The Rmr Group Inc. · NASDAQ:RMR
The Rmr — RMR Group — Investor Presentation (December 2022)
33 slides from The Rmr's investor presentation, Dec 7, 2022
Slide 1: Investor Presentation December 2022
1 INVESTOR PRESENTATIONDecember2022
Slide 2: Warning Regarding Forward-Looking Statements and Disclaimers
2 WARNING REGARDING FORWARD-LOOKING STATEMENTS AND DISCLAIMERSThis presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995and other securities laws. Our forward-looking statements reflect our current views, intents and expectations
Slide 3: RMR Is a Dynamic Alternative Asset Manager
3 RMR IS A DYNAMIC ALTERNATIVE ASSET MANAGER•Over 35 years of experience with buying, selling, financing and operating CRE.•Vertically integrated, nationwide operator of CRE across most real estate sectors.•Scalable platform and a deep bench of experienced management. The RMR Group (Nasdaq: RMR) is
Slide 4: Investment Highlights
4 INVESTMENT HIGHLIGHTSStable revenue basewith approximately 75% of RMR service revenues generated from 20-year evergreen contractswith fixed base management fees. Significant potentialupside to base and incentive fee revenuesas underlying share prices recover, andwe believe there is limited downsid
Slide 5: Clients
5 CLIENTS440 First Street, NW, Washington, DC
Slide 6: RMR Client Summary
6 $1.3 B$3.9 B$0.0 B$1.0 B$2.0 B$3.0 B$4.0 BSeptember 30, 2021September 30, 2022Managed Private Real Estate Capital ($B)RMR CLIENT SUMMARY Assets Under Management (AUM)Annualized Management and Advisory Services Revenues(1)Managed Public Real Estate Capital$30.9B$152.5 MManaged Private Real Estate C
Slide 7: Managed Public Real Estate Capital & Managed Operating Companies
7 MANAGED PUBLIC REAL ESTATE CAPITAL & MANAGED OPERATING COMPANIES Nasdaq:SVCOwns 242hotels and 769retail service-focused net lease properties.$11.3billion AUMNasdaq:DHCOwns 379medical office and life science properties, senior living communities and wellness centers.$7.3billion AUMNasdaq:OPIOwns 16
Slide 8: Contractual Relationships and Fee Structure
8 ClientQuarter Ended September30, 2022Contractual Relationship(2)Base BusinessMgmt. FeesBase PropertyMgmt. FeesConstructionSupervisionFeesTotal(1)MANAGED EQUITY REITS$8,453$974$653$10,080RMR earns fees pursuant to Business Management and Property Management Agreements that renew each year for succe
Slide 9: RMR Platform
9 RMR PLATFORM1224 Hammond Drive, Atlanta, GA
Slide 10: Deep Bench of Senior Management and Scalable Platform
•Legal•Marketing•Market Research •Risk Management•TaxRMR BENEFITS FROM BOTH A DEEP BENCH OF EXPERIENCED SENIOR MANAGEMENT AND A SCALABLE PLATFORMSENIOR VICE PRESIDENTSRMR SHARED SERVICES•Accounting•Acquisitions/Dispositions •Administration•Asset Management•Building Operations•Compliance/Internal Aud
Slide 11: National Vertically Integrated Operating Platform Is a Differentiator
11 NATIONAL VERTICALLY INTEGRATED OPERATING PLATFORM IS A DIFFERENTIATOR AND COMPETITIVE ADVANTAGERMR corporate headquartersRMR offices Ontario, CANPuerto Rico
Slide 12: Diversity of Direct Real Estate Strategies
12 DIVERSITY OF DIRECT REAL ESTATE STRATEGIES HELPS WEATHER DIFFERENT REAL ESTATE CYCLESNote: Based on AUM as of September 30, 2022and excludes $2.5 billion of AUM from the Managed Operating Companies. See “Definitions and Additional Notes” in Appendix. 21%18%15%24%9%6%6%1%21%18%15%24%9%6%24%6%1% 23
Slide 13: RMR's Comprehensive Approach to Real Estate
13 RMR’S COMPREHENSIVE APPROACH TO REAL ESTATE Executing Passionately•Engrained culture-“Like we own it.”•Sophisticated in-house engineering.•Best in class responsiveness.•Agile, accountable, & entrepreneurial.Maximizing Results•Accretive capital deployment.•Market leading leasing execution.•Economi
Slide 14: A Winning Tradition
14 A WINNING TRADITION#3in RetailRealEstate Ownership#6in HotelRealEstate Ownership#4in Senior LivingRealEstate Ownership#13in OfficeRealEstate Ownership#8in IndustrialRealEstate Ownership#7SeniorLivingOperator#6Hotel Operator Domestic Scale Across U.S. Sectors (1) RMR Recognition 1.Real estate owne
Slide 15: Demonstrated Commitment to ESG
15 OPI ENERGY STARPartner of the YearISustained Excellence (awarded in 2022)RMR ENERGY STARPartner of the YearISustained Excellence (awarded in 2022)RMR named"2022Top Placesto Work" for the thirdyear in a rowby The Boston Globe.RMR named"Best Place to Work"in 2021by GlobeSt. Real Estate Forum.DEMONS
Slide 16: Value Proposition
16 VALUE PROPOSITIONSonesta Resort Hilton Head Island
Slide 17: Limited Management Fee Downside from Current REIT Stock Price Levels
17 $1.1M or ~4% $3.4M or ~8% $2.0M or ~5% $4.2M or ~11% - 5 10 15 20 25 30 35 40 45 50DHCOPIILPTSVCMillions ($)Annualized Management Fees Property Mgmt Fees Construction Mgmt Fees Base Mgmt Fees - Debt (E.V.) Base Mgmt Fees - Equity (E.V.)LIMITED MANAGEMENT FEE DOWNSIDE FROM CURRENT REIT STOCK PRICE
Slide 18: Actions Underway at Managed Equity REITs to Improve Share Prices
