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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended September 30, 2019
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or
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Maryland
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47-4122583
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(State of Organization)
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(IRS Employer Identification No.)
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Title Of Each Class
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Trading Symbol
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Name Of Each Exchange On Which Registered
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Class A common stock, $0.001 par value per share
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RMR
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The Nasdaq Stock Market LLC
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(Nasdaq Capital Market)
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Large accelerated filer
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Accelerated filer
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Non-accelerated filer
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Smaller reporting company
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Emerging growth company
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substantially all our revenues are derived from services to a limited number of client companies;
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our revenues are highly variable;
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changing market conditions that may adversely impact our client companies and our business with them;
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potential terminations of our management agreements with our client companies;
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our ability to expand our business depends upon the growth and performance of our client companies and our ability to obtain or create new clients for our business and is often dependent upon circumstances beyond our control;
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the ability of our client companies to operate their businesses profitably and to grow and increase their market capitalizations and total shareholder returns;
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litigation risks;
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risks related to acquisitions, dispositions and other activities by or among our client companies, such as Service Properties Trust’s (formerly known as Hospitality Properties Trust) recent acquisition of a portfolio of net leased properties for $2.4 billion, including, among other things, whether the costs and benefits of such acquisition will be as expected;
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risks related to potential impairment of our equity investments;
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allegations, even if untrue, of any conflicts of interest arising from our management activities;
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our ability to retain the services of our managing directors and other key personnel;
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risks associated with and costs of compliance with laws and regulations, including securities regulations, exchange listing standards and other laws and regulations affecting public companies; and
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other risks described under “risk factors” beginning on page 14.
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We have a limited number of client companies. We have or had long term contracts with our Managed Equity REITs (collectively, Industrial Logistics Properties Trust, a Maryland real estate investment trust, including its subsidiaries, or ILPT; Office Properties Income Trust, a Maryland real estate investment trust, including its subsidiaries, or OPI; Select Income REIT, or SIR (until it ceased to exist on December 31, 2018); Senior Housing Properties Trust, a Maryland real estate investment trust, including its subsidiaries, or SNH; and Service Properties Trust (formerly known as Hospitality Properties Trust), a Maryland real estate investment trust, including its subsidiaries, or SVC); however, the other contracts under which we earn our revenues are for shorter terms, and the long term contracts with our Managed Equity REITs may be terminated in certain circumstances. The termination or loss of any of our management contracts may have a material adverse impact upon our revenues, profits, cash flows and business reputation;
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Our base business management fees earned from our Managed Equity REITs are calculated monthly based upon the lower of each real estate investment trust’s, or REIT’s, cost of its applicable assets and such REIT’s market capitalization. Our business management fees earned from our Managed Operators (collectively, Five Star Senior Living Inc., a Maryland corporation, including its subsidiaries, or Five Star; Sonesta International Hotels Corporation, a Maryland corporation, including its subsidiaries, or Sonesta; and TravelCenters of America Inc., a
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The fact that we earned significant incentive business management fees from certain Managed Equity REITs in the calendar years 2018, 2017 and 2016 may imply that we will earn incentive business management fees in future years. The incentive business management fees which we may earn from our Managed Equity REITs are based upon total returns realized by the REITs’ shareholders compared to the total shareholders return of certain identified indices. We have only limited control over the total returns realized by shareholders of our Managed Equity REITs and effectively no control over indexed total returns. There can be no assurance that we will earn any incentive business management fees in the future;
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We currently intend to pay a regular quarterly dividend of $0.38 per Class A common share and Class B-1 common share. Our dividends are declared and paid at the discretion of our board of directors. Our board may consider many factors when deciding whether to declare and pay dividends, including our current and projected earnings, our cash flows and alternative uses for any available cash. Our board may decide to lower or even eliminate our dividends. There can be no assurance that we will continue to pay any regular dividends or with regard to the amount of dividends we may pay;
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We have undertaken new initiatives and are considering other initiatives to grow our business and any actions we may take to grow our business may not be successful. In addition, any investments or repositioning of the properties we or our client companies may make or pursue may not increase the value of the applicable properties, offset the decline in value those properties may otherwise experience, or increase the market capitalization or total shareholder returns of our client companies; and
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We state that The RMR Group LLC’s $100.0 million commitment to the RMR Office Property Fund LP, or the Open End Fund, may be drawn in the future by the Open End Fund. The acquisition environment for office properties in the United States is competitive and the Open End Fund may not be successful in drawing and investing all, or any, of this capital.
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Page
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ILPT (Nasdaq: ILPT) primarily owns and leases industrial and logistics properties. As of September 30, 2019, ILPT owned 300 properties, including 226 buildings, leasable land parcels and easements in Oahu, Hawaii and 74 buildings located in 29 other states.
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OPI (Nasdaq: OPI) primarily owns office properties leased to single tenants and those with high quality credit characteristics, including the government. As of September 30, 2019, OPI owned 200 properties located in 36 states and the District of Columbia.
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SNH (Nasdaq: SNH) primarily owns senior living, medical office and life science properties. As of September 30, 2019, SNH owned 436 properties located in 41 states and the District of Columbia.
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SVC (Nasdaq: SVC) primarily owns a diverse portfolio of hotels and net lease service and necessity-based retail properties. As of September 30, 2019, SVC owned 1,274 properties (328 hotels and 946 net lease properties) located in 48 states, Puerto Rico, Canada and the District of Columbia.
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Five Star (Nasdaq: FVE) operates senior living communities, many of which are owned by SNH. As of September 30, 2019, Five Star operated 267 senior living communities located in 32 states, including 190 communities that it owned or leased and 77 communities that it managed.
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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 some of those U.S. hotels are owned by SVC. As of September 30, 2019, Sonesta’s business included 78 properties in seven countries.
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TA (Nasdaq: TA) operates and franchises travel centers along the U.S. Interstate Highway System, many of which are owned by SVC, and standalone truck service facilities and restaurants. As of September 30, 2019, TA’s business included operating or franchising 304 properties of which TA owns 58 (51 travel centers, six standalone restaurants and one truck service facility) located in 44 states and Canada.
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Revenue Base. Our revenues are primarily from fees earned under long term agreements with high credit quality companies, many of which are permanent capital vehicles. Our agreements with the Managed Equity REITs are 20 year term evergreen contracts with significant termination fees payable in certain circumstances. For the fiscal year ended September 30, 2019, fees earned from the Managed Equity REITs represented 90.1% of our total revenue.
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Cash Flow and Dividend. Our net income and Adjusted EBITDA for the fiscal year ended September 30, 2019 were $169.0 million and $108.4 million, respectively, and we have no debt outstanding. Our prior dividend rate of $0.35 per share per quarter ($1.40 per share per year) has been well covered by our earnings and cash flows. We recently announced an increased dividend rate of $0.38 per share per quarter ($1.52 per share per year), beginning with the quarterly dividend that we paid on November 14, 2019. This new dividend rate remains well covered by our earnings and cash flows. Adjusted EBITDA is a non U.S. generally accepted accounting principles, or GAAP, financial measure. For a definition of Adjusted EBITDA and a reconciliation of net income to Adjusted EBITDA, see footnote (3) to “Selected Financial Data” on page 31.
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Broad Real Estate Experience. We provide management services to a wide range of real estate assets and businesses that include healthcare facilities, senior living and other apartments, hotels, office buildings, industrial buildings, leased lands, net-lease service and necessity-based retail, including travel centers, and various specialized properties such as properties leased to government tenants and properties specially designed for medical and biotech research. The properties and businesses we managed as of September 30, 2019, are located throughout the United States in 48 states and Washington D.C., and in Puerto Rico and Canada.
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Growth. Since the founding of RMR LLC in 1986, we have substantially grown our real estate assets under management and the number and variety of real estate businesses we manage. As of September 30, 2019, we had $32.8 billion of assets under management, including more than 2,200 properties. The synergies among our clients may also facilitate their and our growth. We assist our clients in realizing investment opportunities by working together to make acquisitions, obtain financing, identifying possible joint venture partners, completing redevelopment activities, and facilitating capital recycling from strategic property dispositions.
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Quality and Depth of Management. Our highly qualified and experienced management team provides a broad base of deep expertise to our clients. Our senior management has worked together through several business cycles in which they acquired, financed, managed and disposed of real estate assets and started real estate businesses. As of September 30, 2019, we employed approximately 600 real estate professionals in more than 30 offices throughout the United States, and the companies we manage collectively had over $12.0 billion of annual revenues and nearly 50,000 employees. We have also assisted our clients to grow by successfully accessing the capital markets; since our founding in 1986, our clients have successfully completed over $38.0 billion of financing in over 170 capital raising transactions.
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Alignment of Interests. We believe our structure fosters strong alignment of interests between our principal executive officer and our shareholders because our principal executive officer, Adam D. Portnoy, has a 51.6% economic interest in RMR LLC. Alignment of interests also exists between us and our Managed Equity REITs due to the manner upon which we earn base management fees and incentive management fees under our Management Agreements with the Managed Equity REITs, as described in more detail below.
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provide research and economic and statistical data in connection with the Managed Equity REIT’s real estate investments and recommend changes in the Managed Equity REIT’s real estate investment policies when appropriate;
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investigate, evaluate and negotiate contracts for the investment in, or the acquisition or disposition of, real estate and related interests, financing and refinancing opportunities and make recommendations concerning specific real estate investments to the Board of Trustees of the Managed Equity REIT;
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investigate, evaluate, prosecute and negotiate any of the Managed Equity REIT’s claims in connection with its real estate investments or otherwise in connection with the conduct of the Managed Equity REIT’s business;
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administer bookkeeping and accounting functions as required for the Managed Equity REIT’s business and operation, contract for audits and prepare or cause to be prepared reports and filings required by a governmental authority in connection with the conduct of the Managed Equity REIT’s business, and otherwise advise and assist the Managed Equity REIT with its compliance with applicable legal and regulatory requirements;
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advise and assist in the preparation of all equity and debt offering documents and all registration statements, prospectuses or other documents filed by the Managed Equity REIT with the SEC or any state;
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retain counsel, consultants and other third party professionals on behalf of the Managed Equity REIT;
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provide internal audit services;
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advise and assist with the Managed Equity REIT’s risk management and business oversight function;
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advise and assist the Managed Equity REIT with respect to the Managed Equity REIT’s public relations, preparation of marketing materials, internet website and investor relations services;
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provide communication facilities for the Managed Equity REIT and its officers and trustees and provide meeting space as required;
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provide office space, equipment and experienced and qualified personnel necessary for the performance of the foregoing services; and
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to the extent not covered above, advise and assist the Managed Equity REIT in the review and negotiation of the Managed Equity REIT’s contracts and agreements, coordination and supervision of all third party legal services and oversight for processing of claims by or against the Managed Equity REIT.
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seek tenants for the Managed Equity REIT’s properties and negotiate leases;
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collect rents and other income from the Managed Equity REIT’s properties;
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make contracts for, and supervise repairs and/or alterations on, the Managed Equity REIT’s properties;
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for the Managed Equity REIT’s account and at its expense, hire, supervise and discharge employees as required for the efficient operation and maintenance of the Managed Equity REIT’s properties;
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obtain appropriate insurance for the Managed Equity REIT’s properties and notify the Managed Equity REIT’s insurance carriers with respect to casualties or injuries at the properties;
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procure supplies and other necessary materials;
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pay from rental receipts, other income derived from the Managed Equity REIT’s properties or other monies made available by the Managed Equity REIT for such purpose, all costs incurred in the operation of the Managed Equity REIT’s properties that are expenses of the Managed Equity REIT;
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establish reasonable rules and regulations for tenants of the Managed Equity REIT’s properties;
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institute or defend, on the Managed Equity REIT’s behalf and in the Managed Equity REIT’s name, any and all legal actions or proceedings relating to the operation of the Managed Equity REIT’s properties;
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maintain the books and records of the Managed Equity REIT reflecting the management and operation of the Managed Equity REIT’s properties and prepare and deliver statements of expenses for tenants of the REIT’s properties;
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aid, assist and cooperate with the Managed Equity REIT in matters relating to taxes and assessments and insurance loss adjustments;
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provide emergency services as may be required for the efficient management and operation of the Managed Equity REIT’s properties; and
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arrange for day to day operations of the Managed Equity REIT’s properties, including water, fuel, electricity, cleaning and other services.
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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 $250.0 million, plus (c) 0.5% of the average invested capital exceeding $250.0 million; and
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the sum of (a) 0.7% of the average market capitalization, as defined in the applicable business management agreement, up to $250.0 million, plus (b) 0.5% of the average market capitalization exceeding $250.0 million.
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The incentive business management fee is calculated as an amount equal to 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 measurement period, and (b) the amount, expressed as a percentage, by which the Managed Equity REIT’s total return per share realized by its common shareholders (i.e. share price appreciation plus dividends) or the “total return per share,” exceeds the total shareholder return of a specified REIT index, the “benchmark return per share,” for the relevant measurement period, with each of (a) and (b) subject to adjustments for common shares issued by the Managed Equity REIT during the measurement period.
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The specified REIT index utilized to calculate the benchmark return per share for each of our Managed Equity REITs when calculating the incentive business management fees is as follows:
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ILPT: On December 31, 2018, our business management agreement with ILPT was amended to provide that for periods beginning on and after January 1, 2019, the SNL U.S. Industrial REIT Index would be utilized. Prior to January 1, 2019, the SNL U.S. REIT Equity Index was utilized.
