RMR - Earnings call 4 2023 | The RMR Group Inc.

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Operator

Good morning, and welcome to The RMR Group Fiscal Fourth Quarter 2023 Earnings Conference Call. [Operator Instructions] Please also note that this event is being recorded today. I would now like to turn the call over to Kevin Barry, Senior Director of Investor Relations. Please go ahead.

Kevin Barry

Good morning, and thank you for joining RMR's Fourth Quarter of Fiscal 2023 Conference Call. call Officer, and Matt today's and Adam on Financial Chief Jordan. me are CEO, President Portnoy; With In just a a our business moment, we will our results, provide quarterly followed by question-and-answer and session. details about conference company. Today's Reform to of note laws. the the other prior recording of without I would Act contains and call of forward-looking securities that prohibited the like is consent meaning Litigation of call and XXXX Private the retransmission Securities today's conference written within the statements on beliefs from results and based we of are November XX, actual as statements and today, may forward-looking These RMR's project. those expectations XXXX, materially differ that company of to any The made revise results the to release forward-looking statements the call. obligation no revision conference in or undertakes today's publicly

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

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

turn Adam. now to will over I call the

Adam Portnoy

funds. and of joining our this generated revenue part This light stems results, RMR morning. large most the in commercial us from private from fact for is estate. finished XXXX all our for that fee real capital you stability highlighting again once year long-term perpetual challenging recurring financial thank the in with a year and solid Kevin, stability Thanks, of platform fiscal of

EBITDA we For reported income adjusted share fourth the quarter, of $XX.X million. $X.XX and adjusted of per fiscal net

several year. debt multifamily on liquidity, approximately quarterly distribution acquire with the the expect transaction track We $XX platforms by billion. remain covered, under the no remains and well of ended assets of to to and close the strong we quarter Our and management end

strategy accretive scale in the us As advances strong opportunity expertise It record. Since platform growth also reminder, a provides track private with to close the a organizations AUM this have deal, capital operational both to focused and an the proven required private expanded a terms acquisition and capital in third-party of multifamily through announcing RMR's been on integrated obtaining a vertically relationships. space gain meaningful consent transaction. both

the team from with ensure We all partners with partners have real to also estate management been has RMR properties the RMR positive combined continue and in markets platform. feedback investing communicated they been eagerness to to transaction closes all and the The and CARROLL they the multifamily very benefits appreciate once capital in meetings commercial them stabilize. have of to joining introduce an

addition reminder, third-party has a series $X business multifamily its the investments billion development potential of in than existing As and XXXX. make through additional fund management growing CARROLL to capabilities, more to the

value and We of scale for CARROLL and RMR. opportunity the business front forward the significant to us closing multifamily transaction create to look the in

debt highlights. estate have capital Turning cost real to now persistent under real RMR sustained markets led commercial and to a the elevated of uncertainty economic sales operational markets slowdown estate and remained and pressure as significant in property activities. Commercial financing

markets on remain for real downward recovery for delayed market valuations. and higher longer Additionally, estate rates have pressure put to interest capital expectations further the

platform. build market out may current opportunities our remains real difficult overall to further additional environment estate, produce the Although external commercial growth the for market

advantage volatility. will the approximately acquisition, will of market well-positioned Following in remain no we cash, million CARROLL still debt, $XXX take have RMR and to current

on despite capital have that the business. our industry expand us have revenue leasing RMR base presented further diversify to that continue had X.X% evaluate space -- private X.X in approximately feet and another X perspective, of clients. This years. commercial average productive lease been to for activity rental quarter, average the that arranging opportunities challenges, a our approximately weighted of resulted will same leases higher our were We presented and From delivered to a behalf than term million of rates square previous rents

to portfolio For volumes results year, leased. ensure estate the efforts is the and maximized. speak of approximately value tenants brokerage leasing tireless of the the estate our community to proactively our year our ended believe managed RMR's square and million and management exceeded asset the these portfolio full property XX XX% feet, real real to high-quality of teams engage We

highlights brief focus few quarter. continues office past a sector. the facing OPI this the to challenging now at conditions our to clients Turning navigating on

As OPI since May. existing vacancies, be debt along expirations mortgage company To on will has approaches on $XXX and interest-only more XXXX, this upcoming addressing end, million than financings upcoming lease closed with the of their maturities. focus

to related to DHC, to more strategies OPI's our XX% office NOI balance manage challenges With benchmarks. industry today's properties. value financeable of meaningful year-over-year financing in show sheet improvement as shop book the billion same-property its unencumbered, OPI estate to is continued in proactively serves to multiple is progress occupancy real exceeded markets, a portfolio evaluate Considering attractive than rate as able and growth portfolio the properties future. At gross this in capital $X that testament by highly a recent

incurrence inconsistent of pace further senior living debt recovery supportive While XXXX. the the in not its be end growth, with has been of remain DHC does SHOP covenant to and until the compliance of fundamentals expect

