RMR - Earnings call transcript Q2 2021

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Operator

Good day and welcome to The RMR Group Fiscal Second Quarter 2021 Earnings Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Michael Kodesch, Director of Investor Relations. Please go ahead.

Michael Kodesch

Good afternoon and thank you for joining RMR’s second quarter of fiscal 2021 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 that I would conference is the without prohibited recording of retransmission prior consent of call written the the company. like today’s and note to Litigation call XXXX and of contains the Today’s Act statements conference meaning of securities laws. Reform within forward-looking the Private Securities other and based are today, on RMR’s results expectations from and materially of XXXX project. statements beliefs May as those XX, forward-looking actual we differ may These that no release conference undertakes the call. any company forward-looking obligation results to The to revise publicly revision today’s the or statements in made of

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

principles adjusted call, income, to EBITDA share, be In margin during with adjusted adjusted like discuss would non-GAAP in adjusted may per accounting numbers U.S. this reconciliation generally A margin. EBITDA net including determined adjusted net accepted of addition, in adjusted the income now, over accordance per earnings to and found we adjusted And earnings I EBITDA our release. can calculation the turn net EBITDA and Adam. share, call income, of earnings to adjusted

Adam Portnoy

country for several you restrictions received aspects RMR population first return easing, we provide everyone. platform. milestones we Throughout starting a positive and afternoon on of over see least of and has first the our to this and early are have of dose having clients. To the the COVID of vaccine With U.S. the normal. call continue tailwinds us its signs Michael the on critical of across to touch generally XX% to to the many adult joining at broader I our achieved XXXX, that today’s you, wanted thank economy believe Thank and part impact begin and will

the Some our has destination basis properties their materialize, demand pandemic. at tenant to this first increasingly significant SVC, our living for full lastly, at the have behalf on the employees of continues hotels examples trends in sequential on in bringing clients travel as increase tenants increases pent-up the teams to And up group occupancy include: leisure back Sonesta as and office increases At begun XX% of experienced office. service on with recently were management their communities, activity seen booking of while DHC to work its XX% since we sequential monthly manage start movings March. quarter senior a DHC’s increased at month-over-month occupancy property

XX% under was DHC weighted a $XX are and The ceased. and management share managed management continue and of this to all, up platform fiscal cash result operating quarter price at Our equity basis, XX%. be ranging ILPT, of OPI’s important confidence quarter appreciation. momentum It’s leasing experience rates considerable third our I feet financial base an in of normal to have note basis With of in revenue paying activity increased continue RMR XX. basis. to our on advisory collection with term growth. these upside weighted deferral net over and at approximately opportunity average each rent increase continued X our sequential XX% of enterprise REITs being through management business unlocked and positive approximately enterprise of average across years on to lease on leases On share our remains REITs, the represented managed value trend quarterly straight in as fees Leasing seen an with but also lost service base results our to remains between share paying into just quarter over of that a increases million on is business X there all an square square also was roll a last second as The XXXX an managed basis, a as SVC, through tenant this of came of return value quarter. except average $XX GAAP the million our fees fiscal results price, in service feet RMR’s from of million X.X price annual behalf there equity continued of XX% tailwinds equity clients. X discussions clients, REITs. million expect rent revenue remainder our March Further, remain seen revenues

and economic SVC current living like communities of Five Sonesta’s to Star senior communities Meanwhile, comfortably away for of events amend lower the group over Five to to XXX pandemic-related transitioned Both DHC’s their Star. to quarter. the liquidity to management Five being senior that of higher noteworthy the highlight best-in-class operational now the continue clients would transition Five operating agreed management. this I from hotels Five strength some to addition country. past the with and around positioned of acuity In in Star’s Marriott Star XXX and operators residents and service and our living at generally this trends, remaining Star has remain a DHC smaller will IHG support larger the acuity completed XXX transition. area diverse largely more recently agreements,

with X,XXX markets. addition Over and companies more investments. portfolio expand a liquidity more scale its $XXX has joint XXX,XXX launched and capital awareness. of industrial brand with Sonesta time, in and diversified venture guest its ILPT brands of new million eager business have in its of portfolio leverage than to close ILPT As rooms, XXX largest to Lion’s are of venture to to the hotel pursue Red multiple significant to across one committed Sonesta than more fund acquisition plans locations, transitions, industrial its partners Lion of partners a Sonesta’s building recent our increasing Red XX Hotels, than result locations, hotel platform and franchise now is Both to the to joint the sector. capacity these greater upon globally, of recently fund growth

ILPT Ohio terminal purchase airport an asset the $XX.X During million. intermodal for Columbus, agreed in quarter, and Rickenbacker the to industrial near

