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, 2023

OR

☐ 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 8, 2023, there were 15,612,179 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.

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Table of Contents

THE RMR GROUP INC.

FORM 10-Q

June 30, 2023

 

Table of Contents

						Page
PART I.			Financial Information
Item 1.			Financial Statements (unaudited)
			Condensed Consolidated Balance Sheets — June 30, 2023 and September 30, 2022			3
			Condensed Consolidated Statements of Income — Three and Nine Months Ended June 30, 2023 and 2022			4
			Condensed Consolidated Statements of Shareholders’ Equity — Three and Nine Months Ended June 30, 2023 and 2022			5
			Condensed Consolidated Statements of Cash Flows — Nine Months Ended June 30, 2023 and 2022			7
			Notes to Unaudited Condensed Consolidated Financial Statements			8
Item 2.			Management’s Discussion and Analysis of Financial Condition and Results of Operations			22
Item 3.			Quantitative and Qualitative Disclosures About Market Risk			31
Item 4.			Controls and Procedures			31
			Warning Concerning Forward-Looking Statements			31
PART II.			Other Information
Item 1A.			Risk Factors			33
Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds			33
Item 6.			Exhibits			33
			Signatures			35

2

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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,
						2023						2022
Assets
Current assets:
Cash and cash equivalents						$	295,423					$	189,088
Due from related parties						102,101						108,821
Prepaid and other current assets						6,486						5,372
Total current assets						404,010						303,281
Property and equipment, net						5,501						2,495
Due from related parties, net of current portion						6,632						14,557
Equity method investments accounted for under the fair value option						17,525						49,114
Goodwill and intangible assets, net of amortization						2,034						2,057
Operating lease right of use assets						29,272						28,894
Deferred tax asset						18,578						17,112
Other assets, net of amortization						117,833						124,895
Total assets						$	601,385					$	542,405
Liabilities and Equity
Current liabilities:
Reimbursable accounts payable and accrued expenses						$	74,263					$	80,221
Accounts payable and accrued expenses						40,316						16,745
Operating lease liabilities						5,056						4,693
Employer compensation liability						1,039						7,516
Total current liabilities						120,674						109,175
Operating lease liabilities, net of current portion						25,406						25,626
Amounts due pursuant to tax receivable agreement, net of current portion						23,308						23,308
Employer compensation liability, net of current portion						6,632						14,557
Total liabilities						176,020						172,666
Commitments and contingencies
Equity:
Class A common stock, $0.001 par value; 31,950,000 and 31,600,000 shares authorized, respectively; 15,614,152 and 15,606,115 shares issued and outstanding, respectively						16						16
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						115,479						113,136
Retained earnings						405,400						355,949
Cumulative common distributions						(282,427)						(262,496)
Total shareholders’ equity						238,484						206,621
Noncontrolling interest						186,881						163,118
Total equity						425,365						369,739
Total liabilities and equity						$	601,385					$	542,405

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,
						2023						2022						2023						2022
Revenues:
Management services						$	45,872					$	51,819					$	141,490					$	144,867
Termination and incentive business management fees						45,474						—						45,474						—
Advisory services						1,141						1,137						3,371						3,392
Total management and advisory services revenues						92,487						52,956						190,335						148,259
Reimbursable compensation and benefits						15,235						14,189						44,441						42,092
Reimbursable equity based compensation						1,622						(69)						7,143						2,896
Other reimbursable expenses						170,881						144,012						497,465						397,063
Total reimbursable costs						187,738						158,132						549,049						442,051
Total revenues						280,225						211,088						739,384						590,310
Expenses:
Compensation and benefits						34,239						32,170						102,039						95,671
Equity based compensation						2,100						512						8,719						4,719
Separation costs						1,064						400						2,002						617
Total compensation and benefits expense						37,403						33,082						112,760						101,007
General and administrative						9,575						8,323						28,198						24,464
Other reimbursable expenses						170,881						144,012						497,465						397,063
Transaction and acquisition related costs						1,196						—						1,196						—
Depreciation and amortization						281						253						821						731
Total expenses						219,336						185,670						640,440						523,265
Operating income						60,889						25,418						98,944						67,045
Interest income						2,833						279						6,837						402
Gain (loss) on equity method investments accounted for under the fair value option						663						(5,489)						23,513						(8,853)
Income before income tax expense						64,385						20,208						129,294						58,594
Income tax expense						(9,214)						(2,943)						(18,581)						(8,448)
Net income						55,171						17,265						110,713						50,146
Net income attributable to noncontrolling interest						(30,530)						(9,695)						(61,262)						(28,142)
Net income attributable to The RMR Group Inc.						$	24,641					$	7,570					$	49,451					$	22,004
Weighted average common shares outstanding - basic						16,435						16,343						16,416						16,332
Weighted average common shares outstanding - diluted						16,435						31,353						31,431						31,342
Net income attributable to The RMR Group Inc. per common share - basic						$	1.48					$	0.46					$	2.98					$	1.33
Net income attributable to The RMR Group Inc. per common share - diluted						$	1.48					$	0.46					$	2.97					$	1.33

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, 2022						$	16					$	1					$	15					$	113,136					$	355,949											$	(262,496)					$	206,621					$	163,118					$	369,739
Share awards, net						—						—						—						594						—												—						594						—						594
Net income						—						—						—						—						6,337												—						6,337						7,903						14,240
Tax distributions to member						—						—						—						—						—												—						—						(3,839)						(3,839)
Common share distributions						—						—						—						—						—												(6,642)						(6,642)						(4,800)						(11,442)
Balance at December 31, 2022						16						1						15						113,730						362,286												(269,138)						206,910						162,382						369,292
Share awards, net						—						—						—						1,015						—												—						1,015						—						1,015
Net income						—						—						—						—						18,473												—						18,473						22,829						41,302
Tax distributions to member						—						—						—						—						—												—						—						(4,545)						(4,545)
Common share distributions						—						—						—						—						—												(6,641)						(6,641)						(4,800)						(11,441)
Balance at March 31, 2023						16						1						15						114,745						380,759												(275,779)						219,757						175,866						395,623
Share awards, net						—						—						—						734						—												—						734						—						734
Net income						—						—						—						—						24,641												—						24,641						30,530						55,171
Tax distributions to member						—						—						—						—						—												—						—						(14,715)						(14,715)
Common share distributions						—						—						—						—						—												(6,648)						(6,648)						(4,800)						(11,448)
Balance at June 30, 2023						$	16					$	1					$	15					$	115,479					$	405,400											$	(282,427)					$	238,484					$	186,881					$	425,365

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, 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 Cash Flows

(dollars in thousands)

(unaudited)

						Nine Months Ended June 30,
						2023						2022
Cash Flows from Operating Activities:
Net income						$	110,713					$	50,146
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization						821						731
Straight line office rent						(235)						(247)
Amortization expense related to other assets						7,062						7,062
Deferred income taxes						(1,466)						(132)
Operating expenses paid in The RMR Group Inc. common shares						2,522						2,518
Distributions from equity method investments						1,623						415
(Gain) loss on equity method investments accounted for under the fair value option						(23,513)						8,853
Changes in assets and liabilities:
Due from related parties						243						(8,550)
Prepaid and other current assets						(1,114)						18
Reimbursable accounts payable and accrued expenses						(5,958)						12,205
Accounts payable and accrued expenses						22,994						16,837
Net cash from operating activities						113,692						89,856
Cash Flows from Investing Activities:
Purchase of property and equipment						(3,227)						(915)
Equity method investment in Seven Hills Realty Trust						—						(9,469)
Proceeds from sale of TravelCenters of America Inc. common shares						53,479						—
Net cash provided by (used in) investing activities						50,252						(10,384)
Cash Flows from Financing Activities:
Distributions to noncontrolling interest						(37,499)						(24,210)
Distributions to common shareholders						(19,931)						(19,130)
Repurchase of common shares						(179)						(31)
Net cash used in financing activities						(57,609)						(43,371)
Increase in cash and cash equivalents						106,335						36,101
Cash and cash equivalents at beginning of period						189,088						159,835
Cash and cash equivalents at end of period						$	295,423					$	195,936
Supplemental Cash Flow Information and Non-Cash Activities:
Income taxes paid						$	16,978					$	7,392
Recognition of right of use assets and related lease liabilities						$	4,119					$	783

See accompanying notes.

