEVN Shares

On May 11, 2022, Tremont Realty Capital purchased 882,407 SEVN common shares of beneficial interest from Diane Portnoy, the mother of Adam D. Portnoy, for an aggregate purchase price of $9,469. As of June 30, 2022, Tremont Realty Capital owned 1,708,058 SEVN common shares, and Mr. Portnoy beneficially owned 13.5% of SEVN’s outstanding common shares of beneficial interest (including through Tremont Realty Capital).

Separation Arrangements

We entered into retirement agreements with certain of our former executive officers. Pursuant to these agreements, we made various cash payments and accelerated the vesting of unvested shares RMR Inc. previously awarded to these retiring officers. We also enter into separation arrangements from time to time with other nonexecutive officers and employees of ours. All costs associated with separation arrangements, for which there remain no substantive performance obligations, are recorded in our condensed consolidated statements of income as separation costs.

In October 2020, we entered into a retirement agreement with David M. Blackman, a former Executive Vice President of RMR LLC. Under Mr. Blackman’s retirement agreement, RMR LLC paid combined cash payments in the amount of $2,850 to Mr. Blackman and $50 in related taxes. In addition, in October 2020, our Compensation Committee approved the acceleration of all 9,400 unvested shares owned by Mr. Blackman of us as of his retirement date, June 30, 2021.

For the three and nine months ended June 30, 2022 and 2021, we recognized cash and equity based separation costs as set forth in the following table:


	Three Months Ended June 30,				Nine Months Ended June 30,
	2022		2021		2022		2021
Former executive officers:
Cash separation costs	$	—	$	—	$	—	$	2,900
Equity based separation costs	—		—		—		295
	—		—		—		3,195
Former nonexecutive officers:
Cash separation costs (1)	252		—		469		805
Equity based separation costs	148		—		148		159
	400		—		617		964
Total separation costs	$	400	$	—	$	617	$	4,159

(1)During the nine months ended June 30, 2021, we were indemnified for a withdrawal liability of $515 that we had recorded during the three months ended September 30, 2020 related to a prior client’s shared pension plan accounted for as a multiemployer benefit plan.

Note 7. Shareholders’ Equity

We award our Class A Common Shares to our Directors, officers and employees under the 2016 Omnibus Equity Plan adopted in 2016, or the 2016 Plan. Shares issued to Directors in that capacity vest immediately. Shares issued to employees in that capacity vest in five equal, consecutive, annual installments, with the first installment vesting on the date of award. We recognize forfeitures as they occur. Compensation expense related to share awards is determined based on the market value of our shares on the date of award, with the aggregate value of the awarded shares amortized to expense over the related vesting period. Expense recognized for shares awarded to Directors in that capacity are included in general and administrative expenses and for shares awarded to employees in that capacity are included in equity based compensation in our condensed consolidated statements of income.

On March 10, 2022, we awarded 3,000 of our Class A Common Shares, valued at $30.36 per share, the closing price of our Class A Common Shares on The Nasdaq Stock Market LLC, or Nasdaq, on that day, to each of our Directors as part of his or her annual compensation for serving as a Director. For the nine months ended June 30, 2022, we recorded general and administrative expense of $547 for these awards.

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The RMR Group Inc.

Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

(dollars in thousands, except per share amounts)

Equity based compensation expense related to shares awarded to certain officers and employees was $581 and $552 for the three months ended June 30, 2022 and 2021, respectively, and $1,823 and $1,656 for the nine months ended June 30, 2022 and 2021, respectively. As of June 30, 2022, we had 157,910 unvested shares outstanding which are scheduled to vest as follows: 57,690 shares in 2022, 47,920 shares in 2023, 34,140 shares in 2024 and 18,160 in 2025.

In connection with the vesting and issuance of awards of our Class A Common Shares to our Directors, officers and employees, we provide for the ability to repurchase our Class A Common Shares to satisfy tax withholding and payment obligations. The repurchase price is based on the closing price of our Class A Common Shares on the Nasdaq. The aggregate value of 970 Class A Common Shares repurchased during the nine months ended June 30, 2022 was $31, which is recorded as a decrease to additional paid in capital within shareholders’ equity in our condensed consolidated balance sheets.

In connection with the issuances and repurchases of our Class A Common Shares, and as required by the RMR LLC operating agreement, RMR LLC concurrently issues or acquires an identical number of Class A Units from RMR Inc.

Distributions

During the nine months ended June 30, 2022 and 2021, we declared and paid dividends on our Class A Common Shares and Class B-1 Common Shares as follows:


Declaration	Record	Paid	Distributions		Total
Date	Date	Date	Per Common Share		Distributions
Nine Months Ended June 30, 2022
10/14/2021	10/25/2021	11/18/2021	$	0.38	$	6,264
1/13/2022	1/24/2022	2/17/2022	0.38		6,265
4/14/2022	4/25/2022	5/19/2022	0.40		6,601

			$	1.16	$	19,130
Nine Months Ended June 30, 2021
10/15/2020	10/26/2020	11/19/2020	$	0.38	$	6,230
1/14/2021	1/25/2021	2/18/2021	0.38		6,230
4/15/2021	4/26/2021	5/20/2021	0.38		6,237

			$	1.14	$	18,697

These dividends were funded in part by distributions from RMR LLC to holders of its membership units as follows:


			Distributions Per		Total		RMR LLC		RMR LLC
Declaration	Record	Paid	RMR LLC		RMR LLC		Distributions		Distributions
Date	Date	Date	Membership Unit		Distributions		to RMR Inc.		to ABP Trust
Nine Months Ended June 30, 2022
10/14/2021	10/25/2021	11/18/2021	$	0.30	$	9,446	$	4,946	$	4,500
1/13/2022	1/24/2022	2/17/2022	0.30		9,446		4,946		4,500
4/14/2022	4/25/2022	5/19/2022	0.32		10,080		5,280		4,800

			$	0.92	$	28,972	$	15,172	$	13,800
Nine Months Ended June 30, 2021
10/15/2020	10/26/2020	11/19/2020	$	0.30	$	9,419	$	4,919	$	4,500
1/14/2021	1/25/2021	2/18/2021	0.30		9,419		4,919		4,500
4/15/2021	4/26/2021	5/20/2021	0.30		9,424		4,924		4,500

			$	0.90	$	28,262	$	14,762	$	13,500

The remainder of the dividends noted above were funded with cash accumulated at RMR Inc.