OPI’s support and acquisitions competition continues on in $XXX Mortgage While we an that involves believe program and highly office assets mortgage operating for RMR activities. take and acquisition strategic potential significant seeing that group to continues increase improve capital our opportunities to merger continued industrial has first assets the buildings. remains made of a and The of helped in agreement. quarter advantage also of development $XXX acquisitions Trust, elevated, screen generate million are for to At improvements. We end leasing, Mortgage million to same-store liquidity for have recycling transactions its over RMR’s individual to REITs, well-positioned definitive pipeline April, volume Tremont X focus of high-quality alone. a OPI while announce we over active the Trust of excited generating leasing opportunities, into and were remains entered bids

to of enhanced think approach scale similar the from the the expected fully benefits platform nature assets invested $X with we combined billion. businesses, two Given

shareholders, increased both immediately sets We liquidity, respective to of and expect shareholder transaction this accretive provide will capital. their cost reduced be of

large several we RMR in in access in continued helped operating interest have in These ventures investors wealth with to grow joint our come the addition appreciate RMR’s turn and Turning fund, to of the build industrial our platform transactions, generate sectors platform, which we to relationships to organically real investors. estate sovereign have to to manage. has the efforts

a transaction our own same in capital. in going building and M&A of estate time, as At of excess build balance significant and real with capital also we off require us to said We and a other internal available is only portion team net offices worth likely we any as high to sources, private such the to leave continue though exploring handful the have expand most potential this into begun momentum our investors. cash with engage past, dialogues markets potential capital family targets, equity

to assess continues year. with uses current over results call Financial now our to will the for of possible Jordan, a financial for Matt the our our excess board it quarter. this form special result, any towards I dividend shareholders the Chief a meaning As of turn review our one-time alternative a returning later some Officer, to will cash, in who

Matt Jordan

Adam the and good everyone. and second of adjusted per of Thanks, million. $X.XX income net $XX In afternoon fiscal or we $X.X adjusted EBITDA reported quarter, share million,

on by adversely impacted we call. were This two items our last highlighted quarter’s earnings results

tax year or $X.XX First, which Directors. in And grants share. includes we levels calendar Board represented $XXX,XXX quarter G&A compensation share as cash withholdings to per $X.X payroll of and the first million, secondly, to per contributions $X.XX approximately of costs, each approximately of our share XXX(k) incurred or issued increased restart, annual related

tailwinds of million REITs we a $X.XX adjusted which improvements effective and of the to enterprise management $XX look As value prepared of million. ahead X, quarter fees X be the days $X.XX the I we positive per and this were the translate EBITDA basis. supporting our will the reinstatement Adam and both in consider managed sequential This color remainder a of to will highlighted offset throughout the $XXX,XXX on these providing fewer construction quarter Management increase impact and equity the quarter, next $XX expect on due between between earlier, increase variables adjusted revenues and activity. and $XX share at remarks. was service into helped average Tremont’s quarter in advisory lower earnings million my January they and projections

incentive expect also equity either do XX% $XXX,XXX X% for results quarter’s include on mortgage of incentive from further remainder fees the not fees of fiscal rate. REITs in our a from the we hurdle any Currently, returns year. This These incentive of represent above fees Tremont.

service between million Looking These levels be are quarter, three on million. and factors. elevated primary revenues ahead we to advisory $XX to based and revenue management next expect $XX.X

secondly, importantly, the from approximately most and and in leverage equity construction assumed travel that service their fees; activity in levels result lastly, and increases generate prices expanded of managed velocity. our and will a current projected of of revenues construction incremental increased management million $XXX,XXX Sonesta incremental REITs; footprint First continuation at as $X.X share

for fees pleased OPI are equity report it from began XXXX. relates to REITs, we our managed incentive fees to As accruing incentive calendar that

revenue fee XX reminder, at we incentive As record of only year. each December a

XX period, approximately fee had March share. $XX if $X.XX measurement annual an been or we per end million, of earned the would However, have incentive of a

cash $X.X compensation expenses quarter, and X. to sequential driven tax payroll a quarter January XXX(k) largely million by the on increased approximately contributions Turning resetting of for $XX.X on basis million

to remainder quarter. expect year, the the we be of cash For approximately compensation fiscal million per $XX.X

closer be typically remainder to XX% XX% we dipped expect reimbursement as to expenses calendar $XXX,XXX cash share $X.X G&A first rate quarter our this quarter, in rate year. director cash While fiscal it were to the our the for million, approximately does of grants. reimbursement each excluding

