UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.  20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): June  13 , 2019

 

The RMR Group Inc.

(Exact name of registrant as specified in its charter)

 

MARYLAND

 

8742

 

47-4122583

(State or other jurisdiction
of incorporation)

 

(Primary Standard Industrial
Classification Code Number)

 

(IRS Employer
Identification Number)

 

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

(Address of principal executive offices, including zip code)

 

(617) 796-8230

(Registrant’s telephone number, including area code)

 

Not Applicable

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

o             Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

o             Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

o             Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

o             Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

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

 

Title of each class

 

Trading Symbol(s)

 

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 is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

x           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 new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  x

 

 

 

 

In this Current Report on Form 8-K, the term “the Company”, “our” or “we” refer to The RMR Group Inc.

 

Item 1.01.     Entry into a Material Definitive Agreement.

 

On June 13, 2019, The RMR Group LLC (“RMR LLC” or the “Tenant”), our majority owned operating subsidiary, and ABP Borrower Inc., a subsidiary of ABP Trust (the “Landlord”), entered into a third amendment (the “Third Amendment”) to the lease between the Tenant and the Landlord dated June 1, 2015, as amended, with respect to our headquarters office space located at 255 Washington Street, Newton, Massachusetts. Among other things, the Third Amendment extended the term of the lease by five years to May 31, 2030. In addition, effective as of September 1, 2018, the Third Amendment expanded the leased space by 13,625 rentable square feet and, effective January 1, 2019, increased the rent payable under the lease pursuant to the schedule set forth under part 4 of the Third Amendment.

 

The foregoing description of the Third Amendment does not purport to be complete and is subject to, and qualified in its entirety by reference to, the full terms of the Third Amendment, a copy of which is attached as Exhibit 10.1 to this Current Report.

 

Information Regarding Certain Relationships and Related Person Transactions

 

We have relationships and historical and continuing transactions with ABP Trust and others related to it. For example: ABP Trust is our controlling shareholder and also holds membership units of RMR LLC; Adam D. Portnoy, one of our Managing Directors, is the sole trustee and owns all of the voting securities of ABP Trust; we are a party to a tax receivable agreement with ABP Trust; and Adam D. Portnoy and Jennifer B. Clark, our other Managing Director, are also officers of ABP Trust and the Company and are officers and employees of RMR LLC.

 

For further information about these and other such relationships and related person transactions, please see our Annual Report on Form 10-K for the year ended September 31, 2018 (the “Annual Report”), our Quarterly Reports for the quarters ended December 31, 2018 and March 31, 2019 (the “Quarterly Reports”), our definitive Proxy Statement for our 2019 Annual Meeting of Shareholders (the “Proxy Statement”), and our other filings with the Securities and Exchange Commission (the “SEC”), including Note 6 to our consolidated financial statements included in our Annual Report, Note 7 to our condensed consolidated financial statements included in our Quarterly Reports, the section captioned “Business” in our Annual Report, the sections captioned “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Related Person Transactions” and “Warning Concerning Forward Looking Statements” in our Annual Report and Quarterly Reports and the section captioned “Related Person Transactions” and the information regarding our Directors and executive officers included in our Proxy Statement. In addition, please see the section captioned “Risk Factors” of our Annual Report and our Quarterly Report for the quarter ended March 31, 2019 for a description of risks that may arise as a result of these and other such relationships and related person transactions. Our filings with the SEC and copies of certain of our agreements with these related parties are publicly available as exhibits to our public filings with the SEC and accessible at the SEC’s website,  www.sec.gov .

 

Item 9.01.  Financial Statements and Exhibits

 

(d)                                  Exhibits

 

10.1                         Third Amendment to Lease, by and between the Registrant and ABP Trust, dated as of June 13, 2019.

 

 

SIGNATURE

 

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 hereunto duly authorized.

 

 

THE RMR GROUP INC.

 

 

 

Date: June 14, 2019

By:

/s/ Matthew P. Jordan

 

 

Matthew P. Jordan

 

 

Executive Vice President,
Chief Financial Officer and Treasurer

 

Exhibit 10.1

 

THIRD AMENDMENT TO LEASE

 

This is a Third Amendment to Lease by and between ABP Borrower Inc., a Maryland corporation (“ Landlord ”) and The RMR Group LLC, a Maryland limited liability company (“ Tenant ”).

 

WHEREAS, Landlord’s and Tenant’s predecessors in interest, entered into a Lease dated June 1, 2015, as amended by First Amendment to Lease dated as of January 1, 2016 and letter agreement dated May 11, 2017, and further amended by Second Amendment to Lease between Landlord and Tenant dated as of July 19, 2018 (as so amended, the “ Lease ”) with respect to premises located at 255 Washington Street, Newton, Massachusetts; and

 

WHEREAS, Tenant desired to expand the premises demised by the Lease by adding thereto, as of September 1, 2018, the premises described on Exhibit 1 (but excluding furniture shown thereon) attached hereto (the “ 2018 Expansion Space ”); and

 

WHEREAS, Landlord and Tenant desire to extend the term of the Lease for five (5) years, so that it shall expire on May 31, 2030.

 

NOW, THEREFORE, Landlord and Tenant agree that the Lease shall be amended as follows.

 

1.                                       Capitalized Terms .  Capitalized terms used herein without definition shall have the meanings ascribed to them by the Lease.

 

2.                                       Premises .  Effective retroactively as of September 1, 2018, (x) the “Premises” as defined in Section 1.1 of the Lease were expanded to include the 2018 Expansion Space and (y) “Premises Rentable Area” as defined in Section 1.1 of the Lease increased to 84,443 square feet, including the 2018 Expansion Space.