On July 14, 2022, we declared a quarterly dividend on our Class A Common Shares and Class B-1 Common Shares to our shareholders of record as of July 25, 2022, in the amount of $0.40 per Class A Common Share and Class B-1 Common Share, or $6,600. This dividend will be partially funded by a distribution from RMR LLC to holders of its membership units in the

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The RMR Group Inc.

Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

(dollars in thousands, except per share amounts)

amount of $0.32 per unit, or $10,080, of which $5,280 will be distributed to us based on our aggregate ownership of 16,500,716 membership units of RMR LLC and $4,800 will be distributed to ABP Trust based on its ownership of 15,000,000 membership units of RMR LLC. The remainder of this dividend will be funded with cash accumulated at RMR Inc. We expect to pay this dividend on or about August 18, 2022.

Note 8. Per Common Share Amounts

We calculate basic earnings per share using the two-class method. Unvested Class A Common Shares awarded to our employees are deemed participating securities for purposes of calculating basic earnings per common share because they have dividend rights. Under the two-class method, we allocate earnings proportionately to vested Class A Common Shares and Class B-1 Common Shares outstanding and unvested Class A Common Shares outstanding for the period. Accordingly, earnings attributable to unvested Class A Common Shares are excluded from basic earnings per share under the two-class method. Our Class B-2 Common Shares, which are paired with ABP Trust’s Class A Units, have no independent economic interest in RMR Inc. and thus are not included as common shares outstanding for purposes of calculating basic earnings per common share.

Diluted earnings per common share is calculated using the treasury stock method for unvested Class A Common Shares and the if-converted method for Class B-2 Common Shares. The 15,000,000 Class A Units that we do not own may be redeemed for our Class A Common Shares on a one-for-one basis, or upon such redemption, we may elect to pay cash instead of issuing Class A Common Shares. Upon redemption of a Class A Unit, the Class B-2 Common Share “paired” with such unit is canceled for no additional consideration. In computing the dilutive effect, if any, that the aforementioned redemption would have on earnings per share, we considered that net income available to holders of our Class A Common Shares would increase due to elimination of the noncontrolling interest offset by any tax effect, which may be dilutive. For the three and nine months ended June 30, 2022 and 2021, the assumed redemption is dilutive to earnings per share as presented in the table below.

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The RMR Group Inc.

Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

(dollars in thousands, except per share amounts)

The calculation of basic and diluted earnings per share for the three and nine months ended June 30, 2022 and 2021, is as follows:


	Three Months Ended June 30,				Nine Months Ended June 30,
	2022		2021		2022		2021
Numerators:
Net income attributable to The RMR Group Inc.	$	7,570	$	8,232	$	22,004	$	22,070
Less: income attributable to unvested participating securities	(72)		(72)		(213)		(194)
Net income attributable to The RMR Group Inc. used in calculating basic EPS	7,498		8,160		21,791		21,876
Effect of dilutive securities:
Add back: income attributable to unvested participating securities	72		72		213		194

Add back: net income attributable to noncontrolling interest	9,695		10,797		28,142		28,192
Add back: income tax expense	2,943		3,361		8,448		8,109
Less: income tax expense assuming redemption of noncontrolling interest’s Class A Units for Class A Common Shares (1)	(5,851)		(6,686)		(16,833)		(17,346)
Net income used in calculating diluted EPS	$	14,357	$	15,704	$	41,761	$	41,025

Denominators:
Common shares outstanding	16,501		16,408		16,501		16,408
Unvested participating securities	(158)		(139)		(169)		(149)
Weighted average common shares outstanding - basic	16,343		16,269		16,332		16,259
Effect of dilutive securities:
Assumed redemption of noncontrolling interest’s Class A Units for Class A Common Shares	15,000		15,000		15,000		15,000
Add: incremental unvested shares	10		39		10		12
Weighted average common shares outstanding - diluted	31,353		31,308		31,342		31,271

Net income attributable to The RMR Group Inc. per common share - basic	$	0.46	$	0.50	$	1.33	$	1.35
Net income attributable to The RMR Group Inc. per common share - diluted	$	0.46	$	0.50	$	1.33	$	1.31

(1)Income tax expense assumes the hypothetical conversion of the noncontrolling interest, which results in estimated tax rates of 29.0% and 29.9% for the three months ended June 30, 2022 and 2021, respectively, and 28.7% and 29.7% for the nine months ended June 30, 2022 and 2021, respectively.

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The RMR Group Inc.

Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

(dollars in thousands, except per share amounts)

Note 9. Net Income Attributable to RMR Inc.

Net income attributable to RMR Inc. for the three and nine months ended June 30, 2022 and 2021, is calculated as follows:


	Three Months Ended				Nine Months Ended
	June 30,				June 30,
	2022		2021		2022		2021
Income before income tax expense	$	20,208	$	22,390	$	58,594	$	58,371
RMR Inc. franchise tax expense and interest income	149		217		485		646


Net income before noncontrolling interest	20,357		22,607		59,079		59,017
Net income attributable to noncontrolling interest	(9,695)		(10,797)		(28,142)		(28,192)
Net income attributable to RMR Inc. before income tax expense	10,662		11,810		30,937		30,825

Income tax expense attributable to RMR Inc.	(2,943)		(3,361)		(8,448)		(8,109)
RMR Inc. franchise tax expense and interest income	(149)		(217)		(485)		(646)
Net income attributable to RMR Inc.	$	7,570	$	8,232	$	22,004	$	22,070

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The RMR Group Inc.

Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

(dollars in thousands, except per share amounts)

Note 10. Segment Reporting

We have one reportable business segment, which is RMR LLC. In the tables below, our All Other Operations includes the operations of RMR Inc., Tremont Realty Capital and until January 5, 2021, RMR Advisors LLC.


	Three Months Ended June 30, 2022
			All Other
	RMR LLC (1)		Operations		Total
Revenues:
Management services	$	51,773	$	46	$	51,819

Advisory services	—		1,137		1,137
Total management and advisory services revenues	51,773		1,183		52,956
Reimbursable compensation and benefits	13,470		719		14,189
Reimbursable equity based compensation	(69)		—		(69)
Other reimbursable expenses	144,012		—		144,012
Total reimbursable costs	157,413		719		158,132
Total revenues	209,186		1,902		211,088
Expenses:
Compensation and benefits	30,743		1,427		32,170
Equity based compensation	61		451		512
Separation costs	400		—		400
Total compensation and benefits expense	31,204		1,878		33,082
General and administrative	7,300		1,023		8,323
Other reimbursable expenses	144,012		—		144,012

Depreciation and amortization	244		9		253
Total expenses	182,760		2,910		185,670
Operating income (loss)	26,426		(1,008)		25,418
Interest and other income	253		26		279

Unrealized loss on equity method investments accounted for under the fair value option	(5,280)		(209)		(5,489)
Income (loss) before income tax expense	21,399		(1,191)		20,208
Income tax expense	—		(2,943)		(2,943)
Net income (loss)	$	21,399	$	(4,134)	$	17,265

Total assets	$	485,799	$	45,237	$	531,036

(1) Intersegment revenues of $1,483 recognized by RMR LLC for services provided to our All Other Operations segment have been eliminated in the condensed consolidated financial statements.