fiscal expenses remainder year, quarter. G&A $X.X the approximately the per to be million For expect of we

relates in to balance it to the we As cash have with no our million approximately debt. continue and we $XXX sheet, quarter ended

our we of Adam to that that is dividend. will a special of return of As yet our expectation a for Board cash for Directors via be initiatives earlier, recommend growth portion meaningful highlighted shareholder retained capital possible it our provide a balance

published we Before can to acknowledge recently website. would be questions, Sustainability our found to on like Report, go which I our

in a employees. billion collective in X publicly entities, $XX billion spans platform annual operating As traded $XX management, under collective revenues, reminder, approximately and a our XX,XXX assets

our and line of overview concludes the waste successes make water open our investments the operate in comprehensive and a long-term those would well our Operator, we communities questions? provides goals goals you we to-date as in as people. against Report are emissions, and to driving we environmental contributions the Sustainability savings That the in energy, remarks. formal making to Our please

Operator

go And come question from Please Sullivan Certainly. Jim first with [Operator Instructions] the BTIG. will ahead.

Jim Sullivan

Thank you.

questions. couple So, of a

dividend of be of you of you currently just a one-time I cash could ongoing the buying are equity about you have but much dividend, private dividend. talked with? had the of as And about know special as could that half wonder consideration help that the all, us sitting that if you think I First platform, kind special here. sizing

Adam Portnoy

on sort The and do Sure. which shareholders. Hi, much are no people of one come of to for we best happy a it conclusions about to Jim. problem, And is form shareholders good what’s reasonable Thanks sort the the debating can and or returning right is particularly news to how think capital question. to is return I to wrong. different is this

cash, In generally or of dividend, of terms special the it size up that I speaking. the could a think half to approximately be half

board an the of our before I end I final be made quarterly think call, make by expect said year. will we the our I will announcement before in determination fiscal have that coming the the meetings. Like last

Jim Sullivan

you good. in still having Okay. platform. private about you a acquisition regarding Thank for prepared And equity Adam, then where Very your discussions talked comments of that. the continuing

You used the word handful.

still situations potential be there just that what product just then am of the a might a You you or handful between maybe your thought is or ask less bid is in have there opportunities curious to available conversations of or of – the are that handful with And maybe spread there simply too acquire on considering I and big or a is available? or it is opportunities. conclusion

Adam Portnoy

we we going said organically money down paths time, about it our expand same and sort work try time. base two accelerate back to started try just are sources. to second, to Yes, private this of question. of we beyond are sources really going initiative think put for we at sort To are step and public great M&A go said capital we to ago, years that. the build from the going and and X to And to we when the said try capital a capital we wanted at over We

have had have a think think we continue are I to building we organically some it I success to amount fair going success. of and

higher. of say that really to an of some closing of bill, not able capabilities thinking But it’s about handful engage this that to work fund, we for company conversations are decided but – opportunities. organically. We make own, opportunities need in markets’ diligent, it to you we to in I partners, capital And haven’t existing go do we gone make eager to think to other a that going shareholders there I than very That less Because with. forward is a us, more are for you more an investors as well. being we think been Remember, and it’s on with strategic – maybe some bring and to a our of we are pretty are fair I organically. good rises, as large don’t well. external prepared on are got sovereign are a source, because that am building we discussions here an the could but not for same a of have that been a firms time, these bar at M&A of my investors to expanding as At acquisition just last about the or firms classes internally to do own table. It’s And groups private accelerant asset to-date. of the we more have There were than And and continuing had opportunities or significant lack build sort an to have success it’s has with us able very I the we the opportunities. we bring lack of remarks, as mind has There to a quite all be And sense different looked not how it comes of did thorough. or heard not forward. of have to say organically down only industrial moving wealth not our we with just think I get acquisition of lot couple don’t in continuing more couple it opportunities. actually led think a do necessarily years, our than little put largest more – been a that price sort comes to something is being said my – it when want issues we that and difficulties in of acquisition find just And control it’s success that’s these I as one at less the point. with of sort if has for have us it we attractive, value to it’s building some what’s to lot that we might there it social really really of some sake. but in fit down

that question, hopefully, answers your So Jim.

