The RMR Group Inc.

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 your telephone keypad, and to withdraw your question, please press star then two. Please note, today's event is being recorded. I would now like to turn the conference over to Matt Murphy, Manager of Investor Relations. Please go ahead.

Good afternoon, and thank you for joining RMR's second quarter fiscal 2025 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, May 7, 2025, 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, Matt, and thank you all for joining us this afternoon. Yesterday, we reported second quarter results that were slightly below our expectations. with adjusted net income coming in at 28 cents per share and distributable earnings of 40 cents per share. The shortfall to our expectations primarily related to our managed equity rates spending less on capital expenditures given the more uncertain economic environment and deleveraging activities adversely impacting RMR's revenues. While in recent months we've been forced to navigate economic volatility We continue to engage with private capital investors regarding our various investment initiatives across the residential sector, credit strategies, and select development opportunities. While we found most partners ready to start investing in a significant way in the latter part of 2024 and into early 2025, recent market volatility has modestly tempered enthusiasm and caused some investors to temporarily pause new allocations. With that said, across many of our investment strategies, we believe now is the time to take advantage of opportunities when others are pulling back. As an example, we were already seeing new supply decrease in the residential sector, which bodes well for rent growth and occupancy gains heading into 2026. With the recent tariff actions, We believe this will further slow new construction starts and strengthen residential fundamentals in many of our Sunbelt markets where migration trends continue to drive housing shortages. During the quarter, we closed two joint venture acquisitions of residential communities in South Florida for an aggregate transaction value of approximately $196 million. RMR raised an aggregate $64.3 million in equity from institutional investors to capitalize these joint ventures, with RMR acting as the general partner and contributing a total of $11 million or retaining a weighted average 15% interest in the combined ventures. Another example of a real estate sector where we have conviction and believe an opportunity exists in today's turbulent market, in April, We closed on a $21 million value-add community shopping center located outside of Chicago. This center is currently 77% occupied, and our business plan includes leasing up current vacancy while also rolling up rents for existing tenants, which today are almost 20% below market. Our target returns over the projected five-year hold period are in the mid to high teens. Our value-add retail strategy is centered on leveraging the experienced retail team we already have in place at RMR to establish a track record within the value-add retail sector that we can then fundraise around in the future. This initial purchase in Chicago is expected to be part of a small portfolio of value-add retail properties we acquire using RMR's balance sheet over the next six to 12 months that will aggregate to approximately $100 million. On balance sheet investments, such as this value add retail acquisition, are all part of our continued strategy to diversify our client base and grow our private capital AUM. While the current fundraising environment may be challenging, we remain confident in our ability to grow private capital AUM in the future. As a reminder, in less than five years' time, our private capital assets under management have grown from essentially zero to over $12 billion, and we believe it could comprise over half of RMR's total AUM in the next five years. Turning to a few notable updates at our public capital clients, DHC posted solid first quarter results. with revenue, normalized FFO per share, and adjusted EBITDA, all handedly beating consensus estimates. These strong results were led by GHC's SHOP segment, which saw consolidated NOI improve 49% year over year because of active asset management and the positive impact of capital deployed to upgrade many of the communities over the last few years. At SVC, first quarter results also exceeded consensus expectations. Revpar at SVC's hotel portfolio improved 2.6% year-over-year and outpaced the industry by 40 basis points, despite meaningful revenue displacement from renovation activity. SVC also continues to benefit from the stable cash flows generated from its triple net lease assets, led by its $3.3 billion investment in travel centers, which are currently leased to investment-grade rated BP. In terms of its deleveraging efforts, we are pleased to report that SVC remains on track to sell 123 non-core hotels for approximately $1.1 billion this year. Despite the ongoing macroeconomic uncertainty, the sales process generates significant interest and pricing that met or exceeded our expectations. ILPT reported first quarter results that highlight the quality of its portfolio as tenants continue to renew in place while also delivering meaningful roll-ups in rent. ILPT completed 2.3 million square feet of leasing activity in the quarter and weighted average rental rates that were approximately 19% higher than prior rents. Although ILPT has no final debt maturities until 2027, it continues to explore ways to delever its balance sheet while also looking to refinance its current debt with longer-term fixed-rate debt. Lastly, OPI continues to face headwinds associated with its nationwide portfolio of office properties. OPI, along with its advisors, continues to explore all options to address its upcoming debt obligations. To conclude, we are pleased with the progress we have made assisting our clients with their financial and strategic objectives. We also believe that RMR operates a durable business model supported by clients with a nationwide portfolio of real estate across multiple sectors. This durable business model with almost 70% of our AUM coming from perpetual capital enables us to drive new initiatives forward in a volatile economic environment. We look forward to updating you on our progress in the coming quarters. With that, I'll now turn the call over to Matt Jordan, Executive Vice President and our Chief Financial Officer. Thanks, Adam. Good afternoon, everyone.