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OPI: On December 31, 2018, our business management agreement with OPI was amended to provide that for periods beginning on and after January 1, 2019, the SNL U.S. Office REIT Index would be utilized. Prior to January 1, 2019, the SNL U.S. REIT Equity Index was utilized.
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SNH: SNL U.S. REIT Healthcare Index
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SVC: SNL U.S. REIT Hotel Index
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No incentive business management fee is payable by the Managed Equity REIT unless its total return per share during the measurement period is positive.
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The measurement period for an annual incentive business management fee is defined as the three year period ending on December 31 of the year for which such fee is being calculated, except for ILPT, whose annual incentive business management fee is based on a shorter period from its initial public offering on January 12, 2018 through the applicable calendar year end.
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If the Managed Equity REIT’s total return per share exceeds 12% per year in the measurement period, the benchmark return per share is adjusted to be the lesser of the total shareholder return of the specified REIT index for such measurement period and 12% per year, or the “adjusted benchmark return per share.” In instances where the adjusted benchmark return per share applies, the incentive fee will be reduced if the Managed Equity REIT’s total return per share is between 200 basis points and 500 basis points below the specified REIT index by a low return factor, as defined in the applicable business management agreement, and there will be no incentive business management fee paid if, in these instances, the Managed Equity REIT’s total return per share is more than 500 basis points below the specified REIT index.
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The incentive management fee payable by the Managed Equity REIT is subject to a cap equal to the value of the number of its common shares which would, after issuance, represent (a) 1.5% of the number of its common shares outstanding on December 31 of the year for which such fee is being calculated multiplied by (b) the average closing price of its common shares during the 10 consecutive trading days having the highest average closing prices during the final 30 trading days of the relevant measurement period.
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Incentive fees paid by the Managed Equity REIT for any measurement period may be subject to certain “clawback” if the financial statements of the Managed Equity REIT for that measurement period are restated due to material non-compliance with any financial reporting requirements under the securities laws as a result of the bad faith, fraud, willful misconduct or gross negligence of RMR LLC and the amount of the incentive fee paid by the Managed Equity REIT was greater than the amount it would have paid based on the restated financial statements.
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have more than $1.07 billion in annual revenues in a fiscal year;
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issue more than $1.0 billion of non-convertible debt during the preceding three year period; or
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become a “large accelerated filer” as defined in Rule 12b-2 promulgated under the Exchange Act, which would occur after: (i) we have filed at least one annual report pursuant to the Exchange Act; (ii) we have been a company reporting with the SEC for at least 12 months; and (iii) the market value of our common shares that are held by non-affiliates equals or exceeds $700.0 million as of the last business day of our most recently completed second fiscal quarter.
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other asset managers may have greater financial, technical, marketing and other resources and more personnel than our Client Companies and we do;
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other asset managers may offer more services than we do or may be more adept at developing, marketing and managing new services than we are;
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our Client Companies may not perform as well as other companies, including companies managed by other asset managers;
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other asset managers and the companies that compete with our Client Companies may have access to more capital or access to capital at lower costs than our Client Companies and we do;
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other asset managers may have stronger ties within certain industries or communities from which they identify investment opportunities;
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other asset managers and the companies that compete with our Client Companies may have higher risk tolerance, different risk assessment or a lower return threshold, which could allow them to acquire a wider variety of assets and a broader range of investments and as a result we and our Client Companies may grow our business less and more slowly than those competitors;
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there are few barriers to entry into the asset management business, and the successful efforts of new entrants into the asset management business are expected to continue to result in increased competition;
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other asset managers may have better expertise or be regarded by potential clients as having better expertise with regard to specific assets or investments;
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other asset managers may have more scalable platforms and may operate more efficiently than we do;
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other asset managers may have better brand recognition than we have, and there is no assurance that we will maintain a positive brand in the future;
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our competitors may from time to time recruit our employees away from us; and
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the market for qualified professionals is intensely competitive, and our ability to continue to compete effectively will also depend upon our ability to attract, retain and motivate our key and talented personnel.
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the Managed Equity REITs face competition for tenants at substantially all of their properties and competing properties may be more attractive to tenants;
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our Client Companies face significant competition for investment opportunities from other investors, some of which have greater financial resources, including publicly traded REITs, non-traded REITs, insurance companies, banking firms, private institutional funds, private equity funds and other investors;
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rising interest rates may increase operating costs, reduce the value of properties and make raising capital difficult for our Client Companies, whereas a sustained period of low interest rates may increase the amount of debt capital available, which may result in declining capitalization rates for property acquisitions and impede the growth of our Client Companies’ businesses;
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changing general economic and financial market conditions could significantly reduce the value of the real estate, loans and other investments of our Client Companies and reduce the amounts earned on those investments;
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the real estate and real estate related investments of our Client Companies may be less liquid than other investments, and the ability of our Client Companies to adjust their portfolios in response to changes in economic or other conditions may be limited;
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changes in investor preferences or market conditions could limit our Client Companies’ ability to raise capital to competitively maintain their properties and operations or make new investments;
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shareholder activism, complaints about management strategies and structures, corporate governance and other matters may divert management attention and be disruptive to the operation of our Client Companies;
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changes in tax laws, regulation or accounting rules may make certain types of investments in or by our Client Companies less valuable;
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our Client Companies are exposed to environmental, building and other laws, natural disasters and other factors beyond their control as a result of their investment in real estate;
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our Client Companies have significant investments in certain types of assets, such as hotels, senior living communities, healthcare properties and travel centers, and market changes which impact these specific types of assets (e.g., new competition for short term accommodations, changes in Medicare and Medicaid rates and fuel efficiency improvements) may adversely impact certain of the Client Companies’ ability to maintain or grow their business;
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the failure of a Managed REIT to continue to qualify as a REIT would subject it to U.S. federal income tax and reduce cash available for distributions to its shareholders, adversely impacting its ability to raise capital and operate its business; and
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complying with REIT requirements may cause a Managed REIT to forgo otherwise attractive opportunities or liquidate otherwise attractive investments.
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a relatively thin trading market for our Class A Common Shares could cause trades of small blocks of shares to have a significant impact on the price of our Class A Common Shares;
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our quarterly or annual earnings, or those of other comparable companies;
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actual or anticipated fluctuations in our operating results;
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changes in accounting standards, policies, guidance, interpretations or principles;
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announcements by us, our Client Companies or our competitors of significant investments, acquisitions or dispositions;
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the inclusion, exclusion, or deletion of our Class A Common Shares from any trading indices;
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the failure of securities analysts to cover our Class A Common Shares;
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changes in earnings estimates by securities analysts or in our ability to meet those estimates;
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the operating and stock price performance of other comparable companies;
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overall market fluctuations; and
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general economic conditions.
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actual receipt of an improper benefit or profit in money, property or services; or
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active and deliberate dishonesty by the director or officer that was established by a final judgment as being material to the cause of action adjudicated.
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Maximum
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Total Number of
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Approximate Dollar
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Shares Purchased
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Value of Shares that
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Number of
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as Part of Publicly
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May Yet Be Purchased
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Shares
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Average Price
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Announced Plans
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Under the Plans or
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Calendar Month
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Purchased (1)
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Paid per Share
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or Programs
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Programs
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July 2019
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3,148
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$
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49.36
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N/A
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N/A
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September 2019
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11,545
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$
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44.60
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N/A
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N/A
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Total
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14,693
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$
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45.62
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N/A
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N/A
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(1)
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These Class A Common Share withholdings and purchases were made to satisfy tax withholding and payment obligations of our current and former officers and other RMR LLC employees in connection with the vesting of awards of our Class A Common Shares. We withheld and purchased these shares at their fair market value based upon the trading price of our Class A Common Shares at the close of trading on Nasdaq on the purchase dates.
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Fiscal Year Ended September 30,
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2019
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2018
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2017
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2016
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2015
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Operating and other information:
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Revenues:
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Management services
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$
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178,075
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$
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191,594
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$
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174,887
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$
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164,397
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$
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162,326
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Incentive business management fees
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120,094
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|
155,881
|
|
|
52,407
|
|
|
62,263
|
|
|
—
|
|
|||||
|
Advisory services
|
|
3,169
|
|
|
4,352
|
|
|
4,102
|
|
|
2,620
|
|
|
2,380
|
|
|||||
|
Total management and advisory services revenues
|
|
301,338
|
|
|
351,827
|
|
|
231,396
|
|
|
229,280
|
|
|
164,706
|
|
|||||
|
Reimbursable compensation and benefits
|
|
57,490
|
|
|
53,152
|
|
|
40,332
|
|
|
37,660
|
|
|
28,230
|
|
|||||
|
Other client company reimbursable expenses (1)
|
|
354,540
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
|
Total reimbursable costs
|
|
412,030
|
|
|
53,152
|
|
|
40,332
|
|
|
37,660
|
|
|
28,230
|
|
|||||
|
Total revenues
|
|
713,368
|
|
|
404,979
|
|
|
271,728
|
|
|
266,940
|
|
|
192,936
|
|
|||||
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Compensation and benefits
|
|
114,529
|
|
|
108,763
|
|
|
92,625
|
|
|
83,419
|
|
|
77,526
|
|
|||||
|
Equity based compensation
|
|
9,040
|
|
|
10,423
|
|
|
7,128
|
|
|
8,566
|
|
|
5,930
|
|
|||||
|
Separation costs
|
|
7,050
|
|
|
3,730
|
|
|
—
|
|
|
1,358
|
|
|
116
|
|
|||||
|
Total compensation and benefits expense
|
|
130,619
|
|
|
122,916
|
|
|
99,753
|
|
|
93,343
|
|
|
83,572
|
|
|||||
|
General and administrative
|
|
28,706
|
|
|
27,149
|
|
|
25,189
|
|
|
23,163
|
|
|
21,081
|
|
|||||
|
Other client company reimbursable expenses (1)
|
|
354,540
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
|
Transaction and acquisition related costs
|
|
698
|
|
|
1,697
|
|
|
9,187
|
|
|
1,966
|
|
|
5,454
|
|
|||||
|
Depreciation and amortization
|
|
1,017
|
|
|
1,248
|
|
|
2,038
|
|
|
1,768
|
|
|
2,117
|
|
|||||
|
Total expenses
|
|
515,580
|
|
|
153,010
|
|
|
136,167
|
|
|
120,240
|
|
|
112,224
|
|
|||||
|
Operating income
|
|
197,788
|
|
|
251,969
|
|
|
135,561
|
|
|
146,700
|
|
|
80,712
|
|
|||||
|
Interest and other income
|
|
8,770
|
|
|
4,546
|
|
|
1,565
|
|
|
234
|
|
|
1,732
|
|
|||||
|
Tax receivable agreement remeasurement
|
|
—
|
|
|
24,710
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
|
Impairment loss on Tremont Mortgage Trust investment
|
|
(6,213
|
)
|
|
(4,359
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
|
Equity in earnings (losses) of investees
|
|
719
|
|
|
(578
|
)
|
|
(206
|
)
|
|
—
|
|
|
115
|
|
|||||
|
Unrealized loss on equity method investments accounted for under the fair value option
|
|
(4,700
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(290
|
)
|
|||||
|
Income before income tax expense
|
|
196,364
|
|
|
276,288
|
|
|
136,920
|
|
|
146,934
|
|
|
82,269
|
|
|||||
|
Income tax expense
|
|
(27,320
|
)
|
|
(58,862
|
)
|
|
(28,251
|
)
|
|
(24,573
|
)
|
|
(4,848
|
)
|
|||||
|
Net income
|
|
169,044
|
|
|
217,426
|
|
|
108,669
|
|
|
122,361
|
|
|
77,421
|
|
|||||
|
Net income attributable to noncontrolling interest
|
|
(94,464
|
)
|
|
(121,385
|
)
|
|
(66,376
|
)
|
|
(85,121
|
)
|
|
(70,118
|
)
|
|||||
|
Net income attributable to The RMR Group Inc.