Jim Sullivan

for the to it I Yes, the makes in year range. per the would quarter $XX million question the about drive sense. of sure. million course And think And me, the final the management higher to prepared then revenues comments factors that three over $XX.X

of repeat what the the company simply acquisition The it’s from year? the was over growing are with rapidly expecting the balance to with wonder as third – well combined one item comment, is with Sonesta transitioning. I brand had Obviously, Sonesta as that do and could you you of if the

if or if impact guidance? just we – what the you expecting could you could your that is So quarterly repeat indicating just are in

Matt Jordan

Yes.

revenue this quarter, in generated Jim, So $XXX,XXX Sonesta for about RMR. fee

$X.X Next recovery are our then Obviously, piece U.S. up transition trends that fourth quarter, in we that and to economy another to fiscal is about what million by million. million, expectations that the a prepared is remarks. in headed. $XXX,XXX hotels our we expecting quarter go $X.X is the growth to where grow to of And would expect referenced of and a $X.X again in around we the

Jim Sullivan

Okay, terrific. Thank you.

Operator

ahead. question will come from B. Bryan next And Riley with FBR. the Maher Please go

Bryan Maher

Adam Good and Matt. afternoon,

there? and actual business of entity? an Just organically. hiring kind to do mean Are response that you buying to specifically to clarify What individuals with question Jim’s on building pursue your in-house you opposed as

Adam Portnoy

little around terms bit hiring markets. capital Hi, individuals a Yes, of Bryan. in

capital real raising in is you when are talking invest core that we entity, so say estate. to pursue about really And what principally

time, while trying the expertise we that estate. long – a have don’t is lot it to track been – in real necessarily doing a investing specifically value-add long have in not not we a marketplace of or are of done we for opportunistic think record We RMR’s investing we have

folks flow and I and long well track record at core mature and successful cash a occupied. us have that’s real real estate, around look think a owning track most record say, we estate

And so to but not of estate different growing investors others. doing behalf behalf their sectors, think investing and it large capital, their it on managing when and we, sovereign are industrial, principally and well I inroads making real about just we core with on wealth in pools say capital invest including industrial organically, in I

it looking for we we answer what acquisition an help organically. always manage in by this is real have that’s question So, ability mean necessarily identify been your to What and building estate. and might the not

We record Those things let’s to can funds then say, have have A always go is very buying the a record. running, about more to certain we sources. and and to continue I attractive what much mean other were private internally. we track off was expertise that in would situation. relationships build capital two M&A that track a find by have building be felt an that capital a of with record, you confident principal that that track It to extent most

is from and focus But better our that’s folks, capital investing be And a investors track others it let’s again, really expanding today I wealth sovereign that’s expertise individuals think do might estate, a real a of record small, their what – that about sources rather I investors. – long what have besides say it’s again most markets terms capital, groundwork we say, team building have core so X or beyond that with out when X sovereign but than towards first what doing. of what spend time laid we would which is, focused hiring in thinking sort where raising on the we have of other to-date, in

your that hope answers Bryan. I So question,

Bryan Maher

past all a third right. seen we years, M&A and people go you think money every later, people out Right. assets are the that we walk that have a just X year want in to the buying gone, of in to wouldn’t XX the I my I where or a mean, is door night, PE buys I and talked have own experience what Y see spend the And right. small shop,

else. So have to do better go from start bit right, always little maybe if it’s a to felt I people, are going somebody that off small something hire you those

I that’s at? of driving was what So kind

Adam Portnoy

Yes.

Bryan Maher

gone that a the like on process there? elevated, doing maybe sovereign moving healthcare diversified like deals and the ILPT of say Is away, saw Vertex their Kind we thought for more has sticking a wealth would What with with been trust appetite b) their a) second. and Pharmaceutical for what’s same with appetite building? you you, the

Adam Portnoy

Yes.

think little I’d it was elevated. my a remarks. alluding is prepared I their appetite bit say I to in

have RMR. one, we have as think both think of experience done assets partners, – some also I the good had I deals experience have that the they with a have working they with but they been with invested,

have our they think to I timeliness professionalism. in to our appreciate reports, our communications, our produce ability come platform, operating

best I X a more with And with one partners, encouraging, months to is – are think done is very relationship doing it, are means we some we call this we introductions two done relationships: us good more the they sovereigns. have those and great to is that when last, of job. that job do somebody very those what’s that get to but of one importantly are with, other us you want existing been a have we a have of they our doing now. the – And in types additional firms can leads this maybe business introduce firms year that these that says, with with and then a

them. should talk You to

would I well. enjoy think them as you working with

have conversations. and conversations had and that like those been introductions have productive We good

the that’s would I to and say – there. continue to is it interest be very I So, good expect

year the am in other in calendar think will strategies have different investors, XXXX, will I additional happen calendar the confident beyond around pretty industrial. with year. wealth that – sovereign think with I classes announcements we I look, asset

Bryan Maher

to of the of clear and word. and probably in that last question. for then kind begin ILPT more appetite or measured And Okay. the better millions have think seeing two-part a and desire deal again marked growing a both maybe and maybe there level It’s you I me of capacity is flow? a in this OPI hundreds increase are What as is is

Adam Portnoy

Right. $XXX of got OPI has liquidity. about million

I has ILPT million could you our liquidity. be could of about guess So, And say current maximum $XXX that appetite.

