The RMR Group Inc. (RMR) 12 Nov 242024 Q4 Earnings call transcript

Good morning, and welcome to the RMR Group Fiscal Fourth Quarter 2024 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded.

I would now like to turn the conference over to Kevin Barry, Senior Director of Investor Relations. Please go ahead.

Good morning, and thank you for joining RMR's Fourth Quarter Fiscal 2024 Conference Call. call Officer, and Matt today's and Adam on Financial Chief Jordan. me are CEO, President Portnoy; With In just question-and-answer a our business moment, they will quarterly followed provide results, by a session. and details about note I would today's call of prohibited is the consent and the written company. retransmission conference prior that without the also of recording to like

on expectations Today's conference Litigation within These Act of XXXX of statements statements Reform XX, securities forward-looking of laws. and meaning call the contains RMR's are November today, based and as forward-looking Securities the beliefs other Private and materially made XXXX, statements no from that we any publicly actual revise release of forward-looking to the in undertakes company today's those revision results may to results the conference differ project. call. obligation or The

could our statements. contained that to cautioned Exchange differences information place our found and Securities are reliance concerning filings forward-looking the which at upon cause in can Commission, be not undue website on factors is those Investors with rmrgroup.com. Additional any

discuss our this of net In share, with adjusted be these reconciliation A we non-GAAP adjusted principles call, EBITDA. accounting distributable determined in earnings figures numbers in per accepted income, net may found U.S. income accordance earnings addition, financial to adjusted results. and including non-GAAP generally can during

the will Adam. I turn call now to over

of joining Thanks, expectations, our which reported for and distributable that Kevin, $XX.X adjusted million. thank Yesterday, per in you income EBITDA earnings $X.XX line with and included share us we were per morning. this $X.XX, all share fourth of net generally quarter of results adjusted

activity increased entering specifically, environment. as favorable that fundraising a capital our and signs time our have past environment. estate transaction year, a resources an past invest seeing business, a public challenging into we simultaneously environment. real More more increase a result, energized private are we This in the seen more have while we Over commercial quarter, supporting and are market clients through to growing continued we

partners our success engaging as well seeing in capital legacy as interest we're institutional with increased potential fact, In from partners. new greater

to many an cycle. note are there important experience industry it the is fundraising that While continues reasons to for optimism, elongated

are real We our estate commercial improves. the position platform opportunities estate the and real of diversity us confident market sectors, to as encompasses that capture will scale

pipeline, and robust partners growing across advancing discussions some with previously have others sectors, We and we which future. number expect of in a discuss are we and existing to discussed new a of and the have

for to our To real transitional and we bridge previously $XXX progressing market Realty strategic expected million estate the our our for commitments Capital, initiatives. middle loans platform, returns which process generate in to and Turning date, aggregate this loans. debt seed in to The these in lending intend originated announced vehicle, fundraising is mid-teens. vehicle, are with private million $XX has Tremont

entered these repurchase September, our UBS to loans into vehicle, million the $XX outlay we of with for our approximately to which net part us allows the agreement up $XXX facility, XX%. cash using was credit master loans. million As UBS, in a effectively leverage After

a also Expanding the priority. RMR platform remains Residential

a acquiring closed in As first garden-style XXX-unit multifamily Denver. July, previously investment announced, we our in we on community

business stages leases as While still increased rental the early it in plan seeing rates property, the is already are roll. this we of for

contribution I'm we pipeline, transaction, our our will acquisitions are EBITDA its increased optimistic activity and residential seeing related in this AUM increase to addition in and residential In that XXXX.

of pipeline, continues. that home long-term the growing continued significant our multifamily high my is ownership cost housing shortage the optimism is growth market belief In addition positioned of based and U.S. to on for our as

on we and Beyond our strategic remain initiatives, operational our equity strategies. of REITs managed assisting with execution their focused the financial

of Seaport our of Pharmaceuticals leasing Boston feet X lease for District, of clients, million million square X.X on behalf FedEx. feet the X.X renewal arranged by we Vertex with early million quarter, than square the highlighted feet of more and in During the square renewal

to Turning of improve program. in combined to the significant sell recovery hotel leverage, third SVC's continued highlights with Notably, in its and performance portfolio, reflected clients. brief including actions across slow and renovation public its SVC its ongoing hotels, quarter $X our a the a few impact plans proceeds. reduction dividend, liquidity to quarterly XXX approximately reduce targeting is taking of billion Sonesta

shareholders. We performance rationalization stable lease from and its and hotel for capital improve are drive the flows confident that will long-term portfolio, management triple-net assets of cash prudent continued value its SVC