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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, 2023, RMR Inc. owned 15,614,152 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 52.6% of the economic interest of RMR LLC as of June 30, 2023. 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 47.4% of the economic interest of RMR LLC as of June 30, 2023, which is presented as a noncontrolling interest within the condensed consolidated financial statements. Adam D. Portnoy, the Chair of our Board, one of our Managing Directors and our President and Chief Executive Officer, 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, 2023, 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. On April 11, 2023, OPI and DHC entered into an agreement to merge, pursuant to which DHC will be merged with and into OPI, with OPI continuing as the surviving entity in the merger. RMR LLC will continue to manage the surviving entity following the merger. For additional information, see Note 6, Related Person Transactions.

RMR LLC’s wholly owned subsidiary, Tremont Realty Capital LLC, or Tremont, 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 loans secured by middle market and transitional commercial real estate. Tremont has in the past and may in the future manage additional accounts that invest in commercial real estate debt. Tremont may also act as a transaction broker for non-investment advisory clients for negotiated fees, which we refer to as the Tremont business.

RMR LLC also provided management services to TravelCenters of America Inc., or TA, until it was acquired by BP Products North America Inc., or BP, on May 15, 2023. TA is a real estate operating company that operates and franchises travel centers primarily along the U.S. interstate highway system, many of which are owned by SVC, and standalone truck service facilities. The Managed Equity REITs, SEVN, and until May 15, 2023, TA, are collectively referred to as the Perpetual Capital clients.

In addition, RMR LLC provides management services to private capital vehicles, including ABP Trust, AlerisLife Inc., or AlerisLife, Sonesta International Hotels Corporation, or Sonesta, and other private entities that own commercial real estate, of which certain of our Managed Equity REITs own minority equity interests. These clients are collectively referred to as the Private Capital clients. AlerisLife is an operator of senior living communities, many of which are owned by DHC, and as discussed in Note 6, Related Person Transactions, was a publicly traded company until March 20, 2023 when it was acquired by a subsidiary of ABP Trust. As a result of this transaction, amounts relating to AlerisLife are characterized as Private Capital for all periods presented. Sonesta is 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.

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.

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The RMR Group Inc.

Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

(dollars in thousands, except per share amounts)

However, the 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, 2022, or our 2022 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.

We report our results in a single reportable segment, which reflects how our chief operating decision maker allocates resources and evaluates our financial results. 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 condensed consolidated 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.

Management Agreements with the Managed Equity REITs

We are party to a business management and a property management agreement with each Managed Equity REIT. The following is a summary of the fees we earn pursuant to our business management agreements with the Managed Equity REITs. For a summary of the fees we earn pursuant to our property management agreements with the Managed Equity REITs, please see Property Management Agreements, below.

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 $21,037 and $25,446 for the three months ended June 30, 2023 and 2022, respectively, and $63,894 and $73,085 for the nine months ended June 30, 2023 and 2022, 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 calendar years 2022 or 2021.

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The RMR Group Inc.

Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

(dollars in thousands, except per share amounts)

Other Management Agreements

We earn management fees by providing continuous services pursuant to the management agreements with AlerisLife, Sonesta and until May 15, 2023, TA, equal to 0.6% of: (i) in the case of AlerisLife, AlerisLife’s revenues from all sources reportable under GAAP, less any revenues reportable by AlerisLife 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 also earn management fees from certain Private 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 base business management fees from TA and the Private Capital clients of $9,134 and $11,107 for the three months ended June 30, 2023 and 2022, respectively, and $29,874 and $28,296 for the nine months ended June 30, 2023 and 2022, respectively. In addition, in connection with BP’s acquisition of TA on May 15, 2023, TA terminated its business management agreement with us and paid us the applicable termination fee of $45,282.

Property Management Agreements

We earn property management fees by providing continuous services pursuant to property management agreements with the Managed Equity REITs and certain Private Capital 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 up to 5.0% of the cost of such construction.

For the three months ended June 30, 2023 and 2022, we earned aggregate property management fees of $15,649 and $15,220, respectively, including construction supervision fees of $4,418 and $4,596, respectively. For the nine months ended June 30, 2023 and 2022, we earned aggregate property management fees of $47,670 and $43,387, respectively, including construction supervision fees of $14,120 and $11,623, respectively.

Management Agreements with Advisory Clients

Tremont is primarily compensated pursuant to its management agreement with SEVN at an annual rate of 1.5% of equity, as defined in the applicable agreement. We earned advisory services revenue of $1,141 and $1,137 for the three months ended June 30, 2023 and 2022, respectively, and $3,371 and $3,392 for the nine months ended June 30, 2023 and 2022, respectively.

Tremont may also earn an incentive fee under its management agreement with SEVN equal to the difference between: (a) the product of (i) 20% and (ii) the difference between (A) core earnings, as defined in the agreement, 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 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 in the aggregate is greater than zero. The incentive fee may not be less than zero. Tremont earned incentive fees from SEVN of $192 for the three and nine months ended June 30, 2023. Tremont did not earn incentive fees from SEVN for the three or nine months ended June 30, 2022.

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 $52 and $46 for the three months ended June 30, 2023 and 2022, respectively, and $52 and $99 for the nine months ended June 30, 2023 and 2022, 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

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(dollars in thousands, except per share amounts)

our clients. A significant portion of these compensation and benefits are charged or passed through to and 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, development costs, security and cleaning services, a significant portion of which are charged or passed through to and paid by tenants of our clients.

Note 3. Equity Method Investments

Seven Hills Realty Trust

As of June 30, 2023, Tremont owned 1,708,058, or approximately 11.6%, of SEVN’s outstanding common shares. 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. 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, 2023 and September 30, 2022, based on quoted market prices, was $17,525 and $15,577, respectively. The unrealized gain (loss) in our condensed consolidated statements of income related to our investment in SEVN was $974 and $(209) for the three months ended June 30, 2023 and 2022, respectively, and $3,571 and $675 for the nine months ended June 30, 2023 and 2022, respectively. We received distributions from SEVN of $598 and $207 for the three months ended June 30, 2023 and 2022, respectively, and $1,623 and $415 for the nine months ended June 30, 2023 and 2022, respectively.

TravelCenters of America Inc.

We previously owned 621,853, or approximately 4.1%, of TA’s outstanding common shares, that had a cost of $13,701 and were accounted for using the equity method of accounting under the fair value option. As discussed in Note 6, Related Person Transactions, BP acquired TA on May 15, 2023 for $86.00 per share in cash. In connection with that acquisition, we received $53,479 for the TA common shares we owned and realized a gain of $39,778. We previously accounted for our investment in TA using the equity method of accounting because we were deemed to exert significant influence, but not control, over TA’s most significant activities. Under the fair value option, we determined fair value using the closing price of TA’s common shares as of the end of the period, which was a Level 1 fair value input, and recorded changes in fair value in earnings in our condensed consolidated statements of income. Net gains and losses recorded in our condensed consolidated statements of income related to our investment in TA was $(311) and $5,280 for the three months ended June 30, 2023 and 2022, respectively, and $19,942 and $(9,528) for the nine months ended June 30, 2023 and 2022, respectively.

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, 2023 and 2022, we recognized estimated income tax expense of $9,214 and $2,943, respectively, which includes $6,751 and $2,162, respectively, of U.S. federal income tax and $2,463 and $781, respectively, of state income taxes. For the nine months ended June 30, 2023 and 2022, we recognized estimated income tax expense of $18,581 and $8,448, respectively, which includes $13,614 and $6,205, respectively, of U.S. federal income tax and $4,967 and $2,243, respectively, of state income taxes.