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The RMR Group Inc.

Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

(dollars in thousands, except per share amounts)


	Three Months Ended June 30, 2021
			All Other
	RMR LLC (1)		Operations		Total
Revenues:
Management services	$	44,376	$	—	$	44,376

Advisory services	—		1,134		1,134
Total management and advisory services revenues	44,376		1,134		45,510
Reimbursable compensation and benefits	12,561		508		13,069
Reimbursable equity based compensation	1,402		—		1,402
Other reimbursable expenses	85,263		—		85,263
Total reimbursable costs	99,226		508		99,734
Total revenues	143,602		1,642		145,244
Expenses:
Compensation and benefits	29,541		989		30,530
Equity based compensation	1,922		32		1,954

Total compensation and benefits expense	31,463		1,021		32,484
General and administrative	5,335		985		6,320
Other reimbursable expenses	85,263		—		85,263
Transaction and acquisition related costs	45		16		61
Depreciation and amortization	234		11		245
Total expenses	122,340		2,033		124,373
Operating income (loss)	21,262		(391)		20,871
Interest and other income	171		8		179
Equity in earnings of investees	—		28		28
Unrealized gain on equity method investment accounted for under the fair value option	1,312		—		1,312
Income (loss) before income tax expense	22,745		(355)		22,390
Income tax expense	—		(3,361)		(3,361)
Net income (loss)	$	22,745	$	(3,716)	$	19,029

Total assets	$	674,378	$	50,211	$	724,589

(1) Intersegment revenues of $801 recognized by RMR LLC for services provided to our All Other Operations segment have been eliminated in the condensed consolidated financial statements.

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The RMR Group Inc.

Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

(dollars in thousands, except per share amounts)


	Nine Months Ended June 30, 2022
			All Other
	RMR LLC (1)		Operations		Total
Revenues:
Management services	$	144,768	$	99	$	144,867

Advisory services	—		3,392		3,392
Total management and advisory services revenues	144,768		3,491		148,259
Reimbursable compensation and benefits	40,139		1,953		42,092
Reimbursable equity based compensation	2,896		—		2,896
Other reimbursable expenses	397,063		—		397,063
Total reimbursable costs	440,098		1,953		442,051
Total revenues	584,866		5,444		590,310
Expenses:
Compensation and benefits	91,906		3,765		95,671
Equity based compensation	3,996		723		4,719
Separation costs	617		—		617
Total compensation and benefits expense	96,519		4,488		101,007
General and administrative	21,370		3,094		24,464
Other reimbursable expenses	397,063		—		397,063

Depreciation and amortization	704		27		731
Total expenses	515,656		7,609		523,265
Operating income (loss)	69,210		(2,165)		67,045
Interest and other income	361		41		402

Unrealized (loss) gain on equity method investments accounted for under the fair value option	(9,528)		675		(8,853)
Income (loss) before income tax expense	60,043		(1,449)		58,594
Income tax expense	—		(8,448)		(8,448)
Net income (loss)	$	60,043	$	(9,897)	$	50,146

Total assets	$	485,799	$	45,237	$	531,036

(1) Intersegment revenues of $3,565 recognized by RMR LLC for services provided to our All Other Operations segment have been eliminated in the condensed consolidated financial statements.

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The RMR Group Inc.

Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

(dollars in thousands, except per share amounts)


	Nine Months Ended June 30, 2021
			All Other
	RMR LLC (1)		Operations		Total
Revenues:
Management services	$	125,106	$	259	$	125,365
Incentive business management fees	—		620		620
Advisory services	—		2,849		2,849
Total management and advisory services revenues	125,106		3,728		128,834
Reimbursable compensation and benefits	38,018		1,435		39,453
Reimbursable equity based compensation	5,611		—		5,611
Other reimbursable expenses	259,856		—		259,856
Total reimbursable costs	303,485		1,435		304,920
Total revenues	428,591		5,163		433,754
Expenses:
Compensation and benefits	86,517		4,093		90,610
Equity based compensation	7,160		107		7,267
Separation costs	4,159		—		4,159
Total compensation and benefits expense	97,836		4,200		102,036
General and administrative	16,690		2,994		19,684
Other reimbursable expenses	259,856		—		259,856
Transaction and acquisition related costs	409		65		474
Depreciation and amortization	702		32		734
Total expenses	375,493		7,291		382,784
Operating income (loss)	53,098		(2,128)		50,970
Interest and other income	585		29		614
Equity in earnings of investees	—		755		755
Unrealized gain on equity method investment accounted for under the fair value option	6,032		—		6,032
Income (loss) before income tax expense	59,715		(1,344)		58,371
Income tax expense	—		(8,109)		(8,109)
Net income (loss)	$	59,715	$	(9,453)	$	50,262

Total assets	$	674,378	$	50,211	$	724,589

(1) Intersegment revenues of $3,003 recognized by RMR LLC for services provided to our All Other Operations segment have been eliminated in the condensed consolidated financial statements.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

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 2021 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. As of June 30, 2022, RMR LLC managed more than 2,100 properties in 47 states, Washington, D.C., Puerto Rico and Canada that are principally owned by the Managed Equity REITs.

Business Environment and Outlook

The continuation and growth of our business depends upon our ability to operate the Managed REITs so as to maintain, grow and increase the value of their businesses, to assist our Managed Operating Companies to grow their businesses and operate profitably and to successfully expand our Managed Private Real Estate Capital business through the execution of new business ventures. 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.

Beyond general real estate industry trends, we are also taking into account general economic factors impacting our clients. More specifically, in the U.S., the Federal Open Market Committee, or FOMC, has recently begun increasing the federal funds rate in an attempt to slow inflation, which has in turn lead to increased borrowing costs. In a period of increased borrowing costs, real estate transaction volumes often slow along with real estate valuation growth. Rising interest rates will also adversely impact our clients with floating rate debt, which they, in some instances, attempt to address with interest rate caps and other strategic actions to reduce leverage. Further, while the FOMC is looking to slow inflation, its efforts may not be successful. The impact of rising costs, both for goods and human capital, are impacting us and our clients and we and our clients are implementing mitigation strategies to minimize the impact of increased costs on our clients’ earnings, where possible.