So, that’s near-term you could say the appetite.

it, two between And we close entities $X.X could those to acquisitions. combined call that have billion appetite so that’s well the for over,

very terms of for the There competitive has able hit deal is In on. continues shortage been of deal bidding looking industrial and we market flow, It there haven’t no industrial. at robust. The it’s been side, Unfortunately, months. now of bids on we in – to issue just many robust. are to is on that has robust be opportunities that those several flow been It unfortunately. becoming a win

the opportunities an been of side, would in that has uptick office I say there late. On

we But the a leased, newer right buildings I tenants, is to type side, was say, in thought pandemic, real let’s the It’s pretty of office it lease. that of there higher think would that office, as well assets think There worst quality leased OPI will an at. good uptick location, office it’s good term say, offerings a owned I to folks has the looking been longer well credit of for are of of, but assets time been which be the that weren’t are has core especially specific. on significant sell. midst the I in estate the lot amount that there a firing,

really the lot of in types market X even weren’t months are So, now it ago, in market. of Those assets the boxes. checks they a

opportunities So I are there. think there more

Bryan Maher

Thanks, Great. That’s Adam. for me. all

Operator

be from with The Please Lau Owen next go question will Oppenheimer. ahead.

Owen Lau

give to can the Good senior back my rate please that compared makes and hotels level? is upside you you and pre-pandemic occupancy confident makes your on an you afternoon. to there get maybe center Thank Could pre-pandemic that question. what taking you. for update level? you you much us Thank – living How what in

Adam Portnoy

Sure.

senior and at communities on SVC through well the you’ve own pandemic, as the Star which within industry hit of and probably as news think occupancy, this year. hotels. senior senior been hotels, QX living, good our – QX well operate Sonesta. in which year, talk as own calendar about living the platform. two of occupancy. portfolio we Five suffered during has the that. we’ve that uptick operate. is – bottom take that areas to first, well whole the we at a I’ll we in hit So in own March started me In the as slight terms living That Starting have In we the greatest this operate I then our see we let to of in sort communities of Both And continued senior living see of as as then

We’re residents. an the tours uptick we in leads of or call potential what seeing communities by

that coming did We’re way, conversion the matter tell by in is XX get where look in speaking, how – XX, it, fast point living I folks in drop communities occupancy points between but the one. of The that But in can basis you and do basis occupancy back years, occupancy XXX occupancy year. the senior in we’re regular pre-pandemic are move-ins. of unprecedented is, I rate space basis had, either increase believe year could will take the question they corner. some answer call I occupancy. increase to the levels, when much conventional year, think drop simply the to is is around could own, XXX also end industry the we or better construction make been living – there somewhere general folks And argument That to sort has think but no whether how muted. XXXX, XX longer. going senior pandemic, in is had you get and either I and it’s will knows and end way, at of this, months, is the have the it of We’ve be place points we turned levels, space the to because in don’t X will of communities, going could the that’s we at you to in months terms the in activity occupancy of at move-outs has beginning than increase seeing down. or be including a slowed bigger to generally X,XXX of an almost in across pre-pandemic you it’s our those between industry, to – the anybody’s guess the is X I issue beginning The the news wisdom a living the senior the about It think specifically, from occupancy. we good anybody a increased

much better. the so return, don’t marketplace. But And think in a you we’re I competition see starting to have getting things again, as

the – side, hotel terms the been than coming XX% to you hotels, if think I even to the to much look devastating was again, in business. wildcard what occupancy the even leisure nights sector that could but of in in to our if are don’t On and/or as spent do EBITDA. summer flow a But occupancy. you of get it I see not we think to or occupancy certain is that hotels do EBITDA, actually in see going Occupancy, will is destinations, focused We be occupancy full-service very at back historically I believe of hotels pre-pandemic alone. slower of you on full-service metric, more the higher could we the at room in spend back business. be through leisure this you we by hotel on destination, Again, higher is, to hotel XXXX. on when hotels, they hotel be I all know, is you – when XX% think on activity we’re to going hotel see time terms get RevPAR probably nights, focus drop EBITDA. Leisure have very driven business in Business, in quickly. – And I that returning back and RevPAR think is focused really pre-pandemic there just

in our market. benefit that of positioned the be with I the And lion’s and a world, a post-pandemic companies we of lot done back? actually and so going hotel does in – question that what Sonesta, The travel. to part think by we’ve it’s through come share have less where think taking hotels own I business to at company is SVC when there back is

that be think going rewards to was I than important it is less program before.

