The RMR Group Inc.

Good day and welcome to the RMR Group Fiscal Second Quarter 2022 Earnings Call. All participants will be in listen-only mode. Should you need assistance, please signal a comfort specialist by pressing star then zero on your telephone keypad. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then 1 on your telephone keypad. To withdraw your question, please press star then 2. Please note this event is being recorded. I would now like to turn the conference over to Michael Kodesh, Director of Investor Relations. Please go ahead.

Good afternoon, and thank you for joining RMR's second quarter of fiscal 2022 conference calls. With me on today's call are President and CEO Adam Portnoy and Chief Financial Officer Matt Jordan. In just a moment, they will provide details about our business and quarterly results, followed by a question and answer session. I would like to note that the recording and retransmission of today's conference call is prohibited without the prior written consent of the company. Today's conference call contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws. These forward-looking statements are based on RMR's beliefs and expectations as of today, May 5, 2022, and the actual results may differ materially from those that we project. The company undertakes no obligation to revise or publicly release the results of any revision to the forward-looking statements made in today's conference call. Additional information concerning factors that could cause those differences is contained in our filings with the Securities and Exchange Commission, which can be found on our website at www.rmrgroup.com. Investors are cautioned not to place undue reliance upon any forward-looking statements. In addition, we may discuss non-GAAP numbers during this call, including adjusted net income, adjusted earnings per share, adjusted EBITDA, and adjusted EBITDA margin. A reconciliation of net income determined in accordance with U.S. generally accepted accounting principles to adjusted net income, adjusted earnings per share, adjusted EBITDA, and the calculation of adjusted EBITDA margin can be found in our earnings release. And now, I would like to turn the call over to Adam.

Thanks, Michael, and thank you for joining us this afternoon. We are pleased to report improved results this quarter that included adjusted net income of 50 cents per share and adjusted EBITDA of $25.7 million, both meaningful sequential quarter increases. This quarter was highlighted by ILPT's $4 billion acquisition of Monmouth Real Estate Investment Corporation, which resulted in asset thunder management at the end of the quarter reaching almost $38 billion. Since becoming a public company at the end of 2015, our assets under management have grown almost 50% in just six and a half years. The closing of the Monmouth transaction was the result of the tireless commitment of many parts of the RMR organization, ensuring a seamless integration of Monmouth's 126 high quality e-commerce focused properties. The transaction provides ILPT with increased scale and greater tenant and geographic diversity, while also ensuring ILPT is well positioned to take advantage of the current industrial market dynamics. Turning to real estate fundamentals and highlights this quarter from some of the other clients. Historically, real estate has proven to be resilient during inflationary environments, and we believe our portfolio is well-positioned to weather market volatility. Approximately 85% of leases at properties RMR manages have annual rent escalators, CPI adjustments, or percentage rent provisions. Further, over 60% of our managed leases have operating expense recoveries that should further mitigate inflationary risks. As new and prospective tenants become increasingly active, in securing their long-term real estate needs, and office building utilization levels increase, we were not surprised to see strong leasing momentum carry into the second fiscal quarter. RMR arranged almost 2 million square feet of leases on behalf of our clients this quarter, with a weighted average lease term of approximately nine years and a weighted average roll-up in rent at over 10%. Additionally, we continue to see increasing signs of a normalizing operating environment, and more specifically, a general easing of pandemic-related business disruptions. Even before mask mandates were listed for air travel, TSA checkpoint travel numbers were up 82% during the first calendar quarter compared to the prior year, indicating a growing eagerness to resume not only leisure travel but also in-person business meetings and conferences. We believe this is a significant precursor to a more robust return of business travel, hospitality demand, and office utilization. OPI and SCC are the two companies we manage that most directly stand to benefit from these improving trends. As post-pandemic tailwinds continue, office fundamentals have exhibited steady improvement with increased office utilization improved leasing volumes, and less available sublease space in the market. Of the four managed equity REITs, OPI remains the most competitive with regard to its total shareholder return versus its peer group, and we remain encouraged by OPI's capital recycling activities, development initiatives, and strong operating results. At SVC, the diversity of its assets continues to distinguish it from other hotel-focused REITs. More specifically, its service retail portfolio, including its leases with Travel Centers of America, continue to be well covered with any pandemic-related disruptions having largely passed. In terms of its hotel portfolio, SVC saw increases in hotel occupancy and rev par throughout the quarter as repositioning efforts materialize, transient travel and group activity recovers, and business travel rebounds. Finally, SVC recently enhanced its liquidity by extending its credit facility through January 2023, gaining extended covenant relief. SVC also recently completed 22 hotel sales with an additional 42 hotels currently under agreements to be sold. We believe SVC is well positioned heading into the second half of 2022. DHC reported sequential quarter NOI growth in its same property shop segment due primarily to rate increases and occupancy stabilization. We are encouraged by these results and with continued capital investments in DHC's senior living assets, we are hopeful for continued acceleration in DHC's recovery. Additionally, earlier this week, Alaris Life, who manages 120 communities, on behalf of DHC, appointed the company's current CFO as interim president and chief executive officer. Alaris Life also announced that it retained the healthcare consulting group of Alvarez and Marsal to conduct an operational review of the company over the coming weeks. We are hopeful that these changes will deliver enhanced financial performance and value creation for both Alaris Life and DHC in the future. At the end of the quarter, DHC had almost $1.5 billion in cash and extended the maturity date of its credit facility to January 2024. With ample liquidity, improving operating performance, and medical office leasing results that have remained resilient, we are confident in DHC's trajectory. Finally, At a commercial mortgage REIT, Seven Hills Realty Trust, we continue to believe that the business has attractive long-term prospects. During the quarter, Seven Hills deployed almost $100 million of capital into three first mortgage bridge loans. And Seven Hills leverages RMR's best-in-class originations platform that touts a strong default-free track record. Turning to our efforts to expand our private capital assets under management. Managed private capital, AUM, ended the quarter at approximately $4 billion, a significant increase from just two years ago when private capital totaled less than $500 million. During the quarter, DHC entered into a $703 million joint venture for 10 office properties with two global institutional investors, who acquired a combined 80% equity interest in the venture. In addition, the Monmouth transaction completed by ILPT was partially funded through a joint venture with an institutional investor who contributed $587 million in equity. This new industrial joint venture will not be included in our private capital AUM metrics until such time as ILPT no longer has a controlling interest in the venture. To that end, we are in active discussions with possible institutional investors seeking to deploy capital in the industrial sector via this new Monmouth joint venture and expect to have more to report in the future. We are also talking to our various private capital relationships about other possible ventures, including credit vehicles that would leverage the successful track record and substantial infrastructure of our Termont Realty Capital subsidiaries. Before I turn the call over to Matt, I wanted to highlight our continued efforts to strengthen corporate governance as we recently added four new independent trustees to the boards of ILPT, OPI, DHC, and Seven Hills. We look forward to benefiting from their collective insights and experiences. With that, I'll now turn the call over to Matt Jordan, our Chief Financial Officer, who will review our financial results for the quarter.