We consider industry and general economic factors when providing services to our clients and attempt to take advantage of opportunities when they arise. For example: (i) since March 2020, ILPT and DHC have completed several joint venture transactions with institutional investors and subsequently grown some of those ventures by acquiring additional properties; (ii) SVC transitioned over 200 hotels from other hotel operators to Sonesta, which on March 17, 2021, completed its acquisition of RLH Corporation, establishing it as one of the largest hotel companies in the U.S. and expanding its franchising capabilities; (iii) on September 30, 2021, SEVN and TRMT merged, resulting in a larger, more diversified mortgage REIT with an expanded capital base; and (iv) on February 25, 2022, ILPT completed its acquisition of 126 new, Class A, single tenant, net leased, e-commerce focused industrial properties as a result of its acquisition of Monmouth Real Estate Investment Corporation, or MNR, in an all-cash transaction valued at approximately $4.0 billion. In addition, we balance our pursuit of growth of our and our clients’ businesses by executing, on behalf of our clients, prudent 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.

Managed Equity REITs

The base business management fees we earn from the Managed Equity REITs 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 REITs, excluding rents or other revenues from hotels, travel centers, senior living properties and wellness centers, which are separately managed by our Managed Operating Companies 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 and certain of the Managed Operating Companies based on a percentage of the cost of such construction. For further information regarding the fees we earn, see Note 2, Revenue Recognition, to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

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The following table presents for each Managed Equity REIT 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, 2022 and 2021, as applicable:


		Lesser of Historical Cost of Assets
		Under Management or
		Total Market Capitalization as of
		June 30,
REIT	Primary Strategy	2022		2021
DHC	Medical office and life science properties, senior living communities and wellness centers	$	3,541,918	$	5,337,144
ILPT	Industrial and logistics properties	5,372,641		1,997,990
OPI	Office properties primarily leased to single tenants, including the government	3,481,695		3,962,573

SVC	Hotels and net lease service and necessity-based retail properties	7,363,672		9,277,211
		$	19,759,926	$	20,574,918

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 or loans secured by real estate and personal property owned in connection with such real estate (including acquisition related costs which may be allocated to intangibles or are unallocated), all before reserves for depreciation, amortization, impairment charges or bad debts 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 and the principal amount of consolidated indebtedness during the period. The table above presents for each Managed Equity REIT, 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 are calculated for the three and nine months ended June 30, 2022 and 2021 may differ from the basis at the end of the periods presented in the table above. As of June 30, 2022, the market capitalization was lower than the historical cost of assets under management for the Managed Equity REITs; the historical cost of assets under management for DHC, ILPT, OPI and SVC as of June 30, 2022, were $7,198,520, $5,644,407, $6,076,279 and $11,368,553, respectively.

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The fee revenues we earned from the Managed Equity REITs for the three and nine months ended June 30, 2022 and 2021 are set forth in the following tables:


	Three Months Ended June 30, 2022						Three Months Ended June 30, 2021
	Base		Base						Base		Base
	Business		Property		Construction				Business		Property		Construction
	Management		Management		Supervision				Management		Management		Supervision
REIT	Revenues		Revenues		Revenues		Total		Revenues		Revenues		Revenues		Total
DHC	$	4,659	$	1,282	$	1,267	$	7,208	$	6,478	$	2,440	$	781	$	9,699
ILPT	7,031		2,404		368		9,803		2,652		1,570		21		4,243
OPI	4,270		3,894		2,476		10,640		4,417		3,786		1,117		9,320

SVC	9,486		1,013		222		10,721		10,924		875		201		12,000
	$	25,446	$	8,593	$	4,333	$	38,372	$	24,471	$	8,671	$	2,120	$	35,262


	Nine Months Ended June 30, 2022						Nine Months Ended June 30, 2021
	Base		Base						Base		Base
	Business		Property		Construction				Business		Property		Construction
	Management		Management		Supervision				Management		Management		Supervision
REIT	Revenues		Revenues		Revenues		Total		Revenues		Revenues		Revenues		Total
DHC	$	15,491	$	5,016	$	3,230	$	23,737	$	17,110	$	7,468	$	2,695	$	27,273
ILPT	14,272		6,761		512		21,545		8,330		4,872		88		13,290
OPI	13,331		12,100		6,291		31,722		12,361		11,941		2,913		27,215

SVC	29,991		3,024		1,098		34,113		30,798		2,492		208		33,498
	$	73,085	$	26,901	$	11,131	$	111,117	$	68,599	$	26,773	$	5,904	$	101,276

Managed Operating Companies and Managed Private Real Estate Capital

We provide business management services to the Managed Operating Companies. ALR operates senior living communities throughout the United States, many of which are owned by and managed for DHC. Sonesta manages and franchises hotels, resorts and cruise ships in the United States, Latin America, the Caribbean and the Middle East; many of the U.S. hotels that Sonesta operates are owned by SVC. TA operates, leases and franchises travel centers along the U.S. interstate highway system, many of which are owned by SVC, and standalone truck service facilities. Generally, our fees earned from business management services to the Managed Operating Companies are based on a percentage of certain revenues.

In addition, we also provide management services to the Managed Private Real Estate Capital clients 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 management fees based on a percentage of the cost of construction activities.

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Our fee revenues from services to the Managed Operating Companies and the Managed Private Real Estate Capital clients for the three and nine months ended June 30, 2022 and 2021, are set forth in the following tables:


	Three Months Ended June 30, 2022								Three Months Ended June 30, 2021
	Base		Base						Base		Base
	Business		Property		Construction				Business		Property		Construction
	Management		Management		Supervision				Management		Management		Supervision
	Revenues		Revenues		Revenues		Total		Revenues		Revenues		Revenues		Total
ABP Trust	$	480	$	360	$	208	$	1,048	$	580	$	446	$	47	$	1,073
Other private entities	2,456		1,671		55		4,182		696		358		11		1,065
ALR	1,239		—		—		1,239		1,794		—		—		1,794
Sonesta	2,491		—		—		2,491		1,522		—		—		1,522
TA	4,441		—		—		4,441		3,660		—		—		3,660
	$	11,107	$	2,031	$	263	$	13,401	$	8,252	$	804	$	58	$	9,114