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Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

(dollars in thousands, except per share amounts)

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,
						2023						2022						2023						2022
Income taxes computed at the federal statutory rate						21.0		%				21.0		%				21.0		%				21.0		%
State taxes, net of federal benefit						3.1		%				3.1		%				3.0		%				3.1		%
Permanent items						0.2		%				0.6		%				0.3		%				0.4		%
Net income attributable to noncontrolling interest						(10.0)		%				(10.1)		%				(9.9)		%				(10.1)		%
Total						14.3		%				14.6		%				14.4		%				14.4		%

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, 2023 and 2022, we had no uncertain tax positions.

Note 5. Fair Value of Financial Instruments

As of June 30, 2023 and September 30, 2022, 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.

The following table presents our assets and liabilities that have been measured at fair value using Level 1 inputs in the fair value hierarchy as of June 30, 2023 and September 30, 2022:

						June 30,						September 30,
						2023						2022
Current portion of due from related parties related to share based payment awards						$	1,039					$	7,516
Long term portion of due from related parties related to share based payment awards						6,632						14,557
Equity method investment in SEVN						17,525						15,577
Equity method investment in TA						—						33,537
Current portion of employer compensation liability related to share based payment awards						1,039						7,516
Long term portion of employer compensation liability related to share based payment awards						6,632						14,557

Note 6. Related Person Transactions

Adam D. Portnoy, Chair of our Board, one of our Managing Directors and our President and Chief Executive Officer, 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. RMR Inc.’s other executive officers are officers and employees of RMR LLC, and Jennifer B. Clark, our other Managing Director, and Matthew P. Jordan, our Executive Vice President, Chief Financial Officer and Treasurer, are also officers of ABP Trust.

Mr. Portnoy is the chair of the board and a managing trustee of each of the Perpetual Capital clients, the controlling shareholder and a director of Sonesta (and its parent) and was the chair of the board and a managing director of AlerisLife until March 20, 2023 when AlerisLife was acquired by ABP Trust. Since March 20, 2023, Mr. Portnoy is the sole director of AlerisLife. Mr. Portnoy was the chair of the board and a managing director of TA until May 15, 2023 when TA was acquired

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(dollars in thousands, except per share amounts)

by BP. Ms. Clark is a managing trustee of OPI and a director of Sonesta (and its parent), and she previously served as a managing director of AlerisLife until March 20, 2023. Ms. Clark also serves as the secretary of all the Perpetual Capital clients, Sonesta and AlerisLife.

As of June 30, 2023, Adam D. Portnoy beneficially owned 13.5% of SEVN’s outstanding common shares (including through Tremont and ABP Trust) and 9.8% of DHC’s outstanding common shares (including through ABP Trust). In addition, Mr. Portnoy beneficially owns shares of ILPT, OPI, SVC, and prior to May 15, 2023, TA, comprising less than 5.0% of the outstanding shares of each of those respective companies.

The Managed Equity REITs and SEVN 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. 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. SEVN’s officers are officers or employees of Tremont or RMR LLC. Some of the executive officers of TA (prior to May 15, 2023), AlerisLife and Sonesta are officers or employees of RMR LLC. Our executive officers are also managing trustees of certain of the Perpetual Capital clients.

Additional information about our related person transactions appears in Note 7, Shareholders’ Equity, below and in our 2022 Annual Report.

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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, 2023 and 2022, we recognized revenues from related parties as set forth in the following table:

						Three Months Ended June 30, 2023																		Three Months Ended June 30, 2022
						Total																		Total
						Management																		Management
						and Advisory						Total												and Advisory						Total
						Services						Reimbursable						Total						Services						Reimbursable						Total
						Revenues						Costs						Revenues						Revenues						Costs						Revenues
Perpetual Capital:
DHC						$	5,655					$	37,352					$	43,007					$	7,208					$	41,318					$	48,526
ILPT						9,113						10,664						19,777						9,803						8,126						17,929
OPI						9,363						89,220						98,583						10,640						80,083						90,723
SVC						10,308						34,643						44,951						10,721						10,412						21,133
Total Managed Equity REITs						34,439						171,879						206,318						38,372						139,939						178,311
SEVN						1,333						1,193						2,526						1,137						1,006						2,143
TA (1)						47,238						—						47,238						4,441						527						4,968
						83,010						173,072						256,082						43,950						141,472						185,422
Private Capital:
AlerisLife (2)						1,381						—						1,381						1,239						99						1,338
Sonesta						2,796						—						2,796						2,491						46						2,537
Other private entities						5,248						14,666						19,914						5,230						16,515						21,745
						9,425						14,666						24,091						8,960						16,660						25,620
Total revenues from related parties						92,435						187,738						280,173						52,910						158,132						211,042
Revenues from unrelated parties						52						—						52						46						—						46
Total revenues						$	92,487					$	187,738					$	280,225					$	52,956					$	158,132					$	211,088

(1)On May 15, 2023, BP acquired TA and TA terminated its management agreement with us. In connection with the termination of TA’s management agreement, we received the applicable termination fee of $45,282. For further information, please see “TA Merger” below.

(2)On March 20, 2023, AlerisLife merged with and into a subsidiary of ABP Trust and ceased to be a public company. As a result, the revenues earned with respect to AlerisLife are characterized as Private Capital for all periods presented. For further information about this transaction, please see “ABP Trust’s Acquisition of AlerisLife” below.

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Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

(dollars in thousands, except per share amounts)

For the nine months ended June 30, 2023 and 2022, we recognized revenues from related parties as set forth in the following table:

						Nine Months Ended June 30, 2023																		Nine Months Ended June 30, 2022
						Total																		Total
						Management																		Management
						and Advisory						Total												and Advisory						Total
						Services						Reimbursable						Total						Services						Reimbursable						Total
						Revenues						Costs						Revenues						Revenues						Costs						Revenues
Perpetual Capital: (1)
DHC						$	17,593					$	117,821					$	135,414					$	23,737					$	109,241					$	132,978
ILPT						27,377						30,615						57,992						21,545						20,387						41,932
OPI						29,448						268,204						297,652						31,722						221,249						252,971
SVC						30,046						75,468						105,514						34,113						43,641						77,754
Total Managed Equity REITs						104,464						492,108						596,572						111,117						394,518						505,635
SEVN						3,563						3,516						7,079						3,392						4,563						7,955
TA (2)						55,214						3,476						58,690						11,499						1,235						12,734
						163,241						499,100						662,341						126,008						400,316						526,324
Private Capital: (1)
AlerisLife (3)						4,014						97						4,111						3,610						245						3,855
Sonesta						6,954						544						7,498						6,092						84						6,176
Other private entities						16,074						49,308						65,382						12,450						41,406						53,856
						27,042						49,949						76,991						22,152						41,735						63,887
Total revenues from related parties						190,283						549,049						739,332						148,160						442,051						590,211
Revenues from unrelated parties						52						—						52						99						—						99
Total revenues						$	190,335					$	549,049					$	739,384					$	148,259					$	442,051					$	590,310

(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 revenues earned with respect to this joint venture are characterized as Private Capital for periods on and after December 23, 2021 and as Perpetual 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)On May 15, 2023, BP acquired TA and TA terminated its management agreement with us. In connection with the termination of TA’s management agreement, we received the applicable termination fee of $45,282. For further information, please see “TA Merger” below.

(3)On March 20, 2023, AlerisLife merged with and into a subsidiary of ABP Trust and ceased to be a public company. As a result, the revenues earned with respect to AlerisLife are characterized as Private Capital for all periods presented. For further information about this transaction, please see “ABP Trust’s Acquisition of AlerisLife” below.

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Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

(dollars in thousands, except per share amounts)

Amounts Due From Related Parties

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

						June 30, 2023																		September 30, 2022
						Accounts						Reimbursable												Accounts						Reimbursable
						Receivable						Costs						Total						Receivable						Costs						Total
Perpetual Capital:
DHC						$	4,692					$	15,525					$	20,217					$	8,098					$	14,148					$	22,246
ILPT						3,928						7,739						11,667						3,235						13,717						16,952
OPI						6,125						45,206						51,331						335						47,943						48,278
SVC						4,640						6,096						10,736						5,627						5,357						10,984
Total Managed Equity REITs						19,385						74,566						93,951						17,295						81,165						98,460
SEVN						3,115						1,433						4,548						1,768						1,262						3,030
TA (1)						—						—						—						124						11,635						11,759
						22,500						75,999						98,499						19,187						94,062						113,249
Private Capital:
AlerisLife (2)						68						—						68						112						492						604
Sonesta						65						—						65						127						290						417
Other private entities						4,166						5,935						10,101						1,658						7,450						9,108
						4,299						5,935						10,234						1,897						8,232						10,129
						$	26,799					$	81,934					$	108,733					$	21,084					$	102,294					$	123,378

(1)On May 15, 2023, BP acquired TA and TA terminated its management agreement with us. For further information about this transaction, please see “TA Merger” below.

