The RMR Group Q2 Earnings Call Highlights

Key Points

• The RMR Group said fiscal Q2 2026 results came in at or above the high end of guidance, with distributable earnings of $0.44 per share and Adjusted EBITDA of $18.5 million. Management also said the company earned $23.6 million in incentive fees for 2025 and expects more incentive fees this year.
• RMR highlighted progress at its managed REITs, including stronger operating trends at Diversified Healthcare Trust, a major deleveraging move at Service Properties Trust, and better-than-expected results and refinancing at Industrial Logistics Properties Trust. Office Properties Income Trust also received court approval for its reorganization plan and is expected to emerge from bankruptcy by the end of the quarter.
• The company said its private capital platform has grown to nearly $12 billion in assets under management, even as fundraising remains challenged by geopolitical uncertainty. RMR also entered the Greenwich multifamily market with a roughly $350 million acquisition, and management guided for Q3 distributable earnings of $0.48 to $0.50 per share.

The RMR Group NASDAQ: RMR reported fiscal second-quarter 2026 results at or above the high end of its outlook, as management highlighted incentive fees from managed REITs, ongoing private capital fundraising efforts and recent balance sheet investments.

President and CEO Adam Portnoy said RMR generated distributable earnings of $0.44 per share and Adjusted EBITDA of $18.5 million for the quarter. He said the results came “despite operating in what remains an unsettled economic environment,” citing market volatility and geopolitical uncertainty.

RMR earned $23.6 million of incentive fees for 2025, and Portnoy said the company is on track to earn incentive fees again this year, with both Diversified Healthcare Trust and Industrial Logistics Properties Trust accruing incentive fees during the quarter.

Managed REITs Show Progress

Portnoy reviewed several developments across RMR’s managed REITs, saying the company has been active in executing clients’ strategic initiatives.

At Diversified Healthcare Trust, or DHC, Portnoy said the company has focused on improving senior housing operating performance after transitioning 116 senior living communities to new operators in the second half of 2025. DHC generated first-quarter Normalized FFO of $33 million, or $0.14 per share, and Adjusted EBITDA of $74 million, both above analyst consensus estimates, according to Portnoy. Same-property NOI in the senior housing operating portfolio rose 13.5% year over year, while occupancy increased 110 basis points.

DHC also sold 13 unencumbered non-core communities in March for gross proceeds of approximately $23 million. Portnoy said asset sales are expected to slow in 2026 after DHC completed about $605 million of sales in 2025, with management now focused on improving NOI in the retained portfolio. He also noted that Moody’s upgraded DHC’s debt ratings in April and revised its outlook to positive from stable.

At Service Properties Trust, or SVC, Portnoy said RMR helped complete a $575 million equity offering that accelerated deleveraging, eliminated near-term refinancing risk and provided flexibility to improve hotel performance and pursue additional asset sales. RMR participated in the offering with a $50 million anchor investment. Portnoy said the proceeds allowed SVC to eliminate all unsecured debt maturities until 2028.

For Industrial Logistics Properties Trust, or ILPT, Portnoy said first-quarter Normalized FFO of $0.33 per share and Adjusted EBITDA of $87 million exceeded the high end of management’s guidance. ILPT completed about 862,000 square feet of leasing during the quarter at rental rates 26% above prior rents. RMR also assisted ILPT with the refinancing of $1.6 billion of debt for its consolidated Mountain Joint Venture, replacing floating-rate and amortizing debt with interest-only fixed-rate debt at a 5.7% rate.

Seven Hills Realty Trust originated three loans totaling $67.5 million during the quarter and generated distributable earnings of $0.24 per share, Portnoy said. Total loan commitments reached approximately $776 million, a record high for the portfolio.

Portnoy also said Office Properties Income Trust, or OPI, received court approval for its plan of reorganization and is expected to emerge from bankruptcy by the end of the fiscal second quarter. He said RMR expects to continue managing OPI under previously disclosed terms, including a five-year term and a flat business management fee of $14 million per year for the first two years, while property management economics remain unchanged.

Private Capital Platform Remains a Focus

Chief Operating Officer Matt Jordan said RMR’s private capital business has grown from “essentially zero” assets under management in 2020 to nearly $12 billion today. He said RMR is building brand awareness with global investors and has met with nearly 200 global investors representing almost $7 trillion in assets under management.