	Nine Months Ended June 30, 2022								Nine Months Ended June 30, 2021
	Base		Base						Base		Base
	Business		Property		Construction				Business		Property		Construction
	Management		Management		Supervision				Management		Management		Supervision
	Revenues		Revenues		Revenues		Total		Revenues		Revenues		Revenues		Total
ABP Trust	$	1,577	$	1,162	$	400	$	3,139	$	1,737	$	1,342	$	92	$	3,171
Other private entities	5,518		3,701		92		9,311		1,726		934		11		2,671
ALR	3,610		—		—		3,610		5,573		—		—		5,573
Sonesta	6,092		—		—		6,092		2,511		—		—		2,511
TA	11,499		—		—		11,499		9,904		—		—		9,904
	$	28,296	$	4,863	$	492	$	33,651	$	21,451	$	2,276	$	103	$	23,830

Advisory Business

Tremont Realty Capital provides advisory services to SEVN, a publicly traded mortgage REIT that focuses on originating and investing in first mortgage whole loans secured by middle market and transitional commercial real estate. Tremont Realty Capital also provided advisory services to TRMT until September 30, 2021, when it merged with and into SEVN. Tremont Realty Capital is primarily compensated pursuant to its management agreements with SEVN (beginning January 6, 2021) and TRMT (until September 30, 2021) based on a percentage of equity, as defined in the applicable agreements.

We earned advisory services revenue of $1,137 and $1,134 for the three months ended June 30, 2022 and 2021, respectively, and $3,392 and $2,849 for the nine months ended June 30, 2022 and 2021, respectively. Tremont Realty Capital did not earn incentive fees from SEVN for the three and nine months ended June 30, 2022. Incentive fees earned from TRMT were zero and $620 for the three and nine months ended June 30, 2021, respectively.

The Tremont business acts as a transaction broker for non-investment advisory clients for negotiated fees. The Tremont business earned fees for such brokerage services of $46 and zero for the three months ended June 30, 2022 and 2021, respectively, and $99 and $259 for the nine months ended June 30, 2022 and 2021, respectively, which amounts are included in management services revenue in our condensed consolidated statements of income.

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RESULTS OF OPERATIONS (dollars in thousands)

Three Months Ended June 30, 2022, Compared to the Three Months Ended June 30, 2021

The following table presents the changes in our operating results for the three months ended June 30, 2022 compared to the three months ended June 30, 2021:


	Three Months Ended June 30,
	2022		2021		$ Change		% Change
Revenues:
Management services	$	51,819	$	44,376	$	7,443	16.8%

Advisory services	1,137		1,134		3		0.3%
Total management and advisory services revenues	52,956		45,510		7,446		16.4%
Reimbursable compensation and benefits	14,189		13,069		1,120		8.6%
Reimbursable equity based compensation	(69)		1,402		(1,471)		(104.9)%
Other reimbursable expenses	144,012		85,263		58,749		68.9%
Total reimbursable costs	158,132		99,734		58,398		58.6%
Total revenues	211,088		145,244		65,844		45.3%
Expenses:
Compensation and benefits	32,170		30,530		1,640		5.4%
Equity based compensation	512		1,954		(1,442)		(73.8)%
Separation costs	400		—		400		n/m
Total compensation and benefits expense	33,082		32,484		598		1.8%
General and administrative	8,323		6,320		2,003		31.7%
Other reimbursable expenses	144,012		85,263		58,749		68.9%
Transaction and acquisition related costs	—		61		(61)		n/m
Depreciation and amortization	253		245		8		3.3%
Total expenses	185,670		124,373		61,297		49.3%
Operating income	25,418		20,871		4,547		21.8%
Interest and other income	279		179		100		55.9%
Equity in earnings of investees	—		28		(28)		n/m
Unrealized (loss) gain on equity method investments accounted for under the fair value option	(5,489)		1,312		(6,801)		n/m
Income before income tax expense	20,208		22,390		(2,182)		(9.7)%
Income tax expense	(2,943)		(3,361)		418		12.4%
Net income	17,265		19,029		(1,764)		(9.3)%
Net income attributable to noncontrolling interest	(9,695)		(10,797)		1,102		10.2%
Net income attributable to The RMR Group Inc.	$	7,570	$	8,232	$	(662)	(8.0)%

n/m - not meaningful

Management services revenue. Management services revenue increased $7,443 primarily due to (i) growth in base business management fees of $4,379 and property management fees of $1,181 earned from ILPT, primarily due to its recent acquisition of MNR, and (ii) increases in construction supervision fees earned from OPI, DHC and SVC aggregating $1,866 due to increased development activity.

Reimbursable compensation and benefits. Reimbursable compensation and benefits include 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 were paid by tenants of our clients. Reimbursable compensation and benefits increased $1,120 primarily due to increases in employee compensation and benefits for which we receive reimbursement.

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

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clients. We record an equal, offsetting amount as equity based compensation expense for the value of these awards. Reimbursable equity based compensation revenue decreased $1,471 primarily as a result of decreases in our clients’ respective share prices.

Other reimbursable expenses. For further information about these reimbursements, see Note 2, 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 consist 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 $1,640 primarily due to increased headcount and wage inflation in the current fiscal year.

Equity based compensation. Equity based compensation consists of the value of vested shares awarded to certain of our employees under our equity compensation plan and by our clients. Equity based compensation decreased $1,442 primarily as a result of decreases in our clients’ respective share prices.

Separation costs. For further information about these costs, see Note 6, 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 consist 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 $2,003 primarily due to increases in technology infrastructure costs, third-party costs related to our expanded role in construction oversight and increases in recruiting and other professional fees.

Transaction and acquisition related costs. Transaction and acquisition related costs in the prior period relate to costs incurred in connection with RMR Mortgage Trust’s conversion from a registered investment company to a commercial mortgage REIT and other strategic initiatives.

Interest and other income. Interest and other income increased $100 primarily due to higher interest earned during the current period as a result of higher interest rates compared to the prior period.

Equity in earnings of investees. Equity in earnings of investees represents our proportionate share of earnings from our former equity interest in TRMT. For further information, see Note 3, Equity Method Investments, to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Unrealized (loss) gain on equity method investments accounted for under the fair value option. Unrealized (loss) gain on equity method investments accounted for under the fair value option represents the gain or loss on our investments in SEVN and TA common shares. For further information, see Note 3, Equity Method 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 decrease in income tax expense of $418 is primarily attributable to a lower effective tax rate for the three months ended June 30, 2022, compared to the same period in the prior year.