|
|
$
|
74,580
|
|
|
$
|
96,041
|
|
|
$
|
42,293
|
|
|
$
|
37,240
|
|
|
$
|
7,303
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Weighted average common shares outstanding - basic
|
|
16,132
|
|
|
16,077
|
|
|
16,032
|
|
|
16,005
|
|
|
16,000
|
|
|||||
|
Weighted average common shares outstanding - diluted
|
|
16,143
|
|
|
16,120
|
|
|
16,048
|
|
|
16,005
|
|
|
16,000
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Net income attributable to The RMR Group Inc. per common share - basic
|
|
$
|
4.59
|
|
|
$
|
5.94
|
|
|
$
|
2.63
|
|
|
$
|
2.33
|
|
|
$
|
0.46
|
|
|
Net income attributable to The RMR Group Inc. per common share - diluted
|
|
$
|
4.59
|
|
|
$
|
5.92
|
|
|
$
|
2.63
|
|
|
$
|
2.33
|
|
|
$
|
0.46
|
|
|
Cash distributions declared per common share
|
|
$
|
1.40
|
|
|
$
|
1.00
|
|
|
$
|
1.00
|
|
|
$
|
1.08
|
|
|
$
|
—
|
|
|
|
|
As of September 30,
|
||||||||||||||||||
|
Operating and other information:
|
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
||||||||||
|
Total assets
|
|
$
|
667,872
|
|
|
$
|
504,428
|
|
|
$
|
383,719
|
|
|
$
|
337,531
|
|
|
$
|
303,892
|
|
|
Total liabilities
|
|
$
|
138,837
|
|
|
$
|
69,767
|
|
|
$
|
94,056
|
|
|
$
|
91,140
|
|
|
$
|
90,240
|
|
|
Total equity
|
|
$
|
529,035
|
|
|
$
|
434,661
|
|
|
$
|
289,663
|
|
|
$
|
246,391
|
|
|
$
|
213,652
|
|
|
|
|
As of or For the Fiscal Year Ended September 30,
|
||||||||||||||||||
|
Operating and other information (unaudited):
|
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
||||||||||
|
Assets under management (2)
|
|
$
|
32,802,834
|
|
|
$
|
30,099,464
|
|
|
$
|
28,469,147
|
|
|
$
|
26,858,438
|
|
|
$
|
25,539,125
|
|
|
Adjusted EBITDA (3)
|
|
$
|
108,392
|
|
|
$
|
120,324
|
|
|
$
|
107,217
|
|
|
$
|
100,112
|
|
|
$
|
92,291
|
|
|
(1)
|
Effective October 1, 2018, we adopted new accounting guidance that required us to account for the cost of services provided by third parties to our Client Companies, and the related reimbursement revenue, on a gross basis. As a result, our consolidated statement of comprehensive income for the fiscal year ended September 30, 2019 reflects corresponding increases in revenue and expense of $354,540, in other client company reimbursable expenses, compared to the prior years, with no impact to net income. For further information about these reimbursements, see Note 2, Summary of Significant Accounting Policies, to our Consolidated Financial Statements included in Part IV, Item 15 of this Annual Report on Form 10-K.
|
|
(2)
|
In addition to presenting a calculation of assets under management of the Managed Equity REITs according to the method used to determine fees pursuant to the terms of the business management agreements as presented in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of this Annual Report on Form 10-K, we have determined to also present total assets under management for all of our Client Companies in a manner that we believe more clearly reflects the size of our business. The calculation of our assets under management for all of our Client Companies as of the dates indicated primarily includes: (i) the gross book value of real estate and related assets, excluding depreciation, amortization, impairment charges or other non-cash reserves, of the Managed Equity REITs and ABP Trust, plus (ii) the gross book value of real estate assets, property and equipment of the Managed Operators, excluding depreciation, amortization, impairment charges or other non-cash reserves, plus (iii) the fair value of investments of AIC and the Open End Fund, the managed assets of RIF and the equity of TRMT. This calculation of total assets under management may include amounts in respect of the Managed Equity REITs that are higher than the calculations of assets under management used for purposes of calculating fees under the terms of the business management agreements, which are based, in part, upon the lesser of historical cost of real estate assets or total market capitalization, determined monthly.
|
|
(3)
|
EBITDA and Adjusted EBITDA are non-GAAP financial measures calculated as presented in the table below. We consider EBITDA and Adjusted EBITDA to be appropriate supplemental measures of our operating performance, along with net income, net income attributable to The RMR Group Inc. and operating income. We believe that EBITDA and Adjusted EBITDA provide useful information to investors because by excluding the effects of certain amounts, such as those outlined in the table below, EBITDA and Adjusted EBITDA may facilitate a comparison of current operating performance with our historical operating performance and with the performance of other asset management businesses. EBITDA and Adjusted EBITDA do not represent cash generated by operating activities in accordance with GAAP and should not be considered as alternatives to net income, net income attributable to The RMR Group Inc. or operating income as an indicator of our financial performance or as a measure of our liquidity. These measures should be considered in conjunction with net income, net income attributable to The RMR Group Inc. and operating income as presented in our consolidated statements of comprehensive income. Also, other asset management businesses may calculate EBITDA and Adjusted EBITDA differently than we do. The following table is a reconciliation of net income to EBITDA and Adjusted EBITDA:
|
|
|
|
Fiscal Year Ended September 30,
|
||||||||||||||||||
|
|
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
||||||||||
|
Net income
|
|
$
|
169,044
|
|
|
$
|
217,426
|
|
|
$
|
108,669
|
|
|
$
|
122,361
|
|
|
$
|
77,421
|
|
|
Plus: income tax expense
|
|
27,320
|
|
|
58,862
|
|
|
28,251
|
|
|
24,573
|
|
|
4,848
|
|
|||||
|
Plus: depreciation and amortization
|
|
1,017
|
|
|
1,248
|
|
|
2,038
|
|
|
1,768
|
|
|
2,117
|
|
|||||
|
EBITDA
|
|
197,381
|
|
|
277,536
|
|
|
138,958
|
|
|
148,702
|
|
|
84,386
|
|
|||||
|
Plus: other asset amortization
|
|
9,416
|
|
|
9,416
|
|
|
9,416
|
|
|
9,416
|
|
|
2,999
|
|
|||||
|
Plus: operating expenses paid in The RMR Group Inc.'s common shares
|
|
3,363
|
|
|
3,865
|
|
|
1,970
|
|
|
933
|
|
|
—
|
|
|||||
|
Plus: separation costs
|
|
7,050
|
|
|
3,730
|
|
|
—
|
|
|
1,358
|
|
|
116
|
|
|||||
|
Plus: transaction and acquisition related costs
|
|
698
|
|
|
1,697
|
|
|
9,187
|
|
|
1,966
|
|
|
5,454
|
|
|||||
|
Plus: unrealized loss on equity method investments accounted for under the fair value option
|
|
4,700
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
290
|
|
|||||
|
Plus: business email compromise fraud costs
|
|
—
|
|
|
225
|
|
|
774
|
|
|
—
|
|
|
—
|
|
|||||
|
Plus: impairment loss on Tremont Mortgage Trust investment
|
|
6,213
|
|
|
4,359
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
|
Less: tax receivable agreement remeasurement due to the Tax Cuts and Jobs Act
|
|
—
|
|
|
(24,710
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
|
Less: incentive business management fees earned
|
|
(120,094
|
)
|
|
(155,881
|
)
|
|
(52,407
|
)
|
|
(62,263
|
)
|
|
—
|
|
|||||
|
Certain other net adjustments
|
|
(335
|
)
|
|
87
|
|
|
(681
|
)
|
|
—
|
|
|
(954
|
)
|
|||||
|
Adjusted EBITDA
|
|
$
|
108,392
|
|
|
$
|
120,324
|
|
|
$
|
107,217
|
|
|
$
|
100,112
|
|
|
$
|
92,291
|
|
|
|
|
|
|
Lesser of Historical Cost of Assets
|
||||||||||
|
|
|
|
|
Under Management or
|
||||||||||
|
|
|
|
|
Total Market Capitalization as of
|
||||||||||
|
|
|
|
|
September 30,
|
||||||||||
|
REIT
|
|
Primary Strategy
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
ILPT
|
|
Industrial and logistics properties
|
|
$
|
2,530,811
|
|
|
$
|
1,547,219
|
|
|
$
|
—
|
|
|
OPI (1)
|
|
Office properties primarily leased to single tenants, including the government
|
|
4,074,202
|
|
|
3,277,442
|
|
|
2,221,945
|
|
|||
|
SIR (1)
|
|
Office properties primarily leased to single tenants
|
|
—
|
|
|
3,445,824
|
|
|
4,575,215
|
|
|||
|
SNH
|
|
Senior living, medical office and life science properties
|
|
5,889,907
|
|
|
7,915,213
|
|
|
8,233,984
|
|
|||
|
SVC
|
|
Hotels and net lease service and necessity-based retail properties
|
|
10,784,131
|
|
|
8,935,518
|
|
|
8,740,307
|
|
|||
|
|
|
|
|
$
|
23,279,051
|
|
|
$
|
25,121,216
|
|
|
$
|
23,771,451
|
|
|
(1)
|
SIR merged with and into OPI on December 31, 2018 with OPI continuing as the surviving entity.
|
|
(1)
|
Excludes reimbursable compensation and benefits and other client company reimbursable expenses.
|
|
(2)
|
SIR merged with and into OPI on December 31, 2018 with OPI continuing as the surviving entity.
|
|
(1)
|
Excludes reimbursable client company operating expenses and reimbursable compensation and benefits.
|
|
|
|
Fiscal Year Ended September 30,
|
|||||||||||||
|
|
|
2019
|
|
2018
|
|
$ Change
|
|
% Change
|
|||||||
|
Revenues:
|
|
|
|
|
|
|
|
|
|||||||
|
Management services
|
|
$
|
178,075
|
|
|
$
|
191,594
|
|
|
$
|
(13,519
|
)
|
|
(7.1
|
)%
|
|
Incentive business management fees
|
|
120,094
|
|
|
155,881
|
|
|
(35,787
|
)
|
|
(23.0
|
)%
|
|||
|
Advisory services
|
|
3,169
|
|
|
4,352
|
|
|
(1,183
|
)
|
|
(27.2
|
)%
|
|||
|
Total management and advisory services revenues
|
|
301,338
|
|
|
351,827
|
|
|
(50,489
|
)
|
|
(14.4
|
)%
|
|||
|
Reimbursable compensation and benefits
|
|
57,490
|
|
|
53,152
|
|
|
4,338
|
|
|
8.2
|
%
|
|||
|
Other client company reimbursable expenses
|
|
354,540
|
|
|
—
|
|
|
354,540
|
|
|
n/m
|
|
|||
|
Total reimbursable costs
|
|
412,030
|
|
|
53,152
|
|
|
358,878
|
|
|
n/m
|
|
|||
|
Total revenues
|
|
713,368
|
|
|
404,979
|
|
|
308,389
|
|
|
76.1
|
%
|
|||
|
Expenses:
|
|
|
|
|
|
|
|
|
|||||||
|
Compensation and benefits
|
|
114,529
|
|
|
108,763
|
|
|
5,766
|
|
|
5.3
|
%
|
|||
|
Equity based compensation
|
|
9,040
|
|
|
10,423
|
|
|
(1,383
|
)
|
|
(13.3
|
)%
|
|||
|
Separation costs
|
|
7,050
|
|
|
3,730
|
|
|
3,320
|
|
|
89.0
|
%
|
|||
|
Total compensation and benefits expense
|
|
130,619
|
|
|
122,916
|
|
|
7,703
|
|
|
6.3
|
%
|
|||
|
General and administrative
|
|
28,706
|
|
|
27,149
|
|
|
1,557
|
|
|
5.7
|
%
|
|||
|
Other client company reimbursable expenses
|
|
354,540
|
|
|
—
|
|
|
354,540
|
|
|
n/m
|
|
|||
|
Transaction and acquisition related costs
|
|
698
|
|
|
1,697
|
|
|
(999
|
)
|
|
(58.9
|
)%
|
|||
|
Depreciation and amortization
|
|
1,017
|
|
|
1,248
|
|
|
(231
|
)
|
|
(18.5
|
)%
|
|||
|
Total expenses
|
|
515,580
|
|
|
153,010
|
|
|
362,570
|
|
|
n/m
|
|
|||
|
Operating income
|
|
197,788
|
|
|
251,969
|
|
|
(54,181
|
)
|
|
(21.5
|
)%
|
|||
|
Interest and other income
|
|
8,770
|
|
|
4,546
|
|
|
4,224
|
|
|
92.9
|
%
|
|||
|
Tax receivable agreement remeasurement
|
|
—
|
|
|
24,710
|
|
|
(24,710
|
)
|
|
n/m
|
|
|||
|
Impairment loss on Tremont Mortgage Trust investment
|
|
(6,213
|
)
|
|
(4,359
|
)
|
|
(1,854
|
)
|
|
(42.5
|
)%
|
|||
|
Equity in earnings (losses) of investees
|
|
719
|
|
|
(578
|
)
|
|
1,297
|
|
|
n/m
|
|
|||
|
Unrealized loss on equity method investment accounted for under the fair value option
|
|
(4,700
|
)
|
|
—
|
|
|
(4,700
|
)
|
|
n/m
|
|
|||
|
Income before income tax expense
|
|
196,364
|
|
|
276,288
|
|
|
(79,924
|
)
|
|
(28.9
|
)%
|
|||
|
Income tax expense
|
|
(27,320
|
)
|
|
(58,862
|
)
|
|
31,542
|
|
|
53.6
|
%
|
|||
|
Net income
|
|
169,044
|
|
|
217,426
|
|
|
(48,382
|
)
|
|
(22.3
|
)%
|
|||
|
Net income attributable to noncontrolling interest
|
|
(94,464
|
)
|
|
(121,385
|
)
|
|
26,921
|
|
|
22.2
|
%
|
|||
|
Net income attributable to The RMR Group Inc.