Jordan said fundraising has been disrupted by the ongoing conflict in the Middle East, with global fundraising in the first quarter of 2026 down 50% from the prior year. However, he said North American real estate still attracted 65% of all dollars raised, and value-add strategies accounted for 56% of fundraising.

RMR’s residential business now represents more than $4.7 billion in value-add residential real estate across 18,500 owned and managed units, Jordan said. In April, RMR closed on the acquisition of a multifamily portfolio in Greenwich, Connecticut, for almost $350 million. The transaction was sourced off-market and marks RMR’s entry into what Jordan described as one of the country’s most supply-constrained and affluent housing markets.

RMR Residential will manage the properties and pursue a multiyear strategy to modernize communities, enhance the resident experience and improve efficiencies. The acquisition was completed through a joint venture in which RMR is a co-general partner and invested $6 million for a 5% ownership interest. Jordan said the remaining approximately $120 million of equity was raised from two institutional partners.

RMR expects to recognize $600,000 of revenue from the transaction in fiscal Q3 and earn ongoing operating fees of about $750,000 annually. Jordan said the venture is expected to generate annual cash-on-cash returns of approximately 7.5% over the longer term, with potential carried interest as investment hurdles are met.

Financial Outlook

Chief Financial Officer Matt Brown said recurring service revenues were $42 million in the quarter, down about $1 million sequentially, primarily due to hotel sales, lower enterprise values at SVC and DHC as those companies paid down debt, and the wind-down of AlerisLife’s business.

Brown said RMR expects recurring service revenues to rise to about $44 million next quarter, driven by revenue from the Greenwich acquisition, higher construction management fees and enterprise value improvements at certain managed REITs.

Recurring cash compensation was $37.7 million, up modestly from the prior quarter due to payroll tax and benefit resets, and is expected to remain consistent in fiscal Q3. Recurring general and administrative expense was $10.1 million, excluding $600,000 in annual director share grants, and is expected to remain around that level for the rest of the fiscal year.

For fiscal Q3, Brown guided for Adjusted EBITDA of approximately $19 million to $21 million and distributable earnings of $0.48 to $0.50 per share. He said RMR will no longer provide guidance for adjusted net income because investments in leveraged real estate have reduced the metric’s usefulness due to depreciation and interest expense.

Brown said RMR’s current liquidity is approximately $133 million, including $75 million of capacity on its revolving credit facility, after the $50 million SVC investment and the $6 million Greenwich joint venture investment. The SVC investment is expected to generate about $420,000 of incremental quarterly dividends.

Management Addresses Fundraising and Capital Allocation

During the question-and-answer session, Portnoy said RMR’s multifamily investments are likely to remain private and continue to be structured through joint ventures and small portfolio investments. He said RMR is also trying to build a dedicated fund around the strategy, but he does not expect a transaction that would roll up the full $4.7 billion multifamily portfolio into a public vehicle.

Portnoy said development and credit remain priorities, though development is difficult in the current market because of uncertainty and elevated required returns. He said Seven Hills has close to $500 million of capacity for new investments over the next year, supported by new capital and expected loan payoffs.

Asked about RMR’s cash position, Portnoy said the company remains “all systems go” for the right opportunities, with more than $100 million of liquidity between cash and revolver capacity. He added that RMR is optimistic it could recover cash if it successfully syndicates its Enhanced Growth Venture tied to the multifamily strategy.

Jordan said fundraising for equity remains challenging, with geopolitical volatility slowing conversations with investors. He said allocations to real estate remain in place over the long term, but fundraising cycles are taking longer.

About The RMR Group NASDAQ: RMR

The RMR Group, Inc NASDAQ: RMR is a publicly traded asset management company that specializes in providing comprehensive real estate and investment management services to both public and private entities. Acting as an external manager, RMR offers a range of services encompassing property management, asset management, fund administration, accounting, investor relations and compliance oversight. Its client base includes real estate investment trusts (REITs), real estate operating companies (REOCs), closed-end real estate funds and institutional investors.

Founded in 1986, RMR Group has built a business model centered on recurring fee revenue generated through long-term service agreements with its managed entities.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.