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Nine Months Ended June 30, 2022, Compared to the Nine Months Ended June 30, 2021

The following table presents the changes in our operating results for the nine months ended June 30, 2022 compared to the nine months ended June 30, 2021:


	Nine Months Ended June 30,
	2022		2021		$ Change		% Change
Revenues:
Management services	$	144,867	$	125,365	$	19,502	15.6%
Incentive business management fees	—		620		(620)		n/m
Advisory services	3,392		2,849		543		19.1%
Total management and advisory services revenues	148,259		128,834		19,425		15.1%
Reimbursable compensation and benefits	42,092		39,453		2,639		6.7%
Reimbursable equity based compensation	2,896		5,611		(2,715)		(48.4)%
Other reimbursable expenses	397,063		259,856		137,207		52.8%
Total reimbursable costs	442,051		304,920		137,131		45.0%
Total revenues	590,310		433,754		156,556		36.1%
Expenses:
Compensation and benefits	95,671		90,610		5,061		5.6%
Equity based compensation	4,719		7,267		(2,548)		(35.1)%
Separation costs	617		4,159		(3,542)		(85.2)%
Total compensation and benefits expense	101,007		102,036		(1,029)		(1.0)%
General and administrative	24,464		19,684		4,780		24.3%
Other reimbursable expenses	397,063		259,856		137,207		52.8%
Transaction and acquisition related costs	—		474		(474)		n/m
Depreciation and amortization	731		734		(3)		(0.4)%
Total expenses	523,265		382,784		140,481		36.7%
Operating income	67,045		50,970		16,075		31.5%
Interest and other income	402		614		(212)		(34.5)%
Equity in earnings of investees	—		755		(755)		n/m
Unrealized (loss) gain on equity method investments accounted for under the fair value option	(8,853)		6,032		(14,885)		n/m
Income before income tax expense	58,594		58,371		223		0.4%
Income tax expense	(8,448)		(8,109)		(339)		(4.2)%
Net income	50,146		50,262		(116)		(0.2)%
Net income attributable to noncontrolling interest	(28,142)		(28,192)		50		0.2%
Net income attributable to The RMR Group Inc.	$	22,004	$	22,070	$	(66)	(0.3)%

n/m - not meaningful

Management services revenue. Management services revenue increased $19,502 primarily due to (i) growth in base business management fees of $5,942 and property management fees of $2,313 earned from ILPT, primarily due to its recent acquisition of MNR, (ii) increases in construction supervision fees earned from OPI, SVC and DHC aggregating $4,803 due to increased development activity, and (iii) an increase in management fees earned from Sonesta and TA of $3,581 and $1,595, respectively, primarily resulting from an increase in travel as pandemic restrictions have eased, and additionally for Sonesta, an increase in the number of hotels that it manages and franchises during the current period.

Incentive business management fees. Incentive business management fees represent fees earned by Tremont Realty Capital from TRMT. For further information about incentive fees, see Note 2, Revenue Recognition, to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10‑Q.

Advisory services revenue. Advisory services revenue increased $543 primarily due to the expiration of the fee waiver that was previously provided to TRMT in effect until December 31, 2020.

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Reimbursable compensation and benefits. Reimbursable compensation and benefits increased $2,639 primarily due to increases in employee compensation and benefits for which we receive reimbursement.

Reimbursable equity based compensation. Reimbursable equity based compensation decreased $2,715 primarily as a result of decreases in our clients’ respective share prices.

Compensation and benefits. Compensation and benefits expense increased $5,061 primarily due to estimated bonus cost increases for the current fiscal year and annual merit increases effective October 1, 2021.

Equity based compensation. Equity based compensation decreased $2,548 primarily due to decreases in our clients’ respective share prices.

General and administrative. General and administrative costs increased $4,780 primarily due to increases in technology infrastructure costs, third-party costs related to our expanded role in construction oversight and increases in recruiting and other professional fees.

Interest and other income. Interest and other income decreased $212 primarily due to lower interest earned during the current period as a result of lower average cash balances invested at higher interest rates, compared to the prior period.

Income tax expense. The increase in income tax expense of $339 is primarily attributable to a one-time reduction in our income tax provision recorded during the prior period of $520 related to final tax regulations released in December 2020. For further information, see Note 4, Income Taxes, to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

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, 2022 and September 30, 2021, we had cash and cash equivalents of $195,936 and $159,835, respectively, of which $22,789 and $23,338, respectively, was held by RMR Inc., with the remainder being held at RMR LLC. 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, 2022 and September 30, 2021, $175,459 and $131,065, respectively, of our cash and cash equivalents were invested in money market funds. 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, and to fund our operations and obligations, in the next twelve months.

Our liquidity is highly dependent upon our receipt of fees from the businesses that we manage. Historically, we have funded our working capital needs with cash generated from our operating activities and we currently do not maintain any credit facilities. 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

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management fees are typically payable to us within 30 days of the end of each month or, in the case of annual incentive business management fees earned from the Managed Equity REITs, if any, within 30 days following each calendar year end. Quarterly incentive fees earned from SEVN, if any, are payable generally within 30 days following the end of the applicable quarter. Historically, we have not experienced losses on collection of our fees and have not recorded any allowances for bad debts.

During the nine months ended June 30, 2022, we paid cash distributions to the holders of our Class A Common Shares, Class B-1 Common Shares and to the other owner of RMR LLC membership units in the aggregate amount of $32,930. On July 14, 2022, we declared a quarterly dividend on our Class A Common Shares and Class B-1 Common Shares to our shareholders of record as of July 25, 2022 in the amount of $0.40 per Class A Common Share and Class B-1 Common Share, or $6,600. This dividend will be partially funded by a distribution from RMR LLC to holders of its membership units in the amount of $0.32 per unit, or $10,080, of which $5,280 will be distributed to us based on our aggregate ownership of 16,500,716 membership units of RMR LLC and $4,800 will be distributed to ABP Trust based on its ownership of 15,000,000 membership units of RMR LLC. The remainder of this dividend will be funded with cash accumulated at RMR Inc. We expect the total dividend will amount to approximately $11,400 and we expect to pay this dividend on or about August 18, 2022. See Note 7, Shareholders’ Equity, to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for more information regarding these distributions.