B. to such also as could Given Bank raising equity preferred asset options and possibly discussions joint sales, coupon capital Riley upcoming which recently its are bonds. finance X permissible the of evaluate we or extend to in include currently Group facility. ventures maturity date help debt with maturities, Securities engaged DHC's credit DHC

cash notes [ in secured at senior From its to of markets its very are Overall durable rate Turning cash assets. of XXXX BP SVC. XXXX, SVC reflect strong the retail offering portfolio flow generation year. interest will into last performance capital use properties. an XX week, hotel its heading of debt all notes, repay billion maturities, and the this mature from flows within plans operational improvement from The continued leaves results service ] well financial $X next a perspective, which and SVC priced the of XX%. leased proceeds to SVC of to which secured positioned by in

sum business. the up, private and while of to the the our our To continue clients and market challenged, plans profile is backdrop strong, on remains of side growing progress capital our we executing financial make strategic

With we to value the CARROLL meaningful growth investors to for acquisition, come. our look delivering forward years creation in the and pending

the quarter. will for over financial the results that, call our now Matt Chief Jordan, turn to our Officer, who With I'll review Financial

Matthew Jordan

good everyone. morning, and Adam, Thanks,

we of For of quarter, $XX.X adjusted income and EBITDA of share, reported an per the net $X.XX over fourth XX%. adjusted margin million EBITDA adjusted

of focus high the management coming on our to in guidance, containment. primarily exceeded impact fees results of due than cost expected stronger our favorable construction the quarterly Our as continued as end well

we earlier, the the to highlighted Adam end the As expect close of by transaction CARROLL year.

As we in. continue the to sector remain preparing increased scale, diversification the to integrate transaction the organizations, and about invest in expanded results to X excited added time we operational expertise

CARROLL will RMR's Given for business. the on transaction exactly focused next be any will guidance financial legacy uncertainty solely when quarter close, of the

which loss transaction line that of expectations quarter, the Recurring was quarter service in million primarily revenues in TA with this and to This decrease the service of were attributable $XX.X full closed impact was million down resulting revenues mid-May. sequentially. the $X.X and

that quarter, upon continues next attractive relates we generated $XXX,XXX group noting Seven in million from Seven CRE seasonal Hills by quarter, million. It's outperform the Hills to expect its Managed peer worth it declines revenues $XX at by also incentive traditional our service of taking to values enterprise recent Trust, REITs advantage at $XX.X Realty to Equity we terms. As invest REIT. current be to and and this our fees the mortgage based of Sonesta, lenders typical commercial pullback recurring between

disciplined Our that strong Tremont volatile and in management curated portfolio even of team capabilities their this a loan period conditions. asset underwriting market lending has underscores

expenses, compensation guidance bonus and ahead flat was approximately to of $XXX,XXX. to slightly of million recurring due a approximately Turning our basis cash true-ups of annual sequential-quarter on $XX

million elimination that remain earlier year. quarter, increases, annual October will corporate at next approximately by roles to $XX of effective ahead cash recurring occurred were compensation X, we this offset be merit expect the to office as Looking which

result basis, G&A to a will restructuring thoughtfully G&A reimbursement quarter, a $X.X a The $X.X due containment, normalized approximately costs, and be $X.X should onetime fees. decreasing rate office million quarter. over technology of XX%. lower roles low investment these our franchise benefit modest $XXX,XXX costs cash approximately to cost in primarily next approximately tax sequentially, million continued a in increase also limiting of On professional on of including million focus this corporate were unusually

nondeductible of slightly was this it costs. rate normal to due to income rate, XX.X% relates year-end As our true-up quarter's our higher than tax of

We all to rate adjusted I of normalized share XX%. Aggregating these prospective earnings next expect expect more our we levels to tax quarter earlier, outlined back range for per assumptions approximately next to to share line the quarter, and That $X.XX questions? range adjusted million. from formal million $XX from remarks. please $XX to open our should would $X.XX to concludes EBITDA you Operator, per drop

Operator

At our first we Bryan [Operator which time, question, Maher this Instructions] will will take Riley. B. with come from

Bryan Maher

the and now this any or last just just a with Adam increased head in it pullback in interest their me. the as guess, seeing maybe week possibly and are rates to in deal to to and I light in expected execution? down, for your to happened SVC you some maybe Just before the of the be couple know which, what's Managed being a I refinancing, desire would appetite either from of favorable Matt, market kind for rates lock market something lenders in relates back be did REITs week,