(2)On March 20, 2023, AlerisLife merged with and into a subsidiary of ABP Trust and ceased to be a public company. As a result, the amounts due from related parties with respect to AlerisLife are characterized as Private Capital for all periods presented. For further information about this transaction, please see “ABP Trust’s Acquisition of AlerisLife” below.

Leases

As of June 30, 2023, 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 $1,221 and $1,470 for the three months ended June 30, 2023 and 2022, respectively, and $4,052 and $4,444 for the nine months ended June 30, 2023 and 2022, 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, 2023, our condensed consolidated balance sheet reflects a liability related to the tax receivable agreement of $25,583, including $2,275 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 2023.

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, 2023 and 2022, pursuant to the RMR LLC operating agreement, RMR LLC made required quarterly tax distributions to holders of its membership units totaling $48,857 and $21,969, respectively, of which $25,758 and $11,559, respectively, was distributed to us and $23,099 and $10,410, 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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(dollars in thousands, except per share amounts)

its noncontrolling interest. We use 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, 2023, Tremont 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 and ABP Trust).

ABP Trust’s Acquisition of AlerisLife

On March 20, 2023, ABP Trust acquired AlerisLife. In connection with that acquisition, AlerisLife terminated its management agreement with RMR LLC and RMR LLC waived its right to receive payment of the termination fee that would have otherwise resulted due to the acquisition. In consideration of this waiver, RMR LLC and ABP Trust amended and restated their management agreement to provide that (i) RMR LLC will also provide services to AlerisLife at ABP Trust’s request, (ii) ABP Trust will pay to RMR LLC management fees with respect to AlerisLife, which fees are calculated based upon AlerisLife’s revenues in the same manner as such fees would have been calculated under AlerisLife’s terminated management agreement with RMR LLC, and (iii) AlerisLife’s properties will not be subject to ABP Trust’s property management agreement with RMR LLC.

TA Merger

On May 15, 2023, BP acquired TA in a merger transaction for $86.00 per TA common share in cash, or the TA Merger. RMR LLC received $53,479 for its TA common shares pursuant to that acquisition. In connection with that acquisition, RMR LLC, which owned an aggregate amount of 4.1% of TA’s outstanding common shares, entered into a voting agreement with BP pursuant to which RMR LLC agreed to vote all of its TA common shares to approve the transaction. Upon consummation of the acquisition, TA terminated its business management agreement with us and in accordance with its terms paid us the applicable termination fee of $45,282.

OPI’s Merger Agreement with DHC

On April 11, 2023, DHC and OPI entered into an Agreement and Plan of Merger, or the DHC-OPI Merger Agreement, pursuant to which, on the terms and subject to the satisfaction or waiver of the conditions thereof, DHC will be merged with and into OPI, with OPI continuing as the surviving entity in the merger, or the DHC-OPI Merger. The DHC-OPI Merger is expected to close during the third quarter of calendar 2023. Contemporaneously with the execution of the DHC-OPI Merger Agreement, we, DHC and OPI entered into a letter agreement, or the RMR Letter Agreement, pursuant to which, on the terms and subject to conditions contained therein, we and DHC have acknowledged and agreed that, effective upon consummation of the DHC-OPI Merger, DHC shall have terminated its business and property management agreements with us for convenience, and we shall have waived our right to receive payment of the termination fee pursuant to each such agreement upon such termination. We will continue to manage the surviving entity following the DHC-OPI Merger. Contemporaneously with the execution of the DHC-OPI Merger Agreement, RMR LLC and OPI entered into a Third Amended and Restated Property Management Agreement, or the Amended Property Management Agreement. The effectiveness of the Amended Property Management Agreement is conditioned upon and will be concurrent with the consummation of the DHC-OPI Merger. Pursuant to the Amended Property Management Agreement, at the effective time of the DHC-OPI Merger, properties then owned by DHC that are subject to its existing property management agreement with RMR LLC, including its medical office and life science properties, will become subject to the terms and conditions of the Amended Property Management Agreement. Also pursuant to the Amended Property Management Agreement, we will be entitled to a renovation and repositioning fee equal to 3% of the cost of any major capital projects and repositionings at senior living communities owned by DHC that the surviving entity may request us to oversee from time to time, consistent with DHC’s existing property management agreement. The terms of the Amended Property Management Agreement are otherwise consistent with the terms of RMR LLC’s existing property management agreement with OPI.

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 of RMR Inc. previously awarded to these retiring officers. We also enter into separation arrangements from time to time with executive and nonexecutive officers and employees

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(dollars in thousands, except per share amounts)

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.

RMR LLC entered into a letter agreement, or the Separation Agreement, dated March 27, 2023, with Jonathan M. Pertchik, a former Executive Vice President of RMR LLC. Mr. Pertchik also served as chief executive officer and was a managing director of TA. Mr. Pertchik resigned as our Executive Vice President, effective 11:59 p.m. on May 14, 2023, the date prior to the closing of the TA Merger, or the Separation Date. Pursuant to the Separation Agreement, RMR LLC paid Mr. Pertchik $211 following the TA Merger and our Compensation Committee approved the acceleration of vesting of Mr. Pertchik’s unvested shares of RMR Inc., effective as of the Separation Date. The Separation Agreement contains other customary terms and conditions, including confidentiality, non-solicitation, and other covenants and a waiver and release.

For the three months ended June 30, 2023 and 2022, we recognized separation costs of $1,064 and $400, respectively, including cash separation costs of $708 and $252, respectively, and equity based separation costs of $356 and $148, respectively. For the nine months ended June 30, 2023 and 2022, we recognized separation costs of $2,002 and $617, respectively, including cash separation costs of $1,520 and $469, respectively, and equity based separation costs of $482 and $148, respectively.

SEVN Property Management Agreement

We entered into a new property management agreement with SEVN in July 2023 with respect to an office property SEVN owns. Pursuant to this agreement, we will provide property management services and SEVN will pay us fees equal to 3.0% of gross collected rents. Also under the terms of this property management agreement, SEVN will pay us additional fees for construction supervision services equal to 5.0% of the cost of such construction. Either we or SEVN may terminate this agreement upon 30 days’ prior notice. No termination fee would be payable as a result of terminating the agreement.

Note 7. Shareholders’ Equity

We award our Class A common stock, or Class A Common Shares, to our Directors, officers and employees under the Amended and Restated 2016 Omnibus Equity Plan, or the 2016 Plan. Director share awards vest immediately. Officer and employee share awards 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 Director share awards are included in general and administrative expenses and expense recognized for officer and employee share awards are included in equity based compensation in our condensed consolidated statements of income.

On March 29, 2023, we awarded 3,000 of our Class A Common Shares, valued at $25.80 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, 2023, we recorded general and administrative expense of $464 for these awards.

Equity based compensation expense related to shares awarded to certain officers and employees was $478 and $581 for the three months ended June 30, 2023 and 2022, respectively, and $1,576 and $1,823 for the nine months ended June 30, 2023 and 2022, respectively. As of June 30, 2023, we had 170,420 unvested shares outstanding which are scheduled to vest as follows: 62,160 shares in 2023, 49,920 shares in 2024, 36,740 shares in 2025 and 21,600 in 2026.

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 for those eligible to do so. The repurchase price is based on the closing price of our Class A Common Shares on Nasdaq on the date of repurchase. The aggregate value of 7,383 Class A Common Shares repurchased during the nine months ended June 30, 2023 was $179, 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.

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The RMR Group Inc.

Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

(dollars in thousands, except per share amounts)

Distributions

During the nine months ended June 30, 2023 and 2022, we declared and paid dividends on our Class A Common Shares and Class B-1 common stock, or Class B-1 Common Shares, as follows:

Declaration						Record						Paid						Distributions						Total
Date						Date						Date						Per Common Share						Distributions
Nine Months Ended June 30, 2023
10/13/2022						10/24/2022						11/17/2022						$	0.40					$	6,642
1/12/2023						1/23/2023						2/16/2023						0.40						6,641
4/13/2023						4/24/2023						5/18/2023						0.40						6,648
																		$	1.20					$	19,931
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

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, 2023
10/13/2022						10/24/2022						11/17/2022						$	0.32					$	10,114					$	5,314					$	4,800
1/12/2023						1/23/2023						2/16/2023						0.32						10,113						5,313						4,800
4/13/2023						4/24/2023						5/18/2023						0.32						10,118						5,318						4,800
																		$	0.96					$	30,345					$	15,945					$	14,400
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

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

On July 13, 2023, 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 24, 2023, in the amount of $0.40 per Class A Common Share and Class B-1 Common Share, or $6,645. 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 $10,116, of which $5,316 will be distributed to us based on our aggregate ownership of 16,613,279 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 17, 2023.

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 stock of RMR Inc., or Class B-2 Common Shares, which are paired with ABP Trust’s Class A Units, have

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The RMR Group Inc.

Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

(dollars in thousands, except per share amounts)

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 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 assumed 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 months ended June 30, 2022 and the nine months ended June 30, 2023 and 2022, the assumed redemption is dilutive to earnings per share. For the three months ended June 30, 2023, such redemption is not reflected in diluted earnings per share as the assumed redemption would be anti-dilutive.

The calculation of basic and diluted earnings per share for the three and nine months ended June 30, 2023 and 2022, is as follows:

						Three Months Ended June 30,												Nine Months Ended June 30,
						2023						2022						2023						2022
Numerators:
Net income attributable to The RMR Group Inc.						$	24,641					$	7,570					$	49,451					$	22,004
Less: income attributable to unvested participating securities						(273)						(72)						(580)						(213)
Net income attributable to The RMR Group Inc. used in calculating basic EPS						24,368						7,498						48,871						21,791
Effect of dilutive securities:
Add back: income attributable to unvested participating securities						—						72						580						213
Add back: net income attributable to noncontrolling interest						—						9,695						61,262						28,142
Add back: income tax expense						—						2,943						18,581						8,448
Less: income tax expense assuming redemption of noncontrolling interest’s Class A Units for Class A Common Shares (1)						—						(5,851)						(35,932)						(16,833)
Net income used in calculating diluted EPS						$	24,368					$	14,357					$	93,362					$	41,761
Denominators:
Common shares outstanding						16,614						16,501						16,614						16,501
Less: unvested participating securities and incremental impact of weighted average						(179)						(158)						(198)						(169)
Weighted average common shares outstanding - basic						16,435						16,343						16,416						16,332
Effect of dilutive securities:
Add: assumed redemption of noncontrolling interest’s Class A Units for Class A Common Shares						—						15,000						15,000						15,000
Add: incremental unvested shares						—						10						15						10
Weighted average common shares outstanding - diluted						16,435						31,353						31,431						31,342
Net income attributable to The RMR Group Inc. per common share - basic						$	1.48					$	0.46					$	2.98					$	1.33
Net income attributable to The RMR Group Inc. per common share - diluted						$	1.48					$	0.46					$	2.97					$	1.33

(1)Income tax expense assumes the hypothetical conversion of the noncontrolling interest, which results in estimated tax rates of 29.0% for the three months ended June 30, 2022, and 27.8% and 28.7% for the nine months ended June 30, 2023 and 2022, 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, 2023 and 2022, is calculated as follows:

						Three Months Ended June 30,												Nine Months Ended June 30,
						2023						2022						2023						2022
Income before income tax expense						$	64,385					$	20,208					$	129,294					$	58,594
RMR Inc. franchise tax expense and interest income						(110)						149						(255)						485
Net income before noncontrolling interest						64,275						20,357						129,039						59,079
Net income attributable to noncontrolling interest						(30,530)						(9,695)						(61,262)						(28,142)
Net income attributable to RMR Inc. before income tax expense						33,745						10,662						67,777						30,937
Income tax expense attributable to RMR Inc.						(9,214)						(2,943)						(18,581)						(8,448)
RMR Inc. franchise tax expense and interest income						110						(149)						255						(485)
Net income attributable to RMR Inc.						$	24,641					$	7,570					$	49,451					$	22,004

Note 10. Subsequent Events

On July 29, 2023, RMR LLC entered into an equity purchase agreement, or the Purchase Agreement, with MPC Partnership Holdings LLC, a Georgia limited liability company, or MPC. MPC, which does business as CARROLL, is a vertically-integrated platform focused on investing in multifamily properties in the Sun Belt region of the United States.

Pursuant to the Purchase Agreement, and upon the terms and subject to the conditions thereof, RMR LLC will acquire all of the issued and outstanding equity interests of MPC for $80,000 in cash, subject to customary adjustments for cash, debt, transaction expenses, working capital, and property management revenue at closing, plus up to an additional $20,000 of contingent consideration subject to the deployment of capital remaining in investment funds managed by MPC prior to the end of such fund’s investment period.

Consummation of the acquisition is subject to customary conditions, including, among others, (i) MPC obtaining all required consents with respect to managed funds, joint-venture investors and applicable lenders with respect to its managed properties, (ii) MPC’s revenues from its property management agreements at the time the acquisition is consummated being not less than 85% of an agreed upon baseline property management revenue and (iii) the absence of any Material Adverse Effect (as defined in the Purchase Agreement).

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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 2022 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, 2023, RMR LLC managed over 2,000 properties in 46 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 Equity REITs, our private capital clients and SEVN so as to maintain, grow and increase the value of their businesses, to assist AlerisLife and Sonesta to grow their businesses and operate profitably, and to successfully expand our business through the execution of new business ventures and additional investments. Our business and the businesses of our clients generally follow the business cycle of the U.S. real estate industry, but with certain property type and regional geographic variations. Typically, as the general U.S. economy expands, commercial real estate occupancies increase and new real estate development occurs; new development frequently leads to increased real estate supply and reduced occupancies; and then the cycle repeats. These general trends can be impacted by property type characteristics or regional factors; for example, demographic factors such as the aging U.S. population, the growth of e-commerce retail sales or net population migration across different geographic regions can slow, accelerate, overwhelm or otherwise impact general cyclical trends. Because of such multiple factors, we believe it is often possible to grow real estate based businesses in selected property types or geographic areas despite general national trends.

Beyond general real estate industry trends, we also take into account general economic factors impacting our clients. More specifically, in the U.S., the Federal Reserve has increased the federal funds rate several times since the beginning of calendar 2022 in an attempt to slow inflation, contributing to macroeconomic uncertainty and market volatility in the U.S. and in the commercial real estate markets. Increased borrowing costs and concerns of a possible or pending economic recession have resulted in an overall decline in commercial real estate transactions. Additionally, concerns about the capital adequacy and liquidity of the banking sector caused by the bank failures in 2023, may result in decreased lending activity from traditional sources such as banks and life insurance companies and may negatively impact the businesses of our clients and our clients' tenants. Rising or sustained high interest rates 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 Federal Reserve is looking to slow inflation, its efforts may not be successful or fully achieve targeted results and they may take longer to achieve. The impact of rising costs, both for goods and human capital, are impacting us and our clients and we and our clients are continuing to implement mitigation strategies to minimize the impact of increased costs on our and our clients’ earnings, where possible.