For the nine months ended June 30, 2022, pursuant to the RMR LLC operating agreement, RMR LLC made required quarterly tax distributions to its holders of its membership units totaling $21,969, of which $11,559 was distributed to us and $10,410 was distributed to ABP Trust, based on each membership unit holder’s then respective ownership percentage in RMR LLC. The $11,559 distributed to us was eliminated in our condensed consolidated financial statements included in Part 1, Item 1 of this Quarterly Report on Form 10-Q, and the $10,410 distributed to ABP Trust was recorded as a reduction of their noncontrolling interest. We expect to use a portion of these funds distributed to us to pay our tax liabilities and amounts due under the tax receivable agreement described in Note 6, Related Person Transactions, to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q. We expect to use the remaining funds distributed to us to fund our long-term tax liabilities and pay dividends.

Cash Flows

Our changes in cash flows for the nine months ended June 30, 2022 compared to the nine months ended June 30, 2021 were as follows: (i) net cash from operating activities increased $17,485 from $72,371 in the prior period to $89,856 in the current period; (ii) net cash used in investing activities increased $9,444 from $940 in the prior period to $10,384 in the current period; and (iii) net cash used in financing activities increased $78 from $43,293 in the prior period to $43,371 in the current period.

The increase in cash from operating activities for the nine months ended June 30, 2022 compared to the prior period primarily reflects increases in net income, excluding the impacts of non-cash gains and losses, and favorable changes in working capital. The increase in cash used in investing activities for the nine months ended June 30, 2022 compared to the prior period was primarily due to the purchase of 882,407 SEVN common shares in the current period. Cash used in financing activities for the nine months ended June 30, 2022 increased nominally from the prior period.

As of June 30, 2022, 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.

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 6, 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, 2022, our condensed consolidated balance sheet reflects a liability related to the tax receivable agreement of $27,792, of which we expect to pay $2,215 to ABP Trust during the fourth quarter of fiscal year 2022.

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Market Risk and Credit Risk

We have not invested in derivative instruments, borrowed through issuing debt securities or transacted in foreign currencies. As a result, we are not subject to significant direct market risk related to interest rate changes, changes to the market standard for determining interest rates, commodity price changes or credit risks; however, if any of these risks were to negatively impact our clients’ businesses or market capitalization, our revenues would likely decline. To the extent we change our approach on the foregoing activities, or engage in other activities, our market and credit risks could change. See Part I, Item 1A “Risk Factors” of our 2021 Annual Report for the risks to us and our clients.

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 funds. The majority 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.

Related Person Transactions

We have relationships and historical and continuing transactions with Adam D. Portnoy, the chair of our Board and one of our Managing Directors, as well as our clients. For further information about these and other such relationships and related person transactions, please see Note 6, Related Person Transactions, to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q, our 2021 Annual Report, our definitive Proxy Statement for our 2022 Annual Meeting of Shareholders and our other filings with the SEC. In addition, see the section captioned “Risk Factors” in our 2021 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 and our principles of consolidation.

A discussion of our critical accounting estimates is included in our 2021 Annual Report. There have been no significant changes in our critical accounting estimates since the fiscal year ended September 30, 2021.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative disclosures about market risk are set forth above in “Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operation—Market Risk and Credit Risk.”

Item 4. Controls and Procedures

As of the end of the period covered by this report, our management carried out an evaluation, under the supervision and with the participation of our President and Chief Executive Officer and our Executive Vice President, Chief Financial Officer and Treasurer, of the effectiveness of our disclosure controls and procedures pursuant to Rules 13a-15 and 15d-15 under the Securities Exchange Act of 1934, as amended. Based upon that evaluation, our President and Chief Executive Officer and our Executive Vice President, Chief Financial Officer and Treasurer concluded that our disclosure controls and procedures are effective.

There have been no changes in our internal control over financial reporting during the quarter ended June 30, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

WARNING CONCERNING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws. Our forward-looking statements reflect our current views, intents and expectations with respect to, among other things, our operations and financial performance. Our forward-looking statements can be identified by the use of words such as “outlook,” “believe,” “expect,” “potential,” “will,” “may,” “estimate,” “anticipate”

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and derivatives or negatives of such words or similar words. Such forward-looking statements are subject to various risks and uncertainties. Accordingly, there are or will be factors that could cause actual outcomes or results to differ materially from those stated or implied in these statements. We believe these factors include, but are not limited to the following:

•the duration and severity of the negative economic impact of COVID-19 and the resulting disruptions on us and our clients;

•substantially all of our revenues are derived from services to a limited number of clients;

•our revenues may be highly variable;

•risks related to supply chain constraints, commodity pricing and other inflation, including inflation impacting wages and employee benefits, and the effect of increasing interest rates;

•changing market conditions, practices and trends may adversely impact our clients and the fees we receive from them;

•potential terminations of our management agreements with our clients;

•our ability to expand our business depends upon the growth and performance of our clients and our ability to obtain or create new clients for our business and is often dependent upon circumstances beyond our control;

•the ability of our clients to operate their businesses profitably and to grow and increase their market capitalizations and total shareholder returns;

•litigation risks;

•risks related to acquisitions, dispositions and other activities by or among our clients;

•allegations, even if untrue, of any conflicts of interest arising from our management activities;

•our ability to retain the services of our managing directors and other key personnel; and

•risks associated with and costs of compliance with laws and regulations, including securities regulations, exchange listing standards and other laws and regulations affecting public companies.

For example:

•We have a limited number of clients. We have long term contracts with our Managed Equity REITs; however, the other contracts under which we earn our revenues are for shorter terms, and the long term contracts with our Managed Equity REITs and our other contracts with other clients may be terminated in certain circumstances. The termination or loss of any of our management contracts may have a material adverse impact upon our revenues, profits, cash flows and business reputation;

•Our base business management fees earned from our Managed Equity REITs are calculated monthly based upon the lower of each REIT’s cost of its applicable assets and such REIT’s market capitalization. Our business management fees earned from our Managed Operating Companies are calculated based upon certain revenues from each operator’s business. Accordingly, our future revenues, income and cash flows will decline if the business activities, assets or market capitalizations of our clients decline;

•The fact that we earned significant incentive business management fees from certain of our Managed Equity REITs in previous years may imply that we will earn incentive business management fees in future years. The incentive business management fees that we may earn from our Managed Equity REITs are based upon total returns realized by the REITs’ shareholders compared to the total shareholders return of certain identified indices. We have only limited control over the total returns realized by shareholders of the Managed Equity REITs and effectively no control over indexed total returns. There can be no assurance that we will earn any incentive business management fees from our Managed Equity REITs in the future;

•The fact that we earned a $0.6 million incentive business management fee from one of our mortgage REITs during the nine months ended June 30, 2021 may imply that we will earn incentive business management fees from our mortgage REITs in future periods. However, there can be no assurance that we will earn any incentive business management fees from our mortgage REITs in the future;