|
|
$
|
74,580
|
|
|
$
|
96,041
|
|
|
$
|
(21,461
|
)
|
|
(22.3
|
)%
|
|
|
|
Fiscal Year Ended September 30,
|
||||||||||
|
Source
|
|
2019
|
|
2018
|
|
Change
|
||||||
|
Managed Equity REITs
|
|
$
|
146,959
|
|
|
$
|
161,162
|
|
|
$
|
(14,203
|
)
|
|
Managed Operators
|
|
26,087
|
|
|
26,949
|
|
|
(862
|
)
|
|||
|
Other
|
|
5,029
|
|
|
3,483
|
|
|
1,546
|
|
|||
|
Total
|
|
$
|
178,075
|
|
|
$
|
191,594
|
|
|
$
|
(13,519
|
)
|
|
|
|
Fiscal Year Ended September 30,
|
|||||||||||||
|
|
|
2018
|
|
2017
|
|
$ Change
|
|
% Change
|
|||||||
|
Revenues:
|
|
|
|
|
|
|
|
|
|||||||
|
Management services
|
|
$
|
191,594
|
|
|
$
|
174,887
|
|
|
$
|
16,707
|
|
|
9.6
|
%
|
|
Incentive business management fees
|
|
155,881
|
|
|
52,407
|
|
|
103,474
|
|
|
197.4
|
%
|
|||
|
Advisory services
|
|
4,352
|
|
|
4,102
|
|
|
250
|
|
|
6.1
|
%
|
|||
|
Total management and advisory services revenues
|
|
351,827
|
|
|
231,396
|
|
|
120,431
|
|
|
52.0
|
%
|
|||
|
Reimbursable compensation and benefits
|
|
53,152
|
|
|
40,332
|
|
|
12,820
|
|
|
31.8
|
%
|
|||
|
Total reimbursable costs
|
|
53,152
|
|
|
40,332
|
|
|
12,820
|
|
|
31.8
|
%
|
|||
|
Total revenues
|
|
404,979
|
|
|
271,728
|
|
|
133,251
|
|
|
49.0
|
%
|
|||
|
Expenses:
|
|
|
|
|
|
|
|
|
|||||||
|
Compensation and benefits
|
|
108,763
|
|
|
92,625
|
|
|
16,138
|
|
|
17.4
|
%
|
|||
|
Equity based compensation
|
|
10,423
|
|
|
7,128
|
|
|
3,295
|
|
|
46.2
|
%
|
|||
|
Separation costs
|
|
3,730
|
|
|
—
|
|
|
3,730
|
|
|
n/m
|
|
|||
|
Total compensation and benefits expense
|
|
122,916
|
|
|
99,753
|
|
|
23,163
|
|
|
23.2
|
%
|
|||
|
General and administrative
|
|
27,149
|
|
|
25,189
|
|
|
1,960
|
|
|
7.8
|
%
|
|||
|
Transaction and acquisition related costs
|
|
1,697
|
|
|
9,187
|
|
|
(7,490
|
)
|
|
(81.5
|
)%
|
|||
|
Depreciation and amortization
|
|
1,248
|
|
|
2,038
|
|
|
(790
|
)
|
|
(38.8
|
)%
|
|||
|
Total expenses
|
|
153,010
|
|
|
136,167
|
|
|
16,843
|
|
|
12.4
|
%
|
|||
|
Operating income
|
|
251,969
|
|
|
135,561
|
|
|
116,408
|
|
|
85.9
|
%
|
|||
|
Interest and other income
|
|
4,546
|
|
|
1,565
|
|
|
2,981
|
|
|
190.5
|
%
|
|||
|
Tax receivable agreement remeasurement
|
|
24,710
|
|
|
—
|
|
|
24,710
|
|
|
n/m
|
|
|||
|
Impairment loss on Tremont Mortgage Trust investment
|
|
(4,359
|
)
|
|
—
|
|
|
(4,359
|
)
|
|
n/m
|
|
|||
|
Equity in losses of investees
|
|
(578
|
)
|
|
(206
|
)
|
|
(372
|
)
|
|
(180.6
|
)%
|
|||
|
Income before income tax expense
|
|
276,288
|
|
|
136,920
|
|
|
139,368
|
|
|
101.8
|
%
|
|||
|
Income tax expense
|
|
(58,862
|
)
|
|
(28,251
|
)
|
|
(30,611
|
)
|
|
(108.4
|
)%
|
|||
|
Net income
|
|
217,426
|
|
|
108,669
|
|
|
108,757
|
|
|
100.1
|
%
|
|||
|
Net income attributable to noncontrolling interest
|
|
(121,385
|
)
|
|
(66,376
|
)
|
|
(55,009
|
)
|
|
(82.9
|
)%
|
|||
|
Net income attributable to The RMR Group Inc.
|
|
$
|
96,041
|
|
|
$
|
42,293
|
|
|
$
|
53,748
|
|
|
127.1
|
%
|
|
|
|
Fiscal Year Ended September 30,
|
||||||||||
|
Source
|
|
2018
|
|
2017
|
|
Change
|
||||||
|
Managed Equity REITs
|
|
$
|
161,162
|
|
|
$
|
146,824
|
|
|
$
|
14,338
|
|
|
Managed Operators
|
|
26,949
|
|
|
25,878
|
|
|
1,071
|
|
|||
|
Other
|
|
3,483
|
|
|
2,185
|
|
|
1,298
|
|
|||
|
Total
|
|
$
|
191,594
|
|
|
$
|
174,887
|
|
|
$
|
16,707
|
|
|
|
|
Payments due by period
|
||||||||||||||||||
|
|
|
|
|
Less than
|
|
|
|
|
|
More than
|
||||||||||
|
Contractual obligations
|
|
Total
|
|
1 year
|
|
1-3 years
|
|
3-5 years
|
|
5 years
|
||||||||||
|
Operating leases
|
|
$
|
45,928
|
|
|
$
|
5,264
|
|
|
$
|
10,508
|
|
|
$
|
8,870
|
|
|
$
|
21,286
|
|
|
Tax Receivable Agreement
|
|
32,061
|
|
|
2,111
|
|
|
6,650
|
|
|
7,316
|
|
|
15,984
|
|
|||||
|
Total (1)
|
|
$
|
77,989
|
|
|
$
|
7,375
|
|
|
$
|
17,158
|
|
|
$
|
16,186
|
|
|
$
|
37,270
|
|
|
(1)
|
In addition to the contractual obligations presented in this table, we also have a $100,000 commitment to the Open End Fund that may be drawn in the future. For additional information regarding this commitment, see Note 6, Related Person Transactions, to our Consolidated Financial Statements included in Part IV, Item 15 of this Annual Report on Form 10-K.
|
|
•
|
business management fees, including base and incentive business management fees; and
|
|
•
|
property management fees, including construction supervision fees and reimbursement for certain compensation and benefits related expenses.
|
|
•
|
our representation on the entity’s governing body;
|
|
•
|
the size of our investment in each entity compared to the size of the entity and the size of other investors’ interests; and
|
|
•
|
the ability and rights to participate in significant policy making decisions and to replace our manager of those entities.
|
|
|
|
|
|
|
|
Number of securities
|
|
|
|
Number of securities
|
|
|
|
remaining available for
|
|
|
|
to be issued upon
|
|
Weighted-average
|
|
future issuance under equity
|
|
|
|
exercise of
|
|
exercise price of
|
|
compensation plans (excluding
|
|
|
|
outstanding options,
|
|
outstanding options,
|
|
securities
|
|
Plan category
|
|
warrants and rights
|
|
warrants and rights
|
|
reflected in column (a))
|
|
|
|
(a)
|
|
(b)
|
|
(c)
|
|
Equity compensation plans approved by security holders - 2016 Plan
|
|
None.
|
|
None.
|
|
297,290 (1)
|
|
Equity compensation plans not approved by security holders
|
|
None.
|
|
None.
|
|
None.
|
|
Total
|
|
None.
|
|
None.
|
|
297,290 (1)
|
|
(1)
|
Consists of shares available for issuance pursuant to the terms of the 2016 Plan. Share awards that are repurchased or forfeited will be added to the shares available for issuance under the 2016 Plan.
|
|
Exhibit
Number
|
|
Description
|
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
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 Current Report on Form 8-K (File No. 001-37616) filed with the SEC on September 15, 2017.
|
|
(4)
|
|
Incorporated by reference to the Registrant’s Amendment No. 1 to Registration Statement on Form S-1 (File No. 333-207423) filed with the SEC on November 2, 2015.
|
|
(5)
|
|
Incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q (File No. 001-37616) filed with the SEC on February 8, 2018.
|
|
(6)
|
|
Incorporated by reference to Registrant’s Current Report on Form 8-K (File No. 001-37616) filed with the SEC on August 3, 2018.
|
|
(7)
|
|
Incorporated by reference to the Registrant’s Current Report on Form 8-K (File No. 001-37616) filed with the SEC on January 18, 2018.
|
|
(8)
|
|
Incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q (File No. 001-37616) filed with the SEC on August 8, 2018.
|
|
(9)
|
|
Incorporated by reference to the Registrant’s Current Report on Form 8-K (File No. 001-37616) filed with the SEC on September 19, 2016.
|
|
(10)
|
|
Incorporated by reference to the Registrant’s Current Report on Form 8-K (File No. 001-37616) filed with the SEC on April 4, 2019.
|
|
(11)
|
|
Incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q (File No. 001-37616) filed with the SEC on May 10, 2017.
|
|
(12)
|
|
Incorporated by reference to the Registrant’s Annual Report on Form 10-K (File No. 001-37616) filed with the SEC on December 12, 2017.
|
|
(13)
|
|
Incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q (File No. 001-37616) filed with the SEC on February 7, 2019.
|
|
(14)
|
|
Incorporated by reference to the Registrant’s Current Report on Form 8-K (File No. 001-37616) filed with the SEC on June 14, 2019.
|
|
(15)
|
|
Incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q (File No. 001-37616) filed with the SEC on May 10, 2019.
|
|
(16)
|
|
Incorporated by reference to Five Star Senior Living Inc.’s Annual Report on Form 10-K (File No. 001-16817) filed with the SEC on March 16, 2015.
|
|
(17)
|
|
Incorporated by reference to TravelCenters of America Inc.’s Annual Report on Form 10-K (File No. 001- 33274) filed with the SEC on March 13, 2015.
|
|
Boston, Massachusetts
|
|
|
November 22, 2019
|
|
|
|
|
September 30,
|
||||||
|
|
|
2019
|
|
2018
|
||||
|
Assets
|
|
|
|
|
||||
|
Current assets:
|
|
|
|
|
||||
|
Cash and cash equivalents
|
|
$
|
358,448
|
|
|
$
|
256,848
|
|
|
Due from related parties
|
|
93,521
|
|
|
28,846
|
|
||
|
Prepaid and other current assets
|
|
12,888
|
|
|
10,392
|
|
||
|
Total current assets
|
|
464,857
|
|
|
296,086
|
|
||
|
|
|
|
|
|
||||
|
Property and equipment, net
|
|
2,383
|
|
|
2,589
|
|
||
|
Due from related parties, net of current portion
|
|
9,238
|
|
|
8,183
|
|
||
|
Equity method investment
|
|
6,658
|
|
|
7,051
|
|
||
|
Equity method investment accounted for under the fair value option
|
|
3,682
|
|
|
—
|
|
||
|
Goodwill
|
|
1,859
|
|
|
1,859
|
|
||
|
Intangible assets, net of amortization
|
|
323
|
|
|
375
|
|
||
|
Deferred tax asset
|
|
25,729
|
|
|
25,726
|
|
||
|
Other assets, net of amortization
|
|
153,143
|
|
|
162,559
|
|
||
|
Total assets
|
|
$
|
667,872
|
|
|
$
|
504,428
|
|
|
|
|
|
|
|
||||
|
Liabilities and Equity
|
|
|
|
|
||||
|
Current liabilities:
|
|
|
|
|
||||
|
Accounts payable and accrued expenses
|
|
$
|
98,029
|
|
|
$
|
28,307
|
|
|
Total current liabilities
|
|
98,029
|
|
|
28,307
|
|
||
|
|
|
|
|
|
||||
|
Long term portion of deferred rent payable, net of current portion
|
|
1,620
|
|
|
1,229
|
|
||
|
Amounts due pursuant to tax receivable agreement, net of current portion
|
|
29,950
|
|
|
32,048
|
|
||
|
Employer compensation liability, net of current portion
|
|
9,238
|
|
|
8,183
|
|
||
|
Total liabilities
|
|
138,837
|
|
|
69,767
|
|
||
|
|
|
|
|
|
||||
|
Commitments and contingencies
|
|
|
|
|
|
|
||
|
|
|
|
|
|
||||
|
Equity:
|
|
|
|
|
||||
|
Class A common stock, $0.001 par value; 31,600,000 shares authorized; 15,302,710 and 15,229,957 shares issued and outstanding, respectively
|
|
15
|
|
|
15
|
|
||
|
Class B-1 common stock, $0.001 par value; 1,000,000 shares authorized, issued and outstanding
|
|
1
|
|
|
1
|
|
||
|
Class B-2 common stock, $0.001 par value; 15,000,000 shares authorized, issued and outstanding
|
|
15
|
|
|
15
|
|
||
|
Additional paid in capital
|
|
103,360
|
|
|
99,239
|
|
||
|
Retained earnings
|
|
257,457
|
|
|
182,877
|
|
||
|
Cumulative other comprehensive income
|
|
—
|
|
|
82
|
|
||
|
Cumulative common distributions
|
|
(72,194
|
)
|
|
(49,467
|
)
|
||
|
Total shareholders’ equity
|
|
288,654
|
|
|
232,762
|
|
||
|
Noncontrolling interest
|
|
240,381
|
|
|
201,899
|
|
||
|
Total equity
|
|
529,035
|
|
|
434,661
|
|
||
|
Total liabilities and equity
|
|
$
|
667,872
|
|
|
$
|
504,428
|
|
|
|
|
Fiscal Year Ended September 30,
|
||||||||||
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
Revenues:
|
|
|
|
|
|
|
||||||
|
Management services
|
|
$
|
178,075
|
|
|
$
|
191,594
|
|
|
$
|
174,887
|
|
|
Incentive business management fees
|
|
120,094
|
|
|
155,881
|
|
|
52,407
|
|
|||
|
Advisory services
|
|
3,169
|
|
|
4,352
|
|
|
4,102
|
|
|||
|
Total management and advisory services revenues
|
|
301,338
|
|
|
351,827
|
|
|
231,396
|
|
|||
|
Reimbursable compensation and benefits
|
|
57,490
|
|
|
53,152
|
|
|
40,332
|
|
|||
|
Other client company reimbursable expenses
|
|
354,540
|
|
|
—
|
|
|
—
|
|
|||
|
Total reimbursable costs
|
|
412,030
|
|
|
53,152
|
|
|
40,332
|
|
|||
|
Total revenues
|
|
713,368
|
|
|
404,979
|
|
|
271,728
|
|
|||
|
Expenses:
|
|
|
|
|
|
|
||||||
|
Compensation and benefits
|
|
114,529
|
|
|
108,763
|
|
|
92,625
|
|
|||
|
Equity based compensation
|
|
9,040
|
|
|
10,423
|
|
|
7,128
|
|
|||
|
Separation costs
|
|
7,050
|
|
|
3,730
|
|
|
—
|
|
|||
|
Total compensation and benefits expense
|
|
130,619
|
|
|
122,916
|
|
|
99,753
|
|
|||
|
General and administrative
|
|
28,706
|
|
|
27,149
|
|
|
25,189
|
|
|||
|
Other client company reimbursable expenses
|
|
354,540
|
|
|
—
|
|
|
—
|
|
|||
|
Transaction and acquisition related costs
|
|
698
|
|
|
1,697
|
|
|
9,187
|
|
|||
|
Depreciation and amortization
|
|
1,017
|
|
|
1,248
|
|
|
2,038
|
|
|||
|
Total expenses
|
|
515,580
|
|
|
153,010
|
|
|
136,167
|
|
|||
|
Operating income
|
|
197,788
|
|
|
251,969
|
|
|
135,561
|
|
|||
|
Interest and other income
|
|
8,770
|
|
|
4,546
|
|
|
1,565
|
|
|||
|
Tax receivable agreement remeasurement
|
|
—
|
|
|
24,710
|
|
|
—
|
|
|||
|
Impairment loss on Tremont Mortgage Trust investment
|
|
(6,213
|
)
|
|
(4,359
|
)
|
|
—
|
|
|||
|
Equity in earnings (losses) of investees
|
|
719
|
|
|
(578
|
)
|
|
(206
|
)
|
|||
|
Unrealized loss on equity method investment accounted for under the fair value option
|
|
(4,700
|
)
|
|
—
|
|
|
—
|
|
|||
|
Income before income tax expense
|
|
196,364
|
|
|
276,288
|
|
|
136,920
|
|
|||
|
Income tax expense
|
|
(27,320
|
)
|
|
(58,862
|
)
|
|
(28,251
|
)
|
|||
|
Net income
|
|
169,044
|
|
|
217,426
|
|
|
108,669
|
|
|||
|
Net income attributable to noncontrolling interest
|
|
(94,464
|
)
|
|
(121,385
|
)
|
|
(66,376
|
)
|
|||
|
Net income attributable to The RMR Group Inc.