Adam Portnoy

capital from say publicly can and estate your and SVC commercial really question I pullback noticeable say there's you. that billion, are maybe very the it's good any around One, to and transaction. you, X week last I capital, where Bryan, the in hard tell feel amount difference Sure, and pretty even raised the I $X rates. have or interest just with in and to you more from around that the is to with debt But we pleased hear activities. real specifically we guess capital, our earlier, about been just we I referenced returns REITs. in financing referenced announced of available would good if specifically a

over upping price. well by accelerating at up size and We got pricing $X a building day it closing lowering million, billion raised $XXX that the We the $X ended interest, by of of billion it or transaction. the the launched and

So and that right markets right that the was the us structure pretty for indication a real are to open good the estate. debt

our engaged we've DHC. them The Riley, are and to one we other announced of us we've companies Bryan, options with with activity is B. help firm, for in engaged publicly that explore your

from response favorable I generally with And pretty investors generally that had would speaking, we've company. in say talking a the

And capital in those say data there is two points, in so debt today's I the market. marketplace would between in financing available

buyers is I think it's peak that and anything, concluded maybe really, interest rates their this have just if their are investors to debt at of debt, that either close and peak. the or conjecture

so better may bit how true therefore, little better idea for little estate rates and can idea as have do job planning. where plan, well. of that's can you an a about have real interest And be, sort you a they to of the When

maybe And by as debt really financing, commercial but well. businesses what's interest specifically driving that's our more real investors further so maybe estate in

your answers that think I Bryan. So question,

Bryan Maher

million route something you away I $XXX into current a it office next do open OPI we I in and think Or away general, can about, where with let's up million relates there? to say, OPI Yes, chipping going chipping does a $XXX you $XXX you've scenario going the million mean know year, pretty little of profound? secured and financing, along keep here, the here, environment more when been million $XXX there as bit do think you well.

Adam Portnoy

we by $XXX to good knowing that I say it bit would of least comfortable due year a exactly mean of about profound, current certain put that in and I pretty million sort mean, able as like feel Yes. our place bank XXXX. say I is not X.X I think you credit that's months that can the renew now, at amount in properties well a we but at $XXX to -- there, our financing as without it would prices million number plan enough don't you redo do is of we large here, little go said, can OPI. that and ability as that facility well due sprinkling I be to It or through will properties properties, facility. redo that put sales, we asset a as we coming sell get about that secured we feel facility enough the at from do likely next and what sell acceptable into some at

to transaction speaking, in say few some for financing using the our That's it to may or a available, way isn't a more of the what financing, gauge is that done, a we're the that around be large to large is -- harder doesn't to if debt not wouldn't collateral I not at difficult remain is like but some that, office do office planning not expectation issuer least. as offices likely. larger in using to And financings in do transaction probably to but an there we REIT current environment. quarters a sort, for and that think, it say It generally happen. become That's is

Bryan Maher

of have vacancies traded? look out there I'll -- in Seven just it back all, as throughout and various including relates look even do playing success quarter of to don't me, at cover hop the numbers. I I whatever. after all high know, fear, what you companies REITs level them leasing for more OPI, you shares the Hills, and I except say It's the activity I the at naysayers the run, the of maybe the the the quarter When Managed RMR not to general in out where queue. One and for and increase or occupancy portfolios

them? would you So to do you how -- what say

Adam Portnoy

as why on. is stocks can I we work day at job company and environment, can we the a the obviously, I a they the And where do I equity say sheets specifically are pretty as OPI and value do the what So management incredibly But to DHC on say other current focused preserve all trade balance trade. think focused can't can I we're -- what as try and in for every we well vehicles. SVC frankly, good to to as come vehicles. different given

least that's think to I for that in disruptive process way So in where is focus doing a much the us. of very and focus is our and shareholder value sort that maximize

leasing, With I you. agree regard with to

our strong leasing portfolio. do we incredibly portfolio, Our an job

and are for this I career. job been this the think the I that's a to that testament groups. an takes have management their organization very in the seriously. mean that folks management asset is RMR These professionals and entire property doing organization their

We of offices this. nationwide doing have and network a professionals

almost frankly do a job we think our of real than so that leasing are of most focused better on because I peers estate and because we exclusively. commercial

So yes, the is by managed RMR. incredible an individual platform benefit for the are I that think REITs

-- time I are be that you more be Bryan, that investors. should so should glad argue it, because we for it's and I something and highlighted, would it's spending think And have you talking that highlighting about I'm something highlighting

are the done. feet board. in re-leasing Our is efforts And that XX have phenomenal. million leasing we we have mean, square of year leased XX% lot a the been I fiscal across

pretty feel those metrics. we good about So

Operator

our will Portnoy over to like closing session. questions, I conference back for turn to And the Instructions] remarks. we with Adam no question-and-answer any conclude [Operator remaining would

Adam Portnoy

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

Operator

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

You disconnect your may now lines.

The RMR Group Inc. (RMR) 16 Nov 232023 Q4 Earnings call transcript