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•We currently intend to pay a regular quarterly dividend of $0.40 per Class A Common Share and Class B-1 Common Share. Our dividends are declared and paid at the discretion of our board of directors. Our board may consider many factors when deciding whether to declare and pay dividends, including our current and projected cash flows and alternative uses for any available cash. Our board may decide to lower or even eliminate our dividends. There can be no assurance that we will continue to pay any regular dividends or with regard to the amount of dividends we may pay;

•We balance our pursuit of growth of our and our clients’ businesses by executing, on behalf of our clients, prudent capital recycling or business arrangement restructurings in an attempt to help our clients prudently manage leverage and increased operating costs and to reposition their portfolios and businesses when circumstances warrant such changes or when other more desirable opportunities are identified. However, these efforts may not be successful and, even if they are successful, they may not be sufficient to prevent our clients from experiencing increases in leverage, to adequately reposition our clients’ portfolios and businesses, or to enable our clients to execute successfully on desirable opportunities;

•Our attempts to take into account industry and economic factors as well as specific property and regional geographic considerations when providing services to our clients may not be successful;

•We have undertaken new initiatives and are considering other initiatives to grow our business and any actions we may take to grow our business may not be successful or we may elect to abandon pursuing some or all of those initiatives in order to pursue other initiatives or for other reasons. In addition, any investments or repositioning of the properties we or our clients may make or pursue may not increase the value of the applicable properties, offset the decline in value those properties may otherwise experience, or increase the market capitalization or total shareholder returns of our clients;

•Our clients’ use of interest rate caps may not be successful or may not be sufficient to mitigate increased costs they may experience as a result of rising interest rates or other inflation;

•The risk mitigation strategies that we may implement to minimize the impact of increased costs on our clients’ earnings as a result of rising costs, including for both goods and human capital, may not be successful or sufficient;

•We state that our cash and cash equivalents balance leaves us well positioned to pursue a range of capital allocation strategies, with a focus on the growth of our private capital business, and to fund our operations and obligations, in the next 12 months. This statement may imply that we will successfully identify and execute one or more capital allocation strategies in the next 12 months and that any capital allocation strategy we may pursue will be successful and benefit us and our shareholders. However, identifying and executing on capital allocation strategies are subject to various uncertainties and risks and may take an extended period to realize any resulting benefit to our business. In addition, we may elect to not pursue a capital allocation strategy or abandon any such strategy we may pursue; and

•The COVID-19 pandemic may have lasting affects on our business and the businesses of our clients. Our business is dependent on revenue generated from sectors that have been and may continue to be adversely impacted by COVID-19 to a greater degree than other sectors. Further, our revenues from other sectors may become increasingly adversely impacted by COVID-19. Accordingly, there can be no assurances that we will be able to successfully manage through the COVID-19 pandemic, resulting market disruptions and their aftermath, or that we will be able to take advantage of any resulting opportunities.

There are or will be additional important factors that could cause business outcomes or financial results to differ materially from those stated or implied in our forward-looking statements. For example, increasing interest rates, inflation and a possible recession, may reduce or limit any growth in the market value of our Managed Equity REITs or cause their rent receipts or construction activities to decline or cause the revenues of our Managed Operating Companies to significantly decline and, as a result, our revenues and cash flows may be adversely impacted.

We have based our forward-looking statements on our current expectations about future events that we believe may affect our business, financial condition and results of operations. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, our forward-looking statements should not be relied on as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected or implied in our forward-looking statements. The matters discussed in this warning should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this Quarterly Report on Form 10-Q and in our 2021 Annual Report, including the “Risk Factors” section of our 2021 Annual Report. We undertake no obligation to update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law.

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Part II. Other Information

Item 1A. Risk Factors

There have been no material changes to the risk factors from those we previously provided in our 2021 Annual Report.

Item 6. Exhibits


Exhibit Number						Description

3.1						Articles of Amendment and Restatement of the Registrant. (1)
3.2						Articles of Amendment, filed July 30, 2015. (1)
3.3						Articles of Amendment, filed September 11, 2015. (1)
3.4						Articles of Amendment, filed March 9, 2016. (2)
3.5						Fourth Amended and Restated Bylaws of the Registrant adopted September 13, 2017. (3)
4.1						Form of The RMR Group Inc. Share Certificate for Class A Common Stock. (4)
4.2						Registration Rights Agreement, dated as of June 5, 2015, by and between the Registrant and ABP Trust (formerly known as Reit Management and Research Trust). (1)
10.1						First Amendment to Amended and Restated Business Management and Shared Services Agreement, dated as of May 31, 2022, by and between Sonesta International Hotels Corporation and The RMR Group LLC. (Filed herewith.)
31.1						Rule 13a-14(a) Certification. (Filed herewith.)
31.2						Rule 13a-14(a) Certification. (Filed herewith.)
32.1						Section 1350 Certification. (Furnished herewith.)
101.INS						XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH						XBRL Taxonomy Extension Schema Document. (Filed herewith.)
101.CAL						XBRL Taxonomy Extension Calculation Linkbase Document. (Filed herewith.)
101.DEF						XBRL Taxonomy Extension Definition Linkbase Document. (Filed herewith.)
101.LAB						XBRL Taxonomy Extension Label Linkbase Document. (Filed herewith.)
101.PRE						XBRL Taxonomy Extension Presentation Linkbase Document. (Filed herewith.)
104						Cover Page Interactive Data File. (formatted as Inline XBRL and contained in Exhibit 101.)

(1)						Incorporated by reference to the Registrant’s Registration Statement on Form S-1 (File No. 333-207423) filed with the U.S. Securities and Exchange Commission on October 14, 2015.
(2)						Incorporated by reference to the Registrant’s Current Report on Form 8-K (File No. 001-37616) filed with the U.S. Securities and Exchange Commission on March 11, 2016.
(3)						Incorporated by reference to the Registrant’s Current Report on Form 8-K (File No. 001-37616) filed with the U.S. Securities and Exchange Commission on September 15, 2017.
(4)						Incorporated by reference to the Registrant’s Amendment No. 1 to Registration Statement on Form S-1 (File No. 333-207423) filed with the U.S. Securities and Exchange Commission on November 2, 2015.

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


			By:			/s/ Matthew P. Jordan
						Matthew P. Jordan
						Executive Vice President, Chief Financial Officer and Treasurer (principal financial officer and principal accounting officer)
						Dated: August 4, 2022