and to its $XXX continues financings, first its In debt sheet. and maturity billion the upcoming since completed in million. advance its OPI $X.X address balance debt maturities year, reduced XXXX of OPI strengthen to its nearly has half secured process the by

are advisers to OPI outside work upcoming to to strategies active OPI's with maturities. and negotiations bondholders, evaluate continue with OPI's in We possible address all we

on highest Lastly, the conducting progress its mix on to comprehensive to DHC its advance turnaround. its company is a increase initiatives properties continues markets key analysis The in upside focus and portfolio, evolve with SHOP to transform asset occupancy to opportunities. its portfolio

program are agreements has currently or of disposition process. the its of a estimated stages recently in DHC $XXX to various SHOP XX properties include expanded total sell to disposition and XX of for million proceeds LOIs communities, which

position We to the market tailwinds sustainable are drive the profitable confident that with portfolio, investments the of strategic capitalize operator and optimization will and transitions DHC capital combined growth. on

confident business on in delivered finish stable XXXX improve. a RMR recurring fiscal The continues we solid sheet. and to have opportunities position a revenues, as heading markets strong growth XXXX ahead client the see roster are diversified a and are we into to solid a to we In fiscal closing, capitalize balance

while to clients future value for create for and long-term measures taking to growth drive RMR shareholders. private advancing its and our We initiatives capital are our success, long-term actively position

Executive President I'll the over Matt our Financial Vice call now turn that, to Jordan, With Officer. and Chief

morning, good and Adam, Thanks, everyone.

earnings reported adjusted per multifamily though true-ups For from were tax EBITDA the adversely The of share of distributable fourth and majority $X.XX rate. acquisition our per our of were earnings by earnings per amortization Denver in quarter, year-end annual adjusted and our million these to share $X.XX, we costs $XX.X of impacted with and adjusted share. line measures expectations, depreciation

sequentially. Recurring with Equity quarter, in million declines driven and share decrease $XX approximately in supervision service our REIT prices Managed of This primarily was $XXX,XXX fees. expectations, decrease our by construction and revenues line were this a

Next static, revenues REITs Managed we expect quarter, enterprise these Equity our assuming remain remain service values at to at levels.

As earlier, credit strategic Adam highlighted this executed platforms. we investments our within on quarter, residential and

them detailed wholly financial the financial presentation insights are these summary impacts. have we in following while to investments provides Our by results investments. But on owned expect RMR, these

UBS loans late the September. to a loans our does these reflect $X.X not in note closed net The facility And approximately It's $X.X we investment important expense. this July were repurchase contributed million quarter. until mortgage quarter of accordingly, interest in that levered via that new EBITDA in adjusted full million income not

basis, a we to expect these EBITDA. on forward, approximately in contribute adjusted loans $XXX,XXX Going quarterly

As net it of relates operating the approximately to $XXX,XXX investment, Denver multifamily quarter, it income. this generated

$X.X basis. we contribute to of income approximately approximately this expect operating Going asset and interest forward, a of million $XXX,XXX net on quarterly expense

compensation expenses. the discussed million, to this call. $X.X compensation approximately bonus Recurring reflects Turning excludes $X we last annual declined sequentially, count true-ups million $XX which quarter's which quarter. cash million approximately head in was actions cash this on quarter Recurring

reimbursement to next ahead our going XX% expect remain million, forward. rate to recurring at $XX compensation Looking cash at cash approximately quarter, we with approximately

to quarter, transformation loan expenses reserves loss estimate $XX of next costs. $XXX,XXX increase costs. G&A $XX.X million of levels volumes will technology recurring expected construction construction to quarter of third-party Recurring million after of $XXX,XXX With improve G&A were to this due the noncash approximately we and oversight exclusion increased

related true-ups XX.X% tax rate year-end of quarter's primarily compensation. deductible provision reflects This to tax on tax income limitations

XX%. tax at expect We rate our next to approximately quarter normalize

next assumptions, earnings we to to and per share. collective per $XX $X.XX $X.XX range quarter, adjusted per to these to from $XX million Aggregating adjusted from EBITDA $X.XX distributable $X.XX to range earnings from share expect million share, to range

That the Operator, concludes remarks. questions. our please for prepared line open