scrappy I And every company able operate you lot than think think Sonesta to actually incremental a that be I pick in be is going to customer. better a forward. positioned positioned, of to environment brands to major up type I like the more better got believe,

hotel So industry back could ‘XX we think EBITDA? people the years. to RevPAR it X get to Some and X take in when do

be will faster it that. I than think

in versus, of than the and are think its major brands, to to history well some way some do Sonesta let’s the positioned short term, better we just say, especially of I actually medium brands. operates major the given the

you, view. a that’s for that’s my long-winded answer but So

Owen Lau

Yes. very Thank That’s Adam. comprehensive. you,

on capital go question. quickly Just return. to back I to that want

think I about buyback? I I And the think, is how a it Then Is one-time doing versus Adam, you you buybacks? flow mentioned how considering dividend. off is think would buyback? the still guess, question table the about potentially the or ultimate Board giving

Adam Portnoy

happy think here, I we’re perfectly Yes, this question. to reasonable no return problems about And this, – talking I can is people to answer. best the there We’re again, capital to right? wrong talking what’s is great about And on differ and want right form again, shareholders. or reiterate

driving open leaning am myself, management, a three I I a our I a share equity my And of I I were specifically when recommendation. to the ask secondary a we to Board RMR’s prepared few not said increase years very where to much can we which was them to, they think was purpose shares to the Board, one want dividend I flow. there did offering, including if be the perhaps and ago, alluded is – And shares, big would the stated remarks everything, dividend selling reasons did large onetime secondary reasons it. you why What is you in I you And one open believe towards, primary think things very special have is from or buyback. don’t the perspective – are we we give the think very the currently in principal is float. of

in shareholders company that and growth. its So participate the could

dividend, a it a bit that. leaning a to towards share sort a it’s comes certain we’re think extent. by some buyback then little of about sort think being defeat I – when of to you – one-time I so the dividend or driven And a migrating on When is tax-driven think more of

if where the we, to point think in that’s in If I as as higher look as recurring concerns dividend than to like an time next of the increasing still many later income generation, look a what at as it that dividend. XXXX. generating also, path business. and that cash – paying at and generation, organization, at one-time flow. and taxes try of case, regular okay, look we the just in recurring going it do get our be cash go say, around a our cash then you judge comparing investors you’re you’re you’re the distributing will in to believe compare regular XXXX versus out down to percentage cash it the they they much dividend, your And metric year think And dividend than regular I the are your more dividend increasing of they our looked to the to health may are they years.

all if reason going dividend. a I And down by by I are increasing one-time Again, problems. so in am a that’s we’re reluctant versus dividend leaning. these problems. These Again, the are dividend, recurring doing think we to doing happy think would I of it another is go how path it be little the this good a

be maybe one-time the But a one the to as I’m the money management, again, is will it. coming of all this to are I back options. better debating option the guess shareholders, dividend debated that think I very And for still do to as way the what’s leading all company. is best the shareholders, how to largest the and CEO in open meetings personally Board We himself Board as and give the

Owen Lau

for That’s me. you, Adam. Thank it Alright.

Operator

with comes from Kamdem question Ronald next The Morgan Stanley. Please go ahead.

Ronald Kamdem

quick Hey, to has VEREIT lot be going in is a number Income spun ones there assets office triple-net M&A one the been Look, some from and with of potentially is a and couple space Realty there me. off. of

you looked be bill assets those at would fit ever Just any interest have if there Thanks. the curious sort guys as would something of for there? that OPI,

Adam Portnoy

Sure.

special safe of it’s looking we on fair we’re in you’re evaluate can just think, majority those I we at to a better we it’s say are in And markets regular of evaluate a large to because that is to those player things again, But we think let’s that the to things the But a enough dynamics types them I partly like of they is always a and present that, look evaluate look the marketplace transactions are that that past, assume lot them our because opportunities And get And or is on. looking whenever evaluate that’s the have activities is pockets that are I just the you basis. think with course, mentioning, others. as vast given given at things, those at at, there realty would we enjoy at think them us themselves, enough our just a opportunities. why that I’m that can imagine, access let’s we’ve at given every think or the those And job. look able working present we’re coming I sovereign the different – I we size as on we comes we But doesn’t would well. the as capital we don’t the those more what we We income the will that I’m vast how is is. saying acted at that look I market we here there never anything those phone as lot VREIT, see stuff. themselves. as of of day large and job somehow think fruition the about say, than of that what manager the to when at. look majority in to think of, well, of and investors I of part assets our out particularly saying, looked be and a we’re this say, feel merger, of important it

