The RMR Group Inc.

Good morning, and welcome to the RMR Group Fiscal Fourth Quarter 2024 Earnings Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on a touch-tone phone. To withdraw your question, please press star, then two. Please note, this event is being recorded. I would now like to turn the conference over to Kevin Barry, Senior Director of Investor Relations. Please go ahead.

Good morning, and thank you for joining RMR's fourth quarter fiscal 2024 conference call. 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 also 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, November 12, 2024, and 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 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, distributable earnings, and adjusted EBITDA. A reconciliation of net income determined in accordance with U.S. generally accepted accounting principles to these non-GAAP figures can be found in our financial results.

I will now turn the call over to Adam. Thanks, Kevin, and thank you all for joining us this morning. Yesterday, we reported fourth quarter results that were generally in line with our expectations, which included adjusted net income per share of 34 cents, distributable earnings per share of 51 cents, and adjusted EBITDA of $21.8 million. Over the past year, we have continued to invest time and resources into growing our private capital business while simultaneously supporting our public clients through a challenging commercial real estate environment. This past quarter, we have seen increased signs that we are entering a more favorable market environment. More specifically, we are seeing an increase in transaction activity, and as a result, a more energized fundraising environment. In fact, we're seeing increased interest from our legacy institutional partners, as well as greater success in engaging with potential new capital partners. While there are many reasons for optimism, It is important to note that the industry continues to experience an elongated fundraising cycle. We are confident that the scale and diversity of real estate sectors our platform encompasses will position us to capture opportunities as the commercial real estate market improves. We have a robust and growing pipeline and are advancing discussions with new and existing partners across a number of sectors, some of which we have previously discussed and others we expect to discuss in the future. Turning to our previously announced strategic initiatives, the fundraising process is progressing for our private debt vehicle, which we intend to seed with $100 million in middle market and transitional bridge loans. To date, our real estate lending platform, Tremont Realty Capital, has originated $67 million in aggregate commitments for this vehicle, and these loans are expected to generate returns in the mid-teens. As part of the credit vehicle, in September, we entered into a $200 million master repurchase agreement with UBS, which allows us to effectively leverage our loans up to 80%. After using the UBS facility, our net cash outlay was approximately $15 million for these loans. Expanding the RMR residential platform also remains a priority. As we previously announced, we closed on our first multifamily investment in July, acquiring a 240-unit garden-style community in Denver. While it is still in the early stages of the business plan for this property, we are already seeing increased rental rates as leases roll. In addition to this transaction, we are seeing increased activity in our residential acquisitions pipeline, and I'm optimistic that our residential AUM and its related EBITDA contribution will increase in 2025. In addition to our growing pipeline, my optimism is based on our continued belief that the U.S. multifamily market is positioned for significant long-term growth as the shortage of housing and high cost of home ownership continues. Beyond our strategic initiatives, we remain focused on assisting our managed equity REITs with the execution of their operational and financial strategies. During the quarter, We arranged 5.2 million square feet of leasing on behalf of our clients, highlighted by the early renewal of Vertex Pharmaceuticals for 1.1 million square feet in Boston Seaport District and the lease renewal of more than 2 million square feet with FedEx. Turning to a few brief highlights across our public clients. SVC's third quarter performance reflected the continued slow recovery of its hotel portfolio, combined with the impact of its ongoing renovation program. Notably, SVC is taking significant actions to improve liquidity and reduce leverage, including a reduction in its quarterly dividend and plans to sell 114 Sinesta hotels, targeting approximately $1 billion in proceeds. We are confident that the rationalization of its hotel portfolio, stable cash flows from its triple net lease assets, and continued prudent capital management will improve performance and drive long-term value for SVC shareholders. OPI continues to advance its process to address its upcoming debt maturities and strengthen its balance sheet. In the first half of the year, OPI completed $1.3 billion in secured financings and has since reduced its 2025 debt maturity by nearly $200 million. We are in active negotiations with OPI bondholders, and we continue to work with OPI's outside advisors to evaluate all possible strategies to address OPI's upcoming maturities. Lastly, DHC continues to progress on its initiative to evolve its portfolio, increase occupancy, and advance its shop turnaround. The company is conducting a comprehensive portfolio analysis to transform its asset mix to focus on properties and key markets with the highest upside opportunities. DHC currently has LOIs or agreements to sell 28 properties for estimated proceeds of $348 million and recently expanded its shop disposition program to include a total of 32 communities, which are in various stages of the disposition process. We are confident that the optimization of the portfolio, combined with the strategic operator transitions and capital investments, will position DHC to capitalize on market tailwinds and drive sustainable, profitable growth. In closing, RMR delivered a solid finish to fiscal 2024, and we are confident we are heading into fiscal 2025 in a strong position to capitalize on the growth opportunities we see ahead as markets improve. The business continues to have stable recurring revenues, a diversified client roster, and a solid balance sheet. We are actively taking measures to position our clients for long-term success while advancing our private capital initiatives to drive future growth and create long-term value for RMR and its shareholders. With that, I'll now turn the call over to Matt Jordan, Executive Vice President and our Chief Financial Officer.