The RMR Group Q3 Earnings Call Highlights

Key Points

• Q3 fiscal 2026 results met expectations: RMR reported distributable earnings of $0.48 per share and adjusted EBITDA of $19.7 million. Recurring service revenue increased to $45.5 million, while total liquidity exceeded $130 million.
• Managed REITs showed operating and balance-sheet improvements: DHC’s same-property senior-housing NOI rose 37% year over year, ILPT recorded 5.4 million square feet of leasing and a rent roll-up above 35%, and SVC continued reducing leverage. RMR expects more than $40 million in 2026 incentive fees, primarily from DHC and ILPT.
• Private-capital expansion continues despite fundraising challenges: Private-capital assets under management surpassed $12 billion, and RMR closed a roughly $350 million Greenwich residential joint venture. However, management cited market volatility and extended 18-to-24-month fundraising cycles as ongoing headwinds.

The RMR Group NASDAQ: RMR reported fiscal third-quarter 2026 results that met its expectations, with distributable earnings of $0.48 per share and adjusted EBITDA of $19.7 million, as the real estate manager continued to emphasize improving the performance of its managed REITs and expanding its private-capital business.

President and CEO Adam Portnoy said the company’s results came despite “broad economic and geopolitical uncertainty.” He cited continued operating and balance-sheet improvements at managed REITs Diversified Healthcare Trust, Industrial Logistics Properties Trust, Service Properties Trust and Office Properties Income Trust.

RMR said it is on pace to generate more than $40 million in incentive fees for calendar 2026, driven by the performance of DHC and ILPT. Chief Operating Officer Matt Jordan said DHC represented about 75% of the potential total as of June 30, while both REITs were at the 1.5% of equity-market-cap incentive-fee cap.

Managed REIT operating progress

Portnoy said DHC continued to improve its senior-housing operations following the transition of 116 communities to new operators over the past year. Since the start of 2025, DHC has completed more than $600 million of non-core asset sales, helping reduce net debt to adjusted EBITDA to 7.1 times as of June 30.

During DHC’s second quarter, normalized funds from operations were $0.16 per share and adjusted EBITDA was $82 million, both above consensus estimates, according to Portnoy. Same-property SHOP NOI increased 37% year over year, while same-property SHOP margins rose 390 basis points to 17.3%.

At ILPT, RMR highlighted a record 5.4 million square feet of leasing and a weighted-average rent roll-up exceeding 35%. The company said this marked ILPT’s seventh consecutive quarter of double-digit rent growth. RMR also helped ILPT refinance $1.6 billion of debt for its consolidated Mountain joint venture, replacing floating-rate debt with interest-only fixed-rate debt carrying a 5.7% interest rate. ILPT subsequently doubled its quarterly dividend to $0.10 per share.

Service Properties Trust continued to recycle capital and reduce leverage, completing more than $900 million of non-core asset sales since the beginning of last year. Portnoy said RMR is working with Sonesta’s new leadership team to increase hotel EBITDA margins and capture benefits from nearly $650 million of hotel capital improvements over the past three years.

SVC’s retained hotels generated a 6.6% increase in revenue per available room, or RevPAR, and a 4.2% rise in hotel EBITDA during the quarter. SVC reported normalized FFO of $0.43 per share and adjusted EBITDA of $146 million. RMR also assisted SVC in using proceeds from a $575 million equity offering to redeem $550 million of unsecured notes due in 2027.

Meanwhile, Office Properties Income Trust emerged from bankruptcy in June and began trading its newly issued shares on Nasdaq. RMR will continue to manage OPI under an initial five-year term and will receive a flat business-management fee of $14 million annually during the first two years.

Private capital expansion amid fundraising headwinds

Jordan said RMR’s private-capital assets under management have expanded from nearly zero in 2020 to more than $12 billion. The company has built an in-house global sales and marketing team over the past year as it seeks to build its investor base and pursue new opportunities.

However, Jordan said fundraising remains challenging. He cited the Middle East conflict, related market volatility and a broader slowdown in real estate fundraising, which he said reached a nine-year low in the first half of the calendar year. He added that fundraising cycles have extended to roughly 18 to 24 months, while RMR is about nine months into its Enhanced Growth Venture fundraising process.

RMR recently closed a roughly $350 million joint-venture acquisition in Greenwich, Connecticut. New institutional investors contributed 95% of the venture’s equity, while RMR retained a 5% general-partner interest. RMR earned an acquisition fee at closing and expects to receive about $750,000 annually in asset-management and property-management fees.

The company said it plans to modernize the Greenwich community, improve the resident experience and identify operating efficiencies. Jordan said RMR expects to continue pursuing one-off residential joint ventures while it raises capital for its residential enhanced-growth strategy.

RMR also wholly owns three multifamily communities totaling 781 units. The properties were nearly 92% occupied and were performing in line with their value-add plans, Jordan said. The company cited 3% to 4% renewal rent growth, nearly break-even new leasing and high-teen returns on apartment renovation investments.

Revenue outlook and capital position

Chief Financial Officer Matt Brown said recurring service revenue rose about $3.5 million sequentially to $45.5 million. The increase reflected higher enterprise values at DHC and SVC, seasonal improvement in Sonesta revenue and acquisition fees from the Greenwich transaction.

For the next quarter, RMR expects recurring service revenue of about $45 million. It forecast adjusted EBITDA of $19 million to $21 million and distributable earnings of $0.48 to $0.50 per share. The company expects full-year adjusted EBITDA of approximately $76.5 million to $78.5 million, excluding $23.6 million of incentive fees earned for calendar 2025 and possible calendar 2026 incentive fees exceeding $40 million.

RMR ended the quarter with more than $130 million of total liquidity, including more than $55 million of cash and $75 million of available capacity under its revolving credit facility.

On profitability, Jordan said RMR’s EBITDA margin is currently in the low-40% range, compared with historical levels at or above 50%. He said the company’s goal is to move back toward a margin of roughly 50% through revenue growth and operating leverage.

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.

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