When providing services to our clients, we consider industry and general economic factors 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; and (iii) 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. More recently, (i) on March 20, 2023, a subsidiary of ABP Trust completed its acquisition of AlerisLife; (ii) on April 11, 2023, OPI and DHC entered into an agreement to merge in an all-share transaction, to create a diversified REIT with a broad portfolio, defensive tenant base and strong growth potential; and (iii) on May 15, 2023, BP acquired all of the outstanding shares of TA common stock for $86.00 per share in cash, representing a total equity value of approximately $1.3 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

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each REIT’s properties and (ii) each REIT’s average market capitalization. The property management fees we earn from the Managed Equity REITs are principally based on a percentage of the gross rents collected at certain managed properties owned by the Managed Equity REITs, excluding rents or other revenues from hotels, travel centers, senior living properties and wellness centers, which are separately managed by AlerisLife, Sonesta or a third party. Also under the terms of the property management agreements, we receive construction supervision fees in connection with certain construction activities undertaken at the properties owned by the Managed Equity REITs based on a percentage of the cost of such construction. 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.

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, 2023 and 2022, as applicable:

												Lesser of Historical Cost of Assets
												Under Management or
												Total Market Capitalization as of
												June 30,
REIT						Primary Strategy						2023						2022
DHC						Medical office and life science properties, senior living communities and wellness centers						$	3,353,922					$	3,541,918
ILPT						Industrial and logistics properties						4,551,558						5,372,641
OPI						Office properties primarily leased to single tenants, including the government						2,934,248						3,481,695
SVC						Hotels and net lease service and necessity-based retail properties						7,247,604						7,363,672
												$	18,087,332					$	19,759,926

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, 2023 and 2022 may differ from the basis at the end of the periods presented in the table above. As of June 30, 2023, the market capitalization was lower than the historical cost of assets under management for each of the Managed Equity REITs; the historical cost of assets under management for DHC, ILPT, OPI and SVC as of June 30, 2023, were $7,524,910, $5,706,718, $5,980,075 and $11,230,781, respectively.

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The fee revenues we earned from the Managed Equity REITs for the three and nine months ended June 30, 2023 and 2022 are set forth in the following tables:

						Three Months Ended June 30, 2023																								Three Months Ended June 30, 2022
						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						$	3,467											$	1,504					$	684					$	5,655					$	4,659											$	1,282					$	1,267					$	7,208
ILPT						5,744												3,132						237						9,113						7,031												2,404						368						9,803
OPI						3,363												3,572						2,428						9,363						4,270												3,894						2,476						10,640
SVC						8,463												936						909						10,308						9,486												1,013						222						10,721
						$	21,037											$	9,144					$	4,258					$	34,439					$	25,446											$	8,593					$	4,333					$	38,372

						Nine Months Ended June 30, 2023																								Nine Months Ended June 30, 2022
						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						$	10,546											$	4,486					$	2,561					$	17,593					$	15,491											$	5,016					$	3,230					$	23,737
ILPT						17,437												9,395						545						27,377						14,272												6,761						512						21,545
OPI						10,722												10,513						8,213						29,448						13,331												12,100						6,291						31,722
SVC						25,189												2,871						1,986						30,046						29,991												3,024						1,098						34,113
						$	63,894											$	27,265					$	13,305					$	104,464					$	73,085											$	26,901					$	11,131					$	111,117

Other Clients

We provide business management services to AlerisLife, Sonesta and until May 15, 2023, TA. AlerisLife 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 AlerisLife, Sonesta and until May 15, 2023, TA, are based on a percentage of certain revenues. In connection with BP’s acquisition of TA on May 15, 2023, TA terminated its business management agreement with us and in accordance with its terms paid us the applicable termination fee of $45,282.

In addition, we also provide management services to certain Private Capital clients that earn fees based on a percentage of average invested capital, as defined in the applicable agreements, property management fees based on a percentage of rents collected from managed properties and construction supervision fees based on a percentage of the cost of construction activities.

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Our management fee revenues from services to these clients for the three and nine months ended June 30, 2023 and 2022, are set forth in the following tables and exclude termination fee revenue earned from TA of $45,282 for the three and nine months ended June 30, 2023:

						Three Months Ended June 30, 2023																								Three Months Ended June 30, 2022
						Base						Base																		Base						Base
						Business						Property						Construction												Business						Property						Construction
						Management						Management						Supervision												Management						Management						Supervision
						Revenues						Revenues						Revenues						Total						Revenues						Revenues						Revenues						Total
AlerisLife						$	1,381					$	—					$	—					$	1,381					$	1,239					$	—					$	—					$	1,239
Sonesta						2,796						—						—						2,796						2,491						—						—						2,491
Other private entities						3,001						2,087						160						5,248						2,936						2,031						263						5,230
TA						1,956						—						—						1,956						4,441						—						—						4,441
						$	9,134					$	2,087					$	160					$	11,381					$	11,107					$	2,031					$	263					$	13,401

						Nine Months Ended June 30, 2023																								Nine Months Ended June 30, 2022
						Base						Base																		Base						Base
						Business						Property						Construction												Business						Property						Construction
						Management						Management						Supervision												Management						Management						Supervision
						Revenues						Revenues						Revenues						Total						Revenues						Revenues						Revenues						Total
AlerisLife						$	4,014					$	—					$	—					$	4,014					$	3,610					$	—					$	—					$	3,610
Sonesta						6,939						—						15						6,954						6,092						—						—						6,092
Other private entities						8,989						6,285						800						16,074						7,095						4,863						492						12,450
TA						9,932						—						—						9,932						11,499						—						—						11,499
						$	29,874					$	6,285					$	815					$	36,974					$	28,296					$	4,863					$	492					$	33,651

Advisory Business

Tremont provides advisory services to SEVN, a publicly traded mortgage REIT that focuses on originating and investing in first mortgage loans secured by middle market and transitional commercial real estate. Tremont is primarily compensated pursuant to its management agreement with SEVN based on a percentage of equity, as defined in the applicable agreement.

Tremont earned advisory services revenue of $1,141 and $1,137 for the three months ended June 30, 2023 and 2022, respectively, and $3,371 and $3,392 for the nine months ended June 30, 2023 and 2022, respectively. Tremont also earned incentive fees from SEVN of $192 for the three and nine months ended June 30, 2023. Tremont did not earn incentive fees from SEVN for the three or nine months ended June 30, 2022.

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 $52 and $46 for the three months ended June 30, 2023 and 2022, respectively, and $52 and $99 for the nine months ended June 30, 2023 and 2022, 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, 2023, Compared to the Three Months Ended June 30, 2022

The following table presents the changes in our operating results for the three months ended June 30, 2023 compared to the three months ended June 30, 2022:

						Three Months Ended June 30,
						2023						2022						$ Change						% Change
Revenues:
Management services						$	45,872					$	51,819					$	(5,947)					(11.5)%
Termination and incentive business management fees						45,474						—						45,474						n/m
Advisory services						1,141						1,137						4						0.4%
Total management and advisory services revenues						92,487						52,956						39,531						74.6%
Reimbursable compensation and benefits						15,235						14,189						1,046						7.4%
Reimbursable equity based compensation						1,622						(69)						1,691						n/m
Other reimbursable expenses						170,881						144,012						26,869						18.7%
Total reimbursable costs						187,738						158,132						29,606						18.7%
Total revenues						280,225						211,088						69,137						32.8%
Expenses:
Compensation and benefits						34,239						32,170						2,069						6.4%
Equity based compensation						2,100						512						1,588						n/m
Separation costs						1,064						400						664						166.0%
Total compensation and benefits expense						37,403						33,082						4,321						13.1%
General and administrative						9,575						8,323						1,252						15.0%
Other reimbursable expenses						170,881						144,012						26,869						18.7%
Transaction and acquisition related costs						1,196						—						1,196						n/m
Depreciation and amortization						281						253						28						11.1%
Total expenses						219,336						185,670						33,666						18.1%
Operating income						60,889						25,418						35,471						139.6%
Interest income						2,833						279						2,554						n/m
Gain (loss) on equity method investments accounted for under the fair value option						663						(5,489)						6,152						112.1%
Income before income tax expense						64,385						20,208						44,177						218.6%
Income tax expense						(9,214)						(2,943)						(6,271)						(213.1)%
Net income						55,171						17,265						37,906						219.6%
Net income attributable to noncontrolling interest						(30,530)						(9,695)						(20,835)						(214.9)%
Net income attributable to The RMR Group Inc.						$	24,641					$	7,570					$	17,071					225.5%

n/m - not meaningful

Management services revenue. Management services revenue decreased $5,947 primarily due to (i) declines in management fees earned from TA of $2,485 as a result of the termination of its business management agreement with us on May 15, 2023, and (ii) declines in base business management fees earned from the Managed Equity REITs of $4,409 in aggregate, due to declines in the enterprise values of these clients during the 2023 fiscal period.