Ronald Kamdem

to, it. Got earlier to the comments I think, then of the to helpful. That’s relationship with And sovereign some investors. the go I want back regarding

That year. is success be presumably basically outside heard similarly, if as industrial with – could structured any potentially really of think of announcement say just building there interesting. be it this you extent was sort just I sort you that I – Would sort another be be you seen the as to to it on Would or can? early of could of curious of color that sort ILPT? with the you’ve

Adam Portnoy

Yes.

we managed of, joint it the REITs significant suggesting. in retain – you in to opportunities do yes, in like do plan even some healthy, we where shareholders, could we our very is say, think, a retaining a you’re participation do be let’s are keep it we that similar some of venture But one a we REITs participating without it. of it doing saw to cash managed in amount back the dividend we in. one that may if of with it’s them talking co-investments I of about a equity to be to reason ILPT what – capital Part something or fashion also participates our where give equity a are

REITs we’re to maybe make flexibility can consider with some managed other we be sense the co-investor structure. manage can with meaning do it of again, in and or what think for a about piece doing we that the sovereign So similar ILPT, may through maintain behalf we it of where investor or will sense our RMR, could a did it, I to think, a equity we trying it on to of investors similar it RMR

transaction sure Of and not RMR. our that, independents like course, the have sense would for the Board any to would go itself, that it just REIT approvals make because through we appropriate for have comfortable with feel to make

consider investors so having that obviously over that. something before question, And your the I get we And think additional to must we yes, of that’s success worked we to jump first back would like that hurdle are having experience. – because part we good the date success are having a with a have To success. to having success are are get us and we

don’t do us relationship are are they us. to a other think to they so us. with potential having introducing unless would introducing good And other they with more bother partners. interested us And I They were partners

sort that’s optimism hopefully that business can some we grow of part why And so, we of organically. our belief around the have that

Ronald Kamdem

And you a forecasting. construction million construction to Can about pretty is incremental nationally? And guys type? – your seeing delta on that is specific the management just sort that what then ground? just question it’s of you’re to you you’re Obviously, talk was Is to $X.X are asset sort on market. – the fees, hear back last of is it. bit just maybe little my which broader color Got going related in broader but a hear the would also seeing there like tight, curious what Thanks. that we the

Matt Jordan

start fee can the with I Well, impact.

out. line, in is always people bid as light The quarter first of Ron, calendar work year, their any get budgets get

put off it the of we last periods. this just in And higher So in one quarter, we’ve about it always the historically fourth being the managed million seen context, construction. occur. on And drop tail of quarter, $XX calendar comes to

run This did $XX the rate, we fee side. guidance a million so much lot $XX what’s million, of expect that construction sizable is next quarter, whereby driving a to drop-off, provided we very million, quarter, to we the get closer which on $XX

Adam Portnoy

seeing of were in lot underway. completion the you’re general obviously I construction activity market, of that think a terms In the of projects

You’ve the are There down. occurring is niche a and senior developments sort on markets. board, slowed living stalling, activity office of projects that have of seen are of certainly for definitely especially hotels, in little pockets that our sort especially things drawing around

– you’re would science, be San say, which markets you let’s For well. markets, seeing touches, core construction but seeing example, markets where activity. science sort that of would interest see Diego in life other life maybe the that area in still an you’re San in Both Francisco, considerable anything as is Boston, the –

don’t And Industrial see of construction is to construction, slowdown a see be to basis where on robust. industrial niche estate of in and assets. done of its I interest any areas real course, some up and spec niches, the industrial. there starting around real construction in most throughout you’re activity pick So in continues country being

Ronald Kamdem

Got all Thank you. helpful. Very for me. That’s it.

Operator

Capital ahead. The Lee will next RBC Kenneth go Please question Markets. come with from

Kenneth Lee

Thanks and my you scale taking near-term we question. just up thoughts milestones build Sonesta if watching for Wondering that there? could share around be platform you out could us the for with Hi. any as Thanks.