18 $22$24$26$28$30$32$34$36$38$40 Maximum Base Business Management Fee Actual Base Business Management Fee Actions underway at the Managed Equity REITs to improve share prices include, but are not limited to:•Improving the balance sheets at SVC, DHC and ILPT.•SVC has executed on $532 million of disp
Slide 19: Growth in RMR's Construction Management Fees
19 GROWTH IN RMR’S CONSTRUCTION MANAGEMENT FEES $98$138$168$195$431$4.9$6.9$8.4$9.2$19.4$0$5$10$15$20$25$30$0$50$100$150$200$250$300$350$400$450$50020182019202020212022Construction Management Fees(Millions) Total RMR Managed Capital Spend(Millions) RMR Managed Capital Spend Total RMR Construction Ma
Slide 20: Adjusted EBITDA Margin Reflects Operating Leverage
20 $92M$100M$107M$120M$108M$91M$93M$106M55%57%57%59%57%50%51%51%0%10%20%30%40%50%60%$0$20$40$60$80$100$120$140 Millions Adjusted EBITDA Adjusted EBITDA MarginRMR’S ADJUSTED EBITDA MARGIN REFLECTS ITS DEMONSTRATED OPERATING LEVERAGE1.Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP financial m
Slide 21: Strong Balance Sheet & Well Covered Dividend
21 STRONG BALANCE SHEET & WELL COVERED DIVIDEND Dividend Payout Summary Balance Sheet1.Adjusted EBITDA and Distributable Earnings are non-GAAP financial measures. See Appendix for a reconciliation of these financialmeasures to the most directly comparable financial measures calculated in accordance
Slide 22: Potential for Robust Growth Opportunities Leveraging the RMR Platform
22 POTENTIAL FOR ROBUST GROWTH OPPORTUNITIES LEVERAGING THE RMR PLATFORM TO DRIVE SHAREHOLDER VALUE•Diverse client platform allows RMR to benefit from its Managed REITs capitalizing on strategic opportunities and weathering real estate cycles.•Gross acquisition volume of approximately $12billion for
Slide 23: Appendix
23 APPENDIX4000 Principio Pkwy, North East, MD
Slide 24: Corporate Structure Overview
24 CORPORATE STRUCTURE OVERVIEWNote: All ownership percentages represent economic interest, and not voting interest, as of September 30, 2022. 1.Adam Portnoy is the sole trustee and an owner of ABP Trust. In addition to ownership of 1,000,000 shares of Class B-1 Common Stock, ABP Trust and Adam Port
Slide 25: Definitions and Additional Notes
25 DEFINITIONS AND ADDITIONAL NOTESActual Base Business Management Fee: Actual base business management fees paid, which was based on the average market capitalization for each Managed Equity REIT when the average market capitalization was lower than the historical cost of real estate assets forthe
Slide 26: Definitions and Additional Notes Cont.
26 DEFINITIONS AND ADDITIONAL NOTES CONT.Non-GAAP Measures:Several non-GAAP measures are referenced in this presentation, including EBITDA, Adjusted EBITDA, Distributable Earnings and Adjusted EBITDA Margin. The RMR Group Inc. considers EBITDA, Adjusted EBITDA, Distributable Earnings and Adjusted EB
Slide 27: Reconciliation of EBITDA and Adjusted EBITDA
27 Three Months Ended September 30,Fiscal Year Ended September 30,(dollars in 000s)20222022Reconciliation of EBITDA and Adjusted EBITDA from Net Income:(1)Net income $27,322$77,468Income tax expense4,78513,233Depreciation and amortization262993EBITDA32,36991,694Other asset amortization2,3549,416Oper
Slide 28: 1.EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP financial measures calculated as presented
28 1.EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP financial measures calculated as presented in the tables above. The RMR Group Inc. considers EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin to be appropriate supplemental measures of its operating performance, along with net in
Slide 29: Reconciliation of Non-GAAP Financial Measures Cont.
29 RECONCILIATION OF NON-GAAP FINANCIAL MEASURES CONT.3.Distributable Earnings is a non-GAAP financial measure calculated as presented in the table above. The RMR Group Inc. considers Distributable Earnings to be an appropriate measure of its operating performance, along with net income attributable
Slide 30: Illustrative Calculation of Incentive Fees from Managed Equity REITs
30 ILLUSTRATIVE CALCULATION OF INCENTIVE FEES FROM MANAGED EQUITY REITSThe incentive fee is equal to twelve percent (12%) of the product of the Equity Market Capitalization (as defined in the applicable agreement) and the amount by which the Total Return per share exceeds the Benchmark Return per sh
Slide 31: Explanation of RMR Inc.'s GAAP Effective Tax Rate
31 EXPLANATION OF RMR INC.’S GAAP EFFECTIVE TAX RATERMRLLC is treated as a partnership for U.S. federal and most applicable state and local income tax purposes. As a partnership, RMRLLC is generally not subject to U.S. federal andmoststate income taxes. Any taxable income or loss generated by RMRLLC
Slide 32: Illustrative Calculation of Noncontrolling Interest
32 ILLUSTRATIVE CALCULATION OF NONCONTROLLING INTERESTABP Trust owns 15,000,000 redeemable Class A Units of RMR LLC, representing 47.5% of the economic interest of RMR LLC as of September 30, 2022, which is presented as a noncontrolling interest in RMR Inc.’s consolidated financial statements. Three
Slide 33: Investor Presentation December 2022
33 INVESTOR PRESENTATIONDecember2022