DIRECT DIAL (617) 573-4859 DIRECT FAX (617) 305-4859 EMAIL ADDRESS margaret.cohen@skadden.com | SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP 500 BOYLSTON STREET BOSTON, MASSACHUSETTS 02116-3740
TEL: (617) 573-4800 FAX: (617) 573-4822 www.skadden.com |
FIRM/AFFILIATE OFFICES
CHICAGO HOUSTON LOS ANGELES NEW YORK PALO ALTO WASHINGTON, D.C. WILMINGTON
BEIJING BRUSSELS FRANKFURT HONG KONG LONDON MOSCOW MUNICH PARIS SÃO PAULO SEOUL SHANGHAI SINGAPORE SYDNEY TOKYO TORONTO |
| November 2, 2015 |
|
VIA EDGAR AND OVERNIGHT COURIER
United States Securities and Exchange Commission
Division of Corporation Finance
100 F Street, N.E.
Washington, D.C. 20549
Attention: Tom Kluck, Legal Branch Chief, Office of Real Estate and Commodities
Re: The RMR Group Inc.
Registration Statement on Form S-1
Filed October 14, 2015
CIK No. 0001644378
Dear Mr. Kluck:
On behalf of The RMR Group Inc. (the “Company”), we are responding to comments of the staff (the “Staff”) of the United States Securities and Exchange Commission (the “Commission”) in your letter dated October 29, 2015 in connection with the above captioned registration statement (the “Registration Statement”). In connection with these responses, on behalf of the Company, we are filing via EDGAR a complete copy of the Amendment No. 1 to the Registration Statement on Form S-1 (as so amended, the “Amended Registration Statement”). For the convenience of the Staff, we also sent to you a paper copy of this letter and clean and marked copies of the Amended Registration Statement.
United States Securities and Exchange Commission
November 2, 2015
Page 2
Your first two numbered comments with respect to the Registration Statement are reproduced below in italicized text. The Company’s responses thereto are set forth immediately following the reproduced comment to which they relate. All references to page numbers in the Company’s responses are to the page numbers in the prospectus included as part of the Amended Registration Statement. Capitalized terms used herein without definition have the meanings given in such prospectus.
Risk Factors, page 13
1. Please include risk factor disclosure regarding conflicts of interest related to the Up-C Transaction.
Response: In response to the Staff’s comment, the Company has added disclosure to page 23 of the prospectus.
The Up-C Transaction, page 31
2. We note your response to comment 2 and your revised disclosure on page 31 that states “for a purchase price based on 48.4% of the amount of the termination fees provided under the management agreements….” Please tell us the amount of the termination fees and how they were calculated.
Response: The Founders’ proposal was based upon the management agreements between RMR LLC and each Managed REIT, as then in effect.
· Each business management agreement then provided for a termination fee calculated as the average of the monthly management fee, including allocated internal audit costs, payable for the past 24 calendar months, annualized and then multiplied by 2.75.
· Each property management agreement then provided for a termination fee calculated as the average of the monthly property management fee payable for the prior 6 calendar months, annualized and then multiplied by 1.0.
The Founders proposed that the termination fee calculation for the purpose of each Managed REIT’s acquisition of an economic interest in RMR LLC be based upon the termination multiples in the business and property management agreements, as then in effect, (i.e., 2.75x for business management and 1.0x for property management) applied to the most recent annualized monthly installment of business and property management fees, after giving effect to any announced acquisitions or dispositions by the Managed REIT at the time of the completion of the Up-C Transaction. Accordingly:
· The Company calculated an adjusted business management and property management fee for each Managed REIT for the month of May 2015, which represented actual fees for May 2015 from the business and property management agreements adjusted for the impact of any acquisitions or
United States Securities and Exchange Commission
November 2, 2015
Page 3
dispositions that had been announced by the Managed REITs at the time of the Up-C Transaction.
· The Company then annualized the adjusted business management fees for May 2015 for each Managed REIT and multiplied the annualized amount by 2.75 years. The Company also annualized the adjusted property management fees for May 2015 for each respective REIT and multiplied the annualized amount by 1.0 year.
These calculations resulted in the following amounts:
|
| Adjusted |
| Adjusted |
| Adjusted |
| Total Adjusted |
| Purchase Price |
| |||||
HPT |
| $ | 42,033,853 |
| $ | 115,593,096 |
| $ | 40,928 |
| $ | 115,634,024 |
| $ | 57,817,012 |
|
SNH |
| 40,579,388 |
| 111,593,316 |
| 9,884,843 |
| 121,478,159 |
| 60,739,080 |
| |||||
SIR |
| 22,325,172 |
| 61,394,223 |
| 11,566,838 |
| 72,961,061 |
| 36,480,531 |
| |||||
GOV |
| 10,329,403 |
| 28,405,859 |
| 7,101,415 |
| 35,507,274 |
| 17,753,637 |
| |||||
Total |
|
|
|
|
|
|
|
|
| $ | 172,790,260 |
| ||||
In order to more clearly describe the Founders’ proposal, we have revised the disclosure on page 32 of the prospectus.
[Remainder of Page Intentionally Left Blank]
United States Securities and Exchange Commission
November 2, 2015
Page 4
If you have any questions regarding the responses to the comments of the Staff, or require additional information, please call me at (617) 573-4859.
| Very truly yours, |
|
|
| /s/ Margaret R. Cohen |
| Margaret R. Cohen |
cc: Jaime John, Accounting Branch Chief
Kristi Marrone, Staff Accountant
Sara von Althann, Attorney-Advisor
United States Securities and Exchange Commission
Matthew P. Jordan, Chief Financial Officer and Treasurer
The RMR Group Inc.
John E. Alessi
Skadden, Arps, Slate, Meagher & Flom LLP