Adam Portnoy

Sure.

the both lot work whole within of come to the need So as I in that needs a we happen, think to a XXXX, there but near-term back. milestones is – Sonesta, also industry also,

sort things have you got so And of two you watching. to be

most come back, to a that tailwind I there starting the is and folks become occupancy think the going especially to space. is industry to believe generally, in leisure

hotels SVC rationalize is taking have I we to think of been have and the what we RMR, need this basically back. Sonesta is and portfolio to do, that

do if prior. able what more as they back SVC it have then running tremendous far than would a a under do and stayed what bunch the under to took terms of that the with reasons were it gave of been they amount were hotels, principal flexibility brands, could those and of whole flexibility in they we of Wyndham well was Marriott as IHG One hotels

hotels do which keep, we’re group we’re capital And much which so a maybe out I so we hotels think convert we to which going spend need time there’ll into in lot hotels through might to invest figuring then be we a maybe invest not year, even this to something of significant capital of maybe sell? going else. hotels And but smaller in, which

the buckets of the that we’re an be pretty we’ve one around how to know are today. we the sort announcement as three I a selling. what as get company hotels? be, of flexibility of how a else small going of in it’s buckets, the hotels something think will the of taking think advantage or to But repositioning the many this portfolio milestone at the terms with flexibility been the will the these doing afforded, fit half to we into I I What’s second year, it’s or representing list. convert other hard each time into of are hotels think those – And

As will growth be likely Sonesta, ‘XX, of lot – will think we and franchising. get external its into a I from ‘XX come

So that’s obviously keep on. something an eye to

as level it’s network the I Sonesta be the and you EBITDA really to to its the get about managed we feel optimism think have good organization RevPAR from be if portfolio peers. ‘XX world, some world, them get we which going of years. it’s able peers. its as and is lot And able out in an how to pretty build the into coming comparing in hotels a Sonesta is portfolio, a franchised its not benchmarking perform better, good going of then that I going operate in to post-COVID think post-COVID And to a hotel the brands of you believe as, pandemic. to And is we major would after their ‘XX as post-pandemic into than world, be to ‘XX/XX

And that’s so, sort are those milestones as of at it. of the – sort look the I

Kenneth Lee

very provide if just any color. you Thanks. just commercial quick within follow-up REIT And year? if helpful mortgage this the one Great. opportunities potential updates I That’s on investment may. side could Wonder

Matt Jordan

dry in. competitive is have that on transitional which and subject two lot now, is are in shareholder vote They they to bridge now, is merger the right a but is REITs, this There There the especially later of we REITs. it’s robust it two a of bridge focused in, of operate summer. loan our space mortgage our $XXX mortgage are to our RMR as the in the loan million we Well, and credit business, obviously pretty work powder the chasing environment put right today. Trust, pipeline, Tremont operating capital space a on a mortgage about side Mortgage

we the So on about before our is focus now, capital further. think we anything deploying right have

Kenneth Lee

Great. you That’s much. very Thank helpful.

Operator

[Operator Instructions] go come The ahead. next America. with Bank Dean Stephan from of Please question will

Dean Stephan

Dean Hey guys, for is afternoon. on This good Mike Carrier.

expectations bit, for longer get that how and expansion color just wondering term? Thanks. on performing the some this maybe that’s a and joint outlook platform You the little growth additional guys but if your versus touched ILPT original we could venture, around

Adam Portnoy

Great. Dean. Thanks,

still I growth. think see optimistic will venture that, we’re that

chance. there a very good is think I

for venture in that see XXXX. of growth are opportunities slower calendar for say, than in will on, a a originally that’s, number And bid think We would then and no shortage And I that anticipated. too we pricing that exist. competition opportunities. we’ve it’s aggressive of other the has no point pretty recommend And honestly, of underwriting tremendous are it’s aggressive. but And marketplace let’s we the growing in It’s opportunities opportunity I reason, feeling an us where the has year probably our we GP, to is amount little is bidding, in not we space. the gotten that partner whatever say, would that as them. this for that to gotten reason, to comfortable often not the pricing us this gotten saying to

some that pricing So this the an sense on at. being we driven particular oftentimes we’re sold it’s largely progress. saying are That said, the this risk-adjusted by these see And doesn’t industrial by return making us just of make we at pricing. surprised assets of some asset be being

when are growth But I we have say, will, I’d We XXXX. we yes. announced first it, to things, buying vehicle pretty in confidently and believe, be remiss that in

a faster market we’d we’ve much Our we announced the little was also venture as since gotten the be competitive it well. hope growing but than are, more has

Dean Stephan

you. all That me. it. Got it for Thank sense. makes That’s

Operator

concludes to this Adam conference question-and-answer like to I closing would our turn the Portnoy gentlemen, session. any and back Ladies remarks. over for

Adam Portnoy

that our us concludes Operator, for joining today. you call. Thank

Operator

presentation. The for conference now concluded. you Thank Thank sir. you, has today’s attending

disconnect. may You now

The RMR Group Inc. (RMR) 11 May 212021 Q2 Earnings call transcript