 

3.                                       Term .  The Original Term shall be extended to expire on May 31, 2030.

 

4.                                       Annual Fixed Rent .  Despite adding the 2018 Expansion Space to the Premises as of September 1, 2018, Annual Fixed Rent shall not increase prior to January 1, 2019.  Effective retroactively as of January 1, 2019, Annual Fixed Rent shall be as follows:

 

Period

 

Annual Fixed Rent

 

Monthly Installments

 

 

 

 

 

 

 

1/1/19 – 5/31/19

 

$3,495,489.22
($3,018,964.92 + $476,525.00)

 

$291,290.83

 

 

 

 

 

 

 

6/1/19 – 8/31/19

 

$3,540,813.44
($3,064,288.44 + $476,525.00)

 

$295,067.79

 

 

 

 

 

 

 

9/1/19 – 5/31/20

 

$3,554,428.44
($3,064,288.44 + $490,140.00)

 

$296,202.37

 

 

 

Period

 

Annual Fixed Rent

 

Monthly Installments

 

6/1/20 – 8/31/20

 

$3,599,751.96
($3,109,611.96 + $490,140.00)

 

$299,979.33

 

 

 

 

 

 

 

9/1/20 – 5/31/21

 

$3,613,366.96
($3,109,611.96 + $503,755.00)

 

$301,113.91

 

 

 

 

 

 

 

6/1/21 – 8/31/21

 

$3,976,663.30
($3,472,908.30 + $503,755.00)

 

$331,388.61

 

 

 

 

 

 

 

9/1/21 – 5/31/22

 

$3,990,278.30
($3,472,908.30 + $517,370.00)

 

$332,523.19

 

 

 

 

 

 

 

6/1/22 – 8/31/22

 

$4,052,598.14
($3,535,228.14 + $517,370.00)

 

$337,716.51

 

 

 

 

 

 

 

9/1/22 – 5/31/23

 

$4,066,213.14
($3,535,228.14 + $530,985.00)

 

$338,851.10

 

 

 

 

 

 

 

6/1/23 – 8/31/23

 

$4,127,824.80
($3,596,839.80 + $530,985.00)

 

$343,985.40

 

 

 

 

 

 

 

9/1/23 – 5/31/24

 

$4,141,439.80
($3,596,839.80 + $544,600.00)

 

$345,119.98

 

 

 

 

 

 

 

6/1/24 – 8/31/24

 

$4,203,759.64
($3,659,159.64 + $544,600.00)

 

$350,313.30

 

 

 

 

 

 

 

9/1/24 – 5/31/25

 

$4,217,374.64
($3,659,159.64 + $558,215.00)

 

$351,447.89

 

 

 

 

 

 

 

6/1/25 – 8/31/25

 

$3,462,163.00

 

$288,513.58

 

 

 

 

 

 

 

9/1/25 – 8/31/26

 

$3,546,606.00

 

$295,550.50

 

 

 

 

 

 

 

9/1/26 – 8/31/27

 

$3,631,049.00

 

$302,587.42

 

 

 

 

 

 

 

9/1/27 – 8/31/28

 

$3,715,492.00

 

$309,624.33

 

 

 

 

 

 

 

9/1/28 – 8/31/29

 

$3,799,935.00

 

$316,661.26

 

 

 

 

 

 

 

9/1/29 – 5/31/30

 

$3,884,378.00

 

$323,698.17

 

 

The reference in the definition of Annual Fixed Rent to an increase pursuant to Section 3.2 of the Lease shall be deleted.

 

2

 

5.                                       Taxes and Operating Costs .  In addition to amounts due under Sections 4.2.1 and 4.2.3 of the Lease on account of Tax Excess and Operating Cost Excess, Tenant shall also pay (x) Tenant’s Additional Percentage of Taxes in excess of the New Tax Base and Tenant’s Additional Percentage of Operating Costs in excess of the New Operating Cost Base, all in the same manner as Tax Excess and Operating Cost Excess shall be paid pursuant to such Sections.  “ Tenant’s Additional Percentage ” shall be 12.46%, the “ New Tax Base ” shall be the Taxes for the 2019 calendar year as the same may be reduced by the amount of any abatement, and the “ New Operating Cost Base ” shall be the Operating Costs for the 2019 calendar year.

 

6.                                       Tenant Improvement Allowance .  Landlord shall provide Tenant an allowance to be applied toward improvements made by Tenant (collectively, “ New Work ”) in the amount of Two Million Six Hundred Fifty-Five Thousand Four Hundred and Twenty-Five Dollars ($2,655,425), which shall be made available to Tenant subject to the conditions with respect to, and in a manner consistent with, how the Refurbishment Allowance was made available to Tenant for Refurbished Work.  Tenant shall not be entitled to any further Refurbishment Allowance pursuant to Section 3.2 of the Lease.

 

7.                                       Brokerage .  Tenant warrants and represents that it engaged no broker in connection with this Third Amendment, and that no broker representing Tenant is entitled to any brokerage fee or commission as a result of this Third Amendment to Lease.

 

8.                                       Affirmation .  Except as herein amended, the Lease is ratified and affirmed.

 

IN WITNESS WHEREOF, Landlord and Tenant have executed this Third Amendment to Lease as of June 13, 2019

 

 

LANDLORD:

 

 

 

ABP Borrower, Inc.

 

 

 

 

 

By:

/s/ Ethan S. Bornstein

 

 

Ethan S. Bornstein

 

 

President

 

 

 

 

 

TENANT:

 

 

 

The RMR Group LLC

 

 

 

 

 

By:

/s/ Jennifer F. Francis

 

 

Jennifer F. Francis

 

 

Senior Vice President

 

3

 

EXHIBIT 1

 

2018 Expansion Space

 

See attached.

 

 

 

5