|
|
$
|
74,580
|
|
|
$
|
96,041
|
|
|
$
|
42,293
|
|
|
Other comprehensive (loss) income:
|
|
|
|
|
|
|
||||||
|
Foreign currency translation adjustments
|
|
(14
|
)
|
|
(3
|
)
|
|
1
|
|
|||
|
Other comprehensive (loss) income
|
|
(14
|
)
|
|
(3
|
)
|
|
1
|
|
|||
|
Comprehensive income
|
|
169,030
|
|
|
217,423
|
|
|
108,670
|
|
|||
|
Comprehensive income attributable to noncontrolling interest
|
|
(94,457
|
)
|
|
(121,384
|
)
|
|
(66,376
|
)
|
|||
|
Comprehensive income attributable to The RMR Group Inc.
|
|
$
|
74,573
|
|
|
$
|
96,039
|
|
|
$
|
42,294
|
|
|
|
|
|
|
|
|
|
||||||
|
Weighted average common shares outstanding - basic
|
|
16,132
|
|
|
16,077
|
|
|
16,032
|
|
|||
|
Weighted average common shares outstanding - diluted
|
|
16,143
|
|
|
16,120
|
|
|
16,048
|
|
|||
|
|
|
|
|
|
|
|
||||||
|
Net income attributable to The RMR Group Inc. per common share - basic
|
|
$
|
4.59
|
|
|
$
|
5.94
|
|
|
$
|
2.63
|
|
|
Net income attributable to The RMR Group Inc. per common share - diluted
|
|
$
|
4.59
|
|
|
$
|
5.92
|
|
|
$
|
2.63
|
|
|
|
|
Class A Common Stock
|
|
Class B-1 Common Stock
|
|
Class B-2 Common Stock
|
|
Additional Paid In Capital
|
|
Retained Earnings
|
|
Cumulative Other Comprehensive Income
|
|
Cumulative Common Distributions
|
|
Total Shareholders' Equity
|
|
Noncontrolling Interest
|
|
Total Equity
|
||||||||||||||||||||
|
Balance at September 30, 2016
|
|
$
|
15
|
|
|
$
|
1
|
|
|
$
|
15
|
|
|
$
|
94,266
|
|
|
$
|
44,543
|
|
|
$
|
83
|
|
|
$
|
(17,209
|
)
|
|
$
|
121,714
|
|
|
$
|
124,677
|
|
|
$
|
246,391
|
|
|
Share grants, net
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,612
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,612
|
|
|
—
|
|
|
1,612
|
|
||||||||||
|
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
42,293
|
|
|
—
|
|
|
—
|
|
|
42,293
|
|
|
66,376
|
|
|
108,669
|
|
||||||||||
|
Tax distributions to Member
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(35,921
|
)
|
|
(35,921
|
)
|
||||||||||
|
Common share distributions
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(16,089
|
)
|
|
(16,089
|
)
|
|
(15,000
|
)
|
|
(31,089
|
)
|
||||||||||
|
Other comprehensive income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
||||||||||
|
Balance at September 30, 2017
|
|
15
|
|
|
1
|
|
|
15
|
|
|
95,878
|
|
|
86,836
|
|
|
84
|
|
|
(33,298
|
)
|
|
149,531
|
|
|
140,132
|
|
|
289,663
|
|
||||||||||
|
Share grants, net
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,361
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,361
|
|
|
—
|
|
|
3,361
|
|
||||||||||
|
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
96,041
|
|
|
—
|
|
|
—
|
|
|
96,041
|
|
|
121,385
|
|
|
217,426
|
|
||||||||||
|
Fees from services provided prior to our initial public offering
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(127
|
)
|
|
(127
|
)
|
||||||||||
|
Tax distributions to Member
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(44,490
|
)
|
|
(44,490
|
)
|
||||||||||
|
Common share distributions
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(16,169
|
)
|
|
(16,169
|
)
|
|
(15,000
|
)
|
|
(31,169
|
)
|
||||||||||
|
Other comprehensive loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
(2
|
)
|
|
(1
|
)
|
|
(3
|
)
|
||||||||||
|
Balance at September 30, 2018
|
|
15
|
|
|
1
|
|
|
15
|
|
|
99,239
|
|
|
182,877
|
|
|
82
|
|
|
(49,467
|
)
|
|
232,762
|
|
|
201,899
|
|
|
434,661
|
|
||||||||||
|
Share grants, net
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,121
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,121
|
|
|
—
|
|
|
4,121
|
|
||||||||||
|
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
74,580
|
|
|
—
|
|
|
—
|
|
|
74,580
|
|
|
94,464
|
|
|
169,044
|
|
||||||||||
|
Tax distributions to Member
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(37,975
|
)
|
|
(37,975
|
)
|
||||||||||
|
Common share distributions
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(22,727
|
)
|
|
(22,727
|
)
|
|
(18,000
|
)
|
|
(40,727
|
)
|
||||||||||
|
Other comprehensive loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7
|
)
|
|
—
|
|
|
(7
|
)
|
|
(7
|
)
|
|
(14
|
)
|
||||||||||
|
Reclassification due to disposition of our Australian operations
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(75
|
)
|
|
—
|
|
|
(75
|
)
|
|
—
|
|
|
(75
|
)
|
||||||||||
|
Balance at September 30, 2019
|
|
$
|
15
|
|
|
$
|
1
|
|
|
$
|
15
|
|
|
$
|
103,360
|
|
|
$
|
257,457
|
|
|
$
|
—
|
|
|
$
|
(72,194
|
)
|
|
$
|
288,654
|
|
|
$
|
240,381
|
|
|
$
|
529,035
|
|
|
|
|
Fiscal Year Ended September 30,
|
||||||||||
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
Cash Flows from Operating Activities:
|
|
|
|
|
|
|
||||||
|
Net income
|
|
$
|
169,044
|
|
|
$
|
217,426
|
|
|
$
|
108,669
|
|
|
Adjustments to reconcile net income to net cash from operating activities:
|
|
|
|
|
|
|
||||||
|
Depreciation and amortization
|
|
1,017
|
|
|
1,248
|
|
|
2,038
|
|
|||
|
Straight line office rent
|
|
391
|
|
|
201
|
|
|
250
|
|
|||
|
Amortization expense related to other assets
|
|
9,416
|
|
|
9,416
|
|
|
9,416
|
|
|||
|
Deferred income taxes
|
|
(3
|
)
|
|
19,815
|
|
|
278
|
|
|||
|
Operating expenses paid in The RMR Group Inc. common shares
|
|
4,948
|
|
|
4,348
|
|
|
1,970
|
|
|||
|
Contingent consideration liability
|
|
—
|
|
|
(491
|
)
|
|
(578
|
)
|
|||
|
Tax receivable agreement remeasurement
|
|
—
|
|
|
(24,710
|
)
|
|
—
|
|
|||
|
Distributions from equity method investments
|
|
549
|
|
|
174
|
|
|
70
|
|
|||
|
Equity in (earnings) losses of investees
|
|
(719
|
)
|
|
578
|
|
|
206
|
|
|||
|
Impairment loss on Tremont Mortgage Trust investment
|
|
6,213
|
|
|
4,359
|
|
|
—
|
|
|||
|
Unrealized loss on equity method investment accounted for under the fair value option
|
|
4,700
|
|
|
—
|
|
|
—
|
|
|||
|
Changes in assets and liabilities:
|
|
|
|
|
|
|
||||||
|
Due from related parties
|
|
(64,849
|
)
|
|
(3,736
|
)
|
|
(366
|
)
|
|||
|
Prepaid and other current assets
|
|
(2,496
|
)
|
|
(3,300
|
)
|
|
(2,402
|
)
|
|||
|
Accounts payable and accrued expenses
|
|
70,003
|
|
|
3,142
|
|
|
6,385
|
|
|||
|
Net cash from operating activities
|
|
198,214
|
|
|
228,470
|
|
|
125,936
|
|
|||
|
|
|
|
|
|
|
|
||||||
|
Cash Flows from Investing Activities:
|
|
|
|
|
|
|
||||||
|
Purchase of property and equipment
|
|
(702
|
)
|
|
(648
|
)
|
|
(827
|
)
|
|||
|
Equity method investment in TravelCenters of America Inc.
|
|
(8,382
|
)
|
|
—
|
|
|
—
|
|
|||
|
Equity method investment in Tremont Mortgage Trust
|
|
(5,650
|
)
|
|
—
|
|
|
(12,002
|
)
|
|||
|
Advances to Tremont Mortgage Trust under the Credit Agreement
|
|
(14,220
|
)
|
|
—
|
|
|
—
|
|
|||
|
Repayments from Tremont Mortgage Trust under the Credit Agreement
|
|
14,220
|
|
|
—
|
|
|
—
|
|
|||
|
Net cash used in investing activities
|
|
(14,734
|
)
|
|
(648
|
)
|
|
(12,829
|
)
|
|||
|
|
|
|
|
|
|
|
||||||
|
Cash Flows from Financing Activities:
|
|
|
|
|
|
|
||||||
|
Distributions to noncontrolling interest
|
|
(55,975
|
)
|
|
(59,490
|
)
|
|
(50,921
|
)
|
|||
|
Distributions to common shareholders
|
|
(22,727
|
)
|
|
(16,169
|
)
|
|
(16,089
|
)
|
|||
|
Repurchase of common shares
|
|
(827
|
)
|
|
(987
|
)
|
|
(358
|
)
|
|||
|
Payments under tax receivable agreement
|
|
(2,266
|
)
|
|
(2,962
|
)
|
|
(2,931
|
)
|
|||
|
Net cash used in financing activities
|
|
(81,795
|
)
|
|
(79,608
|
)
|
|
(70,299
|
)
|
|||
|
|
|
|
|
|
|
|
||||||
|
Effect of exchange rate fluctuations on cash and cash equivalents
|
|
(85
|
)
|
|
(6
|
)
|
|
(1
|
)
|
|||
|
Increase in cash and cash equivalents
|
|
101,600
|
|
|
148,208
|
|
|
42,807
|
|
|||
|
Cash and cash equivalents at beginning of period
|
|
256,848
|
|
|
108,640
|
|
|
65,833
|
|
|||
|
Cash and cash equivalents at end of period
|
|
$
|
358,448
|
|
|
$
|
256,848
|
|
|
$
|
108,640
|
|
|
|
|
|
|
|
|
|
||||||
|
Supplemental Cash Flow Information:
|
|
|
|
|
|
|
||||||
|
Income taxes paid
|
|
$
|
29,620
|
|
|
$
|
37,653
|
|
|
$
|
27,765
|
|
|
Supplemental Schedule of Non-Cash Activities:
|
|
|
|
|
|
|
||||||
|
Fair value of share based payments recorded
|
|
$
|
6,461
|
|
|
$
|
7,421
|
|
|
$
|
5,761
|
|
|
|
|
September 30,
|
||||||
|
|
|
2019
|
|
2018
|
||||
|
Furniture and equipment
|
|
$
|
4,600
|
|
|
$
|
4,444
|
|
|
Leasehold improvements
|
|
1,040
|
|
|
1,063
|
|
||
|
Capitalized software costs
|
|
492
|
|
|
478
|
|
||
|
Total property and equipment
|
|
6,132
|
|
|
5,985
|
|
||
|
Accumulated depreciation
|
|
(3,749
|
)
|
|
(3,396
|
)
|
||
|
Property and equipment, net
|
|
$
|
2,383
|
|
|
$
|
2,589
|
|
|
•
|
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.