Termination and incentive business management fees revenue. Termination and incentive business management fees for the 2023 fiscal period include a termination fee of $45,282 received from TA and an incentive fee of $192 earned by Tremont from SEVN. For further information about these fees, see Note 2, Revenue Recognition, and 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.

Advisory services revenue. Advisory services revenue was relatively unchanged from the prior period.

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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 paid by tenants of our clients. Reimbursable compensation and benefits increased $1,046 primarily due to annual merit increases that were effective October 1, 2022.

Reimbursable equity based compensation. Reimbursable equity based compensation includes awards of common shares by our clients directly to certain of our officers and employees in connection with the provision of management services to those clients. We record an equal, offsetting amount as equity based compensation expense for the value of these awards. Reimbursable equity based compensation revenue increased $1,691 primarily as a result of our clients’ annual employee share awards and increases in certain of 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 $2,069 primarily due to annual merit increases that were effective October 1, 2022.

Equity based compensation. Equity based compensation consists of the value of vested shares awarded to certain of our employees under our and our clients’ equity compensation plans. Equity based compensation increased $1,588 primarily as a result of annual employee share awards and increases in certain of our clients’ respective share prices.

Separation costs. Separation costs consist of employment termination 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 $1,252 primarily due to strategic technology investments, increases in professional fees and increases in third party costs related to our expanded role in construction oversight.

Transaction and acquisition related costs. Transaction and acquisition related costs in the 2023 fiscal period represent costs associated with our evaluation of various strategic initiatives, including the CARROLL transaction.

Depreciation and amortization. Depreciation and amortization was relatively unchanged from the prior period.

Interest income. Interest income increased $2,554 primarily due to higher interest earned during the 2023 fiscal period primarily as a result of higher interest rates and higher average cash balances invested compared to the prior period.

Gain (loss) on equity method investments accounted for under the fair value option. Gain (loss) on equity method investments accounted for under the fair value option represents the unrealized and realized gains or losses 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 increase in income tax expense of $6,271 is primarily attributable to higher taxable income for the 2023 fiscal period compared to the same period in the prior fiscal year.

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Nine Months Ended June 30, 2023, Compared to the Nine Months Ended June 30, 2022

The following table presents the changes in our operating results for the nine months ended June 30, 2023 compared to the nine months ended June 30, 2022:

						Nine Months Ended June 30,
						2023						2022						$ Change						% Change
Revenues:
Management services						$	141,490					$	144,867					$	(3,377)					(2.3)%
Termination and incentive business management fees						45,474						—						45,474						n/m
Advisory services						3,371						3,392						(21)						(0.6)%
Total management and advisory services revenues						190,335						148,259						42,076						28.4%
Reimbursable compensation and benefits						44,441						42,092						2,349						5.6%
Reimbursable equity based compensation						7,143						2,896						4,247						146.7%
Other reimbursable expenses						497,465						397,063						100,402						25.3%
Total reimbursable costs						549,049						442,051						106,998						24.2%
Total revenues						739,384						590,310						149,074						25.3%
Expenses:
Compensation and benefits						102,039						95,671						6,368						6.7%
Equity based compensation						8,719						4,719						4,000						84.8%
Separation costs						2,002						617						1,385						n/m
Total compensation and benefits expense						112,760						101,007						11,753						11.6%
General and administrative						28,198						24,464						3,734						15.3%
Other reimbursable expenses						497,465						397,063						100,402						25.3%
Transaction and acquisition related costs						1,196						—						1,196						n/m
Depreciation and amortization						821						731						90						12.3%
Total expenses						640,440						523,265						117,175						22.4%
Operating income						98,944						67,045						31,899						47.6%
Interest income						6,837						402						6,435						n/m
Gain (loss) on equity method investments accounted for under the fair value option						23,513						(8,853)						32,366						n/m
Income before income tax expense						129,294						58,594						70,700						120.7%
Income tax expense						(18,581)						(8,448)						(10,133)						(119.9)%
Net income						110,713						50,146						60,567						120.8%
Net income attributable to noncontrolling interest						(61,262)						(28,142)						(33,120)						(117.7)%
Net income attributable to The RMR Group Inc.						$	49,451					$	22,004					$	27,447					124.7%

n/m - not meaningful

Management services revenue. Management services revenue decreased $3,377 primarily due to (i) a decline in base business management fees earned from DHC, OPI and SVC of $12,356 in aggregate, due to declines in the enterprise values of these respective clients during the 2023 fiscal period, and (ii) declines in management fees earned from TA of $1,567 as a result of the termination of its business management agreement with us on May 15, 2023, partially offset by (i) growth in base business management fees of $3,165 and property management fees of $2,667 earned from ILPT, primarily due to its acquisition of MNR in February 2022, and (ii) increases in construction supervision fees across all of our clients aggregating $2,497 primarily due to increased development activity.

Termination and incentive business management fees revenue. Termination and incentive business management fees for the 2023 fiscal period include a termination fee of $45,282 received from TA and an incentive fee of $192 earned by Tremont from SEVN. For further information about these fees, see Note 2, Revenue Recognition, and 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.

Advisory services revenue. Advisory services revenue was relatively unchanged from the prior period.

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Reimbursable compensation and benefits. Reimbursable compensation and benefits increased $2,349 primarily due to annual merit increases that were effective October 1, 2022.

Reimbursable equity based compensation. Reimbursable equity based compensation increased $4,247 primarily as a result of our clients’ annual employee share awards and increases in certain of 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 expense increased $6,368 primarily due to annual merit and benefit increases.

Equity based compensation. Equity based compensation increased $4,000 primarily as a result of annual employee share awards and increases in certain of 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 costs increased $3,734 primarily due to strategic technology investments, costs incurred to reimburse a client for an administrative real estate tax matter and increases in third party costs related to our expanded role in construction oversight.

Transaction and acquisition related costs. Transaction and acquisition related costs in the 2023 fiscal period represent costs associated with our evaluation of various strategic initiatives, including the CARROLL transaction.

Depreciation and amortization. Depreciation and amortization was relatively unchanged from the prior period.

Interest income. Interest income increased $6,435 primarily due to higher interest earned during the 2023 fiscal period primarily as a result of higher interest rates and higher average cash balances invested compared to the prior period.

Gain (loss) on equity method investments accounted for under the fair value option. Gain (loss) on equity method investments accounted for under the fair value option represents the unrealized and realized gains or losses 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 increase in income tax expense of $10,133 is primarily attributable to higher taxable income for the 2023 fiscal period compared to the same period in the prior fiscal year.

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, 2023 and September 30, 2022, we had cash and cash equivalents of $295,423 and $189,088, respectively, of which $25,897 and $21,492, 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, 2023 and September 30, 2022, $292,834 and $181,219, respectively, of our cash and cash equivalents were invested in money market bank accounts. We believe that our cash and cash equivalents leave us well positioned to pursue a range of capital allocation strategies, with a focus on the growth of our private capital business, to fund our operations and enhance our technology infrastructure, 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 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.

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On July 29, 2023, RMR LLC entered into a definitive agreement to acquire 100% of the equity interest in CARROLL for $80,000, subject to customary purchase price adjustments, with the potential for incremental earnout consideration of up to $20,000 based on the deployment of future capital. The transaction is expected to be funded entirely with cash on hand. The closing of the acquisition is subject to customary closing conditions; accordingly, we cannot be sure that this acquisition will close on the contemplated terms or at all or it may be delayed.