Riley. today Instructions] Maher from first [Operator B. question The Bryan comes from

we to much of just initiatives? Adam, cash from Matt, deploying at RMR think today. and different day? your a million, that asked $XXX-something me retain private of couple just end AUM how RMR kind do you'll When to the maybe other day way, think think in you run capital up you it's Residential I what for do you And . percentage need position, look to a ops

good Bryan, talk you. Sure. with to

around you'll well see really accelerated, acquisitions, investment. forward. of as good well investments We're money that seen sectors good that are RMR credit we those We've last on different I about it talked pivoting a a of several very but the other in would the in the sort is the like open acquisitions amount as investments initiatives. as much think platform that, for for new time, Residential months, expect investments. you've maybe as investment going I in long focused think I seeding over it's and the say, really sectors which in and

for really just to hold of As let need to we general to I'll operations, answer Matt how sort much that. on

to would of EBITDA, I taxes growth $XX And Yes, or guess still dividends. capital generating we're and Bryan, so that's million. probably $X $XX is I million after really also about business of adjusted a $XX that's that million and highlight, million

$X more So I . than million to would say million. no $XX

receptivity Denver we And in what's think the like do of think equity percentage of stakes retain been each in that date? RMR then investments? example being Residential these stake to when what syndicating And you . acquisition, the about out you equity

Sure.

environment what in remarks, to we talk can we I today about would syndicating there's sort as anything But my the rates, happening sort So in terms been partners. prepared talked a of, about sea equity. with market over the of little say, don't I the the a active bit have is really where announce change more started conversations Fed when last lot in we have months of reducing a X of potential

equity feel funds syndicate that ground. or those be -- we optimistic either the will able to so I we eventually the get feel off And

a and it. remarks, make their is said a prepared elongated. a court can my taking money difficult are predict longer to because to lot LPs time money out it say, those judicious They very have is putting in thing this advantages generally, and precisely. again, very out be not of are decisions. I in that Investors, going there's Timing can I around

their they're making so don't making us. in is to across terms I sector. the and taking unique of this This evaluations decisions. And think And time is

than these XX%. don't believe it on XX%. average, be would will of will retention But limit equity, -- I XX%. be in I upper I our likely less will more be be think terms it expect don't I the In vehicles, our than what

making the public REITs do and for of will shrinking to at And next it just thing we and phrase, me. doing how management public think potential When X, better managed through basically your the incentive fees there, a How of through relative sacrificing think look you the in base right lack -- AUM about process? that potentially entities incentive up X last near the the in upside from the for fees the which that you management these there X, asset in do sales, years the term, from side. fee by kind lower

Sure.

primarily I a vehicles. focused is vehicles, general public So primary across interest on I that's doing all deleveraging public all we're our And and And leverage a the theme theme REITs, example, in what public the think rightsizing as generally think speaking, equity equity reducing those for the the balance the is That's of theme REITs. of objective. across and best sheet.

a view levered trade that's in trade the price. better better should speaking, a general at leveraged as that statement. rewarded -- vehicles, than is, And you those lower Generally highly get our REITs, delever REITs you equity and equity stock

over that and base the So over a stock up both is in REITs, hopefully deleverage that we'll pick price our that that's to as these hope that fee. performance, we management up time pick we'll time, increase way

base, investments just As you know, Bryan, the or lower value gross fee is assets. of AUM our not -- enterprise we get in

value. investments even lower in our are though the being REITs going the all enterprise is paid down, So gross equity on of assets of

increase or, in hopefully, more And the say, price any AUM fee. will up incentive stock And and than that base is performance. reduction potential, made our and management in, say, will hope both more fee AUM, than than drive that so made be will be let's let's there's eventually, up the estate real

take time. It's going to

on to equity our execute strategies these have that. We reach, and we with understand

So little of you said bit what is a true.

the it's actions the is focused We of recommendations of thing to the to REITs, those at and are do we're doing those those best the in taking best thing RMR, terms for these that's what but some equity what's short-term and right and right REITs on thing primarily businesses. with making Boards equity of paying course

[Operator The Kamdem comes Instructions] Ronald question Stanley. with next from Morgan

X Just quick ones.

little vehicle. Or you're lending Should the back to as looking a sort expect point? close is it talk pipeline going all bit RMR . opportunities sort you Just by that a now the just private to through of at story sort Residential year-end? of Maybe the anything well we this at? for XXXX can as of

investment for focused vehicle on seed said an think in very well if investors investing we probably of are, in also have real bringing the the attractive a attract there. story strong up in commercial sector On say, being us vehicle. performance estate. have to and said, estate, terms many that in more track itself, record position there, That lending investors as I we there. they're credit And partners it's of we obviously my a we would vehicle, I prepared a It's remarks, real picking again, portfolio that very into XXXX traction