|
|
|
|
September 30,
|
||||||||||
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
United States
|
|
$
|
196,364
|
|
|
$
|
276,340
|
|
|
$
|
136,971
|
|
|
Foreign
|
|
—
|
|
|
(52
|
)
|
|
(51
|
)
|
|||
|
Total
|
|
$
|
196,364
|
|
|
$
|
276,288
|
|
|
$
|
136,920
|
|
|
|
|
September 30,
|
||||||||||
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
Current:
|
|
|
|
|
|
|
||||||
|
Federal
|
|
$
|
20,020
|
|
|
$
|
29,644
|
|
|
$
|
22,792
|
|
|
State
|
|
7,302
|
|
|
9,403
|
|
|
5,181
|
|
|||
|
Deferred:
|
|
|
|
|
|
|
||||||
|
Federal
|
|
(28
|
)
|
|
15,043
|
|
|
245
|
|
|||
|
State
|
|
26
|
|
|
4,772
|
|
|
33
|
|
|||
|
Total
|
|
$
|
27,320
|
|
|
$
|
58,862
|
|
|
$
|
28,251
|
|
|
|
|
September 30,
|
|||||||
|
|
|
2019
|
|
2018
|
|
2017
|
|||
|
Income taxes computed at the federal statutory rate
|
|
21.0
|
%
|
|
24.5
|
%
|
|
35.0
|
%
|
|
State taxes, net of federal benefit
|
|
2.9
|
%
|
|
2.6
|
%
|
|
2.5
|
%
|
|
Tax Act transitional impact (1)
|
|
—
|
%
|
|
7.2
|
%
|
|
—
|
%
|
|
Permanent items (2)
|
|
0.1
|
%
|
|
(2.2
|
)%
|
|
—
|
%
|
|
Net income attributable to noncontrolling interest
|
|
(10.1
|
)%
|
|
(10.8
|
)%
|
|
(16.9
|
)%
|
|
Total
|
|
13.9
|
%
|
|
21.3
|
%
|
|
20.6
|
%
|
|
(1)
|
Transitional impact for the year ending September 30, 2018 is the $19,817 adjustment to our deferred tax asset due to the reduction in our corporate income tax rate under the Tax Act.
|
|
(2)
|
Permanent items for the year ending September 30, 2018 include the $24,710 reduction in our liability related to the Tax Receivable Agreement with ABP Trust discussed in Note 6, Related Person Transactions.
|
|
|
|
September 30,
|
||||||
|
|
|
2019
|
|
2018
|
||||
|
Deferred tax assets:
|
|
|
|
|
||||
|
Other deferred asset
|
|
$
|
—
|
|
|
$
|
378
|
|
|
Outside basis difference in partnership interest
|
|
25,729
|
|
|
25,726
|
|
||
|
Total deferred tax assets
|
|
25,729
|
|
|
26,104
|
|
||
|
Valuation allowance
|
|
—
|
|
|
(378
|
)
|
||
|
Total deferred tax assets
|
|
$
|
25,729
|
|
|
$
|
25,726
|
|
|
|
|
September 30,
|
||||||
|
|
|
2019
|
|
2018
|
||||
|
Money market funds included in cash and cash equivalents
|
|
$
|
357,526
|
|
|
$
|
253,876
|
|
|
Current portion of due from related parties related to share based payment awards
|
|
4,814
|
|
|
4,986
|
|
||
|
Long term portion of due from related parties related to share based payment awards
|
|
9,238
|
|
|
8,183
|
|
||
|
Current portion of employer compensation liability related to share based payment awards included in accounts payable and accrued expenses
|
|
4,814
|
|
|
4,986
|
|
||
|
Long term portion of employer compensation liability related to share based payment awards
|
|
9,238
|
|
|
8,183
|
|
||
|
|
|
Fiscal Year Ended September 30,
|
|||||||||||||||||||
|
|
|
2019 (1)
|
|
2018
|
|
2017
|
|||||||||||||||
|
|
|
$
|
|
%
|
|
$
|
|
%
|
|
$
|
|
%
|
|||||||||
|
Managed Equity REITs:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
ILPT
|
|
$
|
43,242
|
|
|
6.1
|
%
|
|
$
|
10,935
|
|
|
2.7
|
%
|
|
$
|
—
|
|
|
—
|
%
|
|
OPI (2)
|
|
239,291
|
|
|
33.5
|
|
|
53,954
|
|
|
13.3
|
|
|
35,378
|
|
|
13.0
|
|
|||
|
SIR (2) (3)
|
|
47,843
|
|
|
6.7
|
|
|
62,321
|
|
|
15.4
|
|
|
44,746
|
|
|
16.5
|
|
|||
|
SNH
|
|
210,728
|
|
|
29.5
|
|
|
118,301
|
|
|
29.2
|
|
|
60,926
|
|
|
22.4
|
|
|||
|
SVC
|
|
102,029
|
|
|
14.3
|
|
|
118,596
|
|
|
29.3
|
|
|
95,198
|
|
|
35.0
|
|
|||
|
|
|
643,133
|
|
|
90.1
|
|
|
364,107
|
|
|
89.9
|
|
|
236,248
|
|
|
86.9
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Managed Operators:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Five Star
|
|
9,702
|
|
|
1.4
|
|
|
9,840
|
|
|
2.4
|
|
|
9,624
|
|
|
3.5
|
|
|||
|
Sonesta
|
|
3,186
|
|
|
0.4
|
|
|
2,847
|
|
|
0.7
|
|
|
2,341
|
|
|
0.9
|
|
|||
|
TA
|
|
14,191
|
|
|
2.0
|
|
|
15,357
|
|
|
3.8
|
|
|
14,772
|
|
|
5.4
|
|
|||
|
|
|
27,079
|
|
|
3.8
|
|
|
28,044
|
|
|
6.9
|
|
|
26,737
|
|
|
9.8
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Other Client Companies:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
ABP Trust
|
|
15,070
|
|
|
2.1
|
|
|
4,865
|
|
|
1.2
|
|
|
3,916
|
|
|
1.5
|
|
|||
|
AIC
|
|
570
|
|
|
0.1
|
|
|
240
|
|
|
0.1
|
|
|
240
|
|
|
0.1
|
|
|||
|
Open End Fund
|
|
20,366
|
|
|
2.9
|
|
|
608
|
|
|
0.2
|
|
|
—
|
|
|
—
|
|
|||
|
RIF
|
|
3,013
|
|
|
0.4
|
|
|
2,888
|
|
|
0.7
|
|
|
2,451
|
|
|
0.9
|
|
|||
|
TRMT
|
|
3,509
|
|
|
0.5
|
|
|
2,505
|
|
|
0.6
|
|
|
85
|
|
|
—
|
|
|||
|
|
|
42,528
|
|
|
6.0
|
|
|
11,106
|
|
|
2.8
|
|
|
6,692
|
|
|
2.5
|
|
|||
|
Total revenues from related parties
|
|
712,740
|
|
|
99.9
|
|
|
403,257
|
|
|
99.6
|
|
|
269,677
|
|
|
99.2
|
|
|||
|
Revenues from unrelated parties
|
|
628
|
|
|
0.1
|
|
|
1,722
|
|
|
0.4
|
|
|
2,051
|
|
|
0.8
|
|
|||
|
|
|
$
|
713,368
|
|
|
100.0
|
%
|
|
$
|
404,979
|
|
|
100.0
|
%
|
|
$
|
271,728
|
|
|
100.0
|
%
|
|
(1)
|
Revenues from related parties for the fiscal year ended September 30, 2019 include other Client Company reimbursable expenses of $354,540 and reflects the adoption of ASC 606 as summarized in Note 2, Summary of Significant Accounting Policies.
|
|
(2)
|
SIR merged with and into OPI on December 31, 2018 with OPI continuing as the surviving entity. This table presents revenues for the fiscal years ended September 30, 2018 and 2017 and, for the part of the fiscal year ended September 30, 2019, from SIR separately as they relate to periods prior to this merger.
|
|
(3)
|
For the three months ended December 31, 2018, we recognized $47,843 in revenues from SIR, which amounted to 17.1% of our revenues from related parties for that period.
|
|
|
|
September 30,
|
||||||
|
|
|
2019 (1)
|
|
2018
|
||||
|
Managed Equity REITs:
|
|
|
|
|
||||
|
ILPT
|
|
$
|
10,630
|
|
|
$
|
2,692
|
|
|
OPI
|
|
39,233
|
|
|
7,870
|
|
||
|
SIR
|
|
—
|
|
|
5,887
|
|
||
|
SNH
|
|
25,505
|
|
|
9,705
|
|
||
|
SVC
|
|
18,933
|
|
|
8,391
|
|
||
|
|
|
94,301
|
|
|
34,545
|
|
||
|
|
|
|
|
|
||||
|
Managed Operators:
|
|
|
|
|
||||
|
Five Star
|
|
136
|
|
|
281
|
|
||
|
Sonesta
|
|
37
|
|
|
30
|
|
||
|
TA
|
|
392
|
|
|
599
|
|
||
|
|
|
565
|
|
|
910
|
|
||
|
|
|
|
|
|
||||
|
Other Client Companies:
|
|
|
|
|
||||
|
ABP Trust
|
|
2,580
|
|
|
383
|
|
||
|
AIC
|
|
7
|
|
|
20
|
|
||
|
Open End Fund
|
|
4,567
|
|
|
608
|
|
||
|
RIF
|
|
75
|
|
|
31
|
|
||
|
TRMT
|
|
664
|
|
|
532
|
|
||
|
|
|
7,893
|
|
|
1,574
|
|
||
|
|
|
$
|
102,759
|
|
|
$
|
37,029
|
|
|
(1)
|
Amounts due from related parties as of September 30, 2019 include other Client Company reimbursable expenses of $65,909 reflecting the adoption of ASC 606 as summarized in Note 2, Summary of Significant Accounting Policies.
|
|
•
|
ABP Trust Registration Rights Agreement. RMR Inc. is party to a registration rights agreement with ABP Trust pursuant to which RMR Inc. has granted ABP Trust demand and piggyback registration rights, subject to certain limitations, covering the Class A Common Shares ABP Trust owns, including the shares received on conversion of Class B-1 Common Shares or redemption of the paired Class B-2 Common Shares and Class A Units of RMR LLC.
|
|
•
|
Founders Registration Rights and Lock-Up Agreements. Adam D. Portnoy and ABP Trust are parties to a registration rights and lock-up agreement with each of OPI, SNH and SVC with respect to each such Managed Equity REITs’ common shares pursuant to which ABP Trust and Adam D. Portnoy agreed not to transfer the Managed Equity REITs’ common shares they acquired in connection with RMR LLC’s reorganization in June 2015 for a period of ten years, subject to certain exceptions, and each of those Managed Equity REITs has granted ABP Trust and Adam D. Portnoy demand and piggyback registration rights, subject to certain limitations.