During the nine months ended June 30, 2023, 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 $34,331. On July 13, 2023, 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 24, 2023 in the amount of $0.40 per Class A Common Share and Class B-1 Common Share, or $6,645. 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 $10,116, of which $5,316 will be distributed to us based on our aggregate ownership of 16,613,279 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 $11,445 and we expect to pay this dividend on or about August 17, 2023. 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, 2023, pursuant to the RMR LLC operating agreement, RMR LLC made required quarterly tax distributions to its holders of its membership units totaling $48,857, of which $25,758 was distributed to us and $23,099 was distributed to ABP Trust, based on each membership unit holder’s then respective ownership percentage in RMR LLC. The $25,758 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 $23,099 distributed to ABP Trust was recorded as a reduction of its 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

The $23,836 increase in net cash from operating activities for the nine months ended June 30, 2023 compared to the prior period primarily reflects increases in net income, primarily due to increases in termination fees, offset by unfavorable changes in working capital. The $60,636 increase in net cash provided by investing activities for the nine months ended June 30, 2023 compared to the prior period was primarily due to the proceeds received from the sale of TA’s common shares in the 2023 fiscal period, offset by purchases of property and equipment largely associated with our strategic technology investments in the 2023 fiscal period and the purchase of SEVN common shares in the prior period. Net cash used in financing activities for the nine months ended June 30, 2023 increased $14,238 from the prior period primarily due to higher tax distributions based on current estimates for taxable income in this fiscal year and increased distributions paid to shareholders of our Class A Common Shares and Class B-1 Common Shares in the 2023 fiscal period.

As of June 30, 2023, 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, 2023, our condensed consolidated balance sheet reflects a liability related to the tax receivable agreement of $25,583, of which we expect to pay $2,275 to ABP Trust during the fourth quarter of fiscal year 2023. 

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

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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 2022 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 bank accounts. 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 2022 Annual Report, our definitive Proxy Statement for our 2023 Annual Meeting of Shareholders and our other filings with the SEC. In addition, see the section captioned “Risk Factors” in our 2022 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 2022 Annual Report. There have been no significant changes in our critical accounting estimates since the fiscal year ended September 30, 2022.

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, 2023 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 that are subject to risks and uncertainties. These statements may include words such as “believe”, “expect”, “anticipate”, “intend”, “plan”, “estimate”, “will”, “may” and negatives or derivatives of these or similar expressions. These forward-looking statements include, among others, statements about: the CARROLL acquisition; the DHC-OPI Merger and our expected management arrangements with the combined entity; economic and industry conditions; the impact and opportunities for our and our clients’ businesses from business cycles in the U.S. real estate industry as well as economic and industry conditions; our belief that it is possible to grow real estate based businesses in selected property types or geographic areas despite general national trends; and the sufficiency of our cash and cash equivalents to pursue a range of capital allocation strategies and fund our operations and enhance our technology infrastructure.

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Forward-looking statements reflect our current expectations, are based on judgments and assumptions, are inherently uncertain and are subject to risks, uncertainties and other factors, which could cause our actual results, performance or achievements to differ materially from expected future results, performance or achievements expressed or implied in those forward-looking statements. Some of the risks, uncertainties and other factors that may cause actual results, performance or achievements to differ materially from those expressed or implied by forward-looking statements include, but are not limited to, the following:

•The dependence of our revenues on a limited number of clients,

•The variability of our revenues,

•Risks related to supply chain constraints, commodity pricing and inflation, including inflation impacting wages and employee benefits,

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

•Potential terminations of the management agreements with our clients,

•Increases in or sustained high market interest rates, which may significantly reduce our revenues or impede our growth,

•Our dependence on the growth and performance of our clients,

•Our ability to obtain or create new clients for our business and other circumstances beyond our control,

•The ability of our clients to operate their businesses profitably, optimize their capital structures and to grow and increase their market capitalizations and total shareholder returns,

•Our ability to successfully provide management services to our clients,

•Our ability to maintain or increase the distributions we pay to our shareholders,

•Our ability to successfully pursue and execute capital allocation strategies,

•Our ability to prudently invest in our business to enhance our operations, services and competitive positioning,

•Our ability to complete the CARROLL transaction considering the various closing conditions, and our ability to successfully integrate the business if the transaction is completed,

•Changes to our operating leverage or client diversity,

•Litigation risks,

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

•Conditions to the completion of the OPI-DHC merger transaction that may result in that transaction not being completed or being delayed,

•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,

•Our and our clients’ risks associated with our and our clients' costs of compliance with laws and regulations, including securities regulations, exchange listing standards and other laws and regulations affecting public companies, and

•Other matters.

These risks, uncertainties and other factors are not exhaustive and should be read in conjunction with other cautionary statements that are included in our periodic filings. The information contained in our filings with the SEC, including under the caption “Risk Factors” in our periodic reports, or incorporated therein, identifies important factors that could cause differences

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from the forward-looking statements in this Quarterly Report on Form 10-Q. Our filings with the SEC are available on the SEC’s website at www.sec.gov.

You should not place undue reliance upon our forward-looking statements.

Except as required by law, we do not intend to update or change any forward-looking statements as a result of new information, future events or otherwise.

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 2022 Annual Report.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer purchases of equity securities.

The following table provides information about our purchases of our equity securities during the quarter ended June 30, 2023:

Maximum

Total Number of

Approximate Dollar

Shares Purchased

Value of Shares that

Number of

Average

as Part of Publicly

May Yet Be Purchased

Shares

Price Paid

Announced Plans

Under the Plans or

Calendar Month

Purchased (1)

per Share

or Programs

Programs

May 1 - May 31, 2023

2,785

$

21.46

N/A

N/A

June 1 - June 30, 2023

1,707

23.76

N/A

N/A

Total

4,492

$

22.33

N/A

N/A

(1)These Class A Common Share withholdings and purchases were made to satisfy tax withholding and payment obligations in connection with the vesting of awards of our Class A Common Shares. We withheld and purchased these shares at their fair market values based upon the trading prices of our Class A Common Shares at the close of trading on Nasdaq on the purchase dates.

Item 6. Exhibits

Exhibit Number						Description
2.1						Equity Purchase Agreement, dated as of July 29, 2023, by and among The RMR Group LLC, MPC Partnership Holdings LLC, the Sellers set forth on the signature pages thereto, the Seller Owners set forth on the signature pages thereto, and James A. Rubright, solely in his capacity as the Seller Representative (Schedules to the Equity Purchase Agreement have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Registrant agrees to furnish supplementally a copy of all omitted schedules to the SEC upon its request). (7)
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						Articles of Amendment, filed November 14, 2022. (3)
3.6						Fourth Amended and Restated Bylaws of the Registrant adopted September 13, 2017. (4)
4.1						Form of The RMR Group Inc. Share Certificate for Class A Common Stock. (5)
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						Letter Agreement, dated April 11, 2023, by and among The RMR Group LLC, Diversified Healthcare Trust and Office Properties Income Trust, regarding Second Amended and Restated Business Management Agreement and Third Amended and Restated Property Management Agreement between The RMR Group LLC and Diversified Healthcare Trust. (6)

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10.2						Third Amended and Restated Property Management Agreement, dated as of April 11, 2023, by and between The RMR Group LLC and Office Properties Income Trust. (6)
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.)
99.1						Letter Agreement, dated as of May 1, 2023, between The RMR Group LLC and Service Properties Trust. (Filed herewith.)
99.2						Letter Agreement, dated as of May 25, 2023, between The RMR Group LLC and Office Properties Income Trust (Filed herewith.)
99.3						Property Management Agreement, dated as of July 8, 2023, between The RMR Group LLC and Floral Vale LLC, a subsidiary of Seven Hills Realty Trust. (Filed 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 SEC 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 SEC on March 11, 2016.
(3)						Incorporated by reference to the Registrant’s Annual Report on Form 10-K (File No. 001-37616) filed with the SEC on November 14, 2022.
(4)						Incorporated by reference to the Registrant’s Current Report on Form 8-K (File No. 001-37616) filed with the SEC on September 15, 2017.
(5)						Incorporated by reference to the Registrant’s Amendment No. 1 to Registration Statement on Form S-1 (File No. 333-207423) filed with the SEC on November 2, 2015.
(6)						Incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q (File No. 001-37616) filed with the SEC on May 3, 2023.
(7)						Incorporated by reference to the Registrant’s Current Report on Form 8-K (File No. 001-37616) filed with the SEC on July 31, 2023.

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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 9, 2023

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