XXXX . more it XXXX a it's is a event. likely think do I event So than

the to with the interest far rate us, event, now our behind started in also is new accelerating partners and, that that I then back now it's fair the say table. early an summer frankly, the late And partners to momentum we've cuts legacy 'XX is come elections Residential, on seen think definitely but and the

heading feeling front, Residential into 'XX good we're the too. on So

sort forth. and the could and on down you of goes question so balance. things you're cash it up then lever Obviously, just my was investing, -- Just sort but as second of

to where going and curious of this come sort expect end at Just high-level year? out Any what's would of cash cash what in? year comments next is terms going to go the for of of in to end you sort

'XX. upon the upcoming going it's going term, we're to a investments million -- to I increase to of significant I start get to think in Longer at function to what where on expecting strategic XX, accelerate And cash anything that that in to approximately this cash down frankly, front at executed because strategic some calendar close our . start of we be as $XXX to land to look see Yes. actions. to strategic but the don't just December expect expect on quarter, draw you'll execute next into us I'm

comes next JMP. with Citizens question from The Mitch Germain

multifamily, investors additional I in Are about loan and investments and X X you're is multifamily in attract a mean, venture? enough think there that setting targeting? to larger that loan up to

loans X specific X in So X said to think anywhere on those credit credit I strategies, the from we originally vehicle. --

that to credit do step over could we So vehicle the see could more on in that sheet our months the up. balance coming you

more I And that end we're $XXX the million we've than much it the higher more probably think be would more at on but -- a we've it maybe upper would $XXX million be targeted. little that loans. targeted, be than wouldn't X

mentioned remarks. we that the again, a that talked our picking it On that our the we possibility where also too X a could in side, happen -- could number there's Matt there X here, about an both Residential -- area I'm more investments be But prepared sheet. on put or balance on that's before.

in out around we'll that put work we there's money the an we to Residential. And interest equity we balance our have significant won't In acquisitions. seeing on opportunity other in of may to able sort closing put syndicate are while more it those that move before as with be forward We strategy, to sheet. words, and

the on it there, don't to And going put We be X so there. table. we're it X making it's investments less rule but more still our put likely expect to I sheet. acquisitions or have we'll more I may balance off

remarks, strategies a there and at -- hinted pursuing, tell we my I it prepared sort ask I in you, Mitch, spent other balance this, vehicle. are will the you on There but we are are other didn't put credit we also I'll of talking the asset help where seed vehicle lot we're investments. to pursuing may our and sheet the about strategies residential time those of

you other which that we're that anyone that without that, all paying areas speaking, months. estate, And retail, like the that the activities things to a sort to things go real for have in our the areas development at of are in parts industrial are, it's sort balance looking favorable say, of most coming you of of there of gives generally on some attention high the folks, I'll commercial sheet flavor in also some may go to you that returns if asking, were

asked, than a you feel. that's a Mitch, So but little more gives you it

actually my you second answered Adam. Well, you question. There go,

to Maybe shifting over Matt.

Just in one managed of drop in thinking you about quarter time have But saw saw some we the is of before We REITs. base still other. management fees, over. a a obviously, in little the price increases this

sales. You've got planned asset some

machinations you're about So that kind thinking obviously, of what different with equal what to paying they'll regards attention to are the quarter-over-quarter?

sales flat guiding volumes, given puts execute the and next point, all whether a quarter seasonality or our fourth us to budgets in we're it's the your think, from wash, But on the operators. expectation capital quarter. a takes to . Yes, our to as for answer get tend debt some is to back will flat all their strongest because of utilizing net-net, people to calendar impacting wash it I always enterprise is value perspective and construction

super And to me of maybe last over helpful. kind one Adam. moves maybe then That's for just and

. how with for we is In RMR near the things as refinancing think play at terms should thinking out very date. given how should terms business But could how revenues you of we sustainability are it's the as of of early it? seems that how initially, OPI? structured, least like that process I associated in stages think it Obviously, usual about be about

Yes.

just I'll say on broader it's it's you what's Mitch, about you exactly with -- really question if it OPI. can I not All but a going think I asked, -- what anyways.

plan with and managing OPI conversations it, are That constructive. the operating call, for we engaged -- will we on said, be way said to its foreseeable earnings it's in we way is the its RMR OPI Those the business. the discussions . are planning we continue future. and That being is that it about the way are is bondholders. As thinking

This Officer, over for any President like concludes back session. our Portnoy, closing turn to question-and-answer Adam to I Executive the conference and Chief remarks. would

you a day. us Thank joining good Have all for this morning.

has The Thank conference for today's you attending concluded. now presentation.

now disconnect. may You