|
|
|
|
Fiscal Year Ended September 30,
|
|||||||
|
|
|
2019
|
|
2018
|
|
||||
|
Former executive officers:
|
|
|
|
|
|
||||
|
Cash separation costs
|
|
$
|
5,312
|
|
|
$
|
1,875
|
|
|
|
Equity based separation costs
|
|
1,488
|
|
|
483
|
|
|
||
|
|
|
6,800
|
|
|
2,358
|
|
|
||
|
Former nonexecutive officers:
|
|
|
|
|
|
||||
|
Cash separation costs
|
|
153
|
|
|
1,372
|
|
|
||
|
Equity based separation costs
|
|
97
|
|
|
—
|
|
|
||
|
|
|
250
|
|
|
1,372
|
|
|
||
|
Total separation costs
|
|
$
|
7,050
|
|
|
$
|
3,730
|
|
|
|
|
|
2019
|
|
2018
|
|
2017
|
|||||||||||||||
|
|
|
|
|
Weighted
|
|
|
|
Weighted
|
|
|
|
Weighted
|
|||||||||
|
|
|
Number
|
|
Average
|
|
Number
|
|
Average
|
|
Number
|
|
Average
|
|||||||||
|
|
|
of
|
|
Grant Date
|
|
of
|
|
Grant Date
|
|
of
|
|
Grant Date
|
|||||||||
|
|
|
Shares
|
|
Fair Value
|
|
Shares
|
|
Fair Value
|
|
Shares
|
|
Fair Value
|
|||||||||
|
Unvested shares, beginning of year
|
|
110,240
|
|
|
$
|
69.11
|
|
|
104,020
|
|
|
$
|
45.57
|
|
|
57,760
|
|
|
$
|
37.84
|
|
|
Shares granted
|
|
90,400
|
|
|
$
|
48.31
|
|
|
77,500
|
|
|
$
|
90.83
|
|
|
88,600
|
|
|
$
|
50.65
|
|
|
Vested shares withheld and repurchased
|
|
(17,167
|
)
|
|
$
|
48.18
|
|
|
(11,369
|
)
|
|
$
|
86.92
|
|
|
(6,966
|
)
|
|
$
|
51.35
|
|
|
Shares vested
|
|
(56,833
|
)
|
|
$
|
51.46
|
|
|
(59,671
|
)
|
|
$
|
64.90
|
|
|
(35,374
|
)
|
|
$
|
44.69
|
|
|
Shares forfeited
|
|
(480
|
)
|
|
$
|
68.95
|
|
|
(240
|
)
|
|
$
|
84.90
|
|
|
—
|
|
|
$
|
—
|
|
|
Unvested shares, end of year
|
|
126,160
|
|
|
$
|
59.38
|
|
|
110,240
|
|
|
$
|
69.11
|
|
|
104,020
|
|
|
$
|
45.57
|
|
|
Declaration
|
|
Record
|
|
Paid
|
|
Distributions
|
|
Total
|
||||
|
Date
|
|
Date
|
|
Date
|
|
Per Common Share
|
|
Distributions
|
||||
|
Fiscal Year 2019
|
|
|
|
|
||||||||
|
10/18/2018
|
|
10/29/2018
|
|
11/15/2018
|
|
$
|
0.35
|
|
|
$
|
5,680
|
|
|
1/18/2019
|
|
1/28/2019
|
|
2/21/2019
|
|
0.35
|
|
|
5,680
|
|
||
|
4/18/2019
|
|
4/29/2019
|
|
5/16/2019
|
|
0.35
|
|
|
5,684
|
|
||
|
7/18/2019
|
|
7/29/2019
|
|
8/15/2019
|
|
0.35
|
|
|
5,683
|
|
||
|
|
|
|
|
|
|
$
|
1.40
|
|
|
$
|
22,727
|
|
|
Fiscal Year 2018
|
|
|
|
|
||||||||
|
10/12/2017
|
|
10/23/2017
|
|
11/16/2017
|
|
$
|
0.25
|
|
|
$
|
4,041
|
|
|
1/19/2018
|
|
1/29/2018
|
|
2/22/2018
|
|
0.25
|
|
|
4,040
|
|
||
|
4/19/2018
|
|
4/30/2018
|
|
5/17/2018
|
|
0.25
|
|
|
4,044
|
|
||
|
7/19/2018
|
|
7/30/2018
|
|
8/16/2018
|
|
0.25
|
|
|
4,044
|
|
||
|
|
|
|
|
|
|
$
|
1.00
|
|
|
$
|
16,169
|
|
|
|
|
|
|
|
|
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
|
||||||||
|
Fiscal Year 2019
|
|
|
|
|
|
|
|
|
||||||||||||
|
10/18/2018
|
|
10/29/2018
|
|
11/15/2018
|
|
$
|
0.30
|
|
|
$
|
9,369
|
|
|
$
|
4,869
|
|
|
$
|
4,500
|
|
|
1/18/2019
|
|
1/28/2019
|
|
2/21/2019
|
|
0.30
|
|
|
9,369
|
|
|
4,869
|
|
|
4,500
|
|
||||
|
4/18/2019
|
|
4/29/2019
|
|
5/16/2019
|
|
0.30
|
|
|
9,372
|
|
|
4,872
|
|
|
4,500
|
|
||||
|
7/18/2019
|
|
7/29/2019
|
|
8/15/2019
|
|
0.30
|
|
|
9,371
|
|
|
4,871
|
|
|
4,500
|
|
||||
|
|
|
|
|
|
|
$
|
1.20
|
|
|
$
|
37,481
|
|
|
$
|
19,481
|
|
|
$
|
18,000
|
|
|
Fiscal Year 2018
|
|
|
|
|
|
|
|
|
||||||||||||
|
10/12/2017
|
|
10/23/2017
|
|
11/16/2017
|
|
$
|
0.25
|
|
|
$
|
7,791
|
|
|
$
|
4,041
|
|
|
$
|
3,750
|
|
|
1/19/2018
|
|
1/29/2018
|
|
2/22/2018
|
|
0.25
|
|
|
7,790
|
|
|
4,040
|
|
|
3,750
|
|
||||
|
4/19/2018
|
|
4/30/2018
|
|
5/17/2018
|
|
0.25
|
|
|
7,794
|
|
|
4,044
|
|
|
3,750
|
|
||||
|
7/19/2018
|
|
7/30/2018
|
|
8/16/2018
|
|
0.25
|
|
|
7,794
|
|
|
4,044
|
|
|
3,750
|
|
||||
|
|
|
|
|
|
|
$
|
1.00
|
|
|
$
|
31,169
|
|
|
$
|
16,169
|
|
|
$
|
15,000
|
|
|
|
|
Fiscal Year Ended September 30,
|
||||||||||
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
Basic EPS
|
|
|
|
|
|
|
||||||
|
Numerator:
|
|
|
|
|
|
|
||||||
|
Net income attributable to The RMR Group Inc.
|
|
$
|
74,580
|
|
|
$
|
96,041
|
|
|
$
|
42,293
|
|
|
Income attributable to unvested participating securities
|
|
(482
|
)
|
|
(564
|
)
|
|
(158
|
)
|
|||
|
Net income attributable to The RMR Group Inc. used in calculating basic EPS
|
|
$
|
74,098
|
|
|
$
|
95,477
|
|
|
$
|
42,135
|
|
|
Denominator:
|
|
|
|
|
|
|
||||||
|
Weighted average common shares outstanding - basic
|
|
16,132
|
|
|
16,077
|
|
|
16,032
|
|
|||
|
Net income attributable to The RMR Group Inc. per common share - basic
|
|
$
|
4.59
|
|
|
$
|
5.94
|
|
|
$
|
2.63
|
|
|
|
|
|
|
|
|
|
||||||
|
Diluted EPS
|
|
|
|
|
|
|
||||||
|
Numerator:
|
|
|
|
|
|
|
||||||
|
Net income attributable to The RMR Group Inc.
|
|
$
|
74,580
|
|
|
$
|
96,041
|
|
|
$
|
42,293
|
|
|
Income attributable to unvested participating securities
|
|
(482
|
)
|
|
(564
|
)
|
|
(158
|
)
|
|||
|
Net income attributable to The RMR Group Inc. used in calculating diluted EPS
|
|
$
|
74,098
|
|
|
$
|
95,477
|
|
|
$
|
42,135
|
|
|
Denominator:
|
|
|
|
|
|
|
||||||
|
Weighted average common shares outstanding - basic
|
|
16,132
|
|
|
16,077
|
|
|
16,032
|
|
|||
|
Dilutive effect of incremental unvested shares
|
|
11
|
|
|
43
|
|
|
16
|
|
|||
|
Weighted average common shares outstanding - diluted
|
|
16,143
|
|
|
16,120
|
|
|
16,048
|
|
|||
|
Net income attributable to The RMR Group Inc. per common share - diluted
|
|
$
|
4.59
|
|
|
$
|
5.92
|
|
|
$
|
2.63
|
|
|
|
Fiscal Year Ended September 30,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
Income before income tax expense
|
$
|
196,364
|
|
|
$
|
276,288
|
|
|
$
|
136,920
|
|
|
RMR Inc. franchise tax expense and interest income
|
329
|
|
|
488
|
|
|
635
|
|
|||
|
Tax receivable agreement remeasurement
|
—
|
|
|
(24,710
|
)
|
|
—
|
|
|||
|
Fees from services provided prior to our initial public offering
|
—
|
|
|
(127
|
)
|
|
—
|
|
|||
|
Net income before noncontrolling interest
|
196,693
|
|
|
251,939
|
|
|
137,555
|
|
|||
|
Net income attributable to noncontrolling interest
|
(94,464
|
)
|
|
(121,258
|
)
|
|
(66,376
|
)
|
|||
|
Net income attributable to RMR Inc. before income tax expense
|
102,229
|
|
|
130,681
|
|
|
71,179
|
|
|||
|
Tax receivable agreement remeasurement
|
—
|
|
|
24,710
|
|
|
—
|
|
|||
|
Income tax expense attributable to RMR Inc.
|
(27,320
|
)
|
|
(58,862
|
)
|
|
(28,251
|
)
|
|||
|
RMR Inc. franchise tax expense and interest income
|
(329
|
)
|
|
(488
|
)
|
|
(635
|
)
|
|||
|
Net income attributable to RMR Inc.
|
$
|
74,580
|
|
|
$
|
96,041
|
|
|
$
|
42,293
|
|
|
2020
|
$
|
5,264
|
|
|
2021
|
5,215
|
|
|
|
2022
|
5,293
|
|
|
|
2023
|
4,658
|
|
|
|
2024
|
4,212
|
|
|
|
Thereafter
|
21,286
|
|
|
|
|
$
|
45,928
|
|
|
|
|
Fiscal Year Ended September 30, 2019
|
||||||||||
|
|
|
|
|
All Other
|
|
|
||||||
|
|
|
RMR LLC (1)
|
|
Operations
|
|
Total
|
||||||
|
Revenues:
|
|
|
|
|
|
|
||||||
|
Management services
|
|
$
|
178,075
|
|
|
$
|
—
|
|
|
$
|
178,075
|
|
|
Incentive business management fees
|
|
120,094
|
|
|
—
|
|
|
120,094
|
|
|||
|
Advisory services
|
|
—
|
|
|
3,169
|
|
|
3,169
|
|
|||
|
Total management and advisory services revenues
|
|
298,169
|
|
|
3,169
|
|
|
301,338
|
|
|||
|
Reimbursable compensation and benefits
|
|
54,816
|
|
|
2,674
|
|
|
57,490
|
|
|||
|
Other client company reimbursable expenses
|
|
354,540
|
|
|
—
|
|
|
354,540
|
|
|||
|
Total reimbursable costs
|
|
409,356
|
|
|
2,674
|
|
|
412,030
|
|
|||
|
Total revenues
|
|
707,525
|
|
|
5,843
|
|
|
713,368
|
|
|||
|
Expenses:
|
|
|
|
|
|
|
||||||
|
Compensation and benefits
|
|
107,562
|
|
|
6,967
|
|
|
114,529
|
|
|||
|
Equity based compensation
|
|
8,862
|
|
|
178
|
|
|
9,040
|
|
|||
|
Separation costs
|
|
7,050
|
|
|
—
|
|
|
7,050
|
|
|||
|
Total compensation and benefits expense
|
|
123,474
|
|
|
7,145
|
|
|
130,619
|
|
|||
|
General and administrative
|
|
25,026
|
|
|
3,680
|
|
|
28,706
|
|
|||
|
Other client company reimbursable expenses
|
|
354,540
|
|
|
—
|
|
|
354,540
|
|
|||
|
Transaction and acquisition related costs
|
|
698
|
|
|
—
|
|
|
698
|
|
|||
|
Depreciation and amortization
|
|
966
|
|
|
51
|
|
|
1,017
|
|
|||
|
Total expenses
|
|
504,704
|
|
|
10,876
|
|
|
515,580
|
|
|||
|
Operating income (loss)
|
|
202,821
|
|
|
(5,033
|
)
|
|
197,788
|
|
|||
|
Interest and other income
|
|
7,831
|
|
|
939
|
|
|
8,770
|
|
|||
|
Impairment loss on Tremont Mortgage Trust investment
|
|
—
|
|
|
(6,213
|
)
|
|
(6,213
|
)
|
|||
|
Equity in earnings of investees
|
|
—
|
|
|
719
|
|
|
719
|
|
|||
|
Unrealized loss on equity method investment accounted for under the fair value option
|
|
(4,700
|
)
|
|
—
|
|
|
(4,700
|
)
|
|||
|
Income (loss) before income tax expense
|
|
205,952
|
|
|
(9,588
|
)
|
|
196,364
|
|
|||
|
Income tax expense
|
|
—
|
|
|
(27,320
|
)
|
|
(27,320
|
)
|
|||
|
Net income (loss)
|
|
$
|
205,952
|
|
|
$
|
(36,908
|
)
|
|
$
|
169,044
|
|
|
|
|
|
|
|
|
|
||||||
|
Total assets
|
|
$
|
606,844
|
|
|
$
|
61,028
|
|
|
$
|
667,872
|
|
|
(1)
|
Intersegment revenues of $3,975 recognized by RMR LLC for services provided to our All Other Operations segment have been eliminated in the consolidated financial statements.
|
|
|
|
Fiscal Year Ended September 30, 2018
|
||||||||||
|
|
|
|
|
All Other
|
|
|
||||||
|
|
|
RMR LLC (1)
|
|
Operations
|
|
Total
|
||||||
|
Revenues:
|
|
|
|
|
|
|
||||||
|
Management services
|
|
$
|
191,594
|
|
|
$
|
—
|
|
|
$
|
191,594
|
|
|
Incentive business management fees
|
|
155,881
|
|
|
—
|
|
|
155,881
|
|
|||
|
Advisory services
|
|
—
|
|
|
4,352
|
|
|
4,352
|
|
|||
|
Total management and advisory services revenues
|
|
347,475
|
|
|
4,352
|
|
|
351,827
|
|
|||
|
Reimbursable compensation and benefits
|
|
50,664
|
|
|
2,488
|
|
|
53,152
|
|
|||
|
Total reimbursable costs
|
|
50,664
|
|
|
2,488
|
|
|
53,152
|
|
|||
|
Total revenues
|
|
398,139
|
|
|
6,840
|
|
|
404,979
|
|
|||
|
Expenses:
|
|
|
|
|
|
|
||||||
|
Compensation and benefits
|
|
102,736
|
|
|
6,027
|
|
|
108,763
|
|
|||
|
Equity based compensation
|
|
10,310
|
|
|
113
|
|
|
10,423
|
|
|||
|
Separation costs
|
|
2,946
|
|
|
784
|
|
|
3,730
|
|
|||
|
Total compensation and benefits expense
|
|
115,992
|
|
|
6,924
|
|
|
122,916
|
|
|||
|
General and administrative
|
|
23,397
|
|
|
3,752
|
|
|
27,149
|
|
|||
|
Transaction and acquisition related costs
|
|
1,555
|
|
|
142
|
|
|
1,697
|
|
|||
|
Depreciation and amortization
|
|
1,161
|
|
|
87
|
|
|
1,248
|
|
|||
|
Total expenses
|
|
142,105
|
|
|
10,905
|
|
|
153,010
|
|
|||
|
Operating income (loss)
|
|
256,034
|
|
|
(4,065
|
)
|
|
251,969
|
|
|||
|
Interest and other income
|
|
4,170
|
|
|
376
|
|
|
4,546
|
|
|||
|
Tax receivable agreement remeasurement
|
|
—
|
|
|
24,710
|
|
|
24,710
|
|
|||
|
Impairment loss on Tremont Mortgage Trust investment
|
|
—
|
|
|
(4,359
|
)
|
|
(4,359
|
)
|
|||
|
Equity in earnings (losses) of investees
|
|
33
|
|
|
(611
|
)
|
|
(578
|
)
|
|||
|
Income before income tax expense
|
|
260,237
|
|
|
16,051
|
|
|
276,288
|
|
|||
|
Income tax expense
|
|
—
|
|
|
(58,862
|
)
|
|
(58,862
|
)
|
|||
|
Net income (loss)
|
|
$
|
260,237
|
|
|
$
|
(42,811
|
)
|
|
$
|
217,426
|
|
|
|
|
|
|
|
|
|
||||||
|
Total assets
|
|
$
|
443,211
|
|
|
$
|
61,217
|
|
|
$
|
504,428
|
|
|
(1)
|
Intersegment revenues of $4,002 recognized by RMR LLC for services provided to our All Other Operations segment have been eliminated in the consolidated financial statements.
|
|
|
|
Fiscal Year Ended September 30, 2017
|
||||||||||
|
|
|
|
|
All Other
|
|
|
||||||
|
|
|
RMR LLC (1)
|
|
Operations
|
|
Total
|
||||||
|
Revenues:
|
|
|
|
|
|
|
||||||
|
Management services
|
|
$
|
174,887
|
|
|
$
|
—
|
|
|
$
|
174,887
|
|
|
Incentive business management fees
|
|
52,407
|
|
|
—
|
|
|
52,407
|
|
|||
|
Advisory services
|
|
—
|
|
|
4,102
|
|
|
4,102
|
|
|||
|
Total management and advisory services revenues
|
|
227,294
|
|
|
4,102
|
|
|
231,396
|
|
|||
|
Reimbursable compensation and benefits
|
|
40,279
|
|
|
53
|
|
|
40,332
|
|
|||
|
Total reimbursable costs
|
|
40,279
|
|
|
53
|
|
|
40,332
|
|
|||
|
Total revenues
|
|
267,573
|
|
|
4,155
|
|
|
271,728
|
|
|||
|
Expenses:
|
|
|
|
|
|
|
||||||
|
Compensation and benefits
|
|
89,688
|
|
|
2,937
|
|
|
92,625
|
|
|||
|
Equity based compensation
|
|
7,128
|
|
|
—
|
|
|
7,128
|
|
|||
|
Total compensation and benefits expense
|
|
96,816
|
|
|
2,937
|
|
|
99,753
|
|
|||
|
General and administrative
|
|
23,538
|
|
|
1,651
|
|
|
25,189
|
|
|||
|
Transaction and acquisition related costs
|
|
337
|
|
|
8,850
|
|
|
9,187
|
|
|||
|
Depreciation and amortization
|
|
1,415
|
|
|
623
|
|
|
2,038
|
|
|||
|
Total expenses
|
|
122,106
|
|
|
14,061
|
|
|
136,167
|
|
|||
|
Operating income (loss)
|
|
145,467
|
|
|
(9,906
|
)
|
|
135,561
|
|
|||
|
Interest and other income
|
|
1,130
|
|
|
435
|
|
|
1,565
|
|
|||
|
Equity in losses of investees
|
|
—
|
|
|
(206
|
)
|
|
(206
|
)
|
|||
|
Income (loss) before income tax expense
|
|
146,597
|
|
|
(9,677
|
)
|
|
136,920
|
|
|||
|
Income tax expense
|
|
—
|
|
|
(28,251
|
)
|
|
(28,251
|
)
|
|||
|
Net income (loss)
|
|
$
|
146,597
|
|
|
$
|
(37,928
|
)
|
|
$
|
108,669
|
|
|
|
|
|
|
|
|
|
||||||
|
Total assets
|
|
$
|
308,018
|
|
|
$
|
75,701
|
|
|
$
|
383,719
|
|
|
(1)
|
Intersegment revenues of $738 recognized by RMR LLC for services provided to our All Other Operations segment have been eliminated in the consolidated financial statements.
|
|
|
|
2019
|
||||||||||||||
|
|
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
||||||||
|
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
||||||||
|
Total revenues
|
|
$
|
280,313
|
|
(1)
|
$
|
130,096
|
|
|
$
|
143,715
|
|
|
$
|
159,244
|
|
|
Net income
|
|
$
|
118,080
|
|
|
$
|
18,708
|
|
|
$
|
13,373
|
|
|
$
|
18,883
|
|
|
Net income attributable to The RMR Group Inc.
|
|
$
|
52,209
|
|
|
$
|
8,168
|
|
|
$
|
5,849
|
|
|
$
|
8,354
|
|
|
Net income attributable to The RMR Group Inc. per common share - diluted
|
|
$
|
3.22
|
|
|
$
|
0.50
|
|
|
$
|
0.36
|
|
|
$
|
0.51
|
|
|
Common distributions declared
|
|
$
|
0.35
|
|
|
$
|
0.35
|
|
|
$
|
0.35
|
|
|
$
|
0.35
|
|
|
(1)
|
Includes incentive business management fee revenue of $120,094.
|
|
|
|
2018
|
||||||||||||||
|
|
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
||||||||
|
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
||||||||
|
Total revenues
|
|
$
|
218,541
|
|
(1)
|
$
|
59,281
|
|
|
$
|
62,084
|
|
|
$
|
65,073
|
|
|
Net income
|
|
$
|
159,324
|
|
|
$
|
19,642
|
|
|
$
|
19,449
|
|
|
$
|
19,011
|
|
|
Net income attributable to The RMR Group Inc.
|
|
$
|
71,120
|
|
|
$
|
8,356
|
|
|
$
|
8,381
|
|
|
$
|
8,184
|
|
|
Net income attributable to The RMR Group Inc. per common share - diluted
|
|
$
|
4.39
|
|
|
$
|
0.52
|
|
|
$
|
0.52
|
|
|
$
|
0.50
|
|
|
Common distributions declared
|
|
$
|
0.25
|
|
|
$
|
0.25
|
|
|
$
|
0.25
|
|
|
$
|
0.25
|
|
|
(1)
|
Includes incentive business management fee revenue of $155,881.
|
|
|
|
|
|
|
THE RMR GROUP INC.
|
|
|
|
By:
|
/s/ Adam D. Portnoy
|
|
|
|
Adam D. Portnoy
|
|
|
|
Managing Director, President and Chief Executive Officer
|
|
|
Dated:
|
November 22, 2019
|
|
|
|
|
|
|
|
Signature
|
|
Title
|
|
Date
|
|
/s/ Adam D. Portnoy
|
|
Managing Director, President and Chief Executive Officer (principal executive officer)
|
|
November 22, 2019
|
|
Adam D. Portnoy
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Matthew P. Jordan
|
|
Executive Vice President, Chief Financial Officer and Treasurer (principal financial officer and principal accounting officer)
|
|
November 22, 2019
|
|
Matthew P. Jordan
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Jennifer B. Clark
|
|
Managing Director, Executive Vice President, General Counsel and Secretary
|
|
November 22, 2019
|
|
Jennifer B. Clark
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Ann Logan
|
|
Independent Director
|
|
November 22, 2019
|
|
Ann Logan
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Rosen Plevneliev
|
|
Independent Director
|
|
November 22, 2019
|
|
Rosen Plevneliev
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Walter C. Watkins, Jr.
|
|
Independent Director
|
|
November 22, 2019
|
|
Walter C. Watkins, Jr.
|
|
|
|
|
|
•
|
the act or omission of the director or officer was material to the matter giving rise to the proceeding and (1) was committed in bad faith or (2) was the result of active and deliberate dishonesty;
|
|
•
|
the director or officer actually received an improper personal benefit in money, property or services; or
|
|
•
|
in the case of any criminal proceeding, the director or officer had reasonable cause to believe that the act or omission was unlawful.
|
|
•
|
a written affirmation by the director or officer of his or her good faith belief that he or she has met the standard of conduct necessary for indemnification by the corporation; and
|
|
•
|
a written undertaking by him or her or on his or her behalf to repay the amount paid or reimbursed by the corporation if it is ultimately determined that this standard of conduct was not met.
|
|
•
|
any person who beneficially owns, directly or indirectly, 10% or more of the voting power of our outstanding voting shares; or
|
|
•
|
any of our affiliates or associates who, at any time within the two year period prior to the date in question, was the beneficial owner, directly or indirectly, of 10% or more of the voting power of our then outstanding voting shares.
|
|
•
|
the affirmative vote of at least 80% of the votes entitled to be cast by the holders of outstanding shares of voting stock of the corproation; and
|
|
•
|
the affirmative vote of at least two thirds of the votes entitled to be cast by holders of voting shares other than shares held by the interested stockholder with whom or with whose affiliate the business combination is to be effected or held by an affiliate or associate of the interested stockholder.
|
|
•
|
one-tenth or more but less than one-third;
|
|
•
|
one-third or more but less than a majority; or
|
|
•
|
a majority or more of all voting power.
|
|
•
|
a classified board;
|
|
•
|
a requirement that a special meeting of the stockholders be called at the request of stockholders only if requested by stockholders entitled to cast at least a majority of the votes entitled to be cast at the meeting;
|
|
•
|
a requirement that the number of directors be fixed only by a vote of the board of directors;
|
|
•
|
a requirement that a director may be removed only by the vote of the holders of two-thirds of all votes entitled to be cast generally in the election of directors; and
|
|
•
|
a requirement that a vacancy on the board of directors be filled only by the affirmative vote of a majority of the remaining directors in office, even if the remaining directors do not constitute a quorum, for the remainder of the full term of the class of directors in which the vacancy occurred and until a successor is elected and qualified.
|
|
(1)
|
Registration Statement (Form S-8 No. 333-210029) pertaining to the 2016 Omnibus Equity Plan of The RMR Group Inc.
|
|
(2)
|
Registration Statement (Form S-3 No.333- 228662) and related Prospectus of The RMR Group Inc.
|
|
1.
|
I have reviewed this Annual Report on Form 10-K of The RMR Group Inc.;
|
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
Date: November 22, 2019
|
/s/ Adam D. Portnoy
|
|
|
Adam D. Portnoy
Managing Director, President and Chief Executive Officer (principal executive officer)
|
|
1.
|
I have reviewed this Annual Report on Form 10-K of The RMR Group Inc.;
|
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
Date: November 22, 2019
|
/s/ Matthew P. Jordan
|
|
|
Matthew P. Jordan
Executive Vice President, Chief Financial Officer and Treasurer (principal financial officer and principal accounting officer)
|
|
1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
|
2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
/s/ Adam D. Portnoy
|
|
/s/ Matthew P. Jordan
|
|
Adam D. Portnoy
Managing Director, President and Chief Executive Officer (principal executive officer)
|
|
Matthew P. Jordan
Executive Vice President, Chief Financial Officer and Treasurer (principal financial officer and principal accounting officer)
|